still sharply higher s&p indicated up 17 points or so nasdaq indicated up 49.70. we did see an employment report from adp it was a little bit light but the big number comes tomorrow. see what the president tweets. looking forward to that. becky will be back "squawk on the street" is next ♪ welcome back ♪ your dreams were your ticket out ♪ ♪ welcome back to that same old place ♪ >> good morning and welcome to "squawk on the street. i'm scott wapner with jim cramer live from the new york stock exchange futures up for this day in the markets. looks like a good one off the open, as well. dow opened higher by just about 170 points s&p would be up by 17. nasdaq by 50 so a good day shaping up on wall street take a look at what's taking place over in european markets obviously trade remains front

and center it's green all across the board, whether it's germany, france, over in england, italy or spain. the 10-year note yield dipped. a lot of focus there as well, the spread between the 2 and 10s. there is the 10-year note yield, 2.85 wti was at a little touch below that now but up by .5% we start with the energy and tech boost stock futures pointing to a strong rally at the open plus, china warning u.s. tariffs on chinese imports to take effect at midnight. china saying retaliatory tariffs will be instant. and feeling the gas price heat president trump demanding that opec must, quote, reduce pricing now. the sharp jump in futures comes as the dow looks to avoid its fourth consecutive weekly

decline. blue chips heading into today's session down more than .9% from their jan higuary highs jim, welcome back. the s&p was at 2754 before cramer left. we've given back 40 points on the s&p, closing below a couple of key technical levels on the dow and s&p. set the stage. >> i think that domestic companies, as much as people expect them to roll over, are doing incredibly well. it doesn't really even matter. almost every single one. international companies, there's a paul cast, that's lifting today, almost entirely due to autos. there are articles on european carmakers surge on reports of trump's tariffs. i think it is illusory i think president trump is unchanged in his desire to make it so bmw, mercedes are stopped even though they make a lot of bmws here. we can have a rally today based on the weirdest things in the

world. oil going higher that's negative. the idea we have somehow set is the stage for peace about autos, i with is a big market let it go up because it is oversold and because we have been down so much. but i just don't have a lot of positives about the international. i just have domestic >> so you don't think too much is being made about the trade stuff that we're worrying too much >> okay. here -- tomorrow's china i think the analysts who actually are more powerful than i've seen in a long time, are controlling a lot of the dialogue you get these situations where whether it be carnival -- which reported a decent quarter but bunker fuel is way, way up or whether it be any company that has auto exposure, although the autos are up today any company that's involved in the process. those have been going down anything that buys steel has been going down. if you want the most interesting call -- i read every call when i was coming back and yesterday. is a company called herman

miller they make the aeron chair. boom, boom, boom they reported everything great it is a great microsome. they have europe, latin america. latin america very strong for them they say, yes, steel has hurt us tariffs have hurt us that's all the analysts heard. the stock was up big but the analysts didn't believe. i many am using it as a microcosm because what i'm saying it is with the the analysts are far more negative than the companies on a kb homes call, the only big home builder with a report, there wasn't a single line item -- of course markets are up, supposed to be down. what rates hurt the business are people spending too much no the homes are okay real costs actually down and the stock's been hammered. here's what i leave you with the analysts are negative whether the facts fit that story or not and so as we go up today, you will see a plethora of analysts

saying, be careful, and they control the tone and it is amazing because there are so few of them that are positive about anything other than f.a.n.g >> stocks have their worst first half since 2010. this zigzag chart is like a road to nowhere how do we break out of that? >> if there is actually a deal on european cars >> you don't believe this report >> no. because -- look. president trump is heavily influenced by peter navarro. peter navarro is more interested in china than not, is absolutely certain that we have to stop -- good piece about 2025 in the papers today -- absolutely certain that they want to steal our stuff. like at micron micron today people are starting to say better things, that maybe it is not as important -- >> this report we are talking about, it is the u.s. ambassador to germany is said to be seeking zero tariffs on cars on both sides. that's why european automakers are absolutely ripping today but you don't believe -- >> that would be the greatest

thing. that would be a total win for our country because we have higher -- they gave us higher tariffs than we have two take away the biggest single negative in trade right now. because we do a lot more business with europe than we do with china so if this story's true, the rally's justified. but do you trust it? late wednesday reports that richard grinell, u.s. ambassador -- but did you see any tweet there was a let-up on it >> it seems as if the trump bark is worst than the actual bite. >> it causes a 10% rally in the market going right into earnings. but we got -- you mentioned the 2 and the 10 >> it's the lowest since '07 >> people decided the fed's going to keep raising, inverted yield curve, tlo therefore short

everything other than -- i don't know -- a company that's a fast food company in our country. short everything but olive garden did you see my pictures on twitter? >> why can't the market just get to the moipoint war it realizes that the bark is worst than the bike >> because you wake up and first thing you do is go to twitter. good piece today about twitter and the pushback jack dorsey posted his vitals last night i don't care about jack's vitals so much as i do about the vitals of twitter they're excellent. but i worry! i worry because of bmw and mercedes that's what i'm worried about. if they solve that problem, bark worst than bite, 10% rally 10% rally! >> july is usually good for the market >> it is the summer rally. we get the summer rally if this story is true. >> only if >> only if >> see, these trade things are not going to disappear tomorrow. >> peter navarro is not going to let china -- remember. what export to gdp, what do you

think we are, in terms of the world? 155th. 155th. i didn't even know there were that many countries. 12% -- 11% of our commerce this year is going to be exported navarro seized the moment. remember, larry kudlow is the guy who i wish was more front and center if we saw larry come on air and say i'm confident -- remember, europe not as bad. you got a real rally otherwise, you just get rallies on facebook. >> even tech even tech has had its issues lately as well >> of course micron >> tech stocks rolled over >> look at micron. >> but that's a specific issue though, right? in china >> it's huge it's huge. but like i said, i'm more worried about europe than china. because china's pretty much priced in bad. >> speaking of china, the u.s. is set to impose tariffs on $34

billion in chinese imports tomorrow china says it will promptly strike back. eunice yoon is in beijing with the latest eunice >> reporter: thanks a lot, scott. investors here are on edge the yuan wobbled the stock markets fell once again as china prepares to go to battle the chinese originally said that they were going to impose their tariffs a little bit after midnight in china on friday to match the u.s.'12:01 start time. but july 6th here comes ahead o july 6th in the united states, the chinese government decided to delay the tariffs to immediately after the americans impose theirs. so the chinese government actually issued a statement saying that china absolutely won't fire the first shot and that means that china will impose the tariffs some time around noon in beijing, or beijing time, tomorrow

