♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm beck along with joe kernen and wilfred frost. u.s. equity futures at this hour, there are green arrows across the board the dow indicated up another 55 points s&p up by 4. nasdaq up by 16. this comes after decent gains yesterday. the dow was up by 1% s&p 500, the nasdaq and the russell 2000 all setting new highs once again look at this, the dow, s&p 500 and nasdaq are on track to post the biggest august percentage gains since 2014

overnight in asia, look and you will see the nikkei was barely higher ended in the green but up by just 13 points also in europe we're seeing trading taking place for the most part, the major averages are indicated higher. ftse up by 0.40% the cac also up by 0.24. the ten-year is hitting at 2.851% stubborn number. >> could have seen a bigger rally around the rest of the world following the good news yesterday. if they deserved it, which they don't. they don't have our economy. donald trump is -- >> if there were implications that this could mean that china would get a trade deal as well, that the eu would. >> we are finding out that we

have domestically more going on. trade is not quite as important, i don't think. we like to make things and consume things ourselves that drives you guys crazy, i know that. >> you guys is what? am i representing what china as well at the moment? >> eventually you have to start talking like us. if you want to be a part of this deal -- >> i was explaining you already get grief when you go back home. >> i do. >> you went back, but then they recharged you with twitter and all this you came back. he's back falling into the same old thing. yesterday he did talk -- he did talk american a bit yesterday. he can do it he does it it's so funny. welcome back he does it perfectly, which shows he can if he really wants to try >> he can do it better than you can do your english accent >> i can't do that at all unless

i channel madonna. donald trump just -- i was talking to dom at 8,000 on the nasdaq trump says nasdaq has just gone above 8,000 for the first time in history and then something kind of weird that i think is -- i don't know, talking about results on trump news or from the national left-wing media. dangerous. google and others are suppressing voices of conservatives and hiding information and news that is good they are controlling what we can and cannot see this is a very serious situation and will be addressed. >> meaning addressed with regulation that he's going to propose? >> that's the part i thought we should read. >> we'll have to keep an eye on those stocks today if you keep an eye on google, twitter. this is not the first time he weighed in on this that is more specific than in the past

not sure where that would go in congress how that would get passed around he would will keep an eye on those stocks let's look quickly at google and twitte twitter. >> google is higher. 1 1,256. >> twitter is up as well >> nasdaq over 8,000 yesterday he got confused with his records in one of the press conferences and started talking about dow 26,000 resoundingly strong day yesterday which has not carried through to europe and asia today. that's after the u.s. and mexico reached a trade deal it will be reviewed every six years. it includes new rules of origin for autos including 75% of car contents to come from the

region here is larry kudlow on "closing bell" yesterday taking a victory lap. >> this is a big victory for growth and cooperation, a big victory for free and fair trade. and, yes one of the things he's argued for quite some time is bilateral negotiations they are more efficient than these multilateral negotiations, whether it's three countries or 23 countries that paid off with later this hk more about this with maryscott greenwood, and at 8:00 a.m. we have treasury secretary steve mnuchin. the u.s. commerce department has made a preliminary determination that imports of certain steel wheels from china were subsidized at rates ranging from 58% to 172%

as a result it will impose duties on imports at those rates. u.s. customs officials will begin collecting deposits from importers of the steel wheels in question commerce has until early next week to affirm that. >> i was thinking steel wheels all i could think is rolling stones >> i knew that's what you were thinking about the trump administration is set to begin its emergency program for agriculture immediately after labor day. the aid is designed to help farmers impacted by retaliatory tariffs. the initial bailout includes $6 billion. the government is also going to be purchasing 1$1.2 billion in commodities that it says were unfairly targeted by unjustified retaliation. soybean farmers will get the biggest share of payments, about 3$3.5 billion worth producers o

corn, cotton, dairy, hogs, grain and wheat will receive the rest of the money. the s&p and nasdaq closing at record highs after seven months of refrenchment mike santoli has the answers why do you try to do this? >> even though we're no longer doing the longest bull market, i thought that was specific to that >> you are going make a prediction as to -- >> i will address the question of now what. not sure i will answer the question >> i like that the way you set the context is a hard-earn ed breakout after seve months of pullback, repair and recovery there's a significance at how long we remain below the old high of january. the forward implication of that are generally positive here's a two-year chart of the s&p, which i use to show this steady uptrend, that acceleration from the summer of last year, through january, then this gut check

i think the markets did enough to stay kind of with the weight of the evidence on the bull side throughout the period. now you have this breakout it's hard to say that there's anything particular in the way if you have six months below an old high and then you make a breakout to a new high, the forward earnings historically have been better than average. if you're up 5%, 10% this august you also tend to get better returns. it seems the setup is good the big question is not so much is this as good as it gets but is the market going to remain hard to please you could make the case up 8% year-to-date in the s&p 500, the fed is patient, and you have a lot in your favor, is the market implying we will get deceleration and how much? >> that is what i was going to say. if you were able to take the last year's stock gains and chart that up against earnings gains, earnings would be outperforming that, that's why you see the big pop now. >> for 2018 that's true.

almost at this moment in august the market was also up 8% year-to-date and took flight so you had an acceleration at this point in the year i think it was largely the market pricing in a greater likelihood of the tax cut and europe and the rest of the world started to grow faster >> with multiples where they are, rates headed higher, you need the other side of things to go up. we have trade fears with -- who knows what will happen with aluminum >> i changed that one. aluminum it's a different word altogether mike, how much is the last leg of this pushing us above the record highs it's not just this weekend and yesterday, it was the last two weeks that it's been week. >> it's been part of the setup here you mentioned the trade wars i think the trade agreements, the progress on that front, the greatest help to the markets is at forestalling the idea of an

emerging markets meltdown, a dollar rally that will get to new highs. if you charted it, the dollar is down almost 2% that's when the market got this extra lift above the highs >> just weigh in on what these two are going back and forth about earlier. if you just said -- >> pronunciation >> not that. where you were going back and forth about our economy versus the rest of the world and how that helps you said last year other economies were doing well and we got a gain from that can we also outperform if others are doing worse and we're doing better >> if you look at the results from yesterday, foreign stocks have been doing better than the u.s. the u.s. has been the place to hide as this unfolded. it's not an either/or, but of course you can the big question is have we pulled forward a lot of capex and corporate good news this year

the earnings estimates are holding up >> stock bye bauybacks will pro continue >> $1 trillion of buybacks and dividends from u.s. companies, that's a big help. >> stick around. listen to jeff south i think he can help. jeff south is chief investment strategist at raymond james, and michael tielyler joins us. in the past when i intimated that maybe we were getting long in the tooth, you get mad. you don't entertain the idea that the bull will keep going. kudos for that you still feel the same way even from here? >> i do. the secular bull markets do not end in a 20% or 30% pullback you saw the 1949 to 1966 secular

bull market have a number of those pullbacks. didn't stop the bull market. same thing in '82 to 2000. you had a crash in '87, did that end the secular bull market? it didn't. it was a bad day but it didn't end the secular bull market. we think the market has legs for at least another six, seven years, maybe, maybe into 2027. >> so you don't really necessarily think a 20% pullback even puts you into a new phase you think that could be part of a secular bull if we were to go down 20% >> yeah. >> you do. >> i do. i don't think it constitutes a bear market. alan shaw, i believe at smith barney decades ago came up with that but i don't buy it it may be a tactical bear market, but it doesn't interrupt a secular bull >> used to listen to him on the real "squawk box" in the morning. alan shaw and marshall akoff

who else some other guys there. any way, alan shaw was one of the first technicians, mike. do you remember him? >> i do. >> newton was before, newton zinder was awesome, too. any way, michael, you're not a slouch you are bullish, too, even from here >> exactly there's no sign of recession there's no sign of excess valuation. nothing that will push the markets down right now and in fact, you know, as somebody else said earlier, there's a lot of good tailwinds still affecting the market the breadth on the market has been widening, not narrowing that also suggests we're not quite at the end the fed has been favorable in fact, it looks like they're beginning to think about the end of a rate cycle, which could be bullish, especially with paired

with steepening activities so, all in all, we're still bullish. >> when was the last secular bull end and what precipitated it how long -- in your view, you have some interesting things when is the last one and how long did the secular bear last must have been a while ago this secular bull started in '81, didn't it around there >> no. >> when did it start >> 2000. after the 666 on the s&p how did that happen? 666. was that it? 92% of the stocks traded on the bottom most people think it began in march of 2009. fair enough if you went to use that nobody measures the '82 to 2000 secular bull market from the

nominal price low in december '74. they measure from when the indices broke out from the previous highs everyone wants to mek sure th s one from the nominal low in '89. >> jeff, let me ask you, if you think there's six or seven years potentially left in this bull market, are we going to go six or seven years without a recession? we're talking about 16 years of an expansion that would be unprecedented. whenever you start putting new money in there, when unemployment is 4%, forward multiples have not been that great. are we in a new era? >> that's fair enough. i argued the downturn was so severe and the recovery so muted, you have elongated the mid cycle. so is it different this time, which you're not supposed to

ask? yeah, it is different this time. we also had a shift from tangible assets on corporate balance sheets to intangible assets, which you can't put on the balance sheets intangible assets by definition require higher valuation metrics than historic norms. >> you say slightly overweight stocks versus bonds. that sounds of wishy-washy that's all >> i don't think stocks are ridiculously cheap they're at 16 times earnings, late cycle i disagree with jeff at some point we will have a recession in the next several years. it's not imminent now. at some point we will go over the top. we're closer to that now i think bonds are undeniably expensive. we will not see a return to the ultra low rates that we saw a year and a half ago. i think bond prices, especially if the feed steepens, are likely

toe go down. in that environment maybe stocks have some room to move i think we can get another few percent this year. probably a bit of gain next year i will not go out on a limb and say we have seven years of gains in front of us we'll have a bear market sooner or later for right now, i don't think we're whistling past the graveyard. i'm more cautious than jeff. >> in the short-term we have pushed to these record highs again on the back of a strong august which has been on low volume do we get a short-term wakeup call pushing into september? >> september historically is the worst calendar month for stocks. and i suppose there's some risk that what the fed says at the next rate meetings is going to have some impact by in large i don't think so i think we'll continue inching ahead. volatility is back down. corporate news is all positive

you know, one thing that's gone on is that second quarter earnings exceeded estimates and exceeded the first quarter we're all talking about have we hit peak earnings yet? no, earnings growth is doing well i don't see fundamentally, aside from short-term blips, i don't see we'll have meaningful downturns, september not wi notwithstanding, the rest of the year looks pretty good. >> gentlemen, thanks i wonder about geopolitics, i wonder just about politics, i wonder about november, all you guys want to talk about is the fed. we'll have some interesting things on the horizon coming up. we'll try to figure that out thanks mike, you're leaving >> out of here >> thanks for being here >> i'll see these guys later >> you want to hang out with us "closing bell?

