turned around. predictions on the desk that it's going to be positive by the end of the day you want to stick with that? >> i think it could. you know, actually, i'm going to back off a little bit. well, listen, i'm looking at the chart. the last 45 minutes. last 45 minutes is flat lined. >> we shall see. what are the stories that power lunk will be talking about right now? >> it certainly will be one we're talking about. thank you very much. good afternoon i'm tyler matheson fed chair poul making his case for a strong economy and more rate hikes ahead we'll talk about the market impact and the great rate debate straight ahead defanged shares of snet fliks taking a hit on fears about subscriber growth, but will it finish in the green like my tie? we'll find out is the growth story still impact is the stock aa buy given today ace drop president trump getting ready to speak in the next hour about his meeting and controversial news conference with russia's putin it's caused a lot of concern on both sides of the aisle.

what will the president say. we'll bring you his comments on "power lunch," which begins right now. welcome to "power lunch. i'm melissa lee. stocks carving out gains the nasdaq and nasdaq 100 hitting new record highs despite that netflix miss. materials and tech, the best performing sectors here. gold prices down again falling to new one-year lows check out three movers at this hour the home construction etf, the itb on face for its best day in more than a week united health, that's sinking earnings beat, but medical costs missing estimates, and amazon is higher it says prime day is so far bigger than ever, and many of the glitches have been solved. we have much more on this straight ahead michelle >> thank you, melissa. i'm michelle caruso-cabrera. we begin with jay poulwell's testimony before congress. steve liesman is live in d.c. with all the highlights. hi, steve. >> hey, michelle

-- best strategy for the fed to continue raising interest rates. he said wages were not rising fast enough yet to cause an inflation concern. >> i think gradually raising rates is the way for us to extend this expansion. nothing hurts working families and people at the margin of the labor markets more than a recession. >> powell said it was too soon for those tax cuts from last year to be raising wages right now, and the ultimate effects would be hard to gauge overall, though, he said the tax cuts have had a positive impact on the economy more worrisome, he said, are the administration's trade policies. >> i'm really firmly committed to staying in our lane and, you know, our lane is the economy. trade is really the business of

congress and congress has delegated some of that to the executive branch, but nonetheless, it has significant effects on the economy, and i think when there are long run effects, we should talk about it and talk in principle. i would say in general countries that have remained open to trade that haven't erected barriers, including tariffs, they've grown faster and had higher incomes and higher productivity, and countries that have, you know, gone in a more protection it's direction have done worse. i think that's the empirical result >> he said there have been some reports of businesses cancelling or delaying capital spending plans because of those tariffs, but he held out hope that better trade agreements could come from the process. guys >> good rundown there, steve thanks so much don't move more reaction to powell's testimony. let's also bring in joe, chief economist of -- as well as cnbc contributor and diane, chief economist with grant thornton. ladies and gentlemen, good to have you here. joe, let me start with you looking at the market reaction, it's none the worse for wear after jay powell's statement, testimony earlier today. is that because he stuck to what

everybody expected he would do, sticking to the plan, gradual rate hikes >> yes, pretty much. my guests may disagree, but i'm worried about the yield curve, and i would have -- i wouldn't -- i want powell to say that while in principle these rate hikes are gradual, relative to the global economy and what other central banks are doing, the interest rate path that perhaps he has laid out is too aggressive, and my fear, michelle, is that the fed will keep hiking, invert the curve, and will be talking recession sometime in roughly the 10 to 22 month ban. >> i didn't see all of the testimony. was powell asked about the yield curve in particular and whether or not he was worried about inverting it >> michelle, what could have you possibly been doing other than watching the fed chair's testimony? >> that's what you are for >> popcorn -- a little popcorn, nice soft drink on the side. it goes quite well here's the thing, he was asked about it a couple of times, and

he said he is not all that foeked on the yield curve itself what he is interested in is the neutral interest rate. the trouble with that comment, which is fine as far as it goes, is that no senator asked him to follow-up and say, okay, what is the market telling you about the neutral rate to joe's comment that he is worried, i think that the chairman may believe he is at or close to that neutral rate and that could be the signal that the market is telling him from the yield curve, but the yield curve itself, whether or not it goes to zero or even inverts, powell tried to keep us away from that, and as you know, joe and diane, the fed put out a paper a week or so ago, a couple of weeks ago, that talks about this issue of whether or not the yield curve does do it, and what they're looking at is more shorter end yield curve differentials. we are looking at the fed outlook where the markets outlook for the fed as an indicator. >> diane, give me a bit of a history lesson i think you see the economy

growing rapidly. give me your thoughts about the second quarter maybe even 4.5%, 5%. the question is when have we last had economic growth at that pace and a yield curve that is so close to inverting, which is typically thought of as a recessionary signal of one sort or another, or do the two go hand in hand >> sometimes, but i think the more important issue here is that the fed actually -- there's a division within the fed. there are those that have now come up and said they are a little bit concerned about the yield curve. they're not dominant they're the minority on the other side of it, there's a lot of people within the fed that argue, listen, you know, the balance sheet was meant to reduce the term premium. it worked, and now we're reducing the balance sheet, so as we do that, this won't be as much of a problem going forward. they're counting on this sort of smooth transition on the balance sheet to sort of equalize and not allow that inversion of the yield curve, and i think jay powell was very specific about

going gradually. also, because underlying concerns about inverting the yield curve. that said -- >> i'm a little thick here i want you to explain it in ways that maybe i can understand. am i hearing you say, diane, that the fed's view may be that the position of the yield curve right now is due more to technical factors than to economic factors >> that's what the fed -- most of them believe. now, there are some within the fed that don't agree with that, so that's going to be a bit of a division, and one of the people who doesn't agree with it is rafael bostick who does vote the next time they raise rates, you could see a disent from him. >> is that you, joe? please jump in >> we're going to rename this wonk with swonk. >> tyler, back -- >> go ahead, joe >> -- back october 31st, 2007, we printed 39 gdp.

it was 80 basis points above consensus. that was after the second quarter was 3.8% s&p 500 hit its high for the cycle that month and two months later, you know what happened? >> i do. >> economy hit its economic peak the yield curve had been inverted things look good until all of a sudden they don't. >> that's what i was driving at. go ahead, steve. >> i want to ask joe joe, if you didn't have the yield curve to look at, if that was not something that you were using as a gauge and you saw the idea that we did -- we're going to do 3% or so combined in the first half, maybe a little bit hotter than that, forecast for the third quarter or around 3% you are due in jobs at 200,000 the unemployment rate is 4%. the fed rate is still low. it's certainly when it comes to a real rate it's still low which part of looking at the economy makes you nervous about a recession? >> well, the yield curve i mean, it exists, so you can't ignore it. >> no, no, joe

>> no, you can't say -- you can't create a hypothetical that doesn't exist. >> the yield curve is not the be all and all knowing indicator. >> i look at high yield spreads, which have even a longer lead time you kind of come back to the same thing >> fundamentals don't matter >> the system is built off of a positive slope yield curve carry rules the day. >> can i flip this around? on the other side of the question, going beyond the yield curve, what do i worry about going forward? i worry that we're in a boom-bust cycle now. i worry that we're borrowing growth today at the expense of growth tomorrow, and we do have a fiscal cliff in the fourth quarter of 2019 when the fiscal policy, this spending that we have today, comes off. now, they could extend that and add more spending to the economy and widen deficits and debt, but that has its own price to it, and so without trade wars, which also a full blown trade war could purpose us into a recession in 2019. we're not there yet, and we hope to avoid it, as powell said. fully dodging that whole issue i think there is some real

issues to think about in terms of what we have set ourselves up for and the fed can't deal with that until the policy changes. the fed has to respond to the economy today. they're still reacting i think steve is right they're reacting to all those other economic factors and the yield curve is a debate within the fed, but it's not the primary driver >> lady and gentlemen, thank you so much. good to have you on. thanks, steve, for the rundown diane swonk. joe. >> thanks, guys. let's get back to the backlash to president trump's press conference with sclvladimir putn the president expected to speak about that meeting in less than an hour from now, among other things let's go to kayla in washington. kayla. >> tyler, the president is back in washington. he will be making remarks on the helsinki summit at the top of the next hour. today he did not have an intelligence briefing, but the deputy attorney general, who announced the latest russia indictment, was seen at the white house, and an administration official said rod

