Transcripts For CNBC Squawk Alley 20170630

Good friday morning welcome to squawk alley. John fort is on assignment today. Dow up is 67, just off the highs of the session the s p 500 tech sector is up 17 year to date despite a big selloff yesterday with a volatile and first half of the year what does that mean for this second half . More on tech stocks, lets bring in mark mahaney and jeff ritzer, managing partner at ggb capital. Im looking at the week to date action amd down six google down five netflix five facebook two is this turning into more than a two or three day phenomenon . Thats hard to know i dont think. So i look at these stocks and i look at them differently the highest quality names that we look at are off, 4 , 5 off all time highs i dont view that as a major change google, we have new news there the eu decisions and the fine and what is likely to be more of those going forward. I can see why that stock pulled in more. Netflix always has that kind of stretch valuation. Do you have to go out a number of years and discount it back to seat upside in the stock so i get that. Thats off 10 i dont think this is a fundamental change the underlying changes are consistent and have been and will continue to be. I dont think well have a sustained selloff in tech, at least not for fundamental reasons. So does the composition of the leader group change at all in the second half well, lets see the composition in terms of the stocks that outperformed year to date has been pretty consistent. The question is are there major catalysts in the back half of the year snt one where i can see the diverge sense google there is new news here well see in the next 90 days how they have to change the search process that is one new term that could serve as an overhang on that stock on google shares between now and the end of the year. I dont think there is a similar overhang or negative catalyst for the rest of the large cap internet sector. What do you see from your van Vantage Point . Any changes within the private market we have seen a burst of ipos with some mixed results and share price performance. Well, you saw blue apron go out this week. It has dropped down a little bit below the offering price i think what youre seeing though is the beginning of a wave of companies that will go public over the next six to 12 months were seeing a pipeline chalk full of multibillion dollar small cap and tomorrow small cap tech stocks, Companies Even all the way going up to Companies Like air b b and uber that may go out in 2018 blue apron is the beginning. I think reasonable Performance First week out, lets not forget even giants like facebook, i believe facebook dropped 13 the first week out as a public stock and dropped down to 20 after going public today is a 450 billion company. We dont pay a lot of attention to the first week performance of a stock. We Pay Attention to how a kbhp do company does over the long run and will lead the way for other Tech Companies to get out over the next 12 months you didnt see much change in the fundamentals aside from alphabet i wonder to what degree portfolio managers, your clients are still viewing these stocks mostly through a fundamental ends i ask because weve been talking about fund flows and the positioning, the status of the very large tech stocks as almost part of the safety trade and essentially being bought for other attributes besides whats going on at the company. Some of them are in the low volatility etf as we pointed out. Its funny and ironic how this changed theyve welcome become secular growth utilities ironically with google getting regulated, its become like a utility. I wasnt thinking. That i meant in terms of very steady earnings cash flow generators thats what this group is kind of become. Theyre still riding the secular trends and low levels of penetration. It is surprising in a way that volatility has come down ithink the consistency of the fundamentals and simple number is 29 straight quarters of year over year growth for google. If you keep printing that, there should be less volatility in the stock as the fundamentals are more predictability. That is the case for leading Internet Companies there are problems at ebay where fundamentals are deteriorating f you have that, youll get increased volatility in the stocks jeff, we had a discussion a moment ago about m a and how they will look different in the second half. The question is if amazonwhole foods san Inflection Point in m a. Do you think its an Inflection Point in Tech Companies and mega cap tech being seen as a source of funds to disrupt even more industries than they already have do you think thats true i think its a great point. And if you look at the grocery industry and the u. S. Its about 600 billion or 650 billion a year, relatively untouched by tech what a coincidence that within a couple queekz weeks we have amay whole foods and the First Tech Company going after grocery which is blue apron its an interesting narrative. A category untouched by tech well see other categories that tech goes after as well. It wont be just grocery you have cpg, broad leaf, all kinds of different services, health care, doctors, you know, many, many categories that are untouched by the internet, i think just the beginning of a wave one reason why people like me are very bullish on tech Companies Like amazon and google over the long run. A lot of categories they still havent even gotten into you look at