different combinations >> looks like millions >> real quick before we go, this is big news, newspapers are joining forces to fight google and facebook they want federal lawmakers to give the news industry an exemption from antitrust rules this would let the group negotiate collectively with the tech giants. the goal is to gain more leverage >> go facebook >> that's the story. make sure you join us tomorrow "squawk on the street" begins right now. good morning, welcome to "squawk on the street. i'm david faber along with jim cramer we are live from the new york stock exchange carl quintanilla has the day off. let's give you a look at futures as we head in from the opening bell kind of a mixed bag, let's call it, at this point. not much there european markets, though,

largely in the red you can see other than spain, let's call it even for the uk's ftse crude oil also important to keep an eye on, given the moves last week the ten-year yield came off. still working off a big employment number on friday. we'll see if there's follow up to that and there's wti hanging right below 44 let's get to our road map this morning. and it starts with stocks. they are coming off a volatile week that ended in the green we're going to take a look what to expect this week ahead of fed chair janet yellen appearing on capitol hill wednesday and thursday and secretary steve mnuchin said a plan to raise taxes for the wealthy to pay for middle class tax cuts is not being considered we're going to discuss what should be expected, if anything, from the administration when it comes to tax reform. and amazon prime day is upon us. the deals start at 9:00 p.m.

eastern, but will they be big enough to boost the bottom line? do they really need anything more >> i'm gearing up 20%, up 20%. >> what do you mean, up from last year? >> from last year, which would be monumental, like the day that lives in infamy for the brick and mortar places. if you wanted to buy a retailer today, wait for tomorrow when we start hearing how unbelievable it was >> got it. >> i know what i'm going to be doing at 9:01. >> such a slave to fashion >> of course >> you really are. >> mentally. think they'll put cashmere on sale >> maybe >> there are others besides amazon >> let's look at the stocks, then amazon again. markets are coming off a week of gains for all the major indexes, including the s&p 500. third positive week in the last four president trump is back from the g20 summit, and congress is returning from a holiday recess. yesterday on abc's "this week," treasury secretary steve mnuchin said there is no plan for a tax

increase on the rich and that the trump administration is aiming for a vote on tax reform by the end of this year. >> but, again, the president's focus is a middle income tax cut, reforming the business tax system to make it competitive, and creating a tax simplification that will grow this economy >> no one in the middle class will have a tax increase >> that's our objective, absolutely >> he's saying more or less the same things he's been saying nothing new there. by the way, still no plan from the administration >> look, i just was hoping for some resolving of the debt ceiling. that would be a big win at this point. >> are you hearing anybody -- you know, it's funny seems to be some concern about it mnuchin indicated don't worry, don't worry, hurtling towards august >> there's not -- they need to not take their summer recess, honestly there's just too much on the plate, and i know that health care seems dead on arrival, therefore, means it has to be kicked back. i'm a little discouraged,

candidly i would love to say secretary mnuchin is dead right, it's going to happen, but i have no empirical evidence that's going to happen. >> no, there's nothing to indicate that's going to happen. it's unclear whether it would benefit or be hurt by the failure to pass repeal and replace of the aca you hear different things. once they it out of the way, we have to focus on that, you need a fiscal '18 budget on that, still working on reconciliation for health care, but also some will have predicated on the other in terms of at least being able to roll back the 3.8% tax on investment income so i don't know, jim >> it's too complex. look, i was debating all weekend whether to come in and say, listen, it's game on, because i think that secretary mnuchin is a man who has done a lot of -- has been pretty much good to his word, but it really is congress,

and remember, the speaker said it's going to be tax month they are going to tick up the taxes, but i keep thinking that how can anyone resist going back and doing health care, since that's what the congress has said is the priority different from mnuchin >> right you can't count out mitch mcconnell, interesting story today in "the wall street journal," but right now the vote is clearly not there for health care, at least based on what we're hearing, both from the right, far right, which says it's not enough of a repeal, and more moderate republicans who feel it takes too much away. >> which then puts us right back into earnings season, looking at treasuries, janet yellen speaking twice this week, so let's just say it's a log jam, not unlike the log jam that propelled the stock market from 2009 to 2016, and i'm not as concerned, because it gives you 2018 to look forward to, a lot of goodies >> it's true it's funny, though, i did have a

conversation this morning with a very senior deal maker let me just leave it at that somebody overseas more than that at one of the bigger firms, but they did talk about the fact the regulatory environment is giving some people pause, in part because of the lack of appointments, whether it be ftc, doj, and the lack at this point of having any idea antitrust, but beyond that, also simply saying on policy more generally speaking that there is a growing uncertainty because of the lack of any policy clarity >> incredible. you would have thought by now, not only would it have been game on, but that deals would be happening radicalically, just rapidly, given the fact you have a pro business administration. again, discouraging because one of the great -- if you're a bull because one of the great things about the bulls is that they had mna and you were afraid to shore it what i hear is long, hot summer.

don't expect to come in -- >> not the big stuff i hear this from others, as well big stuff where you're taking a decent amount of risk makes it more difficult to make that decision when you're talking about sort of the one to even as high as $10 billion deals, okay, but above that, big ones that move the needle >> the oil patch -- >> why does the oil patch need it >> because evaluations, a lot of the large oil companies told me when oil was at 26, 27, they regret they didn't do deals. did you know, david, i did a run, a lot of the oil companies, their stocks are almost back to where they were during the decline in february of 2016. but there's been no deals at all, and the companies that have tried have issued equity and it's been disastrous for their stocks so i would have thought someone would have swept in with a $33 to $35 price per barrel win, if you get a lot of pipelines

it's not happening so i'm not seeing european deals. i'm not seeing major mergers, and you know what, the only thing -- i totally understand the policy, given the fact that your incredible analysis of the time warner deal still stalled, but it's stalled because of people -- of the staffing. >> somebody hasn't been appointed yet to run right by the way, "the times" had an interesting take on it, people close to time warner tell me, or close to the deal itself, their expectation that it's more likely to happen sooner rather than later >> how did this happen how did this happen? >> how did what happen >> they just have been very slow in appointing people this guy is awaiting his confirmation you're talking oil i want to get to that. >> yes, yes. >> big declines in crude last week, but that's not stopping

plans for the initial public offering here's what the ceo of the company told our steve sedwick >> these cycles we have been through it the last couple of cycles and always kept our investment if you look at today our investment, not only in the upstream, the downstream, and in particular they are still continuing even though we have the highest, we have the biggest expiration program. >> just on that point, on track for 2018 >> on track for 2018 >> there it is i've spoken often it's not an ipo of a company, it really is an ipo of a country. saudi aramco is larger -- you can't compare it it will be fascinating if and when they do come to market. >> they are in trouble >> they are. >> they are in trouble because they need oil price up in order to be able to show you why that you want to have the reserves, but they have to cut their

pumping in order to make it so that oil price is up, but then they'll miss the quarter and the year if they don't pump enough what are they supposed to do they would be best to go to nigeria and libya and subsidize those countries. i'm not kidding, by not having them pump. that's really how dire it is for them the more they pump, the lower the prices go. they have to pump less, then you don't want the ipo it is so hard for them >> although they will be selling a very small -- dollarwise a large stake, because even 5% of a $1 trillion company is a lot of money who knows the evaluation, but your point the evaluation on the ipo itself will be impacted by the price of oil >> single time to bring this i can't imagine, maybe february 2016 this is just a ridiculous time to bring that deal how badly do they need the money? is this a hot war with yemen that makes them need the money who would come to market with this exxon offering 50 million

shares, sold, i don't want that. i don't understand this deal they've got to find a way to get oil up, but they can't, because we're pumping like mad here. >> diversifying economy from oil over the next 20 to 30 years that's the investment in the vision fund, the investment in blackstone's infrastructure fund those are small but significant investments. not small in the case of vision fund, $45 billion came from the saudis, i think it was, but, you know, that's the plan. and that's also the plan with saudi aramco, not necessarily raising the money to put it back in, but in part to -- >> take it out >> yeah. >> look, i'm sure they are sitting there -- they are not watching, well, maybe they are watching they might say to me, jim, you're taking a 30-day perspective on this. what i am saying is, when you get the perspective, you want to see it up here, that's all i'm saying, and i don't know whether they can do that value play, is someone going to

buy them >> no, no. no, it's never going to -- of course not >> no. >> you could call apple if you wanted to try, though. i could pencil that out for you. what do we need, couple bill in equity >> today was like apple falling behind movies, just like they are falling behind, falling behind i would like to fall behind as much as apple is falling behind. most companies would there's 499 companies in the s&p would like to fall behind like they are there are 500 companies in the s&p, just in case you think there's -- >> i've heard that i've heard that. i think it's conspiracy. yeah, they are not telling us. >> great conspiracy. >> yes >> none there, call it a conspiracy except you and me >> thank you you know us, we're not afraid. when we return, amazon's prime day is on the way.

