♪ live from new york, where business never sleeps. this is "squawk box. good morning everybody welcome to "squawk box" here on cnbc we're live from the nasdaq markets in times square. i'm becky quick with joe kernen and mike san toll i. you'll see that right now the dow is up by 128 points. this comes after a strong week for the dow. up by 0.8% a gain for the week. nasdaq was up by 2.4% and the s&p saw it's best week in a month. s&p up by 12.5 points. nasdaq indicated up by 38. let take a look at what happened overnight in asia. you will see that the nikkei was up by 1.2% hang seng up by 1.75%. and shanghai by 2.5%

the early trading. green arrows across the board. more advances in asia. the biggest gainer is the cac in france up by .7 of a percent. >> last week, the ten-year ended week at 2.831% yield it is just above that at 2.815%. in breaking news out of the uk this morning. that is that the brexit secretary david davis is out the late-night resignation comes as a big blow to prime minister may's struggle to end divisions among her ministers. i've got brexiteer, i follow they've been dissatisfied with how the brexit has begun they think getting pushed around by the eu. in terms of the concessions that they're making and i see pretty

incendiary comments that the british people's will isn't being fulfilled. >> she was a remainor from the start. whether she was really committed to this has always been -- she may be challenged now. reportedly even by david davis they're saying that might happen anyway, in the last hour, the prime minister named dominick raab, i think that's what it is. intech guy it was pronounced raab the shakeup increases the pressure on may who is nine months before britain leaves theoretically and three months before the eu wants a deal in place. then, you saw this in other news secretary of state mike pompeo is brushing off north korean accusations, gangster-like

diplomacy during negotiations in pyongyang. secretary pompeo said he made progress onseting a timeline for the dee nuke larization. secretary pompeo did not meet with kim jong-un on the visit. he met with a 90-year-old gentleman that is part of the last three regimes basically. >> if you're talking to can kim jong-un -- >> didn't even check us in was supposed to be a photo-op. what does this have to do with our hard line with china >> it could be china softening or that north korea is the same one it's been for last -- >> right, that's true. now it's a potential $500

billion in sanctions on china. do we any that china -- >> we're hearing there's nothing on the 200 billion. >> could be a quid pro quo that's with trade, we're going to tell north korea not to play ball >> the one bit of refrj that north korea has is to constantly drag feet. resistant to the whole idea. just keep it in play >> but it does get you back to the idea that things are much more complicated than they seem. there's a reason that the status quo has gotten to that point because security has been very closely tied with trade for a long time. there have been tradeoffs along the way on the economic front to try and secure our country in other ways. >> we know what life has been like for the average north korean for 50 years. with trump dangling and mcdonald's for kim jong-un and maybe a better plane he's riding around in that bucket of bolts. to come into the 21st century as

a real player in the world would be something that i could see inducing this to actually happen theoretically. i don't see why everyone doesn't lean behind -- >> falling back on that old play >> i don't know. we just hear the scuttlebutt my family -- >> i know. for some reason you put yourself in the position and you can feel claustrophobic going through some of those -- we're talking about in thailand happening now. divers have resumed operations rescuing a fifth boy from that cave in the last 30 minutes or so they're still trying to free 7 more remaining soccer players. the young soccer players and the coach who have been trapped over two weeks. the coach, young guy >> he's only 25. >> giving all of his food to the kids. >> he's going to be the one -- >> the letters he sent out, he

apologized to the parents. >> if anyone gets serious ptsd -- i hope they're all fine and hope it all works. >> thank god it -- >> it's not perfect because of the heroic navy s.e.a.l. that we can never forget that already gave his life. >> and conditions have gotten worse. it rained overnight. the levels of water in the cave were higher than when they brought the first four boys out. they were trying to bring out six. one boy out. hopefully five more on the way much then they'll probably have to resupply the oxygen tanks again. >> on the way in, i mean, they were 2.5 miles in. did they go through the little narrow areas on the way in at that point, i would say i'm not going through here i've been in caves. >> they have explored the caves in the past with the coach they have done it many times. >> would you go, parker? >> i wouldn't fit. >> no, you wouldn't. >> the first of the -- hopefully

it would turn out and we'll be smiling at the end of the story. the first of the four boys freed this weekend authorities say that they were hungry but in good condition at the hospital bring you updates as we get them should come fast five now also, let's talk about stocks to watch this morning in the meantime automaker nissan held a news conference a short time ago saying it falsified emissions data at five japanese factories. several japanese companies admitted to data tampering over the past year. nissan shares fell more than 4% ahead of that news while renault is lower down just over 1%. china's costco shipping won clearance from u.s. authorities for the $6 billion purchase of orient overseas international. they didn't find issues after it agreed to sell its long beach container terminal business. groupon's run as an independent

company may be coming to an end. the pioneer of daily deals is seeking a buyer with management contacting several public companies in the last month to drum up interest groupon was worth more than $16 billion in 2011. it's now valued at $2.4 billion. alibaba and iac could be potential buyers. carpenter, u.s. chief economist at ubs a lot of my money is you know, very -- i need to hear a lot of your comments try to figure out what to do. >> you like ubs, santoli >> i think you're fine there >> i don't -- i'm not allowed it figure out anything myself i'm putting my faith in you. it's a big -- you got broad shoulders. >> you have said i'm your favorite economist in the past. >> that's not a high bar

steven parker head of the equity solutions. above steg lis and krugman i'm going to start with you. i don't want to be too hard on seth in a moment let me just summarize what i think you're saying. >> political concerns are there. but don't get overwhelmed by those. the earnings that we're going to see reported in the next month are probably going to dictate what happens and should be fairly positive. >> i think so. the reason markets have stalled we haven't had the news from the corporate sector it's been all about politics and geopolitical headlines people are going to look and see, we're going to be growing earnings again valuations are now fair. they're not expensive. this is going to get investors excited and get money back into stocks. >> the santoli pause and described before it happened.

>> three weeks ago. >> but it has given -- when things consolidate, you see sometimes the e comes up and the -- >> i think the bar has been lowered a little bit the fact that we have taken our foot off the gas like in january, now that means that there is some room for upside. this isn't all priced in i think that's going to be good for markets over the next couple of weeks. >> seth, in your latest comments, you were in a really good mood, i thought, for you. i could have sworn last time you were here, your main concern was that we were running too hot and we had put too much stimulus on the fire for the economy that was going to bring the fed in faster than you would have liked. it was going to be a problem really what you said about friday, you loved that report on friday. >> we thought the jobs report was solid. we missed our forecast by a thousand jobs. >> disappointed with the lack of

wage growth seemed to allay your fears that we're running too hottie think. >> the lack of wage growth is -- we still see well over 200,000 jobs a month that's been our forecast it's going to continue to be our forecast going to put pressure on price inflation. wage inflation it could be rising faster. that's a puzzle there. a few explanations we could think about. broadly, we have a rapidly growing economy. we think the jobs report was -- the fed will keep hiking because they want to slow that down. doesn't get beyond the point where they think they can control it. >> we have golds by on later he's so mess ishl about what's happening right now in terms of tax reforms going to the wrong place. is there a way to be unhappy with the current economic environment whether it's gdp, unemployment any of the inflation

are any of the metrics not on at least above average in terms of being positive >> there's no question that the economy is strong. it's very, very strong to the extent that anyone wants to be negative, that is perhaps too strong not sustainable. >> that's the worry. if you listen to any chair of the fed, past or present, if you grow faster than a sustainable in the long run, you'll get to an inflation if you wait until that happens, it causes the recession. >> i've seen numbers in the fives because of soybeans. it really is >> really big shipment some speculate whether it's to get ahead of the sanctions from china. we have a forehand for this quarter. you know as well as i do, gdp numbers get revised all the time is a 5 possible? sure, it's possible. that's not our forecast. >> a year ago, went up to probably 3 though.

people say we can't sustain that are you certain it's going to be a slowdown after this quarter or this year? >> absolutely certain. forecasting is hard, especially about the future we've got 3.1 written down for this year. >> your peers don't yet. >> i don't think they do we're on the optimistic side >> you've been watching the show you've been watching squawk pox. >> it's better since you've had the chief economist from ubs on. >> gdp is unequivocally, you can't look at it as half empty snipe the growth numbers across the board as it relates to the economy are good that's translating into the corporate sector and the reason why we're seeing 20-plus percent earnings growth. do i think that will sustain probably not we can still setting into a low double digit growth outlook over the rest of the year. do you have a supreme court pick >> i don't

i leave that to you. >> do you have a preference there? >> santoli, they beg you for predictions in englewood cliffs. >> not my field. >> supreme court >> no. >> who has the writings you like >> the answer to this question reside in head of one man. it's not something you can handicap markets are not good at this sort of thing. >> it will be one of those four. >> he said by noon maybe he'll have a decision today. >> it will eek out >> maybe he'll know at that point. >> to this point he's not -- >> bloom off the rose. hardiman is back >> kavanaugh, he's been prolific he's got more than 235 opinions. >> but none of them are groundbreaking, supposedly. >> yeah. but it takes a long time to vet all those things hardiman has been vetted if you're looking for someone who can be easily approved, at

least you know what's in it. >> barrett, she hasn't been -- >> won't get support from the democrats. have someone to get every sickle republican vote. >> went out and polled a bunch of students. they hate his pick at the end, they say he hasn't made it yet. doesn't matter we hate his pick >> liberals are going to hate his pick no matter who it is >> if it was james madison they would hate it. >> no. because it's all been vetted already by conservative leaning people so you know what you're going to get. >> called the president and said for me, wait until after the mid terms make it a bipartisan pick. that ain't happening schumer called trump and said how about merrick garland. i think trump is still laughing approximate it thank you, gentlemen

