north carolina sub decidsided ae bit over the weekend s&p up 14.5. nasdaq very strong indication this morning for where it will open up 42 points or so. so we'll see 9:30 will come faster than you think. melissa, thank you for joining us. >> my pleasure. >> things are happening this week. >> make sure you join us tomorrow squawk on the street is next good monday morning welcome to squawk on the street. david is off oday. futures are up as the white house over the weekend tries to relay concerns about north korea. the president goes to washington this morning europe is rebounding from last week ten year almost back this week the ceo of merck stepping down

from the president's manufacturing council. p&g ramping up it's fight against nelson peltz and netflix with a big score in the content war signing shonda rimes away from abc a tweet from ken frazier saying he will re-sign from the president's manufacturing council was met almost immediately by a response from the president in which he said frazier would now have time to go lower rip off drug prices and immediate reprisal for what i assume the white house sees as a breach of loyalty. >> ken frazier is known as one of the more thoughtful executives out there anyone that followed the drug industry knows that he has a lot of false promise

he speaks his mind the president. he's the president of the united states but it does seem a little, ill advised to just immediately attack him for going and gouging and mr. frazier as also been a man that tried to hold the line on drug pricing. so it does to me, i mean, who am i to say it's unfair it just seems like that mr. frazier deserves better. he speaks his conscious. >> this is video we're watching here of past sit downs between the president and ceos you see frazier has been prominently placed to the president's left in this case there's jared kushner next to mark fields. i don't know that you could say necessarily he was a high profile member of the council but certainly got a lot of notice apparently from the white house. >> merck is a huge employer.

merck has been known as a stand out company for years and years. merck is a company considered to be a great american asset. so i found it disconcerting that he was immediately atakd i understand the president is very, he's, why did he do this i'm just a guy. >> this is the merck statement if you missed it as a ceo of merck and as a matter of personal conscious i feel a response toblt ta responsibility to take a stand against intolerance and extremism and i can assume it's from a lack of response from the

president over the weekend he will sign an order that will have more to do with china and trade. >> right i don't know, he wants to go, he'll have more time to lower rip off drug prices. i don't know my mother and my father would have said that's exactly the opposite of what you should do. guy says his conscious and say i wish you well. how about i wish you well. even the nfl, they know better i don't know -- >> jim we're all finding our way here. >> we're stunned. >> in this extraordinary new dynamic between the government and american business. >> mr. frazier is a man i have looked up to i have praised him many times on our show he has drugs that would do better, that would do much better if he was promotional like other companies

he has been compassionate and he has been the last guy that i know that ever said -- my mom died of cancer and i have seen time and again that -- i have seen time and again that he has said listen maybe my drugs aren't -- he doesn't do the big advertising because he doesn't want to create false promises. he's a man of conscience maybe he didn't buy into the president, the president didn't buy into him twitter is interesting i guess it's a place you can really take some shots but he is the president. it's very meaningful when the president attacks people very meaningful. >> remains so. we'll get to aman this morning not only do we have today's events to look at but also an eye on this council. >> you were just showing the tweet there from the president attack ken fraziers industry, his company and perhaps the man himself. i want to underscore this is an

astonishing political choice that the president of the united states has made this morning he has been under fire over the weekend for seeming to be too soft on white supremacists too soft on nazis. not calling them out by name the white house criticized when they did finally call him out by name doing it via an unsourced background his vice president, his attorney general have been out on national television trying to clear up the political damage from his comments. today ken frazier re-signs in a protest of conscious speaking of fundamental american values the president of the united states had a choice to make this morning and the choice he made was to attack ken frazier, to lash out in anger and frustration saying that the industry has rip off drug prices that is a political choice the president has made

i don't think you will find a political adviser in either party anywhere in washington or around the country that would say that is a wise political move to make given the situation the president finds himself in today. i think this tweet is going to reverberate throughout the day and the president and the white house are going to face intense questions about why he chose to respond this way to ken frazier. >> speak of today, walk us through what we think we're going to get at 3:00 the president over the weekend suggested there might be a news conference of sorts but what is actually on the calendar >> we don't know what we're going to get today we expected the president would have an event related to china later in the afternoon at the white house. he has been in bed minister new jersey over the past week or so. we expected him to go to trump tower today but that was cancelled. the president is is now coming to washington. we have heard from jeff sessions

that he expects that the president will address the nation today regarding what happened in terms of the racist violence in charlottesville, virginia over the weekend but we have not heard that from the white house itself so we don't know if they have an event planned around this event that happened over the weekend. we do know that the china relate event is still on the calendar for later this afternoon at the white house and he's planning to go back up to new york and back up to trump tower this evening, carl. >> we'll come back to you later on this weekend. >> look don't let the door hit you on the way out mr. frazier we're in a polarized country a lot of people feel like mr. frazier called the president out so the president called him out. that's another strain of thought. i totally get that that's not my strain my strain is unimportant i'm offering that in the industry mr. frazier is not known as someone who has done rip off pricing.

whether you like or not what he did in terms of his conscience i think it's good to have a conscience but you have to get your facts straight. mr. frazier has not been at the forefront of raising prices for the sake of raising prices at merck's profitability. so for those that think it's absolutely right that trump called him out because he called trump out, all i can say is i would call him out on something that you may not like his state of conscience which i don't mind but do homework. homework is key because i know companies. i know companies there are some companies that have continually ripped off the american people. if you hate him or like him for what he said can we at least get the facts straight on mr. frazier? >> jim that's why we lean on you. >> i'm talking about merck

that's what i'm allowed to talk about. am i against violence? yes? am i in favor of free speech for the president and mr. frazier, yes? am i in favor of whether he's the guy that ripd off people, no, because the facts don't mandate that there's people that ripd off the people mr. frazier has so kept down his sales by not promising because he doesn't want to give people false hope he could blowout the sales he could blow them out he has every right to try because other people have blown out cancer drugs and made to feel like my mom is going to go on that drug and she's going to live and then she dies. >> jim, people are going to be talking about this all morning long after the break we'll get to the markets and why the futures are soup dramatically today. a lot of corporate news as well including a mixed bag of news regarding netflix. we'll talk about that. price target upgrades over at