rosenstein was there for routine meetings and defendant's exhibit me -- did not meet with president trump. stabilizing alliances. namely through trade senate foreign relations chair bob corker saying that the dam is finally breaking as americans taxes americans with tariffs he pushes away our allies and further strengthens putin. corker calling for a vote on his bill requiring congress to approve new tariffs on national security grounds that's met resistance from leadership so far until today. senate finance chair orrin hatch now says he would work to advance that legislation if the white house continues what he calls recollekless tariff polic. >> i want it to be a success these approaches are not successful they're not the way to go. >> one of the questions that a lot of republicans asked privately is so, yes, we disagree with the way the president handled the meeting

yesterday. what can we actually do, but the trade front is one area, melissa, where we could see some action brewing >> kayla, secretary of state mike pompeo is scheduled to appear before the senate foreign relations committee next week about russia do we have any word on what this relates to, and if the press conference of two is related to his appearance next week >> we don't know exactly what it will relate to, but we know that there have been calls throughout the morning from various republican senators, corker, senator lindsey graham, and many others who have been asking for administration officials, namely cabinet members, who are with the president in helsinki to come testify on the record, under oath about exactly how the decisions were made and the communication strategy was craft crafted. on to have the president say what he said yesterday standing next to vlad peer putin and exactly what happened in that expanded bilateral meeting and what, if anything, they know about what happened in the private meeting. >> kayla, the most overused word

of the past three years probably has been double down do you expect the president to double down today? >> well, i've seen reports that the white house has sent out talking points that reiterate that the president has, in fact, in the past said that he believes the intelligence community about the evidence, that russia did meddle in the 2016 election, and that he does believe that it was russia that was responsible. basically going back on what the president said himself on the stage in helsinki yesterday, trying to quell some of the republican agitation about the way that that messaging was handled yesterday, so we'll see whether the president chooses to do an about-face as we saw on twitter yesterday when he was on his way back to the u.s. where he said i've always believed my intelligence agencies or whether he reverts back to the messaging that he said while standing next to putin yesterday >> all right, kayla. thank you. kayla in washington for us

meantime, netflix shares are down about 5%. 4.5% on concerns about its subscriber numbers, but the stock well off the worst levels of the day have been about $40 from where they are right now julia joins us from los angeles. julia. >> melissa, ceo reed hastings explaining the disappointing user growth and not -- with a lower than expected subscriber forecast for the third quarter, he acknowledges that netflix's rivals are formidable and growing. >> there's a lot of new and strengthening competition with disney entering the market, hbo getting additional funding, the different french broadcasters coming together. that's all normal and expected it is what it is we're not going to be able to change it. >> some analysts see this as a buying opportunity, as do investors with the stock bouncing back from its lows. it was down after hours. now shares are down under 5%

stifel upgrading netflix from hold to buy saying we view netflix's long-term outlook positively given the up side case we believe exists for the company's domestic and international opportunities. we did count at least five analysts lowering their price targets. deutsche bank downgrading netflix today saying the shortfall is most significant because they've taken it face value and it could mark an end to the accelerating international net add trend that net flick has exhibited over the past seven consecutive quarters. hastings saying they're focussing on demonstrating creating the best content and using the interface and marketing. his comments did seem to reassure investors after the initial drop yesterday guys >> thank you for the rundown there, julia much appreciated we're going to talk more about netflix. there's concerns about netflix subscribers, as we were just talking about. amazon got a black eye on its prime day. what if fang starts to falter? can the overall market move higher without them? will the rally survive nc thee,he music "power lunch" is coming right back the kayak explore tool shows you

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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. >> if big tech starts to fall, will the rest of the markets go with it? bob is live at the new york stock exchange bob. i don't know ndx setting a new record high today, despite amazon. excuse me. netflix. >> that's right. that's right it's not the only way to make money. that's my point. let's take a look at the fang names. yes, it's true, because of their heavy market capitalization, they do account for the majority of the gains in the s&p 500. even netflix is up 100% despite

moving down. it's not the only way to make money, and it's wrong to say fang doesn't go up the s&p does not go up let me just show you we're up 4.6% year-to-date in the s&p 500. 52% of the stocks in the s&p 500 are advancing. market breadth is positive all right. it's not amazingly positive, but it is positive there's plenty of other things that are making money out there. tech is up 79% okay so the fang stocks in there are helping a lot. health care, 67% of the stocks in the health care are up. that's not fang. 61% of the stock and energy are up that's not fang. 56% of consumer discretion, yes, amazon is a big help there it's not -- it's only one of several of them. as far as where the s&p 50000 is going for the year, look, some of the sectors that are up there, you could make plenty of money and not be in fang this year as oil and gas is up, russell 2,000 small cap is up dramatically aerospace and defense is up nicely even the broad health care sector all these sectsors except tech,

they don't have anything to do with the fang names. don't give up on fang names either remember when everybody gave up on facebook. look at march. went from 180 to 150 everybody said crisis, and it was, but the company came back missing on subscriber ads for a company like netflix may be disappointing, but it's hardly an crisis. facebook had a much bigger problem back in march with cambridge analytica, and you see the mixed reception here today netflix was down 11% at one point. now only down 4% guys, back to you. >> robert, thank you very much can the rally keep going without fang that's what bob was just talking about. technology and where stocks headed genly from here michael far is president of fahr miller and washington. kevin o'leary co-host of "shark tank." they are both cnbc contributeors, we're happy to say. michael, let's start with netflix. i note in my notes that you say

because of its very nature it is "not suitable, not suitable, for a long-term buy and hold discipline you view it as a speculative stock that would not be in your buy and hold portfolios. why? >> correct well, you've got over 100 pe ratio, and they've got content, and they've got a lot of good things, but they're still in a negative cash flow position, and so i can't -- i can't call -- you know, you saw that stock this morning down over 50 points i can't call fred and ethel, who have been clients of mine for years and say, we've got this netflix thing in your portfolio, and it's down 50 points today. it doesn't work when there are really good earnings and reasonable price to earnings ratios you just can't go to the thin branchs for returns and not understand that there's going to be a significant down side at some point maybe netflix does great, but this kind of behavior in the stock shows me that it really is

inappropriate for a conservative portfolio. >> there are a fair number of people on the street, kevin, who would say that among the stocks that are core holdings in your portfolio for the long-term, netflix would be one of them along with amazon, along with alphabet, along with microsoft what's your view on netflix? speculative or core? >> no. it is -- it's a core holding because it's changing an entire industry here's the issue about netflix yes, it adds volatility to portfolios and certain portfolio mandates won't go to that level of vol, but if you have been a netflix investor now for the years that it has been changing, you are preprogrammed to take drawdowns as high as 32% the truth about the company and, again, it was demonstrated yesterday on the call they're no good at forecasting your subadds. not the down side or the up side they miss forecasts. they blow out the numbers. when you are ahead of yoo you

are numbers by 8%, 9%, you are actually not forecasting very well people are used to that. frankly, it doesn't really matter at the end of the day, quarter to quarter, it's when the narrative changes, when all of a sudden subgrowth is consistently slowing for three quarters in a row. then reality strikes >> i think a guy wants to get paid dividends, and there's no dividends as far as the eye can see. >> there are mandates where people want top line growth, and you only find that around the world in internet and e-commerce if you want 30% growth, you can't find that in traditional names. right now, and it's been consistent for almost a decade, there's a sector in our stock market and the global market where people do not value companies based on free cash flow they value them based on revenue growth with the assumption that they can -- cash will rain from the sky like rain. that's true. they've never done that.

