i think they'll have more of a jpmorgan type quarter. i think it matter that the stock will move higher and i'm looking for an exit so i need them to do it >> john najarian, what have you got for us >> skechers and it's not because steph curry signed with them but i like it and he didn't sign with them, by the way. >> i like it "power lunch" starts now. thanks, guys, i'm melissa lee. slamming european leaders dropping bombshells in the uk and on to finland for a face-to-face with putin. how will president trump's wild european tour finish up? the justice department dropping its own bombshell announcing indictments of a dozen russian intelligence officials over hacking the democrats in the 2016 election the breaking developments coming up. it's been exactly one week since tariffs between the u.s. and china went into effect what impact are they having on the nearly $1 trillion ag and food businesses across america we'll get the lowdown from iowa. "power lunch" starts right now

and we do welcome you to "power lunch." i'm bill griffeth. stocks are carving out some pretty decent gains. the nasdaq setting another intraday record high, s&p hitting a four-month high breaking the 2,800 mark for the zi first time since early february. financials are the big losers at this hour. we'll have more on wells fargo ahead. oil has been marching higher the energy is the best performing sector. new field exploration is leading the way. but gold is hitting a near one-year low, even as inflation numbers get hotter it's on track for its fourth negative week in five. contessa. >> and i'm contessa brewer we begin in washington, d.c., where the justice department has indicted 12 russian intelligence officers, accusing them of being involved in the hack on the dnc

leading up to the 2016 election. kayla tausche has more on this story. kayla. >> contessa, a grand jury impanelled by special counsel robert mueller indicting those 12 russian intelligence officers, finding that they hacked into the clinton campaign, the dnc and the democratic congressional committee. the 11 criminal counts range from conspiracy to commit an offense against the u.s. to aggravated identity left to money laundering deputy attorney general rod rosenstein, who oversees the investigation, said he briefed the president earlier this week on the charges and that president trump was fully aware of what the doj would announce but wouldn't say whether he supported the move >> the president speaks for himself. obviously it was important for the president to know what information we've uncovered because he's got to make very important decisions for the country, so he needs to understand what evidence we have of foreign election interference. >> the announcement coming just two days before president trump is set to meet vladimir putin in

helsinki earlier today in england trump said he would bring up the 2016 election. >> i know you'll ask will we be talking about meddling, and i will absolutely bring that up. i don't think you'll have any, gee, i did it, i did it, you got me there won't be a perry mason here, i don't think, but you never know what happens, right but i will absolutely firmly ask the question >> so trump saying it won't be a gotcha moment, but later on he was asked in a shouted question whether he would ask putin to stay out of u.s. elections president trump said he would. guys, back to you. >> all right, kayla, thank you very much. so these charges obviously come days ahead of the president's meeting with vladimir putin and right at the very moment the meeting with the queen of england was getting under way. so it's hard to ignore the timing in all of that. what do we make of all of this at this point? with us on the cnbc news line is fred kempe, a cnbc contributor fred, that thnks for joining us fred, earlier the president said

his meeting with vladimir putin might be the easiest of all of his meetings do you think that's still the case with these indictments today? >> no, i don't think it is going to be the case i was in brussels for the nato meeting. i happen to be in london today i'm not going to helsinki. but you have a divided administration to start with, so he has been completely at odds with his top advisers on his major foreign policy problem, which is how do you handle russia secretary of state mike pompeo assured congress last month that trump would take a firm stand in helsinki on election meddling. it took some time for trump to have that turn he'd much rather have a summit where he can get along and move things along with vladimir putin. i think we're in a situation right now where he'll be going into that summit where it's absolutely not debatable that there's russian election meddling and mueller's indictments has done what trump does so often which is steal the show and steal the news show

right now. >> can you forge a closer relationship there are all sorts of headlines crossing from a kremlin aide about what the two men could discuss, that they want to join forces and address the humanitarian crisis in syria at least and that they hope that the talks will pave the way for each other to visit each other's capitals can you make nice like this with these indictments now unveiled >> well, it's hard to have a coherent diplomacy when you have differences in your own administration but the things that were moving forward were the possibility of a new start agreement being extended it runs out in 2021. so the beginning of 2020 or newly elected administration, this would be a good time to extend it for another five years. that would be a good news moment it would be 100 days ahead of midterm elections and a way for president trump to show that he can not only do deals with nato and brussels but he can make peace with putin in helsinki, so

that's still a possibility syria, clearly president trump would like to have iran playing less of a role from syria, further from the israeli border out if he can get it i don't know hough hew far he'sg to get there with putin. putin would like to have some easing of sanctions and loosening of support for ukraine. i doubt we'll hear anything about that on monday but those are the major issues i'm looking at. >> how close will the europeans be watching? theresa may was lauding the meeting with putin and yet at the same time they, the european union, has very stiff sanctions against russia right now how closely will they be watching what comes out of the putin/donald trump summit? >> they're going to be watching it very closely, but i would say particularly the ukrainians, the georgians, the people who really depend on u.s. support the good news is that president trump came out of nato with the

alliance together and one didn't necessarily know that was going to be the case at the beginning of the day yesterday but the alliance was together. but on the other hand there was a lot of acrimony among the leaders. so they're going to very much want -- the best outcome would perhaps be nothing much happening in helsinki. the status quo stays a better outcome yet would be moving forward on arms control and lessening tensions and i think that's what the europeans would hope for. >> fred kempe of the atlantic council. fred, again, thanks for joining us. >> thank you. until just about an hour ago, this picture of president trump meeting with the queen was the big story. a showcase of america's special relationship with the uk, but that's now taken a back seat to the news from d.c. wilfred frost joins us from london with more on trump's day of meetings. >> reporter: well, it's been a roller coaster couple of days here in london as well, particularly late last night when an interview the president gave to "the sun" newspaper came

out and appeared to sour the tone between the president and the british prime minister it even raised the question as to whether the president would prefer the recently resigned foreign senior, bocretary, boris johnson, as prime minister over theresa may. he addressed that question earlier today. >> they asked about boris johnson, how would he be as a prime minister he'd be a great prime minister he's been great to me and saying great things about me as president. i also said that this incredible woman right here is doing a fantastic job, a great job, and i mean that. and i must say that i have gotten to know theresa may much better other the last two days than i've known her over the last year and a half i think she's a terrific woman and is doing a terrific job. >> reporter: from chequers to tea with her majesty, the queen. now, the queen has no hard power. what she does have in abundance is wisdom and the respect of

foreign leaders. she also has impartiality. president trump became the 12th president she has met, five democrats, seven republicans she takes no side. it is that mixture of independence and respect that she will have tried to use to get her message to the president across from her prime minister now, that more positive tone this morning only tells half the story. the other half is told by the protesters behind us a record turnout in the uk for a protest against any visiting foreign leader not against any issue, however jeremy corbyn, the leader of the opposition labor party, addressed this crowd moments ago and he thanked them for their belief in hope, democracy and unity. guys >> all right, wil, thank you yes, a momentous day there in england to say the least let's go back to kayla tausche with a news alert between the

upcoming meeting between the president and president putin. >> a kremlin aide has given reuters a preview of what to expect on monday when the two leaders sit down, if in fact they do go through with that meeting. this aide telling reuters that the two leaders will meet one-on-one before expanded meetings in the form of a working breakfast with members of both delegation this aide says that they will give a joint news conference on monday at the end of talks and that they will each hold separate meetings with the president of finland the kremlin says that they view the u.s. and trump as a negotiating partner. you might remember president trump twice this week when asked whether russia was a friend or foe, he said they are simply a competitor, so that will be interesting to watch this dynamic. this aide also tells reuters that russia is ready to look at any facts if there are any concerning alleged russian interference in u.s. politics, so certainly russia and putin appear to come prepared to this

