i go back to listening to nelson pelts potentially having to break up ge. that's why i mentioned honeywell today. that's where the opportunity is. overall, the sector industrials i like them. >> the dow is up 115 it does it for us. power lunch starts right now thank you, scott it's the big headline making interview of the day warren buffet and jamie diamond weighing in on the markets, economy and trade and why publicly traded companies need to scrap quarterly profit forecasts. america is slapping china's zte with a billion dollar penalty in the deal to end crippling sanctions. wilbur ross announcing the news here on cnbc, but did the u.s. go far enough? everything amazon, scoring a big win over the battle for streaming sports get your game face on, power lunch starts right now welcome to power lunch

i'm sara ooeisen. both the nasdaq and the s&p are on track for a fifth straight day of gains but utility stocks are on pace for their worst week of the year nisource leading the declines there. the etf that tracks china on pace for its seventh straight day of gains on pace for its second straight weekly gain. thank you very much. welcome, everybody, i'm tyler mathisen mcdonald's planning a new round of layoffs it did say it's getting rid of management layers to streamline the company. so how are trade tariffs affecting u.s. business? ask thor industries, america's biggest rv manufacturing warning

that tariffs are already raising costs. thor's ceo says he's seeing inflation pressures on raw materials. and honolulu may become the first u.s. city to put a cap on surge pricing by ride hailing companies. the city council approved the plan, but it needs to be signed by honolulu's mayor who opposes the idea. thank you. we begin this hour at the white house where the president is meeting with japan's prime minister right now press conference coming up the administration also announcing a deal with china on zte. and the president just moments ago making comments on the upcoming summit with north korean leader kim jong-un. we're live at the white house with details. >> reporter: that's right. the president is sitting alongside shinzo abe just a few moments ago. doing two things at once managing expectastions and setting some of the conditions for the summit to be a success

here's what he said. >> this will not be just a photo op this will be at a minimum we'll start with perhaps a good relationship that's something that's very important toward the ultimate making of the deal i'd love to say it could happen in one deal. maybe it can they have to denuc if they don't, it will not be acceptable. >> reporter: meanwhile, as you say, wilbur ross on cnbc this morning announcing the zte deal. the company will be required to pay $1.4 billion in penalties. they'll have to fire their entire senior leadership and agree to have managers from the united states watching this deal wilbur ross said this was a huge embarrassment for the chinese side >> it wouldn't be that surprising if the chinese took some sort of a further action on their own. this is a world class embarra embarrassment for that company it's a $17 billion company, had

a $30 billion market cap and they blew it over some violations of u.s. law >> reporter: not everybody in washington sees it that way, though we saw marco rubio and other republicans up on capitol hill expressing skepticism about this deal saying it's too big of a concession from the u.s. to the chinese to allow zte to get back in business atlet. >> we heard those complaints thanks so much. two of the biggest names in business talking to becky quick this morning she joins us with some of her exclusive interview with warren buffet and jeffrey diamond. >> we talked about the economy we also talked about last week's monthly jobs report, which showed unemployment as sitting at 3.8%. >> this number is the lowest it's been in 40, 50 years.

i think sometime later this year it will be the lowest ever of you take global unemployment, it will probably this year be the lowest ever. that's a good thing. we all want wages to go up you are having a lot of conversations seeing wages going on, prerssure to get people. that's sharing the wealth that's being created. we want wages to go up we'll be worrying about wages going high next year right now, god bless it, it's bringing more people back to work work is dignity. work is great. once people start on that ladder of work, they tend to move up a little bit they tend to have household formation. we should do -- both warren and i support the earned income tax credit it helps pay people basically minimum wage is more money it's so much better for society to have people working it's better for social outcomes. this is a wonderful thing we

should be celebrating. of course, we have to start worrying about the downside of it >> all those good numbers. it boosted ceo optimism. this week a survey was released that showed ceo optimism is near historically high levels dimon thinks it's about the of the talk about trade and tariffs. all of that noise that's been coming out of washington recently. >> we did another special survey 90% are worried about if trade goes south, they'll invest less. we're trying to be very clear about this we think the president has raised critical issues about trade, particularly with china around fair competition, market access, the ability to own 100% of a company these things should be negotiated out and the business round table supports the fact of those issues the business round table has been clear we don't think the tariff is the way to do it you hurt your allies more than

you hurt anyone else people tend to retaliate you can insight nationalism in countries because if we're not going to be tough on each other, if you put a country in a tough position, how it might react it creates potential negative outcomes we're cautious about doing it that way china would be very responsive to some of those issues. that's what we're pushing on for trade. >> of course, back to the reason that buffet and dimon got together, trying to end short term thinking on wall street, or at least push back on what's been the trend lately. that's an issue they both have been advocating for years now. they both say it's an important issue, not just for corporate america but also for the nation at large >> the largest companies in america are owned by 100 million people, including veterans, retirees, teachers we feel a tremendous obligation to deliver in the long run to build great companies. one important step -- i learned

this by listening to the warren. some of the ills and problems of people making short term forecasts, particularly quarterly earnings forecast. not transparency, not openness, not having quarterly reporting it can put a company in a position where management, you know, from the ceo down, feels obligated to deliver earnings, and therefore, may do things they wouldn't otherwise have done if you have a good board, you know, the board will say if you have a great investment opportunity and you say it's going to cost me a couple hundred million dollars, someone like warren would say doit that's future earnings we've been pushing on it warren's been part of the -- the one person ming it a real thing. we're hoping a bunch of companies drop it right away. >> warren, this is something you've been preaching about for a long time too. what's an example of where you've seen it go wrong? >> well, when companies get where they're sort of living by

so-called making the numbers, they do a lot of things that really are counter to the long-term interest of the business i've never seen a company whose performance has been improved by having some forecast out there by the ceo that we're going to earn x it's sending -- it's not only sending the wrong message and delivering the wrong results to the company and to the country, it's also teaching the people that work under him or her that quarterly performance is the end game i tell our managers just pretend you're going to -- it's the only business you and your family are going to own for 50 years and you can't sell it. >> things ceo will do in these positions, they say they will cut marketing budgets, r&d spending they will not build a data plant or something all things that would be

terrible for the luong term. >> or they won't build new branches j.p. morgan recently issued their earnings guidance in april. will that be the last guidance we hear. >> he said eventually he wouldn't mind it if companies got away from annualized guidance like this too they're opening it up for right now. they're not even saying the business round table has to not give quarterly guidance. here's 60% of their companies issue guidance on an annual basis. he wants to make sure that people are giving some protection to make sure that they can do the right things. >> let's widen the conversation. let's bring in bob cassini what do you think can be done? >> i have endless respect for jamie and warren i don't think this is the issue. eliminating earnings guidance is not the issue.

only a very small percentage of companies provide it to begin with number two, short termism is built into the structure for the stock market quarterly reports were mandated for the 1934 because they were worrieabout gaps of information. it was created to do that. now, warren and jamie are not calling for elimination of quarterly reports. other people have. bob lutz was on saying i wish all of it would go away. another problem is the ceo life respon lifespans is so much shorter now. the compen ssation is tied to t stock price. how about changing that idea a little bit i think everybody who is calling for less information should be very, very careful here. analysts reports are not going to go away wall street is going to step in. if the companies don't step in to provide information

there will be asymmetry out there. i'm sorry, i'm not on the train with this particular mode of thinking, guys. >> you have to dissect what they're concerned about, right because is it short termism? is it the volatility in the stock that happens on the day they report earnings the short termism is going to happen because they have to report quarterly all the time. regardless if you give guidance or not. >> bob is right from the perspective that this is a much bigger issue there are other people who should say you shouldn't be talking about less information you'd be cutting off that information from a broad array of investors i think what they're trying to get to is giving the ceo a little room so that ceo, he or she, can guide the market to say we're managing over the longer term we need to build this. you're right i don't think this is a call for less information but i also think it's not a position where you want to be spoon feeding the analysts

