started. it's okay. >> i'm not going to take over an earnings basis >> i'm sorry good luck tonight. 6:00 that's for us. "power" starts now >> the bulls are in charge the s&p 500 hitting its highest level in three weeks dow up more than 1 % right now investors are looking past the risk of a trade war. is earnings season more important for wall street? the big banks kick off results this week. the financials rallying today, but they've been battered lately can you bank on the banks to bring in the green trade tariffs, labor shortages, taxes, regulation. how it's playing out in the u.s. economy. we are counting down

>> the dow surging triple digits on pace for its biggest gains since early june today's gains putting it back into positive territory for the year s&p 500, nasdaq, their best three-day sprint since april bonds on the move as well. yields on the two-year treasury note hitting their highest level in more than two weeks gold at a two-week high on pace for its third positive session cracking down it says on fake accounts more on this ahead phil >> thank you i'm bill griffith. we do begin today with this big market rally trade concerns not slowing stocks right now bob pasani at the new york stock exchange i guess earnings are the big story today, huh >> they are, but i think the lack of negative news on trade is the major story don't complain about the volume, folks. i keep getting emails. it's july.

we've got a rally. there's a lot more demand for stocks that are moving up than moving down. why the rally? look, we didn't get any negative headlines over the weekend, and trade is still the primary mover of sentiment at the margins. you have no headlines, no bad news market tends to lift in the sectors that are beaten up here. the economic data, great you know, friday's numbers on jobs i think keeps the fed in what we call a dovish box. the earnings issue, bill was mepgsing, i'm wondering if the bar is not lower i keep hearing >> what's been market leadership that kept the market going it's the more defensive sectors. they're the ones that are lagging today. consumer staples, utilities, telecoms reets, thank heavens for

consumer staples because they helped us out. what i don't like to see today a lot of the big names, texas broadcom, nvidia applied materials. finally, one little surprise i bet you didn't think like in the new high list, there's not many you see in i retailers. nordstrom hit a 52-week high just barely. it's just the negative territory. it did right at the open guys, back to you. >> bob pasani at the new york stock exchange it's the big tug-of-war going on right now in the markets trade war fears on one side. earnings on the other. which one will win scott, senior global equity strategist with wells fargo. steve the portfolio anager

we're seeing if move within the markets. industrials are all leading. we got boeing and caterpillar. the post for children of the trade wars doing quite nicely today. what is driving the markets in today's session in your view >> you know, i think bob pointed it out it's lackof bad trade news i will say this, melissa you know, really if we were in my opinion -- if we were going to have an all-out real trade war, the s&p 500 would be a lot lower than it is it's relatively low. it may have heightened here with the rhetoric we've had lately, but the market doesn't believe we're going to have an all-out trade war, and we don't think we will either. >> you think we're in the clear, scott? >> i don't think we're in the clear. i think we're going to see more volatility, but volatility is good because i think the economic outlook is good we've been pounding the table on

all these pullbacks. get in here. get in this market at the very least, do some rebalancing here that's been the message i think that's where we want it to be, and i think that really we're going to finish a little bit higher than where we are right now at the end of the year, and i think the thing that's going to drive the market is the fed, inflation, as wages going higher, is global growth going to slow. that's what's going to determine the market over the next 12 months >> what do you think do you agree with scott? is the market in denial when it comes to the trade -- the impact the trade could have down the road here? >> i don't think it's denial i think we're at a point right now where when you look at the total impact of tariffs announced, you are looking at somewhere between one-sechblt and one-tenth the positive impact from tax cuts i think it is appropriately having a little bit of a concern as it looks at it, but not overreacting look, the middle of midterm years, particularly the summers, tend to be choppy periods, skps

we acknowledge that this is probably not the end of the trade concern. >> my notes, steve, indicate that you think the possibility of escalation into a full grown trade war is casting a fog over the market what fog >> well, i think that's -- the concern is not just in the united states. like i said, it's relatively minor when you this i about the u.s. trade is only about 14% of our economy. >> as you point out, it's not minor in shanghai. >> i not minor in shanghai the question is do the chinese get so thoroughly overwhelmed that there's spill-over effect >> it wasn't a catalyst in terms of breaking the markets out of its trading range. is it going to be different this season around? >> you know, i think this is

earnings season this year. it's a confirmation process. we're going to see some really good absolute numbers, but really to be honest with you i think the market is starting to look to 2019 >> does the market want to see absolute good numbers every quarter this year? for sure believe me, i think there's a wide -- you know, you miss it overall by the market and miss it for a percent or two one way or the other i don't think it's going to make that much difference it's a confirmation that things are good, and then we need to look toward 2019 to see how much longer that's going to last. >> thank you both. >> thank you well, markets have been struggling off trade they've been shrugging off trade, i should say, and tariffs at least for today, but there's still a lot to pay attention to when it comes to this brewing trade tiff they're kale why is tracking the latest for us in washington kayla. >> hey, bill the strong growth in the u.s.

economy and the labor market and potentially earnings may be overshadowing the uncertainty in global trade for now, but, remember, the u.s. and china on friday did impose tariffs on $34 billion of each other's goods, and at the end of this month tariffs on drars 16 billion more or perhaps even $200 billion more after that could still loom >> what comes next he hopes is deal making. >> finding an evening lib yum where all sides win. that's easy once the first deal is out there, and i think that once people see the first deal and hopefully it will be out there sometime this summer, the ambassador is working on a number of optioned, then that will be a framework for everybody else to fall in. >> first up, maybe europe where president trump travels tomorrow for the nato summit. nearly all member countries have

retaliated against the u.s. except for albania, iceland and montenegro we'll see whether any ground can be broken through when the president gets there there does appear to be some softening at least on behalf of germany to do some sort of deal on auto tariffs. that's somewhere we could get news this week guys >> kayla, thank you very much. the i wanted. >> he is breaking ground on a new self-driving vehicle research center. governor, we'll get to that new technology in just a moment. first, i want to begin with two things one, i'm sorry lebron is leaving. number two, let's talk about trade as well. you do not think that taking the

actions the administration has taken is smart business. explain. >> i mean, first of all, in regard to our european allies, the canadians and the mexicans, we're using a national security issue to try to drive increased tariffs. that doesn't make any sense. i hear what your folks are saying, but believe me, if you are in agriculture or the appliance business and you need to use imported steel, your costs go up, and consumers' prices go up it's not complicated if you have a beef with the agreements that were set in place by your predecessor, then go through the normal channels don't just be slapping things on there. do we need an expedited process to deal with countries that may be cheating under the rules? yes, of course, we do. it's a national security issue it's not even --

>> as i understand it now, as it relates to our relationship with canada and mechanixico and euro, there's no violations under that agreement. what they have imposed here is a national security issue against nations like canada. what are we talking about leer that begins to negotiate it and change the agreement that had been reached what this does with our closest allies and you take this, you take the environment issue, the

withdrawal from the paris accord, the unilateral action on iran i hope we're going to have a burt summit in europe. we're creating a division with our friends who have kept the peace for 70 years in this world. so we have to be careful that we're not fraying relationships that have kept us peaceful, safer that includes free trade now, when you get to china a little different issue that's a place where we should be pulling china into the wto. >> on one hand, we're beating up our allies, and on the other hand, we want them to help us in regard to china. my greatest concern in many regards here, the issue surrounding nato, the issues of trade, the issues of unilateral

action means that we are fraying the relationships that have been so important to this country post world war ii. >> tell us about the new technology and mobility technology that you're showcasing today, and, you know, as long as we're talking about trade issues is this the kind of business and industry that can create more jobs for your state? >> it already has. you know, look, our goal here in ohio -- we've got cloud computing now in the state we use massive amounts of data analytics. we're starting to see more capital being invested from the standpoint of private equity, venture capital. we're beginning to see that. our goal here is that ohio would be viewed now as the knowledge belt not the rust belt with a bunch of dilapidated factories that's not who we are here anymore.

