office qus q office" is leaving the streaming service. it's wednesday, june 26, 2019. "squawk box" begins right now. ♪ 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 becky quick along with joe kernen and andrew ross sorkin. let's take a look at what's been happening this morning steven mnuchin making news in the last hour -- mnuchin gave a progress update on trade negotiations with china that helped to drive the futures higher >> i'm hopeful we see a deal but there needs to be the right efforts in place this is not a deal for having the sake of a deal there is a path to complete

this >> that sort of optimism helping things out the dow futures implied to open up about 118 points higher this comes after a decline for the markets yesterday. the dow was down about 180 points yesterday you saw bigger declines in percentage terms from the s&p and the nasdaq with the s&p down 1%, and the nasdaq down by 1.5%. this morning green arrows across the board. nasdaq indicated up by 67 points the s&p indicated up by 14 if you want to look at the overseas markets in asia, you will see the nikkei was actually in a situation where we have green arrows this morning in europe, but the nikkei down by a half percentage point. shanghai down by 0.2%. hang seng ended higher by just over a tenth of a percent. in europe there are green arrows across the board look and you'll see right now the dax is up by 0.6%. it's the biggest advancer of the major averages there everyone looking better this morning after though comments

from mnuchin look at the treasury market. ten-year note yielding just above 2% apple has confirmed to cnbc that it has purchased autonomous vehicle startup drive.ai the purchase price not disclosed. the last time they raised money, the company was worth 77 -- or raised $77 million in venture funding. reports say that the startup was in the process of shuttering its business in california just about two weeks ago, and apple stepped in to hire dozens of its engineers and purchase the startups cars and other assets apple currently testing lexus suvs in california they have safety drivers behind the wheel still. the larger context of the story is it is suggestive if you had any thought they weren't getting

into the autonomous vehicle space or whether they were scaling back, this is at least a signal from a relatively secretive company about what their next ventures and plans are. then along similar lines, elon musk sent another company-wide email and this was leaked as well interesting because talking about some record levels if certain conditions are met ceos rallying employees to work hard to hit the aggressive vehicle production and delivery goals for the second quarter and musk said tesla is on track to set an all-time vehicle delivery record, but it will be very close. he said getting the right vehicles to the right locations would be extremely important it bounced off the lows. >> it was about $178 in the first week of june remember that? >> nice move from there. >> it's been a volatile

situation. separately, netflix will lose its number one show in 2021. that's when its license for reruns of "the office" run out and the show will move to a new streaming service being launched by nbc universal "the office" accounted for 52 billion viewing minutes for netflix in 2018. the show was shopped to disney, apple and warner media warner media coming out with its own plans, and disney with the disney plus service before the rights were acquired in a deal other popular series could soon leave netflix for streaming services launched by their owe original production companies including "friends." team talked about "friends." >> i thought that was number one. >> that sitcom would move to the warner media platform. the series was produced by warner brothers.

you think of these svod platforms, or now avod platforms, you think it's usually about the new programming you hear about, the new dramas, that's not what people watch >> why is it different than the situation in cable where these series really just stretched out cable and even in some cases broadcast. you have this huge important library that people will stick around to watch again and again. >> but they never used these types of shows oddly enough to market -- they use all the new shows to market -- netflix has their ad out here. they've marketing all these new shows. you will never see an ad for "the office" on the billboard. >> you don't have to >> that was the news i needed. 52 billion minutes worth they should do seconds to get into the trillions i think that would be -- 52

billion minutes. >> divided by -- >> multiply -- >> i think it would be 3 trillion >> i get your point. why not measure in hours or -- >> my point is to measure in seconds so you get to trillions. i would talk billions when you can talk trillions we learned that from him >> yes, michael meyers i think we did. >> from dr. evil or the little person -- mini me. i would go with trillions. coming up -- i had to work on that for a second. 6 times 52 billion would be 300 billion. so then ten on that, you get into the trillions >> yeah. >> put a dollar sign in front of it or a bitcoin sign did you see bitcoin? 12,000 now 126r7b8g9

>> 12,500. >> "deadwood" is out now >> yeah. >> i tried to watch that other thing? >> what "murder mystery? >> terrible. really bad really, really bad like a knockoff of -- >> i have not seen it. >> watch it and tell me. >> some people say it's the worst thing, and other people seem to love it. >> i forced my family to love it they were throwing things at me. they were. the only thing good about it was the popcorn. >> we went to a dinner with friends, the whole table was split. strange. >> terrible. doesn't have anything to do with nbc, right >> no. >> terrible. >> jay powell helping to drive wall street to the worst trading day of june. we'll show you what he said and what it could mean for your money next here's the premarket winners and losers in the dow.

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we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. fed chief jay powell warning against policy bending to short-term political interests here's what he said at an event at the council on foreign relations yesterday. >> this is a good time for consumers and spending data for consumers has been strong.

what's happened is you've seen weakness in manufacturing really around the world, and we can talk about that. that's a story that we're seeing consistently around the world. so we're looking at the overall situation, and wanting to see more frankly some of these developments really happened in the second half of the last intermeeting period i think it's important to not overreact in the short-term to things which may turn out to be temporary or transient >> markets slid a little following powell's comments with wall street logging its worst day of june. basically said we're still on track possibly to cut. i don't know i think it was more consumer confidence numbers yesterday which slid after some great months >> did you see what bullard said he will beehad been approached e white house to be moving to the fed board of governors some people said that caused

concern. were they looking at him as a replacement for powell >> people would love that. >> if it were interfering with powell's term. for more on the fed and the markets, let's bring in stephanie lang from homric hsh g and kevin giddis stephanie, you seem a bit defensive -- not defensive, but you like the dividend plays. is that a reflection of not being as bullish about the recent challenge to the new highs that we've seen with the markets? do you think we're getting close to full value? >> well, we like the dividend plays because quality stocks in the long-term will do better, but given where fixed income rates have gone, we think

investors will be clamoring for yield, and these dividend plays have some of the higher yields out there. in addition, just with all the volatility out there, we think that these types of names can provide downside protection to the market and so we're big believers in dividend payers that can grow their dividends over time. >> always or just in the interest rate environment we're finding ourselves in now >> we've had this since post-crisis. you know, back then yields were going lower quite a bit. we've backed off the higher dividend names for a while now we're quite constructive on those names. just given that yields are going quite lower again. >> no international exposure minimizing international exposure for what reason >> we still have some international exposure we've been underweight really since last september

what we were concerned about is that we're in a global slowdown, it started last april or may, and it's really gone prolonged we were thinking we might have seen a bottoming a couple months ago but with trump putting on the additional tariffs, we're concerned that will be prolonged there. and we had quite a bit of negative momentum. >> you know, kevin, i really was not thinking -- i almost said jj we have kinnehan on. it fib shouanybody should be jjs you. there's a movie, sorkin, "chi "chinatown?" >> yeah. >> i'm comparing it to "murder mystery. there was mystery. >> it was free you didn't pay anything for it

>> which time? >> for "murder mystery." >> you paid in the time it took to watch it. >> want my time back does that make sense, jj, what stephanie said about the environment we find in fixed income are we headed lower from here? >> yeah. i tend to agree with what stephanie said in a more traditional fixed income play, the reach for yield has been going on for some time and it's not new it's just enhanced now you have to look away from traditional treasuries, agencies, go on further into the corporate market that is probably a good market in the intermediate sector the tax-free market where you're getting 80%, 90%% of yields. if you want to reach a bit to leveraged etfs and muny funds,

that gives you more yield, but you also take on more leverage risk it's the same theme but enhanced since raet rates have fallen qa bit. >> we talked many times about whether policymakers are ever completely separating themselves from what we all feel about things they're still human. for him to say, you know, i'm not going to respond to this pli political stuff. i will do what i need to do. he's not immune to reacting to the onslaught from president trump. to me, it just seemed like he was sort of standing up for his independence and i may cut rates, but it's not going to be because of political pressure. it will be because i've seen enough ef that t enough evidence that the economy is slow. were you surprised by that

>> not at all. i thought he was building consensus for the market and the fed. i was not surprised there with you was dissension this is kind of a slow mover on its way to july. and 25 basis points is probably pretty much in the books he just needs to build up to it. >> kevin, you have ever really seen the fed anticipate correctly what the economy was going to do and preempt a weakening or an overheating? they have no idea usually. >> they missed the call for a lock time on inflation that's what hurts the fed more than economic growth they're trying to sustain the economic recovery now and still try to hold out hope for inflation in the future.

so i think that they've missed that for a while that's why they're in the boat they're in now if they'll just focus on trying to keep the economy going, let the rest of it fall into line, they can react to it in time >> stephanie, we'll finish up. this is a fixed income question. how long do you think we'll be in this position i'm thinking of retired people, anybody trying to live on fixed income are we stuck here below 3%, 4% for the next decade? >> i think low rates are here to stay for quite awhile. you look at the 13 trillion in negative yields globally i think there's going to be further pressure on the short end with the fed cutting rates yes, it's a tough spot for retirees that's why a lot of them are forced to go into riskier

assets >> we could go into how many cents 13 trillion is could you guys -- do you know what's next? >> gazillion >> no it's not a gazillion >> i'm going with gazillion. >> quadrillion >> someone say that to you >> no. >> you're right. >> you think i'm that dumb >> no. i couldn't go up with it >> i'm not dumb. i'm still going with gazillion >> where is gazillion? is there a gazillion >> no. >> i think ga-zoo was a gazillion miles from earth >> kazoo >> was it kazoo? we'll figure that out, stephanie. when you come back, will you do that for us? do you have a calculator >> i can figure that out >> how many cents is that that's

negative yields? i even like the two jakes, jj. i thought that was good. it got panned. that was the sequel to -- i like anything jack does don't you? >> yeah. >> he's insane kevin, thank you stephanie, thank you how about you, andrew? did you love nicholson is he your favorite? >> how could you not >> i met him once. >> did you really? >> yeah. he was very nice >> was he really >> yeah. i told him he was the -- i was like -- i was like a dog >> did he know who you were? >> no idea no idea. he knows lauren. >> lauren michael? >> love lauren when we come back, we'll talk about two big american companies that are both moving on huawei-related news we'll talk fedex and micron next

welcome back it's time for the executive edge fedex fourth quarter earnings and revenue beat forecasts the company is warning that u.s./china trade then shun tens quantitative ease profits in 2020

free smith says the company's lawsuit against the united states department of commerce is separate and distinct from recent shipping incidents involving huawei fedex's lawsuit said regulations requiring it to screen and block packages imposes an impossible burden smith said the lawsuit was about five new entities added to the u.s. blacklist with opaque requirements and he said violations result in a fine of $250,000 per package at the time they had said in the lawsuit, they're not a law enforcement agency, they're a shipping company >> think about the number of pack canals and they have to -- >> sure. and being responsible for anything inside of it. >> i saw fred on the other night. he would never do anything that -- >> intentionally >> right and just being a suit against the united states, it's -- he

felt pushed into -- >> so onerous these requirements to expect the shipping agency knows everything in every single pack can package and where it goes. >> if fred smith goes that way, i would have to give the benefit of the doubt to fred smith >> they made a very good point, the lawyers did in the lawsuit, they're not a federal enforcement agency they try to meet the standards and every requirement they can -- >> would we ever run brett baird tape >> they run stuff of us. >> they run "squawk box" stuff all the time. >> we're doing this as a fedex story, what does everyone think of the huawei story with these u.s. tech companies that are -- >> micron and stuff. >> still providing chips shares of micron are higher today. the chipmaker says it has resumed some shipments to huawei this after determining some products are not subject to the

u.s. export ban on that company. micron's third quarter results beating forecasts and it expects demand for chips to recover later on this year >> stock is up 10% >> yeah. >> what's interesting is these companies are getting squeezed by governments on both sides the chinese government called all of these companies in and said i better make sure that you are not doing anything explicitly to us that is not absolutely required by the u.s. government so i think they're looking at parsing this carefully >> even our own administration is parsing this carefully to give the microns and the intels of the world leeway in terms of what we're describing as american made. >> as we're in the middle of trade talks, too >> exactly. we have more coming up on "squawk box. let's tell you what's coming up next we'll get you caught up on political head lines that could have an impact on the markets today and your money. and we'll bring you some new data on china's economy as we