>> that's a long day are you coming >> i might stop by >> we'll hold him to that. >> stop by quickly monkeys might fly out of my nose, too. but -- >> let's see >> i said nose >> mm-hmm. when we come back, talk about a big reopening. fao schwarz trying for a comeback but they need your help please please we have that story after the break. christmas is coming fast big toy story would be great let's look at biggest premarket winners and losers in the dow this morning

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the retail location will open in rockefeller center in november and emphasize the experience and purchase fao schwarz will be holding auditions for its staff. they are looking for performers who can dance on the big piano they are also auditioning magicians, product demonstrators and various costumed actors. >> i remember the first time coming to new york being taken there by my dad and godfather. >> i'm thrilled they're coming back >> i was a little disappointed when i moved here, i went there -- it was a great experience as a child. i was less impressed >> did you go with your brothers >> yeah. >> they are dressed -- did you go there looking like that that must have been -- >> that was for a picture. >> we became more of an attraction than the rest of the

store. >> he's not kidding. >> we may have to dredge those up we've shown them >> i'm tempted to push you on who you said i know who your godfather is >> not that one. i have six god parents >> really, six how did you get away with that >> prince charles? >> lots of friends >> no. >> nixon nixon and frost. >> i'm not sure he would have accepted the offer to be god parent to any of the frost children they remained sort of close. >> okay. usually this is in september, but whenever you go back to school i try to curry favor with the teachers blake is starting today. now it's college you remember, that's when we started. >> my gosh >> that's when we started. now she's -- i can't believe it,

but a freshman at penn it's been a big -- very traumatic for parents. i don't know how parents do it it happens to everyone look at that she was in there somewhere that's 2022 it says there. she's in that group on a football field in penn we took her down once we got the team of interior decorators coming to a conclusion on what to do with the dorm room -- >> penelope and blake? >> and a friend. >> awe >> it's hard, wilf you're in a different phase of life but in terms of where you are, but this will happen to you. >> i can't wait. >> it will happen to you >> i don't want to think about it >> it is -- >> she's been gone since last week >> classes start today jeremy siegel is down there. thinking about making him a godfather. >> you can have up to six.

>> you know, life goes on, obviously, but it is a change. you know it's never going to be like it was. it's hard but it's all good. >> best years of your life, i think. after that, you have to get serious jobs it's still fun if you enjoy your job, but it's more serious >> i leaving home. there's classes you worry about. social things. >> you're thinking about what it means at home for you. but for blake, being there -- >> scotty. >> it's like, my gosh. >> congratulations >> we wish her the best. >> i want her to focus, you know i knows there other things going on can't mail it in at penn >> you won't worry about the classes at all she'll have a fun time >> joe says no >> wait. wait coming up, president trump's economic adviser delivering a trade message to canada

yesterday here on cnbc >> we hope canada is watching carefully at how successful negotiations can go. >> and we'll talk to the ceo of the canadian american business council next. and our newsmaker today is steven mnuchin that's coming up at 8:00 a.m. eastern. as we head to break here's yesterday's s&p 500 winners and losers

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back among the stories front and center, reports last week said the aramco ipo was shelved, now we're getting insight as to why. king salman's father stepped in and shut it down he met with bankers and senior oil executives who told him an ipo would bring full disclosure of all of saudi aramco's financial dealings following those meetings the king sent a message demanding that the ipo be called off saudi's energy minister last week said saudi was still commit

ed to doing the ipo. papa john's founder john schnatter is making a number of accusations against the new ceo, steve ritchie, claiming the source of the company's poor performance is rot at the top. in a letter to franchisees, schnatter blames ritchie for bad financial decisions, insufficient management skills a toxic senior management culture and serious misconduct at the top levels of our leadership. this is a saga we'll see what happens toyota is investing about $500 million in uber as part of an agreement with the companies to work together on autonomous vehicles uber will integrate self-driving technology into its toyota sienna minivans for use in it's ride hailing network we'll talk to a gentleman from waymo later this morning >> he had been with gm for many

years. he knows the traditional auto industry very well >> not until 2040 is when it's supposed to come into effect >> it seems like a long time, but that's everywhere. you will see all kinds of places doing this >> u.s. equity futures are up again after a big gain yesterday. new records in the s&p and the nasdaq you can see all green again today. the united states and mexico reaching a trade agreement here'slarry kudlow on "closing bell" yesterday delivering a trade warning to canada. >> we really would like a deal with them. there's a bunch of issues. we've been at it for some time they know the issues, we know the issues but i must say from time to time, the president has said if we can't reach a good, strong, fair deal with canada, we might

have to resort -- the u.s. might have to resort to auto tariffs >> joining us now is maryscott greenwood. good morning thank you for joining us >> good morning. thanks for having me what do you think about this latest news, the idea that the united states and mexico reached at least an agreement in understanding? >> i think it's a positive development. and if you watch the oval office, that bizarre press availability in the oval office with the president of mexico on the speakerphone, what the mexicans said repeatedly is canada has got to be at the table. the united states wants canada at table, too. but there's tough rhetoric, they want to make sure they negotiate in as harsh and crude a way as possible but i think we'll get there. minister freeland is on her way, and we'll have a week of talks

that i hope will end up with an agreement by the end of this week what are the biggest sticking points >> are several difficult issues. dispute resolution is a big one. in hockey terms, what the u.s. wants to do is pum the rll the f the ice. the canadians and mexicans think it's better to have dispute resolution mechanism in there. the united states has concerns about the so-called supply management system, the system that canada uses to manage dairy and agriculture. canada has issues on u.s. government prodaughtermengol government procurement i think that if the canadians lace up their skates and come prepared to compromise and the u.s. comes prepared, we can get a deal mexico has given quite a lot on rules of origin in the auto sector >> i heard the sun setting

clause was another big issue the u.s. and mexico agreed in theory on the idea of having this agreement sunset. what do you feel would happen there? >> you're right. the u.s. was saying in five years the deal should automatically expire both mexico and canada said that's difficult you don't get investment certainty. nobody makes five-year plans large capital projects have 30-year, 40-year time frames so the xlcompromise was a 16-yer deal with the possibility of extension. the u.s. put water in its line so the sunset is a good example of an issue where there was a big disagreement, and at least two of the three sides have come together i think canada will be okay with that compromise. >> what's the reaction in canada

to the announcement yesterday? do people still back the dovement for not being involved throughout the negotiations and standing firm on certain issues? is there huge pressure to get on board this week? >> i think the reaction in canada is they don't like being talked about the way they're talked about they don't like the threats of the section 232 tariffs, national security tariffs being levied on the auto sector. that being said, canada has been involved in good faith the past year they kept their powder dry now is the time to negotiate canadians don't like the way they're being treated but they understand it's important to get a deal done if they can. i think there will be a lot of interest in trying to get this thing concluded in a reasonable time frame the other thing that canada has begun to appreciate is the u.s. gets attention deficit on these things if we don't do a deal now, maybe the u.s. turns its attention to

china or other deals >> you think something could be done by the end of this week >> i do. ten chapters have closed through all of these rounds of negotiation going on for the last year. bilateral between u.s. and mexico was only the last few weeks, and even though canada was not in the room, canadian ideas were on the table. there's only a handful of tough issues left. if both sides, canada and the united states, agree to negotiate, mexico is already there. >> how quickly do you think relations could be recovered to their very best level? you mentioned people don't like being talked about and threatened with auto tariffs, if a deal is done is all of that water under the bridge can they come together and be best of friends again in a way that's positive for everyone >> i think the relationship can

proceed in a workman like fashion. i don't think we'll see a bromance like with prime minister trudeau and obama i don't predict a bro plamance happening with president trump and any world leader i do think the canada/u.s. relationship is so integrated, it has such a long history and it's so fast there's so many different issues, whether it's border issues, watershed issues ornate to, not to mention the commercial relationship. i think we can get there it's not pretty. i don't think the canadians appreciate it, but if we can get a nafta deal behind us, we can restore regular order, if you will >> scotty, thank you for your time today >> thanks. appreciate being with you guys still to come, tips for women to get ahead in business geared towards those without a trust fund or a pr team.

we'll talk to the author of the new book "leapfrog" straight ahead. and then dr. scott gottlieb will join us. and later, steve mnuchin will join us. you're watching "squawk box" on cnbc reese witherspoon tonight dare to dream big.

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all right. welcome back tiffany just out with its earnings the company reporting a beat on both the top and the bottom lines. quarterly earnings at 1$1.17 a share. comparable sales up by 8% compared to the 5.7 % forecast. tiffany also raising their full-year outlook. they are talking about big numbers, trying to understand what's in the third quarter numbers that they're anticipating they say a lot of things they've been implementing in the plan are starting to pay off. they do say that operating margin could be below the prior year as they continue to really

significantly invest in sgna higher investment spending in technology, marketing communications, merchandising. all in all a strong report across the board that stock up by 3.25% a few female ceos are departing corporate jobs our next guest's advice is to skip the corporate ladder altogether and build in their own corporation. we have the author of "le "leap frog." good morning to you. thanks for joining us. >> happy to be here. >> the take of this is that men use short ccuts to get ahead? should women be copying those sho shortcuts or is that something men should not be doing? >> we could argue the different strategies i think instead of maligning people who have trust funds who have savings accounts who can

fund their own businesses and fund their friends and families businesses, we need our own hacks. so the book is essentially 50 versions of shortcuts that women entrepreneurs can and need to use now. >> the trust fund one is interesting. that's a class issue, a wealth issue, it's not a male versus female issue, is it? >> even among wealthy families, the men tend to inherit the family offices, and the women inherit the philanthropic side of the family offices. >> this must be applying to 1% of the population. so what is the fix for the people that are not in that 1% >> which is to say most americans. >> right >> this is one thing that got me there wasn't a book anywhere, a business book enabling people and speaking to people in the united states that meets them where they are what we know about the shrinking middle class, what we know about

