morning. look out for what cramer said. the dow futures up by about 140 points the nasdaq up by 74. also, pay attention to what has been happening with the treasuries we're looking a the 10-year close to 3%. ke keep an eye on that. wolf, thank you. make sure you join us tomorrow right now time for "squawk on the street." good tuesday morning welcome to squauk "squawk on the street." is this the break out the bulls have been looking for? the s&p futures looking to open nearly 50 points high. europe with solid gains. pmi in france and germany strong and the 10-year within three basis points

alphabet's blow out quarter. the ad business jumps nearly 25%. >> and "tariffs are the greatest." the president weighing this on trade this morning. >> alphabet is not alone the flood gates open for earnings season. there are a lot of earnings to get to today alphabet delivering a blow out quarter. shares are surging this morning. the tech giant sales beat the street the ad machine continues to power ahead. a sign it strengthened online ads will help offset the $5 million fine they got from eu regulators last week a traffic acquisition down as a percentage of overall revenue. >> they explained what was going on with traffic acquisition. this was a level of transparency i'm not used to with alphabet. the move from desk top to hand held requires this happens and you have to spend more

what i love about this quarter was we finally got the rationale of why you like the stock. and he said some stuff i think i've got to read the one thing he goes we want google to be the source you think of when you run into a problem this is basically a call out for billions of people who use this product when they travel and translation. talk about world cup, by the way, and how many people google words. when you use maps, 110 billion algorithms in their maps when you use search, it's just a universal asset. so they basically explained, look, we are a product -- we make a product that billions more people need that are currently using it there's not a lot of companies that can say that. kimberly doesn't have billions of people. united technologies don't have

billions of people that want to use it i say it's no raw costs. we don't care about the $5.1 billion and you're stuck hearing about the cost of acquisition because we're crushing it. and they are. >> when it comes to the traffic acquisition costs, carl mentioned and you alluded to, investors are seizing -- and i talked to one this morning, one buying now because they think finally it's going to show operating leverage. >> yes. >> traffic acquisition costs have been going up operating leverage hasn't been going up markets are now improving they're turning the quarter on the traffic acquisition costs. they said last quarter they expect the pace on year on year growth to slow beginning this quarter and it did and so i think there are a lot of investors, jim, and carl, who are seizing on that as one

reason why there's a new potential for growth at google beyond what they've had previously in terms of margin and profitability. >> i totally agree we talk about how early we are in the adoption of the cloud he's talking about the idea that this is the beginning of the break out. 90% of commerce is offline we do see a great opportunity for digital play a bigger role before they said, listen, we had a great quarter. now they're saying we had a great quarter. here is the reason and this is the first time i mean, waymo is happening. >> they give the numbers on waymo. 8 billion antonymous miles driven. >> it's a lot of different pots boiling. talk about early stages of montization in waymo of the companies out there,

alphabet has the best shot of being the berkshire of tomorrow. >> wow they are most certainly u 2. the dialogue around youtube not that long ago was about how, you know, the copy they got rid of that now we also see there's been a lot of money on people but you're beginning to reap the benefits of people that's not what we're used to hearing. >> they added 4,000 employees during the quarter. >> smartest people. >> for a moment, though, i want to focus on cap x. i think it's worth noting that google now spends more than at&t or verizon on capital expenditures they're at a rate of around $21 billion. they spend $5.5 billion and continue to save for it again. talking about it our commitment to growth is evident. the ongoing trend in cap x

investment they've been investing in search and ads. really, they're building the cloud, the computing power they're putting up new facilities all the time. they're, obviously, investing sizably in what you need in terms of youtube to support that the power they're putting out there and machine learning and what they're spending. this is --i don't know we've ever seen these kinds of numbers. $21 billion. >> yes. >> they're used to at&t and verizon being the leader. >> yeah. >> right one of the things that bothered the heck out of me, if you go and listen to jenson wang, who is the ceo of nvidia, people want to talk about intherium, no it's about the data center you've got to put up data centers every day. because of the demand. >> by the way, the waymo investment isn't considered cap x. it won't be until it's an

ongoing business that's eparate. >> yeah. >> but just the numbers are staggering >> to jim's point, it's not like regulatory risk has gone away completely we've got a couple of bites, but if you can play the sound from last night talking about the google eu fine take a listen to this. >> it's worthwhile, i think, globally for users and everyone in the ecosystem you can clearly see there's robust competition a lot of innovation. a lower prices overall it created more choice for everyone not less we will always take a constructive approach. we'll appeal the commission's decision and take the due process available to us. but we're also looking forward to finding a solution above all that preserves the, you know, enormous benefits of android users and so on. >> so that's interesting more interesting than the number five. >> right. >> finding a solution.

>> you know i look at what he is saying and he's so methodical. remember when steve was saying janet reno, you know, making fun of the government. he's matter of fact. we have a good product we'll do what people want. they're making so much money they have $102 billion in cash. >> that's incredible. >> that's a berkshire-like number. >> yeah. i'm waiting for him to -- becky should go out there and ask them about what he's going to do and he should be talking about there's progress and check the value of your farm every day. >> no. 25 times gap bps do you buy the stock >> yes it's very cheap. you finally understand what you get. and what you're getting is a company that is rona-- youtube solved gdpr, it turns out is important to the benefit. >> which we talked about at the

time. >> right if you get waymo to shift over they're shifting over the other bets and things that make money. google assistant i didn't think anything amazon, they're the anti-amazon. they have target and dominos dominos is a huge chain that uses the cloud they've got dominos and microsoft didn't maybe google web services will come on strong >> the amount of data that will start to come in 5 g we're years away from the internet of things it's only going to exponentially increase cloud is going to become even more important and the analytics on top of it. >> that's what they were saying. it's early days. and, you know, when overseas and you're talking and nobody understands you, you just talk to google. when you're overseas -- >> huge. the olympics it's all anyone uses. >> right and they had -- okay they're talking about the huge

spike in world cup. >> yeah. >> at the world cup. yeah people went to it for their information. >> yeah. these are things doesn't everyone get lost? how do you find -- i mean, when you -- i was screaming at a cab driver can't you put it in google >> there was a twitter poll the other day which app changed your life the most, and some said spotify, google maps was up there. >> yeah. >> if you think about it. >> when you that's right the 8 million fully antonymous miles they've driven, you can make an argument if there's a leader in antonymous it might not be uber. it could be them. >> it's interesting they broke out the number i've been trying to get the number trying to get the number. >> yeah. >> bin go, they've got the number it's way ahead they got 60,000 fiats ready. >> yeah. we got the number and people are

focussed on it. >> jim mentions 5g that takes us to verizon results by growth in wireless. the largest u.s. mobile phone carrier now five straight quarters of growth david, for the first time in five. >> yeah. a little bit of churn but generally speaking looks like a decent number in the market, as you can see, is response accordingly. at least at this point don't have a lot of front for you now, i'm afraid. but, you know, listen, we've talked to lowell mcadam who is handing the reigns off to hans vestberg in the not too distant future and it's about 5g and the investment they've made and continue to make you can see the numbers there. adjust adjust >> yeah. >> a wire line i thought with

the economy better, wireline would do better. it's postpaid. >> hans vestberg is one week away and they did have an increase, at least, in revenues and dab in that business, as well not a bad quarter. >> we were talking about this. this is important because of, you know, obviously everyone is trying to fight back against

netflix. >> i think when people are a little too enthusiastic coming in, extrapolating the love for alphabet to many different areas and alphabet was about cloud data center, demand. and these other companies have true raw costs and the president says he loves tariffs. that's an amazing tweet because if you're on these conference calls and you make things, you're not so pleased. you have to put the price in. >> we'll talk about this after the break. the futures didn't move on that tariff tweet at all we'll get to that when we come back the president did say this morning on twitter "tariffs are the greatest." the president weighs in on the trade war yet again. we'll get you the latest on that we'll get to utx, 3 m, harley is a story today, sherwin williams.