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so north korea is not off the front burner as much as well, we have seen the chinese

true colors. it's not unlike president truman when he fired mcarthur people forget history. as soon as president truman realized that china was a total ally of north korea he recognized that the idea of bombing china would be a mistake. i now feel like once again you're bombing china if you're bombing north korea which would be an ill advised situation. >> why launch this inquiry today to look into whether or not, to investigate the chuy feinese fo requiring u.s. firms to hand over intellectual property. >> i'm waiting for we can't let the chinese be the only people that make steel. but the president is reluctant to use 232 which is a shame. intellectual property. well, still, that was reckless abandon. thanks for nothing but what really matters is we have this

steel industry i thought was promised by the president and i think 232 is a must. i have been saying that china and south korea has been plague unfair we get that. they're all out of business so i thought it made sense. we don't want to make our tanks out of chinese steel i think they would prove to be effective. >> does the auto industry say okay >> no, the auto industry has to fight this we're not making those with aluminum i know that the steel industry, if they did not have foreign steel would be able to raise prices with abandon but you'd like to think they would be responsible. it's better to raise prices than it is to go out of business. >> jim, a lot of people over the weekend looked at historic inflammatory political events, military events, stocks tend not to crater. >> no, they do the opposite. this is like one of those

things, i don't want to be so cliche to say well the sounds of guns but look people last week were very powerful. howard marks was on, scott i googled mark's bearish 2010. i guess i could have done 2011 too and they were all the same comments very similar to what he made and you could say wow, if i showed you those comments you might say well aren't those the ones he said on scott's show no that was fortunate magazine he's a distress guy. i remember like somebody asked about the semi-conductors, hey, i don't do that but he just trashed them by implication. it's very interesting. you can have that view. >> and in your view too cautious a view. >> that's always that kind of hey, you know what, if you growl like a bear and you paw like a bear maybe you're a koala.

i'm a koala bear which aren't even bears but 2010 you can do it there's all the stories popped up and they read very similar to what he said and that's fine because you're allowed because there's free speech. we discussed free speech you're freely able to scare people out of the market you can do it. but, you know, he does know distress better than anyone. i would never walk in to it but it did read a lot like what he said last week like 2010. now he could say jim you are arbitrary and capricious to pick 2010 but i don't know. i picked it out of a hat but he said easy money well it turns out that the dow doubled. well he said commercial real estate was the biggest worry or the banks double he talked about how important it was to be cautious well the s&p went up huge. but that's right you have every right to come on

air and be wrong there's nothing that says you can come on air but if you're wrong, you can't come back i read the way people -- you have every right to be as cautious then as now now am i showing disrespect? i am most respectful like my colleague larry kudlow would always say, with all due respect, but then he would ivicerate you. >> we're going to go to meg and get more on this story. >> we're just looking at shares of drug companies premarket. of course when people make political comments or have in the past we remember that hillary clinton tweet historically they have effected the ibb. you're not seeing an effect on drug company stocks after seeing trump's tweet talking about merck's rip off drug prices. merck is up .3% along with the rest of the market pfizer there also in the green this morning so it is really interesting to

just see the market shake these comments the sort of threat from the president off. drug companies, you know, there has been concern in the bio tech industry that trump was going to have an executive order on drug pricing. that has eased over the last few months and bio tech stocks have come back as people assume that the president was going to go easy on this space and it's going to be interesting to watch to see if ken frazier the ceo of america coming out this morning re-signing from the president's council making it clear to stand here as the ceo of one of the largest pharmaceutical companies in the world what impact this is going to have on the industry. traditionally the drug industry has been hesitant to get involved politically particularly among the biggest companies in the industry. it was really silicon valley leading that charge from the business perspective pharmaceutical companies for the most part stayed out of that conversation but this really changing from ken frazier and merck this morning carl. >> we had a discussion a few

moments ago, meg, about frazier himself. not just practices on pricing but frazier as a man and a human being. you interviewed him several times. what would you say about him as it relates to this decision. >> i have known ken for a few years. having covered the farm suit kals for you guys for about three years. he is very engaged obviously he has done a lot of work in law. outside of merck he paid a lot of attention to the death penalty. there's stories about that there. he is a very engaged person. this is a very strong stand coming out as this member of the presidents manufacturing council feeling like he had a responsibility and responsibility as one of the biggest ceos in the country. this doesn't feel out of character for ken phrase torefr something like this. >> we'll come back to you. when we come back we'll get cramers mad dash

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. in each case there were positives. particularly kohl's. kohl's brought 120 million shares back in the last five years and macy's is buying back debt the one point that really killed everything was when macy's said you know what, it's going to be a really promotional 4th quarter. had he not said that i think the stocks would have been up. they were going up before he said the word promotional.

>> it's true, nordstrom had the first positive comp in three quarters although this times piece over the weekend on varies was rough. >> yeah. that was rather negative. >> celebrating the recent listing at the nasdaq. a power supply utility in the baltics. >> it's good to see some, wow, that's a lot of green. now look when you have it on monday typically what happens is between 10:30 and 11:30 people that weren't able to get out on friday will take profits they'll get out and then you'll say listen it was all phony and then the market comes down and buyers do come back in that's the rhythm. it could change but that's the rhythm. >> would you have bought here in

the past >> some things are down enough that bike them but really, i'm stuck with this retail situation having done it in a vacuum and notwatched the stocks because was off in my garden making some good tomato gravy or sauce or whatever you want to call it but i came back and i said look maybe i wouldn't have bought these stocks but to sell them down look if jeff hn said those things about a promotion, i would have said, you know what, they're getting better the cfo painted a good picture kohl's has a lot of businesses doing well including foot wawefr jcpenney challenged because they didn't live up to the forecast but it's not like they all blew up nordstrom, if they want to do the buyout i'm sure they'll find money. i hate to throw hot water on a group that everybody hates but

it just wasn't that bad. there came to be a real momentum though whoever was in those that thought they were going to have huge quarters, they should like go back and do more homework there was no one promising that. >> the other thing we got friday was cpi which was a little cool having had personal income cool and construction spending cool but the view on the economy in the back half remains i would argue, fairly bullish. >> i see a lot of companies doing better than i thought. there were whole areas that i was really worried about like take cars the price of cars that were old have been going down and then there's hertz. it's come back it was horrible hertz has not been good. i have been building a thesis saying housing is not so good but that's the case. it's as negative as the market is i think given the fact that a lot of companies reporting good

quarters you may say listen apple, forget apple. it was a great quarter you wanted production increase and cost decline that's why you saw a lot of selling. >> jim, your point about tech this morning is well taken all four of them, the top s&p gainers. >> 13 times earnings it's coupled with financials. the journal this morning, agencies looking to pull back all kinds of rules.

