Gains at the open although still on track to break that twomonth winning streak plus pharmaceutical stock rallying ahead of the open, this after Johnson Johnson received a smaller than expected judgment against it involving its sale of opioids. And facebook targeting snapchat again the social network reportedly developing a new messagingapp that would allow even more sharing between friends. Sharing. We share look. Were always sharing. The market is up. Receive watched this market from 3 30 this morning up until now, and theres nothing. Nothing nothing i mean, not even the bonds theres nothing. But people will foment reasons its going up and i refuse to do that you refuse to do what to explain right i think a lot of people recognize that without a new tweet thats disruptive, theyd better get a little longer well get back to fundamentals for while until were interrupted by a new update from the trade war. Hard to know which way thats going to go. Yesterday, jim, we obviously noted this along the way, it was very much unclear that there was any progress made whatsoever there was none i dont think either side was it wasnt phone calls it was nothing look, what matters is that without something new thats negative, people feel like theyve got to come back in. In the end, the process has not led to a bull market its not going up we have to accept the fact that we must have something negative every day to keep driving it lower when we didnt, well, i mean, and the president someone said to me the other day the president is a really good chart reader, he came in exactly where he had to. You know what, i dont care. The sellers stopped. What do you make of the move in bonds were inverted again now we dont throw our hands up or have screeching alarms. We got tired of that rap. I dont think we talk enough about how the fed is no longer as friendly to the stock market as it was. I think a lot of the rally is that the fed is your friend. Now its not necessarily your friend or your knfoe. Are they data dependent or trade war dependent . We dont know if youre jay powell, and you dont know whether youre worse for the economy or shes worse for the economy, i dont know that youre necessarily going to say, i love this guy theres got to be such antipathy right now. I question how often we get antipathy. Jay powell is very low key yes this is a really untenable situation for the president and china. 30year trading below 2 , the 210s, we know where they are, people will tell you its a reflection of the fact that theres nowhere else in the world to get a positive yield. Its not a function at all of a reflection of a negative view of the future of this economy i agree with that we have very healthy consumer i met with Kevin Johnson yesterday, the ceo of starbucks. People say, jim, thats a measure of coffee. He say thats nonsense hes the panoply of the whole country. He charges, some people say, too much for coffee, you can get coffee cheaper with styrofoam. I get it for a buck 50 from the guy with the cart and im enjoying it right now. I pay two bucks, i get a free muffin you can say things are great when you talk to Kevin Johnson yeah. You also asked him about the trade war as well. Is that a segue lets listen to what he had to say when it came to the seemingly increased tensions around trade between china, where starbucks has an enormous presence, and the u. S. You look at the geopolitical situation, i think everybody recognizes its better for all nations and all merchants to be able to have, you know, a good global trade environment and i believe well get there. You know, they all say the same thing and im not saying that he doesnt believe that but you and i both know when we sit down with these ceos in private and we have conversations with them, thats not what theyre saying. No. What theyre saying is theres going to be a recession if this trade war doesnt reach some sort of conclusion and then the president will lose in the fall if theres a recession. And that may not be good for business, because like Bernie Sanders really comes on strong its safe to say joe biden doesnt have the fastball that he used to no. Apart from the election, ceos are generally optimistic, they believe this will get resolved because it makes sense that it will but weve been hearing this for well over a year, year and a half many of them are more, i think, pessimistic when you speak to them privately than they are when they make a comment on your show or this show or any show. Brian golder from hasbro, trying to reduce his exposure to china, ive been emphasizing vietnam as a place that companies are going to the administration doesnt like vietnam, if its shipment from china. They want malaysia, indonesia, and the United States. There has not been a big move back to the United States. No, in a significant way. There have been some but it has not really amounted to anything you would argue is large. There was a piece this morning about whole foods pricing. Pricing is coming down throughout the system were seeing downward pressure on prices, not upward that should not be happening employment is strong tariffs. There should be upward pressure on everything. Theres not. I cant find upward pressure in a world where costco and walmart and amazon and target are beating each other around the head there is no upward pressure on the consumer the fed has said, theres been forecasts that 800 increase for tariff i feel on the ground, with companies, they have