>> thanks, guys. big show big day. lots of news i'm going to hand it off to our friends "squawk on the street. join us tomorrow "squawk on the street" begins now. ♪ good wednesday morning welcome to "squawk on the street." dow futures nearly 200 points off the overnight lows as the white house backs off the harshest approach to restricting chinese investments in the u.s relying on a pending bill in congress, instead. germany is up a percent. most of europe is green. our road map will start with easing trade fears futures point to a positive open reversing early losses as the white house tech-related crack

down on china may be less strict than feared. shares of conagra are down after announcing the deal to acquire pinnacle foods it will create the country's second largest u.s. frozen food company. an american icon under pressure harley-davidson shifting some production overseas amid the tariff concerns. will others be following suit? steep losses this morning coming back after the trump administration announces it rely on a committee in the foreign investment to address concerns about foreign purchases of u.s. technology here is treasury secretary steven mnuchin commenting on the move moments ago on squawk. >> we're very pleased it has been passed on a bipartisan basis. yesterday 400/2 at the house that's an overwhelming bipartisan response. and we've looked at the issue of protecting technology. it's very, very important and we will use these new tools very

carefully. >> so this legislation you'll hear about it more today called firma. it did pass the house 400-2. we'll see what happens in reconciliation but the president says it to my desk if not, then we can talk about tools i may have under executive order. >> the biggest take away seems to be the market reaction, as you say, seen as softer than some of the worst threats that the president and some of the reports have indicated he could do a stricter crack down using presidential power, for instance, to curb investment the fact they're going to use the committee in place at the u.s. treasury created in the 1980s. update their powers a little bit. expand their powers a little bit. give them leeway, for instance, to go after jvs with chinese companies. which would be something new i think michelle asked the treasury secretary about that

and confirmed that i know there are partnerships in the interest of national security the market likes it. it's not the worst possible in terms of confrontation. >> no, it's the existing tool that is used to be expanded for that use and what many people say should have been the chosen road as opposed to a separate plan for dealing with the investments does it take the pressure off on other fronts are we not going to see some tweet that indicates, well, we're going to ratchet things up july 6th is fast approaching only $34 million in tariffs going into places on chinese goods. but does this mean that's it you know, it would seem based on history who knows what tomorrow will bring it's certainly a sigh of relief. >> right mnuchin made a few other headlines. said it's unfortunate that the market had to deal with mixed messages in some of the trade stance no comment on where talks with

china are right now. but he's always willing to listen any proposals and said he expects a big q 2 he did reference atlanta fed. >> he loved that number. >> it's the highest on the street. >> yeah. it's a big number. how far off is that number >> most economists expect at least 3% growth from the quarter, it would be a marked increase above 4% is pretty optimistic. but, again, the question is is it sustainable i mean, this is a quarterly number the president wants to see sustained 3% economic growth we're getting there. confidence remains high. housing numbers are even better than people expect the question is if the administration shooting itself in the foot with the trade tariffs and the uncertainty it causes not to mention, did you see the cbo numbers released in terms of our debt double as a percentage of gdp federal debt from where we were post crisis. it's a concern if we go into another recession, do we have

ammunition >> not concerned about it is mnuchin. they said they would keep an eye on it. here is mnuchin talking gdp. take a listen. >> we're excited this is the six month anniversary of tax kupts we're expecting a big second quarter gdp number let me say, i have no advance notice of what it looks like but the atlanta fed is projecting 4.7. i have no idea whether it'll be that high. but a year ago people were laughing when we talked about 3% gdp. >> we'll see where we get. today's data not especially scintillating. capital goods orders up .2 we were looking for .5 these are preliminary numbers for may. if you want to build a case purchasingisions are being deferred because of trade, you could probably make one. >> we'll get more commentary in the next few weeks they're expected to be pretty

good another 20% plus earnings growth numbers. it's going to be all in the commentary and the question marks around trade and just as far as the economic impact, guys, mnuchin told the folks on "squawkbox" it's not set to have economic impact speaking to i think some of the concerns they're hearing from business, potentially from investors about curbing investment and what it would do to our overall economy chinese investment is down. >> dramatically. if you look at it over the last couple of years, it's down. >> are there any deals that should be worried? >> no, the only deal that everybody continues to focus is qualcomm's spending purchase of nxp and zte enough of an olive branch to allow the chinese anti-trust authorities to approve the deal it's pending it's a good sign on all sides if, in fact, it were allowed to happen hasn't yet but we keep a close eye on shares of nxp as that

barometer. >> m & a lawyers will be busy off this they have to produce their case if ty want it to go through. >> yeah. that's true. it's a very specific part of the bar. lawyers. i dealt with them a lot on the qualcomm stuff joining us this morning is fo treasury secretary larry summers. mr. secretary, good to talk to you, as always >> caller: great to be with you. >> if the choice were between caps on investment and enhanced review i have to imagine you prefer the latter >> caller: yes, although, you know, undescribed increases in review by stiff yus it's important to show restraint. for me the stuff is not about extraction and not international

capital flows. opportunities for american workers and what is known is that our investment in the united states -- causes businesses to expand that otherwise wouldn't have expanded and facilitates lower prices to consumers whose paychecks go further. and we have to have a very good reason or you're going to interfere with that. and i think that's the traditional way in which cfius has operated cfius was used years ago placed in the treasury department because it was a feeling tha they wanted a presumption of

openness to foreign investment also so the other nations give opportunities to do ancillaries. i hope very much that secretary mnuchin will uphold it, as wel as cfius carries out its responsibilities the world is a different place, and there are more issues and potential technological threats. so reviewing and renewing the procedure seems to be the appropriate. but this is a case where it's going to depend on the media. >> i wonder how you characterize china's response to what some call this trade offensive by the u.s. shanghai is in a bear market yaun is in a low for the year. there's some who are backing the administration who want to argue

we're going to have -- soon. do you agree >> caller: i don't -- i think we are sufficiently codependent in the economy the odds that we're going to somehow hurt their economy and that's going to cause them to give us what we want rather than lash back in ways that strengthen our economy i think it's like two guys wrestling on a narrowplatform 20 feet abovthe ground it's easy to injure yourself. >> that's secretary ross' view you want to create an environment where there's pain and out of that pain comes an incentive to reform trade. to reform industrial policy. >> caller: i think secretary

ross is living in a fantasy world yesterday. secretary ross' statement about national security defense for limiting steel imports canada secretary ross -- secretary ross' obsession with the bilateral trade deficits these are not serious statements there are real and difficult issues knowing how to proceed but treating this with methors of two guys trying to face each other standing in a bar is a