>> what matters here just so people know is that if you're a bank regulator you read the paper and what all of these things are saying is go easier now there are people in the world that say there shouldn't be but if you go back over what jaime dimon has been saying, he's not a clown there said it. he was interviewed which broke my heart no wilf did a great job. jamie dimon was saying if you let us lend more aggressively we could have pulled out of this earlier. he could have said wait a second they had a big justice department fine. i come back and say look if you were able to lend more yeah it would help the economy so i think that these are signal to a regulators. if someone has a high fico score

and they want to be able to expand their business don't say no to them because it's been an impetment to business. >> i find that funny because having worked at goldman sachs you have a couple of bad quarters they don't sit back and say are we bad no reviews happen and the reviews tend not to be as pleasant they call people in and it's not like hey, man, you have to work harder no they may have a friendly face but you don't want that review if you didn't make your numbers there's a lot of places you could work many place.

>> i think people understand that culture. >> we have to hit netflix this morning. two pieces of news one is that they secured shonda rimes which is a big blow to abc and disney but then over the weekend arguing the shares could fall by 50% by the end of the decade they look at cash burn and the content defections, the debt on hand. >> netflix defied a lot of people when it made these comments and maybe this time the negatives will be right. one of the things that netflix has done is they have gone after -- we had this fella that managed to be able to crack the inner core of netflix and they have managed to be able to shift. it's exciting to work for netflix. all the independent directors want to work for netflix because they feel they have much more freedom and that's in each country so i think that.

>> we interviewed brian grazer that said the great thing about netflix is creative freedom but they expect to get paid. >> they pay them a lot but what i think matters here is that if you think disney content is make or break, let's just say reid hastings saw this coming now a lot of people i talked to about the disney move were still surprised a little but this is about espn, i think if he has a technology platform and he can off load that to the technologists out there in silicon valley but i do think that netflix is prepared and it's been a great short that

hasn't worked. the first year of tesla wasn't such a great one i was in the good wife and i came out bitcoin $200. i was in favor of $200 and a great actor questioned me and i stuck by the $200 so those that think that i'm not on board, let me just say you're wrong. >> bitcoin by the way, $4,000, up 40% in august alone. >> if you love the car i could

see you buying the stock i gave up on the 3 that's not a stock statement that's a statement from my daughter that said dad i need the 3. it was just too long sorry elon i know you think i'm a figment of imagination. >> did you put down the deposit. the $1,000 deposit. >> yeah. >> you got it back. >> they did that they gave it back to me. people hate tesla so much but then again that's also been very difficult short. >> so mark's credit he says that in his note. i could be way early, right but way early and that could be

embarrassing and harmful in the short-term. >> there you go. it can be. embarrassing and harmful, yeah i mean, maybe i'm early on liking apple >> okay. >> isn't that better. >> yeah. when tim cook came to the set at 93 i said this was a chance to buy. then it went up 60 points. >> the idea of being early here, they have been in charge for pretty much all of the year. the better part of the year and we're seeing that sentiment again today as we see the

markets a lot of green across the board. the dow up 135 the s&p highs in the egs up by near aly percent 20 points to the upside. nasdaq composite up. sit part of this whole picture in terms of a reversal of the tension we have seen in the marketplace. hong kong, the german dax, all very strong for the upside the notable down side one here is japan because they're reopening from a market holiday last week all ten sectors are higher notably though the energy sectors and utilities, energy prices as well in focus here they're the ones lagging the most i want to point out three points in the market that we talked about in terms of risk aversions. first of all the treasury side

of things that bid for risk averse assets. treasury yields did go lower we're seeing that reverse again today. back above 2.2% for the u.s. ten year treasury note yield also gold prices we had seen a rise on the heels of the north korean tension. a fall in those prices today as well also the yen dollar yen has been moving lower. dollar weakness, yen strength. people have been buying that up on the safe haven trade. that's also starting to reverse as well and i'll point out junk bonds. those had been selling off a descent amount over the course of the last week here. we're starting to see a bid there again. risk assets part of the picture. we'll see if that holds into the rest of the week we have been seeing that trade be a theme over the past 18 months back to you. >> indeed, thank you come back to you in a bit. let's get to oil prices as well.

up about 15 cents. >> good morning to you crude prices are still on pause right now just turning positive on the session sitting under $49 barrel still supported by the dollar here but clear catalyst right now isn't there to drive oil over $50 barrel. last week a build in u.s. gasoline inventories was bearish. if they're not rising at this time of the year when demand is supposed to be the strongest it's tough see more upside from here still with that bounce we have seen in crude gas price are up 8 cents in three weeks. that's according to the survey that has the national average at $2.40 a gallon it's up from this time last year but still well below where it was in 2013, 14, and 15 at this time of the year the inventories will be in focus again. was that a blip we saw last week with gasoline? will we see more weeks of strong demand into the end of the summer that of course is the big question finally several crucial meetings for opec but nothing from them

we know compliance with the cuts isn't as strong as it was in january when the deal was announced so that question also. will they do anything about it we'll still be watching this week back to you. >> retail earnings heading our way. courtney reagan with a look at what to expect. >> that's right. this week it's the big box retail and the specialty players we'll be looking for like last week results are expected to show sequential improvement but with the seismic shifts happening in retail it may not be enough to prop up the stock prices so tomorrow is one of the heavier days of the week we'll get results from dow component home depot, coach, dick's sporting goods and urban outfitters wednesday target reports after upping it's guidance in july full results you after months of pressured comp sales the focus will be on walmart analysts are looking for comp sales to grow nearly 2% and investors are curious if they can continue to log the huge gains after last quarter 60%