to be able to test fully we'll be able to see fully autonomous vehicles you go -- it's a process it's connected it's fully autonomous. this is a facility that can accommodate all people from all over the world we're seeing people come now >> so, governor, this is a technology in which a lot of companies, a lot of states are investing millions of dollars in, and i expect that -- or suspect that there would be a lot of ip generated from this self-driving car center that you are aiming to build in ohio. i mean, part of the whole trade thing with china is protecting that intellectual property it's something china is dedicated to developing on its own. how would you go about making sure that that ip is protected if not through the threat of

tariffs and so on as the president is going down that road right now >> right well, isn't that part of the wto? isn't that why we let china in the wto? to say that there are rules of the road when you violate, you need to call them on it. i have my disagreements with the way that the chinese have stolen technology i also kind of wonder about when companies have gone to china were they under an illusion that china wasn't going to steal their things there's a little bit of responsibility on the part of the businesses that decide to go that may give up some of their secrets or where they are forced to cooperate with the chinese government these are serious issues the question is do you resolve this through a tit for tat imposition of tariffs? is that the best way to handle this i think the best way to handle this is through the wto.

>> free and fair trade has resulted in the greatest improvement of the lives of people on the globe in the history of humanity. free and fair makes great sense. we ought to practice it. when we see unfair, take action. >> governor, thank you so much for the insights and the conversation it's almost obligatory for people like me to ask you, are you considering or could you -- >> i don't know. i don't know >> wait until he asks. >> let's just cut it off there i don't know i know what you are going -- what do you think i just fell of the turn ip truck? >> i will take i don't know. >> i don't know what i'm going to do. i honestly don't when i do know, you'll be one of the first couple million to be told >> okay. okay >> noncommitmental on all respects.

>> thanks. thank you. >> we'll take it thank you, governor kasich >> thank you >> just moments ago, the president tweeted about drug prices stocks are already responding. leslie picker, what's the story? >> that's right. we're seeing response already from big pharmaceutical companies. namely pfizer, which was called out by the president in this tweet, which reads pfizer and others should be ashamed that they have raised drug prices for no reason. they are merely taking advantage of the poor and others unable to defend themselves while at the same time giving bargain basement prices to other countries in europe and elsewhere. we will respond now. pfizer reversing earlier gains in the sessions. you can see there back up about .3% for the day. clearly, took a dip after that tweet was published. guys, back to you. >> thanks very much. we appreciate that two big resignations rocking the u.k., as it prepares for brexit. what does it mean for that country's economy and for

europe plus, we're continuing to track the big market rally the dow up now 280 points. power lunch will be right back hi!

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add an ipad to select packages for just $5 a month for 24 months. upgrade online now. a major bombshell. the country's foreign minister resigning just hours after the top brexit official quit how there's serious doubt about what kind of deal, if any, the u.k. will be able to make. wi wilford frost has been following the story.

>> johnson became the most high profile resignation from u.k. prime minister theresa may's cabinet. his reds ig las vegas just hit he said the dream of brexit is dying, and based on the prime minister's plan, he said in that respect we are truly that letter just came out. he is the seventh resignation since november, but more importantly, he is the third brexiteer in the last 24 hours the soft plan for brexit may try to continue brexit in parliament and has said a new foreign secretary will be appointed imminently as she desperately tries to reunite her government and her party. the resignations of davis and johnson in particular increase the chance that she faces a vote of confidence from her own party. for that to happen, 15% of conservative mp's, 48 in total

on current count, need to write a letter to the chairman of the 1922 committee which oversees leadership of the party. the chances of that happening have risen dramatically, but it hasn't been announced yet. it would then be a straight vote for or against theresa may among the 316 conservative mp's. 159 votes will be needed to ouster that vote of confidence is not forthcoming at this stage. >> thank you wilfred frost. >> we have the latest on the efforts to rescue the thai soccer team from that. we'll go to thailand for a live report once again. some hopeful news coming there lately that's coming up on "power lunch. we're all over this market rally. the industrials like caterpillar and boeing, and the financials like goldman sachs and jp morgan leading the way right now. stay with us

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>> specially designed lids instead and things -- starbucks follows mcdonald's which recently announced it would do away with plastic straws groupon reported it is looking for a buyer. recode says that alibaba, which

took a 6% stake in groupon back in 2016 may be a possible suitor groupon shares rallied on the news, but the stock is still down this year and has lost almost half its value over the past five years. hey, ty, what's coming up? >> let me tell you we have a lot going on in the u.k. right now there's the brexit stuff, the world cup, there's wimbledon there is also a golf tournament that will tee off next week over there. the open championship. doesn't get any bigger than that somebody will walk away with that trophy, the claret jug. mike is going to join us to talk golf, basketball, and any sports we want to tackle. that's coming up when it comes to travel, i sweat the details. late checkout... ...down-alternative pillows... ...and of course, price. tripadvisor helps you book a... ...hotel without breaking a sweat. because we now instantly... ...search over 200 booking sites ...to find you the lowest price... ...on the hotel you want. don't sweat your booking.

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we've helped the marine mammal center go solar, install electric vehicle charging stations, and become more energy efficient. pg&e has allowed us to be the most sustainable organization we can be. any time you help a customer, it's a really good feeling. it's especially so when it's a customer that's doing such good and important work for the environment. together, we're building a better california. hello, fb. i'm sue herrera. here's your cnbc news update for this hour. harvey weinstein pleading not guilty to sexual assault in a third criminal case against him. there you see him leaving the courtroom after being released on bail with his attorney who later spoke to the press >> mr. weinstein is not a predator he is not a rapist, and i

believe that when this case is over, we will ultimately see him to be exonerated >> a top turkish official says it 4 people were killed in the derailment of a passenger train in northwestern turkey he says heavy rains caused the ground underneath the rail to collapse of the 362 paekz on board, 318 were injured here at home tab hunter, who was a heart throb for millions of teenage girls in the 1950s with such films a "battle cry" and "damn yankees" has passed away decades later he revealed he was gay. his long-time partner says he passed away on sunday of a blood clot in his leg that ultimately caused cardiac arrest. he was 86 years old. you are up-to-date that's the news update this hour ty, i'll send it back to you >> thank you very much, sue. efforts are continuing to rescue the members of it is thai soccer team that have been trapped in a cave. eight boys have now been brought out safely, and nbc news's matt

bradley is live in thailand. matt >> thanks. you know, what we're seeing in the next 20 hours is what we're hoping will be the last stage of this rescue mission. now, so far we've had two stages they're kind of breaking it up into parts on sunday we saw the first four boys being rescued today we saw the second group of four boys and still left in that cave are four more boys and that 25-year-old youthful soccer coach, all waiting to get out and very anxious to leave. the problem is now that the workers, the rescue workers, they have to refurbish the line that's connecting them that's allowing them to guide themselves out of the cave they have to refill those oxygen tanks that they've placed throughout the cave system, and then that's going to take probably 20 hours. that's a little longer than it took in between the other missions, but we're already starting to see the pace picking up now, it's very important to note that this is no longer an