prescription for real economic pain. >> secretary summers, maybe you can go into a little more detail, since you ran the treasury, on cfius it's sort of an obscure e within the department that looks at these deals and considers their merit based on national security grounds. can you tell us how it works and whether the obama administration could have been tougher on deals with chinese companies in the interest of our national security now we're at this point with china 2025 we're worried about china gaining a competitive edge on technology. >> caller: look, the way i look at it -- i spent time in chinese ai labs. i've spoken with chinese entrepreneurs who studied abroad and who returned to china. where is china's technological

it'soming from terrific entrepreneurs who are geing the benefit of huge government investments. it's coming from an educational system that is privileging excellent, concentrated on sciences and technology. that's where their leadership is coming from. not from taking a stake in some u.s. company look at the zin tech area and the things they'ings they're dog there are other aspects of ai

where it looks like the chinese is doing well and haven't stolen from us. the real approac maintain technological leadership is through lead technologicals. not through trying to hold china down that said, clearly with you have a situation where it looks like chinese companies are in a position to extract intellectual property from an american company. maybe appropriate to stop that merger it's appropriate to look at russian companies or japanese companies in an earlier era. but we have to ask ourselves a question companies are going to invest. they're going toe jobs in cutting-edge sectors do we want to tell them we would like them to do that in the united states? do we want to tell them we want them to do it somewhere outside

the united states? and now for the benefit of american workers, i think mostly we need to tell them they should do it in the united states. >> mr. secretary, i appreciate your commentary. especially coming off the announcement today we'll talk to you soon larry summers. >> caller: bye-bye. harley-davidson under fire from president trump after announcing plans to move some of its production overseas to avoid eu tariffs treasury secretary steven mi mnuchin weighs in. >> i wasn't happy about the announcement i would say in every one of theet amazings, i listen to the president talk about tariffs on motorcycles. he's been a big advocate of harley-davidson and american products so i don't know why harley-davidson would come out and now say they're moving production we've been fighting to lower their tariffs all over the world.

>> our morgan brennan is live in kansas city outside a harley plant. the company is set to be closing this year. good mor, morgan >> reporter: hey, sara good morning like it or not, harley-davidson has become a lightning rod in the global trade debate. stock down 6% this week. it's been a rough week for harley-davidson. you had first, the company saying it's going to have to move some production overseas of the motorcycles it makes that are destined for europe. the second biggest and fastest growing market because of the retaliatory tariffs. and president trump coming out slamming the company for the decisi decision, including thistweet.

800 people work here some of the operations will move to pennsylvania only 400 jobs will be added. harley wll yous story, is clo has nothing to do with the eu tariffs and it has nothing to do with the plan to build this new manufacturing facility in thailand the reason they're closing this is because of slumping sales most notedly in the u.s. which is the biggest market as baby boomers age and newer generations don't seem thave the same deal ridership that's playing out in the financials, including last quarter you look at retail harley is turning to the international markets to stoke a turn around. therein lies the debate. you have the eu tariffs this week it said it's going to see profit dented because of highest aluminium and steel tied to those tariffs. and in terms of that decision to build a company in thailand. the company decided that after the u.s. pulled out of tpp

thailand imposes tariffs on motorcycles for 60%. tpp would have reduced that number hence the company expandsing the manufacturing footprint there. you look at it, you can see where president trump and the rest of the administration is talking about unfair and unbalanced trade but this gets to the very heart of what we've been discussing now for months on cnbc, the fact that imposing tariffs by the u.s. and what is stoking a trade war is that the right way to go about this when you look at harley-davidson, at least this week, at least in light of these announcements, a very difficult decision to move some of that production the answer would be no back over to you. >> morgan, we look forward to today. huge story involving an iconic american brand morgan brennan in kansas city. when we come back, futures, as you know by now, have erased their losses and the white house makes a big announcement on china tech investments we have m & a to look at a look what the megadeal means

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good some news to get to conagra buying pinnacle foods. $10.9 billion in cash and stock. [ applause ] >> we should get to the deal usually when the applauds builds it's because somebody in uniform. i think that's the case. carl, let's get through the quick and dirty on the deal itself $10.9 million that includes debt and cash and stock the two companies have been talking for a long time. it was well over a year ago we reported price was a key issue. pinnacle wanted more than 70 conagra di't want to pay more than 70. and then you get .694 stocks

they are also going to they're rrowing for the cash portion but going to issue about 600 million in stock part of that design to keep the issues below 19.9. you don't need a shareholder vote on the conagra side $250 million in cost synergies and created by may of 2020 we've reported about the mid-sized companies that need to do something scale becomes more important frozen becoming important and conagra sees that as an opportunity here with pinnacle. >> that makes the deal a little bit different than the other food deals we talk about on a regular basis now. frozen has been a bright spot in the grocery store. look at general mills results this morning to see there's not a lot of growth. they're expecting 0 to 1% for fiscal '19 that's general mills

frozen has been a different story. that's in part because of conagra and sean cy, the revitallization of some of the brands conagra shares are down. off the worst levels of the future. >> but they reported a decent number they reported a quarter, also. but it is interesting the stock is down. given they did show some price discipline typically in a stock deal you'll have those smarting the shares of the enkwirer. it can add a little bit of selling pressure. >> they appear to have gotten it pretty cheap it's blow -- below some of the deals we've seen they have a big frozen business now combining some of the conagra brands and the pinnacle brands according to jpmorgan, they'll have 39% of the market it is expected to pass regulatory muster but they might

have to divest some of the brands that's a big chunk it would be number two next to nestle as far as the chile market they would have about 30% and spreads 31%. and healthy choice are the big brands for conagra birds eye. >> yep. >> for pinnacle i would say the deal is out there. lauren hirsch reported it was loing like a done deal. >> amazon whole foods will have a hard time delivering frozen. you know, millennial's it's about that. eng ll'll count down to the opinbeback in a minute what about him? let's do it. ♪

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on the street. opening bell in about two minutes. pretty busy wednesday morning. overnight futures were down about 200 on the dow but then the white house comes out and confirms they will back off against some of the harshest approaches that have been reported regarding chinese investment in the united states. they're going to rely on a bill in congress that passed the house. with that, big spike in futures. it only real hiccup has been the durables data and oil at $71.50 which continues to rise. >> the u.s. is pressuring our allies to buy zero from iran that continues today the overnight session was ugly in china again

another one for the shanghai composite. it's in bear market. a lot of people are worried china is guiding the currency lower to fight the u.s. in the trade war. we know the general market doesn't like that. when china starts playing with the currency emerging market stocks, by the way, at a 10-month low they get hit everyone else is feeling it worse than we are in terms of the market. >> that's true i think, yeah, one out of three global indexes up for the year i think most or two-thirds are down. >> everybody else gets hurt. it's started to be reflected in the indexes. >> europe, also. >> that being the key one. >> european autos have been down for eight or nine straight sessions

