were part of his tenure in terms of the middle east and european operations so more changes at fiat chrysler back to you. >> thank you for that, phil. big news there thank you guys for hanging out this morning. >> pleasure. >> see you tomorrow. >> see you tomorrow and on "closing bell" and "fast money." >> there you go. make sure you join us for more "squawk on the street" begins now. goods monday morning, welcome to squawk "squawk on the street." welcome to the heaviest week of earnings season. 40% of s&p market cap. alphabet on deck tonight our first look at q 2 gdp friday europe is a little soft. ten year near 2.99 the road map begins with

simmering trade tensions global finance leaders voice concerns about geopolitical risks for stocks. >> fiat chrysler is falling in the premarket. machionne announces his resignation. it. and tesla giving to cash back in the effort to cut the losses tensions between tehran and washington on high alert the president goes after iran in a tweet warning any threats in the u.s. would be met with unspecified dired con quinces. -- dire consequences. he tweeted to the iranian president. ministers focussed on geopolitical risks and trade tensions mnuchin came out, guys said the president and the white house will not interfere with

the fed or dollar markets. >> yeah. look, this is a market that is defined by earnings and tweets earnings and tweets. earnings and tweets. when the president tweets something that is viewed as being threatening on trade or threatening on oil, we literally do oil does go up industrials go down on threats of trade and so defense stocks do move positively on this kind of thing. we're kind of in a market. okay all caps take action. buy chevron even though they reported on friday if it was lower caps they would have said okay, you know, maybe we'll keep chevron whole halliburton is not moving. they missed a little bit i think the sellers ought to get a twitter account and look at all caps we are in this i don't want to call it a stupid world, but people react to everything that the president does and that's more important, in

many ways than earnings. >> but for a short period of time. >> right. >> we find evidence the president's tweets on trade matter fairly little. >> i think it's timing they matter fairly little. initially you're in a zone where they matter a great deal larry kudlow last week, when i interviewed him in at delivering alpha he gave some a talk saying that the eu the meetings this week that you talked about, they could go well. but a tweet dismantled that immediately. i don't mind with goldman sachs. what i think they don't understand there's a positive dialogue that the president throws in a tweet the positive dialogue dissipates for the warning. so earnings season is colored by a positive or negative. >> it's not going to affect necessarily the reaction of stocks to the earnings, is it? it's a very good earnings season i think of the 86 companies reported, 95% better than

anticipated. >> it depends on the day. >> yeah. >> oil was doing nothing okay it was doing absolutely nothing. then oil comes alive. >> i would point out a couple of weeks 74 everybody saying it was going to straight up. the saudis, you know, are basically are capacity constrained, to some extent. it did go straight down. >> there's an interesting commentary at halliburton quarter. the greatest area is the permon. i'm trying to describe why we're unchanged. why we're not going anywhere and i think that goldman raises a good point but the fact is that we have to figure out why it's a push/pull market. why does it give up and get started again and then give up and i think the answer is the white house was better in 2017 for stocks it's a pretty simple concept this is a year for trade not stocks and if the president lobs a

negative tweet about autos right now, ahead of -- >> that would have an impact. >> all right when we come back tow that all the time i think all the noise, that's the one important thing. he's been consistent in his antipathy for the eu for germany, in particular, and what continued to be his focus despite what you may hear from secretary mnuchin ontaxing the communique from the g 20 talked about trying to have a better conversation. here is the treasury secretary. >> these trade issues didn't occur overnight. president trump is determined to have free and fair and more balanced trade and we just want to make sure

american companies and american workers are treated fairly. >> yeah. to david's point on auto tariff ares politico said they don't like the idea of 25%. but navarro and the president are pretty much on board. >> look, i think navarro is in charge i think navarro is fiery it's simple. he's kind of like reagan he has a bedrock. >> fiery simpleton or simple >> simple. not simpleton. >> you said he's fiery and simple. >> it's a simple message like reagan and the president likes that and the message is that obama, every president, sold out our workers. that's his view. >> i'm absolutely worried. i went over many of the debates ahead of delivering alpha, but

it's been the same message over and over again you know, china is must be stocked. all of our trading partners are not real partners. and he's the last guy that seems to be in the president's ear so when you say you're worried, what are you worried about >> unlike what larry said last week about how the european union talks are going to go, i'm worried that they are very sensitive to the notion that the they look like idiots. >> they being? >> when you have that, you can't come here and say, you know, we were wrong and we want to give it to the president. that's you the fiery way that the president is presenting it the navarro way makes it so there's less comprise. >> you think the google fine comes in the conversation?

the president did tweet about it. >> yes i think that could come in the conversation it was supposed to be $2.5 billion suddenly it was $5 billion they put a tariff on the tax it was on top of a penalty tariff tax penalty that was so punitive look, alphabet reports tonight. >> it does they're going to appeal that decision, but they'll start accruing for the fine. >> right but the microsoft appeal last three years -- >> they eventually paid it. >> yeah. at that point, no one cared. >> the president is tweeting at the moment. the defense stocks were off iran now they'll come down. the defense stocks, by the way, peaked when the north korean

breakthrough occurred. this seems to be more aimed at some of the newspapers at the same time it takes the stocks. >> right moving on to autos today shares of fiat chrysler are lower. the automaker said that marchionne is stepping down due to health concerns he's being replaced by mike manly who has run jeep for several years. phil reported that alfredo will be leaving the company after not getting that topjob. under manly, jeep sales went 4x, as we talk, also, about the legacy saving fiat and chrysler. >> amazing taking race. race is the best auto stock in the world. >> the poster is up in the hallway. i see it every day. >> yeah. it was brilliant and everyone proved it didn't do that well initially but what it did is

call, you know, into focus that they were going to be able to expand ferrari everyone thought you couldn't do that it was too boutique. he was dead right about that 1 million jeeps sold 1 million. i mean, this was a brand a lot of people thought was faltering. anyone who knew sergio, and we wish him the best of luck. i got to interview him once. i work and work and work and work only because he's a nice man did he not say you're a moron. he was saying like, you know, i agree with that, however, if you would frame it like this it was like basically saying you're so wrong. but he was so nice the man was two steps ahead of everybody. >> he's a straight talker. he's a good interview. he would tell you what he thought. no mixed metaphors or anything else. >> and the sweater.

