we had reached 200 points on the dow. get back yesterday's losses, and then some. up 14 on the s&p, nasdaq indicated up 37. you want to be here tomorrow, don't lie. >> absolutely. he doesn't >> no, he doesn't. make sure you join us tomorrow, "squawk on the street" is next. ♪ ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jaime cramer, david faber at the stock exchange cpi, the hottest pace since '08. the president's just landed in the uk dealter, comcast, twitter, netflix all in the news today.

10-year around 2.86% futures point to a sharply higher open as china trade wars ease the president, brexit and a british royal visit, president trump arriving in london moments ago to visit the uk for the first time since taking office comcast raises its bid for sky as britain gives the green light for rival fox's bid in the battle for that major european tv prize stocks are set to open sharply higher a day after that sell-off due to trade war fears ending a four-day win streak consumer prices up .1 in june, from year-ago levels, prices have increased at the fastest pace since 2012 and on core, since 2008 >> we tried to figure out at this juncture how many rate hikes we're going to get and a number like this is consistent that we'll get more rate hikes will it really help? i don't know you see underneath in the crawl airlines come by the airline numbers are all

weaker that's directly related to demand cedar fare which i know may not be representative but that's a huge theme park operation, numbers well below where expected different instances where i see that the consumer has pulled back from some retailers look, i think that we're getting some pushback. remember, when you look at where the tariffs are going, you're going to get another bad number, i believe, the tariffs are very much now in the bread basket of what people buy. >> bad number in what? >> i think inflation's going to smack the cpi. you go to 5 below. that's like recreational equipment. >> i will never be in a 5 below. i didn't know what it was for. >> i'll take to you 5 below. bargains there are amazing

>> more promises to take david shopping >> carl's calling us out on all these shopping sprees we never go on. >> i can take you to my dollar tree which is excellent, the one in the hamptons. the one that my dad used to go to is the greatest those are made in china. i think that that's what you're going to see i know that the tariffs that are being considered are tariffs that are going to be things that we all buy we don't think about a lot of the things that the chinese import it is too hard to assess we'll start seeing auto parts, for instance auto parts -- many of them are made in china. you're going to start seeing these things the fed is not going to take solace in these numbers. >> delta today saying their fuel bill was $2 billion higher than last year. >> we need to see oil plateau and it is going to be very hard because these natural oil

companies are not drilling you need to see something give you have tariffs and you have oil. i don't want to paint a totally negative picture because in the end all of this is against amazon anybody who really shops thinks year over year if they open a prime account that they're paying less. that's really important. i remember gary cohn -- remember gary he was chief economic advisor. >> i do remember mr. cohen, yes. >> he gave the best single explanation i ever heard about how cpi may not be as accurate because of the digitized economy. so against everything, against this you've got this stitch fix. dollar shave club versus the heavily plastic incredibly difficult to get gillette razor. these are what people see. you'll have china but you'll also have the incredible digitization decline in prices they should equal each other when you see a headline like this, i'm sure people in the fed say, wow, fear the fed

>> which steve leisman had the other day. >> a tremendous piece of reporting. >> morgan stanley saying we'll convert by mid 2019. that almost sounds late. >> there is the president coming off air force one in the uk. of coursing with going to be discussing trade with some business leaders later on today. he'll go to checkers, visit with theresa may. go to windsor castle, eventually, for tea with the queen. first state visit to the uk for the president. >> very significant in the -- i'd say the trip on nato was not as diplomatic as we're used to from presidents. i think that that's fair, not as diplomatic, david? >> i think that's a fair statement. i think that will frost gave a very good idea to him immediately, which is condolences for england for the

football team. i think he has to be more "the apprentice" last show. >> there's woody johnson, by the way, ambassador johnson now. welcoming the president. if you missed the presser earlier this morning, the president did say that the nato alliance remains very strong, said leaders, he says, agreed to boost defense spending substantially. >> that's why the dow's up today. that's how you do it you buy patriot missiles it's the patriot missile act the number 2% to do with the gdp, that's a guideline. let's get that straight. >> the fact that he went to 4% -- >> more than us. more than we spend >> just to put it in perspective, our defense budget i still believe is the equivalent of the next nine countries below us combined. >> germany's too low >> morgan stanley's got a note, morgan brennan helped us get to it it says to get to 2% from the current 1.5% would require $117

billion in additional defense spending by members. they said, by the way, the 4%, they never expect that to happen >> but you got the joint strike fighter. you've got abrams tanks and you have patriot missiles. those are the three, okay? and they cost a lot of money that's what has to be bought is he arms in chief president? yes, when it comes to -- you'll see all those stocks go up why? because that's the only way to really placate the president >> by the way, interesting day for the president to be in the uk because today, may publishes this 98-page white paper on what is essentially a soft brexit the blueprint that in some cases the banks in some cases would lose their current access to the eu market but comes after the resignation of those two cabinet members as she tries to put together a coalition on that front before this self-imposed

deadline >> you mentioned the main man greeting the president was the ambassador to the uk, woody johnson. the other main person was the international trade sector that's for two reasons partly because the prime minister and foreign secretary are making their way back from nato themselves. but also because no doubt trade will be on the agenda for this trip now in that outgoing press conference from nato, of course defense spending was mentioned but the president also said this -- i think they like me a lot on the uk. i think they agree with me on immigration. an interesting perspective from him. i can assure him that not everybody here agrees with him there will be notable differences -- on trade, on tariffs. theresa may, "they were unjustified. and on the upcoming trump/putin

summit especially after that attempted murder on british soil finally, the issue of protests of course, there will be we took some pictures this morning of some protests preparing against the president. it remains to be seen how significant they are certainly there's divided opinion here in the uk ahead of his arrival in london. he's here in the uk. he'll travel now to winfieldhouse coming up next >> what's interesting. it is not just about opinion in the uk there's divided opinion among nato nato's not what it was there are a lot of nationalist leaders now who are in nato. and they're not pro-germany. this is no longer a unified europe in a lot of ways. inclusive nationalism. i think our coverage -- press

coverage in general just presumes it's u fighted bloc, led by germany, against united states that is not true that's the old nato. i think the president is playing up -- he recognizes that there's nationalism in europe whether you like it or not it is not united anymore he's not being completely off base with some of the countries that are in europe >> examples are easy to find erdogan yesterday, we're all watching italy >> why is he in nato that's not a democracy but lot of these countries in the eu the euro common currency are not democracies. you're supposed to have democracies. democracies are united but a lot of democracies are also united against germany. it's true. >> we'll be talking to you, wilfred, as the president makes his way on to the helicopter in preparation for his trip to the uk >> we'll stick with the uk in terms of corporate news from

