a 16-ounce psl who knows it as that as it's known, supposedly. costs about $5 and contains 380 calories, 14 grams of fat, and 50 grams of sugar. it make sure you join us tomorrow we'll see you tomorrow time for "squawk on the street." ♪ good morning welcome to "squawk on the street." i'm david faber along with jim cramer live from the stock exchange carl quintanilla has the day off. a look at futures now. and in other places, as well you can see we're set up for a potentially lower open european markets, of course, open for some type a sort of flat last time we looked let's take a look now.

you can see a mixed picture. >> not a lot of connectivity there. >> no. >> there's the 10 year note yield down a little bit. it.817 crude is moving up this week moving up this week. >> moving up this week and talk about stability and pricing and the airlines come up i have to tell you, kaifd, we're seeing forgiveness in everything it's a big theme for me in the show. >> i appreciate that. >> forgiveness is an important theme in life. >> i like the other theme every day. >> i know. our theme this morning starting with the road map. that is, well, politics and the risks that may have for stocks as the bull market becomes the longest on record. there's renewed trump team legal woes, and we do, as you saw, have the futures a bit lower this morning plus, a trade breakthrough the trump administration reportedly set to announce a nafta handshake deal with mexico as early as tomorrow there are the low-level talks

with the chinese today but certainly any talks would be raised by the market target shares are surging this morning that retailer reports its best same-store sales growth in 13 years. one day after the s&p 500 hit a record high stocks are set to open lower amid political legal concerns surrounding the president. former trump campaign manager paul manafort convicted. eight charges related to tax and bank fraud and michael cohen pleading guilty tuesday to violating banking, tax and campaign finance laws. jim, mike san tolly made the point yesterday. others made it since a lot of what the market cared about in terms of the economic agenda, the trump administration has gotten done in terms of at least tax reform particularly corporate tax reform, to a certain extent, d-regular. it doesn't seem there's as much

at stake despite the fact it's destabilizing. >> i would like to think that. that would be right. unless 24 seats get up and go to democrats in the house and no, absolutely not because this is about impeachment versus nonimpeachment. >> no. >> by the way. let's set the stage. >> for a technical matter i think the house impeaches and the senate convicts. if the house were to go democratic, it's possible they would. >> they may not want to. >> right that could hurt their bigger agenda. >> okay. >> there's much to go and it's very much unclear the senate would, obviously, was impeached over, i believe, one count of perjury. one count. >> right beginning the investigation that lasted five years over a housing deal that ended up being about sex in the oval office who knows. >> i'm saying, you know, if you go back to the nixon playbook,

obviously. some republicans defected. i don't think it'll happen here. there's another president that matters. president xi he reads the papers. maybe he gets a harder line. if he goes a harder line, when does our president tweet i don't want anyone buying anything made in china where is that tweet? look, i don't understand it. >> it's sort of a comedy club. the tweet from the president this morning. >> about cohen >> yeah. >> yeah. >> there it is. >> if anyone is looking for a good lawyer, i would strongly that you don't retain the services of michael cohen! >> there you go. that's all we've heard. >> yeah. i don't know look, you know, the president -- what does he have to do? johnson & johnson? >> nothing your point on china is an interesting one. >> that's what it's about.

xi doesn't think he's been made stronger. >> when it comes to the movement it's a market that is one of the most significant things. >> right. >> he said something on autos yesterday. we report on cnbc.com. 25% even though wilbur ross is saying we're pushing it off because we're making progress. >> it's completely avoided but not discussed at all because of paul manafort 25% tariff on autos, david. >> the rally in west virginia. >> i most fear president xi saying, you know, i am president for life and this guy may not be president. we don't know how the chinese read things. are they smart enough to know impeachment and conviction i think they are but that's what i worry about. i worry about the made in america. i want things bought that are made in america. >> so many of the punt sis indicate when trump is put into a corner he's most dangerous that's what many of them said. of course, we have known the

president for years as a new yorker somebody who among us for decades. he can be tough in a corner. >> i don't think people realize how tough he can be. the "washington post" piece. let's talk about the legal ramifications which are virtually nil. they left out the possibility of what happens in the house and senate that's what you have to watch. it means there will be people who do selling until they see the midterms. >> you got back to gridlock. you've gotten tax reform you had a deregulatory roll back in certain industries. certainly coal but a lot of others, as well. why wouldn't that necessarily, let's say the democrats do win the house. >> the president does nothing and we go back and resume. i guess so. >> the market doesn't seem to mind anything. the market likes profits okay listen to me. >> yeah. >> low's quarter reports stock goes down 3% marvin goes back and forth here is the deal, he closed it he closed the underperforming

orchard. people released they got the headline numbers wrong and the stock is now up. kohls yesterday. i told you it was down i said this is stupid it's ridiculous. the first amendment protects it. people sold the stock. and michelle gets on the conference call and it's all great and the stock goes up a dollar cornel is right. strongest ever and two-thirds of our economy is consumption. so that versus cohen and manafort it's a little bit, you know, xi weighs in and said there will never be a merger again. >> i want to talk more about that. >> you know it xi is more important than anti-trust. >> and it's worth coming back to that point one we've been making. we'll get to amonojabbers in washington for more on the situation surrounding the president and the busy time yesterday you were on with us. i was on the 3:00 to 5:00 yesterday. when it was coming from all places, obviously. it was an hour yesterday. >> yeah.

and the president offering, as you pointed out, his first reaction this morning on twitter relatively quiet morning for the president on twitter but then this tweet this morning. "i guess you have to say this is tongue in cheek from the president saying if anyone is looking for a good lawyer, i would strongly suggest you don't retain the services of michael cohen. meanwhile, michael cohen's own attorney was on the "today" show on nbc this morning. savannah guthrie engaged him in a conversation about a potential pardon from president trump. here is how that went. >> is he hoping for a pardon from president trump >> not only is he not 0 hoping for it, he would not accept a pardon he considers a pardon from somebody who has acted so corruptly as president to be something he would never accept. >> so now you have to game out where it goes. lanny davis saying on television that michael cohen has information he would like to share with the special counsel's office about, he said the possibility that cohen knows