there's about 50 companies like that around the world. on average they're $250 billion market cap each. that includes alibaba and 58.com and our dmers domestic names >> i want to get back to this idea that netflix is not the kind of buy and hold that you would have for the mertzes even if the stock is high in volatility or high in valuation, this is the prime candidate for a long-term hold because you're holding through the bouts of volatility in the long run the trajectory has, in fact, been higher. >> i don't think so. it's what you paw for something. if you are a long-term investor, you have to have a clear disz palestinian. if you look at facebook and if you look at google, they do have

the balance sheets you do have the growth they've got the balance sheets, and these are names that i can own in my portfolio. i do own in my portfolio you know, if -- i've gotten in trouble in the past when i've reached out for those thinner branchs to say i really like the concept. there's really no there there underneath yet and so i like the -- i mean, i like what netflix does i watch stuff on netflix, and, yet, i can't justify the valuation. sticking with my rules on valuation has kept me out of trouble for 30 years, and i'm going to stick with it i can grow my money other places >> what about bob pasani's premise, kevin, that the market can still go up even if fang were to fail, but all this concern that the breadth is too narrow, its signals and ethwe'll we get a pullback. can this market move forward even without these names >> i think that would be very difficult. i'll tell you what, the handoff to financials, which was the narrative in january, the idea

that, okay, everything else is going to take a break, and we're going to hand the football over to financials with a 2% dividend yield at the time, that's actually been a very bad investment you're down almost 11% on some names. this is a different market every market is different every cycle, but this idea that financials are going to come back and lead the charge, and fang will no longer be where capital flow is, the trouble with financials is they have no growth in their loan book. the core of their business -- maybe it's because of tax reform, and the fact that there's a lot of free cash flows as a change in cap spending or whatever >> can you hear the ceos talking around this issue. they're doing a great job managing their businesses, but the banks today are not what they were -- >> you are saying the market can't rally without tech >> i think the rest of this year if -- we're going to continue to

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>> wilfred frost looking at the numbers and what the company will look like under the new ceo david solomon. will >> hey, tyler, let's start with the earnings a big eps shares trading lower why is that? a large amount of the beat came within the inl, or investment in lending business, which analysts don't rate quite as highly as the other areas. also, the bank had a lower compensation ratio than expected, and there was concern that that and with it the earnings beat would not be sustainable. trading was in line while fixed income commodities and currencies bounce back strongly in particular due to commodities. he has committed to their recent strategy changes, such as broadening their client base and

the investment bank and adding more corporate clients in the trading business, rather than just hedge funds, and using the balance sheet to do more lending. >> thank you very much wifred flos. will david solomon be a good fit for goldman? joining us is jeff, the senior associate dean of leadership studies at the yale school of management and cnbc contributor. jeff, always great to see you. >> thanks. great to see you zoo this had been well telegraphed. it's no surprise that david solomon is the next ceo of -- in

terms of his next steps, he was talking about choosing his deputies how important is that? typically once you choose deputies, once you sort of signal to the outside world these are my next crew of people who i trust snoo for example, that harvey schwartz and david solomon stayed on while gary cohen looked like he was ahead of them in the line-up for a while, and then, of course, gary cohen went off the government, and it was clear he wasn't going to be lloyd's successor. you can see that there are multiple candidates out there, and that's among the remarkable

things about this succession is that lloyd is leaving at the top of his game. of course, the firm is performing quite well, but he also has a good bench strength beneath him, which is fantastic. capable in from jay aaron as lloyd did. david solomon has gone through a lot of different trial assignments. >> it's a signal you're going to change a direction historically ceos have always come from the trading side of the bi zpl over there. famous and well known ones. >> that's two.

how about the people are investment bankers, and there's been a false -- the succession process. they've had two traders before now, this is not a culture shift that way when the race for the number two shakes out, how much turnover of that strong bench would be expect to see, and it -- would it be -- do you expect it to be higher or roughly normal with what you would expect at any company when you go through this kind of transition i remember when ge chose jeffrey immelt, the other two who were in the running, very quickly went on to very successful careers, among other places at 3m, boeing, home depot, among others >> that had been the way at ge for good or bad in this culture. the succession process was always a horse race. when jack welch got the job that

he competed to and against he was a whole generation beneath the team that was the likely heirs apparent. they all left when jack ascended to the -- then, of course -- >> what do you expect will happen at goldman? >> goldman -- it's more of a partnership effort even though they're not still a partnership. now, the people have retired very young there historically because of the -- in the past the enormous wealth they had early on they would leave early whether or not they're being promoted or not. in this case i think a number of these people will stay for a bit, but david solomon is 54 years old. there's plenty of time on the clock here you know, it depends what age group we're talking about. if there are people who are, you know -- our age, tyler, i think they might be looking to do other things >> we're going to leave it there. always great to speak with you the trade stars are beginning to play out in the housing market, adding thousands of dollars to the cost of building a home. we're live in maine for that story. don't move because "power lunch" is back t mutinwoines is it to carry cargo... or to carry on a legacy?

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i we worked with pg&eof to save energy because wenie. wanted to help the school. they would put these signs on the door to let the teacher know you didn't cut off the light. the teachers, they would call us the energy patrol. so they would be like, here they come, turn off your lights! those three young ladies were teaching the whole school about energy efficiency.

we actually saved $50,000. and that's just one school, two semesters, three girls. together, we're building a better california. zblooks hi there i'm contessa brewer. former president barack obama spoke to a packed stadium in

johannesberg to mark nelson mandela's 100th birthday he took aim at strong man politics, but did not presentation president trump by name >> look around strong man politics are ascending suddenly whereby elections and some pretense of democracy are maintained the form of it, but those in power seek to undermine every institution or norm that gives democracy meaning. >> mgm resorts has filed federal lawsuits against more than 1,000 las vegas mass shooting victims in an effort to avoid civil liability. it cites a 2002 act that affects companies that invest in protection or services to prevent terrorism. it argues it can't be held liable for the october 2017

deaths and that any claims must be dismissed more americans are dying from liver cancer according to a report from the cdc. it shows liver cancer deaths have increased by 43% over the past 15 years. officials blame the increase on rising levels of hepatitis c among baby boomers that's your cnbc news update this hour. back to you, michelle. >> wow, las vegas story is crazy. >> thank you >> let's get a check on the markets. the major average is posting small gains. the nasdaq and the nasdaq 100 hitting new record highs. matter of fact, two, threes,

fives, the short maturity, and the rest of the curve is unchanged. you see on the 24 hour schart of tens one week of tens minus two the yield curve is everybody's topic of conversation. it was hovering around 24.75, 25 on friday. the lowest close is 24.75. now we'll probably take that out today at 24.50 if we look at the dollar index, it's moving up you notice it's at 95. right almost on top of it. we've had a real shortage of 95 handle closes where, this will be a solid close for the greenback. tyler, back to you >> all right, mr. santelli thank you very much. amazon throws a big party, but it turns out they weren't quite ready when all the guests showed up sorry something went wrong on our end. inside the prime day problems, and netflix, a fang stock getting a bite taken out of it today. the stock is way off its lows of the session, however was the initial selloff an

overreaction we'll discuss that more as "power lunch" resumes.

zmoinchts amazon dealing with backlash from what was a shaky start to prime day courtney reagan here to explain exactly what went wrong and how prime day is going right now >> yeah. things actually look a lot better, but it was definitely a shaky beginning. widespread outages krcrashes, ad it caused a lot of frustration for shoppers you're hearing it on social media. the disruption lasted on some level for at least some users in the sugs from the start of the event at 3:00 p.m. to around 10:00 p.m. now, shoppers got the something went wrong message there were dog images, or maybe they couldn't check out or search those were some of the reported issues they do appear to be resolved, at least now even with the out alkz amazon says the first ten hours of prime day grew even faster

year-over-year in the first ten hours last year. so far best sellers include fire tv stick with alexa voice remote, echo dot, fire 7 tablet with alexa, instant pot, and the life's draw personal water filter those were best sellers last year too according to feed of the large database of amazon sellers, so this is marketplace, marketplace sales increased 89% in the first 12 hours of prime day with orders up 69% for those marketplace sellers compared to the first 12 hours of prime day last year. remember, marketplace does make up more than half of what sold on amazon, so this doesn't account for the first party sales, but are pretty representative sample of at least the marketplace. >> did you get the quick pod i sent you did it arrive yet? >> i wouldn't know what to do with it if you sent it >> my first thought when this happened was that they were hakd by somebody. >> that's what a lot of people have said. amazon has not come out and said what the cause was we know that there were -- >> i wouldn't expect them to

