Transcripts For CNBC Squawk On The Street 20240713

The pound is rallying. Tenyear back to 17 now as that threemonth tenyear curve goes positive road map begins with a trade boost, stocks set for a sharp rally at the open as optimism for a skinny trade deal is growing. Oil prices jumping this morning, this after iran says two missiles struck one of its tankers. Gms urging the uaw to engage in around the clock bargaining to reach a deal and potentially end the more than three week long strike. Were going to begin with u. S. china trade talks, lighthizer, mnuchin, greati ingg chinas vice premier the president and the vice premier set to meet this afternoon. Yesterday, the president was upbeat about the talks take a listen. Were doing very well, were having another one tomorrow. Im meeting with the vice premier over at the white house. And i think it is going really well i will say, i think it is going really well. So we had a very, very good negotiation with china theyll be speaking a little bit later, but theyre basically wrapping it up and were going to see them tomorrow, right here indeed we will. Most of the characterizations say these tariffs on tuesday may not happen i think the president has them where he wants them because hes taking tariffs up over and over and over again. Hes in this position of saying, listen, there is another tariff and we may not do it and i think it is kind of hate him or like him, it was a very good strategy. Now, when i see who is in there, do we see navarro. We see mnuchin i think thats interesting secretary mnuchin, but not Peter Navarro. Peter navarro represents the big patch, the overall intellectual property, no more subsidies, fentanyl seven deadly sins seven deadly sins he talked about it on our air many times and more of a bomb thrower, isnt he . More of an idealist, ideologue. Mnuchin represents what i would say is sentimentality. And goes in there, can get a deal done. It is not a deal that i think will do anything other than make it so that the next tariffs are stalled, but i think people behind the scenes dont realize the last two weeks trump was put through a series of tough things on china we talk about costco, the cost kind, but they put prohibitions on csto, thats like thats their method of commerce i dont know if you see the shipping rates, north american tanker, the stock is double. The shipping rates are all out of control because of what trump did. I think the visas, that is basically a warning shot i think the thing no one counted on was the equivalent of a sport that made it so that china is panicked about hong kong so i think that that was just something hong kong lose face every weekend, it is a situation where i think hate them or like them, he has them where he wants them no one has talked about any kind of fundamental change to subsidies for state run entities the currency package is basically a warmed over package of agreements that they already came to. Agreed and thats why i say if i saw Peter Navarro there, i would say what he stant s if i saw Peter Navarro there, i would say what he stanttands fos the package that a lot of americans like to see and expect to happen when the World Trade Organization welcomed china. That has not happened. If you get a deal where they buy ag, i think that it would justify why the futures are up, but it is not it is going to put us in the soup again, kind of doesnt end it now. But there is so many people who are short this market and expect things to just go wrong, because were at earnings season i think there is a lot of short squeezing going on right now, a bunch of short squeezes. Youll see them one thing i watch is retail. When retail is up so big, ahead of a target, when walmart is up, that is the squeeze. When you see the banks going up ahead of them, reporting next week, thats the squeeze people who felt, you know what, it is risk free, there wont be anything and in the meantime, i think the president wants a bit of a win can you imagine if he gets a win, he says, listen, im not going to raise tariffs they are going it buy 50 billion x. They better do it. They better do it. Were going to find out how the optics work all day long today. Kayla tausche has been tweeting about the optics of the meeting we just saw a few moments ago. Good morning good morning, carl. We did just see the chinese delegation arrive. The vice premier lingering on the steps of the u. S. Trade Representatives Office for a long time, a minute in total this is unusual. They usually shake hands, pat each other on the back and then walk swiftly inside the building it appeared as if they wanted the cameras to get footage of them talking, perhaps for pieces later today, on a day that could signal a significant deescalation in this multiyear trade dispute. On the way into the office this morning, i asked the treasury secretary how things were going, he said were looking forward to another productive day of negotiations but did not respond when si aske if an agreement had been reached. One of the issues we have seen and been able to confirm ourselves is the president likes to be his own closer he likes to make these announcements themselves so even if principles and Senior Administration officials can say, yes, we believe we have consensus to delay the deescalation or cancel the deescalation next week, china said they will buy Agricultural Products we have reached this currency deal, we have approved some waivers for countries to do business with huawei those are all things on the table that sources who are close to the talks say could be in a package that we would see today. The president is the final announcer and until he says those words, a lot of people are reticent to actually say things are final. As for where the white house is on this, a staffer says we need this saying the white house needs a political win, and needs an economic win, given recent Economic Data and recent headline risk coming out of capitol hill of course, democrats and the house have been targeting the president , and according to this white house staffer, we need this jim, as you mentioned, this would not be a final deal by any measure, from the political standpoint, there is also a belief that in order to keep the democratic field at bay, president needs to keep this situation open, the only way to avoid criticism from democrats that hes not tough enough on china is to say were not there yet, we still have this leverage of 250 billion at least in tariffs. Great report, kayla i got to tell you, my the people i talked to were kind of hoping that there would be something involving protecting american industries, something involving allowing our companies to come in without having any joint ventures it is it possible the chinese, when they talk about how i know it is hold, but eunice yoon went over it again, allowing more investment that theyre finally easing so when americans come in, it doesnt have to have a bogus partner to do business in china, using that as an example. China signaling it is ready to do that today announcing the specific dates at which Certain Companies in the Financial Services sector will no longer be required to have a Chinese Investor there. Those will take place phased in over the course of 2020. Now, we should note caveat, china announced this before they first ruled this out in july these are promises they made in years prior. So we are getting a few details, but larry kudlow said if china not only does this in the Financial Services sector, but also in other sectors, then that could be a way that we could try to prevent some of this intellectual property theft at the ground level by keeping some of this chinese ownership out of our companies. Kayla, well talk to you all morning long Kayla Tausche outside ustr in washington, d. C. Between that, between the brexit negotiations and Northern Ireland agreements perhaps they could stay in the customs union, couple of good flames off the fire. When youre talking with companies that are really on the firing line here, im talking about companies that move freight, this is big one of the things that has worried me, you go to any european airport, you go to any airport in london, there are signs everywhere, just say, basically, we dont know the tariff, we dont know what to do, we have no clarity, expect delays get those signs down because we know what to expect. And there will be a lot more commerce when i came in this morning, i got in this morning, i said there was a breakthrough im so used to talking to journalists over this. Im so used to no breakthrough, no breakthrough, no breakthrough my eyes glazed over. Wait a minute. Breakthrough i did not expect a breakthrough any more than i expected to be dri eating Pumpkin Spice spam yesterday. It is a podcast. You cant just go people dont know what youre saying or doing. I didnt really have anything to say i guess on all these things i think given what we have gone through on brexit and the china talks, just frankly im out ofwords myself. Im just waiting all right okay well, picture worth a thousand words. Right now a picture of me having spamwiches i had a triple venti our crew has to wash out your coffee cups, by the way. For ratings is incredible youll do anything. I ate dog food on mad money. I ate pupperoni, i threw that up. They threw the can away. There is nothing like liquid gold, thats the syrup that i poured into your cup did you drink it no speaking of liquid gold, crude prices are up today off the highs of the morning according to irans state run news agency. An oil tanker has been hit by two explosions while making its way through the red sea. It comes aed my allegations that iran has been behind recent attacks on the straits of hormuz and the attack on the Oil Facilities in saudi last month muted reaction here, 27 cents. Funny the oil stocks pop. I think people have to recognize the amount of oil were shipping now is starting to distort world prices the last id say three months were exporting somewhat similar to what the