this morning our parent company, comcast, increasing its offer for sky,a we told you it would yesterday sky, the large broadcast satellite company with a lot of content, also. $14.75 is the new accepted bid, at least one that's been recommended by the board of sky. topping that increased bid from disney and fox that was received and agreed upon, or at least recommended by the board yesterday at $14 where does all this leave all the different moving parts here? let me start sort of with this basic theme, or at least question, which is -- this is what i think people on both sides, the disney and comcast side are starting to really think about, which is, are the prices simply too high for both sky and fox now, for any of us to do both of them is it simply too much? too much debt, too high a price, too little return? think about it from disney's

perspective right now as we told you yesterday. when we strip out the -- the reason they got such rapid approval from the department of justice, you sell those into the marketplace, you'll get a lesser multiple on those businesses that are not growing they do return a good deal of cash private equity may be there. we'll see who others are but it is a huge asset 40% of the ebitda be produced by those. you're going to get a far lower multiple than you are paying for fox lowering the multiples maybe as high as 22 times. that's high. that's high. and that seems to also be something that is figured prominently in the way comcast is now thinking about the fox as ses and looking at sky and its current bid there that has gone up a good deal from 1250 to

1475 there a way that disney conce e conceivably will make it clear that they are no longer going to raise. by the way, i'm always learning new things when it comes to uk takeover law if you were to come out publicly as i indicated previously maybe disney would be willing to do, they would be bound to that under uk takeover law to not raise. it is unlikely they would do that because it would give comcast still the opportunity to come back for fox and they would be prevented for raising for sky. what's more likely i don't know you figure out a way to trust each other through an intermediary and get at least some sense that believe that we're done, comcast done here for fox and disney might be inclined to indicate same. this is where it all ends. i don't know that that's going to be the case the calendar's a key here. disney can choose to continue to pursue sky and you move to an option still probably a month

and a half or so at least for now for uk takeover law for sky itself but these prices have gotten very high for both of those assets >> this morning on "squawk," you used a 4.5 number. >> comcast has indicated a willingness to go as much as 4 1/2 times leverage >> you can't go that high. >> -- to get the fox deal done i think a bid, let's call it, in the low 40s would potentially put you there depending again on what you'd receive in terms of recompense for selling these regional sports networks which you would have to do as you are bound to do as disney is under the doj. >> stocks are saying it's done, disney gets its man, comcast gets its man that's what the stocks are saying you listen to the people involved stocks are saying it's over. we'll just wake up on monday, everybody won. >> and everybody might win --

>> the stocks are not saying anything else. can stocks be wrong? of course. of course they can they went up after you talked yesterday because people interpreted what you said as the possibility that the anger level has reached its peak >> so we'll see. don't have anything definitive to offer >> i think you just offered something totally definitive >> i think the observation, i will repeat again, prices are simply too high for anyone to do both is important. >> speaking of m&a, broad com is back on the business trail preparing to buy ca technologies, $18.9 billion in cash 20% premium to the closing price yesterday, comes months after br broadcom's bid was blocked by the white house. we talked yesterday about ca's long history >> their pfree cash flow

why do i do this the excellent ceo of broadcom has been given no benefit of the doubt -- >> you know this this morning, analysts -- it is rare i see this kind of backlash, wondering what the new strategy is. >> they turned on him. they turned on him >> "what the hock. "out of left field is an understatement," says raymond james. "even prisoners get a phone call." bernstein. >> that's the one i'm hanging my hat. >> our evening was mostly filled with confused and angry calls and e-mails as anybody who bought the stock on the back of small m&a and buybacks >> you looked, didn't you? you cheated.

i was going to read the thing. >> while you were talking about nato >> i was getting made up it was right there >> jim, what about all that? the fact there's a change in direction here they have to do these kinds of deals maintaining they'll cut costs dramatically, raising prices in the main frame business >> three-year contracts. david, i've got to tell you, i am not defending the acquisition. i will tell you that at the same time i'm not defending it, i recognize that hock tan needed to have not episodic cell phone, but continual but slow growth main frame >> look at the stock >> the stock is saying that it is not a great deal. >> that is not what you -- >> i've never seen that kind of -- >> that is a significant -- >> that's people leaving the stadium in the first inning. >> of course the company that pursued qualcomm for months, as we well know, finally having to

give up once cfius said this is not something you will ever able to do. this is designed to move quickly. they don't even need china approval so it is designed for a pretty quick close will they raise prices still a question what will they do with ca? you could argue they'll have to take out as much as $1.8 billion. >> they can do it. they did over 65 acquisitions in the last decades i suggest to hock tan who watches the show closely come here tomorrow come here tomorrow and just talk us through because hock tan deserves a lot of benefit of the doubt and is getting none. yes, he does know how to cut costs, he knows how to raise cash flow. this is not necessarily the disaster the stock is saying but

hock needs to talk us through. >> mr. tan, we talked about the roll-up strategy here's what he said in terms of criticism of that. >> not at all true from our side what we do is we acquire businesses, product lines, that are in proven products, leads in technology, which we build upon, and sustain. we're building up a company that is sustainable for the next ten years. that's what all our franchises are. >> so regardless of whether you acquire qualcomm or not, you are comfortable with your strategy and you don't need to do another very large transaction >> we are doing qualcomm because as an asset to be acquired if we don't do it, we'll continue on our current strategy of beginning to acquire assets in the semiconductor industry and build on those >> there you go. that strategy's gone now they are talking about an entirely new strategy. >> no.

but you know what? i am going to give him some benefit of the doubt he's built a company that has huge free cash flow by buying companies that have bad free cash flow and bad expense structures but yes, it was a company, the acquisition was not what we thought. i've got a half dozen short list semiconductor companies i thought he'd buy i got a half dozen and they're not being bought instead, instead of a hardware, we got a software company with what i will tell you has some of the slowest growth around. by the way, if you look at the free cash flow, it is extraordinary how it is -- it is almost the same for the last five years that is not what hock does he brings out the profits. >> well, it is a significant change in strategy i think shareholders are surprised by it because it was not communicated previously. >> not at all. >> do want to obviously share more of their thoughts i hope hock maybe would consider

joining us i don't think -- they don't need a shareholder vote, obviously, it is a cash deal. just to make sure people understand that. >> no, i'm all over it i'm all over it. i'm a believer in what hock has built, just the percentages say he built you are what your record says you are. jeremy hunt on president trump's visit to his country today. still haven't gotten to news regarding twitter. netflix, got sales figures out of costco and lb "squawk on the street" is back in a minute.