we're going to look at the big push plus, elon musk's high hopes for tesla 3 after they've had the worst week they've had in the year, maybe longer than that it was ugly week last week for tesla, but that's a nice looking car. futures here, you can see now we're sort of creeping towards a lower open more "squawk on the street" live from post nine after this.

amazon's annual prime day event set to begin tonight at 9:00 p.m. eastern, a lot of different deals in an effort to increase the number of subscribers to its prime service. amazon said the 2016 prime day was its biggest ever withsales up 60% from the previous year's event. we'll see how '17 goes of course, we still don't know how many prime members there are. i think last week somebody said 66 million >> i heard 89 today. >> they don't tell us. >> no. >> well, we just accept that >> i've got an idea. this is going to, if it's really that great, ups and fedex, just play it. >> really? 50% on amazon echo, now only $90. echo dot $35 paperwhite $90 anything you're in the market for, jim >> geez, doesn't matter. i'm just going to buy. >> august smart lock, what is

that how about some sony extra bass wireless headphones? >> i heard there's some surprises, so i'm going on did you see the moon last night? amazon, same thing, 9:00, couldn't look at it. 9:00 moon last night, 9:00 amazon forces of nature >> this began a few years ago, remember the success of alibaba singles day. >> that was important. >> generates an enormous amount of volume for that company encouraged it would see amazon, okay, let's just do something that people will end up talking about like us. we're dupes, we're talking about it, helping advertise for them >> did you know the brick and mortar companies are saying, listen, it's only going to be up 20%. only, off a base -- to me, tomorrow -- there was a downgrade today of costco. can i tell you that downgrade was about sentiment? sentiment price is contraction the guy basically said, listen, buy to hold, bemo, sentiment

still too high still so many firms like costco. tomorrow might be the day if you want to buy costco >> one thing i will say, we had a brief conversation about mna earlier, i do hear a lot of the companies who took a look at it, the consumer products area that took a look at amazon, whole foods, didn't respond by at least starting to think direct to consumer, i have to think more about it, i have to think more about my logistics and supply chain >> wow >> so that is an area where we could see consolidation and/or at least response in part to what arguably is the most important deal of the year wasn't that large. it was fairly large, but just in terms of the message it sent >> i mean, there really are these ancillary plays, fedex, you know, ups. david, i keep hearing there could be a challenge at ups. isn't it mostly owned by the drivers and that's kind of a ludicrous idea >> activism?

yes and no if somehow they benefit as well from a higher stock price. i don't know the dynamics there, jim. i've heard the name, but as a possible, but you hear everything activism continues to be very -- >> new activism blocking deals >> yeah. say again? >> activism blocking deals, trying to block deals, saying the company is giving away too much i think that was interesting eqt is, again, a company taking advantage of the fact they have natural gas below a dollar with $3 pricing and to me by 2019 a worldwide market that would make it so you should be, but it doesn't matter it's oil and gas, and, therefore, it's despised not hated, despised. we have to stay focused. >> all right stay focused on the fact that oil and gas is despised. >> there's no mna in this area where things are valued. i'm saying -- >> you know the old story. it's always really hard to pull the trigger when everybody -- when sentiment is -- >> i know. >> if you're a ceo, just afraid.

guys are losing their jobs see the guy, whatever they did that deal? >> oh, my god. in canada? >> ryan ferguson, when they bought those oil sands assets, stock went down. he's out >> he's out! >> you take your job -- >> that guy made a huge deal that was, like, a gutsy deal >> it's hard to be gutsy >> that was a full deal this weekend, by the day. look, i'm about gardening, i'm about the moon, because you have no deals if you had deals, i wouldn't speak about these things how about you and khc. not going to happen. >> not going to happen for sure, but we do have a lot of stocks opening about ten minutes from now and also jim's mad dash as we count you down to the opening bell here's another look at futures as we do that. a lot more "squawk on the street" straight ahead think again. this is the new new york. we are building new airports all across the state.

new roads and bridges. new mass transit. new business friendly environment. new lower taxes. and new university partnerships to grow the businesses of tomorrow today. learn more at esd.ny.gov we, the people, are tired of being surprised with extra monthly fees. we want hd. and every box and dvr. all included. because we don't like surprises. yeah. like changing up the celebrity at the end to someone more handsome. and talented. really. and british. switch from cable to directv. get 4 rooms with hd, dvr, and every box included for $25 a month.

♪ little less than seven minutes before we get to the start of trading for the week. >> wow, david, i need to know, 130 goes to 200, toyota deal immediately added, talking about autonomous driving they have the franchise, autonomous driving add the franchise bitcoin and data center, what don't they have the franchise on? this stock is back, it's bigger than ever. >> back and bigger than ever when wasn't it >> well, it had this little -- >> little whatever you want to call it. >> right there

>> that was pretty little. >> that was when everyone panicked andrew left came on air and said, listen, i don't know i said, look, let it drop and let it buy there we go. david, nvidia is intel in '93, i keep saying that and i'm not backing away from it not just toyota that likes this ship, volvo likes the ship david, autonomous driving is here, boom, how's it work? boom, new call of duty game, boom boom, boom, boom >> boom, boom, boom. i say they are well positioned they are well positioned >> no, they are better than that that presumes nothing. look, what can i say, david? this company has earnings, but it is the most expensive semiconductor company in the market that said, i don't know what to say, it's dominating people are talking about -- jeffrey's downgrades intel to a sell, why? are you listening?

gauntlet, thrown down against intel. it's not just a war of words anymore, david it's a grudge match. it's a claim semimatch two go in, only one goes out >> and that's going to be? all right. >> i don't call my dog nvidia for nothing. >> we have the opening bell. we'll be taking a look at other ene meacou mentioned, as well, wh wco bk. "squawk on the street" back after this hey gary, what are you doing?

oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face.

mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. i did active duty 11 years.my in july of '98. and two in the reserves. our 18 year old was in an accident. when i call usaa it was that voice asking me, "is your daughter ok?" that's where i felt relief. it actually helped to know that somebody else cared and wanted make sure that i was okay. that was really great. we're the rivera family, and we will be with usaa for life. usaa. we know what it means to serve. call today to talk about your insurance needs.

you are watching cnbc's "squawk on the street. opening bell ringing less than two minutes from now we have a full week of trading ahead of us, my dear friend. >> i think we're not talking enough about the fed, because what will happen is we need to hear every fed talking endlessly. officials say going three hikes to four based on the employment number on friday three to four says you can go into these bank quarters, reported on friday, with a full head of steam. therefore, if the numbers aren't so perfect, buy them keep in mind, janet yellen, she does not usually really say -- come out and say that stuff when

she's on the hill, but we need a consensus that that number friday matters sure did matter for the stock market >> it was a big number in terms of the employment number on friday when do we start talking more janet yellen and whether she keeps her job? we're not that far away from it. >> we have to. we haven't put forth on any candidates i'm working on that right now who are the most likely, but you know what, david, she's got some time and during that period maybe she can normalize things what is she going to do with the bond portfolio she could make it easy for the next player so they don't have to keep raising. she's a thoughtful person. i would not count her out for rate hikes >> a bunch you're assuming, there is a small chance she remains >> small, small. small. >> small not completely impossible. would you take the job if you were offered it? >> i wouldn't work for the government

