red rum. let's check out oil. >> just relax. >> just relax. >> i'm relaxed. >> we're taking care of this. >> thank you we'll see you again. >> set your alarm. >> yes. >> make sure you join us tomorrow "squawk on the street" is next ♪ good morning welcome to "squawk on the street." i'm david faber. we're live from the new york stock exchange let's get you started with a look at the futures. you heard joe talking about it we're looking for a lower open this morning european markets, well, they

haven't been faring particularly well lately. nor have the emerging markets given all the talk of tariffs and trade wars you can see italy, the largest looser thus far this morning ten year note yield. crude oil moved up, of course, over the last few weeks. you can see it there is the 10-year note yield which has come down. let's get to our road map this morning. it starts with the stocks. they're on track for what ameers to be at least a fairly sharp drop this morning on the first day of trading for the second half global markets, also, pulling back, as you saw amid the rising trade tensions president trump has a message to europe. you're as bad as china the eu warns washington against imposing new car tariffs and dell on track to be a public company michael dell will join us this morning. stocks are poised to open the second half of this year in negative territory adds trade

tensions continue to heat up between the u.s. and other major economies. heading to the first trading day of july. the dow had a first half decline of 1.8%. the nasdaq, of course, the strongest performer by far of 8.8% and i would guess, mike, faang is a significant portion of that overall index. is it going to be where investors continue to hide the second half. >> especially the f and the n. -- not the f the netflix and amazon doubled it's an uneven market. you're seeing the market clench up each time we get the volleys of tariff threats, the market reflexively goes negative and tries to recover what is weighing on the market right now is just the ongoing nature of it there's not a process. there's not really a patience to

see any negotiations develop it's about it seems as from the president the aggression is the point right now. and he thinks it's going to bring the other side closer to him. >> on july 6th,tariffs of $34 billion go into effect and re--l there is no longer a threat or aggression these are real world taxes that are coming back and forth on u.s. products and foreign products just yesterday canada's tariffs from the united states products like ketchup and chocolate and caffeine went into effect. >> chocolate nobody told me about chocolate >> you're not canadian you won't have to pay extra. >> good. the food companies have closed their factories in canada. they produce it here and then send it north of the border because we're part of nafta.

but now all of a sudden that's going to be taxed. so things have gone from bad to worse, as far as the tariffs and i think what is notable is that the chamber of commerce is weighing in this morning this is the biggest, most powerful business group in the united states, and they're not happy with the president's trade strategy in fact, here is the statement, which spoke pretty loudly. the administration is threatening to undermight be the economic process that it works so hard to achieve we should seek free and fair trade, but this is not the way to do it we've had mr. donahue on many times. >> yes saying a similar thing the president's comments in an interview this weekend, i think, specific to auto tariffs. >> yes. >> and we saw that with a tweet few weeks ago, of course, the idea of a 20% tariff on european/german makers of automobiles. not there aren't others but that's the major market. he seems committed to that being his key weapon. >> so a lot of people ask when

this becomes a trade war when does it go from a skurmish to a war investors are saying the carps it's a new level and i think you have to look no further than what the european union is commenting on the very topic. they put out a response to the commentary -- to the commerce department in terms of open comments saying this risks as much as $300 billion worth of u.s. products. in terms of retaliation if they go forward with the auto tariffs. now we're talking about a fifth of all us ex-ports. >> yes there's a threshold where it becomes a little bit too much for investors and business leaders to shrug off that might be it it might be the car trade. i think the context matters a lot. because all of this is going on when international economies have kind of rolled over a little bit in terms of growth

rates. the emerging markets are struggling the fed is tightening. and all the stuff is offsetting what we thought was great u.s. economic momentum. the momentum is there but its blunting its effect. are we squaurnndering the period where we could have had all cylinders firing in terms of growth and trade will gum it up. >> absolutely. >> or one of the things. >> look at gm's statement. like many of the automakers and said it's going to undermine our competitiveness, risk u.s. jobs. can the administration go forward? >> national security grounds to declare these tariffs. >> he's got the act. you know about this? >> i did read about it. >> axis is reporting that president trump has a bill that would make the u.s. not have to comply with the wto, world trade organization, which governs free

trade and includes 164 members that the u.s. helped create. instead, he would have even more power to unilaterally impose tariffs and go ahead with this stuff. >> there's continued murmurings of us leaving the wto. >> the white house saying it's a text of a potential bill that was, you know, drawn up at the president's request. and we'll see. >> wilbur ross toldus it was premature. >> united states fair and reciprocal tariff act better known as the f.a.r.t. act. >> will you stop saying that >> i'm talking trade, david. >> we'll get to dell in a minute first, phil l.a. bow he'll be ready in a minute. >> i'm ready >> reporter: i hear you. >> hello, david.

if they come to me we'll go over the numbers from tesla announcing q 2 numbers tesla saying it delivered 53,059 vehicles in the second quarter that's more than wall street expected most on wall street were expecting the deliveries around 50 to 51,000 all though, they were all over the place in terms of their estimates. so this is viewed in a positive light. we talked about the deliveries of the model 3 hitting 5,000 per week for the final week of the second quarter hitting the target the company had set there. total model 3 production came in at 28,578. that is a smidge more than most people on wall street were expecting. but perhaps the most news worthy item in the announcement on quarterly deliveries from tesla is the company saying it expects to increase production of the model 3s to 6,000 per week by late next month. the company reaffirming the

guidance to be positive net income and cash flow positive in q 3 and q 4. those are the numbers from tesla as well as a little bit of guidance from the company in terms of cash flow positive and profitability in the third and fourth quarter. >> they worked hard to get there, phil. we know that the third assembly line under a tent, i guess. yes, that got them there, huh? >> reporter: well, yeah. they didn't have it, they wouldn't have made the 5,000 per week and veterans of the auto industry they're having a field day with it saying that's not how you sustain production it's not going away, david they are bursting at the seams every month. >> yeah. >> how about the shade thrown by steven armstrong of ford on twitter. making fun of making 7,000 cars in seven days. he said 7,000 cars in about four hours. love ford. >> reporter: he's got a point. ford's production is far more