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xfinity xfi, simple, easy, awesome. . six minutes before we get going here with trading at the nyse on this thursday. j&j. >> positive note out today about ge, paypal i'm picking this this is the largest -- this is really the big daddy j&j is down 5% since he went to sell she has the most gravitas in the group. i think she was afraid to keep a sell ahead of when they report >> she's the analyst at goldman sachs. >> she, i think, is now the

reigning person in the group this stock has started to sneak up it was at $121 remember, j&j sells at only 15 times next year's earnings that is ridiculous this is the number one balance sheet in the world in the world >> it's like the only one. >> they thought it was only batteries. batteries and j&j with the aaa nothing like this company. alex gorski. >> what's this about >> couple of quarters that were softer and a belief that perhaps there wasn't that much in the pipe and, you know what frankly, when you think about j&j, it got overinflated versus the rest of the group. now it is under. great call by jane i congratulate her i listen to her on allergan. could have saved a fortune we have a lot of stocks we haven't gotten to this morning we'll also revisit the

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you're watching cnbc's "squawk on the street," live from the financial capital of the world. opening bell in just about 30 sends. busy, busy morning president in the uk as we continue to watch his european tour kroer cpi up, the hottest in about a

decade a downgrade for netflix out of the ubs evidence lab which i know you like. >> yes that's csi ubs i think what was most interesting was that he had to raise his price target i'm not being facetious here but when you are really engaging how netflix is doing by looking at how the sequels are doing, looking how many google searches on "luke cage 2," on "13 reasons," i never want to just say the evidence lab has phony evidence but i do think that the methodology, while rigorous, may not capture the growth as they think it does. i think the far more important call is -- >> target goes to $425 but they say we don't see the pronounced up side to q2 results versus prior quarters. >> it was at $375. the price target had already

been well overrun. [ opening bell ] >> we all know many shows that are watched. the evidence lab has to be -- has to have more evidence to make me feel that the prosecution -- i think the prosecution's rested here, david. the prosecution is resting. >> okay. >> just saying resting. >> you don't really ever rest. >> i'm not the prosecution >> you're not. got it >> there is the opening bell big board today, natural gas provider south jersey industry celebrating its of 60th listing anniversary. speaking of big calls on popular names, goldman, heath terry ups

his target on twitter to $55 from $40 in large part on what he's calling better information quality. of course today is the day they will start to remove a lot of these bots >> a beautiful piece a beautiful piece about twitter from goldman basically saying they're not getting any recognition for basically kind of revolutionizing the way they monetize which in the end is what we really care about. we want to know whether they're monetizing correctly i like the piece i thought it was very smart. >> today is the day i guess followers start falling off. >> i checked my number of followers to see if i lost followers. that's what's going to happen? >> i haven't lost any -- who knows what it would have been otherwise but i haven't seen a marked decrease. you might since you have 10x my followers or david's >> people have to recognize how easy it was to buy followers i know people who have bought followers. they bought followers in order

to get more followers to get followers. you buy phony followers to get real followers that's what's been happening david, you know people who have bought followers >> i do? >> will you just humor me for once >> i don't think i do. >> an outfit in florida -- >> apparently they were selling a lot of followers >> i know from my daughter that people have bought followers because i once said to her, i said, geese, i think you should get some followers "dad, i'm not buying any followers. no, not buying just getting the evidence lab is knocking netflix. >> evidence lab. >> evidence lab. the evidence lab is about blood spatter. >> when is chuck moonves giving them a show. >> they're antinetflix it is quite possible the evidence lab -- >> the evidence lab. we have an all-time high on costco june comps 97.

e-commerce up almost 28. >> i joke about the pajama traders. costco was down very badly when that number came out because it represented deceleration from the previous month i look at it and say costco, winner costco, winner remember, what do we pay for without realizing and not caring, our costco card, spotify. we pay for netflix we pay for apple services. do we ever look at that bill we pay that every -- if you guys haven't backed up your -- if people haven't backed up their pictures, i can tell tales of woe about cell phones that were put through the washing machine. going through the washing money doesn't work the quality of your phone is harmed now just because my wife put it through the washing machine, she meant nothing by it. it didn't really upset me. i was able to deal with it didn't bother me i was able to get a phone within the -- it's fine it didn't bother me one bit. >> i'm speaking of apple

its relationship with broadcom is a very important one. >> that's the episodic problem that's why when you read the morgan stanley note today you feel good about apple because of the service revenue. >> the transition to 5g, some wonder whether broadcom is still going to be tied as closely to apple in terms of -- >> are you trying to find a reason to say that you shouldn't just throw broadcom into the dust pit >> no, i'm not i'm just trying to understand exactly what's going on today given the incredible decline in that company's stock >> scott mcgregor -- >> some of the challenges that those who were not bullish on the company believe are coming for it, as you might imagine you can think of qualcomm, they're sitting there going, see, we told you this guy was going to go out and do another deal and would this really have benefited our shareholders what would we be doing if we

were now owned by them we could argue they wouldn't have done another deal -- >> a lot of the advisors that were against the acquisition -- >> the broadcom deal >> yeah. i can tell you steve mullenkauf, the ceo of qualcomm. i did everything i could rather than just say will you really just slag him? i really need it he couldn't do it. >> qualcomm, it is worth looking at nxp we haven't done it in a while. it is the 12th of july remember qualcomm's deal to acquire nxp semiconductor has until july 25th. it is trading well below the offer. still waiting for the approvals from china for antitrust many people want to believe that it is linked to the zte situation, and that given the okay that we got i guess

yesterday from commerce on the zte deal, although there is still legislation pending in congress connected to the defense authorization bill that would reverse this, but it is unclear whether that will pass they want to believe that, well, now that this is out of the way, nxp is looking better. who knows? there is one thing i will tell you though in recent days i've been hearing from the number of nxp holders who want to believe that if in fact you get to the 25th and this deal is not extended, i'm sorry, that they haven't received the antitrust approvals, that the deal will be extended another month, another 60 days. i am not hearing that. i'm hearing sort of quite strongly that the belief really is that this is it the 25th both companies, in particular qualcomm, just want to move on with their plan. that would be to obviously buy back an enormous amount of stock, pay the $2 billion

reverse break free and move on it's been forever at this point. 21 months. can you imagine? the underlying business of nxp during that time period has changed to a certain extent. the automobile industry forecasts have changed to a certain extent so we'll see nobody seems to know is it tied to zte? if it is, would you therefore expect to get this approval very soon maybe. but don't necessarily expect to see an extension if that approval is not received in the next 13 days >> it sells at 14 times next year's earnings if it breaks down to 98 which is where i think it would go. 14 times is low versus the cohort yes, it does have auto, but david, it's taking an increasing amount of auto which is really the story, the growth and how much there are in each car i wouldn't pay 14 times that when it settles around $95, $98, it's in sync with a lot of these other companies. if it broke $95 and then