the average savings account of americans, even the name of the round which we call the friends and family round is irrelevant for 95% of americans who don't have savings accounts or friends and family who can write checks. >> somebody last week said a big part of the problem is when you go to find these vc funders, most of them are white men she was saying for african-american women it's particularly difficult to get funding. when african-american women get funded, it's about $60,000 on average versus over $1 million that a man will get. >> difficult is an understatement we hear the numbers tossed around, last year 2.5% of venture cap tap goiital women, s 0.25% for african-american women. we are completely out of the equation so i think in that case we go to other sources. one of my hacks, people are more

successful at getting crowd funding money. >> you talk about women taking on more gdebt is that based on mentality, they don't wish to do that or banks are not lending to them. >> it's a combination of all of those things we have a perception that debt is a bad thing but no startup is successful without that what happens, women are not getting the loans, but there are also resources like sba loans and other products that we're not taking advantage of. you make it to the top of things when you close a series "a," but not when you close a small sba >> books have been written saying women are great investors because they're more risk adverse that could be the counter issue here if you're not willing to take a risk and take on that debt, it's tough. we are talking jend specificgens

i hate doing that, but that's the point of the book. >> studies have found that women are not really risk adverse, they take risk at different points, risk at different stages, take risks for different reasons. i guarantee a woman taking a risk for something that will better the life of her kids or family will not be risk adverse at all it depends on context, but it's true women do run businesses differently, the reality is the way the numbers pan out we should be tripping over ourselves to invest, to loan, to basically seed the ecosystem of what is ultimately the most entrepreneurial community of all, specifically 8 out of every 10 women-owned businesses in this community is developed by a black or brown woman >> thank you very much for joining us >> thank you when we come back, as we

mentioned, tiffany just out with quarterly results. we'll dig through the numbers with dana telsey after this break. right now that stock is up by more than 5%. and then fda commissioner dr. scott gottlieb will join us to talk about lowering drug prices and fighting the opioid epidemic sq "squawk box" will be right bk.ac at&t provides edge-to-edge intelligence, covering virtually every part of your manufacturing business. & so this won't happen. because you've made sure this sensor and this machine are integrated. & she can talk to him, & yes... atta, boy. some people assign genders to machines. and you can be sure you won't have any problems. except for the daily theft of your danish. not cool! at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & this shipment will be delivered...

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all right, welcome back, everybody. tiffany just out with its quarterly results as we showed you beating on both the top and bottom lines and raising its outlook for the full year. joining us to break down the report is dana telse dana, the numbers are strong across the board the stock is up by better than 5% but when you look at that four-year guidance they're giving, that's before you saw a beat of 16 cents so are they being ultra conservative. >> it's the back half of the year and they mentioned they're going to increase investment spending whether it's marketing, whether it's investing in personalization, next year you'll have a ren nation of the flagship on 57th street they're

going to be doing. there's a lot of work to be done crm systems, visual presentation, there's a lot being done to modernize the tiffany message and grow constant currency comps. >> so watching the stock up does not suggest the street thinks they're being very conservative or the street doesn't care if they're investing and spendi spending -- >> as long as they drive top line growth they can spend people feel they're going to beat the numbers they put out there. >> so what's the big beat this quarter? what was the estimate? >> overall their same-store sales, it was 8%, the census was 7.3% europe was less worse. it came in down 1 and the expectation was down 4. >> so it's all top lines. >> and gross marge in came in a

64%. expectation was 62.7 so you have it on the top line and on the margin where you beat. >> and that was at a time when the street was anticipating putting a lot more into it so the margins didn't get crushed as much as expected. >> what works is the higher margin item. your lower priced goods and higher margin. the sales growth came from local customers, so you saw more locals rather than tourist spending, which is interesting also if you ever get a pop in tourism, that's going to help drive your top line even more. >> that's all interesting. dana, thank you for the quick analysis we really appreciate it. coming up, another retailer about to report talking about best buy we'll bring you the numbers and reaction on wall street. later, our news maker of the morning is steven mnuchin. he will join us at 8:00 a.m. from the white house to talk about the new trade deal with mexico we'll talk about china, i arteit "squawk box" will be right back.

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get ready to see it all tune in live, september 7th 8/7 central news makers come to "squawk box. we talk about the opioid addiction and the latest on trade from steven mnuchin. two interviews you can't afford to miss. can anything stop the bulls? we will get the latest on whether or not the market's climb can continue. plus saudi aramco's big -- is in jeopardy the second half of "squawk box" begins right now. >> announcer: live from the

beating heart of business, new york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in squawk box. >> see, you can do it, joe. >> i'm joe kernen along with becky quick and wilfred frost. u.s. futures up again, up 46 points before the big move yesterday and the trade deal and everything else we were talking about last week it seems every morning we come in, it's one of those periods where maybe it's low volume but for whatever reason there seems to be buying just about every day. august is not a good month but it's been good this year tiffany is out with quarterly numbers and the company was 16 cents above expectations revenue and sales forecasts also

raised its outlook and the stock has moderated its gains now. it had been up quite a bit more but still up 3.25%. twitter has suspended a total of 770 accounts for violations of its policies the company says 284 of those accounts engaged in what it called coordinated manipulation. many of those accounts appeared to have originated in iran swiss food giant nestle and starbucks have finalized a nearly $7.2 billion licensing deal nestle gets perpetual rights to sell starbucks' products globally as places other than the company's coffee shops the u.s. and mexico struck a trade deal yesterday that paved the way to replace nafta it will last 16 years and be reviewed every 6 years and must be approved by congress. it requires 75% of car contents must come from the region and sets wage guidelines for certain

jobs here's larry kudlow on cnbc yesterday taking a victory lap >> i think this is a big victory. it's a big victory for growth and prosperity, it's a big victory for cooperation, it's a big victory for free and fair trade. i think all of these things work together and, yes, one of the things he's argued for quite some time is bilateral negotiations are really more efficient than all these multi-lateral negotiations, whether it's three countries or 23 countries. i think that paid off with mexico >> 8:00 a.m. eastern time our news maker of the morning will be treasury secretary steven mnuchin. earnings just out from retailer best buy. the electronics retailer earning 91 cents per share for the second quarter that's 8 cents above estimates revenues also topped street forecasts. we'll have more on that in a moment it is down 6.5%.

we'll dig into the numbers and discuss that in a few minutes' time. in the meantime lets get right to the broader markets joining us for that conversation is brian nick, chief investment strategy at nuvene and brian leavitt. gentlemen, let's talk about the two things wejust talked about first up the trade talks with mexico and secondly earnings brian, let's start with you. what do you think is really driving the market why do you think we're seeing higher and higher every day? >> because corporate earnings continue to be good, companies are keeping more of what they make, and we're still in a benign -- relatively benign inflationary environment so this cycle doesn't end until you've seen a prolonged period of tightening my concern recently has been along the lines of the strong dollar and that has been part and parcel of concerns about where we're going with trade this is one step we need to see ultimately what this means for the united states and china because you would want

to see some alleviation in the strength of the dollar, some moderation in the dollar continue to support u.s. growth, help u.s. multi nationals, so this doesn't feel like the end of the cycle to me. >> brian, we did see just a little bit of the dollar giving back on the some of the strength of this news >> i don't think it's a coincidence that august 15th you saw the bottom of the chinese yuan against the u.s. dollar and that's been the date after which the s&p melted up. but concerns about the strong dollar as relates to how these economies will function going forward, once that dollar starts to pull back, it's been a pretty nice window for equity markets to go higher. >> i heard some analysis yesterday and saw some headlines about how people now think the yuan will not be a weapon in the trade war. do you think that's the case >> i think that's the optimistic case china has other things they can do to address their domestic concerns which don't pivot

around the trade relationship with the united states they have a slower economy, slower secular growth. they can do fiscal stimulus, all of those things don't spook international markets the way weakening their kcurrency does. >> this is a page out of the playbook a lot of former ambassadors said they wished we would take, which is come to an agreement with other trading partners like canada, mexico and europe, get everybody on the same page and go after the chinese with a little more force. so anybody who's thinking this means if we get an agreement with nafta that we're going to get a quick agreement with china could be mistaken. does that matter for the markets? >> yes, it does. they can be mistaken the initial reaction means that trump is backing off and the administration is backing off and we'll proceed and start ticking off these different trade agreements i don't think we get anything with china before the midterm elections and i think that uncertainty stays in the markets

and you'll feel that in the dollar in the near term there could be another leg of some dollar strength and some deterioration in foreign assets, but ultimately what we believe is these will get done, it will be in the best interests of the global economy, and the u.s. dollar is likely in a longer term decline given the big deficits we're going to run. we're in a longer term secular decline of the dollar. >> what are you telling investors to do? >> from my perspective, the environment hasn't changed significantly. u.s. growth is better. the question is whether that's sustainably better i suspect you'll see moderation into 2019. this is still a growth in a slow growth world environment for those worried about the recent strength in the dollar and what's happened in the emerging markets, emerging market valuations are quite cheap. growth looks sound you strip out turkey and argentina, i understand those are meaningful but more idiosyncratic, growth looks good. >> our growth in this country is

much better than globally and rates are going up i don't see how you can forecast a weaker dollar as if it's just a given. i don't know why the dollar wouldn't stay in an uptrendi we have not gone to a new consistent higher level. >> that's your view but i don't know whether that's true or not. >> right >> the question is whether stimulus late in the cycle -- >> not just stimulus, but deregulation, the whole new corporate tax structure that makes us more competitive globally >> so what's your forecast for 2019 for gdp, back to 2% >> no, i think we'll see 2.5% growth in the united states but we're not going to be at 4% growth quarter over quarter. >> 2.5 is probably better than europe and a lot of the rest of the world. >> i think ultimately the federal reserve is going to have to back off, like we saw them do

in early 2016. i don't think -- they're going to run concerns of flattening the yield curve. we've got significant supply coming into the treasury market that in my mind needs to be funded if you think about the last time we ran really huge deficits, '04, '05, '06 after the bush era tax cuts, a lot of that money found its way overseas, the u.s. going out and purchasing foreign goods and that money getting back. >> brian and brian, thank you both for joining us, appreciate it retailer best buy as we mentioned earlier out with earnings this morning. stock lower despite beating on every metric for this quarter, but did give a current quarter earnings outlook that was below analysts' forecast it was forecast 79 to 84 cents eps for this quarter, the estimate had been 92 so a strong quarter just passed but weak

guidance going forward here to help us break down the numbers, moody's lead retail analyst. charlie, good morning to you. >> good morning. >> let's talk about this share price reaction i guess it has been up sort of 19% year to date, 30% over one year and the guidance for the holiday quarter sounding a bit soft. >> i wondering if this is priced for perfection best buy is one of the top performing retailers we've seen over the last couple of years. a few years ago, the world thought best buy was going to get amazoned and we didn't believe that we took a different view and thought management had a good strategy the stores would be assets it was a sector that lent itself to consultative selling where you want to go in and get some advice before you buy, something some of the products are big ticket, the appliances are big ticket i frankly don't understand why the market is disappointed. >> charlie, i asked for a three-year chart to show specifically it was $25.