something about criminal computer hacking what the president knew about that in advance and whether or not the president cheered that on so the potential here is that michael cohen has a lot more information to share with investigators, guys. as you game out what it means for the market, i think you're right to look at the trump agenda and figure out where we are in the cycle of this presidency tax cuts have gotten done. a lot of deregulation has gotten done i think the market is sanguine about this than they would have been at this point last year what remains in the trump cover is largely the trade effort that he's engaged in on multiple fronts around the world. and then also a supreme court nomination those are things the market would be looking at in terms what would be the impact if trump is either so distracted by this scandal he can't really focus on day-to-day business or in a worst case scenario for.trump, impeached, convicted, and removed from office, guys. >> back to cohen for a second. lanny davis seemed to indicate a

potential willingness to cooperate with mueller there's nothing formally in terms of his cooperation. >> we don't see a formal cooperation agreement in the documents released yesterday i'm told it's possible it's under seal but ultimately it doesn't matter because if the lawyer is saying he wants to talk, the special counsel is conducting an elaborate investigation into this you can imagine they're going to talk to him and take whatever information he has they've already got whatever tape recordings there are. whatever documents there are, receipts, transactions, testimony from the bank. all of that. the special counsel's office already has that piece in place. but, you know, lanny davis indicating that michael cohen is really in a biting mood here in terms of the president that can't be good for the president and his case it's a little bit of a head scratcher to see that sort of tongue in cheek tweet from the president. not at all the reaction people expected from a president whose instinct to double down, triple down, and fight, fight, fight. >> yeah.

i think that's probably a fair statement. thank you. also, in washington, of course, the chinese and u.s. officials are set to begin two days of lower level talks on trade. the president has expressed low expectations for progress. meantime politico reports a handshake deal on nafta between the u.s. and mexico could be announced as soon as tomorrow. jim, that would be a positive. >> yeah. that would, actually that's earnings. that's just what we care about if you get a deal, it goes to the all time high. they're heavily connected to mexico they bring up a lot of autos that come from mexico. we would begin to see, again, at end of the chill mexico is a huge trading partner. there's a lot of companies constellation brands trying to get caught in the middle stock is down huge because of what i think is a wise canopy investment. >> it's exactly that time of the morning when you mentioned

cannabis. >> i guess it's a little early to have a beer but not cannabis. >> people worry about auto parts in canada, so, yeah, that's big. it's big when we get a handshake. it says, you know, handshake in europe, obviously, the president's tweet would indicate the handshake may not be as forward as what we think. >> right we did discuss it but i think it did get a bit lost the comment he made during the rally about 25% tariff on european autos that said, it seemed as though that had been pushed back, according to the commerces sec -- commerce secretary. >> right this is leery. >> you've said so many times that would be bad. >> yes. >> okay. now understand, nafta was set up when peso was 4-1. doing some business in mexico city i got an 18.5 to 1 ratio not bad if you're mexico this is a deal that was set up without currency manipulation.

the currency falls apart and gives them an advantage. $5 an hour labor very little collusion control. health care provided by the state. how do you compete against that? it's been difficult. but we've been trying to get rid of the chill. >> yeah. >> remember lanny davis from the other side. >> i sure do. >> i remember lanny davis for a lot of things. >> right it was an interesting choice from the start given how partisan he can be. >> yeah. and lanny is no -- look, i liked lanny. he was good for a comment. >> yeah. >> delightful guy. >> i think we're going to -- >> he wants to be the cohen's lawyer. >> i guess so. hopefully he doesn't go the route where he shows up everywhere. >> they had that on 60 minutes they said that about avenue cincinnati >> yeah. we're going to make the turn from politics to earnings. target gets a lift

upbeat earnings and guidance hear what the ceo told cnbc about what social working. another look at the futures. 16 minutes to go before we get started trading. more "squawk on the street" coming up. at at&t innovations, we give you more for your thing. here we're adding tv and movies from our unlimited plan to the powerful new samsung galaxy note9. the perfect device for entertainment & productivity. so, it's essentially the ed helms of devices? how so? well he's both very entertaining and very productive. you think? yeah, i do. and that's my completely unbiased opinion. buy a galaxy note9 and get one free. more for your thing. that's our thing.

target is up in the premarket this after a full year guidance and posted better than expected quarterly results. including the best same-store sales performance in 13 years. low's beat on the top and bottom line just shy of consensus. the company did cut the full-year outlook. you heard jim talking about that earlier. >> the press is so worthy. it's driving me crazy with the headlines. do your homework. >> all right. >> yeah. i'm saying that the people and the traders will blast out if they did a little homework, they get out of their darn -- and put onan outfit from reality. >> as for target, brian cornell was on "squawkbox" earlier

this is what he told becky quick about the retailer's investments beginning to pay off. >> we're seeing a great consumer response unprecedented traffic. as we go back and look, we've never seen traffic growth like this stores are a driving growth again. digital up 41% the brands are connecting with our guests so all of those investments are starting to work hand and hand. >> comp sales up 6.5%. the traffic rose 6.4%. digital sales he said 41%. comp store sales grew 4.9. from all over, you know -- >> how about the quote the strongest i've seen in my career two-thirds of our economy is spending and retail. know why michael cohen and paul manafort don't take us down? because target and walmart will take us up. >> consumer is -- best in 25. >> he put it the strongest i've

seen in my career. david, this is a sea change. with the exception of sears and j.c. penney. listen to urban utfitters to richard hanes today. he's saying things about anthropology and free people doubled 17%. it's incredible numbers from urban outfitters tjx multiple price increases today. including a lot of bears who were saying, listen, you know, i got it wrong. >> this after yesterday. and kohls which turned around. >> yeah. >> listen to what cornell had to say about the consumer. >> okay. >> incredible impressive, david. it's a healthy consumer environment. i've been doing this for a long time i think it's the healthiest environment i've ever seen importantly for us, we're building market share in virtually every category. >> all right. >> listen to that. remember they do a lot of like

cat and jack when you buy it, you know that's made by them. >> it is >> cat and jack is theirs. >> i didn't know that. >> see. >> i didn't know what it is. >> they have a lot of private label stuff that sells well. they've been the most forward in trying other than j crew trying to get people to design things for them. it's an incubator, david. >> second gross margin 30.3% compared with 30.4% from a year ago. sgna 21.7 over 21.6 a year ago and their tax rate fell. >> aren't you a rain on the parade guy you're supposed to say the toll brothers is the most important conference call. i might do that. >> i knew you would do a mad dash on toll. >> you're so surprising. up next that mad dash. one more look at futures about nine minutes before we get

