Transcripts For CNBC Squawk On The Street 20170706

G20 bond sell off continues in the u. K. In japan, italy, germany and here and oil is reversing some of yesterdays losses our road map begin with after a strong start to the second half stocks are stalling. Markets set to open lower amid signs of a tech rally and lowing sector hiring last month president bullish on u. S. Markets as he prepares to meet merkel, putin at the g20. Shares of costco climbing in the premarket stronger than expected june sales. Futures moving lower ahead of tomorrows key jobs number shows the private sector added 158,000 jobs in june meanwhile jobless claims fell still near historic lows well see what it means for tomorrow. Historic loes and some of the minutes yesterday, some of the deviciveness still lead me to believe there would be a rate hike which is what we need its not talking to north korea. You saw the futures go down. They actually rally. I dont want to put too much on that. I think that the fed minutes created a little bit of a flurry some thought i always liked that because you cant ignore the decline. The decline is something exten shl. How do we factor in north korea. We spent an hour and a half on squawk box about north korea we talked about what the president was speaking has been a big misinterpretation about what the president is saying i think he was talking tough about germany because poland has always liked to be independent of germany its not just against rush yans. Its just germany. At a time when youre look for uniformity against north korea. The square where he was speak was the epicenter of the uprising against the nazi occupation are you saying he is trying to revise germanys image. I think both. They waited a month. Churchill wanted him to go they wouldnt go held off which allowed the germans to annihilate the polish home army and then the russians came in. It was considered to be a horrendous move by russia and germany. Thats what he is representing you go in and youre basically saying you guys destroyed the greatest city in Central Europe and you also tell the russians thanks for nothing he has brought up things that have not been brought up for years. The reason why he went into that long discussion of polish history. That polish history is something that the polls have been begging to have reopened for a long time which is how the russians crushed the home uprising. Waiting on the outside of warsaw a horrendous thing they did. So you have a horrendous occupation and in order to make it so there would be a phony government put in at the minute that it ended to bring this up again is so fraught. He is saying listen its time for the quarter to be independent of russia and germany. That was supposed to happen in the 20s and 30s. I think this is very similar to when reagan said tear down this wall this is independence of a corridor against germany and russia wow. Yeah. Harsh words for russia as well well find out very soon what it means for the g20 a man is watching that this morning. Hes in hamburg. Good morning to you. Yeah, good morning youre exactly right. We saw the president in warsaw this morning as you guys have been discussing and the president putting on a president ial sales pitch there particularly in terms of u. S. Military hardware and equipment saying the americans make the best in the world and we want you to buy more u. S. Military equipment and also specifically on something the United States and poland can really do a deal. I want to take this opportunity to congratulate the government and people of poland for receiving their first shipment of u. S. Ly Liquified Natural Gas last month and you made a very good deal i understand let me be very clear about one crucial point. The United States will never use energy to coerce nations and we cannot allow others to do so so the president there very much suggesting that the United States is simply a better trading partner for poland and the rest of Central Europe when it comes to Energy Rather than say russia which is right over the horizon there from poland. So that is an important sales point that the president made. He also did something that he had been criticized for not doing on foreign soil earlier in the year that was specifically make mention of the mutual defense Agreements Inside the nato treaty heres what the president said on that part. We stand firmly behind article five mutual defense commitment. Words are easy but actions are what matters and for its own protection, europe, you know, this Everybody Knows this. Everybody has to know this, europe must do more. Theyre not as interested on his perspective on the paris accords. He might get push back there as well well wait and see what happens. So much speculation on what the handshake guys will look like. Those handshake what is trump has been doing all year have been scrutinized and well see how the one goes with putin here tomorrow. After those swieps aimed at the president in the past week well check in and the company and this is a spot trade. And between 5 and 5 30 was a major change all its doing that one shipment is to say listen we combine pipelines and shipments and poland, lets put it in perspective. There is really this was a drop in the bucket it would be something if poland tries to get a diverse identified way to get natural gas including not just russia that would break the hammer lock but this was a spot trade. No more and the president seemed to make it sound like it was a longterm agreement. There are so many ships right now in the water that have natural gas. If you want it, the market is going to be the second biggest market by next year. Polish govern. There was no longterm agreement. For people that may not remember, he was the leader in actually retro fitting this huge terminal that it was spending billions on to import natural gas for the export of it which now as jim has mentioned so many times is a very important market also free port, another big producer will be coming online and huge market. This is a very important commodity for our country. And the biggest statement is it would be natural gas that was the 3 billion shipment to poland just to give you perspective. Its been over 2 billion cubic feet per day to various countries but mostly latin america. The big win would be if we produce a gigantic we have a gigantic amount of gasoline our natural gas. To mexico that would take the natural gas which is far bigger than anybody realizes all of these things were very geopolitical. When you talk about trade with mexico people tend to forget but that becomes a very important part of it. Mexico thats because they have not been able to put money in their own drilling offshore which if they did they wouldnt need us at all this Natural Gas Market is something that i talk about endlessly. Why . Its big, its liquid and it will be a major factor globally by 2018. The next project obviously is 20182019. 6 moss away. Its all happening. When i talked to him this morning very proud of what im very proud of what he has done theres going to be one more and we do have so much lng today so lets put what trump said in perspective but lets recognize that this is a major, major export opportunity for the u. S. And i wish there was more places for us to put it he had an api data number last night. Were going to get numbers today that give Us Inventories the key number snou not the w is not the inventory number. Thats what we need to see to see whether our producers cannot make enough money. Hence the downgrade today for exxon and chevron out of rbc. Brutal saying wooechb the diverse identified models they cant do enough. A lot of people look at volvo and texas is the one they could highlight. Unless we get ahead of ourselves were a fossil fuel burning world. Lets get over that. Speaking of that news, were on track for their worst week of the year this is down 18 from a week ago monday well watch that we got a downgrade at ge, costco, apple news, a lot more squawk on the street continues in men aomt. The power of innovative thinking. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. So thats the idea. What do you think . Hate to play devils advocate but. I kind of feel like its a game changer. I wouldnt go that far. Are you there . Hes probably on mute. Yeah. Gary wont like it. Why . Because hes gary. phone ringing what . Keep going yeah. laughs voice on phone its not millennial enough. There are a lot of ways to say no. Thank you so much. Thank you so were doing it. Yes start saying yes to your companys best ideas. Let us help with money and knowhow, so you can get business done. American express open. President trump will give a major speech and talks will focus on developing ties in industry and infrastructure. Shares of tesla on track for the worst week in ten months the model s failed to achieve a top score in one of the crash tests run by the Insurance Institute for Highway Safety it only received an acceptable rating however tesla is saying the most objective tests are done by the government which found they carry an extremely low rate of the injury the other part is the journal takes a look at what volvo might mean for teslas future. Arguing that if others get into the space like that teslas lead might not be as large as some think. This has been against tesla in the last 48 hours and have to tell you that there are many analysts if you even read what the bulls have been saying they have been saying okay, look, the stock is going higher but maybe the fundamentals didnt dictate it and then the bears are saying the fundamentals dont dictate any rally at all this is the exposure of what i always felt was a cold stock but remember what jim stewart, my favorite writer said on this show which is the shareholders of tesla and drivers of tesla like tesla and the street has been unable to shake that. Unable to shake that love and that the model 3 will come out and happen once again. We got a nice email from tesla talking about the show case of it its so inexpensive. I do believe thats frozen a lot of the buying. When i look at this, i goes goodbyes back to 2,000. A lot of Companies Like tesla didnt produce didnt produce numbers but the difference is theres a product. Theres a product that you can get in and drive and enjoy as you say we made this comparison before he gets as much leniency as besos has from his with this expectation that it will come if you believe. Its a tech company not a car company. It has come although people are still arguing about amazon as well you got thats kind of the play book right here, isnt it theres no way to justify 53 billion market value on the number of automobiles theyre going to produce next year or the year after. Only if its a tech company thats the only justification. If its a tech company that happens to also sell cars i can understand the cut. Yeah, you have been, i would argue agnostic and removed but 309 a friend writes would he equal a bear market from the high would you get more aggressive then in your stance . I just think that hes a great showman for technology bang, bang, bang, boom, boom, boom we move on to costco. June comps were up 6 some wondered that this morkt the stock in the premarket wasnt reacting more. I was going over with some very good retail analysts about what the real issuers retail but the issue is wait a second its 25 times earnings amazon represented a compression of the price to earnings multiple so the reason why costco cant fly is people think wait a second, the group and we look at oreilly yesterday is every single retailer is having price attorneyings for home gamers its hard to understand people dont want to pay up even for the best costco is the best i think longer term costco does fine remember how we talk about tesla as a tech company. Costco is a club and they pay your dues and give you good prices on everything and if you look at where you can charge me more, you can charge me for for costco club and amazon prime and more for netflix and thats why i like those three did you see theyre working on a wine called next. I bought that which i just use for cooking. Can i just make a point that this is a good example im in italy and its the house wine for tuscany who owns it . Do you think the italians own it Constellation Brands best wine in tuscany when we come back well get kramers mad dash and countdown to the opening bell. Futures remain in the red. Dont go away. Lets get to a mad dash well talk a little ge dow component has not been able to maintain any sort of momentum in terms of its price. No. I talk about my Charitable Trust winners. This is a Charitable Trust loser. Heres what jp morgan. Broken below 27. Theyre saying 27 price target goes to 22. Thats pretty aggressive they talk about being worth only 20. They expect a major restructuring. I regard that as positive and then they say no quick and easy fix for the new ceo. This was a piece and undercurrent of all of this is that the company is broken and cant really be fixed. I question that. I think theres assets here. I think theres possibilities here but do understand that people have to recognize that the numbers are probably going to have to take a hit down i still regard a triumph position on the board, if that occurs to be a nice catalyst. Well, you would have to believe as this price continues to move down that they are getting more focus despite the change in leadership thats taking place in the company it does not mean that they necessarily would back off. No and i think theres no reason you have to keep pressure on a new ceo. Their focus has been on cost. Delivering on the promises already made by ge management. Thank you because i think they can deliver a 2 billion cut and if thats the case then jp morgan may have to eat its words but down first and then up and the guy has been dead right so i question the current ceo exactly on what jp morgan has been saying he said i was captive to the bears. I have to tell you, captive to those that are right. Well be watching ge shares breaking below 27. Convenient that in a little bit of time. Down over 15 as you see this year we have a lot more stocks vimong up well be getting to those as well when we get to the opening bell guys, five month high. Italy ten year one month high. Japan ten year five month high our own 237 is the highest since may 11th how hard does this go. To me whats going on in europe we have things not being put together we have the final bailout of the major bank in italy. That was 6 billion. We had the recapitalization early. We had the recapitalization and theyre ready to lent. They finally did what we did multiple years ago and therefore the money will flow the cash economies in these countries will change can. And its dramatically undervalued and youll continue. I think the bond yields are insane anyone that owns them nuts just nuts but i know theres a lot of, you just have charters those firms will be crushed in terms of what generates income for their shareholders and the pensions. German ten year, wow. Yeah. Twice the level two weeks ago. Thats hurting a lot of people by the way. Including and some of the stocks in europe have been reacting to that as well theres a big move in commerce bank. I watch the banks. I watch recapitalization im quite impressed. Its the administration for Childrens Services at new yorkers for children its encore wire maker of electrical building wire sell brath its 25th listing anniversary. Take part in whatever happened yesterday this is becoming monotonous. These are all part in parcel with a market that doesnt know what to do with itself people said it was good so kfc is good. If thats what were going to trade on that speech in poland. And l brands, were short things to trade on. Its still working day it should be so people dont have to go back and forth and lose a lot of money. You mention ge. Brings the year today loss at 15 . Not quite as bad as verizon. No, its really just, these are good yield and jp morgan piece did not call into question the yield. But, you know, in davids world we have deals and the deals continue when theyre positive again im trying to fight the trend of sell today by tomorrow. I dont want to say you shouldnt take a period seriously. Thats really big news from last night. Thats very bad for retail its the key to this market. That has just been dreadful. Where is this thing 5. 