>> and the sweater and focussed on where we know everything is going and antonymous and how quickly we'll get there in making sure that fiat chrysler was well prepared for the future i think it was a key part of the focus and the success will have to continue. >> he was the first to partner with waymo a forward-looking fellow and i think everyone who talked with him never believed he could pull off chrysler. never believed he could pull off what happened with jeep. never believed he could pull off the spin off i don't know why this man was under estimated. i don't know he's a trailblazer i guess people are used to sedate auto people he had a little personnel. i hope he does well. >> and a definite vision, which he executed on. >> yeah. and now as the trade conversation heats up, i mean, fiat is highly leveraged to what happens. >> oh, my.

this is mulan's crown jewel and he's a sophisticated person. revered in italy revered in europe. and this is manly, i know everyone said he was going to get it anyway. it was going to happen this there's no good time for what happened. >> apparently he's very ill. it's very unfortunate. to your point, he was planning on stepping down early in 2019 they already had a plan in place. clearly in terms of succession but they had to move to it more quickly than anticipated. >> i think that a man who is constantly counted out and delivers was exactly what the auto industry needed a lot of people keep hoping forford turns. this man just he delivered on cars he wasn't in favor of the whole move toward electric and then he changed his mind that's another thing that he was

capable of doing changing his mind. people in the auto business never change their mind. >> it's true. >> we're going to talk about tesla and the story in the journal that they're reportedly asking suppliers for money back. looking to help turn a profit. we'll get that and get details also news today on hasbro, papa johns, and details at&t provides edge-to-edge intelligence, covering virtually every part of your manufacturing business. & so this won't happen. because you've made sure this sensor and this machine are integrated.

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watch tesla this morning the automaker is asking suppliers to refund a portion of the money they had previously spent. the journal said a memo -- they looked at a memo sent last week to a supplier some of the money spent since 2016 be returned and the fulfillment of that request was seen as essential to tesla's

continued operation. i'm not sure what that means. >> yeah. initially it was supposed to be positive it shows you that the fanciful way that there's reporting on tesla. i regard the 2025. that's what i the 5.3. and they're trading down today piece out by s&p questioning what is going on they're down i think this matters because it is about the bonds not about the common stock the common stock is what many commentators talk about. the bonds are what people who are looking at tesla survive on talking about. this is a decline of some magnitude. they're at 89.375. any time you see bonds below out you have to worry. the bond market is saying the stocks would be down. >> more questions about the true cash balances of the company. >> yes. >> because of the way it moved around during the course of the quarter lower and somehow

higher. >> yeah. and it perhaps give a sense they were lower. >> yeah. >> and otherwise would have like to have been. >> a couple of big downgrades last week. >> jpmorgan reiterated their sell. >> yeah. i care about it. >> just like the president, you have to watch the tweets with elon musk. the ill advised tweet. >> yeah. about the diver. >> yeah. that was off message there. >> that was bizarre. >> but, jim, you're right to keep an eye on the bonds that's where the real story is that's the people doing the work in terms of the balance sheet and trying to understand. >> yes. >> and we still wait here and wonder whether they'll achieve free cash flow positive on a sustainable basis.

and whether or not they'll have to raise more capital. >> and while jaguar, we talked about ferrari and other automakers are discovering electric. >> yeah. >> discover electric. >> and sergio was saying that he's going to move -- he might get in against tesla i think what he did -- i remember it was struggling in the 40 and 50s they started talking about ferrari and ferrari is anyone could beat tesla it's ferrari i mean, they are a craftsman.

>> we have the back story. we can go to will on that. >> he's his own business story. >> they move the needle. but i do think that tesla is going to remain the common stock because this is a man elon musk has been counted out so many times. then he tweets all is well and i don't know s&p idiots and the bonds are dumb next thing you know yeah the pied piper of tesla. as always, look at that tesla. >> yeah. look at that tesla. >> we'll get cramer's mad dash and count down to the opening bell finally. hey ron! they're finally taking down that schwab billboard. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity...

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seven minutes to go before we get started before trading this week on a monday morning let's get to our first mad dash. we'll talk hasbro. >> yeah. he's going to be on mad money told you there's going to be a big impact on toys "r" us. remember, they had huge inventory problems he still did almost almost the number double people were looking. this reminds me of nike. once they got their arms around sports authority, you saw a move of 20 points we've got ten of it here for hasbro and it could go to 120. >> and the channel of toys "r"

us disappears and what >> they manage to find other ways to sell. >> exactly they have a lot of good product. i know there are people who think it's episodic because it's tied to movies they do their own programming. and brian is a wiz what i love about brian, initially he did not see hasbro. no one saw it. no one saw it but toys "r" us. >> toys just closed. then he got his arms around it and said this could be the last bad quarter and many people think it is. and i think they're dead right brian has done so much to make it experience. not that monopoly isn't doing great. they have a lot of product that are tied to entertainment. and very tied to artificial intelligence, like about what you want. >> a sign of management and how much it matters. when you look at hasbro over mattell. one is half the market cap of the other. it used to be reversed mattell was twice the market cap of hasbro.