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house ways and means has a hearing on steel/aluminium some reports in the german press there's new offer he's going to bring that it's more of a discussion and dialogue. but kudlow said differently last week we'll see. >> yeah. larry was poignant there could be an upside surprise. but at the same time that was last wednesday. >> right i mean, wednesday. it's a long time ago. >> things change quickly. >> right they can change quickly, at least. >> if you're greg hayes, the excellent ceo of united technologies you can't be that big of a fan of tariffs more importantly, when you see

what could happen down the road, could you get the whirlpool situation? well, jeez it was terrible because of raw costs you can argue -- >> that is interesting because whirlpool thought initially it was going to be a beneficiary given the tariffs on washing machines and suffered as a result of the aluminium and steel tariffs. >> huge. really talking about a huge amount of costs that made it so you didn't like whirlpool. i want to contrast that with sherwin williams that was a terrific move if you do acquisitions and self-help, you can be good a lot of companies are being victimized by the raw costs. kimberly and raw costs in timber now the canadian timber decision has really hurt a lot of people. but i think that canada has not necessarily endeared itself to our president. that's hurt them. >> i've been making a list of

companies directly attributing to tariffs we have itw. it's harley today. >> right. >> constellation whirlpool i'm not sure they've said tariffs they talked about cost inflation. but it's a short list. >> yeah. i just think that a lot of people are saying beware this is about to occur this is about to occur if they continue, if he does the extra $200 billion, then we're going to have to take numbers down but if they were to -- if lumber were to peak, that would be great. there's also one of the things i've been working on freight for instance carrier left 50,000 carrier air-conditions at the loading dock not enough drivers think about what that number could have been. and the big issue here is that when they pasta rule about 80 hours -- >> i'm looking at -- it's funny to read that. >> yeah. >> with the exclamation point. tariffs are great! >> right

i look at the situation. i think that did the president affect trucking? no when you have the rule, it says 80 hours they used to do a lot of off the books driving. now the trains are filled entirely warren buffett unbelievable acquisition. you're finding the raw costs creep up then you have to have your costs. you have to charge more. and that could only hurt but, you know, otis was up 2% in orders the organic growth was 6% in united technologies. i love that the gear turbo fan engine they have the different kinks worked out there's a lot to like here, but they do discuss the costs. and no one wants to hear it. >> cramer's mad dash after the break. a look at the opening bell as futures look strong on this tuesday. don't go away.

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seven minutes to go before we get started with trading 3m is one name we didn't get to. >> this is what i'm talking about. some were fearing they wouldn't be able to generate. they look like they did generate a big upside surprise, but when you parse with the numbers, there's a lot not to like. it's not a clean bottom line should it be down seven? i think that's excessive management has gone from being -- to a company that keeps beating clean to now he's chairman people are saying wait a second how good is the business now i have to tell you, they did do organic growth that was far

in excess of what people were looking for. they brought back a lot of shares there was a tax benefit. it was not clean does that mean it should be down this much? i don't think so do i think it could be a buy down here? i don't know it's tusa who is now in control of everything. tusa is like don't cross the wizard behind the curtain tusa is saying i'm not changing myself behind the curtain tusa is saying he's a sell he reiterates the sell on ge. >> he's a hard core man. >> tusa is the man. >> we're talking about jpmorgan's analyst who follows ge and 3m and decidely negative on both. >> and sticking on it and giving them the business. and i remember there was a great article about chase utley who played 14 years for the phillies. >> yes. >> utley is the man. >> yes. >> tusa is the man now.

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you're watching "squawk on the street." live from the financial capital of the world the opening bell in a couple of minutes. futures looking strong as we may open closer to 2028 than we've been in a long time. we open the show with a question of whether or not this is a break out of sorts >> i still want to see i keep hearing the same thing whenever i'm on the calls, people are saying that you've got to be careful of fx. you have to be caring about hiring costs, labor shortage and these are coming back to hurt the industrials and not hurting health care. obviously. they're not hurting tech but this theme about the -- there are enough industrials in the dow jones average to make not be as sanguine as the buyers here. >> how about 10-year 2.96. jpm at a two-month high.

>> good luck it's a dream come true for the banks. remember when the banks reported, i was out there saying good things about the bank saying it's ridiculous when the 10-year was at 3. >> they weren't responding. >> no. everyone loves jpmorgan. we were above 3 last time, i don't recall the banks rallying that strong. >> but in january, january 29th they peaked. this is is a quarter where everyone said rates are too low. they won't make any money. now you have the joy there's joy. i thought that the cfo was mad at me. >> i know. [ applause ] >> i said i don't get this they did a good quarter. no one is listening to me. i was thinking maybe i'm not

doing my job i have to push harder. so i did and i was right. >> is that because the prospect of a lower yield is more worrisome? >> yeah. they've raised -- [ opening bell ] they're not making more on their loans. now they are and it's all algorithm the rates go higher they say buy. >> yeah. like they did the 110 million buildings that were drawn. >> yeah. ai, data, the cloud, iot. >> as the opening bell rings that's the left side of your screen on the big board it's unilever as they highlight the new magnum ice cream tubs.

>> it's worth mentioning that paul goldman at unilever has done remarkable things he's an innovative guy he's also the most forward in terms of packaging in terms of the environment. he's done a good job i want to see whether proctor can do a good job. >> they have any organic growth? >> yeah. still doing better in merging markets. proctor will tell you they're not. unilever has done well but in the end, it's a challenge. look at kimberly kimberly is a good company but the raw costs are bad. and in going forward what we're going to hear about is higher oil. again, 3m is a little too negative now. >> we didn't mention the iranians responding to the president's tweet yesterday saying color us unimpressed. the world heard even harsher bluster a few months ago, as we continue to watch the dynamic

and the affect on oil. >> interesting less bluster that's sml you don't hear much i'm cutting my numbers blustered. tariffs are the greatest >> not muhammad ali. >> he's been replaced. >> it's going to be interesting to see if alphabet hangs in there. amazon is not far behind >>well, look, again there's a have, have not there's a group of stocks it's facebook, amazon, netflix, what used to be google. >> i shall call them faang. >> yes faang is doing well. >> look what i have created! >> hey, there's an unbelievable note about apple they said service is not that good the new phones i don't know how well they're going to be received there is a lot of question marks

about the whole way of the company. raising price target buy, buy, buy. you know, when you're in the zone, even if you're bad, you're good okay if you're bad, you're good if you're not in the zone, it doesn't matter what you have to say. >> who's not in the zone >> yeah. i would argue 3m ge is not the zone jetblue not in the zone. know who is? >> no. >> paypal. i want to know why paypal is in the zone. >> i guess the investors letter indicated ownership stake there. >> he did use -- i was, obviously, playing. >> yes. >> you knew what you were going to get. >> you're my epic man. remember him >> i do. >> that's probably harsh. >> yeah. >> i take that back. paypal he did say $125 market in

