i think he wants to make a deal. can anybody be certain but we'll be certain soon because the negotiations continue go ahead >> you mentioned you raisedhumah chairman kim i wonder what you would say to the group of people who have no ability to lehear and see this press conference, the hundreds of thousands kept in ghoul lo p. have you let them down >> i don't think so. i think we've done a wonderful thing, but not much i can do now. at a certain point i believe he is going to do things better i think they are one of the great winners today, that large

group of people that you're talking about. i think they'll be a great winner as a group. go ahead >> would you consider removing the sanctions without significant improvement in the human rights situation >> i want significant improvement. i want to know it won't be happening. once you start that process there will be a point at which -- even though you won't be finished for a while because it want happen scientifically or mechanically, t you can't go back once we get to that point i'll give that serious thought. go ahead >> did you also discuss the cost of denuclearization and how will north korea foot the bill and will the cripplingsanctions remain in place? >> i think south korea and japan will help them they know they will have to help them i think they'll help them greatly. we won't have to help them

the united states has been paying a big in a lot of different places south korea, which obviously is next door, and japan, they will be helping them and doing a very generous job and a terrific job. so they will be helping them yes, ma'am >> i would like to follow up on steve's question he asked how long it would take to denuclearize the north korean peninsula you said a long time -- >> we'll do it as fast as scientifically possible and i've heard horror stories that it's a 15-year process. i think whoever wrote that is wrong. there will be a point at which you're 20% through you can't go back >> how long will that take >> i had an uncle that was a

great professor for 40 years at m.i.t. i used to discuss nuclear with him all the time he was a genius, dr. john trump at m.i.t i think he was there 40 years, i was told we used to talk about nuclear. you're talking about a complex subject. it's not like, gee, let's get rid of the nukes it takes time. the main period of time is the first period where you hit a certain point and you can't go back >> how long will that take >> we don't know but it will go pretty quickly. go ahead >> i wanted to ask again on the sanctions campaign you eluded the chinese are not doing as great a job of securing the border as before you expressed doubts when president kim went to see

president xi, and the south koreans are talking about restoring a form of trade. with all of those players appearing to be moving towards eroding sanctions, how can you keep the sanctions regime in place? what leverage do you have on these countries? >> we have a lot of leverage we have tremendous leverage. i believe china, despite my relationship with president xi, a man who i have great respect for and like a lot, we're having tough talks on trade i think that probably affects china. but i have to do what i have to do over the last two months i think the border is more open than when we started, but that is what it is we have a tremendous deficit in trade. commonly known as a trade deficit, we have a deficit in

trade with china we have to do something about it we can't continue to let that happen i think that's had an impact on my relationship in terms of the border i don't think it affects my feeling orionship to president xi, but when we first started we were not ready to go that route as we started preparing and getting ready to do that, i think that's had an impact on frank lit border, which is a shame. i have do it i have no choice for our country i have to do it. south korea will do whatever is necessary to get a deal done if that means we can't trade, we won't trade. if they think and they would do this with our concurrence, if they think that they can do some work because we're far down the line, we're actually very far. that document when you read it today, that's far down the line. that's not something that just happened to be put together. this was done over months.

the rhetoric was important and the sanctions were important >> mr. president, i was wondering if you could give us some sense of whether chairman kim told you how many nuclear weapons he believes he's made, whether he's willing to turn those over first, and then whether in your mind you need to do more than was done in the iran deal for actually dismantling the uranium and plutonium processes, and whether or not you had a sense that chairman kim understood what that involved and had a timetable in his own mind of shutting that. >> david, i can tell you, he understands. he understands it so well. he understands it better than the people that are doing the work for him that is an easy one.

as far as what he has, it's substantial. it's very substantial. the timing will go quickly i believe you'll see good action as an example, one of the things with the missile site, that was a throw-in at the end. i believe that it's going to go quickly. i believe it will go fast. it is a substantial arsenal. no question about it i used to say maybe it's all talk and no action but we have pretty good intelligence into that though probably less there than any other country. but we have enough intelligence to know that what they have is very substantial this is why i always say this shouldn't have taken place so late into the process. wouldn't thishave been better if it was 5 years ago, 20 years ago, 15 years ago when we didn't

have to worry about not having a successful meeting like today. i still love my first interview with you, david. still have that. go ahead [inaudible question]we have not. we'll probably need another summit or meeting. we can use a different term. but we'll probably need another one. i will say this, we're much further along than i hav thought. i've told people, dn't want to build up peoples hopes. i told people this would be a success the meful meeting if we along, developed a relationship and got to this point three, four months from now, but it

happened quickly a lot of it was because of the fotion that was put down before we met. we didn't have, as an example, bringing back the remains that was not on the agenda today. i brought that up at the very end because so many people were e about it he was really very gracious and instead of saying well, let's talk about it the next time, he said it makes se we will do it. they know where many of those incredible people are. where they're buried along roads. along highways along paths. because our soldiers were moving back and forth and they had to move r it very sad. he knew. that was brought up at the very end. you know, it was great that he was able to do it. a lot of people will be happy about that go ahead >> thank you, mr. president.

congratulations. >> thank you thank you for the nice way you're treating us it's very good beautiful what you do. go ahead >> so you -- >> now i'll probably get this killer question. >> i do want to talk about the future of north korea, specifically the people. kim jong-un is saying he's wanting a brighter future with prosperity for his people, yet we know they lived under oppression you showed him this video of what the future can be like. do you have an idea specifically of the model that he would like to go towards? economically, is he open to more economic freedom >> it's a good question. you saw a tape today i think that was done well, but that was done at the highest level of future development. i told him you may not want this you may want to do a much smaller version of this. you're going to do something but you may want to do a smaller version. you may not want that with trains, everything

maybe you won't want that. it's up to them. it's up to the people on what they want. they may not want that that was a version of what could happen, what could take place. they have great beaches. you see that when they're exploding their cannons into the ocean. i said look at that. wouldn't that make a great condo behind instead of doing that, you could have the best hotels in the world there. think of it from a real estate perspective. you have south korea, china and they own the land in the middle. how bad is that? it's great i told them, you may not want to do what's there. you may want to do a smaller version of it. that could be. though i tell you what, he looked at that tape, he looked at that ipad, i'm ing you, they really enjoyed it, i believe. go ahead couple more.

three more >> brian bennett from "time" magazine >> am i on the cover again this week >> it's entirely possible. do you see kim jong-un as an equal? >> in what way >> you showed a video that showed you and kim jong-un on equal footing and discussing the future >> i don't view it that way. i'll do wlafsh it tahatever it make the world a safer place if i have to say i'm sitting on a stage -- i understand what you're getting at. if i have to say i'm sitting on a stage with chairman kim and that's going to get us to save 30 million lives, could be more than that, i'm willing to sit on the stage. i'm willing to travel to singapore, proudly, gladly again, othern the fact that it is taking my time, they have

given up a tremendous amount even before. add the olympics to it you could add the olympics to the question they went to the olympics. they took an olympics that would have maybe been a massive fail ch ure and mat a tremendous success. if i can save millions of lives by coming here, sitting down, establishing a relationship with someone, who is a very powerful man. who has firm control of a country. and that country has very powerful nuclear weapons it's my honor to do it >> are you concerned that the video you showed could be used by kim as propaganda -- >> no, i'm not concerned at all. go ahead >> mr. president, in the year

2000 president clinton got a request from kim jong-il to travel to pyongyang -- >> spent $3 billion and got nothing. >> you got the request and right away went here to meet him do you understand those people who say that you gave him the ultimate present, a legitimacy to a regime who will oppress its people without an ongoing process before you as the u.s. president e hands with this leader of north korea who is perceived to be oppressing brutally his own people? do you understand that >> i understand that much better than y do. go ahead thank you very much.

>> mr. president, you mentioned a couple specific concessions that you got from kim, the return of remains and the destruction of the nuclear sites -- >> and much more >> i know you said the last thing waan add-on, it wasn't in the agreement but that he gave you his word. if he doesn't follow through on these things, what are you prepared to do in response and then will you lose faith in the process? >> no, i think he'll do it otherwise i wouldn't be doing this it was the engine testing site in addition to all of the other things that they've agreed to do they have a powerful engine testing site that we'rable to see because of the heat that it emits. i'm able to -- i'm happy -- i'll tell you what, i'm happy with those two points you mentioned, but you might be referring to the thing that's not in there, the engine testing site.

honestly i think he's going to do these things. i may be wrong i may stand before you in six months and say hey, i was wrong. i don't flo no i'll ever admit t one more go ahead >> thanks, m president i would like to know will you call chinese president xi when you come back to d.c. to discuss about achievements you made today with chairman kim? >> yes i will what is your expectation about china's role to accelerate the process to establish a long-term peace mechanism? >> my expectation of china is china is a great country with a great leader and a frienof mine i believ he's happy that we've made this kind of progress i have heard from him but i'll be calling him shortly, maybe even before i land i have to say, the united states

is a great country and we have set records economically, over $7 trillion in net worth aition to what we have we are almost twice the size -- the economy of the united , nob, but the united states is almost twice the size of the economy of cha. we have a great country. we're on a correct path. one more that's it. where is south korea you deserve one. yes. you deserve one. >> i have two questions for you, mr. president. you mentioned earlier that you would talk with south korean president moon jae-in over the phone? what do you plan to discuss with him? >> i will tell him about the meeting, very successful and he'll be involved in the final negoti

heine n. also a friend of mine. i look forward to speaking to him. he'll be happy i already sent word to him about what hapd. i sent the document to him actually and all of the details behind t document. i'll talk to him shortly f i may ask another question in signing the peace treaty, do you plan to work this out with north korea's chairman kim only or what do you think about the involvement of south korea and china as the signatories >> i would like to have them involved also. >> both of them? >> there's a question of whether or not we are supposed to or legally have to. i don't care i think it's great to have china involved and south korea okay >> thank you [inaudible question] they probably have a rough transcript if you have one no, they didn't record it.

i don't think. i wish there were. [inaudible question] i don't. we probably have notes or something. they have detailed notes, i would imagine. we had a great conversation. it was a heart-felt conversation [inaudible question] i don't have to verify i have one of the great memories of all time. [inaudible question] yeah, but i don't want to discus what we did is we had -- we've had numerous discussions we've had very important relationships established at mike's level and other levels. a couple of people are here from north korea. a few people in the back from the room when we went into this final

agreement, we didn't go in cold. we went in with tremendous relationship and knowledge that's why we got it done. so i will head back. i don't know about you folks, it's been a long time since i've taken it easy. now maybe we can take it a bit easier and then the work begins again. i hope we answered your questions and thank you very much congratulations to everybody to me, this is an important event in world history and to be really true to myself, i have to add i want to get it completed mike, our whole team, has to get to work and get it completed otherwise we've done a good job, but if don't get the ball over the goal line it doesn't mean enough. thank you. congratulations to everybody in the room thank you very much. appreciate it. >> that is president trump just wrapping up a news conference to finish his one-day summit with north korean leader kim jong-un,

acknowledging the historic nature of the talks. president trump saying early on that he's prepared to start a w history, to write a new chapter between the two nations on this. he said the past does not have to detype the ffine the futures adversaries can be friends he brought up a number of points, number one, economic sanctions will remain in effect for now. he also said that 32,000 american soldiers will remain in south korea, but the united states will be stopping the war games, the war exercises with south korea on the border. donald trump went on to say the methods to verify denuclearization were discussed though not outlined, but they included having a lot of people there. president trump said the remains of those who were killed in action or missing in action from the korean war will be returned starting immediately michelle caruso-cabrera has been

standing by in singapore >> that was something to behold. michelle, your thoughts initially. they do like to ask the same question six, seven times. >> becky brought up a lot of the key points i would say he insisted that verification would happen. that's one of the crucial things that we heard from mike pompeo, the secretary of state, that we've been hearing since the bush administration. this is the doctrine of the united states, cvid, complete verifiable irreversible denuclearization and the verifying has always been the hard part he insisted that would happen and that the sanctions will not come off until he's satisfied

that the nukes are no longer affected the most solemn moment is when he was was talk about otto warmbier, after he was arrested for stealing a poster. he said that one of the key reasons that we are all here today is because of otto warmbier that was one of the key moments that brought this tuation, that otto did not die in vain. he talked a lot about human rights he seemed to suggest it was the second most important topic besides denuclearization he was asked specifically about the prison camps the u.n. believe there's are more than 100,000 north koreans within prison camps in north korea. president trump said he believes those peoples lives will be better as a result of what's happened today he believes that chairman kim

will change what is happening there. he fought back against this conventional wisdom within foreign policy that having just sat down with kim jong-un was a big victory for him. he doesn't subscribe to those i would say a president that complains about the press so much demonstrated how much he loves to interact with the press. he was so comfortable taking questions from anyone and everyone and rarely refused to answer a question. explained why, how he didn't want to be threatening to say what would happen if north korea didn't follow along. and then there are the classic laugh out loud moments that can happen with him, where he said i didn't need a recording of the meeting because i have one of the great memories of all time also when he was complaining about how much it cost to conduct the war games for south korea. i know a lot about ps, flying bomber for 6 1/2 hours

is very expensive. as always with him, when he decides he will talk to the press, a wide rangin cotion he had with them. went on for nearly an hour >> said if it doesn't work out, maybe i'm wrong, but i won't adm admit it, i'll make up some excuse his state of mind seemed good, just in general, after 25 hours of apparently being up eyes wide open, but peace is worth the effort who knows. none of us know what lurks in the mind of kim jong-un at this point. >> that is the great history >> 51% benefit of the doubt? i don't know if you would go 51%, do you? >> i don't know. there was one question asked about the economic model that chairman kim wants to follow

there were great hintsrom every senior leader in the world about some opening of north korea, as if something will re in terms of the way he runs the country economically the president didn't really answer the question. he said this is how your country could be if things change. does chairman kim want to change the way the country is run economically because it would lead, of course, to improved livelihood for his millions of people who have been suffering for decades under socialism. >> okay. michelle, we'll come back to you a lot over the next several hours. thank you. we'll talk to you in a moment. let's get reaction from our guest host, joel witt. you have been sitting here patiently listening to the president. took a shot, by the way, at a number of administrations, folks who tried this before. i don't think he was necessarily thinking of you personally but he might as well have been

>> right >> i'm on a historical jihad when he mentions the clinton administration i was part of that negotiation i'm going to tell one story. when i was sitting in the state department in 1993 and '94, intelligence estimates were telling us north korea could have 100 nuclear weapons by the year 2000. as a result of the agreement we reached, when it collapsed at that time, they had less than five- they had material for less than five it's not a black and white picture about the history. president trump, i think, has been very courageous in taking this step forward. the issue nois can he build on the momentum established by the summit one thing that has not been reported extensively is in the summit document it says secretary pompeo is going to start negotiations very soon to

build on what was done at the summit that's critical. >> how hopeful are you in terms of handicapping where things are, having beened to the president just now, having seen the ines of this document. do you -- where do you put the odds >> we talked earlier about lou i spent 25 years talki ing about this issue i always want to keep the door open to progress, but i'm not going to be optimistic about it. >> because why >> i'm not optimistic because we have had in problems in the past there's no doubt about that. but we need to keep testing the proposition that there's a peaceful path forward.