and that is a bit unusual from a customs perspective. it also really shows just how sensitive beijing is about appearing as though it could be the aggressor. it wants to make sure that it appears like the innocent party, the victim, the good guy, as it tries to gain support in this fight with president trump now the two countries are going to be imposing tariffs of up to 25% on $34 billion worth of goods. the u.s. is going to punish chinese-made high-tech, among other products, and the chinese are going to strike back largely on farm goods targeting president trump's political base as for american companies in china, thecommerce ministry said today that american companies could get caught up and hurt in this whole tariff war because the tariffs would wreak havoc on global supply chains in fact, the ministry said, foreign firms account for about $20 billion. that's about two-thirds of the exports from china subject to the tariffs, with many of them

american it also said that the u.s. is firing shots at the entire world, including itself. guys >> yeah. interesting. we'll follow it. eunice yoon, thanks so much from beijing. >> she's been doing fabulous >> opening fire is what china says the u.s. is doing >> what are they trying to do? sh stop o stop our farmers? what do we do when farmers get in trouble in this country we write them a check. we've done it since hamilton i will tell you the world would take every single piece of food that we produce. the world is short food. it is not long food. it is a silly thing that they're doing in the sense that they're trying to hurt us because they -- we import -- we import a lot. they take very little of ours. but every bit -- you think that the world doesn't want our soy do you think that the world doesn't want our d rams? micron d ram prices could go up because

of the chinese way to strike back eunice is dead right, they want to look like the good guy. but i got news for them -- trump looks like the bad guy everywhere is that shocking is there a country in the world that's trading with us right now that thinks that trump's a good guy? name me that country please >> no. but you could make the case, and a lot of people have, that he's right on trade maybe the method of getting there is unorthodox -- >> he's dead right because we have been shut out of almost -- do you see the german surplus? it's obscene the german surplus is insane when i was over in europe -- look, i was over for the feed of germany in the world cup you could hear the cheers of every country on earth -- except for germany. the inability of people to process the fact that the world is flooded with german exports including china, which is why they want to play.

so i say, yes, they're right that's why the domestic stocks work but if we make a deal, german autos? what's the -- other than some semi-conductors, what? you want to short iowa why don't you short some nebraska we do the state thing going? we can short -- >> i'm still thinking it is a russell world and we're just living in it kind of thing just play small caps because that's the place to be >> the numbers are so good the tax cut works for therm. the tax cut was amazing for these smaller business that herman miller call was really instructive they do office furniture, regular furniture, real people that's what's selling. >> you still buy the small caps. >> yeah. yeah still buying and stay away from the banks until we get a little more inflection >> we'll talk about that >> we'll discuss those >> the losing streak was epic when you were gone >> it ain't over >> the dow down every day you were gone. >> but it's so cheap

who can trade at ten times earnings post recession? let's step away for just a second we'll take a siesta. the road ahead for tesla the automaker looks to shake off wall street concerns about the model 3. taking another look at futures this morning, it is going to be a strong pen dow opened higher 165. more live from the new york stock exchange when we return. whoooo. looking for a hotel that fits... ...your budget?

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tesla rising in the premarket after a 7% drop on tuesday. the recent decline coming despite the automaker reaching its production goal of 5,000 model 3 sedans by the end of the second quarter tesla has decided to skip a break-in roll testing step in the manufacturing of its model 3 vehicles all this sort of went down while you were away. >> i followed pretty closely >> what do you make of this? >> look, i think that it was really interesting that we thought we got to the 5,000 number that somehow tesla would be able to bust the shorts i'm speaking elon musk interesting debate while i was away between bull and bear it is getting pretty savage out there. i think that tesla in the end is

a company where tony saganaggi may be very right. tony had some interesting things to say you got to get him on the show as much as sometimes i get upset with tony because he did say at 94 -- >> you're talking about apple. >> i just got the new watch face, they just updated it now it looks nautical? now i have like -- well, there you go trust me i got the band, too. it's really remarkable because what's happened is this is taking everybody by storm. tony didn't like apple but he's been dead-right on tesla. i'm just saying. i want to give him credit where it's due i love tony. he know tony from my hedge fund days i think people ignore him at

their own risk he does fabulous work. >> you think the shorts are going to get the upper hand? they've been bulldozed >> well, yeah, they have been. >> it's down 10% >> it's stuck here because there are too many shorts. the longs are unshakeable. and as long as the longs are unshakeable, it doesn't -- remember, you need sellers as we know from herbalife. i still think it is a great read their book is great -- no! because you need sellers and the sellers never developed in herbalife the sellers haven't developed in tesla. you need real sellers. >> until the cold status is removed, why would you get sellers? >> there, you answered the question i have nothing more to say on it as long as the cold status -- hey, as long as your kid's still saying, hey! there's a tesla! kids say, hey! tesla! >> a buddy of mine bought a tesla.

all he could talk about was he bought a tesla. >> my 9-year-old literally wants to get a tesla 9 years old. she's talking about tesla. >> there you go. we got tired of waiting and she ended up redoing her 2002 volkswagen bug there. up next, it is cramer's mad dash as we countdown to the opening bell looks like a positive thursday for futures. dow opened higher by still 160 nasdaq by 46 s&p would be positive by about 16 more "squawk on the street" from the nyse straight ahead.

we're back seven minutes before the opening bell time for "cramer's mad dash. >> rich greenfield you know he likes to make a splash you know he'd walk a mile for a camera we do love him >> he would admit as much, too >> he's fun. he makes the game exciting he says, it's not a game, it's actually stocks. all right, so he says, in this piece about facebook, which is driving the stock, first of all, raising price target to $275 i always say, why not $279 right? but he calls instagram an absolute monster and you know what? when you do that, talking about 1 billion users per day. you just say, okay, i know facebook's losing, losing, losing, but instagram is gaining. "the new york times" had a story that someone posted on instagram

a picture, sure enough people saw it invades their privacy. right? have the "times" done that story yet? >> you remember when that was $149 and change? >> that's when we were really worried about privacy. >> it wasn't that long ago >> no. look at this all i can say is, this kind of piece is the kind of piece that supersedes every article you read about facebook in europe and facebook in commerce and facebook and the s.e.c you know what? it's instagram they should just rename it instagram. >> you think $275 is reasonable? >> no, i think it is ridiculous. i mean -- i shouldn't say ridiculous if they can do the 2019 numbers, it's possible. but $275 is the kind of thing that, it gets you on tv. >> he said he likes that >> you're right. >> tech has to work for that to work, right? >> oh, no. i disagree this is not china tech remember, the world's divided between non-china tech and china