>> i'm sort of with you, bob i'm wondering whether we have our eye on theight ball here and the real ball that matters is the quarterly profits not the quarterly estimates. and as you point out, it would seem to me that the analyst community will leap in there will be a consensus estimate >> actually, that's why this started. the companies tried to guide inanalyith analysts. >> here's what we think we're going to do. >> we have seen time and time again, bob, where the company has hit the numbers. it's a spending number it's a lower earnings quality. a lower tax rate that helps push them over the line investors see through that we do see the market being efficient. >> what these guys want, they want to reduce volatility in their stocks so they don't have to be bothered constantly by investors so they can sit around and think great thoughts

okay i get that idea. i don't think it's necessarily going to happen. somebody is going to fill the void that's there. i don't think less information will lead to less volatility in their stocks which i know is the goal there i'm sorry that may not be politically correct to say. >> i think it's a fair point i'm not sure any of this will get addressed. companies where the ceo doesn't have the same authority these two have where they can go in and run things the way they want to maybe provide a little cover. >> there's no doubt that -- and there are studies that when a company focuses long term on spending and boosts r&d way up then that's long term value creation that leads to direct revenue and profit growth in the company the question is, do they have a long enough leash, not everybody's a jeff bezos to be able to do that. getting rid of guidance might be a way. >> investor timelines have

gotten shoulder. >> or look at the activists that have come in and said you guys blow way too much money on our r&d. pare it back. >> or marketing, yeah. >> so i'm not sure it will attack the volatility problem. i don't think it's a bad conversation to have there is something to be said for getting people talk about these things and remembering that if you have a longer time frame you can do a lot more. >> final thought one final point. i have endless admiration for warren telling people they ought to hold stocks for the rest of their lives is unrealistic we're not going to buy coca cola at 30 and sit into our 90s i may want to change my portfolio three, four times a year i might want to make investments. i want more information. you can argue yes because i move around stuff more often i may not be as profitable as a

long-term buy and hold investor. that's my decision to make and a substantial part of the investment community does not sit around and hold coca cola into their 90s. >> there's also the thought that if a company provides less information they could trade at a discount there could be a price to be paid if they offer less information. >> thank you, folks, nice to see you after the noontime hour. becky quick's full interview, you can find it on cnbc.com. would it be better if companies were encouraged to focus more on the long term? senator mark warner is about to join us. trade, tariffs, much more. let's get started. show of hands. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees?

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the u.s. striking a deal with china zte will be paying a billion dollars penalty in an effort to end the crippling sanctions over national security fears. did the deal go far enough what does it mean for trade negotiations between the u.s. and china? joining us now, senator mark warner senator warner, nice to see you. >> nice to see you, thank you. >> judging by your tweet, you say beijing is about to get one heck of a deal what is your main concern here, that this doesn't go far enough to protect national security >> first of all, remember my

background was i was the co-founder of nextel this is an awful, awful deal zte was called up originally on violating sanctions with iran and north korea. but the truth is, zte is a national security risk it has been banned by use by the pentagon the head of the cia, the fbi have all called it out as a security risk. this is not something that you should trade in mr. trump's trade war. this is a national security issue. trump may have done something i didn't think could be accomplished he may have unified virtually every united states senator to make sure we stop this effort. this so-called billion dollar plus fine and the idea you're going to put an inspection team in that's not going to go in on the design floor and get rid of the back doors that have built into this equipment that makes it so vulnerable on a going forward basis. frankly, the intelligence community needs to do a better job of declassifying some of

this information. >> on that point, you're not impressed at all by the fact that the u.s. commerce department can hand pick members of zte's internal team, including embedding a compliance department into its state backed company from china >> i do not believe that cuts the mustard at all putting a compliance team might be able to determine whether zte was going to sell again to a sanctioned company i don't believe the commerce department will have the team that's going to be down on the design floor with the engineers who are building the technology, the underlying software that presents these vulnerabilities why should we not take the recommendation, advice of the cia, the fbi, and the nsa who have all said in public testimony we shouldn't buy this equipment. candidly when trump first came out with this, i thought he's doing the right thing.

then he buckled. it's already happened with a legislation virtually unanimous support for stopping this. you have folks like marco rubio and tom cotton and others. >> are you going to try to block it >> absolutely. >> to prevent the deal coming through? >> how many republicans do you think agree with you >> the overwhelming majority everyone on the intelligence community believes go back and look at the vote that just took place a week ago in the banking committee i think the vote was 18-2 on this issue of a zte amendment. >> can i be clear that i understand what your concern is when it comes to the compliance team that's in there without precedent that we do this, i assume, and correct me if i'm wrong, and it's you don't

think they'll have the technical strength >> i think a compliance team -- my version of a compliance teams have been about filings, recordings you know, i'm sure there will be appropriate accounting expertise. the notion that zte is going to adequately redesign all its equipment so that the chinese government doesn't have access to the back doors that our intelligence community has identified i didn't see any of that in this agreement. i'm not sure the commerce department has got that level of expertise. >> in other words, if they could evade on the most critical points of technology, that they could evade the compliance team, no matter who they happen to be? >> that's my reading of what mr. ross suggested was he was going after them based upon zte's violation of sales to countries that were sanctioned like iran and north korea. >> what's the alternative, put

them out of business, which was the risk and why china was so concerned? >> i think the notion is they are a national security risk look at what our british partners are doing for example i think we have to decide whether we're going to protect our intellectual property. and in a world where china is trying to invest in our key technologies, when they're sending students to steal technology, our failure to have a cyber doctrine not just under trump, but under obama and bush. when american countries price to pay to get into the chinese market is giving up intellectual property, i think we need to draw a firm line when the chinese -- particularly tech tallanies are operating on a todifferent basis. one of the things i think the u.s. government needto d better job of is getting that message out to you, getting it out to college presidents. getting it out to ceos and i've been arguing we need to

declassify a lot of this information, otherwise it's me or somebody else making the statement without all the backup. >> if i can turn your attention to facebook. facebook in the news having had dozens of agreements with various manufacturers, including wawe what questions do you have for facebook they say no data was stored in any servers, they were only stored on devices. does that cut the mustard for you? >> want to hear from google and twitter as well. we've got letters out to see what kind of partnerships they would have i go back again, if the pentagon is saying we don't want to use wawe equipment, the fact that facebook has been less than forthcoming on this whole journey since the 2016 election where the information dribbles out. i would like to have in effect, technology experts ascertain whether that statement that facebo

facebook's information only went to the handheld devices and not the servers, i'll grant them the benefit of the doubt we saw facebook said the same about blackberry, but it was clear on blackberry there was ability to hack files beyond the user itself. >> what is the next step when it comes to this particular issue with facebook? do you call zuckerberg back to the hill >> we did not have him testify before our committee in a way i'm glad we didn't. that was testimony that showed how little senators know about social media i think the intelligence committee that's been working on this, some of us with tech backgrounds. i want zuckerberg, the ceo of twitter and google to come in as well i do think we need to recognize we're getting our arms around

2016 technology. where somebody posts with a fake identity saying their, you kny k from d.c. but it's boris from st. petersburg the next step is going to be live streaming technology. congress is going to overreact let's get them in on the front end and talk about competition, privacy and talk about identity validation. >> when you first heard about this, i'm curious what your reaction was obviously the concerns about wawe were raised back in 2012. and so for an american u.s. tech giant to have any sort of relationship with a company with which the u.s. government has issues with, were you shocked? did you think this was in confidence >> no, i was disappointed. but i also have to acknowledge that kwwe as the united states

government has been really slow in getting out in a no non-classified way this information. i like to look at the ckaspersk labs i'll cut facebook a little bit of a break because we didn't make the case strong enough. getting rid of anti-virus software is a little bit of a problem. ripping out routers, servers, and basic handset devices, that's an enormously bigger hurdle we've got to do a better job i think in terms of drawing the line. >> senator warner, we want today ask you about trade and how you're working with other lawmakers to try to block the president from having the authority to impose tariffs.

