Hour Favorite Song on a friday. Welcome to world Wide Exchange. Im sara eisen. Im wilfred frost. Very good morning to you from me as well. Happy friday. Lets check in on the markets this morning. Triple record close yesterday. The dough the s p 500 and the nasdaq all finishing at a record high. First time weve seen that happen on the same day since december 1999. Im dplad you finished that because i wouldnt have gotten it right. Looks like the gains are continuing on this friday morning extending those record highs just a little bit here. Dow futures up 11. 35. S p up 1. Nasdaq up a little more than 3. That includes for bonds as well into stocks and out of bonds. The tenyear yield up slightly yesterday and sort of backing off to flat this morning. 1. 53. It is off the highs we saw around 1. 57. Still low yields dominate even with the jump in stocks. Absolutely right. Well talk more about the record highs. Lets have a look around the rest of the world first. European equities have had a strong week. Mixed performance as you can see german down 1 . They had gdp earlier. Construction was a notable drag. Over the course of the week, the german dax is up 3. 3 . There up over 3 as well. All of the embassies looking over 1 close to 2 of gains for the week. Lets have a look at the uk yield. Thats been a big factor driving fak source globally over the last week or so. There you have it. Ticking up a little bit. Similar to the last 24 hours. Still low levels. In Asia Economic data was in focus. Fixed Investment Data all coming in sort of forecast. The trade is seemed to brush that aside as you can see shanghai closing up 1. 6 . Japan trading after being closed for mountain day yesterday up 1. 4 and is up 4 for the week. Strong performance in both europe and asia. On the back of the weaker japanese yen and wall street. This is all part of the big story. Jump in oil prices. Moved higher 4 . That was a decedent jump. Energy sectors led the s p. Theyre flat in morning, but as you can see up above 43 a barrel. Brent just below 46 a barrel. 45. 91. Gnat gas continued to be under pressure. It didnt work in april, but its giving the bulls some hope. That was the talk on the floor yesterday. As for the dollar, the dollar has been pretty much weaker overall for the week and for the past month or so. The euro a little bit stronger this morning at 1. 11. The pound weaker and below that 1 pntd 30 level 1. 29 its a good sign for the japanese authorities at least and for global risk taking overall. Quickly lets show you gold this morning when were seeing a stronger u. S. Dollar. Weaker gold prices. Id say looking at these record highs all three years youve said closing at record highs yesterday. Whats driving this, yes, there are some factors out there. Record low Interest Rates around the world. Oil prizes stabilizing somewhat and earnings has been all right. It comes back to a relative attraction. Better to buy. Tina. What does tina stand for. There is no alternative. We hear it every single day and thats the excuse the traders are giving. Its a relative reason to buy something then you get a shake out and a bit of a fare factor that comes back. Protection or china or oil prices. Suddenly people think im only holding this for relative reasons and not attraction. I think its not built on fundamentals this rally and im not quite sure why were hitting the alltime highs. Also a crucial difference between the low Interest Rates in the u. S. Which is helping u. S. Stocks higher and where were seeing the rest of the world. The rest of the world is easing. The u. S. Is down because of whats happening in the rest of the world. And the next move will be tightening. Though theres less than a 50 chance if the fed tightens this year. On the fundamental story there is a case to be made that things are looking better from a corporate profits perspective. Yes profits are set to decline this earnings period, but most strategists agree the backdrop as improved. The Lower Oil Price has come off. The strong dollar has weakened and youre starting to see signs of strength even in beaten down sectors. Yes sales are still declining at may sis and nordstroms and co kohls, but did you see the gains yesterday. Were talking double digit percentage moves. When Terry Lundgren the ceo of macys puts the world improvement in a press release, theyre making moves all of these stores are starting to manage their inventories better. And therefore the profit margins. By no means are the problems over. We got the nordstroms report last night. We saw an 11 gain in the afterhours so potentially signs of progress in the really troubled industries and sectors. Well see what retail shows for the month. Also jcpenney out this morning. Relative to where they are last quarter. Its not that enticing longer term. Add to where valuations are looking at earnings growth. And valuations arent cheap. Were late cycle. Look at the loan growth figures we saw. Of course all segments particularly autos super high. It cant get better from here. Weve had a long run of low growth. A long run of it. To see record highs. I dont know. Its the most hated rally and a lot of strategists are not on board and a lot of bearish sentiment. A lot of high profile names that have come