meeting monday to discuss these allegations that the department of justice has just unveiled interestingly, though, there's already pushback on capitol hill the top senate democrat, chuck schumer, has called for president trump to cancel the meeting in the wake of that indictment >> well, the president has not shown that he's amenable to chuck schumer's suggestions in the past that's unlikely to hold any weight kayla, thank you let's get more on this and how the president has performed so far on his european trip what should the markets take away from a flood of developments let's bring in alexis crow, from pricewaterhouse coopers. it's good to talk to you today you've got the world watching on a number of issues you've got nato and brexit and russian indictments and trade wars how has the president navigated all of these murky global waters >> well, i would agree with mr. kempe. certainly the president has actually emerged from brussels with allies intact, i think

which is very impressive certainly i think the tone is different than past administrations. but one thing to point out is that asking allies to spend 2% of gdp in their defense spending is nothing new certainly past administrations -- >> but asking them to spend 4% is. >> certainly but if you think about the new post cold war era security environment in which we face, risks are transnational, they're nebulous, they're fighting climate change, environmental degradati degradation, international terrorism. >> half of which the president doesn't agree is happening. >> to a certain extent america can't guarantee the security of its allies as it could do during the cold war, so increasing spending of course makes sense the question and the irony becomes how are we going to ask our allies to increase defense spending when we're hitting them in the jugular vein of net exports as a percentage of gdp in europe, the eurozone

countries are far more vulnerable than the u.s., china or japan to an escalating trade war. >> and yet they have agreed so far, right so does he give up -- does he give up something in terms of negotiating the tariffs? does he emerge from this tour in a stronger position than before? >> i think fundamentally we have to look at the longer term very much transatlantic values are vivified and expressed and ablgtdhis news conference with theresa may. leading into it there was a big question about what would trade look like if trump was trying to influence brexit and then she said, no, no, no, we're going to negotiate our own trade deal with the united states is that likely to happen is it likely to happen soon? >> certainly there is this special relationship between the u.s. and the uk and we see that it even is very robust against any kind of statements,

mercurial or not that are coming out. both the uk and the u.s. to some extent view themselves as being special and that underpins that special relationship so yes, likely to see any kind of trade agreement that benefits both countries but investors and companies are totally focused on what goes on between london and brussels at the moment that trumps everything else. >> what about the eu and russia, they'll be watching this summit very carefully there's the nord stream 2 pipeline that has become the contentious issue now that the president brought that up. what are you expecting to come out of that summit. >> to the president's credit, one thing he's prioritizing is dialogue the issue is that that dialogue has to be based on mutually beneficial and very clear overt terms. it's not at the moment of course russia was g8, a member of the p5 security council and has the largest gas reserves in the world as well as

the need to be able to engage with russia on any resolution on syria and iran so it's important to have this dialogue, the terms need to be in the open. >> alexis crow, thank you for joining us appreciate your perspective. stocks are moving higher today. energy and consumer staples leading the way. on the downside, you can see financials one of the worst groups today after jpmorgan, citigroup and wells fargo reported results is that a bad sign as earnings season really gets going next week we're all over the mke, artsnext on "power lunch. are you ready to take your wifi to the next level?

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xfinity xfi, simple, easy, awesome. welcome back to "power lunch. let's get to meg terrell for market flash. >> another example of the amazon effect amazon web services is reportedly considering selling its own network switches for business customers this would affect companies like cisco juniper networks and f-5 networks cisco is down 2.2% juniper down almost 2% as well the information reporting that amazon web services plans to undercut cisco andothers on price by potentially as much as 70% to 80% here. bill, back over to you.

>> all right, meg, thank you meantime in the market overall the nasdaq hitting a new all-time high today. the dow closing in on a triple-digit rally, back above 25,000 as you can see. once again the markets ignoring the dramatic in d.c. and overseas surrounding the hacking of the 2016 election are investors simply laser focused on earnings season joining us to discuss, eric marshall and peter anderson, chief investment officer at anderson capital management. peter, if you didn't look at the market and just saw we have indictments against 12 russian intelligence officials and all that's going on otherwise today, then the earnings come out and the banks are going sharply lower, why is the dow up 100 points right now >> well, you know, i think it's a number of things the first thing is we have been so distracted by these global events and the tariffs and nato now, but when you look at the fundamentals of the u.s. economy, the positives really do

outweigh the negatives i mean you have tax reform, right, and regulatory reform and you've got the best employment picture that we've seen in a long time. so when you're weighing that against the negatives, i think people -- analysts are correctly extrapolating that earnings season will be very, very strong one last thing about earnings. when you break down earnings, it's a simple -- earnings growth is the simple sum of the revenue increasement, margin improvement and share buybacks so you've got three ways to grow on that earnings growth. so far what we've seen is the margin improvement a lot of people think it was the share buybacks, but when you break that down, the 27% on earnings growth, half of it comes from margin expansion. >> eric, why are financials failing us at this point when we take a look at the market and what has led us so far, of course it's technology all-time highs being made by amazon, microsoft, facebook, et cetera do we need the baton, so to speak, to be passed to a group like the financials to carry us

through or can we keep going without the financials because the earnings oez-- jpmorgan, the earnings were fine and the stock is flat. >> well, generally speaking, financials and transports, you'd like to see those areas really lead a healthy bull market so i don't think you can really extrapolate any one trading day as far as what's going to happen but what we've really seen in recent weeks is all the anxiety over trade tariffs have really caused investor sentiment to turn overly too negative we think some of the hardest hit areas like semi conductors, materials and industrials really have become oversold at the hodges funds, we're looking for those areas to find some oversold individual stocks. once we hit earnings season, we think the focus back onto fundamentals of companies will help reverse a lot of that negativity out there

>> but the underlying question, eric, that i was trying to get at, do you question the health of this market because of the narrow leadership? maybe peter has an answer for me in terms of we don't want to extrapolate one trading session, but this has been underperformance for the past at least three months, for the past year to date in terms of the financials if we're looking for the leadership to change to another group like financials, it's not happening right now and it doesn't seem that the earnings at least are the catalyst so far. >> that's right and i think you'll see that in the financials the inverted yield curve that we'll all anticipating that will hit interest margins and i think people are factoring that in one good thing about all this, the p.e. of the s&p 500, if you've looked for the forward p.e., it's finally down to the 25-year average. it's gone from 19 to 16 times, so in terms of thinking this market might be overvalued, you just have to look at that forward p.e. and i think that dismisses that argument. >> eric marshall, peter

andersen, thank you both for your thoughts on today's market action. well, the deal is done but the government coming in with another challenge to at&t's takeover of time warner. is ceo randall stephenson worried? >> we think the likelihood of this being reversed and overturned is really remote. >> we'll hear much more from stephenson coming up, and we'll also hear from the head of an iconic british brand of what business leaders in the uk think of president trump you always pay your insurance on time. tap one little bumper and up go your rates. what good is your insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today.