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to improve short-term memory. prevagen. healthier brain. better life. seven minutes before we get started here it's hump day! >> yeah. a mad dash and toll. >> i had to. what happened on the conference call was magnificent it drove the stock up even more. david, raw costs starting to come down. >> what happened with lumber >> it was a corner it was kind of almost a corner

on it. people bid it up ahead because they thought that mr. president would do something that made it so it would be worse. >> what did we end up with 10% on lumber? >> yeah. i know that canada -- we thought that it would be even higher david, the value is good a lot of cash buy. there is a flight to new the salt didn't matter everybody was worried that maybe a change in state and local did not matter they made that point apartments are doing very well. >> that would matter now people have -- i mean, people pay your property taxes. >> yeah. share count is down dramatically david, this was you know what they're saying is because interest rates drop a little bit during this period, and because

the consumer is so strong, once again. this is great. business is great. best in a dozen years, david i don't think people realize homes which have been doing badly, retail. this is the consumer's hay day -- heyday. i have never seen it like this. >> never >> never. >> never >> never. >> because of late '90s. >> the loan to value is better than 2005. people aren't screwing up more than they can. >> yeah. >> we're building 1.3 million units. >> you're talking about housing. >> yes. >> housing in particular housing in particular. this versus michael cohen and paul manafort. >> got it. that's true news, too. >> it's fake true news. >> i don't know what did giuliani say truth is not truth didn't one of the founding fathers say "i hold these truths

to be not to be evident. >> yes that's the exact quote. >> we'll talk about stocks when we come back

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watching cnbc "squawk on the street." live from the financial capital in the world the opening bell ringing a little more than a minute from now. it's enough time to turn to you and ask what is the key today in terms of how things are going to go, jim. >> yeah. i can't avoid what brian cornell said because what brian cornell is saying is, listen, this is housing days and he has enough stores in enough parts of the country to make a big difference. i could add lowe's and home depot. it's target. and usually i hate to be such a -- [ applause ] i'm seeing strong buying in chipotle, but, no. i'm not going to outthink it

[ applause ] >> it's stronger than it's been in a long time we know that. >> right [ applause ] david, millennial's love target. [ opening bell ] t they don't like to talk. they like to tweet and carbona. they have a vending machine for cars two, they deliver your car right to your couch. that's why millennial's love it. >> let's tell you what rang the bell innovator management celebrating. i think it's official now. every single person has their own. >> i was offered an etf. >> yeah. there should be a lot of jim

cramer etfs. over at the nasdaq cintas. >> uniforms are part of the employment work force trade. >> right. >> and they are an amazing company. amazing. >> right. >> i cannot believe how good lowe's is. don't forget cbs is embedded in target they're clean. they're fabulous. >> yep. >> if you go to target, david, you'll be impressed with the cvs. >> i was in a target. >> you were? >> yes. >> what were you doing there did your wife make a mistake >> no, we were shopping a little bit. >> you were shopping >> we had to get, like, some -- i don't know i don't know what we got whatever i wandered around aimlessly for awhile. >> because you wanted entertainment? >> yeah. i don't mean like it's going to

statute of liberty. >> you know it is. 13 years best in 13 years. >> i want to congratulate brian. brian did not incur an easy situations first he closes canada then a lagging focus you know, and then he fixes it and now a lot of other things going. by the way, the food looks great. walmart is being slighted now. >> it's interesting you mention that becky asked what it was like to compete against walmart and amazon take a listen. >> we compete with everyone. so we got to be on the top of our game. >> it's walmart and amazon. >> those are two big players i think about them every day and we measure ourselves against their performance. so we're fighting for those trips. we're fighting for those footsteps. right now i think we're starting to build momentum. >> now, i do wonder given how

good and strong the consumer is now whether all are being lifted you have to be pretty bad to not get it right in this environment. >> j.c. penney. >> yeah. okay >> there was an interesting change in j.c. penney. >> yeah. you can say marvin ellison left a sinking ship i think marvin knew there wasn't much i love marvin. he was great at home depot he's doing fantastic things at l lowe's it's cheap money the balance sheet of the consumer is fantastic. i think the average american hedge fund manager doesn't understands because they're at the hamptons where they spend $22 million buying a house and they're out of touch and they don't know how much a gallon of

milk costs. >> that's probably true. >> have you ever had the no-fat milk and it's like clear >> i try not to. >> i put it on the granola. >> i love milk and chocolate milk. >> yeah. >> lowe's is up $6 i'm glad we told viewers to buy lowe's when it was down. urban benefitted yesterday tjx and kohls strong it's been a parade are those guys out of the woods? >> they have a good chance sheet. leslie webster is doing his best i want to see bath and body works had decent numbers >> and victoria secret, you know, they're going away from buying expensive bras and athletic-related -- >> it's not there yet.

women love lululemon it's incredible. okay lou lu lemon is probably one of the strongest. can i call out under armour again. >> sure. >> people should read the cole's quarter. it is remarkable and michelle is doing incredible things but they are a house of brands they've got some high brands nike was good. >> the flexibility to turn around -- >> kevin is great. >> kevin got back. it's $13 he said i was screaming at him when we met each other, mostly wife said i have to broker this. i can't stand my husband not getting along with this fella. he said i have to get more focus. last quarter he focussed david, i want to point out something that is shocking that everyone is overlooking. i have to tell you it's monumental and the size is bigger than cohen or manafort. facebook stock is up. >> you're right.