>> good to see you both. >> best economist on the planet right there. >> thank you, seth. >> at the best firm. also folks, starbucks announcing a big change coming to the way you're going to be drinking its cold beverages. kate rogers is at starbucks with more on this it is groundbreaking news, kate. >> that's right, becky good morning starbucks announcing today it's going to be eliminating plastic straws from stores globally by 2020 if you order a cold front with the exception of the frappuccino, you get one of these. this is a recyclable strawless lit. they will be available for those frappuccinos or upon customer request once the plastic straws are phased out a major reason is cold beverages a account for the u.s. that's up 37% from just five years ago. the face-out will begin in seattle and vancouver. this mall in the u.s

starbucks says to meet the goal, it will eliminate 1 billion plastic straws through the year 2020 it's already made the plastic lids available in 8,000 scores in the u.s. and canada in doing this, the company is the largest food and beverage retailer to make a commitment. we know mcdonald's began testing and started a face-out process that will be fully implemented by 2019. but a shareholder proposal to begin the phase-out process for the plastic straws in the u.s. at mcdonald's did not pass with enough votes earlier in the year starbucks making a big move. this is one of their new poll drinks it has the lid on it we'll have have to see once the face-out is fully implemented. >> thank you it only came to me earlier this year about how awful straws are for the environment. i did a little research. they're single use items, take

hundreds of years to break down. they're not biodegradable. why is starbucks focusing on this now the why now? >> i think starbucks has always been committed to sustainable practices, that our coffee is 99% fully invested they've invest 10 million dollars to bring it to the market it matters to the shareholders, the company, their story -- a lot of companies do care about this dunkin' donuts for example chipotle is diverting less of it waste to land fills. i think companies relies this matters to customers and starbucks taking a big step in the right direction for it. >> kate, thank you very much i just figured out where you are. she's right there. >> i'm right next door can you see me

>> i can't i'll bring you a drink, becky. >> she's in front of a starbucks store. >> why did you pick that starbucks? out off the four we have on our corners, why did you pick that corner >> i wanted you to be able to see me from the set. >> good. best in show they meant in starbucks. but across the street. they would -- they had their l.l. bean too? >> he tried to meet and both switched they're waving again from -- i love that couple everyone should see that if you haven't seen it even if you don't have dogs. >> xiaomi shares stumbled in the debut in the hong kong stock exchange emily tan has more on what happened with the smartphone from hong kong >> xiaomi, the number 4

smartphone maker made a debut on the hong kong stock exchange today. the most actively traded stock $9835 million worth of shares changing hands the stock briefly touched the issue price of 17 hong dong dolores at midday after falling and closed at $16.80 down one%. fees and commission after pricing shares at the bottom of the range. xiaomi was one of the most highly anticipated ipos this year but comes to market as a time when the hong kong and china markets have sold down lingering concerns over seat valuations and the sign of u.s. trade war. it's the biggest tech ipo in four years since alibaba becomes the first trade -- xiaomi performance shows a growing list of tech companies looking to raise funds in hong kong i'm emily tan. back to you. all right. thank you emily.

separately, chinese tech giant ten cent planning to spin off the streaming music service. the proposed spinoff including the size and price range, are have not been finalized. ten cent currently provide e-commerce, smartphones and more it also runs the app -- used by a billion people every month i think you can download 50 cent on a ten cent platform couldn't you do that >> your technology knowledge is beyond -- >> santo >> why wouldn't you be able to. >> i don't think there's exclusivity on that. the top water cooler stories. tell you why you might consider wearing a cow costume to work tomorrow then, we're going -- >> what? >> then we talk train with asa

hutchinson and their reduction in paperp and other things "squawk box" will be right back. when my hot water heater failed, she was pregnant, in-laws were coming, a little bit of water, it really- it rocked our world. i had no idea the amount of damage that water could do. we called usaa. and they greeted me as they always do. sergeant baker, how are you? they were on it. it was unbelievable. having insurance is something everyone needs, but having usaa- now that's a privilege. we're the baker's and we're usaa members for life. usaa. get your insurance quote today.

talking about cows the reference to chicago filet is holding the cow appreciation day tomorrow it's a customer appreciation event tied to the market campaign eat more chicken customers who wear cow costumes receive a free entree at the restaurant that's all you got to do. >> is it worth it? >> millions of people participated last year i assume that means more cow costumes, right? >> 1.8 million wore cow costumes to save five bucks how long has that campaign been running? >> multidecades. >> the big billboards for so long also we should tell you the louvre is capitalizing on beyonce and jay z's recent album.

inside the iconic paris museum the louvre is now offering a guided tour of their visit it's a 90-minute tour and smoes 17 pieces of art seen in the video, including the mona lisa if visitors want to walk in beyonce's and jay z's footsteps they're offering a map highlighting that route. pretty capitalistic. get a lot of interest. >> younger people. takes a while. >> i think you can go every day for a year >> and still see something new. >> yeah. >> i saw those two are probably the two -- what was the other? wing afphroditeaphrodite. there's one every step, really >> if that tour lets you see --

got a lot of criticism the way it fit into the surrounding. it's amazing >> can't imagine it without it >> smart >> maybe we got -- >> when we come back, trade war fallout. china's retaliatory tariff on soybeans kicking in. we'll talk to arkansas governor asa hutchinson they rank tenth in the nation in soybean production as we head to a break, let's look at friday's winners and losers alerts -- wouldn't you like one from the market

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>> announcer: welcome back you're watching "squawk box. live from the nasdaq market site in times square. good morning futures at this hour sharply higher as you can see up 124 that would come after a pretty good gain on friday. did the weekend up >> yeah, it was up >> i think it was a gain of 185 points for the dow over the course of the week. >> other indexes did better than the dow actually >> i'm looking on twitter. no one corrected me yet, i don't think. it was not afro fight i.

it was mighty afphrodite that was nike. which i knew on the front of a ship instead of being a roman replica of really old greek sculpture, that's why it's a big deal at the louvre it's the original and it was some race. victory at the island in greek. >> squawk pedia. >> most iconic in the louvre >> but it wasn't i'm trying to see whether anyone corrected me i don't think they did i immediately said i got to go look i hate it when people right in. >> that you're wrong. >> i hate that i like when people say you're right. >> that's why you block people president trump is expected to make his selection to replace supreme court justice kennedy. kayla tausche joins us with more. >> president trump says he'll make up his mind on who the

second nominee will be, by noon today at the latest. >>let say it's the four people they're excellent. everyone you can't go wrong i'm getting very close to making a final decision >> the four contenders, all appellate judges preapproved by the federalist society including amy coney barrett of the 7th circuit in indiana brett kavanaugh of the d.c. circuit. ray kethledge from ohio. and expanded to include tom hardiman from the third circuit in pennsylvania. kavanaugh and hardiman are getting the most look right now. it was suggested to the president over the weekend that hardyman and kethledge would see the smoothest paths to confirmation leonard leo said on abc this week yesterday that would be a detriment. >> i think that first of all, with regard to ray kethledge and

tom hardyman, there's a little less known by conservatives. their records are a little lighter. it might take some time. the president ran on the supreme court issue and it greatly enthused voters. there are people who are well-known and distinguished records. >> on twitter, the president said an exceptional person will be chosen. they're holding it close to the vest ahead of the primetime announcement that will happen at 9:00 p.m. eastern tonight. becky? >> kayla, thank you very much. we'll be watching. as mike mentioned earlier, maybe it will get leaked a little early. we'll have to wait and see kayla tausche. a trade war is under way the 25% tariff on soy bones is hitting some states hard joining us now is asa hutchinson, the governor from arkansas thank you for being bus this morning. >> good to be with you today >> what have the tariffs meant to this point for your state

>> well, our number one ak export is joy beans. we sell them to china. the ag experts say with a 25% tariff, that will be reduced by 2/3. we can make up that by expending other overseas it will affect price and exports. we're concerned about the retol tal torrey impacts of a war or skirmishing and we're feeling the impact of in terms of price. arkansas, we rely upon our ex poerts overseas in terms of products but also ag products more specifically. we're hurt both by the tariffs that we impose but also tariffs that come back in a retol tal torrey fashion we give confidence to the president but we hope to bring

an end to the trade war. >> it's not just china as you said, there are otherish us taking place. u.s. and mexico, u.s. and canada, us and europe. what's the total amount of damages as you look at all the issues right now >> i don't know that you can put a total dollar amount on the impact your first impact with prices going up, we produce -- a good example, we have a belgium company located in arkansas. beckert steel. it produces steel for tires ar in fencing they get hit by our own tariff for those goods coming in from china or other places overseas that hurts us in term of that expansion. but then you expand that also to concerns about agriculture we give the president latitude

because we know he's trying to reduce that. i thought we were in a good position early on. from an arkansas standpoint, we'd like to see the tensions reduc reduced. >> governor, i hear you. i hear this from a lot of people that are kind of in the president's, in his camp overall but not crazy about the trade stuff. so they say we're going to kbif him time and be patient. if you were king, would you have preferred to stay with the status quo of what we've seen in the way things have operated the past years do you wish the president hadn't done anything if you could change it in time? was the status quo preferable to you? >> no. i think he's done exactly the right thing by raising the issue of trade early on, he gained significant concessions, particularly from china saying that we're going to reduce that imbalance by importing more agricultural products from the united states.

that was a win for us. he was in a very, very good position since then, the discussions have deteriorated and we've gone back and forth. i think he did absolutely the right thing by raising the trait issues, by push being the edge on it. but we're at the brinks manship level right now. that's where we got to say enough is enough let's end these skirmishes. >> it's like the movie airplane. there's never a good time to try to do a lot of things. >> or sniffing glue. >> stop smoking cigarettes there's never a good time. given the unemployment rate and gdp and stock market and everything else, if you were ever going to do it, you got a little leeway and you've seen the chinese stock market and the chinese currency, they're going to -- a small margin for error in terms of the amount of debt layered on the economy i don't know who is going to say

uncle first. >> that's where we don't need to be in a position that somebody has to say uncle as you pointed out, china has got their own issues to worry about. they need the united states. the united states needs that global trade with china. arkansas is a perfect example of it we need it both ways we have industry that we've recruited from china that's investing here and the tariffs hit us in terms of increasing the cost of that investment and it puts it in jeopardy we're working with the administration, our trade ambassador to get exemptions for that china showed maturity, i think the united states has to the point where we're trying to get somebody to say uncle. i think we need to say let's figure out a way we can both benefit from this trade. they've agreed to increase their imports. that's a good thing.