out and said theyre bearish and guess what, the market has run up to markets high. Its a good discussion. Weve enjoyed it. Also notable comments the tell you about from san francisco. Williams makes the case for why the central bank should vaz interesting rates this year. As the economy gets closer to the goals, feds goals, quote we can pull our foot off the gas a bit and hopefully execute a nice soft landing. As for the timing, williams believes the gradual hike should include another increase this year. Williams we should not is not a voting member. Most of the fed president s still sticking with 12 hikes this year. A lot different than the forecast showed in september. They thought four hikes this year. Some stocks to watch today. Karl icon is reportedly making an offer to buy dele can recollect. Cahn currently owns and sits on the board. Nordstroms shares slightly higher. Also raising the profit forecast. Up 10 . Other stocks to watch this morning. Dillards the chain reporting same store drop. That was a bigger decline than expected so bucking the trend of better results there. Planet fitness posting better than expected results. Raising full year guidance. Shares hitting alltime high on that news. Toshiba reporting first profit in six quarters. The Japanese Company benefitting from a major restructuring following an accounting scandal. When we come back, follow the money. New data on where investors are putting their money to work right now. Heres a hint, think risk, think records. But first, facebook and twitter question today, whats driving record equity market highs . Is it global low Interest Rates, decedent earnings, or inspiration gnat olympic pempss. Let us know. We have much more to come on world Wide Exchange. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov welcome back to world Wide Exchange. Let get you up to speed. Asia closing higher. The nikkei finishing up nearly 4 . Also a strong week in europe. Not seeing it today, but the germany is up 3 and banks have been strong performers. Its not just u. S. Equities that have been doing well recently. Lets have a look at the futures market. Called higher all be it very slightly. Just above flat of course. All three embassies hitting record closes. Oil prices were key yesterday. Gained about 4 . Energy was one of the top performers settling down today. We are a little higher for wti. 43. 5. Sara. Wilfred, it turns out investors are taking more risks in bond funds. Lipper reports that money poured into the riskiest bonds. At 1. 7 billion. This comes after two straight weeks of outflows. Stocks are at record levels leading investors to look for better returns in corporate debt. Overall sales posted 3. 8 billion in outflows. That tells you the story about the rally and the fact people are not on board with it. Still seeing outflows in stock funds, but better Risk Appetite in bond fund. Absolutely right. Lots of assets moving around given the debate. Still to come on world Wide Exchange. An historic night in rio. Michael phelps wins a record four straight gold. Well bring you the olympic highlights, but first heres todays national forecast. From the Weather Channel jen carfagno. Good morning. We have more storms today with big rain fall potential. Thats going to be the story into the weekend actually. In the southwest shifts more to louisiana and new orleans and areas near by. Flash flooding is going to be a concern here. Plus rain is going to continue to move into parts of illinois, indiana, chicago thats you. Detroit could see Severe Weather today. Lightning straights that caused house fires into the northeast. So today the heat is also going to be a huge story. Much of the country running above average. Dallas going to triple digits again. Yesterday third day this week we set an energy usage record here because of the heat in texas. It continues again today. And the heat and the humidity continues in the east. Thats your coast to coast forecast. Meteorologist general carfagno. World Wide Exchange continues after this. Would you help me make art . Each one of our journeys keeps us young hey, i have an idea well never get older. Arty go be amazing amazing announcer give your Cardboard Box another life. Welcome back and good morning. Lets get you up to speed on the market action. Looks like stockings are building on record closes yesterday. Futures indicating a higher open for wall street. Futures up 1. 5. Were talking minor gains here. Dow futures up 15. 5. Nasdaq up 4. We are higher for the week. If the gains continue, were looking at a seven weekly gain in a row for if nasdaq. Big part of the story has been the beaten down Department Stores. Earnings out of may sis and kohls sent them to the top of s p tooif yesterday. Certainly that better profit surprise out of kohls and the stocks are continuing to gain in morning. Nordstroms reporting after the bell strength into the report and a pop after as well. Better results fueling nordstroms. J krrkcpenney going to be the o watch. It reports later. Also get the gort report on Monthly Retail sales. Dollar is a bit weaker against the euro. The pound weakening below the 1. 