>> you would >> if the government ever called me, yes. but they ain't ever going to call me, so don't worry about it any government previous administration, i don't care if you serve >> how about pagonia >> i'd pick it up. >> there it is, opening bell for this monday at the new york stock exchange going to have a mixed bag it looks like perhaps down a bit more here at the big board, gold standard ventures celebrating its fifth anniversary. over at the nasdaq, i think it's ratta electronic industries. >> another day gold is down, gold isn't doing anything. north korea off the headlines, what happened there, it was big and then it's gone what is that about >> it will be gone until the next missile test, then it will come back. it will be recurring >> charles krauthammer had a piece about how the president

has to acquiesce >> no good choices, as you and i both do, read all the different potential -- >> can't kocome up with anythin. >> potential military options, none of them are good on north korea. speaking of anything, anything out of the g20 that has a broader impact on the market >> just possibly the only thing i saw was that the president was so isolated on his own that you're going to see some, to me, some tough trade. some fight back. >> i think it was the japanese trade deal or chinese? >> everybody else -- >> deals going on around us. >> i am waiting for the president to declare the steel industry a precious national fence industry and that's why the stocks are holding up. it should be now, because he's no longer getting help from the chinese. not that there was any reason to believe the chinese would help the united states with north korea, because it's in north korea and china's interest to

continue the ridiculously terrible relations they have with the west. it's good for them they want the u.s. out does that not occur to anybody, they want the u.s. out of south korea? that's the chinese posture since 19 -- since we got to the alu and it's still the same. >> summers, larry summers, former treasury secretary, who kept up a drum beat of criticism for the most part, sometimes he goes after mnuchin, he writes, i think, in an op-ed, "the president's behavior in and around the summit was unsettling to u.s. allies and confirm the fears to those who believe his conduct is the greatest threat to american security." >> little severe >> i don't know. >> obviously, the left was not happy. merkel was the idol of the left. >> how about that cybersecurity unit we were going to have with the russians for ten minutes sent mnuchin on tv to talk about

it, then he said, no, it's not going to happen. >> i think the president has to watch "house of cards" this season know that putin is petrov and all deals are off. he likes tv, watches a lot of fox, watch netflix, "house of cards," whole thing would be solved without president underwood's -- president's underwood, you should say >> i haven't kept up the reason i mention is netflix quietly -- sorry >> football season, what's going on there >> monday night football, worried about it with disney we haven't talked about moffitt piece on disney. >> no, we haven't. >> remember they assassinated comcast, but, obviously, you have to worry about the price of what sports costs. i wish bob eiger would talk about the idea those costs can somehow be reined in >> these are long-term deals that they've signed. it makes it difficult when you talk about that.

but as you watch cord cutting accelerate, which it will and is, you have fewer and fewer subscribers. >> david, i watch espn on my hand held, i'm a customer, i'm a sign-up guy. >> that's the big moment you've got to figure out exactly what your revenue source is from there and how you negotiate those kinds of deals direct to consumer, and you cut out -- you have contracts in place with the distributors >> verizon, i watch every ad it's very hard to get through without watching the ads you want to watch schefter, you have to watch the ads. >> you do, you do. apple, as you pointed out, it's down nine cents. the story this morning that apple itunes not getting as much play any longer. >> now reading, don't forget, that year or year you're not going to have pokemon.

it's all negative for apple, but david, i want to be a faber report >> you do? you're not allowed to do that. >> abercrombie and fitch >> why do you want to talk about abercrombie a abercrombie and fitch? >> people were speculating there was going to be a deal, now it's off. perhaps because they are supposed to lose a lot of money. thermal based. >> they say, jim, they are generating solid comp store sales momentum at hollister, solid momentum >> happy hollister >> solid momentum. those are the kinds of things that sears says. >> sears saw more k-marts. >> announced more closings on friday, it was straight forward about their suppliers and trying to get everybody and their financiers to have more confidence. >> well, more credit lines, seem to get a credit line every couple of days >> that's the key question >> if they close all the k-marts, would the stock go

higher >> much, much higher >> you know what stock is in good shape mcdonald's mcdonald's is a key to this market >> really? why? >> why because if you have a good growth story of which mcdonald's has the best, you can continue to have your stock rewarded, even if it's not a semiconductor company or a fang member mcdonald's is the umbrella that allows you to say this could happen to you. it's an amazing run. and easterbrook does nothing to stoke it he doesn't come on tv, he doesn't juice the stock. he just quietly makes really great egg mcmuffins and breakfast all day and new technology and soon there's going to be a loyalty program. not unlike macy's going to announce a loyalty program david, panera bread and ulta are the two loyalty programs everybody talks about and you have to do those in order to

defeat whom? >> amazon. >> today best buy's down, rumors amazon is developing its own geek squad it never ends. it never ends. >> no, it doesn't. not until they finally -- not until you get some sort of antitrust action >> remember i said they could do that, but most likely be against walmart for telling people if you don't switch your data center away from amazon, we're going to come after you. and that is not -- you can't do that >> that's a hard one to do >> but best buy, which had been holding up so well, why, because they had the ability to install and amazon didn't. the idea that bezos over the weekend said to someone, hey, how about a geek squad stock's down 3 it works like that now >> can imagine it would be a real threat. >> look at the dollar stores, they can't get out of their way because amazon prime and reasonable, the pricing, it is just amazing >> and the logistics getting it the same day is the key. >> some things you can't do.

he can't say, you know what, we're going to be in the cruise line business. >> no. he can't >> can't be in the hotel business, not going after air bnb. >> no. >> but i find uber in conjunction, perhaps, for delivery >> with amazon >> yeah. well, there is already amazon uses a lot of services. >> let's look -- >> costco, david, will you >> what about it >> amazon. >> wow down 1%. >> still hey, how about paypal with that new deal >> saw that. >> deal with uber. bernstein, long a nonbeliever, goes whole to buy and i think paypal, dan showman is doing a remarkable job i would do a faber report part two, valiant selling a lot of assets and paying down debt, $4.6 billion how much have they done? >> moving too fast >> trying to cover everything i can. i'm done at 9:59, i have no

choice >> you just move through them. you don't really need me here. >> that's not fair i love you i love you >> i'm going to move to tesla -- thank you, love you, too down a little bit, had a terrible week last week. talk a lot about it, got a look at the model 3, we also have a story that sales in hong kong are done after the authorities slashed the tax break for electric vehicles on april 1st, done as in they are not selling anything where's the bottom for that? >> bears are in control right now, there's no doubt about that i do think the stock got ahead of itself in terms of the people buying it ahead of the model 3, so now they are selling the news meantime, no one thoughtabout hong kong. there's just an overall push by all the bears making a stand here it's not unlike zinder they are not letting it go it's become, david, an either -- i was talking to a fabulous guy

over the weekend, that's his first name, he was saying to me his son wants to buy, because it's a technology company. david, this is the battleground. if it's an auto, it's worth much less if it's a tech, it's worth much more lots of commentary this weekend about the solar panel business and how the utilities, the empire struck back >> fighting back and not allowing them to sell back into the grid lobbyists for the utilities are fairly powerful. yeah, that was interesting >> very good piece >> to bring the proliferation of solar panels to a screeching halt >> i know. remember they bought solar city. you end up with the bears still in charge of the narrative, david. they are in charge of the narrative. >> not the case for long, then when it changes, it changes pretty violently >> if the model 3 -- model 3 sales, whatever that would be, the next data point, that model 3 sales, all the people put the $1,000 down, get their car

>> meanwhile, here we are flat more or less on the s&p. nasdaq is up again >> ge is down again. did you think ge would be up i just read during the break saying, listen, never fear, execute unwinder, both more ways to drive value at ge, ce transition >> there are two stocks on the dow, ge and verizon. verizon is down almost 19% this year >> incredible, yet they managed to offload those cell phone lines that frontier used to. >> also a deal cincinnati bell, did you catch that one >> hawaiian deal i was going to talk about how big that was until you said listen there's deals, small deals from $8 to $10 billion not even a billion >> doesn't even make it. >> david, i struggle, i struggle to find deals of any import whatsoever >> it is another quiet morning when it comes to that, yes