>> we know there were also some issues with the aws and they have not clarified whether that was related or not we don't know, but it's suspicious >> thanks, court while the focus has been on prime day, amazon announcing three new web service deals today with 21st century fox, major league baseball, and epic games, the developer of fort nite let's before bring in a cnbc contributor ed great to see you again how meaningful are these tie-ups, and particularly on the video game side, since amazon seems to really be sort of one of the piners wh e pioneers wheo that space >> ironically, they're announcing these new customers on the day that they've had some issues on their own end with aws, with their prime day stuff. it's still significant it's massive it's important because it's basically as the internet grows, as streaming grows, as e-commerce grows, so does aws. this is just the guts of the future amazon seems to be sort of

leading the way. microsoft, of course, as well as google, they sell competing services, and they're also gaining market share i think aws has sort of a slide slight lead in terms of the software that also comes with this it's not simply storage. they're also giving you access to different types of tools to help your businesses run >> you know, we like to hear about how many things have been bought on amazon prime day i mean, that's always fun, the number of items in the first hour or first ten hours. it's really the prime subscriptions. we won't know that for a while, will we? >> we won't know for a month 30 days comes around, and we'll see the credit card purchases, who has a new prime member hit, and that's the point prime day is to drive prime subscribers. they could even lose money on every transaction, but over the long-term, if they get more prime subscribers, that's how they win we know there's over 100 million prime members around the world i estimate maybe about 80 million of that sh is in the u.s. they're getting closer saturation point that's the thing i think there are about 100 million households that's probably the ceiling. at least in the u.s. >> want to pivot to netflix.

major comeback with a major reversal you probably saw in the af hours session on the news, the stock was quickly down 14% now we're down by just about 5%. what do you make of this major reversal >> well, you live by growth and die by it too, and i think the netflix thesis is still impact 300 million stops, 400 million stops. that is likely the key, though, to understand it is that's going to come from international growth more than domestic growth. i think they missed the international estimate by a little bit not by a ton you know, longer term, i think it's definitely -- they're still in a good spot, and the subscriber numbers are ticking up the way you want it to if we're getting to the big in be >> we want to bring in dan morgan, senior portfolio manager at sinovis trust dan ed was just talking about the misses in the second quarter. there's also going to be misses in the third quarter when it comes to guidance. do we have -- are we starting to

see maybe a pattern? i don't want to -- i don't want to project on to the stock story because we're seeing a major reversal, but are you getting concerned here >> obviously, as you mentioned, the third quarter, you know, guidance was way below estimates. we would have to go back into the first and second quarter of 2016 where we saw these -- a series of missed guidance in terms of subscription -- subscribers. it may be too early to pull the emergency cord now, but, you know, you kind of wonder if if that seven consecutive quarters of strong growth in the international subscriber barks and you start to wonder if maybe that's going to start to slow down, and that's really the whole preface behind the stock, right? because much domestic being so saturated. >> i'm glad you mentioned those misses in 2016 because it was followed in the second half of 2016 with the string of beats. i guess that's what the bulls are looking for in ermz it of, hey, this has happened before. this has not happened, though, before, dan, with the back drop

of competition that we're seeing these days when it comes to consolidation, when it comes to new products, new streaming services, et cetera. can you at least acknowledge that the environment could be a little bit different in temz of netflix regaining their stride and regaining the stride and netflix actually beating >> i totally agree the disney 20th century fox deal is huge. if they corner that content out of disney and 20th century fox and control it, and not allow netflix and amazon and some of the other competing companies like apple to get access to it, then it's going to become a war over content who has the best movies and shows we know netflix does a lot of internal production. but you are up against tremendous content from disney and 20th century it could be that things may start to really change them. and it might get more competitive. that's why it's a tough call right now. it's not so easy to look back and say had it happened before let's move on. i think the landscape is

changing, tyler. >> you may be restricted to say what your company is doing with netflix shares today and i fully understand that. but tell us if you have been sell if can you or tell us what would cause -- what would the point be at which you would consider lightening the position >> well, tyler, i think if we get another quarter like the quarter we had before where with we get the subsequent quarters of negative subscriber growth -- not negative growth but not meeting expectations the other thing we spend time on is just the cost structure we note they have a burn rate of about 3 to $4 billion they are spending each year for content their cash flow number was about 559 million negative they'd have to keep issuing debt every time they burn through the cash we are also keeping a close eye on that. at this point if you own the stock it's a hold. it may be a little premature to buy. you might get further weakness down the road as other

technology company reports but tyler, i think at this point we are at a wait and see but i agree i think it's a little bit different landscape than it's been in the first and second quarter of 2016. >> all right dan and ed, thanks to you. >> thank you. president trump slapping duties on canadian lumber last year what impact does that have and u.s. lumber? now in diana olick live with that story in maine. >> a big potential for expansion and big profit but can u.s. lumber producers do that fast enough we are in the middle of maine with answers and awful lot of lumber coming up next on power lunch. you always pay your insurance on time.

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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. >> tariffs on canadian lumber have been a been for u.s. producer but the demand is so great they have trouble keeping up. diana is present at maine. >> this mid-size lumber company in the middle of maine is operating day and night just to keep up with the demand. now pleasant river lunler is profiting and planning big >> with the duties that are in place, you know that's giving us a level of confidence that we

didn't have before that you know we have a level playing field. >> he said he is putting $20 million into the business, planning to expand production by 50% in the next two years and adding about 40 more workers to the 300 he employs already. >> the canadian lumber duties are giving u.s. producer the capital and confidence to increase production. but there is one thing they can't grow in these forests. this is steel. the u.s. just slapped new tariffs on kmienz steel, aluminum and machine parts increasing the costs to expand mills like this one. but the owner claims he is not worried. >> it's not a factor in our decision making. we are not looking ahead stuff might be more expensive we better hold back we feel that we'll be able to put in the equipment we need at the price we need to put it in and expand and grow. and we're going to do that. >> it's just not the trooerltd

materials to papd. they need more workers and that is competitive labor market to get workers in here. they have to pay more and that's costing more more on this story on cnbc.com and even more fun pictures on instagram at dianing olig. >> we will look for that thank you. president trump meeting with gop lawmakers expected to address the controversial press conference with vladimir putin we will bring you the remarks on the other side of the break. stay with us

the president expected to make remarks about his highly criticized summit are russian president vladimir putin the press conference is expected to happen moments from now kayla tausche joins from us the capital with what we can expect. >> that meeting is set to take place at 2:00 p.m. the president is going to be meeting with about seven members of the house who are part of the ways and means committee the scheduled topic for the meeting is tax reform 2.0 the folks meeting with the president, four including the ways and means chair kevin brady and the budget chair diane black have not taken the opportunity

to criticize the president for the meeting that he held with vladimir putin in helsinki yesterday and the comments he made during the press conference afterward. although there are three members of the meeting who have taken the opportunity to the criticize the president. congressman eric paulson called the performance embarrassing by the president. saying the american president taking the side of a russian dictator over american intelligence agencies is dangerous. just for one of those quotes we'll see what the president has to say when he comes on camera in just a few minutes. we know the white house has sent talking points to prominent members of the republican party in which they say the president does have great confidence in the u.s. intelligence agencies they reference four occasions in the past where the president has blamed russia for election meddling and said that it was better for the president to meet and to put grievances behind the u.s. than to not meet. although we have seen the president respond a couple of

times directly on twitter. yesterday, when he began the journey from helsinki back to the u.s., he tweeted this. we believe from air force one. he said as i have said today and many times i have great confidence in my intelligence people however, i also recognize that in order to build a brighter future we cannot exclusively focus on the past. he also tweeted today while i had a great meeting with nato raising vast amounts of money, i had an even better meeting with vladimir putin of russia we will see what line the president takes in just a few minutes. and what the audience of seven members of congress has to say if anything when they join him back to you. hey there, kayla one of our producers jackson burning pays a lot of close attention to politics you would assume based on the controversy that these come from safe districts but that doesn't appear to be the case there are four in there in districts where they might have to worry about re-election