three months this is the first time i've heard this, part of the fabric of society and calls it the nonamazon economy. it's at the heart of the nonamazon economy. >> $107 billion market cap. >> wow it's vintech. >> it's payments. >> yeah. you have to go into payments one word for you "payments." >> the semiconductors are coming back from yesterday's bruising why are they up? because the data center is when you -- if you were to take a chain saw through data center, you would see a lot of user. >> yeah. and google is spending 5.5 billion in cap x a quarter, and a lot is going to compute power. >> securing the power for the data centers to keep them cool we've got to follow them

building these things all over the world. >> you have to be long nvidia because these chips are so environmentally not friendly that you -- remember, they build -- you know alphabet literally builds data centers where dominion power is. dominion has a low cost and doing a wind farm. you know, environmental is driving this and i think that if you can cut downthe raw cost for data center, remember, they have a big deal with snap. i wonder how snap is doing. >> snap, i don't know. >> is he talking a bit more about it some people believe it's going to be a dish service it will not be able to break out. snap everything they do will be copied by facebook. >> remember when instagram came up with stories and people said that's some a defense by stories. >> have you seen the stories versus snaps stories is insane. >> yeah. my wife goes to a concert the

other night. the taylor swift thing and i said how was it? she said check out my instagram page i'm asking you directly. how was it check out instagram. we don't even talk to each other. how was that >> i like the creepiness of you see someone you haven't seen in awhile but you know everything they've done for the past two weeks from social media. >> i see you're having a fun summer. >> how do you know because i follow you on instagram. you center to go to bed at like 9:30 how is it going over there i'm checking my feed. >> i'm not on facebook or instagram. >> you don't check your feed >> no. i don't belong to them. >> he's got a compuserve account. >> aol. >> you read books? >> yeah. i read books what do you do instead of play video games? >> not much. >> swim. >> yeah.

swim i spent a lot of time in water. >> what do you do instead of going to the mall? >> i wander around aimlessly i don't know. >> i don't know what to say about you. i'm so proud -- i'm proud that i'm a hologram. >> you are yes. >> all right. >> from holograms to harleys. >> yeah. a transition. >> sixth quarter in the row they beat on the 0 top and bottom line but they bring their operating margin guide down. a year ago in the high teens but, obviously, having already said they're going to move protection because of these european tariffs. >> but this is one of those stocks everyone anticipated it would be bad when it's a little bit better, people like it and that's kind of the ticket. you have to lower expectations versus say skyworks last week. they kept their guidance pretty good and did a little better but not enough better than they expected

i'm finding these companies where you come in with a negative bias and they do slightly better than expected. you really can get some genuine, terrific numbers versus whirlpool everyone thought it was going to be good. a money manager said i think whirlpool will be good. >> what is the tariff on chinese washing machines 15%? i forget some of the numbers >> oh, my. >> you would have thought they would be a beneficiary and whirlpool stock responded positively at the time that was the first wave of tariffs early this year, if i remember. >> yeah. >> and raw costs are going up. >> yeah. >> because we have a -- >> tariffs. >> yeah. i need a cheat sheet on the numbers. you forget sometimes there's a lot of talk about the auto tariff, by the way, today you know that. >> yeah. we had a guess on earlier on "squawkbox" saying, you know, he believes it's coming in the next few weeks. an announcement. >> i know. and i'm glad that united technologies people are looking

at the fact that the numbers were great and not focussed on the input costs of china i mean, they did have some terrific growth. the aerospace is just on fire. they raised numbers. we're getting a little common sense, but, you know, it shouldn't have been down. >> that's a good jumping off point. speaking of china. we have to talk about nxp and qualcomm 11: 59 until the chinese have to approve the deal. >> cinderella situation? >> a couple of important things i think worth mentioning here. we'll bring you occuup to date what we know and don't know. given how widely this has held among the hedge fund community, we're looking for what might be a significant move up very quickly. there's no shortage of phone calls that come in we're trying to understand what it is that we know at this point. so here is what i can tell you

not much people close to qualcomm indicate they've heard nothing credible no change, really, at this point. and nothing credible that would indicate a change in posture from the chinese, at this point. that doesn't mean that it won't happen in the next 24 to even perhaps 36 hours, but as of now, they tell me there's been nothing they've heard that indicates that the approval is forthcoming. it could happen. it may not happen. time is running out. we all know that qualcomm reports earnings tomorrow after the bell. we'll be meeting prior to that most likely at that point they'll sign off on the plan to move on to initiate that large buy back and to, of course, exit the nxp deal but they've got to wait and see, i guess. it's possible that the chinese can come at the last moment.

here is why it's important beyond nxp i think this bears a watching on our part it's my understanding that secretary mnuchin, commerce secretary ross have been very much involved in trying to seek the approval from the anti-trust authorities in china for this deal it's not alien to them they're well aware of it they seem to be of the belief once zte was through, and once congress backed down trying to rescind what the administration did to put it back in business, they thought they were going to get an approval from china on nxp. they may still but the reason i mention this, because if you do not get this approval, if, in fact, the chinese anti-trust authorities choose not to weigh in they'll effectively have killed a $40 billion deal and it is no doubt, in my mind, a ratcheting up of tensions between china and the u.s.

particularly because mnuchin and ross have made it known it's a concern of theirs. and so that will send a message. not to mention, of course, the chill it will send overall in terms of large technology deals that need anti-trust approval in china. or even deals like disney and fox. now they may say they're not worried at all putting the two studios together but if nxp doesn't get approved, everything becomes more worrisome. so nxp is well beyond the fact there's a lot up and a lot down, potentially, for investors it's about the larger issues going on between china and the u.s. >> the stock was down a couple of bucks when i walked in today. right now it's down a little bit. david, why did the president and his team not get a quid pro quo? >> i don't know the answer i don't have great insight into exactly what it is mnuchin and ross have been trying to negotiate or not, jim. i think there was an expectations it would be -- and

by the way, still got some time. there is still tomorrow. >> you mean like we have sympom time it's 9:42 a.m. you're talking about potential malmstrom of selling at 10:00. >> not tonight if you go in tomorrow without anything, i mean, you know. >> i'm going to say up because of you i'm going to stay up. >> you don't have to stay up tonight. >> no. >> stay up the next night because it's by midnight. >> tonight >> no. tomorrow night. >> so tomorrow night. >> 11:59 wednesday. >> i should stay up and see if the ball drops kind of like new years. >> correct. >> except the ball is nxp. >> correct. >> guys, 28.27 best day for stocks in about two weeks. let's get to bob on the floor. good morning, bob. >> good morning, guys. great start. 4-1 advancing declining stocks it's mostly because of technology you have google up, amazon strong here. facebook is strong