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you're watching cnbc "squawk on the street" live from the financial capital of the world opening bell set to ring in just about two minutes' time. while you were away, we got a lot of ge news >> it's all over like a cheap suit >> they spin off health care, exit baker hughes. is that it >> i liked it. it is interesting because steve tusa was on. still the biggest bear >> still is. reiterated sell. >> in that sell call, he said listen, got the de facto dividend cut which is what will happen with this spinoff health care he has enough capital to be raised he thinks more will be raised but he got it. he was on a conference call the most polite, the most thoughtful, the most respectful i've ever heard him be, and i basically congratulated john

flannery on the bold, bold move. he reiterates his price target which is really about $11. the stock's at $13 he's thinking $11? >> because he says some of the parts are still overvalued and they're going to significantly cut the dividend more. >> they're putting almost $20 billion on the health care but i will tell you that john flannery knows the health care business better than anyone and that business is on fire that thing is going -- you want to own ge just for that. i am very worried still about power, but so is he. he's worried about -- john flannery has his arms around it. larry culp, lead director, brilliant. brilliant. >> we'll talk about it on the other side >> other side? what's that mean >> other side of the opening bell i want to continue the conversation on ge but we do have the opening bell which

you're going to hear in about three seconds' time. because you are watching the opening bell here at the new york stock exchange. [ opening bell ] >> the fraxa foundation draws attention to down syndrome and mission continues. back to ge i hear you telling me you're betting with flannery over tuesday at this point. >> i am. i just think it was a really thoughtful plan. does it really raise to $25 billion? that was disputed on the conference call. it wasn't that friendly. that's why i mentioned tusa. he was respectful. i felt like it was the conference call that most people on the call thought flannery just fell off a turnip truck he didn't. he's a thoughtful man, came up

with a bold plan and i like the plan i do think, by the way, no one is giving him any credit on the brilliance of now doing baker hughes, a ge company have you seen the price of oil baker hughes, a ge company, is what you want to do, you want to spin that off. at least they're selling it is entirely possible that oil can go up higher because we know the problems in libya, we know the problems in venezuela, we know we can't pump more. the president tweets but there's no more spare capacity oil has doubled -- has doubled what a win for flannery! look, maybe it is better being lucky than good, scott but baker hughes, a ge company -- could they lose that? "baker hughes, a ge company. what is this new york football giants, a new york football team it is not a real cut it is a move now obviously tusa's saying -- >> used word significant

>> but he said de facto. that's what i like health care, you can count that kind of as a dividend. they're all floating 20% and 80% back at a certain point -- and the culp decision is not idle, getting john brennan out i think that flannery has reached the longer term -- let's just say -- plan, provided that long-term health care is really under control, which he seemed to indicate, and if they can get their arms around power. i like that he said power is still real trouble but what he's saying is aerospace -- boeing news today, aerospace is incredible. for that smaller jet which you really need. i was on an a-300. there's like seven airports that plane can land open bar, by the way i bought everybody a drink -- but it was free! >> you are a bar owner

>> i think the aerospace is so strong that it can compensate for a lot more than people realize. oil's very good. he knows health care and health care's a great position. >> the dow's opened higher by 165. >> wait until europe closes. >> you say this is all about the auto going to zero tariffs with europe on auto >> yes europe's up big and we tend to follow europe and that's kind of what's going on. i've got to tell you, scott. i'm going to reiterate that the analysts are incredibly negative if we're going to really key on the idea that oil's up as a good thing, that's suspect. >> goldman says commodities will rally because this trade stuff's been oversold. >> they've liked commodities for a long time. that's been a not great call platinum, 10-year low. diesel engines people relate autos and commodities, whether that's right or wrong and autos are where everybody's

worried. people are worried that if you really shut down the u.s. market, that is going to cause a real decline in autos in europe. >> i want to talk about financials with you. the xlf literally had a 13-day losing streak. a 13-day losing streak >> yeah. it's relentless. all people care about is the curve. really doesn't matter how much money these companies make the curve, the curve, the curve. let's understand each other, sea car happened the outperformance of banks after sea car every year is extraordinary. let them dump on these stocks. when these companies import, they will have great commerce. yes, $210, $210 -- $210. i mean there is good pizza in pisa not kidding. but there is to me an understanding that the group has to be sold except for fintack. i watched mastercard go up at 3:30 this morning.

3:30 no, i don't trust the banks yet because there has to be some inflection why can't the fed just sell some bonds. >> when you talk about financials, we lump everything together the big banks are the ones that the stocks have done -- >> they're choking >> -- nothing. >> big banks -- >> i'm glad you're here because you're from washington, d.c. big banks have the same streak going as the washington nationals. >> that's not a good streak. >> no. i think there should be a team meeting without management at jpmorgan jpmorgan is at 11 times earnings this is insane these prices are insane! >> closed-door meeting figure out what the heck is going on >> honestly, jpmorgan's going to report a great quarter it always does great in the second half and nobody really cares right now. but watch. they can really turn the jets on >> you just said the narrative is all about the yields. that's not changing any time soon >> we don't know that. if they would go the way of

bullard, who is the most thoughtful person on the fed, and said, we got to wait here, then there would be as big a rally in the fins as there would be if this story is true about the potential tariff peace between trump and merkel trump and merkel they're buds when i was on "the apprentice," i was always -- everyone's a great friend of the president. they need to get together, merkel and trump >> they're going to have this highly anticipated nato meeting next week. >> that's important. list listen >> a lot of fireworks there. >> yes, there could be >> the risk's to the downside going into that, isn't it? >> the risk is downside every day. every time that we're involved with another country it's negative notice that. thank heaven we didn't win the

world cup. then we'd be hated by 48 countries. >> we had this big conversation about the financials, they are getting a bump today the sizzle's coming out of the market a little bit. >> that has tore short-lived because the curve. it's the autos and the curve autos and the curve. autos and the curve. >> bob pisani is watching it all on the floor, as always. he'll be there in just a moment. look, you know what's been doing well drug stocks. they're starting to get a little pep. that's interesting because that's defensive mccormick, used to be mccormick spice, that had the best quarter of probably any company in the consumer that thing took off. mccormick and estee lauder >> i'm glad you brought up drug stocks a related thing, you missed that amazon deal. >> holy cow was that bad for walgreens! >> $11 billion in market cap

wiped out of those three stocks because they buy pillpack. >> walgreens didn't help with a really terrible quarter where they were bad in the front and bad in the back. walgreens seems to have no strategy cvs is at least trying to diversify. but that group is -- remember when amazon was on, off, on, off. well amazon is on. i don't want to be in their crosshairs nothing's changed except for the fact that kroger reported a good quarter because they've kind of figured out some stuff a lot of retailers that have figured out alternate ways to be on the web and also have a good deal with azure, are doing it right. they're no longer funding their own enemy, which is amazon services microsoft's on fire here i don't know why people don't talk about it. why don't they >> we have been talking about it microsoft, intel -- >> by the way, don't forget about health care, these health care insurers and hospitals?