you really want to get congress into trade policy? congress has difficulty agreeing on things. and some would argue as part of the reason why we're here in the first place for allowing all of the barrier and tariffs to go up in the first place >> that's a good point as someone who supports expanded trade, one of the few people who thinks tpp was a good idea, this was a real balancing act for me. i determined when this president is so egregiously uses section 232 and calls out national security reasons and penalizes canada and our european allies when we need to have a united front against i believe a very real threat from china, his misuse of this tool i do believe demands legislative response again, i think you'll see a

broad -- matter of fact, i think there are more republicans than democrats. >> i want to go to the investigation by the intelligence committee into the russian interference in the 2016 election as alleged. i'd like to get an update on where you are. i think the president and a lot of the country are frustrated the investigations take as long as they do give me an update. second, give me your reaction to the president's allegations that the fbi embedded a quote, spy into his 2016 campaign, an assertion that several in his own party are now calling into question >> i would like this to be over as soon as possible as long as we get the full information. if certain witnesses and others have been more forthcoming, remember it took us months into the investigation before we found out about the now fairly famous trump tower meeting with

trump jr., kushner, paul manafort and a russian agent who came over offering dirt on clinton. by the way, it was a week after that meeting two years ago that trump went on and said to the russians, hey, have you got hillary clinton e-mails? go hack them and send them out a few months later that happened let's look at where we're at there is three things we absolutely no on a bipartisan basis. russians massively intervened. they hacked into both politically parties. they did it with an attempt to help trump and hurt clinton. we reaffirmed that second, they hit 21 of the state's voting systems they ended up as well using social media in ways that, frankly, caught, i think the companies and the u.s. government totally off guard and all of the intelligence community has said the russians

will be back in terms of election security and in terms of social media, we're not prepared for 2018 or 2020 that's a huge concern of mine. in terms of the fbi issue, you know, what was the most outrageous about that event was the white house and allies were going to try to force the head of the fbi and deputy attorney general to reveal classified information on a partisan only basis. that was their intent. that would be against the law and against any of the traditions what came out of that, though, was we finally got it into a bipartisan basis and briefly received -- pretty much that the fbi acted completely appropriately. and even members of the president's own team or party had validated there. >> we have to leave it there thank you very much. >> thank you now, the gain for the dow today, the index being left by

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tripadvisor. visit tripadvisor.com hello, everyone, here is your cnbc news update. israeli police say masked palestinians threw rocks and chairs as tourists visited jerusalem's most sensitive holy site two young palestinians were

arrested. six children who were badly burned by guatemala's volcano arriving in texas for treatment. they were flown in by a u.s. military plane officials are suspending the rescue effort in the volcano zone due to rainy weather and unsafe conditions. vladmir putin is suggesting it's a joke to suggest the kremlin may have interfered in the presidential election to favor donald trump he was speaking during his annual call in show on state run television and talk about expanding your brand yep, those are crayolas. they are getting into the makeup business just make sure your toddler doesn't mistake it for a regular crayon and write all over the walls. that's the news update at this

hour. >> that sounds like something me as a child would have been nto the rally is fading at this hour, as you can see here the dow is still higher. the s&p is in the red. it's down .3%. nasdaq hit earlier highs -- new highs earlier in the session facebook, alphabet, netflix, trading lower this hour. energy and telecom are the best performi performing s&p sectors the etf that tracks the group, xrt, it's been the story of the week on pace for the best week since november 2016. s signet fuelling gains. all are up again. warren buffet and jamie dimon are saying companies should stop giving quarterly guidance should companies just deal with it deal with all the volatility

we'll debate that next on power lunch.

warren buffet and jamie dimon doubling down on their

call for companies to stop quarterly reports. they say it folcuses on short term got a whole chapter in this book called even buffet isn't perfect, devoted to this very topic, thanks for joining us, guys. >> thank you >> make the case >> well, there are a number of reasons. first of all, i would agree with those who say that we shouldn't focus on the short term. we should focus on the long term that won't happen if we eliminate guidance the reason we focus on quarterly results is because the s.e.c. mandates quarterly earnings. if we eliminate guidance, analysts will still make estimates but the estimates will be less accurate than they were previously there are a number of academic

studies that show this there is no evidence that these companies focus more on long term valuation there's more evidence that do more things like research and development. we're in an era where the s.e.c. believes that transparency is a good thing those who want to say that investors are better off with less information, i disagree with that. >> i think it was tyler and melissa pointed that out earlier. you're not suggesting we should get rid of quarterly reports, are you? >> that's a good point what i'm saying is if you're interested in long term results it would be more effective to get rid of that s.e.c. mandate for quarterly earnings i'm not in favor of that i think reporting quarterly is

important. i'd like to point out many years before we had that mandate there were a number of companies who did that anyway because ininvestors wanted the information. >> why do you think they are right? >> well, i don't think by the way you should get rid of quarterly reports. that's really great. i think that -- i think what they're saying is something we've all been saying for a long time you have to also understand something else that is, over the years, regardless to whether there's guidance or isn't guidance, the algorithms have taken control. there will always be, you know, algorithms that are hanging on whatever word it might be that are going to drive stocks in the shi short term i call it meet, beat or cheat. you have the cheating in there when you get to guidance, you have to assume that management is giving you realistic guidance how many are out there trying to low ball so they can gun it the next quarter that's not inguidance you want to see everybody is forced to play games. >> aren't we smarter than that

>> no. no no, we're not. >> sure we do. don't we open up the quarterly results and see what they're spending on? that's how they gamed the system we see that, don't we? >> melissa -- >> herb. >> we shouldn't have to sit there and say, oh, they're sandbagging everybody. that gets into the game of it. then you've got to stop it that's where it becomes a problem. >> herb makes a good point when he points out the fact that there's a lot of volatility. what investors really hate is when a company misses its earnings estimate by a few pennies and the stock drops. my point is eliminating guidance is not going to solve that problem. we'll still have earnings estimates. it's just that the earnings estimates are going to be less accurate and the bottom line is that if managements don't like this, if they don't like the fact that the public markets are revaluing their company, then they shouldn't be public. they can remain as a private company. >> why is it if it is true as

was reported only one out of five of these big public companies do do quarterly estimates? why have so many gone away from it >> the bottom line is if you're an investor in something like berkshire hathaway you've got a star ceo you've got warren buffet running your company you may not care as much for guidance guidance is much more important for small companies. the reason they provide the guidance is to reassure investors to let investors know this is a good investment. they should invest in the company. they know if they don't provide the guidance, investors will buy the stock only at a lower price, which is the same thing it's saying that they will have a higher cost of capital. >> it's not just smaller companies. what about smaller investors you know, big institutional investors, hedge funds, they pay hundreds of thousands of dollars for access to information, research, analysts who talk to these companies. for smaller investors that can't afford to pay that for research,

isn't having every bit of information like quarterly guidance helpful when it comes to investing >> they have to know what does the guidance mean at that point? if they're doing that kind of work where they're paying attention to guidance, then they obviously should be doing the work where they could do some analysis on their own. i don't think the small investor is paying attendance to guidance if they are, they're paying attention to the game. tyler asked a good question, why do companies get rid of guidance for me when i see a company stop giving guidance it's because things are going to get worse. they defer to annual guidance. then we come up to the end of the year or the next quarter and we can start gauging what's the quarter going to be. it's still a game. look, i can see both sides of it but i do think you get into a situation where you know, you want to sort of eliminate -- you don't want to eliminate information, but you want to eliminate -- >> let me ask you one last

question you have two companies that do the same thing, one gives guidance, one does not the one that does not, will it trade at a discount? >> it depends on the company. >> it will. >> it will. >> depends on the company. you have the studies, i suspect that will show that. >> gentlemen, where you are, herb, it looks great >> mr. greenburg's yacht. >> enjoy it, see you later. >> thank you when we come back, everything amazon. they're making another big play in streaming sports. the stock is up 65% this year. a new callout today highlights a major obstacle for amazon. we'll talk to the analyst who made the call, next. hi, i'm joan lunden with a place for mom,

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we're tracking the action. ten year yield trading lower in the last few minutes canadian dollar and mexican peso as well. any news >> yeah, actually there is going on right now, that took a little bite for a while out of equities, dropped from a close to 3% trade earlier in terms of treasuries, it's this chart. eem, of course, this is the etf for emerging markets that's a two-day chart it looks like we took out yesterday's lows it's turning into a rather big down lay there and when you consider all the events that could affect the emerging markets from a policy perspective over the next eight days, it makes sense, maybe a little fight to safety, look at a one-week chart of tens, you can see we almost got up to the 3% mark. then we moved through a resistance support level at 294. yesterday's high basically, if you open the chart up to may 1st, a lot of traders were using that 294 area as a pivot they did well with it yesterday, did well with it early but it

definitely, as we started to see buying pushing yields down due to emerging market issues, it brought in more buying, even to euro dollars, which is not the currency, the t-bill, kind of like the fed funds contract moved a lot as well. italian tens heated up earlier in the session, as did the two-year these yields are almost back up to where they were at their worst about a week ago finally, the euro's fourth day up if it closes where it is, which means dollar index fourth day down, also more volatility based on those emerging market stories. >> the brazilian real getting slammed too. a lot of emerging markets currency getting slammed shares of amazon are off slightly today but they're up 65% in a year. up next, what one analyst says could be a roadblock on the way to $2,000 a share. next on "power lunch." that's why i switched to the spark cash card from capital one.