25 yield. Cash flow is great there nobody claiming that the dividend is in any danger. Its not the question for verizon is what will it do through talking about acquisitions theres a general feeling that the company will need to do something to enhance its top line instead of waiting for g6 which at some point will be a meaningful contribution and he believes that will be the case buts hard to ghetto cussed on something thats still quite a few years out potentially and we hear ludicrous things that are not going to happen. There are a group of things that might be more likely when it comes to what they may or may not do in terms of trying to fight what is a Competitive Landscape in their core business. The acquisition of yahoo and aol. Theyre putting it together. Its right. Its not as though, its not in anyway equal to at ts decisions to diversify by buying directv and then of course by buying time warner which is a deal far, far, far in excess. I always felt verizon was a good core holding. Thats a widely owned stock a lot of people own it for the yield. People own it and when you meet people, theres good people own tesla and good people own verizon and a lot of stock but they dont get talked about much like jp morgan that i think has been an excellent stock but what happened this morning . Goldman sachs comes out and says hey were at our price target. Theres not a lot more upside. I thought that that piece was indicative of wha think youre going to start hearing which is some of the banks are fully valued if you tell me that jp morgan is fully valued at 14 times earnings ill tell you youre far too negative. Implicit in that is the tax reform goes nowhere right . Exactly right an undercurrent is that youre not going to get any help from anybody else and jp morgan has done selfhelp the reevaluation is begin with the fed raising rates. The market value is 332 billion. Far in excess of wells fargo in a 280 million market value. We do have a lot of cash. We saw they were interested in buying world pay thats something that theyre vaguely interested in it. According to them. Well, vaguely an important deal for them. Hugely important deal for a Cigarette Company i thought until yesterday. Just kidding but it didnt didnt sterling cooper have the account . They might have. Joke. Didnt want to actually, i mentioned time warner in passing right now. I did want to get to it more specifically stock is down a bit this morning. There is a New York Times story about the challenges facing cnn. Not challenges but the continued dispute between cnn and the president of the United States in which they make brief mention of something we have talked about many time which is is could that deal despite the fact that it does not appear in anyway to violate antitrust law be stopped or try to be stopped as a result of the president s for cn, this after speaking to a number of people close to this deal they expect its going to close as soon as the next 60 days so you could see and at this point there is no expectation, none now we dont know. We have talked about this so many times, would it be a possibility. You saw the latest tweets. Only in the last week and then the wrestling and all but the expectation is this deal is going to be done and could be done frankly sooner than some people had thought now time warner stock price has been moving up and spread has been closing and this is not complete mystery to those in the marketplace that the review could be done fairly soon. Im saying its a different ownership and perhaps one while theres little to stop the deal from Going Forward the president s anamous is a card. Youre experiencing the antitrust division that indicates that the Justice Department isnt going to take any nonsense, right . You got longterm staffers there. We talked about antitrust by the way, we still dont have a full commission. Not even close so thats been an issue for people in the merger and acquisition business overall so this deal is going to close. There you go. Maybe its better to you. Easier phone call can. Hes still running cnn too. When you kale him you tell him how the change covers. I dont think thats really his style. No now i want to make it clear. They have a long relationship congratulations on doing that its always a wildcard there doesnt seem to be an expectation that its ever going to be played. Ill take your ace of spades over their wildcard up 15 thats the biggest so far. That has nothing to do with it thats the new ceo i continue to be medicine herized by the firing of mark fields now the New York Post says adam of twitter fame is a front runner to run pandora. Hes going to come to new york city thats terrific. Ill get the full story does he like tequila. Do you have a favorite . Yes. Constellation brands. Yeah. They bought that for a rounding error and already double production. C i was jealous of clooney and then he played me in a movie and then i said maybe hes not so bad anymore. I never saw the movie. You came out okay. I enjoyed it. I watched it on an airplane. I wasnt going to watch it and i said have to watch it. I havent seen it because my wife says im not that great a guy. Not only is he the coolest guy in the world but hes nice do you want to buy more are you near each other in italy . Maybe you could get together happy thursday everyone we had a lousy start 41 declining to advancing stocks. Were at the lows for the day. Take a look at the sectors leading the way to the down side but not much energy elsewhere. Bank stocks are struggling to get into the green the trend has been up for awhile now the bank etf were moving up toward several weeks now and at the highest level since march even though were down fractionally today thats the same situation over europe a down day in europe as well and most of the big bank names are on the upside. All on the upside here and again this is a down day in europe part of it is on the aggressive move to stabilize the italian banks. But simply the yield play we have been talking about for awhile i dont normally talk about bond yields but when Stock Traders Start Talking about bank stocks you have to take a note here about the 8 week highs on the u. S. Germany 18 month highs, france and japan. Mull month highs as well thats a big story id keep an eye on the jobs report tomorrow. If we get wage growth thats going to help bond yields further and increase the possibility of a rate hike you saw yesterday with the minutes the fed is mushy on the rate hike right now. That might help solidify it. People not on the wage growth story tomorrow here. Oil stock kind of either side of positive or negative some of the big guys are up. Exxon and mobile did get a down rate over rbc capital and its time they have been taking down number across the board for all the big oil name across the board now. Theyre up a little bit today. Oil moved to the upside. If you want to see how divided the analysts take a look on how they are over at exxon and the numbers keep coming down were down 10 on the year and the numbers are coming down. 9 t cents in the start of the quarter. Now theyre at 89. Number keeps coming down thats the same for the pool year chevron is the same for all the oil majors despite the fact that were already to the down side we still get downgrades even with assuming theyre on the weak side. I want to know the retail numbers yesterday we talk a lot about oreilly and the automotive business but at the end of the day i noted that some of the big retailers were down very very big. Some of the other is down big they were weaker than expected down 10 same store sales from Victoria Secret notably theres a reason for that to be happening theres a little concern here that maybe lower card sales may lead to slower Consumer Spending and then of course you have a knock on effect were down 9 points on the dow. Back to you. Thank you very much. I wanted to get here this morning. We mentioned it briefly i think. Liberty interactives unit owns and controls qvc is now going to also include the Home Shopping network. This deal has been talked about for many years of course Liberty Interactive or liberty owned a substantial stake in hsn. The question is when and if they would buy the remainder and this morning they announced the deal to do just that. 1. 