>> did you see who alerted them to the iranian pages fire eye. >> fire eye? >> yeah. want to grab that? i'll take over. >> i think i do. >> nvidia is up. people say wait a second you know, the performance is not as good as we thought. where is your friend andrew wright. >> left? >> andrew left. >> yes he hit nvidia hard trying to get it to $200 i think that the problem has been answered. it will be addressed correctly in temple -- terms of the new gains. i think the new chips are extraordinary. nvidia is going higher despite the fact that andrew wright is wrong. he's left. he should be right. >> netflix is actually had a couple of -- ever since we noted when i came in on monday and said what happened there

things had legs. >> what is that, david >> i don't know. >> it's not a lot of new releases. >> just momentum. >> yeah. >> not a lot of room. >> no. business drives that stock. >> what drives that stock? >> they've got a new cfo there. >> yes. >> they do. >> a new talented, you know, the pr it's all good there. >> will comcast breakthrough >> it's like shareholders. >> i don't know. we have to keep an eye on the sky. process it has a ways to go. we're talking into september which is more than 48 days is up. >> terms of what they're 1975 that comcast is out there on today. oil is up nicely. >> you mentioned something earlier that is worth repeating. we have a number of times. will the chinese let any deals occur? >> it brings me back

utx, by the way, hasn't gotten approval that's the hold up the deal should have closed and utx, i believe, it was split that deal is not closed. what the heck is going on? >> i think that's bears watching in the world of m & a. >> every chinese company that has been born. the president is out of touch with how china -- >> what are we going to do ban them from becoming public? >> what the heck why not? >> we want to hurt the listing fees i don't know but the chinese, you know, you notice the chinese are propping up the stock market. they're buying their own stocks. that's something i think is a great thing to do. japan did that. >> yeah. >> the chinese are buying their own stocks to prop them up we read a lot of stories how they're being hurt lowe's. >> i can't get you to focus. >> i'm sorry i'm a little bit nonlinear

today. it's true. >> you are. >> let's get back -- >> i had three and a half hours of sleep. >> i think that's not enough you need three hours and 45 minutes. >> my wife woke me up. >> on china, again, i think the utx rock well. we'll see. but what they do given what happened on nxp is important i'm not hearing a lot of big m & a pursued right now. just in general because of some insecurities on the part of those who make those decisions i think whether it's evaluation, whether if you're a large company or typically more global and, therefore, more worried about trade. whether it's anti-trust approvals in places like china. >> sodastream is the biggest one. >> yeah. >>well, those are deals that don't typically mean. >> but china is a huge, huge, huge issue and i think xi digs in he reads the "washington post" and digs in.

i bet you, you know, look, if they were the russians, they would be trying to get the democrats to win the house you know. >> right use facebook. >> yeah. facebook is down -- >> it is up 75 cents >> what is that? they announced more pages. i believe trump will ban new listings here. i really do. he has to relate the two he has to watch our network. i know he's kind of fixated on other things watch our network. he's been banning these. >> it's a bad sign i thought the nxp deal -- >> we gave them zte. >> and they come back and they slam it. >> it's upset about cfius and broadcom and call -- qualcomm. >> what do you think about the

semiconductors they've been weak. >> i have no opinion. >> here is where they're weak, david. cell phones are weak and there's worries there's a slow down in an internet of things. i didn't get that from sisco, but, david, the operative stock if you ask me now what is the key to this market it would be analog devices which is remarkable company. they put up good numbers and the stock is probably down the most in the stock market. analog devices are fantastic and that's internet of things. >> tiny modems, right? >> yeah. >> a lot of cars. >> in other words when you talk about connectivity to all things you can monitor what is coming off that you need a chip to do that. >> yeah. on this, the new homes that people like, they're all digital. the homes are digitized. people like that they like new homes. that's a big, big -- >> they like new homes digitized. >> yeah. tim cook loves to digitize a

house. he showed me to take the shades down >> i know. i was with you when it happened. >> wasn't it something >> yeah. >> we were in the townhouse. it doesn't appear to move is apple. >> right. >> as aggressively of their competitors. >> people love alexa. >> finally i never thought we would get there. it's up $9 amazon web services, you know, there's still -- amazon web services is not as cheap as people think it happens to be cheaper than the other guys a price war with google cloud is what web services needs in order to get the prices down for everybody including retail when you see cornell and target at 41% comps, remember that's the web. that is a company that does not want to support amazon. >> that's interesting. >> so many retailers and investors are concerned about for so long in terms of what

they were going to be giving up to amazon. >> remember best buy the first to kind of prove there is life amazon remember the showrooming theme like i said, we engaged in discussion about that. and then they come along and said we'll figure out a way. >> there's something look at that stock 52-week high here is a deal with best buy the device has gotten more complicated. you can no longer buy them online you need a salesperson to explain. that was the secret with best buy. you need help to put things up in your house. you need amazohelp when you buy something for $1,000, you like to ask the guy how the heck does this work? ever corps. said growing signs that the retail apocalypse

narrative that dominated investor sentiment has passed the peak i agree with that. video games is the only area that is a little bit weak. i think they have come back. >> yeah. >> do you play red debt? >> i don't play any video games. >> you don't >> neither do you. >> my nephew does. >> yeah. home depot up 10 points after where it fell after the morons sold it and chowder heads took it down to 93. >> okay. bob, tell us what is moving this morning. >> don't get me started. bottom line is this, folks positive territory on the dow. narrow trading take a look at the sectors and

retailers. xrt another historic high. and e margierging markets the dollar has been weak, the trade we've been talking about short emerging markets short some of the stock markets overseas has been unwinding a little bit banks haven't been doing much today. they had a good few days the guys we're talking about all these amazing prints from target i just want to point out the same-store sales numbers we put 6.5%. that was the best we've seen in a long, long time for those guys so walmart up 4.6% those were amazing numbers the best comps in 10 years for walmart and 13 years for target overall. let's talk about where the markets are going right now. because there you go these are amazing numbers. we haven't seen numbers like this in a long time. the bottom line is, you can't do any better than this they're refurbishing the stores. we have a strong consumer and tax cuts

it's amazing we saw the interview with the target ceo this morning. it was wonderful let's talk about the impact all this washington news is going to have on the stock market that's what people want to talk about now. cohen and manafort here is what is important. it's been lopsided in the way trades have been for the last couple of months china trade is impacted on the strong dollar. we've seen long u.s. equities. stronger dollar. we've seen short emerging markets. we've seen short commodities, and short treasuries the treasury short hasn't worked well the market is positioned in a lopsided way can the political developments impact that? it's not entirely clear to me it will look at the stock market and how that's positioned recently the overperformance of the s&p compared to the rest of the world. europe, japan, emerging markets. china down 24% we've seen this unwind a little bit. the dollar weakened in the last few days not dramatically so. the numbers get crazy when you look at some of the tech names like the internet stocks in china versus the internet stocks

in the united states it's a little bit of ajoke people are comparing them. up 27% for the united states and the internet markets down 12% for the china internet etf overall. it's been very difficult to actually pick stocks and stay on one side for a particularly long period of time look at that u.s. internet versus china internet we've never seen outperformances like that. where is it going to matter? tony has been talking about this for the last couple of days. he was on the air yesterday. i think he has the right attitude he said politics may cause the markets to move but it caused the market to trend overtime i think that's important thing keep an eye on what is mattering to the market now. you see we have stable inflation. we have a neutral fed. we have no credit stress we have ramping investment we have, in particular, spectacular strong eps