>> david, how about mutual fund inflows. >> how about them? >> remember those days when i'd come in and say mutual fund inflows, now it goes to etfs >> all etfs. >> i know. >> wrote all about that, too >> i thought it was a very good piece. >> did you >> i thought it was a very good piece how they were kind of in charge, but i take that as bullish. what it says is, unless there's some stock where there's a real negative story, there's an undercurrent of lift to this market, and a lot of it has to do with money coming in supporting the big companies that are already big >> all right i got nothing left we've hit it all >> no, we haven't. that is ridiculous how about the iconic, hold the buy, jpmorgan, even though they cut the price and earnings >> jpmorgan, got to mention them every morning. >> well, we haven't mentioned thech them >> also involved in the sale of energy futures to mr. buffett. >> yeah, i think i should have

encore on tonight. >> all right >> i have them >> you do? >> booked them booked them friday i do my own booking. >> we'll discuss that while we have seema mody join us on the floor. seema? >> good morning, david emergency and oil prices continue to weigh on the markets. that's what's contributing to the decline in the dow, which is off just about 20 points, but a lot to look forward to, june retail sales coming out later this week, consumer prices, plus fed chair janet yellen commentary on wednesday, also the monthly labor market conditions number out at 10:00 a.m. eastern a quick look at global markets, trade tensions on full display over the weekend following president trump and chinese president xi jinping's brief exchange at g20, of course, in hamburg, germany trump striking a conciliatory tone, but no major announcement on north korea and trade this comes one week ahead of the 100-day plan announcement, where the expectation is we will get a comprehensive plan from both

china and the united states. july 16th, put that on the calendar meantime in d.c., senate republicans returning from the july 4th recess, which means the health care bill will be back in focus. the recent rotation out of tech, that's helped health care stocks, up about 2.5% over the past month, but will the uncertainty end the rotation that's what analysts have been talking about this morning the other focus will be financials, s&p 500 forecasting a rise in bank earnings, noting interest will rise, along with higher rates, which benefits banks on deposits, as well as brokerage firms on their investment counts. banks trending down monday morning. elsewhere this morning, results from pepsi tomorrow. delta airlines on thursday, that could be an interesting report to hear. with recent drop in oil prices, does that help the bottom line of airline carriers? certain a talk this earnings season lowest since june 26th, pushing to its sixth negative week in

seven. and gold hitting its lowest levels since march david, back to you >> thank you, seema. now let's check in with rick santelli at the cme group in chicago. rick >> good morning, david you know, rates in the u.s. are maybe down a basis point in europe, they are virtually down maybe two basis points. let's look at intra-day boons, high yield close under 50 basis points, 56 and change, hovering around 55. you can see the one weak chart there. what's fascinating there, as all this is going on, of course, there is some debate by traders and strategists as to the longevity of the stimulative/managing type policies that have been implemented over the past many years, and there's also issues that the european markets aren't really functioning very good there's liquidity issues well, of course there are. you know, the ecb's basically consumed all the water and left

a sahara-type environment to trade. really it's their issue in terms of trying to buy everything that's fit to be purchased and already printed. look at one week now look at january of early january of '16, last time boons were here. if you look at one week, very similar pattern. we basically intra-day touch that 240 zone. backed up just a bit what's really fascinating is look at the ten-year from may. look at that pattern, it should be no surprise if you look at the same day ten year minus two-year yield curve, the curve is steepened, along with the rise in rates and the fall in price. the long end is virtually always proactive, but it's important in this discussion when so much importance is placed on the curve, whether due to future fed policy or the notion of what it may signify economically just remember, that if you want to move long end rates and end year curve along the globe, pretty much the central bank of that country has more than

enough ammunition in forms of skurtds to do so finally, i normally look at the euro at this point because it's been hovering at 114, but one year the dollar index gives you a bit of a disappointing picture, even considering rates are running up, because they are running up in europe, as well. that's kind of the leader of this parade. david, jim, back to you. >> thank you, rick, particularly on europe. let's get to look at oil prices now, little closer look with jackie, joining us from the commoditydesk. jackie >> good morning to you, david. you can see crude prices are starting the week under pressure the session low was $43.65 a little bit rebounding from there. but at the same time the market is looking at all of the aspects in play right now. it's looking at opec, international factors, and it's not too optimistic about them. it's also looking about here, what's happening here in the united states, that drilling continues. i brought out a point this morning that the u.s. interior secretary last week signed an

order to hold more lease sales and also to speed up permitting on federal land. this is a step by the trump administration to really move forward with its energy plan and it's also indicative of the fact we're going to keep going here it's sort of a survival of the fittest mentality as we start to compete on the global stage in the energy arena and compete with some of those opec players, so that's what the market is focusing on now. some of the players i speak to are saying the first quarter of next year you could see prices lower than where they are now, so we're talking about the 30s at this point i would say probably for the rest of the summer we can bounce around these levels, but if something doesn't change in the supply/demand picture, you will see more pressure going forward. david? >> all right, thank you, jackie. jackie de angeles. oil has. >> $43 is a battleground level that is the battleground thank you, knowing this stuff so cold

>> holds $43, doesn't go down. >> she said short it with all your heart >> okay. >> she has credence. still to come, rbc's mark mahaney, what he's expecting from amazon prime day. we'll be right back. ♪ [brother] any last words? [boy] karma, danny... ...karma! [vo] progress is seizing the moment. your summer moment awaits you, now that the summer of audi sales event is here. audi will cover your first month's lease payment on select models during the summer of audi sales event.

netflix ceo -- sorry, there is a look at the s&p winners this morning so far nvidia in the lead, along with freeport and flir

and the show goes by fast. >> yeah. >> stop trading now, which means the end of the show. what are you doing >> credit piece today, which is positive talking about modernization, talking about how advertising is okay, but they did cut their price target from 30 to 25, and a reminder that there are 711 million shares potentially coming off, you know, what can i say

snap did not have great first quarter. have they learned their lesson, i understand some advertisers like it, but you got to get through the lock up, got to get through the lock up. >> any sort of fundamental change in the business instagram has just come after them hard. >> people -- of course, they talked about profits in 2019 here in this piece, but, look, turned out to be every bit of bezos. he's bezos, he's zuckerberg. these guys don't like competition. they like to wipe it out i think instagram is incredibly powerful i feel bad for snap. i feel bad for them. >> you feel bad for them come on, don't feel bad for them >> no, i chided them earlier, now i just feel bad. >> that's even worse they don't want your pity. >> well, they have it. i feel bad for them. >> what do you got on "mad money" tonight >> david, you know, i like this whole mna beef, i have bob shapard from oncor and bill

doyle from novocure, which has a device i think is revolutionary. great to be working with you people think perhaps because i interrupt, i apologize, that we're brusque. we're not brusque. >> love is never having to say sorry. you know that. >> i urge everyone to follow my garden pictures if they like to garden >> man spends hours in the garden >> this is not a cheap suit. >> clears his head >> i like to weed. that does not mean i like marijuana. >> to weed >> before weed became universal and accepted, weed meant pulling out thistle. i'm still in the pull out thistle mode, all right? i'm like a peaceful gardener it's like gandhi in there when i'm gardening. >> see him on "mad money" later. coming up on this show, shaun matthews, his take on the markets and fed ahead of yellen's testimony later this week we're facing 20 billion security events every day. ddos campaigns, ransomware, malware attacks...

actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that.