let's make sure that we can stop the escalation of the tensions in terms of trade. >> we need to find out if there's an expression in mandarin or something that -- if we say we're waiting for you to say uncle. they'll be like uncle what i wonder if there's a cross ponding -- someone has to throw in the towel what does that mean? >> someone has got to blink. >> governor, joe makes the good point that this is a time where we're enjoying very low unemployment strong economy and a strong stock market that's probably very little sol la lass to farmers in your state. other areas of the economy have, correct? >> farmers are always the first casualty in a trade wash and while the economy has been very, very good in arkansas and

your point is well taken treated over 70,000 jobs in the last three years we've reached the lowest unemployment rate in arkansas history last year. our economy is good. we're having -- president trump led the effort on the tax cut. he's benefited our state our ad community has done well it's just that there is little margin tore error whenever you put in your soybeans at the beginning of the year under a particular price contract and that price dws down, then you'll be losing money. so there isn't much margin for error. whatever you're looking to state, it's dependent on a place like arkansas. it can impact our economy here in the state as you point out, it's not just about china. mexico is our number one purchaser of our rice products be and canada is a big purchaser of our goods

so there's a larger impact than just china here. >> do you think eventually what we think of that monday lott i can, people in the farming industry would abandon -- would turn on the president. that's what supposedly china is smart enough to understand they go to red states to inflict the pain they're not one there. taking one for the team at this point, aren't they at this point? >> that's right. there's a lot of continued support for the president, as i continue to support the president. lukewarm you know, giving you some patience, but you'd like him to start pulling back on this it sounds like. >> we love what he's doing with our court nominees, we love what he's doing in our tax cuts we love the deregulatory environment. we give him patience on this but we also think it's appropriate to say, there is a point that you should not

squeeze us further >> governor, want to thank you for your time today. >> thank you good to be with you today. >> coming up, more on this and the big report on friday from kevin hassett. chairman of trump's counsel of economic advisers. that's at 7:30 a.m. >> the important ways and means committee. a long time congressman. not going to be around much longer we need to cherish him he has concerns about the trade war. plus, it's time for scott cone to shine he'll join us with a hint about the low case of cnbc's top state for business you're watching "squawk box" on cnbc whoooo.

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welcome back everybody movie pass says that it will refund users who were affected by an outage on friday night while the issue has been fixed, the company will reimburse customers who paid out of pocket for tickets. subscribers will need to send movie pass a message that

includes their ticket stub. rolling stones keep raking in the dough the iconic band is extending their ten-year deal with universal music. the deal includes audio and video catalogs and global merchandising of the stone's famous tongue logo >> that's mick jagger's tongue >> he bit off a piece. details are hazy either in a basketball accident or gymnastics accident >> bit off a piece on the end? >> lost part of his tongue by biting it off by accident. >> not reflected in the logo, though >> no. it looks like a complete tongue. i knew a guy who did that, by the way. >> really? >> i think -- >> i think forrest gump. >> still around. >> when we come back, we're going to get a check on prices

gary ross is the head of global oil analytics. he's going to join us next right now, as we head to a break, take a check of what's been happening in the european markets. green arrows across the board, although we have moderated a bit. cac was up by .7%, now it's up by .5% at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & if your customer also forgets socks! & you could send him a coupon for that item.

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welcome back to "squawk box. u.s. crude inventories hitting our lowest level in more than three years. joining us now, gary ross, head of global oil analytics and chief energy economist at s&p global plat. so give us a quick rundown on why we're here and whether we're likely to stay here and what the most important factors are in being at 70 or wherever we are right now. >> okay. well, we've seen a dramatic drop in inventories over the past year over 200 million barrels >> what caused that? >> that's opec cuts were part of it plus venezuela going down from 2 million barrels a day to 1.3 million barrels a day. big drop in venezuela. the opec cuts were supposed to be 1.8 million barrels a day

it turned out to be 2.8 million barrels a day. we've seen inventories come down dramatically we had a big stock draw in june. two-thirds of what drives price is inventory change. so if inventories are going down, it's hard for price not to go up. the other third is driven by the demand for inventory that's everyone who buys and sells oil. you know, what's in their minds? are they comfortable holding inventory or not we know what the supply of inventory is but the demand for inventory is a little more difficult. we never see it. it's driven by market psychological, opec, fear of interruptions and supply and here we have now iranian sanctions, the trump administration calling for zero imports from iran beginning in november going to lead to a sharp reduction in iranian exports and add to the stock decline

>> although the president is calling for is saudi arabia to increase their production. your thoughts on whether that will be met to the extent he would like to see. >> they already started going up in june quite a bit. and they're going up in july they're adding -- they're producing somewhere around 10.7 to 11 now. and the question is how much can they ultimately produce? we all remember back in 2008 the bush administration kept on saying, well, the saudis are going to increase production but they never really did because they couldn't. cheney went over there, came back, said they can't do what they can't do. and they couldn't increase production so there's a real question of how much they really can bring on the market. so perhaps 11 million barrels a day, 11.3 million, that's all we think they have the capability of it sets the market up for quite a tight situation. >> how far can that psychological of potential constricted supply down the road or demand for inventories take

this price because i think that's the question now what's already priced in in terms of potential supply disruptions and the lack of the saudis' ability to add supply? >> that's a very difficult question because a lot of it is priced in but on the other hand, it's the surprise element we've just lost 500 a day of libyan oil in the past two weeks. what happens in libya is a key factor people worried about trump using the spr card that's an issue. i think directionally the market's going to go higher. under the pressure of stock draws. now, we have refinery maintenance season that's in another month, two months, we'll be talking about crude demand going down because refineries are going down for maintenance. >> you didn't say anything about global growth or gdp >> it's strong >> does that -- >> it's a big deal part of the reason why we've seen this 200 million-plus

decline inventory. >> i thought we were there with the fracking and the drilling. are we on 100% right now >> we are. >> it's not helping? >> it's helping. we were basing everything on you haven't mentioned it at all. >> it's a big factor but at the margin, can't supply this gap, this deficit. >> what's with the tie those are -- >> elephants >> i know. are you a republican >> no. it's good luck >> it is good luck i was just reading about that. some people think the trunk should be down >> no. it has to be up. >> we have them at the entrance. feng shui, you have them there it's a good symbol for the gop >> i always wear an elephant tie. >> i think it's weird it's good luck and also the gop.

iy did they pick that >> don't know. >> you know the national bird was almost the turkey? ♪

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live from the beating heart of business, new york, this is "squawk box. >> it's awesome. good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen andrew is out today mike santoli is with us. we have been watching the u.s. equity futures which have been

in the green all morning right now the dow indicated up 124 points the s&p by 12 and the nasdaq by 34 let's call it here's what's making headlines at this hour twitter suspending more than a million accounts a day in may and june according to "the washington post. the newspaper says that the suspensions were part of an effort to try and reduce the flow of misinformation on the twitter platform and adds that the pace of suspensions has continued this month as well. starbucks has announced plans to eliminate plastic straws from its stores by 2020 it will make alternative straws available. it will also develop strawless lids for cold drinks and nissan is admitting it altered tests in japan it had allowed unqualified inspectors to conduct post-production tests at its plants the erroneous testing did not affect cars that were exported

to other countries an update this morning for you. that mission to save a group of boys and their soccer coach trapped in a flooded cave in thailand has resumed in fact, a fifth boy was rescued today. the first four were freed this weekend. they were judged healthy as they recovered in the hospital. divers are still trying to free seven remaining youth soccer players and their coach who've been trapped for over two weeks. we've all been watching this so carefully. obviously a very perilous journ journey. you know about the navy s.e.a.l. who perished trying to set up oxygen canisters to get these boys out they went ahead with this rescue over the weekend after thinking this was as good as it's going to get for months. it's the rainy season there. the cave has filled with water but after a few days of trying to pump things out in little rain, they thought this was the best time to do it it's a pain staking journey. it took hours and hours to get the first four boys out. they were working on bringing

another six out and the first of them out already this morning. >> it's like two and a half miles. it's not all under water but 5/8 of a mile, these boys that weren't great swimmers to begin with got to go in murky water hopefully, like, 20, 30 years from now they will remember wow i had an experience. hopefully that's all it ends up for all 12 we're at seven now five in counting seven to go. >> seven to go plus the coach. >> all right bring you updates as we get them a couple of stocks to watch this morning jeffreys downgrading p&g citing market growth which is slowing as challenges for the price target is now $79. hsbc initiating coverage on michael kors with a buy. setting a price target of $88. implying a 33% upside.

i could do that in my head third of 66. right? get that santoli >> that's it a stronger than expected jobs report lifting stocks the economy adding 213,000 jobs in june, better than expected. steve leisman joins us now with more i read a lot of stuff over the weekend. >> what'd you read >> just i like the weekend "wall street journal." >> it's very good. >> it is >> all the negative stuff on trade. in the op-ed section >> that was okay that was weird that was a little weird. but the most fascinating thing and i made everyone in my family read it was the europe is also divided. did you read that piece? you got to read that piece. >> which one >> with the philosopher in poland talking about poland and hungary. >> and migration. >> no, not on migration. but how similar just the view of elitists and how they want to

sort of put -- they want to decide what freedom is and then as long as you live under their idea of what freedom is, it's fine then if there's a pushback in poland, hungary, other places regarding the eu and the bureaucrats in belgium >> having just coming back from there too. >> yeah. >> i'll have to read that. >> anyway, just reading about the piece for employment, there's a lot of different facets that i hadn't thought of. people are leaving saying take this job and shove it. i'm going to make more money >> there's quitting going on but there's also people coming in you know that for 16 years i've been deathly afraid of doing math live on television. so i don't do it live on tv. but i did get to do it later over the weekend and in the comfort of my home. it turns out that we had that surge in people coming into the workforce on friday. but there were two negatives before that. so i didn't have a chance to do the six month average. this is just a way to think

about it just the gains in the labor force. 257,000 a month have been coming into the workforce looking for work and a bunch of them ended up unemployed in the first month which is normal. then every time we've had a spike in unemployment for the past three or four years -- >> how much of that has caused graduation and how many are people who have not been working thinking okay there are enough jobs >> the summer is a tough time when it comes to it. teachers leave jobs. there was some enormous number of college educated people that left the workforce 800,000-plus which is, like, the most ever. nobody is taking anything from the unemployment but i do want to talk about wages. >> is that you or me that's me. the other thing i read, people are dreading coming back into the workforce. they come back and get a job immediately. >> there was a story about that. there was a woman who was a lawyer that's an interesting group right there. these women who have either been