growth rate. friday, foot locker and estee lauder round out the roreports when it comes to comparable sales growth many of this week's reporting companies are expected to log gains lead by home depot at 4.9% and both ends of the spectrum including discounters walmart and target all the way to coach as well as both sporting goods retailers. dick's sporting goods and foot locker should see positive growth now they're look for earnings beats for gap and miss for urban b but it's hard to predict with retail broad fundamentals still challenged wells fargo, that gap could beat but wouldn't be surprised to see a sell off there and it's also lowering estimates for urban investors are look for reasons to sell many of these names regardless of the results. carl. >> get some rest courtney. you're going to need it.

>> which are you looking forward to the most? >> gap stores could be good. it could surprise. i do a lot of shopping at gap. the prices have been very good old navy has been good and i think it would surprise people i don't think people are quite aware. there's been big changes at gap stores and they're positive. i think it's working at target i think, you know, underpromised and overdelivering and that's good but i do think that gap is kind of, i don't want to say it's back because retail is so impossible but go shopping and go shopping at banana republic and gap you'll be surprised hi wife saw my gap slacks this weekend. she thought i looked good in them. >> that's why. >> i like to shop everywhere david isn't here today but i went to a great gap in san francisco and i felt like a million bucks. wow. >> when we come back we'll get more reaction to merck ceo ken frazier re-signing from the

president's manufacturing council and the president firing back almost immediately on twitter. as we go to break take a look at the movement this morning. ten year works it's way back above 221. back in a moment ♪

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snap's moving higher this morning. the lockup expires on the 782 million shares held by employees. nearly four times the number of shares that hit the market in the ipo. we already know he said he's not going to sell this year other than what's tax required. >> these are staff people and it's probably going to be an ill advised decision to sell the tech crunch just came out and said snapchat lets you picachu yourself so maybe their ratio is better than i think that's the pe. so maybe they got a whole new

method of measuring. maybe we are all small and, you know, it's like at the end of sunset boulevard they're big and the picture got small. >> jim we didn't have you here friday to talk about the dau miss, right? >> yeah. >> or the fact that the dancing hot dog is now the most widely wachd watched ar super star. >> people do not understand the nature of facebook if you do something really great facebook will imitate you because it's not like there's a creative jail. hey they have a better one people should recognize that not to switch too far but the dollar stores a lot of people think could be good too but when it comes to snap my problem with snap is always the same which is that snap, twitter, these are about advertising and it's just, i think the reach for facebook is just a better place to advertise. snap is an underage group so it's not like you're going to

see a lot of captain morgan ads there. maybe gillette. >> it's a lot of food and movies. >> yes movies are good and there's good sports on there and you can advertise against that but i'm just saying that when you sit down with the ceos about where you get the real good advertising it always comes back to alphabet and facebook. >> we had an analyst on friday that said they should broaden their scope to older users because 98% of people brush their teeth twice a day. >> what do we have to hide if we're doing things that disappear, what am i hide something i don't know that i ate too much this weekend? what am i hiding >> dow has had a nice open up 121.

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we should have peltz just added to ge. proctor isn't taking city down here and we have to be aware that this fight is going to get very ugly. going to get very, very ugly. >> we tried to make the distinction between the tone of akman and adp and you're saying they're converging it's not going to get that bad. >> yes believes that, this is procter & gamble, seeking a board seat to satisfy his own agenda his agenda from what i can tell is to see the stock go higher so i share his agenda as anyone who is a member. >> you and your price appreciation agenda. >> i know i'm out of line looking for higher prices but i think he's in favor of higher prices and if that's wrong, wow. >> what are you going to do

tonight? >> i tried to like franticty lyy trying to get my act together. that's bad i got ipic theaters are challenged here movie ratings are challenged the only thing that doesn't seem to be challenged is playing outside and having a great time. >> we'll see you tonight 6:00 p.m. eastern. >> politics. >> i know. >> when we come back more on merck. ken frazier re-signing from the president manufacturing counciling more from bill george. dow in a nice open here at 132 don't go away.

good monday morning. welcome back to squawk on the

street i'm with kelly evans and sarah at the new york stock exchange nice open as some concerns about north korea are better some what >> our road map for the hour begins with president trump versus ceo ken frazier stepping down from the president's council. trump firing back. >> the president expected to launch a big crack down on china today. >> plus retailers walmart, target and home depot all getting ready to report. will it be a bright spot for the sect sector. >> the president going after ken frazier on twitter after frazier announced he is re-signing from the president's manufacturing council. >> we're expecting the president to be here at the white house within about a half hour's time so we'll see if he has anything further to say about the racist violence in charlottesville,

virginia over the weekend that left three taed including two police personnel over the weekend in sharltdsville, virginia but here at the white house they're announcing to the announcement by ken frazier that he is re-signing from the president's advisory board over his handling of that incident. our country's strength stems from its diversity and the contributions made as ceo of merck and matter of personal conscious i feel a responsibility to take a stand against intolerance and extremism. the president responded with a very tough tweet of his own. the president had an opportunity to decide how he was going to handle it and this is what he decided to say now that ken frazier of merc mercmerck merck pharma has re-signed from the president's manufacturing council he will have more time

to rip off drug prices the we don't know carl whether we're going to hear from the president or not on this subject today but there's a mounting pressure for the president to come out and clarify some of his statements from over the weekend. his vice president, his attorney general have been out doing exactly that over the past 24 ours or so and we'll see whether we get an additional statement from the president today, carl. >> thank you for setting that up we want to take a closer look at this this morning. joining us is bill george, professor at harvard business school he served on the boards of exxon and goldman sax. good morning to you. >> good morning, carl. >> have to get your reaction to this what do you think of what happened on twitter today? >> i have great admiration for ken frazier. his courage. he's been a leader in the pharmaceutical industry. and by the way he's been the person in the industry that's