they can do no wrong they just only know to go higher centene is my favorite there >> i mentioned bob pisani on the floor watching what's moving bob, what do you see >> i think the important thing is we started strong but faded a little bit i am not happy with what i'm seeing in the banks. the leadership is completely gone we can't even get a modest rally on a big global update here. look at the sectors, that's what i'm talking about. we had a nice start. all the big banks were positive right at the open. and then within three minutes, we had some selling pressure come in and they went down it is a good sign to see semi-conductors up because this is another group that's had lot of selling pressure recently that's holding up. energy's been a market leader. that's a good sign industrials have not been doing very well. i would say that's a very modest rally for the open so let's just say right now, good start but very indeterminant right now

even after the first five minutes. let me show you what the autos are doing. obviously we have a little bit of good news here. there's a lot of talk maybe european tariffs, european auto tariffs, might be removed. that's helping the european autos. they've had a tough time so volkswagen, daimler, bmw, they're all doing well porsche is on the up side. here in the u.s., ford and gm are on the up side that's nice to see gm was $45 two weeks ago look at it it's now $39 even with a modest rally again, bit of a laggard for a while. china tariffs are obviously still looming, so there's concerns about slower global growth in general. but let me show you the banks. we had a great rally, still have it over in europe, all the big banks are up santander, all up 2 where %, 3%. but jpmorgan, very marginal. a lot of big banks have gone negative they were up first three

minutes, then went negative right now. keep an eye on that. where are we the last two weeks it's been very, very defensive we're in a trading range 2,700 to 2,750 right now smack in the middle of 2,727 but the strength is coming from all those defensive groups that we really do not like to see as market leadership. we notably oversold industrials, semi-conductors and banks. when i say oversold, i watch short term trading, relative strength indicators. when you are below 30, you're really oversold. below 20, you're really oversold these are buying signs for these sectors. industrials at 15? that's way, way oversold just in the last few weeks, these are short-term trading indicators, semi-conductors and banks. that's why you need to see a little bit more of a bounce here or you'll get very, very serious concerns about long-term trends. semi-conductors, very important to note, these things have been down in 10% range recently

micron's been down 10% in two weeks. it is nice to see it bounce today, up 1.5% roo it noight now nvidia, advanced micro, broad com. all down 8%. we need to get more back into the industrials, tech, particularly semis and some of the bank stocks. as of today, the evidence is not there. we're getting any kind of real notable turnaround despite the strength in the dow. guys, back to you. >> thank you very much great analysis of everything let's go to chicago. rick santelli. >> 22 -- 24-hour 10, you see what's going on there. it continues to drop 2s are up to at 2.54

10s are unchanged at 2. 83%. could be the lowest close, another fresh low close going back to 2007 it's been very incremental, very slow on these comps going back to '07 but the point is there has been very little steepening everybody heard jim say that's a big feature. it is not necessarily a feature because it makes sense 50, 60 basis points affected by the big inventory in fed policy. doesn't matter it is what investors think, and jay powell is going to have to try to get inside investors' heads as he forges ahead on n m normalizati normalization. as you look at a one week of 10s, you can see the deterioration. how many sessions in a row do we close in the 2.90s now we're in the 2.80s you start getting around 2.75s, you are getting more significant support, more from the standpoint should it get vial laid big currency moves lately aren't

really the dollar index so much. you look at an october start to the dollar index, the feature is it is whittling away at 95 whether it was october or the last four, five weeks, seemed to get there, maybe close there or above it slightly, and back off. the big action and big focus is on the dollar/yuan the chinese currency, tomorrow's july 6th, so we'll see if there will be a tariff game or not the chinese have said even with all the time zones, they're going to wait to see what we do first. when we do dollar/yuan, you can see that spike -- that spike -- in favor of the dollar but it seems to have ended a little perspective -- that spike was about a one-year high for the dollar as you see on the following chart. judge? jim? back to you. >> rick, all right thank you very much. rick's talking about the yuan and the devaluation in china baba shares and other stocks related to that have been hit pretty hard as a result. >> i think they're biased. a lot of companies are really

discovering the chinese channel. by the way, there isn't a company i talk to that doesn't say watch this >> ba baba's down 11%. >> i think it is a buy it's a fabulous company. i just think they truly have it. i'm in favor of alibaba. still to come, walter isaacson on what's at stake for business when it comes to trade and tariffs. we'll be right back.

netflix reportedly testing a new pricing plan the streaming giant looking at a new high-end streaming plan dubbed "ultra" which would offer up to four simultaneous high-definition video streams. ultra plans would cost more than the current premium option,

about $17 a month. if anybody has pricing power, theoretically it is them >> i think they do netflix up almost 100% this year one of people's favorite stocks. the worldwide notion of entertainment is something that everybody wants to be. so it is not dumb. it's too late to -- it is too late to buy. i think that it's had such a run. >> how many times could you ask yourself that question >> true. do you have mlb.com? >> yeah. you know the resolution. resolution's unbelievable. and you would pay -- mlb.com is an amazing site. always way ahead of everybody. i feel strongly that people will pay. they'll do anything. they'll say, listen, once you're hooked on ultra high-resolution, it is really hard to go back in the same way that when you have a tv that has both the old and then hd? you can't believe, it's like, wow -- is that fuzzy what was i doing i think alternate is really

great. >> there is no point in which they can go too far? >> it is too cheap the price is such a bargain. the amount of product they put out, the amount of hip products they put out remember, it is artificial intelligence they kno it's artificial intelligence, they know what you want. you may like this, i'm looking at it and i like every one of them i'm glad they told me. i hate spam, except when it's from netflix, how do they know i like that? it's like they created that product for me it is weird how intelligent and they know what you want. >> amazon is $26, $27 below it's all-time high? >> netflix is a loved stock and there's nothing else happening other than signups and the signups are terrific, because there are billions of people in

the world and you can watch it on your cell phone. >> if i got netflix, amazon, microsoft, apple, intel. >> keep intel out. i think intel is in a little bit of disarray. >> well, because of the ceo news >> he's a very forceful figure and i don't know -- i have long since stopped making judgments about someone's personality. >> but you're a huge fan of how he's running the company >> it's not talked about except in the stock, the stock is to a man who is visionary, who would turn it back to the engineering ways i miss him i think he's a great man >> all right >> i said it, u yocan hate me for it >> up next, it's squ"squawk on e street." we'll be right back. whoooo.