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i'll be right with you the government once again challenging at&t's acquisition of time warner, announcing that it's going to appeal that ruling that allowed the deal to go through. at&t ceo randall stephenson spoke earlier today with our julia boorstin in sun valley, idaho. >> reporter: randall stephenson telling me that at&t was prepared for the doj to appeal judge leon's decision and that this appeal has no impact on the way he's running the combined company. >> we think the likelihood of this thing being reversed and overturned is really remote. it's a very narrow path that would have to be traveled to get this thing reversed in any way so we're about executing our plan the merger is closed we own time warner. >> stephenson says in light of recent run-ups in the price tags of fox and sky, he's more confident in the value of his own deal than ever >> we feel really good about the

assets that we got, the great brands that we got, and we'll execute. in terms of overhanging the stock and uncertainty, there's not much we can do about that except address it in the court we'll work it as expeditiously as we can but it's in the hands of the court now. >> as for what this means for other deals, he said the doj's appeal should not change the plans of other media ceos. obviously a lot of conversations going on at the conference stephenson is focused on growing warner media which will run independently to preserve its culture. he said it could include ramping up the amount of hbo content that they create and distribute. >> julia, thank you. president trump is leaving england right now, but before he left he met with some business leaders, including the head of aston martin we'll tell you what they thought of him. and one investment firm coming out and saying they were wrong. this is a big mea culpa.

they say it is a trade war the chief onisecomt gives us his take on the impact of the trade war. we'll be right back on "power lunch. 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. tap one little bumper and up go your rates. what good is your insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty mutual insurance. ♪ liberty. liberty. liberty. liberty. ♪ [stomach gurgles] ♪when you have nausea, heartburn, indigestion, upset stomach, diarrhea... girl, pepto ultra coating will treat your stomach right.

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hello, everyone, i'm sue here herera the justice department announcing indictments of 12 russian intelligence officers for hacking offenses during the 2016 presidential election deputy attorney general rod rosenstein making the announcement as part of the ongoing special counsel's probe. >> the indictment charges 12 russian military officers by name for conspiring to interfere with the 2016 presidential election 11 of the defendants are charged with conspiring to hack into computers, steal documents and release those documents with the intent to interfere in the election >> all of this taking place as president trump and the first lady met with the queen at windsor castle the president and the queen reviewed the british guard of honor before heading inside for a spot of tea. british detectives investigating the poisoning of two people by the nerve agent novichok say scientists have found the source of the deadly

substance. a small bottle was found during a search of victim charlie rowley's home. they are still probing where that bottle came from. you are up to date that's the news update this hour contessa, back to you. >> that's a dangerous search sue, thank you. let's get a check on the markets this hour. stocks posting some nice gains the nasdaq hitting another intraday record high the s&p 500 breaking the 2,800 mark for the first time since february 2nd as we approach the midpoint of the month, july is on track to be the best month for the dow and s&p 500 since the beginning of the year. energy, consumer staples and industrials are the best performing s&p sectors telecom and financials are the biggest laggards wells fargo is dragging down financials on the back of its disappointing earnings citi also a major drag on its mixed results. you can see citi is down by 2%, wells fargo off by a percent. we've seen the protests, a lot of people in london today

very unhappy with the president's visit to the uk. what do business leaders, though, there think of the president? phil lebeau spoke to the head of an iconic british company about that phil, what did he say? >> reporter: well, andy palmer is the ceo of aston martin he was with other business leaders from the uk who had dinner last night with president donald trump why was andy palmer at this dinner this was a meeting apparently of a number of business executives who have an amount of exposure to the u.s. and for aston martin, this is a company on a roll right now so his thoughts are perhaps one the president and his staff wanted to hear from in 2017 aston martin had its best sales in a decade, record revenue of $1.25 billion the target for this company, to double sales from 7,000 up to 14,000 keep in mind the u.s. is aston martin's second largest market in terms of sales, about 25% of their global sales go to the u.s. andy palmer has a unique

perspective, being based here in europe, in terms of whether or not european business leaders perhaps have underestimated president trump. here's what he had to say. >> i think everybody has underestimated him to some extent during the election process, he wasn't caricatured in europe in a particularly friendly way, and i think that you never underestimate the position of the presidents of the united states in that sense, donald trump's approach to it so perhaps they did, but they don't anymore. >> as you look at the shares of bmw, daimler, volkswagen, we know the story there they have all been moving lower on concerns about a tariff being slapped on european exported vehicles coming into the united states i asked andy palmer, i said, are you worried that if you add on tens of thousands of dollars to the price of a $150,000 or $200,000 aston martin vehicle

that it will spook buyers and make them not want to buy the car? he said no he said anybody who has the means to afford an aston martin will continue to buy an aston martin even if there's a tariff. but he's hoping like many others here in europe that there is not an escalation of the trade tensions guys, back to you. >> before you go, i want to ask you about the other end of the spectrum when it comes to transportation, that would be the harleys. harley davidson on the hot seat with the president talking about moving production overseas to side step tariffs. according to a report in germany, that company has been invited to open a factory in berlin now. >> reporter: yeah, i don't make a whole lot out of there because i think this is a no-brainer if you are an economic development minister or somebody in charge of that let's say in berlin, sure, why not extend the invitation to harley davidson. do i think it will lead anywhere hard to say. keep in mind harley davidson is moving production overseas to supply europe. it has not said that it's moving

plants to europe they have a plant coming online in thailand, they have a plant in india, so they have capacity that they can fill the supply into europe. i'm not sure that just because they get an invitation it will lead to them adding a plant in germany. >> phil lebeau in england. thanks, phil. as trade tensions continue to heighten, many are asking what tariffs will mean for the economy, ubs thought tariffs would never become a reality but now they're changing their tune n a note to investors they say we were wrong, these tariffs could be bad news for the global economy. let's bring in the chief economist, seth carpenter. >> it's a pleasure to be here. >> i want to understand what you miscalculated and you thought they would release the list but not escalate it but they have escalated it and you're looking for the implementation by september? >> that's exactly right. so the first round of tariffs were placed on $50 billion worth of imports from china. but those $50 billion were

carefully picked so that they would have very, very, very small effects on the u.s. economy, so it was an opening salvo and a very, very real move it was meant to show in our view that the administration was serious, and we think they have been but we saw that as the administration being extraordinarily careful in the way that they were implementing policy we expected a release of a list of 200, but alist isn't a lega step instead, they also initiated a further investigation into chinese trade practices and that step, that step is a very important legal step which really sets in motion a whole series of actions which will ultimately lead in either tariffs on the one hand or the president certifying that all of the complaints the u.s. has had with china are now resolved. and we think it almost certainly has to result in the tariffs. >> they have taken that step and yet just confirmed that there are no high-level trade talks going on with china. how concerning is that to you? >> so it is somewhat concerning. on the other hand, when these

sorts of high-level discussions go back and forth, you don't tend to read about the true discussions in the news. so there should be some staff-level discussions that are going on i hope there are some staff-level discussions going on and there is a path to de-escalation. there were trade negotiations going on before the first round of tariffs were imposed, and so if they can come back to that momentum and those deals that they were in the process of trying to make and build on that, then there is a path to de-escalation. we just think that that path is fairly narrow. >> but i guess it all depends on what the objective is by imposing these tariffs and there are those who believe that the president ultimately wants more production to come back to the united states. that doesn't happen overnight, so that could mean that the tariffs are in place for quite a long time. what do you think? >> i completely agree with what you're saying. our view is that the administration probably needs to be a bit more explicit about what their definition of success is we have definitely heard from trump over not just since he's

been president but for many decades his view on trade and h feels very strongly about it this is one area we've consistently had the view that it's not going to flip flop willy-nilly because it's something that the administration cares about so what the ultimate objective is in our view is some actual change in the benefits of trade, more of that accruing to the united states. we have to see precisely how that plays out. >> this terms of the impact, seth, right now escalation is not factored into any of your estimates for the u.s. economy how do you take a look at what the impacts could be do you take a look at it in a very sort of strict way in the $250 billion of goods that are going to be subject to tariffs and the impact on the economy or would you go broader and say this will perhaps cast a pall over capital spending or maybe there could be qualitative retaliation by china what's the worst-case scenario >> markets like to discount worst-case scenarios. >> so far the markets seem to be