Small Business as cross america. Some of them still dont have a website or own a domain name there is tremendous upside for Companies Like wicks and square and google so were bullish over the next five years as Small Business in america and around the world comes on the internet and tech does play a bigger role in Industries Like grocery and cpg more broadly mark made this point the other day that the whole elements of the economy that are still untouched by tech. How does all of that play into eventual valuations, guidance on operating margin and eventually well see antitrust concerns . It will its already playing into the latter, the antitrust concerns, carl you mentioned that people like mark and Jeff Richards tend to operate a lot longer term than most of us in the Public Market do mark, let me cut you off really quick were getting a piece of tape from the white house part two secretary of defense, we have our several of our really wonderful leaders here. You have your leaders with you and your representatives and were going to be discussing two things mostly and number one would be north korea and we pretty much discussed that last night at length. I think we have a very, very strong solid plan. And, number two, is going to be, of course, trade because the trade deal up is and we want to make a deal thats fair for the United States and fair for south korea so well start doing that. Gary cohen is here, wilbur ross is here and thats a very important thing. Wilbur, perhaps you would like to say a few things about trade right now and we can probably leave the media. Perhaps you would say a few words about trade and what were looking to do. Yes, sir. Trade imbalance with south korea has doubled since the treat qy a put into infect. The largest single component of that is automotive trade a absolute majority of about a nontariff trade barriers to the u. S. Exports only 25,000 cars per big three manufacturer are allowed in based on u. S. Engines. Anything above that needs to be encore even standards. So that kind of rulemaking effects quite a few industries and really restricts the 5 00 stha access that u. S. Companies have to the korean market we have a separate problem with other Steel Products there is no domestic market for tubular goods in korea so everything they make is for export and weve had recent trade cases demonstrating that a lot of that is dumped chinese steel coming as hot rolled coil and then coming back to the u. S. s oil field tubular goods so there are a lot of very specific problems and i think the way to address it is to deal product by product with what we can do to change the export side and what we can do to reduce the Bad Influence side all right thank you very much. You can stay for this also perhaps gary he could ken saycoe words also about trade. Thank you, mr. President. As you know, much of our biggest problem on trade has to do with our economic relationship with china. And we have maintained a very large trade deficit with china and it continues to grow as wilbur said,china has many predatory practices involved in the way they deal with us with intellectual property and trade barriers for us. Were forced to transfer technology into china, forced to have joint ventures in china we have tariffs and nontariff barriers, unable to own companies in china as well and were dealing with all their policies at some point we would be interested to hear how youre dealing with the chinese policies and how can you help us in dealing with chinese policies i thank you very much the fact is that United States has trade deficits with many, many countries and we cannot allow that to continue and well start with south korea right now. But question not allow that to continue this is really a statement that i make about all trade, for many, many years the United States has suffered through massive trade deficits thats why we have 20 trillion in debt. So well be changing that. Got news is we make the great products and i appreciate very much giving south korea is giving very, very big orders to the United States for, as you know, for military theyre buying many f35 fighter jets from lockheed theyre buying other military equipment at a level they never reached before so thats good also i understand youre dealing with alaska, great state, on natural gas and other parts of the United States. We have a lot of natural gas so we love that youre going to do that. And things like that will bring down the trade deficit substantially. Mr. President , would you like to Say Something before the media leaves [ speaking korean okay. We can do. That and im sure that everybody understood that answer, i hope it was a very good answer. Thank you all very much, media thank you. President of korea, republic of korea president moon facing off essentially against key players in the president s cabinet. More discussion about trade, perhaps, than the Nuclear Threat out of north korea i dont think it was a coincidence that he brought the media in to talk about trade this one is of his key issues where he talks to his supporters President Trump that, is complaining about the trade deficit that we have and the former trade deal thats have been worked out with other countries like south core eechlt we south korea. It doesnt put them in our top five trade deficits. It is interesting he turned the table over to gary cohen after wilbur ross. Cohen is sort of less idealistic and i think hard line on this