middle east is exporting. If you have a ship, go to houston. Meanwhile, though, a lot of the companies themselves are not doing particularly well. The more they produce, the less they manage some of the the more they produce, the less they make. They make they need to stop producing. Look at the rig count. Well see the rig count today. It goes down, but the production is staying up. Do you know there was a major area of colorado the other day that everybody just said, you know what, im not going to be there. It is an area that is tertiary but it is an anadarko area they had occidental bought them, spent a great deal of money. Now looking at the high. At the high. Because when there were two pipelines, Oil Pipelines that got to the gulf. Ever since those pipelines were opened, it is incredible how much were flooding the world with oil i dont think people realize were like what saudi arabia was. We didnt have the infrastructure to be that. Now we do. Oil stays up the oil stocks go up for about 25 minutes and people realize, no, forward curve is still at 52 bucks. Five years from now. 52 thats what doesnt move. So you have all the oil stocks up theyre doing all right the smaller producers in particular, the ones relying on continued financing, it is not good no, it is not im not saying it is over. But it is it is a mute point because we dont know how to shut the spigot off. We know produce, produce, produce. And these little companies are fighting for their lives and 55 if thats true, why is employment in the permian all of a sudden a concern to some people i mean, the technology is really great we just dont need as many people to bring out the amount of oil, but a lot of the Big Oil Companies dont know what to do with all the oil i think chevron is feeling pretty good it didnt buy anadarko there is just a sur fed of oil it is an amazing thing in our lifetime you should see natural gas, back to the lowest level it has ever been incredible. The share of Household Spending on Energy Spending in general since the late 70s cut in half at least yeah. And even lightbulbs cut. No lightbulbs cut our energy use by do you know every utility i have on, the numbers are down in the number of electricity it is because of lightbulbs. Who would have thought those matter. I wish i could make that happen in my own home. My con ed bill keeps going up and they keep charging for gas and 5 rate increase. Coal is down double digits hook me up with them. 5. 4 increase coal down double digits. How about that in. Double digits in shipments. Consumption, electricity consumption. Yes were going to get cramers mad dash, count down to the opening bell a ton of research, upgrades of deck, square, j j, roku, boston beer, news on gm and walmart were back in a moment orlando isnt just the theme park capital of the world, it also has the highest growth in manufacturing jobs in the us. Its a competition for the talent. Employees need more than just a paycheck. 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The kohler walkin bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassag. Everything is installed in as little as a day by a kohlercertified installe. And its made by kohler americas leading plumbing brand. We need this bath. Yes. Yes you do. A kohler walkin bath provides independence with peace of mind. Call. And ask about saving 1000 on a walkin bath, or visit kohlerwalkinbath. Com for more info. Time for a mad dash. Last one of the week talking a little bit of j j. A lot of things swirling around this company for a long time now. Yes david, it has been underperformer, im not saying im embarrassed, Great American company, aaa Balance Sheet but it has been a very bad stock to own why . Litigation bernstein today actually tries to quantify it, says that they believe that the litigation problems and here we talk about opiates, talking about talc, and risperdal, some people say there is cases, instances where men grew breasts from risperdal, big victory in philadelphia the other day, theyre saying the worst case is now priced in. Now, i have been reluctant to say that, because what you do is you get very complacent when you hear that. Because what happens is you get lower Court Victories by the plaintiffs and then theyre overturned but if you every one of these is either thats reuters, coming out with the talc, this is a loss on opiates, oklahoma here and so what you have is the ultimate news headline driven stock, bernstein tries to make you feel in this hold to buy it is priced in i want to warn people, as a share holder from my travel trust, dont get complacent here there is many more bad headlines coming sacklers, purdue, a negotiation, bankruptcy, thats going to be very bad for is there a point at which the fundamentals overtake the concern about litigation this is what i keep i think theyre going to report a good quarter, david. But i think shareholders are beleaguered here, the institutions are beleaguered i cant find an institution willing to stick its neck out. It is a shame. It is a good company it is the wealthy one, the biggest pot of gold if youre a plaintiff lawyer you got to go after it they have the money. So it is not asbestos not one of those situations, but talc, opiate, risperdal, too much for shareholders to take not for j j, theyll withstand it. The litigation expanse annually must be extraordinary worst of all the major drugs. This is johnson johnson, the finest this is not some this is not teva, right . It is not mylan. It is j j, a national treasure, unbelievable a lot more stocks were going to keep an eye on as we get you ready for the opening bell here. Stick around a lot more squawk on the street coming right back. Introducing even more value from fidelity. Fidelity now has zero commissions for online u. S. Equity trades and etfs. And fidelity also offers zero account fees for brokerage accounts, plus zero minimums to open an account. And only fidelity offers four zero Expense Ratio index funds directly to investors. 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The opening bell in four minutes as we have our eyes peeled for more headlines on trade. Jim and david mentioned the j j upgrade. Square deckers double digit seltzer sales as far as the eye can see. Lets talk about boston beer. This is a moribund brand, frankly beer has been a not great growth category. And everyone got caught unawares even just two quarters ago on constellation brands, there was an outcry, where is your spiked selgts selgts seltzer. This is their they got the runway truly and the club do you know about this truly yes. It took the country by storm. And at made, head of the Brewers Association said for specific weeks, white claw outsold budweiser. Thats incredible. This stuff didnt exist it is, by the way, when i talk about popularity with millennials, you go to a millennial refrigerator an you open it, and there is just it just got different flavors this is better than vaping maybe this is, like, what they evolved to from vaping watermelon, spiked seltzer from watermelon vaping, no . Maybe i dont know okay, fine. I dont know i havent looked at a millennial refrigerator i dont do that. Im told the Gross Margins on this, 99 . Unbelievable Gross Margins. On what on which product again what were talking about. The white claw product. And truly. And truly it is because anybody was caught unawares you speak to the major consumer they never want to touch alcoa. They have no cannabis, no cannabis stocks doing horribly. Oh, my god. Tilray to 25 from 57. And this was a 28 billion market cap, now a 2 billion market cap. At the time, of course, when it was go back a bit, go back when you couldnt borrow it, that was the problem everyone wanted to short it. But the borrow was there it is, was simply not within reach whatsoever and so nobody was able to actually get a hold of the share. Or short shares. You could have you might have ended up okay, even with borrow 100 something incredible. Crazy in terms of percentages. This all started october 30th, 2017 and thats when constellation made its initial investment to buy 10 of canopy. Downgraded today, hold to sell, by what is incredible, the stock was at 10, when the investment is made now at 20. The Company Still has 3 billion in cash, okay . It has just lost a huge amount, now 7 billion company i mean, it is almost paced now that canopys chairman is the cfo of constellation it almost pays for i cant believe ill say this for canopy to buy shares. Its own shares if you believe if you dont believe, then there is nothing here next week, freeia reports. Thats irwin simon, used to be this group this group has cost more people more money than anything i can remember in my lifetime other than dotcoms the cannabis etf, mj, is down 8 since its inception. It is incredible. It is like a there will be three winners, maybe two. Look, it is a big market, all right . Everybody kind of thought that the United States would come in, or that it would there would be a beer that would be canned. There will be legalization. Eventually were all dead yes, thats a good point. One of the better ones you made. Thank you very much there is the big board, and the bell, obviously, lots of green at the cnbc real Time Exchange Global Investors, principle Global Investors celebrating the fourth anniversary of its etf platform at the nasdaq, hbt financial, a Bank Holding Company in illinois speaking of banks, starting next week, all the big ones are coming i wish they didnt run because there is a propensity for that for the companies to say, look, the amount of trading wasnt so good we didnt have the right kind of volatility, but we make a lot of money on fees. And thats fine, but there has been a wall, jpm, i dont know, can it break out here, citi, trades at just a little above tangible book. The group seems to meet a wall because the tradeoff of yield and once they get off under 3, people seem to be less excited also, speaking of yield, they trade on rates and it is not it is not been working for them