65 shares of qvca for each share of hsni. That represents about a billion 2 or so in terms of the equity that will go to shareholders so theyre being valued at 2. 1 billion it is a premium. It is going to be up and is up nicely about a 29 premium and overall the question is why now. One reason is hsn stock has not done as well overtime as qvc so while the ratio might have been 2. 8 shares of hsn for each share of qvc its not 1. 3 or the other way around spe is a they do the deal now. When you put a multiple on that or so you can imagine as a percentage of the overall deal price that number is fairly large. And larger than it would have been had they done the deal when hsn has real growth. And the last quarter i believe qvcs top line was down 1 of the Constant Currency bases. And its top line growth and they do continue to grow operating earnings before. Operating earnings overall it will be about 14 billion revenue. Although amazon did shutter its own business briefly. How brilliant they waited its so big. Been doing fine not great. The stock price up 5 this year. Everybody is challenged. Yes. Also Mindy Grossman only left recently a well regarded ceo of hsn she just took over. In fact. Work tried to get her on tv multiple years and that will be in the next hour on squawk on the street we asked and he said yes youre kidding. I dont know who carl and david are. Who . Who are you talking about . Lets get to another man that doesnt have two first names his name is Rick Santelli. Hes at the cme group in chicago. Good morning. I know adp was disappointing it isnt disappointing to see the move higher. Of course im speaking with respect to rates rates using much higher on stronger data. Its not just having effects on yield curves the curve steepenings at long end rallies. Its been simple in that regard and all the following charts are going to be 61. And monday 26th for 6 days how markets move theres tens minus 2s. Heres ten year yield. Italy, 223, france, 90 and any of you that think that its only limited to the euro zone, sorry. Canada, marching on, japan, theres more thumbs on the scale. You cant even find a new place to put one but yet it is gone from 4 to 10 basis points. Warning thats why we dont use percentages. Heck of a move lets see how it deals with this squeeze it here. Its going to pop out somewhere else and finally the dollar index. You talk about counter intuitive. On Foreign Exchange look at the wonderful swan dive. Since its all rates and since any of these comparisons were always with another currency here in the dollar index primarily the euro is the large percentage its garnering all the contention maybe thats it. The equity markets in playing this out finding a little negative. Were going to have a nice bounce here under 46 barrel and now the bounce is coming ahead of that department of Energy Report that was delayed and in line with the seasonal Pricing Trends we should be seeing this time of year thats supportive. If the doe confirms that youll see these prices start to feel a little bit, like they can have some lift to them. The other piece of it you mentioned is the opec factor we do have the idea here that opec has gone up for the last two months in a row. That will be in conflict with the Production Cut so thats bearish and also the notion that the russians dont want to stay in this potentially longterm. That could be to the down side it could swing things either way. Traders want to see evidence that the trends we have been seeing about supply are starting to take hold that these rig counts are going to continue to go down that u. S. Production is going to continue to two down for these prices to go higher. Back to you. Jackie, thank you dow is down 101. Ge the big lager this morning. Were keeping our eye on germany as the president and air force one arrive in advance of the g20 and of course that important bilateral thwi Russias Putin were back in a minute lady arrive at the g20. And theres no events that we expect this evening there. But obviously tomorrow will be a big day and the summit and the weeke weekend. Its really important create a trend among all the major parties. Germany and russia with with the History Lesson that people dont get. He talked about it i know that theres been some high profile, rory mcilroy and ed sheeran this morning theyre saying this direct program is interesting. And they must be able to get things under control you get the slamming and by anonymous people under control they seem to think its more under control. I kind of like it. It was a way to complain so maybe they think theyre further along. I think ed sheeran would beg to differ and rory mcilroy. Whats on mad tonight im trying to find new ways to get people involved in stocks lock before they become stocks and its been very hard to do and lets see what jason has to say. I have to tell you guys im torn with this crisis from north korea. We should be worried i feel like stocks are hard to factor hard. Well see you tonight mad money. A lot to think about today qvc ceo mike george on the deal with hsn dow down 111 and the wolf huffed and puffed. Like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. 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It senses your every move and automatically adjusts on both sides to keep you comfortable. And snoring. Does your bed do that . Right now save on sleep number 360™ smart beds. Plus, its the lowest prices of the season with savings of 500 on our most popular p5 bed. Ends sunday. Markets on low some high profile downgrades and ge and watching gop and the next bond sell off around the world with rising yields Economic Data crossing the tape. Lets get to Rick Santelli for those numbers on ism lets see if we can put a positive number on the board today. June read on ism nonmanufacturing Service Sector the biggest swap of the economy wanted to do well and we did 57. 4 almost a full point better than expectations and if you look at this number heres what is interesting. The best number in february, 57. 6 57. 5 second best in april. Now the 3rd best at 57. 4 see how tightly backed they are. I look at that as a good thing pretty lofty area considering the best number we had of late was 1, 2 years ago today july of 2015 it was 59. That was the best number in ten years going back to 05. So anything much about 57 is good we now have three for 2017 we see yields move up didnt they yes they did and week ago monday were at 2 12 it does sound like Something Back to you. Thank you Rick Santelli the president arriving ahead of the g20 summit just a few moments ago aman is there. Yeah, good morning. Air force one was down here a few moments ago as you just mentioned and theres going to be a whole range of topics here for the president to address and he made a speech it was very warmly received by the polish people that turned out to hear from the president of the United States this morning. He also took the opportunity to tout the u. S. Economy and u. S. Financial markets. Heres what he said. When i say that the stock market is at an all time high we picked up in market value almost 4 trillion since november 8th which was the election 4 trillion its a lot of money. Personally i picked up nothing but thats all right everyone else is getting rich. Thak okay. Im very happy with the intense security presence here in hamburg it is going to be like that and ive never seen them before by the United States president. That is the issue of bureaucracy and how it cripples Economic Growth heres how he put that. The steady creep of government bureaucracy that drains the vitality and wealth of the people. The