good morning welcome back to "squawk on the street." i'm sara eisen here with david

faber and mike santoli on the new york stock exchange. carl has the day off let's look where we are in the markets. starting off the week a little bit lower. the futures indicated we were going to build on friday's gains for stocks tenth of a percent, watching crude oil also lower, 44.17, fractional moves in this early action, david. >> yes, so far let's get to our road map this morning. starting with a packed week for wall street. janet yellen's testimony on capitol hill, and we'll have the start of earnings season, so what should you be keeping an eye on straight ahead. >> and washington in focus president trump arriving home from the g20 meetings in germany and congress comes back to work. we'll get a live report from the nation's capital >> plus amazon gearing up for it biggest sales day of the year. the details on prime day straight ahead >> as we noted, markets down this morning following a strong holiday shortened week with the

president back in the country following the g20 summit the dow hoping to get in the green following its fifth positive week in the last week, did manage to post higher last week after a volatile week for more we are joined by jpmorgan economist and managing director and av chief market strategist and co-head of multiasset solutions. good morning to you, gentlemen >> good morning. >> so we're starting off the week kind of slow, anthony bond yields in the u.s. and globally have in recent sessions really dictated the direction. is it all eyes on yellen wednesday? >> i think all eyes will be on yellen you're seeing the steepening of the yield curve, but all eyes will be on yellen and given the confidence that she got from the employment report, she's going to be a lot more confident about saying that unwinding of the balance sheet is likely to happen sooner rather than later. >> is that okay with the markets, given the fact we're not seeing so much evidence of inflation, wage growth wasn't robust again in the jobs report.

is the fed potentially making a mistake if it does go forward with its plans >> remember, sara, they are starting very slowly talking about $10 billion of unwinding. that's not the full amount that is actually retiring started very slowly. >> still >> still had the option. >> slowly shrinking into potentially what could be a weakening of the broader economy. >> but $10 billion a month is really not something to write home about that's very slow, and they could potentially delay that so it's not something that i think would rattle the financial markets. >> you know, if there's one thing a lot of investors, whether optimistic or skeptical seem to agree on is we're in a late cycle environment however you might define that. is that a premise you buy into and how would an investor act upon that or position for that >> again, it's all a matter of a definition i think it's given that you don't have a build up of traditional accesses, you don't have much over investment, you don't have wages growing at 3%

to 4%. i think it's premature to call for the end of the cycle imminently, although we are at the stage of the cycle where much of the gains are going to have to come from earnings growth as opposed to the past four to six years when the bulk of the gains came from multiple expansion. from that perspective, from the perspective of capital asset pricing, i do think you're getting past the mid cycle and toward the end >> do you think earnings growth, at least in the coming quarters, are going to substantiate where the markets are or no? >> i think so, but i think across the world earnings expectations are quite elevated. you see the significant increase over the last few months, so i think opportunity for positive surprises are going to be fewer and far in between, and, therefore, it's really focused on the companies that can actually deliver against those expectations that will prove to be critical. >> what do you expect for earnings season as far as the underlying economic fundamentals and whether they continue to bolster markets at these prices? >> i think right now we're probably looking at a very

healthy second quarter, probably something in the neighborhood of 6% to 7% and we know they typically beat by about 3%, and to extend a bit about your earlier comment, if you look at the real fed funds rate right now, it's still in negative territory. historically you don't get a market correction until the real fed funds rate on average goes to 1.4%. >> when are we going to see that >> we're going to see that when the federal reserve starts to raise rates. guess what, if inflation starts to pick up, that dilutes that to some extent. never a recession since 1960 without seeing the real fed funds rate at 4.7% we're in negative territory today, so very stimulative >> that seems far away from the current levels >> indeed, that's why i'm not worried. >> congress gets back to work today. "new york times" has an article, "republican lawmakers are increasingly aware they are promised to dismantle

obamacare's largest policy achievement, is deeply imperilled what would you say are the market expectations right now about health care and how that games out tax reform >> look, the one worry is even though corporations are ebulent about the prospects, some of the optimism is, in fact, tied to clarity on tax policy and fiscal policy to the extent we see muddling regarding the health care bill and that becomes a barrier to passage of tax bill or infrastructure spending, i do think corporations could delay some of the spending and hiring that they've thus far planned for and that could be a negative for the market >> when are we going to see the muddling what do you call what we're seeing right now >> right now you're still hearing out of ryan that they are expecting to come out with a clarity as far as at least the intended tax bill. i'm not confident that's going to happen, but that's what we're

hearing. >> anthony your expectations? >> if we see 10% corporate profit growth or 11% and the economy is still growing at 2% and they are dragging their feet in washington, the markets are going to say we have time to wait until 2018. the economy is not at risk of a recession. if we were on the verge -- >> don't need to see a pickup in capital spending or wages or pricing power, a lot of things that are still missing >> because if we see that, the federal reserve can panic and that can be more negative. i think the fed does expect something to happen, but it's probably a 2018 story. >> thank you for kicking off the week with us, gentlemen, in the markets. anthony chance, good to see you both >> thank you the world petroleum conference is under way attracting 500 senior oil executives and dozens of energy sm ministers across the world steve sedgewick is there in istanbul and spoke to the ceo of saudi aramco take it away >> very different atmosphere

from the last wpc conference they had back in russia in 2014 and the price then was around $108 a barrel. so you can see the different atmosphere now, we're in the mid 40s, as well, so a lot of questions about what's going on at the oil producers such as opec and nonopec to take oil off the market and get down. they think the strategy is working, for instance, the russian oil minister said it is coming down, but what about investment, as well? as you say, i spoke to the boss of saudi aramco and asked if the current price was affecting levels and putting in danger the ipo of saudi aramco, the biggest ipo the planet has ever seen let's listen in. >> if you look at 2016 and 2017, not different from 2015 where we've seen low prices. what we concentrate on is the long term and always investment, our biggest capital program was

in 2016 during a low cycle >> on that point, ipo is on track for 2018 >> is on track for 2018. >> and that's it it's a short answer, but very important answer for the market. let us remember, david, this ipo could be anywhere from a trillion dollars, which some skeptics think it's worth, or what saudi thinks it's worth is $2 trillion. of course, they don't want to do this at $44 a barrel, sub $50 a barrel, so very interesting to see, but i had the one line from him. didn't want to answer anymore questions about the ipo, whether it was going to be new york, whether it was going to be london, whether concerns about litigation issues in the united states or listing issues in the uk, as well. but very interesting, they say, they are on track with this, as well that's quite an important point. the other thing an important point about and for the whole industry is he's worried like everyone else is about oversupply at the moment, but ebz he says there's so much investment not happening in the

market, i.e. $1 trillion worth of investment hasn't happened since the price has fallen from over $100 to sub $50 he's worried about an inflection point which we could see longer term volatility and potentially the big prices again we saw in 2014 and before that, as well. lots of big questions here for the delegates seeing, quite frankly, very tough times, but they have their costs down, that's the good news trouble is the competition, even at lower prices from shale and other producers who haven't got price caps, it's absolutely intense. i think these are quite troubled times here in istanbul back to you. >> all right, thank you very much, steve sedgewick, very interesting. of course, especially about that monumental ipo still coming, apparently when we come back, we're going to get -- they are getting to work in washington. congress does return from its holiday recess and the president is back from the g20 summit. plus, ready, set, shop amazon prime day ready to get under way. a look at the e-commerce gntia's

biggest sales day of the year. "squawk on the street" will be right back

kayla tausche joins us from washington hi, kayla. >> hey, mike the senate returns with support for the bill still faltering and now a three-week time crunch president trump tweeting he couldn't imagine republicans taking off for august recess without a, "beautiful new bill fully approved," but the

pre-recess have grown by two with marco rubio and john hogan saying they don't currently support the bill a handful of others pointing to a bipartisan alternative mitch mcconnell said they'd have to figure out other options this morning, senator moran of kansas staying they wished they'd done a bipartisan bill from the start and senator john mccain saying this on "face the nation." >> i fear that it's going to fail and then we should convene and say what are we going to do? introduce a bill, say to the democrats, here's a bill doesn't mean they control it it means they can have amendments considered. and even when they lose, then they are part of the process >> other republicans are holding out hope senator ted cruz, who's hoping to build momentum for his amendment, and senator pat toomey on "squawk box" said there's still a chance, if slim.