[ applause ] let's get to the opening bell. [ opening bell ] we should be congratulating the germans on their commitment to the u.s. not criticizing them. it was also the report which is out of the alliance of auto manufacturers, a big trade group saying a full trade war could be a $45 million hit to consumers based on additional tariffs on foreign automobiles. >> it's hard to quantify clearly i think the auto tariffs would be an escalation president trump yesterday indicating that they're

finishing up their study of auto exports from europe and other places into the u.s. so we'll see whether they go ahead with the tariffs there as far as the groups, though, it's energy that continues to lead here on higher oil prices and financials continue to make new lows i guess there was a consensus trade going into the year. >> yea the expectations once you see car results things would turn around we'd see a turn around but lows for the year, as you point out, goldman sachs down 13% this year morgan stanley and wells fargo has its on set of issues jpmorgan the best performer and down 2%. >> xlf has been down 12 days this would be 13 sectors lost nearly a half a trillion since the january high. you got a sort of expectations coming in on capital returns post c-car

obviously, the curve flattest since august of '07. >> that's been the story right. that flattening yield curve and what it portends for the future. will the fed keep hiking interest rates and will the curve flattening to ultimately invert to indicate a recession that's one of the big questions for the market as far as a worse performing group than financials this year, look at consumer staples there are a lot of movers. general mills is a little bit higher it did report higher profits. >> and then the 1% number was sort of in line if not a little bit better. >> the convenience store results were a little bit stronger they helped offset the north american retail sales business it's still shrinking down 1% organic revenue growth for the year sales are expected to be flat. they're dealing with the blue buffalo pet food company that deals with the obscures the earnings picture a little bit and going into the year.

but the yogurt category is soft. cereal not growing very much snacks some of their ice creams and others not growing that's why the food companies are looking for a sort of fresh idea pun intended. >> number one or number two in the category. >> yeah. they get rid of the ceo, most of them have done or look to increase scale a lot of them are doing that, as well. >> ge after yesterday's strong performance. best day its seen in some time a follow through for general electric up a little over 1%. you see it there this despite what is continued sentiments from one mr. tusa at jpmorgan yesterday's announcement turned him around tusa saying in his view there's little new deleveraging for the

enterprise this plan falls well short of what we view as a number to truly derisk and provide optionalty with lingering outstanding items noted, as well, he says in an interview. suffice to say unimpressed i think there was a hope, perhaps, among ge's management they could turn mr. tusa, to the very least, a neutral stance given how important he's been. but the stock continuing to move higher despite what is a negative review of those from yesterday. and, obviously, a very positive overall reception in the market for a stock that has not seen many good days in what has been a brutal, let's call it last year or so. >> the chart has seen good days lately is world wrestling entertainment. wwe. signs a multimedia deal with fox sports and more than triples the fees

it was getting in the current deal takes effect in the fall of next year the stock was $20 a year ago now $73. >> they were early with the streaming service of their own subscription-based streaming service. but that has also pick up a great deal of momentum and helped that company over some time now those rights numbers were big, big numbers for the fox broadcast scores taking away from our parent company comcast. one of the two offerings the other will stay on nbc. >> the two groups i've been watching just to see what th trade concerns are on any given day, industrials which are catching a bit today bowing is leading the dow now. big trade war kind of stock. and then technology, which has been dragged into the mix lately i mean, semis have been hit hard on talk of curbing investment and tech exports to china to try to protect intellectual

property that jives with the treasury secretary's announcement and the treasury's announcement this morning they're going to expand the powers of the committee cfius, which monitors foreign investment deals in the interest of national security, it's seen as a softer tech and technology is rebounding some of those names are getting a little relief lately. >> yeah. netflix back above 400 up about 2.5% after that drubing it took on monday. did you see the -- >> thank god. >> you're worried about the 100% gain. >> it was back to doubling for the year which is really sad. really, really sad did you see the work out of mkm if said your portfolio avoided the last five days of every month you would be up five for the year instead of one. as we're now paying a little more attention this week to potential, i wouldn't say year-end selling as much as year end rebalancing. some funds too heavily weighted

into one name. >> i did want to hit comcast, our parent company as well as, of course, fox and disney. this morning the wall street journal has a story about an hour ago that says comcast is exploring private equity investors that could be called on to provide additional capital should comcast need it, if the bidding gets for the fox assets gets to very high levels i have no idea if that's the case certainly a possibility. as i reported last week, there is also a possibility that comcast will actually, if it chooses to come back with a higher offer to try to top the $38 cash stock bid from disney that has been accepted by fox. that it would include stock in its own offer. right now comcast last bid was

$35 all cash let me give you a sort of a quick run down of a few things as we told you last week, unlikely to bid this week would be comcast happy to sort of let things settle wanted to see the proxy which has been out as we learned continued concerns about regulatory when it comes to the comcast bid. but that does not mean that comcast is notxpected to come back with a bid they feel will be significantly hi than disney enough so that shareholders will go to a shareholder vote would not feel they can vote in favor of a current disney bid if they stay where they are. there's a lot of mmuurrs around. ten days ago bloomberg had a story saying that potentially doj was -- >> this is a story of authenticity staying true to yourself

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cycle. so i think there's i think he can play the news cycle. yeah is there a concern that there's going to be broaderer policy mistakes it's kind of like that kid throwing a rock at a hornet's nest from a long distance. maybe he hits it and it creates a bigger problem at the moment, we think these will soften and that creates opportunities for investors. >> diane, you know, there's i think morgan stanley is a good

example of arguing we've seen the highs for the year on the ten year you should buy the ten year outright. >> there's a sense that the good news that we're seeing the movement into the dollar pushing down ten year yields. i think that's because we've got an opportunity with the rest of the world. we're seeing that money come in. that's the good news that's also bad news for manufacturers compounding the loss in competitiveness they now have steel 50% higher than anywhere else in the world aluminium 80% higher they lost some competitiveness we've seen some front running of the threats of further tariffs out there i think is important the other issue is restill have a lot of debt out there and you're going to see a lot of debt and deficits pushing the yields back up by the end of the year. >> yes we got a fresh reminder of that from the congressional budget office yesterday thank you for joining us on the big news of the day.