attached part-time to the workforce or have left the workforce in order to help raise their kids, coming back in it's always been a difficult thing. that group is one that's found difficulty finding full-time employment and again -- if you could just go to the wage chart since we've used a bunch of this on discussion here i want to show wages have risen say about 2015. then they've kind of flattened out. there's three reasons why. 2.7% we're up 0.2% in the past year, actually in the past two years we're up 0.2% on the annual average or the six-month average of the annual gains there. and why is that? well, the first one is people say you have younger workers replacing older workers. jeffries has a nice stat that says it takes the wages of five young workers to replace the wages of four older workers. so baby boomers retire, come out. you also have people coming in

at lower skills, some of the lower skilled jobs out there being filled and third is the productivity is not there yet. those are the three reasons why the wages follow productivity boost. and they're not there yet. they are to come bottom line on this is the reason why the market cheered on friday, strong payroll growth, but you didn't have the strong wage gains yellen said -- and i don't know the way powell thinks about this yellen had said 3% to 4% wage growth is not inflation. we talked about this on friday accuracy and productivity, that's non-inflationary wage growth that's what you should be getting. so we're well below that at 2.74%. there's room to grow when it comes to wages and that should happen in the next several months if we stay at these low unemployment rates. >> all right found it for you if america's divided, so is europe it's a polish philosopher politician talking about nato. i love the term, degenerate

liberalism -- what no it's said in a philosophical way. but i'm sending this to you. >> okay. >> the whole thing, the more i read it, it was like you can describe the whole world on this piece. why'd you skip that wione? >> okay. you want to know what i did this weekend. >> you took the lead editorial which is anti-trade and you just love that. but you don't -- >> i wish the trump administration was reading a little bit of the op-ed section of "the wall street journal. >> it was weird. it said degenerate liberal and it was a picture of you. >> a picture of me >> it was a really good -- >> and deplorables >> actually, they mentioned deplorables. and they don't want to leave the guy does not want poland to leave and thought brexit was a huge mistake but there are problems right now with just the whole sort of elitist controlling all of our lives. >> well, i mean, the eu is --

>> i'm going to send this to you. >> okay. i'll read it >> you will? promise? >> i always do >> get back to me. >> i listened to the music you sent the other day >> i love it >> chet baker. >> joe and i have music in common >> it's the only thing >> thanks, steve >> thank you the focus is on china, oil, global growth, and much more joining us from london is isabel ilago who is chief strategist at blackrock. let's talk about this. your outlook is a positive one, but you say there are more chances for pitfalls ahead what's your takeaway >> good morning. yes, you're right. our outlook remains positive because we're still seeing strong growth particularly in the u.s. but also in china and europe stabilizing

but there are also a wider range of possibilities for this growth outcomes and we're also seeing tighter financial conditions which are creating a challenge for a number of asset classes. and as a result we think it's a good time to start building resilience into portfolios so it's certainly not as rosy a market outlook as we had in 2017 >> what does that mean how do you do that >> right so if you look at our quality time chart, one way of doing this is to focusing on quality stocks the stocks of companies that have strong balance sheets and strong earnings growth so you still get the upside from having that equity exposure, but you focus on the -- on companies that will do better if we see a further tightening and financial conditions and more uncertainty in the outlook >> isabelle --

>> that's one way of doing it. >> those with fast earnings growth and strong balance sheets, it sounds like a prudent conservative thing to do however, doesn't it bring you to a place where you're actually in the u.s. anyway buying the very largest stocks of the nasdaq and technology where you've already had great performance. i wonder what that also means globally to have a preference for quality. >> so, you're absolutely right at this particular point in time, there's actually a very strong correlation between the quality stocks and the momentum stocks the ones that have been doing well in fact, we do still retain this preference from momentum stocks. and from a global perspective, you are absolutely right that does mean an overweight position towards the united states which right now is our most preferred stock market because that's simply where we see the strongest potential for earnings growth to out-perform but we also like emerging markets equities

which should continue to do well again in the baseline scenario where we can avoid going into a full blown trade war without further escalation from -- without meaningful further escalation from where we are here you're right we do have a preference for u.s. stocks right now but we also like emerging markets. >> just in terms of the risks, you mention the potential for trade war as being one of them but you also talk about growth overheating. are you talking specifically about the united states market with that? >> so you're absolutely right. we're now facing a situation where there's higher uncertainty about growth outcomes both on the upside and downside. so the trade war is obviously the downside risk part but as far as the u.s. goes and yes, you're right, this is a very specific u.s. concern there is a possibility of overheating which would then force the fed to tighten the

brakes faster than anyone expects. and bring the end of the cycle perhaps sooner than they anticipate on this, i have to say the news we got on friday on the labor market front suggests that we shouldn't be too worried about this overheating scenario, but we're only halfway through the year there's still a significant amount of fiscal spending, having to come through the pipes. so this overheating scenario is one that definitely needs to be kept on the radar screen as a tail risk if nothing else. >> it may start in the united states if the overheating starts but if the fed does ratchet up rates, i would imagine that would affect the emerging markets more than anywhere else. >> right so i think there's two components the one is the potential for u.s. growth to surprise on the upside and if you look at our chart and even growth, you get a flavor of that and that could have positive

spillovers if u.s. growth accelerates, that's great for the entire world including emerging markets. the problem is if this growth becomes inflationary and if the fed has to tighten faster than expected, that would be a head wind not just for emerging markets >> isabelle, want to thank you for your time this morning we appreciate it >> thank you all right. coming up, the future of health care the newly formed venture between bezos, buffett, and dimon. what he brings to the table and how the venture could reshape health care. talk about that next and later, council of economic advisers's kevin hassett will join us stay tuned you're watching "squawk box" on cnbc

♪ welcome back to "squawk box," everybody. the futures this morning have been positive all morning long in fact, we've been watching the dow up triple digits right now up about 124 points. s&p futures up by 12 and the nasdaq which had a strong week last week now indicated up by about 36 points.

atul gawande is the new doctor with the amazon jpmorgan health care venture today. and meg tirrell has more on the man running the venture. have you talked to this gentleman yet? are you going to bring that to us >> we are trying >> efforting >> becky may have the best chance at that >> i met him at davos last year. >> before he was who he is >> yeah. but he's been so well known for so long as a writer for the new yorker, as this surgeon who's been running this incredible think tank too and a group doing research around the globe >> on the first day still little is known about the venture including its name, of course. gawande says he's been referring to it as abj for the companies behind it. we know it's an independent company. it's headquartered in boston and it's not for profit. although gawande hasn't detailed

specific plans for it, some of his goals may be gleaned as becky was saying from recent speaking appearances and his writing to the new yorker and elsewhere. he told an audience in late june the aims of the company and its billionaire founders are threefold. first, drive better outcomes, improve satisfaction, and reduce cost not just for the millions of the companies but also in the longer term establishing models to be established elsewhere. he's laid out a few ways it may be established first by tackling misutilizatio of care. of course it's something he looked at in an article. he was sent a $20,000 check. and finally high administrative costs much of which he says are driven by middle men though analysts in that space largely noted gawande's

appointment with a sigh of relief investors didn't see him as much of a threat because of his lack of experience running a health care system. that's the biggest knock on gawande as he starts this new venture. i spoke with andy slavet who ran it in the obama administration who said it's his strength >> in talking with, you know, bill gates, warren buffett, and charlie munger back in may, they all pointed out -- and by the way, charlie munger has experience running a hospital. they said you can get into the idea of silos. if you pick somebody from one silo or another, they can see the places to cut fat from some areas. >> that's what a lot of people were saying. maybe they would slightly improve part of the system but they won't dramatically change the system. >> and we see the areas that he'll be targeting likely. but we don't know by what means.

right? are they just going to set best practices? are they going to set up a model joint health care consortium that's going to embody those >> we've seen joint health care consortia before which has changed things a little bit. not massively. there's been a lot of talk of technology he did throw around the use of algorithms he laid out two sort of low hanging fruit areas at that aspen conference one is cardiovascular disease and high blood pressure. he said that's a huge opportunity to get better outcomes we're just not doing it. and the other is in treating back pain. >> this is not just cutting costs. it's also looking for better outcomes in all of these areas he's talked about elder care he wrote a book recently about that and just simple steps in hospitals. making sure people wash their hands. every time they enter or leave a room it cuts down dramatically infection rates. >> makes you feel better about your ocd

>> it does >> reading about the alzheimer's, you know, now that we've had some time to think about it, i'm not sure i'm not sure hopeful, cautiously optimistic previous tests didn't show anything like that >> i know. the amyloid clearance -- >> but that would be such a proof of concept -- >> is that what happened >> they actually -- it appeared that they disrupted the progression of the disease by disrupting the amyloid plaque which that's a proof of concept which we don't know if that really works but fingers crossed, because that would be -- the way they stock -- >> by the way the stocks acted >> i was out that day. but biogen ended up something like 160%. it would be big. >> meg, thank you. when we come back, council of economic advisers chair kevin hassett will join us to talk about the economy, jobs, and trade. then the president's pick for supreme court. what to expect from tonight's primetime event. plus much more on the market's latest move higher

investors shrugging off fears after a strong jobs number on friday also history on the history channel. travis pastrana pays tburite to evel knievel details after the break. "squawk box" will be right back. imagine traveling hassle-free with your golf clubs.

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coming up, council of economic advisers chair kevin hassett joins us after the break. trade, the economy, and more as we head to break, look at tplditsrey futus. uprie gi so far this morning. d. show of hands. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade the platform, price and service that gives you the edge you need. alright one quick game of rock, paper, scissors. 1, 2, 3, go. e*trade. the original place to invest online.