>> and you had a shake up there which shocked people we had what we thought was a good ceo they brought in sales force.com to figure out what people wanted. >> mattell. >> yes and i don't know and i think the execution is so sloppy it almost doesn't matter whether they bring someone in from the outside. the guy who is turning this around, i love when he came on "mad money" last time. >> is he coming on again >> yeah. victory lap. >> all right we got an opening bell about five minutes away. stay with us

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♪ ♪ the difference between possible and impossible? it's a person who believes they can, surrounded and supported by others - by us - who believe it, too u.s. bank - the power of possible. the opening bell is sponsored by u.s. bank. the power of possible. >> you're watching cnbc "squawk on the street. the opening bell in under two minutes. last couple of days have brought tweets from the president on everything from north korea to iran to putin, mueller, the nfl. and just a few moments ago, amazon he said the amazon "washington post" has gone crazy againstme

>> this was about third party sellers on the amazon platform. >>right. he was foes kused on the post amazon april 5th was his last tweet. >> i interviewed nelson

recently and nelson said he told the president that they're getting away remember the person who ran the post office said -- [ opening bell ] >> i don't know. the ipo market is cannabis, cannabis, cannabis this till ray which does medical -- >> the willie nelson brand i saw willie nelson is bringing a band of cannabis to the market. >> >> it's california based. the stock keeps going up there's a belief there's a divisional on

cannabis there are people who thinks it's a total joke people say everybody is gearing up for canada and then united states but united states after that because, obviously, sessions is so committed to trying to shut it down at lot of money went out and into till ray. you believe in the cannabis story -- this is the most exciting ipo and people like b.j.s. but they love tilray. >> sonos priced nearly 14 million shares. >> that's interesting. a good piece by rich greenfield said i can't stay on the sidelines anymore. spotify. the subscription economy and i think when you look at spotify, you look a stock they did a crazy ipo. it was not an ipo. and i think it'll continue that way. >> the worse performer today is illinois tool. >> and i know well. >> yeah. this was a bad miss. and it was a bad miss on

multiple lines as this is it. this is the second bad one this is two strikes you're out business it's shocking because it didn't matter i mean, it didn't matter what line there's only one line that was good they've got a bunch of divisions. they were bad. i'm not sugar coating. it was bad. >> they cut their second half guide on 4 x operating margins got cut on costs. right. i mean, that's not the narrative of earnings. >> it's not the stars it's themselves if you go over the honey well quarter last friday. similar businesses in a lot of ways and they saw anyone of what they did. this is just -- i don't even -- it's mind boggling how they should have done maybe restructuring of some sort. >> illinois toolwork specific issue as 0 supposed to any

trouble in the industrial economy. >> rast quarter i felt they made promises and they madepromises >> speaking of getting your armers around the situation. ge reported on friday. we were not here for that. but the power segment continues to be a burden that the company is trying to get its arms around but it -- the brief happiness that followed the announcement amongst investors, that followed the announcement of the plan to split off the health care business and the roughly two-thirds ownership at baker

hughes has been done away with as a result of earnings on friday, which no follow through. but a follow through to end on the negative, obviously. >> let's go over how bad was it? deutsche bank said it was not that bad they said stay away and downgrades it. a lot of what happened was that really thought out by steve tusa about accounts receivable and power and how things were accounted when you switched to accounts receivable to ge credit and then he predicted the same thing was going to happen to health care. and tusa's work, i mean, he's done he is able to put it in context to make it so what he was saying it was fine. we're fine when thinks are good. but things have weakened and maybe the payments aren't going to be there. so it was a very damning piece and i still believe that the

restructure was right. so does tusa, frankly. i didn't understand how weak the accounts receivable situation was. something david alluded to at one point. how they're accounted for. >> well, you know, at one point were they giving some sweet heart deals in terms of pay us up front where they really benefit from the overall life of the contract and, in particular, the maintenance that goes in and the upcome and everything else that's with the margin can be. >> exactly ge has to address it john flannery has to address it. the last line of tusa's very thoughtful piece was this is about to happen to health care and that was john's vision.

>> right. >> it made the earnings look better and because ge capital is being scaled down. >> they pushed out too much product? >> no. >> they got the sales. but when you look something a long-term contract and then you sell it to ge capital and get rebated, then that's fine as long as the credit is good right. if the credit good meaning that customers could pay. >> right. >> now there's issues about whether the customer is going to pay. the group has gotten weak. there are issues if you're shrinking the ge capital can they do this and the answer is no it was all, frankly, it was all a tremendous read through for various footnotes which are enclosed in the report and you find yourself saying tusa is on to something. if tusa is on to something, the numbers haven't come out. >> interesting the numbers are going up is the ten year yield after all those sessions in the 2.8.

2.91 highest since june 22nd we'll get our first look at gdp for the second quarter on friday we can't rule out 5.5 plus. >> what is incredible is that there is a everyone said the banks are done the banks are done ever since then we've had a rising rate and the banks are the biggest performers and the one that is a mess is jpmorgan is the only metric that turned out to matter was the ten year it didn't seem to matter what they reported. but jpmorgan bumped it last week. >> guys, i think important to revisit a name we've talked so often about nxp semiconductor. because we're down to it now and nxp is down again. 1.68%. how widely this held among hedge

funds who are out in there hoping against hope that you get something from the chinese anti-trust authorities and the netflix 24 hours that allows this deal to be approved and therefore to close a few weeks ago when i reported the call com would not extend beyond the 25th, there were a lot of hedge funds riding that reporting, but now of course they've done the work and said that's true now. we do see that, as well. that is not in doubt as i reported weeks ago. they're going to end it on the 25th $2 billion break up fee going to be paid to nxp, if they don't get the approval what has emboldened some investors is the fact you have congress abandoning that effort in legislation connected to the defense department authorization to undo the trump deal to put zte back in business so people are looking and going

that's it, right they've gotten everything they want in china. and, of course, when you step back and i made this argument many times over the last few months, it's hard to understand exactly why the chinese would allow this deal to die it doesn't appear to be in their best interest to then say to the world, well, we're not going to let a lot of technology deals go through. it gives them the opportunity, frankly, to do these joint ventures sometimes to get those technology transfers that we know they really value so a lot of people still come back to the basic flash that doesn't make sense for them not to allow the deal to happen. we're down to it in the last day, let's call it, we need to get something done tomorrow if you're going to get the deal done before the deadline >>well, there are some things that are happening that are negative if this deal breaks down skyworks solution did a terrific job last week. a great conference call. a great conference call.