and their appearance suggests they are not that worried about appearing with the president despite what happened yesterday. >> and there is this seemingly catch 22 that a lot of republicans have been talking about privately. on one hand many disagree with the way the president handled the meeting and the press conference yesterday on the other hand they acknowledge it would be political suicide to distance themselves from the president especially for many who are up for re-election. interesting dance that a lot of members of congress are having to delicately navigate here. and we'll see what happens in a few minutes. >> you know, kayla, i've been interesting as i license listened to responses here and look back at what the president said and didn't say, and i don't draw conclusions on this at all. but i wonder whether -- and some have said the president sided with mr. putin i heard it as a much more

equivocal set of comments than that he did not criticize mr. putin he didn't say that, mr. putin, you are wrong. but i didn't hear it quite as black and white as some, even in his own party have said. >> well, it is that very point, tyler, that i think republicans are taking issue with, the fact that despite the evidence that so many agencies within the intelligence community have put forth, despite the indictment that the special counsel handed down on friday, that the president was willing to put the u.s. and russia on equal footing, say that both countries are at fault for the relations that they have and a deterioration of those relations. and both countries are potentially at fault even for what happened during the 2016 election so. >> equivocal is even too much. >> being equivocal, you say yes, i say no, the old beatles song you say yes i say no where do we go from here

but it was not a full throated response to mr. >> condemnation. >> condemnation to mr. putin i think that's what people are reacting to here at any rate that -- just of an observation. so kayla thank you very much and we'll be back to you i'm sure soon as the day ee involves what can we expect to hear from president trump about his meeting with vladimir putin? joining us are kim wallace, managing director for the u.s. at the eurasia group and brian at keefe and woods you work for a financial firm. and let me get your reaction to what seems to be investors stepping past not only trade tussles but, you know, sort of international turmoil with respect to the nato meetings last week, and yesterday's session with mr. putin what do you make of that.

>> i think you have a great contrast in the last two days between the meeting in helsinki and today, the fed chairman being up on the hill and i think the investors are looking to the latter, not the former looking past politics they look to economics and economic data and the fed chairman paints a rosy picture of the economy. fundamentals are god, economic data is good i think investors are worried about -- in the back of their minds they are worried about what was said in helsinki. but they don't see a follow-through to the global economy or the domestic economy. so i think they're able to separate and compartmentalize both of them and really go with the economic picture which is quite positive. >> kim, let me turn to you and get maybe a little bit of a history lesson my notes point out that in 1972 when watergate began -- and i don't mean to draw anything other than sort of the most circumstantial of comparisons to

watergate -- but it was certainly a case when a white house was taking a lot of criticism and flak, including from people in its own party the markets were able to motor along reasonably well until they couldn't anymore >> that's right. you know, once again, the lesson is there is a difference between attempting to price headline and political risk and pricing event risk and so when it comes to things like trade tensions and certainly when it comes to the work the mueller team is conducting around the 2016 election, there is not anything tangible for markets to price. whereas, as was noted, the chairman today of the fed gave a very supportive picture of the economy, in part to rationalize his continued push for raising rates. but he added a bit of caution by using the phrase for now, a few times. i would say until you have evidence that what was discussed in helsinki and the reaction

tell the, along with mueller areas work until that's more tangible it won't be priced in as you alluded equity markets didn't begin selling off until jrn of '93 when the mccord trial started. that was something they needed that loss of confidence in the white house persisted through many years for a lot of different reasons. but the lesson to be drawn is once you lose confidence in the white house and the structure we have currently in the world economy, it takes a lot going right for a long time to restore that confidence. >> brian, are we close to that point in so much -- you maetd the point there is sort of two different spheres. there is the geopolitical and what's going on there. there is the kpk what's going on in the economic is going well in the united states so there is no fear. are we at a point where the spheres are close to colliding and that the president may be squandering political capital doing what he is doing on the geopolitical stage and losing support within his own party for

other efforts such as tax reform 2.0, for instance? >> yeah, i mean, it's -- i understand kim's point and i think it's value toyed a point. i think comparison to the watergate era is -- goes only so far because it was a different era. you had vietnam. you were going into an inflationary era the economic picture was also quite different. so, yes, i think you have to look at the political situation and the legal situation of president nixon at the time in the context of what was going on globally and economically. i don't see the president -- president trump being in legal jeopardy at this point yesterday was a diplomatic mistake. it was a problem for u.s. geopolitical standing and moral authority of the united states

but it was not a legal issue that puts him in any kind of jeopardy in the future even if democrats win the -- the congress in 2016 -- 2018 injury the better comparison is probably the white water situation of the 1990s where the markets would fluctuate from time to time but really went -- got through the political drama fairly well. the economy was good. >> okay. >> the markets were good >> that's the time period to look at. i guess, to melissa's point, somebody else weighing in here u.s. senator majority leader mitch mcconnell saying the u.s. values the nato treat with eu countries, our friends and russia is not. somebody else weighing in adding to the comments yesterday. let me ask you, does the president actually get hurt when it comes to the elections based on what happened yesterday

do you think he or any of the republicans who are running would suffer as a result of that >> that depends on the turnout factor if the president is willing and able to get his base to turn out and in higher numbers than the average in midterm elections, to vote for establishment republicans that they generally have drifted away from the last six years, then that will underpin republicans going into the mid-terms. a couple of points that brian made it's less important i think whether or not the president can create space to talk about tax reform 2.0 when was the last time you heard republicans talk about tax reform 1 the.0 that's a loss to them. in terms of the second point -- in erms of the legal jeopardy to the president. >> you mean the tax reform was lost to the republican sns it was bad for them that's what i should understand. >> tharp they were not talking about the bill of 2017 they are talking about something aspirpgsle which few thing think will pass before the mid-terms is the point

the second point about the president's legal jeopardy or not, none of us know that. you have to admit that the body of work put forward by the special counsel, particularly the friday 29-page indictment, should lead people to pull back from making conclusions about anyone's legal jeopardy in this case certainly every time we think mueller surprised us with more information something else comes forward to rock that normalized view i think it's early to come in about what the president does or doesn't face in terms of legal jeopardy and in terms of the political agenda, certainly most republicans would prefer to be talking about the economy than they are talking about helsinki. >> all right, kim, brian thank you very much we appreciate it. >> thanks, guys. >> we are waiting for the president to speak about the meeting with russian president vladimir putin tomorrow we hear from one of the president's early advisers, steve bannon from our delivering alpha conference and just in the last few minutes he sent this statement about the president's summit with putin. he supports the president.

he says the elites in the country left president trump with disasters across the globe, specifically in korea, afghanistan and iran rerejecting the managed decline philosophy of america's political class. potus knows he needs to end the cold war on our terms and unite the west against the rise of a totalarian china we will ask him about that and a lot more don't miss the interview with steve bannon tomorrow afternoon live from the delivering alpha conference. guys and he doesn't actually address some of the criticisms that have been raised bannon didn't in that statement. >> but he has long seen china as the principal economic and national security threat >> yes. >> to the united states. and that we are -- i don't know whether he used this word. but at -- fundamentally at war with them. >> yes for sure. i don't think he would disagree with that characterization he is far more concerned about china than russia. most definitely. >> yes. >> we will talk tomorrow. >> interesting

president trump expected to make remarks any moment reacting to the blowback from the news conference with the russian president putin yesterday, stocks meantime well they've been rising for weeks. but the bears are a little hungry as the case for a sbig spa pulled up. back after this in two minutes 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.