reasonably optimistic. just at the top of this segment you went through the equity prices and they seem to be holding up reasonably well our view is, yes, you absolutely have to take both a specific narrow direct view, prices are going up on some goods and as a result demand for those goods will fall and so there's a first-round effect that seems reasonably straightforward when it comes to the first round of tariffs, the tariffs on $50 billion, that seems like a fine way of analyzing the effect. but when the longer list that's been published, when we get to this $200 billion in potential chinese imports subject to tariff, at the top end, there are some categories in that group where china is if not the only source, is a predominant source of those for the united states if you think of those as intermediate goods and some of them are inputs to manufacturing production, you could imagine then supply chain disruptions. and that's for us the part that we worry most about, that nonlinear effect where it's not

just somewhat higher prices causes somewhat lower spending. >> no back of the envelope calculations yet, though >> we published as a bank a few different scenarios. none of the scenarios that we publish specifically had exactly the situation that we're in now because we had not yet heard what the chinese retaliation would be but that note said if the u.s. imposes tariffs on another $200 billion of chinese imports and imposes tariffs uniformly across all automobile imports in reaction to u.s. imports on china, the chinese government retaliates in exactly a symmetric way, that could be 100 basis points of growth on the u.s. economy. >> 100 basis points. all right, seth, thank you we'll be hearing a lot more on the economy and trade next week at delivering alpha larry kudlow will be there along with a host of other big names and our own michelle kbrus owe cabrera will sit down with steve bannon, former white house

strategist. in the meantime to the bond market we go rick santelli tracking the action at the cme after a week of weak auctions rick >> yeah, no, the best auction of all was really that 10-year note auction a bit above average. those 69 billion in supply are already in the hands of investors. if you look at a june 1st start to two-year notes which have captured the imagination of every yield curve flattening trader in the world, yes, it's pretty aggressive. right now it's up four basis points, darn close to a fresh closing high going all the way back to 2008 here's something fascinating many are talking about equities and the range and indeed they are in a range unless you look at the s&p from a closing basis, and then pair it up on a chart with a two-year note don't you find this chart fascinating? the two-year note and the fed and the s&p 500 are all on track. the economy is doing pretty well and it certainly looks like the s&p is going to close above that

june high, so in my opinion it's not the highest level on a closing basis going back to february 1st looks like a breakout to me. you look at the 10-year in that same period and there you go we're up four on twos, up one on tens so another 3, 3.5 basis points flattening and throughout all combinations of the yield curves what's going on in china has been a big talking point let's look at the chart of the dollar versus the yuan the dollar is at the highest level since august of 2017 contessa, back to you. >> all right, rick, thank you. up next, a closer look at two industries caught smack dab in the middle of this trade war. we're talking to iowa's agriculture secretary about the impact on farmers and the booze industry also, feeling the heat, especially american whiskey and bourbon. we're talking to the ceo of mickteres about the impact on global growth. the conversation would probably

go best with a glass of bourbon. >> you think >>e' s iwe wlleef can get some out here stay with us

well, as the trump administration is rolling out tariffs against some of america's largest trading partners, farmers across the country are worried their businesses may be among the first casualties of this growing trade war. joining us on the cnbc news line is mike naig, secretary of agriculture for the state of iowa secretary naig, great to talk to you today. can you tell us, has china cancelled orders for iowa farmers? >> first of all, it's great to be with you, thanks for having me yes, we are already feeling the brunt of these tariffs in the

form of, yes, reduction in the purchase of products that historically we've been selling to china for many years now, soybean in particular. >> is there any chance that you independently go to china with a trade representative representing only iowa and talk to the chinese directly about trade between the state and that nation >> well, i think historically we've worked hard to develop these markets over many decades, and frankly that's one of the things that's concerning to our producers is the fact that they've spent a lot of time and energy to build this market, particularly china and soybean, and we'd like to see that effort pay dividends, not be wasted but in thamerms of what do we p going forward, we do not have any current plans to send a trade delegation at this point, but we are always in contact with our customers around the world. >> mr. secretary, do you have a plan b otherwise i realize that you can't just turn things around on a dime when it comes to where you sell

and what you sell, but are you thinking about other markets where you can sell your goods or planting something else that could be used elsewhere instead? >> you know, for iowa, we are predominantly corn and soybean production in this state, so it's not like we will be able to shift that production to accommodate -- we're in the middle of the 2018 growing season here, and frankly this is uncertainty very challenging for our producers. i do think in the long run there could be additional market opportunities for our products if you see a downside to the demand in china. but again, we'll have to see that play out. i think what's concerning to us and our producers is this near-term turbulence that we're seeing in the marketplace. >> but secretary, the soybean producers in canada are having a blockbuster year if the chinese shift suppliers and move to canada, are those customers that are gone forever? >> again, that's a concern that we destroy demand for our

products around the world on a more permanent basis again, i think we have to see this play out. when you look at china and how much they need in terms of the -- their efforts to produce protein for their population, they will need to buy soybean from around the world. and so we think in the long run we continue to be a significant supplier to the country, but are we the first supplier or secondary supplier again, those are things that we're concerned about. we want to continue to have these efforts that we've put forward to develop this market pay dividends in the long run. having said all that, we know there are issues that need to be resolved with china and i think our farmers and our businesses are hopeful that we can get to a positive conclusion here >> and do you think that this is going to have an impact on the midterm elections? i mean this is a state that clearly went for president trump. >> i think it could. issues that hit the pocketbook certainly will have political ramifications. you know, we've got in this situation in iowa where the cost

to produce a crop is we can seli for at this point. and so you know our prourpss are patient but to a point so our message to the president is you know we can't continue to bear the brunt of the retaliation and that our farmers can't afraid to wait they plan for 2019 growing season and for making economic decisions impacting for yeerps to come. >> right. >> we need certainty in this marketplace. patient but to a point. >> mike naig thank you for your time today, zblier thanks for having me. fifa is making billions of dollars off the world cup shouldn't you make a couple of bucks as well. >> yes. >> o nurext guest tell us the smart way to gamble on the championship game. power lunch back in two. you can bet on it. kr for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today.

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wednesday dlifrpg avila return was with are you ready to take your wifi to the next level? then you need xfinity xfi.

a more powerful way to stay connected. 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. so after a month of soccer fever, the world cup final between france and croatia is on sunday and our next guest is developed a mathematical model he uses to determine who has the best chance of winning. it's technical analysis for sports if you will. >> i like that. >> joining sus david sumter professor of applied math at the university of sula in sweden thank you for joining us >> thank you for having me. >> you -- you explain. how this thing works you're looking at nature and

then trying to apply what happens in nature to the soccerfield. >> exactly originally i'm a math ma tissuen how birds move together, how fish schools use together and how we use mathematical model to explain that and i thought can i apply this to humans the ideal spot is soccer you have players and how they sbrkt and build up mathematical rules. >> and if you watch 4-year-olds play soccer it looks like a swarm of mankato os. >> i have some kmars to show -- give you an idea this is paul he plays for france you can get an idea of is the important passes he made each of the dots is the origin of the pass and the end point where he made passes to we can use algorithm and figure out the important passes

>> do you look at defenses >> we have a plot here opinion the next one is the defense. if we go to the next one this is where he gets the ball back. and he has been one -- he hasn't scored a goal for france in this tournament but he has been one of the key players. >> did do you this for all the players. >> we do this automatically for all the players. we built. >> both sides. >> we built a bot my football knowledge put into a bot which evaluates everything that happens. >> how did you do up to this point in the tournament. >> right, i mean bettingwise. >> yes. >> everyone is interested in the money. >> on croatia and uk did you pick the winner. >> right the thing croatia and uk it was a 50/50 match. >> oh. >> that means 50/50 match you could back the team which has the better odds so i backed croatia for that match. >> okay. >> how much did you make >> france is clearly the heavy favorite in this match coming up. >> yes, again. >> look at this sports book odds. >> yes what you have here is the implied probability win for the

sport books odds so the odds say here that there is a 69% of france winning be 39% for croatia. but i would sap croatia just have -- they may be on a 40% i would say france are definitely favorites to win this match but maybe if you want to place a bet croatia the time to go for. >> not bad advice shut should the sports books hire you or read be -- you have a book about soccer mattics too. >> exactly so in the book i made a model for the premiere league and been running the model three years and made a 2,000% profit on that model. it's an amazing outcome. the only problem is the model made the money but i didn't place all the bets recommended. >> professor thank you for joining us >> thank you for having me >> melissa. >> trucht the machine i guess. the markets are up today no thanks to financials the stocks getting earning season off a rocky start we tell you what it expect next we can johnson & johnson hit with a $4 billion ruling is the suit that huge not a big

deal and how many twirmt followers did you lose in the purge? the numbers on the fake accounts coming up on the second hour of power lunch. need a change of scenery?