>> i think there's still a path. it's very, very difficult when you can only lose two votes and there may already be two that are irretrievable, but we have to give this every effort. >> senator toomey said a new version of the bill comes out today. the cbo will then score it if the votes materialize, a vote could happen as soon as next week, but, of course, as we saw this play out on the house side, really anything can happen up to the wire guys >> all right, kayla. stay close, thank you very much. the president in addition to health care returning home this weekend to mixed reviews following his meeting with vladimir putin and other world leaders at the g20 summit in germany. for more on that, joined by former state department senior official and center for american progress fellow max bergman, as well as ambassador james claspman gentlemen, thank you very much for being with us this morning >> thank you >> thank you >> max, it's interesting, prior g20 meetings under earlier administrations it was pretty

common to sort of get the communiques and sort of not dismiss them, but say it's kind of a broad brand declaration of intent is it different now that we have this administration that's really making an effort to retreat a bit from this kind of global approach? >> yeah, i couldn't agree with your characterization more usually the g20 statements are quite boring, you know what's going to be in them beforehand yes, you know, people look at them very closely, but really they don't draw a lot of attention. in this case, the fact that, you know, they were able to get a final agreement on the statement, essentially acknowledge that the united states was an outsider, was alone, is really shocking. i think the whole summit was a demonstration that america first actually kind of means america alone by itself, that no other country followed donald trump's leadership on climate change,

and so, you know, we had a situation, i think, that was quite shocking not just to folks that follow foreign policy, but also to the entire world, where here was a case where the united states was actively on the sidelines while europe, russia, china, were sort of stepping up and taking the helms of global leadership hasn't really happened for the last 70 years. >> ambassador glassman, granting that the other 19 nations were somewhat shocked and taken aback by this, you would imagine the trump white house says this is by design, this is what we ran on, this is the approach we intend to carry out on the global stage is there a sense within the white house that this is exactly the strategy >> well, i think it is actually, i think the retreat of the united states from world leadership began in 2009 this is a continuation of the obama policy, but from a different angle, and i think we're going to see more of it.

now you have to understand that the foreign policy establishment, con ssensus, whi i think dominates the u.s. senate, is still trying to push back against the direction that the trump administration is going in, but there's no doubt that's the direction that they are going in a retreat from leadership, and i think overall that's not going to be good for the united states >> you think it's not going to be good, so substantively what do you think is going to come out of it, whether it be with regard to trade policy and trade agreements or other things that, you know, folks in the markets want to be focused on? >> that's a great question i think the most important thing for your viewers, for people who care about the markets, is what's happening in trade. pulling out of tpp, i think, was a bigmistake, a strategic mistake, also an economic mistake. i think we're moving in the wrong direction with nafta already, and you're seeing the rest of the world making good trade deals, you know, europe and japan have entered into a

trade deal mexico and china this is what's -- this is what the world is really all about, this reversion to some kind of really pre world war ii image of the united states, it's not going to work, and i think in the end it's going to fail, but this administration is going to continue to push it, going to continue to use phrases like defending western civilization these are kind of antique notions, and they are moving in the wrong direction and i think for markets, that's not a good thing. we can already see that in what's happened this year, where the u.s. market, yes, it's done well, but compared to the rest of the world it has not done well, and i think we're going to continue to see that >> i'm not sure, though, that you can really wrap your head around what exactly the implication, max, of the u.s. loss of leadership in a global stage, the g19 plus one concept actually means economically for this country in the next few

years. do you have a way of defining it and showing the real world consequences of that >> well, what i would say is that the system is in some ways incredibly stable because it's built on the power and leadership of the united states, and we don't really know what will happen when the united states pulls back. and fortunately there is actually a model and example we can look to and it's the 1920s and 1930s. just pick up on the trade point, you know, the summit started with threats of a trade war between the u.s. and its closest partner, the europeans and, you know, 1930, the tariff act helped crater global trade, so we have a real precedent that we need to be mindful of and need to avoid, but things can fall apart very quickly when you withdraw the major leader, the major player in the world order, and if we start taking protectionist trade measures against europeans, against mexico, against china, those countries will follow suit and

we could have a real unraveling of global stability. it's a real challenge, and i couldn't agree with most of the comments of the ambassador >> ambassador glassman, there was also a school of thought that says the chinese will move into that void and gain more prominence in terms of world affairs as a result of our stepping back. do you agree with that >> i do. and we're already seeing the chinese take -- first of all, they played the long game, but what we're seeing, for example, in soft power, which is what i was involved in in the state department, is the chinese moving into africa in a big way, moving into latin america in a big way, so i don't think it's necessarily going to happen overnight, but i think over the long term there's no doubt about it, absolutely and i would also point out, though, there is -- there is some -- there's a struggle going on between parts of congress at any rate and the administration over these kinds of issues and we're seeing that in the sanctions bill so the sanctions bill against

russia passes 98-2, even though i think there's serious problems as far as energy is concerned and maybe they'll get fixed. you know, the speaker wants to drive this thing through the house and it really deprives the president of a lot of power, so congress is suspicious, skeptical, really unhappy with what the president is doing and taking apart or trying to take apart the consensus that's dominated since world war ii, so we're going to see some friction there, but there's no doubt where the administration stands and would like to go >> yeah. shifts in policy might not happen all that quickly. thank you, ambassador glassman and max, appreciate it >> thank you when we come back, amazon's prime day is here, so how does the e-commerce giant handle all of the orders? we've got an inside look for you at one of its prime day facilities and taking a look at stocks at this hour, they are sort of flat hovering around the unchanged line they've gone positive in the

last few moments or two, but we're talking less than a point for the dow. opng fsdaq in the lead up a whpiour points "squawk on the street" will be right back ♪ there's nothing more important than your health. so if you're on medicare or will be soon, you may want more than parts a and b here's why. medicare only covers about 80% of your part b medical expenses. the rest is up to you. you might want to consider an aarp medicare supplement insurance plan,

insured by unitedhealthcare insurance company. like any medicare supplement insurance plan, these help pick up some of what medicare doesn't pay. and, these plans let you choose any doctor or hospital that accepts medicare patients. you could stay with the doctor or specialist you trust... or go with someone new. you're not stuck in a network... because there aren't any. so don't wait. call now to request your free decision guide and find the aarp medicare supplement plan that works for you. there's a range to choose from, depending on your needs and your budget. rates are competitive. and they're the only plans of their kind endorsed by aarp. like any of these types of plans, they let you apply whenever you want. there's no enrollment window... no waiting to apply.

so call now. remember, medicare supplement plans help cover some of what medicare doesn't pay. you'll be able to choose any doctor or hospital that accepts medicare patients. whether you're on medicare now or turning 65 soon, it's a good time to get your ducks in a row. duck: quack! call to request your free decision guide now. because the time to think about tomorrow is today.

speaking of, shares of abercrombie and fitch are under pressure this morning, the retailer issuing a statement saying it has terminated discussions over a potential transaction. those discussions, remember, began in late may after the company received expressions of interest, but abercrombie now says its best path forward is, quote, rigorous execution of our business plan. guys, the stock now is down more than 20% original dow jones report said there was interest from express and american eagle outfitters, but that didn't pan out. i guess they couldn't come to any kind of agreement. >> the big question has been would there be any kind of private equity bid for some of these names. obviously, the market is saying not right now. you don't really know how far down you have to chase what looked like kind of cheap stocks

to the rest of mall retailers n now. >> wonder if it's going to be trickier to find buyers? private equity or rivals >> other retailers try to come in and be the savior is a tough proposition here >> yeah. generating solid comp store sales momentum at hollister, so they have that going for you >> that's the priebright spot. >> they are not used to shrink mode they are built on square footage mode and when it goes in reverse, hard to know. >> also you have to be on trend. look at kate spade, that was a sale, difference is, kate spade had very strong comps, they knew their audience and continued to innovate around that just had trouble being a public company in this kind of environment, squeezing out the profitability. so, the retail -- >> once you express interest and you see the terms of all the leases and see what actually is involved, it's not just buying a brand, right, it's buying lots

of real estate commitments and all the rest >> well, we'll be watching that. of course, we saw shares down about 20%. speaking of retail, amazon prime day kicking off tonight is expected to break records again this year, which means even more packages will need to be delivered and fast how does the e-commerce giant pull it all off? our morgan brennan is on the ground at the prime air facility in seattle never know where morgan is going to wind up she's there in seattle morgan, tell us about it >> reporter: hey, david. that's right so take a look behind me, this is a boeing 767, it has been outfitted to fly freight it is one of 24 amazon planes that will help move goods for the e-commerce giant as it makes 48-hour deliveries on the heels of its prime day, which starts later tonight. now this is the latest step in a strategy to build out an in-house transportation network that includes tractor trailers, container shipping, and dozens of automated warehouses, so i

