1. 2 billion google does have the option of appealing the decision the stock, as you can see, down by 1. 25 this is something weve known was in the works and coming, but this is a larnlgs flge number tt your head around it makes me wonder, too, two sectors were not seen as virtuous, financial and energy in the new administration they are more virtuous or more part of the solution. Technology theres more questions about it, not just abroad but also in the United States about its power privacy issues. Concerns with Law Enforcement when they want the encryption codes. For some people, when amazon bought whole foods, they were like, wow, kale by robot im out. This is too much. I think these issues have been brewing for a long time but its also part of the political zeitgeist were in in terms of who has the power, who is wielding it. Tetechnology is a sector has been winning and the less firt wo virtuous have been losing. Im overweight financials, industrials. The sector that performed since election date and the beginning of the year have been lower year to date. If we have a different varying perception its we think more of the agenda will get through ultimately i think there are real opportunities particularly in Financials Energy is a tough run. It cuts both ways. The good news is youre easing some of the regulations. The bad news for the sector and the stocks means more drilling a lot of people will punch holes in the ground at anything above 35 a barrel thats a tough thing technology worries me a bit. You can see there are real concerns on the beft and riglefe right about the power of these companies. Potential political backlash could be an issue. I think so. By its not stopping you fro being long in the sector no. Thats where the growth is im being conngnizant of where e risks are. Clearly theyre winning. Theyre winning so much, as the president would say, its scary. That could be a bit of the problem. Nice. Well talk more about this in a bit. Lets check the markets. The u. S. Equity futures, markets were mildly mixed yesterday. Slight gains, slight losses depending on which index you were looking at. This morning things are relatively flat. The nasdaq, future also about 27 points below fair value. You can see a bit of weakness creeping in. Well see where things trade yesterday the markets closed at about the weakest ovals of the day. Overnight in asia, will you see the knee say ended the day up by a third of a percent the hang seng slightly weaker. Shanghai was up a bit. In europe in the early trade, you will see at this hour there are some declines. Both from the dax and from the cac. Reach are down about 0. 4 . The ftse is flat, as are stocks in italy if you check out crude oil prices which yesterday ended up slightly, a gain of 37 cents, they are indicated up by that much again work ti up to 43. 75. Here are the big stories were watching this morning. The white house is warning syria that it will pay a heavy price if it conducts another chemical weapons attack in an unusual Statement Issued late last night, the white house says it spotted activity similar to preparations the Syrian Government made before its april 4th attack the white house gave no further details of how those details were detected. Nikki haley tweeting that any further attacks done to the people of syria will be blamed on assad, but also on russia and iran who support him killing his own people well continue to follow this developing story. Big moves in the euro on comments from Mario Draghi Draghi says growth in the eurozone is above trend and broadening, but he said inflation is not solid enough to exit theeus massive simplus prograstimulus program. Sprint is in talks with comcast and Charter Communications for a possible wireless deal. The wall street journal says under one option comcast and charter would invest in Sprints Network in exchange for favorable terms to cell Service Using the carriers network. The wall street journal says under one option comcast and charter would invest in Sprints Network in exchange for favorable terms to cell Service Using the carriers network. Back in may there was a wireless truce that barred either company from doing a deal without the others consent. Sprint shares in the premarket are lower. More gop senators voicing opposition to the healthcare reform bill after a cbo report said the plan would report in 22 million more People Without Health Insurance by 2026 versus current law. Ylan mui has more on that. Reporter the early reaction to this cbo score is not looking good senator Susan Collins of maine came out against the bill last night. She wont even vote to start debate on it she has criticized the medicaid cutsnd t s and the impact on ru communities. Bill cassidy said the cbo estimates made him more concerned about this bill. And Lindsey Graham said hes worried that republicans will regret rushing to vote this week Mitch Mcconnell said everyone will act soon on this bill obamacare forced millions off the plans they liked and forced millions into plans they didnt want or couldnt afford. So unless we act, more americans will be left trapped, forced to buy obamacare to buy insurance, but left without the means to actually do so. Lawmakers are in the thick of negotiations right now senator rand paul said he spoke to the president sunday night about his opposition to the bill nbc confirmed that Vice President mike pence will have dinner with conservative senators