i think that's what matters. if there is something that is going to impact back from the politics, i think it will be a negative for the moment, though, the market doesn't particularly see that right now the dow down 14 points david, back to you. >> thank you, bob. let's head to the bond pits now. rick santelli at the cme group in chicago rick >> good morning, david well, yields pretty much globally continue to melt. as a matter of fact, if we just isolate the month of august, you'll see that these have bee big moves. not necessarily big in a single day or session time frame. but cumulatively look at a two year month to date. taking the high yield close to where we're at now down nine basis points for ten year our high yield closed down 20 basis points. 10s minus 2 big moves. you have to subtract 20 from 9 you get what i'm saying. bunds down 14 basis points from

their high closing yield to where they're currently trading at 33 basis points figure 14 basis points is a percentage of 33 finally, something i don't look at often, but with nafta talks and mexico looking like it's getting closer and canada not so much i thought let's look at a canadian ten year. they're down 14 basis points month to date from high close to current trade. finally, the dollar yaun this is almost unchanged for the month of august. and that highlights how investors moved in and out of various trades during market volatility david, jim, back to you. >> okay. thank you. still to come, former choice va - vice president gerald storch will join us "squawk on the street" will be right back

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>> i have john carreyrou, from "the wall street journal" and then kevin conroy from exact sciences, a very big deal with pfiz pfizerifi today, they use certan kinds of -- how do you say it on tv they discovered collin -- colon cancer without having to have a colonosco colonoscopy. >> coming up, target, with better than expected results they're giving that stock a nice boost this morning 6 rd to make sense of it all. well, victor, do you have something for him?

>>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.

sales now down 1.5%. what's the problem, realtors say inventory, unchanged in july year over year, at 1.92 million units for sale, that's 4.3 months supply. note, june's inventory was low they revised it lower saying june's inventory was actually down year over year, so this year we're seeing no decline in inventory. tight inventory. median price of an existing home sale in july was $269,600. realtors do note that prices are decelerati

decelerating, or dropping, sales on the higher end, sales of million-dollar-plus homes up dramatically, up 0.7% in july. welcome back to "squawk on the street," live from post nine at the new york stock exchange carl has the day off let's take a look at markets a little pause in the buying action, dow's down 33 points, s&p is down 5.3%, the nasdaq do down .2% our road map for the hour begins with the longest bull run in history, s&p 500 has now been in a bull market for a record 3,453

days. >> but this morning market caution prevails as the -- u.s. china trade negotiations are set to resume. plus a look at the state of the u.s. consumer, we'll dig through the results for target and lowe's possible jail time for two men close to the president paul manafort convicted of two counts of financial fraud. and michael cohen convicted of violating the campaign finance law at the direction of the president. the president is accusing him of making up stories to get a plea deal and calling manafort as a brave man. what does it actually mean for the economy? the market agenda? if anything at all we had a crazy hour yesterday.

joining us now, former white house political director, and american enterprise institute fellow and cnbc contributor. help investors understand what if any are the consequences for the president. >> i don't think there's any short-term consequences, the market doesn't seem to be having a reaction on this news, it's like it's baked in already because this has been going on for some time. i think the challenge becomes for the trump administration, particularly, possibly for the markets if you see a very direct connection with the president. you know, michael cohen has alleged that, he said he acted on direction from the president. he's admitted to campaign finance violations trump is saying something very different and previously michael cohen said something different so this person's question and his character i think cause people to question really what is the true story here

even though it is important to note that he did that under oath yesterday, that he did it under the direction of the president. >> any legal or political implications for president trump? >> first, you know, about the markets. i think you can go back, whether it's watergate, iran contra, the clinton impeachment, it's tough to tease out a whole lot of market impact. maybe a little bit with the iran contra, leading up there but really you don't see, the economy is good. i think what brian cornell said that it's probably more important for the market than michael cohen said what i would want to know, is how will republicans respond this is not going to be a booster going into their midterm elections and what can republicans do, if anything, in the fall to boost enthusiasm i don't think they're going to pass any tax cuts. my friend talked about a

government shutdown, to get people juiced up i don't think there's a whole lot republicans can do >> what do republicans do? to come back to it, michael cohen said that he was directed by the president to pay off a model and a porn star to stay quiet just weeks before the election >> the events of the 2016 presidential election, i think the whole sex, drugs and rock 'n roll story is back page for the president. what the president needs to do is talk about the economy, the economic news in this country every day has been strong. consumer confidence has been stronger under donald trump's presidency than it's been at points in the reagan and clinton economies. so from an overarching

perspective, the incumbent party should do very well in these times. but unfortunately, we're talking about michael cohen and other unsavory characters in the trump world. we're talking about things that don't matter to the livelihood of americans >> donald trump sort of didn't hit a home run here in the economy, he sort of started on third base, 97% of those market days happened under obama. so people aren't giving the president as much as you would think normally >> what do you think of the midterms doe does this improve the hand of the democrats running for house seats? >> nobody thinks they're going to hold the house, they're worried about the senate this is demoralizing for the republican base, it's very energizing for the democratic base, it's very hard to think what republicans can do between now and election day, to sort of

turn that around, especially if it is just more mueller, cohen legal proceedings, rather than focusing on market milestones or record low nemployment and tha sort of thing. >> sarah, there is that school that says the threat of impeachment itself is the thing that would energize republican turnout. that's the steve bannon school right now. maybe this is the card to play >> it is something the country does not want. most independents say we have been through this in the '90s, it's a trying time for the country, they don't like trump personally, they dolike what he's doing for the economy, president obama deserves a lot of credit for this economy, but so does president trump. and people like that, and i think they will ha democrat also

focus on impeachment, and you know, following around the president's secretary, and making some very outlandish comments from the podium this cool resistance i do think helps the democratic party >> i have seen it show up in some of the investment moment s that i have gotten this morning, how likely is that >> there's going to be a tremendous amount of pressure on democrats to take the house to impeach the president, there's no doubt about it. certainly if you listen to the people talking today, this has greatly strengthened their case, apart, really apart from whatever happens with the mueller investigation. of course the senate still likely to be a republican.