. >> what have been the singing poin -- sticking points in the past? >> one of the things is the bad political relationship when you try to move forward with agreements that deal with nuclear weapons, that are at heart of north korea's security concerns, if you don't build a political found dags for doing th that, the process will be difficult. particularly since we had 70 years of hostile relations with north korea. >> president obama was criticized for engaging the iranian regime it's like how can you talk to these guys now we're hearing the same thing again. how do you negotiate with your enemies if you don't negotiate with your enemies? they'll put your flag there, your flag will be there, but there's criticism that sudden will you you legitimized this

regime >> i think it was shimon peres who said you don't negotiate peace with your friends, you negotiate peace with your enemies. there'no need to sit in a room with these people. >> we know that probably somewhere in north korea, god knows what's happening in some of those camps while this was going on, and that in the back of your mind you know that's happening. that's just the reality of it. >> that's the reality. i talk to a lot of human riteghs experts, i listen to what they say. a lot of them want to ca out north korea on human rites is rs issues, and that's fine, but you have to realize how do you make progress on human rights with a country like north korea the only way do is by engaging with them and improving the relationship to where they take concrete steps

>> the good news is we're engaged now. but how far along do you think we really are? david sanger asked that question about how many nukes do they have really wanted him to quantify it he wouldn't give a number. he said substantial. the question is does he know answer and isn't saying it or -- because he said have they actually talked about it that's a real question, especially if you have to verify it >> of course it's a real question i have not seen u.s. when i did see them, there was always a range it wasn't know they have exactly 20 weapons >> there's always a range. one is too many. whether it's one or 50, you need -- one can't be used. >> but the reason why the question was so important f you're getting to a place where you can verify what's supposed to happen here, you need to know the number and the number they presented. >> and the real number

>> that's what verification is all about. they may present a number. we may have our intelligence estimates. but if the process works, we will figure out -- maybe not with 100% certainty, but with a high percentage of certainty whe what they have >> joel, you made the point earlier this morning that this is not going to be a quick or easy process the president said that we're on this path, and that he thinks it will be not too long of a time before we're able to know of some of these issues you make the point it could take ten years to completely denuclearize >> i found his comments interesting on that point. there is a point in time, he's exactly right, that's less than ten years, where you will see the threat diminish dramatically that happens if we focus on getting the nuclear weapons out of north korea or dismantled

first. then move on to other topics like production infrastructure and dealing with scientists. you could diminish the threat quickly, not in ten years, but much sooner. >> in your heart of hearts do you feel like we're at a point where nixon went to china, or where gorbachev and reagan were actually deciding to, you know, to completely end the cold war are we at a madeleine albright kim jong-il father moment where it's stay tuned, it's just another stepping stone on the way to more problems >> i think this goes back to a point i made earlier this is the beginning of a long process. >> will we remember this as som? we have pompeo who is cia. john bolton who is like the hawk of all hawks can we take any -- does that make us feel better about the

process that these guys are fairly suspicious of the whole process, i would think >> there's no american official i know of in the administrations i was in and certainly in this administration who trusts north korea. i think everyone is very skeptical. but on your earlier point, we may look back at this as being a significant moment but only if we maintain the momentum forward here. so what we need to see quickly is negotiations between secretary pompeo and his team and kim jong-un and his team and we need to see the results of that. i always tell journalists who ask me are you pessimistic or optimistic, i always say i'm neither. >> you're realistic. >> exactly >> all right we'll be back with you in a second let's get to the cnbc market desk for reaction to today's

events brian sullivan joins us from there. we have already seen over the past six months or so, we're going to the summit. the dow is up 30 not going to the summit, dow down 30. it's not trading -- should, based on nuclear armageddon, but not trading like that in the equity markets any other markets moving more significantly than stocks? >> not yet it's odd because you and i talked back in august. august was the peak hostility when trump was throwing around rocket man and saying doesn't that guy have something better to do with his life? we talked about the binary effect of nuclear war. we worried the markets, maybe north korea is the biggest risk to the global markets. it's odd we're not seeing thatn de-risked these global markets

let's dive in on this with tim seymour, guy adami, and jeff kilburg. it's an interesting question, jeff, that joe raises. where is the market reaction where is the reaction to risk and the vix? because we have this summit which some said would never happen it's happened. it looks like it's going well. for some reason we're not seeing that reaction globally >> metered response, but nonetheless the market has moved up the s&p 500 athe higher end of the range. we will pick and parse all the different words out of the summit today three words we did not hear today, maximum pressure policy that's what the market wants to hear as the day unrolls, we're looking at the ten-year, the vix muted. but this is a positive movement. at the end of the day, this north korean summit this is the

proxy to china what do you mean about maximum pressure policy. >> that's what trump talked about all the time in the event this went south, enforcing more tariffs and pressure on north korea would be the response of the trump administration in the event this went south, but that did not happen, so that's positive >> how do you advise clients with north korea so many other things are quantifiable we say this happens, earnings go down north korea is an irrelevant country econically the economy is roughly the size of vermont by our best estimates. it's not relevant in the economic sense >> i think vermont may have an issue with that. >> jmbers, tim just numbers it's essentially the u.s. economy of 1870. how do you analyze anything with regard to north korea? >> this is one of the big tail risks starting the year that people were concerned about.

taking this, granted we have very much early days of negotiations, but this removes a tail risk to the market. in you rewind to 1985, it took two years from the first meeting of reagan and gorbachev to ultimately come to an agreement on the end of the cold war so people today see a long path forward in terms of getting any type of clarity by e. about this completdenuclearization remains. >> it's the beginning, not the end of the process >> next steps, trump will go back to washington we'll see him meet with mike pompeo and the rest of his staffers, debrief them and then see hopefully a trilateral meeting in july. >> when does the all-star panel start? that's us. >> you guys get the point of my

question which is this the north korean economy, from a numbers perspective, it means nothing. but last year we talked about nuclear war, the threat of the korean peninsula, the possibility that japan might get involved you don't have to care about nxnx north korea, but you do have to care about china >> if the market believes that somehow the markets lag because of china tariff co, trade war with china, if this agreement made that area safer today, does that now give the president more bargaining power with the chinese >> answer your own question. >> i think it does >> i think it does the opposite. cozying up with north korea right now will not help in your relationship with china. i think the biggest takeaway from markets, there may be some folks that believe trump

cemented his backing in -- i think geopolitically, i'm not sure about that. but within his own party, in terms ofmidterm elections, the market takeaways are on a week where we have the fed, doj, ecb, a huge cpi number at 8:30. that's where volatility will come from. i think china, if anything, bristles by -- >> i was going to say one more llow-up on that. 86% of north korean trade, that we know of, 86% is with china. to your point could this tense up relations with china because all of a sudden we're cozying up to one of their biggest trade partners >> it's a sphere of influence. china believes it's their region to control what's going on i don't think the u.s. can walk in there and make peace. >> you will get the answer for

what this means by the end of the week by june 15th the u.s. trade representative has to come up with a list of chinese products and goods that will be subject to tariffs that will be telling for how much china is being rewarded for the effort they had bringing this together. i think this is a good first step for u.s./china relations. i think china is going to be seen as helping to bridge the ga gap. >> we'll be here a couple more hours. we will take this issue, this meeting and frame it out to what cnbc does. becky, back to you in new york this is a massive meeting. a massive moment in global history. we'll see how the markets react to it. >> so far not a lot. but this may have been stuff that was bought on the rumor and hanging out while we wait to see what happens brian, thank you very much we do have reporters on the

ground and across the globe. akiko fujita is live in seoul. eunice yoon is in beijing. kayla tausche is iwashington akiko can tell us what the south korean reaction is to all of this >> good morning to you we have gotten a statement from moon jae-in's ruling party calling the summit a declaration to the world, the era of peace has arrived. president moon jae-in and his party putting a positive spin on what happened and transpired over in singapore. but i want to get back to a critical point that trump raised, which is the issue of stopping those war games, those joint u.s./south korean military exercises that happen on the ground annually. here in south korea that's likely to be seen as a huge concession on the part of the u.s. a bit of background here these are exercises that happen

annually something the u.s. says are defensive in nature. north korea sees these as provocations earlier this year north korea canceled that second sumt with south korea after those exercises began, and also threatened to pull out of what eventually came out of the singapore summit as a result so the u.s. calling for an end to those exercises, that's seen as a big concession here in south korea. we did hear the president say that south korea will do whatever is necessary to get this deal done we do know the president is currently speaking with moon jae-in they are having a phone call we have gotten reaction from japan as well. prime minister abe saying the agreement today is one step towards comprehensive aid the statement is the first step to the denuclearization of north korea. he said he is appreciative of

president trump's reference to the abductees. the japanese pushing this forward. japanese foreign inister, tato kano expected to meet here tomorrow with the washington officials and mike pompeo. that's the latest from here. >> thank you very much we'll come back to you and speak to you many times over the next several hours. right now over to kayla tausche in washington. >> good morning. we heard the president pulling back the curtain on the several hours that he and his delegation spent with the representatives from north korea and leader kim ju jong-un. he said there was the joint statement that materialized. but he talked about the various other items that were discussed in the meeting that they didn't have time to reach a fall agreement on or include in that document among them, the planned closure

of a missile testing site that the president said kim jong-un committed to doing immediately and then other processes that they discussed here's how he described that process going forward. >> as we do that we'll have a lot of people there, we'll work with them on other things. this is complete denuclearization of north korea. and it will be verified. >> will those people be americans? >> a combination of both we have talked about it. go ahead . >> in that statement he said it couldn't be plainer than they put it in the document he said denuclearization will take a long time but negotiations will continue, and he said that chairman kim accepted an invitation to visit

the white house at some point in the future what did the u.s. offer north korea to get them to agree to this beginning of this denuclearization process you heard akiko talk about the ceasing of those military exercises. the president said his desire to have a military draw down in the region at some point in the future in response to denuclearization he also talked about a future relaxing of economic sank slun s in response to denuclearization and improvement on the human rights front he did also say there was an oblique reference to globalization of north korea this being an inflection for north kore the video he showed chairman kim, the messaging around this being north korea's step into the future and according to officials i spoke to just the choice of singapore as the site for this summit showing kim what

a modernized, high-tech, advanced society can look like, that's a desire that the administration is hoping to stoke in chairman kim and getting him to follow through on the process. >> i wanted to get your reaction given that you spent some time in canada with the president your reaction to some of his comments around trade and in particular some of our long-time allies >> it seems to be that the president is making the assumption that the relationships with allies like europe and like canada are so longstanding they are not at risk he said they're taking advantage of us on trade he said lease seen a secret document that canada produced that shows the trade deficit or canada's trade advantage with the u.s. is over 1$100 billion he said he has good

relationships with mr. trudeau, but that the status quo needs to be changed and he doesn't believe long term relationships will be changed. he believes that justin trudeau did not think he would be watching the press conference, and he said that's going to be an expensive decision for canada we'll see how that plays out >> does that line up with everything you saw on the ground >> it does >> thank you >> now let's get to beijing. that's where eunice yoon is standing by. what all of this means for chin china. >> that's right. president trump said he would be calling president xi jinping and that he would be happy with this bold step. this is what he said at the press conference

>> most importantly i want to thank chairman kim for taking the first bold step towards a bright new future for his people our unprecedented meeting, the first between an american president and a leader of north korea proves that real change is indeed possible. my meeting with chairman kim was honest, direct, and productive >> china has responded saying that the summit is creating new history, even before the joint declaration was announced, the foreign minister said he hoped to see dialogue, denuclearization and a stable peace mechanism after this summit beijing got all three. also the statement read like a letter of intent, which suggested that the time frame of denuclearization is going to be extended, much longer than what the trump administration had initially said that is more in line with what the chinese had wanted they wanted a more fwphased

approach which they believe is more stable for the region and would allow beijing to play a dominant role. what was also interesting is the comments coming out of the foreign ministry they suggested lifting sanctions possibly on north korea. the foreign ministry said adjustment to the u.n. sanctions has to be made in accordance with the situation on how north korea has implemented the agreement including suspending or removing relevant sanction measures this is an indication that the chinese could be agitating to end the pressure campaign which does contradict what president trump had said at the press conference when he said the sanctions would stay in place at least for now. secretary of state mike pompeo will be heading to beijing on thursday where i'm sure he will be hashing out these issues to an eager audience in beijing guys

>> eunice, thank you we have three hours to go now, eunice this is worth it, though we want to thank our guest host, joel your time with us was too short but great having you you got to watch this with us, former state department official, 25 years of experience negotiating with the north koreans. these are not final thoughts you look healthy >> final thoughts for this morning. >> i was struck by the line president trump used which was enemies can become friends the past doesn't need to define the future this is a line that the north koreans have started using recently ending 70 years of hostility can't happen overnight the summit establishes a framework to move forward and now can the administration maintain focus to get the job

done >> his father or his father's father could have done this thti theyld have seen the benefit of coming in to the modern world in terms of economic development and everything maybe they were worried their regime was at risk to do that. for me it makes sense this person wants to do that. he could be seen as the father of modern north korea if he were to do that >> don't forget, i forgot his exact age, maybe 34. he's thinking he will be leader of north korea for decades more. so he's looking into the future. so there may be a gradual path into the future where he gives up his nuclear weapons and modernizes his country >> i could see him just not selfishly but see him wanting this to happen, which makes me

think maybe we don't need to be as skeptical as we have been in the past >> not optimistic, not pessimistic but realisc. >> trust but verify. >> on the realistic side, in terms of the fault lines ahead, this is one man's decision thbody else he needs to consult here, from the north korean side. >> that's an important point in the past when the north korean leader reaches an agreement, everyone falls in line i've experienced that when i spent a lot of time in north korea during the '90s implementing that agreement. they fall in line. having kim jong-un on board is the ultimate fantasy of u.s. cisionmakers >> joel, thank you for being here >> thank you president trump addressing members of the media atfter wrapping up his historic summit with the north korean leader