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good morning, welcome to "squawk on the street. carl, sarah and david have the morning off. we're the only schmucks working. >> i have had my time off, it's good to be back. >> let's look at the markets, higher a little more than half a percent. the nasdaq is doing okay as well, a gain of 35 points. our road map of the hour starts with from words to action tariffs on chinese imports take

effect tomorrow. to look at the how the street is reacting, straight ahead. plus embraer and boeing joining forces and we have economic data crossing the tape right now. rick santelli has the numbers. >> this is our june read on nonmanufacturing from the ism, it's due for supply management 56.2, no, i'm sorry, 59.1, wow, much better, don't you think 59.1, that sequentially follows 58.6 and 59.1, that's a whopper of a number. that's the best number since february when it was 59.5, and consider this, 59.9. just .8 higher than our january number that goings baes back to comps and that number accounts to a

20-year high at least the highest in my database a very solid number. let's see if we get any reaction look at 10s minus 2's, 283 ten-year, it really is something else to watch good data not have that upward yield effect like it used to. a lot's involved here but you want to pay attention to that dynamic. >> rick, thank you very much the stock market's perspective on this is getting a little bit of a lift on the dow, we have given up a good amount of the gains we saw earlier green across the board as the dow looks to bounce back from tuesday's losses, investors looking ahead to this afternoon's fed minutes and the $34 billion in new tariffs the u.s. is set to levy against

china. j.p. morgan asset management global market strategist david, you first, is this all about trade and it's going to be all about trade for the foreseeable future >> i think what you're seeing is kind of policy, particularly in the u.s., the fed tightening rights, moving toward a more -- so to me, it's really a battle of the policy at this point, and who is going to win out? is it going to be that fiscal policy >> we have been range bound, how do we get out of it? >> hopefully we get out of it by having this tariffs fight become more in the rear view mirror rather than something we constantly fret about. on our team, we're positioning portfolios so this will resolve

itself to the up side. there is the dangerous that all of the tax cut boosts that people's expectations for future profits will be more than offset by some of the decline in trade volumes and the decline in profit margins the sub indexes, especially the prices paid. the manufacturing component says that prices paid is quite high you can have a good headline number, but some worrying details about some future profit margins. >> and inflation, et cetera. rick highlighted this mystery. you saw the isi manufacturing number yet the yield curve doesn't budge. you would expect it to steepen interest rates are going to go higher because the economy is strong it got flatter

what is the mystery there? why is this happening? >> i think investors have recognized the 3% growth that the economy is experiencing in the u.s. is a sugar high potential growth, trend growth for the u.s. economy is still around 2%. so i think the bond market looks at things, particularly the lock end of the yield curve, they say growth is pretty good now so we're going back to 2. >> that doesn't sound road for the stock market. >> we need to focus on profitability. over the next 12 to 18 months, i think corporate profit will remain robust. the stocks would finish the day lower, it's about expectations and unfortunately, i think expectations are beginning to fade a little bit. >> brian, the issue is really getting the market to focus on what's good and not so much on

what's so worrisome? >> that's absolutely correct, it's all about expectations and that's one of the primary drivers in the market in the short-term, what people are expecting in the future. and it feels like people want to take their foot on the throttle a little bit, until they see what the trade battle will end up looking like. what will the retaliation be from china we're not too worried about whether or not this will turn into an outright trade war, where you get capital controls, and we have already seen it with select items threats about steel and al aluminum ought -- you know, there's a lot of negotiation tactics. >> what are you saying, brian, everybody should work through the worries and stay in the

market >> if everybody agrees that trend growth is around 2%, i actually believe that it's closer to 3% i don't think this is just a sugar high, when you fundamen l fundamentally alter the -- you suddenly get a burst in capital expenditures from business, that really sews the seeds for future productivity growth and wage growth i like taking the other side of that saying that trend growth is 2%, i think it's much higher >> do you think 2,000 on the s&p is possible at the end of the year >> i think the past of least resistance for equities is higher, as the path creeps upward, embracing fixed income

depending on where we are in the cycle. profit growth looks good, it's not going off the cliff next year, it's just slowing. multiples are more attractive than they were at the beginning of the year. >> are ten-years going to creep up to more than 3? >> i think this year probably closer to 3.25 but we have a tight labor market, we have fiscal policy, which is juicing the cycle >> if not now then when? >> exactly, the stars do feel aligned for rates to start rising, and at least during the interim, rates and equities can rise netogether. >> are you more worried about trade or the fed >> i think that the fed is right now so transparent with everything, any news on the margin that we get from the fed is really more noise than signal, really, i think they

have it etched in stone that they want to gradually get to 2.8%, 2.9% inflation target. used to be the talk was how much inflation overshoot are they targeting, the question really is how much interest rate overshooting the upside risk, is they hyped once too many times, what is it? 25 basis points. that's not going to threaten the equity markets what would is if you increase input costs for all businesses which really crimps profit margin, so i think trade is the bigger threat. >> unless you let the economy run too hot for too long, then you have to become so reactive on the other side of that, that could have a dramatically negative impact on the stock market >> that's true, but let's think

about whether or not we are letting the economy run too hot for too long it was probably too cold for too long, during a good chunk of this recovery. the fed was trying to accommodate that, they're going to try to accommodate it on it's way up if the fed issing ingoing to -t might cause a little bit of a sputterer a stutter step with the economy but nothing that would actually result in a tripping into a recession. >> good to hear from you both today, brian, david, thank you very much. when question come back, the war of words turning to action, we have just 24 hours to go until tariffs against china take effect plus a joint venture between betwee -- "squawk on the street" is back right after this, don't move less plans.