the kayak explore tool shows you the places you can fly on your budget. so you can be confident you're getting the most bang for your buck. alo-ha. kayak. search one and done. >> announcer: where big tech meets the street. >> investors clearly want a piece of the action. >> large cap tech stocks doing well. >> squawk alley live sfl morgan brennan john fortt, squawk alley 11:00 a.m. eastern on cnbc hi i'm contessa brewer here is the men u a new story

new indictments against russian intelligence officers. what compact could this have on the president he is's meeting with president putin process monday the five-star fund manager up 12% this year gives us topics. we talk to the and i willry about the impact of tariffs on the bourbon industry and we have a taste test of the new old $10,000 bottle hour lunch starts right now. ♪ raise your glass ♪ >> love a taste test i'm melissa leo. markets moving higher in seks sections the s&p 500 breaking 2,800 the first time since march right now it's a 2801 up by just about .1%. and nasdaq is the one in the red. but marginally here np in terms of leaders we have energy and staples, financials meantime are

lagging. speaking of citifinancials citi jp morgan wells fargo. they reported this morning jp morgan hovering near flat line and tech stocks continuing the run at lifetime highs. bill. melissa i'm bill griffeth and here is what's happening at this hour. target announced a one-day jail july 17th, the same as amundsonen's prime day the promotion includes free two-day shipping on orders over $35. according a ibm study the average cost of a data breach globally is around $4 million. that's a 6.4% increase over the past year. costs sociabilitywood megabreaches reach to the hundreds of millions of dollars. and consumer sentiment has fall ton a six-month low this month. negative concerns about the impact of tariffs have risen to 38% in july, impaired to only 15% in may contessa bill, thank you. we begin with the justice

indictment of a dozens russian intelligence officers for the mts hacking of the election. kayla is live with the latest. >> contessa grand jury impanelled by robert mueller is dieting 12 russian intelligence officers for attempting to interfere in the 2016 election deputy attorney general rod rosenstein would not ee a little bit on the decision to announce the news today simultaneously with the president's meeting the queen of england and just two day before meeting vladimir putin, a meeting the kremlin bills as one to restore u.s./russia ties. >> the time as i mentioned is a function of the collection of the facts, the evidence and the law and adetermination that it was sufficient to present the indictment at this time. as i mentioned, i did brief the president. with regard to the nature of the investigation, i only comment on the evidence >> so here is the evidence doj laid out the 12 officers sent malicious

links to democratic volunteers and employees. obtaining passwords and usernames to hack into clinton dnc and cc servers they used aliases to up load and publicize the documents and mined bitcoin to pay for it. the president's outside attorney rudy giuliani tweeting the indictments are good news for americans. the russians are nailed no americans are involved time for mueller to end this pursuit of the president and say president trump is completely innocent guys back to you. all right kayla thank you very much. joining us on the cnbc news line is john carlin former chief of staff and senior counsel to robert mueller and chairs morrison and foresters global richk and crisis management group. thank you for joining us >> thank you. >> what do you make of the indictments? and interestingly, the timing of the announcement of the indictments. >> these indictments are once again stunning investigative work by the team that lays out in meticulous detail the work

that russian intelligence officers did to commit criminal acts inside the united states to distort one of our campaigns and it lays out in particular that they didn't just break into the campaigns, that before doing it they carefully set up a site called dc leaks to release the information in order to effect the way people thought about the campaign also, new in the indictment is the specific detail -- in one of the appraises of of the indictment that on july 27th, 2016, that the conspirators launch for the first time attacks at a domain hosted by a third party provider, and targeted 76 email addresses. why is that significant? that's laid out in the indictment that's the same day that the then candidate trump called for

russia to take action. he said russia, if you are listening i hope you'll be able to find the 30,000 emails that are missing. i think you'll be rewarded mieltly by the press and this indictment lays out they responded. >> let me ask you on the timing issue, though. here it is friday and president meets with putin monday. how does that affect that meeting, do you think. >> yeah, i mean it should be i hope it's high noon in helsinki this is a faceoff between the leader of the free world and putin's russia who has been determined to undermine democracy. and so he needs to be confronted if the meeting proceeds with the fact that not only did he interfere in our election but that russia has been routinely weather the whether the release of a massive ran some ware that caused $300 million of damage to fedex alone or the companies attacked every day by russian criminals who right now if you look at the most wanted list for cybercriminals it's a whose who of russians that are residing

comfortably under the protection of putin so i hope that our -- our president stands up and calls out the behavior and says it's unacceptable. >> in the meantime is there any indication, john, we have takenny further safeguards against sberchs in meddling in elections. >> that's a great question i don't think we have done enough there have been some actions taken by states, amazingly there are still five states using entirely digital ballot systems, including the state of georgia and do not have paper let ballot systems. and another new fact in this indictment was the russian targeting of state and local elections and the theft of over 500,000 voter records. >> wow john, interesting in this indictment is the little bit about bitcoin that those indicted mined bitcoin in order to fund the activities and actually laundered money using bitcoin. the doj set up a task force into

bitcoin. do you think this gives them further power or impetus to try and put in more regulations surrounding the cryptocurrency and its use in places like the dark web >> yeah, it's -- it's a fascinating growing area that needs more dedicated resources and hopefully this task force that's assigned they are coming from investigators and law enforcement one thing we see all the time in my practice right now is companies that suffer hacks by the most sophisticated looking nation sfat actors and you know what they do once they hack the company is all they are doing is using the fact that they have access to those servers to bitcoin mine. it's something laid out a little bit in the indictment. they just use the free server power to bitcoin mine. because that's such a valueleable way of getting currency you can use for criminal purposes. >> fascinating stuch john thank you so much for joining us appreciate your analysis

john carlin. now let's get back to the markets here bob pisani standing at at nysc on this summer friday. >> 2,800 second week ever gain look at the sectors. the important thing is good weeks two weeks in a row now but the banks look, still polleding back we had the earnings statement for the big names not doing anything look at this here today. wells fargo outright miss. all the stocks to the oh downside the important thing is we need better numbers overall s that's what the market says here we had gootd the number at jp morgan but not much elsewhere credit growths was solid the yield curve is a problem look at the spread between the two and ten. down to 25 basis points. the banks getting killed on this yield curve declining overall. finally not a lot of concerns about the trade wars yet from most of the cfos they talked to at at this time ecitigroup as well jp morgan but we keep an eye on that. >> back to you. >> thank you bob the s&p may be hitting a four-month high but the next guest's fund is still not

performing s&p so far the clear bridge large cap growth fund is up 12% versus roughly the 5% on the snch joining sus margaret manager of the portfolio which has a five-star rating as well. >> thank you. >> you have favorite stocks that you tell us about. is there an underlying theme to get you into these companies. >> i would say the underlying theme here is that we all know tech has been the leader in the market the last 18 months or so. but when we look at large cap software, for example, it's 35 to 40 times. it's hard for us to imagine that the mechanics outperformer mink coming from that group. >> getting expensive. >> just within certain sectors. >> yeah. >> but there are areas where we see value, media, energy or some beaten down areas we are looking for the diamonds in the rough. >> in the media you like disney. >> we like disney. yes. it's interesting because with today we talk about at&t time warner but the bidding war for fox

really underscores the idea that content has value. and i think disney have a long record of creating value from the cone right now the industry is in transition because everyone is trying to shift content from being consumed in the traditional bundle to being consumed over the top. and disney is actually taking big steps towards that goal. i think that's going to reinvig rate growth down the road if you're patient. >> at what price is fox too expensive from your standpoint. >> we're getting there the original bid they made because there are so many costs they can take out of the fox business with the deal, it was still a creative now we are talking more longer term akreepgs. longer term year one but akreetive after. but they move the cone over the top to the extent they have fox content as well as their it increasing chance for success. there are few players that can put the content over the top and have enough to subscribe. >> the top holdings are recognizable amundsonen microsoft, visa adobe.