best buy was being posited that you go to best buy to look at tvs to buy on amazon. >> right. >> and they did some things. they did magnolia, they did geek squad. the new guy, whatever his name is, totally transformed this and it's gone -- if we went back a little further it was a $10 stock a couple of years before that $10. now it's almost 79 what did they say about the third quarter? >> they guided 79 to 84 cents. >> that's a big miss, 92 cents because the full year they're raising the full year outlook, right? >> but charlie, going back to some other things to focus on, the credit quality you're also very happy with. >> yes. >> so there's no concerns there? >> no. best buy is one of the top credits in our retail portfolio. with the debt paydown this most recent quarter, it gets even

better best buy's metrics, i think if i were to have to handicap our portfolio in the u.s., costco is probably the strongest from a pure credit perspective. best buy is in there i would say uantitatively best buy looks better than walmart because walmart has been spending so much, the acquisition of flip cart layered in on that but best buy has been a very positive story for us for the last four or five years at least. it's an example of what can happen to brick and mortar when they unlock those stores and really double down on the customer experience. if you look, i'm thinking that online sales may have been a little off this quarter. i'm thinking they're probably low double digits. but you've got a big base. the stores are still critically important. so as i look at best buy, i'm not that worried about quarter over quarter because i'm a fixed income analyst, but there are just so many positives going on. the investments.

geek squad, all these ancillary businesses, the purchase of great call earlier this month will add to those services so i think the story for best buy will continue to be a positive one. >> charlie, thanks for joining us. >> thank you. when we come back, fda commissioner dr. scott gottlieb will join us right after this break to talk drug pricing america's war on opioid addiction and the state of health care. at 8:00 a.m. another interview with steven mnuchin. stick around for his comments on the possibility of auto tariffs. the ongoing trade talks and much more stay tuned, you are tcngwahi "squawk box" on cnbc this wi-fi is fast.

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simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. we're going to get to dr. scott gottlieb i don't know if you saw the article over the weekend in the weekend "wall street journal," but a lot of things facing the fda, a lot of nuance and it's something that i think dr. scott gottlieb has been talking to us about for years and years and now he's in a position to actually make some policy decisions. joining us now, fda commissioner dr. scott gottlieb good interview, scott. it was like required reading over the weekend you got a lot off your chest there too and it's -- you know what i decided from reading it things are really nuanced and you need -- it's not a sound

bite that tells us how to deal with prescription drug prices, chronic illnesses, opioid addiction. these are all things we need to approach carefully and methodically to try to make some headway on. >> it's a complicated environment. i think it's also an environment where we're seeing a lot of opportunity. there's tremendous progress being made we're still doing a lot to try to address issues of drug pricing and competition. we'll be announcing some new policies coming up i think there's a lot of unfinished business that we can attack. >> can you be more clear about what some of these initiatives might be in terms of competition? >> sure. one of the places that we focused a lot of attention is on complex drugs. you saw the recent approval of the generic epipen we'll put out additional guidance to create pathways for complex drugs to come to market. we'll also address competition within the generic drug markets. competition between generic firms. one of the things we do is we disclose on our website what we call paragraph 4 certifications

when generic companies come and try to bust patents basically. we disclose when generic companies file paragraph 4 certifications we're going to start disclosing more information, like how many people have filed paragraph 4 certifications, whether or not we've awarded exclusivity to any generic firms, when the last patent expires that could be a blocking patent. whether or not there's been a generic approval this information will help make generic companies more competitive by allowing them to place bets on where the best opportunities are. also when generic firms would forfeit their 180 days of exclusivity. if you're attempting to bust a patent, you get 180 days of exclusivity on the market. sometimes we see generic firms just sit on those 180 days of exclusivity awards and not actually try to prosecute their

applications and get the drugs onto the market, so we're going to put out guidance saying when we think generic firms forfeit that 180 days of exclusivity after about 30 months when they give it up so another firm could come in and try to prosecute the application. >> that was one of the points of the piece over the weekend the first to market scares away second, third and fourth to market and they stay with the high prices and those aren't market forces. >> what we're seeing is that it's hard to be second or third to market if you're a branded drug so we see these drugs come to market targeting unmet medical needs and they're oftentimes breakthrough drugs that provide public health benefit. once those drugs come to the market we have data that demonstrates that it's taking longer for the second or third drug in that category or class to come to the market. in many cases we're seeing these bre

breakthrough designated drugs go without competition for many, many years. >> why because the one that comes out, that's what doctors prescribe and it just isn't worth it for the second or third company to try to do it they can't get their name in front of physicians or something? >> i think there's a whole host of reasons but one of them is if your targeting an unmet medical need and there's a drug available on the market for that medical need, it's harder to run a clinical trial you can't run a placebo-controlled trial because people want active therapy. >> clinical trials are a whole issue, trying to get a placebo-controlled trial and you're trying to shift that to more -- you know, there's trials going on everywhere with certain things that might not be controlled because it's so hard to do with a placebo, but that sounds like a hard -- to try to just look at historical data or something. that's going to be hard to do too. you need placebo-controlled trials for certain things, don't you? >> we put out guidance in the oncology setting we're

discouraging placebo-controlled trials and looking at active comparisons to standard of care because it's hard to do the placebo trials in that setting and it might not be ethical to withhold treatment. >> i was fascinated by something in your interview on the weekend around the pricing and payment methods for certain drugs and how that hasn't adapted with time as certain new drugs that manage to cure a disease as opposed to reduce the sufferin of someone suffering from a disease until they may reach the end of their life. the payment models haven't adapted to deal with those real ground-breaking drugs which fully cure our disease and we need to change our way of thinking towards those can you explain that a bit more? >> i think the old model for drug development was you would take a drug oftentimes for life. the cost of developing the drug would be amortized over the life of the patient what we're seeing are curative therapy with maybe just one

administration of a medical product like a gene therapy product or regenerative medicine, things like that, so you have to front load all of the costs of development and the return on investment and the cost of the risk capital in a one-time administration. we don't have good ways in the health care system to amortize those over time. if we can develop a cure for sickle cell disease but it's a gene therapy product and a one-time administration, we might want to go out and cure a whole bunch of people but that can be very expensive if you have to assume those costs all at once. i don't think the system is structured to do that. we have to think of different ways to pay for treatment so week amortize them over time. >> does it risk excess criticism for high prices when in fact it's a must more justified high price? >> i don't know what the right price is for a treatment i think the right price is what the market will pay and the value it's delivering to

patients more importantly. i don't think that we have a sense of what the right price is in the marketplace we have a market-based pricing system that does try to reward innovation based on value that's delivering to the patient. the prices do reflect -- i think what we have to keep in mind, the prices do reflect the cost of capital and the risk inherent in drug development. when you think about investing in a drug development program, i was on the other side of this working on venture capital for many years, you think about the cost of capitalism it's not just the outlays you spent to try to develop the drug but it's the time cost of capital and you adjust what you're going to pay for the risk of the endeavor. ultimately you have to think about what your return on investment will be based on how you price the drug based on kauflt of capital. i think this where we can do a lot and reduce the cost of capital by trying to lower the risk. >> can you update us real quickly on efforts to stem this opioid crisis? we don't have a lot of time, but

where are we on that >> we're making progress we're going to put out data tomorrow showing that the prescription use of opioids in the retail setting, the medical setting have declined and are continuing to decline. but at the same time we've seen rates of use of illicit products go up and the rate of seizures of fentanyl increase dramatically it does raise concerns that the declines we're seeing in the medical setting is being offset and maybe even dwarfed by rises in illicit drug use. so i think the nature of this challenge is changing. we're going to announce that we took action against 21 websites that were selling illicit opioids and brings to 70 the number of websites that we've targeted over the summer and tried to shut down obviously just a small fraction. we're also working with social media sites and other intermediaries to target these websites that oftentimes are the entities selling these drugs, these illicit drugs. >> that's crazy. i can't believe that goes on anyway, fda commissioner dr. scott gottlieb, thank you. >> thanks a lot. >> update us in a few weeks or

months and we'll see you again, thanks. when we return, tariff exemption denied plains are hit with tariffs for a steel pipeline carrying crude. we'll get a report on why their request for exemption was denied and how it's affecting business. take a look at the futures, there are green arrows across the board. the nasdaq yesterday crossing 8,000 for the first time this morning indicated up another 16 points. the dow was up 1% yesterday. it's indicated up 54 points and the s&p which set another record yet up by just over 4 points stick around, "squawk box" will be right back. with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