and the stock was crushed. and that is a very good analog nxp will say we have more auto it doesn't matter. people grouped these together. it's the wrong time. not that there's a good time you have a chance to go 127.50 in a short amount of time. they're not going to close in on the same day but soon after. it closes that's a huge return you can imagine why the guys are in there they're going to sell as the day passes. >> many of them will. >> it's the 24 up. it may be now 15 down. >> right and before this happened, i thought it would bottom at 90 on the bad day. i think you're right

high80s. >> if the chinese do not allow this deal to be approved, it will send a larger signal. you'll see more weakness it will be ratcheting up ratcheting up the attention between u.s. and china no doubt about it. >> i know he's, you know, i don't know what is going on. i hear nothing, unfortunately. but this will be an important moment. >> it's more important than a tweet. >> yes and i like the idea about

debating in my mind how important the tweets are in a vacuum, skyworks was really, really good. but we're not a vacuum we're in a vacuum cleaner. and they could be sucked up. dyson. it could be dysoned. >> amazon was down about a percent a moment ago currently down 1.5 jpm two month high is leading the dow. we'll get to bob. >> good morning, carl. happy monday and let's say it's a mixed open now. let's take a look at the sec story leadership here. of course, this is the biggest week for earnings. that's going to matter now semiis weak here because we have problems micron has been weak.

87% are beating expectations the numbers are going up so today we're talking about 22% earnings for the second quarter. july 1st we were talking about 20.6%. revenues are also up a little bit. the important thing is q3, the numbers are holding well this is exactly what happened in the first quarter. we had better numbers and expected going in hay were high. and the second quarter numbers held up. overall let's look where we are in terms of the trends now earnings are solid the momentum has been favorable overall. we're just shy of new highs on the s&p 2800 is still on the upside sentiment i would say it's neutral. that's not high priced by historic standards now there are bearish trends that exist out there we have no clarity on trade and

that's certainly an issue. the dollar is strong all though not dramatically strong not a lot of earnings commentary as i mentioned here we're talking about leadership overall. fairly narrow. i have a little bit of a difference of opinion on that. you heard jim talking about illinois toolworks they lowered guidance. they cited specifically 4 x. 12 cents hit for the the year on foreign exchange also, higher costs so we're getting into the argument about margin pressure here obviously the margin is getting higher pressure. it's anxiety about peak margin not just for industrials but in general there's been peak margin anxiety for two years in the s&p 500. we peaked the s&p about 10% margin overall it may we're certainly not

getting better numbers on margins but it's holding up right around that 10% level. so far i would say there was anxiety about this but it's not manifesting itself in any way. the numbers are not dramatically coming down. about that narrow leadership, well, here is the source of it it's basically been argued that the faang stocks and the big leadership group this month a certain extent they are. the s&p is up 3% apple is down. i guess the problem is the implications are not worth owning anything but faang. that's the wrong way to look at the market you have pharmaceuticals people with the downside today semiconductsers are up and the transports are up because airlines and railroads, by and large, had good numbers and very good earnings. i guess keep in mind there's plenty to buy in the stock market besides the faang carl, back to you. >> thank you very much let's get to rick santelli, as well check in on the bond pits in

chicago. >> good morning, carl. it is an exciting day in so many fixed income areas you look at a two day of ten year note yields, hey, we popped over the 290 level as a matter of fact, it doesn't like we're going to get 23 sessions in a row. starting june 21st, when we started settling in the 280s, 22 sessions doesn't look like number 23. in that time, the last couple of days, we've seen some decent steepening 10s to 2s. 24 the low they're now at 30. 30s minus 10, nine is the low and 30s minus 5s they're at 27 maybe more focus should be japan. see the next chart year to date of 10 year japanese government bonds. first thing is, look to the right side for scaling so far this year they've had a crazy range. two basis points to 10 basis points the bank of japan is trying to control the yield curve.

but they're also running out of things to control in a successful way as banks and other profits keep moving lower. they're going to tweak it a little bit maybe remove some stimulus we've discussed that it has to be coming. the pressure is ratcheting up. we want to pay attention it's hovering at the top of the range, obviously look at a year to date of the dollar yen now the dollar was virtually in the neighborhood the zip code of the best levels of the year. it's reversed that a bit not a huge move. and one week of the dollar index, no doubt trump's comments may have taken that upside momentum away from high to low, we lost over a little over a penny. back to you. >> all right, rick, talk to you in awhile. when we come back this morning alphabet getting ready to report tonight after the bell plus, the president taking on tehran what it means for the state of geopolitics and the oil markets.

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. jpmorgan's jamie dimon is making comments to cnn that could derail a stronger economy. he said i would remind folks that the president's team has already said there will be no need for retaliation here. if i was the president, i would be a little ticked off at some of my advisors it goes on to say if you do another 200 billion in tariffs, i think you will get close to reversing the benefits you have seen in the economy. >> he was talking about ge gave you a pretty good exposition in tariffs, what it would mean to ge and it's not material, but it's still a huge amount of money. i mean the not material is always in the ugliness in the eye of the beholder. and the trade war, stanley noted

this morning about trade war and semis and how you can have a yellow turn to red recent tariffs increase the risk of analog, upstocks under perform. these have been tight, all of the supply has been tight, the demand's been aggressive so these stocks are not going to rally on a day like today. ek, ow's down 19 to start the wea busy week, we'll get stop trading with jim in a minute ♪ ♪

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just say, "add epix." epix has a whole lot more. whoa! time for jim and stop trading. >> the halliburton conference call is not a good one because they're -- they're talking about a slowdown, they're talking about all the problems of people here, about how you can't get the oil out, schlumberger is much more international, they're just not that expose, as halliburton is to fracking i have to tell you that halliburton is a great company, but if you can't get through the market you're not as able do to as much drilling as you would like >> what's on mad tonight >> hasbro, i think brian's going

to tell you a very different story. he told us that the selling will end because of toys "r" us and when it does, people will look back and say look at all the experiential toy stuff that they have created >> fascinating story plus you have alphabet to look at >> it does not start with we reported a great quarter, if it's not a great quarter, because people don't like that as much as they used to. by the way, microsoft call, that had the most congratulations that was a very 1999 call, congratulations. he does not care he is a tnp ceo. take no prisoners. i love him i love sacha he delivered on every line item. he had windows 10. >> congratulations >> yes, congratulations. >> jim, we'll see you tonight.