they're unlikely to expel the president from office. and democrats, i've been loathe to talk about impeachment. i've been listening to elizabeth warren today, she doesn't want to talk about it, she wants to talk about her economic plan, but if democrats do take the house, i do think that is likely to happen. >> i believe it will happen, i don't believe that the democratic base will allow -- the reason the democratic base is so energized is that they believe that they were robbed of this election, that hillary clinton should have been the president, that trump is not someone who should be serving, he's not fit for office, that's what they believe. they're going to require democratic leadership in the house to go through those hearings and it will be difficult for democrats to resist it because what's going to happen,

shortly after 2018 elections, people are going to file for primaries for the 2020 elections and they will be pushed on that issue. we're getting a news alert on nafta negotiations. kayla, what do we know >> negotiations are picking back up today between the u.s. and mexican delegations. we saw the mexican delegation arrive at the u.s. trade office here in d.c. just a few moments ago. and while there is some expectation that a deal could be within reach is saying some of these things can be worked out in a matter of hours. and there's some interesting hedging coming from the mexican side as well mexico's economy minister says all three sides, u.s., mexico and canada would need to be pregna present for even a hand shake

deal >> we're here to try and get solved the issues that are most important between the u.s. and mexico that will lead to atrilateral meeting with canada. >> mexico has said they expect the possibility of a deal to come together by the end of this week of course then canada would then re-enter negotiations. they would have about a week to reach a try lateral deal, they're racing against the clock, but there's some optimism, albeit hedged optimism in washington. back to you. >> let's get more on the market impact major all on the muller and manafort -- well, the cohen and manafort cases mike, give me your take here in

temperatures of whether and why yesterday's news matters in terms of how investors are looking at the stock market right now? >> i actually think that the markets have looked through this and shrugged it off. even though this is obviously a negative development from the trump administration, it's not like this comes as a terrible surprise these discussions and these negotiations and the trials have been going on for a while. so there's nothing here that's extraordinarily earth shattering the other issue is whether this rises to the threshold that could lead to impeachment and remove him from office but there's a long, long way to go before we get to that so the more important issues largely focus on the strength of the economy, the economy remains on very firm footing, what you're seeing is some of the strongest growth since the expansion started. in addition to that, when you're talking about the equity

markets, you're also focusing on the earnings story it wasn't just about bottom line growth, it was about top line growth and revenue growth of about 9% that's the story that markets focus on >> if memory serves, when bill clinton was impeached, for what was it, one count of perjury it had been mid '90s but the market kept going up during that entire period, if you remember, of course, that was the dotcom craze >> during the impeachment proceedings, it dipped leading to the impeachment proceeding, but late '98, early '99, the market was going up. that's an important milestone to be aware of. >> mike? >> i think that's an important point, the markets will -- obviously there's lots of

headlin headlines, but at the end of the day, we're going to be focused more on the drivers of the market obviously we had some progress today on nafta, which by the way, sometimes people underestimate the importance of nafta, we do a lot more bilateral trade than we do with mexico and canada. so this progress on nafta is encouraging. what we're going to focus on next week, remember on august 27, we'll hear about the $200 billion of tariffs that the administration will weigh in here that's the next big focus, what will the u.s. do in terms of tariffs? how will they sequence it? will it be 10% or 5%, then what will china's reaction be

>> a lot of moving parts, thank you for the story. when we come back, the parade of retail results continues. this morning we're hearing from target and lowe's, we're going to dig through those reports and what ty hesay about the u.s. consumer squa"squawk on the street" wille right back such a good time to ♪ [ laughing ] ♪ scoobidoo doobidoo ♪ scoobidoo doobidoo

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retailers beat on earnings. both are reporting the best in 13 years kate, just to tie these two companies together, you have a couple of big box retailers, both talking a lot about reinvesting in the stores and find of fitting their strategies for the current times, both of which look like they have some tail winds as well when it comes to target, it seems like they have already vaulted the high expectations. >> i think target was already pretty positive in expectations going into the quarter i think what was amazing with their comp was that historic highest in the last 13 years, is that it was all driven by traffic. so it's pretty amazing when you think of e-com and e-com in everyone's lives, is that

they're driving traffic to the stores, which means that their e-commerce sales is not cannibalizing their in store sales. that's why you're seeing thearg trending higher today. >> do you think it's some specific goods, home goods or something like that, or i guess just getting the customer reengaged? >> i think the customer is reengaging it's a little hard to say, but we have heard from enough companies now but you have seeing this team that comps are better and the company is stronger they have had a lot of successful brand launches this year, they have had a lot of success from market share gains, but they have also had a lot of success in terms of talking to the customer and how they're conveying value. so i think all of those points wrapped up is what's driving the better results and are probably

sustainable. >> given the point that kate's talking about, the tax cuts are really helping the group brian has never seen the u.s. consumer in stronger shape how, then, do you distinguish which ones have the best execution going on right now >> it's a good question. and kate actually brought up, the best metric to look at, it's traffic. it's consumers getting in their car and physically driving to their store, that's a big thing to do when you can just go to a retailer like amazon what target's doing right now is putting up traffic numbers that are out of the realm of even understanding. we haven't seen -- even target themselves say this is the best traffic result they have had since they started reporting traffic result 13 years ago. my whole career. >> i go for baby products.

they're good at that >> they actually talked about home being a big driver, they had a 10% increase in home so they're relying on the gravitas of multiple things. if they were only good at one thing, you probably wouldn't go to the store zplf >> i want to look at lowe's, they even stronger than target they have had a 5.5% sales increa increase what's going on? >> i think lowe's is a factor of a new management team in place you have what the strategic outlook is going to look like in the shoirt-term. i think the ceo with the call this morning, he has a lot of

ideas on how to make the space more competitive >> what's your take, quick, on lowe's versus home depot, because really there's not much of a difference valuation wise between lowe's and home depot. >> we'll have not talking about the valuation, but they're talking about what lowe's could be starting in 2019. this quarter wasn't that big of a deal what we're really excited about is december, when you have a new ceo announced today, they'll come up with a new financial plan and they're unveil it to the street, so you'll see a big catalyst on the street and might get investors to look at lowe's instead of home depot. >> and becky's full interview with brian cornel is up with cnbc.com >> coming up, u.s.-china trade talks set to resume today.

plus a company benefitting from the steel and aluminum tariffs, we'll take you to a plant in kentucky as it gets ready to reopen its doors. dow's down 14 points welcome to the place...