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the dow has been on the rise nearly two straight week the bulls are running but as mike instantly reports there is food for bears out there do they have a case? mike's petition new york stock exchange with more. >> hi, melissa it was six months aig the snch crossed the 2,800 mark we are about in the same spot. the six months of sideways action has had the bears enough time to collect their thoughts and make a real big case for why the market is vulnerable it centers on three main points. one is that how the bond market is sending a scarey message. we talk about the flattish yield curve but correspondent bonds softening up is a case that bears say look maybe there is a recession in the sights of the bond market. two, the narrow leadership as they describe the stock market pointing out fang stocks and big tech stocks responsible for a big portion of the gains maybe that's an unstable

situation. and then peak everything peak earning growth. peak u.s. economic growth following tax cuts peak optimism, liquidity these are things bear i owes say that are good now and can only get worse. you can take each point in turp and say, maybe any will be an issue but just not yet if you wanted to answer it, the bond signal that people point to about a flattish yield curve it's not timely. there is nothing magic about it, especially before in fact short term yields exceed long-term you heard the fed chair powell nopt want to invest the dynamic with a lot of magic. that's not giving you a timely negative indicator the ralphy is not narrow more than half of all stocks in the s&p up year to date. you have the elk equal weighted version also up. it's selective but not fatally narrow can you past the peak and later in the cycle and still not have an imminent end to the bull market i think that's where we are. a lot of what the bears talk about are the features of a bull market that's been maturing and

going on a while but that doesn't mean it's expiring. >> at least in today's session, mike the reversal we see in netflix shares and the ability of the nasdaq to hit a record high without the participation of netflix at all. i mean, that's really fuel for the bulls here >> without a doubt obviously it kind of goes against that idea that the market is somehow fully beholden to the strength and in all of the stocks even netflix is in reversal to be only narrowly down. shows you there is muscle memory in buying the secular winner stocks yes, of course we could get to a point that zorpts the market arguably three years aig we were in that position where it looked like only a few stocks carrying the weight but right now it seems as if the bulls definitely reap the benefit of the doubt with this driving recovery toward the old high >> the jury was out last night but look at netflix today. thanks, mike. >> he did a great job of laying out the cases for the bears and

bulls. who is right, the bull or bear joining sus david katz at president and ceo at advisers. and good to have you here guys david who is right, bulls or bears. >> we think ultimately the bulls are right. in terms of the three bear arguments we think they are manageable the one thing we worry on a negative or bearish case would be a trade war and tariffs if that settles down we feel good about the stock market. the economy is good earning are coming in good and outlooks good valueses are 15.5 times earnings all of those allow higher. >> how about you, michael, the wall of worry he laid out for us. >> i don't think the bears are coming out of hieber nation yet. synchronize the global growth and profits likely peaked but they are growing although monetary policy is tightening powell said it's doing so gradually

and ininterest rates and inphrasing seem to be rising they are no where near levels that have been problematic in the past i do think we a bump from the fiscal policy in terms of economic growth. >> david, you like technology but you want the more moderately priced tech shares what is moderately priced technology don't you get what pay for in this market in this that the high flier providing the growth, they tend to support higher valuations >> well, for the last 18 and 24 months absolutely the high fliers have gone higher. but that's similar to a lot that happened in 1997, 1998 when it changed it changed we are no the expecting that type of turn this type but we do think the high flying tech stocks are slowing down and we think the duller things like a sisco is starting to do better qualcomm caught up in the china tariff trade war we think if there is any sort of resolution we think that has 30 or 40% upside if you buy the technology like a sisk an at 14 times earning was

a good yield we think you are doing well we are wary about something 80 times earning. if there is disaamodt the stocks are downside not just for one day but for months. >> what do you think about the technology stacks, in particular fang would you move to those or find an area of the market where the valuations are less losty. >> we still like technology but we would begin to pivot towards parts of the market that benefit from the later stages of the economic cycle so i do think there are a number of indicators to suggest we are getting in the later innings flattening yield curve, tighter monetary policy, rising rates, building inflationary pressures. >> pivot where. >> energy stocks, material stocks, and natural rurs resources stocks these tend to benefit when inflation is rising when you have supply chain disruptions and input costs are rising we see all three. >> why do you think the etf better than individual names or is that just your business. >> it happens to be a bit of our

business but i think what's interesting tyler going on sfr a sector perspective is for a first time in a long time you see dispersion and real differences in sector and stre returns when monetary policy was all kind of moving in one direction, everything was going up and down together we are now starting to see a lot of different sector performance. and we think energy, materials, natural resource stocks will outperform the broader market going forward. >> david, you like the financials i see you think that the they are finally turning. jp morgan, wells fargo what's going to happen now >> well, business has been great. earnings are come in very strong rising rights are gootd loan portfolio are the c corps results good the stocks haven't reacted >> you're not worried about the the flattening yoeld curve. >> well that curve slows down a little bit but if you have five things going well and one slowly we passenger on the five valuations are pretty reasonable you can get great financials at 12 times earnings.

goemds had very good numbered today. stocks at less hand 10 multiple. if you look at 12 to 18 months there are lots that are can be 18 to 30% higher >> on the two year ten year spread now below 25 at this point. >> one away from inversion. >> yet the companies are making a boat load of money. >> okay. point taken. thanks guys. david katz and michael aron. >> thanks. >> showing you bitcoin on the coin boys jumping 10%. hitting 7-week high. first time since june it's broken above 7,000 earlier today master card secured a patton for a method to speed up crypt offer currency payment. this was a sudden move that happened right around 2:00 >> let's go to kayla tausche with breaking news from the senate majority leader mitch mcconnell kayla. >> well, tyler we know the president is speaking at the white house now. in the meantime on capitol hill on the other enof pennsylvania

avenue, the senate majority leader after the senate's multiple times weekly gop policy lunch made some remarks about the putin summit and the backlash from republicans. he said that it's important for our friends to hear from our friends. he said he is not here to critique anyone else though he says the u.s. values the nato treaty and eu countries are friends of the u.s. and that russia is not. he said that any talk of potentially impeaching the deputy attorney general rod rosenstein as some house conservatives are discussing he says in the senate that's far-fetched. so very interesting commentary from mcconnell who is stepping right up to the line of criticizing the president but not crossing over that line. know saying he does stand with the u.s.'s allies, especially in nato and that russia is not a friend of the u.s. >> all right kayla thank you very much. kayla tausche in our newsroom in washington well we are awaiting president trump to make remarks

about yesterday as summit with russian president vladimir putin. we will bring that to you as soon as it begins. plus papa john's founder stepping down as chairman last week after reports surfaced he made a racial slur in a conference call. but now he says the board made a big mistake. we have that story on the other side of the break.

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papa john's founder john schnatter made a quick exit at chairman after a story broke that he use add racial slur in a conference call. but now schnatter says that exit was a little too quick kate rogers joins with us the story. >> every day something new cnbc obtained a letter from mr. schnatter in which he shares his side of the stoerp he says forbes mischaracterized the event that took place when he participated in laundry services diversity media training as the company has been testing his return to advertising amp the comments he had made about the nfl back in november the letter says that during that meeting he was asked whether he is raies racist he writes i of course said no which is a truthful statement as those of you who know me well will attest and of course if you felt otherwise, you would not be sitting on the papa john board the letter says that the agency suggested papa john's teamup with can't anywest which he

rejected on the notion that can't anyuses racial slurs in lyric processes. he admits to using a racial slur but it was wasn't a epithet. he knead made to decision the fired laundry and offer them less than they were owed after they asked for $6 million a as some people at the agency had been offended by schnatter compensates after the forbes story came out he says the board asked him to step down without investigation adding he believes it's a mistake schnatter says i will not allow my good name for the good name of the company i founded and loved to be unfairly tainted of course we reached tout to papa johns laundry service and can't anywoeft for comment we hadn't haven't heard back. forbear points to his statement he knitted it. >> is it within the recommend of possibility that schnatter puts up a fight and challenges the board bullying him to quit. >> that's what happened. a source close to schnatter says he sent this letter to the board via email anhydrous patty glazer

on sunday. he sent the email on saturday, hired glaser sunday. they are pushing back saying the brody shouldn't have done this and it's up up to the shareholder. >> somebody is leaking the tape and we'll know. >> we will see. >> headlines crossing from president trump's meeting with gop lawmakers. and kayla is back with the details. hi, kayla. >> the president taking a firmer stance on the evidence provided by the u.s. intelligence community about the russian interference in the 2016 election he says he has full faith and support for american intelligence agencies. and says he accepts the u.s. intelligence community's conclusion that russia meddling took place though he says that russia's actions had no impact on the outcome of the elections he says that the u.s. has never had a worse relationship with russia, but it got better and may get better in the future these are comments he makes in front of a handful of members of congress, republican members of congress they're at the white house to talk about tax reform.