micron and the chips have turned around from yesterday. a little tougher intels on the upside there's your leadership group, clearly. but materials are a smaller sector are doing well. energy is doing well banks have had a terrific run. remember yield curves steepened yesterday and had a good run from the banks big names up 2 or 3% but kind of on the flat side other than banks pretty good and yet for the first time in awhile, we're seeing head winds for stocks we've been talking about it. the guys have been talking about it this morning. we've seen higher rates. we've seen a rising dollar we've seen tariffs in higher costs starting to pop up in the commentary for companies we've seen companies collect guidance in the last couple of days haven't seen that in awhile. take a look here kimberly clark here talked about higher commodities and weak foreign currencies whirlpool talked about a stronger dollar, higher costs, and, of course, also talked about weakness in europe, as well illinois tool works yesterday was a big story. they talked about currency and inflationary challenges. these are all pretty similar

about stronger dollar and inflation. whirlpool's ceo summed it up today. we have uncertainty related to tariffs and global trade actions. they've lead to -- increased goods. if you take a look at the earnings movers, kimberly-clark had a decent number joioverall. harley davidson did beat but they warned about the potential of the new european tariffs on the profits margins. it's on the upside and 3m lowered the top end of their guidance i love to follow retail trading activity we had good numbers this week. generally good numbers from "t- td ameritrade. the cash on hand for the clients are near record low they're

taking the cash and accounts and trading stocks you could say that's a contraried indicator when the retailers start throwing their money in, it's a sign. bottom line, it's an overall good for them. finally, i want to mention obmh, the number one luxury retailer in the world they'll report after the close number one in champagne andlet are goods a -- leather. now we're near the highs today back to you. >> bob, thank you very much. let's get to the bond pits, too. and check in with rick santelli. good morning >> reporter: good morning, carl. we see treasury rates, european rates continue to move higher. look at a two day of two-year. we traded at 264 plus yield. we continue to extend our 10-year run with respect to the last time the 2-year yells were at this level. two day of 10 we traded up to a

297 yield. the curve is parallel today holding the recent steepness what is fascinating here is how close to 3% we're getting. maybe some of you don't remember accurately we've talked so much about 3%, but actually, for 2018, there have been eight closes above 3%. two of those were like 3% and fractions of a basis point so, as we get closer, we need to be cognizant of the notion that so much consolidation that we've moved away from when we move away from high frequency areas, we tend to get momentum. i would be shocked if we don't give 3% a go of it look at bund yields they topped 40 trading around 41 or 42. what is interesting there above and beyond the fact we haven't been up 40 for awhile. that's where bunds sell in 2017 at 42 basis points so virtually unchanged on the year if you look at one week of the dollar yen, everybody is focussed on it the chart being the dollar

continues to fall a bit. not super aggressive, but after the dollar fell and then came all the way back, here we are losing our on change status several sessions ago and finally the chinese currency certainly hasn't slowed down it's hovering at the weakest level since july 7th, 2017 from a closing perspective. and what is interesting about that is the dollar strength we see continues to be questioned as to whether this is engineered or not by china. i don't know that it makes all that much difference, does it? carl, jim, david, back to you. >> thank you very much we'll come back to you in awhile when we return, alphabet's big quarter. what it means for the stock today. up about 4.5%. senator elizabeth warren weighing in on the eu's fine on google nasdaq has joined the dow and the s&p in having the best month since january.

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president tweets, our country is doing great, best financial numbers on the planet. great to have usa winning again. it is great for the stocks in two weeks. nasdaq record high and the s&p 2825 we'll get stock trading with jim in a minute. whoooo. tripadvisor makes finding your perfect hotel... relaxing. just enter your destination and dates. tripadvisor searches over 200 booking sites to find the hotel you want for the lowest price. dates. deals. done! tripadvisor.

we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.

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let's get to jim in stock trading. >> the most important thing right now is david keeps eating his popsicle i guess i have to buy you in. >> this is delicious. >> david, it's breakfast time, okay >> got the rest of the day to put it off. >> speaking of breakfast, on starbucks, beamo basically cut their price target talking about cannibalization, deep deeper cuts and the stock is not down there is a sense that the company has been in there buying back every share >> you said below 50, you think. >> i think they stay in there. 2.74 yield, look, if you don't have any growth the yield is not going to save you 2.74 it is important to note that when companies get hit with what i regard as negative commentary and they don't go down, it's worth taking a look. how about that >> all right how about tonight? >> speaking of taking a look, centene, such a big winner,

getting rushed today down five bucks. let's speak to michael neidorff. lockheed martin up seven the negativity in 3m, i'm sayin it's too excessive. >> at&t to look at tonight, as well. >> at&t, and maybe we get an ice cream sandwich for david later on. >> i love ice cream sandwiches, too. >> you can get some on your way out. there's a ton. >> i don't think there's any sandwiches these are delicious. >> when we had mcdonald's reporting, you and i will have egg mcmuffins. >> "mad money," 6:00 p.m. eastern time. the president weighs in on the trade war. we'll talk with a former u.s. trade rep with the dow up 134. hi i'm joan lunden.

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at tweets regarding trade from the president and continued robust earnings out of corporate america, specifically tech and google today >> our road map for the hour begins with the earnings blitz harley-davidson, verizon, 3m, eli lily, many others out with results this morning as the busiest week of the season continues. >> alphabet out with a big beat. we'll get a breakdown in just a minute. and finally, tariffs are the greatest that was the president this morning in support of his trade policy >> let's begin with earnings tariffs not so much the greatest for some of these names out today. let's start with alphabet, though a big beat on the bottom line after the bell the stock is surging off the back of a jump in revenue and paid clicks. verizon, another winner today. reporting a beat this morning, boosted by growth in its wireless subscriber division and as we mentioned, harley-davidson, eli lily, 3m, united technology, some of the others out with results. want to show you a chart of whirlpool right now sinking this morning after missing expectations on both the top and

bottom lines as far as trade headlines that have shown up in earnings, overall, the earnings picture is better and the market is rallying off a bit but harley-davidson, we know they're moving to europe no wonder, u.s. retail sales falling 6.4% international sales rising 0.7%. that's why they're focused on moving the production for those markets overseas so they don't have to deal with tariffs. that's where the growth is, and then whirlpool, what a crazy story, in support of the tariffs on electronics and appliances on their competitors, and yet hit really hard by those steel tariffs, which are driving up costs. they're expecting to pay $350 million more this year from rising raw material costs. call it a very challenging cost environment. >> yeah. so we're keeping a list of names that have been attributing weak guides to tariffs. it includes whirlpool and harley it was illinois tool works yesterday. some of the comments from greg hayes out of utx today, talking

about labor costs. but adding that tariffs don't necessarily help that situation. and they're going to have to find ways to be more efficient. >> and certainly potentially, at least, at play here if things continue to worsen with china, given how important otis elevator, their unit is in china, as you might expect incredible pace of building going on in that country and they sell a lot of elevators into them. >> yeah, with the cost inflation theme, it is not just the tariffs, to your point commodity costs have been rising kimberly-clark, for instance, tom falk, the ceo cited a challenging environment, particularly with commodity inflation. they also lowered their earnings guidance on this double whammy, higher cost inflation and a worsening currency outlook a stronger u.s. dollar for those that are selling abroad, guys. the other positive, though, in today's market is that china is stimulating its economy. fiscally and monetarily infusing a record amount of cash, weakening their currency and also showing new infrastructure bonds. >> you know, el-erian says most

