without getting regulated. but physical place, we don't innovate as much anymore as apple and tesla show >> walter, as always, a pleasure being with you thank you for joining us. >> final check of the markets. we're going to open lower to start the first trading day of the week dow opens lower by 130 that does it for us. "squawk on the street" begins right now. ♪ r-o-c-k in the usa r-o-c-k in the usa ♪ congratulations to the women's u.s. soccer team dow futures down about 100 as we get ready for a -- the last quiet week before q2 earnings. powell on deck wednesday and thursday on the hill, downgrade of apple today, watching deutsche's restructuring and a lot more europe is mixed. turkey in focus as the central bank there gets fired. the dow would be 10,000 points higher if not for the fed.

the president criticizes the fed and europe as powell testifies this week. >> deutsche bank announcing massive job cuts, exitinging global equities business, a highlyanticipated $8.3 billion restructuring plan, but will it be the last. >> another controversy brewing at starbucks we'll tell you what has the company apologizing this morning. late last week, the s&p was at -- within striking distance of 3k. since the release of the stronger than expected june jobs number on friday, stocks have fallen on dampened hopes of a fed rate cut as the chairman prepares to testify on the hill later this week the president ramps up his criticism of the fed over the weekend. take a listen. >> despite everything, they're not doing well and we're doing great. they're not doing well at all, we're doing great. we're taking money out and interest rates have gone up.

if the fed didn't do what it did or even half, we would have the dow that would be as good as it is, it is doing good, but we would have a dow that would be anywhere from 5,000 to 10,000 points higher. >> markets still says 100% chance of a cut at the end of this month, guys. >> yeah, i think morgan stanley saying 50 basis points don't know if they're going to cut. really solid job number. and one of the things i think that we aren't even commenting on, how many times have we had to say the fed is -- their job is not to try to get stocks up we have a president who is basically saying, hey, what's with the fed we need a dow 10,000 you know, the -- so many things are remarkable about what is being said in the white house. eyes glaze over. there is a moment where all we would have talked about today is how wrong is this man in the white house? but instead we say, dow 10,000.

>> he said virtually the same thing in a tweet a number of weeks ago and many times since then in terms of how much he believes the fed policy has cost and clearly in terms of what he watches very closely, that being the president, which is the dow. >> was he upset about the rise in downgrade >> i don't know he was upset about that he is a little bit focused on 5g i want to talk about -- >> i'm glad. there is a notice about pricing. >> the emerging wireless world and whether it is going to be a good one for investors or not. as for the market overall, jim, after that number on friday, what do we do? >> look, i think -- i don't like this morgan stanley downgrade, which is basically -- >> on global equities. >> yes, basically, look, you should -- bad news is bad news it read as if it was written on july 2nd the idea that we could have good growth in jobs, i know jobs, that's lagging indicator, does at least make it look like the -- he should wait, jay

powell should wait there is nothing wrong with w t waiting. they have press conferences every time now you can just wait. >> you could you just keep getting that kind of withering criticism from the chief executive. >> if he goes any closer to that helicopter, won't be able to hear a thing. >> true. >> audio mix near the blade, the rotors is tough. >> worst town address. >> jim is referring to this morgan stanley note that basically is taking their global equity allocation it a five-year low. they say earnings estimates for the rest of the year still too high bond markets painting a gloomy picture. pmi has gone negative. >> look, some of the data, the macro data is not that great but when you start drilling down on individual companies, we continue to get some very good numbers. and it is very difficult with the exception of the paper companies and the chemical companies to find companies that are really disappointing now, there is a downgrade with american airlines, boeing, people are -- boeing has its own

problems we have a number of ipos my biggest worry is that we have so many ipos trading, but that's not the essence of these calls the essence of the calls are that say that pepsi is going to miss tomorrow. and pepsi is up 20 points very quickly off of the -- off the ten year i just don't see a lot of conagras, conagra being a company that clearly didn't miss >> yes >> i don't see a lot. >> you don't see that? >> no. >> does that mean you're buying here all these record highs? >> i think if you look at kohl's, all right, an article today, about kohl's, it is in "usa today," it is about you can return things now to 1100 stores and kohl's, at nine times earnings you say, look, nine times earnings, is that dangerous? but then we have companies that are z scale, endesk, page duty have you seen that service now. these are selling at -- i'm not saying insane multiples, but