asked dave clark, head of worldwide operations and transportation, whether this is simply a shipping strategy tied to the growth of amazon prime and prime membership, or whether this represents a future additional business for the company. >> first and foremost, i think it's innovation for customers, so whether it be planes enabling us to do later cut offs for two-day deliveries or flex, which enables to do one-hour delivery in things like our prime now business, creating new delivery services for customers is a big deal for us >> reporter: so clark says these planes, which will total 40 by next year, are being leased from air transport services group and atlas air worldwide. will add necessary capacity above and beyond the contracts with ups and fedex, but unlike traditional transportation networks, this also means that amazon can run planes cross-country and not have to stop at cargo hubs along the way. that means flights can take off

later and also means they can cut down on fuel costs and actually time. this can cut upwards of 12 hours off of packages' journeys during these nonstop cross-country flights. in addition to this i also asked whether there are long-term strategies to add more of these planes above and beyond the 40 that are coming online through next year. no comment on that, but if you're wondering when drones will be a part of the mix, as well, clark does say that amazon is working with regulators, but this is still likely years away. guys, back to you. >> i was not wondering that. i'm terrified of drones in new york city delivering packages. i feel like that's a recipe of disaster >> add that to your list of fears. >> i have many fears morgan, thank you. interesting look at the delivery of prime day now let's send it out to sue herrera for a cnbc update at this hour, good morning, sue >> good morning, sara. here's what's happening at this hour iraqi forces advancing to retake one of the last areas of mosul

where isis militants are holding out. it comes a day after the prime minister visited troops to congratulate them on the nine-month battle to retake that city isis militants are still in possession of a tiny sliver of the old city the most senior vatican cleric to ever be charged in the catholic church sex abuse scandal returning to australia to stand trial, cardinal pell avoiding the media upon arriving at sydney airport. california's governor jerry brown declaring a state of emergency for butte county due to a wildfire burning in that region the so-called wall fire has consumed more than 5,600 acres and more than 4,000 people are under a mandatory evacuation and at least two people were injured in this year's fourth running of the bulls at pamplona festival today's run lasted 2:19, one of its fastest. five people, including four americans, have been gored since the runs started on friday

that's the news update this hour, back downtown to you guys. sara >> all right, sue, yep, speaking of scary things, thank you >> you got it. when we come back, a jam-packed agenda on wall street fed chair janet yellen getting ready to testify on the hill this week. we'll talk to the ceo of cantor fitzgerald shawn matthews. and elon musk revealing photos of tesla's lower price model 3 for the first time we'll show you them next a used,

stocks are little changed at this hour. technology and materials are certainly bright spots in the session. geopolitical tensions, though, are high, and fed chair janet yellen is set to testify this week for two days before congress, so how to position your portfolio, joining us now, shawn matthews, ceo of cantor fitzgerald welcome back nice to see you. we have a little more volatility

after a long period of calm. do you expect that to continue >> i think the volatility is really about rotation going on in the marketplace right now if you look at the indexes, they've been relatively flat with an upwards trajectory the story the next six months will be about rotation in people's portfolios. if you look at some of the interesting areas, you have credit spreads remaining relatively tight where equity prices were significantly under pressure in the first half of the year for telecom, for energy i think that rotates and changes and you'll see prices do better there, but in general, people are wait and hold and see what's going to happen as far as tax reform and regulatory reform >> what about the rotation out of bonds in recent weeks as a global phenomenon? is this the start of a bond bear market >> i think you're going to see -- you would be a better seller here as opposed to a buyer, and i think most people are now looking at the bond market as a rotation play. you have to keep some of your assets there, so you're going to try to figure out where the opportunities are. if you look at high yields

space, it is stress side under tremendous pressure. the high end of high yield it's incredibly tight you're seeing double b trading at 5% yields, which is certainly a tight level when you look at, you know, historic norms so i think people are cautious, and i think you're going to have some duration come back in the marketplace and rates back up over the next year or so >> when you talk about just how firm high yield credit, the riskier end of the corporate bond market is, to me the big question is, is that a reliable signal always has been in the past. department have to worry until credit started to get stressed can we rely on that? >> here's the interesting thing. if you look at the equity markets now, 70% of the volume coming in is really coming in through passive nature, so that's money just pouring in 20% is really high frequency guys playing the market for a minute by minute process, and 10% is relative value, so i think the market is skewed towards the passive scenario, which is allowing it to continue

to go up, but if you look at the breadth of the rally, it's getting tighter and tighter as we move higher >> although a lot of that so-called passive is quantitative, looking at fundamental signals and looking at things like credit. okay, nothing to worry about right now. >> sure, and credit has been completely benign for an extended period of time and duration hasn't been a problem and people haven't really had to hedge their risk if we think about hedging your risk out in the fixed income market, it hasn't happened in a long time and i think people are starting to look at that now if you look at the central banks, they are starting to take the thought process of easing away that's the beginning of the end when you start to think about what happens >> what about activity levels overall? you know, given what i hear certainly from people who are looking at potentially doing something, whether it be a deal or anything else and perhaps deciding i'm not sure about the landscape when it comes to policy >> when you look at the overall financial services market, the first quarter was a really strong market in general the second quarter was weaker, and it was weaker across the entire curve, so people are on

wait and see mode. you had a big rally. if you think about the rally we had, especially in the equity market, it was significant fixed income, people are getting more concerned about fixed income as time goes along, so everyone is in a wait and see mode to try and figure out where the next move is, and i think at some point in time cash has to be a good asset class. a long time people have talked about cash that has to come into play i think the next year that does come into play >> activity levels are down. >> correct >> what about trading activity expecting the big banks to start reporting earnings at the end of the week what can you tell us in terms of your business? >> i think in general the marketplace you've seen volumes are definitely down. that's been a trend that's been in place the last three months, so i'm not sure about others, but certainly i would think it's going to be a more challenging quarter than the first quarter >> where are your clients in terms of how bullish they are on this market and how much conviction they have >> they don't have a tremendous

amount of conviction i was talking to a bunch of big hedge funds and one of the things we talked about early in the year is buying protection to the upside something you never hear about, right, so all of a sudden we can't miss the rally, we have to buy protection, buy calls to think about where the market is going, and that's a phenomenon you never hear about, usually buy protection by the downside i think that's playing itself out and now i think people are literally in wait and see mode to what happens, which means volumes come down, activity comes down people stick to their winners, and you just have less trading volume >> that low conviction level, seems to also kind of have application to the business as itself, right, so people say i don't know where the business is going, you say only 10% of people are fundamentally implementing stock picking right now in terms of where the market is, yet a lot of macro fund managers saying i'm done, this doesn't make sense to me today what does that mean for your business >> i think there will always be

new players that come into and participate in the markets, so that's not a big concern it's a healthy rotation if you think about large global macro players. i was playing golf with one this weekend who decided to retire a year ago he had enough, i'm done, it's perfectly fine, and i move on. that's natural so you're going to have new guys who come and participate in the markets. there's always going to be a cycle. face it, we've lived without a business cycle now for almost eight years. zero interest rates across the curve, no business cycle, the business cycle is coming into play again, the fed is going to lead us into a business cycle mentality and everyone is going to follow, so i think that's when, you know, the relative value players come out again >> paper at 5% may be scary in that environment >> it could be >> shawn, thank you. shawn matthews, ceo of cantor fitzgerald one of tesla's largest markets, hong kong, may not have that status much longer. phil lebeau joins us more with that story morning, phil. >> this is interesting,

statistics gathered by "the wall street journal" when looking at registrations in hong kong for the month of april show zero vehicles delivered in hong kong in april, zero tesla models delivered then well, keep in mind there are some factors that were behind this, principally, there was an ev tax break taken off the books, so there was a rush in march and zero deliveries in april. tesla saying when thehong kong government reduced the tax exemption and increased the cost of our cars by nearly 100%, it's expected demand be impacted immediately following the change, particularly because of the large number who bought just prior to the change being implemented. that's what's happening with tesla over in hong kong. and in china, this is what's happening in the u.s. this weekend. elon musk tweeting out these pictures of the very first tesla model 3 after it was built at the plant in fremont