investors believe that rather than a full-blown trade war, current tensions will ultimately deliver a still free and fairer trade system right? so that's sort of explains the price action. >> glass half full. >> yeah. >> and we get it endlessly i think on the multitude of guests we have on almost everybody believes we will reach some sort of a deal, despite the fact that this administration is yet to have any deal of any kind >> so who blinks first let's see wednesday with the eu. ec president european commissioner president jean-claude juncker after president trump called the eu a foe. will he come offering some sort of a deal to lower tariffs across the eu? and then out of the 28 governments that make up the eu, how do they react to that. >> particularly germany, given auto tariffs are a key part of what it -- is afraid of. >> right. >> yeah. of course, tech the other story. breaking out today, it is alphabet, the google parent, hitting an all-time high after a strong earnings beat the tech giant shrugs off

concerns over regulation, the fine from the eu as net revenues rise at the fastest pace in four years. stock up almost 4.5% let's bring in use yef scully and anthony di clement morning, guys. good to see you. let's talk about the term that everybody is essentially talking about, and that is that its investments are now accounting for a very significant part of their profit >> well, so remember, this is first and foremost still a very large or largest search engine platform out there and even after 20 years, this business continues to grow somewhere between 15 to 20%. the investments you're talking about are not only fueling continued growth, but also allowing them to move into tangential areas like youtube. it's really not tangential any more, since the acquisition, but clearly that has become a major, major fuel for growth and that's

why their over all growth is well north of 20%. and they have all these bets, which for now the street has given them a pass on, as long as they continue to outperform on their pour they have carte blanche to continue to invest very aggressively. >> anthony, is it enough to change your view on the stock, or is it more ratification of what a bull arguments that have been made up until now >> i think it's a relief of what could have been construed as a bear case, which is that they're spending in an inflated way. i think this improves, to your point, the narrative in the sense that the excess revenue growth they delivered to the street dropped to the bottom line and so you really had a very strong quarter in terms of not only revenue, but also how that revenue translated into operating income for x defines and then earnings. so if you look at it in terms of regulatory relief, better profitability, i agree some of those investments starting to bear fruit and pay off. and you look at it in terms of

that very strong revenue growth remaining sustainable as driven by youtube and search and other. it really comes together as a very nice stock story, particularly with the stock trading at only mid 20s, 25 times forward gap epps so for those reasons, i think the stock continues to work and grind higher and i think it bodes well for facebook. which is the other kind of member of the fang, where, you know, we've got that coming up tomorrow night probably see a rising tide lift all boats in digital media, i would think, from this report. and as a lateralist report and so google and facebook, i think you could say are great, you know, growth rely i have to stock valuation stories at this time >> yeah, with facebook up 2% in reaction then there's also the european fine $5 billion, record amount. just last week we talked to the eu chief antitrust regulator who issued this fine and ordered google to

change its business in europe. remember, here's what she said when we asked her what the problem was with android >> this is not about apple this is not about android. this is about google behavior. a behavior that's illegal for a dominant company, because it's unlocking -- locking down competition and disabling innovation and choice that we would all like to enjoy. >> yusef did management change your mind in europe? >> not at all. i would say if there is one dark cloud over google or alphabet, over time this is not going to show up in q3 numbers. but i think over time, particularly in 2019, then gdp are to a certain degree may have an impact on youtube, not on the search business. but this android ruling has the potential of really changing how

the company is conducting that side of the business so the $5 billion, in my mind, is really a shot over the bow in how serious the regulators are and honestly, all the checks that we've been getting from europe so far show that the europeans are really not happy with how google has been kind of behaving and facebook to a certain degree, as well, with gdpr so -- and to your comment earlier about juncker coming to the white house, the european regulators have no incentive to have the massive u.s. technology companies make more money in europe. >> anthony, on the subject of making more money, it is interesting to note that for the alphabet told us about waymo in terms of profitability from the unit >> i think it's tremendous i think all of our checks show

that waymo is well ahead of gm cruise and the other competitors in terms of autonomous driving you'll see commercialization of this in phoenix. already the first rider program, the early rider program is under way in phoenix and i think by the end of the year, you'll start to see kind of videos of robotaxis picking up passengers, delivering them to the grocery store, no driver. and when we start to see that working and start to see the commercialization start to take effect, i think analysts and investors are going to afford a very robust valuation for waymo within alphabet. we think potentially in excess of $50 billion and i think that only underpins some of the moon shots and the options and the opportunity that you have as an investor in alphabet how quickly will we live in a world where robo taxis are ubiquitous i don't know the answer to that, but i think when you look at the business model, google will be, you know -- waymo will probably be the first player to $1

billion in revenue in that space. they start with phoenix and they will go to three, five, ten cities, and away we go they're certainly contracting to acquire a lot of cars from both jaguar, land rover and fiat chrysler very exciting. i think it's a grand opportunity for alphabet and waymo. >> finally, can we spin out any implications for facebook on wednesday, amazon thursday or even twitter on friday >> absolutely. i think as anthony said earlier, alphabet's performance yesterday, particularly on the youtube site, which they didn't quantify but certainly qualified, speaks volume about strength across the overall online advertising spectrum. remember, the online advertising space is growing somewhere between 15 and 20% google is growing in the mid 20s. we think facebook is going to show growth of north of 40%,

which considering their size at 50, $55 billion, is very, very massive. so we continue to have facebook as our top pick. on amazon, you know, i think amazon remains in a league of its own. certainly their advertising business, which is brand-new initiative that they have shared with the street is certainly going to be a major focal point and a big driver of operating margins over time. but short-term, it's really all around, all about e-commerce, and, you know, as prime day showed last week, growing at 60% year on year, they continue to dominate, they continue to grow market share at the expense of everybody. >> yeah, we're not quite done with fang earnings quite yet we'll see what the rest of the week brings. thanks, guys talk to you soon. >> thank you >> thank you when we return, quote, we are the piggy bank that is being robbed president trump weighing in on tariffs in the trade war on twitter this morning former u.s. trade

representative, carla hill, will join us to weigh in. getting a quick check on the major averages nice rally the dow up 138 points. s&p up almost three quarters of a percent. but tech is the big winner ivg p. up a percent and tech drins& industrials and financials up, as well. more "squawk on the street" after this are you ready to take your wifi to the next level?

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so far, this is just the first round of tariffs, the near-term impact to utc appears to be relatively modest. we'll say about 5 cents a share. that 5 cents is included in our revised eps guidance >> united technologies ceo greg hayes, outlining the effects of tariffs on his company this morning, president trump reiterating his stance in a tweet, quote, tariffs are the greatest either a country which has threatened the united states unfairly on trade negotiates a fair deal or gets hit with tariffs. it's as simple as that and everybody is talking remember, we are the piggy bank that is being robbed all will be great. joining us from washington, former u.s. trade representative, chief u.s. nafta negotiator, overall trade expert, carla hill, and pimco head of public policy and managing director, libby can tremendously ambassador, are tariffs the greatest >> no, tariffs are hurting our economy. you know, diplomacy is the greatest but when you look at what the

steel and aluminum tariffs have done, we have lost 16 jobs for every job that we created in the steel industry so this is not the way to go >> where does it go from here? given the president doesn't appear to be backing down. i hate the word doubling down, but that's what he's doing here, when it comes to this trade tactic. >> i worry about that. i think that we should -- it was a shame we pulled out of the trans-pacific partnership. what we could do through negotiations is open the market, so we have more opportunity. but not only are we losing jobs because of the tariffs, but we're losing investment. you know, if you look at the first quarter of 2016, the inward investment was about $150 billion. the first quarter of 2017, when president trump was in office, it dropped to $90 billion. this year, 2018, it's down to