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amazon making another investment in live sports, buying the uk rights to broadcast 20 english premier league soccer games but it's not all good news for amazon today a new note says the online giant could get squeezed from rising transport costs. joining us, ben shakter, senior

internet analyst thanks for being here. right now you're not changing your price target or estimates but what is the concern here >> certainly in the near term i think it's potential to see costs rise you have ftr noting that costs could rise double digits so i think that will impact profitability for amazon it doesn't mean that we don't still love the stock and love the company. but in the near term, you could see some costs >> a critical point in terms of determining how it will impact or how big the impact will be is third party versus their own fleet. so right now, what is the worst case scenario? would it be more costly if they were transported with their own fleet? >> the third party, you don't want to see costs rising out of their control. what we saw if you think back to holiday 15 where they had real serious problems, they had to go out and try to find drivers last minute and when you're trying to do things like that, obviously

costs can spiral out of control fairly quickly >> as amazon continues to get dean deeper into the logistics side of the business, does this raise a red flag in terms of completely having their own fleet, their own planes, et cetera. >> i mean, i think amazon wants to make sure that they satisfy they're customers' needs to get packages quickly so if they can control that, they'll do that better on the cost side, you know, they've never been that focused on trying to make sure that they optimize the cost structure relative to near-term pressures. over the long-term, controlling their own fleet, controlling the last mile, certainly they want to get there if they can get the scale that's necessary >> and ben, just quickly, we're having a big debate about short-termism and guidance if companies stop giving guidance, what would that do to your estimates and your view >> well, amazon doesn't really give guidance beyond one quarter. >> other companies in your universe >> in general, yeah, we do need to see some guidance these companies are so opaque to begin with, to not have management help you understand where the trends are, it can be

very difficult so the more we can get from our companies, the happier we are >> ben, we're going to leave it there. appreciate it. and we are moments away from a news conference with president trump and japanese prime nierbe we will go live to the white house on the other side of this break. machine. the lexus es. with standard technology like lexus safety system plus. the lexus es, and es hybrid. experience amazing at your lexus dealer.

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welcome to the second hour of "power lunch. we begin with breaking news. president trump set to hold a news conference with japanese prime minister shinzo abe. trade, north korea expected to be at the top of the agenda. this will be the 30th time the two leaders have spoken on the phone or in person since trump took office. >> as soon as that begins, we'll go right to it meantime, let's get you caught up on the markets. the dow the only index at this moment in the green, on track for its best week in almost three months right now it is higher by 0.2% s&p down by just about 0.4%. mcdonald's and chevron are the leading components, intel and visa are lacking semi stocks among the biggest losers, intel and nvidia are among those on the downside. energy, the top performing

sector the oil etf, the xop on pace for its best day since may chesapeake, california resources, a apache among the leaders. >> all right, melissa, as we await the president and japanese prime minister shinzo abe, let's head out to the white house where our eamon javers is standing by. eamon, what are we listening for, north korea and trade >> officially on the agenda is north korea and trade. i was talking to a white house official earlier today who said this is really all about north korea. the key here is that the japanese side and the u.s. side want to get on the same page ahead of this summit in singapore next week with the north koreans. the japanese have a number of key concerns about what's going to happen here in terms of this negotiation. they're not going to be participating directly but obviously they're in the region. one of the concerns they have is this idea that the united states might agree to some deal short of full denuclearization or a deal that would allow the north koreans to retain missiles that could hit japan, even if they couldn't get the united states,

so they've got a lot at stake here we heard from the president sitting next to shinzo abe in the oval office a few moments ago. the president talking about the preparations he was asked about for the summit next week he said he doesn't really need to prepare he said this isn't really about preparation. it's about attitude, and it's about whether both sides want to get to a deal. the president suggesting there that if both sides don't want a deal, it's not going to happen, no matter how much preparation you have going into a summit like this. so, very unpredictable the president trying to to tamp down expectations here going in but also to set some parameters as to what he expects from the north koreans. >> and he said earlier this week, as i recall, this is not a one and done kind of process or at least he does not anticipate it to be that way, right >> reporter: yeah, tyler, that was fascinating because this has been so much the focus of the administration's foreign policy agenda for a couple of months now, and then suddenly you started to hear the president talking about not just one summit but multiple summits. the willingness to come back and do this again at some point if nothing comes of this. he's always said he's willing to walk away here if the summit

doesn't go very well, and if he doesn't get what he wants, he's willing to stand up and walk out, he says in a respectful way. so he's setting the expectation that they could come up with absolutely nothing here. one of the things that the president talked about last week is the idea simply of ending the korean war, which on the books, is still ongoing even if they get just that, that would be a bit of a diplomatic victory and some progress, anyway, in the talks, and as diplomats like to say, talking is better than shooting so as long as the talking is going on, that's probably a win for those people who are worried about a confrontation on the korean peninsula. >> eamon, thanks very much what can we expect to hear from mr. trump and prime minister abe? let's bring in chief investment officer and fred kemp, president and ceo of the atlantic council. fred, let me begin with you. there's a lot to unpack here, a lot of moving parts here let's start with the zte deal, which was announced earlier today by secretary ross. there are a lot of interlocking

parts here, in other words, zte is a chinese company, north korea is china's sort of protege in northeast asia. talk me through this zte deal. did we do it in part to mollify the chinese before we talked to the north koreans and is it or is it not, from where you sit, a good deal? >> well, let me start with the second question first, and then i'll get quickly to the first one. first of all, they broke u.s. law. and they were going out of business and so, it is the most intrusive deal of this sort that has ever been leveled on a chinese company, $1 billion fine having external monitors, enforcement agents in your company, having to change your management, almost unheard of. but does it actually fix our problems with the chinese companies engaging inn espionage it doesn't but do we have a strategy from

this to build to get to that i think that's the question i'd be asking. how is it connected? the timing is very interesting and it's hard for me to believe it's not connected i don't have personal information that it is, but the fact that they are solving this issue just a few days before they go to kim jong-un, the issue with the talks is these are bilateral talks with the north koreans. in the past, it's been six-party talks, but that doesn't mean the other parties aren't having individual talks to the side and the chinese leader has met twice in the last few weeks, last few days, with the north korean leader, so certainly this must have played some sort of role. >> so, john, unpack zte for us and its relation to the north korea talks or just to our bilateral relationships with china. >> well, fred raised the important points about whether there's a strategy or not. zte and wawe are both foreign policy arms of the chinese government that's the first thing to realize. this is not kansas, this is not a leveraged buyout

>> state companies >> this is foreign policy. not only state companies, they're state policy driven companies. wawe tried to buy 3 com ten years ago, it was crushed. dick cheney's guys killed it i actually was writing something about it at the time i got a phone call from the white house that said, stay away are from this. both of those are companies that are part of china's official going out program, taking companies out where they could learn new skills zte's role was to bring telecom systems to emerging markets in latin america and africa and then provide the trade financing, which means you've got a grip on that government then so, zte has played a very important foreign policy role. this puts that back -- >> to your point, secretary of state mike pompeo just sitting down in the front row of the rose garden as we await the president and prime minister shinzo abe senator mark warren said on -- senator mark warner said earlier on the show, this compliance team that's going to be in

there, that wilbur ross is very proud of, he's very concerned that they won't have the skill set because commerce was dealing with the issue of them selling sanctioned materials, et cetera. but the spying is what he's worried about, and that is in the deep integration of the chips, and he is worried that this does not solve that >> doesn't solve it at all you know, $1 billion is chump change in the foreign policy business and $400 million escrow means nothing to the chinese the real issue here is whether they're going to be able to continue to do what they're doing, not only in the u.s., with equipment, but elsewhere in the world, because it's part of their -- the belt and silk road program and it's part of their going out program. very important >> hey, fred, just what we're about to see from prime minister abe and president trump, do we -- does the u.s. need its friends to be close and to be backing when it comes to north korea? and i'm wondering because i know abe and trump are very close,