>> now we can all have hopit wid and it will. it will soon end the past does not have to define the future yesterday's conflict does not have to be tomorrow's war. and as history has proven over and over again, adversaries can indeed become friends. joining us is john raines. how do you handicap this at this point? >> it's got to be a positive day for the president. the atmosphere is positive you've seen that with the previous comments that the guests have made the big question is can they hold thimontum there's a huge number of steps they will have to complete to get this on track. if they can get moving, overall positive >> john, you're the head of political risk how do you measure risk in a situation like this and how has it changed in the last 24 hours? >> that depends on when you look

at political risk, it depends on the clients you're serving the main concerns were the possibility of interstate war. with two folks talking, that decreases, and then the risk to trade. we've seen increased risk to trade throughout the weeks, but this has to be a posite foundation there as well >> one thing that president trump went on to say is that today is the beginning of an arduous process, something that could take years before we see an end to the situation. doesn't mean things can't improve over the short-term. how do you try to measure the end game for this? >> very slowly, very carefully we've seen there before when we had to have through intensive, you know, negotiations and inspections, we saw this in iraq, seen this with libya, elsewhere, sometimes they end up being positive developments, sometimes they don't go in the

direction we intended. i think it will be a slow process. this is a positive day today don't be surprised in the least that we see something negative transpire in the next few months maybe they don'tallow inspectors in. that's a prospect this administration has to face and then how do theydle a situation like that. >> my question to you is the president was asked repeatedly how fast this process could take, then how fast it would take to denuclearize he said it will happen fast. it will be comprehensive and happen fast. in terms of what the market should think about realistically, what do you think the timeline looks like? >> i think it's elongated. i don't think anybody thinks this could happen in six months. from the president's perspective, from the administration perspective going into november's elections, the

quicker the better but as long as it doesn't go off the rails, that's what the markets hope ande to, but also for this administration the last thing they want is having a political of diplomatic fiasco before the elections. so at this point it's steady as we go. hopefully no major impediments or stumbles, but at this point this is the best they could hope for. >> thank you for your time today. >> thank you very much appreciate it. >> coming up, president trump leaving singapore after that historic one-on-one meeting with north korea's leader, kim jong-un. fred kempe is making his way to our set. he was in seoul last month we'll get his reaction to the news conference. stay tuned you're watching a specl itiaedion of "squawk box."

good morning welcome to a special edition of "squawk x" on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host is fred kemp, a cnbc contributor welcome. >> good to be here >> president trump and north korean leader kim jong-un meeting in that historic summit in singapore president trump wrapping up a news conference about 45 minutes

ago. >> most importantly i want to thank chairman kim for taking the first bold step towards a bright new future for his people our unprecedented meeting, the first between an american president and a leader of north korea proves that real change is indeed possible. my meeting with chairman kim was honest, direct, and productive >> so far the reaction in the markets has been muted dow futures indicated down by 17 points s&p off by 2 points. the nasdaq down by 9 points. also overnight in asia, look and see what happened. trading closed at this point stocks were higher for the hang seng, up by a tenth of a

percentage point looking at europe, modest changes. the cac 40 is down the ten-year note now yield iin yielding let's get you up to speed on what's been happening. president trump and kim jong-un both shook hands and were joined by their interpreters. it was about 45 minutes that the two gentlemen were together.

trump and kim we then joined by their dop edtop advisers the group then held a working lunch. they announced they would sign a document and they committed to working towards complete denuclearization of the korean peninsula and promised to join efforts to promote a lasting peace regime >>'s go to michelle so-cabrera . >> in addition to the events that joe outlined which were

tremendo tremendous, after the event, the president held an hour-long news conference discussing many issues he discussed the prisoners in north korea, relations with allies, japanese abductees, otto warmbi warmbier, the american student who died after being imprisoned after trying to take home a poster from a trip but the core question was how can you trust kim jong-un? how can you trust the north koreans to do what they said they would do, denuclearize. here's how he answered it one tim

time >> will have a lot of people there, working there >> mike pompeo will now begin a round of negotiations to begin the process of figuring out how the verification process will work already experts are weighing in. the foundation for the defense of democracy who worked on the six-party talks back in 2005 says it is a classic game for north korea to play, which is to extend the negotiation process for a long time. so the next test is to see how quickly mike pompeo can wrap up negotiations the president already headed to the airport. the pool tells us he's on the plane, on air force one headed back to the united states. back to you. >> thank you for that. let's head to cnbc world

headquarters, brian sullivan has been anchoring the markets desk tracking global financial reaction to the summit >> thank you very much good morning i think the question of the day and for our panel here later on will be where is that big market reaction it was such a big story last year when we saw the rhetoric rise, tensions increase, but right now the market is calm futures are little changed a bit of a different story in asia japan is a story maybe not getting enough attention the kospi is down. the ten-year yield at 2.96%. got a fed meeting kicking off

today. interest rates will be in focus. oil traded here and overseas also higher. been a busy week already it's only tuesday. the opec meeting and seminar next week asot just this, as you mentioned at the top of the show, that 4:00 hour, we have at&t/time warner decision coming down as well there's a lot going on this week it's like 5 days in 2 so far >> i think that's this afternoon. >> 4:30 after the market closes. we'll hear from the judge and also then we will get what could be a lengthy decision. >> thanks, brian and heummoned people to come back does that mean it's a complex ruling >> not necessarily >> could be yes or no? >> i think all bets are off.

>> someone says if he determines consumer prices will go up -- you only have to show some hindrance of competition i read if it went up a dollar a month by 2021, is that enough to worry about? pends on the guy, right? >> depends and what you think is happening in the market now. are prices supposed to be coming doup >> north k is the story. but this is a big deal for media and -- >> not just media, but all corporations looking for a merger as we have repeatedly said you will see a lot of transactions if this gets allowed >> president trump concluding that historic meeting with kim jong-un earlier this morning to talk more about this let's bring in scott seimen and fred

kemp, our guest host for this morning. scott, hold on one minute. i want to get fred's comments. i saw you're outlook for what you're expecting and what you could consider a rin you almost decemb win you say it would be a win but we don't want to get ahead of ourselves either >> i feel a bit vindicated when president trump pulled the whole house down, on cnbc i came on and i said it still could be june 12th. the reason i argued that is the three major players here so badly wanted a deal for thr own purposes president trump wants a deal for his legacy purpose, for his art of the deal purposes kim jong-un needs a deal for his econic purposes, and in the background president moon of

south korea who has put his whole legacy behind peace. left of center, fought for peace for many years refugee from north korea he wanted a deal >> it's been posited on the air today that china may have mixed feelings about it in terms of being jealous that they're not exerting a bigger role in their sphere of influence. didn't they always worry about the refugee problem? wouldn't they like denuclearization of the peninsula or not >> they want denuclearization of the peninsula with u.s. troops gone all the previous negotiations with north korea have been six-party talks, multi-party talks, that doesn't mean the parties weren't there, they just weren't there. so china is exercising influence from the background.

kim jong-un met twice with xi jinping, with the chinese president. we don't know what they said we do know his approach became tougher on u.s. exercises after that and we know that the pulling down of zte sanctions, the deal with zte, it's a big economic deal for china, takes place several days ahead of the i don't have evidence to say they were connected, but for anyone to think they're not connected has to watch the china/u.s. relations >> talking about motivation, you say wanting to get to the table and get to the table quickly on the surface this looks like a great deal negotiating advice 101, when you want to make a deal real bad, that's from t. boone pickenseal, last night how do you look at this deal this morning relative to what t. boone was saying last flight >> i think it's too early to know this is a deal that has none of

the language or specifics of denuclearization, which would be hundreds of pages. pompeo suggests that there are new ways tverify he is flying off now to meet with the south korean and foreign officials. >> scott, things you agree with that were just said and things you disagree with? >> i agreed with everything that i heard. i think the chinese want to make sure they continue to be involved in the process. i think their top priority is stability on the peninsula denuclearization is part of that that's a second tier priority.

they would like some sort of arrangement that maybe results in a draw down of u.s. troops over time. so, yes, the are a lot of unanswer questions there's the statement, there's what t said at the press conference and everything said from this point forward. so we're in the first step of a much longer process. >> scott or fred, we have had also someone telling us within the last couple of days that previous administrations were, i guess, hindered by six-party talks because they didn't want to engage in one-on-one talks because it would have legitimized north korea, and any of the previous three, four, five administrations could have done this, too, if they wanted to, they just didn't want to do it is it that easy, scott

or did something good happen or was it just the timing >> i think one of the deciding factors is or was trump's desire to be engaged in bilateral discussions. he has made it -- >> is that a good thing or not will we get taken to the cleaners we heard t. boone pickens comments alec baldwin tweeted this is a diversion from the mueller investigation. i saw that tweet, too. i wonder if that's true. >> i'm sure trump is looking at this as he probably does most everything, how is this going to play with the base at home how will this position him and the republican party for the midterm elections. and certainly the fact that he h has media along with him, including sean hannity suggests that he will put a lot of emphases on spinning this in a way that plays well with his bas

base >>ything is political, fred >> you can't separate any of this from all the rest of it whether it's a diversion in his own mind from the mueller investigation -- >> i was just -- i could cite any tweet i felt like citing when i did that. >> here's the thing that's interesting. i was in south korea a few days ago. recently and one of the south korean officials said to me president trump needs to be served a cup of tea, open the door for him, that's contrary to who president trump is that's not the way he treated justin trudeau for example, but here he did. he talks about a -- talks about i learned he's a talented man, he's a smart negotiator, we'll meet again, meet many times. he would invite kim to the white house at the right time. in terms of allowing kim to go

home and save face on the world stage, he had been given the instruction to not have it blow up he would do that. >> he went out of his way to say that, that he did not want to sathings that whoosh seen thate threatening. >> and that's interesting because on that he would be listening to his allies. that's not what he datid at the g7 >> i saw him talk about trudeau in glowing terms and macron in glowing terms. >> this will be a bumpy road there will be times when kim doesn't do what the president wants him to do, but i think the maximum pressures will continue. the sanction also stay on. what i heard from an intelligence source is that kim truly believed there was a military threat on the table started moving around town more than he used to do

really felt the u.s. might be coming after him he may have come to believe that his nuclear weapons, which he always saw as a means of survival were more of a danger for him. that'seal question, has he made that mental schiff. >> he may not have been wrong. >> absolutely. >> just because you're paranoid doesn't mean -- all right. scott, thank you the global market reaction to events in singapore brian sullivan is at the cnbc market desk. what do you have coming up >> there's a lot going on outside of this historic summit. don't forget the likelihood that at 4:00 today we could get a decision on at&t/time warner the federal reserve kicking off a two-day meeting. the ecb on thursday. a lot to discuss with the markets, your money, north korea

and much more. we'll hit it all coming up after the break. >> i feel really great we'll have a great discun. i think tremendous success it will be tremendously susful it's m we will have a terrific relationship, i veha no doubt.

he wants to do things. i think he wants to be you would be surprised very smart, very good negotiator wants to do the right thing. he brought up the fact that in the past they took dialogue -- or they never were like we are there's never been anything like what's taken place now they went down the line. billions of dollars were given you know, the following day the nuclear program continued. this is a much different time and this is a much differen president in all fairness. >> that was the president in his news conference following the historic meeting with kim jong-un. brian sullivan has more on how things are faring this morning >> there's a lot going on. this is a historic meeting a

monumental moment for the world and the korean peninsula and the 6,000 families who got their m.a.im m.i.a.s hopefully coming up. the markets not really reacting to the news. we have a great lineup ofolks. erin, not only do we have north korea, we have the likelihood that we have an at&t/time warner decision, which is not just company-specific that's mac one the fed's two-day meeting starts today. ecb on thursday, massive opec meeting next week. for you and your clients, what's key? >> the path of fed policy and ecb policy trumps what we're seeing this week -- >> trumps trump. >> trumps trump. it's not so much about the rate hike that's priced in to the market there'o things to watch. one, does the dot plot change? it only takes one fed governor to increase their dot plot

and does that comment about the th of -- the stance of monetary policy remaining accommodative does that language change does he dampen that down that will be k to watch. >> could there be a change in the thinking or action with regard to interest rates >> it sounds like they may use this meeting as the time to signal the path for the eventual tapering of quantitative easing. so that's going to be key to watch. >> the dot plots, if you're out there, dot plots are where the federal reserve governors put their expectations i think we're at 3%, they put a pin in the paper and they show it guy, north korea, this is huge a massive global story from a risk perspective are we giving enough attention to interestif you're under the age

years old, you have not managed money or -- >> are you >> not even close. >> if you're a registered financial adviser, trader under the age of 35, you have not invested client money in a rising interest rate environment. >> we talk about f missteps. we should not talk about a fed misstep, we should be talking about the fact that the fed is in the equation. rest rates are going higher and what does that mean for the markets. the market gets more expensive the higher interest rates go i don't think the fed is making a mimissteby raising rates, but i think as rates continue go higher, as the yield curve flattens, that brings with it market risk that i don't think is being priced in at all. >> based upon that pretext, if you think about any other day we would be laser focused on this

cpi number >> this is not a normal day. >> this is the last piece of information that we have as ab ingredient into this fed meeting. erin is talking about the dot plots. i think with the last three weeks, whether it was italy or some other dynamic, people feel this is a much more friendlier and benign fed, not as aggressive so we're more comfortable with the 3% ten-year than the last time around. if you talk about a 3% ten-year based on where the market is, it's surprising how well we digested these numbers we saw about 1$117 billion rolling off the 4$4.6 trillion balance sheet expansioexpansion. if ty raise interest rates for the fourth time in 2018 -- >> right at the top of their inflation rate i agree with you >> exactly to put a finer point on it, they

talked about and eluded to the fact that they want inflation running hotter inflation does not include energy or food, but they want to see it go further. they are in the conucndrum righ now. >> if you look at the markets and what they're pricing in, they're pricing in four rate hikes this year. >> there's only a 40% chance for december >> but the markets are pricing it in. >> fair enough >> your point on symmetric and whether they reinsert that back into the fed statement is important. they interjected that wo back at the last fomc statement, that suggested they are allowing inflation to run hot >> we will wrap this up. we will be here for the next couple of hours. a lot more to do >> thank you very much when we come back, did today's meeting change the hearts and minds of leaders around the world

former australian prime minister kevin rudd will weigh in with his reaction to the summit give us the picture for stability in the region. and the sector to watch today as the united states and north korea try to narrow their differences, we'll talk about the defense stocks in the next half hour. let's look at yesterday's s&p 500 winners and losers