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markets down -- as we watch g-20 tweets on everything from north korea to amazon. >> our hour begins with president trump's iran warning >> 35% of the s&p is going to report what to expect this hour. >> what the future holds for the automaker next first let's go to diana olick. existing home sales, how do they look >> existing homes sales down

the street was looking for 5.45, may's read was revised down as well 2% year over year, and because it's june's number, we now have the first half of the year down 2.2% why the weakness when the economy is improving, could be prices, median existing home price was $276,900 that is an all-time high, up 5.2% year over year the reason prices continue to gain is very low inventory but still at a 4 po.3-month sup. realtors say it could be a sign possibly of more homes coming on the market 26 days is the average it took in june, that's down from 28 days a year ago. all cash still very high at 22%,

investors high at 13%, and first-time buyers still very low at 31% so weakness continues the third straight move of losses in home sales down 0.6% in june. back to you guys stocks are a little bit lower here, geopolitical tensions are back, although three weeks up, as the biggest names report their earnings. boeing, the dow's heaviest weight president chief investment officer at wells fargo investment institute guys, good to see you both everybody buckle up. running at a .1, .3%, is that a tail wind for stock? >> if the stock market doesn't

go up, then the pea multiple is going to be a boat load lower. i don't think that's going to happen, if the geopolitical risk is perhaps overstated. >> are there going to be stories that impress you or is this a repeat of what we saw the q1 reports >> these are stories on the topside, on the sales and revenue growth close watch on u.s. dollars, strong impacting q2, close watch an forward guidance as it relates to both margins and any dents to cap ex or spending for the rest of the year >> goldman-sachs equity's strategy -- and then straight export hit where do you expect that to show up if at all at this point >> you know, i'm just going to take it a little bit differently, and i was following

up on darrell it's point, the revenue numbers are surprising much, much more than we have seen in a very long time but the margin line, which is really where all the beats occur, have been more modest because you're starting to see wage pressures what we're seeing is the economy is under -- we don't appreciate how strong the economy is and that's short of the revenue number but we may start seeing margin pressures, companies have been complaining about it, it's possibly it's s.t.a.r.tarting t up in the numbers and that's making people uncomfortable. >> looking forex head winds. >> we have seen it in areas like shipping and trucking, but if it's more broad based i don't think the market is going to light. >> so we have heightened

rhetoric between the u.s. and iran from president trump, what are the market implications if at all beyond oil? >> so far the markets have taken it pretty well, right? i mean for the tweets overnight, i think the markets if they're focused on any political risk, it continues to have to be trade and tariffs. this is a big week so see we have president of the european commission in town we need to watch auto tariffs. and we also have trade representative robert litehieise on the hill on thursday and it will give us a good look into the administration's head as it relates to auto tariffs and nafta. >> everybody's worried about auto tariffs if we do see that happen, does that change your view on the economy's trajectory and the market's direction >> most of the work we have done

on that so far suggest that even with some pretty substantial tariff implications the direct impact is .2, .3 off the global gdp growth it's the impact on the supply chains, and how it dents confidence and septembntiment. >> you have said the geopolitical risk is overstated right now. and typically that's the right way to go. when would that change for you, though short of all out war >> you know, i think it's this issue of supply chains if we're selling soybeans, which is a commodikmocommodities marku take that one part away from a

supply chain, things break up. i think you could see something very interesting, and you talked about autos, that you could have some advanced buying in anticipation, if you're concerned that they're all of a sudden caught up if i want to buy a foreign car and now i think there's going to be a tariff on it. and say i have a problem, or i could buy it today and get it back on the other end. i wouldn't be surprised if you actually see a pull forward. >> that would or wouldn't concern you? that's a larger concern, though, if you saw that? >> if you want to talk about a retaliation from china, the retaliation is not tariff for tariff, it's you see this part that you need, we're not going to supply it but then you know they have taken the gloves off and no one wants to take the gloves off.

>> talking about the auto tariffs. here's the quote, if you do another 200 billi$200 billion ik you're getting pretty close to those benefits and supply is close to overwhelming domestically. so you got inventories going to the roof is that a test case for what could happen, or is it too specific for something else? >> you're exactly right, carl, it is a test case, so have you you the agricultural softs. cattle, hogs, soybeans we have to remember that so far, even if tomorrow the additional $16 billion in tariffs go into effect you're talking about $46 billion in actual tariffs, so if you're talking about $32.5 billion on a

$20 trillion global economy. but it absolutely will have price impact very acute and specific right impact where it hurts most >> you were talking about the warning signs that things were going badly. if you're concerned about trade then it's going to happen in the auto industry or the steel industry, but in reality, when you phit a 311 on the 10-year, and now it's down to 280, that's a sign the market's in the economy. but if this thing goes badly, and i just don't think we're going there, but if it does, you could see a one handle on the ten. >> because of slow economic -- >> because if you think it's going to go badly, you're talking about recession, so the real loser on this is the banking section. jamie dimon is not talking this

up because he's concerned about the banking sector again, i don't think we're going there, but that's really what goes bad >> the one point i would make really quickly is industrials, the one loaded with industrials in the earnings season on record on sales and earnings so far so the place where we saw the biggest dent was going to come, has not shown up as of yet >> fair enough >> and financials are the best performers right now, as the 10-year goes to 290. coming up, the president responding strongly over twitter with a warning to iran that it will, quote, suffer consequences if the country continues it's threats against the united states we'll break down the geopitalmptsf e olic iac oth president's comments when we return more "squawk on the street" right after a break. ♪