regardless of how profitable they may be. How some of the other businesses are performing we had tom on yesterday from kdw talking about 15year lows im not saying theyre, like, schlumberger, up 2 at 4 00. And now it is barely up. Can you imagine . These are, like, bear markets, curry as we talk but i dont trust the banks. But, look, the good news is theyre so depressed take Goldman Sachs, okay please Goldman Sachs is trading i cant believe this, it is trading 2 now it is up to trading 7 bucks above tangible they have a card an apple card that may already have 5 million users they have spent the money that they need to make it work. They have a good story to tell will anyone listen will anyone listen i dont know that stock is up 22, 23 for the year versus Morgan Stanley, a terrible performer versus the first quarter, remember when james gorman he was objected, yes, i didnt have a great quarter. Hes very selfeffacing man. But ive got to tell you that the yield curve is not right to tell the story the one that is most interesting to me is, believe it or not, wells fargo. And here because it yields 4, sells at the lowest multiplier i can ever remember and charlie sharp is coming in Elizabeth Warren has no problem, senator warren, has no problem with charlie sharp. Not to mention the reuters piece, theyre building up their Mortgage Loan origination business and team, according to an internal memo. I think charlie will cut costs. Hes going to spend a lot of money on technology. And it is going to become the star it used to be again i really mean this i have done a lot of work with wells. Like i never thought that bed, bath would get a great ceo i never thought wells fargo could get someone to the character, the quality of charlie, charlie is also a tough guy. I dont know if you ever met him. I have, yes. I feel ill prepared when i meet charlie i feel like hes schooled. He schooled me he likes to school people. Yeah. A lot of these hard core industrials get a lead, parker, hannafin. Hope springs eternal, right right. Fastenal, they had good numbers. This is an example of somebody thinking the industrials can have good numbers. I had emerson on david farr, i think theyre too china. There is, like, too china versus not that much china. Too china. 3m is too china. United technologies. A lot of china. But diverse foversifdiversified. All the growth it so smart for greg hayes to say, listen, otis, isnt going to happen. I want it off my Balance Sheet the merger with raytheon, we dont talk about that. Raytheon up 30 points, very quietly. A special case. Defense is look, Everybody Needs it is amazing how when you look at what the saudis have, you look at what the turks have, the kurds is hard to understand our great ally, the turks have tremendous military, and they have universal by the way, universal participation in the military but you see how much arms we provided to everybody, we did do so if these industrials are reflecting maybe a china deal, pmi stabilized, can the fed gets you off the hook i dont think hes off the hook. I think there is still the yield curve is what is going to be maybe his friend. If we get long rates up. I think hes committed to one more maybe not this month. No. Maybe not this month maybe he needs to see the employment is so strong, carl . It is incredible there is no inflation. I know ron paul was saying there is a lot of inflation that hes a gold bug. I show me the inflation at walmart healthcare, and, you know, some i guess some shelter you could argue. If there was real inflation in healthcare, why are the managed Care Companies on the 52 week low or close and the answer is senator warren. Senator warren, i cant get people to talk about anything other than senator warren. Thats interesting you say that, because lets say we put trade on the back burner, right . And there is no flareup between u. S. And europe. Were going to graduate to primaries in iowa in january and february, Political Risk becomes the big story. What does next year look like and people say, it depends on how biden does and how is that possible and you say, what david says, thats so far away doesnt it matter what president xi does, and they want to say, i dont want to talk about president xi, i want to talk about the possibility of president elect warren and whether shes a socialist, or enlightened capitalist. I dont want to talk about her, i want to talk about numbers. It comes up every time. For you too. Without a doubt i had lunch yesterday, sully wi actually who was one of her students at penn and how different she is now versus versus whatever that was, 30 years ago or so. Shes migrated. Germany, david, destination. Wondering about her change and whether or not some of it is going to moderate back if in fact she this is the big issue this is the big issue. Can you get her to shift if bernie is not going to be able to complete his run. And so far, she has shifted to an even harder line. Yeah. Her china policy, president xi, if he were smart, he would say, let me take this deal, because if he looks at what president warren would be like, president warren is talking hes taking all these things and then throwing in climate change. She also has sanders on her flank, right take him out of the equation, has some cover i dont know, i she wants to reform the Banking System what exactly does that mean . Break up the banks can you imagine . Break up big tech . Imagine . Imagine, david. It would be interesting a lot of fees for the bankers. A lot of shrink to grow talk i hadnt thought of it like that. Can you take apart jpmorgan so create jpmorgan, i was the old when i started 33 years ago, so chemical, jpmorgan, chase, first chicago, bank one, i may be forgetting one. Thats all one bank now. That sounds like the breakup of at t, david southwest, jpmorgan. What else . Ameritech, bellsouth, pacific telesis. Pacific bank assist i keep telling people, maybe you should be focused on but they talk about my wealth, my wealth they dont call it wealth. How would i be able to make a living billionaires how would i be able to make a living jim stewart comes on, your good friend, and talks about the fact that, all right, the bar starts here. Does it keep moving down 50, 40, 30, 20, 10 i got people who say you dont talk about it enough it is extraordinary. You dont talk about her enough. Stock market is up 30 plus percent since the election of donald trump that was an important story, his election for the markets yes, i think thats not talked enough. There is just tremendous wealth created. I think that you speak to a lot of those people are pretty bearish, i speak to. Those people feel the trade ends badly. I think the president has the upper hand because of hong kong. People dont want to relate those two. When a general manager of a team can pose a threat to a country, what is that about what happens if lebron james speaks out can you imagine if he speaks out . What happens i dont know anything more happens with the nba do you nike reportedly taking their Houston Rockets merchandise out of china stores. Nba, by the way, now canceling all media appearances for the duration of their stay they sure dont want to lose that money right . They dont want to lose that china money. China is the Growth Opportunity as it is for many corporations or has been sometimes an elusive, oftentimes an elusive Growth Opportunity given everything you have to give up, which is why were in the midst of the trade negotiations. What do people in the white house say, certain part of the wing they say it is time for the elites to pay. It is time for the elites to get hammered the elites have to pay the price. It is a very steve bannon, your buddy was talking about earlier. My buddy. Yep. Yepper rooney. Lets talk about ioc this morning briefly. Interactive group, interactive corp. Says it is moving ahead with a proposed transaction at this point that would distribute shares of match, match group, to isc stock holders resulting in two fully independent companies. It would be tax free and also would actually have the respective vote go one for one for match holders and create some value in part because there is a thought that match is underlevered, does have a lot of ebitda, you can put more debt on it, and therefore have some sort of significant buyback and or other opportunities that come along for iac as a result. Keep an eye on that. Not that big a reaction. Match actually down. Did want to point that out. They were up big iacs board of directors for that transaction it is interesting that earlier this week there were a bunch of positive notes about match. And optco upgraded it. There was, lets say, a sense there would be major uearnings breakout i had match on, i think a remarkable company right just one of the great Growth Companies of our era, tremendous number of people end up marrying and being successful, the numbers number s are algorithmic. They started thinking maybe individuals should be thinking again, but match is algorithmic. It turns out to be shocking number of people who can meet people in that forum so the way most people i think meet. How people meet now tinder, you know, tinder meet that way too and apparently it involves swiping. Yes like if you swipe left, versus i dont know. Do you know which one is the one . If you like someone, do you know which swipe right like swipe left that means you take the pats and give 14, swipe right probably best that youre not sure. Im not im not sure i dont really know. I have to talk to my friend Ashley Madison about this. I forgot two banks that jpmorgan is also Washington Mutual and bear stearns. I allegedly recommended, urban legend what i would point out, if they give licenses to the fin tech banks, that would be competitive. Right. Do you think senator warren has that in mind in. I dont know what she has in mind i would love to sit down and talk to her. We all would. Shes the most important person in business right now. She is if they if these people dont stop, they dont stop. Im ready you talked to him. You can talk to me i love talking to her shes inconsiderably thoughtful. Shes a very reagan democrat, go back to that era that Reagan Reagan was initially a democrat. Shes got reagan principles. I think shell surprise people in being more reasonable than they want to believe and this notion that someone said to me the other day, im moving to new zealand if she becomes president. New zealand. It is beautiful there it is. My father always said, during world war ii bought property there a long time ago, that was a favorite spot. Guys, 2975, all indices up for the week nasdaq green for the month to bob pisani. 