pricing as if there is a lot of new money coming into the market there is money coming out of the market i would never mind a strategist who just says we can't handle that money more ipos that are selling at eight to ten times sales. >> sales. >> that's what i'm worried about. that's not the essence of a downgrade of the semiconductor, capital equipment stocks by davidson which are not that expensive. micron reports micron was at three times earnings it said they were going to push out the turn in drams and the stock went up. there is two markets, the nonexpensive market, where there has been some hiccups, kohl's, nordstrom downgraded to sell this week and then expensive market no one is talking about, really expensive, every one of these deals, almost all of them, have good revenues i don't like the 1999, good discussion about 1999 previous show, which is those companies had no revs.

>> hopes for cash flow or -- >> chewy chewy is real. >> yeah. >> pets.com ceo wainwright, that was a disastedisaster, realreal real it is real, david. get real, david. realreal is real >> really quickly, bernstein, s saginaki saying tech at 21.4 times is higher, more expensive than it has been for the past 15 years. he's not saying short tech, but you need to start separating what is expensive in tech and what is not. >> that's what i agree with. tony, i think, that's a very reasonable piece we keep bringing these companies public and we -- with the exception, of course, of lyft, alibaba. i'm sorry -- >> uber. >> uber. you're looking at companies that are amazon-like. and those are expensive. anything that is -- shopify is a company i like very much talking about how that is a winner, all right. talking about alibaba, a square

winner, there is a piece by lisa ellis talking about square being a winner because of their venmo-like product so, i mean, we have got these companies that people are -- david, you talk about towers, later, i hope. >> we talk about it on -- what day was that wednesday? >> expensive stocks. >> yeah, they are. >> so, i mean, against them, we have got the banks, 12 times earnings, a lot of retailers, nine, ten. so i find that the call really makes sense, but nobody has research on all the companies that have come public in last four weeks and they are so loved. today, crowd strike. everybody loves crowd strike i defy people to tell me what crowd strike does. david. >> cybersecurity >> wow. >> then again, semantic gets a $28 bid from broadcom. >> it may. you say 28, sorry --

>> they should halt trading. it is crazy. >> i hope to reach a deal with -- >> it is expensive but they have revenues >> yes. >> that's the difference between 1999 where you had lots of companies and no revenue. >> jim mentions the banks. the german banks,s th s thbanks restructuring plan moves include closing down the global equity trading business the ceo says this is say rest t restart, we're returning to our roots and to what once made us one of the leading banks of the world. this was a $145 stock in may of '07 >> newman was smart, frank newman, he's a good man. >> they are -- you can forgive investors if they are taking a wait and see approach here given

how many partial restructurings and semirestructurings there have been in the history of this bank over the last five to ten years, not to mention ceos this time they're talking about really going back potentially to the roots becoming the best european commercial bank at least that's the view of some of their large investors one of whom, by the way, i should point out, doug bronstein will join me in the next hour. >> is he will donald trump join >> he will not that's right he had a long-term relationship -- >> the wrong db. >> did you see the statement, they're going to refocus on clients? >> yes >> who are they focused on nonclients we're going to start focusing on people who don't matter and start focusing on people who -- refocusing the bank around our clients. that's novel what is the ethos of a company that previously was focused on something other than the clients is always wrong? is that their -- >> i don't have an answer on

that one like precision railroading what were they doing before that nonprecision railroading before it came along? >> we have to talk about because -- >> somebody says let's be precise. >> let's focus on clients, let's do business. >> guys, listen, the market not reacting necessarily well, they had a call, i think it just ended not long ago two-thirds of the capital will be apportioned to the commercial -- to this -- to their core business, one third to the investment bank they're going to keep fx as a core product but it will be very similar what citi does. marketing to treasurers, all treasury products out there. that can be very profitable. no longer, of course, having the big salaries and big use of capital that goes along with having a big investment bank >> don't you find it ironic that germany is very strong and ten-year and -- >> right, so -- >> mismanagement. >> about 25% of tangible book value. >> so maybe we should write down