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cnbc live from the nasdaq market site in times square we'll get a fresh read on u.s. home prices in 90 minutes time it is expected to show a year over year increase of 6.5% checking in on shares of electronics retailer best buy, they're falling despite a beat on both the top and bottom lines for best buy's second quarter. however, it did give a current quarter earnings forecast that falls below wall street consensus at 5.7%. another retailer seeing its stock surge this morning, dsw reported quarterly earnings of 63 cents per share, 17 cents above estimates. comparable store sales rose 9.7%, nearly four times the consensus estimate that's up 21%. in december plains all-american ordered materials from a mill in greece to build a $1.1 billion pipeline. the steel pipes began arriving

last month even though it was ordered before the trade war began, plains needs to pay a tariff of $40 million. the request for exemption has been denied and leslie joins us with more on that story. leslie, good morning. >> reporter: hey, becky, that's right. behind me is pipe imported from greece you can see the tubes right here, they have stamps on them that say made from greece. they arrived on u.s. shores weeks ago, but they were ordered, as you mentioned, back in december, well before there was any talk of tariffs. upon reaching u.s. shores, this project, a $1.1 billion project to bring crude from the basin where we're standing now to corpus christi, that project is subject to an added $40 million in tariffs thanks to the enactment of the tariffs this year now, the company filed for an exemption, was denied the ability to exempt this steel

from tariffs the reason for that is because commerce department said that the steel that they were importing from greece could actually be sourced by domestic producers, but the company says that the exemptions process should actually prevent these retroactive tariffs from taking place as well as protect against critical infrastructure projects like pipelines to deliver crude oil. at the end of the day, though, this is kind of a similar chorus we're hearing from companies about flaws that they see in the exemptions process, especially as we can hear from oil and gas industry companies >> there have been instances where a single company has filed two petitions and one has been accepted and the other denied, despite the fact that the petitions were virtually identical. so it makes this process seem quite arbitrary. >> reporter: now, the commerce

department cotold cnbc they believe the exemptions process is transparent, that it's fair, and they gave us a statement saying that the commerce department is not in the business of rewarding such behavior behavior meaning importing foreign steel. before the tariffs, steel imports threatened to impair the national security by eroding our domestic industry. with the tariffs in place, that is no longer the case. one of the big questions especially for u.s. oil and gas companies is if they are now to rely on domestic producers, are the domestic producers ready and available to supply them with the steel they need, guys. >> leslie, what happens? i mean this is a situation that has changed pretty rapidly and we could see change again if some of these tariffs are taken off. is it any steel that was delivered during the time while the tariffs was on you'll have to pay those tariffs no matter what >> reporter: exactly so you are -- even if you ordered it last year, two years ago, three years ago, you have to pay the tariff as that import

reaches u.s. shores, which was the case here. they ordered it back in december, but it takes about six to nine months for this type of steel to get produced, rolled, shipped over here on the various vessels. they haven't received all of their shipments yet, but they did start arriving early last month, which was after the point where the imposition of tariffs were in place. therefore, they were subjected to a $40 million tax on a project that they just weren't modeling, they weren't anticipating that extra cost to build these pipelines. >> leslie, thank you very much for that leslie picker in texas. let's get a broader check-in on the markets joining us is the editor of the shork report, steven shork good morning, steven i guess this recent dollar weakness has been helpful for oil prices. >> it certainly has. we of course in the wake of what we saw in turkey the past couple of weeks, we had a lot of

volatility with the dollar which certainly at one point was helping the bears, but certainly now with the weakness in the dollar, that is favorable for the oil bulls. we're also looking at a market right now that is really being kept afloat on headlines some of these headlines are old. venezuela, it's in the final chapter of its saga, iran sanctions. everyone knows those sanctions were coming up we do have some new headlines, of course. what we got out of iran yesterday threatening to choke off the strait of hormuz will put a geopolitical bid into the market and civil strife in libya is helping to propel the market. >> so overall, though, stephen, on the geopolitical point, are you saying that's already priced in net/net those issues or it could give a further boost to oil prices >> if we all know it, if we all know the headlines, then in theory it's all priced in

absolutely so when you get a market like this that lives up to headlines, you need more and more headlines to feed it but keep in mind, and listeners should also bear in mind that this is a market that's been extremely resilient. on top of the geopolitics, at the beginning of summer we had the loss of canadian imports because of an upgrader that went out in calgary so we lost a lot of imports there in may, a recent report by the eia told us that the state of texas, the refinery epicenter of the united states, was exporting 500,000 barrels more crude oil than it was taking in. and yet the consumer at the pump received a 7% discount this summer relative to the last five years. so the consumer and price was unaffected so while we do have these headlines, the market has been able to absorb these shocks and certainly keep the market well supplied now we're at the end of the summer, so to go back to our high school calculus, that dy over dx moment where record

demand will not transition into the fall, as refineries go into their maintenance season, they buy fewer barrels, demand is taken out of the market. if we are going to see any sort of pullback in price, i suspect it should occur over the next few weeks as this demand falls off. let's keep in mind that coming in october, we've 11 million barrels that will make its way to the market. that will certainly help quell any geopolitical headlines october is probably your weakest demand month for crude oil and we're getting an 11 million barrel surplus to hit the market then. >> clearly there was good news on trade yesterday with the mexico deal. but what about if things continue to worsen with china. they talked about l & g tariffs. is that a big potential impact for prices or is the fact that most of china's energy comes from asia, middle east anyway, it's kind of a headline but not a real factor. >> well, it's not a real factor for china per se, because at

this point they import a d de minimus amountin china outside of mexico has been the largest. if china goes ahead, and i am skeptical that china would go ahead and actually tariff the import of something important as l & g regardless of how small amount they import but at this point i'm racking it up to your point, just noise that the market has to contend with. >> stephen, great stuff. thank you for joining us this morning. >> thank you. >> unbelievable really. coming up, self-driving cars and the future of the auto industry just guest after guest the author of "autonomy" larry burns joins us after the break thursday becky quick will sit down with warren buffett ahead of his lunch with the winning bidder of the annual glide

foundation auction i'd ask her to tape it and run it on "squawk box" but that fell on deaf ears >> becky is doing "closing bell" today. she likes other shows. >> we have to do it live because there are other people after us. >> $3.3 million is what it's rated. we'll be right back. who would have thought, who would have guessed? an energy company helping cars emit less.

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welcome back to "squawk box. toyota is investing $500 million in uber and will partner to develop self-driving cars. the companies plan to launch a pilot program by 2021 but aren't saying where this is the latest in a series of partnerships between traditional automakers and tech companies. our next guest says it's not a matter of whether the self-driving car will disrupt the auto industry, it's a question of when, which i guess we all know that larry burns is a former gm executive who's now an advisor for google's self-driving car and author of "autonomy, the quest to build the driverless car. vancouver, we're talking about 2040 chandler, arizona, where it's

almost possible right now for early adopters i realize chandler, arizona, versus manhattan, the -- what you're trying to do is vastly different, isn't it? i've been -- when i was in tucson, they have a lot of room for growth out in arizona, do they not you can go miles without even seeing another car when will it be ready for manhattan? >> well, certainly the difference between chandler and manhattan is -- >> daunting. >> but that's by design. this is about learning it's about getting out on public roads and proving that the technology is safe and consumers like it and businesses can make money by developing it relative to manhattan, i've looked at manhattan carefully in the research i've done the taxi system, for example, has a lot of improvements that could be realized. i think we're probably maybe in a ten-year window where we could handle the complexity that you see. >> no kidding, ten years we're always going to have to look at counterfactuals, too,

because for every mishap or accident with self-driving, it is going to be played up to the hilt in the backdrop of that are the number of fatalities per year with driver-operated cars, but they're not going to get -- it doesn't get the same play so you're always going to have to deal with that. >> today there's 1.3 million people a year dying on the world's roadways that's epidemic in scale 90% or more of those crashes are due to human error, so i believe the biggest risk we have here is not realizing this potential as soon as possible if we get there one day sooner we'll save 3,000 lives this is about developing the technology, proving it out and getting it ready for everyone. >> were you a skeptic at one point? i would imagine being from to it and the auto industry there, it may have been something that you didn't necessarily believe at the very beginning >> i wasn't a skeptic but i did believe car-to-car communication was going to be a big part of the solution today i believe we can get this

done with digital maps, sensors and computers onboard. new york city i'm an optimistic technologist by nature i think we can do it. >> should the government be doing more to enable this going forward. if, say, there was a big infrastructure spend in the next couple of years, should this be built into the thinking? >> first of all, i don't think we need a lot of infrastructure spend to do this the real breakthrough is gps satellites and data so it's not dependent on roadway infrastructure i think the government has been doing a good job both at the federal and state job. they're allowing companies like wamo and others to do this work on public roads. that's the only place we'll prove it out so far they haven't put up any barriers to get in the way of that learning. >> i always -- i don't -- i haven't looked into it enough to understand how you just prevent systems from going down. it's just that i -- you know, my gps, if i'm in an area where it might take a couple of minutes

before it comes back, it's going to have to be onboard. >> basically you do have a gps, but you're downloading the information up the road for about a mile even if you lost your gps onboard the vehicle -- >> that's only 60 seconds if you're going 60 miles per hour. >> certainly hacking is a very important issue but that impacts all facets of our life, your medical records, your financial records, so this is not unique to self-driving cars. >> but one is a more quick life-and-death situation than another. it would be horrible to have your bank hacked or medical records that but if i had to choose between those or having my car hacked. >> or your airplane. >> exactly transportation is different. >> so there are experts out there working hard on that in order to put that robustness into the system. that's part of the learning process. again, we're looking at 40,000 americans dying on roadways right now. >> no question. >> so we've got to get to these solutions. it's a cure for this epidemic of

roadway transportation. >> do you think one company will get there first and be the best? do you think one will take an enormous amount of market share? >> certainly that possibility is there. this is complex technology to develop and it has a network scale behind it. i think it's going to be about providing the best experience for people riding around i call that the ultimate riding machine. that experience is more than just going from point a to point b. you have to do that safely, conveniently and affordably. so, yeah, this is a very, very important technology race. i think it's important for companies to be in it. >> from a distance it looks to me that not all of these companies kind of follow the same guidelines and the same rules. does it frustrate you when you see other players that maybe haven't been -- i think wamo has been better than many. >> wamo has an extraordinary safety record. over 8 million miles on public

roads. only one fender-bender we don't want wildcatters out there. when you saw fracking come on the scene, you had companies doing fracking without casing the pipes properly and we had leakage. i think the oil industry began to police itself on that so absolutely we want the best practices shared and we want them followed as we develop this technology. >> so when we talk about the window, is it going to take longer than we think or will it come on us quicker than we think? >> so far everything has happened faster than we think, but there's a lot of remaining tough challenges we've got the regulatory environment, consumer acceptance, cities need to accept this. we need to prove out the use cases. that's going to maybe slow it down a bit but again, i think we're going to be there. i think we need to be there sooner because the benefits are so compelling. we could be there sooner i think there will be the pushback of companies with vested interest in the 100-year-old system that will -- >> we've got to go

will conservatives be okay with google or will they be excluded? anyway, have you heard -- no, that's the news hook of the day. more and more stuff is coming out. if you search -- well, i'll show it to you. larry, thanks. >> thank you very much >> tell google i said that just for the heck of it larry, thanks. the new book is "autonomy, the quest to build the driverless car. >> you have to be careful in your car coming up at the top of the hour, treasury secretary steven mnuchin on the latest tariff talks, the deal with mexico and what canada might say when trade representatives arrive in washington today that news making interview straight ahead. a check on the futures after the dow's triple-digit gain yesterday and the nasdaq closing above 8,000 for the first time dow futures up by 60 points, s&p up by 4, the nasdaq up by another 16 "squawk box" will be right back.