50 points in the s p in the last 24 hours. Quite a move and there has been a confluence of positive developments on several fronts this is not just trade talks at least i dont think so. Lets look at what happened in the last 12 to 15 hours overall. First, the u. S. China trade talk and the market is clearly saying even a truce is fine just no more tariffs is the key to moving the markets. Number two, there has been talk about potential breakthrough in the brexit deal, sterling is up huge european markets all rallied maybe something will happen on brexit overnight, talk about the hong kong protests cooling, maybe not a deescalation of the violence. That moved asia pretty big so three major stories that potentially are contributing to the rally that were seeing today. See what happened in the overnight markets, take a look at hang seng, up 2. 3 . The ftse 250, main one in london up 3 today. Germany up italy also on the upside here in the United States, the usual positive trade deal stories moving here. So the semis, china etf, mchi, banks, yields moving up the last couple of days retail is even rallying. There is a classic one and more defensive names like utilities and reits have been lagging. The question now is lets assume there is a truce of some kind. Positive for the markets what is next what happens i asked art cashin yesterday, we get a truce, is that enough to carry us through to christmas. Could we hit new highs on that only 3 from new high on the s p. He said hes not sure and the problem here is it doesnt a truce doesnt change the lower growth story in 2020 forget a recession just 1 to 2 gdp, doesnt change that story and lower earnings and doesnt end the trade wars we got all sorts of other things floating around out there. We have capital flows, and export controls that are floating around out there. It does, though, diminish the head winds thats why any kind of deal, even a truce, is a positive for the markets. Would itchange this bizarre leadership we have been having i keep pointing out, semiconductors as a Leadership Group makes zero sense a small group of people who believe in growth at any cost up there buying semiconductors. Will save the world. The rest are playing defensive sectors. Consumer staples number three. The laggards are mostly the cyclical sector here energy and retail, healthcare has been a problem because of pharmaceutical and biotech getting hit hard and materials have also on this lagging. So the question is, is this going to flip around at all as a result of a trade truce. Not sure we need a broader deal i think, yes, it could happen. But not necessarily on a limited one that we have got here right now. Those of you who are hopeful about earnings commentary, did you see fastenal, classic deep cyclical, deep industrial, largely u. S. Revenue base company. Look at that earnings were good and the commentary was good. The concern here is the commentary is going to be very weak in the Fourth Quarter unless we get better trade talks. Here is a definite grounds toward the bulls to be a little more optimistic and less worrisome about the earnings outlook overall. Finally want to point out, ipos still not good tough one last week. Yesterday, a biotech did not do very well. Today, another one, Infectious Disease therapies, 20, that was below end of the price talk. Well see how this goes today. It is overall rough week for those ipos, most of recent ones still down on the week carl, back to you. Thank you, bob. Yields the other big story we got more data before the weekend gets here. Lets get to Rick Santelli if youre looking at rates, it has been a big week and not only for the obvious reasons of trade really the firmness started before that. Youll see look at one week of 10s. Consider that we are at 153 last week were up 14 basis points on the week thats a big week. Now lets look at bunds. Theyre also up 14 basis points. You know how much i hate applying percentages to yields but consider this, were up 14 basis points on an instrument that a week ago is at minus 59 the same amount of 14 basis points of a tenyear that was at 153 last week. You get the picture. Definitely the bunds are outperforming. I think theyre leading. I think a lot of it has to do with how policy in the eurozone may change under Christine Lagarde. It is obvious manufacture ty ofg finance ministers and important bureaucrats with the linkage between brussels and germany and Monetary Policy have been unhappy that german savers are bankrolling the expansion in the stimulus they dont like it anymore and with merkel out, theyre not going to do it anymore Christine Lagarde will be the person to try to bridge that relationship to ultimately bring more stimulus. Now, if we look at gilts, theyre the winner this demonstrates, not only is there a global dynamic starting in europe, but you add in brexit, the clear winner on the week is the gilt, up one basis point shy of one quarter of 1 theyre up 24 basis points on the week 44 last week theyre 68 today and finally, the dollar index f the other direction. In very simple terms, when the dollar index was strong, there was a lot of nervousness in the market there was a scramble for dollars around the globe maybe in a simplified macro version with Everything Else going on around it back to you. All right, rick thank you very much. Rick santelli. Getting a tweet from the president. Good things are happening at china trade talk meeting warmer feelings than in recent past more like the old days i will be meeting with the vice premier. All would like to see something significant happen that is significant in itself ive got to tell you the tone of what he is tweeting is the old days. Just not that long ago, what . About seven fridays ago that he was so angry that he thats when he in a fit of peak said listen, another 5 . It was earlier than that. Right but im telling you, in return for not raising the 30, he is going to get something but if they do it again, if they make certain promises, then they take them back, ive got to tell you, this is going to be the end of the visa thats the key question, how long does it make the market to believe this will stick . They meet again in november potentially at a peck. Thats xi and trump. So would you want to see more of a ratification in a sense in that meeting yes, but i really point out again its secretary mnuchin who looks like he is the power here. We did not see trade adviser navarro there, so the softer line seems to be in play which is good for the stock market, but maybe not good for the overall picture that a lot of people would like to see in terms of them versus us. But the chinese have not followed up on anything theyve promised to date so i would not be greedy here. Understood. Message received. I wouldnt be greedy. In San Francisco with a news alert about uber good morning. Good morning, carl. Uber shares are up this morning. The Company Announcing that it will acquire grocery delivery startup corner shop. Terms were not disclosed, but walmart had struck a deal to buy the startup for nearly a quarter billion last year. That was called off on antitrust concerns. This is ubers first move into grocery delivery another crowded field that shares language near record lows look for those indications that it can get to profitability. Shares up now nearly 2 this morning, but they are lower by more than 30 from the ipo earlier this year. Watching uber along with various headlines regarding weworks attempts to raise cash here and how long their available catch will last. Yeah, they want to move with all dispatch to raise moneys as quickly as they can. The cash crunch looming, is that the correct we know wework consumes a great deal of capital. Their new coceos are working to divest of businesses mr. Neumann distributed stock to buy certain businesses at a much higher valuation, so you also have people unhappy with that as well who may want to be in a position to buy back the businesses they sold to wework who knows. Yeah jp morgan and Goldman Sachs involved as they have been all along. They put their private Wealth Management clients in this private company. They obviously helped finance. Jp morgan certainly leading a number of banks that made loans to both the company and to mr. Neumann personally. Rather amazing turn about, because one of the things that i actually i mean, i was shopping for weworks not that long ago within, say, a mile, phil, phil, phil, just a remarkable business in terms of all the great businesses that are being formed it is an incredible asset, so everyone feels like thaik they were suckers to invest you would find if you wanted to start a Small Business, its i deal and a lot of people want to start a Small Business they want to create a business thats shopified. Rejus did im just saying its easy to get sucked in because if you go to where neumann had his office, you kind of felt like it was the garden of eden and now you feel like somebody ate the apple. Before we go, we didnt hit s. A. P. Today. Raised forecast. Bill mcdermott out as ceo coceos there as well taking over, but they reportedbetter. Stock up over 10 . I know youre a closet charter, david a lot of people said you know whats going to happen with apple . The fable double top it can never take out that high. You tweeted about this early this morning. Guess what, haters of tim cook and all the things that hes done that you