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welcome back to "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box" on cnbc look at u.s. equity futures at this hour. we're about three hours before the opening bell if it opened now, the dow would open 128 points higher

nasdaq about 70 points higher. s&p 500 up about 15 points time for our quick round up of the political headlines. robert mueller will testify in an open session of the house judiciary and intelligence committees it will happen on july 17th. in may he said he didn't believe it was appropriate for him to speak further and he wouldn't go beyond what was in the report in future testimony to congress stephanie grisham will succeed sarah sanders as white house press secretary. she was one of trump's first campaign hires as a press aide in 2015. tonight marks the first democratic debate of the 2020 presidential campaign. 10 of the 20 candidates who qualified will participate tonight including senator elizabeth warren, cory booker and amy klobuchar.

tomorrow we will do all of the highlights from the candidates economic plans, and we will see how different they all are all right. coming up, futures jumping on secretary mnuchin's comments on a u.s./china trade deal is 90% of the way done. how did china's economy perform last quarter then later, our guest host for the next hour is stephen moore. he'll weigh in on the fed's next move, the state of the economy and -- >> and crypto. >> he's a bitcoin maven with bitcoin now at 12,500. stay tuned you're watching "squawk box" on cnbc

welcome back u.s. equity futures at this hour have been higher we've been watching this through the morning. steven mnuchin was interviewed earlier on cnbc by hadley gamble he said that he's hopeful about a china trade deal getting done. said they're 90% of the way there. they've been 90% of the way there for quite awhile he sounded optimistic will u.s./china trade talks

>> i'm hopeful that we see a deal, but there needs to be the right efforts in place. this is not a deal for the sake of having a deal we were about 90% of the way there. we'll see what we get. >> stock futures did hpop on the news this is not the first time an administration official has made big comments like this only to knit a snag. eunice yoon joins us from beiji beijing. at least there's optimism heading into the talks this weekend. >> yeah. there appears to be some optimism but some of the latest we've been hear sergeant foreign ministry has been not commenting on some of the haven't repoven that we've heard about the u.s. considering holding off on

slapping china with new tariffs on 3$300 billion worth of goods. the talk here has been that that decision could come after presidents trump and president xi need at the g20 and then be used as a way to tout to the domestic audience back home that this is a win. so a senior trump administration official had said that from the u.s.'s perspective, this is the main goal, to make sure that they find a new path forward to try to restart the talks in fact, that official went on to say that they also wanted to make sure that the u.s. didn't in any way compromise its stance when it comes to tariffs but this doesn't bode well for the trade deal itself because the chinese have repeatedly said

they want their own preconditions in place and those preconditions have included their stance on tariffs as well. their stance has been that they want to make sure the u.s. lifts all imposed tariffs. so the case could come up at the trump/xi talks officially one thing that we have not really seen much is a response from china through state media or through the foreign ministry about federal express's lawsuit. just a couple minutes ago the global times said the suit shows the u.s. government violates market principles because it forced federal express's hand and argues that fedex's apparent fear about being added to china's unreliable entity list shows it is an effective tool, this list. and the exact line is that china cannot do without punishing foreign companies that don't follow market rules. >> eunice, separately we were

talking earlier this hour about a number of u.s. companies including micron and intel that are continuing to ship product to china, not just china but to huawei specifically, which is on that banned list as people talk in china where you are about whatever compromise may or may not be reached around huawei in this larger trade negotiation, is there some needle that can be thread here, meaning when the president talks about huawei as a national security risk but then also talks about it as part of this trade negotiation, is there someplace in the middle that this could work has anyone talked about what that looks like? >> well, there's definitely a sense here that there should be some sort of compromise because over and over, especially in the state media, people have been saying huawei is being very unfairly treated, and that at

the end of the day the two sides really need each other so i was talking to a couple of former officials in the chinese government who said that the two countries are so tightly knitted, and that when you look at the i.t. supply chain and the industries in general, it's just impossible to completely separate the two so there is a sense that there has to be some srt ort of way forward where the two will work continuously together what that path will be will be dependent on how the conversations go this weekend. >> eunice, thank you for that. i'm sure we'll talk to you a lot this week and next our next guest has exclusive data showing unsustainable growth of the chinese growth in the second quarter we want to welcome in leland miller your key economic indate kaeiai,

indicator 2019, we may have more leverage than we think >> people have been gloomy about china and been gloomy about trade, but you have antidotal snippets coming out of china this is wrong, that's wrong, people are panicked. that's caused the idea that china is on a precipitous downslope. it's not the improvement from the first quarter to the second quarter is clear. there's reasons for this you have an active credit situation now. the idea that the chinese economy is falling off the table right before the talks, that's not happening. >> when you think about the leverage points in this, who has the upper hand at this point >> the u.s. will always have the upper hand on this, they have the stronger trade relationship. president trump could get through with some hiccups if h wanted to put tariffs on the chinese economy and suffer through the re-election.

it would be much tougher for xi because huawei and other technology companies are under attack xi would have a hard time if they moved away from the table that means trump has more leverage we know trump wants a deal and a roaring stock market >> you are surprised there's not been a greater tickle down effect in china relative to the numbers that you seem to have in mind >> our numbers are days old. so they're days old. a lot of the negative monthly data what's come out is official data that's usually serve months lag behind ours. we would expect an upturn because you see so much tightness on credit reversed, first through broad borrowing and now through the return of shadow banks we used to talk about shadow banking all the time in china and about how that would effectively take down the country eventually in a sort of financial crisis of massive proportions. do you still have any worry

about that >> sure, that's a problem for another day. today we let them back in, they create growth and everything was good when people talk about deleveraging, that was a crack down on shadow finance >> why is the shadow banking business back in business in china? >> the chinese are preparing for the worst case scenario this year at this point it looks like you're going to get a reset at osaka like we've been saying for many weeks you will move towards a trade deal, but if they don't get that, they're preparing their economy for being able to cushion the fallout. the fallout would be significant. >> you think the reintroduction of this sort of shadow banking system -- >> re-emergence. >> these money market program s that are guaranteeing things that make no sense whatsoever, you think that's a centrally planned operation or do you think that was a market driven event that has happened because of a handful of financial

players are starting to introduce those products again this is beijing deciding there's a lot of equivocation last fall, do we continue on the path of a little bit of restrictions, little bit of reform and deleveraging, or batten down the happens and protect the economy against trump's trade war. the decision was made with bad data that we're going out out to protect the economy. you still see that if you see a turn up in the trade discussions, then the chinese are preparing themselves for a worst case scenario. >> if we have you on the air monday morning, what will you be telling everybody? what will we say happened? >> they'll reset talks punt on the tariffs. and you'll have that glide path to a deal if they want it. >> punt meaning they'll get rid of the tariffs or -- >> they're not taking off the old tariffs, unless the president gets excited and decides to pull back that's not what the white house is planning. the white house is planning to punt on the next tranche of tariffs which they have

tentatively scheduled to go into effect july 1st at 25% >> june neunice told us the chie position is to take off the tariffs -- >> for a deal. months down the line that will be in discussion that's one of the final sticking points but in terms it of resetting at osaka, they have to put huawei on the table explicitly or implicitly and punt on the tariffs. that's what the house is planning to do >> leland, thank you for coming in when we return, fedex reporting results last night what the numbers tell us about the trade war with china is straight ahead. and as we head to break a quick check of what's been happening in european markets right now. green arrows across the board. ftse relatively flat, so is the cac. the dax in germany up 0.4%ment "squawk x"ilbeig bk.bo wl rhtac excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away.

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welcome back, everybody. fedex beating on both the top and the bottom line yesterday, but the trade tensions with china also ending the contract with amazon could bring some pain in the year 2020. let's dig into the numbers some more joining us this morning on the "squawk" news line is christian wetherbee. christian, the market didn't seem surprised by hearing some of these profit warnings out there, the stock is actually higher this morning. what did you think of what you heard? >> yes so i think you're right. i think the market was relatively well prepared for what was probably going to be somewhat of a negative message coming from the company last night.

freight trends in general have been i think a lot softer than many predicted earlier this year including us and there's a number of factors playing out. but it seems like over the last month or so there's a greater concern by shippers and transportation companies the uncertainty around global trade issues is beginning to freeze people and keep them from making decisions for investing. i think that was, you know, anticipated to come through in fedex numbers and frankly it did. >> you know, the stock as we're looking at a chart over the last couple of months you can see how much it has come down. it was trading up at about $195 a couple of months ago you say though that even with the negative sentiment out there, there's a couple of big picture positives that have the potential to pay off over time what are they? >> yeah, so i think the biggest thing for us is the ongoing integration of its tnt acquisition which was made a few years ago. and they did suffer a major setback a couple of years ago when that business was hit with the cyber attack in the ukraine.