30 level and the dollar dronger against the japanese yen. A 1 3 higher in the japanese stock market. Quickly also part of the story is price of oil. Surged yesterday and has flipped positive again in the early action. Wti crude. 43. 59. Up a quarter of a . Brent International Benchmark just went over 49 a barrel. A lot of talk of an upcoming meeting. Informal meeting between opec and nonopec. Either way, we are seeing a higher price of oil. Thank you for that. Lets switch focus in sports news today. Mega deal in cleveland. Lebron james is resigning with the cavaliers. A deal worth 100 million. Good for him. All right. To the olympics. If you went to sleep early last night, you missed some great moments in rio. Nbcs gay gray joins us live from brazil with all the highlights. Jay. Reporter good morning to this point the rest of the world no real answer for the american athletes here. They are on fire and yesterday the performances so dominant it brought them to tears it was a magic and emotional night in rio. Finishing 12 in the womens all of a sudden finals and Simone Manuel overcome for gold. First female africanamerican swimmer ever to win a medal. Inspired performances continued in the pool. Ryan murphy with gold in the 200 mens backstroke and Michael Phelps winning the 22 gold of his career. Im living a dream come true. While Kayla Harrison was a nightmare for points winning her second consecutive gold in judo. Confirming shes the best in history. Its a huge honor. Looking to add more gold to their olympic willing sis Michael Phelps and Katie Ledecky will be back in the pool later today. Another high profile summer game. Track and field running here in rio as well. I stayed up late past my night. Way to late to watch simone biles. What a performance. Im sure everyone is talking about her in rio. Its overwhelming and to see her so route with emotion after it happened. I heard one of the commentators saying they had never seen her cry in any type of meet so she understood the gravity of this. She left no doubt she is by far the best womens gym nest in the world. She was wearing so much sparkly stuff around her eyes. Thats what you were focused on. Jay, what are you wearing . Is this official team america, team usa outfit . Its more of the team usa golf. This is one of the shirts the men team will be wearing as they continue their tournament today and try and get into the wait a second here. The golf course beautiful here. Players saying its a real challenge. If you can steal any team gb stash, i would be very grateful. Slip it in your bag and bring it back for me. Im working on it. Im really looking forward to the track and field getting started. Thats the 4 by 100 is the most exciting. That gymnastics though, the floor routine, the vault. It was so exciting. Heres the medal count so far. The United States clearly topping the list with 16 golds and 38 total medals. China number 2 followed by japan. Russia and try to get it right today. Great britain in fifth place. Were making it into the top five. U. S. Versus uk. Were doing pretty good now. Not bad. Not bad at all. Saturday night ill be watching the 10,000 meters. Youve been excited for that for a while. Looking forward to that. Hillary clinton is taking a break from the campaign trail today while donald trump plans to stump in pennsylvania. Nbc tracie potts joins us from washington on what was a big week for us here because a lot of talk about economic policy. Reporter exactly, but the big talked to is going to be about whether or not donald trump and the Republican Party are on the same page. While hes stopping in pennsylvania today, the team is going be in florida sitting down with the Republican Party. Some are callen an energy meeting. Trump is doubling down what he had so say about the president and isis. Barack obama is the founder of isis. Donald trump is not backing down. Claiming the president is responsible for isis. I tell the truth. I tell the truth. Actually a lot of people like that i said it. As Trumps Campaign in pennsylvania today, his staff is meeting with the Republican Party in florida. Despite reports the party is frustrated with the nominee, trumps team calls todays meeting routine. Whats not routine, more than 70 Party Insiders going public urging the gop to give up on trump and redirect the money to struggling lawmakers up for reelection. Because he refuses to do what every other president ial candidate in decades has done and release his tax returns. Hillary clinton released eight years worth and says last years is coming soon. Her campaign is responding to a report that one of her top aides at the state department did double duty for the clinton foundation. The American People are tired of the pay to play politics in washington, d. C. In a statement the Clinton Campaign says aide sheryl mills volunteered for the foundation on her own time. Reporter and the campaign is saying that she actually went up to new york to conduct some interviews for the foundation that she did it not only on her own time, but own dime. She paid for that trip and any allegation it was a conflict with the state department job, theyre calling it absurd. Very quiet from paul ryans office this week. What do you hear about the house leadership, the house establishment as the controversy continues to pile up and as he lays out more details of the