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♪ welcome back to "squawk box" on cnbc. among the stories front and center this morning, cosmetics maker avon has sold its last u.s.-based factory they sold it to french cosmetics company fareva group they will continue to make products for avon and will also produce private label products for drugstore chain walgreens. daily deals groupon is seeking a buyer. they've been stepping up efforts to find a buyer. alibaba which already owns

nearly 60% of groupon has been mentioned. then "ant-man and the wasp" topped the weekend's box office. it took in $76 million in north american ticket sales. by comparison, the original "ant-man" movie in 2015 took in $57 million in its debut weekend. and honoring the man who paved the way for dozens of daredevils, travis pastrana succeeded in triply kating three of evel knievel's jumps to jump 143 feet to clear 52 crushed cars and 192 feet over 16 greyhound buses he concluded the evel live event on history channel by clearing the fountains at cesar's palace. wait for it. wait for it.

all of them. all right. let's get to kayla tausche she joins us from washington >> good morning. the imposition of tariffs came and went on friday with no sign of a breakthrough in talks the u.s. is now charging manufacturing and industrial parts from china and china, agricultural products from the u.s in three weeks, another round on $16 billion in goods could go into effect with more retaliation potentially provoking more action from the united states. the u.s. trade representative on friday allowed companies to begin asking for exemptions from these new tariffs. though that process can take several months the uncertainty that this trade policy has wrought stands against a backdrop of strong overall growth and solid job gains as seen by last week's data the backdrop of the data will loom large in brussels this week of the 28 other member

countries, all but three have fought back against u.s. metal tariffs either by retaliating themselves or challenging the tariffs at the world trade organization though some softening by angela merkel is lifting german car makers today merkel telling reporters, quote, we have to have an agreement in europe if we want to negotiate trade tariffs in the auto sector, for example we can't just do this with the united states. but rather we must include all countries that we have auto trade with we'll see whether that provides an impasse that can be broken when president trump arrives in europe a little bit later on this week. guys >> great all right. thank you, kayla big sign of confidence in the economy after a strong june employment report. joining us now to talk about the economy and the trade war with china, white house council of economic advisers chairman kevin hassett. you heard right there, kevin, and you read -- i know you read. i know you see newspapers. and that's -- that is the

narrative. everything's going so well. so people would say if things are going well, this is the time to try this. others would say why create head winds when you finally have the wind at our back from tax reform and deregulation why try to throw a wrench in the works now? >> well, i think that the president's attitude is that you try to fix things when you can and the first thing that he did, you might recall, is he focused on tax reform last year. and he even put off any kind of trade negotiations for the whole time that we're pushing the tax reform and so now he's trying to fix the trade policies around the world too. you know, we've got asymmetries between other countries and the united states. and it's top of the trump agenda to fix those and to negotiate better deals. ambassador lighthizer is out there negotiating with lots of countries. canada, mexico you saw the europeans offered 00 on auto tariffs. i think there's a lot of signs the trump strategy is working. >> when you just look at numbers

and not everyone is -- you know, i would say republicans 90% don't like what's happening, kevin. but when you just do pure numbers, so, you know, we sell china whatever it is $200 billion, they sell us $500 billion. it's clear if we were to do tariffs -- we could do tariffs on $500 billion. they can't so theoretically we can cause more pain to china and i think we're seeing it in their currency and in the markets. but do they ever -- and we don't know what the expression would be in mandarin, but as far as crying uncle, they're not big on giving in or losing face, you know, or saying okay you win so i wonder whether there is a certain amount of pain where they'd come to our side of things and if they don't, how long will this last? >> the bottom line is that for years and years and years and we talked about it on this show

before, china has been misbehaving and the wto has done nothing about it they've been stealing our intellectual property, they've been forcing companies in china. if you look at it, we sell more to china than they sell to us. just all the stuff we sell to china, we make in china. so they've not been adhering to the developed country rules with respective trade and we need them to just sort of be a better nation >> that's never going to happen. do you think they're trying -- do you think they're whispering in north korea's ear to give us a hard time now because of the trade? >> yeah, that's not my lane. but i think that the end game is that china acts like a developed nation they lower their tariffs and open up markets, then i think there's a positive road. did a simulation of what happens if countries around the world reduce their trade barriers like the u.s. that's trump's vision of the future you're right negotiations are tricky and

economists aren't necessarily the best at modeling how it works out in the near term it is something i think both countries should share >> then you've got europe. you know, they're belly aching and everything else. but you look at the nato stuff and it's like, i mean, really. what's the story how many of them are even at 2%? and supposedly we're spoiling the -- you know, we're making them mad about nato. we're making them mad about the tariffs. >> i mean, here's the thing. like, when i was looking at the german numbers, i was in germany a little while ago they could get to the 2% and still have a budget surplus. yet they refused to do it. they've got treaties that obligate them to spend a lot of money. that's the kind of stuff that president trump is calling people out on. calling the chinese out. >> i wonder whether the end result is that it benefits the united states down the road or

whether it somehow -- the unintended consequences are poisoning the well and in other areas. you know, whether it becomes not fruitful to even try to do this stuff. i mean, there's arguments where, you're married, right? there's arguments i just don't have >> every argument. i lose every argument. >> i do too. but some of them, it's like, you're right, honey. so i don't know. are we sure this is a good move? >> you know, i think the long run objective that president trump promised the voters he would pursue is one where we're treated fairly where our deals are reciprocal and he's working hard to get there. he's acquired a lot of leverage with his actions so the next stage is one where hopefully we're going to start soon where you're going to start to see the better deals. he wrote "the art of the deal," right? he's about making deals. he has to deliver deals. he understands that. i spoke with him about trade last week. a number of us did so i think the next stage is going to be we get deals and the deals are a lot better for

american workers >> when we put forward the possible nuclear option, $500 billion. is that a negotiating tactic or are we willing to go that far? >> i don't think anything trump says is a negotiating tactic that if we get a better deal it's going to happen it's not just a tactic a tactic is something you would never do and could ignore it that's not president trump >> you know, all the economy -- even some of the people in the president's party that are in some of these states that are going to be affected, they say, you know, we're giving the president some leeway. the economy's strong you know, we're giving him some breathing room and we're patient. but they're going to draw the line somewhere as long as it's a trade skirmish, they're like, okay let's get something. the minute it's a trade war, you're going to lose support you think we're ready to go to scorched earth trade war >> i think we're going to get deals and you'll like them --

>> will it be in the year 2022 when we finally get them >> i think that's what america's firms and workers expect that's why growth is so high you saw the jobs report last friday all of that good economic news reflects optimism about the long-run agenda. >> do you block the numbers of all your friends at the aei now? >> of course i take them >> really? >> yeah. i think people really agree with the point that the oecd simulation is a way to think about a better world they worry like you that it'll take more to get there ambassador lighthizer is out there negotiating with our partners trying to get better deals. i think they will start to come in. >> to that end, though, we were talking all morning about is there a point where somebody blinks how do you get to a point like that where other nations can feel like, okay, they can go back and respond to their domestic voters, too, that they didn't get completely fleeced in this is there a way for all sides to

win? >> yeah. i think that, gain, all sides win if we reduce our trade barriers and increase global trade. that'll increase global gdp and increase our gdp you know, finding an equilibrium where all sides win will be easy once the first deal is out there. once people see the first deal and hopefully it'll be out there some time this summer, ambassador lighthizer is working on a number of options, then that will be a framework for everybody else to follow. >> when are we doing entitlements you ever think about that? >> as an economist, i've been writing about it for years it's something we talk about but i think right now front and center on the agenda is getting to the next step of trade negotiations with our partners and then as we move forward to next year, you know, i think that we still have an infrastructure plan to do and so in the long run as an economist, absolutely trillion dollar deficits are something we have to address but i think in the near term, entitlements is just, you know, not on the table given where congress is. >> okay. thank you, kevin >> thanks, guys.

>> all right we'll see you again soon hopefully. >> bye-bye when we come back, president trump set to reveal his supreme court pick to replace anthony kennedy. the primetime announcement is expected tonight we'll preview who the pick may be after the break and in the next hour, financial services committee chair jeb hensarling will join us. "squawk box" will be right back after a quick break.

welcome back, everybody. president trump is close to naming his pick to replace retiring supreme court justice anthony kennedy. nbc news is reporting that the president is still considering four nominees but is focusing primarily on brett kavanaugh and thomas hardiman. joining us now to talk about it is john malcolm. he is vice president at the heritage foundation, senior legal fellow and the director of the mese center for studies. in 2016 john created a short list of successors for the late justice antonin scalia a list that president trump cite as influential in his own roster of potential nominees. thank you for being with us today. >> great to be with you. >> so how many of the names considered right now were on the short list you came up with back

in 2016? >> brett kavanaugh was on that list and he'd do an outstanding job as would the other people being considered >> what's the difference between the candidates we've been talking about the most often are there differences between them is it something that you think would be easier for any of them to get appointed politically or make it through the senate process? are there others that have dbig differences of opinion >> thomas hardiman is the one flying under the radar screen the furthest there are big differences between them thomas hardiman has been a judge since 2003 he was a district court judge for three years before amy has written on a lot of issues conservatives care about. >> we were joking earlier about

a bit where a lot of kids on college campuses were asked what they thought of the president's nominee. they all said they hated it before they found out that he hadn't made that nomination yet. but it is telling that very likely any of his picks will please conservatives and very likely any of his picks would disappoint liberals. is that fair to say? >> well, that remains to be seen you hear whisper campaigns going on with criticisms of the potential nominees that they do like or don't like i think many will rally around the nominee. all four of them are excellent yeah, the democrats are stealing for a fight. and i think this is going to make the gorsuch confirmation hearing look like a minor dustup >> do you worry still about the souter phenomenon? you almost have to be a manchurian candidate, don't you?

your whole career would have to be about fooling people. how did that happen with sue toto - souter did he change? was the vetting -- what happened there? i don't even understand how something like that could happen >> i wasn't involved in it, but here's how it could happen and did happen so david souter was a fairly obscure justice on the namps supreme court. just four or five months before he was elevated to the supreme court, he was confirmed to the first circuit court of appeals almost all the rulings he had made dealt with obscure issues of new hampshire law the president was looking for somebody who could get through those times like today that are contentious times. he had whispering in his ear, two influential people don't worry, david souter is our kind of guy. from a conservative's perspective he turned out not to

be our kind of guy >> what are the big issues face faceing the court? are there other issues to be on the lookout for? >> all anybody is hearing about is roe v. wade of course they consider a whole variety of issues. many of interest to the business community dealing with patents and arbitration and, you know, any court that is going to be setting rules particularly for businesses that rely on commercial certainty has to care about who the nominee is going to be. people make very important life decisions and business decisions based on the law and anything that unsettles the law in that kind of way is probably not good for business >> so who has the -- who do we know the least about in terms of actual words on paper of the four >> well, amy barrett in terms of judicial opinions. because she's only issued eight or nine of them, i believe thomas hardiman has written a

lot of opinions, but only in a few areas that conservatives care about religious liberty and the second amendment are the two that immediately come to mind kethledge and kavanaugh have fairly extensive records as does hardiman they've been on the court for a decade or more and have written quite a number of opinions that people can examine >> who was also ran in the gorsuch -- that was hardiman so you're saying he's under the radar? why is he under the radar if he was the closest to getting it with gorsuch >> well, look. tom hardiman is a great guy and a fabulous judge he sit os ths on the third circt court of appeals he hasn't had the opportunity to rule on as many issues that conservatives care about he hasn't dealt with any cases involving abortion all of the opinions he's written are very, very solid but you would, you know, sometimes look and say i'd like more comfort than the fact he's

a very good judge and written on a number of issues i don't particularly care about. >> can understand the preferences among these four finalists. but do you think it makes a big difference in terms of the speed of confirmability? is that kind of the track that he president's going to be most focused on >> well, i don't know he's going to be most focused on that i think he's going to be most focused on the person who has done the best job and the best personal rapport with him. a lot of this comes down to gut feel there's no question that brett kavanaugh has an extensive record he's written hundreds of opinions he was on ken starr's group. he served in the bush white house for five years a lot to examine but they could get it done before the supreme court resumes its business on october 1st. >> do you have a -- okay it's not 25%, 25%, 25%, 25%. in your view, it's not do you have a favorite if this was the kentucky derby what do you think? >> yeah, look.