we think though over the course of the next sort of 24 months or so there's still meaningful accretion coming from that the company is sticking to its guns about the potential payoff from that. there's a big integration happening in the second half of the fiscal year and that should to pay out in fiscal 2021. i think that's one of the keys i think when you look at the rest of the business it's still relatively well leveraged. e-commerce, still a lot of volume growth opportunity there. we think as we get through fiscal '20 which will be a challenging year you're going to see some of the initiative particularly the six and seven day delivery initiatives begin to pay off you have to be patient and wait but we think there is a light at the end of the opportunitile >> walking away from amazon was the right decision >> probably. when you have the customers of size and amazon is relatively small for fedex, particularly relative to the competitors in this space you know, but i think as the company moves forward, it has a potential opportunity now to sell that message to some of the

other bigger customers who compete directly with amazon it's a lot less entrenched with amazon than its competitor and i think that ultimately is something they can use to their advantage. >> a lot of their revenue and earnings are coming from overseas at this point how big of a -- what we have already heard with the company getting called on the carpet from the chinese government. >> i think it's an issue, i think it's a meaningful issue. i think the segment is the biggest segment and that's where we see the international head winds sort of hit. when we look at the guide for fiscal '20 which game in below sell side expectations the biggest miss was on the express side they're calling for about a 10% decline in profit in the biggest business and the majority of those head winds are coming from sort of the global macro and slowing trade trends so i think it's something we need to be absolutely focused on you know, we're optimistic that

potentially we get some resolution as we move through the rest of this calendar year that could provide some upside as we move through their fiscal year. >> what do you think about the company's lawsuit against the u.s. department of commerce? just in terms of saying that it can't police every package. >> yeah. this has been an ongoing issue for fedex and u.p.s. for the last several years and it's kind of come across in a number of end markets but the reality is they do their best to monitor what's in the contents of the packages and where they're going. but it's difficult for them. i think, you know, the explanation that fred gave last night on the conference call made sense to us we'll see where it goes, but i think they'll adhere to the rules and laws out there so you have to give them some credit for that. >> thank you, christian. we should point out christian has a buy rating on the stock, a price rating of $192. let's get a check on the price of bitcoin interesting piece in "the wall street journal" today that --

did you read that? the hedge funds are short and individuals are the ones that -- >> yeah. >> which are responsible for 4-1 basis. but up at 12 -- over $12,500 $12,600 in the last week really surged. i don't know, was $20,000 the high >> i think higher than that. >> not much higher than that. >> we'll talk more -- we have a bitcoin -- >> we will talk about it, you know, warren buffett's i think -- i don't know. i think he's still think it's rat poisoned square. >> he has the glide luncheon there will be seven crypto guys. >> hoping to take sense into him and he'll probably talk sense into them. stephen moore -- >> he'll try to talk sense into all of us about crypto he is involved in a big crypto project. we will talk about that.

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stocks futures surging after treasury secretary said the trade deal is about 90% done taking on the trump economy. >> in this country our economy and our government belong to all of us. >> what will democratic presidential hopefuls say during tonight's debate we'll have a preview. and the stock market of things stockex matches buyers and the sellers and the ceo will join us as the second hour of "squawk box" begins right now. ♪ live from the beating part of business, new york. this is "squawk box."

>> good morning. welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin here with joe kernen and becky quick now stephen moore we'll talk about crypto in a moment but before we do that steve mnuchin is telling cnbc this morning that the trade deal between the united states and china is quote about 90% complete. >> i'm hopeful that we see a deal, but there needs to be the right efforts in place and this isn't -- you know, a deal for having the sake of a deal we were about 90% of the way there. i think there's a path to complete this. but we'll see where we get. >> that comment pushing futures higher this morning, but we should point out we have heard secretary mnuchin make -- i think we have heard the 90% number before, so should investors take a skeptical view or a positive view we'll find out in a couple of moments when president trump and

xi jinping will meet at the g20 summit in japan hoping to calm the 11-month trade war. so we introed that with the -- we still have it that the deal is 90% complete you can -- whether he said that or not, you heard exactly what he said. we were about 90% of the way there with the deal and i think there's a path to complete this. so now let's - >> reflective -- >> i don't know what currently -- >> have we taken back steps from the position or, you know >> i understand what he's saying i don't know -- it's not an exact science. i don't know where we are, but he's basically saying we're almost there, i think there's a path which sort of implies that they're looking at where we were at 90% maybe -- >> but the chinese aren't looking at where we were. >> let's get to the guest host you were asking us exactly what he means by this. >> trying to interpret it. >> trying to interpret it. >> so, you know, we talked about

yesterday, it was down 180 points isn't -- and 125 isn't that much either we have these little fluctuations but the bottom line is we're almost at new highs again. we hit new highs for the s&p and we're close with the dow so there's a lot of other things happening with china and separate from china. in the economy right now. >> right joe, when you look at what happened -- i'm a pro trump guy, obviously i worked with him on the campaign, on the economy the stock market was at 18,000 how the day before the election and now it's closing on 27,000 you know, if my math is right that's close to a 50% increase in equity values in 2 1/2 years so it's a damn good record on the stock market now, those comments i was trying to decipher what steve mnuchin was saying i know him, i know he's dedicated to getting this done and they understand the

implications if they don't get the deal done this year. to overuse a football cliche there's a big difference being on the ten yard line and scoring a touchdown. 90% of the way there is fine, but oftentimes, andrew, the last ten yards. i take some umbrage in the comment but i wouldn't overreact to it either >> do you think when you say they understand the political implications, you mean that steve mnuchin and the administration know if they don't get a trade deal done and the tariffs are weighing on the any in an election year it will much harder? >> i agree with that 100% and that doesn't say that trump will take any deal but it makes it easier to get a deal done. by the way, this isn't going to be solved in the next year or two. this is going to be the epic battle of our times. it will go on for ten or 15 years. the other thing i would say, if they get the deal done, from 90%

to 100%, joe, then i think you're talking about a big, big -- the upside on the economy and the stock market for getting this done are just huge. i think you're talking about the dow at 30,000 easily it releases the animal spirits of the economy i talked to the ceo of fedex recently and he's a good friend. he said the tariffs are killing our business now, he does a lot of business in china and that's an example of businesses that have been hurt. >> the issues that supposedly are most important to us are issues that aren't going to be solved china would have to fundamentally change the way it does business. >> what are the chances of that? >> yeah. >> i support trump -- i understand that this is having a negative impact on the economy and i think most americans are behind trump when we recognize -- >> but this could be the long game, this could be like a cold war. >> it could be that's exactly my point. you take it step by step. >> how do we get -- what does a

100% deal mean being sold or something? >> yeah. the chinese man -- they're going to buy more of our soybeans. and there has to be something on the intellectual property and the question of course is the chinese -- i have talked to the negotiators. they say we can get them to agree verbally. >> but not in the law. >> but we can't get them to agree to the metrics >> same with a lot of the deals. >> do you have a brilliant idea of how you solve the huawei problem? not just intellectual property problem, but the national security problem >> well, i mean, the -- you know, sanctions on huawei i think were exactly the right thing to do. i think that's hurting -- as they have even admitted is hurting that company very significantly. other than that, i mean i would just stick with the program. i think that's working you are right, huawei is incredibly abusive company in terms of national security and also i have gotten calls from companies all the time that say huawei, they're overt in terms

of stealing. >> no. intellectual property, not a question and clearly -- i don't know if it can be resolved but resolvable to the extent you can come up with a pact around intellectual property across the board. >> but their stuff is built on stolen - >> "a," if you open up the market and "b" if you believe there are enforceable protections not only around huawei but all chinese companies that's solvable. the national security piece is much harder to solve you're either a national security threat or you're not. >> and there's a new cold war, i think it is. and remember in the 1980s we had significant technology transfer, you know, restrictions, on what we sold to the soviet union. we may need to revisit that. one quick thing i know we're coming to a break. joe, you said they have to change their legal system on an intellectual property, but isn't that enough. they passed a law last year we won't steal your intellectual

property but it's just words on a piece of paper >> so it could be a tariff deal, but we don't go do 25%. >> it will expand u.s. markets to china and a very productive way. it will help the farmers. >> but then to be continued with all of the other stuff and it's not -- >> you know, in my opinion, that's not going to get resolved quickly. i mean, that is -- it's very difficult -- the chinese, by the way, a lot of the chinese governments they deny they're stealing our intellectual property the first step of resolution is to admit you have a problem and they won't admit that right now. >> right. >> let's talk about what we have heard from jay powell yesterday. he was speaking at a council of foreign relations event in new york the federal reserve chairman powell stressed that the central bank's independence emphasized that politics will not play a role in sustaining economic growth. >> anything that matters for the achievement of the dual mandate in principle can matter for us that is true of financial conditions and many other things

also, financial conditions, our policy works through the financial conditions we don't react to any -- it isn't one thing. but the broad range of financial conditions and we look for sustained changes. we try to look through short term changes >> again that's jay powell last night what do you think? >> look, i agree with what he just said. look, i don't agree with what they did last week and i was asked do you think the fed should be independent, yes, i do i think the president should have the right to weigh in, i agree with what you're doing or not. i think that's appropriate. >> but the fed can take it or leave it. >> exactly i mean, so this is -- look, i think powell has done -- i give a "b." you know we've got low interest rates, strong employment. we have rising wages, a good economy. i think what they did late last year did take some growth off the economy. i think it really hurt, but i think we're back -- and by the

way, is there that big of a difference between what they stay where they right now or cut by a quarter point at the margin you can make a positive contribution to the economy. but we're -- look, i'm bullish on the economy, especially if we get the trade deal done. >> bullish on the economy, but that the interest rates won't rise any time soon >> they better not i'm much more worried about deflation than inflation right now. i'm -- people say oh you're just a dove on inflation, no, i'm not. i want stable prices but look, i talk to the farmers, i talk to people who are selling minerals and commodities. they're facing a tough time. oil is up, you know, a bit now. >> that's the worst you have been called in the last couple of months people call you a dove there's been some other -- haven't there been more colorful terms -- i wouldn't mind being called a dove. it's a sweet bird. >> i think they'll cut the rates the next time. that's a good thing. and i have a question for you

guys because you cover this closer than i do if you're going to cut rates, do it now. >> part of it they don't want to give the president more -- >> there might be some of that but then who's playing politics, right? we won't do the right thing -- >> but trump has been -- you know, just relentless on powell recently. >> who, trump? of course. >> yeah. last week -- >> he's only human, powell. >> when trump gave the presidential medal of freedom to arthur laffer -- >> he says he's not threatening powell but then makes the comments that sound threatening. i mean, how -- you know, you know, some people would argue it's your nomination - >> i think it's counterproductive for what he wants. >> i told the president this i think it's fine for him to criticize the fed when he thinks

they're not promoting the economy. i think it's inappropriate to say i want to get rid of powell. unless he does something egregious, a criminal activity or something like that then i don't think -- by the way, let's not forget, donald trump appointed jerome powell. not like this is an obama leftover. >> and back him into the corner where he really resists doing what he might have done by now he's the new jeff sessions now. >> remember what happened in january. this bull market began in early january when the fed had to put its tail between the legs and admit that it had made a mistake. >> you're making it harder too. >> trump was the one who was bashing it andrew, that might have had a positive effect on their thinking you know? >> stephen moore is our guest host he'll be here the rest of the hour. >> you dove. i know you heard worse than that. >> i'm a hawk. when we come back, mortgage applications, we'll break down the numbers and what they're

saying about home sales and rates. then they are the stock market for sneakers. the ceo of stockex will talk d y 'sooerart le sneak mke anwhit bming stay tuned you're watching "squawk box" on cnbc and it really shows. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life. ♪ get your usaa auto insurance quote today.