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comments come after president trump broke long standing precedent last week in a cnbc's interview that criticized the fed's rate hikes and usualed it to stop. mnuchin said i fully support the fed's independence, as does the president, the president was very clear in saying that he supports the chairman. it raises questions of federal influence if the fed does not raise rates in december. that is mostly unchanged since the president began talking about fed policy and that dove tails with most economists unlikely to be influenced by the commentary, the fed has been nearly silent for itself on the president's comments a spokesperson in washington would only point reporters to recent comments by powell affirming the fed's independents james bullard the first one to make a public comment, saying he was not surprised by president

trump's remarks and that they would not affect monetary policy they see no upside in commenting publicly on the president's remarks. >> a question on the dollar, it is falling again and the yes or no had specific issues which is causing a lot of drama on the japanese bond market the president has gotten what he wants on the currency market it has led to a pretty steep drop on the u.s. dollar. i wonder if that will happen again? >> in a temporary way, maybe, but if you put up that yuan-dollar chart, he put the t tariffs on the retaliatory tariffs, the same thing with the peso when the united states threatens to put tariffs on countries their currency weakens and that undoes a lot of what the president's trying to do in terms of making foreign goods

more expensive so what the president's finding out and maybe the tweet was sort of frustration with that is that there's a lot more to international trade than just to tariff itself. you put the tariff on, the currency can weaken and then you have a focus on the interest rate differential and that's what it threatens to make a trade war into a currency war that brings the federal reserve and central bank into the game >> it the judgment there is that those economies feel it worse than the u.s. in terms of their overall economy. >> that's the game that's being played and we'll see who ends up with more pain and who is more likely to stick to their guns when it comes to these trade wars the big story is fiat chrysler ceo stepping down from his role as chief executive of that automaker phil joining us with all of that >> check out shares of chrysler,

it was down much more premarket and at the beginning of the day. it's still down on the day the replacement of the ceo, that was a decision the board of directors made on saturday evening. mike manly has been named ceo. he's going to be in charge of fca europe, who was passed over for the top job is going to be leaving the company and that's something we might be looking for is if we see other executives leaving there's been a rapid decline in marchionne's health. he brought in chrysler starting in 2009. so who is mike manly and what is wall street and what are

investors expecting from him he has been in charge of the jeep brand since 2009, and look what's happened to their sales since then 339,000 globally then. it's gone up four fold since then to 1.38 million and a big part of that has been manley pushing the brand. the big test will come on thursday when chrysler reports it's earnings. but really his initial thoughts as he becomes the ceo of this company. >> big story, big legacy, big shoes to fill. when we come back, busiest week of earnings season with about 35% of the s&p reporting during this next five days. don't miss our projection or what we expect from amazon, facebook and google.

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time for our etf spot

heights. as alphabet gets ready to report after the bell tonight >> these earnings this week, when we have alphabet, facebook, amazon if you look at the pnqy, this is the invescco internet etf. about one quarter of this fund is amazon and google look at the chart. and a lot of these charts look like this, peaked about a month ago, also peaked in terms of relevant s&p about a month ago look at the fdn, slightly larger fund, this really is pretty close to a fang fund in the absence of a straight one, 29% this one, amazon, facebook, google similar formation, a little bit stronger, looks a little closer to the highs, but still a

similar story where you've been almost a month without a new high also wanted to highlight the xlp, it's communications services, facebook and google, 34% of this one. there's no escape because these were being bundled in with facebook and very vice son >> this is the six-month anniversary of our january highs? but in your view constructively? >> i think the market has done just enough to preserve the uptrend. so, you know, i still think until further notice that's where we are it is an unusually long period to go to have a krcorrection not recovering off all-time highs. >> seasonality starting to fade

now. that's all true? >> all true, third quarter is also the quarter when you tend to see downward revisions when analysts kind of get it wrong a little more than not and that what why august tends to be a little bit sloppy >> as we head to break, take a look at the dow, it's down 35 points so nothing major in terms of a selloff today it is a tech heavy nasdaq that's getting hit. google's alphabet and face pobok are higher we'll be right back on "squawk on the street.

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that he will face dire consequences for threatening the united states. this after rohuhani said that a with iran would be the mother of all wars. >> the level of corruption in iran resembles something more like the mafia than a government three are dead after a mass shooting incident in toronto night. 12 more have been hospitalized the 29-year-old shooter exchanged gun fire with police before he was killed and victor espinosa was injured after his horse had a heart attack and went down espinosa was taken to the hospital with fractured

vertebrae. we wish him the very best. that's the news update this however. i will send it back downtown to you, sarah >> welcome back to squa"squawk n the treet" i'm here with caone hour into t, and this is after slight declines the dow is down 48 financials remain a bright spot and positive in the s&p. joining us now to talk about the markets, we have got geopolitical tensions, trade, and earnings all in the mix. our cash and u.s. directors on the floor in the mix of those three i just mentioned, potential tariffs on the horizon, the geo politics and knee deep in earnings season, which is moving the market today? >> i think earnings season is holding the market together. the other things are what the market is puzzled about. i think many traders are now

starting backward in a set date, they're taking november 6 which is election day and trying to figure out how soon before that date the president will need to get some trade agreements out and to make sure he doesn't put a dent in the midterm election and that will be there the other date they'll be watching is this friday when gdp comes out. and if it comes out at 4.2 as many people are guessing, there won't be a megaphone in the world big enough for this president. he will be all over the place. >> an all caps tweet perhaps >> right. >> markets are either at or within a couple of percentage points of an all-time high in our latest cnbc survey, the president gets 50% approval on the economy, 34% disapproval i'm not sure where the urgency is on the mid temples. >> he wants to go further, i

think unbeknownst to us, feverishly, in back rooms they're working on a new canadian plan and a new mexican plan at the very least and i think he also would like to get some kind of overall settlement on automobile tariffs and get that kind of neutralized. and he will be taking all manner of credit for those things so i think he wants to get some of that stuff done i think the big geopolitical danger is after helsinki if something were to happen in europe or the ukraine or whatever, it might become too tempting to the president to want to look very stern against russia and make a move of some kind i don't think it would be overtly troops, but today to the ukrainians or something like