economic plan. Reporter thats been a rocky relationship between paul ryan and donald trump. Keep in mind he won a primary where trump was congratulating the guy on the other side and pushing him and saying nice things about him, although he ended up endorsing ryan. In terms of where theyre going to land on donald trump and the candidacy, theyre between a rock and a hard place. Hes the partys nominee. They cant say too much about him negative. This week meant to be economic week. So many other factors seem to be grabbing the headlines. Do you think thats a path we can expect to continue throughout the campaign. Its not going to be about policy. Reporter exactly. A lot of people have been saying since the primaries when theres so much going on with the 17 republican candidates. Lets talk about the issues. So now we are talking about some of the issues in terms of taxes and jobs and the economy, but they continue to be overshadowed, but some of these outside issues about the candidates in the campaigns the. What is interest accident they have some overlap. They want to spend massively on infrastructure. There are certainly differences, but more similarities than you might think. Well, more so than we normally see because you have donald trump who is not your traditional Republican Party candidate and hes crossing other. Hes trying to cross over. And get a lot of democrats and clearly Hillary Clinton now because theres so many republicans who are saying no to donald trump is also trying to cross over and get republicans so youre right. Its a campaign unlike what weve seen in terms of the candidates, but also the issues. Issues are being drabbed into the crossover on both sides. It is difficult to follow. Thank you for being here with us this morning. Tracie potts in washington. When we come back this morning. Top stories including stocks at record levels. As we head to break, our twitter question, whats driving record equity market highs. Global low Interest Rates. Stable iedsing earnings, decedent earnings, or inspirational olympic performances. Get in touch with us. World Wide Exchange. Your Business Needs Better Technology to drive better performance. So you neeit to be reliable and fast. Really fast. Introducing the comcast business Summer Savings event. Fast Internet Speed to drive performance, plus cutting edge wifi for your employees and customers, and voice mobility so your calls find you wherever you are. Get some of our most advanced products at a great price with over 500 in savings. Call today and ask how to get these savings plus a 250 prepaid card. Comcast business. Built for business. Good morning. Stocks widely climbing. Wti nearing 44 a barrel. Plus taking twinkies to a who knew levnew level. Its friday, august 12, 2016. Youre watching world Wide Exchange on cnbc. Sgoo good morning and welcome back to world Wide Exchange on cnbc. Im sara eisen. Happy friday. Im wilfred frost. Good morning to you from me as well. Lets check in on the global markets. Three record closes yesterday across the major embassies here in the u. S. And were pulling higher once again. All be it slightly. The dow by about 121. Nasdaq by two or throw points. Its been a strong week around the rest of the world also europe, mixed today. As you can see german, a little softer after gdp numbers did beat estimates, but underlying areas in weakness like construction. Pretty much flat across the board. The dax is up over 3 for the week as a whole. Also been a strong week in asia. The nikkei closing up a percent today after being closinged yesterday. That takes gains to 4 . Shanghai also up today as was hong kong. As for the Broader Market picture strength in oil. It looks to continue oil prices picking up steam in the last half hour or so. Wti crude inching towards 44 a barrel. Brent is higher above 46 a barrel. 46. 35. Gnat gas continues to be under pressure and talk continues to swirl. Countries like swenz are really hurting vuls of the low oil price is. Countries like saudi arabia are ramping up production. Thats why we got the big jump yesterday. Talk we might once get an opec decision to freeze out. We heard that talk before. We saw the meeting before in april and nothing happened. Tenyear treasury note wield slightly higher. Money going out of stocks and into bonds. Stocks for a change leave tlg charge here in the bond market. 1. 54 is theyearold on the tenyear treasury. Thats the Economic Data point of the day. As for the dollar, its a bit weaker against the euro. Stronger against the japanese yen. That has been a big focus. That level above 102 importantly for japan. Saw 1 pop in equities overnight. Back below 1 pnts 30 against the dollar. Gold is stronger right now. Weaker. My bad. 5 . Its holding near recent highs. Its been an opposite dollar story with gold. It has indeed. Lots of data on the agenda today. Two key reports at 8 30 a. M. Eastern. 