welcome back to "squawk box" this morning let's tell you what's making the headlines. walmart has cooled speculation

it planned to exit the japanese market it plans to list as a minority stake and keep majority ownership. also on the docket, philadelphia energy solution is expected to seek permission to permanently close the oil refinery following last week's massive explosion at the complex. you remember the dramatic images that we saw literally this happened i believe right before "squawk" had gone on air this according to a reuters report the refinery the largest and oldest on the east coast and it can squeeze gasoline supplies in the east coast. that is reflected in the price of gasoline. earnings in from general mills, they reported 83 cents per share, beating estimates by 6 cents. revenue however did miss wall street forecasts somebody is not eating enough wheaties. mortgage applications

hitting the wires right now. diana olick has the numbers. what are you seeing? >> well, becky, almost like falling mortgage rates are becoming humdrum at least for home buyers. total mortgage applications increased 1.3% for the week but 40% higher from a year ago the rates have fallen in the last three weeks and the average on the 30 year fixed with conforming loan balances dropped to 4.06% from 4.14% last week. that's for loans with a 20% down payment and that is 78 basis points low they were the same week one year ago. so up 92% from a year ago. now you think everyone has refied everybody but as home values rise, more people are eligible and can benefit from the refis so they jump in. now mortgage applications to buy a home were not nearly as impressive down 1% for the week but still 9% high their an year

ago. they're up against high prices and low supply of homes dropping in economic uncertainty with the trade war and people are less up for the big investment in a home back to you guys. >> all right, diana, thanks. coming up, we'll talk about something totally different. a stock market for things. stockx is a big market for high end watches, retro sneakers and much more. the company is looking to disrupt retail with their unique shopping experience. we'll speak to the ceo after the break. time now for today's aflac trivia question. how many oscar meyer wienermobiles are currently crisscrossing the country? the answer when cnbc "squawk box" continues do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere? ughhh nooo, there's no insurance for that.

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now the answer to today's aflac trivia quiz. how many oscar mayer wienermobiles are currently crisscrossing the country? the answer, six with 12 drivers. >> welcome back, everybody in the sneaker resale market it's fast growing and the next

guests are right in the middle of it all. stockx announced the series c-funding round where they raised over $100 million and now they're valued at $1 billion and they're announcing a new ceo joining us is josh luber, the outgoing ceo and scott cutler, the incoming ceo of stockx welcome to both of you great to see you josh, thanks for coming by. >> thanks for having us. >> let's talk a little bit about the -- well, i guess we should talk about the succession news first, because you're sitting here live. what's going on? >> this is 3 1/2 years in the making scott and i have known each other since we started the company, just a couple of days afterwards at the time, scott was at stubhub which is a shining example for us of how a marketplace works in the primary market so he has been an adviser, a friend and a mentor and i had the opportunity for him to have the join -- to join the team is like a perfect marriage. >> scott, not just stubhub, but also ebay where you have a lot of experience coming in to this. what do you see in this market that makes you think this is the

place to be? >> it's interesting when they started it would be the combination of the big model, the marketplace likes stubhub and the blending of primary and secondary and patterned after marketplaces which i had been a part of. so it was a unique combination of the experiences i had -- had seen in senior management in those places and coming together in a marketplace that i'm passionate around. >> why do you need a new ceo >> we need nine ceos, there's so much work. this is the best part of being in a hyper growth company where you know in three years we have hit $1 billion but i mean, this is day zero around here. you know, we want the best people we can possibly get to go to that next level. >> from the founder model, i feel much better about the company having a ceo that doesn't wear his hat like that i immediately think this is guy -- i'll take you >> thanks. that's all good.

>> for me, i feel like -- if i'm giving you my money i'd -- >> is there anything you plan to do differently now that you're running the show >> look, this is a company in hyper growth and now we have to scale it globally and beyond the categories this is about scaling an incredible opportunity and taking advantage of what's available in the marketplace. >> when you talk about scaling, globally i appreciate. that makes a lot of sense. category, what categories can you go into? >> so the company started with sneakers and rapidly grew into street ware and it has a similar customer base, watches and handbags particularly for items that have trading value where a product based experience like stockx can provide a unique trading experience for those products, those are the categories that ultimately will trade on a marketplace like this. >> josh, i should mention a couple of things first of all, you're sticking

around in the check conservative team and on the board. and i jumped right into this and we have had you here before. stockx is different from an ebay because you actually authenticate to make sure these are legit and real is that the biggest takeaway, that's your competitive m.o. >> it is it's a massive value in the fact that we authenticate and that just facilitating the larger market the stock market model which is the real reason we have grown so fast and the real reason we can go into other categories the real reason we're sitting here today but it's true. if you're a 14-year-old you want to make sure you won't get a fake pair of jordan's and ezs a that's a massive vald val and that's why we have four or five authentications centers around the world. >> you're the largest to come out of michigan. what happened, how did you get there? >> like we sound like a broken record it's the model it is this idea of taking stock

market commerce and the mechanisms of how buyers and sellers come together in the stock market and applying it to consumer goods that's why scott is here. >> scott, in terms of the international expansion, how will it be different or the same when you're in europe, when you're in asia what do you have to do to ramp up there >> well, you have two things that are coming together here, obviously there's a big transition still offline to online that's going to benefit -- >> that does that mean >> meaning that more people are starting their journey on stockx on a marketplace that's -- today a largely a resale marketplace so we have sellers that are coming from around the world buyers obviously from around the world and the magic is how we authenticate the products and get them to the buyers anywhere around the world and how do you do that in a seamless fashion? there's a lot of work behind the scenes to make it happen. >> can you see a day where you're actually selling the product itself >> yeah. absolutely

i mean, we have a long and storied attraction to the brand and so there are customers that look at the brand of stock as something. then also in this model i think we'll see over time increasingly more brands that will work with us as a distribution channel just like you would as a traditional retailer to get their products directly to consumers because quite frankly, stockx has millions and millions of buyers and the -- >> as you look at amazon right now, for example, they sell certain products that they're effectively keeping in their warehouse. i mean, then they have their marketplace on top of that there's lots of -- >> yeah. >> then all of a sudden you have people in the marketplace that are complaining about being undercut by the retailer, if you will if you become the retailer how that works >> sure. clearly we're not creating the next nike, we're not creating the next adidas so we won't be in that position i think it's more of a question of ultimately will those brands

participate in online marketplaces like this we believe they will it's an exciting opportunity. >> josh, how big is the overall market for resales of sneakers of handbags? >> what's great about this, you start to converge and the primary and secondary markets together and the resale sneaker market globally is 6 or $7 million but the global one is a $100 billion you start to release the products and it's not just the hard core sneaker customer but everyone who's bought a pair of sneakers and so the market is really big. >> do you have to capitalize on that and move from just the resales on to the bigger market in order to justify the valuation? >> it's not about justifying the valuation to othat the valuation is just a function of really the small piece of one vertical and one country that we have today right, we're just starting to expand into europe and into

china. we're just starting to expand into other verticals but the big, big idea is that not only do you move in to selling secondary market products to those customers but then primary products to all customers. so i guess it is day zero and what this looks like. >> you see a lot of people now wearing sneakers or at least rubber shoes in a professional capacity in fact, i'm doing it today. yeah, it's great, because they're more comfortable and better for your back and your legs do you see that market expanding of kind of casual sneakers that are kind of more business wear that would seem to be a huge market for you. >> yeah, literally anybody -- everybody, right >> we'll get you in the hat more can we get you in the backwards hat, to do that? [ laughter ] >> that's -- >> we'll take that offline. >> but this is news you can use for men who are trying to figure it out sneakers with suits is a different thing to do. what are you recommending? >> for what sneakers to wear

with what suits? >> yeah, i'm actually wearing regular, classic shoes. >> what is that? there you go. >> these are awesome like they're made of rubber. >> who makes them? >> i don't think you can buy those shoes on his site. >> being fashionable, look at these. they're beautiful. >> it is difficult, you have to make the right choices the right brands. >> it never looks good with the suit. never looks good. >> you have to have a little - >> it's okay it's accepted. it's accepted. >> you need a more narrow shoe you have a big bulky basketball shoe the jordan is the staple for what you want to wear. >> jordans >> yeah. >> it's narrow and sleek that's the shoe. >> you get used to it. >> i want to look good. >> anything else >> none of us are wearing shoes. >> literally like last week i was in paris at fashion week

it is all sneaker and street wear there walking down the runway at all of the big brand -- the convergence of this is the idea here not only of sneakers and fashion and street wear, but also of primary and secondary markets. it's all in one market. >> okay. josh and scott, thank you for coming in. we appreciate it. >> i'm going to buy some jordans. coming up, the trump economy, democratic presidential hopefuls they're debating each other tonight. but they're sure to attack president trump's plans on everything from trade to taxes the big issues to walk straight ahead. take a look at the u.s. equity futures at this hour. we are just about two hours away and the dow looks like it would be up about 116 points higher. you're watching "squawk box" on cnbc and we are back in a moment together to invest in all the things that move us forward. every day, invesco combines ideas with technology,

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around cryptocurrencies. we have watched the cost of bitcoin rise in the past week. kind of crazy. interesting article in "the wall street journal" which we should get to, about it being driven by the retail investor, if you will the hedge funds and institutions are shorting it at the price, and sort of how that's going to ultimately - >> shorting which? >> bitcoin, right, joe >> yeah. >> i think that was the underlying thesis of that piece. explain what you're doing and let's get into how this is all going to work. >> so you know, there's an old saying if you can't join them, beat them. i couldn't beat them so i'm partnering up with some folks in silicon valley out in california by the way, these guys are like 26, 27, 28 years old they're smart as hell and they want to create a cryptocurrency that will be a challenge and a competitor to government fiat money. this is the new thing. i mean, by the way, a lot of

companies -- this is the big thing in silicon valley right now. you know, obviously it's called decentral. obviously, the story that's really outshadowed everything is what facebook is doing with their libra. but my feeling is these -- this is, you know, a great business investment and healthy for the economy that the government run currencies now have real competition. >> let me ask you about that i have been asking the same question basically all week which is one of the last things that the -- that the governments around the world have is a monopoly on fiat currency. >> right. >> so the idea that governments around the world are going to give that monopoly up in the same way that the companies that have monopolies don't want to give up that so quickly are going to give this up to a bitcoin or any of these currencies where it's very hard to track where it's very hard to tax. all of these things become - >> so you laid your finger on the problem.