unprecedented mission. when they started this on sunday, this was seen as so incredibly risky, because it had really never been done before. the cave divers, the expert cave diver who's did this and had done rescue missions before, they had never seen anything like this, and now we can't really say that it's routine, but we can say that they know what they're doing now they're starting to gain more confidence, and the pace of the rescues is really picking up we can hope. we can expect that they're going to be working much faster when they start again in the morning here a couple of miles from where i'm standing outside the main hospital here in shanghai back to you. >> we're all hoping for the best thanks so much >> markets right now, we are in rally mode with the dow, s&p, and nasdaq up for the third straight day the dow firmly up 1% s&p 500 up by .4%. the nasdaq up by .6% we should know the financials are your leading sectors on the s&p 500. in terms of the dow leaders, caterpillar, j pr morgan, caterpillar, and -- twitter

shares following on reports that it's cracking down on fake accounts the cfo tweeting moments ago about the story, which has helped the stock recover some of its losses saying that the monthly active user number isn't affected by the fake accounts being removed, and that's why you see the stock ticking higher right now. >> there was a recommendation based on that that they're expecting fewer active users and so down go the earnings. i digress because we want to turn to golf right now the oldest trophy in sports -- let me repeat that the oldest trophy in sport is the claret jug we're getting a firsthand look at it right now. they tee off a week from thursday at a fabled course. we'll talk about that in a moment we are thrilled to have mike tarico in the house. host with nbc sports he'll be leading coverage for the open for nbc and the golf channel. >> this is a highlight for me. >> mutual admiration for all of us >> this is -- i live in michigan, and you guys are on in my office during the day, so

this is a treat for me i got to watch in person instead of on tv >> we are so glad to have you here and the jug as well. >> yes >> this is -- i said this is the stanley cup of golf here >> exactly it has a different history because where it goes back to the roots of the game. scotland where the game began, and the names -- this is really a living history of golf because all the players who have won the open, their names are on here. every single one going back to 1872 >> that's right. the funny story is this started in 1860, the open, and the rule was if you waon it three times, you got to keep the belt there was a champions belt made of moroccon leather. they retired the belt. they had to come up with another idea after a couple of years of a bit of a debate, this is what they came up with, and it's lasted for about 150 years. it was a good debate >> what has really struck me is

the intricacy. you can see the names engraved in very small type starting at the tip of the jug >> first names are listed here the next set of names are listed there. they said we have to do something. they added band after band after band, and each year the names go on there's a little story gary player's name from the 1950s, slightly larger than some of other names >> why is that >> you used to be able to get your own name engraved, and let's just say the font size was just a bit bigger than the others >> a wee bit bigger. >> he is the john hancock now. >> it's a surprisingly petite trophy you think of the stanley cup it does not look like it would survive a week with alexander ovechkin put it that way. >> there's not enough volume to hold the liquid alexander ovechkin put into the stanley cup. there's been everything in here. the claret jug, so a little bit of wine. a few beers over the years >> some of us have called it the claritin jug we won't say who >> who would do that it's all about the

anti-histamines. >>. >> it's back to karnuski that's the vanderbilt thing. that was maybe, what, ten years ago. no, that was almost 20 years ago. >> 19 years ago. it reallygoes down as one of the greatest collapses in all of sport. not just golf, but all of sport. for those that don't remember john vandevelt had a lead. he needed to make a six on the par four he made seven, but that doesn't begin to tell the story. it's an unbelievable tale. as a matter of fact, there's a show on golf channel tonight >> really? >> 9:00 eastern time tonight go down swinging it's john vandevelt, and it takes an hour to tell the story of that hole, and it's worth every second i watched a sneak preview. >> you lived it. you and curtis strange were calling that final hour. that incredible time >> i'm going to give you a double sneak peek. we're doing a show on golf channel next week. curtis and i got together to watch it together the way we broadcast it and we had never done that. i have only watched it a couple

of times we went back and watched it. we filmed it for a feature that will air next week on our golf channel. >> i must have been channelling that yesterday when i was on the par four >> were you rolling up your pants like that? >> tyler, if you were doing that, i wish there was video of that >> headed in the burn again. >> what is karnewski known for what is the layout like? >> it's a little bit of that it's probably the most difficult layout of courses in the rotation for the open, and there are nine, soon to be ten courses throughout the united kingdom. there's a difficulty to it without the weather, but then when the weather blows on the coast of scotland, it can really be challenging and difficult that year of vandevelt, the score to get in the playoff, and it was a three-man playoff, was six over par >> what? >> guys who were 13, 14 over par, they were finishing on the fringes of the top ten it can be that difficult i don't think it will play that difficult this time around, but it's one of the toughest of the

open >> can you name who won that year >> you know that i don't know. >> paul lori fans out. >> yes >> tiger, is he coming all the way back, or not >> he will never be back to what he was he was unbelievable. he was as good as we've ever seen other than jack nicklaus, right at that level, for a very long time, right i don't think he can ever get back there he is in his 40s who gets better in sports in their 40s when they're coming off all the surgeries? now -- >> ben hogan where. >> different time. different era, right >> yes, yes. >> can he play at a championship level in the majors? i think he can if his confidence comes back, and that putter you see in his hands there, that's the key. >> the new one >> if he can put and put well and put with confidence, i think if there's a major he can win again it would either be the masters where your great intimate knowledge of the course is so important or the open. you can use your brain around the golf course. >> that's great for ratings. tiger is great for ratings >> yes >> what do you think of the

story that was trickling out last week that he and mickelson might play a $10 million match >> there's a part of me -- >> you should call it. >> i would love to there's a part of me that says that would be great. there's also a part of me who loves golf that says i want to see it in a genuine setting. i want to see it in a major. >> not an exhibition >> for all their greatness together, 19 majors, we've never seen them head-to-head in one of those battles like we saw phil mickelson with henrik stenson at the open two years ago we've never had that they've been in contention at the same time, but not mano-y-mano. if they do it for made tore for tv, that would be fine it would be a lot of fun, but in golf it's got to be one of the majors to really resonate with you. >> you are the most versatile guy in sports on television. i can ask you any sport here nba, lebron. i'm an original laker fan. i got to say, i'm not thrilled about the talent grasp that's going on and the money that's being thrown out there and all those things what do you think of what's going on right now >> in general, with the league i would say that some of the super

teams are great. golden state did it the old-fashioned way. people have criticized goellden state. four of their players were drafted. they did it the right way with great leadership in their front office i would say that in general the sport is not as healthy even though the ratings might be a little bit better. have you some steams, but we don't see great basketball competitions throughout the league i liked it when the 258ent was disbursed a little bit this will be great for the lakers down the line i don't think it will be as good this year. that's not the cast around lebron to be a championship cast in the western conference. >> and you did it all without notes. we'll be watching next week. >> fantastic >> not can't wait to get there. great to be here with all of you. >> you can catch more of mike and the claret jug -- not the claritin jug >> i never called it that. stop >> don't forget about the documentary on golf channel at