$49 billion. this is not going in the right direction on any score >> so what do you make, libby, over at pimco of the market's action if ambassador hills is right, it's slowing economy and investment into our country, why does the market continue to brush it off >> i think for a few reasons i think primarily, at this point, at least, the macro effects of the tariffs have been pretty di minimus. we've seen the steel and aluminum tariffs, the $34 billion of chinese goods but for all intents and purposes, it's been pretty small. and it's very much dwarfed by the fiscal stimulus we've seen, both from the tax cuts, but also from this large spending bill that was passed earlier this year so i think at this point, the market is just assuming, i think, that this is a negotiating tactic, and we would take some issue with that. and at this point is more focused on the fiscal stimulus and the robust growth and the animal spirits that continue to dominate the economy. >> when does it become a macro

event, as libby says, ambassador hills? when does it start to show up in the data is that if the president goes forward with all $500 billion worth of chinese imports >> well, we will feel the effect i agree that the market, because of the tax program and the economy, is relatively strong. but just wait. if we can't come to a resolution with our trading partners, the trade falls off, inward investment is destroyed, and there's a tit for tat tariff battle we are going to have a terrible time with our economy. >> i mean, libby, what's the cost is this going to be a midterm impact >> yeah, so i would agree with ambassador hills we think -- we've had this long standing view things will get worse before they get better, especially as it relates to china. so i think that the macro impact could be meaningful down the

road just given that there really isn't any sort of clean resolution at this point, given what we are asking china to concede. they do not want to make concessions on their industrial policy so from here it is going to escalate and you could see some macro impact. >> you don't think juncker brings any kind of salve tomorrow >> i don't think so. >> really? >> clearly, angela merkel wants to avoid auto tariffs, but, you know, that's only one country in the european union and what i think he has made clear is he is coming here to talk, not to come to make deals. i think that sort of the best resolution or best outcome from tomorrow's meeting could be more of a commitment for further discussions. but at this point, i highly doubt that we see any sort of resolution and i will just say, to the mid terms -- sorry -- the mid terms, i think that president trump thinks this is a political winner for him and honestly, the polls would corroborate that 75% of republicans support president trump's approach on trade.

and he thinks this will galvanize republicans -- >> to the economy, though, as ambassador hills predicts? >> he assumes we will be in a better place ultimately, and that the economy is so robust that it can endure some short-term pain. >> "times" did a piece on how it's being affected in a negative way and sticking with it. >> it's so interesting people are not putting their own self interest above the national interest they think this is good for the country and if there is short-term pain, they're willing to endure it. >> ambassador hills, on nafta, since you've been on the other side of the negotiating table, what do you think of the president's new-found friendship with the incoming president of mexico and seemingly bilateral discussion unclear whether that involves all of nafta or whether they're going to have to pressure canadians at some point. where do you think that's all going? >> well, i hope that we keep it as a north american agreement, because we have made this region the most competitive in the world.

and i know that representatives from the united states and mexico are getting together this thursday let's get it worked out. we want to modernize the north american free trade agreement, not tear it up talk about loss of jobs, the destruction of our supply chains this would be horrific >> we'll leave it there. thank you. ambassador carla hills, who was a trade adviser to president george h.w. bush, and libby cantrel. when we come back, financials turning around, posting its fifth positive session in six why e nkaron hthbas e aot streak you can probably guess we'll get to that when we come back in a minute

welcome back to "squawk on the street." dow up almost 200. the banks revving up their earnings season. ubs did report a beat. joining us to help us out with our etf spotlight, head of u.s. bank equity strategy at rbc capital markets. good to see you. >> thank you, carl. >> what a reversal, at least in sentiment, right all because of what the yields

have done or more to it? >> i think it has a lot to do with it. when you look at the ten-year government bond yield, that has a lot to do with the way the banks trade. prior to the financial crisis, it really wasn't as linked to the ten-year but post financial crisis, when the ten-year fell below 3%, it's very tightly correlated. >> was c car a catalyst or is this too far after that fact >> no, people are realizing that k krar is important, and the banks didn't react well, even though they gave back enormous amounts of capital jpmorgan and all the banks gave back a ton of capital. >> if we look at this through an etf lens, how do you slice it? what's leveraged most and what's going well >> two etfs, you can look at, one is kre, which is a regional bank etf and the other is the bix or the bkx, large cap bank bix is more of a regional bank as well. but kre is probably the best way to play the consolidation in the banking industry, because that's

made up of a number of smaller names. >> i feel like you have to be a fixed income analyst to be a bank analyst. >> you know, it's interesting -- >> how do you know where the ten-year is going? it was off of a report on the bank of japan yesterday, which moved global yields. >> sorry, you're right on the day-to-day trading, that's a big influence but if you look longer-term, you still have to sink into the fundamentals but on a day-to-day trading basis, the government bond yields have a great deal of influence on how the banks trade. >> and the fundamentals are pointing you to bank of america? >> bank of america for the large caps and bb&t for the regionals. these names i think will continue to benefit from a strong economy obviously, bank of america is across the country bb&t is down in the southeastern part of the united states. two really good names to own and the stocks are not that expensive. the banks trade generally at about 70% of the s&p, which is just about at average. >> yeah, well, goldman sachs has been complaining about its multiple to book, although it did not respond particularly well since earnings, unlike the

aforementioned bac or even jpm goldman stuck in a rut for a while, you think >> i think the change at the top, that certainly has some people, you know, assessing what's going on, what's going to change for goldman sachs clearly, they're going to take it in a different direction. lori blankfein was a very successful trader. now they have an investment banker running goldman sachs so i think that's quite significant. >> i wonder, are we going to go back to the days where we fret about trading revenue, and like that is the big story? or is that really going into the background >> right now, it tends to be on the back burner, because the rules have changed so much that these big trading houses can never get back to the way they were, because of the capital that's required to trade it's just too cost prohibitive. >> right been an interesting quarter so far. we'll see what comes in the next few months thanks good to see you as always. >> thank you, carl. up next, harley-davidson out with a beat this morning as the continue continues its fight with president trump over tariffs. we'll tell you how much they expect tariffs to impact their bottom line. got some new info on that.

first, take a look at bitcoin. actually, up over 8,000 for the first time in two months up over 20% for the week so a little bit of a comeback there, well up at 17,000 or so high we hit last year. up05 2 stay with us here on "squawk on the street." whoooo. you rely on tripadvisor so you don't miss out on the perfect hotel... but did you know you can also use tripadvisor

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and we use this information in partnership with first responders and california's emergency response systems. to learn more about the community wildfire safety program and how you can help keep your home and community safe, visit pge.com/wildfiresafety good morning, everyone i'm sue herera here is your cnbc update at this hour north korea has started dismantling key facilities at its main satellite launch site this is from satellite images. it appears to be a step towards fulfilling a commitment made by kim jong-un at his summit with president trump. a hydroelectric dam collapsed in southeastern laos, leaving an unknown number of people dead and hundreds missing. that's according to the state media there. thousands were left homeless

the rescue efforts were under way as top government officials rushed to the site and public appeals were launched for aid. aerial pictures released by the greek government show the extent of the damage caused by wildfires raging near athens the official death toll now stands at 50 prime minister alexis tsipras declaring three days of national mourning for the victims. back here at home, firefighters in central california continue their assault of a large wildfire burning near yosemite national park the ferguson fire has burned some 36,000 acres, and it's only 16% contained. 3,500 structures remain at risk. and it is hot ask dry out there. that is the update sarah, i'll send it back downtown to you. >> sue herera, thank you. welcome back to "squawk on the street," i'm sarah eisen here with david faber at the new york stock exchange, one hour into the trading session and we've got a pretty strong rally. dow up 200 points.