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good morning welcome back to this special edition of "squawk box." president trump starting his journey back now to the united states after wrapping up a long news conference. it will soon endl have hope that and it will. it will soon end the past does not have to define the future yesterday's conflict does not have to be tomorrow's war. and as history has proven over and over again, adversaries can indeed become friends. >> u.s. equity futures are a all red. down 26 on the dow jones the s&p is down about a point and a half the nasdaq down about 7 or so. i said i would never see keep in mind, but keep in mind that the

dow is 25-325, 332. the dow in the last three weeks, it's been about four, five weeks, it was sell in may, go away you should have known then you shouave bought on may 1st. let's bring you up to speed on what happened in sinre president trump and north korean leader kim jong-un shook hands they then met privately only joined by their interpreted ters for about 45 minutes trump and kim then were joined by their advisers, including mike pompeo, mike kelly and john bolton the group held a working lunch trump and kim emerged from that saying they would sign a document and a letter signing

ceremony followed that they agreed to work on complete denuclearization of the korean peninsula and promised to build a lasting anstable peace regime depending on how you want to look at it, if you're happy and optimistic, it's a great start a lot of details have to be filled in. if you're not, it's nebulous and we have no idea exactly about the -- how you put it into effect, verify things, whae next step is in fairness, in one day you couldn't have dotted all the is. >> and we have to say joel witt, who was here for the first few hours, he said he looks at it realistically, but he has some hope and optimism. always willing to think that

something good will come from this >> i want to know whether we're sitting here watching something that we'll remember when we're old anddecrepit, or are we going to be going it's more of the same >> i think the answer is we don't know we w't know. >> but, you know what? aren't you sort of hopeful >> on a morning like this you have to be >> a historic meeting. the first time in the 68 years since the korean war that an american president ever sat down with the leader of north korea >> little rocket man with the small button it hasn't been that long since it looked like -- he was talking out san francisco, in 15 minutes i could wipe san francisco off the face of the earth. and yet here we are it's mind boggling >> you can look at the half empty which is there is no language on denuclearization

being quick, verifiable and irreversible the details of economic incentives are not there but they are there, and talking to south korean leaders they believe kim jong-un. and they came into this telling the u.s. this, that kim jong-un has made a strategic choice. he is seeing his nuclear weapons are not getting him where he wants. he was running out of money. he's already taken steps to loosen up his economy. as tough as he's been with the elites, and had his uncle executed, his brother assassinated more likely than not, as he is going down to the people he's trying to take care of them more economically. companies across the border in south korea are salivating about the economic possibilities that are there. i think you have to bet on he needs this bad enough that he will move this

but there's no such thing as a fast denucizion. >> the response of south korea has always been for me hard to understand before we got positive about this reconciliation, they talked about reunification at a time where we knew how brutal kim jong-un was. we knew about the regime we knew what was going on and people trying to get across. in south korea there are displaced families that are only either side and they always had that in the back of their mind, they all held out for reunification. we fought a war in 1950 about that, it's not going to happen but it's a possibility >> i covered german unification for the "wall street journal." the south koreans have seen that germany, west germany was 60 million people, 17 million for the east germans it will be tough on the

peninsula because the north koreans are so much further behind, and it's 55 million/25 million. >> 55 million on the south >> absolutely. the north is smaller, 25 million, the south is 50 million people the gap in earnings is so large. it's a huge cost for the south koreans. they don't want a surprise unification. they don't want to absorb that cost they would more like the approach that kim jong-un wantsd that's their aim over time >> fred kempe is our guest host today. we will have much more from him throughout the show. we would like to take a moment to send out best wishes to our former colleague and current economic council director larry kudlow. sarah huckabee sanders says that larry kudlow suffered what is termed a very mild heart attack last night larry's currently listed in good condition at walter reid national military medical

center doctors expect he will make a ll recovery. he's been a good friend and colleague for over 15 years. we all are sending our best wishes and prayers to larry. >> yes >> and he's a young guy. and you get this little minor warning sign, hopefully, and figure out what action you need to take. i don't know what it entails, but i guess -- i don't know. if it's mild, you want to change the way your diet is he has a stressful job >> he has a stressful job. >> maybe come back to cnbc >> this is a walk in the cake, you think? >> yes >> compared to that. >> we wish our besarry this morning we want to get over to kayla tausche now. she's standing by in washington and has more reaction to this historic day between the u.s. and north korea. good morning >> i share with you in sending thoughts and prayers to larry and his wife judy as he makes

that recovery from that heart attack, which the president announced by tweet just before walking into that 45-minute meeting with the north korean leader, kim jong-un. in that meeting you did have the discussion of this joint agreement that resulted from th korea and the u.s., and you had several verbal commitments among them north korea committing to closing down a missile engine testing site and discussions of verification and what that process will look like the president says that complete denuclearization will take a long time, but he also said it will go quickly, that once it begins it's irreversible he was asked why this time was different, given how many prior agreements north korea has pledged to denuclearize. why does the president trust the north korean leader this time around >> they proceeded down a path in

the past, and ultimately as you know nothing got done in one case they took billions of dollars during the clinton regime took billions of dollars and nothing happened that was a terrible thing. he actually brought it up to me. he said we have never gone this far. i don't think they've ever had the confidence frankly in a president that they have right now for getting things done and having the ability to get things done >> the president acknowledged it may not work he may be standing in front of an audience six months from now acknowledging that it was the same as prior agreements, where north korea failed to deliver. the mood in washington a reaction is one of cautious optimism there is broad bipartisan support of the president's willingness to take the meeting, but also criticism of the potential elevation of a brutal dictator on the world stage, and for the most part lawmakers who have weighed in over the last 24

hours have been managing expectations based on these past actions by north korea for whatever the result will be. we'll wait to see what the full reaction across the political spectrum is. for now it's cautious optimism and managed expectations becky? >> kayla, thank you very much. kayla tausche. joining us now is asia society policy institute president kevin rudd, also the former prime minister of australia. our guest host this morning, fred kempe of the atlantic council. mr. prime mister, s talk what this means for the region how significant is this? what do we need to see next? >> everyone is going to moan about the lack of detail in the text of the actual agreement between the two leaders, but i don't buy that i think we should give the president some credit for what's been achieved. it's only his kind of unique style which has enabled us to

get to this point in the process. and we need to give a time to see what detail shakes out of the tree from here on in the bottom line is six months ago we're talking about the possibility of conflict and war. now we have an extended period of diplomacy that will be good for regional stability, in terms of perception of country risk and regional risk for investors across east asia, it's good news the final bid is you still have to have a plan "b. what happens if it doesn't work in the end that's down the track. >> i want to know more, but not the final bid as a plan b but how do we get to the verify stage. as you look at the dominos or permutations that we have to go through, what happens really next >> that's the guts of the dilemma. if you put their nuclear program into three boxes, which is one,

missiles, long-range, medium-range, short-range. two, nuclear material, the accumulated weaponry that they already developed so far thirdly the rest is the nuclear supply cha wch puts all thattog place for the united states and the north koreans to start is with missiles. the logical place to start within that is north korea's most recent acquisition of icbms. then once you start to work your way systematically through those piles, each of them has a detailed verification regime to attach to it of course it could break down at any point along that stage or along that whole process, but that's where the meat and potatoes will now happen >> mr. prime minister, kevin, great to see you i wonder if you would talk about the china piece of this.

no one knows klein fla better than you do. can you give us a feeling? they weren't at the talks but to an extent they were. kim jong-un met with xi jinping twice in the lead-up to this what do you think they discussed? what do you think china wants out of this? give us feeling about this zte agreement done two, three days ago? can they separate this from north korea or are they related? >> thanks for the question, fred i think the bottom line of the chinese is they're happy with what's happened here in singapo singapore. one of china's deep strategic interests here, they don't want a conflict or war on the korean peninsula. that's bad china would have to become the north reans. and china might lose that's bad for the regime. secondck thng they want is to se if an agreement can be put in

place that would see american troops off the peninsula, something which the president of the united states spoke about for the first ti publicly today. that's good news for the chinese as well. thirdly a future arrannt on the peninsula which keeps the two koreas divided rather than united that sts china's interests as well so far, fred, they would be happy. in terms of their influence on kim jong-un, what's been interesting is the extent to which they tried to signal to the world thatr he's our boy after all they arrive in singapore with an air china flight if no one picked up that symbolism, i don't think anyone is watching closely. on the zte question, i think president trump has been trying to finesse something in the background which is internally important for xi jinping to maximize positive dynamics from the chinese, leveraging the north koreans in terms of the

optimal outcome in singapore that is where we stand now, but as you know, fred, the devil lies in the detail for the next six months >> prime minister rudd, it's impossible to get inside kim jong-un's head but fred brought up an interesting point earlier -- >> or his hair rut >> or his hair cut we could an interesting point where he decided that having nuclear weapons is no longer the thing that's going to keep his regime safe, but potentially the thing that could bring down his regime because united states. threat to the what do you think about that >> that's why we can't rule out the possibility that what we just witnessed happened in singapore is potentially a fundamental paradigm shift everyone in the national security area in washington will say there's not enough detail yet, no one should get excited if you look at this in a broader historical frame, go back to gorbachev meeting with reagan in

reykjavik, that was in 1985. we didn't see the end of the soviet union until 1991. we may be in such a process as well with this been the first step of a much broader normalization of the unorth korea relationship part of that, to answer your question, may be a deep calculation in the back of this guy's brain that there's a different way for his country's future but he won't reach that conclusion until all the bits are put together and he has to satisfy the rest of hiregime that gives him an effective long-term security guarantee that's going to be hard. >> it's ping-pong diplomacy, big mac diplomacy. wouldn't you know it would be -- >> they ate korean food at that lunch. >> they did. but we're not making the

mcdonald's thing up. he wants a mcdonald's, in fact i do, too. >> mcdonald's is a big unifying factor here. >> it is >> basketball. >> dennis rodman may be the original >> that's it he's crying tears of joy, andrew he was >> kevin, thank you. when we come back, a sector to watch on this historic day. which defense stocks will be on the move following the nuclear summit between president trump and kim jong-un, that's next when "squawk" returns. >> it's very telling that anybody who takes over a situation like he did at 26 years of age and is able to run it and run it tough -- i don't say he was nice or anything about it he ran it. very few people at that age, 1 out of 10,000 probably couldn't out of 10,000 probably couldn't do it. most feared hackers. my friends call me "hackaddy." [ evil laugh ]

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♪ we call them war games i call them war games and they're tremendously expensive the amount of money that we spend on that is incredible. >> welcome back to "squawk box" this morning president trump talking about the expensive war games with south korea. we want to see how the summit could impact defense stocks this morning. joining us now joe denardi

good morning to you. first, your reaction to the news >> yeah, i think our perspective on this is that defense stocks rallied on a lot of the negative rhetoric between the u.s. and north korea over the past several months so it would make sense that defense stocks kind of give some of that back as the rhetoric goes the other way at the end of the day, i think north korea appears to have developed a nuclear weapon with an icbm delivery system. and i think that that changes the way that countries in that region of the u.s. have to think about their missile defense capabilities and i think longer term, you know, that's pretty beneficial for companies like raytheon an lockheed martin. >> lockheed, reiaytheon, all relatively unchanged in terms of the timeline of what may happen and how it could

kbangt tho impact those stocks, what are you looking for? >> i think as you talked about this morning, there's a long way to go from here to a verified denuclearization i think until there are more steps to getting there, i'm not sure how much the market is going to give to this signing. >> in terms of downside, though, you look at those particular stocks you want to separate them out a little bit for us? >> i think the easy way to differentiate, raytheon has by far the most exposure to international foreign military sales. they're really focused on missile defense and missiles so i think they are the best way to play the kind of heightened threat environment inrnationally. lockheed would be a second then air environment which is a smaller cap name would probably be a third >> fred was telling -- what was the news you just saw cross? >> this is the interesting

thing. reuters is reporting that the south korean psidential office says it needs clarity on trump's intentions after he said washington will stop joint military exercises so this suggests there was not a pre-cooked agreement with the south koreans that this was a good move. and this is something to watch because what trump has done in his success thus far on north korea is something he didn't do in the g7 which is he had a strategy he consulted allies. he stayed close with the south koreans. he saw abe from japan ahead of the meeting. he's got to keep tight with his allies going through this. they're a little bit in south korea. some are nervous that trump might be willing to trade away the troops on the peninsula. while in the end if there's a deal, the south koreans should want our troops to stay. >> by the way, the president said today that those 32,000 troops would be staying there for now. >> joe, thank you for your

perspective. fred, thank you. appreciate it. when we come back, the high stakes of the nuclear summit an. and north korea. former senate majority leader george mitch ell is no stranger in bringing countries together he will be our guest starting the top of the hour. and later, andrew's exclusive interview with paul tudor jones. his reaction to today's events, the markets, the fed, and much more that starts at 8:00 a.m. eastern time more "squawk box" right after this break

at crowne plaza, we know business travel i't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly.

an historic summit president trump and kim jong-un meet face to face.

the negotiations, the outcome, and the global implications. a special edition of "squawk box" begins right now. >> good morning. welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square our guest host this hour, george membership mitchell is here went on to serve as special envoy for ireland and mid-east peace. also fred kempe. >> let's bring up to speed on what happened in singapore overnight. president trump and kim jong-un shaking hands to start things off. and that's already been parsed went about 15 seconds. both shook very firmly then they stopped for awhile the president patted kim jong-un

on theand then i think they shook hands again we're going to try to figure out the body language of that. they already g a body language ushering in a new relationship between their countries. and in a joint statement, the two agreed to pursue stabilization. >> he wants to do things you'd be very surprised. very smart very good negotiator wants to do the right thing. he brought up the fact that in the past they took dialogue -- they never were like we are. there's never been anything like what's taken place now but they went down the line. billions of dollars were given the following day, the nuclear program continued. but this is a much different time and a much different president in all fairness. this is important to me. >> and if you were still asleep this morning and missed president trump's news conference, you can watch the

entire thing right now on cnbc.com we saw it. i would recommend watching it. he took -- there were some funny moments. there were some serious moments. but he took question after question after question. andrew, you had a 520 price is right on how long it would go. >> just missed all of a sudden we mtrade. and back >> g7. >> we are going to talk more, but i do see now what the big part -- you know, you look at what's trending. when the president said we gave away absolutely nothing and we got this great letter, the criticism right now from people for whatever reason they may or may not want it to work out anyway, but e criticism is the president said he would end war games with south korea at this point. because they're provocative and

it would save a lot of money and the bombers are based down in guam and it's 6 1/2 hours away the president said i know a lot about airplanes. they are making fun of that comment asbut that's going to bg that as far as the president saying i didn't have to agree to anything, agreeing to bring kim jong-un into the world community and agreeing, fred, apparently -- did we know south korea didn't know about this >> the report from the president's office in south korea is they have to look into what this means. >> that's from reuters >>t dok new. >> ben wyche's ecstatic he apparently got nothing in return for giving that up >> i don't think he's ecstatic about it i think the whole -- look. i think people are hopeful that this is going to end in a very positive way >> it's nice to still try to find one.