9:00 p.m. eastern time let's get to julia >> melissa, twitter pairing its losses the stock was down by 9.7% at its session low. now it's down only about 5% after twitter cfo ned seagull tweeted to clarify the wash wash post report that the company had purjed 70 million accounts he tweets some clarification most of the accounts we remove are not included in our reported metrics as they have not been active on the platform for 30 days are auto more or we them at sign up and they are never counted. he also said you would hear it directly from us he said the article reflects us getting better at improving the health of our service. the company is reporting earnings on july 27th. there's been some concern that that 70 million number would impact twitter's monthly active user number. guys, back to you. >> quick question. if the bots -- if some of the 20 million accounts were bots, let's say, and the bots were programmed to tweet on a weekly

basis or even a daily basis, wouldn't they still be counted as an mau? >> yes, but i think what he is saying here is that what they're finding and the majority of what they found in these 70 million or 80 million user accounts that they have suspended between may and june, is that a majority of those were either really old and had not been in use or the second they were started, they were removed it seems like this is a process at getting better of cleaning house on the really old accounts they haven't checked on in a while or that people can't start the bot accounts they've said that the cleaning house is much more likely to impact the monthly active users than the daily active users, which they are now more focused on, but they did say that, you know, the 70 million is not a number that's going to be impacting their miu's. >> julia, thank you. julia borestein in los angeles big reveal on cnbc america's top state for business only one man, one man, knows the answer scott cowen. he is live in the mystery state,

scott. >> well, there is a team involved in this that's sort of a circle of trust, but it is very, very limited you are right about that since we've started doing top states back in 2007, seven of the winning states have had republican governors four have had democratic governors. what state am i in red or blue? what does it mean when 36 states this year are choosing governors, and those other midterm elections? we'll run down the list coming up still a chance here.

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>> cnbc about to unveil its annual rankings of the best states tore business scott cohen is live somewhere we are told in the -- is that a eucalyptus tree next to you i see? over to your right >> to my right >> i saw that. >> we always get the amateur botonists, and maybe the pro botonists when we do this. we do keep that in mind, just so you know we're, you know -- we've learned a few things over the years. the other thing that we've learned is it's always interesting doing mesh's top states for business in an election year. you know that the big midterms are coming up this fall. maybe have you heard that. all of congress is up for grabs, of course, but it's not just congress >> we want our state back. we want our government to work again. >> looks like voters will have a real choice this november. >> give me the opportunity, and i guarantee you will not be

disappointed >> reporter: it's the other midterm elections. >> we need an economy that works for every one of us. >> i'm running for re-election as governor for the great state of texas >> reporter: 36 states choose governors this year, and the stakes are huge. >> the most important work done in the country in public policy is done in the states by governors and state legislatures >> we have a clear choice in november, and the things we stand for could not be more different. >> this is not a job for me it is my mission. >> reporter: it's governors who lead the state's efforts to attract business >> let me say loudly and clearly, maryland is open for business >> reporter: also, the governors elected this year will preside over redistricting following the 2020 census. >> this has tremendous potential for party gains on both sides. >> republicans hold a huge advantage at the state level,

but that also makes them vulnerable holding 26 of the 36 states up for grabs. among the states to watch, open seats in florida and ohio. >> get out and vote. i hope you'll vote for -- >> bruce rouner faces a tough challenge from j.b.pritzger. >> and bill walker has to take on both the republicans and the democrats. >> so am i in a red state or a blue state well, all the suspense will come to an end tomorrow morning on ""squawk box." we're doing this differently tune in 6:00 to 9:00 eastern time on "squawk. where we will reveal the top five states for business and where i am, and you'll be able to see where your state stacks up we're giving our patented die bol cal hints today. let's take a look at the next one. it is perennial favorite now, remember, i said die bol cal hints.

we try not to be obvious just like -- >> that's for the botonists out there. >> perennial >> perennial >> you are wearing a red shirt. >> yeah. >> nothing gets past her >> i don't know. you noticed a tree >> woolly bully, perennial favorite nothing is coming. >> we'll have to think chew on it >> we'll have another die bol cal hint you can read all about our study, read about the governors as well. top states.cnbc.com. our _#top states. the big reveal tomorrow morning. >> scott, thanks see you next hour. scott cohen. a top chinese phone company goes public and fizzles. behind the disappointing ipo and weren't financials supposed to lead the markets as interest rates went up? it hasn't happened yet, but the financials are the top group today. is this the start of something

big? 'rtring nawee adfincials next on "power lunch." so lionel, what does being able to trade 24/5 mean to you? well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪

you're not gonna say it are you?

welcome back to power lunch. time for trading nation. let's check out financials the group up 2 percent making it the

best performing sector in the s&p 500 ahead of earning reports. what should you expect mike cap larry is at high tower advisers good to have you with us frank, i want to start with you and talk about the looks like it has good support in the chart. >> look at the xlf it's held support numerous times this year. see it again here. each rally has been weaker than the previous creating a series of lower highs clearly if we break below that it's nchgt implications for the financial sector and the market in general one stat i want to focus on is wells fargo. wells fargo got hit especiallily hard down 25% but since then doing better than the dpchlt lf outperforming and then also performing recently what we a pattern trying to break out above here it's much different than the big

banks. >> michael, where do you see the financials in particularly the ones we get earnings reports out on on friday. >> we are very bullish on this space. it's flown under the radar lagging the rest of the sectors. but there is a rising interest rate environment there is fiscal tax stimulus only helping assets are powering pourpg in the spanks and financial services folks haven't looked at it having been focused on tech. this is it's one of two or three the sectors we expect positive earnings at the end of the week. if that changes the sectorer gets hit but we would continue to buy and own. >> for more on the insight heads to our website follow us on twitter @trade attention. a rough chart for xiaomi the company closing low ner the debut in the hong kong market. josh lipton has more on the disappointing ipo. josh >> melissa, this was not the

debut xiaomi bulls hoped for here that stock dropped as much as 6% during the session but xiaomi's president seemed to shrug off the bad news telling cnbc the short term stock price is dictated by market conditions what we will do is focus on long-term growth of business he weighed in on trade tensions saying he wasn't concerned because they haven't done much business in the u.s. they are a smartphone powerhouse but faces competition not just from apple and samsung in the home market it's actually in fourth place behind others. remembers xiaomi's straej strategy is to sell low-priced phones that means tech investors have to get comfortable with a different marjman profile. gross margins for the company 13% by way of comparison apple's come in at 38% still bulls point to the expansion in groepgt markets like india and the efforts to diversify beyond smartphones

into connected devices like smart tvs and higher margin internet services back to you. >> josh thank you. bill rally on wall street look at the numbers. up more than 300 points for the dow s&p highest level in three weeks. dow positive for the year. so should you keep riding this ral? forget the data scandal meantime, fischer hitting new all time highs plus a tweet from the twitter cfo helping the stock to pair loss this is hour. the second hour of power begins after this quick break >> announcer: and now the trading nation stats of the day and a word from our sponsor. >> daily price flukt aches of individual stocks can offer trading opportunities. however, if you're unhappy with your returns while trading actively, consider taking smaller positions over a greater investment time frame. evaluating trends over multiple weeks rather than hours can help a trader locate more consistently tradeable trends while possibly trading less

frequently

the bank stocks are removeland for being tao high, to a rich but we coined the term five years aig here is the fang once again exciting and enthralling and defying all of the negatives to charge higher. >> good afternoon, everybody and welcome to the second hour of power lunch time tyler mathisen here is the minnesota men u. the stock tug of war as the earning season kicks on friday will results be enough to push