trying to constrain drug prices. very constructive on this. he's taking a stand as always or should take a stand and i'm extremely disappointed the president didn't agree with him because he never mentioned president trump in his statement and i think talking about honoring our values and standing up against hatred we should all stand for that and i think it was a missed opportunity by the president. but i do think ken has a lot of courage and this is, he spart of a group of business people that have more and more stepping up his business statement bob iger did the same thing when he re-signed elon musk re-signed. if leaders don't take a stand then they are come poliplicit i what's going on. >> if you were one of the remaining ceos on this council you'd step down. >> i certainly would you feel an obligation to be a

part of these groups at first back in january when he agreed to do it but yes i would of course step down and i would hope to have the courage to do something like ken frazier did. >> we have been reaching out furiousously to other members of the manufacturing council for any comment on his decision and on their own decision but how do you walk the line of being there to effect policy changes that the ceos have been talking about and complaining about like high corporate taxes for so long but also endorsing some of the social policies, climate change now in response to charlottesville. >> that's a very important question you have raised and it does raise the question where you draw the line and when do you say this has gone too far and i think ken has done that but i think others will do the same thing these ceos are representing a

global constituent sy. patients all over the world, employees all over the world, shareholders the same and they have to represent all of their constituent sy as well as work toward u. s. policy and i think you'll see ken continue to work toward constructive health care policies and drug pricing policies as well i don't think his voice is going to be muted. in fact i think it will be accentuated by this and i hope others would do the same thing i certainly would. >> when others have been asked why they would stay on the president's council they don't necessarily support him. jamie dimon said he's a pay ttr and wants what's best for this country. imlying that anybody that doesn't leave the council is somehow supporting what happened that leaves little room for people that say i'm here to try to work for the good outcomes for this country. >> that's true

that's where one has to make a decision it does come down to a personal decision it comes down to who you represent in your company and it's a tough call. that's why people joined and worked constructively to try to get better policies, particularly on health care where we need to do that desperately as a country i certainly think and hope that people like ken frazier will continue to work toward that but at a certain point in time it become ace matter of personal conscious and principle. >> bill before we let you go, lloyd blankfein tweeted in the last 30 minutes or so. he says a house divided against itself can't stand and then he says isolate those that try to separate us. no equivalence with those that bring us together. it's obviously a sub tweet of sorts. he's not referring to what happened over the weekend or what happened this morning but do you believe that that true is widely held in american business and is it held by people now serving the white house that have come from goldman and other

companies? >> i can't speak for the people in the white house today they certainly would when they had that position. absolutely good for lloyd that's stepping up how can anyone support a group of neo-nazis after what they did to the jewish people this is intolerable and i agree, this has no place in america and i think we have to isolate people these people do not stand for american values that everyone is created equal so we all have to take a stand against it and even without the violence and now with the violence that just accentuates. we cannot split our country. >> bill yogeorge, thanks for yo time. >> thank you, carl. >> stocks are surging as investors shrug off tensions at home and abroad. the dow is up over 100 points here after the open.

with us is citigroup's chief strategist always good to check in with you. >> good to be here. >> i was going to ask you about merck. stocks trading up actually usually immediately negative and then buying opportunities. any strategy around this >> not really. we talked awhile back that tweets would become more muted and they would let it roll off their backs and that was early in the presidency. itunesed them out. >> what about north korea? a lot of noise last week certainly too much for a market that had run up to a record high plus 20% since the election. what's the feeling about the risk and how it influences investor behavior from here. >> there's a couple of things. when the market was vulnerable we tracked top 50, how they trade relative to one another so for example think of it how is google trade versus exxon versus merck versuses procter & gamble

for that matter. if they're trading together they tend to be very macro sensitive. if they're separately you tend to see investors and portfolio managers looking on a micro basis. almost ignoring macro. one client told me if you don't do macro, macro will do you. so we got down to i think it was tuesday last week, 5.7% correlation. that's extraordinarily low we have never seen that before and it suggests that people were vulnerable to a macro and it could have been the chinese weakness or some capital spending number. anything macro would have changed the focus on the fed so i think there's still vulnerability in the very near term in the market but we don't have wildly complacent investors. when we talk to clients we see them always bringing up concern and when we look at one of our

sentiment me tric sentiment metrics it's still in that territory. >> you're still bullish. >> i'm constructive over the course of the year by next year we see the market up in the middle of year we're where we should be an there's more about rotation where you can see financials do better and energy do better and some large cap tech weaken. >> we had some high profile managers it was pimco saying their cash balances are above average of course talking about the percentage of year assets in gold anything change in your model? >> not really. with a we saw the end of june we saw their median cash positions had come town from the lowest level since '08 when we started asking where is your cash positions. they're just getting dragged into a market up over 10%. especially when there's a whole movement from active management. these guys are being pressured to put money to work as opposed

to sit back and i don't think it's because of that i was in boss on the last week visiting with some of the institutions there and i kept telling them it's fascinating. the market is up but you're so glum you're wealthier and you're still not feeling good about it. which is odd. >> why are we up this morning? >> clearly nothing bad happened over the weekend i mean, leaving out charlottesville. i'm talking about the korean peninsula looked calm and there is, you're hearing the news about back channel communications and diplomacy trying to rachet down what seemed to be more rhetoric than anything i even look at the korean dollar it hasn't moved that much to suggest that currency traders were worried these things get overdone because it's exciting and it's, you know, everybody jumps all over it and the question is does anybody really raeshlgswant to h

brink. >> but if we get closer then what is the strategy is it move to cash is it going to safe havens >> we saw the safe haven with people running into dollar and treasury yieldsor treasury bonds bringing down the yields as opposed to making an economic call and i think that would probably replicate itself. a lot of investors say is there something else other than treasuries in the dollar maybe some gold? although i'm not. >> my dad asked me about it. that's not a good signal

i apologized dad if you're watching but i worry when the traditional retail investor starts asking questions about something they don't know much about it's usually worrisome sign. >> thank you for joining us. >> sorry dad. >> >> when we come back another big week ahead for retail earnings coming off a rough week. we'll get details and analysis and the big names to report in a minute plus another lockup for snap it's the biggest one yet 782 shares hit the open market we'll discuss the impact on the stock with the dow up 136.