the book like cal fed >> i don't know. they're not raising any new equity the savings are coming from the cuts and everything else and then will be put back into dealing with it with the capital they need. >> do your eyes glaze over at this point with how many restructurings they had? >> that's what you're seeing today on the market. those wondering, well, are you really pulling off the band-aid in its entirety or -- >> shoot, man, you're looking at the band-aid. >> i didn't notice >> you only looked at the band-aid. >> no -- >> i had a procedure. >> no, no. he did it. pulling off the band-aid that was -- that was subliminal you knew you were looking at me, pulling off the band-aid. >> use your head when you say things like that. >> the whole time, the makeup people what they did, you had to do -- pull off the band-aid. >> do it. >> i didn't think about it >> you really are raising eyebrows on this one. >> thanks for nothing. why don't you put a big bull's eye -- >> nobody can see -- >> why did you say pull off the band-aid

why didn't you say opening the commode? >> i have it in my notes, rip off the band-aid. >> he saw you in makeup -- >> that's the mueller report we'll go over that that should be redacted. >> when we come back, starbucks apologizing to police who were asked by an employee to either move or leave a store in arizona. we're going to fill you in on that the premarket, coming off that jobs number on friday, also one of the lightest volume days of the year and five days of gains. we're back in a minute [ dogs barking ] what about him? let's do it. [ sniffing ] come on. this summer, add a new member to the family. hurry into the mercedes-benz summer event today

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♪ starbucks is apologizing to police in tempe, arizona, after an employee at one of its stores in that city asked six officers to leave or move out of the customer's line of sight on july fourth, a barista approached them about a customer not feeling safe because of their presence starbucks president of u.s. retail issued a statement saying, quote, when those officers entered the store, and a customer raised a concern over their presence, they should have been welcomed and treated with dignity. and the most utmost respect by our partners employees instead, they were made to feel unwelcome and disrespected which is completely unacceptable i don't know where to go with this one, guys >> certainly opposite of philadelphia

i do think that there is tremendous latitude among starbucks, you know. but at the same time, kevin johnson is a person -- a person who has really been kind of running the company seamlessly when there was a problem with philadelphia, immediately flew to philadelphia. i want to see if he flies there. if he flies to arizona. >> i don't know how this ranks not going to affect the stock. >> nothing affects the stock. >> no. >> stock goes up the stock is -- china doesn't affect the stock the price doesn't affect the stock. the prices are up a little bit for coffee it has been one of the great stocks of this run. >> up almost 80% over the last year. >> kevin johnson came in. >> you talk about him now, there was a time you had your doubts. >> well, and then he -- then he came in and told me, listen, we're going to take that nestle money and buy back billions of dollars of stock that was the sign that you had a ceo who was deeply committed to

thinking that his stock was cheap and he did, he followed up bought up hand over fist, every single day it was remarkable. and then did a bit of an acceleration and then changed in china. that relationship with alibaba, very smart you flagged that congratulations. >> thank you thank you. >> meanwhile, they seem to be bucking the overall traffic problem for the industry, right? a lot of these competitors have been having to make it up on ticket. >> right they never -- they pulled back from the mall under howard schultz. less and less mall because -- >> how long it would be until we heard his name he's no longer associated with the company. >> i don't hear his name very much. >> no, it is not -- it is not as often. i don't hear his name on the campaign trail either. i guess he's had back surgery and trying to figure out whether he wants to still compete or not. >> there is how many people now running? >> 23 i believe, democratic side >> he's independent. but he -- this is kevin

johnson's company. and kevin has done remarkable things in terms of the line. brian nichol, at taco bell, was i noticed a great -- a personally understood technology he comes into chipotle and puts in the technology. kevin johnson, juniper downgraded today, the man knows technology, he comes in and he solves the through-put, how long it takes to get and johnson solves -- does a lot of solving the through-put. next thing you know you got much better numbers these guys are technocrats >> mcdonald's is the same thing. it is all engineering. it is all engineering. >> they want to hold -- how about the way apple -- people say, hold it, he's a technocrat. i think he's more than a technocrat we want a technocrat at mcdonald's, at taco bell, at chipotle, at starbucks, but we want a da vinci. supposed to be da vinci, right >> aprt apple?