stabilized oil is 29 cents above a six-handle hasn't had a six-handle since june 26th. it's been a quick trip since $75. >> i think that that whole move yesterday back down off of libya is -- it's a phony move. what you need to see -- remember, demand has gone up demand was at 1% a year for 23 years. and now it is at 1.5%, thank you core lab for that number you think if that demand went up, you would expect a lot more nations would be drilling and they're not. it is not just libya's 700,000 a day, it is about the 10 million a day that you need to see be added by 2020 in order to keep a lid. when you have a $2 billion fuel cost increase by bell that for delta, i mean, geez. that is horrendous >> ed bastion was on squawk this morning, he said they see margin expansion ending by the end of

the year their capacities cuts are not as low as they originally planned may be why the stock's not reacting >> this is one of the situations where i'm more worried for boeing about u.s. airlines than i am about china because u.s. airlines, we got too many -- there's too much competition in the business where the airlines -- some people felt the airlines deated a benign slap-happy oligopoly. then suddenly started competing against each other competition hasn't lowered the price the way people would expect but that's coming down the seat mile numbers are not good but the balance is exactly what you said these have been the worst stocks in the market. the worst. so -- this is the worst numbers they can bounce. i want to see what gary kelly does at southwest. formally the best. but the stock has been terrible. >> finally one quick note on papa john's, john snyder resigns

after admitting that he used a racial slur in a conference call stocks up 8% almost this morning. he is the founder. he's the icon on their logo. he's the namesake of the company. he is a 30% shareholder and a lot of discussion today about how they sort of re-invent the image of the company since he's so integral to the product >> it's been a vast underperformer versus domino's pizza. one of the reason why it was because he said basically at halloween last year that the nfl, which they are a big sponsor, has not helped them but also because everyone else -- when you talk to high-level people in the pizza industry, people think this company is falling apart now i don't think that this pizza is still a growth category in an industry dwoid evoid of g. when you see the disparity between domino's and papa john's, that's just plain old share take people who own the stock better

hope there is an equity offering to clean this company up this is just disgracele. ju call it what it is. >> some of the big sports partnerships have ended. mel b. was a big part of it. >> they'll remain a pariah for some time. >> as we watch the president's helicopter touch down near london, i wanted the president to end on broadcom again because it is going to be the stock story of the day, by far losing 18% of your market value after you announce a deal, roughly $18 billion all-cash deal to acquire ca, and investors just sort of very much wondering what the new strategy of the company is. analysts at bernstein said the entry point is to a broader move to get much bigger in the infrastructure software space duplicating their so far successful model but jim, investors are not buying it right now. it is rare you would see a stock suffer -- a large cap company

suffer like this after announcing a deal. it's lost -- it was $100 billion. it's losing almost as much in value as it's spending to acquire ca >> they had a gigantic buyback this is a cash deal, so they could come back in again, they paid a lot of money for a company that a lot of people on wall street haven't liked for some time, it's software it is linked not to software defined network or software defined storage, which is of course where all the cloud kings are, the vm wares. it is linked to the main frame main frame has remained a sticky business but you want to be linked to the cloud. now if you go to ca's site, it is very curious. you can see what people have used it for. lawyerial has u loreal has used ca

i tried to sign up for it, had a lot of really good speakers. it's still on the site i mean you can't -- in a day and age where we measure companies by their site, this is the worst i've seen. it's almost like a dead site one of those mob sites like computer associate. as a he posed to ca. hock has a lot of work to do but there is a lot of cash there. you're silent. >> yes, i am >> you're silent >> when david has said his peace, that's it >> that's incredible i was going to go back to five below. you really shot me down. >> lb is down. though june comps were up 3. bath and body works up 10. >> some people did a whisper that the comps were good at 4,

but they came in at 3. maybe it is the most hated major retailer and it is victoria's secret broke it, according to jeffries. they still have a lot of real estate in shopping malls the stock is saying that this is slow motion, let's just talk about the president. >> that is the president he's going to participate here in a meet and greet at the u.s. embassy in london. later on will arrive at a cattle, then a dinner. that's woody johnson from the uk >> jets have a first round pick the next year and the year after

and year after that's just because of where they finish. >> don't even start with me, okay it is bad enough trying to be a new york sports fan when your teams are the mets, jets and the knicks >> i often think of the jets as broadcom today >> that's really nice. that's really nice >> dow's up 140. 139. let's get to bob pisani. >> good morning, guys. wur global markets are mostly up china had a great session, up about 2% it's been really rocky though the last couple of months with concerns about trade look at these markets. they're way off of their recent highs. china's 20%. brazil's 16% south korea, 12% japan, germany a lot of markets are off of their highs. even germany down 9% we started off strong on the transports airlines were up on delta news energies have been up and down all week it started up, it's down right

now. industrials generally have had a good week. semis are mostly up, most live because broadcom is down 15%, 16%. take a look at airlines. delta, lot of people said delta lowered the numbers but remember, there is a lot of talk about what they're doing, concentrating on reducing capacity there and a lot of positive comments from them. you see delta just basically flat american's down 30% on the year. it it's been a terrible year. they've already priced in the fuel costs we're about to begin the earnings season. a number of companies have already reported but as i keep pointing out, numbers are positive that's why the markets keep holding up very well people say, how much of it is really the tax cuts? we know it is about one-third. we expect 20% earnings growth. if you back out the tax cuts, pretax earnings are up about 13%. so seven percentage points is due to the tax cuts but the rest is just the companies' profits are better overall by the way, it is not cost

cutting. that is to story is two years old. revenue growth has been great this year. we expect 8% in the quarter here with 8% the third quarter, 6% in the fourth quarter they were half of this last year so real revenue growth, companies are actually grow being their top line that really is what matters here earnings growth, i make it very simple people say, what could derail the whole parade you got to stay in what i call the 20% club in other words, second quarter, third quarter, fourth quarter, we're all expecting earnings growth above 20% than q3 number q1 was 26% q3 we'll likely beat that number of 26% 23% will probably go to 26%. most analysts feel the market will do very well. finally, 23 companies have already reported and numbers have been good 24% earnings growth, revenue's up 12% that's a very good leading indicator. we are already off to a good

start, jpmorgan. right now, 119 on the ow a big day for macro data we'll get another auction today. rick santelli's at the cme >> yes, big everywhere you look, especially big in terms of flattening yield curves. look at a one week of 2-year note yields, slowly climbing almost every session we make a new comp going back about ten years to 2008. today of course we'll pay close attention, $259 and change the current high-yield close from yesterday. we are dabbling getting close to 2.60%. we're unchanged in 5s and 10s. we're down 1 and 30s it is flattening in a very slow fashion. intraday in 10-year, what's notable at 8:30 eastern, hot hot hot, numbers on cpi, barely perceptible movement

after the data, we started to slide. these are the lowest yields since '07. if you look at 30s minus 5s at 19, incrementally the flattest since '07. if you look at 10s minus 5s, both trading at 9. same scenario. it is all about the yuan i'm sure offshore has a little bigger range but as you see on the $24/wan, dollar moving up. mid-august 2017 was the last time the dollar was this strong against the yuan microsoft's chairman john thompson on the landscape for tech when it comes to regulation and trade. dow's off 124. s&p 2,782. back in just a moment. hi i'm joan lunden.