you're 100% correct, andrew. this is freaking out the central bankers of the world you know, they don't want competition from the private sector where there's no government oversight you saw the story last week that the federal reserve bank, that the s.e.c. are all looking into this new facebook -- you know, currency. >> right. >> and the question is whether they can stop it the only reason you want the cryptocurrencies is if you're a drug dealer involved in illicit activities and that's crazy. you can be in a law-abiding activity and you don't want the government keeping track of every transaction. >> you don't want the bankers debasing your hard earned dollars. >> exactly i think this will actually strengthen the dollar. i'm a big believer in the dollar it's been a good, stable currency for a long time but it fluctuates now, the big question i have with something with bitcoin -- i'll throw this back at you. like what is the purpose of a

currency it's to retain its value over time well, bitcoin has been, you know, peaks and valleys over time which makes it seem more like a speculation. with our decentral, we want our -- our goal is to keep it stable in price and value. >> similarly, that's what libra is trying to do. the issue is is there a distinction between a commodity? >> that's what they're looking into right now, the commission you're right the politics will try to stop that and that's like saying they're trying to stop google. i think it's good thing for free enterprise. >> the toothpaste is out of the tube the genie's out of the bottle. >> yeah. >> the horse has left the stable, things like that. >> yeah. it will actually -- this competition --

>> put a cat back in the bag >> humpy dumpty, can't put him back together. >> one more of these. >> i think you can put a cat in a bag pretty easily. >> good luck. >> not very humane can't put the toothpaste back in the tube, no way "squawk box" is coming right back we'll figure it out. woman: my reputation was trashed online. i felt completely helpless. my entire career and business were in jeopardy. i called reputation defender. they were able to restore my good name. if you are under attack, i recommend calling reputation defender.

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i'm hopeful that we see a deal, but there needs to be the right efforts in place this isn't, you know, a deal for having the sake of a deal.

we were about 90% of the way there. i think there's a path to complete this. but we'll see where we get. >> that was treasury secretary steven mnuchin speaking to hadley gamble on trade look at the futures right now. we're under two hours away from the opening bell and the dow looking higher on the back of his comments there dow up about 102 points and nasdaq looking to open higher. and for more on the markets i want to bring in a managing director at wolf research and cnbc's senior markets commentator mike santoli you look a look at -- a lot at the technicals of this i don't know where you want to land on how the markets are moving today relative to these comments around china. >> i don't think i'm going to do a better job than anybody else with respect to mnuchin's comments

>> you think it will break out anyway. >> we think that value will do better than growth here and we like the pharmaceutical stocks the reason we think this is so, the nasdaq made the high in april, the recent high, the s&p made a more recent high and the dow is right in between. nasdaq seems to be fading a little bit and mike and i were talking off air just it seems a little bit odd that the nasdaq could be near the all-time highs and have more new lows occurring on a daily basis than new highs so it seems strange. we like pharmaceuticals. >> mike, i don't know where -- i don't know if you want to talk about the technical aspect of this or this idea of what steve mnuchin is saying. this 90% number has been thrown around before. >> i think we have 95% at some point. i don't think there's terribly much new information in nose comments relative to what we thought. but reiterating the comments is not bad. so maybe that means they're

looking at the path that the treasury secretary is looking at for the market's purposes if we don't get the new round of tariffs threatened or imposed that's probably okay right now i think just to john's point about this rotation, the market -- the question comes in to this week was have we gone as far as we can, feeding off the expectations of the fed rate cuts and the safe defensive and large cap growth stocks holding everything up. because there's a whole big tier of cheaper looking cyclical stocks nobody seems to want to touch. talk about fedex or ford or whatever depressed retailer out because people think we're marinating in the slow growth environment. we keep getting disappointed economically. >> one thing about the mnuchin comment, i have been playing it over in my mind, it indicates to me that trump wants to get this deal done. i think -- i wonder how you guys react to that? am i misinterpreting that? >> he's speaking on behalf of

the president. >> mnuchin is not freelancing here, he's in constant touch with the president. >> well, the rule has been that mnuchin and kudlow sit on that shoulder of the president. >> right >> that says you want a deal then you have lighthizer and navarro who have taken a harder line you know, again, i don't know that anybody has inflated expectations of the deal you know, going into this weekend. >> what is baked into the cake though monday morning? meaning, if we wake up on monday morning and the headline is already baked in that says what? >> that we will continue to negotiate and hopefully get some kind of a deal and no immediate -- of the extra tariff. >> anything less than that, the market moves down? >> i'm not sure if it does i think that it's also -- i mean, john feeding off some cautious sentiment i don't think the market is geared up for up up and away and everything will

go away at this point. >> i think the cynics will say if you get the deal that's the time to sell i don't know if that's the case. but if we don't get a deal we're likely to be in. >> say that again. >> if we get the deal, the cynics will say sell the news. we're up 17% without a deal. if you got the deal it's the time to sell. >> you think it's priced in? >> i don't know what's priced in i think there are experts who will tell you what's priced in i don't know. >> steve asked a smart question which i'll ask you he asked one earlier in the hour, which was should the -- if the fed is going to move later anyway, should they have already moved? >> i'm dubious on most central bank activities. >> me too. >> they have created a monster they have to kill the monster. when they do it, i don't know. but they're clearly behind the curve. we have a model that says they're 50 basis points behind the curve. some would say 75 points behind.

they always break it. >> even though it was relatively modest yesterday and got to the high and the market was settling back a little bit, it did show you the sensitivity to where -- how the fed wants to characterize the next move and the level of urgency it has about that if you have bullard and the st. louis fed president saying half a percent probably isn't justified in july even though he voted for 25 in june it sort of moves the dovish frontier of policy back. >> a chance that the dow hits a record >> good. >> yeah? >> yeah. real good. >> what are the answers? >> i have to ask my algo, but i'll get back to you coming up, we have the first democratic debate that is set for tonight. how are the candidates planning to take on the trump economy what you may or may not hear this evening is coming up right rkrsr we get steve moore's dahoe, his favorite pick out

of the 22 currently in the clown car. we'll be right back. we're the slowskys.

we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. welcome back, everyone the first democratic debate will be held this evening so how will the candidates take on the trump economy joining us right now is brookings institution david wessel, director of the fiscal and monetary policy. and heritage foundation's stephen moore. david, tell us what you think happens here, who do the candidates take on the trump economy?

>> i think they say two things one is obviously the economy is doing pretty well. but a lot of people aren't feeling it so they'll be speaking to people who feel insecure, people who have a lot of student loan, worried about health insurance costs. people in communities that aren't doing very well and secondly they'll say the economy is doing okay now, but president trump is ruining it with this -- with the trade wars and inconsistent policies towards the middle east and incompetence in government and try to paint him as reckless and endangering the strong economy that we have now and they'll say he inherited from barack obama. >> david, do you think the old adage works in this election this time around it's the economy, stupid. >> it's a really good question on one hand, the economy always matters. i think if the economy is as good on november 2020 as it is now, low unemployment, high stock market, low inflation, wages moving up, albeit slowly that will be a tail wind for the

president. so on the other hand, a lot of things that we used to think are true seem to be different this time so it's really hard to tell whether president trump's character, some misadventure in the middle east, something involving the endless mueller report, a really strong democratic candidate who seems to exude youth and charisma that can offset the economy but if the economy is where it is right now in november 2020, that's definitely a huge plus for the president. >> okay, steve, let's talk about what david laid out in terms of a strategy for the democrats if the economy looks pretty good on the surface but there are a lot of pockets, a lot of places that people don't feel it, how much does that message resonate and what does the trump administration say in response >> well, that's what people are always going to say. some people are left behind. you have a big, big, big economy. a lot of people out there. but look, i was looking up the statistics before the election, 36% of americans rated the economy as good or great. you know what that number is today?

71%. david, how is this the extension of the obama economy i worked on the economic program. everything we have done has been to repeal everything that obama did from the paris climate accord to the regulations, on and on so we have totally reversed course from what obama did the economy is growing by my reckoning almost twice as fast as it was. we have the lowest unemployment rate in 50 years this is the best time in -- my or your lifetime to be looking for a job. now, i have always said this you know, there are a lot of people who don't like donald trump. his approval rating gets anywhere near 50%. but even on election day 2016 when his approval rating was less than 40%, he won. and that's because there are a lot of people in my opinion who don't necessarily approve of donald trump and his behavior and what he says, but still vote for him because they like his policies, like the direction of the economy. so if the economy is as good as david just said, you know, a year and a half from now as it is today, i believe that donald

trump will win a 40-state re-election landslide. >> i don't know who this we is i was and speaking for the democratic party steve is now speaking for the administration which is interesting because the administration seems to have disowned him but look, i think the fact is that - >> i was just over at -- david, david, david, i was just at the white house last week. how am i -- how am i being disowned by the white house when i was just there last week >> the democrats will point out that a lot of people at the top of the income distribution are doing very well. the president will say that like, you know, in a capitalist economy if you do well, if you do good for the economy, everybody benefits and the democrats will accuse him of trickle down and will point out that the wealthiest of americans have benefited more from the trump tax cuts i think that that will have some resonance only if people in the middle feel like they're somehow getting screwed.

so i think a lot really depends on what happens to the economy in the next year and a half. and what's ironic is everything the president is doing now seems to be undermining consumer and business confidence. jay powell pointed out the other day that business investment has fallen off the -- you know, the trade war is popular as long as the president is seen as getting ruts from china. but if it's just hurting farmers and raising consumer prices and doing strange things like taxing autos then i think that -- i think i think that will undermine people's confidence and begin to doubt - >> i want to take a shot back at you. you wrote in march that steven moore has a $75,000 tax lien, took an outrageous shot at me. i just got a $50,000 check from the irs for an overpayment of taxes. i wonder if you'll write a correction on your tweet back in march. i'll send you the check. >> i thought earn --

>> why did you take a cheap shot at me? you didn't call and ask me you just took a cheap shot >> i'm not interested in talking about steve moore. i'm interested in talking about the economy. >> you're not interested in setting the truth straight that's why people call it the fake media because you make things up and don't correct yourself >> so, do you think the democratic debate is going to go like this tonight where the democrats end up attacking each other or do you think the focus is going to be on a more united front? it's hard to stand out on a stage with ten other people? >> i think it's hard to stand up there and say i'm good as the next guy and he's as good as me and we have to beat donald trump. the demand on the candidates is to say something that makes people think, wow, this person could be president and could beat donald trump. >> all right thank you, david, thank you, steve moore for being here and speaking for the administration while david just

was sort of trying to figure out what democrats say he has no -- he has no feeling one way or the other. >> i want the democrats to talk about the economy, nonstop in that debate. that's trump's territory when we return, reaction to treasury secretary mnuchin's comments on a trade deal being na% complete setor portman will be our guest. he may talk to about stuff too because he's a republican.