>> all right june gains break even for june on the s&p we're hanging on to that by a pretty good cushion. bob is on the floor. hey, bob. >> good morning. happy wednesday. the affect the cfius announcement moves about a half a percentage point mnuchin expected a big second quarter gdp number he expected it i think that helped a little bit, as well just off the highs didn't help asia, though as we noted yesterday, they're in bear market down another 1%. look at the shenzen and hang shy down 20% from the recent the philippines. vietnam also down 20%. europe bounced back, as well largely in positive territory. here in the u.s. energy, you know, oil near $72 in the last couple of days and that's powering the energy stocks forward semis probably the biggest beneficiary of the cfius announcement take a look at the semis

some of the usual names up about 2% overall marvel, in vnvidia, micron caterpillar isping the dow jones industrial average some the other standard on the upside what is not moving at all is the bank stocks. we have noted this for a long time now yesterday we noted 12 days in a year it hasn't happened before in history. we have banks nearing bear markets. goldman, pnc, bank of america not quite bear market. they've been drifting down now for several weeks. notedly off their highs. finally, i want to quickly note, speaking of problems in china. did you see what happened with the used car company sells used cars in china they priced $25 million at $9.

we're talking about almost half. they were supposed to raise $437 million. they raised $225 million it's difficult to sell chinese stocks not just in china but even in the united states. back to you guys. >> yeah. sort of another side effect of the policies bob, thank you let's go to the bond pits now. rick santelli. good morning, rick >> reporter: good morning. one week of tens tells you everything you need to k just a slight ski slope and all of a sudden we're in the mid 280s down four basis points at 284. if you own the chart up to february 1st, the technicians out there blur your eyes a bit it has that topping look to it not only that, if you look at overseas one week of bunds, we keep knocking at the door. monday, today right around that 30 basis point level open the chart up a little bit, it's a significant level

i like to look at days where there was crazy volatility like periods at the end of may and those areas in the market, in this case, under 30 and bunds under 284 in treasury yields ten year those are areas you want to pay attention to we hit them and lifted off again. that means that's a weak zone. and here we are. consolidating there. if we look at one week of dollar index, it's the bright point we're back to the 95 one week of the dollar yaun. dollar continues to escalate they're trying to ease in china. a sign they're not as strong as they think carl, back to you. >> thank you very much when we come back, automakers sending up flair over tariffs. the eye-popping price tag they're attributing to some of these trade tactics. dow is up 73 oil up near 72

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welcome back i was speaking earlier about comcast, fox and disney, somebody, some mystery person out there ran a commercial break so many people may not have actually seen what it was we said we're going to recap some of the reporting around us. fox may be up because "the wall street journal" story indicating the comcast, our parent company, has reached out to private equity and other strategic partners in the event it should need more cash to increase its bid to a very high level for the fox assets the expectation is comcast will not come back this week, taking its time a bit, perhaps going to wait until the shareholder vote is set a new record date they had wanting to read the proxy which has come out since disney raised to $38 in cash and stock, well above the $35 comcast has offered all in cash. i also reported last week that comcast could include stock in that perhaps even more importantly, a

lot of murmurings out of washington, d.c., after a bloomberg story last week indicated the doj may be close to approving a disney/fox transaction. continuing to hear this bubble up as something we could see no confirmation from anybody involved on either side or from officials at the doj but importantly perhaps nobody also striking forcefully down that story. regardless, my understanding is that comcast would still come back with a higher offer regardless of whether, in fact, the doj, surprisingly, one would have to say, were to tentatively e the fox/disney transaction. feeling that a higher bid will still give shareholders pause when they do need to vote on potential said transaction that's where we stand right now. not too much incremental news but we're watching closely don't expect we're going to see anything from our parent this week unclear whether we get something before the july 4th extended

holiday there. i don't know what days you're taking off >> the same ones you are i'm glad i got to hear that report twice >> the important thing is that david not go on vacation again that's the key >> dow up 14 going green again for the month. sk "squawk on the street" back in a moment exactly. so i started trading. but with everything out there, how do you know what to buy? well, i think my friend victor has just the thing for you. check this out, td ameritrade makes it easier to find the investments that might be right for you. like our etf comparison tool it lets you see how etfs measure up to one another. analyst ratings and past performance... nice. td ameritrade also offers access to coaches and a full educrriculum to help you improve your sll that is cool. and if you still have any questions you can always chat with us on facebook or call our experienced service team, 24/7. yep. just because you're doing it yourself doesn't mean you're on your own.

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click, call or visit a store today. dow up 150 almost. benefiting from a couple of things the industrial trade is back to a large degree as the white house backs off some of the harshest measures of restricting chinese investment in the united states and then oil near 72 is going to give you some really good action on oil and gas exploration, on the xle going for its be quarter in about seven years dollar not even having much of an impact on crude's rise. >> the dollar has been strong lately i'd just note this rally is becoming more broad sed. all of the sectors in the s&p 500 are higher led by energy and industrials. but you've got other sectors like consumer stap staples and financials who have joined the party. the analysts say it makes sense. they were a little disappointed on the accretion numbers they gave, the guidance that they gave on their financials, on their margins.

but overall more of a sell the news because this was widely telegraphed in the press and they think it makes sense combining two big frozen businesses together. >> stock had a nice move over the last few weeks up. >> higher. >> we'll keep track of this. a handful of components are red on the dow right now with mcdonald's a loser and some pharma is up 146. don't go anywhere.

♪ good wednesday morning welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at the new york stock exchange. first, let's get to diana olick in washington. breaking news on pending homes >> carl, pending home sales in may down, 0.5% for the month down% for the year and that is the fifth straight month of annual losses remember, these are signed contracts to buy existing homes

so people out shopping in may, you might have seen the sales of newly built homes rose in may but only in the south where homes are most affordable and reel realtors are pointing to affordability. it continues to hamper first-time buyers and move-up buyers as well as the supply situation which is getting even worse. too few homes for sale home sales fell in all regions of the nation for the year, but monthly they did rise in the northeast and the midwest and slightly in the west but they fell in the south. remember that pending home sales are an indicator of future closed sales in june and july. that's a miss. the street was looking for a slight gain. sales down 0.5%. >> diana olick, thank you. we're going to start with this rebound we're seeing in stocks pretty sharply as the tech-relat crackdown on china will be less strict than investors feared >> we'll take you live to a harley plant set to close as the

american manufacturer shifts in response to tariffsverseas >> and conagra is buying pinnacle foods citi's co-head is going to join me in an exclusive later this hour and talk about why 2018 is set to be a record year for m&a. >> we begin in washington. our kayla tausche is with us for the latest following the white house's big announcement it will be e panding the authority of the committee known as cfius in its approach to limit chinese investment in the u.s. help us understand this. >> treasury department is closing its review of restrictions on specifically chinese investments saying today it will lean instead on bipartisan legislation that would broaden the type of foreign transactions that would come under the treasury's review of transactions happening here in the u.s. on a national security basis it is a significant