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pharmaceuticals and akcea thera therapeutics are under pressure as the fda declines to approve a drug this same as a surprise to investors after an fda panel recommended approval for the drug earlier this year. nestle and starbucks say they have finalized their $7 billion licensing deal they will market the packaged coffees and teas around the world. 500 starbucks employees will shift to nestle as part of that deal. papa john's founder is making a number of accusations against papa john's new ceo, steve ritchie, claiming that the source of the company's poor performance is at his words rot at the top in a letter to franchisees he flames ritchie for bad decisions and insufficient management skills to correct them, a toxic senior management culture and serious misconduct at the top of the leadership

the reason it matters is because he still owns so much of the company. still to come, steven mnuchin joins us after the break. we'll talk about the trade deal with mexico, negotiating with canada and the state of the u.s. economy. our big squawk news maker interview is next. later, could miami be the city that wins amazon's hq 2 a look at what the city has to offer and why it may be a perfect fit for the company. "squawk box" will be right back. you always pay your insurance on time.

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amazon's second headquarters we are looking at the cities still in the standings the final hour of "squawk box" begins right now >> announcer: live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here at cnbc live at the nasdaq in times square i'm joe kernen along with becky quick and wilfred frost. it's the gateway to the entire world, isn't it, times square? that's what we think you might not agree, but it's one of them. >> i agree. >> it's one of them. there's some that are similar in front of parliament is second at least probably >> i'd take that the fifth biggest economy in the world. >> there it is, the crossroads

of the world and you can see "the lion king" if you want. the dow jones up 66 points so far on the premarket session nasdaq up almost 20, s&p indicated up 5 nasdaq and s&p, it would be new highs for both and the dow is not far from a new high. a couple of percentage points, i think. there is the 10-year 2.85 as far as the treasury yield. still below 3% i don't know listening to powell last week and just the whole environment, i don't know, 3.25 or 2.5 i don't know. >> i wouldn't place a bet. >> i wouldn't either. >> we are looking forward to speaking with secretary mnuchin in just a few minutes, but first some corporate headlines this morning. three retail stocks on the move. shares of best buy are under pressure they're falling despite a beat on both the top and bottom lines for best buy's second quarter, but they did give current quarter guidance that was below

consensus. it's down 4% recovered off its lows, it was down 6% earlier. different story for tiffany. they earned $1.17 a share, 16 cents above estimates. also beat forecasts. dsw reported earnings of 63 cents per share, 17 cents above estimates. same-store sales rose 9.7%, nearly four times the estimate and that is up 21% for the moment, the ball is in canada's court. the united states reaching a preliminary deal with mexico with president trump's request to revamp nafta. right now attention turns north to negotiations with canada. joining us to talk about that is u.s. treasury secretary, steven mnuchin. mr. secretary, thank you for being here today we know that the agreement with mexico really centers on the auto industry, just in terms of rules of origin and potential

for pay in 40% to 45% of what has to go into these cars. what happens now with canada how firm do you think that these negotiations will be, and do you think something can wrap up this week >> well, i do, but let me first comment because there's been a lot of focus on autos. but these changes are much more than autos this is about autos, this is about intellectual property, this is about agriculture, this is about better deals for financial services, currency transparency and greater market access for our companies so this is really -- we did what the president's objectives were, which was to rebalance the relationship, to modernize it and create more market access. now we'll turn to canada and hopefully we'll get canada onboard. >> where are the biggest sticking points with canada right now of that list of things that you just laid out >> well, i don't anticipate there's going to be a lot of sticking points. i think that ambassador light

lighthizer has done a terrific job working on details we've made a lot of progress with canada and hopefully they'll come onboard if not, we'll move forward with mexico this is a great move forward for trade. >> let's talk about what happens if canada is not part of the deal the president laid out very clearly that he's ready to move on and have a u.s./mexico agreement. is that something that you think could get approved by congress >> i do. i think our objective is to try to get canada aboard quickly, but this is a great deal for american workers if you remember one thing, this deal is about more trade for u.s. companies in goods and services that's what we're focused on >> what would you think -- i know you think that there's been a lot that's been already cleared out with canada. we have had some optimistic guests earlier this morning who have joined us to say that they think a deal can get worked out by thursday or by friday, but of all the issues right now, i mean what do you think is going to be potentially a problem?

is it agriculture, because that's been such a huge sticking point between the united states and canada >> well, i'm not going to speculate on any one issue what i would say is the u.s. market and canadian markets are very intertwined it's important for them to get this deal and it's important for us to get this deal. so i think we'll be successful but again, if we don't, we'll move forward with mexico and then we'll reach a separate agreement with canada. so this is really about a trade win, this is about the president's economic agenda that we've been very clear from day one, tax reform, regulatory relief and trade and this is the first major component of the trade agreements. >> was mexico able to walk out of this negotiation and feel like they got anything on the other side i heard the long list of what we got. >> absolutely. ike this i think this is a win-win for mexican workers, labor prices. i think it's good for mexican companies. it creates certainty around

trade between mexico and the u.s. and i think we look very much forward to working with the new government on their priorities. >> some market analysts have looked at this and said great, if we can get a deal done with mexico, bring canada into that, wrap that up in quick succession and then we can move on to talks with china others say, wait a second, maybe what we're doing is lining up our friends and allies so we can take a tougher stance when it comes to china what's the more accurate representation of what you think is happening >> well, our objective, and we put them in three categories the first was nafta, the second is dealing with the eu, which we are making progress on, and the third is china and we've been very clear, we need better market access to china, we need reciprocal trade. these are issues that our allies in the g7 agree with us on we need better protection for intellectual property. we need to make sure that we have reasonable access into their markets. this can't be a one-way transaction where they have free trade here and we have no trade

there. >> if we are successful in wrapping things up with canada by friday and moving ahead with nafta, what's the timeline for europe and then the timeline for china? how do you see things playing out? >> well, as you know, these are complicated issues we are progressing on the eu conversation, so since president juncker was here we made progress on those conversations. china had a team here last week. these are not issues that are going to be resolved in any one or two meetings, but if they're serious about the types of commitments they were talking about, then it's a move in the right direction. but we've heard these issues before so it can't just be talk, it has to be follow-through as well. >> secretary mnuchin, after this talk last week the chinese have stemmed the fall in the yuan late last week and early this week was that something you pressed them to do do you welcome that move >> we do one of the top issues we discussed was the currency

as part of any deal, we would want to make sure that they support their currency we're not going to have a situation where we pick up gains in trade to only lose them in currency devaluation and as part of the nafta deal, for the first time we have a very strong currency chapter that talks about currency transparency, so this is something we're very much focused on in all of our trading relationships. >> so if they manipulate it stronger, that's okay. it's the way we'd like them to manipulate so we don't call them a manipulator if it's in the direction that favors us where are we on whether we do declare china as a currency manipulator, because it seems that they did some manipulation last week. >> well, if you look at what's going on in the currency, and you are correct, to the extent that they go in and support the currency, and again, this is something -- their currency is more of a controlled currency than other markets that are completely free access but if they go in and support their currency, that is not

currency manipulation. if they let their currency weaken, either for structural reasons or for actual manipulation, that is something that's manipulation and, again, this is one of the important issues but let me just say there's lots of important issues. we need to make sure our technology is protected, we need to make sure our companies aren't forced into joint ventures, an we need to make sure we have fair market access. that's what this is all about, so we can have a level playing field for our companies and our products. >> secretary mnuchin, what you're trying to achieve with china, both the starting point and where you're trying to get to sounds like much bigger structural changes than the adjustments that you've made with mexico, which even still took a full year how optimistic are you that something can be agreed that's palatable to you and the president? and if it's not, how much pain are you willing to inflict on the chinese economy? do you think their economy is already starting to feel a bit of pain?

are you willing to push them to the brink, if necessary? >> well, if china just signed on to the same mexico agreement, we'd have no problem we'd have a surplus with china so these are -- >> but they're not going to do that. >> these are not complicated issues but they're not going to do that, but they have to open their markets. that's what this is about. as the president said, it's not just about buying more soybeans, but we're happy for them to buy more soybeans. this is about structural changes that create fair market access. >> and would you be content to push them into a recession, if necessary, and cause serious harm to chinese workers? >> we're not looking to do harm to them, we're looking to create benefits for our workers so the tariffs are about protecting our companies and protecting our workers we're not looking to have impact on their economy but they have grown off of our workers and our companies and that's something the president is very focused on he wants a fair, reciprocal relationship i think that's something that's

pretty simple. it's something that other countries in the g7 feel the same way about the good news here is a lot of people questioned whether we'd get a deal with mexico we got it. we're now dealing with canada, the eu, and we'll simultaneously work on what we call wto 2.0 to bring -- modernize the world trade organization into the 21st century, and that's something that i've been speaking to my counterparts, ambassador lighthizer has done a phenomenal job speaking to his counterparts, and jared kushner was terrific in managing these issues with mexico as well. >> mr. secretary, did you listen to jay powell's comments last week >> i did read them >> so is he -- can you give us a little color on how you thought -- we had bullard on here saying don't mess with the yield curve. he almost sounded like he thought we were at neutral already. i don't think that's what jay powell was saying.