we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.

even better than expected results may not be enough to lift retail stocks this week remember last week both retail dow components report this week home depot on tuesday, walmart on thursday. target second quarter report is sandwiched in between those two. they report as well. specialty players including urban outfitters report as well. now the world's largest retailer is expected to see as comparable

sales grow nearly 2% for the second quarter walmart is fighting to grab share online and analysts like the strides it's made so far as well as innovative ways. it continues to be another important me trick for investors. it changed quarter to quarter how it's calculated. target upped it's forecast in july setting a lift in traffic and sales. so much of what we heard from other retailers are ready. who continues to be one of the weaker areas of issues because it's a traffic driver despite making up 20% of target sales. several analysts are expected coach as well. likes coach here he's looking forward to the first formal look at the combined coach kate spade business and many retail point

to brands over boxes we'll look at that this week as well and more sales move online into amazon and that follows the stock movements we have seen from a michael kors versus a nordstrom when both beat expectations but shares went in opposite directions, carl. >> thanks a lot. a lot to digest. for more let's bring in managing director and president and ceo at the american apparel and footwear association is that sort of what you see july ending a little bit better? some of these year over year comps getting less bad at least? >> that's the case we were surprised to see how clean retailers actually were in the month of july so promotional levels are down. retailers are exiting in a clean note starting off in a positive way it's very early in the back to school season. >> what areas in the sector did you think were poised to do

better >> i think some strong brands where there is real evidence of innovation brands like coach, lululemon where it's exceptionally high and the off price segment which is left for dead and touted as the next segment that amazon is going to take over look for strong numbers across all three of the off pricers. >> then there's the department store. really interesting to watch the price action around what was largely better results or at least less bad what do these companies have to prove? it feels like the case is still there on department stores >> yeah. i think -- >> i think last week was a bit of a severe over reaction and business is not that bad the results were not that bad. consumer confidence is at a 16 year high. the price of gasoline is $2.40 a gallon unemployment is 4.3%

this is all positive signs for the industry i would look forward to good results this week. i think you're going to see an improvement. >> what were you going to say about the department stores? >> i was going to comment more generally whether it's department stores or specialty retailers. the numbers are actually going to be in line or better. i think guidance is going to be reiterated and maybe in some cases we see a tick up but i don't think it's going to matter it's going to be very much a show me space and i think the prevailing view and negative sentiment is there that some of these companies don't stand a chance to amazon. >> thinking about the brands and their future here is that the way to go? to bet on people that can distribute any channel they need to and own the relationship with the customer as opposed to worry about shopping in a mall or online. >> it's about managing across channels when i think about the checklist of why i would like a particular stock, brand and innovation have always been there and obviously executing and that goes along with a strong management team

and managing technology across grounds was never on the checklist before it's core today and that's important. lululemon has done tremendous overhaul and now it's one of the few companies that's seamless and offering that seamless experience across all channels. >> we had you on in the past retailers successfully burr rid the border tax but now we have these nafta negotiations is that going to be important in the second half of the year. >> it's going to be important. yes we're very pleased and proud that it's no longer with us and that it's unlikely there will be any consumer tax whatsoever. we have review of taxes going

forward. we have review of nafta going forward. unlikely it will do any damage to apparel and footwear. >> we'll see what happens guys thank you so much. >> thank you. >> we have a live shot for you of president trump he just arrived at joint base andrews. he's heading back to the white house before leaving for new york today see brief stop in washington d.c. we also have news out of charlottesville. kayla is there on the scene and she yoijoins us with more. >> we're getting word from our nbc colleagues just down the street at the courthouse where the suspect in saturday's car ramming incident appeared via teleconference for an arraignment. the judge denied james alex fields jr. bail after that incident that took place that caused one fatality and 19

injuries some highlights, fields said he has no ties to charlottesville and didn't have the finances to make bail now or at any point in the future he makes about $600 a week but he has no ties to charlottesville as the city and it's leaders and the leaders of the university around which this town is centered have described this as an event in which people converged on charlottesville who are not part of this community and do not share these views and trying to isolate this community and against the messages of white supremacy on clear display during the weekend's events. a judge denying bail for him. >> anyone familiar with that area knows charlottesville is the nicest place in virginia you have the university.

it's completely the opposite of the depiction that you might expect from what happened this weekend. it's a much different story when you're talk of course about a lot of the rural areas in virginia and the carolinas. places where they had to have conversations daily about whether to change the names of street scienigns of universitie places that still have lee or jackson on their name for example and something like this is going to accelerate those talks. >> well, and kelly, right behind me there is a statue of general robert e. lee and if you walk up close to it you can see very faintly the words black lives matter that have been scrubbed from that. that's organized a multiyear debate over the removal of statutes.

they'll be adding new statutes to supplement the history and there's a tough conversation going on here over the last several years but charlottesville is open for business unemployment, 3.7% doing better than the rest of state as a whole and it's a very affluent and very liberal college town but certainly one where a very intense debate has been taking place over the last several years. >> as we're talking, we're showing the president boarding marine one of the helicopter there. just wanted to say going back to your point if you think about what happened in south carolina with the horrible shooting in north charlotte on teston and t nikki haley responded. you'll see something similar now. where people that have had the struggles we'll see many leaders step up and say we'll accelerate the plans to take them down. >> as the mayor of lexington did over the weekend. >> kentucky.