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jumped off a super crane. what? whoa! skyscraper. can't fix it with duct tape, then you ain't using enough duct tape. rated pg-13. welcome back to "squawk on the street." the war of words continues this morning. china's commerce ministry says that the u.s. is, quote,openin fire on the entire world and this comes as we are less than 24 hours from the first real imposition of u.s. tariffs against chandler eunice joins us from beijing with the latest. >> china said that the u.s. isn't just firing on the rest of the world, but it's also firing at riitself

chinese finance ministry says that the u.s. could get caught in the cross fire because this will damage international supply chains the chinese said originally that they wanted to impose the tariffs a little bit after midnight in china on friday, but then they decided to change things in order -- because of the time difference, july 6 in the u.s., comes after july 6 in china, i should say, comes after july 6 in the united states. and so the chinese government said they were going to delay their tariffs until immediately after the americans impose theirs the government said that china would absolutely won't fire the first shot, and that means that china will impose it's tariffs around noon local time this is a bit unusual for china. but it also shows just how sensitive beijing is to make sure that it does not appear as

though it's the cause of the problem. it wants to make sure that it looks as though it is the innocent party, that it is the good guy here in this fight against president donald trutru. now the two countries are going to be imposing tariffs of 25% on $34 billion worth of goods, the u.s. is going to be punishing chinese made high-tech auto parts among other products china is going to fire back largely at farm goods, charging up president trump's political base so what can chi there's been a lot of speculation, some have been wondering whether the chinese are purposely trying to deval the currency to make exports that much cheaper. there are those that say that's not the case there's also been talk that the chinese could weaken the policy

or loosen the policy even further as it already did today, either way, investors are bracing themselves for the impact of a trade war on the stack market, that actually hit multiyear lows and dropped again today. >> another tool they could use joining us now to further discuss the global impact, let's bring in cfr director of internationinte international steel. if you haven't read ben's books, they're great, great one on the marshall plan. i'm buttering you up because i'm about to provoke you i know you hate tariffs i read all your stuff. but what if ultimately we actually have fewer tariffs because of this? >> it could work, this is the one bright spot in the markets

right now on the trade picture, michelle president trump suggested earlier this week that this tariff fight was really all about autos. it wasn't about steel or aluminum, he would be willing to negotiate on that, but he was going to focus on autos. so the possibility of a u.s.-eu deal i think is really the silver lining here >> and franking, don't you think his ultimate goal too is to have a similar reduction in tariffs from china >> there are a number of different statutes that the president is relying on, the 232 was originally steel and aluminum, all very confusing but i think president trump's modus operandi is to limit tar riffs one area while raising them in another. >> but the president will have

to make some concessions here, the u.s. imposes a 25% tariff on the import of pick-up trucks, it's not clear yet to what extent he's going to be willing to take that down significantly. maybe the europeans are going to demand zero. dmo in order to make this legal under wtorules -- >> ben, can we say that, you may not like his methods on howhe' approaching all of this, some would say that, but he's winning and he's going to get results as a result of all of this? >> even if hillary clinton were elected president, we were headed for a trade war against china. but we would have dealt with it differently. we could have dealt with it yuan

la l unilaterally with our eu partners >> there can be meaningful things that happen >> this is possible, this is the root of the whole internal battle going on within the eu right now, whether they should be in effect caving to donald trump on the auto issue, which may encourage him to use this tactic elsewhere >> frank, what's the next step here, do you think >> remember, the 232 on automobiles, the timeline is not until early next year, they're talking about possibility a result in august or september before the midterms. so there's some time to work out a resolution on the automobile case before there's even a finding. but the point about the wto i think is exactly right, the way to address the problems in china and elsewhere is through a multilateral basis >> haven't we tried that for the

last 30 years, frank i mean that's the thing, when guys like you say that repeatedly on tv and i'm not trying to single you out, ben said the same thing, we hear this over and over again from people who have been involved in trade discussions with china you guys see the tweets and the emails, isn't that what we have tried for 30 years it hasn't changed chinese behavior to a degree that's sufficient >> there's a bipartisan support that we need to be more aggressive with china. but i think the way to address it is not on a unilateral basis. if you have an alliance of like-minded countkuhcountries, , other asian countries, that's what the tpp was all about it was creating an alliance of like-minded countries who would put control on chinese behavior. the tpp addressed for the first time in trade ules, something

call eed state owned enterprises it addresses a lot of the issues that president trump is complaining about. >> how far do you think goes >> well, it could go very far, putting aside the possibility of an auto deal if the president goes forward with tariffs against china tomorrow, china retaliates and then you're going to see the canadians and others putting up barriers to chinese imports because they're going to be concerned about the diversion of chinese goods to their market. >> so we go to full fejed trade wars >> unless the president does the mother of all climb downs tomorrow, this thing will spread >> thank you, guys good to have you on, much appreciated. ben and frank. >> thank you all right, when we come back, boeing swallowing embraer's concerns wall -- "squawk on the street"

is back after this, do not go away

boeing and embraer focus on commercial aviation. phil joins us with the details >> this has been in negotiation since last december when boeing indicated that it was interested in acquiring or working with embraer in a joint venture when it comes to working with the company's aviation section boeing will earn 80%, embrear will earn 20%, the value, $4.75 billion. by the way, this will be while not a wholly owned subsidiary of boeing, boeing will have operational and management control. this comes as boeing and it's competitor airbus are both expanding their portfolios if you will on the lower end of the

commercial aviation. that's long been a specialty for embrear, airbus has been working out of canada. don't forget, we get the farm bureau air show in about a week and a half and we'll be talking be dennis when we're over there. just yesterday, he is concerned that these trade tensions could ultimately hurt the airlines in terms of the number of people that are fined. >> boeing wanted the entire enchilada of embraer they didn't say okay we're going

to turn over their defense -- these negotiations went on for a long time, in part because of what you talked about because of the protectionist attitude if you will of the business climate down in brazil and the fact that embraer. >> we also want you to talk about tesla, we had you on just before fourth of july. when the automaker reached its production goal of the model 3 sedans, but then it decided to suspend this brake and rear end test >> the shares are under pressure again today. we should point out a couple of things about the brake and control test tesla says it suspended its