think are nothing, the double top is no more now it just looks Like Base Camp four and Everest Everest used to be my dogs name before it became nvidia sinv a theyve got the lev new stream, paying 11 every month hes invented nothing, david, nothing. You cant get the watch because its sold out, but hes done nothing. I want to make that clear. Hes been worthless, right because we have people come on air, best days behind them stock didnt tell the truth. What matters is the soul are you going to cover any of this tonight on mad . I may have to because i have Mickey Drexler won who was on th board of apple the greatest retail store of all time yes, if you want excitement, go to the retail store at the old gm building. David, ill take you shopping. It will blow your socks off. I have been to that store. He wants me to go shopping with david, do a twopart segment on mad money and i said we have wendys on tonight. Take a look at that best comp since 2015. Some clown said never mind we did see some downgrades. Yeah. Well see you tonight busy day mad money 6 00 p. M. Eastern. Dow is up 364. Almost back to 2,980 [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. But youre not mad, because you have e trade which isnt complicated. Their tools make trading quicker and simpler. So you can take on the markets with confidence. Dont get mad. Get e trade and start trading today. Welcome back to squawk on street the Rick Santelli here live breaking news the last of this week. Were looking at the preliminary read on the university of michigan and the number were expecting is in the vicinity of 92 much better than that. 96. 0, 96. 0 this is a preliminary read, but 96. 0 actually is the best read since july when it was 98. 4. This read will be thrown out as we get our final read in a couple of weeks, but it is a good one lets look at the one year inflation expectation. It was downgraded from 2. 8 last look to 2. 5. So was the 5 to 10 year outlook from 2. 4 to 2. 2. Those are indeed big moves well continue to monitor as we transition from the first look to our final look for the month of october Interest Rates are up big on the day. Up big on the week carl, back to you. All right, rick thank you, Rick Santelli good friday morning. Welcome back to squawk on the street. Were at post nine of the new york stock exchange. Big gains on this friday dow is up almost 400 points. Were back above 2,980 as the president tweets positive things about china trade talks, decent brexit news as well. It starts with the trade rally, those stocks surging ahead of president s meeting with the chinas top trade negotiator the president saying good things are happening, but is this rally really here to last . Crude reality, oil prices are up a bit after iran says two missiles struck one of its tankers. And are the rich paying less in taxes than the rest of america . Were going to dig through those numbers next lets get over to our senior economics reporter Steve Leishman for his thoughts on the ongoing split. Thats been going on for a while, carl. And also the volatility in the university of michigan survey, its been down big and now its up big i think thats a good sign for sure for the economy i think there had been concern that whats been happening in manufacturing and the trade war would slip on over into whats happening with consumers it has not really yet and theres no real sign of any kind of weakening of the consumer its been the consumer who held up the economy here. I think if youre out there forecasting 2 growth, forecasting even a little bit stronger growth, then this kind of confidence, there should be every reason that consumers keep spending as long as the job numbers and the wage numbers stay intact. I will note, though, carl, its been an interesting morning. I interviewed neil earlier, hes one of the more dovish fed members signaling his support for a rate cut as Interest Rates rise, its sort of automatic that probabilities for fed fund rate cuts actually fall now, were still at 69 on the october rate cut probability, but were now falling down into the high 20s on the december rate cut by the way, that 69 number for october is one of the lower numbers weve had. This numbers been back above 80 i dont think the market is backing out its expectations for the Federal Reserve to act in october. Its just that theres maybe sort of a bet on the other side given some of the strength in the data, given the idea that the trade war may have some sort of resolution. I asked neal that and he said no, im still on board with a rate cut because were not hitting our inflation target theres no reason to slow down the job market ultimately the market is going to reduce those probabilities, carl, every time theres optimistic news on trade steve, ill take it thank you for bringing us the latest on that Steve Leishman, stocks are surging on the trade hopes the president meeting with the vice premier later today dow is currently up 390 points lets get down to d. C. Where kayla has the very latest. Reporter morgan, good morning. President trump is sitting about 100 yards away from here but continues to executive produce these trade talks from afar just tweeting a few moments ago as you mentioned that good things are happening at the china trade talk meeting saying there are warmer feelings than in the recent past, more like the old days he confirms again he will be meeting with the vice premier today and saying all sides would like something significant to happen we should note that meeting with the vice premier is slated to happen before the market closed and we know the president likes to see the market go up on some of these developments. Sources close to these talks that ive spoken to in just the last few hours are reluctant to say exactly what the president said, but they did say a little detail about whats on the table here first theres an expectation that both sides will unveil this agreed upon language that would keep china from manipulating its currency or intervening in its currency then theres the expect there would be licenses for huawei that are granted an expectation that china will announce agricultural purchases and china has announced further opening of the Financial Services sector removing the requirement for a Chinese Investor for foreign Financial Firms to operate there and theres the expectation it could roll that out to other sectors as well. The big question, what happens to tariffs my ron brilliant, who is one of the executives says that the october tariff hike, that is pretty much a guarantee thats going to be off the table. What everyone is wondering is what happens to the december 15th round of tariffs, the one that will hit consumers hardest right before the holidays. Well see whether the president announces anything on that front, but as far as where the white house stands on this, staffer in the words in the words of one staffer, we need this right now back to you. Kayla, thank you. As we mentioned before, stocks are rallying right now joining us is former top trump adviser and Deputy Director at the National Economic council, cleat williams and with us at post nine is chief Market Strategist j. J. Kenehan the public rhetoric, certainly some of the optics were getting outside of buildings this morning and the tweets, as someone who has been involved in the talks in the past, do you think it jives with the conversations happening behind closed doors right now i do and i think that a lot of the optimism youre seeing is justified. It sounds like there is Real Progress i heard that the talks yesterday actually went better than expected and so i think that we are headed in a positive direction here of the things that kayla was just talking about, one thing i want to highlight thats already happening is that china is increasing agricultural purchases and they actually set a record last week with the amount of u. S. Pork that they imported and then the huawei issue, i actually want to point out, thats good for the u. S. This isnt just some sort of concession to china. It makes sense for us to continue to do business with huawei on nonNational Security sensitive stuff where other countries would otherwise get that business. And so i think the optimism is justified and whats happening behind closed doors i think is likely consistent with the tweets so j. J. , what does happen with all of these tariffs and what do you think of the dow being up 376 points, the s p up almost 1. 5 . What do you think is baked into the market i think its great and as we head into earnings, were starting to see the financials we havent seen perform in a while. Most of them up at least 2 . I agree with clete, its great news out of there. However, whats is going to take for the market to get over 3,000 on the s p i dont see anything without an actual pen to paper, so to speak, thats going to drive us above 3,000 in the short term. It just seems hard to see that theres an impetus without them coming out with an announcement saying we have a deal and then well turn to earnings next week again, the sort of innuendo and this may happen, this may not happen, its almost like the markets higher. Lets face it, were just back to october 1st levels on both the s p and bond yields at the moment. If we get some sort of i guess quote unquote skinny deal or at least a halt in the increase in rates on tariffs next week, possibly into december on another trench of imports as well, does the fed have a reason to cut at the end of this month . You know, as steve just talked about, we see the probabilities coming down a little bit i would think they probably dont actually and youll see that change pretty quickly that being said, i want to qualify it goaltenders whdepende skinny deal is if were just going to kick the december 15th, i think the pressure remains on the fed to cut. I just want to followup on something you said youve been hearing from people things went better than expected is that be ynd juyond just pres reports . Do you have any reason to expect things