>> or rirj virginvirginia lexington virginia had plenty of these discussions themselves we'll check back in with you shortly. when we come back we have shares of snap soaring as the largest lockup expierres. plus a look at stocks. strong japanese gdp figures overnight. s&p up 22. nasdaq is up 72 for better than a 1% gain. squawk on the street will be ghba rit ck you always pay

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here is your cnbc fuse update at this hour. vice president pence speaking on the "today" show this morning defended president trump's statements on the white supremacist attack. >> he made a very strong statement that directly contradicted the idiology of hatred, violence, bigotry, those things must be condemned in this

country. they're totally unacceptable. >> obviously that was attorney general sessions and not the vice president an attack by gunmen on the turkish restaurant left 18 people dead last night 8 more were injured in the attack the assault lasted nearly 7 hours. the chairman of the joint chiefs of staff meeting with the defense minister in seoul. they want to peacefully resolve it's standoff with north korea but it is read do use military options is it if provoked. that's the news update this hour >> today is the largest lockup expiration on snap shares are actually surging right now up about 8%. this comes on the heels of last week's disappointing earnings results which tanks the stock. it's been all over the place julia joins us with more what are the risks around this other. >> i have to point out what kind

of volatility we're seeing in snap shares today. this morning, earlier this morning snap shares hit an all time low today up more than 60% for the stocks all time highs but now they are rebounding up about 7% a lot of talk about how they're short covering here as well as perhaps the stock finding it's bottom now today the lockup expires in and an estimated 782 million shares held by employees that's nearly four times the number of shares that hit the market in snaps ipo. how many of those shares could actually sell. about three quarters are owned by directors, executive officers and other affiliates they limit how many shares they could sell per quarter no individual can sell more than 1% of outstanding shares of the class of stock that they're selling. and co-founders that each own 211 million shares announced they would not sell any shares this year. jp morgan saying that that move should, quote, help alleviate

near term concerns around the lockup that leaves 182 million shares held by other employees according to jp morgan one of the stocks risks is continued pressure on the stock from the tail end of a substantial lockup expiration. now for comparison the bottom for facebook and twitter shares was the day after their lockup expirations. the low for linked in was one week after it's lockup noting that those three companies were also high profile ipos with sceptical wall street opinions initially similar to snap today's stock moves could give a hint about how employees feel about the company and also other period perhaps after so many dramatic declines especially after last week's earnings reports that a stock has hit it's bottom. back to you. >> we'll see still a long way from that $17 ipo price. >> for more we're joined by james.

just downgraded the stock to neutral on friday. so you western impressed with the result and they were actually ahead of facebook on this virtually little development here and then on the user experiences yes the dancing hot dog is great and i think we're seeing some developments but at the end of the day it doesn't draw in new users and doesn't educate the users on the things working like maps and search and that's what is going to count in terms of driving that monetization level higher. >> specifically around this lockup expiration this is the second one what have you found in these tech companies do you see it as any bottom for snap >> a lot of these guys are also under water so i discount that a little bit and evan spiegel

selling shares attend of the year. >> and bobby murphy. >> but what you have to focus on is the fact that user growth is actually okay. 100% of the problems are self-inflicted the users are there they're not monetizing by definition that's where the disconnect was. you think the consistent criticism that they are product guys and not ad guys is fair >> they're focused on the mission statement and i think a lot of the cases here can be extended over to twitter as well because they have strengths and they're not focussing on those strengths. they're trying to be everything to everyone so the mission statements are aligned with capitalizing about what they have in front of him. >> what facebook is doing right is having a good ad strategy but it's just having the largest

social network and able to copy features it looks elsewhere. look at the reports this weekend about how whatever the name of that data company that it bought, it uses that installation on people's phones to track their usage of apps like snapchat or whatever. it might be house party. one that internally they have been obsessed with making sure that they don't steal a beat on them how can you blame the co-founder what is it going to take for them to become a couple of billion users in size. can they simply not get there and is that what the market is saying >> it's not the number of users. they're focused on the affluent market so by design they're not going to get to the same scale as book that's fine but as long as they're customers that big advertisers and agencies want to go after they should be able to monetize that. they're not seeing that happen

in north korea they're better business people you can balance it together. we're not seeing that on snap. >> so what is value here >> after estimates came down the revenue multiple is still around 8 or 9 times 18. so make of that what you will. i mean, what is fair value five times, six times? i mean -- >> are you at 1377 >> my target is neutral. i'm saying at this point lit perform at best with the market. >> it's an interesting idea that the number one competitor is not facebook but snap itself runs counter to the narrative. >> look gave them the benefit of the doubt. yes, there was part hope in there along with the estimates but the hope was justified because the numbers could easily get there if they monetize in

the manner in which they're theoretically capable of. >> thank you for joining with us your call today. >> when we come back president trump getting ready to sign a memo on china's trade practices. reaction from beijing is straight ahead ua othstet will be back in two. whoooo.

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launch a probe into china's trade practices. china responding to the potential u.s. crack down. eunice joins us with more. >> thanks so much. well president trump hasn't even signed anything yet but the chinese government and state media already indicated that this is not going to go down very woefrl here and it could be a set back to u.s. china relations. officially the trump administration officials have said that this directive which is supposed to focus on intellectual property is

unrelated to what the president perceives as a lack of action on the part of chinese to reign in north korea. however based on some of the tweets and the comments of the president and the conversations that i have been having with chinese officials they believe he is trying to connect the two and it really bothers them the foreign ministry today weighed in saying the korean peninsula issue and trade issue are two different categories it's clearly inappropriate to use one issue as a tool to press the other issue. in the chinese state media since the weekend has been threatening retaliation. the u.s. action can trigger the trade war and we should make washington realize that china is not the one to be messed around with now if you take the chinese threats just at face value the concern now is that this could descend into the trade war that the global business community has been worried about, kelly.