the markets back to new high sns or will investors focus on trade worries? scandals what scandal despite all the concerns that users and investor -- investors would leave facebook, amid privacy concerns, the stock continues to hit all time highs. look at that up again today will the run continue. >> we will look at that. and the last straw, starbucks announces a big change come to the way you drink beverages, grab a cup and settle in as hour number two of power starts now ♪ way down among brazilian, coffee beans provide the billions. >> ♪ ♪ >> welcome to power lunch. markets are in rally with all three major zig-zags up the 13 strait day the dow higher by 1.25 the s.n.a.p. you said.75 and the snds up .6%. financials and industrials leading sectors utilities meantime are lagging

within the financials the kbe and k tracking the regional banks on face for jp morgan win alter. the. industrials have a positive day. caterpillar and bowing and 3m among the leaders. the vicks hid hitting the lowest level since june 21st. >> trade tensions have risen faster than the temperature in july and yet as you dee see the dow seeing another day of triple digit gains, the best we have seen since early june snaft, could tariff troubles be helping the market set up for new high pps bob misseny and bab sanlty standing by to answer that. >> i think at this stage we live with the trade tensions four months or something like that. we have waxed and wasn'ted but they've been an annoyance on the overhang on the market in that sense the fact that you had sentiment cool off that has

set up for the rally also there is diminishing impact the longer we exist with the tariff threats and the threats exceed the realities at least to date i think there is a chance that has been the case. if you look at where within the market has been done, to industrials for example, they went from a big premium valuation to the market to a discount to the market now it's relieved some of that pressure as well. >> what i think is amazing is how much trade is the marjle mover of the market sentiment overall. the idea was that there was nothing more nfrgt over the weekend not that we got rid of the trade war concerns look what i think is important the growth areas still really matter here. so technology and financials are expected to have a very good quarter overall. with yes we have concern base loan growth in financials. but overall, the growth still prevails over more defensive sectors. froegt over lack of growth and as long as market can levitate itself into believing that trade is going to work

itself out, that the other marj flal issues, stronger dollar, somewhat higher interest rates, some concerns about rising input costs. remember the inflation story sit sitting there on the sideline. the markets convinced they are not overwhelmed by the problems. i think a lot of good news is priced in. >> we are here at the level of s&p 5008780 here three weeks aig. been around the ceiling of the market since february. we will see if there is enough power to get us beyond that. i think all we have done is seen the laggard sectors lead financials and industrials tech sitting out lab a and emerging markets up about 1 the.5% if you look at eem/etf. >> thanks, guys see you later, mike, bob at the new york st. croix exchange. >> can with earnings season kicking off friday will it be the catalyst to push become to new highs let's bring in chief investment strategist. and the perforate director with

anchora adviser. >> good to have. >> you with the claret jug. >> with the claret jug. >> how could the monday be better. >> does that make you feel more positive. >> a lot of smiles from the three acres. >> what is the message of the markets to you these recent days >> what is the market telling us. >> you start off with a tug of war. i think tariffs are going to win in the near term in the tug of war. over the weekend you add up the announced tariffs either we are employeesing. >> they are not winning now. the market is up 300 points today. >> look at this it's $150 billion with the potential to offset about half of the positive impacts of the tax cuts throw in higher gas prices and that's worrisome if we break down the administration, let's call it trump act i. tax cuts, deg o deregulation stocks rally 30 from november of 2016 elections trump act ii since he started talking about tariffs, in late january, the

market is down 4 or 5% the average stock more than 10 off the 52 one trump act 2 in claret terms double bogey. >> mark, your thoughts, what's the market staying. >> tyler, i think it is being schizophrenic. we saw behavior basically over the month of june that i think was smrkle with regard to activity in the market translates from what sentiment was it related to concerns around trade already deaccelerating global economic growth particularly outside the united states in what could be amplified as a consequence of a trade war. and so you saw rotation into the defensive bond surrogate secretary sectors. so far last week toward the end of the last week on friday's goldilocks jobs report and today you see the reversal whether it's more than a countertrend rally for the cycle trade it's peter out sooner rather than later or whether you mentioned that it's earnings

season re-establishing a higher floor for the stock market upon which it can build it predicated op the delivery of corporate prompts expected to be up 20% on the year over year basis if the surprises come in even amount gains over that it might pull back investor concern that is yes we have seen the peak in earnings last lass acquire but it's not deaccelerating the market needs to worry at this juncture. >> at what point, david do you look around the world and see the impact you're markets have absorbed this idea of a trade dispute or trade war in kind we are bumping along here doing all right but around the world we see stock markets reacting more dramatically take for instance in china wrp the shanghai is in combos composite territory it's dinging dloebl growth to the point the u.s. should be concerned. >> the u.s. should already be concerned. >> okay. >> there is nothing good that comes out of tariff talk nothing good it's nothing more than indirect

tax on us as consumer, race raising prices is it going to slow down the economy we have learned that time and time and again. and trump gets a b plus on tax cuts and deregulation, d on trade. it will slow down our growth rates. margins are peaking. we are going to have a great quarter with earnings up 20%, margin still healthy but i think the next iteration is going to be slower growth on a u.s. particularly if the tariffs unfold so how do you quickly play it? maybe more u.s. small caps hamilton beach, not just simply blunders but many other products growing the free cash flow in addition to the large caps where you can own a bowing i think you want more small caps in the market space. >> what about you, mark? i find it interesting if we are talking about trade versus earnings, trade represented by a couple of dow components, cater pillar and boeing doing well today. but the financials reporting earnings jpmorgan and goldman

ask sachs. >> i think you are getting the trade risk off trade manifesting in the rally we see in things like boeing and cater pillar which suffered so long on the other hand you have financials as a sector that are trading cheaply on an absolute basis, 12 times earnings not just relative to the market basis that have really underperformed dramatically relative to most is sectors if not all so far this year i think you are seeing a setup where if there is a rotation in what lagged financials and what can help the market financials representing about 14% of the s&p 500, that have been reporting good earnings, and are expected to again this quarter, we just saw the "wall street journal" article this morning that talked about long growth at a 5.5% pace on year offer year versus the beginning of the year which was negligible that is that's indicative of exertion and industrial activity picking up on the back of business spending which i think is a setup for the financials to perform well which is why we

believe that's a sector in which one wants to participate in particularly the regional passengers over the remainder of this year. >> thank you very much good to have you both. >> my pleasure. >> thank you gentlemen, see you gees later while the market appears to be shrugging off trade war fears for now the next guest has op-ed in the "wall street journal" saying the unfair trade practices of china have little to do with trade deficits a bilateral trade agreements that president trump has been railing against. we welcome back allen blinder, a professor at princeton and form adviserer at the fed and your book is called advice and dissent wevtd get that in. >> thank you. >> essentially essentially i saw say op-ed piece is looking at bilateral agreements is to simplistic when you look at the whole global economy everything works out in the wash. >> sort of the first part is

what you said is right we should never focus on bilateral trade deficit sees or surpluses. the multilateral deficit that we have is large. and it means that america is investing -- that's good -- much more than it's saving -- that's not so good. and if you do that you have to look somewhere else to borrow the money appear opinion fortunately we are a very creditworthy nation that attracts a lot of foreign capitol. we do it with ease. >> here is where i was getting it in works out at the at the wash you saukd about something paul samuelson said comparative advantages where we are versus china. treasuries we seal let a lot of treasury to finance our future and that's where it works out in the wash, right. >> that's right. that's right they're a arigt mitticle identity that says what you borrow is equal to what you send