efficient and this is nothing compared to the giant automakers i should point out, i mentioned it this morning, people who saw that, i talked to one person who said that's fine where is ford's market cap now what has ford's stock been doing? clearly the tesla investors are going to fire back at anybody who takes a shot at them. >> yeah. phil, thank you. let's get to other important corporate news we got this morning. dell is going public again the company will be buying out or offered to buy out the tracking stock of the cloud software unit vmware dell has a stock that has been out there tracking the performance of that. holders of the tracking stock will be able to receive $109 a share made up of a cash for roughly 41% or so of that. yeah, 41.4% of that. and the remainor in newly

creately dell technologies class c shares we'll have an exclusive interview with michael dell. of course, the man behind this continues to be the majority owner of the dell technologies itself as it will become a public company. all though, in some ways it has been as a result of this tracking stock being out there certainly forced to file financial disclosures and the like it is said, mike, to be simplifying the capital structure of the company to get people some sense here. vmware is declaring a dividend it's a beneficiary of tax reform they had a lot of cash overseas. they are paying at $11 billion dividend $9 billion is going to dell. dell is using that $9 billion for dvnt the tracker that has been dramatically trading at a discount to the underlying value of the vmware. and that's one reason why they wanted to attack it.

frankly, they'll benefit from attacking the discount giving some of it to the holders. but taking some of it for themselves another $2 billion in dividends will be paid to the 19% of vmware shareholders out there. >> correct. >> i want to make that clear but this does effectively make dell a public company. it's funny because given how long it's been private for a number of years, you forget how enormous this company is i mean, we're talking, you know, about a company that will have roughly $70 billion equity value. equity value along that's before debt they paid down about $13 billion in debt. 82. billion in nongap revenue. cash flow from operations of $7.7 billion so it operates in a peer group, i guess of ibm and oracle. >> microsoft they run up against hp in some areas. it includes emc. >> yes includes emc. >> at 81% of vmware, as well.

>> yeah. it's a huge kind of enterprise technology services and software company. really on the scale in terms of revenue pretty close to ibm. i think you have to be talking about the very biggest technology how it gets valued within that based on what the sustained profitability will be and the growth rate, their growth rates have been very good at dell. >> yes. >> and they are pointing, you know, in terms of in the deck -- dive in on the call. they're pointing to fairly significant growth rates, as well, continuing consolidated nongap revenue growth. they see year over year of 17% consolidated at and dat growth part was due to the need to potentially reduce debt even more significantly as a result of tax reform no longer allowing a level of interest payments to be taxed deductible. of course, given a highly debted company wouldn't be good

more has been made than justified, they said but this does take a company public that its founder and ceo has said many times he wants to be private do we have that? take a listen. >> i don't have any plans to do that we're enjoying being private and, look, we get to take risks and be bold and not think about the short term and it certainly is working quite well for us. >> there's no question that the technology industries is characterized by the sort of changes and, you know, companies have to adjust this is a change or die business we know that. >> positive thing i can tell you is that this administration, this president is focussed on growth and creating jobs. and i see that as only good news >>well, that was a lot of

different things from michael dell, including his desire in' 14 to stay private it appears that dvmt needs 50% of the holders to agree. some telling me it's not necessarily in a natural shareholder base given a lot of these people were tracking vmware but it will continue to potentially trade at some discount a lot of people trying to not back into the numbers of what this will trade at versus the peer group we talked about. >> they prefer microsoft versus ee ratio. >> to the last sound byte, michael dell was part of the presidential advisory council. >> yeah. >> he was super optimistic in the early days of the administration. >> we look forward to having him on with us 45 minutes from now also, when we come back, how to navigate the markets in the second half of the year.

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futures pointing to a lower open on this first trading day of the second half of the year, as tariff concerns remain front and center here is what wilbur ross told us this morning about the impact of all of this on economic growth. >> we don't see any signs right now of any weakening in the economy. we think the june quarter will be a very, very strong quarter well above 3%, and maybe even pushing closer to a 4% annualized number. i think the claims about the sky is falling, at best, are premature and quite inaccurate. >> should investors share his optimism as we enter the second half of the year joining us to debate that is

tony craszenzi welcome. nice to see you. tony, everybody is expecting this quarter to post very good growth as the commerce secretary told "squawkbox" this morning. the question is, can it sustain itself, especially with all these tariffs ratcheting up. >> the bond market is looking to the current strength of the economy. you can say it about the federal reserve. the fed is predicting 2.8% growth this year 2.4 next year and 2% in 2020 in other words, the jobless rates are more likely to be put under pressure by looking through the data, in other words, markets are thinking that growth will move to a more sustainable pace we welcome some degree of slowing. it wouldn't be worried, though, if the tariff rhetoric picks up because it could harm confidence confidence is the cheapest form of stimulus. if the government starts to harm

it, it could be a big impact. >> china had manufacturing numbers. they were weaker over the weekend, and new orders, i think, were contracting. south korea's numbers turned lower. we'll get u.s. manufacturing numbers later this morning at what point is this going to hit the data >> growth this year nominally or globally is in the low 60s that's where it was last year. probably similar next year you have to they down the road it's not yet worrisome, if it were, you would see a different story in the stock market. it's a matter of what happens in washington in the next months. >> how do the markets set up here to absorb this? one waying of looking, we had rapid growth and tax cuts. >> there's so much data that is green. our gdp forecast for the second

year of the year is close to 4%. we were surprised by how high those numbers were regardless how good the numbers look, i don't think sentiment is the greatest i think there's a bit of a disconnect and the point in confidence that's going to drive the market yes, we're telling clients we expect high single digits for the stock market, but that being said, we have a long road to go before it feeds in the data is one thing but sentiment is another. >> 4% gdp growth second half. >> second quarter. >> second quarter. and continuing into the second half of the year close to 4. >> why what is it in the data potentially that sort of was surprising >> it's consumption. consumption data is running hot and that tends to be a late cycle indicator. so a few things we look at are squarely late cycle. consumption is one m & a is another volatility then there's a few other indicators that are indicating mid cycle. we're in the weird balance where i don't know investors know where we are in the cycle.