went better i think the mood coming out of there was positive and youre already seeing some of that effectuated in some of these announcements out of china, not only the ag sales but the Foreign Ownership caps i do think that youre getting positive signals from the inside i dont want to go into any more detail than that one other point i do want to make, and this is something you have been alluding to is what happens with the tariffs i would agree with what myron said that youre going to see an october 15th delay from the u. S. Project, though, theres a history here where we want to make sure that china actually implements the stuff in a meaningful way and so i think before you get to the point where the other tariffs are taken off the table or you see roll backs of existing tariffs, theres going to need to be some sort of period of implementation i also think this is going to be an ongoing issue the u. S. Shouldnt just stop here its good to Bank Progress its good to dial down the temperature, but they need to keep pushing china and all these other structural issues that affect our economy really quick, how much is riding on this potential meeting with xi in november at a stapec do we believe it will happen we dont know yet these meetings at the leader level are critical and that includes the meeting today thats because i think china wants to hear directly from the president what his objectives are and what his intentions are for the future and the same thing for us is we want to hear from president xi that he is sincere and is really going to implement this stuff. Thats why the leader to leader engagements are irreplaceable. J. J. , i want to shift gears a little bit whats leading s p higher today is actually fasinol. Its sort of seen as an early read on the Broader Health of industrial economy weve seen these weak manufacturing numbers, but you see a strong Earnings Report like this as we do get into earnings season, is there a chance here that some of the industrial and manufacturing sides of the economy could be holding up better, at least through the companies, than has been expected . I think they have been holding up a little better than many of us expected. However well see what they say going forward. The thing that concerns me is they continue to put off building infrastructure. What i really want to hear is a lot of these Industrial Companies coming out and saying were investing money and i dont know that they necessarily will because how can you invest when you dont know the rules of the game toughest thing about being a ceo in that space in my opinion is we dont know the rules. When Companies Know the rules, whether they like them or dont like them, they find a way to make money, to play within those rules. When the rules could change at any moment, its very, very difficult. What really burns you is if you dont spend money now on infrastructure, this is the type of thing that comes back to haunt you in two or three years. We havent seen anybody really talking about it in the last few quarters if we continue with two or three more quarters, it makes me a little bit nervous for what happens after tariff news does come out. Interesting clete, how much is riding on Something Like usmca getting through congress as well i would imagine theres a much more wholistic picture that needs to be taken into account here. I think its important for the United States to make progress on all of these different trade deals and i think that progress on china, progress on usmca is really going to give our market the certainty that it needs so that we can have more Capital Invest mentes going on in an area where weve been lagging a little bit. Usmca is critical too. Im still hearing good things, in spite of everything going on with the meechimpeachment proceedings, im still hearing good things. Usmca is important and a lot of ways the substance of that is going to be more economically meaningful in the short term than china, and thats an important one too. I hope we can get both of these in a more stable place, a little more certainty for our businesses and that will help the economy going into 2020. Yeah. Trade, trade, trade. Of course, weve got these brexit headlines helping propel the markets. Gentlemen, thanks for joining us thank you. When we and back, global merger and acquisition activity may have slowed in the third quarter, but one deal maker behind four of the years biggest deals says dont worry about it were going to city with citis global head of m and e next. Byron wien will have his thoughts on todays rally and more and a lot more squawk on the street coming right back. Global activity did slow meaningful in the third quarter. China hindered a willingness for many buyers to look outside the u. S. For a deal and yet volume in 2019 overall still on pace to be what would be the fourth best year in more than 20 here to shed light on this as we have him do every so often during the course of the year is mark schafer hes citis cohead of global mergers and acquisitions always good to get a report card still a meaningful part of revenues and certainly earnings given the margins in your business for banks like citi and others what are we seeing and what do we expect in this Fourth Quarter in the year of what is not as good as weve been accustomed to but pretty good. Its prizing its held up as well as it hd. At tulane when i was in there march, itslooking like flat t down 10. As you said, fourth best year. Well see. Its still pretty good and so a number of factors factor in to that, but notwithstanding the china issues, brexit, hong kong, the market is still a bit of a risk on market at this point. Yet its largely domestic ten of the top ten deals were domestic m a deals. Thats exactly right. The top ten deals, a couple of them were not seven or eight of them were in north america, but a couple were domestic transactions cross border volumes are the lowest weve seen in about 15 years, a little under 25 of the market for all the right reasons. Trend against globalization, all the things weve seen. Its not terribly surprising that way hostiles are down. It makes it pretty difficult were still seeing its narrow its health care, tech and industrially globally are driving volume. Health care, tech and industrial is sort of where everything is. Over half the market is generated in north america, so its a narrow market unlike others weve seen that are more broad based. We can all remember a time when you would see multinationals do cross borders. Is there an speexpectation that china starts to get better, we get some sort of deal today that youll start to see a pickup again . You know, you could, but i still think there is a trend sort of against globalization broadly defined. Were in a more mercantile world than weve been. Do i think it covers immediately . No do i think we can see more there are still pockets, transatlantic. European champion looking into the u. S. That kind of stuff but i think at least for the time being its likely to remain a little depressed. How would you describe the mood on the boards that you visit with if and when they are considering a deal, management, for example . Are they nervous at this point are they reluctant no. Look, i think that there is sort of some healthy concern about slowing gdp, about what does it really mean. Today we look better in the terms of china and perhaps brexit who knows whether thats true next week. Weve been running up and down on that basis. Look, i think there is a healthy skepticism about what the future portends on the other hand, theres still a desire as we can see, because the deals are really driven by the mega transactions. Theres still a desired transact. Ive heard this for a frame and i want to get your take on it from a number of my banking friends. If you want to get something done, get it done pretty soon, because as Elizabeth Warren rises in the primaries and the possibility of a warren presidency becomes more pronounced, its going to be tougher to think about getting anything done. Fair or not fair i dont tend to know whos whats going to happen, right . Coming up. I think that whats more on minds for ceos as i see is Macro Economic and broader geopolitical issues. The 2020 election is coming, but its still weve still got a ways to go before we ultimately see who the primary candidates are and then who actually runs against whom in the general election thats a little beyond. All right youve done your share of technology deals let me throw another one at you. If i say i want to buy a company but i need chinese approval, does the board say dont do it i think its tough right now. I do think that its very, very if it touches National Security or critical infrastructure, very, very semiconductors, maybe the for the you get away from that it may be a little bit easier, but i think its a brave soul to right now enter necessarily into that fray. Most of the boards would say why are we doing this . Because we look at just the duration you could be stuck out two years. What happens it could deteriorate in that time frame its difficult to hold a business in limbo and not be able to close and do all the things you want to do with all the time frames were seeing. Lets hit activism which continues. It keeps you guys busy certainly. It helps pays the bills as well. Is that expected to continue im thinking right now weve got Marathon Petroleum is one where elliott is one, emerson is another one. And there are others at t of course is does that continue it does i dont see any reason why it necessarily goes away. As you know, it shifted years ago from govern nance to really valuation in some other analysis youve seen the number of transactions that are announced. The challenge looking for a better price, if we dont like the transaction pushing against it i think its a matter of the aum is up. Returns have been good i see no reason why activism most roads lead back to one firm elliott is doing pretty much more than anybody else. Theyre very aggressive