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can the u.s. close the deal on trade with china? >> we're about 90% of the way there. i think there's a path to complete this but we'll see what we get. >> the stocks are jumping following comments from treasury secretary mnuchin. we'll get reaction from senator portman. and congress is getting ready to look at facebook's currency libra as bitcoin surges to 17 month highs. and please raise my taxes. what are the odds of a wealth tax and would it work? the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york. this is "squawk box.

>> good morning, welcome back to "squawk box" here on cnbc. i'm joe kernen with becky quick and andrew ross sorkin the futures are up triple digits this morning up 112 on the dow the nasdaq is indicated up about 62 that gets back some of yesterday's big sell-off in the nasdaq and the s&p trying to get back to close to the recent new high. not quite there yet. treasury yields indicated -- or are, not indicated, futures are where we're expecting things to open, but there's the ten year ahead of the g20 summit and the highly anticipated meeting between president trump and president xi of china, treasury secretary steven mnuchin says the two countries may be almost there when it comes to working out the trade deal here's exactly what he told cnbc's hadley gamble this morning. >> i'm hopeful we see a deal but

there needs to be the right efforts in place and this isn't, you know, a deal for having the sake of a deal. we were about 90% of the way there. i think there's a path to complete this. but we'll see where we get. >> joining us now former u.s. trade representative ohio senator rob portman. senator, you probably have heard the news already this morning, what secretary mnuchin said was that the last deal we were about 90% there and i have hopes that now we can get the remaining 10%. which makes it sounds like he's saying that the 90% is still on the table and that's where i'm wondering whether that really is the story. did -- when the 90% was on the table, when china back tracked on all of those different areas that we talked about, do we know whether that's changed do we know whether we're 90% there now or had we been at 90% back then and we may not be there now? do you know? >> joe, i think it's the first time i have heard a number

around it, but in our conversations where secretary mnuchin and u.s. gr lighthizer, we had been told that they were very close i guess that's the 90% but then that china had walked back so you're probably right. probably we were very close. they had walked back some the structural changes probably on the subsidy side and the tech transfer side, both of which are important to having a deal that makes sense for us so look, i think we are in a situation where at a minimum where we'll jump start the talks thanks to president trump and xi and which need to be back at the table. we haven't had serious negotiations for almost six weeks now. second, i think there is a way to move forward on this. i think it's a positive statement but we were 90% there and they walked back last time hopefully they're willing to come back to the table with a more genuine effort. >> senator, should we hope for a a -- an agreement to keep talking or should we hope for

something actually substantial to be signed, you know, where we're ready to go right now? do you think it's possible we do anything more than just sort of delay more tariffs maybe even take off some of the ones that we have now, but still agree to talk for the next six months or so do you think it's possible to arrive at a deal where some of these issues are solved? >> i think it's possible i think what will happen is there will be a commitment to, again, start the talks again in earnest and there might be some exchange of some ideas on how to break through some of the logjam that we had about six weeks ago with regard to again some of the structural issues that are more difficult for china. to focus on. i think there's also a possibility that president trump will be willing with, you know, that commitment to be able to postpone some of the so-called phase four or fourth tier tariffs so we'll see i think it's positive news look see what happens on saturday, it's coming up quickly. >> it is coming up quickly

nothing -- it's been a little bit quiet on the iran front recently do you -- do you have comments on that or where you stand on that i guess it's a wild card at this point, isn't it? but it seems like -- i don't know whether we're on the cusp of something that gets worse or something that everybody pulls back do you have a feeling there? >> well, again, there's been an overture by us to say, let's talk and i think that's a positive development. you can't call downing the unmanned aerial surveillance plane a positive development but in the aftermath of that, not to move forward with the strikes although we did apparently move forward with some things on the cyber front, but then the overture from us to talk and the ability now to at least have a conversation is probably viewed as positive. >> do you have a feel for how the -- this latest immigration -- i'm going to cover as many things as i can.

but what's going to happen will the -- will this move with the house successfully moved on yesterday, will that move beyond the house now? how is that going to play out? is there any room for the president and democrats actually coming to some type of agreement here where we do need this humanitarian aid and maybe some of it can go for security? do you know what's going to happen there >> yeah, i think that's positive the appropriations committee voted out the package 30-1 and then when it got to the floors there were concerns raised by democrats as you saw in the house but passed the house the humanitarian funds are virtually sure to go to the border the question is whether on our side there will be an additional amendment that has to do actually with iran and the president's ability to use force rather than with regard to the border funding so we'll see what happens there. i think there's going to be a close vote but i think in the end we won't be pulling back the president's ability to keep on

the table the possibility of a military strike should iran again take another provocative action so that's really the issue right now. it's not so much whether the border money will get there, but whether something will be attached to it or not. but i think it's real, everybody acknowledges it, but how do you reduce the flow? how do you deal with the fact that the countries like guatemala, hon door -- honduras are sending the families, the kids and if you have a kid you have different rules one we need to have the families actually apply for asylum and refugee status in their home country which is something done under the obama administration that might make a lot of sense to be able to reduce the flow and reduce some of the danger that's evident with regard to this long journey north. we saw yesterday images of a man and his daughter who had drowned

in the rio grande. i mean, there are just horrible stories coming out of what is going on might be there could be a bipartisan agreement to at least encourage people to apply. go through the process, but do so in their home countries >> the -- when do you think election season starts i'm wondering have you invited people over either night to watch? are you having any viewing parties or anything at your house for the debates? when do you think -- it's starting, isn't it what is the beginning of the election season that's why i'm worried about usmca. infrastructure we have mueller coming back. so they're going to jump all over on that july 17th we're not getting anything done. are we, between now and the election. >> well, two thoughts. one, i think the usmca is an exception because it makes sense for the democrats. it's better than nafta if you're a democrat. >> isn't that a win for trump? >> it would be, but when you get down to the actual facts if you

look at it, there's no enforceable labor standards in nafta, but there are in the usmca. on the facts at least, if you have any logic applied to this it's likely that will pass but you're right i mean, this week one of my ohio constituents said to me, it must be tough to get things done in an election year i said this is not an election year this is an off year. i think next year is going to be even crazier you know, we have some things we have to do if we don't deal with the budget issues we go into shutdown mode again. >> when it's all said and done, will the democrats run a more mainstream candidate or will they go with -- i don't know if you saw the moveon.org, i mean, elizabeth warren double digits ahead of the more mainstream candidates i mean, there is a real fervor for someone that will have, you know, i guess outlined really progressive policy initiatives that excites the -- that base of

the democratic party do you think they'll be able to go with biden or will they go with elizabeth warren? do you think, someone like that? >> i wouldn't be the best person to look into the crystal ball. you have to ask someone who is more closely aligned with the democratic politics. i think there are two -- >> andrew? >> andrew, where are you one is that the democrats want a candidate who can beat president trump. they say that's the number one priority and you're right. there's a leftward lurch in the democratic party and those two things are contradictory, i think. >> you didn't answer me. which night are you more excited about tonight? i'm more excited about tomorrow night. i don't know why they're both at 9:00 so i won't see anything unless i dvr it like a reds game. >> way past your bedtime. >> by the way -- >> cincinnati reds are on fire they're on fire, joe. >> well, they were and now they lost three straight. >> senator, you may think this

is a political question, but i have a question for you. completely unrelated to business i saw that -- i saw and i would commend you for this that you're calling for a national memorial for the journalists that were killed last year at the "capital gazette. but at the same time, you have been very supportive of president trump. so given that we're having this conversation and given that you think i'm on the other side of this, you can condemn the president's comments about being the enemy of the people and his comments for calling "the new york times" traitors and treasonous do you want to comment on that >> first of all, it's a memorial for fallen journalists not just those who died five years ago by for all of the hundreds of journalists who have been killed not just in this country but other countries. i think it's something i feel strongly about the free and open press plays a critical role in our democracy by the way it's all private

funded which i like. we'll talk more about it today i think it's appropriate and should be near the mall. >> do you think the president's comments about journalists represent? >> i won't comment on his comments. >> why not if you're going to be as supportive of journalists why wouldn't you say something >> well, of course i'm supportive of journalists. >> therefore you're not supportive of what the president says about journalists >> i don't know what you're talking about. >> the ones that he repeats daily about them being the enemy of the people. >> i don't think you're the enemy of the people, you do a good job and that's why i like coming on the show. >> we'll take that for what it is thank you. still to come on confrontation box this morning, the biggest stocks driving the recent market. we'll have a rundown next. and facebook is counting on users and investors taking an interest in libra, but the united states house is also showing interest and probably not in a way that facebook would like. after the break we'll speak with

financial services committee ranking member patrick mchenry on what he wants to hear from the social media giant when a hearing on libra convenes in just a few short weeks stay tuned you're watching "squawk box" on cnbc you can be sure of. they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences and engineers outcomes. ♪ cool. ♪

welcome back to "squawk box," everybody. we have been watching the futures this morning and the dow is indicated up by 113 point at the open if we were to stay at this level nasdaq is up by 61 this comes after a down day for stocks yet. the nasdaq was the biggest decliner down by 1.5%. little more than an hour till the opening bell on wall street dominic chu has a look at some of this morning's biggest stock movers dominic, what's tops on the list i'm going have to -- >> well, so here's what i would say. i felt like this would be a good time to take a look because we have this kind of a bit of a bump here with secretary mnuchin's comments about trade and everything else and the dow is not far away from the record levels we are still kind of a bit away from there but look at the dow over the last year, remember, this level here we're trying to get above those so the dow industrials

maybe not far away but since that beginning of the year, we have gained 3,321 points on the dow overall. as we make this push towards record highs, i thought we'd take stock in which stocks have actually gotten us there so joe to your point, let's take a look at the movers from a year to date basis. these stocks in particular, boeing up 15%. we know it's kind of not great there. but still, visa up 30% and apple up 25% what this means is that boeing out of the 3,32 is points about 317 worth of those points is boeing about 266 of those points is visa, and around 256 of those points is apple. so these three stocks the biggest point contributors and look on the downside, the one stock that's dragged the most off of the dow in the push back towards record highs shares of 3m this move here on a year to date basis down 9% means it's dragged about 125 points off the overall dow.

so if you look at six stocks in particular, we talk about boeing, visa, apple, throw in there home depot, travelers and microsoft and you have pretty much half of the dow's gains this year, just the six stocks but 3m, the big laggard, it's pretty much what we're talking about in terms of the dow this year so far as we make a push towards record highs, guys >> wow visa is a dow component, dom. >> dow component. >> thank you for that. i was listening you you listing the dow components so i got a lot out of it. >> i didn't talk about disney and the streaming and everything else. >> you don't need to talk about disney yeah, they changed them too quickly. i can't keep -- you know keep track of all of them. all right, dominic chu see you soon. okay we'll talk bitcoin, hitting a 17 month high this morning.