they've met a number of times, but we hit them on trade, the president is going to g7 before this north korea summit in singapore this weekend where we're hearing it's going to be fractious and contentious and our best friends are mad at us and i'm just wondering how important that's going to be when it comes to president trump heading into the singapore summit >> yeah, i mean, look, the background for abe and his visit here is he's invested more in the trump relationship probably than any other foreign leader. 12 hours of meetings at a minimum saw him at the trump tower before he was even inaugurated. and a lot of people in japan are saying, what have you got out of this and this gets to your point. what he's got out of this is steel and aluminum tariffs on a national security argument against a military ally and that's what our european allies are complaining about as well. when a prime minister abe sees a zte agreement, he worries a little bit that things are more transactional than they are strategic and so i think you have a very transactional

president. the tariffs against our allies on 232 could put us in a position where it actually drives them closer to china, not further away from china as they don't want to be left out on the sidelines, so it's really hard to see what the u.s. gains by taking these 232 actions against our allies at the same time that it's trying to be a little bit tougher with china >> several senators have cosponsored legislation that would require congressional oversight or a congressional review ahead of the imposition of 232 tariffs i want to roll a sound byte from the earlier exclusive on cnbc with jamie diamond in which he talks about how the u.s. is fighting for fair trade. let's listen and then get your reactions. >> we think the president has raised some very critical issues about trade, particularly with china, around state-owned enterprises, fair competition, market access, the ability to own 100% of a company, and these

things should be negotiated out. the business round table has been quite clear that we don't think tariffs are the way to do it tariff has unpredictable outcomes, you hurt your allies more than anybody else, people tend to retaliate. >> john? >> absolutely. opening markets, intellectual property, those are the important things and they take time to do and the work is done down in the weeds, it's not done by a cabinet member or president sitting down with another head of state >> but what do you say, though, to everybody who argues they've done it the same way for 30 years and you still have china demanding the handing over of intellectual property. they still have tariffs. they do so many things i mean, you had to laugh when xi stood up at davos the year before and claimed to have the mantle of, you know, international trade when they are some of the greatest violators of all the principles that we think are important in international trade. >> it's not that long since

nicken a mix nixon and mao sat in to pa go da and worked out the opening of china. and it's only ten years ago that the first law in china allowed a chinese person to have personal property, which means there were no courts. so, ip in china was always keeping things secret. it wasn't exposing it and then defending it so they're changing the whole way they do that it takes a long time to do it. the best case for it is the market value of alibaba and the other i.t. companies is pressure on the chinese government to protect their intellectual property >> and the government's desire to do business overseas. one of the big headlines was opening up and so you have the ambassador to the eu from from china going over there shopping around, looking at where they're going to do deals now. >> of course >> to fred's point, we may be pushing our allies closer to china at this point with what is going on here. >> very well yeah, i have no illusion that china is wonderful and fair and all that the first investment i ever made in chain, the factory manager quit after six months and opened

a competitor across the street so i've been robbed and stolen and all that but it's changed -- it's dramatically changing in the last 10, 15, 20 years and this is not an overnight story. it's a keep the pressure on story. >> fred, what we seem to be seeing is the tactical game on trade, in other words, yesterday larry kudlow, your friend and ours, said that ultimately, the way to increase foreign trade, which is a good thing, and reduce balance of payments deficits is to lower tariffs and reduce non-tariff trade barriers, and yet. admit, wh at the same time we seem to be raising tariffand trade barriers talk tus about the tactical game that seems to be unfolding here as michelle points out, we've done it one way for a long time. this is an approach that's more stick than carrot. >> first of all, let's give the president credit where credit is due. he is taking on china on issues where we gave them a pass for a very long time

what i worry about is that if you actually make the wrong diagnosis, you could come up with the wrong cure, and his diagnosis that it's all about trade deficits, also with our allies, sometimes can lead to a cure like tariffs, which doesn't actually hit at the underlying problem with china, obviously, it's unfair trade, it's reciprocity, it's also stealing of ip, so i worry about that i just want to say one thing about jamie diamond and warren buffett because i think what people -- some people are missing in this is the geopolitical factor, which is the global economy is shifting it's shifting toward digital it's shifting toward artificial intelligence, new ways of creating energy. it's shifting toward a sharing economy. all of this is -- we're in strategic competition not only with china and others, and this could really free up companies to look a little bit less at the short-term and a little bit more at these long-term challenges, so i also wanted to comment on

that and that if they can actually drive u.s. companies more into this direction, that could also have a geopolitical impact that would be positive. >> well, that's an interesting way to think about the debate of the day that we've been having here on cnbc fred and john, stick with us if you can as we await the president but we want to pause here and go to eric with a market flash >> couple things here. disney stock and fox, 21st century fox, popping up a little bit because the d oj's anti-trust chief at the deal corporate governance conference just said a few minutes ago that the merger deal in place had good advice and was carved out surgically a transaction that might be doable. so that's good news for investors that are looking for that merger and a market flash on deutsche bank it has been reported that recently the deutsche bank chair has been shopping the idea of a merger with commerce bank to top deutsche bank's shareholders is and german officials back to you guys >> thank you very much, eric another piece of market news here

the brazilian real hitting a two-year low against the u.s. dollar amid rising political uncertainty. the brazilian government engaged in diesel prices currency has moved lower as investors have shrugged off or been unimpressed by the brazili brazilian central baggank's attempt. and take a look at the brazilian brazilian stock market it is down now nearly 7% getting hammered and finally the brazilian etf that trades in the u.s., that index is down more than 7% actually, that's what we're showing you there. today on pace for its worst day in over a year melissa. >> and we should note that there has been a bit to safety on the back of this e.m. so we're seeing a lot -- >> treasuries. >> exactly a bid for safety in treasuries and the yen, for instance, so this is something that's impacting the world beyond emerging markets

let's get to eamon javers at the white house as we await the beginning of this news conference >> reporter: i think we're getting close here the vice president is here the secretary of state has just arrived. the president's daughter, ivanka trump, is here they've all been exchanging greetings here remember, this will be the standard format we expect, two and two, two questions for the u.s. press, two questions for the japanese press we've got the g7 coming up and japan being a member of that, there might be a question there and then the subject that's on everyone's mind here is north korea and what's going to happen at that singapore summit next week what are the japanese concerns here that are specific to japan and different from the united states is there any daylight at all between the japanese side and the u.s. side? i think that's what a lot of reporters here in the rose garden are going to be looking for in the comments that we're going to have in just a few moments' time, guys. back to you. >> thanks very much. fred kemp, let's underline this we are worried about north korea here in the united states because they have intercontinental ballistic missiles in other words, we think they can hit us but for a long time, they have been able to hit japan because

they have intermediate and short range missiles and the japanese are very worried that we're going to strike some kind of deal that doesn't think that much about them, aren't they >> i would listen to two or three things when these leaders come out one of them is this question is president trump forward leaning in addressing japanese security concerns and that has to do with the short range missiles and complete denuclearization the president's been good on that thus far. second, abducties. there are 12, according to the japanese, 12 japanese abductees since the '70s and '80s that are unaccounted for in north korea and this may sound like a small thing when it comes to nuclear weapons but for abe, who's got some domestic political difficulties, this is a big domestic political issue the president before has said that he would take this to kim, listen this time to see whether he says that again and then, trade, obviously, is in the background. certainly prime minister abe would like to be exempted from

tariffs and certainly doesn't want the tariffs then being extended toward japanese autos perhaps that doesn't come out at all but you can guess that it did come up in their private conversation >> yeah, for sure, japanmen wans an exemption there what's important for investors in what we're listening for on north korea? >> i think it's easy to give up the visitors it's hard to give up the missiles and so the giving -- giving a token here for japan is not a difficult thing to do. north korea has taken and given people back several times over the years already, so no -- >> you're talking about the kidnapped -- >> the japanese visitors, right? >> as they call them >> to north korea. that's important but the thing is, kim's father, kim, right, kji, in 2008, actually proposed the same sort of a deal. they wanted to get out of the six-party talks.