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will be steve kudlow and steve bannon that's coming up wednesday all day on cnbc. we're talking about nationalist efforts in europe. >> i will be interviewing my old pal larry kuowdl >> we're back in just a moment the kayak price forecast tool tells you whether to wait or book your flight now. so you can be confident you're getting the best price. giddyup! kayak. search one and done.

time for jim and stop trading. >> take a look at texas instruments, that's the kind of thing we're going to see it's a rotation and into everything else. >> r. >> what's on mad tonight >> jeff jonas from sage. i finally got a rise out of you, mr. five below. >> retail is not the way to go >> victoria secret is done, do

you think he ever knew what victoria secret was? >> i posed as a security guard >> for work? >> no, he gave me like the security guard pendant it was fun >> jim, we'll key you tonight, "mad money," 6:00 p.m. dow up 150 here ahead of bank earnings tomorrow. back in a minute

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welcome to "squawk on the street." >> the president's trip to the uk, oil back to 70.50. >> major indexes all in the green this morning after the dow and s&p posted their worst day in 15 weeks. the president just arrived in the uk, his first trip there since taking office. what to expect from his meeting with teresa may, following a

contentious week with resignations and comcast increases it's offer, the uk does improve fox's bid for the british broadcaster. we will discuss what comes next. stocks certainly rebounding nicely, dow's up 170 dow's back after posting their worst day in two weeks we are headed for an up week, but it's the first in a month. jim, our chief investment strategist, you'are you surpriso see this big strength given some of the head winds? >> no, not really, i think optimism is building, sarah, in the sense of, you know, i think that jobs report really -- it's just a one-month report, but it set a tone that there was slack in the labor market, the unemployment rate rising and still posting a 200 k gain in jobs and no wage pressure, that's

kind of a goldilocks idea of course it's the earnings season, we know that's going to be good, tax induced i think people are starting to get used to the trade war rhetoric, it's more headline risk than real risk and it do s bouncing back as it has today. i think there's some sense building that this correction or pause has gone on long enough, and it's done what it's needed to do, that is it's rebounded the stock options to some degree, checked optimism if you will, and earnings are going to continue to come through and a lot of people are expecting a rally in the second half i'm not sure i agree with all of that, but i can see where people are coming and looking at that >> this is the most constructive i have seen you in a while, because the first half of the year was approaching a thesis of

stagflation. >> i still think the market is going to continue to struggle in the streecond half we'll maybe have a decent valuation at year end to play in '19. or it could be that we hit an air pocket and break those february lows and create a minipanic or a great buying opportunity. there's three great things that happened here in the second half, and one is i don't think overheat pressures including rising inflation, even if it's mild, including fed tightening, and including another leg up in the bond yield is over i think all three of those are going to continue to pester us as we move through the second half i think we're going to break 3% wage inflation, break the 10-year cpi. i think there's a case to be made that the u.s. economy slows

down in the second half. we' i think we might slow to $2. 2.i the second half. we have had a doubling of the entire yield curve over the last 12 to 18 months, not just the ten-year, but across the curve we have had a tremendous flattening of the yield curve, you also have had an increasing cost for companies with commodities going back to three-year highs, you're pressuring consumer budgets with those costs. real wages have gone flat now in the last year. i think we slow down and that could really surprise wall street estimates for year end. >> while trade remains a big element of that, jim, stick around for a moment, because we want to get to washington for a

news alert our cameras catching up with the treasury secretary just moments ago. >> secretary mnuchin is on capitol hill for an annual hearing that is billed about the global financial system, international financial stal stability, but you can bet that it's going to focus on trade stephany caught up with the treasury secretary this morning and here's what he said. >> do you support the tariffs? >> i support our policies absolutely what about the economy >> we're monitoring closely and we're looking for a very strong as i mentioned gdp this quarter and the economy is doing fabulous >> the treasury secretary striking an optimistic tone. he told cnbc that while it was billed to tout the global

finance system, he was hearing a lot about tariffs when he was home in texas for the local recess, and that's what he wants to talk about today, guys? >> all right, kayla, thank you very much for the update let's bring back jim paulson, as better than burns mckinnckinney -- we're monitoring the impact on the economy, jim just told us it's more headline risk do you agree are we at the point where we could see some real economic impact in terms of consumer prices and exports >> i think in the long-term you definitely could see an impact in the near term, a lot of what we have had, we have had a tug of war, really in the u.s., very strong economic fundamentals, we have broken out of the earnings recession in a very big way. on the other side of the tug of war, you have a lot of political headlines, such as trade wars,

concerns about populist elections. and with respect to the trade -- with respect to the concerns about trade, it's something that definitely could push up consumer prices, it's something that consumers are probably going to feel the impact because consumers are stagflationa stagflationary, they pull off that trick of cooling down the economy at the same time overheating prices and i think that's something that will be spread across the entire u.s. economy. there's no winners in trade wars, there's only losers, you look for the relatively less losers and some of the places you might look for, are companies that are little more domestically located, small cap and mid cap is an under exploited space, looking into defense and maybe looking a little bit away from rirveg ssk assets, places like commodities

or industrials perhaps >> you're sounding a little bit more defense here. jim, what does the fed do with all of this? because if we have inflation, consumer prices year over year, the biggest jump since 2012, a big impact over tariffs, perhaps a small impact, but that could have a greater impact on inflation. what does it mean for projections next year? >> i think it gets really tough. up until now, sarah, what the fed has done has been pretty agreed upon, the growth rate in the economy both here and globally has been strong, we have got some overheated prices. no one's too upset that the fed's raising rates. it could get difficult in the second half, if we get a stagflation sort of feel, where, okay, growth slows down, job

creation slows down, but you still have because you're in full employment, you still have are an upward pressure on inflation and stagflation. you have to put the economy in a box and they probably have to respond by raising rates i don't think the fed will take the funds rate through the 10-year yield by itself. i think ultimately if the fed's going to keep tightening, the message from that will come through the 10-year yield. i think the fed is going to do a full forum this year so that's probably going to be more important to watch. >> absolutely. guys, thank you for weighing in. when we come back, the latest in the bidding war for sky, as comcast increases it's offer and the uk says it will not impose the fox bid, we'll get a lot morero fm davis, and the dow is up 178. "squawk on the street" is back in a moment. for the past five years,