de-escalation in the trade fight between the u.s. and china and by opting not to put these restrictions in place, it removes a key tool thathe administration had outlined all throughout this spring that it was keeping on hand to use against china. even though the treasury secretary this morning on cnbc declined to call this an olive branch to beijing, it was clear that the administration is using ticeably different tone to describe those relations >> we're going to treat china the way we're going to treat other people and to the extent that we were worried about transactions, we will block them. but we are not going to, on a wholesale basis, discriminate against china as part of a negotiation. >> the decision comes amid months of market volatility, hand wringing from capitol hill and dissension among white house advisers mnuchin said when this decision was made yesterday afternoon it was a unanimous one but from

talking to sources i'm told mnuchin had been advocating for this softer approach behind the scenes and there were varying viewpoints behind the scenes as these discussions were taking place. the question now is what h in these talks we don't know whether these ffs be put in place on july 6th the u.s. tariffs on $3billion in chinese imports i asked thcretary about that he said i'm not a betting man and there had been talk of china's vice president visiting washington to continue those talks ahead of the july 6th deadline we're still waiting to hear whether that could still happen. >> appears to be a victory for the treasury secretary mnuchin and his efforts here a tausche, thank you markets reversing early losses with all major indices higher following that document let's bring in ed cashin this is an administration that does pay attention to the stock

market so can investors have faith th they won't let it fall and they'll come up with easier policies to ameliorate some of the nerves >> i think that's what you're seeing this morning. when they announced they were going to use cfius and remember the first word is committee. so that means more deliberative. more collegial that means the gun is no longer in any one person's hand including the president, sthat if there were a misguarded word or whatever, that might start things off the market looked at that and said it's going to be a committee of professionals, then we probably won't have the train run off the track. and that's a kind of sigh of relief rally you're seeing here. i would be careful because there are still signs around that we're going to see volatility going into the end of the quarter and the end of the half. people are reweighting and rebalancing their positions. they're taking a look at where they're going. the absolute hero continues to be the energy sector that's

bringing this on and while people talk about the financials quote/unquote being somewhat weaker, they are in a collective group they are at multi-decade lows as a group in action. and it has not -- that has not been wiped awaeasy that tends to drag on for a little biti wod suggest to the you want to be very nimble be careful here the next few days you'll get this twist or that. monday was all about that rebalancing. it wasn't that said let's take profit in the banks. what happens, folks, is you have a formula. and it says to you that 25% of your portfolio should be in the banks. the banks get very hot and they run up and just because of the cause in action, that makes them 36% of your portfolio so to get back to formula, you've got to either buy more the other or sell down

what they do is a combination of both and that's why you see those crazy swings even when there's no news. >> you think the rebalancing dynamic outweighs the trade dynam snick what's more powerful here >> unless there's a marked, sudden surprise, someone like cfius, i think thathe rebalancing would certainly be follow to the trade. again, the trade would only pile up if there were surprises now you'll get some rumors that the koreans are starting to reinforce their testing area all over again the president is going to get asked about that a lot will depend on what is said trade will be there. the other thing the viewers should remember is trade will be less important when it's retaliation. when china says, oh, yeah, well, i'll match you well, matching you is not as severe as escalating

so escalation will have far more importance >> what about the impact on foreign markets very quickly and how that could spill over to the u.s., or is the u.s. a safe harbor versus a china down 2fro? strong, and china is verya iffy you and i discussed off camera before we began their currency is in a rather difficult spot. their banking system, they're putting extra money in there are people who are writing that off saying it's small internal stuff, but china and some of the other banks are there and let's not forget the importance of the quarter. as this quarter ends, the central banks around the world are going to be less accommodative, and the governments around the world are going to have to find a new buyer for the debt they're bringing out that's going to make us all more vulnerable >> art, glad to have you back. art cashin key labor decision being

handed down over at skoecotus today. back to eamon javers >> the municipal employees unior not those unions can collect mandatory dues even from state employees who are not members of that union mark janus is an illinois state employee, not a member of ask me, objected to the idea that ask me was collecting dues from his paycheck on a weekly and monthly basis. so he brought the case to court. the court here deciding ultimately that mark janus is right and the previous supreme court precedent will be overturned now that precedent had allowed those municipal employee unions to collect those -- what are called agency shop agreement fees here's what the court is saying here we conclude that public sector agency shop agreements violate

the first amendment and abo abood errein concluding otherwise. it is reversed and the case is remanded for fther proceedin consistent with this opinion so that means a 1977 supreme court case that allowed those public sector ns to llect those dues from nonunion members en overturned by the supreme court. this is a loss for unions and a big win for people like mark janus who decided they didn't want to participate in the union in their workplace and pay what amounted to in mark janus' case, $45 a month napt was the small amount of money but it's made a big difference here at the supreme court today. >> what a consequential week for the court. >> meantime, harley-davidson, the latest manufacturer to announce it will move some production overseas in response to the white house trade policy. morgan brennan is outside a plant in kansas city, missouri, set to close by the end of next

year morning again, morgan. >> good morning, carl. it's been a rough road for harley declining demand in the u.s. for years now. even last quarter you saw retail sales drop 12% here in this market and now, as the company is increasingly betting on expansion into international markets to stoke a turn around, you've got all these headwinds from trade and tariffs so harley still makes many of its motorcycles here i want to be clear on that point. including the motorcycles that s that is not changing but in recent years that has also expanded its manufacturing footprints to brazil, india and later this year a new factory coming online in thailand. meantime, here in kansas city, this factory behind me is set to close based on an announcement from the company earlier this year, next year in 2019. and the company has said in the past that is really due to the slumping sales here in the u.s we caught up with an employee.

he's been working here as a welder for 11 years. as he was getting off the nightshift to get his take on this factory's closure >> i was told a lot of it is some of the stuff is going to india. i really don't know, but personally, it's an amican icon we're supposed to be built here and everything and so, really, we should just continue regardless of how much money they can save because, you know what, when you're number one, that's all that counts >> now president trump has linked the scenario that's playing out here in kansas city to the opening of that new facility in thailand, and he's pointed to them via twitter in the last couple of days and said this is the reason why this decision by harley to move some production of those motorcycles an excuse.the eu is really just harley is not commenting on

that based on its s.e.c. filing earlier in the week where it granularly detailed the impact of those retaliatory tariffs in the eu on its financial prospects, i think it would probably contest that. that set, for workers, it is all interconnected d regardless of why you're seeing these moves of more production overseas, for hundreds of employees here, like marty, what all of this means essentially is that they're no longer going to be working for a company that for many of these employees is beloved and for which they havsupported. guys, back over to you >> morgan, that's a good setup for our next discussion. morgan brennan in kansas city today. the criticism of harley not the first of the president's barbs against corporate america as you probably know. we've seen tweets attacking amazon, boeing, apple, nordstrom, merck, all major companies that have formerly been in the president's crosshairs joiningous how that impacts investment, former chairman of