they wanted to deal directly with the u.s., so this is a victory for them and they were willing to give up a treaty with north and south korea to do it that was -- that was an overture made ten years ago, so this is them taking ten years to get just where they were wanting to be ten years ago, being able to talk directly without all the other parties at the table, including japan. >> one of the reasons it went so roughly ten years ago, if i recall correctly, it was the first time the north koreans finally admitted that they had kidnapped japanese people in the '70s and it worked in the reverse. they thought that would help in japan and the japanese were so angry that it took them so long to fess up to what they had done, it totally backfired >> japanese and korean blood is still hot. >> they have a very, very contentious history. >> absolutely. >> all right, ron is here, has joined us. welcome, ron we're waiting, obviously, the president's joint press conference with prime minister abe. so many moving parts and so little time. two summits within five days >> one of which the president apparently does not want to go

to >> as he departs for quebec later today, it's not a summit where he is likely to have a lot of sort of kumbaya moments >> no, and you know, in the past, and i've covered a handful of these, these have generally been large-scale photo ops, very friendly >> very little kpocomes out of e ever >> except in this instance, the president is probably going to be roundly criticized by his g 6 partners, many of whom, including canada, have already voiced their displeasure with our current position on trade. so, listen, it's going to be awkward. we've not seen anything like this in quite a long time. prior to g7s being photo ops, they used to be productive meetings if you go back to 1985 and that era the g5 meetings among the, at the time, top five industrial powers were actually fruitful. they talked about currencies and trade and interest rates >> in light of that, if they don't accomplish much, why do they bother? why don't you stay home and save everybody the money, especially today when clearly nothing's going to happen. >> i don't know that nothing's

going to happen here i mean, if you don't have a joint communique that includes the united states, that would be rare >> they won't. >> it could be that partners stake out very difficult position s for us to deal with, and that happens right before the president -- >> why doesn't the market seem to care about that >> at this point now, i don't know the market doesn't seem to care about anything the market doesn't care about north korea. the market doesn't care about trade wars >> we talked to investors, they say they think the worst case scenario isn't going to happen it's in nobody's interest to have a full blown trade war. president trump knows that this is sort of minor disagreements and it's getting a little messy >> larry kudlow said it was like a family squabble but when you're dealing with a president who doesn't have a lot of respect for history, the 19 30s could come back to you without much effort because he doesn't understand or appreciate the multilateral structures that have been put in place since world war ii that would prevent these types of tensions from getting out of control an actual trade war, a shooting war, that's what nato is for i'm not predicting that. i'm just saying that i think

this particular president doesn't necessarily respect the framework in which he's currently operating. >> most homicides are done inside the family. that's a fact. that's why i think the event you're going to see from the g 6.5 meetings is you're going to see a g6 communique, not g7. that's the first time that's ever happened. that's a big deal. >> that would be a big deal. also joining us is mike, chief investment officer -- actually, it looks like we're seeing president trump and prime minister abe so let's go to the white house rose garden. >> thank you very much today, i'm greatly honored to welcome my good friend, prime minister abe of japan, to the white house.

over the past 16 months, the prime minister and i have worked closely together to address common challenges, of which there are many, seize opportunities and advance the interests of our nations today, we have had another deeply productive and very valuable discussion. we have developed not only a strong working relationship over the last year and a half, specifically 503 days, but a great personal friendship. i was honored by the tremendous hospitality the prime minister showed me when the american delegation went to japan last year it was really something, very special. and we had the prime minister and mrs. abe as our guests at mar-a-lago in palm beach the steadfast alliance between japan and the united states is an enduring force of peace and stability in the pacific region

and around the world from the beginning of my administration, the prime minister and i have been working to expand our cooperation in a range of areas, including defense and commerce which is what we discussed today. as i prepare to meet next week with kim jong-un and i want to bring up the fact that the prime minister and also president moon of south korea were extremely helpful, cooperative, and they'd like to see something happen, be great for north korea, south korea, be great for japan, the united states, and the world. our partnership has been invaluable in reaching this important moment, and we will continue to be in very close communication in the weeks ahead, including the issue of japanese abductees, which i know is of great personal importance to prime minister abe. i hope the upcoming meeting in

singapore represents the beginning of a bright new future for north korea and indeed a bright new future for the world. the denuclearization of the korean peninsula would usher in a new era of prosperity, security, and peace for all koreans, north and south, and for people everywhere. prime minister abe and i are also working to improve the trading relationship between the united states and japan, something we have to do. the united states seeks a bilateral deal with japan that is base on the principle of fairness and reciprocity we're working hard to reduce our trade imbalance, which is very substantial, remove barriers to u.s. exports, and to achieve a fair and mutually beneficial economic partnership, and we're on our way the prime minister was telling us just moments ago that they're

buying billions and billions of dollars of additional products of all kinds military jets, airliners from boeing, lots of farm products, we're going to be doing a lot more business with japan, which is what everybody wants to see there has never been a better time to invest in the united states thanks to our massive tax cuts, historic deregulation, a strong trade policy, which has just really begun, because i will tell you, over the years, it has been an extraordinarily weak trade policy, the opening of american energy and a return to the rule of law, our economy is absolutely booming, best it's ever been. unemployment is at the lowest level in nearly half a century, and for african-american and hispanic-american workers, unemployment has reached its lowest level ever recorded we welcome and encourage japanese investors to open new

plants and factories in the united states, and that will happen prime minister has told me that will happen. we want new auto plants going into michigan and pennsylvania and ohio, and many of our states that have them and some that don't, and they'll be doing that japan has also remained a critical partner in our efforts to promote a free and open pacific region where sovereign nations uphold the rule of law, are respect the rights of their neighbors, and honor the interests of their people. these core principles allow diverse nations to thrive and prosper all together in one beautiful, peaceful atmosphere we're all happy about it it's what's happening now. prime minister abe, it is a true privilege to work with you you've become my great friend. i want to thank you for being here at the white house, for our meetings today, so productive.

i'm also very proud to say that the bonds between our nations are stronger than ever before and i know that together we can unlock incredible new opportunities, achieve remarkable new prosperity, and ensure the safety and security of our citizens for a very, very long time to come. and that's what we intend to do. thank you very much. thank you. mr. prime minister >> translator: mr. president, i am so grateful to you for this meeting that you offered with great hospitality at such busy time as g7 summit and u.s.-north korea summit meetings are upcoming i also would like to express my appreciation to the people of the united states for always warmly welcoming us as your ally

in five days, u.s.-north korea summit is to take place. first of all, i would like to pay my deep respect to the outstanding leadership of president trump as he made this decision that no past presidents were ever able to accomplish in the last 18 months, we really spent many hours to discuss this issue. we shall never repeat the past mistakes while this thought is completely shared between us, we are able to witness an historic talk which will take place shortly. today, with president trump, our discussion was focused on issue of north korea what should we do as we approach the upcoming u.s.-north korea summit as well as for the peace

and stability of northeast asia after the summit on this topic, we took good amount of time and carried out in depth and candid exchange of views. i am not able to talk about the details of what we discussed, but one thing i can say is that japan and the united states are always together. i strongly hope that this historic is summit in singapore will be a resounding success there is a beautiful poet town facing the sea of japan. a mere 13-year-old girl living there was abducted by north korea. 45 years have passed since then, during which time family members single-mindedly prayed for her return and kept on waiting

the parents became old, remaining time is slipping away. it is the long-held desire of the japanese people to have her and all of their abductees come home so that the parents, while they are healthy, can embrace the girl and other abductees again in their arms. of course, i wish to directly face north korea and talk with them so that abduction problem be resolved quickly. to this end, i am determined to take all possible means. on behalf of the citizens of japan, i would like to thank president trump and the people of the united states for their understanding and support toward the resolution of the abduction issue.

japan will continue to ask for complete implementation of the successive united nation security council resolutions there is no change at all for japan's policy to seek comprehensive solution of the abduction, nuclear, and missile programs and to realize real peace in the northeast asia. this is what japan strongly hopes for. now, a major step forward is about to be taken, donald, president trump. you are about to make a new history, not only japan but the whole international community is strongly looking forward for the united states-north korea summit to open doors toward peace and stability of the northeast asia.