technology and materials commodities are real standouts in the session but technology helping the nasdaq gain 1%, thanks in large part to google parent alphabet and those blowout earnings we got last night got some breaking news here on pepsi co the company announcing right now that it is taking over the refreshments contract at madison square garden. remember, coca-cola has been msg's beverage company going all the way back to 1910, some 108 years. pepsi will now become the exclusive nonalcoholic beverage and snack partner across all the msg properties ceo and msg ceo james dolan announcing it together this morning at the garden, guys, in new york obviously, no financial terms are disclosed on this. we don't really know the size and scope, but it is a big deal. and it shows you the soda wars are alive and well for pepsi to swoop in and take this long running coca-cola contract not just the garden, but it's

the knicks and the rangers and the rockettes and the concerts and everything else that goes along with that. >> radio city, also. >> exactly >> i'm sure it will have an impact on the level of play in the arena, as well >> oh. are you hoping that? >> no. >> are the knicks not doing too well >> no, they're not. >>i >>ing. >> oh. well, look, coca-cola is out with earnings tomorrow so it might be something to ask about about. but clearly these food service deals and marketing opportunities are still being fought on. and if you talk to analysts, the significance is two-fold not just the sales that come from these deals, but also the exposure to young people people don't go and get fountain drinks any more. and so any way you can get the brand exposure on the screen or, you know, in signage or just the drinks in these popular live concert events, for instance, is a plus. >> and we know they're upping their marketing spend on some core categories. >> pepsi trying to chop with coke on that one. >> we're watching stories with harley today on the rise this

morning after beating the top and bottom lines, but they do continue to spar with the white house on tariffs dom chu has been watching that >> they've been making a lot of comments with regard to the earnings conference call it finished a half an hour or so during that analyst q & a portion of the call, many of the analysts, the overwhelming theme, a lot of different questions about the effect of tariffs, what it could mean, what their future plans are. cfo john oilen spoke on the phone with regard to engaging the government, not just here, but all over the world and here's what he had to say about tariffs and the way they're treating their government relations. >> we are working with the administration, we are working with all governments we can to do the best we can to get these tariffs removed. and it's all i can say about it. we are very engaged and have got a dialogue and constant dialogue going on with the respective parties that we need to. >> so carl, like you said, they also spoke with the margin

impact a couple other themes they brought up during the call they talked about the idea that their emerging markets growth is experiencing some growth there they like the idea of china, brazil and mexico, partially offsetting the declines in india, so seeing growth in some of those markets out there also the idea -- we talk about their manufacturing facilities in thailand, and others around the world that could possibly supply motorcycles to europe in the event or because of the tariffs that are happening right now with the european union. they did say in terms of an update, when we look at our thailand facility, we will come online early in the fourth quarter. the purpose of that facility, like we have in brazil and india, is to provide lower prices to our consumers, one not burdened with excessive tariffs. we'll look at all of our options there. we have got three international facilities, we're looking at the best opportunity to supply the eu out of those facilities so guys, as we take a look at the overall themes, trade tariffs definitely the overwhelming one in this conference call. back over to you >> dom, as you know, the stocks

sometimes trade as they adjust their shipment guidance. about you in this case, they reiterate that and i wonder if investors were reassured by the fact they didn't bring that down. >> they also talked about this idea, carl, they have their inventory levels and they are not adjusting a lot of them pricing wise, especially for markets in europe. what they are looking at right now and they have said in the past, they are going to absorb some of the costs of those tariffs with their european dealers. and it was something interesting that matt levy tissue, the ceo said, when he spoke to their european dealers, they said it was one of the proudest moments for them, the fact they have such a great dealer relationship with them. it could be thousands per bike in cost to preserve some of the margin for their dealers, as well so they spoke a lot about the inventory levels and what they're going to do with shipments around the world >> the stock is up 6.5%. dom, thank you on harley-davidson our john harwood sitting down with massachusetts senator elizabeth warren for a candid conversation on the president,

corporate tax reform, capitalism and a lot more john joins us now from washington john, what were some of the highlights >> sarah, you know elizabeth warren is a leading member of the senate in the democratic caucus, a strong prospect for 2020 on the democratic side and also a big advocate of business regulation she came up with the idea for the consumer finance protection bureau that became part of the u.s. government after the dodd/frank law and i asked her if she realized how polarizing that makes her to business and wall street >> i get that there are a lot of folks who liked having the power and the riches they have they like being able to tweak their little pinky and the united states government does just what they want. they like being able to get regulations rolled back or not enforced i totally get that and i get that -- i push hard against that, that i may be a threat to them on that but my view on that is don't call me the polarizing figure. they're the ones who want to

take advantage of this country they're the ones who want to cheat. they're the ones who want to say that their personal wealth, their power is more important than building an america that works for everyone >> you don't think capitalists are bad people. >> i am a capitalist come on. i believe in markets what i don't believe in is theft. what i don't believe in is cheating >> now, one other thing that capitalists may be on the watch for, if elizabeth warren becomes president or if democrats retake the senate in the house, she says she wants to roll back those trump republican tax cuts. didn't say where the numbers should go, but she noted that there was a time in the united states when the economy was doing very well where the top personal rate was well over 50%, guys >> her saying she's a capitalist, does that separate her from bernie sanders? who is a so-called socialist >> yeah, possibly. i mean, look, we have a mixed

economy, right we don't have a pure, free market we have a free market that is regulated and elizabeth warren wants more regulation than some other democrats and many, many republicans. bernie sanders describes himself differently. so i do think that is a significant difference, and both of these politicians may, of course, end up in that 2020 democratic nomination race >> yeah, i was just sort of wondering what her standing is right now within the party i mean, is she -- >> it's very strong. >> i know it's super early >> it's super early. i think you've got to consider her one of the very top-ranked democratic contenders at this stage. don't know for sure that she's going to run she certainly left me with the impression that she is going to. is joe biden going to run? i think warren and joe biden would be the two at the top of the polls right now. biden probably ahead of elizabeth warren but he's somewhat older, and i think it's more in doubt that

he's going to run. then you've got a whole cadre of younger people, cory booker, kamla harris, kerstin gillibrand, others who want to run. i also interestingly, sarah, asked whether or not democrats need a younger candidate to appeal to that obama coalition with millennials and nonwhites and she said you've got to be a political pundit to answer that question all i know is why i'm in this fight. >> john harwood, thank you >> you bet >> we'll look for more excerpts on that on cnbc.com. >> when we come back, a surprise victim of the trade war, we'll tell you what it is and how it could impact consumers across the globe. plenty of earnings coke is on the way facebook wednesday night, starbucks, amazon, mcdonald's, twitter on friday. dow up 221 and s&p close to 2830 back in a moment or joints. but do you take something for your brain. with an ingredient originally discovered in jellyfish,