cnn and bill george the former chairman and ceo of midtronnic and hbs professor. good to see you both this morning. bill, "washington post" has an interesting piece on how the prident feels personally betrayed by harley what do you make of this sort of rift between two parties that seemed to be much aligned earlier in the year? >> i think harley has to run a global business. they've been seeing ining sales in the u.s. for seven or eight years. and they've been contemplating this for at least three months and the thailand move was the first to move away from kansas city the steel aluminum tariffs probably were the straw that broke the camel's back they have to go this way they have no choice. they have to run a business. it was just with a large group of global ceos they're all thinking the same way. we have to run our business. they may be great with the tax cuts, great for the easing in regulations. but they'll run their business

what they have to do to be competitive. this is a great global company and they'll continue to be great. but unfortunately, you can't make everything in your home market you have to have production around the globe true for autos, true for my former company medtronic i don't know many companies that don't think globally about their supply chains. the great thing about these amanompanies, we're winning in the global markets. more important is the ip protection and ensuring we have market ip protection and we have market access. that's what they want to see they do not want trade wars. i can tell you it's not just harley it's all the ceos i talk to. >> how much do tariffs play a role in a company's decision to move its manufacturing and is that a real concern or is it more about cost of employment, cost of manufacturing? what figures into that decision? >> david, i think it's huge. the stand-alone tariffs are going to put a big threat on them and the tariffs to china

which i'm pleased secretary convinced them to backf from buw whether that's coming or not and the fear of that says they have to get out from under that. i'm sure the autos are thinking the same way that they do note tariff wars and they can't be in that position and these european tariffs on harley, 41% just mean that they can't be competitive in the european market. trying to get to lower cost vehicles because that's what the european market wants. and i think that's a huge thing. >> walter, what about the argument that the president would probably give that i'm playing a longer game trying to fix some structural problems and i just gave you tax cuts, by the way, which are another way of leveling the playing field here do midwestically >> i agree i'm down here in new orleans i'm watching the fact that just a few blocks from here in the port of new orleans, metal exports and imports have gone down 50% in the past year.

soybeans down 20%. this just isn't harley-davidson. there's a wonderful company run by somebody i've admired my whole life, jay lepair right here in new orleans. they make everything from conveyor belts to trip healing equipment. he says everything i hold. they can't get the metals. they have production in shanghai as well. the uncertainty causes things to be put on hold you look at pipe and steel companies here they're laying people off. even small businesses, one of the small businesses happening right behind me is micro breweries. two of them have stopped right now because they can't get the metal and aluminum to do their distilleries so uncertainty and tariffs are already significantly hurting businesses right her new orleans. >> walter, wanted to ask about

the twitter attacks specifically andrew, the ceo of dow chemical, told us last year when the president used to still hold ceo council meetings at the white house, this was the most pro-business president that this nation has ever seen can he still be that to business executives when he is tloe threatening a company to be taxed like never before on twitter? >> there are three or four things in that one is the notion that a president would single out companies. we talked aboucrony capitalism we've talked about the need for, you know, a pro business administration to have an even playing field. when you're doing this as personal on twitter, that not only leads to uncertainty but it und undermines the basic advantage america has which is a rule of law in the playing field deep in the bones of donald trump is an instinctive an-trade feeling

he just doesn't like globalization. and he ran on that platform. so we shouldn't be surprised, but, of course, it is now really hurting business >> walter, bill, wish we had a little more time for this one. we'll save it for next time. good to see you bethltern and b. when we come back, we're going to talk between disney and comcast. bidding war over fox assets. even this morning's news, conagra buying pinnacle. it's on track for a record citi's co-head of global m&a is going to join me next. ♪

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time for our etf spotlight we'll turn to jackie deangelis looking at oil today >> energy certainly in focus this morning after u.s. crude prices spiked almost 10% in the last week alone. think about that for a second. notice how much more wti has moved in a week than brent has the moves higher are not all opec related also a contributing factor, the iran news yesterday that the u.s. surge allies to cut imports. and consider the technicals. he levels have been breached that tends to strengthen the up side momentum. inventories are drawing down as they typically do during the

summer because demand is higher. more upici side to come. last night's numbers showed a drawn down of 9 plus barrels meantime the energy stocks are seeing a boost from this the etfs all higher today. the xle, xop, oih are collectively covering exploration, drilling, servicing, gains across the board, guys. >> thank you, jackie we're only halfway through 2018, but m&a volume in the u.s. set to hit a record. already topping a trillion dollars. here to shed light on what's to comehis year asmark the halfway point is mark schaeffer he always joins us at least once, maybe twice a year oftentimes you're a sober voice, i will say, in terms of, hey, don't get too crazy here but you think this has legs. >> i'm smiling >> on recorde. numbs are up dramatically as

you talk about bo in the u.s. and globally. and it's really driven by the big deals. you are talking about three times the volume of last year in the first half of the big deals and almost double the number europe's recovered we talk over the years about a $500 billion gap europe's comeback. the moment sum broum is broad b. >> what's pushing it is it macro or is it really much more specific to sort of the fundamentals of reach industry >> i've come on and we've talked a lot about macro. i think this is more fundamental. you look at tech innovation and disruption and the need for scale. look at the faangs >> look what netflix and disney and comcast are trying to do >> exactly i think it's driving it in a big way because of the disruptive aspects. how you capture it, analyze it,

how you utilize it, distribu it and i don't think the futurists talk about the markewon. i don't think that's going away any time soon. that and the need for scale in an environment where you have good ceo confidence while they question how long this sort of bull market is going to run. the markets are benign and capital availability you raised $100 billion in broadcom so a lot of factors that i think will permit this to drive. i'm not discounting macro because i think i was watching some of the stuff here today around cfius and around trade. there are realotential impacts but at least at this point we do feel decoupled from short-term fluctuations in markets. >> you mentioned the disruption, but the apples or the googles or amazons of the world, amazon, to be fair, they did the whole foodal they are named all thee of doing the big deal they don't seem to me to be in

the crosshairs of the potential huge acquirers >> they sort of had to because through organic growth and through their business models, they've been able to do things that others haven't. obviously, amazon did, whole foods. will that change and will we see it down the road i'm not smart enough to know that but the companies around them have had a look toward things like scale and for -- how do you counter the threat? >> you mentioned broadcom in terms of the financing you guys were able to raise. qualcomm that had to be one of the weirdest thing you've ever dealt with, ending as it did with cfius. is that a threat in the future we're seeing the changes today in terms of investment you dealt with it first hand in terms of a -- well, now what's a u.s. acquirer but was then a foreign acquirer and does china continue to sort of sit there and say no, we're not going to let deals happen >> ultimately it's hard to know. somewhat speculative in nature

but i think the trade issue coming back to macro is real i do think regulation, particularly if it's used as an element of trade policy becomes problematic for -->> but you'res at this point or the board say, let's put the brakes on? >> if you have business in china given what's going on and people are raising issues i think in certain sectors like semis, hard to see how you, at the moment, how you get and think thatl get it done because the other thing that's happening is you see the -- for these highly regulated transactions -- >> they take forever >> the time frames have lengthened out to 18 months to two years. that's problematic in my view. >> but not enough to stop what you're talking about right now as the fundamental desire and need of companies? >> i don't think so. there's a timing issue if we get some clarity around trade over the next several months, that would help a lot. zte in that sort of political football and other things.