remember, the first 30 model 3s will be delivered at the end of this month as you take a look at shares of tesla, keep in mind that we are at the beginning of what is going to be a very busy second half of the year for tesla, starting with the model 3 deliveries and moving all the way through the end of the year with several announcements expected shares once again under pressure, down basically 13% in the last month >> all right, phil we'll keep watching that mix of positive and negative factors surrounding tesla. as we head to a quick break, taking a look at shares of clubcorp. surging after announcing it's being sold clubcorp., one of the largest operators of golf clubs. 30% premium to friday's close, although, below its all-time high "squawk on the street" back after this quick break stay with us

look at me...look at me... look at me... you used to be the "yes" guy. what happened to that guy? legacy technology can handcuff any company. but "yes" is here. so, you're saying we can cut delivery time? yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes. won't replace the full value of your totaled new car. the guy says you picked the wrong insurance plan. no, i picked the wrong insurance company. with liberty mutual new car replacement™, you won't have to worry about replacing your car because you'll get the full value back including depreciation. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™. liberty mutual insurance.

are you desperate for

dividends? who isn't. the five highest yielding stocks and findinout g if any are worth your money at tradingnation.cnbc.com whoooo. i enjoy the fresher things in life. fresh towels. fresh soaps. and of course, tripadvisor's freshest, lowest prices. so if you're anything like me... ...you'll want to check tripadvisor. we now instantly compare prices from over 200 booking sites... ...to find you the lowest price... ...on the hotel you want. go on, try something fresh. tripadvisor. the latest reviews.

the lowest prices. welcome back let's get out to the cme group rick santelli with the santelli exchange morning, rick. >> good morning, and thank you, sara like to welcome my first guest of the week, peter wallaceson, thanks for taking the time as former general treasury counsel. you've written some interesting pieces, especially regarding gse potential reform one of the most recent, the national association of realtors getting a little skittish about the amount of capital money buffer in the government-sponsored enterprise, you know, freddie and fannie and everybody trying to get a mortgage, they want to maybe establish some sort of market liquidity fund your thoughts on that notion >> i don't really think it's necessary. it's a bit of an alarmism going on here.

in fact, if the two gses need some more capital, they can always assess the treasury, the treasury will produce it i don't think that will cause any disruption in the market the real problem here, of course, is that the gse still exists and we have to do something about that >> all right now, you know, i couldn't have picked a better way to tee up my thought for the day. whether it's health care, whether it's changing six-decade-old global policy, whether it's on trade, on protection like nato, it seems as though governments, whether it's d.c., brussels, they can get things done that give government more control whether it's financially responsible or works or not, but going the other way is nearly impossible i'm almost given up. i don't think we're going to see gse reform are you as skeptical or cynical as i am on this topic? >> well, here's my problem, and that is the gses can be reformed, they can be eliminated

the trouble is that many people in congress want to create a different, newer, and bigger government responsibility for the housing market we've got to stop that it was the gses and the government policies that pursued and regulated the gses that caused the last financial crisis by reducing underwriting standards. every time the government gets into a market, it does the same thing, it distorts the market and causes a financial problem of some kind, and we're going to see that again unless we get rid of the gses and return this market to the private sector >> you know, as i said, i kind of given up hope, but there is some hope. when i look at chicago, they had as many rules for taxes and medallions and protecting that industry as any major city in the country. then all of a sudden the ride sharing hits and it was below the radar and those cars could do anything they want. is it going to take some type

of -- and they've already started -- internet, where you get your financing that way, or the government doesn't pay attention for a while, gets a life of its own, then take it and ignore it for a generation is that going to be the solution to housing >> well, ultimately, the solution to housing is to provide an opportunity for the private sector to participate, because that will produce high quality mortgages, prime mortgages, which are excellent investments and to the extent that the private sector can produce those and it can do that easily, it always has. the result will be a very stable market with good low-cost housing. right now the government's policies are forcing up housing prices so that housing is becoming much less affordable than it was in the early 1990s this has got to stop we have to stop the government's involvement in this and start a true market for housing.

>> thank you so much you could have been talking about health care, as well as housing, almost synonymous in how the government gets their girth in the middle of these things thank you so much. david, back to you >> all right, thank you, rick santelli let's send i let's send it over to jon fortt with a look at what's coming up on "squawk alley." >> what's a retailer to do for the slow period between dads and grads and back to school invent a holiday the newspaper industry looking to train anti-trust regulators on facebook and google and away from themselves. we'll dig into whether that might work and it's the ninth anniversary of the app store really changed everything when wel lles to software diriti'lte you why all that coming up on "squawk alley.

the power of a low volatility investing approach. the power of smart beta. power your client's portfolio with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc.

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.

welcome back cnbc kicking off its 11th annual countdown of america's top states for business. scott cohen is with us from the top state which remains a mystery. >> does this help you? i don't know this is -- we're welcoming your guesses, but we do keep it a mystery, that's part of the whole thing. it's a very closely guarded

secret, even within cnbc because we prosecute leakers it's a great system we have. what we're going to be doing for those of you who haven't been with us for the 11 years we've done this before, is that we're counting down the top states all day tomorrow, the five top states for business and give you clues and eventually on the "closing bell" tomorrow we'll reveal where i am, america's top state for business it's a lot of fun but also a serious study that goes behind this since we started doing this in 2007 we've had ten categories of competitiveness but assign them a weight based on how much the states are pushing these particular aspects of competitiveness. here's how it stacks up, workforce, wrts 425 points a battle for skilled workers and we look at the education level of the workforce, availability of skilled workers and so on infrastructure, roads, bridges, shipping, airlines, also utility, water utilities, cost of doing businesses, taxes, incentives, wages and the cost

of rent, economy is the basic economic indicators in the state, and also the strength of the state economy, quality of life looks at attractions, crime rates, air quality inclusiveness, technology and innovation, which states are attracting research dollars and the most patents, education from kindergarten and college and beyond, business friendliness, the climates of the state, access to capital, venture capital and bank financing and the cost of living that's 2500 total points the state with the most is the top state for business this year is the most competitive since we've started, the top three states this year separated by just five points so we're going to have fun with this through tomorrow and in the end, top states.cnbc.com see where your state stacks up and read about the whole issue of state competitiveness. guys >> don't you usually give us a clue, scott, so we can start the guessing we know there are trees and

grass. >> well, this is a clue. and we will start with what we call our diabolical hints. the first one on the "closing bell" today as we go through this again and then each type that we unveil a state, we'll give you another diabolical hint about where i am maybe you got some amateur bot nists out there, maybe something indigenous, i don't know or maybe it's not because we like to mess with you. >> white trunks, white oak maybe. >> birch. >> birch trees >> thank you we look forward to it. always a highlight. coming up much more on amazon prime day why rbc's mark ma hainey says amazon's stock is prize to go up, 1.25%. "squawk on the street" will be right back

attention homeowners age sixty-two and older. one reverse mortgage has a great way for you to live a better retirement... it's called a reverse mortgage. call rfree information kityour 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, you'll get this magnifier with led light absolutely free! when you call the experts at one reverse mortgage today you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home... and here's the best part... you still own yohome. call now! take control of your retirement today!

welcome back to "squawk on the street." i'm dominic chu. you can see stocks at the highest this section, tech materials your leaders right now, health care and real estate some of the biggest laggards looking at retail this morning as well, the xrt, the etf that

tracks the retail business down about 2% abercrombie the worst of the bunch on pace for its worst day in almost a year town almost 20% after the retailer said efforts to sell itself have stalled. dick sporting goods, amazon bucking the trend up 1% ahead of its annual prime day now back downtown for the start of "squawk alley." guys, back over to you >> all right thank you, dom good morning it is 8:00 a.m. at amazon headquarters in seattle, 11:00 on wall street "squawk alley" is live ♪ ♪ ♪ typical drive today time to emancipate ♪ ♪ i guess