north korea abounds with rich natural resources. north korea has diligent workforce. if north korea is willing to take steps toward the right direction, north korea can see a bright future ahead for itself japan, based on the japan-north korea pyongyang declaration, is prepared to settle the unfortunate past to normalize our diplomatic relations, and to provide economic cooperation japan wishes to play the role as much as possible donald, i value highly your strong commitment to world peace and prosperity in closing, i wish to add that japan stands ready to make every effort to assist you for the success of u.s.-north korea summit thank you. >> appreciate it so, we'll take a few questions

we can start john roberts, go ahead >> mr. president, on the subject -- and i have a question for the prime minister as well on the subject of north korea, how far are you willing to go in terms of economic security political guarantees with kim? are you willing to move down the road toward normalizing relationships -- normalizing relations with north korea as the prime minister suggested he was willing to at some point you teased us as well out on the south lawn last week you said that you might sign a peace deal to end the war. where are you with that? and what was in the letter >> well, the letter was just a greeting it was really very nice. perhaps i can get approval to the put it out it was really a very warm letter, very nice letter i appreciated it very much and nothing other than, we look forward to seeing you, and we look forward to the summit and hopefully some wonderful things will work out.

so, it was really very warm, very nice. we appreciated it. i think, john, that we are going to -- we're going to have a great success. i don't think it will be in one meeting. i think it will take longer than that this has been going on for many, many decades this is something that should have been solved by other presidents, as i've said often before, long before this point they waited until the last second, and they shouldn't have waited this should have been solved by many others. i'm not just saying president obama. i'm saying other presidents. long time ago, this should have been solved in a lot easier manner and a lot less dangerous manner. but it wasn't. so i'll solve it and we'll get it done. as far as the prime minister's concerned, we've -- we will agree and we have agreed that we're going to be helping if the deal is done, we're going to be helping north korea, we're going to be working with china, we're going to be working with south korea, president xi of china has

been terrific. the border has been certainly more closed than ever before i'd like him to close it a little bit more, but it's been more closed than ever before china has never worked with us this way, and you know, i give him a lot of credit because as you know, we're in a dispute as to the imbalance of trade. it's a massive imbalance in china's favor. it's been that way for many decades and it should have also been handled by previous presidents, but it wasn't. so i'll handle that too. but i give president xi tremendous credit and i give president moon tremendous credit he really would like to see something happen they've been living with the threat of war from their beginning, and it doesn't make sense, and i really believe that kim jong-un wants to do something. i think he wants to see something incredible happen for the people of north korea. so we have a lot of great opportunities right now. shouldn't have waited to this point, but we have a lot of great opportunities. john, please >> again, plmr. president, would

you be willing to go so far as to normalize relations with north korea and what about the idea of signing an agreement on the 12 th to end the war >> well, it could be we could sign an agreement as you know, that would be a first step it's what happens after the agreement that really is the big point, but yes, we could absolutely sign an agreement we're looking at it. we're talking about it with them we're talking about it with a lot of other people, but that could happen but that's really the beginning. sounds a little bit strange, but that's probably the easy part. the hard part remains after that >> normalizing relations >> normalizing relations is something that i would expect to do, i would hope to do, when everything's complete. we would certainly hope to do that i know that prime minister abe and president moon have told me very strongly that they are going to go and they will help them economically, tremendously. japan has a tremendous stake and so do they we, orlann the other hand, havay

far away japan will be helping. i believe china will be helping economically also. i think china wants to see something very good happen, very positive happen, and certainly south korea has already stated their intentions they will be very helpful. so, there are a lot of good farks linfar factors lined up for north korea. a lot of factors that give it tremendous potential it has tremendous potential because the people are great, and we would certainly like to see normalization, yes >> and prime minister abe, if i could address you as well. we know how important an issue the abductees is for you president trump said at mar-a-lago during your last meeting that it's a very important issue for him as well. we know about the medium range ballistic missiles did you get an assurance from president trump that he would address both of those in his first meeting with kim

>> translator: today, we had long hours of discussion with president trump, good amount of discussion on the issue of abduction, i was able to have a detailed discussion and i think president trump fully understands the is situation. he supports the position of japan. last year, president trump visited japan. on that occasion, he met with the families of abductees. i told you about the 13-year-old girl abducted. the mother of this girl met with president trump and very seriously he intently stened to the voices and views of the family members so, president trump, amongst the world leaders, i think he is one of the leaders who understands the issue the most, the greatest so, at the upcoming summit, the importance of abductee abduction would be explained to mr. kim

jong-un. >> translator: what about the medium range missiles? >> translator: as i said earlier on in my statement, the security council's resolution must be implemented. all weapons of mass destruction and all ballistic missiles, these are the words used in the resolution of the security council. in other words, the security council resolution must be completely implemented on this point, between japan and the u.s. and international community, share the same view i'm convinced about it thank you. next question, please. >> translator: thank you i'm from tbs television. i have question for both president trump as well as the prime minister abe you have not used the language of applying the largest pressure

on north korea, but are u continuing with the sanction, and the denuclearization, you will be asking for that. and what is the deadline for the denuclearization and my question to prime minister is, how to apply pressure to north korea and the tone of the language are you in full agreement, complete agreement, with the united states? president trump has stated that we are implementing sanctions and those sanctions are very strong sanctions he also stated that until north korea takes the action, the sanctions will not be lifted and japan is in full agreement and japan's position is perfectly in a alignment with the united states and in our summit meeting this time, we had in depth discussion with president trump as to how

we should respond to north korea, and as for the future policy on north korea, inclusive of the u.s.-north korea summit meeting, we had detailed coordination aligning our positions. as i have already mentioned, japan and the united states are always together. japan and the united states will be in full alignment to seek success for the historic u.s.-north korea summit meeting in singapore >> yes, thank you very much. maximum pressure is absolutely in effect. we don't use the term anymore, because we're going into a friendly negotiation perhaps after that negotiation i will be using it again you'll know how well we do at the negotiation if you hear me saying we're going to use maximum pressure, you'll know the negotiation did not do well. frankly. there's no reason to say it. we, in the meantime, haven't removed any sanctions.

we have a list of over 300 massive, in some cases, sanctions to put on north korea, and i've decided to hold that until we can make a deal, because i really believe there's a potential to make a deal, and i just don't think it's nice going in under those circumstances but yes, the campaign hasn't changed. china has continued to hold the border we, again, would like them to do more in that sense, but they've been really good, and the president has been very good but maximum sanction is there. we are leaving all of the existing sanctions on. we have many, many sanctions to go, but i don't want to use them unless it's necessary, and i don't think it will be necessary but we will soon know. okay thank you. where's sager? daily caller >> thank you, plmr. president. i have a question for the prime minister as well mr. president, under what you've said repeatedly that you are

willing to walk away from the negotiations if they don't do well, under what exact conditions would you be walking away from that summit, and if the summit does go well, will you be inviting north korea leader kim jong-un to the united states >> well, the answer is yes to the second part of your question but certainly if it goes well. and i think it would be well received i think he would look at it very favorably, so i think that could happen all i can say is i am totally prepared to walk away. i did it once before you have to be able to walk away if you're not going to be able to walk away, we didn't walk away from the horrible iran deal that was signed, and if you look at what's happened since i signed that deal, iran and in all fairness, i say it with great respect for the people of iran, but iran is acting a lot differently. they're no longer looking so much not mediterranean they're no longer looking so much to what's going on in syria, what's going on in yemen and lots of other places

they're a much different country over the last three months and again, i say that with hope that maybe something can happen. but when you mention sanctions, we're putting sanctions on iran, the likes of which nobody has ever seen before including, frankly, north korea. that would have been the next phase if we did it or find it necessary to do. but nuclear, to me, is always first. and we're going to be fine with respect to iran but we also got something out of it that's very important a lot of the people that write about this, some of whom i have great respect for, but they haven't picked it up iran is not the same country that it was a few months ago they're a much, much different group of leaders, and i hope at some point they'll come to us and we'll sit down and we'll

make a deal that's good for them and good for us and good for everybody, and it will be great for iran i expect it to be. i want it to be great for iran but if they would have walked our side from some of the horrible provisions that you know as well as i do and probably everybody sitting here knows, we could have had a great deal nothing wrong with a deal. but there's something wrong with that deal. we had a great opportunity to make a phenomenal deal so i am totally prepared to walk it could happen. maybe it won't be necessary. i hope it won't be necessary to walk, because i really believe that kim jong-un wants to do something that is going to be great for his people and also great for his family and great for himself. okay thank you very much. >> sir, if you do invite him to the white house -- or to the united states, would it be here at the white house or at mar-a-lago >> maybe we'll start with the white house. what do you think?