that that would be the primary geopolitical concern and i think he's working behind the scene to get this economy virtually roaring going into the midterms. >> why is the market not worried at all about the president wading into monetary policy and the u.s. dollar? >> they are a little concerned, and i think the reason is he started out with kernan by saying i put a very good man into the fed, that was an interesting way to say that. sothat took a little bit of th steam out of it. i think the major negative of it is it might put powell in a bit of a box because as much as he -- if he were to side with, you know, yellin's kind of thinking, and say, you know, we stayed below 2% for so long, maybe we should let it run a little to the hot side and trump's comments have now put him in a position of people

saying, trump has frightened him into inaction and that's what's going on and if there's a danger there, that's what the danger is >> papa john's remains in the news, they have adopted a new tactic in an attempt to limit the influence of john schnatter, this follows his united statse l slur and his exit from the company. >> papa john's adopted a poison pill to keep john schnatter from buying more shares and taking control of the company now schnatter currently has a 30% take the plan would be activated if he or his affiliates and associated attempted to acquire more shares, the company addmov the wake of schnatter resigning

as chair of the company he founded over a week ago. he retains a board seat. he said he felt pressured into using the word and did not use it as a racial epithet the board has voted remove schnatter who is papa john of course i did speak with his attorney last week who maintains her client is not stepping away from the company without a fight. she also said that the shareholders are the only ones who can remove him from the board, not the board itself. nevertheless the company is trying to limit its founder's powers when we come back, a cannabis company acreage announcing it's intentions to go public this morning. as you might remember, former house speaker boehner on the house advisory board and they spoke to us about legalization

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alphabet out with earnings today after the bell some arerectth pdiing e stock could see a major breakout more "squawk on the street" coming right up. mr. speak

. we are closely monitoring developments in the wake of president trump's twitter threat to iran. in which he wrote, to the iranian president rouhani, never, ever threaten the united states again or will you suffer like you have never suffered before along with our own chief international correspondent michelle cabrera michelle, i saw this and immediately thought of the fire and fury threat to north korea things have certainly calmed

there, is the strategy going to work on iran >> that's possible, but i think you should see president trump's comments ina tweet in a bigger context. ambassador bolton came out today in support of the president. i think the message from the three of them is that the president wants to do what he promised which was there's going to be a shift in the united states attitude towards iran iran has said things like that for decades, death to the great state, et cetera, et cetera, et cetera, and we have essentially ignored them your basic question is where does this lead to? and that we don't know yet >> what is the market telling you on that front? clearly prices are higher, iran is a major exporter and produ r producer >> i think the bigger issues that are going to unfold is are we going to see potentially an iranian nuclear restart when the

sanctions kick back in, are we going to see an intensification of the proxy wars, are we going to be more ballistic missiles fired from yemen into saudi arabia we had an issue late last week are we going to see a real intensification of middle east unrest and i do agree with michelle that i actually think things are getting a little bit different this time. because we not only have sanctions with a snap back, we also have these raging proxy wars that are essentially putting water ways at risk >> the persian gulf, is what we're talking about? >> the strait of hormuz, standing ready to keep water ways open. but we also have the pop among these straights rite off of yem yemen, so you have more than 20 million barrels going through those critical water ways, and

we have the iranian regime saying if we can't get our barrels out, nobody is going to get their barrels out. >> if they did close the strait of hormuz, two or three days the u.s. navy could absolutely reopen it. but you have the many small boats that iran can use to swarm. and it would be certainly a lifting of tensions dramatically in the region for sure >> it i mean absolutely, i don't think anyone believes that the u.s. fleet in bahrain that we can affect ships going through there. >> so michelle, can you just give us -- bring us up to speed on the sanctions against iran? because we are expecting in november, another round and it essentially ties off iran's oil to the rest of the world, right? >> right so there's several steps, first

there's a the effort by the administration to get everyone to stop buying iranian oil the first step to achieve that, are the chinese and the indians going to get on board. subsequently with that, what we have seen in the last year or so is that many bank in the world just don't want to help those deals, period, regardless of what the state of diplomacy is at any given moment because it's too risky to deal with them, it's too difficult, there's more paper work then there's the question of the snap back sanctions, which again, even as we work very hard to try to maintain some way for european businesses to still to do business in iran, it's going to get very, very difficult if we start to say or american banks say we're not going to process any of those deals and you're not going to use american dollars for any of those deals so the pressure on iran could

get very, very intense >> their economy is already getting squeezed, their currency is getting crushed, inflation is soaring. >> i get very worried about the desperation of the regime. as you mentioned, the currency has lost about half of its value, you have protests breaking out all over the country. if the iranian leadership comes to see these sanctions and the real rigorous enforcement of sanctions to impme mntlement re change, we could see hostilities before we get to the point where they cap litulate. >> i think they are starting to get desperate, i think that is their intention. >> yeah, i absolutely agree. >> are you raising your forecast bottom line, what is the upshot for oil? >> we always say that we don't

think $100 is inevitable, but we certainly see a path poh have a real breakout in oil prices and the implications with the military and security challenges with iran, that could royal the oil market right now >> let's get over to the cme this morning and get the santelli exchange. good morning, rick >> good morning, carl, i would like to welcome a very special guest, doctr. astralia, welcome i have reread the paper several times over the last couple of weeks, the notion of the yield curve being an indicator, an early warning sign, send up smoke signals about a recession down the road. but my main question is simple doctor, do you think managed

interest rates since 2007, 2008 has distorted the signals you researched >> i don't think so, every time there's a signal, the market experts have said this time it won't work any longer, but since 1968, the recession signal has been perfect, has a perfect record there have been seven recessions and it has signaled all seven of them >> now, doctor, when it comes to partial inversions, many traders on this floor have done research and it's much harder with partial inversions, but the verdict seems to be, if any portion of the yield curve inveri inve inverts, the entire part from mid and long invert. do you see that same dynamic historically >> i think that's true generally. the research i have used personally has used the disturbance between the 10-year and the 3-month interest rates and so i look at those and i use