>> yes he's not da vinci. he's not michelangelo. what is that he's not mozart. >> easter brooks pointed out the fast food experience needs to feel like it feels when you're online and things are popping up, suggested for you, algorithms at work it has taken a while for the quick service industry to get that. >> loyalty, where is mcdonald's? your loyalty is to the fries come on. stay focused >> i'm trying. i had some mcdonald's fries recently. >> how were they >> pretty good. >> i had wendy's fries two weeks ago. fantastic. >> i went to the mcdonald's on the way home from vietnam in taipei the spicy something or other, just like home that's the appeal. just like home we're getting cramer's mad dash, count down to the opening bell here look at futures, weak to start this monday morning. we're back in a moment ♪

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♪ welcome back we get started with trading here, full week of trading at the new york stock exchange. time for a mad dash. 3m. >> you can't put a band-aid over this 3m situation. this is a p fast primer, a particular kind of, let's just say, fluorinated chemical. john lynch saying there could be multiple billions of dollars that 3m is on the line for.

>> liability. >> yes. >> as a result of -- >> ground water, ground water contamination. 3m liability average of 6 billion, but our topdown framework estimates 3m's liability at an average of $22 billion. 22 so, mine, this is a great american company it is true they had to pay very big remediation, u.s. state attorney general of minnesota, 800 million -- >> authority under way or is this something that is still going to take years and years to resolve? >> there is a footnote in the last quarter that really basically, i think, minimizes how much 3m is going to pay. if you look at what lynch says lynch says there is liability all over the world you would never buy a share of 3m again if you read his piece i think his piece is too negative, but i understand 3m is going to have to address this p

fast litigation for more aggressively than they have so far as it is the stock has been tough. lynch with tusa, big bears on ge, now he's really said, remember, tusa doesn't like 3m either i think that this chemical cross hairs piece makes you feel like it is wr grace -- >> some corporations that fight these things for years and come out with a far smaller liability than anticipated and then there are others, think monsanto now. >> asbestos. i think this is too negative this is litigation >> all right we'll keep an eye on shares of 3m, which weakened a little bit. opening bell, though, five minutes away stay with us on "squawk on the street." so ...how are you feeling?

on a scale of one to five? one to five? it's more like five million. there's everything from happy to extremely happy. there's also angry. i'm really angry clive! actually, really angry. thank you. but what if your business could understand what your customers are feeling... and then do something about it. turn problems into opportunities. thanks drone. customers into fanatics change the whole experience. alright who wants to go again? i do! i do! i have a really good feeling about this. you're watching "squawk on the street" liv, live from the financial capital of the world the fed chief goes to the hill for his semiannual monetary policy commentary. we'll get fed minutes for the june meeting that same day on wednesday. >> i think it is getting harder and harder for fed chief to

ignore the criticism i think at a certain point he has to reassert the independence of the fed, and that he's not going to do what the president tells him to do because this trump beat is too intense. and it has got to -- he's got to defend the institution. >> he goes beyond saying, i got a four year term, i intend to serve it all. >> you don't do something against your instincts to prove the president -- to prove to the president that you're not listening to him, do you >> someone is going to ask him, do you feel compelled to cut rates because of the president and i think he's going to have to say, you can't just say i ignore the president i mean, he can say independence, independence but at some point he has to say the job of the fed is to x, not to get the dow to 10,000 he's got to say that applause for that. that would be something the president would say, right thousands of people applauding when i say that.

no, i think at a certain point he has to say my job is x. not to get the dow higher. i think that's a legitimate thing for him to have to do. >> the opening bell here, s&p 500, cnbc real time exchange at the big board. iaa, salvage vehicle marketplace, celebrating being a new independent public company at the nasdaq, principle financial celebrating the closing of its acquisition of the wells fargo institutional retirement and trust business. speaking of vehicles, china auto sales go positive for the first time in 13 months. >> then you hear they gave big discounts. like, you know, last week, phil was talking, phil lebeau was talking about too many suvs maybe. that's a new -- autos have not been a great place to be they have been the last bastion of the bear and it is incredible how they're pulling back from bad markets, trying to be more