>> but i think there's a real question about whether it's all verifiable therefe we have -- >> we don't want to get ahead of ourselves. >> the north koreans have taken unilateral moves they gave back hostages. >> as president trump said this morning, this is the beginni of an arduous process. our eyes are wide open meantime, we do have complete cnbc team coverage of today's historic summit. michelle caruso-cabrera is on the ground in singapore. akiko fujita is in seoul bringing us reaction from south korea. kayla tausche is in washington, d.c. monitoring the response there. and brian sullivan is looking at the market reaction. we'll start with michelle and what we heard on the ground in singapore. michelle >> hi, becky good morning as you have alluded to, an incredible series of events overnight here in singapore between president trump and the north korean leader kim jong-un.

not that long ago these two were trading withering insults. what we saw today, they appeared before the camera numerous times in what could only be described as cordial moments here's a recap of what you missed while you were asleep >> getting a good picture, everybody? so we look nice and handsome better than anybody could have expected top of the line. really good. >> we have historic meeting and decided to leave the past behind >> i think both sides are going to be impressed with the result. i think our whole relationship with north korea and the korean peninsula is going to be a very much different situation we have developed a very special bond he's a very talented man i also learned that he loves his country very much. >> and then they went on to sign

the agreement that you guys have talked about earlier after all of that, then president trump held a news conference for nearly an hour. a question that came up over and over again, andrew's already highlighted this how can they be sure that kim j denuclearization >> we're going to have a lot of people there and we're going to be working with them on a lot of other things but this is complete denuclearization of north korea. and it will be verified. >> will those people will americans or international >> a combination of both combinations of both. and we have talked about it, yes. >> and the traveling press pool tells us the president has boarded air force one and has already departed for the united states this is earlier than expected. he had originally thought about going back around 7:00 a.m. tomorrow morning local time. but he's going back around 7:00 p.m. local time and headed off guys, back to you. >> great, michelle

we had some shots. fairly long flight, no doubt now let's head to seoul where akiko fujita has south korea's reaction to today's historic summit we're very interested to hear, akiko. >> good morning to you well, publicly the south koreans are hailing this summit a big success. we got a statement -- official statement from the blue house earlier today saying the two koreas and the u.s. will write a new history of peace and cooperation moving forward and we got this tweet from president moon jae-in saying we will never go back to the past again and never give up on the bold journey so president moon jae-in making it clear he is on board to move the agreement he saw signed over in singapore forward privately you can bet south koreans have a lot of questions particularly because of what we heard from president trump as it relates to the end of what he called the war games take a listen. >> i want to get our soldiers

out. i want to bring our soldiers back home. we have right now 32,000 soldiers in south korea. that's not part of the equation right now to bring them home at some point i hope it will be. we will be stopping the war games which will save us a tremendous amount of money >> the so-called war games he's referring to are the u.s./south korea joint military exercises these are ananual exercises hel here on the grounds. these are defensive in nature to prepare for the readiness of the u.s. forces that are here. the fact that the president has talked about making -- bringing an end to that is likely to be seen as a big concession largely because north korea has talked about seeing these as provocations before. president trump today used that word saying these are provocative. south korea certainly is looking for clarification, what this means. they're likely to get that

tomorrow when secretary pompeo arrives here to meet with korean officials as well as japanese officials who will be briefed on the ground >> i guess it begs the question, that didn't come out of the blue though, i don't think. now we're under the impression that there was no -- that south korea wasn't prepared for the possibility of this. but i've seen some previous interviews that president trump has given where this was something that i think might have been on the t maybe not completely signed off on by president moon, but do you know >> well, the statement coming from the blue house seems to suggest that they were caught a bit off guard by this. keep in mind going into this summit, president moon jae-in tried to get a seat at the table. he suggested flying into singapore for a trilateral with the koreans and the u.s. that suggested he wanted to be at the table to make sure this type of agreement would not be made without them being at the table. having said that, joe, you did

talk about comments the president has made before about the u.s. having to shoulso much of the cost of having the american troops based here talking about having those like thsouth koreans as well as the nese pay for more of the cost of having american troops based here so, you know, when you think about what the president has said before about the costs associated with it, that wouldn't entirely be a surprise. seeing this be raised in a summit with the north koreans has caught the south koreans off guard. >> i guess if the eventual end result would be a verifiable, really peace treaty with the north, you wouldn't necessarily need the war games anymore if you could be sure that -- or the exercises wouldn't be as big a priority if that were to come about. so there's a lot of things would have to happen akiko, thank you good to have you there because we're talking about this a lot and everybody else

the twitter sphere is exploding. >> let's turn to george mitchell who we have with us this morning. u.s. special envoy for northern ireland and mid-east peace he's now at dla pipe tr law firm fred kempe is also here. there's a lot of optimism this morning, but also give us a sense of the realism in terms of what has to happen next and how you feel about it. >> i think first we all must hope and pray this succeeds. this has been a dangerous flash point for decades. and it would be a significant accomplishment to denuclearize the peninsula to hopefully bring about a unified korea. that second part is much more difficult and longer range secondly, however, i think we must be careful. it is notable to me that the united states' position has expressed repeatedly by pompeo

including the day before the meeting is that it has to be complete verifiable denuclearization but the statement by the two sides omitted the words verifiable and irreversible. is that significant? on its face, yes but can it be verifiable and irreversible remains to be seen. it's going to take a long time the third point to be made is nortkorea's program is vast widespread the truly significant part of this will be whether there is a capability built into the agreement to actually verify it. and i think that's going to be very difficult to achieve. let's be clear about one thing here we should be positive, but in fact, two american presidents previously have reached agreements with north korea on denuclearization

the problem has been implementation, getting them to do what they say they're going to do, and verify. >> but we haven't seen meetings like this. why hasn't it happened before? >> because no american president would agree to meet the leader of north korea i without preconditions. >> in retrospect, were those decisions a mistake given the conversation we're having this morning? >> we won't know that until we get to the end of this process if this process produces the same result as before, then the answer is yes. but if it produces a positive result, the answer is no let's be clear the president has already made significant concessions. the meeting itself which kim jong-un desperately wanted, which his father and grandfather could not get -- >> president trump did not say that was a concession. he said i'm happy to take the meeting. >> that's fine the second point is, the president reversed american policy including his own policy that denuclearization always had been a precondition to talks

now that it was not a precondition, it's the objective of the talks and the third is to giving up on the military exercises with south korea. we have to be very careful that we do not take any steps that produce the abandonment of south korea and japan. this this is a difficult high wire act. and only time will tell if this has been accomplished in the way that will produce a success. >> the 32,000 american troops are still going to be there. war games happen once a year and we've just completed the most recent round of war games with the south koreans. so maybe we have 11 months to figure out if there is progress made otherwise the war games are back on. >> that's always possible, as i said it remains to be seen. it's a very significant first step the question is, will it produce the desired result

and it will take a long time and a lot of activity to reach that decision now, the president set for himself a very high bar because he's denounced the iran agreement. which has the most intrusive nuclear inspection program ever implemented anywhere to top that in north korea is going to be very, very difficult. >> okay.george mitchell, thank u fred, you're sticking around we'll have a longer conversation with you i'm actually headed downtown in just a moment. i'll join you guys at the top of the hour >> he's guest hosting too. >> he is we have an exclusive interview coming up. i'll be joined by paul tudor joi jones. first we have global reaction to today's summit we'll head to brian sullivan for that >> thank you very much looking forward to that interview as well. h korea's out ther a lot of people said last year this is the biggest risk for the economy. if you believe this summit derisks north korea, what becomes the thing globally

you've got to worry about? our fed? ecb? china? emerging markets 'll scing else wediuss with our all-star panel when we return here on a special "squawk box. cause, when, really want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital.

we signed a very, very comprehensive document and i believe he's going to live up to that document. in fact, when he lands which is going to be shortly, i think he will start that process right

away i think he wants to get it done. i really feel that very strongly >> welcome back to this special presentation of "squawk box. that was president donald trump answering questions from reporters after his historic summit with north korean leader kim jong-un. the two agrees to pursue the denuclearization of the korean peninsula. we are talking this morning about what comes next. let's head to the cnbc market desk for reaction to today's events and brian sullivan joins us from there i haven't seen the video, brian. i want to see it there are apparently some simulated hotels on beaches and condos, i don't know trump towers i don't know what was in that video, brian i think we're all going to have to see that when we have a chance >> yeah. the video that was shown at the thing. by the way, i've been to that hotel in sentosa it's ad place. think new jersey with million dollar houses and an amusement park built into it

that said, guys, we've got our all-star panel who is back here. welcome. thank you for coming in, guys. let's talk about this. because this is -- last august we had trump using terms like "rocket man" and making threats. north korea was makingts they were testing missiles the vix was on the rise. widely spoken, north korea was the biggest single geopolitical risk out there in your mind, two things has this meeting as lovey dovy as it looks actually rerisked the mark -- derisked the markets and if so, what do you look at >> i thinks derisked the markets. there was a lot of skepticism in this meeting that's a positive thing. we haven't had nothing like this before right now in the fed, it's back front and center as we see sentiment coming out of north korea, helps us with the conversations going on with china. i think the fed, 800 pound gorilla in the room, is back front aerocentnd center.

>> the two-day begins today. the decision tomorrow ously 2:00 p.m. eastern time what are you expecting what is the best and worst possible outcomes for the federal reserve tomorrow >> so my base case is that they're not going to move dots from three rate hikes expected this year to four rate hikes this year. >> they're not going to get more hawkish? >> i don't think so. >> what if they do >> i think the appropriate timing will be smber and they also have the clarity of what the italian budget looks like if they do, you know, i think you'll continue to see the curve flatten. i think you'll continue to see interest rates, you know, rise will go above that 3% threshold. i don't think it's going to be that meaningful for equities i think it's going to be more meaningful for the fx market as well as the flatness of the yid curve. >> it's still pretty early the dot plots are the individual

forecasts of each of the federal reserve members. it sounds fancy, but it's basically their projection on where they think interest rates are going. would you agree, guy adami we're at the beginning of this north korea process according to all the guests on "squawk box" this morning, not the end. so north korea is not going away but le past that do you think it is the fed >> the biggest risk to the market >> right now >> i think so. >> why >> well, because i think -- if you believe as i do that much of the market move to the upside over the last eight years has been predicated or built on federal reserve policy, then almost by definition if they're backing away and starting to ratchet back, you have to believe it's goi to have some sort of deleterious effect to the downside but there are other risks as well tim can speak about emerging markets. i still think deutsche bank is a tremendous risk. i think there's a chance it's systemic i think there are things out there that people don't care

about. >> well, we care, but there's only so many -- there's only so much room in the headlines and this meeting, as it should, is getting a huge amount of globtion as it should it's historic. first time a president's ever met with the leader of north korea. yet that means that other things are not maybe getting attention. >> if we didn't have this summit today, i don't think we would be in a different place i think wier looki ining at the fed -- you've all outlined the fed. let me focus on the ecb. i would y the ecb is a much tougher task think of the impact on treasuries we were at a 2.75% 10-year a few days ago think of the impact on the dollar on the ecb. erin said we've seen a more hawkish tone going into this meeting. that actually could put downward pressure on the dollar, could be a boom to risk assets, could relieve emerging markets which in turn could give a backbone to taking markets higher.

i think we are range bound in but nonetheless, ecb is a double edged sword. >> i think the two things to wah coming out of the ecb meens to other bonds and then also actually what happens to eem and to emerging market equities if you see the dollar taper off. you could see some flows coming back to emerging markets that could be a good risk sentiment. >> one last thing watch, i think we talk about the leadership look at the s&p 500. these ten concentrated stocks. a lot of people talk about fang. but if you look historically speaking, thconcentration, the top ten s&p 500 names. 1980, 26%. 2000, 24%. currently in 2018, we're only at 23% in these names is there more room to run? potentially. >> we're going to leave it there, but i'm going to add something for next week. it's an opec meeting and also an

opec seminar they do it every three years opec actually saying that output grew in may both with opec nations and non-opec nations and opec is blaming thunited states saying their supply grew by 1.86 million. >> we're at record exports >> that's it and 1.7 million of the 1.86 million coming from the united states venezuela's production actually rose 28,000 barrels which is incredible because venezuela's production has been one of the reasons oil prices have gone up. so we've got this huge opec meeting, by the way, in austria next week. joe, you've got the fed, you've got the ecb, you've got north korea, you've got opec next week, you've got at&t an warner it's going to be a busy few days >> yeah. you know, sullivan, so you've been to that hotel so here's one for you. i'm going to vienna next week too. i am but just so i can act like you

i can name -- you've been to that hotel on that island? >> we were there in 2012 for cnbc and it's a weird place. i mean, it's a little island -- >> that's what you said. like bayone with nho >> it's right next to the port but it's super high end. >> i can be cool too so i'm going to vienna believe me, i'm not going anywhere near opec anyway thanks, brian. >> the hills are alive with the sound of kernen. >> oh, there's adami they're just trying to take -- i'm shocked the show is still awake. this sp like 3:00 in the afternoon for you. >> i was in at 3:30. >> i know you're rigged. you strolled in at 3:57 with your makeup brush in your hand >>now wh is. i'm not going to mention names i was here i was here at 20 after 3:00. all right. still to come this morning, andrew's gone, but h gone far he's going to bring us a live

exclusive conversation with famed investor paul tudor jones. plus i will have continuing coverage of today's historic summit in singapore. coming right back. >> a certain time, i will. that will be a day i look very much forward to at the appropriate time and i also will be inviting chairman kim at the appropriate time to the white house. i think it's going to be something that will be very important. and he has accepted. i said at the appropriate time we want to go a little bit further down the road.

good morning, everybody. welcome back to "squawk box. if you are just waking up this morning, let's bring you up to speeon the big developments out of singapore overnight president trump and north korean leader kim jong-un signing a document after their historic summit the two agreeing to pursue the denuclearization of the korean peninsula and put war games on hold president trump said that the sanctions imposed against the kim regime wl not be removed until the u.s. is sure in his words that nukes are no longer a factor

>> moist importantly i want to thank chairman kim for taking rst step toward a new future for his people. this meeting proves that real change is, indeed, possible. my meeting with chairman kim was honest, direct, and productive >>ow let's get reaction to today's big event from washington kayla tausche joins us live from capitol hill kayla? >> good morning, joe the president's remarks on what was had discussed between the two leaders entail a lot more than what was included in the joint statement between the u.s. and north korea. kim jong-un will close a missile testing site the u.s. plans to stop military exercises and the president said eventually he wants the u.s. to draw down troops in the region and relax economic sanctions depending on how talks go.

the summit laid the ground work for continued negotiations to add details including how to verify north korea's progress. >> at a certain time, i will i said that will be a day that i look very much forward to at the appropriate time i also will be inviting chairman kim at the appropriate time to the white house. i would -- i think it's really going to be something that will be very important. and he has accepted. i said at the appropriate time we want to go a little bit further down the road. >> so as those continued negotiations get underway, they'll be led by mike pompeo who will travel to south korea tomorrow and then thursday to china to discuss this and looming trade actions from the administration. awaiting him there and awaiting president trump when he returns to washington is a road block from congress on a potential deal in addition to a key defense spending bill approved by top senate republican mitch

mcconnell would limit the president's ability to offer a reprieve to zte. that reprieve was seen as a gateway to chinese cooperation on this summit as well as any potential trade deal between the two nations. so while this has been a high level and historic day, certainly many difficult discussions awade the administration in the days ahead. >> kayla, we've talked quite a bit about that this morning about whether the talks are wrapped h zte and at we're seeing now >> ctainly it was viewed that zte was a point of leverage for the white house and the administration that was something that china desperately wanted and in being able to announce that deal as the commerce secretary did last week, they were able to check that box. but now congress has weighed in and officially added this limit to what the president could potentially do with zte to the defense spending bill. so it will be a -- as i imagine,

a heating debate as this comes to the floor of the senate and a heated debate the white house and the other end of pennsylvania avenue as they decide how to move forward on that >> we will checkack with you later. joining us right now, mike baucus he has served as u.s. ambassador to china during the obama administration albright stonebridge group's wen wendy sherman. and our guest host this morning as well former senate majority leader george mitchell and fred kempe of the atlantic council. welcome to all of you. ambassador sherman, why don't we start with you your take on what we saw this morning. >> we're all glad we're talking and we're not at war that's a big plus. and so i'm grateful that the president had this conversation, established this relationship. but two things the statement that came out is very, very thin. it does not stand up to previous statements in fact, the 1992 joint declaration between north and

south korea talked for a -- talked about a verified denuclearization as did the september 2005 six-party agreement. so this is a pretty thin statement. so there is an enormous amount of work ahead that has to be very detailed, very specific but there's also tremendous concern this morning in a statement by a south korean official that they need to understand better what the president meant by standing by for the joint exercises. it was quite stunning. i expected that in the discussions of the ndaa, the national defense authorization act. i would hope there would be a debate and a discussion about whether, in fact, these joint exercises should stop because, indeet indeed, they were set up not for the nuclear weapons. thoughy're certainly important to that now. they were set up because north korea has a huge conventional capability it was to, in fact, be a

deterrent against that capability there's growing concern here my final point is that this is not only a big day for kim jong-un who can go back anow photos of the american flag and the north korean flag side by side which frankly took me aback a bit. but this is a big day for xi jingping because china would love for american troops to be gone from the korean peninsula china understands that this discussion is not just about north korea. it's about the future of asia. we want to make sure that we as a pacipower have a lot to say about what the future of northeast asia is like >> ambassador baucus, you know the chinese mentality very well when it comes to this. they were not there today. president xi was not at this summit in singapore, but his presence was felt. what should we be looking for from china after this? >> i think china is pleased. that china would like united states to withdraw its thad

missiles from korea. just assume have the troops leave south korea. so i think china's pleased this might lead in china's view as a peace agreement anat legitimatizes kim trump has gone a way to legitimatize kim so i think china's quite pleased. they're looking at the long ball they are very patient. they're working very hard. don't forget china is the 800 pound gorilla there. proximity is power this is even more existential than it is to other countries in the region and so they're going to push very aggressively. we have to make sure that as ambassador sherman said, that we're present as well. >> fred?