testing. it does extensive brakes systeming on all of the model 3s after the leave the production line tesla says, we're testing these vehicles, it's not like we're sending them out and don't test the brakes part of the it speaks to some of the -- how tesla was able to achieve it's production target what was the quality of the manufacturing? there's nothing to suggest that these are unsafe vehicles, there's nothing to suggest that there were corners being cut by tesla and therefore these model 3s are not true model 3s but what wall street is focused on is the production method and is it stable going forward now for our atf spotlight,

we send it back to hq. >> a big chinese stock, e -- the etf that attracts 50 large cap stocks that aretraded on the nasdaq exchange. as we talk about them, we'll see if they close in negative territory by day's end in that span, those shares lost about 14% of their value in that time they have lost about a fifth of their value after hitting the high back on january 6 a lot of that downside has been attributed to those heightened fray trade tensions between the u.s. and china. you can see they're just below

that $42 level now the fund management team at black rock which managed this fsi ets says they're still focused on chinese stocks, they say really this is largely a negotiating tactic side of things nonetheless, traders will be watching certain big chinese names, like allibabalibaba, j.d they're seen -- michelle certainly ones to watch, just given the trade tensions >> it really seems like chinese stocks have gotten hit much harder on these trade fears and u.s. stocks. >> it's the valuation things too. theon is down 3.7% versus the dollar in a couple of weeks.

albie b allibaba is down 7% it's ultrasensitive of trade, currency and the whole kit and c kaboodle >> you wonder if it emboldens the u.s. saying we can handle a lot more than they can handle. and it gives them just that much more strength to stick with this stuff? >> i think clearly they're emboldened >> here's what's happening at this hour, secretary of state mike pompeo departing joint base andrews for pyongyang, his first visit there since last month's summit in singapore, he is due to stop in anchorage on his way, this will be his third trip to new orleans korea. british prime minister

teresa may describing a nerve agent attack during a visit to berlin >> this is effective by this nerve agent, to see two more people expose to the nerve agent in the uk is deeply disturbing and we will be leaving no stone unturned in the investigation. rescuers are trying to figure out how to get the soccer team out of the the cave in thailand they have been trapped for 12 days we'll be watching that story very closely that's it for this hour. when we come back here just 24 hours to go until tariffs against china take effect. what you need to know is straight ahead "squawk on the street" will be

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all right, welcome back to "squawk on the street," live from post nine at the new york stock exchange we are just a little over an hour into the trading session. look at where we stand right now, off the best levels for the day. dow still up by 82 points, s&p up 33% tech's big run is up a quarter of a percent but that gain today has been cut in half as well, michelle. >> how much of these do you think these reports out of germany specifically handles the original story, the suggestion that the u.s. has said to germany and the eu as a whole, but really it's germany. if you put your tariffs to zero on cars, we'll put our tariffs

to zero on cars. that suggests there's some end to what people are calling trade madness? >> michelle this morning thought that was a huge thing why the market was even up, 200 points in the premarket and he was wholly skeptical on that whole story >> on the story itself, right. but the market reaction would suggest that if it were true, they really like it. >> the problem has been the market's been reacting to every bit of news on trade here's an announced tariff market sales down 1% oh, wait, maybe it's more bark than bite, markets come back that's why there's sort of this range bound market that we have been suck in >> the u.s. is expected to impose tariffs later on the today. on $34 billion in chinese imports. china says it will promptly strike back against any action here's a look at where things stand at the moment. >> this all started in march when the u.s. administration

unveiled wide sweeping steel and aluminum tariffs and that sparked retaliatory responses from china, mexico, the europe union and canada starting with china which put tariffs on $3 billion of u.s. goods like aluminum, steal, and pork the european union also retaliated unveiling tariffs on bourb bourbon, orange juice and this was all a result of the tariffs that went into effect in june. and then there's canada, hardest hit by those steel tariffs, responding with force, $12.6 billion on u.s. goods, like steel, why isky and u.s. contine

mi -- condiments it's the next round that could spark an even larger international response as part of the intellectual property tariff battle that the donald trump administration will impose duties on 818 chinese imports worth $34 billion. that is down from the $50 billion that was first wagered china says it will retailate with tariffs on goods. president trump had initially threatened to impose a 20% tariff on all cars made in europe that may not get implemented, a lot of moving parts on the trade front. >> thank you for that rundown. much appreciated tariff threats creating unwanted uncertainty and worry for many small american manufacturers the louisiana-based manufacturer of conveyor belts and food processing equipment putting all future investments on hold joining us is the president and

ceo. good to have you here. >> good to be here thank you, michelle. >> what kind of investments are you stopping as a result of fears about tariffs and trade? >> no, i think that's a prospective problem. what i think we're seeing, to give a clear picture of the impact we're seeing already, is that the first five months of the year, we saw pretty remarkable growth, probably influenced by the deregulations and by the tax changes but in june our bookings were soft, actually lower than last year and what we know for sure is is that these tariffs have not been good, they definitely have caused an impact where we are at a competitive disadvantage to foreign manufacturers of equipment so that not only can they compete in the global game

more effectively, but they're also positioned to compete domestically, because you can import german, canadian and japanese equipment now that's made with cheaper steel than what we would get. that's clearly an impact and there's some longer term implications that are caused by this uncertainty and that's the point you were referencing and that's more prospective, where is this headed problem it we're doing a slow walk on what we're making with respect to investments anything we haven't committed to, we're walking slowly and we're expecting that our customers are in the same position we're in. so that's a big deal and then the last and probably -- go ahead >> no, forgive me, finish your thought, sir >> the point that's least well understood in all of this, is probably the complexity of how

trade operates today that we are a global -- we're probably the poster child for a company that manufactures in the u.s. and sells our products and services globally and we have to so source the absolute best so we'll use molding equipment in germany, and we have some from the u.s. and some from canada and we have dozens of specialized processes that we can control ever step of our process, because we're selling into food packaging and selling. so we cannot afford to have anything that's not state of the addres art, the best it can be. so this is going to disrupt that process, and also how we source or components. any time you change the production of any component, it

can take months to qualify that particular component >> let's get a question in here. we have so many questions. >> i'm just curious, sir, as to whether you believe the president is right, though, to think that other countries have an unfair advantage over us and he is going to take action by any means he feels he can get results and there's simply more bark than what may be actual bite and that the worst-case scenario you anticipate may not come to drfruition >> let's walk back from the last question first, i think the worst case may not come to fruition, but the overhang of that uncertainty and the concern about it is real to this day and it's only going to continue until it's resolved. we come back and say what problem are we trying to solve because when we talk about the balance of trade, are we talking