facebook how do you go forward and outperform even holding the big about names. >> well knows names are so big in the index it's a little bit misleading tech is 40%. of the russell 1,000 we are underweight a couple hundred basis points underweight if you look at tech holding it includes oracle which are not high flierers qualcomm which have not formed performed well within our tech holding i think we shift a little bit more to some some value. some defense. >> are oracle and equal kochl recent additions they've been underperformers especially when you look at. >> qualcomm is a very recent addition and oracle relatively recent addition last six months. >> you are retoiting into. >> we've been rotating into little bit more value. >> another sector you mentioned energy an area you like. sh lumber. >> it's a well managed good quality company. oil as a commodity is up 15%

appear shlumbevya there is potential appreciation there process. after several years of very little investment outside the u.s. now with higher oil prices we are seeding cap x improve they'red leverage to outside the u.s. increases in capital spending op exploration and production. >> the the trade war is taking up the lion share of headlines how does that influence where you want to put your money. >> it's something we think about. although right now the trade war is a really a manageable risk. i mean, our just back of the envelope numbers imply that the trade -- the trade war as it's being contemplated right now, the tariffs announced and implemented that's about a $50 billion head wind to the u.s. economy. it's not nothing but we sit in the face of a $200 system stimulus from tax cuts and we have 3% gdp growth. those are manageable as we see them now the real question and risk that might make us make changes in

the portfolio is what happens in rounds three and four four and five and the trade ware escalation who sberps into the fray and what else other goods are included. >> the qualitative retaliation that mccould go down they don't have to that many goods. >> that gets back to technology. one of the things we think longer term is china has been clear about the fact that they want to build their own technology industry. to the extent that we have escalating trade war it cements the view that that's the right move and may speed their efforts that's a longer term competitive threat for tech. >> marpgt of clear bridge coming up twitter cleaning house and followers dropping like flies. a look at who is most impacted by the purge and bottoms up, trade war has a change in sfirts for the whisk were industry. the president of the michters joins us live power lunch back in two so no matter what you trade, or where you trade,

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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. shares of networking stocks falling right now. following reports that amtzen web services is considering selling networking switchers joining on the cnbc news line is james fish analyst at piper jaffrey he has a buy rating on sisco $50 price target great to speak with you i know

there are a lot of questions still. but i didn't know that amazon actually made and manufactured its own switches thp these would be white box switches that this they would sell according to the information up to 80% less than sisco list prices. >> yeah, thanks for having me. aapologizes for the background noise here amazesen and other cloud service providers and even some service provide ars have been offering their own or doing their executing on their own white box switching, switches for a couple ever years now and it's always been a threat to essential the ciscos and the others of the world. at the end of the day this has been a well-known potential threat and the difference here isn't necessarily that amazon is going to be doing it internally as they've been doing it for years as i just said, it's the idea that they could be selling it commercially to their -- their existing aws customers in order

to bridge a hybrid environment together all through amazon. so at the end of the day, this is pretty well-known to us and somewhat expected i think by investors overall. >> well. >> and on the the 70 to 80% pricing. >> yeah. >> that's the advantage of the white box switch is essentially the value of the switches today is in the software and usually because of that you can saveon sort of hardware costs overall. so that difference makes a lot of zbleens i get what you say in terms of this has been known but hasn't been priced in. we are seeing a 4.5% decline inis coshares at this point. i would take it you use this as buying opportunity there is no threat whatsoever to cisco? do you have any grasp of the customers of aws who currently purchase cisco switchers which now who may now purchase aws ones >> well, no, it's a threat and it's been a threat longer

term the near term impact is questionable just because we haven't seen full deployments yet or selling process of amazon switches at this point but it's a longer term threat. no doubt and no doubt am i discounting that it's just going to take time to show up. white box switches is less than 3% of the mechanic it's been a threat it's known it's just a question of when and if it were will have impact and if the -- if case o cisco and its peers stop this threat. >> and in your coverage ufrps who in your view has the risk to losing mechanic share to aws switchers? >> well, i mean cisco is the largest player no doubt about that for the longer term. it's a question for cisco if this announced -- this the amazon product would accelerate the share losses or not. and it will take time to find

itself and in terms of actual exposure, though, it's our belief at least that amazon's a large customer of juniper, for example. that it might become an issue there. just as amazon could theoretically leverage more internally built solutions and kind of phase out the juniper products. >> thanks for come in on the developing story petition appreciate it james fish of piper. >> thanks for having me. >> speaking of technology. if you've been betting big on tech and media the past five years you've probably been doing well a new study from boston consulting group sates the top nine performing stocks between 2013 and 2017 came from those two sectors. chip maker and video garnered the highest return bied by netflix, broadcom, china's 10 cents and facebook and speaking of netflix. >> yeah. earning on deck monday the stock is down 3 -- 3.5%

ahead of that. but up over the year a whopping 108% do you get in or expectations stooigh? trading nation is next

welcome back to power lunch. it is time for trading nation. today we look at netflix tumbling of the 3% the drop still barrel making a dent in the massive year to date surge. to bad the dip or fade the rally. piper jaffrey. michael with grade yan investments. craig, clearly this is bullish looking chart. the momentum is there. but it's a big mover around earnings what do you do. >> well clearly this is a stock we have gotten wrong this year the stock is up 108% as you mentioned. seems like every buyback in the stock you want to be stepping up and buying the stock there is a 9% implied volatility move into the quarter here from my perspective i'm not committing fresh money with a stock this far extended above the 50 and 200 day moving average. i'd be waiting for a pull back even if i miss on the quarter i'm a buyer on the pullback. >> i don't know. mike, expectations high into the last report and it was a blowout

since then i think it added more than $40 billion in market cap are you convinced? >> no, i'm not convinced we don't own the stock here. and i'd be cautious going into earnings .like you said the stock already doubled this year. astronomical valuations are achieved to it to the untune of 80 plus for earnings per share priced earning ebd multiples are high i would not be a buyer into it what with he hear is we hear efrl inks things we hear viewing hours are starting to not accelerate as much as possible which means they are seeding sthar to hulu and amazon prime they are spending on original content making the negative cash flow continue to mount and finally, you know, we think that the- dsh the newer original content isn't getting as much accolades as past previous content. >> i don't know. they just got a ton of emmy

nominations. >> you're right. they did but the shows aren't as powerful in my opinion as they have been in the past. so all in all i think the stock is priced pvgten any misstep we think there is a significant correction in the stock in the risk reward is too high at this point. >> we will see monday afternoon craig and mike thank you for joining us today and for more trading naks you can help to the website or follow us on twitter see you on closing bell. power lunch returns in two minutes. >> announcer: and now the trading nation stats of the day and a word from our sponsor. in a losing trade avoid letting emotions get the best of you. too often traders want to add to a losing position. but experienced traders will say the first loss is your best loss in other words, take s amall loss and move on before it becomes too big.