issue because he went straight to the trade deficit with china which is larger than korea he said thats our biggest problem on trade they had specific predatory practices. And we asked for your help, speaking to the korean president , on how to deal with that as you have dealt with. That i think its interesting. It shows the split within the administration that others have been reporting on when it comes to how tough of a line they want to take on trade. By the way, just a quick point. The president said that big trade deficits with all the countries is one of the reasons why we have 20 trillion in debt throws two entirely different buckets were talking b it just was interesting that he seems to think about it as general financial disadvantage that the country is in. Right. And this is the cause there are also not a lot of mainstream economist thats think our trade deficit is a major problem or even in the top 20 problems for the United States some things just arent made in this country and we can get them cheaper if we bring them in overseas. We have seen efforts to get things that we used to make back into this country in terms production dow is settling off the session highs. Were up 65 points when we come back, the president is set to make a joint statement with the president of south korea. Well take you to washington for that at the start of the event in the rose garden in the meantime, take a look at the nasdaq 100 winners for the quarter. Youre going to recognize some of these names were back in a minute at fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. As weve been mentioning, to day is the last trading day of the month, quarter, and the half we have more on what we can expect the second half of the year good morning, dom. Good morning. The stock market bulls throughout may have more to cheer about that, is if recent history has anything to do with it take a look at what is going on with the major indexes in the second half of the year. We asked our data partners to crunch the numbers turns out the nasdaq is up almost 4. 5 on average for the second half of the year. Its been a positive trade almost three quarters of the time the dow up 3 , also a p 70 positive win rate. There s p 500 maybe one of the laggers here 2. 5 to the upside and the real lagered among the major indices here, a 2 gain for the russell 2,000 small cap insex. Its a positive trade 565 of the time we want to call your attention to one index in particular and that is the nasdaq 100 over the course of the last 20 years, this larger cap or mega cap nasdaq index is actually one of the biggest winners its up on average 6 over the last six months of the year. Its a positive trade around 70 of the time. As we talk about the themes that are developing and what to expect, technology, biotechnology, nasdaq in particular could have a big say, guys, into what happens. Back to you. All right dom, thank you well continue the conversation on tech. What will the second half of the year hold for the worlds most valuable companies they get set to release the iphone 8 later this year yep, were talking apple for more, were joined by global head of technology, brian white. Just looking at the returns on apple, up 25 for the year most of that actually came in the first quarter. Were wondering in the second half of the year when were expected to get the new slate of iphones, have the gains already been priced in around that in the first half of the year its a great question i think life on planet apple has never been more exciting its the top pick for second half of the year it remind me a lot of 2013 stock rebounded 156 from the level, the valuation very similar to the bottom in apple in spring of 2016. If it put in a similar type rise, apple would be at about 230 from the low in april 2016. So we have a price target at 202. I think this 8 pull back, great buying opportunity in 2013, the stock was down 40 off the high from 2012, right . Its not as if its really been that bad recently, it is i just wonder about the valuation. Noes that its expected ever, but what the market has been willing to pay for apple if you got above 15 times forward earnings once or twice, you kind of got there in may is there a ceiling on that do you , so you got to remember, apple was over 130 before falling to that 90 range in april 2016 so it had that massive correction and then you started to bottom as we thought last summer. And so off that bottom, you know, 156 ingives you 230. Were not saying its going exactly. There we have a price target of 202 i see a lot of similarities in the cycle. In terms of valuation, again, you know, i make this argument, its 11 times x cash sugar Water Companies at 22 apr apples growth relative to the s p 500, sugar water is off the charts relative to the companies over the past eight years. But sugar water is a staple we dont know if phones are are phones a staple or not zpe depending on how good it s. Try living without your phone. Thats what we have to think b april sl apple is so imbedded in our life with our phone and its going to be in our home its going to be in our car. You know, vr is going to come out. Home pod is coming out there is so much in there. And think about if youve got to compete with a company that has 257 billion in cash, how are you going to invest in all these new areas . I think its going to be impossible for most companies. Brian, one of the skeptics arguments is whats the next