are we later or mid? it's actually hard to say given the data. >> where are we? >> let me hit one other point. one big driver of this, without a doubt, is fiscal stimulus. the government authorized a $150 million increase in spending in march. when does the fiscal year end? september. there's a large amount of money that has to be spent in a short time the defense department $80 million increase that's a main driver that's what the bond market, the message on low interest rates is looking through. it knows this will awane and spill over to next year. the impulse will go from positive to negative. >> it turns next year? >> 2020. >> thank you good to see you both still to come, dell's ceo michael dell, his company is moving to go public again. this after offering to buy the

tracking stock of vmware we'll talk about that and other things more "sqwkn e re,"ua othstet first, right here from the nyse. . it's willingham, edge of the box, willingham shoots... goooooooaaaaaaaallllllll! that...was...magic. willingham tucks it in and puts the championship to bed. sweet dreams, nighty night. as long as soccer players celebrate with a slide, you can count on geico saving folks money. fifteen minutes could save you fifteen percent or more on car insurance. pressure, what pressure? the players on the...

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♪ ♪ each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. you're watching cnbc squawk on the street. we're live from the financial capital of the world the opening bell in about 30 seconds from now you can hear the applause already building [ applause ] as we open the second half of the year anything you're watching this

morning, mike? [ applause ] [ opening bell ] >> we'll have more red on it at the big board. the embraced kids foundation helping kids dealing with cancer a number of things to wait on here, including earnings season which is a bit away still in terms of trying to hold on grab ahold to something in terms of the fundamentals of the market. >> this week it's a holiday shortened week we'll get a jobs report on friday thursday the minutes from the

last fed meeting today we'll get some manufacturing data one thing that we're watching here at the open and really has been trading all night, which is the price of oil after the presidential tweet intervening in the market on saturday. that was a little bit of a surprise the president tweeted out just spoke to siking solomon of saud arabia i'm asking saudi arabia to increase production. maybe up to 2 million barrels to make the difference. prices too high. and according to the president, he has agreed. >> yeah. all though i should say i'm read thing a note from jpmorgan talking about the trump confusion over oil over the weekend and it looks like the kingdom didn't make such a promise. >> it's flat holding near the highs. oil gained 8% last week. since saudi arabia and opec and the allies like russia oil has gone the other way. >> it's unclear. even if there was any kind of

soft agreement they had the capacity to ramp up supply the market is skeptical of that idea it could happen quickly or effectively. >> yeah. i was hearing that last week, as well if we believe somehow there's an unlimited supply, they have an enormous amount but at some point, even the saudis can get to a point where it becomes more difficult to produce in terms of the numbers they are now mike, tesla, obviously, going to be a future on the upside. everything else looking fairly red this morning. >> it is. >> as we kind of get into the trading day here. >> tesla up almost 5%. close to 360 it's amazing such an eye of the beholder stock. we look at the same information they're going to be self-imposed targets. they benefit from the -- self-improsed production targets over the year and now the momentum is behind it's been above 37 there's a lot of juice behind

the little move to the upside. it's amazing because even the annual production pace they're on now for total all the models about half of what they're going to do two years ago. it's amazing you can twist the same numbers any which way. >> yeah. produced 53,000 cars delivered 41,000, apparently and also 23,000 sx models in the quarter. averaged 2300 model three produced per week in the second quarter and 2700 adjusted for the two weeks of down time, apparently the shorts have been in there. they continue to wage that war. >> yeah. and it's hard to know what they're going to come with in terms of a catalyst. if they have cleared this number, i guess it's a matter of whether the company says they need to raise. >> whether it's sustainable. >> exactly. >> we'll see what they come back with. >> look at some of the first half winners and losers. i think it's an interesting

story. they're all big winners. so, yes, you have the small caps versus the dow the dow underperformance that's a trade story there's also a story of higher interest rates from the federal reserve. >> yes. >> and the liquidity that fuelled the gold market over years and years. it's slowly coming down. investors are grappling with at the same time they're dealing with the trade risks. >> the banks have struggled. >> yeah. >> you can tell starting this year the growth expectations are very high. a tax cut and fiscal stimulus that is going to accelerate an already good economy it's almost as if we've kind of

taken the opportunity to say the fed sees that as cover for raising rates pretty steadily. and the administration seems to see it as cover for, you know, getting some of these kind of trade issues out in the open and try to fight that war. so, again, you have a push/pull. that left the markets in this confused state a little bit of year to date but with a lot of variation underneath the surface >> the dollar had a 5% up quarter. that's a pretty big rise in a three month period that's a concern, again, for multinationals that are feeling the tail wind of the weaker dollar if the fed keeps raising rates the u.s. outperforms amid global trade concerns that's the view it's going to be worse for china and south korea and europe the money flows into the dollar. >> yeah. sara, we had some news over the weekend on nestle. another letter imploring the company to move faster for quick

history lesson here. it was june 25th, 2017 when mr. love first wrote an investor letter in which he also made public, basically, the large position -- large in dollar terms about 1.25% overall of nestle now they say it's an investment of more than $3 billion in nestle imploring the company to move more quickly if there's any one take away he said the manage system not moving enough. it divests less than 2% of sales despite the environment. wants them to do more and comes back to the 23% ownership. wonders why they aren't doing something with that. perha perhaps putting it into more productive use pushing them

they have been doing things at nestle he said it's not fast enough. >> they have a new ceo. >> relatively new. >> yes it's an outsider ceo a lot of investors were optimistic about that. came from a a german health care company he made a lot of deals and created a lot of shareholder value at that company. if you read the report, from love, it reminds me of some of the arguments that nelson pelts made about proctor and gamble. the company is not responding fast enough. they have an insular culture i think that exact word was used a obamacabureaucracy. i think that's why shareholders understand the arguments missing ships, failing to integrate companies they bought that are growing fast entire the culture and that sort of thing it applies to a lot of companies across the board the counter argument he owns a 1% stake in a global giant.