but he is using this as an opportunity to re-establish his views in the wake of some withering criticism following the meeting in helsinki yesterday wrp the president basically put the u.s. and russia on equal footing. he blamed them equally for the actions of the 2016 election interference and the deterioration of russia u.s. recommendations guys. >> and just crossing now kayla, you may have said it because it was it was happening as you poke trump says his administration will move aggressively to repel efforts to interfere in the 2018 election thanks very much and as cale lay highlighted we await the actual tape the comments have been said on camera and when that happens we will bring you retires bring in white house political director for george w. bush sara he is clearly trying to walk back what he said yesterday. >> he needed to. because standing on stage with vladimir putin and not rebouking what happened in the last election, particularly the 13 indictments last friday, i think

certainly was appalling to many people across the political landscape. >> all right we do want to bring another headline that kayla my not have seen because she was on the air trump says he meant to say in helsinki he saw no reason why it would not be russia that interfered in the elections. john harwood is this enough to walk it back is it effective. >> no. this president sort of waveled around this issue a long time. he has had the appropriate intelligence for the entirety of his presidency at various points when it's advantageous to him he will question it in the course of an answer sometimes he says maybe it's russia probably it's russia the acid test was when he was standing alongside vladimir putin and had a chance in front of the dictator of russia to make a firm statement about what he actually believed

he instead made the statement that he has made on multiple occasions before, that cast doubt on the work of the u.s. intelligence community now, his aides told him to say something different. but it doesn't really tell you anything about a change in his actual view or a change in the emphasis of his administration now, it's true that in some ways the administration runs separately from the president. so dan coates for example, who warned the -- the director of national intelligence warned before the summit that the red lights were blinking, russia was coming at us again he suggested they be confronted. so dan coates is making that warning. but the president is not convincing in the slightest on this subject. >> and other headlines coming trump says he discussed syria, the iran nuclear am picks during the meeting with putin he hopes at some point iran will call us and maybe we will make a new deal maybe not. >> sara, let me turn to you with

a couple of yeses. it seems to me from listening to the president over the years, that the most important complimentary word in his vocabulary is strong and the greatest compliment he can give someone is to call them strong and the most vial word he can say about somebody is that he or she is we can. by his own standards was he strong yesterday. >> he wasn't strong. because as john pointed out he had an opportunity to at a minimum tell us what he raised with vladimir putin. which he didn't do he didn't say i raised crimea. i raised the indictments, i raised all these issues the united states has had with russia since the end of the cold war. you know, and look, he says u.s. relations have never been worse. i remember as a child practicing going under my desk. >> well, you anticipated my next question. >> yes. >> john, jump in here.

i mean, what do people in the -- in the united states foreign policy establishment, in the diplomatic corps feel and think when they hear the president sap that the relationship with russia -- they may not be good but never been worse can we rather cuba, remember vietnam? can we remember the 80s. >> they're appalled by the president's statements and talking about the issues of arms control, syria, nobody thinks the president actually cares very much about knows issues he doesn't -- he is not somebody who is interested in police per se what he is interested in is protecting himself he is in legal jeopardy. his campaign chairman is in jail his national security adviser has pled guilty to a felony is now a cooperating witness with robert mueller and so the thing that was obvious yesterday that he cared the most about was not any of the bilateral issues between russia and the united states it's discrediting the investigation that has the

potential to extremely negatively affect him and his family that's what is motivating the president. whatever he is telling members of congress today. >> sara, what did you think of the response from everyone else on capitol hill and the media? the reason i ask is that for so long they have been so outraged over so many things that i wonder if this just sounds like to his base more of the same from them. >> i don't think -- someone asked me if it was a tipping point earlier today. and i don't think it was with his base and the reason i know is twofold. one, we have seen strong criticism of his comments but it's largely been from senators who have been critical others cy criticizing paul ryan they have been criticizing but more clinical. i think we need to see the full body of the senate and some leaders in the house, they would need to be more critical in the language they need to use is needs to be stronger. >> will they be. >> no i think it would have

happened in the last 24 hours if they were. and the sec thing you would need to occur to see the trump base move away is you would need one or two senior white house officials resign over this and we haven't seen that. >> should the president, john harwood, put himself in the position where he is answering questions side by side with another world leader or was that in itself a mistake? >> well, it's only a mistake if you can't handle it. and if the answers you give are disappointing or revealing in a negative way about you and your motivations. every previous president we had has been able to handle it donald trump doesn't have the ability to do it very effectively. one post script to the question you were just discussing with sara about whether this is a tipping point. bob corker said something like i think the dam may be breaking. it hasn't broken yet certainly but one thing was significant. a few minutes aig mitch!

connell was talking to reportering and describing potential legislation the senate might take up to constrain the president on tariffs or on russian meddling that is potentially different if they follow through on that. he also -- mitch mcconnell was dismissive of the effort by some on the right within the republican caucus in the house to say they are going to attempt to giannecchini rod rosenstein i think if that happened if aren't republicans move on that and it passes the house that would have negative on the president pan accelerate some of the erosion we are seeing now. >> two more headlines crossing trump said that queen elizabeth the ii is an terrific person and also that getting along with russia can be a good thing the fact that the headlines are crossing means the pool camera is in there and it's happening now john and sara stick around we are taking a break. we are awaiting the tape of the president trump's remarks about his controversial summit with the russian president.

we will bring that to you as soon as we get it. don't miss the interview tomorrow with steve bannon live from the delivering avila conference with the white house chief strategist process he put out a statement today about what he thought happened with the president yesterday. and he is talking more autbo it tomorrow well will look at the tape of the president after the break. from the nyeri highlands, 6,000 feet above sea level. but how do you really know that the beans journeyed to the port of mombasa and across the pacific? that you can trust they're 100% authentic? ibm blockchain. a smart way to track every step, ensuring this coffee did indeed come from 6,000 feet above sea level. and not a foot lower. ♪ ♪

welcome back to power lunch. we are moments away we think from tape playback of president trump on camera with the pool's camera talking about the summit yesterday in helsinki with vladimir putin the big headline is trump claims he misspoke on election meddling now says he sees no reason why it won be russia that was possible we will hear those words if the flesh from the tape playback in the meantime we are tap dancing waiting to bring in with john harwood and sara fagan the political director for george w. bush i imagine a lot of in is in the delivery and whether or not you believe

he thinks that. >> even if he does believe it, the opportunity to say it was yesterday. he needed to have done it in advance -- with -- standing next to vladimir putin. i don't think he should have done that press conference he shouldn't have done it regardless he should have cancelled on friday when robert mueller put out the indictments. >> what do you make about the -- there is a column in the journal today that suggests that the timing was on purpose by mueller in order to shape the conversation and to in some ways perhaps derail or hurt this summit do you buy that some people actually saw the diming as another political motivation by mueller. >> well, certainly bob mueller knew this press conference was happening the following week and he -- you know, to me, you know, it had to have been a factor in his decision now, you know -- but if you are a member of the intelligence

community and law enforcement in this country and you care very deeply about these issues, you know, putting that out the day after the press conference is also a real problem for you. so, you know, if it took that long to put it together and it was coming, you know, you certainly don't want to sit on that two or three months better to get it out before the press conference than ever after. in many ways there are no ways to do that perfectly. >> we are waiting for the tape john harwood, your thoughts about the timing. >> robert mueller is not a political guy. he is a prosecutor, served under president presidents of woegt parties. i would not be inclined to think he is timing for political reasons. but sara is right, before or after, it's possible that the indictments were scheduled to happen on that day and then the question is well, do we delay them until after the meeting then that's the decision point

i seriously doubt that robert mueller set out to hurt the summit meeting itself. what he is alleging and investigating is going to hurt donald trump there is no question about that. but if you begin with that assumption it's -- i'm not sure the timing is all that significant. >> other headlines we expect to her him say there is tremendous talant within the agencies and not lifting sanctions on russia. everything is remaining. sara. >> well, michelle, on that point, you know you asked sara before, is it going to be in his tone does he mean it? there is no question he does not mean it. he is being directed to do damage control he has been carrying a -- throughout his presidency, a war against the people who have been investigating him and casting doubt on that intelligence he has had a year and a half to make the intention clear and he has done so that is what he believes and what he is trying to do now is limit the damage. >> within his own party, sara,

is this enough based onway we know the president told the pool could that fooul sooting some of the criticism? >> i think it's going to soothe the criticism. it's been sharp in corners but not sharp enough to see widespread defections people resign, for if this to be a tipping point in his foreign policy outlook people's outlook on the foreign policy decisions i suspect him walking it back, praising the intelligence agencies will be enough. you know, but, i think you -- michelle mentioned earlier the comments from steve bannon it's the best explanation i've heard for what happened on that press conference stage, which is if you believe mcis the real threat, and you need russia as an ally to combat china, that's a logical explanation for what happened i don't agree with it. i don't think most people agree with it.