big thing . At some point it will be a saturated market you are saying it doesnt matter theyre spreading enough into home and other categories that thats enough to make up and should drive the growth on its own . Theyre doing a lot of things the ecosystem is not just a phone, its an ecosystem but youre right over 60 st sales are coming from iphone today its more as a percentage of profits. But the market share smart phones is only 15 big opportunity. The middle class and the world, not in the u. S but especially in asia, thats where the middle class is growing. One of the first thing thez want is an iphone so i think, you know, you have cash play. You have ar, vr, i think youll be in robotics there is a lot out there on the horizon. But iphone can still gain share. So lets not foregot about that. You make it sound like they may never have to buy anything big. Do a 10 billion plus deal. It just depends on what direction the Company Wants to go if there is something that they cant organic they buy a lot of small companies, obviously. But if there is something really big market and they cant do it organically, they can do a big deal for sure. Lets see if we get repatriation in the second half. Brian, thank you. Thank you. Brian white bullish on apple which is actually higher today by. 5 dow up is 64 points on this final dave the quarter nike leading the charge. Well get more from the president and the rose garden ofor ireblresident of puic kean a moment we continue to await the startup President Trumps joint statement with south korean president moon at the white house. Our reporters are standing by to break it down for us what will you be listening for were told by the press pool that they were brought into the cabinet room where they had a Frank Exchange of views and diplomatic speak between the u. S. Side and south korean side. Were told that secretary wilbur ross brought up the issue of restrictive access to the south korean auto market for u. S. Automakers the south korean president moon also spoke a little bit. Were waiting on the translation in terms of what he said with regards to the remark. The United States has trade deficits with a number of countries and theyre working to fix that clearly this say president who focused very much on renegotiating the trade terms between the United States and south korea. At the same time, the United States very much needs south korea as a bull work against north korea and buttresses that peninsula. There are dynamics going on geopolitically, a very delicate dance. So what were watching for in the joint statement are their comments giving any hint wrf theyof where theyre going to land on both of those delicate issues. Why are they going teit for tat on trade when they should be figuring out how to strategize against north korea . By President Trump. Thats an issue that he has used to put stenter of h at the cer of his economic agenda he seemed to have an appeal with his base the question is whether he can get anywhere with that discussion remember, our trade deal with south korea was negotiated by two president s, first george w. Bush struck a deal in 2007 then you had democrats saying that they were not satisfied with the deal. Precisely because it didnt do enough for the Auto Industry president obama in the white house renegotiated aspects of that deal to the point that not only Auto Companies but auto Company Unions approved of that deal and it was ratified by the senate so whether he can renegotiate that and get the South Koreans to come to a deal with him, i would be surprised if he could and as you suggested, it seems pretty clear that from the administrations rhetoric that in National Security terms its much higher priority right now to make progress on north korea. People are starting to dissect a moment earlier this morning where the president linked the trade deficit with korea to the 20 trillion federal debt level z that make any sense to you thats an interesting question, carl i dont want to dissect that one on the fly here in the rose garden but, sure. I mean, that sort of the point that president s been making on the campaign trail his base will appreciate that comment. His base will say, you know what we elected this president to go in there and renegotiate the terms of all of this and deal with the federal government. So in terms of the math, i dont it this base is going to care about the math or how that comment is derived theyre going to care about whether or not the perfect says doing the things that they elected him to do which is renegotiate trade deeldz aals a bring jobs to Middle America the rhetoric will appeal to his base i would like to get into that substantively. No, it does not make sense the United States is has a large debt because we chronically are not willing to tax enough to pay for our obligations or to cut our obligations to fit our taxes thats why we have the debt. And whether or not renegotiating a trade deal with korea would have any impact on that, i dont think so no. I mean the trade deficit just detracts from growth we import a lot more from other countries that manufacture like korea and much more china. I was going to ask you, john, where china fits into this equation when it comes to trade, gary cohen did bring it up. When it comes to north korea this is a key part of everything thats going on and how they strategize what to do about it well, the president during the campaign made a big show