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economist david rosenberg said there is trouble brewing this one key area of the market. more "squawk on the street" coming right up.

an unexpected victim of the growing trade war, meat. billions of pounds of pork, poultry and beef are piling up in u.s. cold storage warehouses as exports slow over the global trade tensions aditi roy is in san francisco. >> reporter: hi, sarah, that's right. the combination of the rising supply of frozen meat, plus the trade tariffs going on could mean lower prices for you to pay at the meat counter. but analysts say it could take a while before the trade tariffs have an impact on consumer prices in the meantime, the usda has come up with monthly numbers on frozen meat supplies and show the total pounds of beef were up

year over year frozen poultry up 6% from a year ago and frozen pork up slightly from last year analysts say these numbers are historically big the reason the supply of meat in cold storage has been building up because of low feed prices that's one of the major inputs of the industry. that's led to higher production. but demand has also been on the rise, prompting some to add plants and also hype production even more. analysts say ballooning supply eventually outpaced demand meat exports have helped to ease the oversupply, but now with trade tariffs in place, some question whether frozen meat supplies will skyrocket. mexico and china are among the largest export destinations for u.s. meat, both countries have imposed tariffs on u.s. pork analysts say tariffs would have to be in place for a while before they start cutting into profits in big meat companies and lead to lower prices at the grocery store. but it is something they are watching meantime, we talked to several cold storage companies they include zero mountain of

arkansas the ceo there tells me they are at capacity, actually expanding, but that has nothing to do with tariffs and everything to do with some of the macro factors that we just talked about. in fact, he doesn't forecast that tariffs will have a meaningful impact on their business, but, again, it is something that the industry is watching back to you guys >> thank you very much, aditi. let's get over to the cme group and check in with rick santelli and the santelli exchange hey, rick. >> good morning, carl. like to welcome my guest, andy brenner. thanks for joining me, andy. >> rick, always a pleasure good to see you, buddy >> okay. after going through 22 sessions of tense closing in the 280s, that all changed part of the catalyst, at least i believe, is the banking system not only in europe, but in japan, with their policy meeting at the end of the month and qe off the charts there how do you put the pieces together >> well, rick, there's been stories that have been going around that the bank of japan is about to change their guidance and allow rates to rise a little bit. this caught the people that had

the flat in the u.s. offsides. so you saw a dramatic steepening of fives 30s and blew right through that 288, 289, 290 level and now around 296 we see the ten-year with support at 303, but in reality, for the market to really get out of control, you've got to go and break that 322 level in the long bond and i don't see that happening this time around and i don't see the japanese actually following through next week so we'll have to wait and see when the bounce comes. >> you know, and that's an interesting thought. because i'm not sure they're going to put the white flag up on prices era type qe plus, but because it's even more, more than any other central bank has done so the real issue then becomes, and i've said this all along, is that the world is going to push on the central bank and the markets are going to push on their policy how will it show up if they only

tinker on their massive stimulus >> well, rick, i think the federal reserve is going to continue to raise rates, regardless of what the president may want or not want them to do. and i think that it's eventually going to break i really don't have a lot of respect for where we stand with ecb. i still don't like 9-plus trillion of negative rates and i think one of the things the ecb has done is just weakened their banking system. if you now look at the top five banks in market value in europe, they don't even equate to what wells or citi -- or excuse me, or wells or bank of america or jp are it's horrible. they can't make money. >> and finally, being agnostic about the policy, it certainly seems to me that all the trade issues are largely ignored by the market so as a past trader, the only thing i can think of is if resolution comes, is that going to be a tailwind your last thought. >> yeah, rick, i think it will be somewhat of a tailwind. the question is exactly how it's

going to come. right now you're seeing the chinese using this as cover to deval their currency and try to kick up their economy domestically so we don't know exactly how it's going to turn out but i don't think it's going to be -- i don't think it's going to be good for the equity markets long-term. but we'll have to wait and see >> yep test two growth never seems to be exactly what it is meant to be in the end. andy brenner, thank you. sarah, back to you. >> rick, thank you and i'm going to send it over now to jon fortt with a look at what's coming up in the next hour on "squawk alley. >> alphabet up more than 4% after earnings we have to dig into what that means, not just for google, but what it means for facebook, coming up. and all the rest of the internet ecosystem that's trying to make some money around these ad th'somg gits at cinup on "squawk alley.

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take a look at the dow, up almost a full percent. 222 points firmly above the 25,000 which we dipped below during yesterday's trading session. we've got a slew of earnings on the whole which are much better, but some individual movers being

hit by tariffs, cost inflation, strong dollar, some of the impacts we've seen as a result of the trade war like whirlpool, prime example. >> whirlpool had absolutely no good quarter, they cut their guide, missed on revenue talking about slower global growth obviously inflation concerns weakness in europe and the middle east. i think it is curious utx and 3m are not reacting the same way. utx leading the dow, 3m, one of the few in the red. >> speaking of trade and how this plays out from an economics perspective, the imf warning on negative effects of the trade war this hour, putting out a report on global debt imbalances, entitled protectionism is not the answer, warning the u.s. is perpetuating debt imbalances around the world. joining us, the chief economist from washington. first on cnbc. nice to see you, maury

thanks for joining us. let's put this in plain english. it gets wonky when you talk about imbalance. is this a shot at the administration's trade policy? >> you know, i would question how you characterize the report. i think our message is that there are global imbalances which have remained pretty much constant the last few years. let me explain what i mean those are current account imbalances between exports and imports. our view is that these are not due to any one country, these are the result of national policies interacting and it is up for the entire global community to work together to resolve these. you know, the u.s. has some work to do in this regard but

countries with big surpluses also have work to do. >> when the president says we're the piggy bank being robbed, i assume he is talking about the fact that the u.s. has the biggest trade deficit, and considers that a mark of unfair trade where everybody else is taking advantage of us is that true >> you know, we view deficits at the aggregate level as being largely macro economic phenomena, so if you have an economy that's saving insufficiently and borrowing abroad, that shows up in a trade deficit. i think the point to keep in mind is that countries that trade generally gain from that trade and you see that in the greater availability and lower prices of goods and they're mutual gains it is not a zero sum gain.

>> finally, a question i have been dying to ask you and it is related to this. are the chinese manipulating their currency weaker now as a weapon in this trade tit for tat with the u.s.? >> it looks at the median turn and retrospective looking at 2017, but you know, there have been short term movements. there's no evidence of manipulation i think the recent u.s. treasury report came to the same conclusion about china, they haven't been intervening in their foreign exchange market as far as we can see, but if you look at the combination of, you know, lower growth indicators for the last couple of months, the fact that the people's bank is easing a little bit and threats of tariffs against china, all those pushing the direction of lower exchange

rate >> thank you for joining us. we appreciate it always a good read coming up later on "closing bell" td ameritrade ceo is here. talking strong trading, what the retail investor is dngoi meantime, "squawk alley" is up next with the dow up 200 points. eligible for medicare? that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like any of these types of plans, they pick up some of what medicare doesn't pay.

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good morning it is 10:00 a.m. in kansas city, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ ♪ but i still have found what i'm looking for ♪ but i still haven't found wha i'm looking for ♪ but i still haven't found wha i'm looking for ♪ but i still. good tuesday morning i am carl quintanilla with jon fortt. morgan brennan has the morning off. what an interesting day we have to