>> so i hear all the half empty and i think the half full is that we actually have a process going now. it's going topompeo. i think ambassador sherman is right. and sara mitchell said this as well there's no language there about complete verifiable denuclearization we know yesterday the sherpas were negotiating whether we drove for that language, i can only imagine we tried to and we couldn't get the language and then settled for less language then you have to ask yourself can we keep up the maximum pressure of sanctions and also the potential of military threat that would then make north korea compliant. there the chinese foreign minister said after the summit that u.n. security council resolutions say if north korea respects and acts in accordance

with them, then sanction measures can be removed or reduced. so i guess my question f senator mitchell who has done so much niating in the past is how much do you see this half empty and how much do you see this half full on the one hand we're moving in a great direction. i think kim jong-un really does need the economic help right now. that's the south korean view on the other hand, the calling off military exercises seems to be unilaterally surprising south koreans. and there has been no message to troops so the news agency says u.s. forces in korea have received no guidance on stopping training exercises. it looks like our military's caught by surprise on this and also the south korean president. >> i tnk the one thing absent from this discussion this morning and from much of the press reporting has been the reaction of japan.

japan is a major power in the region we have a very close relationship with japan. there is a deep and long standing hostility between japan and the korean people in general tragic eves he second t of the world war. and what japan's approach is here and their deep concern we not sacrifice them in north korea. and leaving them vulnerable to shorter range missiles that might reach them i think that's going to be a significant factor weighing in but i do think as i said, it's a first step no one can answer all of the questions in the first meeting the meeting itself raises questions. indeed, kim's statement on his statement of april, it isn't a new statement.

it success we reaffirm the statement he made in april providing -- calling for denuclearization and the major task facing secretary of state pompeo will be to live up to the standard he himself has set. when we hear those words from nokoreans, then we will know there has been significant progress that will have to be followed by implementing -- and that's a long-term process. so i think it's a positive thing that this process is moving forward. we have to be -- >> senator, you saw in the past the -- i don't know whether you had the pomp and circumstance in the past i don't know whether you really saw someone -- in this case i think he's kind of putting himself out there more i'm talking about kim jong-un. than we saw previously we keep going back and forth

is this is a nixon/china moment? or a gorbachev/reagan moment or is it kim jong-un's father moment what is your gut telling you that kim jong-un wants to do it see to me -- and i never would have believed you would be the most positive person on the panel we have about the success of this, but i think maybe you are here what are the chances he's playing the entire world at this point? and that six months from now we realize he wasn't serious at all. is that possible to go this far out and have this much publicity and go to singapore and the smile only to completely be disassembling and planning to hide all his nuclear weapons and keep them? is that what you think the most likely outcome is? >> i think the crunch will come down the road. i believe that his objective is to get to the point where sanctions are lifted where his tenure in office is

secure keep in mind that his principle objective throughout and that of most political leaders -- >> you mentioned he may have engaged in this because he was afraid of his long-term survi survivabili survivability. if he backs out -- >> joe, let me finish. i think what he hopes is that he will be able to move this down the road and retain some degree of nuclear threat. and therefore will resist it at some point, the crunch is going to come. >> right >> i don't think president trump would agree to a process that does not include verifiable and irreversible the crunch will come when -- >> somebody has to give.

>> the koreans believe kim jong-un has made a strategic choice now is the time to test it one talks about verifiable, ir refe -- irreversible you freeze taking care of what's going no the future and cap. then you have to start dismantl you know, denuclearization is gd difficult process. and then the final stage is moving material outside of north korea. dealing with the thousands of sciences or hundreds of scientis and so anyone who thinks this was g to take place in this meet i meeting, we don't even have a sequence of these gs or language on ese things it is going to be a tough negotiation going forward. but we have to bet on the fact he made a choice to move

and we can keep peep on the side that's why i'm a little bit unhaabout leaving the joint exercises. maybe a little premature to do that. >> if i could make one more poin inddition he on verification and certainty, there is a gap on timing the north koreans have always spoken about phased long-term and so forth so you'll not only have a gap in the substance of the wording to be closed in the negotiations between the pacing of what occurs and only then will we know whether orot this is successful >> and a very long and arduous proce process. am bos dobassador sherman, ambar baucus, thank you for your time. >> thank you let's take a look at the

global markets joining us now mohamed el-eriany to give your insight on the markets with this. in a nutshell, i can ask a question that maybe speaks your language on the korean peninsula now, is there a new normal >> no. there's a first constructed step that contains political risk that's positive. i think it allows the markets to focus on the more e issuings and that is the central bank meetings, what's happening to global growth, and how contained is contagion from emerging markets. we have other things on the radar screen that we're looking at right now >> i gave you a chance to use your famous term that you used for the economy after the financial crisis in the korean peninsula. but in saying what you said, so,

you're -- are you half empty or half full on the whole prospect? i'm trying to -- it sounded like you're saying this is not a paradigm shift this is not a nenormal that is separate from what we saw in the previous agreements that we've tried to cut with that regime. this is not qualitatively different. we just don't know >> oh, sure is qualitatively different. to have the president of the united states meet with the leader of north korea isqualita. it engages them in a process, but it is a process. and this is the first constructive step. i think the words irreversible, that word is very important. there's nothing irreversible but this is a constructive process that can lead to a new normal but we're not there yet. there you go. there you got it in finally. not a whole lot of market reaction anything else you see globally

that would indicate or let's say we didn't know any of this was happening. anything the the market would have tipped you off these talks were going on anywhere >> the market is saying this contains political risk, so we don't need to worry about that political risk for now and they're waiting. they're waiting for three really important indicators, joe. first, what's going to happen with central banks not so much the fed. i think the fed peoplere pretty calm about what they will deliver including a rate hike. but what about the ecb that is what they're looking at. there are questions about how robust is global growth. and finally, keep an eye on emerging markets currencies there remain tentative. look what happened to the argentine peso yesterday there are things to look at. the market is saying in a wait and see attitude all three of these factors >> all of those were put in.

and then even the developments in italy do you see any of that worsening to the extent we're talking about at six months from now are we on the cusp of something troubling in emerging markets or not? >> it's not troubling from a fundamental perspective. but we know that technical issues are important emerging markets are the recipient of large inflows of capital that is pushed out of advanced economies that's what happened the last few years because of very low interest rates in qe now the tide is going out on global leiquidity i think so b t i think it's technically more difficult. >> which means what? >> which means we should expect market volatility.

keep an eye on the more vulnerable economies there would be opportunities to take advantage of overshoots in the stronger economy so this is the old fashioned emerging market play technical contagion and both risks and opportunities. i actually think it's a good investment environment in emerging marke >> even when you have the potential for the dollar to be getting much stronger what that would mean in terms >> stronger dollar, higher interest rates, higher oil prices and we saw the currencies react. but you've had some pretty big overshoots in currencies so this is a much more volatile environment. no doubt about it. it's just going to cause technical locations that investors in local currency as you point out can take advantage of >> mohamed, recently when you've

been on, you've thrown off the shackles, the socialist pimco shackles yet you've been pretty optimistic about tax reform, deregulation, and what it means for growth are you at 3% now? you're able to say it now. you're able to say it. are you there for 2018 >> so joe, you love minterpreting what i said earlier. i'm in the 2.5% to 3% -- >> you're not 3% you were very positive about that >> yeah. no, no this is relative to the rest of the world. the u.s. is the economy that has legs to it it's the economy that's being driven by pro growth policies. i'd like to see infrastructure plans to get us there. >> you're an infrastructure guy, yeah you're like part keynesian and part deregulation anx

reform that's the missing element to get to 3.5% in your view is infrastructure >> i'm pro growth. you've heard me say over and over again, we have the ability to grow faster we have the skills, the entrepreneurship wsh and most importantly there's still a ton of cash on the sideline that's not being channelled to productive investments we have all the capability to grow faster. we just need the enag policies tax reform was one deregulation was another and infrastructure improvements and modernization would be a third. >> all right, mohamed. thank you for all that and we'll see. we'll see whether, you know -- you should be proud of that new normal phrase. everybody's using it we heard it from you yeah we'll see. we'll see whether this is a new normal we don't know with north korea at this point. hope springs eternal thanks mohamed >> thanks. we are approaching the top

of the hour so let's do a quick check with brian sullivan. >> i don't know if there's a new normal because i don't know if there was an old normal. thanks for being here, guys. i wantd with a question. would you invest in north korea if the market opened up? >> i don't think investing in north korea is going to be like going to russia in '93 i think investing in north korea is based upon vague pledges here is impossible. >> we're stretching. i think if this process continues, if the market opened up a touch, would you touch it >> i would but ain, i think the conduit for that is going to be ina. i think china are the ones that will continue to control this economy and that's what you should be looking for. >> i think we're 18 months away from that at best. but it's a commodity play. so the short answer is yes but we're so far away from that. i need to be able to find it on a map. i have trouble finding north dakota on a map -- >> you admit that? >> i just did on live tv >> you know where north dakota

it's north of south dakota >> that's a good point >> i think it will be investing in the south korean or chinese construction names but 10, 20 years down the line -- >> is that how you play? because if it does open up, they need a lot of help on everything south korean building stocks were moving yesterday. that kind of thing >> so they need to invest $80 billion to $140 billion purely in infrastructure for housing, roads, utilities to get them back to sort of developed market economy. so there's a lot of money that's going to be piling in that's i think 2.1% of south korean gdp it could be a big lift to some of these names if, in fact, we continue to see us go down this path >> i think the answer is yes but i think as we have these vague proclamations coming out of the summit and let's be clear, the summit was a success. exceeded expectations. but there's going to be month ifs not years of negotiations. they have access to north korea which potentially may be part of south korea at some point. i think the answer is yes. it'll be interesting

>> some of the hardest working folks out here we appreciate you coming here on "squawk box" with your views there's no way to say it, the markets may not be doing a lot right now, but this is a massive global event it's an historic moment. markets may not be moving now, at some point they likely will >> that's right, brian brian, thank you thank you to all the traders today as well. our guest hosts hour, senator george mitchell and fred kempe. senator mitchell, you have been through this before. when you look at north korea and what happened today, again, your best thought as to where we stand right now and what the challenges are >> it took five years in northern ireland and it could very well take longer in north korea. and i think we have to be both persevering and patient. positive where we can be, but i repeat and emphasis vefication

and irreversibility are essential. secretary of state pompeo has said that over and over again. and we can't settle for anything less than that i want to thank you for ing with us this morning. he's been our guest host for the last hour. fred kempe has been with us for two hours and will stay with us for the lastour of "squawk box" today we appreciate that but yes, more to come today. >> coming up, andrew has left squawk square. he made it downtown to the tudor investment trading floor he's getting ready for an exclusive interview. andrew, how was your -- did you uber down there? what'd you give the driver what kind of rating? >> gthe driver a high rating we are downtown and we are here for a rare exclusive interview with paul tudor jones, the legendary macro investor we're going to talk to him about the markets, this historic day, and a new project underway that's going to launch torw.omro

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leader kim jong-un plus this hour, a rare interview with legendary investor paul tudor jones. it's a cnbc exclusive as the final hour of "squawk box" begins right now. good morning and welcome back to a special edition of "squawk box" live from the nasdaq market site in times square i'm joe kernen along with becky quick. andrew will join us in just a couple minutes with an exclusive interview with legendary stor paul tudor jones. meantime, though, day for the history books. president trump and north korean leader kim jong-un signing a joint declaration. president trump holding a lengthy news conference earlier this morning where he took any and all questions, it seemed like he said his meeting with kim

jong-un was honest, direct, and productive among other things. let's get right to michelle caruso-cabrera you know, i hate to say anything positive about the president i'll get -- i'll be called a sycophant. but i thought he was on his game at that press conference, michelle when he looked out at all the media, he said, wow. this is tough. and it would be tough. but he had a couple questions that were tough. i thought there were some pretty good answers or at lea honest answers. >> president trump says he dislikes the media, but if you could have watched -- and you can watch it all online on cnbc.com if you watched that whole press conference, he doth protest too much he wasn't afraid of any of them. it capped off what was potentially a consequential day here in singapore where president trump and north korean leader kim jong-un spent nearly

five hours together. they appeared before the cameras multiple times remember, these are two gentlemen who are just a few months ago insulting each other. kim jong-un calling president trump a dotard prt trump calling kim jong-un rocket man they signed an agreement and in it north korea commits to the complete denuclearization of the entire korean peninsula. afterwards, president trump held a wide ranging news conference he was asked repeatedly of do you trust the north koreans? can you trust kim jo-un? and president trump said he believes kim jong-un will come ply. >> we signed a very, very comprehensive document i think he's going to live up to that document. when he lands which is going to be shortly, i think he will start that process right away. i think he wants to get it done. i really feel that very strongly >> so north korea sitting at the table with the president because it is a nuclear power.

they have conducted six nuclear tests since 2006 the first one -- and they've gotten better at conducting nuclear tests. back in 2006, they prod a bomb with only half a kiloton. for context, hiroshima was nine. let's move onto the next full screen there we can show you as they got progressively stronger after that the most recent one happening in late 2017 was more than 100 kilotons that's why we're all sitting at the table as you can see 140 to 250 kilotons. the table.at got him a seat at now let's see if president trump has achieved enough here to actually undo what i'm showing you there. guys, back to you. >> all right michelle, thank you. and as michelle said, you can watch president trump's news conference pretty interesting in its entirety on cnbc.com.