10 00 a. M. Eastern be on the lookout for month by business inventories and data. Just one Earnings Report to keep an eye on today. Jcpenney will release the Quarterly Results before the open. Wall street banks are asking the fed to grant them an additional fiveyear grace period to apply with the vol ker rule. More time to exit Fund Investments that are difficult to sell, but no longer allowed by law. In order to grant more leeway, asked to provide more detail on specific investments to prove they are, quote, ill liquid. Interesting story to watch. Stocks to watch today for you, acay sha communication shares sore. This is the best performing ipo of the year. The ceo will be joining squawk box at 640 im eastern time. N videoia beating demand. Nvidia. South koreanfgtd i investigating google. This comes after the Korea Fair Trade Commission recently decided to clear google of anticompetition charges involving the preloading of google appings on the android phones. This is isnt the only regulatory issue. Yesterday the company ruz fined 6. 8 million in rauussia and fas charges. So beyond tthe consumer fronr this week with data and Retail Companies set to report. Our landon dowdy joinings us with a prove. Reporter get a better ride on the son r consumer. Sales are expected to rise, but not quite as much as in june. Stronger vehicle sales should boost, but a drop in oil prices could prove to be a negative. Jcpenney results also important to watch. July was weaker thannen tis pated for overall retail sales, but jcs q2 could be better than expected. We saw that with macys yesterday. Investors are positive on jcpenney with shares up 32 over the past three months. Also next week offer even more. You want to watch to see if target sales can bounce back and if walmart can post another solid quarter. Thank you very much for that. It was certainly the retailers, energy and retailers. The Department Stores importantly because those are some of the hardest hit stocks, even with the 17 gain yesterday for may sis the stock is down more than 40 over the last 12 months. A lot of catchup they have to do, but there were glimmers of hope in the two reports. Would put may sis and coals at the top of the list. Macys sighted improvement. Terry lundgren was on squawk box talking about its our turn for the consumer to start spending on apparel. They spent or cars, spent on improvements. Thats why the retail sales report we get will be key. I completely agree. Its interesting saying its our turn now. I just wonder though whether that is sustainable because is very much funded by credit. Weve seen such High Consumer loan growth all through the year, in fact, but particularly in q2 and i wonder how sustainable it is. Is it based off skbres rates. And how much is baked in and whether the Department Stores do start to take the right moves. May have sis announcing 100 store closures. Nordstroms been investing in Online Retail and growth nichetives are investors going to start rewarding the beaten down sector. 100 store closures was just the start. He pointed out an amazing fact. Here in the u. S. There are five times the Square Footage of storefronts compared to other developed countries. Were overstored. Massively. Structurally knees guys are still challenged. The pop in the share price yesterday massive as it was was a bounce back from a terrible first quarter. Not a structural bounce. That raises the question after the Department Stores well get jcpenney this morning. Whats going to be the next catalyst for this market. After we saw that triple record close yesterday on the back of higher oil prices, Energy Shares and Consumer Discretionary with retail, is it going be a better backdrop on earnings. Did we get that signal enough to propel stocks higher. Is it going to be the Economic Data . Is it going be hopes that the fed doesnt raise rates. These are all factors that play here as we look at another record close. Absolutely right. Time for top trending stories. Ryan lochtes hair is the talk of the olympics. Dieing to a platinum broaden as you noticed after debuting the new look on twitter, fans quickly noticed his due is changing color and that was thanks to the chlorine. Now has a prominent green color sending social media into a frenzy. When you bleach your hair. I dont know, but i do know. Dint know. Well, bleach in a pool turns a certain color green. Its a classic mistake you thought someone would have been aware of that. Or at least the hair stylist. Although the pools in rio have been green which has been talk on social media. But theyve been fast. Super fast. Right. Another olympics related trending story. Figi making history. Scoring first ever medal, a gold after defeating Great Britain in the rugby sevens. In celebrations tweeting by royal decree i declare today a national hug of fijian day. Kreez him. Do it. Do it now. Kind of really embracing the positivity off the back of their first ever medal even though they beat Great Britain to get it, congratulations. Speaking of celebration, today marking the end of an era for alex rodriguez. Playing his final game as a new york yankee tonight against the rays. Team is planning to honor him. After a controversial arod saying its kind of all surreal right now. The synopsis of it is a happy moment and i think the fans probably agree. Im sure they do. And congratulations to him. Tbs picking up cordens drop the mic. This coming up after apple music picked up cbss spin off car pool car oweky. Another big success. The drop the mic stuff, not quite as good as car pool. The cara dell la vein was in excellent. Walmart and hostess