>> his voice is one that is heard well beyond what we expect for a small stake percentage wise. >> in a way it's telling that activists are gravitating toward $200 billion global companies where you don't necessarily have a stick. you have the public platform you can try to press for change and maybe it's going to be, you know, heard and maybe not. >> it's been the case for a long time ever since icahn came against apple. he held on to apple and netflix. he would have $23 billion in gains. >> he made out pretty well. >> he did great. >> i think he sold too soon. yez to say, of course. but just something else. >> yeah. it's a common investors mistake. to sell your winners. >> it certainly is. >> by the way, nestle is down 10%. that argues for his case, as well to your point, the company has done some deals and they're

interested in more pet food. >> i guess. >> they're trying to zero in on the pet food business, bottled water business, and the frozen business, as well. and they're trying to focus that they announced a big buy back, which, obviously, try to bypass some of the investors, as well. >> yeah. want to try to get notes from the dell conference call, which i believe concluded not long ago. of course, this morning, if you haven't heard already. dell going to be exchanging cash and new shares of dell essentially taking the company public for what is currently the tracking stock under the dvmt of the ownership in vmware. its 81% ownership. it will continue to own 81% plus of vmware. helping the transaction happen

vmware it will, of course, be creating a public equity that will be a true public equity of dells. not a tracking stock of vm or anything along those lines will be listed here on the nyse. so following the close of the deal, current holders of this tracking stock, they'll own about 20.8% between 20.8 and 31% of dell technologies depending on how many elect cash silver lake will own 24% now of deal and will be going down to what could be, let's call it 16 to 18%. and michael dell, will continue to be the chairman and ceo of the company who is joining us about 20 minutes from now will beneficially own between 47 and 54% of that stock. so, yes, public company but still complete control for mr. dell i'm sure is a force to him as he makes long-term decisions for the company. >> and a big public company,

which, in a way that was unusual it was private at this scale that the company reached now the one you can say for sure as the company is putting it will simplify things. it will make a more efficient capital structure and corporate structure. we'll see what the market prices and in terms was long-term growth potential. >> finally, i want to point out the food companies they're moving and they moved on friday as a result of canada imposing a lot of tariffs on u.s. products. a lot of them included food like ketchup and chocolate and caffeine now the analysts are going back to the food companies and looking at who ships the products from the factories in the u.s. north of the border to canada thanks to kent goldman and jpmorgan for crunching the numbers. the most exposed are smucker, hershey, and campbell's soup in terms of u.s. goods exported to canada that will face tariffs. and some of the companies have been under pressure and have come out with statements, obviously, saying they do not support tariffs.

and it makes costs a little more expensive. you have smucker with 5% of the sales. the jams are made here. >> campbell has a lot on the plate. as the board concerns any number of different things. >> it got caught with the steel and aluminium tariffs. it is already rethinking the total business strategy and soup is being taxed in canada, when it comes from the u.s. it looks like 3% of total sales are canadian but a lot is made here. >> let's get to courtney on the floor and has more on what is moving this morning. court a courtney >> reporter: hey, david. stocks lower the dow is the most pressured of the major indexes. futures under pressure all morning. you should expect light trading volume this week we have a marketened market day tomorrow the markets closed for the july 4th holiday. let's get the market pulse tech under pressure. energy under pressure. discretionary under pressure you can see utilities by about a

quarter of a percent very risk of course. chip stocks are taking it on the china. folks taking money off the table after big gains and momentum names like nvidia. the dow, of course, coming off the worst first half of the year since 2010 down almost 2% for the year. the nasdaq the clear winner. up about 9%. that could change. you look historically july the best performing month for the third quarter for the dow and the s&p. it is, though, the start of the nasdaq's worst four months of the year tech stocks may be taking a little bit of a breather the s&p has been up an average of 1% in july since about 1950 the second half of the year wrings in an inflow of retirement funds tariff talks could throw a wrench into this when we look forward this year. new tariffs between the u.s. and china. those will hit both sides on friday ahead of that and weaker chinese

manufacturing data asian markets selling off. shanghai composite down nearly 2.5% $34 billion worth of chinese goods tariffed and i want to bring it to your attention, sara, you were talking about consumers. look at the battle emerging from perry ellis. we don't talk about it a lot but now making an all cash offer for perry ellis. 50 cents more per share than made by the founder and ceo at $27.50 sara, back over to you. >> thank you we'll head to the bond pits. rick santelli. good morning, rick >> reporter: good morning, sara. a 24 hour chart of two-year note yields you can see they firmed up bit they're unchanged. look at a one week of tens, you

can see we had a drift and we're drifting tens are down a couple of basis point, that means we have 253, 284. we're hovering in the low 30s. 31ish on tens minus twos why is that important? the low closing level is 32 plus and the lowest date level from friday, just right around 30.5 we want to continue to look at the spread as it continues to trade at levels unseen since 2007 now, as you look at year to date of the mexican ten year, of course, after the election highly predicted but it doesn't dismiss the notion that things are going to be different. hovering just a bit above 7.6% as you can see on the chart, not a lot ofinfluence with respect to what happened yesterday because it wasn't a surprise you can see a similar scenario certainly we see movement on the

dollar side it benefitted the dollar nothing really of late that is surprising or jumps out. finally, let's get back to our own domestic situation i'm looking up at the dollar index. it's up half a cent. it has been pretty choppy in there. as you can clearly see on the one-year chart we're going back and retesting levels for the dollar intdex after a big drop o friday we haven't seen since july of 2017. >> getting stronger by the day coming up the exclusive with michael dell his company moving to go public again after offering to buy the tracking stock of vmware first, as you heard rick mention, mexico electing a leftist as the next president. what it could mean for nafta and other economic policies. squawk on the street will be back

mexico elected a new president, a leftist who will become the leader of the second largest economy in latin america. what is the stake when it comes

to nafta and oil investment by oil companies? michelle carissa cabrera has a look at the implications from the election >> reporter: hi, david the economic advisors told reporters his government advisor says that his government will have new economic policies. this is part of the continuing efforts to keep voters calm. he's pledged to eradicate corruption and focus on the poor, increased social spending, but despite someone who believes in a much larger role for the state in economic policy the u.s. president tweeted about the election late last night saying congratulations to andres

muriel lopez obrador >> clearly the reality is that mexico needs some sort of an arrangement with the u.s., where the vast bulk of their exports and they have a huge trade sus pl -- surplpur surplus with us, bl they have a trade deficit. so they very much need their involvement with the u.s we think he understands that and it's really a question of when will the talks resume. >> reporter: amlo also doesn't like foreign investment in the oil sector, so we'll see if he tries to reverse that reform, which only happened four years ago. >> michelle, the peso is down about a percent. last the cause of that, because he got a bigger majority

because he got a bigger majority, means he could be more extreme in his policies. there was a rally after his last speech wednesday night because he had said similar things to the economic adviser, don't worry, i'm not going to blow out the budget, i'm going to be respectful to business >> we'll see what he does. with that, michelle, thank you looking at u.s. stocks opening in the red, most groups are actually lower, the only one in the s&p that's higher right now is utilities, energy getting whacked the hardest. dow's down .68%. "squawk on the street" will be right back whoooo.