but it's an interesting take and you know, i guess in many respects even if the president thinks that and that's a genuine belief it's smarter to leave that issue aside and just effective effectively say intelligence communities in the united states are strong, solid and he has their full -- his full faith and qualifies in them and also to say, yes, russia meddled. what i tiend -- go ahead did- >> i was going to say to your point there is a longstanding belief within the political establishment did -- definitely on the right over the decades that the u.s. should have as good a relationship with china as it does with russia because the last thing we want is for mcand russia to team up against us and that's what our strategic goal should always be. i'm not convinced that that's necessarily what the president was thinking about yesterday perhaps. i thought what was just the most obvious possible is it just irks him, the suggestion that perhaps he didn't win the election fair and square and he sees every question

related to the investigation always as a suggestion that otherwise he wouldn't be president. >> i think that's -- >> michelle, i think that there is more to it than that. but that is an explanation that is -- has a lot of currency in republican circles i was talking to a republican member of congress this morning and said, did it press conference yesterday -- is that going to change the republican reaction to the president in a meaningful way and the answer was, no, it won't, that he -- he is totally irrational on the subject of russia and its interference in the election he think it discredits him i wanted to barf yesterday when i watched him on television. however my constituents love him and things are not likely to change that is echos the judgment sara made that it does not appear at this point that we have any evidence of a dramatic turn. >> it it does seem there is a conflation of the quote collusion question and the russian interference question.

and the two it seems to me can be certainly very separable. let's bring in kayla tausche with any late news that she may have kayla. >> well, tyler, two of the most important headlines in addition to what you guys have been in an to what you guys have been discussing number one, the idea that the president is now saying he has full faith in his intelligence agencies and their findings, that is going to hopefully for the white house be a morale boosting statement. yesterday we did see the director of national intelligence, dan coats, put out a statement, a rare rebuke of the president to basically affirm the work and the unvarnished and objective nature of the work and the findings that community provides the white house. and there were questions today about whether the next event that we would see was the possible resignation of director coats. and so by the president going out there and saying publicly that he affirms the findings, he believes them and he has faith

in the community, perhaps that will alleviate some of that tension there. the second thing that i think is really important is the fact that the president is now saying that he will work to stop any potential interference by russia in elections going forward that was something that the president didn't offer up in a very clear way yesterday from helsinki but one of the more overlooked findings by the special counsel's indictment from friday is that in addition to hacking the democratic parties and campaigns that russia did, they also sought to hack into state boards of elections and try to get voter data and they successfully got voter data for about 500,000 voters. >> kayla, we have to break in. >> yesterday i returned from a trip to europe where i met leaders across europe to seek a

more peaceful future for the united states. we want to have peace. that's what we want, that's what we're going to have. i say peace through strength i have helped the nato alliance greatly by increasing defense contributions by our nato allies by over $44 billion. and secretary sultanberg was fantastic. i increased it by my meeting last year $44 billion, and this year it'll be hundreds of billions of dollars over the coming years and i think there's unity with nato there's a lot of positive things happening. there's a great spirit we didn't have before and there's a lot of money they're putting out. they weren't paying their bills on time, and now they're doing

that and i want to just say thank you very much to secretary sultanberg, he really has been terrific i also had meetings with prime minister may on a range of issues concerning our special relationship, and that's between the united kingdom and ourselves. we met with the queen who is absolutely a terrific person, where she reviewed her honor guard for the first time in seven years they tell me we walked in front of the undho guard, and the relationship was a good one but she was very inspiring indeed most recently i returned from helsinki, finland, and i was going to give a news conference over the next couple of days about the tremendous success

because as successful as nato was, i think this was our most successful visit, and that had to do as you know with russia. i met with russian president vladimir putin in an attempt to tackle some of the most pressing issues facing humanity we have never been in a worse relationship with russia than we are as of a few days ago and i think that's gotten substantially better i think it has the possibility to get much better, and i used to talk about this during the campaign, getting along with russia would be a good thing getting along with china would be a good thing. not a bad thing, a good thing. in fact, a very good thing we're nuclear powers, great nuclear powers russia and us have about 90% of the nuclear weapons. so i always felt getting along is a positive thing and not just for that reason. i entered the meeting with the firm conviction that diplomacy and engagement is better than hostility and conflict and i feel that with everybody

we have 29 members in nato as an example, and i have great relationships or at least good relationships with everybody the press covered it quite inaccurately they said i insulted people. well, if asking people to pay up money that they are supposed to pay is insulting maybe i did but i can tell you when i left everybody was thrilled and that's the way it wthis was, to. my meeting with president putin was really interesting in so many different ways because we haven't had relationships with russia for a long time and we started let me begin by saying that once again the full faith and support for america's intelligence agencies, i have a full faith in our intelligence agencies. whoops, they just turned off the lights there we go. you guys, okay

that was strange that's okay. so i'll begin by stating that i have full faith and support for america's great intelligence agencies, always had and i have felt very strongly that while russia's actions had no impact at all on the outcome of the election, let me be totally clear in saying that, and i've said this many times, i accept our intelligence community's conclusion that russia's meddling in the 2016 election took place. could be other people also there's a lot of people out there. there was no collusion at all, and people have seen that and they've seen that strongly the house has already come out strongly on that a lot of people have come out strongly on that i thought i made myself very clear having just reviewed the

transcript now yv to s now, i have to say i came back and i said what is going on, what's the big deal? so i got a transcript and i reviewed a clip of an answer that i gave and i realize that there is a need for some clarification. it should have been obvious. i thought it would be obvious, but i would like to clarify just in case it wasn't. in a key sentence in my remarks i said the word would instead of wouldn't the sentence should have been "i don't see any reason why i wouldn't." or why it wouldn't be russia so just to repeat it, i said the word would instead of wouldn't and the sentence should have been and i thought i may be a little bit unclear on the transcript or unclear on the actual video the sentence should have been "i don't see any reason why it

wouldn't be russia." sort of a double negative. so you can put thatin, and i think that probably clarifies things pretty good-bye itself. i have on numerous occasions noted our intelligence findings that russians attempted to interfere in our elections unlike previous administrations my administration has and will continue to move aggressively to repeal any efforts and repel -- we will stop it, we will repel it, any efforts to interfere in our elections. we're doing everything in our power to prevent russian interference in 2018 and we have a lot of power as you know president obama was given information just prior to the election -- last election, 2016 and they decided not to do anything about it. the reason they decided that was pretty obvious to all. they thought hillary clinton was

going to win the election, and they didn't think it was a big deal when i won the election they thought it was a big deal and all of a sudden they went into action, but it was a little bit late so he was given that in sharp contrast to the way it should be and president obama along with brennen and clapper and the whole group that you see on television now probably getting paid a lot of money by the networks, they knew about russia's attempt to interfere in the election in september and they totally buried it and as i said they buried it because they thought that hillary clinton was going to win. turned out, didn't happen that way. by contrast my administration has taken a very firm stance -- it's a very firm stance on a strong action. we're going to take strong action to secure our election systems and the process.

furthermore, as has been stated and we stated it previously on many occasions, no collusion yesterday we made significant progress for investing in some of the worst conflicts on earth. so when i met with president putin for about two and a half hours we talked about numerous things and among those things are the problems that you see in the middle east where they're very much involved, we're very much involved i entered the negotiations with president putin from a position of tremendous strength our economy is moving and our military is being funded $700 billion this year, $716 billion next year. it will be more powerful as a military than we've ever had before president putin and i addressed a range of issues starting with the civil war in syria and need for