teaming up. Package deep fried twinkies will be exclusively available at walmart. Unlike regular twinkies, have you ever had this . No. You need to. You live here now. Must be kept in the freezer and baked before eating them. They look a bit gross. All the politicians go to iowa, b you know, in the beginning of the psycycle and t go. Its a thing. Okay. Still to come, todays must reads a little fun fact on this day in 1981, ibm introduced first personal computer, the model 5150. The invention of the pc took the world by storm. Saelts continue to decline falling more than 5 in the Second Quarter of the year. Were back in just a couple of minutes. Welcome to opportunitys knocking, where selfproclaimed financial superstars pitch you investment opportunities. Ive got a fantastic deal for you gold with the right pool of investors, theres a lot of money to be made. But first, investors must ask the right questions and use the smartcheck challenge to make the right decisions. Youre not even registered; im done with you i can. I can. Savvy investors check their financial pros background by visiting smartcheck. Gov welcome back to world Wide Exchange. Now to todays must read stories catching our attention. My pick from the washington post. Its titled dont buy it will hype. The u. S. Is not experiencing a terrible new crime wave. The reason i picked it is because who its from. Coke industries, mark holden, a prominent conservative writing from the Law Enforcement Community Writing half of 2015 murder increase occurred in baltimore, chicago, and the district. The very cities that those pushing the crime panic repeatedly use as examples while we must work to address the issues, driving this unacceptable localized violence, it is not the norm. It goes through the facts and figures and it just shows you need to have the facts in order for america to have the debate. This is something americans are fearful of. Rightfully sew. Its in the headlines. We need to see where its coming from and provide a more targeted approach. Its something donald trump talks about the law and order candidate as we wants to frame himself so interesting to have two prominent conservatives come out and say lets get the facts clear. My pick is in the wall street journal. It relates to Hillary Clintons economic plan. A big part of our plan will be unleashing the power of t private sector to create more jobs at higher pay and that means for us creating an Infrastructure Bank to get private funds off the sidelines and compliment or private investments. 25 billion in government seed funding could unlock more than 250 billion and really get our country moving on our infrastructure plans. Its titled the clinton plans growth deficit. Really focusing in particular on what she just outlined. The infrastructure part of it. Writing sure americas roads and bridges could use patching, but how does this fix the growth problem. The economic argument behind mrs. Clintons proposal is the drum beat of fiscal stimulus. The multipliers will increase demand. Hes a little bit critical of the level of which both candidates focus on infrastructure. Of course donald trump promises twice the amount that clinton is. Its a very good point because he goes through the issues of actually delivering the infrastructure projects. Obama intended to, but theres so much red tape to get over and often they dont have that multipliers effect that says lower taxes puts money in the consumers pocket. Its a onetime spend sometimes. I do think its a fair criticism. I do think the narrative on economic growth, you dont hear clearly enough from either candidate. The infrastructure spend is one thing. Dthd talks about deregulation, talks about lower taxes. I think thats psychologically equals lower growth in americans minds. Be eager to hear more from Hillary Clinton how she plans to stimulate growth. With that in mind, were approaching the top of the hour. Andrew sorkin joins us. Were talking markets markets markets. The dow with a record. The s p with a record. The nasdaq with a record. All for the First Time Since 1999 happening at the same time. Were going talk about it with a big number of market participates and guests. We have an wind glad joining us this morning. Richard stein berg. Were all going to talk markets there we had a little jcpenny talk too. Given what happened with macys trying to understand whats going on with the retail world. Kevin is going to be joining us in a bit. Toss around the trump economic plan and hillarys economic plan and kevin o leery coming up in the show. Busy man. Thank you well see you at the top of the hour. When we come back, though, city groups chief economist. See gradual shift towards helicopter money. Stay tuned. Youre watching world Wide Exchange. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov you know what, guys . Theres a lot of tree branches and dry brush over here. We should probably move the bonfire over there. [smokey whistling a tune] im guessing smokey liked that idea. Winblad. Welcome back to world Wide Exchange. We have a special guest. Chief global economist at citigroup. You and your team have been decidedly more bearish and pessimistic than the average wall street economist. Weve been more pessimistic about the Global Economy, not specifically about the u. S. Economy. Weve seen growth this year at slightly below 2 . Thats where were likely to end up. I am, however, concerned both about the Global Economy and about the u. S. Economy in the slightly longer rise. After the election, either President Trump of president clinton, if President Trump certain of trade wars and president clint high risk of trade wars and neither would be good for the u. S. Or for the Global Economy. How damaging would that be . Are they both being very foolish with this slightly is antifree trade rhetoric . In my view, yes. I think it is its common. Its part of the new pop list ant antiglobalization stance. I think its dangerous and indeed irresponsible, yes. How do you determine how much campaign bluster and appeal and what is going to be policy and have to factor into your forecast. We shall see. Indeed president obama first run for office found it a lot more antitrade than he turned out to be so theres always hope that once the bluster and the nonsense of the campaign is behind us that we end up with something less destructive, but it is in the air. Its not just the case in the u. S. Its true in europe. Its true in china. That antiglobalization including antitrade, antiimmigration sentiment is strengthening to everybodys cost. With that in mind, markets hitting in highs, theyve really stl shrugged off the issue. Brexit itself, if thats all it is, if it doesnt lead to further breakup of the uk, which is still my central scenario, and if it doesnt lead to a further unraveling of the eu. There is a material risk of the further exits from testimony eu starting with the italian referendum as a source of concern. So, yes, i think markets not for the first time are getting it wrong in my view. They are under pricing the risk and overpricing future earnings growth. What is the possible chance of the rest of europe breaking up, elections in your own country, holland, france, german, is there a 20 chance. Its hard to quantify. I would say it must be Something Like that the main risk is italy. You couldnt have the referendum on nexit so to speak. You could only have laws that have been passed. In france we would have to win the first round. Italy is me the main source of concern because of the referendum stuff. Do you predict the next move from the fed will be higher Interest Rates, lower Interest Rates. Something else . We shall see. Our current expectations is we still have bond rate increase this year. I would make to contingent in who wins the election myself thachlt is my personal view that the only necessary condition is that mrs. Clinton is the next president. If my view if mr. Trump is the next president , the next move will be a rate cut. Because theyll be reacting to the conditions he brings or because mr. Trump will force it. Both because of the risk, high risk and possible reality of trade conflict. The massive adverse supply shock in the labor market that mr. Trump migration poms policies and exportion policies and the uncertainty about it. The fact also is we journalize uncertainty is bad. The option valuation goes up. Cap business on the head. And very quickly explain to us what helicopter money is. What it means for the markets. What it means for economies and why youre expecting to see more or it. Its monetized fiscal stimulus which is not completely reversed in terms of Balance Sheet expansion. Central bank Balance Sheet is profitable. The owner of the bank can use that money to spend more or tax less. Thats the only way i think you have any realistic chance of getting out of very weak low real Interest Rate that youre in. Expect that in the end people will blunder into it. Thank you for that. Were going have to leave it there. Thats it for world Wide Exchange. Have a lovely morning. Have a lovely weekend. Squawk box is next. With unique features, like claim free rewards. Ohh customized Home Protection extra features all at an affordable price im going to live in this. In means getting more from your Home Insurance with an expert allstate agent. Its good to be in, good hands. Good morning t. Markets rallying like its 1999 thats the last time the dow, s p 500 and nasdaq hit high records on the same day. Rally in retail nordstroms shares soring in premarket trade. Got one report on the schedule. Going for gold in rio, a thrilling dual in the pool plus an unforgettable night of gymnastics. Were going to bring you the highlights. Its friday august 12, 2016. Squawk box begins right now. Good morning everybody. Happy friday. A little jack johnson to get you started easing into the weekend. This is squawk box right here on cnbc. Im becky quick along with andrew sorkin. Andrew, welcome back. Thank you. I missed the big day yesterday with donald. I want to talk about donald. Well get caught up. I watched it, but i wasnt here. I know. We missed you. Were glad youre back. Thank you. It was nice. Nice to be back. Joe has been out. Hes coming back next week. Were all going different im going to rio tonight. So ill see you on monday. Im leaving. En route to go out west to jackson hole. Hes been looking at google maps to show me where hes going be. Anyway, in the meantime
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