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lebron james taking his talents to the west coast. he has agreed to a four-year $154 million deal with the club. lebron leaving the cavaliers after four consecutive finals appearances. lebron japes is the numbmes is

selling sports star. they captured the whole nba basketball market for such shoes. they reupped in 2015 for one of those lifetime contracts the rumors are it was said to be worth maybe a billion dollars, nike doesn't share these kinds of details they don't even let out how many lebron shoes are selling but we know from other industries, he does pretty well. >> the man's played 239 playoff games. that's a lot of wear and tear. >> he's in the same division now. >> why are they all on the west coast? why are all the good teams there? >> you know what's fun it will be lakers, celtics setting up like the '80s again >> don't they need to sign kauai leonard? >> kauai leonard would be an addition for them that would be

quite significant. all right, we have to go, we'll talk me ri t bakordunghere if you want coming up, we have dell ceo michael dell, keep it here

let's take a look at markets starting off down for the year s&p down .4%, it's trade kern n that's been weighing on stocks global globally. >> let's go to rick santelli to get those numbers. >> reporter: we're expecting the numbers around a half a percent, around .4, it's perhaps the smallest up number of the year and it's the smallest number going back to october of last year and up a shade to only up .9

the june read on ism, manufacturing, we're expecting 58 and change, a big number here anything with a 60 handing is really big our last read was 58, and that was very solid 58 versus 56.3 on the employment component, remember with two employment data points this week, thursday and friday, that's something to pay attention to prices paid, you thinking about inflation, it actually is hotter than expected at 76.8, but it's smaller than our last look at 79.5, and new orders, basically a push, 63.5 versus our last look at 63.7 >> rick santelli, not bad on the manufacturing front. let's get to our road map for the hour, it does start with

pressure on stocks for the second half of the year. china imposing retaliatory tariffs over the weekend and going public again, dulcet to buy odell set to buy out shares. a ton of news to get to this morning on trade canada striking back against the u.s., declaring a tax on about 80 u.s. exports. amon joins us. >> reporter: that is happening in canada and the united states, we have got the u.s. chamber of commerce here in washington, launching a campaign of its own to impose an increase on tariffs. in this case, they are drawing a line in the sand here on

tariffs. this is a statement from tom donahue, saying the administration is threatening to undermine the economic progress it worked so hard to achieve we should seek free and fair trade, but this is just not the way to do it as we watch the stock market reaction to all this today, wilbur ross, the commentator was on cnbc this morning explaining that the u. that >> there's no bright level on the stock market that's going to change policy. the president is trying to fix long-term problems that should have been dealt with a long time ago, weren't and there obviously is going to be some pulling and tugging as we try to deal with very serious problems so there will be some hiccups along the way. but the fact remains the numbers

are very small >> reporter: there will be some hiccups, the commerce secretary says, but ultimately that matches what administration officials tell me privately, which is that they feel like with the stock market relatively strong, the economy very strong, this is the time to readjust the u.s. trade relationship with nations around the world, when the united states is on a strong economic footing, now they can make some progress, even if it does cause some of those hiccups in the short-term. meanwhile no reaction yet from the administration to that chamber of commerce. >> relatively strong, eamon, thank you, the stock is up what, 2% this year investwe are off session lo, it's down 123 right now, half a

percent. jim, what are investors' attitude right now when it comes to trade and how much economic damage this is going to do and how bad it's going to get? >> i think sarah, people are getting more and more worried about it as the tit for tat back and forth continues to escalate face in the second half, i think what we're really going to face is the gdp number, and we're really going to slow to the low 2s in the second half and that's not on wall street's estimate for earnings you look at the economic indexes, they're all over the place around the world now

the u.s. surprise index just went negative at the end of last week i think we're focused on fiscal simm pl stimulus, and we're experiencin extreme economic tightening. trade slows growth and raises inflation and we may have a little bit of both of those problems, a little stagflation in the second half. >> you've given us a lot do worry about. given that background of slow growth in trade, monetary tightening, how do you factor in 20% earnings growth that we're about to experience in the second quarter >> the market has got around a little bit more experienced about trade, but we are looking at an kpeconomies in u.s. that very strong, and i think we are going to see another strong

earnings season, the analysts are looking at 22% if you look at the indicators that have usually been predictive of a strong earnings season, economic surprises, they have trended down as we just mentioned, but they were still positive for most of the quarter, u.s. gdp came in earlier than expected. and for most of the quarters se have seen between 80% and 90% of those surprise to the up side on the top and bottom line, so we could be a much higher earnings in the third quarter. >> we're looking at 20% annual growth and yet not really paying up for it. basically the valuations of the market have been compressed and i w07onder what you think about the markets view of how long this might last, barrons cover saying prepare for the end of the bull market, economists

saying prepare for a slowing of the u.s. economy how does that play into an investors' playbook right now? >> we are still mid cycle and not lead cycle yet so what you're seeing is not only has earnings growth been strong, but you're finally seeing sales come back after a quarter of companies do buy backs to boost their earnings. corporates are actually spending again, we saw s&p 500 companies reduce their cap x, so one of the things we're going to be watching for this earnings season is what corporates are saying in their guidance, because that could be of concern because all this trade uncertainty actually starts to bring down number or causes a confidence shock, that's what we're watching for but actually so far so good, corporates have optimistic numbers so far. >> what's been working, u.s.