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time for your etf spotlight. tech of course has driven much of this decades long bull market here now is the managing partner at group ventures. everybody should have an etf, gene, i'm glad you do. we're almost there with everybody else what are you doing with the ctf that's going to set it apart that's going to make me or an investor out there want to participate? >> we're really playing into this next wave there's always little waves going into tech, but there's another wave coming in, ai, robotics, self-driving cars, augmented reality and virtual

reality. this th this is the sweet spot a lot of these companies-- >> you're just going to end up owning alphabet and nvidium? >> i would also just point out tesla and amd are other ones stay today we studied 40 tech companies, and what we found is tech still pays off. we still believe that's a lot of upside to apple. but outside of apple, over the last five years, the companies that grew at greater than 20%, returned on average 6x, and the ones that grew less than 20% returned on average 2x, the point is this, this etf really

wants to capture growing tech companies that you haven't heard of >> are you having an equal weighted portfolio, you're spreading your bets, you're not saying the biggest companies are going to be the biggest winners, but that also means you can afford those that don't work a couple of years ago, would you have had 3d printing because you didn't know if that was going to be a passing fad. >> there are 30 companies within the index, so there is a little bit of diversification related to that 3d printing is not one of you are themes, but your point's well taken, so that's maybe something that's not going to take off the storstories, the companies are performing the best, tend to get the best weighting within the index. >> today we're talking about the longest bull market on record, tech making up the biggest return in that

we're all debating whether this is the late cycle, this is the end of the cycle, and this is the peak what does this launch today saying >> i think what it's saying is there's still some massive untapped opportunities on what tech can capture over thelast ten years, tech has grown and it's taken over advertising, taken over computers and replaced that with devices, but thyou're going to e tech taking over health care, so i think this bull market in tech will keep going through the next decade >> we'll have you back soon to talk about tesla or apple or something like that. let's get over to sue herrera. >> hello, everyone here's what's happening at this hour we begin today with hawaii which is preparing for a category 5 storm as hurricane lane moves

toward the island. many residents have begun stocking up on food, supplies and water. tropical storm force winds, excessive rain and large swells are expected to hit hawaii beginning today. just released showing a helicopter crash in arkansas last week that left the pilot injured. it shows the chopper going down after it lifts off a launch pad at a training facility the pilot sustained a head injury and had to be extracted from the helicopter. and aflight scare for rapper post malone his flight made an emergency landing in new york after it blew two tires while taking off. the rapper performed with aerosmith at monday's mtv awards ceremony and was bound for tour stops in london. and pumpkin spice season

seems to keep getting earlier and earlier. starbucks announced it will bring back the seasonal pumpkin spice latte on september 28. this marks the 15th birthday of the fan favorite drink count me among them. back down to mike. are you a pumpkin spice kind of guy? >> not the sweet syrupy kind but halloween is coming. >> you will found out, sarah the back to school catalogs starred coming in july it's awful see you later. when we come back, reopening its doors, century aluminum getting a boost from the tariffs on amilunum and steel, we'll take you live to it's plant in kentucky "squawk on the street" will be right back it's absolute confidence in 30,000 precision parts,

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welcome back to "squawk on the street." a little over an hour into the trading session, political turmoil is the theme of the day, stocks are slipping slightly, nothing dramatic nasdaq is flat part of this is the weaker dollar which has reflected some of the political uncertainty as always we welcome in art cash i ing. we talked about yesterday there was some nervousness ahead of these two news items on cohen and manafort. >> it was much more cohen, while the market was trading, we were

getting stories that the manafort jury was saying if we can't reach a consensus, but we didn't know too much but when they said that cohn was moving to a plea bargain deal. the traders on the floor said well let's take a look at that what does that mean? if they're going to let him plead and maybe move down, they must think he's got something on the president, and secondarily, we had about $2 billion for sale on the bell. so the reaction so far today is amazingly benign, but i think that's because the twitters from the president have been amazingly benign, and given his past history -- >> sort of joking it off a little bit >> art, there was a got research note, he said it's sort of a boy who cried wolf phenomenon for

the markets, in that this isn't the first time that political or geopolitical surprises have come about. every time the market sells off, it goes right back up and reclaims new highs, so there's sort of a numb effect to these kinds of headlines right now >> we're building these headlines, the question is, will they affect the election will the president stop being as benign as he's been this morning? will that begin to move things up you've got people like senator blumenthal and others starting to ask for impeachment i don't think he'll be impeached. but the simple indictment, the impeachment could tie up the government for a year or two. >> could it be better for

market when you talk about nixon and clinton -- clinton, the market did well because the economy was doing well >> with clinton, you had more than just the impeachment going on, y2k was coming up and all eyes were on that, and there was a massive buying because everybody had to replace their equipment. it was a pretty exciting two years at the end of the century. but i think that the market would be a little concerned if they thought the progress that we're making on deregulation and things like that were to suddenly dry up because the government becomes paralyzed with introspection, for now, it's got full weighting.

it's as you said, i have seen this movie before, and nobody dies so why will i be upset? if the movie begins to change, then the market will change. >> s&p fell 20% over that period of time, it was also during the oil embargo and the arab-israeli war. art, thank you, always good to get your perspective commerce secretary wilbur ross will be there making remarks at the ceremonial restart and to the ribbon coming, we're also at the plant in kentucky and she had more on the story. jackie >> reporter: well, those tariffs on imported aluminum and steel have american producers optimistic tick thhat the playi field will be more competitive

today, a restart, a ribbon coming, getting a start today after getting shut down. it's at 60% capacity now, by next year, it's going to be at 100% capacity. it's going to create 300 more jobs here. this aluminum is high purity, it's used in military defense. this is the only plant in the country that makes it. century says it isn't just creating jobs, but this is in the interest of national security when the tariffs hit back in march, china hadn't hit back yet. now it says that it could increase tariffs on 500 u.s. goods, whisky, wheat, soybeans, that could eventually take a toll on other industries the short falls that could be caused in other industries, some experts are wondering if the steel and aluminum up tick will