nearing $13,000, and now they're being summoned to capitol hill and facebook was invited to testify at a july hearing. we want to welcome in patrick mchenry, the ranking member of the financial services committee. thank you for joining us this morning. >> thanks for having me. >> what's your issue right now with facebook and libra? >> well, we don't know anything. we know about a white paper, we know about a consortium and pledges of money we don't know about the nature of the technology, how they'll comply with any money laundering provisions we have here in the united states and that global regime we don't know what they're going to do with their consumer data and how that relates to the new digital currency to call it cryptocurrency those in the weeds on the technology

of cryptocurrency call this a digital currency, not a cryptocurrency because it is much more identifiable with consumer information. so we need to understand all of that and that's before you even get into the basic political question here in the united states of facebook's utility, its power and massive trove of consumer data. >> have you had -- called for similar hearings related to other cryptocurrencies >> no. but i have asked for us to have an artificial intelligence and financial technology task force and we do have those on the financial services committee i think it's important for policymakers to understand the nature of blockchain and cryptocurrency and the technology revolution that's occurring outside of the united states that's the other question here why are they developing this in switzerland and not here in the united states, not here in the headquarters for almost all of

the members of the consortium? i think there are deeper questions here and why are we falling behind against other regimes when it comes to digital assets and digital currency. >> you said we think we're falling behind why do you think that? >> we don't have a regime permissive for cryptocurrency and we see the dollars raised are outside the four walls of the united states. and outside of american domiciled individuals. that's what we're seeing with cryptocurrency and so it looks like libra is falling on really -- following in their wake and thereby pumping up a broader set of assets based off of facebook. >> here to me is one of the great conundrums of the whole situation. from a business perspective, you would want the united states to be the leader in crypto -- be the leader in everything possibly but you'd think, okay, from loerp -- intellectual property

we want to be the leaders in everything however, crypto, when it comes to bitcoin and the other currencies are not government fiat money, right? in fact the advantage of them, is that they're not fiat money, right? i mean, that's the issue so either we want to advocate for the monopoly power of fiat currency in the united states and all of the power thats come with that, that the government and the federal reserve and everybody else have, or you want to advocate for crypto it's hard to be in the middle. >> well, here's the reality. even the chinese can't wall off cryptocurrency every regime that has tried to prohibit that action and activity within their country has failed so it is a reality of the situation. just like cross border trade is a reality. what i want to understand is the nature of the technology the benefits, the costs to it.

what i hear from democrats on the hill and maxine waters she wants to have a moratorium on this that's not what i'm calling for. i think we need to understand this, because there's an opportunity here there's also a cost to it as you talked about with the question of fiat money. i don't know if at this stage what facebook is developing with libra is a threat to dollar denominated assets globally or our powers of reserve currency we don't know that yet because we haven't asked any questions i want to understand it. >> when you look at the regulatory bodies involved in this thus far, do you think they're moving too slowly? >> yes. >> you do? >> i think they're in -- >> some people would say that's being careful. >> well, what i would say is the cftc has moved forward and figured out a permissive regime and they understand that is not perfectly a commodity, but there's a way to fall within

their regime the securities and exchange commission wants to be it a security it's neither a commodity nor a security, it's a new invention so we need a new regulatory regime around crypto. >> thank you for coming on. >> great to be with you, andrew. coming up, another day, another billionaire who says tax me more but is there a way to tax the super rich and another guwhy o -- just write a check. weigh a wealth tax and debate how it might be done woman: my reputation was trashed online.

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coming up some breaking economic data, durable goods orders for the month of may are due out at the bottom of the hour we'll bring you the numbers and the instant analysis. will a wealth tax work it's shaking up the action on the campaign trail that's all ahead when "squawk box" returns as someone in witness protection,

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welcome back to "squawk box" here on cnbc we are live from the nasdaq market site and times square if we have -- we have been watching the futures and the dow is off almost by triple digits yesterday. >> hi, we have durables coming out. last time they were disappointing and this time they're disappointing as well we're expecting minus 0.3 and it was revised from down 2.1, and last month was revised just a small amount and nondefense was plus 0.4 which is better than expected. as you said the futures were boyant but off the highs

when we came in, the s&ps were up 10 1/2 and now up 11 1/2. the yield is now 2.017 now so they're not a big enough deal to unseat what we're really looking at and that's mnuchin saying that the trade wash is -- war is 90% back to you, joe. >> thank you, jim. another voice from the 1%, he's got to be 0.0001% saying tax me more -- >> i thought you're talking about robert. >> i have a long way to go before that. >> you know how a cat -- the first time you clap it jumps there's a reflex eventually it doesn't move at all. how many times are we going to jump - >> "the washington post" had a story today. if it's a day that ends in a "y" it's a democrat calling for higher taxes >> is there anybody reading the "new york times" who doesn't agree with this in the first

place? >> let's tell people what we're talking about, he's the founder of kd homes and sun america and he said it's time for rich people to pay more taxes he said the system of opportunity that made america great and helped create his $7 billion fortune is no longer working for most americans and he said it's time for a wealth tax. quote, don't get me wrong, i'm not advocating an end to the capitalist system that's yielded some of the greatest gains in prosperity in human history, but i believe it's time for those of us with great wealth to end the income inequality and demand to be taxed at a a higher rate than everyone else. now, broed didn't endorse any specific candidate or plan, but he welcomed the 1 percenters to join the movement. 18 others said that the balanced-budget amendment tax is quote, patriotic and strengthens american freedom and democracy the signers included george

soros, chris hughes and molly munger it's not just wealthy liberals calling for higher taxes stan druckenmiller said on this show he sides with joe biden on calls to increase the tax on capital gains which of course mainly flow to the wealthy >> i'm going to shock you. i kind of agree with biden i don't -- i don't really think capital gains promote investment as much as advertised out there. >> and you can go back to broed and say, well, this is a guy that gives so much to charity. his actual tax bill every year is probably low. he's given away more than $2 billion but he's stirred up the liberal base in california by reinventing education through private charter schools which is not popular among democrats. i would say he's more of a moderate democrat politically than a lot of folks that have

come out constantly in support of higher taxes on the wealthy. >> i thought the most interesting line he didn't think that philanthropy alone -- to the tax break issue on philanthropy would ever get you there. >> it's an interesting journey that bill gates started off as well, saying i'm going to fix this with my money you quickly realize like gates did that whatever you do is tiny compared to what the government needs to and should do to fix that problem they all end up making that same discovery. >> but they do say that philanthropy can do things the government can't you can do -- sort of incubation projects, see what works then try to bring it -- >> when you're trying to fix the structure of opportunity in america which is ultimately what they want to do, you realize quickly government has it. >> the line that struck me was he said i came to realize that no amount of philanthropic work, the factory workers and the entrepreneurs and the

electricians, teacher and nurses from the basic prosperity that we call the american dream. >> what got me when he said the excuse that we want government to be as efficient as private entities and that we can't let the government spend the money until that happens is a specious argument that's like saying, look, i know 90 cents is going to fall by the way side but we let the government try to solve our problems and that was -- >> there's that caveat that's impossible that he wants the government to be more transparent and efficient. >> the government is never going to do it can't worry about that let's throw some more money at it anyway. now, i ask you what he pays you -- right you said, well, probably not much because of his philanthropic, does he have to take the write-off for the philanthropic? >> no. everyone can voluntarily overpay their taxes. the irs has a special -- >> but he's obeying the law. >> which is what they all say. >> honestly the answer to the

question -- to the charge is that yeah, you could pay more but if you're not changing the system - >> it does don't anything. it's not effective. >> but they feel that strongly they can certainly write a check any day. >> that's like him saying the philanthropy doesn't work unless you change the system. a drop in the bucket michael strahan, the resident scholar and a senior fellow at the american center for progress -- what did you say michael, nice to see you you saw this op-ed, you looked at it. and your reaction especially given the conversation we are having here. know matter -- by the way, a lot of people are talking about this is anything like this ever going to really happen >> well, i think we might see higher tax rates on high income people, depending on who gets elected president and the makeup of the congress and that's

certainly a possibility and we have seen the tax rates change regarding a wealth tax i think this is fundamentally misguided. if the goal is to kind of push opportunity in to the middle class and into the working class and into the lives of the working poor, then a wealth tax would end up being counterproductive. there are serious issues with liquidity. how do you pay a wealth tax if all your assets are in liquid? that's going to hit people that are entrepreneurs, trying to start businesses particularly in the early private phase. we know that most new jobs come from new firms this is bad for those businesses, it will be bad for job creation. >> so structurally, just to be clear you don't like the idea of a wealth tax what about raising capital gains in the same way that druckenmiller was talking about? >> if the problem we're trying to solve is that rich people

have too much money, i don't think that's a problem and i don't think the tax code should be used in some sort of a punitive way in order to try and reduce the amount of money or the amount of wealth or income that people at the top enjoy if instead we think, you know, that there are some important programs that we could put in place that can help push economic opportunity further down the income distribution and we need to raise revenue to pay for those programs, rather than paying through the deficit, then i think we should look at what is the most efficient and reasonable way to raise that revenue as we can. and, you know, again, looking at the top, you know, 0.001% for the revenue certainly those folks should be paying their fair share, but the smaller the group you're targeting, the more opportunities there are to game the system we know the estate tax doesn't make much money. we know that if you were to crank the top income tax up to, you know, 90%, that that wouldn't raise much money

either so it seems to me that the point is more punitive toward the rich than to solve problems i object to the tax code being used that way. >> seth, answer that piece of it, but also the practicalities of a wealth tax itself. >> at the top the 0.01% as much wealth as the bottom 80% and in warren's taxes that it would raise $2.7 trillion and you can argue about the figure but it's in the ballpark which is you know could do just an enormous amount of good i think the practicalities, i think the bottom line with the experiences of our estate tax and other taxes is taxes don't work when we cut them repeatedly, when we don't enforce them, when we allow high income people to avoid and evade them but if we design - >> but the reason i asked you about the practicalities of it, think about all of the ill liquid assets that wealthy

people are in possession of and how the assets are valued or quote/unquote marked if you will and all of the gamesmanship and gaming that will take. >> and it's double taxation unless you got it through a death and it was never marked up but most wealth, you have paid once do we want to get rid of the notion, double taxation is something we want to avoid if you want to do it, fine but you need -- most of this money you pay taxes on it once. >> can i say one thing most of the wealth of the super wealthy has not been taxed because -- >> that's what i said. estate hasn't that -- it's been marked up and not taxed that's different than someone who's a self-made billionaire or billionaire who paid income tax on it it the first time around if you're going to tax the wealth admit you're double taxing it. >> the capital gains is the route -- enormous wealth can i just say the top of -- of