of saying that he had a unique ability to make china force north korea to constrain the Nuclear Program and said it could be done quickly and easily then he had president xi come to visit him. They had a session the president came out and said, well, i got a little education there. I discovered its not so easy. Just recently he tweeted that he had discovered that the chinese had made a good faith effort to curb north Koreas Nuclear ambitions. But hit not worked and now were in the posture where the administration our Intelligence Community says theyre seeing evidence of another test coming. And theyre trying to figure out what they can do about it. Whether its military or the sanctions that treasury secretary secretary announced yesterday. Were not seeing the fruits of the thing that president said he could do easily last year p its clear that china has a big voice in that process. Dont go too far away i was just going to point out, these are go ahead. Sorry. We have a little delay here i was going to point out, these are two new president s, right . Whatever happened in previous administrations in both countries now youve got two people who are facing each other for the first time there is that sort of blank slate aspect to this meeting all the political dynamic ands economic dynamic thats existed before will still exist even if you got two new personalities here yeah. Joining us on the phone it this morning, former u. S. Trade rep and adam hills good morning once again, the rhetoric is sharp when it comes to trade here this morning with the korean visit reports this morning of internal discussion onz the white house on steel tariffs will we get something in the neighborhood 2of 20 even the president s advisors are advising against it. Are we on the cusp of Something Big . I hope that the president is accessible in dealing with south korea. We need to enforce the korean Free Trade Agreement but we dont need to tear up and south korea is a strongal lichlt we benefit from the economic relationship that we have with south korea. And theres no reason to apply for restrictive tariffs without understanding on what basis are you doing this madam ambassador, were going to try to reestabilsh a more effective phone signal with you. Well come back to you in a moment, we hope. Ill turn to you on something the commerce secretary said a few moments ago and that is that theyre going to go product by product to try to rectify the trade imbalance with south korea which of course begs the question which sectors might be a risk if any . Yeah, thats a very open question and also the open question is what will the South Koreans say in response to that . We have the u. S. Side of that conversation in the cabinet room a few moments ago. But what we dont have is how the South Koreans responded to the idea of going product by product and renegotiating all the tariffs. That is a complicated process. They might not want to engage in it well see how they react to that idea and i do want to bring you one moment sort of diplomatic leave ti that we had a few moments ago. There is a lot of interest in this meeting to give you a sense of how much, when they opened up the oval office earlier today, the press kind of came crushing in in order to get the picture of the two leaders together in the oval somebody jostled the couch thats in the oval office which jostled an end table which tilted over a lamp but fortunately the president s aide was there and in the nick of time was able to kacht lamp brit hit the ground and created major diplomatic incident of lamp smashing in the oval office so we avoided that thats in the win column for the twhous day well see how the negotiations on the substance go. So far, no lamps have been destroyed in this session. Thats good to hear, i guess. Can you tell us anything since were talking about trade and the stance that administration is taking adds we await to hear more on south korea specifically what about this issue about President Trump imposing tariffs on steel imports at g20 next week there was a report a lot of interest that president was leaning toward it even though during his meeting with his closest advisors and cabinet members most of them opposed it. What can you tell us i can tell thought reporters are solid reporters and well plugged in here at the white house. I also can tell that you i talked to two officials here in the west wing just behind me about that report and they were pouring cold water on it saying its not exactly clear yet where the sprpresident is going toenl up that say big number. It is clear there are some in this administration in the protectionist cam hop think thats a good idea but there is a globalist element for lack of a better word inside this administration which doesnt think that those kind of tariffs are a good idea and they might hurt u. S. Construction and other industries inside the country that will be taxed with those higher costs so the officials here putting a little bit of cold water on the idea thats where theyre going to end up much its clearly under discussion and something that wall street should be paying attention to. Guess what . We got the right guest to comment on that. Ambassador carla hills back on the line im not sure if you heard our discussion, fwhut idea that the administration could impose 20 tariffs on steel imports is that a good idea . Not at all. I did not hear the discussion. But i think the administration ought