help their balance what if china slapped a 25% tariff on whisky also recall, aluminum spiked 10%. china actually exported moral aluminum in may. so today here celebrating a restart at this aluminum faci facili facility, but as the trade war blossoms, could other industries stall, guys? >> it certainly has a spillover effect jackie, live in kentucky today where we'll see the u.s. commerce secretary later $16 billion in new tariffs are set to take hold on china tomorrow president trump saying reuters, quote, i don't anticipate anything coming out of it. joining us now to discuss it, at

post nine, robert kune, a long time advisor to china's government, author of "how china's leaders think featurin president xi." how are china's leaders thinking right now about this trade friction with the u.s. >> obviously it's a very serious issue, and everyone is taking it seriously. we're actually in the unhappy land of self-fulfilling proph y prophesies on both sides there a narrow view in china that the u.s. is trying to constrain, limit china's development. the narrative in the u.s. is that chesapeaina's trying to re the u.s., trying to ravage our economy. so we have these two self-fulfilling prophecy, because when each side sees something that re-enforces it's own biases, it goes from theory into practice, which is what we're seeing now we should be talking opposites,

there is great opportunity for the u.s. and china to work together the bilateral relations will form the basis for world peace and prosperity in the first half of the 21st century. there are real issues. and china's transformation since it joined the wto in 2001 are dramatic and that must cause certain changes in china that has to occur whereas focusing on the trade deficit, which our president does is not looked upon favorably by the vast majority of american economists and business leaders, there are fundamental problems in the relationship that need to be addressed that china is beginning to recognize and i talked to experts in both countries, off the record and there is, i find, great commonality that china recogn e recognizes it needs to open it's markets more to foreign companies, not so succumb to foreign pressure, but to create

more competition in the markets to drive companies to higher levels. >> not to cut you off, it's just how messy it could get until they really come to the table at a high level there is this narrative that the chinese stock market and it's currency are under a lot of pressure now and they have a lot more to lose economically in this trade war and therefore president xi will have to relent and they'll blink first. >> if we talk about who blinks first we're already at the wrong table. that's not the way to think about it china has to look strong to it's own people the narrative in china is that president xi and the party are rejuvenioouuvenating the countr it's internationally and economically and politically and scientifically is a very important factor for them. nobody wants to back down or lose, but if we focus on who's

winning and who's losing, we're already in the wrong place, we should talk about how american companies can do more business between china and the u.s. >> the guys you're talking to are not in power. >> that doesn't sound good. >> that's correct, the people in power, i would say have a more limited view of things, but, you know, so it's easy to be a good prognosticator in the long-term, but really lousy in the short-term, so i'm not going to tell you what's going to happen tomorrow at the trade conversation or next week, but i really do think over a number of years, a short number of years, we'll see great commonity betwecommonity -- common aality between the u.s. d china. >> do you think the chinese

recognize they need to open their markets and they focus on intellectual policies a >> i want to lay out what i think are the major real problems regarding china it we talk about the trade deficit. trade deficit is very complicated, it's not like a real estate company, expenses and revenues, you have intermediary products, china gets 3% to 5% of that, it's imported product there's an estimated $40 billion that the chinese spend on edge caution and travel we get high quality goods at cheaper prices funded by other people so there are five areas they're concerned with opening markets is critical. intellectual property rights, third is industrial espionage, we have to face that, cyber theft that has occurred. fourth is fourth transfer technologies that have occurred

in jointing ventures and the fifth is china's investment in technology for the future. those are the five real areas that people are concerned about. if you take those five, the chinese realize they have to do that for their own benefit, and it improves the investment structure of their own companies. foreign competition will force obt to merge and get better rerkuhn, thank you very much >> "squawk on the street" is coming right back. your digestive system has billions of bacteria, but life can throw them off balance. re-align yourself, with align probiotic. and try new align gummies, with prebiotics and probiotics

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one area of the mark just hit new highs for the first time in six months, find out what it is, at tradingnation.cnbc.com, more "squawk on the street" coming right up. imagine traveling hassle-free with your golf clubs.

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rick santelli here with the santelli exchange. i want to welcome my guest, mark, thank you for being here. >> great to talk to you. >> jay powell will make a speech on friday. many are very anxious. i doubt if the topics are going to be the same as previous years. and it seems that one of the key issues will be the portfolio, the security portfolio and the changes that may be made what do you see? >> i think you're exactly right. we are still in the period of removing the accommodation so that means that the balance sheet is going to shrink that means they're going to be allowing runoff and there will be a certain amount of sales and what that means is that the portfolio will change, but that will be in a predictable way, much like they have described over the last several months. >> one of the issues that seems to make sense to study is proportionally issuance, which is a huge topic as it grows

rather large and the national debt's top 21 trillion, there's a lot more short-term securities does that make a difference to jay powell and company >> it does in the sense that it really affects the market movement and the interest rates, but i don't think it will affect the direction the fed will go because they are still primarily allowing the runoff in the short-term securities. and in the longer securities, they are making nice sales but they are still watching it because the market movement will affect how they move with the sales. >> gotcha. now, another issue, and i think that this one isn't as important as the rest but still merits some introspection that is the morgan securities versus the treasury securities the fed seems reluctant to let go of the mortgage securities. more than likely let them run off without liquidation. would you agree with that? >> yeah, i think that's probably

the right thing. i don't think you want to flood the market with the mortgage securities to the extent i think that you want to manage that very carefully because that will affect the interest rates in those kind of instruments. and that will be important to the housing market so i think that is an important consideration. >> now, when it comes to interest rates, it seems rather counter intuitive if you have watched the last couple weeks of trade, they are really dropping rather dramatically with 20 basis points off the yield ends. do you see any driver for that your final thought >> i absolutely do see a driver for that because i think the markets have come to the conclusion that the fed is serious about fighting inflation. and so then the inflationary pressure at the long end of the market has adjusted to that fact and that's the key driver in why the ten-year has stayed low. >> mark, we're out of time here. and i like your notion of that being inflation.

thank you, mark olson. david faber, back to you thank you, mr. santelli, for bringing that to us. now we'll send it over to john fortt for a look at what is coming up on "squawk alley." don't look now okay, go ahead and look. target is up % on earnings, this after walmart has strong earnings that stock jumped up above the mid-90s. ecommerce is weighing in we'll talk about it on "squawk alley. ♪ adults are just kids with much, much better toys.

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good morning, it is 10:00 a.m. at target headquarters in minneapolis, minnesota 11:00 a.m. here on wall street and "squawk alley" is live ♪