west became great not because of paperwork and regulations but people were allowed to chase their dreams. And pursue their destiny so its policy rhetoric there. Now today and that meeting with Angela Merkel and Vladimir Putin. And wont be just one of the diplomatic functions and so thats one that the entire world will be looking forward to tomorrow here in hamburg as well guys bachbl back to you. Thank you very much the president set to meet merkel later this morning with Russias Vladimir Putin tomorrow. Were joined by former assistant secretary of state and author of red line and adviser to president bush dan price that helped organize the first g20 summit in washington in 2008 good morning, thank you for being with us. Good morning. Secretary crowley walk us through how you think the speech today in warsaw frames the objectives for the summit this weekend. Well i think it gives the president some momentum. Poland is one of the most popular proamerican countries in europe. Its also a country that dedicated 2 of gdp to defense its a safe and positive ground for the president. Now he goes into the g20 and i think theres three things to watch here one is what happened in the merkel meeting today remember the last time the president was in europe the g7 its probably a bad meeting with Vladimir Putin so he avoids the trap that president george w. Bush had High Expectations and its the same experience as president obama. And overriding your issue of north korea and to what extent does the president lean into and its a week about the expanding trade. And if you do something about this we will he did say he was considering some extreme options and we watch the president here make his way across the tarmac who introduced him this morning. As well he was here. And some argue he is boxed in regarding russia i dont know if hes been boxed in but he has challenges at the g20 it will be something that will be a subject of discussions but the real question here for President Trump as always president s and summits is whether they can help build consensus on important global issues whether its terrorism, trade, north korea or migration and that will be the test. Most president s come to understand that Global Problems Require Global Solutions and that go it alone unilateralism is not a successful course its interesting building up a consensus and you help organize that first g20 meeting in 2008 and it came as the financial crisis and was a very big deal a lot of the countries got together and pledged physical support, monetary support. They threw money at the problem but it helped stabilize a market im wondering what the status is of intervention at a time where you tonight have a financial or economic crisis to deal with its more geopolitical complex issues like north korea and isis and whether we can really see any kind of Solutions Like we did back in 2008. Youre right. The first g20 really focused on the Global Financial crisis initially a financial crisis rapidly becoming a macroeconomic crisis and putting in place the regulatory agenda and the financial commitments necessary. This g20 is a little different. I think there will be a significant focus on trade you know the United States has threatened unilaterally to impose tariffs on steel under section 232 and National Economic adviser as was reported i think wisely urged the president to defer decision on that to see if he couldnt develop consensus at the g20 to deal with the very real problem of overcapacity on steel and a number of other issue as well. And really the question is can the discussion of the g20 on trade focus on fixing problems and charting a future course for will it dwell on the threat of u. S. Unilateral action which in my view would be unfortunate. It seems like theyre completely opposite here europe and japan have just inked the political basis of a trade deal theyre doing it without the United States. Without the u. K. Theyre going at it multilaterally it appears that the u. S. And the u. K. Are going in very Different Directions aiming for bilateral trade deals and more protectionist type action instead of going the opposite way do you see any kind of room for consensus. Well, thats a very, very good question. During the g7, you know, United States objective some of the language and the joint statements so will it play well in this larger forum its a very, very interesting dynamic to this meeting. You know, now you have the two leading defenders of the existing international system. Chancellor merkel and president xi and two of the leading disrupters from the status quo how does that dynamic play out i think one of the dark horse aspects of this meeting, one of the issues that chancellor merkel but on the agenda is Economic Development in africa a way of trying to fix some of the conflict states in the middle east and north africa that have created the significant migration process, you know, problem that manifests itself most significantly and trump has these very skeptical nation building. He has proposed a very dramatic cut in the budget for diplomacy and development. Will he respond to merkel here that would be helpful to merkel as she faces an election in germany coming up in september that could help narrow this gap that has the president then and does he respond to that. Unlike anything we have seen in recent years thanks again. My pleasure. Thank you well, during his second oversaes trip the president did talk about the stock market rally earlier. Largely in the red right now ahead of tomorrows big jobs report were seeing. 5 decline in the dow. All major sectors are lower. For more, lets bring in the executive Vice President and chief Investment Officer just a quick comment before we dive into this local bond move that were seeing on g20. On strategy around north korea and trade. What as an investor will be be listening for . What could have the potential to move mashlths here we have inhe dependence who said the world would always come back. While many maybe giving up on it, thinking theyre going the wrong way at the end of the day theyre more likely to cooperate. And were expecting it wont be in the end and cooperate and better for them in the long run. Maybe thats why the market hasnt really reacted about the differences on trade and protectionist kind of moves. So far very Little Market reaction and same in north korea that seemed to be an imminent threat how do you read that i think from the markets perspective that g20 meeting has actually become totally irrelevant after the north korea incident soes incident so effectively it has become a discussion between donald trump and the chinese authority. And in that context whatever we discuss at g20 doesnt really have much bearing on the markets at all so explain to me whats happening with global yields now reaching multimonth and some cases multiyear highs including u. S. Treasuries. It is spooking the stock market. What is driving it that Central Banks globally will be with drawing their monetary accommodation which has been extraordinary so the question global Bond Investments are asking is this peak bonds. It may be for rates but doesnt mean that rates will two higher so the number one thing we tell investors to do is not forget the diverse fireworks kags benefits dont forget to mark them in time because the stock markets will degrade the bond markets a little weaker isnt the reason to run and give up insurance its akined to thinking i havent had a car accident in awhile and today ill drop my Car Insurance and maybe take a chance its too risky in fact higher rates is good for bonds. It means lower returns thats number one. Second thing to remember is active management great time for it now terrible time. Theres a lot of moving parts that an active manager can take advantage of and finally the idea that just thinking about where the market is today, the ten year, its rare that it would go much above where the market thinks the terminal fed funds rate will be where is it that the fed will put the policy rate in the end markets in the mid 2s or so so dont expect the ten year yield to go meaningfully so long as theres a view that rates wont go up much on the end of the yield curve. Early in the year when people were talking 3 was going to happen tomorrow and you were very cautious on the ten year yield does this latest move recalibrate your stance . Just simply moving yields back into the Training Range as you know, the u. S. Ten year went to about 260 after the election it was an overreaction to the idea trumps policy would ignite Economic Growth in 2017. Instead theres 2 growth and then a rally back which is an overreaction to the idea that they wont be hit with stimulus this year. There will be some next year and deregulation efforts that keep the growth as the fed said in its minutes yesterday above potential through 2019 which is another way of saying the jobless rate will keep falling through 2019 more than likely which is another way of saying the fed will keep raising its policy rate but not higher than the mid 2s or so so rates probably wont go up much. So the bottom line siis its a reset. Going back to the older trading range. Probably see 2. 