the top 0.1% 80% of the assets are publicly traded so it's easy to track the net worth of someone like warren buffett or bill gates like we can do that on a day to day basis, this is not terribly hard. >> you don't think that -- >> but it's awfully difficult -- >> you don't think that most wealthy individuals would actually sell some of the stocks and you cap -- if you raise the capital gains to try to move it into private assets that would be much harder to track? >> i - >> there are unintended consequences that would happen as a result of this, in terms of how people would restructure their assets, no >> i mean -- >> look -- >> you know, a tax of 2 cents on every dollar i would not sure it would cause people to radically, totally go out of publicly held assets >> here's the issue. there used to be 20 countries in

europe that had a wealth tax, now there are three. two of those it's norway and spain. they only raise about a third of what they expected to raise, so even the four that are left are probably going to get rid of it. the problem is not just the liquidity issue of how you sell something, but how you value something that's most of the wealthy aside from warren buffett and bill gates and those who made their wealth from publicly traded stock, most have private companies that are difficult to value, difficult to sell and difficult to monetize quickly to get liquidity from every year larry sommers, not exactly the most conservative economist has said a wealth tax is not practical. >> so the two economists who, you know, were behind senator warren's wealth tax responded to a lot of the claims yesterday and i think their argument was convincing >> it's all hope. >> unlike europe where they

designed wealth tax that had all kinds of exemptions and it's easier to move around here to get around it is to relinquish the u.s. citizenship to throw up our hands, obviously other countries have had - >> we have a wealth tax. we have capital gain taxes and property taxes and that's something that the other countries don't have. >> right. >> those are kind of wealth taxes, right capital -- the capital gains tax is a tax on income on what -- on the income you receive when you sell the capital gain i mean, there are just enormous practical difficulties here. >> michael, on your end, two issues are going on here one, i think you have a view -- i don't want to speak for you, about the practicalities of actually how you'd do it by the way i don't disagree with

you. i think there's a larger philosophical view that you have that we shouldn't be raising taxes. my question to you -- let me ask it this way. do you think we need to raise revenue? do you look at the current budget where we are, i'm sure you'd like to get rid of entitlements and other things but do you say to yourself as a country, we need to do more and we probably need more money to do it? i saw a statistic, this will freak you out. the median net worth of a black bostonian, $8 in boston. in boston. so you have to say to yourself there's something fundamentally wrong in this country and the question is, how do you fix it >> i mean, you know, i think the fundamentals of the country pretty sound do i think we need more revenue, yes, i do think we need more revenue. i think our deficit situation is out of control i think given demographic pressures that we face over the coming years and decades we need

to increase revenue share of gdp. i think it's reasonable to raise that revenue in a progressive way. i'm in favor of progressive tax structures so i think the question is how do you do that and where do you go to get that revenue that will cost the least economic distortions that will be the most efficient and that will actually be enforceable, be a way to get the revenue and there -- you know, there are a whole bunch of places i would look before going after the wealth of 75,000 u.s. families like senator warren wants to. >> what would you do >> one would be to continue closing tax expenditures, to broaden the tax base we made some progress on that with the 2017 trump tax law but there's still -- we still spent a lot of money through the tax code that would be -- >> like what like what? >> like the exemption for employer provided health insurance is one

we still have a large mortgage interest deduction in the tax code. >> how about 1031 exchanges? we can get down the list but you're not touching the high priced stuff. >> i mean, the largest is employer provided health insurance. by far so i certainly am targeting t the -- where we're spending the money. and then, you know, look and see what are our actual revenue needs? what do we want to spend money on and make decisions that way rather than using the tax code as a way to punish people at the top for having been successful. >> but mike, i would add to that, elizabeth warren is getting the biggest cheers of any candidate on the campaign trail when she says tax the diamonds, the yachts and the rembrandts of the rich that is her winning line right now. this is popular. this is politically popular. >> among republicans too, right? >> yeah. >> i agree with you that it's popular for senator warren's

current group of supporters and -- >> not just her 60, 65% of all americans including close to half or more of republicans back this i do think - >> sure. >> to your point you don't want to punish success but do you think the american electorate has changed their view of the wealthy after the crisis leading up to this election? >> i think there has been some of that. i mean, if you kind of look, you know, it's somewhat confusing, right? so in the 1990s we actually had income inequality increasing significantly and we didn't see all of this outrage about yachts and diamonds over the past ten years, we have seen income inequality level off or even decrease depending on how you measure it. >> that's right. >> and yet, we're seeing all this populist frustration. sorting through that is important and what people actually care about is how they're doing. i think the goal of the public policy should be to help people in the middle class, help people in the working class and help the working poor to do better

and i think if we can succeed at doing that, then a lot of this frustration will likely evaporate. >> okay. a debate that isn't going away but it was a great conversation right here so thank you >> robert, i couldn't help of thinking of the work arounds, they'll tax your yacht maybe you mortgage your yacht and the bank owns your yacht the work arounds - >> that's right. the whole industry of accountants who are wealthy that are ready for this >> robert, thank you when we come back the most important market forces driving investors mid week technology coming off the weakest performance since last month and tuesday was the worst day in june for the dow and the s&p 500 and the futures are in the green this morning where can investors find strength in technology and the broader markets? advice for your portfolio when "squawk box" returns

futures are up, but only by about 71 points for the dow right now. we'll be right back. i'm here at the nasdaq market site with jpmorgan global market strategist alex dragon, you talk about the hunt for yield, the unique challenges

presented so late in the economic cycle tell us more. >> so global central banks are cutting rates late in the cycle. that's really sucking the yield out of core government bonds in fact, we now are looking at over $12 trillion worth of global government debt trading over is really throwing the gauntlet down to investors for them to go hunting in emerging markets. those sectors are not going to protect your portfolio against any late cycle economic volatility >> so where should investors go? >> investors need to focus less on the income and more on the diversification benefits that can be provided from focusing on core government debt and mortgage-backed securities. >> what are you focusing on for the second half of this year >> two factors that are front of mine for investors at the moment one is trade, the other is central bank rate cuts for us, i think the key focus is trade discussion and in particular what happens between the u.s. and china. >> good insights thank you so much. >> thank you >> for more insights from jp

morgue an s morgan asset managemenanagement online welcome back the markets factored in a rate cut from the fed next month. our next guest is not expecting any fed rate cuts anytime soon joining us now is jeff sal, market strategist at capitalplag good to see you. >> pleasure. >> what makes you think that's not the case >> i don't see anything in the dmae tells me we need to cut

rates. i travel all over the world, economies are strong europe is still having some issues with it but overall the u.s. economy is doing pretty darn well and i just don't see any reason to cut rates right here. >> having listened to fed members, i guess, including bullard, who said he would have cut rates at this past meeting, what do you think they're looking at what do you think they're seeing that gets to that sort of consensus, particularly with what we heard about where the dot plots went after the last meeting? >> you see some of the softening economic figures that have come out, the numbers this morning on durable goods, the housing slowdown, despite the drop in mortgage rates they're looking at that. but overall, what i'm seeing is the economy's doing pretty darn well it is actually in a very sweet spot we issued a trading flash on june 3rd with the s&p at 2729 saying a bottom had been formed,

and we were going to trade to new highs and where s&p will be up 200 points from that. i think the stock market is telling you there is not going to be a recession, the economy is going to reaccelerate in the back half of this year, and e n earnings continue to come through better than people expect. >> you don't think any of what the market has done lately has been because of the anticipation of that rate cut you think this is just purely trading on fundamentals here >> well, you know, i think the anticipation of rate cuts certainly spurred some further upside in the equity markets but i really think it is more about a reacceleration in the economy in the back half of this year and the fact that people are under invested you go out and talk to the individual investors out there, and, becky, they're not just cautious, they're scared to death. that makes me think the equity markets will go high here. >> what happens if the rate cut doesn't come you think that takes some of the wind out of the sails? what do you tell people to do? >> you might get a stall if the

rate cuts don't appear, but, again, i think the fundamentals are strong, i think the market is not expensive despite what a lot of pundits are telling you our work suggests the current interest rate environment that the fair market multiple on the s&p 500 is 19 times forward earnings, which gives you basically a 3200 objective on this years' numbers. and much higher objective next year if next year's estimate is correct. >> how do you figure out what the trade war could mean if things get worse, if the tariffs continue or if the tariffs on the additional $300 billion in goods from china actually materialize? >> that's a head wind. no doubt about that. i think before the end of the year that the trade dispute will be resolved. china has a lot more to lose than the u.s. does just like we evidently have signed the trade agreement with mexico and canada, i think you'll get a trade agreement out of china >> and so you would be telling

people to buy what what particular areas? s&p straight up or you think there are certain sectors that do much better >> technology has pulled back here after a pretty darn good run off the june 3rd low i continue to like tech. i like energy a lot. i like the master limited partnerships, the midstream mlps, as cheap as they have been this 20 years, they pay roughly 8% and about 80% of that distribution is tax deferred and they don't have that much price sensitivity to the price of crude oil they have the pipes, and the storage facilities and they have long-term contracts with people like exxon and chevron >> anything you stay away from, jeff >> i'm not real fond about utilities. that's been a dead wrong call, by the way i'm not real fond of consumer staples. pretty much all the other sectors i think are fairly attractive right here. >> why consumer staples? >> i think they're expensive a lot of the portfolio managers

i talked to have not believed the rally and yet they had to put money to work because money has been coming in over the transom. they bought the defensive sectors. and i think it made them pretty expensive. >> jeff what do you say to the clients who you talk to who are so nervous and so scared >> well, i say bull markets do not end with that kind of sentiment. bull markets, if you remember, in '99, people were buying technology out the kazoo and before this market is over, i think you'll see that kind of enthusiasm again >> jeff, good it see you thank you for your time. >> always a pleasure, becky. >> coming up, when we return, we're going to check stocks and get you ready for the trading day ahead. we're counting down to two exclusive interviews morgan stanley's chairman and ceo james gorman tomorrow on "squawk on the street" and closing bell, the first of those taking place at 10:30 a.m. eastern time "saw rur i it. quk"etnsn a moment call the insurance company it's them, calling us.

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final check of the markets, up triple digits in the dow, getting back some of yesterday's -- i think 180 point loss getting back about 80 at this point. the nasdaq indicated up 40 or so to open there. the s&p up 8

do you buy the microwave popcorn that has the fake butter flavor on it or -- do you like twizzlers? >> i'm just going to, you know, just bottled water. >> bottled water, kale and some beyond beef. >> i'll get you a strong drink. >> make sure you join us tomorrow we may talk about what happens tonight. "squawk on the street" is next ♪ good morning and welcome to "squawk on the street. i'm david faber with sara eisen and mike santoli, live from the new york stock exchange. jim has the day off. carl is on assignment. a look at futures. we get started with trading, half hour from now, here from the new york stock exchange. looking up not as much as we were