i also say tech disruptions is driving deals. A lot of sponsored money, private equity money on the sidelines. Theres some positive factors. Frankly, if we get some valuation reset downwards, after some period of weve got low rates that doesnt seem to be fueling well, its not unhelpful, but youre right, its still a pretty good market notwithstanding. Better than i predicted in the beginning of the year. You tend to be a realist actually finally i want to end on something ive talked a bit about of late because it comes up a lot which is esg. Is it a real thing in the world youre dealing with . Does it come up in conversations about one Company Buying another . It does i think its more sort of advanced the agenda in europe relative to the u. S. , but its clearly now coming to the forefront in the u. S. If youre investing capital and m a is a form of investment, youre going to look at the esg ramifications of that. I think its still relatively early days here in this market, but its definitely coming and its accelerating. We dont have metrics to measure. I will assume at some point you like to give out your hand out, right . Is there a way to say youre going to cut my company . But let me tell you, they rate poorly or they rate well on these things. I think all that stuff is coming we dont quite have it yet to your point about having independent standards or scorecards that are truly independent or some independent body does it, but its something. Its not going away. Companies are very wisely, i think, addressing it head on mark, always good to get your take and updates thank you. Mark schafer, cohead of global m a. Were up almost 400 points. Take a look at the best performing names on the dow for the week, including cat ta bierr dow, home depot. Best day for the dow since june 4th. Dont go away. But when i started seeing things, i didnt know what was happening. So i kept it in. He started believing things that werent true. I knew something was wrong. But i didnt say a word. During the course of their disease around 50 of people with parkinsons may experience hallucinations or delusions. 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And only fidelity offers four zero Expense Ratio index funds directly to investors. With all of those zeros, there are zero reasons to invest anywhere else. Fidelity. So maybe ill win saved by zero dows up 402 as we get a positive tweet from the president about china trade saying warmer feelings than in the recent past. Now a second tweet saying one of the great things about the deal is the fact that for various reasons we do not have to go through the very long and politically complex congressional approval process when the deal is fully negotiated, i sign it myself on behalf of our country, fast and clean. Sort of runs counter to what some have written about this deal and why congress would have to approve usmca and not this. For now, though, we have the president s take on this for various reasons. When feelings are facts, i guess the rhetoric here obviously very positive and certainly adding to the gains were seeing in the market right now. The dow up 400 points. Best day of gains since early june so were going to continue to watch these headlines and these tweets from the president. Meantime, it is time now for our etf shot light we are taking a look at Something Else that has been gaining. Crude oil is rising. Officials from iran saying an oil tanker has been hit by two explosions while making its way through the red sea. The tanker was hit by missiles about 100 kilometers of the coast of saudi arabia. The s p and oih are all surging on news of this today in whats already been a pretty strong week for crude lets get over to sue herera and get a news update. Good morning, everyone. Heres whats happening at this hour a wildfire burning north of los angeles exploded in size overnight. The saddle ridge fire grew to nearly 4,000 acres fueled by strong wins and dry vegetation 20,000 people had their power turned off while evacuations were ordered in various communities. Interstate 5 and 405 were closed five people were stabbed in a Shopping Center in manchester england. Police say Counter Terrorism detectives were leading the investigation. The mall was evacuated as armed Police Rushed to the scene a man has been arrested. The no bbel prize for peace has been awarded to the ethiopian Prime Minister he was cited for his initiative to resolve the border conflict he said he was humbled and thrilled by the award. The first 3d printed boat took to the water at the university of maine. It was made with the Worlds Largest 3d printer inabout 70 hours. Both were unveiled at the universitys advanced structures and composites center. Youre up to date. Thats the news update at this hour ill send it back uptown to. That is so cool its taking root rockets and now boats. Sue, thank you. We come back, stocks surging, but is the rally here to last . Legendary investor byron wien gives us his insight next when squawk on t see rurhetrtetns welcome back to squawk on the street. Stocks enjoying a very good friday on the trade meeting this week the. The is meeting with the top trade negotiator in just a few hours. Byron wien joins us this morning. Always good to be here, carl. Any surprises for you this week well, this is a surprise. Well have to look at the details of the deal, but having a deal with china has been an important impediment to the market and now if this deal is meaningful, that could really allow stocks to move forward again. All right so what does meaningful mean and how long does it take before the market believes its actually going to happen . Meaningful means that china will stop confiscating intellectual property, that companies that do deals or join ventures with china wont have to turn over their intellectual property that the Financial Markets will open up and the companies can enter china and do business without a chinese partner. Those are some of the key elements i doubt that well get all of those at this phase. I think were more likely to get some minor agreement on some trade practices and the willingness of china to buy our soybeans and other Agricultural Products, but i dont think its going to be a broad deal i think theyll have to wait for that. Byron, people are trying to put together a Shopping List if you wanted to get to 3,100 and beyond, daytime obviously with china, no flare up with the europeans, you get usmca passed, you end the gm strike, the 737 maxflis again. Do you think what else do we need and is that enough . Brexit. Brexit. We need a brexit deal does the fed still need to cut . I dont it looks like thats moving forward too, so it looks like everything except the 737 is moving to a better place. Where does the dollar go from here i dont think the dollar goes up a lot you know, i think were going to be, you know, lowering rates again. Thats not good for the dollar i think the economy is going to be growing very slowly at 1. 5 to 2 . I think the dollar is pretty full here. I dont see it taking a sharp dive down, but i dont think its going higher from here. Byron, you mentioned brexit today Morgan Stanley takes their chance of a brexit deal to 55. They were at 35 before hooch how much do you think actually changed today . I dont know. The key element of it, the real road block is Northern Ireland you have to have a free flow of people and goods in Northern Ireland. That has to be a part of it. So well have to see if they really make progress on that but i think both the eu and the uk want a deal britain has really suffered economically and the deal hasnt even happened yet. So i think people want to get this done and behind them and move forward byron, were talking about policies i want to get your thoughts on politics, specifically here in the u. S. As weve got this 2020 election gearing up and certainly some shifts in the polls among Democratic Candidates youve got the impeachment inquiry playing out and all this drama in d. C. Right now. How do you think thats factoring into the market and how big is the risk . Well, i think the market is assuming right now that theres so much turmoil in the Democratic Party with Bernie Sanders heart attack, i think joe biden has suffered as a result of the ukraine situation. Donald trump has suffered too. But right now i think the market is assuming donald trump is going to get a second term in spite of the impeachment because he isnt going to be convicted in the senate. You know, there are more cards that are going to turn up on this one, so i dont think you can really make a definitive statement. I think the market assumes trump is going to get a second term. Byron, a Political Risk notwithstanding going into the election, all the things that we just talked about going right, if we get all those things checked off the list, it sounds like you think were more in a mid cycle. As powell said, maybe we are true mid cycle rather than late. Well, you know, i dont think i definitely said on this program that i dont think were going to have a recession next year. Donald trump certainly doesnt want to be running for reelection if in a recession. The earliest i could see a recession is 2021 and i dont even think thats a sure thing we all the way you get out of a recession is fiscal and Monetary Policy. We already have trillion dollar deficits we already have an easy monitoring policy. How much easier can it get so the policy the usual policy tools arent there. So i think what the policymakers are going to try to do is use some fiscal spending, some Monetary Policy to defer the next recession as far out in the future as possible and thats good for the equity market. Given how given the tool kit and how some argue there are dwindling number of tools in the kit, how much are you spending right now thinking about potential shocks well, you know, look, the market is always vulnerable to a 10 correction i think but i dont think the market is year valued here with these Interest Rates, i think the market can comfortably trade above 3,000. How much more above 3,000 we can get to really depends on earnings earnings have been disappointing. I dont think earnings are going to be strong i think well be lucky to get a 5 earnings improvement in 2020, so i think the market has limited upside, but it does have some upside and thats why its surging on the good news today interesting you think profits will be limited because of margin pressure yeah. Plus theyre going up. Labor is tight average Hourly Earnings are headed toward 4 so my view is that companies have a limited amount of Pricing Power and therefore Earnings Growth is going to be limited. Interest rates stay here you think . Whats your outlook . I think rates are going to be rising i dont think theyre going to get, you know, to 3 , but i do think theyre going to the 10year is going to get over 2 . Its already at 170. Its made a lot of progress over the past month i think youre going to see higher rates but even if the 10year is 2 or 2. 