abroad we are not beating the arigt me tick. >> finish your thought i'm sorry. >> i said we're fortunate. others are not so the fortunate that we can borrow at low interest rates and not worry about at least for a while, maybe a long, long while, a drop in the currency value. other countries that ran anything like that size of deficit might have real clear and present dangers. but we don't. >> are we borrowing to invest, or are we borrowing to spend and is the heart of the multilateral trade deficit that america and americans spend more than we make >> yeah, that's exactly the heart of it. given that we spend more than we make by a very large amount, about 3. -- 3 and a 1/3% of gdp or something we have to run trade deficits with the rest of the world? does it have to be with china

the mostly no it can be other countries. as you know a lot of stuff counts as coming to the fruns mcis using china as a way station. the chinese do something to it and send it to the united states but the fact that we don't save enough compared to what we invest means we have to have this big deficit with the rest of the world. >> professor, do you think the federal reserve should take into consideration what's going on with the trade war in terms of determining whether or not they go ahead with the forecasted path for monetary policy >> yes but i think the impact on the fed on monetary policy is likely to be pretty small, unless the trade war gets a lot lot worse then it seems likely it's a bit inflationary and the fed cares about that it's a bit contractary on the overall economy and the fed cares about that it's like a supply shock if you just imagine this is like

a small oil shock. illustrate not oil -- although oil is going up also -- so you can think of it as kind of magnifying the effects of a supply shock age gous to a oil shock but not so far in magnitude. >> it sounds like silly semantics but i'm curious from somebody of your stat your are we in a trade war in everybody on this program calls it a tiff, a brewing trade tit-for-tat. nobody wants to call it a war yet. what constitutes a war and what difference does it make? >> i think it's a matter of magnitude. i would call it a war but not -- you know, not every war is world war ii there have been small and big wars through history the chinese i think the other day said this was the biggest trade war in history i don't think that's right but the danger -- look, if it stops where it is today which doesn't seem likely by the way -- but if it stops where it

is today we will call this a very small trade war, skirmish or whatever. the danger is that it blossoms into something larger. >> alan blinder at princeton thank you for your thoughts. >> thank you sure. still hared on power lunch reports off of twitter has been deleting millions of fake accounts the news sinking the stock but shares recovering as the company fights back. the details and the trade next plus, the president tweeting in just the last hour about high drug provides, calling out fiezer and we have the short list for the supreme court pick, who is on deck and what it means for business, all that coming up on power lunch. with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

well twitter is apparently cleaning house new reports say the company will delete millions of fake or suspicious accounts when it's all said and done. users may be happy but investors don't seem to be now the cfo looking to set the record straight. julia boorstin joins from us los angeles with that story. hi, julia. >> tyler, twitter shares plummeted nearly 10% following a "washington post" report that twitter suspended more than 70 million accounts between may and june over a million accounts each day saying that twitter has more than doubled its suspension rate since october. this raised concerns that the suspensions would hit twitter's monthly active user numbers. at which timer paired the losses, the stock now down about 5% after twitter cfo ned segal

says most accountsed removed were not reported in the metrics as they have been active or 30 days more or we catch them at sign up and never counted. the "washington post" report follows twitter revealing in a blog post that as of may its systemsed identified and challenged more than 9.9 million potentially spam or automated accounts per we can. and did you to improvements in the past year they're now removing 214% more accounts for violating spam policies. known as first quarter shareholders letter, twitter warned that ongoing information quality empties, as it calls them, impacted monthly users and may continue to impact them but they did say that daily active users which twitter is now looking to focus on will be less impacted by the changes. guys back to you. >> isn't it ultimately a good thing in theening long run if they get rid of fake accounts oh. >> of course. >> or spamming accounts. >> yes of course. look getting rid of fake accounts is better for everyone.

it should be better forrers. they're not bombarded by fake accounts but there is the concern if twitter has 330 million active users how many are fake or spam twitter has made this point and ned came out and said in the tweet saying it's not impacting the big picture numbers. but i think there is some anxiety on behalf of investors as we saw in the stock dip that maybe the numbers people have been counting on the past couple of years are not as true or as accurate as they may hope. but i do think ultimately everything that twitter is doing to get rid of the fake accounts will be better for users, advertisers, everyone. and as to how much it does impact those hard numbers, twitter reports earnings at the end of the month i'm sure we'll hear more from them about this this but he made the point if they were eliminating 70 million monthly active users from the base thp they have to issue a filing to disclose that. >> julia thank you very much pch. let's bring in cfr equity

analyst petition downgraded twitter if from a sell who hold thanks for being us. >> thanks for being with us. >> thank. >> it bounced off the ned segal tweets is there a concern on your part that the 70 million account number that they removed does not impact the mau number of 336 million or so that there could be a component of the 336 that are bots, programmed to, you know, fly under the radar of the screening processes to not be caught and called out as bots? >> in short, yes and i would also point out that could this limit future growth to some extent maybe. that's i think secondary i think the bigger picture issue is that through friday twitter shares were i think the best performer in the s&p 500 in the technology sector. they almost doubled year to date the pe -- was close to 60.

the valuation to us seemed stretched at best. and honestly this is just kind of an additional consideration to remind people more about risk. >> if accurate "washington pos"" story scott would you i will still downgrade to a sell. >> absolutely. it's a consideration that secondary at best. but i think what's going on here, is look, twitter has had -- we acknowledge this in the note this morning -- a lot of positive momentum across a number of different fronts and that's great and largely if not overly reflected in the stock. this is -- i mean not to bore people -- but this is to some extent a garden variety valuation call we try to make. >> okay. >> the stock has risen excessively we think right now doesn't really reflect, not just some of the risks but some of the execution issues that could crop up as soon as later this month. >> scott, i'm not picking on you particularly but i'm just wondering, it seems

to me that as far as wall street analysts go that cover twitter it's ear either naive or they're not doing homework when they don't take into conferencing the percentage of bots represent on the user accounts. to remove that many i would think is a positive. if i'm not somebody retirisant about going on twitter and i see they are getting rid of the bad guys i'm maybe going back again. what tuning? >> yeah, bill, i think that's a reasonable point obviously i heard your conversation earlier about how, look, this is positive for the company. but i think what it speaks to is what julia was referencing which is the notion of how pervasive was the issue? because we doept have the exact number the "washington post" talked about 70 million users ned segal the cof said it's not that many in the context of our monthly active user account. but we don't know exactly what the implications will be i think that over the near term what it speaks to is really the

fact that this is not the first time that twitter has made these kind of adjustments in terms of getting rid of accounts or how they count them. it reminds people that as much as the stock reflect perfection in terms of execution and opportunity, there are we think, a number of risks that people just are not accounting for at this point. >> very quickly. it may not admit to a quick answer but how transferrable are the concerns that are at twitter across other companies, other social media platforms in other words, how can we believe the numbers? >> right i mean, tyler, i think that's an important question that's come up around social media for almost as long as it's been around. >> yes. >> the difference though, is that twitter i think allows and maybe passively almost encourages people to some extent to take aliases or not use real names. other prominent social media platforms like facebook o

snapchat ner focused on the notion of the individual and the persona and associating that with a name and identity that's why it's perhaps more of an issue for twitter than some of the other platforms that we know and use >> scott, thank you. scott, cfri. rising prices are making homeowners equity rich but they are tapping the equity less and less and we find out why coming up. and forget defriending all that talk about users and investors fleeing facebook on privacy concerns hasn't panned out as this stock tshi all-time highs. a debate coming up