tonight mike lee of utah will be among them the white house issued a statement attacking the cbo saying the institution has a history of inaccuracies and its analysis must not be trusted blindly. We know this institution is widely considered to be objective and nonpartisan. Its certainly a Nonpartisan Group and objective on these things, but some of the numbers theyve been asked to predict are tough. The white house was pointing out the inaccuracies for the cbo scoring for obamacare. How many people they expected to have under the plan. This is an intractable problem the republicans are learning owning this is a difficult situation. In terms of a vote thats still expected to happen a couple of things. On the cbo numbers the cbo was fairly accurate in estimating the total tnumber of people who would be underinsured in the obama plan. They got wrong the number of people who would get insurance from their employer versus the number of people on exchanges and underestimated the number of people who would use medicaid. On the second point to the vote, right now is seems like leadership is still on traktdck hold a vote this week, likely on thursday before that, they have to vogt on a measure to proceed. Usually goes without a hitch but were hearing a few senators saying they wont even do that if they cant get that motion to proceed, which is likely to happen tuesday or wednesday, they cant move forward to a vote on the substance of the bill elan, thank you very much commerce secretary wilbur ross canceled a trip to germany. He was due to leave today to meet the german economic minister and speak at an event held by the Economic Council the German EconomyMinistry Said ross did not give a reason for the cancellation trade has been a fairly contentious issue. The u. S. Commerce department imposed antidumping duties on soft wood lumber of up to 7. 72 . This prompted an angry reaction from the canadian government which said it would defend its lumber industry through litigation a final decision on the duties is scheduled for september, notably after august 16th when nafta talks are expected to begin. Well talk more about nafta with son sonny perdue lets look at the broader markets. Joining us is doug cotey and ed keon our guest host is Jason Trennert ed, youre underweight u. S. Equities how difficult of a move was that what keeps you up at night in terms of the continued sustained sort of holding on to record high levels here in the u. S. Equities were selling at high levels of evaluation. Not nosebleed levels also im concerned that the Economic Data has been consistently weaker than expected Earnings Data was great. First quarter was great. Second quarter was great im concerned that the u. S. Economy which has been growing at about 2 is more likely to break below that than above it. So theres risk to the down side in terms of earnings estimates and therefore valuations i think the earnings forecast this year are solid. How will weakness in Economic Growth manifest itself i think next year earnings could be challenged. If we perceive that growth is slowing and the risk of recession is rising, i dont think the market is priced for anything close to that doug, do you think invests. Reporter too complacent about the risks to the economy given some of the data has been disappointing . No. The growth in reflation trade is on track and what a lot of the worry about the inflation numbers, they really are rearview looking. Backward looking a lot of forward look data ed mentioned corporate earnings, theyre solid. Manufacturing is solid you look at europe, whats going on in europe is new. Economic activity at a sixyear high even frances Consumer Spending and manufacturing doing well germany doing well they are finally coming on line and contributing to the Global Economy. Thats why corporate earnings are so good. I actually agree with jason. Most of trumps policies do get done i dont think thats priced into the market and i dont care if it happens today, but i think we have plenty of time to wait for the right policies, which are tax cuts to happen, and i think investors can actually lower their risk by getting into the market now i agree europe is doing better so why not just overrotate into europe i think the valuations are two multiple points lower. As an asset allocator i want to move money into where you are Getting Better value so we rotated money into europe and into emerging markets after being on the sidelines i believe theres faster growth elsewhere. I want to buy where that growth is one thing i might add, i actually like japan quite a bit. I think that also trades cheap to the u. S in my opinion there are slight structural change, is that are happening there. Monetary policy Getting Better more focus on minority shareholders but again, the problem i have with europe, theres no big structural change, is that i can see. A lot of benefits that youre seeing in the european economy are largely driven by currency it counts, but the u. S. Actually, whether you like the president or dont like the president , there are things that are pro growth that are on the horizon. Whether they get passed or not is another story the regulatory changes will happen regardless of what happens in congress. We talk about financials, energy, those thing also provide, in my opinion, big stimulus for the economy going into next year if you are of the belief that the reflation trade will happen, that trumps policies