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it gives you super fast speeds for all your devices, provides the most wifi coverage for your home, and lets you control your network with the xfi app. it's the ultimate wifi experience. xfinity xfi, simple, easy, awesome. welcome back yesterday our parent company comcast increasing its offer for sky, the uk broadcaster, the 14.75 a share, it's an offer that has been recommended by sky's independent committee of directors and it exceeds the 14 pound offer that it recently received from fox and dizdisney this is for the 61% that sky doesn't own.

it's really only 61% that's actually available in the public float. the question that we have been asking in the past few days, is this the largest prize for disney's own shares for cash and it's stock the likelihood of a comcast bid for those assets has declined. but much of this dependent on what's likely to happen over the next few days, comcast has, as many would argue, have until the 20th of july to make a finl al decision as to whether it wants to acquire those fox assets, given that the vote is on the 27th of this month that said, disney itself, certainly it's wanted to acquire sky with it's partner, fox it but are the prices simply getting too high for both of these assets, the fox assets and

sky for either of these companies to buy both of them. that may very well be where we are right now. and it does raise the prospect at least that disney, while it is not expected to do so publicly, could perhaps privately indicate that it is no longer going to increase it's bid for sky, clearing the way for comcast to acquire that company and comcast not to step up in any way to try to counter bid for the fox assets we will see. joining us on the phone now for a better perspective of course also a former nbc executive vice president and we're happy to say, of course a cnbc contributor, tom, put on your ceo hat for me of the media company, what fox will pay for those disney assets, because it will be selling it's rsm for what they conceivably could be saying are we at top price for both of

those assets >> well, comcast is clearly mulling now and it's a question that obviously disney is mulling now as well. you know, the stated purpose on both sides, presumably is to be a bigger player when it comes to netflix, when it comes to the streaming world and the global needs of video on demand that all that requires. i think the value of these assets for purposes of really having a commanding presence in that particular game is overblown and in that sense, i think we are getting to the top in terms of the value of these ass assets having said that, i have always maintained sky is much more valuable to comcast than it is to disney, disney does not know that business, disney does not know truck controls, it does not

know set top boxes, it doesn't know that kind of infrastructure business i think comcast would have a much easier time digesting it, not to mention the fact that it needed some kind of global assets, far more than disney does at this point, which already has a global business. >> and so given those expectations and the needs of each company, is this the way it should go in your sense? in other words, disney conceivably should back off on sky in one way or the other and therefore comcast should also similarly not bid again to acquire the fox as sets? >> well, if you're doing some game theory here, what comcast should probably want to do, if it believes that disney is going to top any bid it makes for the fox assets is to bid higher. it weakens disney, it makes it

less likely that disney is going to authorize fox to go higher in the bidding for the sky assets and so i think there's some value here if comcast really believes disney is going to pay a higher price, make them pay the highest price they possibly would and that certainly puts some sort of a crimp on fox's ability to acquire the rest of sky. at the same time, i think if fox is to some extent caught as a minority shareholder inside of a comcast owned sky, which clearly it does not want to be, that can create some negotiating dynamics for both parties in terms of how other pieces of it may work out. >> yeah, i mean you could imagine them selling the 39% to comcast, and as i have said,

comcast perhaps selling hulu down the road, both obviously would be positive for raising money for what would be strained balance sheets. >> just beyond the deal back and forth and the sort of bankers, what's the consumer impact of a comcast owning the european prize and the fox assets versus a disney is there any difference? >> that's interesting. when i talk to people in the uk about this, they're pretty indifferent as to whether comcast or disney owns the sky assets and i don't think it truly matters from a consumer's point of view on the ground, obviously, higher the asset goes for, it's going to need to be paid for in some way and subscription fees on the sky side could be affected by that, not to mention the fact that

satellite assets are already pretty challenged as they are. and the more they're burdened in templ terms of a higher cost, the more the decline in the satellite as a distribution play could be compromised. so i think that there's potential consumer impacts there. on the fox side, i think the most significant consumer impact was the question of whether espn and disney, if they were going to acquire the regional sports channel themselves, were going to have some kind of significant decision in the sports area that might have some impact on consumers. that's obviously been taken care of what it means for a single studio to own 40% of major studio assets in the country, could have some consumer impact. but in the scheme of things, i wouldn't think that would be felt by most movie goers.

>> and neither did the doj tom, thank you for your insights, as always, appreciate it. >> thanks for having me. and as we head to break, jonathan gray, jim chenos, steve bannon will all be at the delivering alpha conference. for more you can go to deliveringalpha.com. the dow is up 150. eligible for medicare?

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the president arrives in london this morning for his first uk meeting since being in office hey, steve >> reporter: it's quite extraordinary watching the circus here in what is a very aft affluent part of london. we have the ambassador robert johnson's office as well president trump flew in from

where air force one parked here in the capital of london, and he's going to be speaking to mrs. may later on at kensington palace asset raymond is one of the organizers of the may trump meeting. >> when he talks about his trade policies, they're about lowering food standards, weakening our labor. these are all policies that were ultimately rejected. >> reporter: so a big dinner hosted by mrs. may this evening. the president in the last hour has been speaking to the ambassador and his family. he'll be flying out to kensington palace. in the morning he will have bilateral talks with mrs. may, of course he would love to get

an agreement on trade. in the meantime, we're expecting a big demonstration, 5:30 p.m. local time in the evening. and then more demonstrations to come tomorrow. >> steve sedgewick, thank you very much for setting up the presidents day in london now for our ets spotlight. mike santoli, broadcom down. >> that shows you the other stocks are bouncing in the sector as you had the big cap in general hitting a new high today, semi caps have been in a -- if you look at the big etf that tracks american software, it's been up about 28% and now about 25%.

and broadcom within that has been a very weak performer i think a lot of people asking questions, if semi sun renders lerenders -- surrenders it's -- broadcom buying a no growth firm yesterday. it's by no means broadcom saying software's doing great, let's go buy ca, perhaps because they can't get approval to go out and buy other chip companies >> they mentioned by name intel and ati, texas instruments. >> escalating trade protectionism. >> in a weird way i think people would take comfort if it was about trade and not necessarily a cyclical trade story that is a market that's going to

become pretty dependent on chips. we'll talk to former cea chairman on why the economy's actually doing better than we think. we're back in a moment are you ready to take your wifi to the next level?