but i do think it's just a fundamental transformation of the economy and i think basically ceos and boards are doing what you'd expect them to do to -- some of these threats are existential. in some cases it's defensive and others it's trying to get aheade we see it in so many business models self-driving cars. cutting the cord in our business, payments. this is real it's not going away. >> we don't talk that much about private equity but it's worth noting they have a lot of what we call dry patterns a lot of money sitting there are they ever going to use it? >> i think they've started to. we think there's about $3 trillion in terms of buying capacity we are seeing -- clearly seeing an increase in lbos which is not unhelpful. i think they'll use it the valuations have come in from 17 still highly valued. premiums have come down. part of that is value. capital availability which is quite good i do think we'll see an

increase >> these leverage ratios keep going up conagra, comcast at&t did any concerns there >> you know, look. again, hard to say in my vie we're in a good environment. as leverage levels tick up, you'll start to wonder it's been health far and again, in this market, i don't talk in my own book here but i'm pretty conservative.is is prett as i've ever seen it >> mark, thanks. >> global co-head of m&a at citi as we head to break, let's get a check on where we stand. in the markets, a nice rally going on the dow up 200 points, 213 exact. boeing and kaert pillar leading the action there s&p up 0.6%. ghl industry groups are higher rit now. "squawk on the street" will be right back

good morning r cnbc news update

>> national security adviser john bolton meet with vladimir putin in moscow. they've agreed to a date and location for a putin/trump summit the announcement will be made tomorrow >>s mattis mt with xi jinping in beijing president xi called relations between the two militaries a model component of their overall bilateral relations. north korea denuclearization was expected to top their agenda prince william arriving in the west bank to meet with palestinian president ma mumd abbas. he was greeted by an honor guard. the prince is the first member of the british royal family to pay a visit to that region and here at home, one of the most expensive homes in california history is up for sale sun microsoft's co-founder mcnealy is selling that palo alto mansionor $98.6 million the four-story megahome has

32,000 square feet of living space. it consistents of 20 rooms, including a spa, a full gym, asketball court and what home would be complete without an indoor ice rink actually, you could get four families together, split it up and you'd never see each other it would be fine you're up to date. that's the news update this hour carl, back downtown to you >> sue, thank you very much. sue herera when we come back, conagra reaches the deal to buy pinnacle in cash and stock. take a look at ge. one of the s&p's leaders up more than 4% right now on its second day out of the dow ckn miteis up 216. ba ia nu alerts -- wouldn't you like one from the market

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welcome back i'm sara eisen here with carl quintanilla and david faber. stocks are near session highs. good rly going on. dow up 226 points.

s&p up 19. the nasdaq up 0.5% groups like energy are leading oil prices are higher right now. just got a drawdown in inventories. also with the geopolitical tensions off the u.s. supposedly telling allies not to buy oi iran. that's given energy a joellt he. it's a better trend to the market instead of going for a hard-line tactic to block investment from china and other places into the u.s., they're going to expand the powers of this committee called cfius inside the treasury which already approves deals in the interest of national security >> having some m&a this morning doesn't hurt >> right conagra, although the stock getting hit today. conagra buying pinnacle foods. $10.9 billion deal in cash and stock. figure includes student debt the per share price coming in at

68 conagra and pinnacle had already been higher leading up to this deal could be a bit of sell the news because a lot of it had been broken by news outlets, including cnbc.com they are combining two portfolios, mostly frozen food which has been a bright spot within the overall food sector in groceries but we have talked so many times about food deals now everybody is wondering what's next. cra kraft/heinz is on the lookout. >> they want to do a deal. nobody wants to do a deal with them somebo wants to dance, they're happy to do it they'll do whatever you want >> this sector, the domestic food companies can grow. campbell's has all sorts of problems with it there may be cost synergies there. >> campbell is the one people are focused on >> smucker a lot of people loorking at. >> whether or not the board and the family, of course, the family that controls over 37% of the stock at campbell makes a

decision we'll see. >> they've got a board meeting this week. today. >> yeah, they do and they'll make some decisions there in terms of potent yelly hiring bankers officially. but we don't know what's going to end up with campbell. many believe they'll not move to a full sale of the company as for this deal, you never as an acquirer like to see your stock down regardless of whether it's been up over the last couple of weeks. you don't like to see this kind of response in the stock market period you're right, of course, pinnacle, there had been hoped among shareholders you'd get a number in excess of 68, in excess of 70 jana was in there. and it appears there was somewhat successful in talking them down saying take this number cash and stock they get an opportunity to participate in potentially the benefits of this combination itself and midsize companies need to get bigger in scale and be number one or two. >> there's a number of factors

you have this retail war playing out in the grocery space with amazon and whole foods combining. amazon buying whole foods. they've offered all sorts of deals and discounts. now kroger and walmart squeezed their margins further. that puts pressure on packaged food companies at a time when they're not resonating with millennial consumers they've missed the trends, and it really goes back to a lot of the cultural problems at some of these package food companies they buy these smaller, faster growing companies and don't integrate. some of ths learned. anon't keep the lessons on board so it's very bureaucratic. conagra has been a standout in that respect they moved their headquarters from omaha, nebraska, to chicago, despite the tax incentives that nebraska was offering in part to address this cultural change and they've managed to revitalize the frozen business the question is can they compete as these smaller brands continue to gain share and private label as well? >> right >> dow up 275 now.