not raised prices theyve been eating a lot of the price increases. Now, the next the Retail Federation always says the next round of tariffs could be very difficult. But so far, so good for the consumer right and the president pointing out, were talking about 100 billion or what will be near 100 billion collected in terms of tariffs since they were put into effect remember they first said, the media was saying it wasnt collecting its not necessarily xi running a check to the United States no, the chinese are not writing the check. Peter november avarro my buddy. You and i talked yesterday about Johnson Johnson. What a big win, david from a judge in oklahoma. The shares are up in the premarket this morning the judge ruling the company did help fuel the states Opioid Crisis he ordered j j to pay 572 million in penalties now, that is less than analysts had been expecting meg tirrell has been following this from the beginning, she joins us from norman, oklahoma, and of course was there for the verdict. Meg, should we be surprised that the stock is up or does that make sense reporter david, if you look at what analysts were kind of pegging the result to be, the stock is up, because its so much less. Wall street was looking for making 1 to 2 billion that j j could have been ordered to pay here the state of course was looking for 17 billion. Comparatively the 572 million is a lot less. The judges language was pretty strong he said that j j marketed aggressively, quote, that its marketing was false, deceptive and misleading, that it caused exponentially increasing rates of addiction and Overdose Deaths in the state of okay okay. Of course that 572 million he ordered them to pay is to abate this Opioid Crisis for at least one year we talked after the decision with Oklahoma Attorney general mike hunter who had a message directly for j js ceo i challenge the ceo to put his money where his mouth is the Business Roundtable of which hes a member has made the very daring statement that theyre going to start looking out for people outside of their shareholders this is their responsibility, to put action behind his words. Reporter immediately after the decision, Johnson Johnson says it plans to appeal. It says it is not responsible for the Opioid Crisis here in the state and that it marketed responsibly. Of course j j wasnt the only defendant in this case teva and purdue were also namedd but they settled this case shows that Johnson Johnson is now found liable in this case, and what its going to pay is much more than what purdue settled for now everybody is looking forward to what this means for future cases. J js attorney said we shouldnt extrapolate. The cases that are consolidated in the mdl proceeding in cleveland, ohio, are under a different law, they have different parties, different theories and so we do believe those are very different reporter but guys, of course extrapolate is what wall street is now doing and you saw a lot of stocks, not just Johnson Johnsons, popping last night as this ruling was less than wall street expected but as the dust is kind of settling this morning you are seeing analysts coming out and saying, maybe this doesnt look so good, when you extrapolate it out to the thousands of cases about to be heard in ohio, if no settlement is reached. Wells fargo saying they spoke to one of the Companies Involved in that litigation and theyre hearing updates every day and potentially pushing towards a settlement even Johnson Johnson in its Statement Last night said a settlement in that case is potentially on the table is this case changing the Way Companies are thinking about the overall litigation well be following this closely, guys meg, thank you. In ohio, jim, is where its going to be very important, as meg pointed out, multidistrict federal court, different law being applied there. J j telling me, look, this is oklahoma Supreme Court, filed promptly in terms of the appeal. Right and based on both fact and law, their products, a crush resistant pill and a patch, have low rates of diversion, 1 of the market david, the real thing, as we go against, if youre j j, you roll the dice for the quarter i dont know why that is but i think maybe they just want to set a precedent, writing checks they are the most deep pocketed of any of these companies. Yeah, jeez. Mallinckrodt is oh, jeez. But i think that they want to fight because they have the money to fight but its interesting that meg was talking about the Business Roundtable that was very interesting to me, the Oklahoma Attorney general mentioned that Business Roundtable finding im not even sure, communique i guess we want to call it, that shareholder value is not necessarily the only thing theyll be focused on. Of course j j has the credo, they claim to have a responsibility to a lot of other people, what the Business Roundtable is now talking about. Right the ceo spent a huge amount of time its the first time i heard that Business Roundtable change cited. Its fascinating, what this will mean, if anything. We talk about the rise of pse gs overprescribed and the other guys of course did much more. J j felt that they di less, therefore why should they settle, and they ended up having to pay much more theyll have to go to the Supreme Court. I dont know about the oklahoma Supreme Court, to me the fact and the law we move on, as meg said, to cleveland and that case. A lot of other cases are consolidated that would seem to be very important in terms