>> mr. prime minister, you are the only major world leader not to have a sit-down or a planned sit-down with kim jong-un. you hinted in your address today that you would be willing to do so on the maer of abduee do you have any plans currently to do so and would it be focused solely on abductees or would you be willing to have a separate denuclearization discussion with kim jong-un directly without the united states? thank you. >> translator: of course, on the issue of abduction, we have to resolve this problem with abe administration, this is of the highest priority. and if anything contributes to that resolution, if the talk leads to the solution of the problem between u.s. and north korea or between japan and north korea, the meetings we would -- we wish to have on the issue of

abduction in the final analysis, chairman kim jong-un and between me, between japan and north korea, problem has to be solved. of course, japan, for japan, missile issue and nuclear issue, very important nuclear issue, missile issue, regarding these issues, at the u.s. and north korea summit meeting, first and foremost, i'm hopeful for the progress and then, on the issue of abduction, the -- we will collaborate with the u.s. and international community, and on -- and japan, ourselves, must talk directly with north korea in the final analysis. i am determined about that mr. hiyashi.

>> translator: thank you prime minister abe, i have question to prime minister as well as president trump. starting with prime minister, you have already mentioned to a certain degree on the abduction issue in order to hold japan-north korea summit, the premise that you need to obtain results for the abduction issue. what kind of concrete pathway are you envisaging to hold the summit meeting in your meeting with president trump today, have you asked the president trump to raise the question of abduction at the u.s.-north korea summit meeting in singapore next is my question to president trump. kim jong-un has maintained his position that abduction issue i something that had already been resolved so what kind of explanation has been given to the united states on abduction issue in the north korea to u.s. consultations?

and how should we approach the north korea in order to seek solution for the abduction, and what did you convey to prime minister abe today in this regard >> well, you for prime minister abe in this regard >> i'll speak first because i can fell you on the prime minister's behalf he very much talked about abduction it was preimminent in our conversations. we'll discuss it with north korea, absolutely, absolutely. >> prime minister? >> translator: now, at our japan-u.s. summit meeting we had at mar-a-lago in february, today, once again as president trump has mentioned already, i explained on the abduction issue

once again and conveyed to him the earnest wish of the families of the abductees and president trump again stated the fact that the issue will be raised at the upcoming u.s.-north korea summit now, at the u.s.-north korea summit meeting as to the concrete matters to be discussed, i'd like to refrain at this juncture, but in any case, japan's position were explained at length and president trump has given understanding and promised the issue would be brought up at the summit meeting in singapore, and i'm delighted of this. president trump and the international community, i'd like to closely work with president trump as well as seeking the solution to the issue. japan, itself, needs to have

direct consultation with north korea. i have not changed my resolve in doing so under this decision and result, what will be conducive to solve the abduction issue, of course, i will have to think about the summit meeting for japan, north korea summit meeting if we are to have a summit meeting at the nuclear missile, what is more important, the abduction issue, the solution to all these issues must be sought, and i hope that we will be able to realize that meeting which would lead to solution of the problems first and foremost, we need to seek advancements of the abduction, nuclear, and missile programs, japan and u.s. should closely cooperate with each other so that we will be able to see great success for the historic u.s.-north korea summit meeting, and japan would like to

give our all-out efforts in support. thank you. >> i'd like to just close by paying my high eest republic, regards, and love to the warmbier family. the incredible family of otto warmbier, who was a brilliant, beautiful, terrific young man, and he has not died in vain. i can tell you that. he has not died in vain. to the warmbier family, our love and our respect. also, i'd like to say that we were tremendously successful in getting our three hostages back, and very thankful to the cooperation received from north korea. and the three united states citizens are now very happily staying in their homes with

their families, very happy they didn't think this was going to happen, and, frankly, it never would have happened, but it has, and i just want to wish them well ag i really respect the fact that we're able to work with north korean folks and get them out, very, very well-engrained already, back into -- they told me they are now going to movies and they are going out to dinner they are back. they are back in our country it's a terrific thing. i believe we're going to have a terrific success or modified success, but in one form or another, if it all goes, and things can happen between now and then, and i know many of you are going, and i look forward to seeing you there and traveling with you it's a long way, but i really believe that we have the potential to do something incredible for the world, and

it's my honor to be involved, thank you very much, thank you thank you. >> president trump and prime minister abe finishing up the joint news conference in the rose garden. the president said if the summit goes well, that he would invite kim jong un to the white house president trying to be optimistic, but there could be a terrific success or modified success. the prime minister talked about a huge issue for theapane, those abducted in the '60s and '70s, fates unknown for many of them the prime minister went through great pains to say we have detailed, coordinated, and aligned our positions. the japanese prime minister trying to make very clear or show the world they are on the same page as the president goes into this meeting with kim jong un >> yeah. i think he did a good job playing to the japanese cameras,

which is what this is for, political support at home, and this is good at home this will help him look like he's tough on the hostage situation. >> the president seems to assume the north korean leader would like money to improve the north korean economy and make things better for his people. do you believe that? >> no. i've been there. i don't know him, but i know his father and uncle, he does not care a rat's behind about the north korean people. the year i was there, million north koreans starved to death while there were small group of officials living like kings. it's still like that this is legitimate bad guy, and people around him are bad, but what they really want to do, here the opportunity, they want to be rich like the russians and chinese leaders. if you make them rich, you might be able to get something done here that was the essence of the proposal ten years ago, you could reproduce that today if you protect him and give him gillions of dollars. there's a lot of resources there's minerals in the north

korean mountains no one has the cigarette tax franchise in north korea yet all of those are up for grabs once you open north korea. >> the president also said that you'll know the meeting did not go well if he uses the term "maximum pressure" again, which they are not using because he wants the meeting to go friendly eamon, what else did you hear relating to the preparation and goals of the white house ahead of next week >> well, sarah, striking here is you saw the president simultaneously lowering inspecti expectations for the summit saying it could be a moderate success or a big success saying nothing might come of it at all, could walk away, and at the same time, shouldering the burden saying that previous presidents should have dealt with the north korean nuclear problem in saying that he promises to solve it he said i will solve it. you got two different messages there from the president at the same time. one hand, lowering expectations for this, and on the other hand, a promise to solve a problem that has been a problem for

presidents, several presidents before him interesting messaging choice here by the president, and for prime minister abe, you saw him say that he's in lock-step with the united states. we talked about the idea of looking for any daylight between the u.s. and japanese positions here on the issue of medium range missiles, abe is alongside the united states and convinced they share the same position and on the issue of economic sanctions and when to lift sanctions on north korea, abe said he feels that he and the united states are in lock step, so a message here to the world and perhaps north korea saying the united states and japan are side by side on this as we go into this summit in singapore next week. >> what did you hear that stuck out to you what's the most important thing? >> news conferences. when there's news, and there was news here. i agree, he said it won't be done in one meeting. so that was lowering examinations, but could have an end war agreement. that would be the easy part, but big news in singapore even if it's only a first meeting to

have that kind of stuff in a first meeting would be a big deal, and what was not said? no talk about the exemption from tariffs so that seemed to be still on the books there was talk about the japanese buying a lot more american goods and building plants so particularly cnbc listeners, ihink tho are interestinteresting messages there, and then the talk that he has 300 massive sanctions in the background and so he's also holding out a stick in the background if things do not go for it, so that was interesting as well. >> i would say that as much as the japanese said they are in lockstep with the united states, we don't know what the united states' position is. public reports today there's not been a single national security counsel summit in the west wing to discuss the upcoming meeting between president trump and kim jong un so how regoes about it and whether he wings this entirely based on his personal relationship with kim jong un as it develops is intriguing. immediately after what could be a difficult g-7 meeting. >> for sure.

thank you so much. thank you. >> pleasure. >> guys, next time i see you, it's in singapore. i leave tomorrow morning, and we'll be live. >> whatever happens, it's a monumental event >> it is, absolutely >> thank you for watching "power lunch", and "closing bell" starts right now >> i'm wilfred frost, this is the "closing bell" to give guidance or not to give guidance that's the question, a question weighed in on this morning by warren buffet and jamie dim on.s >> we are monitoring the deals at the top corporate governance conference >> reporter: travel to the land of fire and ice is heating up. i why airlines are ramping up flights to iceland a group of senators introducing a bill to curve the president's ability to impose tariffs. we'll have a senator behind the move