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>> announcer: the president heads to the nato summit what the markets will be watching for how the meeting could affect the agenda squawks box. >> shark tank tonight 7:00 p.m. eastern. get yours. in the last hour president trump taking a shot at the drug industry tweeting fiezers and others should be ashamed to have raised drug prices for know reason. they are merely taking advantage of the poor and others unable to defend themselves while at the same time giving bargain basement prices to other countries in europe and elsewhere. we will respond. joining us on the phone to discuss this david meris the analyst at wells fargo great to have you with us. >> good afternoon. >> david, you tracked this and tracking the drug price insides in july which is a popular month as far as drug price increases go is fiezer doing any worse than any other drug company out there

why do you think it's singled out? >> in early july they had a big number of price increases that's why they are being singled out near recent and a wig company. and it's a little unfair to shinl them out because there are lots of other companies doing the same but to single out -- sometimes you need to single out one company to make an example of the practice that's going on widespread >> so fiezer in particular had price increases on 41 drugs on july 1st by as much as 9% but it lowered prices on five druks by 444% according to what you have found. what do you think the administration could do? is this something that investors should be concerned about when it comes to investing in the sector which seem to have come to life finally in recent weeks. >> there are a few things. first, is it a real issue? absolutely when viagra came out it was low priced five years aig it was $800 now it's $2,200. generics just came out and guess

what the generics sell at $50. someone is making money at $50 someone else is charging $2,200. the world understands, americans understand that companies need to make money. they need to innovate. everyone understands that drug companies keep people out of expensive areas like hospitals and doctor's offices but there is a public trust part and that's why it resonates with voters and consumers they're going to the pharmacy and a large number of prescriptions are being abandoned at the pharmacy because someone has a prescription at hand they go into the pharmacies and get told what the co-pay is and can't afraid it. >> right. >> what can the president do he is doing a lot. first of all warning the sfree and the industry is not doing anything that's the first mistake he can push for faster generic prufrms. he is doing that he can require discounts and reebts to be disclosed he can take away tax deduction ability for advertising or promotions or sporting events. ke call for medicare to

negotiate drug prices. some people think this will never happen but it might. and they change the crazy hacks waxman rules that pay off generics for trials. there are lots of things to do they have to start to do them. >> as he singled out fiezer and side while they are raising prices in the u.s. they are offering bargain basement prices overseas >> we haven't looked specifically at fiezer's drugs here and there but as a rule it's fair to say something everyamerican gets u in arms. we understand if a drug is cheap ner india or mexico there is something wrong with a developed country like the uk or france getting a bargain on a drug we ino invented there is something about subzsing the. >> they had say you are suckers and don't negotiate the price. >> given all the president could do david, should there be a discount embedded in the

multiples of the drug stocks. >> we have been saying -- we put out a report series over the last six months called the brave new world, saying that the whole world about pharmaceuticalings is changing. the margins are decreasing they may be spending a little moit bit more on r & d but profit margins are coming. they are among the the most profitable in the u.s. but something has to give. and the consumer can't give anymore. now it's time for the industry to figure out a way to either pay lower discounts and reebts and get that savings to consumers with, but somehow the consumerer has to get relief i think that generated the tweet today. >> david, a pleasure thank you for phonecall. >> thank you. >> tyler. >> let's check on the markets which are active today as you see right here rally mode, investors have brushing off trade engs its for now now now the dow. up 303 at 24760. the nasdaq higher by.of 6 at

77.37 and the snap you said .75%. financials and secretary e-leaders. utilities and industrials leader. >> do you lead ertz include cater pillar goemd sach and cater pill. >> sue herera with the news update. >> here is what's happening at this hour. eight of the 12 boys trapped in a flooded cave in northern thailand are safe and recuperating in a hospital after the second day of a high-stakes rescue the official in charge of the rescue says getting the final four boys and the coach out of the cave could take more than one operation. indiana's attorney general speaking publicly the first time since being accused of 1k5u8 harassment by four women he rejects calls to resign zpieing he did anything inappropriate. >> these past several days have witnessed my name and reputation dragged through the gutter in ways i would have never

imagined apparentlily in this climate the standard is guilty and who cares if you're innocent nissan motor admitting that employees clfd the emissions data at plants since 2013. speaking at a press conference, the company's chief competitive officer and other executives apologize but maintain there is no problem with the vehicle quality. you are up to date that's the news update this hour. melissa back to you. >> thank you president trump's pick tonight will change the face of the supreme court, possibly for decades. how will business fair before the new court? we drill down on the candidates. and the anticipation building for the reveal of cnbc's top state for business. we head back to scott cohn at an undisclosed location with another diabolical clue

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welcome back to power lunch. president trump set to reveal the pick to replace justice kennedy on the supreme court in primetime tonight, a move changing the face of the court potentially for decades. kayla is in washington with the latest hi, kayla. >> out of four candidates president trump is honing in on two according to nbc news.

both 53 years old and both served at federal appellate judges and served in the current roles more than a decked the first, brett kavanaugh of d.c. is seen as the establishment choice with codified views and a public profile and nearly a dozen of his opinions held up by supreme court majorities he has a long record praised by presidents a outside judicial adviser, among others. know critics may seize on his role oversees documents that were processed and landed on the desk of president george w. bush as well as his role as a staffer for ken starr, the independent counsel in the white water investigation. the second candidate the president is said to be closely watching is judge thomas hardiman from the third circuit court of appeals in pittsburgh he was the runner-up in the nomination to justice neil gorsuch last year. and actually worked with president trump's sister, herself a judgen oh the third circuit court of appeals his views are reliably

conservative but less clear on abortion and reproductive rights which will figure prominently in confirmation proceedings that said when hardiman was confirmed in 2007 was the vote was 95-0, including 18 democrats. we'll see who the president chooses tonight at 9:00 p.m. eastern back to you. >> kayla thank you. let's bring in adam white research fellow a at hoover institution and director for the administrative state at george maso masons antonen scalia law skoom. i heard you kayla's rundown of who is in the lead let's start with brett kavanaugh. what is he known for how might he rule on cases involving business. >> judge kavanaugh sits on the u.s. court of appeals for the d.c. circuit hearing a lot of cases involving regulation, regulatory power and structure of the government. he issued a number of opinions casting doubt on the broad

powers granted to attentions if he goes to the supreme court one can expect he continue that is trend of skepticism of overdelegation of power. judge hardiman has a less developed record on this his opinions impressed kevlts in the last go around and impressed the white house. but he has a less clear record on regulations of regulatory power and those related issues. >> there are concerns among some about the -- about the justices and their positions on such things as gun control, roe versus wade, sticking with a provider -- a stare ziesis, sticking with precedent and so forth. what can you tell us there. >> both of the alleged front runners are -- have opinions that weigh in on these things. judge kavanaugh has shown judicial restraint most famously where he was reluctant to see the d.c. circuit get involved in the affordable care act. judge hardiman has participatesed questions of

precedent and not gone out too far of the supreme court precedents in sensitive issues both have shown qualities of judicial restraint but of course on the supreme court it's always a little different since the court isn't bound by its own precedents. and so that will remain open question and how they either proceed in that environment. >> final thought there as to -- as to how easily or difficultly, either of the individuals would get through senate confirmation? obviously they both cleared in the past one by what was if 97-0 processor 97-1 but the supreme court is a different kettle of fish, as they say. >> hardiman was conserved unanimously to the third circuit. judge kavanaughs was one of the more challenging in the bush administration he arrived after the deal struck to end the democrat's filibuster of president bush's judicial nominees he has already seen a challenging time through the confirmation process