only mcdonald's in the red automakers are warning the white house the tariffs could drive up the price of cars by nearly $6,000 our phil lebeau is in chicago watching all of this morning, phil. >> morning keep this in mind. the average vehicle bought in a dealership last month, about $32,500. that's the average price paid. according to the alliance for auto manufacturers, which is a trade group of all of the do mefidwest -- domestic and forein automakers the average price for a vehicle in a dealership will go up nearly $6,000. that in turn will lead to 1 million to 2 million fewer vehicles sold and ultimately to 195,000 auto industry jobs being lost here's the ceo of auto nation talking about just how damaging he believes auto tariffs would be >> automotive tariffs will make

steel tariffs look like a company picnic where everybody is kissing and hugging this will unleash if it comes about, a real trade war because the numbers are so much bigger >> you want some numbers to look at consider this. we're on pace for our fourth straight year of auto sales above 17 million vehles. that's if the pace of sales this year continues to hold up. this would be the fourth straight year with 17 million vehicles we'll look at the domestic and then at some of the european automakers remember that this is an industry that is already grapple with the fact that we're eight years into a growth cycle, far longer than people expected in terms of the auto industry andw. so if you think that we're going to see a down turn and then yous the concern and that's the reason why you -- especially the european automakers. look at the pressure they're

under because people are looking at the tariffs and saying, this would be incredibly damaging to business here in the united states >> phil, would used car prices benefit in a scenario like that? does that give a jolt to that market >> i bet there would be people who say i'm not paying $600 a month for a new vehicle. can i pay $100 to $150 less a month? and that's why people decide to buy a car. how much can i afford per month? and if it's $100 to $150, which is generally is to go used, you'll see people go from the new market down to the used market that may push up used prices a little bit, but there's a lot of volume down there with all of these vehicles >> finally, you put, i think, he was talking bmw and mercedes together they manufacture -- they assemble about as much in this couny as they import >> yeah. and more so. you're looking at between the

two of them, back of the envelope math, about 900,000 to 1 million vehicles assembled here in the united states and most of those are exported primarily to china but to some other markets as well vecles from here in the u.s. >> so, phil, my question is, can the president's plan work? if he does impose those tariffs, are we going to see a whole lot more investment and manufacturing facilities from the europeans in this country to sell their cars here >> i'm not sure how much more investment you will see from the european automakers. right now they are primarily selling suvs in the united states that are built in the united states. you're look at about 500,0 german automobiles that are imported to the u.s. those are high end sedans. i'm not sure that you'd see, let's say, bmw bring a plant over here to build just sedans the sedan market is slowing down it's somewhat limited volume and so i think they would think twice about whether or not they want to do that.

>> right phil lebeau, thank you for that. so much going on in the automotive space this was the best gain for ree weeks ago.p sie about don't go awa

small cap stocks just did something that could point to a big market rally for the second half of the year tradingnation.cnbc.com more "squawk on the street" coming up.

welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! save up to 15% when you book early at hollidayinn.com let's get over to rick santelli for the santelli exchange this morning. hi, rick >> good morning, carl. i'd like to welcome dr. john silvia thank you for joining me today >> sure. >> listen, i'm going to throw a curveball at you i love cars. i love everything cars and phil lebeau's great at giving us news on cars he just said that one of the groups, one of the auto groups,

car alliance of automobile manufactures thinks 5,000 to 6,000 additional, for american cars, should all these tariffs and everything happen, god, that seemke a bigber. you probably haven't read the study but jennerically, is this just the auto association trying to negotiate the negotiator? >> well, i think, again, as we've learned over the last year and a half, trump is a negotiator he throws something out. talks about it and expects some response from thside also, i think there has to be, again, pick up on phil's comment. a lot of the suvs sold by foreign manufacturers are actually manufactured in the united states to the u.s. market there should be some margin in terms of profit margin there so you know, when i look at that versus the high end sedans, there may be more price stick sticknestic stickiness in the high end sedans it's going to be difficult to raise prices significantly

>> let's go to something i find interesting. we have our humphrey hawkins where we get these biannual testimonies on both sides of the aisle by our fed chairman. bank of england has a biannual stability report that was the b, italy, merkel's coalition, emerging markets, volatility, they didn't mention anything on the tariff issue because it probably didn't meet when they were getting this together my question to you is, if we are going to deal with trade, we look at it like our economy is doing good everybody else we're trying to compete with is not. it really is an exceptionally good time. >> well, i think the challenge from the euro community and even in the uk, when you look at some of their recent data is, their economic growth seems to be slowing down relative to what was expected three or four months ago so yes, they're in a position where if there is a negative impact because of trade, it adds

to an already slowing economy in the euro community, as well as china. so yeah, they would fight. but again, it goes back to your earlier point if we're negotiating give and take, there's an incentive abroad to say we need to give a little bit on trade so we can sustain our economic growth. actually we may be in a pretty gotiations here. terms of >> now, another story, and rightly so, the biggest story of the last 24 hours, is maybe the whole cfius move versus the micro management style of looking at one offs with regard to who can do what, that can be a negotiating tactic as well this president may have taken good copadop in the know cabinet, not in the know cabinet member to a new level. your final thoughts? >> absolutely. i think that's exactly what's happening. he's a negotiator, throwing out ideas, he's playing a versus b and we'll see where it goes. clearly, next month, in july, we

get 4% plus economic growth for the second quarter, that's a pretty strong number no matter what >> thanks, john. you're always interesting to discuss economic issues with and look forward to our next talk. back to you. >> rick santelli, thank you. let's send it over to jon fortt with a look at what's coming up in the next hour on "squawk alley. good morning, jon. >> good morning. the executive branch about to take a stronger hand when it comes to what china gets to invest in when it comes to the u.s. tech especially. what does this mean for the tech industry we will dig in coming up on "squawk alley. you're gonna do great! thanks, dad! break a leg! aflac?! not that kind of break. oooh! that had to hurt.

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welcome back to "squawk on the street." i'm eric markets near the highs of the day. energy the top sector as oil prices extend their gains but industrial stocks standing out to the upside. among the names higher, caterpillar, boeing, up by more than 2% today. take a look at shares of ge, up again today after its 8% gains yesterday. ge on pace for its best week in three years. now i'll send it back downtown to you guys. >> all right eric, thank you very much. indeed all s&p sectors are energy, industrials, materia ing as eric said

the vix below 15 and the 10-year around 2.85. oil the other big story surging adding to earlier gains after the eia reported a 9.9 million barrel drop in weekly inventories, the biggest supply drop all year long coupled with the iran news yesterday and 7258 happens in a hurry. >> catapulting the price of oil and the highest sector to the top of the s&p just like we saw yesterday. coming up on "power lunch" today, at 1:00 p.m., believe it or not europe is rationing its beer at the heart of the summer season and the world cup, what's with that? what does it mean for the stocks we are going to discuss it and the analyst that's betting big on amazon, new $1900 price target, will be on to make his case >> all right we'll see you on power. >> when we come back the latest on the president's fight with harley-davidson. markets hanging on to healthy gains. best gain for the dow and s&p in almost a month

"squawk alley" starts in a few minutes.

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wall street and "squawk alley" is live. ♪ ♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with jon fortt. morgan brennan is with us from a harley-davidson plant in kansas city a lot more from morgan later this hour. first up, though, this morning the trump white house announcing a pivot in its approach to restricting chinese investments in the united states our kayla tausche is in washington with all the details. hey, kayla. >> hey, carl the administration decided to forgo investment