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provides the most wifi coverage for your home, and lets you control your network with the xfi app. it's the ultimate wifi experience. xfinity xfi, simple, easy, awesome. good morning, everyone i'm sue herrera, here is your cnbc news update at this hour. brexit secretary don rob releasing the government's plan for brexit, calling it principled, pragmatic and ambitious. but his speech had to be temporarily holts as brexiters heckled him. >> we have come to an agreement to the proposal we're putting to the european union, which absolutely delivers on the br

brexit that the people voted for. the death toll from the flooding in japan climbs to 200. rescuers are correspondenti iar. stormy daniels has been arrested, she was being accused of allowing a customer to touch her while on stage in a nonsexual manner, she was later released on bail you are up to date, that's the news update this hour. sarah, i will send it back down to you welcome back, everyone to "squawk on the street. live as always from post nine at the new york stock exchange. stocks are mostly higher coming back after yesterday breaking that four-day win streak, the dow is 200 points, as some o the trade fears are offset by an

optimistic view of q2 and earnings >> speaks of the large banks, they often evolve from large mna transacti transactions broadcom unexpectedly announcing it's acquisition of cea tea technologies now off it's lows for shares of broadcom this morning. let's go through some of the details. it's $44.50 a share, it is an all cash deal worth roughly $19 billion. about a 20% premium to where ca was trading. it has been adjusts over time, but right now there's concern that stable margins will actually come down and they don't need a lot of approvals here so this conceivably can get done fairly quickly.

for example don't even need china. broadcom is a u.s. company now, having moved from singapore not that long ago. so there ee's a need for japan e in the u.s they do sell a lot of services to the u.s. government but it's more about what many investors and analysts view as a change in strategy that really has concerned the overall market today. let me share a bernstein note, which by the way was not fully negative, we should point out. but here's a key part of it. they said our evening, that was last night, was mostly filled with confused and angry calls and emails as the company effectively just walked away from what it has done the last few months, what would be small m & a and buy backs. we're absolutely speechless that the company did not host broad

investor conference. out of left field is an understatement, says raymond james, and even prisoners, this is back to that bernstein report, get a phone call many feeling blind sided by this decision to do a large deal, a mainfra mainframe, software, not an area where this company has been focussed, lending to the narrative that this company just needs to do deals, regardless of where they may be. >> and there are questions about how broad that goes, right. >> very much so. meantime the u.s. economy is running hotter than any time since the great recession. consumer inflation this morning hitting a 6-year high, our next guest who is president obama's

top economic advisor says the economy may be even faster than the government data suggests joining us is harvard school of law's professor, jason, we were very surprised to see this offered by you, an obama official saying that the economy is even better than it looks what made you write this >> i like to think of myself as an economist who looks at the economic data. and this actually comes out of work that we did during the obama administration on what's the most accurate way to measure growth and unfortunately, the main numbers published by the government aren't the single most accurate way to measure growth, if you do it accurately, yes, growth in the first quarter was a lot better than what people thought >> what about growth in the second quarter, which is already expected to be quite good? >> growth rate is tracking very high in the second quarter, some of that looks like it's going to be transitory factors, like china bought a lot of so i baybs

to get themselves in ahead of the tariffs. i don't think it's hugely surprising that you do a nearly $250 billion fiscal stimulus and you get some extra growth out of it. >> what exactly is the fiscal data understating that we should be paying attention to >> the way that the bureau of economic analysis measures gdp growth, is they add up all the spending in the economy. that grew at 2% in the first quarter, there's another measure where you add up all the incomes and profits in the first quarter, that grew even faster at 3.6%. my favorite measure is to average the two of those, you take the spending, you take the income, all of it has errors in it, you average it out and minimize some of those errors and that would show the economy growing at about a 2.8% rate in the first quarter. >> one of the questions that investors are looking at now, is

it strong enough to with stand the impact of the tariffs, the ones that have already gone into place and the ones that have been threatened on the chinese imports just yesterday >> look, the tariffs are a negative, we can debate how big a negative they are for the economy, the ones so far aren't a huge negative for growth, the question is the uncertainty about the future ramification leading to delays in investment. and maybe even permanent decisions by american companies, so i think investors should be unhappy about the tariffs. just how unhappy depends on just where they think they're going >> jason, you mentioned the effect of the tax cuts and there's a lot of belief that it simply moved forward certain demand where do you stand in terms of what we're going to see in year, let's call it two of the new tax regime >> yeah, if you look at both the tax cut and the spending

increase, you saw fiscal expansion in the first year, so another fiscal expansion above and beyond it in the second year and then it drops off and goes into reverse i would expect it to be boosting the economy this year and next year and subtracting from growth in 2020 forward. i think what we're mostly seeing is temporary demand pulled forward. i see relatively little evidence for the type of supply side boost it was designed to provide. but it's still early >> on wages, jason, we're looking for evidence of a pass through to the worker. you say based on broader research, there's reason to be september kl th skeptical that that will happen, why. >> so far we have seen a big increase in after tax profits, a relatively small increase in wages, in fact wages aren't increasing a whole lot faster than they were two years ago when the unemployment rate was a lot higher i think we can pretty definitively rule out the idea

that this year's corporate tax cut is being passed into wages that doesn't mean it won't happen over time, it's certainly not happening quickly and i have some skepticism about what will happen over time as well. >> let's put a headline on it. we like to make news here, are you saying that the trump economy is stronger than the obama economy because of the policies >> i'm saying that if you do a huge fiscal stimulus on top of an economy that president obama left in very good shape, you're going to get a temporary boost on top of it, but i would love to see a higher productive rate, but we're not seeing that yet. that's not your headline >> it was close. i don't expect you to actually fully agree. jason, thanks for joining us from harvard the founder of papa john's resigning following the united states of a racial slur in a conference call which he

admitted yesterday contessa brewer is here with that >> the board of papa john's says that schnatter has resigned. he also resigned from louisville's board of trustees schnatter used the n-word during a training session in may. he talked about nfl players kneeling during the national anthem on this call schnatter allegedly complained kfc founders colonel sanders never faced backlash for using a racist word. and that conference call was designed to help papa john's to avoid more -- simply stated racism has no place in our society. schnatter launched papa john's from his father's barn in indiana in 1984.

it has grown to more than 4,700 stores in 40 countries with more than a billion dollars in annual sales. schnatter is the largest shareholder holding roughly $47 million in stock the real question this brings up is what happens to a company's brand if they base it all on an individual and that individual makes some pretty significant missteps >> contessa, a big story today, shares up 40%, wow when we come back this morning, as major banks get set to report earnings, thomas michaud will tell us what to expect from the banks after that roughta t srto the year, dow is up 176, we're back after a short break [music playing]