small cap stocks, u.s. bank stocks, a lot of people see those as a safe haven and that helps the overall market because they represent a big chunk of it. >> i think the bull is going to continue on this year, i think we need a valuations adjustment that might be a little more difficult forthcoming in the second half. what i would do is not necessarily leave, but i would diversify. the energies, the materials, and some of the defensive sectors that have been left for dead like staples and utility stocks in the united states i would also diversify, i would look at raising a little bit of cash, i would look at adding a little hedge fund expose yuure period of time and if we do get a correction above february lows, you could see a buy more aggressively in

the first half of 2019 >> the dow's down 107, it was down almost 200 at the open, guys thank you jill and jim when we come back, dell going public once again, buying out the tracking stock of its software vm ware, dell's ceo michael dell is going do joto js after the break. don't go anywhere. with amazing amenities like movie theaters, exercise rooms and swimming pools, public cafes, bars and bistros even pet care services. and there's never been an easier way to get great advice. a place for mom is a free service that pairs you with a local advisor to help you sort through your options and find a perfect place. a place for mom. you know your family we know senior living. together we'll make the right choice. i was on the fence about changing from a manual to an electric toothbrush.

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five years after taking the company private, dell will becoming public again, buying out the tracking stock of vm ware, it's a software unit that it owns less than 1% of. and new dell technologies class v shares are up. chairman and ceo michael dell, nice to have you hire. thanks for coming down >> nice to be with you, i missed you guys >> we missed you too now dell is going on the nyc as a publicly traded equity you have told me you prefer to be private what was the cost-benefit analysis that it was worth doing this transaction to become a public company again >> in the last year we have transformed, we have become the essential infrastructure

company, really changed the profile nature of the company in terms of our capabilities, a broad set of capabilities across the data center, software defined, everything, 85% of our engineers are software you look at our business last quarter, it grew 17% in growth, you know, earnings were up, strong double digits and this is about simplifying our capital structure and exposing the value that we have created to shareholders. >> why was that worth doing, again? i understand simplifying the capital structure is certainly something you might want to do, but why is it worth becoming a public company to do it? >> well, look, i think we went through a fairly exhaustive process that was disclosed in the 13d filing and you guys reported on a fair bid, and looked at all the various

options and came to the conclusion, along with two special committees, two independent specials committee >> right, vmware and -- right. >> that this was the best option >> the best option to do what, to simplify the cap tital structure? >> and why was that a desired end? >> it was getting too complicated. and at the same time, we have an extraordinary business, that's doing incredibly well, we brought together the best assets of the industry, we have invested heavily, we changed the trajectory considerably, and if you look at the original businesses that we started with, we have had 21 quarters in a row of growth and share in those businesses, we have been gaining shares dramatically in servers we're number one in revenue and profit, in declining business, number one in revenue growth and

service, number one in storage, there's a broad swathe of categories and then you step back and you say what's going on in the industry, and more broadly, there is a technology-led boom in investment that requires modern it infrastructure. and dell technologies is the leading infrastructure company on the planet. and because we brought together dell and emc and pivotable, we captured the hearts and minds of the decision makers in this age of 5g and it and ai, and we're winning, and so, it's a great time to, you know, do this >> it's a great time to do it because of the state of the industry, because you're in a good position to do it >> it's -- i mean you're not giving up control anyhow, but you could conceivably done okay

as a private company if you continued as you have, right >> you're right. >> is it because you will be selling 15% to 18% as a company? is that why going public is a better thing >> they will continue to hold and they're very committed to the investment and i got to tell you, i have asked them several times, hey, you guys want to sell, i'll buy them out >> they have been a partner for some time, and it's been a big investment gain for them >> everything's working out pretty well. look, we have a fantastic business here, it's doing extraordinarily well >> you would buy out silver lake if they actually wanted to sell? >> that's not the transaction that we're here to talk about, right? >> the transaction we are talking about is taking out the tracking stock, which has been

trading at a significant discount to the underlying value. but there were a number of other things you could have considered a reverse merger would have been one. why was this the preferred method >>we went through all the various options, certainly the ipo was an option, there were other options that were discussed and we concluded that this was, you know, the best of all the options. >> why, though >> it was a relatively straight fraorward app, and it was a one-step simplification, instead of a two-step simplification the option to go public was very much there, right. but then we -- you would then later, probably convert the tracking stock into the public

comment and so you create a little more complexity before you have less complexity, so if you could do it in one step, that certainly is easier >> another question is about vmware, of course you control it at 81% or so >> i love vmware >> do you want it to remain a public company. >> we want them to remain an independent public company, pat and his team have done a fabulous job of moving the business for the multicloud area, and along with the kind of turbo boost with dell technologies, with 12,000 salespeople, vmware is still in a strong position. >> so there's no plans to consolidate that as well >> we have no plans to do that >> you made the case a few years argue when you went private, that the public sometimes doesn't have the patience to wait out the kinds of

transactions the company has done you're now saying you're winning, you're winning against whom i mean who is your competition, who should investors view dell technologies alongside? >> first i would say, there's about a $3 trillion it industry and we're but a small, you know, $87 billion company, in the $3 trillion, so it's an enormous overall market space we compete with a variety of companies. when we look at our business, we measure relative share, how are we doing are we gaining share are we lyiie i losing share, w e we're about 23% of all the companies. in many cases, for example, in storage, we're bigger than

number 2 and number 3 and number 4 all combined together. and we're growing. and by the way, we look at share of the profits as or even more important than revenue or units. but i think what's happening more broadly with this technology-led boom in investment, is that the role of technology is fundamentally changing so you think any business out there, small, large, public, private, any type of business, is using technology today in fundamentally different ways than it was five or ten years ago. so the importance of data and the amount of data, with all these billions of connected devices, that are being created, that is creating kind of this tsunami of data and information, and it has to be used in real

time, turned into insights on the edge, in a distributed core and in clouds, on premise, public clouds and no company is better positioned to win in that than dell technologies and that's why we're winning against our competition. and i believe we have a fabulous future ahead of us >> the changes you have made in the companies in the five-plus years it's been a private company, should we believe somehow that you are able to do things that you're no longer able to do as a public company >> i do not believe that we won't be able to do that i believe, given the structure that we have and the momentum that we have and the set of assets that we have, that we continue to invest for the long-term. and that's absolutely what we intend to do we said it on our conference call this morning. >> yes. >> and it will be clearly repeated