do you think we're already at neutral and would you persuade chairman powell not to raise rates any more do you agree with the president in that respect? >> well, i think, as you know, as treasury secretary, i respect the independence of the fed. i meet with jay powell on a weekly basis we talk about a lot of economic issues it would be inappropriate for me to comment on interest rates in that position. but what i would say is i think jay has been a phenomenal leader at the fed i think he understands the issue of growth and he's carefully monitoring the growth numbers and the inflation numbers and we'll see. i, for one, am not at all concerned about the yield curve. i don't think that's a predictor of economic growth i think it's a market condition. and for now having a flat yield curve with us issuing long-term debt is something we're perfectly content with. >> as rates go up, you know the dollar gets stronger you prefer a weaker dollar, i've

been told in the past. >> i'm not going to comment on the dollar i'm not falling for that one this morning. >> you're so ready >> i was close it was a nice try. >> i take it back. there was that one time when you may have -- your body language may have intimated that maybe you'd be comfortable with a lower dollar and you're not going to go there again. >> i thought at that time i gave a rather balanced comment on the dollar, which people interpreted because it was balanced it was different than previous treasury secretaries, but i'll leave it at that. >> let me ask you this what you just said isthat you think we shouldn't fear an inverted yield curve or something that's happened with this and other people could interpret that to say you're okay with rates being raised again. >> no, you shouldn't interpret that's what i'm saying at all because i'm not commenting on rates. what i'm saying is that the shape of the yield curve itself is not something that i'm at all concerned about. the shape of the yield curve could be because of people --

the market's projection of where rates are in the future and perhaps the market thinks we'll have a lower end point on rates. so i just -- i don't think it's something that we need to be so focused on what i think we need to be focused on is great economic growth in this country the fact that we've had 4% gdp, the fact that we're going to be over 3% for the year, we are delivering on what was the president's economic agenda about creating growth. i'd also just comment on wages are going up i know some people comment that the numbers don't show that, but let me just say with new people coming into the workforce at lower wages, that's going to show on a gross level some different things, but wages are going up on same people. and the president is delivering on his economic plan that's what this is all about. >> secretary mnuchin, this morning uk prime minister theresa may said a no deal brexit wouldn't be the end of the world. do you agree with that and do

you in fact welcome a sort of no deal from the uk side because it might allow you to do a fuller free trade deal with the uk? >> well, we are very much ready to do a free trade deal with the uk, so whenever they're ready, as president trump has said, they're at the front of the bus, not the back of the bus. they're a great ally, they're a great trading partner in financial services and goods and we welcome more opportunities for u.s. companies and u.s. companies more trade >> it took you a year with mexico how quickly could this be pulled together after march 2019 when the uk leaves, a month, a year, how long >> well, i'm not going to speculate, but, again, i would say we have a lot of similarities in the u.s. and uk markets that i think should allow us to do a quick deal. >> i realize that in the month of april, the united states saw the largest-ever monthly budget surplus because individual tax receipts skyrocketed what have we seen in the months

since then >> you know, the thing about the tax receipts, and we should be very focused because this obviously is a good thing as we see trillions of dollars coming back but i wouldn't be too short term focused on the numbers because as you know with automatic expensing, which creates enormous capital investment, that's going to have a negative impact short term on taxes so our tax plan was really designed to stimulate the economy and get growth so we're humming along on what our projections are. as i've said, at 3% economic growth, this tax plan will not only pay for itself but will create additional revenues for the government. >> secretary, do you ever think about entitlement reform does that ever come into your aura in terms of -- and i'm just talking about deficits are rising we're -- not just from the last year and a half, but you saw what happened in the previous eight years. so we're at a pretty big number. i never hear any talk about

entitlements anymore that's where most of the spending is. do you have a plan will it ever be on your plate? maybe after the next election? >> well, we do talk about deficits and it is something longer term we're focused on the first phase was to create growth the next phase will be responsible on the deficit side. i think as you know the president was very focused on getting military spending. it was very important. that was a big strategic issue to get that, the democrats required an enormous increase in non-military spending which longer term we can't afford. so we will be looking at deficits but the good news is that the economic growth of the tax plan will create a lot of revenues to help reduce this over time. >> mr. treasury secretary, we appreciate your time today thank you for joining us. >> thank you coming up, a top exec from shopify will join us with a unique snapshot of the u.s. consumer this company helps more than

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welcome back e-commerce platform shopify powers more than 600,000 businesses it's most successful merchants are leveraging social media for profit and pointing to a big shift in the retail sector joining us is the chief operating officer. >> thanks for having me. >> shopify just to explain quickly is the software behind various retail companies' webs. >> yeah. >> you help them difficult their website to make it different. >> we have more than 600,000 stores the objective of the company is to level the playing field and make it really easy for anyone with a product or great idea to build a wonderful online store some of those stores that started at their mom's kitchen table have grown to 100, 200 or even a billion dollars on our platform. >> what you're suggesting is new is that people have aborted the one shop for all platform like amazon online and want to go to

individual websites instead. >> in the last 20 years or so, e-commerce has done about $1.9 trillion and in the next couple of years it will go to $4 trillion when you say that, a lot of people assume amazon amazon actually plays a role for the things that you need, the things with bar codes on it, diapers, toilet paper, toothpaste, amazon is a great place to buy those things. if you want to buy a cool pair of kicks or something from tommy john, a lot of those are powered by shopify we're trying to make it really easy for small businesses to start and grow really large. >> the $1.9 trillion figure you mentioned already, has that largely gone into the amazon-type products or has it been evenly split. there's growth for amazon and for your customers >> the merchants on shopify have sold more than $55 billion consumers are really excited about going direct to the manufacturer or product owner. in many ways commerce should have been a direct to consumer

model, but it wasn't able to do so because it didn't have distribution what's happened now is the internet gives everyone distribution so you can be a store like chubbies or movement watches and you can start on shopify and go direct to the consumer and build a business without having to share your profits with amazon. >> and have brands already caught hold of the power or is there growth to come >> social media has become a marketing tool for brands because it doesn't mean necessarily the brand with the highest capital or the most money is able to win social media provides an opportunity for these incredible brands to actually find consumers just by using resourcefulness and creativity and doesn't necessarily take a lot of money if you look at fashion nova on shopify that have become billion dollar brands or kylie

cosmetics, most of that growth came from social media. >> okay, harley, thanks very much when we return, where in the world is scott cohn? he is covering the front-runners and long shots to win the amazon hq2. >> reporter: one of the things we know about the company is that it wants and needs to expand its presence in latin america. so why not build the second quarters here in miami where there's already a construction boom and they want amazon to be a part of it we'll tell you why miami thinks it may have a special edge over the 19 other competitors atomg up later on on "squawk box. at u.s. bank, we believe one small change can echo throughout an entire community. that's why we proudly support, invest and volunteer in communities like yours.

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welcome back we've been watching the futures this morning after another strong day for the markets yesterday where both the s&p 500 and the nasdaq set new records with the nasdaq crossing 8,000 for the first time ever, you're looking this morning, 63 points higher for the dow futures, up by 5 for the s&p futures, the nasdaq up by 24 when we come back, washington reacts to treasury secretary mnuchin's comments right here on "squawk box. we have a live report from capitol hill "squawk box" will be right back. >> we did what the president's objectives were, which was to rebalance the relationship, to

modernize it and create more market access. now we'll turn to canada and hopefully we'll get canada onboard. ♪

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all right, good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning, the latest reading on home prices just about 30 minutes away the monthly report is expected to show a 6.5% year-over-year increase for home prices for the month of june. that would be identical to the may reading. b.j.'s wholesale issuing its first earnings report since going public in late june. they earned 31 cents a share for the second quarter, 4 cents better than expected revenue also topping forecasts but it's current revenue forecast is a little short of consensus and the stock is off by just over 1%. toyota is investing half a billion dollars in uber.

we th they will work together on developing self-driving cars canada's foreign minister will be in washington today for trade talks. this comes after the u.s. and mexico struck a preliminary deal yesterday to overhaul nafta. eamon javers joins us with the latest. >> reporter: good morning. the latest is your guys' interview with steven mnuchin within the past half how, the secretary offering some thoughts on bringing in canada. he didn't want to answer becky's specific question on which sectors could be a sticking point in the negotiations, but he did offer his sense on the way forward here for the united states and canada. here's what he said. >> i'm not going to speculate on any one issue. what i would say is the u.s. market and the canadian markets are very intertwined it's important for them to get this deal and it's important for us to get this deal. so i think we'll be successful but again, if we don't, we'll

move forward with mexico and then we'll reach a separate agreement with canada. >> so treasury secretary there saying that the united states is comfortable moving forward with just a bilateral deal with mexico that echos the statements of other officials yesterday who suggested that in fact the united states is perfectly prepared to move forward with mexico alone of course behind the scenes officials suggest that they really do want canada to sign onboard by the end of this week. that gives them a fighting chance at getting a new nafta deal done and signed by the current president of mexico before he turns over the reins of power to the incoming president-elect. politically that would make things easier but it depends on that canada piece coming into place by friday of this week and that's the big unknown, guys. >> when would our congress get to vote on it? >> i asked the u.s. trade representative that in the roosevelt room yesterday at the white house. he said ultimately they'll have to send a formal notification to

congress and then congress has to hold hearings, they have to write a bill and they have to have at the end of the day a straight up or down vote, so that could be a long process you could be looking at months here before anything is officially approved up on capitol hill >> would nancy and chuck sign anything trump negotiated? >> that's a fascinating question, isn't it >> what about nancy and sid? >> i asked him if he thought he had the votes on the hill. republicans control the hill there's an election coming up in november, but that's a long way off. he said they're not ready to start counting votes yet they haven't looked at what the vote count is, but he did say that he thinks labor likes this and he thinks business likes this and that's the beginning of a coalition between democrats and republicans. >> and maybe big business -- maybe free market guys maybe don't like it. so i don't know. it's strange bedfellows. i don't know what's going to happen >> where are the free market guys on capitol hill these days? >> is there going to be -- >> you never know. that's why we have jobs, right