if you weren't watching, i don't know why you wouldn't have been watching -- >> aside from thfact it was 4:20 in the morning. >> were we not here? doing our part >> it's a time we needed to be watching let's get a qucheck of the futures this morning market reaction has been muted to all of is tthis the dow futures indicated up by about 2.5 points again, muted reaction throughout all of this. probably not a lot that came as a huge surprise. and people still waiting to see what comes next in all of this if you take a look at what's been happening in europe throughout the early trading there, you're going to see that things have also barely budged for much of the major markets. you are talking about red arrows for the dax in germany but just the cac down 0.1% and the ftse down by 0.25% while markets in italy and spain are both higher. then finally look at the treasury yields here in the united states.

the 10-year note right now yielding 2.968%. let's now get back to the aforementioned andrew ross sorkin he now joins us with a special guest. andrew >> thank you, joe. we're live at tudor investment ace where there are cameras not allowed on the trading floor typically but today they are we're here with legendary macro investor paul tudor jones. we want to get his take on everything going on in the market this historic day and also a project he's orking on with just capital something that's going to begin tomorrow trading in tandem with goldman sachs. we'll talk about that. before we get into it, just want to get your sense of what has taken place over the last couple of hours in singapore. >> i think obviously this is a very bigoric deal. i don't think there's any

surprises here which is why the markets aren't reacting that much i think it's kind of business as usual. we knew that he was going to -- he wouldn't be going there unless he was going to sign something, unless there was going to be some positive pronouncement. i think we got what we thought we would >> it's interesting you have that take. the markets haven't gone either direction on this. however, there's a sense of optimism about all of this as somebody who's traded this or is there a way -- i guess the better question is is there a way to trade all of this at all? >> i think we've been trading it the past 12 months leading up to this point so this is semi-anticlimactic, right? in the sense we went through the period a year ago. a year ago we were close to military conflict. i don't think people realize just how close we were to some type of armed conflict here we are a year later and again swob much of this has already been played out.

and i think this is anti-climactic >> what happens now though in terms of how you think about it relative to the measures that are going to take place over the next several months. >> this is a tail event. it could always lead to nuclear conflict north korea's 25 million people economically very sadly bereft country. unlessin it was going to lead to some type of conflict. it's a nonissue particularly now. but it seems we're having some meaningful adult dialogue between the two countries. i think it's a great thing i think we'll see it slip off the radar screen >> and are you hopeful that something will happen? >> absolutely. i think it's fantastic it could be donald trump's crowning achievement so far in his presidency a lot better than tax cut. >> really? >> absolutely. we can talk about that >> let's look more broadly for a

moment just as a macro trader in terms of the way you look around the world, the way you look at growth around the united states. you talked about a potential bubble emerging. are you still in the same place? >> i think that there's the things driving the worlday they all start and end here in the united states. the rest of the world -- i can't remember a time when things are as kind of boring as they are. right? western europe somewhat static policy there even though we're going to talk about the end of qe japan's been relatively unimaginative in what they're doing in the economic situations same in china. you have some stories in emerging markets but where the action is is here in the united states you've got three things that are kind of pushing the prices and all the asset classes. that's first fiscal policy really fiscal profit

and of course we have -- and i would call it more of a e irritant >> are you worried about a trade war? >> you have to put it in prpt, right? if question look at our four biggest tradie ining partners, e have one of 3.5% there's a 2.5% gap if the president was trying to normalize the tariffs, it'd be 2.5% on we have a trillion and a half dollars -- it's a $40 billion problem and an $87 billion world economy. the danger would be that he's just not trying to equalize on

playing field. the danger is that he's trying to do away with the bilateral trade deficits country by country. and there's a problem with that. because we're running a structural budget deficit. if you just balance the accounts typically the way that balances is you run a trade deficit to do that on the one hand we had this massive budget deficit that the administration has engineered. on the other hand, he'trying to do away with bilateral trade deficits and the accounts don't balance. so it could be dangerous if he's focusing on not on trying to get free and fair trade but to do away with that bilateral trade deficit. it's actually jamming a square peg in a round hole. >> and then there's the fed in all of this. expected to raise interest rat later this week. if you were running the fed this year, what would you do?

>> it's where they should be we've got 3.8% unemployment and negative real rates. and we have a 5% on the way to a 7% budget deficit. the last time that we had unemployment rate where it is now was 2000 and we are running a budget surplus at that time of 2.5% you're talking about bond scarcity at that time. now we have the exact opposite so we've got fiscal policy that literally came from another galaxy and we have monetary laxity. and that brew is what s got the stock market so jacked up. >> when you wake up, you wake up at about 3:00 in the morning and check the london markets every morning. what are you thinking about over the past couple of weeks what's been the issues that have consumed you at that hour? >> ooh

i think the first thing i'd do is i had this running debate where i'm going to look at the prices first and not p&l first i always say please let the be a slow transition. that while i'm sleeping nothing bad has happened sometimes i look at the prices and sometimes i look straight at the other. what i'm thinking at that point in time is has there been a significant change another time, another thing you're always doing is particularly if you got global positions is what economic releases have come out they're going to be impacting your prices >> single best investment that's

working for you right now? and single investment that maybe hasn't worked for you the way you thought? >> probably right now, i literally as light as i've been, i can't remember how many years it's been e i've been this light. >> when you say been this light, what respect >> in my positions >> meaning you're most in cash >> meaning i don't have a lot of macro positions on right now because i think the reward and risk in a variety of things has diminished at this point in time i like to have significant ct aheadositiohen there's an em i don't like having positions and is probably a fault of mine at times just because i think ultimately interest rates are going up or i think ultimately the dollar's going to go higher. i much prefer to be leveraged right at that point when they move the most so i'm not subject to unexpected events overnight or over the course of weeks or months >> is there something you're

waiting for? >> yeah. there's a lot i'm waiting for. i think the third and fourth quarter are going to be phenomenal trading times i think we're going to get into a summer lull. >> what do you think will happen in the third and fourth quarters though >> i think we'll see rates move significantly higher beginning some time.>> talking about the k market tomorrow, goldman sachs is launching a new etf based on just capital, a foundation that you founded. it really sort of takes a different look at capitalism and takes a different look at how to construct an etf and even sort of what makes a stock work or not. it's not the profit and loss statement. it's a whole series of other metrics. tell us about how just began and what this etf is all about >> it really was one of the

cases from the mouth of babes comes innocent wisdom. six years ago, a student raises his hande back of a class in columbia and asks the professor why can't corporations be a force for goodness? why can't they use their capital? human and financial in the pursuit of just capital, if you will and that professor who that was asked to has a great bit of appeal. and it's easy to dismiss an idea like that. but the reality is that the court -- the philanthropic sector is -- the private sector

is 15 trillion so it's 40 the size of philanthropic giving every year. if you're going to have true social change, if you're going to have real societal betterment, it has to start with the private sector it has to start with business. and that kind of led us to think, this is worth a better look so we got a all group of friends and we started looking because i think the original idea was that we were going to just see if companies who were ticking the boxes on a variety of just behaviors have a -- all the way back in 2013, we ran some most basic screens. those companies always only a price basis outperformed the market which was at the time really interesting to me obviously being a markets guy.

>> did you believe in this whole social impact, social responsible investing approach >> so here's what's interesting. when i thought we had found something new, i didn't even know -- here i'd been on wall street for almost 35 years i didn't even know there was a $3 trillion esg environmental social governance industry built around and of course that in itself was telling that -- admittedly i'm not a stock guy. i'm a macro guy. i had never heard of becausit was so fractured. it was because there were just niche and funds doing it and a lot of them always had an agenda and so our first idea was -- the first question to ask ourself was how do you define what is just and someone had the bright idea of let's ask the american public let's ask the greatest people in

the greatest country who for the last 25 years have dominated this world let's let them define for us so there's no question what is justness and so we began polling and, boy, does the american public have a story to tell >> and they came up with effectively through your poll seven different drivers of what you think moves a company in the right direction. and they have very little to do with actually a profit and loss statement. >> here's the most interesting thing. we start out -- we started focus grouping and polling then we took 200 metrics and then combined them into about 39 that we actually measure. and we aggregate those into the seven drivers. the seven drivers are in order of importance, the first is how do you pay and treat your workers. that's 23% 37 the second is how do you treat your customers? do you respect their privacy do you respect tm individually that's 19% and the third is, products

do you mike high quality, low cost, and socially beneficial products and then there's environmental sustainability communities. domestic job creation. and the final driver at 6% is d yorve your shareholders and management that's incredible, right when you think about it. because the way capitalism is practiced today is that i'd say 80% to 85% of what the corporate bedrooms do is manage for the profitability of a particular company. and everything else kind of comes after that it's diametrically opposed to what the greatest people in the greatest country on earth think should be the way that they manage their companies so the first time i saw that, it

was like being smacked in the face but over the years after awhile, you can't help, i think. it starts to impact the way you t how -- what actually companies should be doing on this one other thing. how did we get to where we are today in today's definition of what a company's mission is? you go back to 1970. milton friedman famously said thcial responsibility of a company is to improve its profits. that's how we got to this shareholder management -- i shouldn't say me first but certainly the concentration on their benefits. when milton friedman said that, rates had come from 91% to 70%

and social inequality -- excuse me income inequality was 1/5 of what it is today you can see that 40-year-old definition of capitalism which every ceo, every shareholder began to adopt you can see how relevant it was at the time. but it's a different deal. 90% of the wealth of this cos owned by the -- excuse me. 35% of the wealth of this country was owned by the bottom 90%. today 23% of the wealth of this country is owned by the bottom 90%. and the 12% different has gone to the top of the 1% so capitalism may need modernizing. >> react to this, if you would this is a noted professor from berkeley saying it's absurd to

try to separate responsible to irresponsible firms. how can a responsible firm claim superior returns when there's no agreement on what responsibility means or how to measure it >> well, i'd like to update him. there is actually a definition the american public just gave it to us. the great news is there's a win/win here we can close this chasm and we can do it in a way where everybody wins and here's the most amazing thing. so we created this index we take the thousand largest companies in america and we rank them from 1 to 1,000 and we also rank them on a relative basis within the sector. and the most interesting thing is if you take the top half of each sector anjudge them against the bottom half of each

sector, according to the american public's definition of social responsibility, here's what you get you get companies that on average create 20% more jobs they pay their employees better than the bottom 500 do that emit 40% less greenhouse gases. they pay 70% less fines on a variety of things. they donate 2.4 times as much to local communities and charities. but the most important point, they on average have a 7% higher r.o.e. than the bottom ones. this is just based on those socially responsible metrics that the american public has said are so important. just one last thought. when you think about -- when you look at our top three drivers, right? the number one is do you play -- how do you pay and treat your

employees? if you have a motivated workforce that you pay well and treat well, you produce a high quality of low cost product. it has some benefit. and you treat your customers throughout the entire process. you respect their privacy, et cetera it's a good winning formula. and these companies are out-performing those that don't. >> becky quick back in the studio has a question for you. >> thank you for taking the time this morning you made a couple of comments about the broad market earlier but that you do think in the third and fourth quarter it will get more interesting and interest rates you think are going to go much higher. you also said you thought stock prices have the potential to go much higher at the end of the year too i just wondered if you could tell us why. normally when people say interest rates are going to go up sharply, that could act as gravity. why do you tnk they both go up >> well, again, let's just put things in perspective where interest rates are

we have negative rates if you look at what has shot off the stock market historically, it's been real rates on the look of 200 basis points. we're negative right now so when you've got a lot of tech companies growing at 20% per year, who cares about a hundred basis points who cares, right so i think you'll see rates go up and stocks go up. if you had to -- if you ask me to kind of think of some time periods, i would pick '87 in the u.s. but a time when you had a budget deficit. and you had stocks and rates going up for a period of time. '99 the u.s., that would also jump to my mind when things got crazy the end of the year. '89 in japan

again, they had strong fiscal monetary policies that worked their way through the stock markets. i could see things getting crazy particularly at year end after the midterm elections. i could see them get crazy to the upside >> but you've been talking about a bubble in the equity markets as well on the downside. >> all right you're too young because you've never seen this movie "pumping iron," but in it -- and this is back -- >> this is thearou arnold schwarzenegger movie i know the movie >> if you see the guy, just looked flipping amazing in it, but he was roided out of his brains so that's not sustainable. here we've got negative rates. we've got interest rates that again look unlike anything we've seen in the stock market top before and e got a 6% budget deficit during peacetime with 3.8% unemployment.

so yes i think this is going to end with a lot higher prices and forcing the fed to shut it off the reason i picked a couple of those years is if you look at the stock market relative to p gdp, we're at levels that historically in some oer countries led to a blowoff and some contraction will go through this it's an old story. we'll probably play it again. >> what are you looking for as the top then or the tipping point >> i'd want to see a lot of -- again, we've got buybacks like the terminator they don't stop. and we're retiring equity as a percentage of total market cap rates have got to gop enough to either shut the economy down and overwhelm from real money

selling like in '07 or to make it better for buyback. >> i know joe's got a question, i want to go to it but i nt to ask a question relating to etfs etf world, how do you think he that'sng to impact things if and when we do have a downturn >> liquidity is extraordinary extrant. can we talk about the etf that's going to debut on wednesday though >> we can. >> okay. so we talked about how these companies outperform the other wonderful news is th this index that's of the people, by the people, and for the people the just index it's as american as apple pie. it has historically if we just take the constituents right now, if we go back ten years, they've outperformed the rest of the market by over 50%

since we've been live, they've outperformed the russell by about 4.4% there's actually possibly alpha in the simple metrics that the american public has identified so i'm excited because here's possibly a chance to make money and do good by investing in this etf. and i think besides the retail -- i think the retail reception is going to be great for people that want to be invested in the stock market but i think state pension funds, to be able to tick off all your esg, to have something called just on your portfolio, it should be -- i think it's going to be a big etf down the road. i think it's going to rival the s&p and the nasdaq i think it has both potentially, possibly performance

characteristics and you get to feel good when you own them. >> let me go to joe. when do you think on the characteristics that this model works? meaning it's worked over the past two years hard to go back and really back test it given the way the polling and everything else works. you think it's a five-year period before you really know? ten years? what do you think is -- you need a downturn >> well, i think -- look in 2013 when we first started this, we just took some of the basic esg characteristics and then went back in 2013 d they were absolutely kicking ass then then every time we started creating these indices and started monitoring for the last five years and they continue to outperform. i was looking at some of our materials. said through march 31, the just etf since we've been tracking it live outperformed the russell by 3.47%. let's update that through

yesterday. and it's up 4.2% so we've had another 90 basis points of increasing obviously it's a too short of a time, but i have intuitively believed the story the public's telling. i think the bu model is simple treat your employees well. great products you're going to outperform >> let me bring joe into the conversation joe? >> that's what i'm trying to figure out, paul exactly how whether there's some type of corporate behavior that you think resulted in th wi that you pointed out. we all know we want corporations to stay globally competitive and, you know, when you're trying to think of workforce and benefits, you want to do as much as you can going back to adam smith

profitability sets prices. prices when you watch your p's and q's that's what keeps you competitive. so we understand the benefits. i'm trying to figure out whether you really are poimpbting the finger at corporations for the income inequality. or whether we made some policy mistakes in the government staying at zero for so long. anybody who owned assets benefitted over the past ten years. that's where all the gains have been made. i don't see it because of egregious torhey did better, md pay their employees better is it their fault? i'm not sure i understand. >> well, i don't think it's