so any shareholder that says we want to do this to optimize for the short-term, not to be there for the long-term, you came to the wrong company. i am the ultimate long-term investor in my own company >> you were previously, but you have more control than the last time you lost your public company. >> it was exactly 30 years ago that we went public, during the time we were public, the stock went up 13,500%. that was better than the s&p 500, don't know if we'll do it again, but we'll give it a shot. >> the last time we talked, it was january 17 in davos, it was inauguration week of president donald trump and here's what you told me then >> optimism among my peers in the united states and i think that's founded on what we see in

terms of the high quality team that's been selected, the advisory committees that have been put together as we have been involved in those discussions, and the basic agenda as a pro growth agenda, we think is quite positive >> you are pretty optimistic, so there are no ceo advisory counscount counc councils, and a lot of that high quality team has left the white house. are you still feeling optimistic >> notwithstanding those extremely optimistic point, i have seen the business environment and what we're going on broadly so what i'm looking at is the top 50 countries in the world. and what is our growth rate? first you have something extraordinary going on right now where almost every one of the top 50 economies in the world is growing. and i look at our business,

they're pretty much all growing double digits, right and it's not just large or small or medium customers and not just this product or that product, it's every product, every customer, every region, almost without exception growing at double digits. so there is definitely, again, a technology led boom in investment that requires modern inf infrastructure and turns out, we're the world's leader in that >> so you're not worried about limits being put on that from the united states and now others in the form of tariffs and trade protecti protectionism? i mean just last week, we were talking about ways to curb chinese investment in u.s. technology >> well, sure, those are conc n concerns that we all have to look at and address, they're not unique to our country. we're certainly paying attention and weighing in terms of global

trade. >> are you still weighing in with the administration even though you're not officially on the ceo council anymore? >> we're definitely weighing in with our point of view on all of the matters as it relates to trade. >> you are as global a company as it comes with a global supply chain manufacturing in places around the world how concerned are you about this back and forth, particularly as it relates to china, which is an important market >> we do have a significant business in china. china is our second largest market outside the united states to sell our product. >> right >> you know, i still take the belief that, you know, the trade, as it relates to the u.s. and china specifically, the countries are completely intertwined, it's mutual assured destruction if there's a massive

breakdown in trade, and it will be an extremely bad outcome for other countries. so i think that the likelihood of that happening is extremely low. will there be modifications to trade flows and trade agreements and that sort of thing probably so. but i think we're as well positioned or as correctly positioned as any company could be >> so like a lot of the ceos that we have spoken to, you eventually think that rationalirational rationality prevail, i guess to put it one way michael you mentioned 30 years since the first company first went public, you've been a ceo for a long time. you're still a young man, don't get me wrong, i think we're relative peers there do you ever think of sort of another chapter or are you focused squarely on remaining in this job from here >> i love what i'm doing, if somebody told me i couldn't do

this, i would go into some kind of a depression. so i absolutely love what i'm doing. >> and will keep doing it, i assume >> and plan to keep doing it for many years to come. >> we look forward to standing by and keeping you in mind as well as a public company >> thank you as we head to break, take a look at the major averages here, the dow still down triple digits, off the lows of the session, down 116, s&p is down about a third of a percent, still those trade concerns linger squa"squawk on the street" wille right back medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company.

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hello, everyone, i'm sue herre herrera, the new president of mexico, holding a victory rally on the main square of mexico city has his electors rally over his victory. rescue divers are advancing in the main passageway inside the flooded cave in northern

thailand where 12 boys and their soccer coach have been missing for a week floods have hampered the rescue efforts. firefighters continue to battle a massive wildfire in northern california that has burned more than 132,000 acres that fire is currently only 2% contained. and call him l.a. lebron, the los angeles lakers signing former cleveland cavaliers forward lebron james to a four-year, 1$154 million contract it's the second time lebron has left cleveland since drafting him in 2014. that's the news update this hour, sarah, back down to the floor with you shares of tesla jumping this morning after releasing it's quarterly production numbers, also announcing that the

automaker met it's q-2 production goals. >> it's the production numbers that really have the stocks and the shares of tesla moving higher today the delivery numbers may not match what a lot on wall street were expecting we'll start with deliveries, tesla delivered just over 40,000 vehicles, you'll see the models s and x, 23,300. but the model 3 deliveries of just over 18,000, that was below what many on wall street were expecting. why are shares moving higher because tesla achieved it's self-imposed target of building 5,000 model 3s, they did it in the month of june, and the ceo saying not only did we hit the model 3s, but we achieved a production for a combined model

3 week it's a little bit hard to see, but it was early in the morning sunday morning, that at the time, he said you met email, he said i think we just became a real car company a lot of people are focusing on the tent they built three or four weeks ago, that's where they added another model 3 production line, that helped move the company over 53,000 produced they do expect the model 3 production to hit 6,000 per week at the end of august the company reaffirming it's guidance and it expects to be profitable and be cash flow positive in the third and fourth quarter and that's why you see shares of tesla up over $1$13. time now for our etf

spotlight, take a look at the new communications stocks. the big names in communications, including facebook let's discuss this new shift that includes facebook andrew, good to see you. >> good to see you too >> let's just get the basics out of the way, so s&p indexes is making this shift, they're taking stocks from the technology sector, from the consumer discretion sector >> i think it's a huge shift in etfs, and th no different than how t-mobile with netflix, those are the kinds of things we're going to see happening and those sectors are so established and so for s&p to change that and spiders t

absolutely huge. >> so there's kind of an intellectual rationale behind saying this is now communications, it's telecome, it's media, but it's going to mean a lot of capital swinging from one sector to another kwhae what else is going to happen to effect this change >> there will be a reconstitution of the index where we'll see twitter, and index coming over. rebranding the sector will be important. when you talk about where the money is going to come from, if i were to launch this with a couple of partners, you're talking about over $100 billion in assets in these 11 sectors combined or 10, this is goinging to the 11th. and they're used by insurance companies like usaa, large asset managers, like stadium and