>> is there going to be a 538 -- >> we'll speculate about what it all means after november. >> i love watching all that stuff, the probabilities. >> the little needle >> they're so accurate anyway, it is fun to handicap it what's the average loss, 28 seats or 29 seats? >> a midterm election for any president, the first midterm is usually a loss, right, it usually can be pretty bad. we've seen some devastating losses for previous presidents where they lose control. that first two-year window is the window where presidents really pass the bulk of their agenda, and then after that it can be tangling with a hostile congress for the next two years and then battling into a re-elect so the phases of the presidency shift. we're about to see the phase of this presidency shift from one where he was -- he had the votes and was able to pass legislation that he liked, the tax bill was the number one thing that he got done in his first two years and then we'll see what the second two years looks like but oftentimes the agenda

cupboard is empty. >> is there anything stronger than hostile for your adjective there? i've seen some hostile congresses in the past but you may need a new word for this congress don't you think? >> i'm going to hit up my thesaurus. >> republicans have been circulating a list of investigations they think democrats will begin if they get the gavel in all these different committees up on capitol hill. they're right and they might be underestimating the number of things that democrats want to investigate. look at what republicans did when barack obama was president in terms of irs, benghazi, all these issues republicans had concerns about and wanted to investigate. i think you'll see the mirror image of that maybe with a multiplier on that. >> thanks, eamon joining us now antonio, the former head of economic affairs at the mexican embassy

so antonio, you've seen some of the changes to the old nafta they're at least saying there's positive things for mexico there. do you see that? >> i would say that the positive things is an end to uncertainty. as you know investors hate uncertainty. they don't like tariffs, but they hate uncertainty even more than tariffs that's a big deal. secondly, the sunset clause, which was pretty controversial, has been watered down. and then there is a strong dispute settlement mechanism mexico wants to have a level playing field. the u.s. is big, mexico small, so mexico needs to have a dispute resolution to deal with big neighbor up north. so those are good things for mexico. >> what about the idea of the sunset i'm still a little unenclosuclen it this is a 16-year deal meaning

it has to be reviewed every six years? we agree to just take a look at it >> that's right. the original idea was sudden death after five years unless the three parties agreed otherwise. and that generates uncertainty and that was an absolute no-go so i think that was a creative solution i'm okay with the new sunset. >> what do you think of this minimum wage, $16 an hour in certain areas. is that a significant percentage increase for many workers in mexico and how is it going to be policed and enforced from the u.s. side? >> to be frank, i don't think you will be seeing $16 dollar an hour wages in mexico so the idea is that high wage production would take place in the u.s. or canada, if canada joins, and high labor intensive production, for example, in car seats, the wiring will take place in mexico. what is unprecedented is that in free trade agreements you have

regional rules of origin you don't have national rules of origin even though this is called $16 an hour wage, you could put u.s. or canada. that's equivalent. this is a whole new ball game. >> nafta already existed, so we understand that there are political, i guess, manipulation of free trade to some extent it's never going to be perfect it's in ever going to be where everything flows freely. the journal is criticizing this trade deal, "the wall street journal" in that we are manipulating or president trump is deregulating everything domestic but adding to international regulations. does this new deal lessen the regulations under nafta or are we just layering on more things for business to deal with in both mexico and the united states >> well, the original nafta is like a phone book. it's hundreds of rules

so it was really in a way managed trade. one way trade is managed is through rules of origin. because you have free trades with regard to tariffs, zero tariffs. but to get zero tariffs, you need to be producing regionally. what is considered regionally? that's what you get to rules of origin that's where you get managed trade. so there was managed trade before and there is managed trade now. i do think the rules of origin on oautos are pretty strict and are complex. companies will have to c calculate, do they live with the new nafta rules? the threat to do the 232 national security tariffs on autos, if that goes into play, again, that's a complete game-changer and companies could be jammed. it's nafta or nothing. >> what is the situation just in terms of whether this will be a

tri-lateral deal or a bilateral deal, because i'm confused i've read conflicting statements out of mexico as to whether or not they would go ahead with this without canada? >> so mexico very badly wants a tri-lateral deal, but at the end of the day it's a decision that canada has to make from an economic perspective, canada will suffer high costs if it's excluded from the new agreement, so it's not only benefits of membership, if they're left out it will be very problematic for them politically it will be difficult for the prime minister to say, well, i'm negotiated under pressure an i received something that looks like an ultimatum so sign by friday or we're going to go alone with mexico. the politics are complicated, the economics are more clear. >> does nafta cease to exist if there's not a deal agreed to by friday what's your understanding of this >> for nafta to cease to exist, the u.s. would have to withdraw and that's a six-month process so the u.s. would still have to

deal with that. >> election time in canada too i mean is there any way trudeau can do this politically? >> i think it will be one of the most difficult decisions in his mandate. so the economics are there even though there are some tough issues for example, nafta chapter 19 which deals with unfair trade practices, dumping, has been eliminated in the preliminary agreement between mexico and the u.s. and for canada, that's a very important mechanism. you've heard about lumber and all that, so chapter 19 goes away, canada doesn't like it secondly, protection for by l j biologics. ten years is more than canada wanted and more than canada gave in the tpp and a lot of ag frictions between canada and the u.s how they will deal with that over the next couple days, i don't know >> antonio ortiz mena, thank

you. we appreciate it. >> thank you. coming up, what is the dollar telling us about the expectations for trade talks currencies right now not moving too much the euro is up a third of 1%, but the dollar pausing its recent pullback. we'll talk currency structures next. later this week don't miss becky's live interview with warren buffett he'll sit down with head of his lunch with the winning bidder from the glide foundation. that's thursday at 11:00 a.m. eastern time on quk le"sawaly" here on cnbc bu you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. healthier brain. better life.

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welcome back to "squawk box. check this out, we've got a new video of russian president vladimir putin on vacation he kept his shirt on this year. >> okay. >> the kremlin released the video of putin hiking and boating in siberia along with his defense minister and head of his secret service he described the beauty of the area as a fairy tale forest. >> it looks pretty nice for siberia. >> siberia is meant to be stunning when it's not minus -- for two weeks a year. >> where do you want to go, siberia? we use it -- >> exile. >> there may be great fishing up there. not that i like fishing. people go there for salmon. putin isn't the only world leader having a little fun check this out video going viral of british prime minister theresa may,

having a lot of fun lately trying out her dance moves as she visited a school in capetown may was welcomed by a group of children performing a dance routine and joined in. she started a three-nation visit to africa in capetown today and met south africa's president >> i just feel for her here. >> i give her credit for jumping in and being part of the whole thing. >> and the video is much better with our music when i first watched it silently, it looked quite cringe worthy >> none of us will look great. >> that's what i mean, it's like your worst nightmare. >> i give her credit she's jumping in and taking part in the meantime let's see how currencies are reacting to the announced trade deal between the united states and mexico and expectations for talks with canada that we assume will begin today. joining us is adam cole adam, maybe the biggest piece of news is what we heard from the

treasury secretary just a little bit ago when he told us that the currency manipulation issue did come up in the talks with china last week, that we've seen the yuan strengthen and that's probably very likely because of a direct result of these talks what do you think of that? >> so i think that the yuan is being actually managed quite passively at the moment. we see most of the direction being a reflection of broad dollar direction the dollar is driving the yuan rather than the other way around that could clearly change and china could maintain the threat of using the currency as a weapon in a trade war, but at the moment we don't see much evidence that that's happening actually it would appear that it's still being managed against a broader basket of currencies it's the dollar general direction that's driving the yuan largely. >> where do you think the dollar is going to be headed over the slightly longer term, over the

next one to three months >> so we still think higher. the consensus, i think, is still negative for the dollar. we started the year with a very negative tone for the dollar if you look at analysts' forecasts, the consensus is the dollar goes down broadly going forward. i think the reasons for that are the twin deficits, the prospect of relatively strong global growth we think the dollar direction is much more conventional than that it's being driven by policy divergence in the dollar's favor. that is a feature of our expectations going forward, the fed continues to tighten the rest of the world in aggregate does very little in terms of policy so we think the dollar continues to grind gradually higher the rest of the year. >> if it's hard to look at it looking at different economies that the dollar will have weakness and wondering how much is baked in. jay powell was a little less

forceful than some anticipated he might be. maybe that's what you see happening in the market right now? >> so i think the debate we have in the rest of this year is about what happens to fed policy next year. i do agree the direction of fed policy for the rest of this year and for that matter for ecb and boj policy is pretty much set out already. where i think we differ from the way the market is priced is the flat profile for rates through the course of next year. as i say, i think the debate we have the remainder of this year is whether the u.s. policy moves more in line with the dot plot or more in line with the forward curve, and we tend more towards the dot plot which is a steadier process of higher rates through the course of next year also >> all right, adam, thanks for your time today. when we return, scott cohn takes a look at one city contending to be the host of amazon's hq2 this was a perfect assignment for you, scott, start traveling

around different places to find the winner here you are. >> reporter: that's right. that's what we do. so there's 20 total locations, as you know, and this one in miami hasn't been in a lot of the buzz, a lot of the talk about it, but the people here say it should be. think they ha edge kind of a personal connection when it comes to jeff bezos. the ceo of amazon. we'll tell you what it is and we'll have our report card amr amazon race report card on mii coming up next we're voya. we stay with you to and through retirement. so you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that tie. voya. helping you to and through retirement. ayep, and my teeth are yellow.? time for whitestrips. crest glamorous white whitestrips are the only ada-accepted whitening strips proven to be safe and effective. and they whiten 25x better than a leading whitening toothpaste. crest. healthy, beautiful smiles for life.

♪ 20 cities now waiting for amazon to announce a decision on its $5 billion hq2 project to. cnbc is visiting as many of the potential locations as we can. today's stop is miami. that's where we find scott conan. the $5 billion thing is bezoes self-funding it? what will he do with the money >> reporter: that's a good idea.

that's a good idea we can visit more and more of these. we'll see what happens still no word from amazon about a decision so we are continuing to make our way around to these 20 finalists and today we're on the ninth floor of the 58-story paramount tower, which is part of the miami world center development which is under construction, as you can see, around me if some people have their way, this apartment balcony that i'm standing on will overlook a key part of the project amazon's hq 2. it's one of the their joes being offered. miami is a great place for transportation, including a gateway to latin america it has low costs, relatively friendly regulations, and it has people. >> we have one of the most diverse talent pools you'll find anywhere in the united states. it's a talent pool that is highly educated. people are coming here from all over the world. >> and if none of that is

enough, how about this palmetto high school alma mater of one jeffrey bezos the 1982 valedictorian. he got good grades in high school here is our report card for miami. we give it an a plus for population pretty good on stability and business friendliness. miami does have a shortage of tech workers, but a solid infrastructure overall so we the city a grade of a b plus not bad in the overall scheme of things we have report cards for all the finalists at topstates.cnbc.com. amazon is saying it will make a final decision sometime this year guys >> hey, scott.

has anyone gotten an "a. some are getting low marks who has come out on top so far >> well, so we've redone the report cards now there are 20 finalists so we can focus on them. and two locations got an "a-minus." they're the two locations in texas. austin and dallas. both getting a minus there's some quality of life issues in texas we talk about in terms of top states but it's a diverse economy. and good work forces in both places great transportation, particularly in dallas so they do well. but then you get places like boston, like miami, like atlanta and certainly the three sites of the d.c. area you have to consider some tough decisions to make the hope is maybe jeff bezos will feels like coming home.

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that does it for us today. make sure you join us today on "closing bell" at 3:00 3:00 to 5:00. >> i got to be there at 3:00 >> 3:00. >> now it's time for "squawk on the street." ♪ good tuesday morning welcome to squawk "squawk on the street." futures continue to add to gains after record closes monday for the s&p, russell, and nasdaq and trade a point of focus as canada heads to the ba