5 to 3 by 2018 its possible but again dont look for much. As long as the global bond yield anchor is in place and we would expect that even from europe and japan in particular. Final word to you, do you see any reason to be selling stocks . No not at all. In this environment. We think the bonds are still in the trading range global synchronized growth is still very much in place i think for the bond market move in a totally different direction policy has change and theres no inkeling that thats going to take place and inflation has to rise and theres no evidence of that so in that sort of an environment you still like equities i think equities offer tremendous value and i think there is a substantial correction i hope not but if there is one i would be a buyer on the dip rather than a seller at this point. Well see what the jobs report shows tomorrow. Gentlemen, thank you. Thank you. Theyre in agreement. Tesla is getting put to the test this new crash rating questioning the safety of the model s and then the owner of qvc buying rival hsn valued at over 2 billion. Qvc ceo is going to join us exclusively. Dow continues down 104 [pony neighing] what . Hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. 1. Another 4. 5 this morning. Under pressure in part because of this test and a series of tests done by the Insurance Institute for Highway Safety heres the video of the crash test basically its when the right drivers side or the front drivers side corner of the car hits an object another car, et cetera at 40 Miles Per Hour according to the iihs, they did it twice go through and hit the steering wheel. The head of the dummy goes through and thats why they gave it only an acceptable rating in this particular crash test and did not make it a top safety pick wait a second we still believe the model s is among the safest car if not the safest car out on the road in response to our question, the company says the most objective and accurate independent testing of Vehicle Safety is currently done by the u. S. Government who found the model s and model x to be the two car with the lowest probability of injury of any cars that it has ever tested making them the safest cars in history. Went back and asked the people about this and they said we think theres better safer choices. This also comes on the heels of Goldman Sachs cutting its price target and reiterating its sell rating on tesla in part because it believes the model s sales are plateauing in the Second Quarter model s sales totalled about 12,000 vehicles and if you put model s and x together they have been between 22,025,000 per quarter for the last four quarters as you take a look at shares of tesla theres a number of story lines out there now putting pressure on this stock but its not uncommon that youll see the stock move higher in anticipation of the event then it starts to pull back a little bit this is a dramatic pull back were down about 17 over the last three or four days. Amazing were going to watch it. Thats for sure. Oil sector rallying this morning on data that showed that u. S. Demand is increasing the president is in poland and now germany touting the growth of Domestic Energy transports. Joining us is the head of research and oil analyst good morning guys. Got headlines out of russia today saying that opec has the right to recommend deeper cuts at the upcoming meeting. Theres questions about that yesterday but is that what were trading around or is it Something Else yeah. Opec is the biggest needle mover from our perspective a lot of attention gets paid to the u. S. Because most Data Available comes out of u. S. Production but realistically the amount that u. S. Production is swinging is not much compared to what opec can impact on overall supplies and so their positive headlines out of opec meeting have the most near term impact and longterm impact because they can take millions of barrels a day off the market. Walk us through what youre either near or longterm targets are and have they changed . Yeah we got much more bearish over the past two months we came into the year really constructive the view was that even if the u. S. Produces more and beats some of the forecasts, opec looked like they were ready to balance the market themselves. Since then exports remained high nigeria and libya have come back online and cuts hasnt had any effect at all so inventories just arent coming down and on top of that it looks like relations between opec countries are deteriorating with the saudi arabia and qatar so if opec dissolvesor comes apart or is unable to reach an accord thats going to be problematic for the rest of the year and eventually demand will overwhelm supply but in the near term it does not look very constructive. Michael i wanted to ask you about the supply and demand picture for Eastern Europe President Trump speaking in warsaw earlier today attended the threecs summit. 12 nations in Eastern Europe and touted Americas Energy revolution wants to sell more energy. Spoke about getting good deals the whole summit was about infrastructure and Energy Production and that sort of thing. How big of a market is this for United States . U. S. Oil and Natural Gas Companies . How does that alter the supply and demand dynamic and impact prices so, you know its important to understand that the dynamic as the u. S. Is a exporter. Its still top 10 or top 15 exporter and we switch the picture around and were likely to become a natural gas exporter in the near future so Eastern Europe is an important market for u. S. I would say though that its actually the sink for exports globally more of that is actually going into asia and also other niche markets. So this deal that trump is talking about and this trip that trump is on is more putting a seal of approval on what the market is already going to make happen in the next couple of years and that is insuring that low cost natural gas exports reach as many markets as they can along with russia and australia. Finally, people are trying to draw some, connect some dots in the longterm you mentioned the longevity of opec. We got this volvo news going all electric in a couple of years. I just wonder longterm if you think those narratives bring down your five year target, your ten year target . Longterm, theyre going to move the needle. Demand growth is never going to be at the pace that it was last decade when it was really higher and driving 100 oil a lot of it had to do with just the denominator, right if you had 2 billion cars in the world in 20 years from 1 billion today and say half of those new cars are electric vehicles you still have 50 growth in conventional cars on top of all the investor oil demand and fuel, aviation, trucking so its hard to get in the way permanantly of Oil Demand Growth although the volvo news is defendly underpinning in the space. Good discussion obviously commodities getting tons of attention recently thank you so much. When we come back, its lets make a deal. Liberty interactive which is the owner of qvc is buying the Home Shopping network or what it doesnt already own. That values Home Shopping Network Overall at 2. 