but of course as you mentioned, the lower court nomination process is completely different. and the senators will approach in differently and so it remains to be seen whether even hardiman would enjoy such an easy time through this confirmation hearing if he gets the nomination. >> adam, we appreciate your counsel thank you very much. >> thank you. the good news is americans have more equity than ever in homes. the puzzling news is a lot of enemy are leaving that money alone. diana olick joins us to sort it out for us diana. >> bill as values sky rocket so does the a equity the and it grew by 7% in the first quarter of this year according to black knight. the largest single quarter growth since been tracked in 2005 homeowners have a collective 5.8 trillion in tapable equity, the highest recorded the average homeowner with a mortgage gained 1470 oh dollars

in the toppingle equity over the past year and has 11390 oh available. but fewer people are doing that. home equity lines of credit were flat at the start of the year. and for those using them the amount cashed out at 2-year low. more people are doing cash outry financing which doesn't make a son of sense because interest rates are higher so they lose the rock bottom rate most have already done the refie on but the first loans are generally fixed rate and home equity lines are not -- homeowners do not want to gamble on the monthly payment more kevlt more numbers on line. realtime check cnbc.com. >> thank you this spring facebook was under fire for breaches of the user privacy and there was plenty of talk of fleeing as a result by investors and users. however the stock is at an all-time will the optimism last we debate, coming up you always pay your insurance on time.

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white. hes a price target of $225 and ali who as a 4-star rating on facebook abtarget of shh 198. alia i'll start with you should we impute anything on facebook based on the "washington post" article about the accounts being scrubbed from twitter? >> no, not really. i mean, let's just focus on twitter first. those types of accounts were probably not necessarily to be monetized that effectively anyways. the resources applied for advertises on the twitter side were not focused op those types of accounts. we think the same thing might be happening with facebook. in addition, of course, you have instagram side of facebook, which basically in my opinion is growing faster nan the traditional. i never thought i'd say this about facebook, than the traditional facebook platform. that's certainly positive pch but to answer your question, no. >> all right brian where do you stand on? you initiated back in april, right and you have a $225 price

target where does the stock go what's the next dalgtsist from here and how should you -- or how would you alleviate concerns on the part of investors who think there is another shoe to drop? but they can't possibly know the extent of apps having access to data. >> well with, i definitely think march was grounds zero on this data privacy issue and so we said there was going to be a lot of aftershocks afterwards but the big surprise is out of the way. we saw last week with the fbi and s.e.c. some of the aftershocks. but this is a stock that is tremendously under valued for growth significantly. 21 times x kwash for a company growing 40% and eps 43% this year i think it has a lot of upside from here. we remain very bullish on this story. >> can they keep up that rate of growth because the history of companies that grow at that speed. >> right. >> the law of big numbersly

takes over. >> maybe you maybe you it won't grow that fast in the next few years but i think it can grow 30%. >> wow >> you can see that growth when you look at the the win but for. messenger be instagram there is significant growth from the new avenues for facebook and i look at artificial intelligence, ar, v.r., this is coming together as an enormous tech platform not just facebook itself. >> ali, in terms of valuation why don't you recognize that perhaps facebook is being discounted considering the growth that it has in store? >> yeah, that's -- that's one thing that i probably disagree with your other guest, is that i think growth, we are seeing deacceleration in the growth what happens happening as i mentioned instagram is growingly nicely on the user and revenue side that's offset by the slowdown we see in the traditional fischer platform when it comes to ad

revenues and then keep in mind that margins are probably coming under pressure of course, you know, basically over 45% operating margin is certainly something to be wraud proud of and represents a solid company. but we're thinking that's going down a little bit given the fact that they're going to be investing in data security, data privacy, on top of that also acquiring more premium or -- premium or valuable content for their facebook watch and/or for in re instagram stories. >> spending goes up. >> those things -- in my opinion. >> yes. >> is exactly one of those things in my opinion put pressure on margins a little bit. >> is what's app contributing to profit margin. >> i think it's relatively myren today but it can. >> this they have to figure that out. it's a huge user base. >> instagram is even more exciting in what's happening and they came out with instagram tv. there is a lot of new innovations. and v.r., i am hugely excited

about that long-term they came out with ava 2.0 fa 8 not a lot talked about but having the avatar your friends, interacts you can listen to concerts together. watch watch movies together, listen to concerts together. i think there's a lot to be done on the vr front. >> brave new world, i guess. >> yes, there is >> all right, gentlemen, thank you. >> i've got my avatar working. starbucks ditching plastic straws in the company's latest push to go green we will tell you what's behind the move and the nonstop search for the top state for business he will have another clue -- >> a diabolical clue >> a diabolical clue after this break.

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well, we're getting closer and closer to the big reveal what is 2018's top state for business scott cohn is live at an undisclosed location with another clue that's a lovely buddha like position you have assumed there,

mr. cohn >> you know i've done a few sillily things in my many years in television, most of them in connection with top states for business and about to do another. we always look at the states in ten categories of competitiveness. one of them being quality of life and one of our metrics for quality of life are things to do in this state you can actually go sledding down a sand dune, which i'm now going to attempt on live television all right, coordination is not my thing if you like to do what i just did, come to this state, the top state for business here's another diabolical hint it is dog heaven figure out what that means top states/cnbc.com. we reveal the top place you can do this tomorrow night on squawk

box. >> i think i've got it >> you think you've got it i may have it, too i may have it, too i'm not sure all right, mr. cohn, we'll see you tomorrow get down safe. >> i think i got it. that one gave it away, but we'll see. starbucks is ditching straws and flipping for lids. it says here, kate rogers is live in new york city with that very story for us, kate? >> reporter: hi, bill, that's right. starbucks announced this morning it's going to be getting rid of those single use plastic straws by 2020. instead you order a cold or ice drink you're going to get one of these, a recycle strawless plastic kid. the company designed these but it's not saying how much it cost to implement these once these plastic straws are phased out, you can actually get an alternative material straw including one that's made out of

paper. a major reason for these change is the popularity of cold beverages. starbucks said here in the u.s. they now account for 50% of the mix. the phase-out will begin in seattle and vancouver this fall. these lids are already available at 8,000 of the company's locations in the u.s. and canada and they said in making this change they will be getting rid of 1 billion plastic straws at their stores around the globe per year until they're phased out. plastic straws are a big point of contention in the u.s. and america. we know that seattle, starbucks' hometown actually banned the straws and the hyatt hotel saying we will be geing d ttriof plastic straws >> kate rogers outside of starbucks. check please is next do you want $4.95 commissions for stocks,

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all right, very quickly we have mike here as we get ready for the british open we were all deferential except for our head of communications, brian steel, who thought this was the stanley cup or something. and he tweeted this picture a little while ago not good, brian. so what happened last night at dinner >> so i went to dinner with -- and my son and dylan and his son asked for straws for their lemonade, and they said we don't have straws anymore, and they

said we are switching to paper straws and paper straws are back ordered. they can't get straws. >> buy paper straws. >> give me a paper straw for my martini and i'll be a happy boy. >> good to be with you >> thank you for watching power lunch. >> "the closing bell" right now. it's time for "the closing bell." investors shrugging off trade fears. markets are ral aelg wrrg but lots of head winds remain. we'll talk to one market strategist who says now is the time to sell trade wars are heating up. more companies applying for tariff waivers, but few are getting approved i'll have the details. i'm scott cohn all day long i've been dropping diabolical hints about this year's top state for business. and in for kelly evanerize, facebook shares hitting an all-time high. we'll discuss whether the data scanda