i'm a big brett kavanaugh fan. >> he's a bushy though does that matter to the president? >> it may matter to the president. you know, i would probably give the nod to brett kavanaugh, but really any of the four would do an outstanding job >> really? any of the four. all right. you're the opposite of all those guys on college campuses they didn't like any of them they're all satan. >> i'm a few years removed from college. >> god help us all right. thank you. i'll thank him thank you. it was great to have you on. the guy that wrote the list. >> the original list yeah coming up, stocks to watch ahead of the opening bell on wall street. check out the european markets at this hour we're going to have more on the markets at the top of the hour as well. but a lot of green everywhere for a monday you know when people have the monday blues. "squawk box" will be right back. you always pay your insurance on time.

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take a look at a couple stocks to watch this morning helen of troy reported quarterly profit well above the consensus estimate of $1.46. this is a household and personal care products maker. also saw revenue beat forecasts. helped bay 30% surge on online sales as well as stronger sales in some of its brands like braun and vicks. >> now i know them

>> and gamestop was rated buy at jeffries that firm says the video game retailer has a well-defined plan to remake itself under new leadership altice u.s. was upgraded citing a number of initiatives which will improve the results as well as an attractive valuation what's going on with -- santoli, what's going on with disney and comcast? >> disney has a deal >> i know. but when is it the 21st >> i think it's the 28th >> what's the date today the 9th? >> yeah. >> so what's going on? >> something's going to happen >> are you hearing >> no. >> huh you don't know -- what do you do all weekend? you didn't make calls or anything okay let me know if you hear in ig. >> i will. when we come back, investors shaking off trade fears for now. we've been watching the futures which have been up sharply all morning. dow up by 118, nasdaq by 35, s&p

up by 11 plus financials committee chair jeb hensarling will join us. "squawk box" will be right back. whoooo.

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futures jump the dow pointing to a triple digit gain with just 90 minutes to go until the opening bell on wall street. trade war underway >> china acts like a developed nation either they lower their tariff barriers on us, open the markets. then there's positives down the road >> we'll talk to jeb hensarling about why he opposes the tariffs straight ahead plus get your guesses ready for the top cnbc state for business we'll give you a hint as the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york, this is "squawk box. >> very close.

top state or the supreme court pick very close >> i'm on top state. >> very close in terms of anticipation, global, you know, waiting for what's going to happen >> building up suspense. >> i can't decide. i'm equally excited about both good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and mike santoli andrew is off today. let's get a check on the marks futures indicated up 117 on the dow. treasuries still below 2.9%. waiting once again we were supposed to be at 3.25% by the end of the year what's your call, santoli, on the 10-year? >> i don't have a specific target >> give me a range >> above where we are now. >> below 3%? >> but not a lot

3.25% would be something sounds about right >> we're tethered by the european rates >> would you be more surprised -- >> fed officials out there saying maybe they don't want to move if the yield curve is going to be more >> would you be more surprised by that or -- >> there's no reason to be more surprised by 3.25% but i am. >> i think arguing among 50 basis points as the potential range, it's crazy. i mean, the thing has been dead sitting there. >> at 9% it's crazy. >> it's a significant move as a percentage of the overall yield. >> like three or four times a year, we would move rates around remember back then a developing story we're watching in the uk theresa may has named a new brexit minister dominic raab

he is a former housing minister. comes after a late night resignation of david davis who was previously in that post. shakeup increases the pressure on may who has nine months before britain's expected to leave the eu and just over three months before the eu says it wants a deal in place. and an update on the mission to save the group of boys and their soccer coach trapped in the flooded cave in thailand, a thai military official telling dow jones that now a total of seven have been rescued. that official says there are plans to retrieve an eighth boy later today. and we'll bring you further updates as we get them >> that's great news there were four over the weekend. then three so far today. we were hoping to see a total of six brought out today. >> yeah. i don't even like thinking of -- i mean, it may be happening in realtime right now >> it is, i think. >> that's just so frightening. murky waters through those narrow -- do you have to take

the tank off going through >> well, the boys, their tanks are being held by the two divers going with them. so they wouldn't have to take off the tanks, but some of the other divers would have to remove their tanks they tried to make it much easier for the boys by making sure they had two divers to help them along the way >> and they're holding a rope. >> they also have a face mask that covers their whole face which is supposingedly easier f someone who hasn't dove before we'll keep you updated on that story. automaker nissan is admitting it altered the results of emissions and fuel economy tests for new vehicles that were sold in japan. that is the latest scandal to hit nissan which admitted last september it had allowed unqualified inspectors to conduct various post-production tests at its plants. the erroneous testing did not affect cars that were exported to other countrcountries, but au can see, nissan and renault down

by more than 2%. starbucks plans to eliminate plastic straws from stores by 2020 it's going to make alternative material straws available. and also develop strawless lids for cold drinks. a slowdown in sales in china is only temporary, it's said. and looking at a partnership with jack ma from alibaba. he made the announcement at the roastery in shanghai >> somebody was making the comments about the new lids without straws that they're the equivalent of millennials going back to sippy cups. >> did they say how appropriate or that would be something i would say? >> it may have been a little close to that snarkiness yes. >> it may have been implied, anyway all right. jeffries initiating coverage of gamestop with a buy rating with what it sees as a well defined vision under new leadership.

i thought i saw trump tweet. >> there's been a couple mostly about nato and the lack of spending by european allies. >> what ask this intro santoli. >> we're going to talk markets >> you're right here all right. let me read what they prepared for me let's get back to the broader markets. can the trade war and earnings report give another shot mike santoli our coanchor joins us now and he will speak >> i don't like to be preo introducing myself >> didn't really turn into anything on the downside but definitely had to work off a little bit of excess optimism. here's where we're set up now. the bulls might have a little

more of an opening for a few reasons. the trade issue in general, we've been living with it for four months. i think we could argue that in many respects, it's been or soshed i don't think anything the market focuses intently on for months at a time is completely coming as a surprise is it like a weak version of brexit where so much intense focus on it turns into relief? you could argue that it's also had a couple of other beneficial effects one, it's really kind of trained a lot of optimism out of the market ang lot of people are concerned about this you look at the sentiment surveys. it has subdued a lot of it that's positive. it's hard for the market to make headway. then of course the profits, the fundamentals have remained pretty stalwart. we're good right now we're going to be focusing on earnings coming this week. also treasury yields have come in therefore relative bonds look okay so all this sets up pretty well, i think, for a relatively decent market outlook in the short-term. the problem is, the bulls have not been able to make much of any rallies.

they've been stalled out we'll see if that changes now. >> all right let's continue this discussion right now joining us is jurrien timmer also jim o'sullivan. jurrien, you play into what mike has been talking about you say is this the real question is this the pause that refreshes or an appetizer for scary stuff to come? what's the answer? >> we're sort of in between mid-cycle and late cycle fed raising rates, but we have this earnings boom 20% year over year growth for q1, q2 which is about to start getting reported looking around 21%, q3 22% we're able to pull off this win in the market where the pe ratio in january was way too high. it was 19.5% it's come down to 16.2% and the s&p is down 5% in terms of correcting an expensive market, this is about

as good as it gets and this earnings tail wind, nobody else has in the world globally earnings have gone from 20% which is very good 20% growth to like 12% and we've gone from basically 12% to 24% and it's allowing the u.s. market to kind of sit there going sideways while these late cycle pressures are working themselves out emerging markets down 19%. so we're in a very unique spot in the u.s. right now. >> so you would be telling people to buy right here that the market has corrected itself. >> i would say if you're a long-term investor, the s&p just has to sit around and do nothing for the next six months. and if earnings continue to grow which all indications are that they will, we'll be trading at a 15 multiple, what's not to like there? a lot of it does come down to a year from now, you know, where is the fed going to be if the fed keeps pushing policy to restrictive levels, let's say, and the way i measure that

is by looking at the policy rate, fed funds rate over and above the so-called natural rate or our star. if two three years we're 200 points above the natural rate and the curve is inverted and earnings growth has slowed down trend of 7%, that's not such a great scenario if the fed says we're going to do three or four more hikes and call it a day, then that's a pretty favorable conclusion. >> so jim, you're the fed watcher here what will the fed do >> i think they keep going pretty much quarter point to quarter. if you keep doing that, that's six moves over the next year and a half that would get you up to basically 340 on the funds rate. fed officials put neutral at 290. so that's moderately restrictive. is that enough to throw you into recession. it would keep the debate going i mean, i think for now the data are so strong despite the worries about trade that there's no letup at this point from

quarter point to quarter from the fed. >> i think there's a lot of focus on the yield curve and will it be inverted a year from now and i think, you know, the shape of the yield curve whether it's inverted or not is only one part of the puzzle. the other one is just how high have rates risen above the so-called natural rate and historically, you've had both at the same time. this time around, you know, the curve is 100 basis points. if the fed hikes four more times and we get to a flat curve or six more times to get to an inverted curve, even then we're only modestly restrictive. to me that's not going to be enough but it does end up too, like, a year from now we're going to have this conversation and it's going to be a lot more pressing than it is now. >> what would it take for the trade issue as you describe them to become more than just this distraction, nuisance level issue for investors? >> well, i mean, a lot of it depends even on the psychological of it. we're already seeing the surveys

last week. the data in the report themselves were very strong. booming near 60 readings for both ism indexes but you look at the comments in there, there's a lot of worries about trade. i mean, the question is do you get to the point where the worries start to feed more into the data do they feed into the equity market coming down that feeds back into confidence. so even though at this point there's a lot of worry out there in the comments, i mean, obviously the market has held up very well. and the data continue to be very strong i mean, it's a mystery in some ways but for now, you're not getting enough of the data. >> all right want to thank you gentlemen for joining us today good to see you both >> thank you coming up in the last hour, we heard from cea chair kevin hassett. >> i think that there's a positive outcome that we could see down the road. >> now republican congressman jeb hensarling has a different take on the tariffs and the impact the trade war might have on his home state of texas