hello, everyone. i'm sue her aire here is the cnbc news update president trump and the first

lady melania board air force one for scotland this for a private weekend at his golf property before meeting with president putin in monday. i mike pomp o traveling to mexico to meet with the president-elect. he avoid are a team of high ranking officials including jared kushner and trade, security and border will be on the agenda the university of louisville is removing the papa john's name from the football stadium. the school is taking the action after the piz aifr chain's founder john schnatter made a racial slur. also being renamed is the john schnatter center for free enterprise at the university business college. good news for fans of the british tv hit "downton abbey. and i'm one of them. creators of the series noun announcing primary cast members are reuniting for the feature film and the screen play written.

can't wait. that's the news update this hour contessa wak to you. i'm a fan but never saw the finale. >> you didn't. >> should i wait for the movie. >> no, no you need to see the finale. >> thank you. >> got it. >> zblets checking the markets stocks are higher but the nasdaq dipped to negative territory after setting the all-time high right now the dow is up almost 100 points the nasdaq down 5 and the s&p is up oh, about 2 points. and energy and consumer staples the leaders. telecom utilities lagging at this point and within the dow walgreen's and united tech leading. cisco and johnson & johnson are lagging. mels aire. >> all right the trade tares i have and chinese imports could have a deep impact on the largest and business yourier container port adydy joins us from the the port of los angeles with that story. >> hi, this is the busiest important port in the country. and the director here tell us he expects to see a big impact pr the tariffs. yet in the short term he says

they are seeing an increase in traffic as importers are trying to beat the tariff clock a new report from the national retail frags as well as haasken associates shows imports at the ports were at record high for june and projecting another record month in july while the port of l.a. has the yet to issue the june numbers. it's director tells us he expects the results will fall in line with the national trend but he says once the tariffs trickle down he says the impact could be 15% of goods moving through here and put at risk 240,000 jobs nationally. he says the message to president trump would be onto rethink the tactics. >> we fully support fair trade and investment rules to make our u.s. companies competitive but let's go about this where we have a level of certainty and we can continue to pump threw the great cargo in the supply chain. it's so important to the

nation's kpee. >> the director says the top retailers wlrlt wal-mart, target, kiosk o import from china through the port and right now they ramp up for the busiest peak back to school season importing items from furniture to apparel back to you. >> thank you very much. and sticking with tariffs one of the industry's hit hardest is american whisky at a time when whisky had been in high spirits. >> well done. >> according to the distilled spirits council more than 3 billion worth of whisky was sold in the united states last year kentucky alone exported $450 million of worth of bourbon. >> that's where it has to come from. >> no it has to come from the united states there are other things about bourbon that make it particularly, the way they char the white oak barrels, the proof of of bourbonpy got a big bourbon primer last year in kentucky. >> okay. >> with us a joseph malio the co one era the president of the

michter's one of the things i heard from and i willries in louisville is how michter's especially is making this attempt to export ambushen and not just your michter's brand but a taste for bourbon around the world. what do tare i was do to that attempt. >> you know, it's a great question you know, one thing though that i hope is as we discuss tares tariffs doesn't get lost and see in the tax bill that passed at the end of 2017 it was actually some really important tax relief for a couple of years for and i willers. that has allowed michter's and other kentucky and i willers to reinvest we bought 145 acres that we are building on. we have a second and i willry opening in cement. >> are you suggesting that that offsets the negative impact of the tariffs then. >> well i think there are unrelated but it certainly helps the industry and it spurs investment in the industry and it's helped us a lot at michter's. i'm hoping it becomes a permanent relief

we are such a heavily taxed industry at home and braid to begin with. >> a lot of sin taxes. >> there certainly are no shortage. >> yes. >> but as far as -- as far as tariffs go, you know, at michter's we don't believe that it's going to have a material effect on our sales growth and that's -- we are in kind of a unique position. you know, right now we are aloindicating everything we make because demand is exepediting our supply and we won't rush stuff. >> you have to plan so far ahead. >> absolutely zba. >> because of the aging process. how do you plan for what the trade war might do to you. >> that's a really amazing question, you know but we always say -- we do all the projections. we project like it takes 25 year bourboned to and laying down stuff we hope to sell in 25 years. when we do the prongtsen the one thing we say is we are confident we will be wrong. >> but right now what percentage of your output is pd shipped overseas and is it a proposal

yum? because the argument had been made that premium products could withstand tariffs because the consumer of that caliber product they don't mind paying a little bit more. >> i think, you know -- i think that that is an important observation. and i think it applies to michter's. you know, in the u.s. our least expensive stuff suggested retail is $50 a bottle. we have stuff here like the 25 year ambushen retails for as much as shh 10,000 a bottle. in the u.s we are more expensive abroad you know, so. >> we are not selling to price sensitive consumes we sell to consumers who want a certain type of whisky. >> one thing i heard in louisville was we don't know whether the chinese consumer with a love of luxury and all things luces is going to find this more attractive because it has become more unattainable. >> i don't know the answer to that but, you know, china i think is an amazing potential export market for u.s. whisky

you know, as you've reported there's been some really nice growth in mcand u.s. whisky i hope it continues. >> would you stop with the important questions we got to taste something. >> we are -- it's because the and i willed spirpts council says the sales of hard alcohol have outpaced beer in 2017. >> why is that. >> can you explain to us we are tasting what you brought to us explain why people are turning to alcohol like ambushen. i think there is a growing appreciation of it millennials as opposed to beer and some ear. >> which would. >> will let's sta better 10 year this is the first release of 10-year rye in over a year s in a very much a kentucky style rye. kentucky style rye obviously the majority grain is rye. however the context style rye has fair amount of corn and barrelly malt fair amount of rye but sweetness this retails for about $$160 a bottle. >> i don't think we were supposed to drink on the air you

shouldn't take that shot. >> better to ask for forgiveness. >> while we taste. >> that's the ten-year. >> this is the 25 year ambushen. >> nobody offered me this by the way last week in lufrl nobody got out the 10,000 bottle to say. >> oh, good. >> i would not have wasted this. >> good catch. >> as you were alluding you really have to plan ahead in the whisky business. but you know the company are used to dealing with a lot of intangibles and unknowables you do the best you can. >> you can hold inventory for a while. >> the great thing about whisky is typically it's better with age. >> yes. >> isn't there something we eat between a 10 year and 25 year ambush zbloon that would actually be a good idea. >> if we had more time. >> here we go. but there is a certain complexity of flavor. >> woo that's nice. >> there is a richness. >> very nice. >> a whole cascade of different things going on. there is no substitute for age on a really good whisky.

there is a lot of good whiskies from kskt. >> we stepped on the answer about how spirits are outselling beer and win is this cycles. >> things go in cycles but i think a lot of it is really cocktail culture. you know, younger people in their 20s and 30s really are into context cocktails, mixologies np inch the mixologistists around the country have done a great job. and with social media it's spreading around the world, shanghai, sydney everywhere. >> interesting. >> i don't know about you but i can't feel my lips anymore. >> how fun. >> i'll take yours. >> thank you so much for coming in thank you for so much for the most amazing taste i will nevers taste this ambushen again in my life. >> of course you will. >> thanks so much. >> johnson zen johnson ordered to pay billions to women who claim the company baby powder gave them cancer the details and what it means for e mpy inthcoangog forward. that's next. my digestive system used to make me feel sluggish