that difference as an indicator and that's one that's perfect since 1968 >> no, and i perfectly understand that and i think it really did change -- but in on this floor continue to say, three month to two-year is widespread, so it obviously makes a difference, but whenever tens and three months invert, so did tens and twos. so i guess the real issue is couldn't this speed up production and have a steeper curve? >> there's a big question on what the central bank does they could use this as indicato as opposed to just expectations. these are bond market expectations now you mentioned the two-year rate, a lot of the comments recently have been about the difference between the ten-year

and the two-year rate. and i would caution there because the research was done looking at the difference between ten and three months so when you look at ten minus two, that's like the old saying that it may predict nine out of the last five recessions >> no, and i completely understand that. but as many of us have done, out of respect for your research, we continue to overlay tens minus three months, ten minus twos, the patterns are identical so the real issue at the heart of this is the spread between the three month and two year nobody is going to answer that question because we don't know i would like to finish up with, you have now written and talked to different entities, and in your opinion, you don't see a recession? could you tell us what you do see? >> when i look at the ten minus three months is maybe at 90 basis points, so that's not a

direct signal of recession right now. obviously it's dangerously close to getting close to zero, which is the actual benchmark for this indicator. so i think it bears a lot of close watching, but at this point, i don't see a recession a year from now, according to the model. >> doctor thank you for your thoughts and your research is more famous and more people reading it today than back in 1 1996 >> now let's send it over to john port with a look at what's coming up on squawk alley. >> we are checking in on fang trades, and after a revealing interview with febacook co-founder mark zuckerberg, we have top analysts coming up on squawk alley well, victor, do you have something for him? >>check this out.

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hormuz shares are soaring the company beating expectations on profits and revenues that were down for the quarter, not as bad as analysts expected. they're emerging from toys r us bankruptcy last year in better shape than people were

expecting. there are comments from the ceo and cfo about moving production potentially away from china because of the threatened tariffs. brian goldner, on "mad money" tonight 6:00 p.m. eastern. john boehner got in the pop business as an advise r, now the company is going public. kevin murphy is joining us big series >> thank you very much >> plans to go public on canadian securities exchange everything is canadian now >> that is true. that's where we're most welcome today. we would love to be public on the new york stock exchange or nasdaq in today's world, canada is where we're headed. >> how did both those things

change, acreage? >> when we go public, it gives us optionality our goal is to take stock and tangible assets and use that to go out and aggregate more of this country's assets and canada's. >> you said you could have raised more. why not? >> we set out to raise $50 million and when speaker boehner joined our board, we had so much enthusiasm for the round that in fact we raised $119 million. one of the reasons we stopped there is it was in fact the largest round ever done in canada's history in the united states, but we also wanted to save some for the ipo or rto we could have raised as much as $300 million in this round, and that's the type of enthusiasm

we're now seeing for the space. >> it is interesting you say that we all get stopped occasionally by people. they stop and want to talk cannabis i wonder given how much money is available, is there a chance there's going to be overcapacity in a sense >> this business is estimated to be $100 billion in size and today -- >> 100 billion, what does that number mean? >> that means with sales in the united states for the illicit market and the regulated market is anticipated by 2025 to be $100 billion in size today, the regulated markets or medical markets capture between 7 and $8 billion there's so much room to grow in this space that's why people believe that now time to get in, and time to get in early. >> what has speaker boehner and governor weld been doing on your

behalf, have they made head way when it comes to opening up regulation in this country >> speaker boehner and governor weld have been a watershed moment for the cannabis industry it is not only that they've added billions of dollars of value to our firm but they've had a huge impact on the entire industry so everyone in this industry is now doing a lot better now that speaker boehner and governor weld are part of it. >> administration policy >> i think it is all of the above. they really give us a very good road map as to how things work legislatively, and they also are compassionate men that have the courage to change their mind about cannabis, and that i believe really turned a lot of heads, and it has made others think about why this isn't the scary drug that's now schedule

one with no medicinal value. >> where are we, sorry, on federal versus state at this point? sessions is still strongly saying this is schedule one. still going to prosecute different things within the administration, and obviously the states are trying to figure it out in terms of whether they're going to get federal pressure. >> the majority of the country believes medical should be legal as well as recreational. we're hopeful congress listens to constituents and votes accordingly. >> the president was asked a few weeks ago about cory gardner's bill, didn't dismiss it out of hand could it be that easy? >> you can agree or disagree on things with this president, but the one thing we believe president trump has done a wonderful thing for the business and believes it should be left to the states and is a believer in medical cannabis. >> the attorney general hasn't gotten the memo. >> i don't know if he has gotten

the memo on a number of issues, but that's neither here or there. >> how many customers do you expect to come online in canada in october, 5 million, 8 million? can they all be supplied that quickly? >> california market is larger than all of canada if you think about the canadian markets and the united states markets, it is our goal to bring compassionate care and medicine to the 340 million people in this country we believe canada is an exciting time they've certainly led the charge as it relates to cannabis. now it is our belief that the united states will soon follow and we believe it will be the largest marketplace for cannabis in the world >> we're going to be seeing you again i have a feeling good to have you back. >> grateful to be on the show. thank you for the hospitality.

this afternoon, back on closing bell alphabet earnings are the one to watch. the numbers, full reaction, analysis, 4:00 p.m. eastern. yes, carl, i will be there at 3:00 it is an exciting week, facebook later, amazon on thursday. i know you're jealous. >> you're going to have plenty to work with on wednesday and more dow down 36. "squawk alley" starts in a couple of minutes.

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good morning, it is 11:00 a.m. at chrysler headquarters in auburn hills, michigan 11:00 a.m. on wall street. "squawk alley" is