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♪ welcome back to "squawk box. 8:15, 8:16 right now futures right now continue to trade up triple digits we're up 112 on the dow. the nasdaq strong up 38. overnight in asia, you wouldn't know there was a full blown trade war with all of the indexes sharply higher all more than 1% shanghai actually up 2.5%. president trump just tweeting, the united states is spending far more on nato than any other country. see, we were just talking about that do you think -- sometimes he does watch, i think. this is not fair maybe he's got more than one screen >> he's also on the way to the nato summit or perhaps is already there. >> he can still watch, right

>> sure. on his plane that's how he caught justin trudeau making those comments after he left. >> you think it's because he's going to nato. i think it's because he's watching "squawk box." see, because i'm an optimist >> or you are -- >> yeah. maybe. he says it's not fair nor is it acceptable while these countries have been increasing their contribution since i took office, they must do much more germany is at 1% the u.s. is at 4%. and nato benefits europe far more than it does the u.s. by some accounts, u.s. is paying for 90% of nato with many countries nowhere near close to their 2% commitment. how do they make a commitment and not come close >> happens with every one of these. the paris accord was the same thing. >> on top of this, the u.s. has a trade surplus of 151 -- that's probably billion, isn't it it says million.

i think it's probably billion. with the u.s. withbig trade barriers on u.s. goods no did he say million does he mean billion >> i'm looking up his tweet right now. >> in the last hour, president trump cea chair kevin hassett spoke out on the trade war with china and the impact on the u.s. economy. here's what he said. >> the end game is that china acts like a developed nation that they lower their tariff barriers on us, they open their markets up to us if they do that, i think there's a positive outcome we can see down the road. >> joining us now from his home state of texas, congressman jeb he hensarling i'll start again with what i asked asa hutchinson if you were king and i know there's times where you -- actually i think you did think you were king with the financial stuff. but if you were king, do you wish we had done absolutely nothing and we let the status quo in terms of trade

relations -- is it billion or million? >> billion >> would you prefer the status quo would remain right where it was the way it's been for the past 30 years? or on the other hand you're going give me a nuanced answer you're either for it or against it >> i'm again the status quo. includes -- well, the status quo still has a lot of trade barriers, joe. and it also includes a china that is exprouating crook and hook and involuntary transfers so my concern here with the administration is number one, when i hear the president announce at the g7 that he wants to reduce all trade barriers, eliminate them, i applaud him. but i also hear talk about lowering trade deficits. well, those are not identical goals. so the first thing i'd do is ask

the administration let's clarify what the end game is here number one then number two as i was listening to your lead-in. i applaud everything the president is doing with respect to nato. i do think the u.s. has shouldered really a disproportionate burden of their defense. and these are countries that have committed to 2% but when it comes to the eu, i would say that we know the big problem we have is china and maybe we ought to be concentrating our resources and our diplomacy in uniting the world in dealing with a serial violator of the wto, again one who is taking a lot of america's ip and technology. that might be a course of action that we need to take a good look at >> so would you put any challenges with -- so europe's our allies and, you know, we can't make them mad if we're going to go after china so we have to let them do whatever they've been doing forever that's kind of appeasing europe

they're not always great actors, either, in this whole scenario, right? >> again, let's look at the what the end goal here is for example, in my neck of the world, my 140 -- 445th of america district of texas, i'm hearing from people who in my district take steel and fabricate it into shelving and elements of housing. and i've heard from one lady in dallas who says her company is now seeing 25% increases in their steel prices he's afraid the customers aren't going to stay with her she may have to lay off people so again, i know the president's right that other countries have more to lose than we have to lose, but losing less is not winning. and so i hope that the administration is very, very careful here so whatever jobs may be being saved in certain segments of our economy, very well could be lost in other segments of the

economy. so again, i just think we have to be very careful and not be shooting ourselves in the foot here >> there's some people, congressmen. i saw an article that we need a sputnik moment to challenge china. there's no way by 2025 we're going to be leading the world in a lot of the places where we need to lead the world if we don't do something now against china and the way they operate >> again, that's why i think we ought to focus on what is the most immediate threat which happens to be coming from china. >> all right look at the yuan look at the stock market this may be the only thing they end up understanding is total hard ball. >> it very well could be i get it i am hopeful by the time the dust settles, the president's strategy ends up being brilliant. they have a lot more to lose than we have to lose because their economy is still far more export dependent than ours is.

but i know, again, that trade is has always been a win/win situation. no trade has been a lose/lose situation. listen, we may be in for a bumpy ride in the short-term and end up in a very good destination. but again, that's why i called upon the administration. let's clarify what the end game is and let's appreciate the fact that all over america, it's not -- you know, so much of our imports are "b" to "b. and we've got a lot of americans that are losing. but we also have american consumers. i guess it was july 1st, it certainly became a whole lot more expensive to drink a six pack with your friends at the laundromat when you're doing your laundry when you look at the tariffs on washing machines and aluminum i hope we have a total appreciation for what's happening to our american businesses, what's happening to our american consumers and related to this, i know the administration is looking at the

application of section 232 to automobiles. you know, is this is national defense concern they ought to drop that. my accord i drive in washington is not a threat to national security when you start conflating certain economic interests with national security, that isn't draining the swamp it's filling the swamp and this administration ought to stop >> who do you like for scotus? >> i like them all my crystal ball is too fuzzy i'll be happy with the selection. >> will it be before the midterms will the person be sitting on the bench? >> i believe so, yes absolutely >> absolutely? okay all right. thank you. >> absolutely. >> okay. we'll see you soon >> thank you when we come back, why one analyst thinks there is a 33% upside to michael kors share price. he will join us. and later, we're just one day away from the big unveil of cnbc's top state for business. but first, a hint.

scott cohn joins us from the top secret location with what's coming up in the next half hour. you sent a picture it's got us already wondering, scott. >> yeah. >> where are you >> i don't know if this helps you at all you'll find out in due time. we're going to do this differently this year. as you said, we're going to reveal the top state tomorrow on "squawk box. we usually drag it out over the whole day. but today we'll talk about what we found in some of our travels around the country and your first diabolical hint. that's coming up later on "squawk box.

coming up, president trump set to announce the supreme court pick tonight we will take you live to washington next. we have got a problem. a few problems actually. we've got aging roadways, aging power grids, ...aging everything. we also have the age-old problem of bias in the workplace. really... never heard of it. the question is... who's going to fix all of this? an actor? probably not. but you know who can solve it? business. because solving big problems is what business does best. so let's take on the wage gap, the opportunity gap, the achievement gap. whatever the problem, business can help. and i know who can help them do it.

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♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center, groupon shares, higher in premarket trading recode reports that the company's been stepping up efforts to seek a buyer. alibaba which already owns nearly 6% of groupon has been mentioned as a possible suitor despite a back and forth market, averaged gains in the quarter. however, stock funds saw a nearly $59 billion outflow

during the quarter while bond funds for bonds as i said bond funds had an inflow of $127 billion. stocks are also becoming less popular with sovereign investment funds according to a study by invesco more than a third of the funds plan to cut their stocks over the next three years and hsbc isinitiating michael kors as a buy with a target price of $88. that's an upside of 33% from where the stock trades right now. joining us on the "squawk" news line is the analyst behind the call erawan rambourg. and erawan, you look at this an think it's similar to what happened at coach. why don't you explain that >> if you look at the restructuring, the repurposing that happened two years ago, you're looking at a similar

playbook kors has cleaned up, distribution has become lest promotional. really thinking about equity i think the call today is more in comparison to the traditional premium european players in luxury they've had a phenomenal run mostly down to a buoyant chinese consumer we think tapestry and kors is more a play on the u.s. consumer we think looking at the u.s. recovery with saving rates being low, looking at consumer confidence, looking at the recent unemployment figures, we think it's interesting to look at these two companies in that regard they really both depend on the u.s. consumer. and we see affordable luxury overall lagging quite significantly in terms of relation to the peers. >> let's back that up for those that aren't familiar kors has two lines one is the michael kors high end

line the other is the michael line that they've been selling at discounters. you think the stock price is not reflective of the progress they've made >> yes absolutely it's not that we're a lot ahead of consensus it's just that we believe that investor don't belief in the story. we don't have aggressive figures. on our figures, the stock is trading on 12 times next year. and again, if you look at the traditional european premium luxury tiers, they're trading significantly ahead. >> to what degree is this, you know, not so much of a discount but very modest valuation for kors reflect just concerns in general about the category or about the sales channel? i mean are they overly dependent on department stores do they have a direct to consumer strategy that investors are embracing right now? >> they do have a direct to consumer strategy. actually, their own retail is

bound to outperform wholesale. wholesale exposure overall is a long-term negative however, we don't see that as an issue in the short-term. again, because most of the wholesale exposure is u.s. driven and again, we see the u.s. recovering so despite their department store exposure being greater than that of a company like coach, for example, we don't see that as a short-term negative as we see the consumer here in the u.s. picking up. >> all right want to thank you for your time today. >> thanks for having me. let's get to washington now. kayla tausche joins us with more on the trade war and president trump's scotus pick expected later tonight. >> good morning, becky president trump's focus today, selecting a replacement for the second supreme court vacancy of his term so far. the four options are all preapproved by judicial groups and sit on federal courts in d.c., ohio, and indiana. the perspective justices are 46

to 53 and served on their current bench from 1 to 13 years. announced at 9:00 p.m. tonight, the president will then travel to brussels from for the nato summit president trump tweeted this isn't fair nor it is acceptable. on the ground contributions and trade, two issues with which trump often conflates will loom large. with 25 of the u.s.'s 28 nu toe counterparts currently fighting back against our metal tariffs this morning white house's chief economist kevin hassett says he expects some talks with europe, canada, mexico, and also china >> i think the next stage is one where hopefully we're going to start soon where you're going to start to see the better deals. he wrote "the art of the deal," right? he has to deliver deals.