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banks will be a very big story in the morning jpmorgan, citi and wells all set to report earnings joining us on what to expect tomorrow, thomas michaud is a ceo at wfc and company take us forward 24 hours what are the headlines going to be tomorrow? >> i think bank headlines are going to be very good. i think the market is going to like what they see, they're going to see good revenue control, they're going to see improving margins and the bull story on the fundamentals is going to be in tact. >> why haven't the shares reflected or started to price that in? >> the bank fundamentals story is starting to play out.

there are a lot of factors in the banks' favor there's talk about are we going to have a recession and it's really been that play. i'll tell you where you've seen it, in the second half of june, the xlf, the largest financial etf had its first down days in its history. really it's been the macroissues driving it and drfrankly we thik it's driving studeopportunities. >> there were good earnings coming, they were fairly strong, stocks haven't done anything >> that's right. >> what changes the narrative, does it take resolving the trade war before people come down on the trade wars >> i think the fundamentals are really strong in many of the cases, especially the biggest banks. the small bank earnings are going to be just fine, but the bigger banks may present the

most opportunity at this time. >> goldman-sachs, they ronted 1.2 times book, i know the margin is very low it but what changes it >> i think you just continue to execute, it's just like tomorrow's earnings. tomorrow's earnings are just another stopping point on the big story. goldman-sachs is not the biggest one, the one we like is bank of america. they're going to go from roughly 11 last year, so what we think is going to be 18 in 2020. we think for investors, it will be a good period for the stock as long as we don't have a major recession, i think that bull story happens. >> i just want to bring up the fact that last quarter, the trading activity was bullish >> we're expecting it to be a down link quarter, and a little bit up year over year. i think a lot of people were talking about goldman, they did not have a particularly good year last year, but they overall

comps -- draw lines between what the curving is doing, and what the banks results will be. >> and then it's interesting, because i would say, the conversation ash tround the curt least in conversations with our investors is the predominant one, the fundamentals in the banks they invest between one year and three years but the question really is, what's going to happen to the economy, all the near term outlook is very bullish for the economy. if we have a hard recession, the banking industry will be impacted, they're not recession proof, as is most of corporate america. >> the big banks will move up to >> pe multiple it's a 66 relative multiple.

every time that's happened the stocks have rallied. so we think, and remember too, that banks have given 10% or more for earnings for eight years. they have been grinding it out i want to talk about competition, the gap between is american banks and the local banks is widening. j.p. morgan north of two i think the competitive balance is shifting in favor of the american banks relative to the market, we think those stocks are goodbyes. >> thanks for setting us up. >> thank you for having me let's send it over to john fort and take a look at what's coming up on squawk alley. >> which have john thompson, he's a chairman on microsoft, he's a partner with light speed, there's a lot going on in software, a lot going on with cloud and the global economy

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let's get to rick santelli

gym karen from -- thanks for joining me this morning. good morning i was taken aback by the year over year numbers 2.3 encore the market seems to have dozed through it there are plenty of reasons for that what were your thoughts on cpi and market reaction? >> i think that we're getting closer to the peak of market inflation. it may start to run out of steam by august, possibly september. i think that core pce running at 2% last data set around might strug tol hang on to that. might dip to 1.9 that's what the market is focusing on right now. >> the big elephant in the room, every conversation seriously for months on this floor for years, the flattening curve i want a logistic question how difficult is it going to be for the fed to, you know, try to

put a positive spin on any inversions early inversions on the curve considering they're talking two more tightenings >> here's the story. we care about the yield curve being flat but not overly worried about it i think this is partially what the fed is going to start to tell us. some of the manipulation that's come through with quantitative easing has pushed down the yield curve. flattened it reducing the term -- what we've estimated it the curve is about 40 basis points flatter than it ordinarily would be. if the yield curve 30 basis points, at 40 to that. if we adjust for it, account for it, it would be more like 70 basis points in normal historical terms that's what the feds will tell us the market reaction, once you start to get to a flat yield curve, which i believe we'll get to by sometime in the beginning of 2019, it could be flat to invert it, i think the markets are going to be a little more concerned about that and it

could create a little bit of volatility around it i still think that we have to be respective of what it did to the curve and flattened it more than it would be now. we have to take it with a little bit of a grain of salt. >> you're preaching to the choir here we're had it ton trading floors for a long time. it's difficult to teach investors to look at something they've almost been conditioned to believe ends up in a certain scenario having said that, our last few seconds here, is it possible that jay of powell and company would quicken balance sheet reduction from its current space in october to roughly 50 billion a month? final thought. >> i think it's going to be hard for them to do that because of bank reserves. bank resevers may not be able to fall as much as we thought they would. it they sped the pace up of balance sheet runoff, i think that could be more disruptive. maybe a better solution if they don't hike rates as fast and

that could resteepen the yield curve and let the inflation powers start to quicken into the marketplace so we get shape to the yield curve again. i don't see anything wrong with that. >> it's the least of two fears go slow and inflation ramps up, that might cause a bigger scare than an inverted curve that doesn't mean what it once did. jim care ron, we'll have an exciting future. thank you for your time this morning. sara, back to you. >> rick santelli, thank you. the president has landed in london coming up on the closing bell, we'll have a lot more on this official event all throughout the day, including a gala dinner, official arrival ceremony wilfred frost is there on the ground with much color and commentary and find out how special this relationship is between the u.s. and the uk. it's coming up at 3:00 p.m. eastern and we have charles barkley on another note. >> is he going to be commenting on nato? >> no.

>> he probably could. sir charles if you asked him. oil we're keeping an eye on. cracking below 70 for the first time since june 26th that's notable considering we were at 75 just the other day. meanwhile, 2787 within the 20-point range between 27-8 and 2800 that people consider rec s resistan resistance. >> you got to commend the resilience of this market in the face of some big and potentially scary headlines on trade we're headed for the best week in stock that we've seen in over a month. saw a blip yesterday back on track today. technology is leading the way. caa is a big gainer. >> conversely, broad come a big loser. you have to wonder when the next headline will hit in terms of the next round of possible tariffs or things of that nature

and how the market will take it. >> whether the distractions will be earnings. better revenue growth. d question on margins will be key. saw it on consumer prices today. >> ndx dow is once again green for the year break even there is 24,719 squawk alley starts in a moment. i love you, basement guest bathroom. your privacy makes you my number 1 place to go number 2.

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from sun valley, on creating a modern media company the challenges and rewards ahead. an exclusive on "squawk box. good morning it is 4:00 p.m. in london. 11:00 a.m. on wall street. squawk alley is live ♪ ♪ good thursday morning. i'm carl -- interesting market day as the dow is up