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42 minutes past the hour well back to power lunch johnson & johnson ordered to pay billions to 22 women who claimed that asbestos in the talcum

powder gave them cancer meg joins with us mere. >> it's a staggering number. a jury st. louis ordered shr 4:6 million dollars. now it was just in the latest in the yearslong legal battle for a isaacic prand and j & j faces 9,000 similar lawsuit. they make baby powder they note the natural talc can contain asbestos talc products have been in the asbestos free since the 70s. they dispute the claims and plans to appeal and has squaechl overturned verdicts. they argue the there should be a warning label or discontinue the product we talked this morning with one of the lead attorney base that. >> johnson & johnson doesn't believe in putting warnings on a product a cancer warning on a are product that doesn't cause canser >> so there you have it guy.

and bart williams is one of the lead attorneys he didn't argue this the case in st. louis they have multiple times because there are so many cases. >> if they got rid of the talc powder that would be tantamount to admitting something is wrong. in the midst of the litigation you don't want to do that. >> that's what he said he said johnson & johnson doesn't feel they should withdraw the product that's safe. >> they say all the agencies agree with them when you look petition cancer society they say the data is mixed if there is a risk it's low. but the juries keep returning the verdicts >> yeah. >> meg thank you. >> thank you. >> digging deeper into what this could mean for the stock joining us now is an analyst at credit suisse. what's the back of the envelope calculation in terms of worst-case scenario litigation risk. >> it's tough to calculate the a number talking about 9,000 cases in the $4 billion range the numbers get very large speaking to investors we do i

think most people feel this judgment will be reduced or reversed they won on appeal in many of the other cases. i don't think investors are overly concerned but you see the stock is down today people more concerned than yesterday but it's tough to quantify because the numbers could be incredibly large. >> so the more than 9,000 cases out there and those plaintiffs are alleging that this powder caused either ovarian cancer or mesothelioma is there a feel in the analyst community as to which cases johnson & johnson has a better shot of prevailing in. >> i think we have in general the talc cases and in general the investors have been farrell confident. there is a number of different product liability cases that j & j and other companies are fighting this is one they are successful with to date i don't think people are overly concerned. the amount of the damages and the fact they've been appealed in one keeps people fairly comfortable. today is a little bit of a shock with the amount of the they were talking about here and what it

could mean if we see more cases like that. >> that's why i feel like i keep missing something here when you have that much litigation and when you have juries that consistently keep finding johnson & johnson at fault in this case, why aren't people more concerned about the future of this company? >> i mean i realize that the talc-related products themselves as a percentage of the revenue for this company is pretty small. >> right. >> but the litigation costs could be astronomical heert, right. >> and you have to wonder whether it would be better for them to be out of the headlines with some big settlement than to keep relitigating it and grabbing headlines every time especially on consumer products. >> that's exactly right. people have asked that does it make sense to do a settlement we have seen thatten oh the mesh side with companies making settlements. would it be better to make a settlement and get it out of the headlines not a bad idea but i think they feel very confident. until now they won all these on appeal so they never had to pay. they remain confident and until maybe we see cases like this --

i don't think things change i think they remain confident that ultimate limit they prevail and don't want to pay the fines. >> johnson & johnson reports on tuesday. what are you specking to see. >> we do expect a small beat we are on the top line we're i think close to, sr. 1 billion above the consensus a nony above on the bottom line stock underperformed this year i think questions around what turns it around? do we see defensive rotation in the pharma sector in general or if not that i think it's the pharma business that's driving the story and they need so pharma stories continue to drive it but people are looking more from consumer which we need talking about familiar medical baseds. knows devices have not performed at the level of pharma whether it's a deal or other new assets that turn the story around there is a bit of change in management. u new cfo and leadership team coming together. we will see if there is a tone or strategy on tuesday to get people rejuvenated right now people are looking for

reasons to buy the name aside from that it's a defensive nature especially with cases like this that call in question some of the defensiveness. >> thank you for joining us. >> thanks. >> the president's china tare i was could hurt one company close to him that would be his daughters. that story next on power lunch let's get started. show of hands. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade the platform, price and service that gives you the edge you need. alright one quick game of rock, paper, scissors. 1, 2, 3, go. e*trade. the original place to invest online.

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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. welcome back to power lunch. bye-bye followers. this week twitter announced it was cleaning house and deleting millions or in some cases hundreds of fake and suspicious accounts users are now starting to see the impacts of that purge. take a look. former president obama lost 2.3 million followers. president trump lost 300,000 jack dorsey lost about 200,000 jim kramer lost about 50,000 i lost a whopping 300. you lost >> about 7,000, 8,000. i didn't know how many followers i had until today. >> i know the name of all of my followers, by the way, i'm able to do that

we're very close i'm stunned that guy was a bot >> jayne tweeted out i think i only have ten followers left but they're all really funny president trump china tariffs could be hitting close to home for the president. family dinners are about to get a lot tougher. >> this is really kind of oan ironic twist in this trade spat. it'll also hurt many u.s. companies including ivanka trump's. her lifestyle and clothing brand makes many of its products in china, and according to the trade list some of her goods would be subject to the next round of tariffs leather bags are on that list. so this $148 bag, this right here, that would be subject to a $14.80 tariff. and contessa has a $250 bag that

would get a $25 tariff >> but it smells like leather. >> it is leather the spokeswoman would only say the ivanka trump brand is held to the same standards as those in her category. she hopes to deepen her tize in china receiving seven new trademarks just tris spring in china from books to racks to spic spices -- >> so is she expanding into new areas in china that she's not in the united states? >> she's filed applications to do so and those applications were filed and approved much faster than any applications are typically approved >> remember the video of her daughter -- >> she's huge there, very

popular. and part of the reason she did that she was already getting ripped off a lot of people were doing ivanka trump products, and she wanted to get out of ahead of and she had all these trademarks approve. she's the symbol of wealth and children of wealth in china. >> even though these bags aren't expensive in terms of luxury wealth expensive, but they still have the sort of cashe in china people might be willing to pay $1500 in tariffs for >> to add another tariff on top of that for products that were already under pressure, that's going to be tough. >> to the point the fellow that was just here from mickters says, look, we're not selling to pri price conscious people >> i think she's targeting not the value buyer but really value

based customers who want every day working products >> these are not inexpensive compared to some of the things we see in new york city, but when you go into marshals and find this even on discount it's a significant investment for a lot of women >> and i think adding to that is only going to make it tougher. it's already a slightly high price point for what it is >> interesting and check please is next >> oh, boy

i love the royals. i'm sort of an -- in that regard i was waiting to watching to see how this was going to go with the queen and president trump. that's my favorite moment right there. where'd she go he sort of stepped in front of her. there are certain protocol things you never turn your back on the queen. >> i liked how he looked and she was over there >> where'd she go? >> if tourists keep using your private road as a shortcut, what do you do? you just charge them neighbors in north carolina decided tourists kept cut through to get to the beach and they collected $900 over july fourth weekend and goes to the repair and maintenance of the

road i think it's a brilliant idea. >> it is a good idea we've all been to the resort areas in parts of the country and in summertime on certain days you can't get anywhere and locals, it drives them crazy so now they're going to monetize that >> i wonder how much they charge per car. >> $5. >> that's a deal if you want a shortcut i guess so >> i think we made a go of it four times it looks like we're holding right now. what's interesting this time around we are not doing it with the leadership of the likely suspects yes, we have lifetime highs but information technology overall it's in the red. financials, in the red we're doing it with the leadership of industrials. so we'll see if we can pull this going into the close are you looking for the bourbon? >> it is gone. >> there's no more bourbon here. time to go

it's friday. thank you both for being here. thanks so much for watching "power lunch." "closing bell" starts right now. it is time for "the closing bell." big banks kicking off earnings today and the stocks are underperforming. we'll talk to the cfo of wells fargo in a first on cnbc interview. i'm michael santoli. at any time downgraded today i'm wilfred frost in london where it has been a roller coaster day for the president. he started by undermining his host the prime minister and then backtracked and promised her a free trade deal. onto tea with the queen all against the backdrop o