1 billion. Were going to speak exclusively withvc c me qeoikgeorge straight ahead you always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Good morning, im sue herrera. Representative Steve Scalise is back in intensive care after doctors became concerned about the risk of infection. The House Majority whip has been recovering at a d. C. Hospital following last months shooting at a congressional baseball practice a rare rumble in the great plains a 5. 8 earthquake hit near lincoln montana after midnight the tremors were Strong Enough to it. And items from iraq using false shipping labels and then planned on displaying those items in a biblical museum. And it looks like 1492 on the hudson river take a look at that. Replicas of the ships used by Christopher Columbus to cross the atlantic pulled into the dock today theyll be open for tours all month long thats the news update this hour back downtown to you sarah. That will be a good sight coming back. Thank you. You got it. President trump arriving in germany moments ago for the g20 summit where he is set to be meeting with german chancellor Angela Merkel later today and russian president Vladimir Putin tomorrow joining us to discuss is the council on former relations senior fellow and director of interNational Economics and president and ceo of the Atlantic Council on the phone that was on the ground in warsaw for President Trumps speech so well start with you fred. We got a lot of history. We saw the warm reaction in the crowd. He spoke to the people of poland did you get anything new in terms of the strategy or how President Trump was going to approach his fellow World Leaders today at g20 . Yeah he knew all along this was going to be his more friendly audience. There will be more protests. Problems with climate. Problems with trade. Angela merkel has already said negative things about how he looks at the Global Economy versus how she looks at it when theres winners. He knew he was coming into a friendly audience here and to poland and first came june 8th and he encouraged and saluted at that meeth so this was a very successful trip this was a successful stop very popular. Hear themselves praised so highly for the historic role in history and now things are going to get tough. I wonder if he took a tougher stance on russia as well he did call out russia for interfering with the ukraine and backing regimes like iran and syria. That was new also the selling of natural gas to these eastern and Central European countries it comes as theyre trying to take that business from russia so is this a new posture from President Trump toward russia ahead of the Putin Meeting tomorrow yes lng is a big economic issue for the United States. Its a big opportunity in europe and indeed globally but its also a chance for him to change the narrative a bit on russia. He cant be seen going into this summit as being too soft on russia given all the investigations swirling around his Campaign Last year on its links to russia. The lng, we should point out or jim cramer made the point this morning is just a one time contract this is not part of a longterm deal at this point in anyway and represents a tiny, tiny portion of the countrys even daily gains. He wants to start this summit with a positive narrative and he also has a longterm vision of the whole summit has become a discussion between the president and xi. Well, he was saying the president would never allow it and just north korea and personally and others are, you know, your point to trumps and caught a lot. And warsaw and people dont really feel it he talked about partnering with other countries and it does put him in a different position to negotiate. He insists its not going to be negotiations but has his first meeting with putin. Ben we were talking about fossil fuels a moment ago. When it comes to Climate Change is that going to continue to be a devicive issue and Angela Merkel made very clear that shes not going to shy away from the issue. And hiding the fact that there are major differences between the European Union and the United States on these issues and that theyre not going to go away and new french president consider the paris climate agreeme agreement. Thank you for joining us. Fred kempe on the phone calling in from warsaw this morning. Lets take a look same store costs up 6. Much better than expected. When we come back the ceo of qvc is going to join us on the deal with buying home spphoing network. Dow is down 116. Were back in a moment attention homeowners age sixtytwo and older. One reverse mortgage has a great way for you to live a better retirement. Its called a reverse mortgage. Call right now to receive your free information kit with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money and more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home. And heres the best part. You still own yohome. Call now take control of your retirement today the deal values hsn and creates a power house that produces 55,000 hours of shopable content each year some of which sarah still watches. Mike george is the ceo of qvc and he joins us now live from the companys headquaters. Nice to have you why now before this deal its one certainly thought about discussed rumored for many years. Why is this the right time for qvc to buy what it didnt already control or libber toy buy what it didnt control of hsn . This was the perfect time to bring these two brands together. Theres so much change going on and by combining forces our ability to serve the customer at that higher level combined forces to create new digital platforms new Interactive Television platforms in a world of rapidly changing technology, rapidly changing retail landscape, now is the time to combine forces and we think this is attractive for the shareholders of both businesses. And an attractive valuation for us now we join forces and compete that much more strongly in the broader retail marketplace. But i would assume you might have said the same thing a year ago, two years ago or two years hence. Why now . Why is it the right time now you mention a lot of Different Things but you didnt necessarily explain to me why this is the moment that makes the most sense for qvc. This timing made a lot of sense for us from the standpoint of looking at the relative valuations that valuation has really flipped so this was a time that we felt like we could acquire the company on terms that would be attractive tos the shareholders of qvc and now the hsni shareholders participate in the upside of what we think is is a very financially attractive opportunity. Got it. Some hair shoulders wonder whether given hsn has not had any growth whether the growth rate is going to be lower than it otherwise would be. Is that going to be the case and are you concerned at all about hsn in terms of some of the struggles they had with the top line its a challenging marketplace but we believe in what we do we believe in highly differentiated and engaging shopping experiences and hsn fundamentally follows our belief in a similar model so they had struggles in the last couple of years and much lower scale than qvc so its harder to pursue the strategies and when you put the two together youre talk about an entity that has five networks in the u. S. , Third Largest ecommerce and mobile commerce retailer in the u. S. After only amazon and walmart when you put that together it should be added to the Growth Profile throughout what the two companies could do on their own. And also chasing those we could pile back into Customer Value and back into innovations for growth. Yeah. Somewhere between 75,000,110 million. There was push back on your analyst call which just took place. About how long its going to take you to achieve those. You said somewhere between 3 to 5 years. At least one analyst said why so long ill ask the same question that does seem to be a long period of time to realize