of trying to determine what if any is going to be the ultimate liable. Just on j j, this is the toughest its ever been to own this stock, just the toughest, because you have talc and you have this. And j j is adamant that they didnt do anything wrong ive got to tell you, david, theres an argument that because theyre the honey pot, that they have so much money, that the plaintiffs are salivating against j j. They know that Drug Companies are not liked. Theyre not. No. I mean, where are they in the hierarchy of disliked companies . High should they be all right. Up next were going to have jims mad dash well count you down to the opening bell, about 15 minutes until we get started with trading here at the nyc. Were expecting a higher open. More squawk on the street straight ahead see thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Time for mad dash as we get ready for the opening bell at the nysc we want to talk chipotle yes, david, this is one of the few stocks, like when you first got in the business of what we do, they have a new product, and people buy the stock. By the way, yesterday with Kevin Johnson, a pumpkin latte cold nitro not nitro, thats what the millenials like, thats whats driving that stock. David, the carne asada is coming this september, and they say they expect it to drive traffic. David, this is like the old days, a new product, hip, hip, hooray you know what . Its going to happen this thing has you rightly called it. Thank you in terms of how long it would take to right the problems, and its been off to the races since. The cfo stayed throughout the period, this whole time, he bought a ton of stock, everybody laughed at him, why do you keep buying that stock . He had faith in the enterprise brian niccol comes in and hes going technological, hes making it so theres tremendous delivery, go pick up, and the lines that have been shorter david, ive got to tell you that this is the way it used to trade, high, midsingle digit, low double digit growth. There is an appetite people have very, very forgivenesslike traits in our country, or you could say they dont have any memory, because remember when the rat was here and the people were sick, the boston virus and the oregon . What the hell was that was that taco bell i have no memory of that. Was that pizza hut . People dont remember Jack Restaurant is up very big. Have you had the new chicken sandwich from popeyes i have not. My son has you cant get it, line out the door to your point, these are in favor right now in the market as well, its a way to play the consumer, its a way not to be involved in trade war issues qsr, mcdonalds. What this this haveto do whether there were two calls, three calls, seven calls, no calls, busy signals . Nothing. You heard it, nothing still to come, speaking of china, Brian Goldner will talk about everything from the state of the consumer to the 4 billion deal to acquire Entertainment One to how things are going in terms of making stuff from china opening bell ten minutes from now. Stay with us on squawk on the street. Creating the future. So, every day, we put our latest technology and unrivaled network to work. The United StatesPostal Service makes more ecommerce deliveries to homes than anyone else in the country. Were going to get started with trading in seven minutes. You can see were expecting a higher open, although the month is still trending lower. Opening bell just a few minutes away wow. Youre watching cnbcs squawk on the street. Opening belfour minutes frl fou now. I want to get to some breaking news jim, we were following this yesterday as this heated up and now we have confirmation, Philip Morris international is in discussions with altria regarding a potential all stock merger of equals the two companies confirmed in a press release that was just issued moments ago this is extraordinary, putting these two together i want to mention this because yesterday the stock started to move. I heard about it a bit, frankly was unsuccessful in sort of getting anywhere on it bonnie herzog, the wellfollowed analyst at wells fargo who covers this industry, did put a note out later yesterday noting the move in pm, which was down almost 5 , and mo, of course altria, up 5 . Merger of equals, altria is far smaller than Philip Morris international. These two Companies Used to be one company. They were one company just to share herzogs analysis, because its what weve got for you right now, she said the jewel stake, remember, that huge deal that altria did that i of course made a lot of because they spent an enormous amount of money for a 35 stake it was more than that, with no path to control. None. But it showed you how they viewed their future and the future overall of people actually inhaling tobacco thats wrapped in paper, at least she said given juuls clear dominance and their international ambitions, thats the Philip MorrisInternational Entrant to this area, is worth more to Philip Morris by owning altria, given its full control of sales and distribution. She said it would be an opportunity to accelerate the growth rollout, the overall global rollout, and pm could invest in altrias strong cash flow as well so thats what weve got right now on this. Theyve told us they wont make further they wont have further discussions. I dont know if theyre uk or bound by different law, because of course there are certain markets where you have to international, right. If there is something going on, you have to