to be quite weary of moving out and igniting retaliatory action thats are adverse to our economy i know they believe that bilateral trade deficits are important. But that is an incorrect economic analysis. We really ought to look at our overall financial picture. You know, you have a deficit with your grosser. And you have a surplus with your firm that hires you. And you do not want to be obstructionist toward the naem youre buying goods from we have a strong relationship with south korea i do think that the koreans pretrade agreement is a good agreement. I do think it should be enforced that is that the provision should be enforced but to slap a 20 tariff on all Steel Products coming in from south korea does not make sense. Does not comply with the treaty. And could be ignite a reaction and just to be clear, that report wasnt specifically about south korea. It was about steel imports from places like china. That was actually something separate than the south korea trade discussion but were bringing it up because they had a report and it certainly got our attention and the attention on wall street today. And would have, all sorts of political and economic ripple effects for countries not just including china. But arent world and who knows exactly if its the cause. But, of course, the steel index up is 1. 5 so the market at least thinking there say possibility of some movement along that front. Ambassador, i assume you dont really agree with this idea that the United States can go product category by product category to try to establish what it believes with the administration believes would be more fairness, more reciprocal kind of agreements here that do help u. S. Business s that not a productive avenue . My own view is they are reporting, as i understand it, to use our National Security as a basis for applying tariffs on various products, steel, aluminum, et cetera, against various countries. And if they can establish a National Security connection which i doubt, then thats one thing. But we rarely have used 232. And i worry very much that where we began to apply tariffs on products that come in from other countries under a National Security basis there will we will induce retaliation. We have been arguing against china using National Security and anything other than economic consideration with respect to limiting our exports to them we call it discrimination. And we would begin this i thishgs think is quite dangerous zbhch madam ambassador, well check in with our auto reporter phil lebeau as we talk about the potential for tariffs in steel phil, its a tough one to call today. You got steel makers up. But then you have whirlpool and gm up as well. Zbh i was struck by the comments from wilbur ross, the commerce secretary regarding the trade deficit with south korea when it comes to the Auto Industry a couple things to keep in mind. Ier that occasionally from people, isnt south korea a closed snashgt why are we not selling more vehicles to them . Its not a closed market but a unique market where youre dominate bid hyundai, key yashgs the local players, gm owns another fwhp there and then you have boutique offerings. But its a market where if youre not offering those particular smaller vehicles, youre not going to get very many sales so the big three have largely said with the exception of general motors, look, its an interesting market were not going to focus on selling too many cars there. Where there is a trade deficit where i think the administration could make some hay, components. You do not seat same level of localization of components for korean automobiles from korean auto parts makers in the United States and in north america that you see say from the japanese automakers so i suspect that one area where theyll say bring more of that production over here tired of seeing a lot of them made in south korean and then sent over here for being put into the south korean automobile thats are built in georgia and in alabama, down in that area. Ambassador carla hill still with us. I want to get your comment on what phil is saying. Youve been in the meet brgz and with the leaders how are your counter parts in other countries like south korea going to react to some of the comments that were hearing from the commerce secretary and the president as it relates to trying to close the trade gap . How much room is for compromise on the other side . Im not sure what your question is directed to. I havent heard the comments that they have made in the last hour and the suggestion that we could settle by having greater investment in south korea for components if, that makes economic sense for the companies in the United States, thats a good economic outcome. But actual think administration has opposed investment abroad saying that it takes jobs from the United States. That is not true, of course. I mean the economic reports show the outward investment that grows the foreign workforce by 10 increases domestic workforce by 3 . But the fact is that there are different jobs and we have to train our u. S. Workers to take different jobs as we move upscale. But really the negotiation ought to be get your market open so that we as a competitor have equal access because we think that made in the United States is top of the line and where we get upset is where there are restrictions on u. S. Exports or u. S. Investment ambassador, pleads stise sti with for a menomt. Well try to sneak in a quick break as we await the president and president moon ke all the di. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Can we at least analyze customer can we push the offer online . Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . Yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong insurance company. With Liberty Mutual new car replacement™, heres the president and president moon in the rose gart en garden. Thank you very much were honored to welcome president moon of south korea and his lovely wife madam kim to the white house. Mr. President , let me be the first to congratulate you on your election. Tremendous election victory. And also the people of south korea for providing such an incredible example of democracy for the world to see it was very exciting i must say congratulations. This morning president moon and Vice President pence laid a wreath at the Korean War Veterans Memorial to commemorate the 67th anniversary of the korean war its a beautiful ceremony. We will never forget that americans and cokoreans bravely fought and died together for a free korea to the korean and American Veterans of that war, great people, were eternally grateful for your service and for your sacrifice. More than six decades after our partnership was forged in the fires of war, the alliance between the United States and south korea is a corner stone of peace and security and a very, very dangerous part of the world. The link between our countries cemented in battle is now also tied together by culture, commerce, and common values. Together we are facing the threat of the reckless and brutal regime in north korea the nuclear and Ballistic Missile programs of that regime require a determined response. The north korean dictatorship has no regard for the safety and security of its people or its neighbors and has no respect for human life and thats been proven over and over again millions of north koreas own citizens have suffered and starved to death and the entire world just witnessed what the regime did to our wonder Otto Warmbier i thank you for your comments on the travesty of ottos death our thoughts and prayers remain with his wonderful family. The era of strategic patience with the north korean regime has failed many years it has failed and, frankly, that patience is over were working closely with south korea and japan as well as partners around the world on a range of Diplomatic Security and economic measures to protect our allies and our own citizens from this menace known as north korea. The United States calls on other regional powers and all responsible nations to join us in implementing sanctions and demanding that the north korean regime choose a better path and do it quickly and a different future for its long suffering people our goal is peace, stability, and prosperity for the region. But the United States will defend itself always will defend itself, always, and we will always defend our allies as part of that commitment, were working together to ensure fair burden sharing and support of the United States military presence in south military presence in south korea. Burden sharing is a very important factor a factor thats becoming more and more prevalent, certainly in this administration. Were also working to create a fair and reciprocal economic relationship, from when the u. S. korea trade deal was signed in 2011 to 2016, and you know who signed it, you know who wanted it, our trade deficit with south korea has increased by more than 11 billion not exactly a great deal i was gratified to learn about the new investment South Carolina south Korean Companies are making in the United States. This month, shanair is sending its first shipment of american liquefied natural gas to south korea in a deal worth more than 25 billion. Its great we will do more to remove barrier s to reciprocal trade an market access. We talked last night and today about some tough trade issues, like autos and steel. And im encouraged by president moons assurances that he will work to create a level playing field, so that American Workers and businesses and especially automakers can have a fair shake at dealing with south korea. South Korean Companies sell cars in america, American Companies should have that same exact privilege on a reciprocal basis. And im sure well be able to work that out. In addition, ive called on south korea to stop enabling the export of dumped steel these would be important steps forward in our trading relationship, very important steps. They have to be made not fair to the american worker, if they are not. And they will be our teams are going to get to work on these issues, and theyre going to sign a deal thats great for south korea and great for the United States. Mr. President , im thrilled that you are here today and deeply honored that you choose to go to the United States as your first foreign trip as president. I greatly enjoyed our dinner last night and the many productive discussions that weve already started having today. I look forward to working with you, for many years to come, to strengthen our alliance, protect our citizens from common threats, and deepen the enduring bonds of friendship between americans and the great people of south korea thank you very much, president moon thank you. [ applause ] translator let me begin by expressing my deep appreciation to president for extending me such a special welcome. When i was elected president last month, President