black or white there are shades of gray here, right? thatt it is. and one of the reasons why i think just capital is so important, we've got to start e dialogue and the debate. because we have to modernize the definition of capitalism i don't think you can have this kind of income stratification without having the government come in at to me for your very point, that's the worst of all outcomes because that's the worst way to redistribute income. so hopefully this is an organic way where we can drive resources through investments towards more just companies we give out a seal to the top 100 companies. the most just companies. and so five years from now, i hope when you're in a store and you're getting ready to buy a box of corn flakes

for the reason you are pointing out, the reason this is so important, we have to rethink what corporate stewardship is. we have to rethink the way tt otherwise we're going to be back to milton friedman is that a better alternative>> friedman was definitely onto something. and i understand maybe a n neo-capitalist viewpoint in the most simplistic terms, we do have a meritocracy. there already winners and losers and there's no income inequality whatsoever watching how walmart stock has performed for shareholders over the years. and watching how employees at walmart have performed, it looks

like there hasn't been a completely equitable distribution of all the good times that walmart has had it seems like shareholders have done better than the rank and file at walmart. now, i'd like that to change but not if the overall pie stops growing for everyone else. that's my only problem with redistribution forced redistributn the that it may be of a smaller pie do you think that way at all or not >> can i just say? forced redistribution is -- that's not a good word this is about amplifying the public's voice this is about amplifying what americans think companies should be doing again, at the end of the day, if a company wants to be aligned with the american public, they'll probably be rewarded by maybe a better workforce and maybe their product wills do better over time again, i think what we're doing here is just beginning the debate and the dialogue,

promoting transparency, giving the public a voice then allowing all that tflow through to ultimately into corporate actions. again, it's a win/win. go look at the companies that are doing it they're out-performing everyone else. >> let me ask you this, just a broader question about the markets. relates to the etf as well though you have a number of pension funds that are going to be buying into just the conversations you have with pension funds today, in terms of -- what is a realistic expectation? and by the way, it's true of retail investors too you think in return in a ten-year period. how are they thinking about it how does the just piece factor into all of this >> i think pension funds are looking at the long-termurns on stocks and bonds. they're probably thinking in that 6% to 7% range would be ideal for them that would solve so many of their issues

i think it shows them a variety of things. it's clear the income stratification we have today is creating a lot of these problems 62% of americans distrust corporations and joe, 76% of young people will not identify themselves as a capitalist so yeah. i think we've got to find some way to attack issues of trust. i think aligning in some form or fashion, it's not necessarily going to happen overnight. i think over time, i think it's going to be great. it's going to preserve this very system i consider myself a proud capitalist

one of the reasons i'm so excited about this >> we're going to leave it there. the etf, the ticker is just. >> j-u-s-t got my fingers crossed >> thank you for joining us on this historic day and your commentary on the markets and where we are we appreciate it very much >> thank you appreciate it. >> and i should mention to everybody that paul is a member -- you know this -- on the advisory board of delivering alpha which is coming up this summer you can go to deliveringalpha.com for more information there. back to you. >> all right, andrew and thank you to paul jones too. let's get to steve leisman he has results from cnbc's all america exclusive -- >> no, no, no. start that again get it right >> scroll back down. steve leisman has results from cnbc's all-american -- >> no, no, no, no. >> okay. >> joe, you're better than that.

>> he has results from cnbc's exclusive fed survey. >> can we get a little music on that back of that? that would be great? i do and they're very much in line to what paul tudor jones was talking about. plet me show you the results there. 100% seeing a rate hike coming tomorrow 81% say a second one comes or a follow-up in ser but there the agreement ends you can see the number of rate hikes, total number 3.5 what that means is there's a split between those expecting three hikes this year. september would be the last one. and four hikes same kind of split when it comes to 2019 where it's 2.6 and i want to go on and show you, this is in line with what paul tudor jones was saying. is the fed is seen going maybe a little bit further than maybe the market overall thinks. 62% think the fed will hike rates to get above neutral which is to act affirmatively to

slow the economy and i think that's what mr. jones was saying there and that's in line with what our respondents are saying 30% say no 5% are waiting to see. i want to show you now the trajectory of the terminal rate. where would the fed stop you can see that's gone up and up and up. and about, oh, a little more than a year's time we've gone from 2.3% to 3.3%. we've added a percentage point is this bad? if we get the growth that's been talked about, this 3% number, and we're going to have the underlying inflation, then it would be in line with where the economy would require. and very quickly, i'll show you the target rate expectatom our panel here 2.3% for this year 2.95%. and then eventually getting to that terminal rate of 3.3% i don't know how big a deal that is, but it's certainly in line with the idea the fed's going to get a little bit further, the quarter point that's out there

>> okay, thanks. i don't know i couldn't -- i thought it was very interesting, paul tudor jones. he made some compelling points you know, the government can't do it. the philanthropic community can't do it. but at just one point i was thinking of all the people out there, steve, that were nodding about being socially responsible for all these companies and he was saying the wisdom of the american people, 250 million, listen to them they're the wisdom then if you think the same people who elected did eed d ee, then they go no, no, no. you pick and choose what you listen to. >> that's how humansrate i know some philanthropic companies that can't get out of their way in the process of making money like patagonia you know this company? they have their express -- the make money to help the environment. they make more and more money.

i've been to some of these charity benefits >> if you had gone, for example, five years ago all in on renewables when oil prices were $200 a barrel anbefore the latest renaissance in fossilfues country, that would not have been a great corporate strategy for exxon to have abandoned all and go into wind >> i don't think that would have been smart >> no. >> but doing some wind and some renewable. >> but the social justice cause of the day, red meat, salt, take your pick. ten years later, it's not the social justice cause that we thought it was. >> that's true and skepticism on that is a good idea >> money flows down hill and that, you know, the invisible hand guides the allocation of capital. >> we have to go, joe.

but you can do well. fred kempe hired me 24 years ago. does the fed tighten more than the marks? think paul tudor jones is right. that it should go up 150 i don't know whether they have the guts i look at the global market. and what you have to do if the u.s. goes in that direction, one impact is on emerging markets. what i'm worried about which mohamed el-erian underestimated, i think, is risks in emerging markets particularly in turkey with the elections coming up >> whatever you think about it, paul tudor jones is trending nationally on twitter. he kicked off a conversation that people are taking up from here steve, thank you very much >> pleasure. folks, we are continuing our special coverage of president trump and kim jong-un's hi summit in singapore today. joining us right now is brookings institute senior fellow michael o'hanlon. thank you for waiting patiently for us while we've been going through all of this. but your take on this just hours after the summit

is this a situation you're looking at with glass half full or glass half empty? >> hi, becky it's just a tiny first step. it's a good first step i have no problem with it especially compared to 2017 where we had a real risk of war on the korean peninsula. we could again but i think we're starting to see a resetting of expectations. this isn't going to be an instantaneous libya model. there's not going to be complete denuclearization the united states has reset itsc level. the question is will kim jong-un now do a deal that's reasonable. i think one way to test it is going to be with the follow-up talks. but to ask if he's prepared to give a data base on where all his infrastructure is located -- i don't mean his bombs he's going to keep those for awhile but the terial, the infrastructure, the industry that makes more highly enriched uranium and plutonium. we've got to shut that down. we've got to have inspectors go in and shut that down.

you've got to give deals that have incentives without giving away the farm too soon you know, it's going to be hard work ahead because we're not going to get that one flash boom denuclearization in exchange for turni turning north korea. it's going to be a longer process. the question now is can we get a reasonable good deal i'm hopeful but it's way too soon to know >> we had a former negotiator who's been negotiating with the north koreans for the last 25 years through both of clinton and george w. bush president is -- presidencies he said you could be looking at ten years. however, he did think you would know sooner than that if this is heading in the right direction how long before we know if this is legitimate and what would those signs be >> i agree with that kind of time horizon i think you need to get into north korea fairly soon.

maybe not americans. but international inspectors and we need to be able to go to at least the big sites and then have some ability to go to suspected sites and verify what's there and verify that it's being shut down so they can't keep building more bombs let's remember, as we sit here and speak, as kim and trump finish their summit and go home, the north korean centrifuges are still spinning they're still making more materials for bombs you can't have all this happy talk while they're expanding for very long. i would say within months and certainly within the first presidential term of donald trump, we've got to see a verifiable shutdown of existing infrastructure and then fairly soon after that, a dismantlement. once that happens, then north korea's arsenal is capped at whatever size it is today. 20, 30, 40 bombs then we can worry about what to do about those 20 or 30 or 40 bombs. we can be more patient

i think ten years, maybe even 20 years is a realistic time horizon for getting rid of all of that. >> the president said today that those economic sanctions will remain until he is convinced this is heading the right direction. you're talking about a process that would take at least a year or two before you could really be convinced of that the chinese today are saying they'd like to see some of these economic sanctions come down as a result of this meeting today so what happens? >> well, i think the chinese view there at the end is a little too optimistic. especially the u.n. sanctions that were imposed after the missile and nuclear tests of 2017 those sanctions can be suspended as we start to see north korea allow access onto its territory for these inspectors, provide data bases on centrifuges, plutonium reprocessing, and so on so you suspend those sanctions u don't lift them until the centrifuges are dismantled until the production is out of

the country for good then the sanctions can go away for good meanwhile, i would keep some of the american or u.s. sanctions and some of our bans on world bank loans and things like that for a longer period until we see the warheads start to come out so you've got to sequence this and have different categories of sanctions you would suspend or lift at different places along the way. but the key step, the key meul when they stop building more infrastructure for making bombs. and when they dismantle what they've already got. then we can imagine e sanctions be lifted. not just suspended but lifted. keepsome the long haul until they're truly a denuclearized country. that's the kind of sequencing we've got to work through. that's secretary pompeo's job in the coming months. >> i don't think you noticed but you said we need to see some of that by the end of president trump's first term

there was a collective scream out in the mainstream medialand when you said -- i don't think you said that on purpose you just meant -- >> i couldn't think of a cleaner way to say it, so i just went with it. >> you got to think. be careful what you say. thank you. >> my pleasure. >> for certain people. thank you, we appreciate it dpp you hear it? did you notice >> yeah. >> by the end of his first term. who knows what he can accomplish in his second term we'll ask mitt romney who says he'll win. court ruling on the at&t and time warner merger expected today after the market close this will conclude the six-week trial that could determine the outcomes of other merchers gersh industry joining us now -- do you know anything, jennifer have you talked to the judge today? it would be great if you just tell us what's going to happen i'd like to know >> i would too >> you don't >> we haven't.

but we talked to enough legal experts i feel like i've quickly become an attorney >> really? ooh, i'm sorry no that's what we need. another attorney can you handicap it for us in your view after talking to all these people >> sure. i mean, there's really three ta people >> there's three outcomes. obviously at&t wins straight outright without a stay granted. the soonest they can close is june 18th, and the doj would have the right to appeal, all though if the deal closed, it would have to unreallyavel a de. the second outcome is at&t loses and appeals. some of our regulatory contacts indicated they thought an appeal was highly likely there's me deal fatigue here. and the third option is they win but with some sort of conditions and that is a very gray area so, you know, i firmly believe

that the first scenario will play out, you know, we followed the trial intensely. we kept waiting for a smoking gun from the doj and one didn't come, in our view. or more importantly the attorneys i speak to their view. >> this is a big deal, jennifer, in terms of what happens to everybody else, too. i think the judge would have to think about this if it would cast a pal on all the other deals, which i think are necessary for old media to be able to compete with these fast-moving in this daunting future for old media if they don't to allow it to happen, for example, and suddenly we don't know about 21st century we don't know about disney we don't know about comcast or t-mobile and all these guys are left on their own to fight facebook or google or amazon that's a scary future.

do you think the judge realizes and takes that into account that it can come to a grinding halt and we'll defenseless i'll sign all my information to facebook and never own anything again and they can know everything about me and sell ite very much articulated that point. that tell com is not just competing with tel com anymore it's widened to include many of the faang stocks you mentioned it's in his hands. i fully respt he's making the right decision, but i think we have to know that, you know, sprint and t-mobile it's interesting because we've heard recent reports i thought that was going to be hard to get done there seems to be an appreciation in d.c. that just what i mentioned the competitor field is wider than at&t, verizon, sprint, and t-mobile i think they're looking, the lens that is being looking

through with this competition has gotten much wider. >> so if there are conditions, what would thatructured like, in your view >> that's a bag of tricks. i think if one of the conditions is selling direct tv, i think that's a non-starter i think the whole conversation who is the buyer of that asset has been clearly challenged recently i think there's behavioral conditions i think the biggest concern is that some of the content would be restricted from the at&t's competitors. you know, i think i've heard randall stephenson say on your show it's almost a nonsensical argument they're paid more with more eye balls. i think something with the content being distributed and who can watch that could be a condition. i think that's a condition that at&t would gladly embrace, frankly. >> all right what time today, do you think?

>> 4:00 but i heard no one can bring a phone or any device in the courtroom and the full opinion has to be read before anyone can leave the courtroom so, you know, who knows. li30 eastern time probably is >> does that mean anything does it mean it's going to be a complex ruling or you're good or not good we don't know? >> we don't know and there's been a lot of surprises in telecom lately. who knows. >> the government sector they don't know so we don't know anyway anyway, thank you, jennifer. >> thank you. >> if you hear anything, call us back or message me, if they leak to you now. >> okay. coming up some parting shots. parting shots -- nice. fred kemp on the historic final

thoughts anyway we'll get it from fred. president trump and kim jong-un. on about five hours now. m not sure what i'm sayi check out the futures which are now up again a little up about 33 on the up four on the s&p up 7 3/4 on the nasdaq

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>> we had a great discussion and i think tremendous success. >> mr. president, how is it going so far, sir? >> very good. >> what do you think >> very, very good. >> we had a historic meeting and decided to leave the past behind and we're about to sign a historic document. >> the letter we're signing is very comprehensive, and i think both sides will be impressed with the result. a lot of good will went this

a lot of work. a lot of preparation i would say it worked out for both of us far better than anybody could have expected. >> will you be meeting again, sir? >> our guest host is fred kemp watching this play out, how would you sum this up? >> well, half empty half full. the half full is the mood music is great the two leaders came together and trump got the expectations he set the bar low and progress and process is going the two things i worry about denuclearzation is not defined and the ending of military excises there was a free to uggestion before from the chinese from the north koreans, from the russians and the trump administration turned it down so why, at this point, without apparently consultation with the

allies would we not do that? i think he has to keep the allies close through this process, that's what i'm going to watch for is south korea close. apan close do we move forward through a process of economic incentives and denuclearzation. >> thank you so much for your time we appreciate it thank you for joining us please meet us back here tomorrow morning right now it's time for "squawk on the street. >> good tuesday morning. welcome to squawk on the street. carl quintanilla with jim cramer david faber is off futures positive now as we turn to cpi in line a two-day fed meeting and at&t ruling europe is slightly red ten year 2.97 as cp circumstance a fresh six-year high. >>