5, equities are still attractive compared with bonds byron, when you think about the year that ipos have had and the come to jesus that the private markets have had on valuation, do you see any dislocations there that could alter the way public assets trade . No. I think the market has been very realistic about ipos these Companies Remain private for a long period of time. Theyve been able to have successive rounds of financing and very high prices the Venture Capital and private market has not been discertainidissernincerning of what theyre paying and thats why weve had disappointing ipos i dont think it affects the rest of the market i think people are going to be Investment Bankers are going to be very careful in pricing future ipos. Because many of them have reached the private market price thats pretty full finally, before we let you go, were getting close to the end of the year. Youre probably working on your surprise list for 2020 now. I am. Can you give us a hint of what it might include . No. I want to hold the suspense out for you, carl. Otherwise i dont have any appeal. Youve got plenty of appeal, byron. We love getting your take on everything and theres a lot to choose from today. Have a good weekend. Okay. See you soon. I look forward to seeing you soon as we head to break, take a look at shares of uber moving higher today after the Company Announced that it is buying a majority ownership stake in lattin American Grocery Delivery Company cornershop the deal is expected to close in early 2020 stocks up 4 still down more than 30 since its ipo. More squawk on the street when we return. Rget theyre in publi and you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Bank earnings just around the corner find out on trading nation more squawk on the street is coming up. Oney . Its racquetball time. thumps ugh carl, does your firm offer a satisfaction guarantee . Like schwab does. Guarantee . splash carl, can you remind me what youve invested my money in . Its complicated. Are you asking enough questions about the way your wealth is being managed . If not, talk to schwab. A modern approach to Wealth Management. Woman what gives me confidence about Investment Decisions . Rigorous fundamental research. With Portfolio Managers focused on the long term. Who look beyond the spreadsheets to understand companies, from breakroom to boardroom. Who know the only way to get a 360 view is to go around the world to get it. Can i rely on deep research to help make quality Investment Decisions . With capital group, i can. Talk to your advisor or consultant for investment risks and information. Shares of apple in a new record high today. Weve got a look at some of todays movers. That record high helping to wipe out the nasdaqs gains and really causing a broad move to the upside wiping out all of the losses, rather, that week that we saw in the markets. Apple as we mentioned hitting that alltime high today, a 52week high yesterday continues momentum and very strong volume. Already about 350 of the average daily volume that weve seen trading in apple. With that move apple gets that much closer to microsofts market cap right now there are about 20 billion or so apart. I know you only see six figures there, but those are seven figure numbers those are much larger numbers than that, rather. Those are in the millions that youre seeing there. The interesting thing is that microsoft had been the big momentum mover in the first half of the year, but over the last few months youve seen apple move higher, even as there have been doubts. The fact that we now have a lot more confidence in their sales of those iphone 11s, its really helping to move apple higher also creating a halo effect for chip makers. Chip makers up 2. 5 on average and that wipes out the losses for the weeks as well. One of the biggest gainers today, the best performers is fastenal there have been worries because of the china trade issues the company had expressed concerns back in julys conference call, but its earnings today beat and it had Strong Demand for manufacturing as well despite the slow down that weve seen in manufacturing. Its at an all time high today on some of the china names today as well getting some optimism. And among the Leaders Within the nasdaq 100 back over to you. Thank you so much. Lets get back to the cme group in chicago and get the santelli exchange. Good morning again, rick. Good morning, carl. Jerome snyder, managing director of penco a fascinating week in so many ways lets start at the beginning were up three basis points in terms of steepening. It wasnt that many weeks ago we were at minus five now were hovering around 13. Basically were seeing Investor Sentiment pivot today happens to be a good day trade and negotiations seem to be going well. Negotiations seem to be going well relatively appeasing the markets. Funding pressure seems to be alleviated Dollar Strength has subsided were seeing some of that go back into the markets in terms of higher yield. I think the ultimate thing is recognize the fact that volatility in the marketplace still emanates from Interest Rate exposure. The uncertainty, where the fed is going, how people are going to react to the higher Interest Rates. Doesnt that surprise you no, not necessarily it really beckons the pivot point that investors need to focus on being more defensive, especially as we approach year end. Focus on the value most importantly, think about that short term is effectively the new high yield not in terms of risk, but in terms of income generation opportunities. It also helps to protect you from the volatility were seeing in the marketplace. Even with the fed buying t bills which they dont kwacall , its still probably a good bargain. I know we were talking off camera, up close to a quarter point in 10year yields. Still 25 basis points is a percent percentage of 46 where it started. All the uncertainty i think is a function of central bankers never knowing where the red exit sign was now were uncertain but were uncertain for good things. The fact that as we head to break, lets check the markets. Dow un391 points, 1. 5 similar for the s p 500. Nasdaq up 1. 7 higher for materials, industrials, financials on all these trade headline optimistic trade headlines, on pace for gains for the week as well more squawk on the street when we return. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. To take care of yourself. But natures bounty has innovative ways to help you maintain balance and help keep you active and wellrested. Because hey, tomorrows coming up fast. Natures bounty. Because youre better off healthy. Owning and running the biggesta Small Business is finding the right people. In hiring our first recruiter, we decided to post a job on linkedin. They had to have worked. At a recruiter firm and be bilingual. When we saw ana marias profile. She had a ton of experience in hr. The interview went really well. And she seemed like someone who could really sell mckenzie to perspective employees. We found the best person to find the best person for us. Post a job today at linkedin. Com grow some recent headlines saying the rich are paying lower tax rate than the rest of the country and should be taxed more but what do the numbers actually say. Robert frank joins us with a look at who really pays what robert good morning, david a new oped and articles earlier in the week saying the first time in over 100 years, the richest americans paid a lower tax rate than the bottom 50 of americans. Research is from a new book from two economists at university f california berkeley advising Elizabeth Warren and Bernie Sanders on both their wealth taxes. The economists say the 400 richest americans paid a tax rate of 23 compared to bottom half of america which pays 24 heres how they got numbers. They look at all estimated taxes paid, including federal, state, payroll, local, property taxes, they calculate that as a share of income. They do not include the effects of things like earned income tax credit and other transfers since we dont know what the richest 400 pay in tax, they pay based on corporate profits recent numbers from the cbo shows the rich pay a higher raid, payirai rate, 33 of federal taxes, 14 at the bottom. Thats obamas former economic adviser, looked at taxes paid, found the top 1 paid 40 versus 20 for the bottom he tweeted standard data shows the tax system is overall progressive. Back to you. Thank you robert frank important story as we continue to watch the tape. Dow holding a tight range, up almost 400 we said earlier, back above 2982 vix is almost a 15 handle, hovers above 16. Which is low compared to where we have been the last several weeks. Apple hitting an alltime high does the stock have room to run . Well debate that next on squawk alley. Dont go away. Good morning it is 8 00 a. M. In cupertino, 11 00 a. M. On wall street. Squawk alley is live. Good morning welcome to squawk alley. I am Carly Fiorina with morgan brennan. Jon fortt has the morning off. Going to start the hour wi