Trump was the first foreign leader to give me a congratulatory call after going through such a tumultuous journey, the Korean People finally achieve d victor. The words of President Trump convey conveyed what we have accomplished in for freedom, democracy, peace and prosperity, towards which we have walked together, for all the greater lands and you gave your consolation and support, once again let me take this opportunity to thank you, mr. President , and the American People in our first foreign conversation with President Trump last may, he came across as a man of determination and pragmatism, leaving me a powerful impression. And yesterday and today, i had a candid and lengthy conversation with President Trump and i was able to prove myself right from developing the rockous alliance, to building lasting peace on the korean peninsula, i affirmed President Trumps unswerving commitment, and we were able to build a broad consensus. During my visit this time, President Trump and i were able to forge friendship as well as deep mutual trust. As we endeavor to tackle numerous challenges ahead of us, this will give us a Solid Foundation to rely on. First, President Trump and i agreed that only Strong Security can bring about genuine peace. Through combined posture, including extended deterrents, we concurred to strengthen our overwhelming deterrence. The threat and provocations by the north will be met with a stern response gravest challenge confronting our two nations is the nuclear and missile threat posed by north korea President Trump and i decided to place a top priority on addressing this issue and coordinate closely on relevant policies. To this end, our two leaders will employ both sanctions and dialogue in a phased and comprehensive approach and based on this, we both pledge to seek a fundamental resolution of the north Korean Nuclear problem the north Korean Nuclear issue must be resolved without fail. North korea by no means must underestimate the Firm Commitment of korea and the u. S. In this regard i also urge pyongyang to promptly return to the negotiating table for denuclearization of the korean peninsula. National security leaves no room for either compromise or concession on this occasion, the u. S. And President Trumps firm resolve for the alliance is noted with great appreciation the republic of korea will drive to strengthen combined defense capabilities, while at the same time pursuing defense reform, built up its own capacity to defe defend itself. As we undertake these efforts, i hope will gather further traction second, Economic Partnership between our countries forms an essential pillar for future Oriented Development of the alliance we both agreed on this Economic Growth and job creation will be promoted to ensure our peoples enjoyed greater mutual benefits through the collective efforts we committed to make third, as we fight against terrorism and torre global challenges together, the alliance as agreed by ourselves will be broadened and developed into global partnership, as we move forward, our two nations will work towards developing highlevel in diverse areas of interest to make it happen, concrete actions will be formulated in close concentration. I would like to take a moment to convey my heartfelt sympathy and condolences to the American People and the bereaved family grieving over the death of mr. Warmbier i deeply sympathize with americans who are saddened that they were not able to defend their fellow citizen as a former human rights attorney myself, i am keenly aware of the significance of human rights as the universal value of humanity, to make sure such tragedy never repeets itself, our two nations will cooperate with the community of nations to promote human rights in north korea i also invited President Trump to visit korea this year and he graciously accepted my offer mr. And mrs. Trumps visit to korea will once again demonstrate not only our friendship, but also the intimate bond our peoples have come to foster through thick and thin your visit will become yet another milestone in defining our partnership. I will see to it myself. On second, mr. President , i extend my sincerest gratitude to you and the first lady for such warm hospitality thank you. [ applause ] thank you, everybody. Thank you very much. Will you apologize to mika brzezinski, mr. President . President trump there with president moon, not taking any questions, obviously, but a statement in which he said the patience is over, regarding north korea, a regime he called reckless, with no respect for human life, that deserves a determined response. Didnt say exactly what that would be of course, president moon making some news, as well, saying, do not underestimate the relationship between two countries, inviting President Trump to korea this year, which he says was accepted yeah, they emphasized the friendship part of the equation and how theyre going fight north korea. They both sent their condolence to Otto Warmbiers family in cincinnati and less emphasis on the trade frictions, which is what we got in the previous public statements and what the president said was a very Frank Exchange, right . So that was behind closed doors, but this is about the security relationship where theres a lot of agreement yeah. So shortened session on monday if youre not going to if youre taking a long weekend, enjoy. For those who are here, well see you monday lets get over to melissa lee and the half