horizon, they use these to rener reflect their view it will technically stay in that family, but you'll have to view it differently hughes or even broad based index investing is a large view. you will be getting michael dell's new company, when it comes out. but that doesn't mean what's going on with facebook and twitter has anything to do with asia and supplying >> it's also going to reduce cosmetically, the s&p 500's overall weighting in technology, but it's still going to be the same businesses that drive the index. one quick wrinkle, the market is dominated by at&t and verizon. this is really going to change the complexion of what has been telecom? >> if you want to stay in

telecom, you will have to pick the four stocks yourself, because obviously these companies will not have the same growth index it's a condiment in the crosshairs, canada slapping a tariff on imported ketchup and other products kraft heinz produced two million bottles per day. i wonder how many of those going to canada. >> canada imposing that 10 percent tariff on ketchup, kraft heinz a big player in the k ketchup industry now has to make a big decision, do they offset that tariff by passing on to the consumer, which could hurt it's market share in canada, where it's the market leader

it own s 10% of the ketchup market french's marketing an alternative to hines, even slapping a maple leaf on its bottle to drum up canadian support. this is a long standing rivalry between heins and preferencefres now french's sources it's key tomato place from that plant in a some boymbolic move, the cn president visited the french's

plant. tells canniadians how to boycot american goods and at the top of that list is heinz a key source of jobs and growth in this small industrial town in ohio >> have you talked to anyone going in or out of there and i'm wondering because we heard about harley-davidson, similar story, they're shifting production because it hurts because they have to deal with eu tariffs, but you talk to workers at harley, and they're supportive of what the president is doing to protect the industry. and i'm just wondering in a key state like ohio what the reaction is. >> the canadian prime minister is attacking heins ketchup many of them said we are trump supporters, we agree with the broader idea of tariffs, we

don't agree with increasing the cost or the price of the product, they think that will hurt economic growth so a lot of people have a lot of views here on what tariffs mean, not just in washington, but what it means for them here in their hometown of freemont. >> i think they like the idea of fighting back, it's just, we'll see what happens when the exhibition shake out >> when it becomes personal, that's when they care. >> when it starts to hit their pocket books rjsz wh. when we come back, billionaire loeb is pressing nestle really cutting our losses here hi i'm joan lunden.

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it is the first trading day for the second half of the year, and we have got four top stocks that investors are expecting to break out. coming up, trading nation.cnbc.com, more "squawk on the street" after this

>> i have been watching the market since the late 70s and

it's very hard to evaluate the markets with so many different inputs i get inputs both inside of trading and outside of trading i'll tell you what i mean. there's many that believe we're going to have a handicap in the third quarter, and saying it most likely could continue to build on that momentum with respect to growth. we put that in one corner, what's in the other corner everybody seems to be upset, we have talked to many multinational corporations who are concerned about the dollar and those are c nrcompanies that could raise prices like tariffs. how do we reconcile it the best way to reconcile it is to go back to the real basics, a

president is supposed to be a leader, great leaders sometimes take you to places you don't want to go, but you need to go to, i think that came from rosiland carter, actually. but this president always seems to find himself standing in a puddle but sometimes we find that issues are dry and things seem to work out. at least with investors domestically, it seems like we had some record buying with respect to stock announcements in q-2 look for that to continue. but i think it's ironic that we have some leads into some of the stock indexes, it's always hard to know what's moving a market but at the end of the day, if w get a tail wind, the president should be able to pull off no damage with regard to the patient, where he's trying to leverage morte tariffs to end u with free trade.

but those who give this president the benefit of the doubt, seem to do the best back to you. >> rick santelli les send you over to john fort with a look at what's coming up on squawk going public again, elon musk seemed to figure out how to make more cars what does that tell us about the second half of the year? we'll dig intohacongp. tt mi u

big news this morning out of dell.company is going to go public once again. it will buy up the tracking stock of its cloud software unit, it owns 81%. floated this tracking stock a number of years ago as well. had a number of different options it could pursue here in terms of trying to simplify capital structure. it could have done a reverse merger, but it also could have chosen simply to go public and then incheventually done anothe traction to clean up the tracking stock

instead it chose the current transaction. and we asked dell ceo and founder michael dell why this was the chosen way to go about simplifying that capital structure. >> relatively straightforward path and it is sort of a one step simplification instead of a two step simplification. the option to go public was very much there but then you would then later probably convert the tracking stock into the public comment. and so you create a little more complexity before you have less. so if you can do it in one step, that certainly is easier >> of course you spend a great deal of time talking about the benefits overall of this company and what they have been able to do, the years that they have been private and how large they are. it is once again at least going to increase its visibility in the public markets even though

it's been competing against oracle or cisco in certainly parts of its business and others >> and when it does come out, decidedly no longer will be this sort of pc and server company that people thought of dell as and maybe misunderstood. i think it is fascinating how it will be received in terms of michael dell here saying that it is the i.t. infrastructure company, services in general so part ibm, part oracle so it is a hodge-podge of things interesting to see how the market swallows it >> and interesting that he is even more optimistic than he was. he used to be on the president's ceo advisory council says he is still making his views pretty clear on trade. and not worried about it >> and thinks like so many others that things will calm down china is the world's second largest market not just manufacturing, but selling in to the chinese market

>> and yet he is not worried which is interesting in other news, the heat is on nestle. loeb is urging to split into three divisions. he has criticized the company for a lackluster effort to revamp its strategy. over the last year, nestle has initiated a large buyback program. it has that deal with starbucks. loeb says the efforts have failed to satisfy. >> and he started this in june of '17, this effort. he didn't get that much traction unclear if terms of where things stand in terms of coming up to the board again. he did make significant changes not that long ago, but one we'll clearly continue to follow >> but like so many big food companies, and is the upshot that they are all just going to split up or just combine and get big sner because we're seeing both happening and not a lot of growth on either side.

squa"squawk alley" is up ne. the dow down 86 points

good morning it is 10:00 a.m. at dell

headquarters in round rock, texas. 11:00 a.m. here on wall street squawk "squawk alley" is live ♪ good monday morning. welcome to "squawk alley" plenty to talk about this morning we begin with the corporate story of the morning, dell announcing a buyout of the shares that track the performance of its cloud in