he understands that. i spoke with him about trade last week. a number of us did i think the next stage is going to be that we get deals. >> though hassett did not comment on how long this current standoff specifically with china, becky, will last. back to you. >> all right kayla, thank you very much let's talk more about this right now, dig into the possible economic impact of the trade war with our next guest. we are joined by austan goolsbee who is professor at the university of chicago's booth school of business he's also the former chairman of the council of economic advisers under the obama administration also alex brill who is research fellow at the american enterprise institute aught t austan, i want to start with you. kayla played those sound bites of the cea which you used to hold he said these are issues where the president needs to come up with some results at this point. what do you think? >> look, i agree with that

you could hear kevin who is a friend you could hear him parsing his words quite carefully. to my ear i did not hear him trying to endorse a strategy of launching trade wars against five major economic blocks around the world and saying the onus is going to be on the president to sort out some deals and, does -- at the beginning it seemed like maybe the president is playing some super dimensional chess. and now it just seems that he's smashing the house maybe they'll just decline to do these -- the worst part of these tariffs. because if this starts to escalate, it will pull us all into a recession >> let's talk a little bit about that what do you think, alex? he's your former colleague at the american enterprise institute. joe even asked him this morning

if he still takes calls from anyone at the aei based on what's happened. because aei has been very supportive of open trade what do you think about what's happened here? >> well, i spent a lot of time working with kevin over the years. kevin understands the value and benefit of free trade. and as most economists who come on this show know well that we're all better off with open markets the question is how do we get our markets to be open and fair? i'm not endorsing the strategy under way at the white house, but i do take comfort in kevin's comments and other comments that the ultimate goal is one where we're striving for an open market that's the right answer. >> alex, we've heard from a lot of people that, look, we weren't in a fair situation. this was not a place -- and a lot of people have agreed we the administration's reading o the situation.

some have disagreed with you we go about this. is that your view as well? >> that's exactly right. there are specific issues with regard to our trade relationship with china but not only with china, but ore of our major trading partners around the world. we're good with intellectual property laws. and we need a process that takes us from where we are, you know, forward, not backwards and so -- >> which this is not one >> it's usual to have bumps along the road i wish i had better clarity into what the end game is though. >> austan, let's talk about that i think you would agree we weren't in a situation of free trade before how do we fix it what we've been doing a lot of people would say has not been working. >> the first thing is we're in clear violation of the credo that we picked seven fights while carrying a six shooter if your thing is china that they

violate intellectual property, what you do is get all the major economies of the world, of the pacific, you go to china as a collective and say we're going to put a stop to this behavior it's almost as if you form a transpacific partnership to get all of the major economies to try to get the chinese to change their behavior >> i hear you, but neither one of our political candidates who were running for president were going to endorse that. hillary clinton was opposed to the tpp too. >> that's true but the -- you cannot simultaneously be taking the position the president takes which is we've got to do something about china. we've got to get them to change their behavior and then turn around and destroy the very thing that was designed to try to get them to change their behavior and that's what he's doing so yes, we're going to hit bumps in the road. but when there are bumps in the road, you don't want to add bumps to the road by slamming your head against the road and that so far is what we're

doing. i noticed that joe got himself over to europe with his kids before all of this started because he knows that there's a danger they're going to start raising the price on the rest of us >> that was purely a euro -- that was purely the exchange i've been talking about -- you never said anything to me on twitter or anything. i've been laughing about -- trump should be in jail after that tweet according to you. remember you had him going straight to jail >> you know i was right. >> when i'm looking forward -- and. >> you know how you know i was right, joe you didn't hear him say boo about the jobs numbers he knows it was wrong. >> i thought it was going to be a terrible number because he didn't say anything about it >> i know. you know he knows -- he knows he shouldn't have done it >> you are unhinged. now you're mad tax reform is causing buybacks and you're going crazy with that. are you like nancy pelosi?

is it just crumbs for the average workers? >> joe, you can't change your tune now >> you guys sound ridiculous >> you promised this was going to go into wages and it hasn't i'm waiting for my wage to go up where's my wage increase >> what are you going to do with 5% this quarter? what are you going to do when gdp is over 5% >> i'm going to have a party and say, yes, it's so great. >> okay. we'll have you back. that'll be -- we'll have to see that remember what you said >> okay. i will >> all right thanks, alex we can't get -- alex is okay, but he's aei which is, you know, the zrrdemocrats like the trade wars more than republicans it's like they're on the same side we don't have anybody to push back on goolsbee which we need >> we have you coming up on "ua bsqwkox," the top state for -- >> af new guess. indiana.

news alert for you harvey weinstein has just arrived in a court in new york he is set to be arraigned on new sex charges announced last week. weinstein is expected to plead not guilty we're going to reveal cnbc's top state tomorrow on "squawk box. but scott cohn is there right now looking at stories behind this report. some people said it looks like you were standing near some mesquite or something. >> it could be texas

>> it should be texas every year, probably, scott? shouldn't it if you're totally fair, no give it -- what's it start with? what letter does it start with >> it's "a" "b" "c" "d" "e" "f" "g" -- there's a 1 in 26 chance. zbl >> it doesn't start with a "z" >> it does not, no it doesn't start with an "x" or a "y." so let me just kind of -- let's bring this back here the way we do this study every year which is the underlying thing that we keep you guessing about, a couple of things. we go through all sorts of data on all the states. we also travel around the country to see what's going on out there. and this state, all of the states are engaged in an increasingly brutal battle which is the most important here every state is in a war for workers.

>> reporter: it's dinner time at the four quarter restaurant. the most important meal of the day. because it's the only meal when they're open the only thing that's holding you back is not being able to find people. >> absolutely. the idea of trying to open more services here, you know, it's not even -- we can barely staff our dinner service >> reporter: the four quarter is many madison, wisconsin, but it could be in almost any other state. the labor department reports 6.7 million job openings nationwide. more openings than there are unemployed people to fill them in especially short supply skilled workers whether on computers or in kitchens it's really bad in wisconsin with unemployment at historic lows and that's before the giant foxconn plant now under construction that's supposed to add 13,000 jobs. so wisconsin is targeting chicago millennials.

>> an our commute or an hour with friends in wisconsin, the average commute is less than 22 minutes. >> reporter: patrick cunningham and his wife made the move three years ago. >> i thought wisconsin was beer and cheese farming maybe. that's all people think of >> reporter: state officials know it will take more than flashy ads >> i'm really trying to eliminate the skills gap investments from k through 12 schools to our technical colleges to our training facilities and correctional institutions. >> reporter: workforce is the most important in our study. we do ten gcategories workforce is 10% how did wisconsin do is that possibly where i am now? we're going to reveal the top state about 24 hours from now. this time tomorrow between now and then, here is your first diabolical hint woolly bully what does that mean? you'll find out tomorrow morning

at least if you don't figure it out before then. also read all about our study and everything about competitiveness and this issue of workforce at topstates.cnbc.com >> you know what the top states for sam was from texas maybe. >> oh! that was a look of total puzzlement. >> yeah. >> now he's expressionless. >> maybe georgia. >> georgia is great, too it doesn't look anything like

georgia. >> it's a state where there are bison. >> am i right or am i right? it's the united states okay >> that's right. we'll call it the office usa! usa! >> that's good okay sorry. scott, thank you we're going to keep guessing every state and claim we guessed it correctly when we come back, jim cramer joins us live. running a small business is demanding. and that's why small business owners need more. like internet that's up to the challenge. the gig-speed network from comcast business gives you more. with speeds up to 20 times faster than the average. that means powering more devices, more video conferencing, and more downloads in seconds, not minutes. get fast internet and add phone and tv for only $34.90 more per month. comcast is building america's largest gig-speed network to give small businesses more. call 1-800-501-6000 today.

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all right. let's get down to the new york stock exchange jim cramer joins us now. it was interesting, jim. china's currency china's stock market and then suddenly north korea doesn't like us anymore. suddenly north korea doesn't look like they want to play ball is there a relationship? you have to be naive to think there's not. >> yeah. lets understand their proxy. when you get that kind of flip-flop by them. some think it's a flip-flop by us figure it out. i can't. china, i believe, said listen

make some problems for president trump. how about the resistance we're giving to the 10 cent ipo for music. we're fine with that one is an unregulated country and one is a communist dictatorship. >> how about these trade wars, jim? what is the latest with where it goes will it be over in a year? six months >> i mean, right now we have to deal with the fact that dan d'amico said this weekend the last time they provoked the same provision is under president bush it cost 13,000 jobs, according to the trade commission. i don't think it's as big a deal yet. we're concerned if there's further. but we got further stuff but we got rid of those tariffs. 30% on steel and year and a half. so i'm a little more optimistic than most. >> so everybody is expecting a pretty good earnings season. what will be notable or surprising or something that we're not talking about now,

jim? >> you mentioned yaun. yaun is going down 4% versus the dollar 5% year row decline versus the dollar a lot of negative commentary what pepsico is going to report tomorrow the banks will be good on friday that would be shocking wouldn't mind seeing that. they are 11 times earnings. >> okay, jim thanks. >> thank you, guys. >> thank you, jim. 'lbeig bk.es couple of minut wel rhtac year, i am sorry about that.

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all right a final check on the markets. we've been watching the futures. they've been in the green. dow futures up by triple digits. up by 109 points that's off the highs we've seen earlier. check out the nasdaq that's sitting at some of the highest levels we've seen. do you think maybe colorado? >> maybe colorado. i thought the buffalos. >> that was a great place.

>> get a lot from there. >> that's true. >> i don't know. there's new things like infrastructure that are very big. >> yeah. that does it for us today. mike, it was great to see you. thank you. join us tomorrow right now it's time for "squawk on the street. ♪ good morning welcome to "squawk on the street." i'm david faber along with jim cramer carl has the morning off a look at futures. as you can see, we're heading for what appears to be a higher open european markets were playing along. let's take a look how europe is faring green across the board no huge moves. some nice ones there