about a level playing field in tariffs, subsidies, when you conflate all of them and say they're cheating us. you get a misunderstanding of what we're dealing with. >> i think for some reason that gives him a lot of leverage when you put them all together. tell me something, two you pay tariffs when you ship stuff into china and the eu would it benefit you if there were lower tariffs to your products where you ship? >> if that is the goal, is that is what we ultimately can get, is a level, tariff free open ike though is not an improvement in the balance of trade the balance of trade goes where it can we're talking about millions and millions of individual transactions where each person wins, you don't get cheated when

someone gives you a better deal. yes, we pay tariffs and yes it would be better and yes ip is a huge concern >> where are your most problematic tariffs? >> i don't know for sure, but i would say countries that do least well, say, a brazil, is a country where they are very protectionist, and the result is they have a very bad economy china is benefiting because they have been freeing up and freeing up and they're more free today and they have more market forces going on today, and this has been going on for 40 years the trend is terrific and we simply need to continue to try to move and set the example of moving in that direction >> yeah. i think a lot of people believe that, jay, and we really thank you for your perspective, a real manufacturer, representing manufacturers all over the world, good to have you on >> thank you as we head to another quick

break, let's get another look and where major indexes are. dow is up by 80. even the futures were up 200 at one point. take a look at shares of chinese firm zte as well the wall street journal cplwi cg it has named a neweo toomy th a deal with the u.s. to get a supply ban lifted. [ 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. like all standardized medicare supplement insurance plans, it could save you in out-of-pocket medical costs. call now to request your free decision guide. i've been with my doctor for 12 years.

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one veteran wall street researcher says the consumer is sending an ominous sign to stocks find out morone trading nation on cnbc.com. more "squawk on the street" coming up. hi i'm joan lunden.

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>> you're kind of my high yield spread guy, what do you see when you look at the high yield market, and especially the spread relationship with investment grade tell me if you would recommend investors should highlight or focus more or less on some of these particular securities? >> yes, what we have seen in high yield is over the past couple of weeks, the spreads are wider, there's been a little bit of weakness, the bonds are on average maybe down one point i don't think you should be overly concerned i like the high end market better than the low end. i would rather look at the investment rates -- >> what would make them above average? >> i think they have to get a little bit cheap ever. where we are with the two-year up over 2.5% i think you can get good yield from that and if i want a little

bit more credit or duration risk, i would probably move to the investment grade market right now. >> when it comes to the investment grade, what focus would you have with regard to trying to payattention to what the biggest influence is, is it stocks is it the s&p, where is is focal point of that particular investment >> i always gravitate to the russell market or small caps when i look at the bond market, we were ahead of last year's torrid pace. what we really have is an investment grade bond market we have the potential to have more mna companies are prefunding their pension plans, so, again, they are able to issue bonds to fund their pension plan, which is good for the company in the

long-term. the bond yields are still very low. this is all very positive to me when i look at this, and the one area people have been focused on lately is banks and the yield curve. i think we have that wrong, youm going to talk about a bit later and highlighted in an article in the "wall street journal". some of the ramifications of tax reform last year gave an incentive due to the drop in the retail structure for pentecosts to kind of load more treasuries into take that kind of tax advantage. well that tax advantage goes until september. how much of a difference is that making >> we think that's made a huge difference we thought it would slow down a little bit we see continued issuance. companies will issue corporate debt and say specifically they want to fund their pension plans with it. when that corporate bond gets issued some buy bonds, some buy

equities i suspect, though, by certainly before september most companies will have done this. that's a support that's there. still there clearly as yield curves are flattening. i think it's almost over as we near that september deadline i don't think companies will wait until the last minute >> excellent peter, always interesting to get your thoughts on high yield and investment grade can't wait to talk to you after we get through some of these tariff issues one way or the other. michele, back to you one way or the other, that's one way to put it. let's send it over to john ford. he has a look what's coming up on "squawk alley". >> reporter: talk of a global trade war heats up so is ecommerce in india we'll have a "new york times" reporter who is based out there for his take on what it looks lin ll athe ground and he's seen sicovaeynd seen a lot. we'll have that coming up on "squawk alley"

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where we're making the next generation of multiscreen welcadvertising possible.ght, we have the broad and targeted reach you need to access the customers you're looking for on tv and digital platforms. then we connect you to our team of media experts, who are ready to help you maximize your budget while elevating your advertising effectiveness. sounds like an advertising opportunity knocking. visit comcastspotlight.com today. one of my favorite annual events here at cnbc, coming up the big reveal of cnbc's 12th annual america's top states for business rankings. scott cohn will be live from the mystery top state next week.

always keeps us guessing to the bitter end today he joins us live from silicon valley that i know is in california with a look at what to expect. hey there, scott hi, michele. we lookto it every year we try to hold the stakes to the qualities they sell themselves if more states are talking about workforce, workforce carries more weight in our studies we do this across ten categories and then 60 plus metrics across those coordination no one puts the states through their paces like top states for business does. we have 2,500 total possible states the state with the most is where i will be starting on monday now we like to gut check these categories a bit, and how we set up this study, so we turn every year to our cnbc global cfo council. cfos across a wide section of public and private companies

we asked them what they are looking for in a location, and sure enough nearly two-thirds say that workforce is the top priority for them as well, just like it is in our study, for them cost of doing business comes a distance second then access to capital and business friendliness we asked whether businesses are having a tough time finding skilled workers. sure enough 83% now say yes. that's a figure that's going up steadily year after year and why workforce is really the battleground for america's top states for business but just one of the things that makes the state a great place to set up shop we'll be looking at the state that puts it all together, the most together, that's where we'll be, the bigamistry our coverage starts on monday with the big reveal on "squawk box" on tuesday morning. here on mosquito on the street we'll talk with the governor of the top states for business. can you fine all about it and see where your state stacks up

on cnbc.com. when we come back harley-davidson responding to the president's attack we'll hear from an executive at that company "squawk alley" minutes away stay with us

♪ good morning, welcome to "squawk alley" i'm jon fortt with michelle caruso-cabrera and wilbur frost at the new york stock exchange we got a lot to get to morning, but we'll start with markets the markets giving up most of their early session gains. the dow was up about 182 points, now just barely above the flat line and joining us for more is kenny from o'neal securities and our own bob pisani good morning to both of you guys what's going on here the semis were up pretty strong at first i don't know why the semis would be higher. >> it was a broad market rally. europe was