>> all right thank you. all major indexes up this morning. the dow now positive for the month of august. 150 point rally with markets seeming to shrug off the geo-political trade concerns and tensions and we're off the second worst week of the year. let's bring in ben steel director of international economics on the council of foreign relations and next to him is the global quantitative strategy at wells fargo investment institute quickly on this issue about u.s. trade how much of a head wind is that >> he is trying to put pressure on china to move forward, cooperate on north korea and he would prefer not to take any action that would trigger a tic for tat trade war and he's put himself in a very difficult

position. >> he's trade sanctioning china over north korea. >> he's made clear there's a linkage between the two and that cop progress will north korea will result in him taking pressure off china in regard to trade. >> how much is that because there one anything adverse there over the weekend and we had some strong growth figures overseas. >> it's a large part of it it's korean equity and it's the vicks and that's way down. all of that starting to feed into risk oncoming back into the market. >> why doesn't the market seem worried about the trade war with china with president trump expected to make this executive memorandum and china already firing back. >> rightly or wrongly the markets reach the conclusion since the election that you can't draw much from donald trump's public comments.

that is it doesn't readily translate into policy. having said that, north korea maybe entirely different because donald trump doesn't need cooperation from congress in order to launch a military strike against north korea or north korean facilities so that's why the north korea crisis i think is very real and the markets will have to continue to pay attention. >> is that savvy to link it with trade? the art of the deal? the negotiation? >> my view is that the chinese reaction is appropriate. that donald trump should not be linking the two. they are qualitatively different. everyone in that region and the south china sea, east china seas region has an enormous vested interest in security and we should not be letting trade problems interfere with cooperation to eliminate the north korean nuclear threat. >> even if this is just a respite and things heat up once again people over the weekend

trying to draw analogs to past crisis, stocks don't end up being a doesster six months out, 12 months out. >> it depends on what the backdrop looks like. if you have liquidity and global central banks are accommodative. if you have earnings growing and low inflation that's a good background for investing so the way you look at risks in that backdrop is there's opportunities to buy and that's what you're seeing is people stepping in that weren't able to get in before the north korean issue. >> what flips that dynamic >> you need the backdrop to change and the economy to slow and earnings to start to hit a pothole. you need the central banks to start to get more aggressive you'd see a much bigger market reaction. >> anything you would add to that. >> geopolitics not going away. he made clear that he is considering firing missiles toward guam to demonstrate to

the united states that he has the capacity to hit a major military base in the region. if he does so and donald trump wants to escalate he may try to shoot down a missile and then we presumably are in a situation that could be very dangerous first and foremost in terms of our concerns here for the marke markets. >> let's go down that road and say what happens the reaction may not be that exaggerated and it's something that should be temporary i know it's hard to talk from precedent in those situations. >> the most important thing is what's happened over the last 7 orrel years. if you have a 60-40 portfolio in march of '09, it's twice as volatile as the portfolio you started out with years ago you should be taking that equity money and putting it back over and you're older now. >> people have a 60-40

portfolio. >> maybe they do. >> thank you both for joining us this morning. >> when we come back this morning. the fight against nelson peltz is heating up. dow is up 146. ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.

>> four of this year's five performing etfs have something in common. more squawk on the street coming up

flan is working you will not benefit from the change for the sake of change. no word yet from trion i do be expect them to comment white papers, et cetera. the stock is doing relatively well hit a decent quarter, kelly. this is just a further escalation in this proxy fight which will come to a head on october 10th so far it's been pretty civil and continues to be so but david taylor, the ceo of p & g, sending a new letter, sort of going a little more personally at peltz giving investors what they think is a reason not to vote him on to the board they say he doesn't bring ideas. criticisms of the company are outdated if you look back at ten years this is peltz comments but taylor has been on the job since november 1st, 2015 and the

stock outperformed it depends on your time frame. >> i wonder if they looked at the interview david faber and say we can take our case directly to the public and tell them the activists don't know what they're talking about and perhaps they're deciding they would rather push back a little. >> i think there is a strategy to fight back and be more public it's a little more different because adp was messier. and the ceo, remember, peltz is not demanding a ceo change or a drastic strategy change. they're coming at this friendly. they want to add urgency and a few ideas to the board they own a huge amount of stock. >> this is like turning the titanic. even if you had an aggressive captain at the helm this is one of the biggest activist campaigns that would have ever been waged >> he only has 1.4% of the company and 3.5 billion stake. we'll see if they start making the case to share hold whaerz that looks like and what changes they are advocating for.

p & g says it's not enough to move the needle or to let us put him on the board >> they'll be able to answer back now dow is up 15 will 8 points now pretty much session highs with the s&p 50up0 26. nasdaq up 1% "squawk on the street. we'll be right back. t-mobile announces zero down for all. now, get the whole family the hottest smartphone brands like samsung galaxy for zero down. plus, get 4 unlimited lines for 40 bucks a month, taxes and fees included. more reasons why t-mobile is america's best unlimited network.

don't miss fired google engineer james damore. he'll talk more about why he wrote the memo, whether he would have done anything differently, his reaction to the fallout since. he had a short essay in the "wall street journal" over the weekend and we've seen and heard from a couple times. it will be interesting to press him on a few more things. >> that's a big get. a lot of questions for him amazing how it changes the conversation in the valley and aren't world, right? >> it's more entered the consciousness than ever. i don't know what that means i don't know if there is going to be an effort to most companies back towards the middle or not. time will tell >> i think also the conversation is more from one being about sexism in silicon valley to being about echo chambers in companies and whether you're allowed to voice political opposition and social open

stoi opposition to a company and he's very critical of the company and a lot of people side with him. >> he has a shirt with gulog on it that is putting it mildly. >> all right "squawk alley" is next at ally, we're doing digital financial services right. but if that's not enough, we have 7500 allys looking out for one thing, you. call in the next ten minutes to save on... and if that's not enough, we'll look after your every dollar. put down the phone. and if that's not enough, we'll look after your every cent. grab your wallet. access denied. and if that's still not enough to help you save... ooo i need these! we'll just bring out the snowplow. you don't need those! we'll do anything, seriously anything, to help our customers. thanks. ally. do it right.

welcome back to "squawk on the street." all sectors flashing green this morning with financials and real estate and tech all leading the charge industrials, however, also up almost 1%. propelled by aerospace suppliers like arconic and also about it transport clz are bouncing back after a month of losses. the top performing transportation names this morning, railroads, norfolk southern, kansas city southern and union pacific and airfreight and logistics names including expediters international and u.p.s. with that, i send it back downtown for the start of "squawk alley. guys >> all right thank you very much, morgan. good morning it is 11:00 a.m. at merk headquarters in new jersey and 11:00 a.m. on wall street and "squawk alley" is live ♪