will be enacted at some point in time, are you hand over fist in financials and energy . I look at it from an Asset Allocation standpoint. I want to be i do agree with ed, maybe large caps are not the place to be. U. S. Small, mid, global reits, emerging markets, international, you want to vspread your bets im core on the sectors. I like bonds here. Bonds cribbed to risk control. I think people are too concerned i dont use bonds, i dont care about rates going up i use bonds as risk control to the overall portfolio. Maybe we should care about rates going down what was interesting in yesterdays session is the tlt, the etf that tracks the bond market hit a year to date high stocks are sitting close to record highs at what point do we say bonds and stocks should not be going up together. Were watching the spreads narrow, the fiveyear spread is the narrowest since 2007 should we worry . It does seem a conundrum. I fend tend to think in this cae bond market may be seeing some weakness if we get pro growth policies, i would agree that growth will be better and that the stock market will do better at this point it looks like a tossup on whether we will get those policies soon. On europe, macron said he would lower taxes, pro growth. Do you expect that it seems like hes consolidating power. That would be big for france would be. I might be revealing my thing, because i have not seen a lot of structural changes out of europe in a long time one reason we were wrong about not being overweight europe year to date, we were worried about this never endum the problem with euro is you will have a rolling existential question about its existence forever. You still have these questions, and theyre tamped down because growth is better when growth is weaker again, you will have an election next year, so the euro is a topdown political elite driven idea. Its nerver been popular with regular people are you surprised to see it at 1. 12 . I am actually for my perspective, i would tend to fade it thats my own feeling. Listen, doug, anything is that would change the mixture as far as pro growth in europe i think would be welcomed. I think britain as well britain is actually doing much better than everybody expected after brexit even though prem htheresa may he election problems. I think the uk continues to do well and contribute to the global growth. And Company Earnings are growing faster than the fast pace in the United States. And cheapness. With a couple multiple points in your pocket its a better bet than the u. S. Right now. Thank you when we come back, if youre getting ready to hit the road for the 4th th oth of july hol youre not alone aaa expects this to be the busiest july 4th holiday well tell you how gas prices are affecting those numbers. Get ready for scenes like this are you ok . What happened . Dad kinda walked into my swing. Huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . 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Xfinity mobile. Were one week away from the july 4th ho tth holiday millions are getting ready to hit the road according to gas buddy its the cheapest Independence Day in more than a decade joining us now is patrick dehan. Its no surprise to anyone who has been watching the price of crude oil, this is a relatively cheap time to go you talk about the drop in crowd oil coming right before the biggest su efgest summer hof the year gas prices nationally down 15 cents a gallon in the last few weeks. And the lowest july 4th sense 2005 how price sensitive are consumers . I knows there Something Like three states where you have gasoline prices below 2 a gallon how price sensitive are consumers to saying i will drive. I think theyre becoming used to the low prices and not as excited about them keep in mind, this is a dramatic turnaround weve seen two years low gas pries. That 1. 99 still makes a big difference what does that mean if prices go up, not that im predicting that they will but if gas prices were to cross above 3 a gallon, what would that mean for people rewinding back to 2008, where this is something americans have to the felt in a long time thats when we start to see Consumer Behavior reacting the most going back over 3 would be a big deal in terms of this move afoot to raise the gas tax. Part of that has been the debate has come back because gas prices have been so low. The gasoline tax, is that something that would change Consumer Behavior . I think a lot of taxes slated to come in are coming at a time when gas prices are low already. Indiana will raise its gas tax 10 cents on july 1st california will do the same thing in november. Motorists have not really felt the gas taxes show up at the bump yet thats why politicians are probably busy trying to pass them i dont know if this is a fair question, is there a natural beneficiary to lower gas prices is it restaurants . Other parts of Consumer Spending that tend to doppler particulary well with lower prices at the pump i think so. Its going into the Convenience Stores fast casual is a big winner as motorists have extra cash on road trips, they wont look for the dollar menu, but they want something quick and easy, restaurants, entertainment option as well think of going to the movies, ball game, Discretionary Spending is up also automakers as americans go back to bigger vehicles. How far are most people planning on driving . Are we talking about an hours trip or longer our gas buddy summer driving survey found