lets call it 10 million in synergies. Well start to see benefits within the first year and well work hard to get them as quickly as we can but we want to be conservative of what we shared externally and we also know theres some heavy lifting to get those. We need to align some technology platforms. We need to negotiate new arrangements with various third parties what we dont want to do is try to rush forward and kind of lose what is special about both brands. We want to take our time bringing the teams together figure out the opportunities and work on them in a methodical way. We might beat that time frame but to get all the benefits we see, you know, we think its smart to take our time to capture those in the right way. If you grew up in the 90s this was a phenomenon and for a Small Business and entrepreneur you made it on qvc that was it. If you saw the movie joy you know that story well but that was in the early 90s i wonder how big of an opportunity it is these days given the proliferation of online shopping. How much demand there is from the Small Businesses and what your audience looks like whether you have millennial shoppers we have a very Diverse Customer range just look at the facts of the Business Today versus the early 90s our business is stronger than ever 14 billion in revenue. 23 million customers around the world 320 million item wes ship and sell every year. So theres a whole lot of demand for what we do and now some folks are experiencing qvc and hsn over the top through roku or an ipad or mobile device so theres many more ways to kind of experience the video content that we create so that opportunity still exists for the small vendor well talk to someone like it cosmetics that came on qvc five years ago and now has a brand worth well over a billion dollars and we can talk about lot of those more recent examples in addition to the Great Stories back in the 90s. So for folks just starting out with an idea, to have access to this combined qvc and hsn platform, the opportunities are extraordinary. You were straightforward in the call certainly you have been in the past in saying its not the easiest environment for retail top line on a Constant Currency basis last quarter at qvc. As a combined qvc hsn, are you going to be able to achieve topline growth in a significant way . Our aspiration and our expectation is to get to top line growth. Weve been open about some of the struggles the industry is facing and also some of the opportunities we have to do better this is a demanding customer everyday we have to show up with a diverse range of products, great values, great service. So we have seen our Business Performance improve as we just keep leaning in to make the experience that much better everyday for the customer. And underneath all of that is this extraordinary loyalty of our customers. We have retention rates and repeat purchase rates that are among the highest of any retailer so it isnt easy but we bring fire power to the marketplace and we can use that to continue to innovate and continue to grow this business. Mr. George, thank you for being with us. Appreciate it. Thank you, appreciate it. Mike george, ceo of qvc, soon to be ceo of the combined qvc and hsn. Sara a lot of good deals you can get. Jewelry for your wife, Beauty Products yeah, great lets send it to john in San Francisco with a look at whats coming up next on squawk alley morning, john. Morning President Trump meeting for the g20, stark languages, questions on whether the west has the will to survive. We will check on the impact on markets and investors. Also, initial coin offerings, a new trend, but should you trust them finally, details coming starting to come in on microsoft atnd mreorganization, well have th aore coming up on squawk alley. Welcome back to squawk on the street. Lets get to Rick Santelli at the cme group in chicago for the Santelli Exchange as always. Good morning, rick. Thank you id like to welcome andy brenner. Andy, usually when youre on together, youre remote. So great youre in chicago, in town for a Charity Event youre a good guy. I look at the markets, i see canada higher, i see japan higher, all of europe higher, treasuries are higher. And a lot of this started the day after the 26th of june not that many sessions ago i call it the g20 because theres a lot of governments now in europe whose tenures have moved well over 20, now closer to 30 basis points just in a handful of trading days, your thoughts well, draghi opened up pandoras box and overnight it was the 30 year french auction that did very poorly that was the catalyst for what were seeing today theyve risen up to 55 basis points when you just said, june 26, 22, 23 basis points. So people are fearful independent counsel that the Central Banks, the end of the quantitative easing is near and its going to be worse and worse and worse and youre going to have to make room for this liquidity that the three or four major Central Banks have added to the marketplace were talking 15 trillion in the last few years. And i dont understand why anybody should be surprised. When we watch olympics and you have to weight lifters, you get it up. You still have to be Strong Enough to put it back down so theyve done the heavy lifting but they need to put it down it will be shocking to many. Let me give you an example lets say mario draghi sees whats going on, it was a balloon he floated he says i am taking it back, we can wait, we dont have to taper at the end of the year. Is that going to take the fear out of investors minds . I dont, rick i think theyve opened up the box and i dont see how theyll shut it. Everyone knows its absurd german rates at 22 basis points, now 55 just a couple years ago it was 2 these rates are artificially managed. Mines 58 and thats after a selloff. Thats silly to have negative Interest Rates why . Makes no sense at all. So i think investors are now scared and i think, you know, its a question of whats going to happen next will this start to bring in the risk priority traders . Are they going to start selling . First their bonds, then their equities are we going to have a whole big selloff . That could happen between now and you brought up the french auction, that didnt go well my frame of mind is youre correct, but the markets kind of bulletproof vest, the global sovereign fixed income market, its now experiencing fundamentals that it seemed to be impervious to not that long ago. In your final answer, what should investors be doing . How should they be treating this i think fixed income is the place to be but you have to be careful. I like short Term Investment grade product, i like municipals as long as youre not buying the illinois or new jersey or connecticut right now. I think theres plenty of opportune places to put your money where you can get 4 , 5 , 6 and sleep at night. Thats what i would advise people to do i think equity markets are expensive. I think the european sovereigns are ridiculous even with the backup. European sovereigns are i dont see an answer there. Were out of time, euro bonds is the answer, ira said it. George soros has always hinted at this, not really a good thing. Andy in person, thank you for coming to chicago and talking to us back to you. Rick, thank you with the dow down about 110 points when we come back, amazon wine why jeff bezos may enter Something Else 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. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Welcome back to squawk on the street. Financials sounding out as one of the best performing sectors in a down market overall as treasury markets tick higher this past june, financials turned in their best month since november so check out those stocks, they will be a focus ahead of tomorrows big jobs report that does it for this hour of squawk on the street. Lets send it to the nyse for the start of squawk alley. Back to you guys. Thank you very much its 5 00 p. M. In hamburg, germany, 11 00 a. M. On wall street and squawk alley is live its been a long time since i rock and roll good thursday morning, welcom