disciplined and people keep saying, well, you know what, in the end, they have to spend a fortune to get electrified fortune to be able to deal with the new world. and fortune to do autonomous and then there is musk. >> there is some op-eds today that are looking at the things they could do in retaliation if these trade talks don't go well. reneging on ag buys, adding companies like fedex to an unreliable, national security list >> painful. >> banning rare earths we're back to that again. >> rare earths, obviously there is a dispute about how much they have versus where we can get it. fedex has become just a tremendous whipping boy. i just -- they really intend to do this -- they got a couple of packages wrong i got a fedex package that didn't go to me. i'm not putting them on a black list i'm not switching to u.p.s., david. >> you're not? >> no. >> okay. >> but fedex stock is one of -- part of the bear market i'm

talking about. ten times earnings, that's still a bear that's not z scaler. not z scaler not zendesk. no fed octa. >> no? >> no. >> just pointing out there is two markets two markets. >> boeing is the worst dow component at the moment. apple is not far behind, jim you mentioned earlier rosenblat goes to sell on, quote, fundamental deterioration over the next six to 12 months. >> then we have web bush today talking about apple checks confidence in iphone demand, despite -- these are polar opposite pieces and i find that apple is a battleground stock, but it did -- it has been moving up nicely and if you look at the price tag of rosenblat, he's been using 150 price tag the whole time he was on this morning, and i listened and said, all right, he doesn't like apple, okay he doesn't like apple.

rosenblat securities you got june zha zhang, he doest like it. he's been wrong. wrong. >> so will he continue to be wrong? >> well, you know, he's not michael pachter with netflix. >> that's the definition of stubborn right there. >> nice fellow >> rosenblat says it is not a short. apple is not a short because of the buybacks, the cash balance >> just wanted to make a splash to some degree i look at the webb bush piece, i think he's done a lot of checks. really talks about china being okay i think it count aeracts effectively but it is not exciting how about morgan stanley, sell everything and go home sell everything and get the velveeta ready >> helpful for kraft

>> that is the fallout shelter spot. >> only thing that would be. that stuff is amazing how long it has been sitting -- there is no sell date on most things that kraft sells. including the stock. no sell date here, it yields so much. >> put him in the clear shelter. >> the thermonuclear etf you're developing >> campbell's got some play today on this renewed attempt to put some fire under soup sales not soupy sales. soup sales. >> campbell's to 45. >> nobody knows -- >> afraid to go there. >> you do that soupy sales imitation. >> what am i going to do he mentioned soupy sales i have a best of soupy sales, campbell's is doing better >> yeah. yeah >> that's -- >> a little bit. not exactly setting the world on fire. >> better than conagra better than kraft.

>> okay. not as good as png. >> png is amazing. >> not moving into battling insects with some new products, trying to go up against se johnson's raid market share in that area. >> raid, yeah. yeah i think that's -- whole group of people -- reminds everybody of monsanto you mentioned monsanto david mentioned monsanto -- monsanto is maybe the great debacle of the era. >> one of the worst deals of all time it climbed the charts as like to say given the incredible liability it has taken on by a buyer in germany, bayer we say here, same company. >> and beyond meat never stops never stops. >> i stopped i opened up my freezer, i noticed we still had some beyond meat patties, i left them in there. >> how about the dog will the dog eat it? >> i haven't given them to the

dog. >> blue buffalo was on some list -- >> that's right. heart disease. got to be careful. >> we tried it on your recommendation, not recommendation, but because you did it, we also tried it and i agree. >> you to? >> yeah. >> did you compare it to kibbles? >> when you did it, did you have regular pattys >> of course, yes. >> i'm going to have an actual sit-down cook. >> you keep saying this. >> i can't just do it. it is not like snap. can't just -- >> not that hard, jim. you go to the supermarket, buy some beyond meat patties put them on the grill. >> i was trying to get the ceo of bond meaeyond meat >> you want to get the ceo >> you need the right condiments it is a condiments issue. >> you need a lot of kraft heinz. kraft heinz slices with the cellophane, right? >> delicious wanted to talk about the wireless industry briefly.

come back to it. >> what kind of segue is that? i'm talking about cheese >> talked about it a lot last week, of course, last tuesday, i reported on the key differences or areas of focus now for the doj, for dish, for t-mo, for deutsche telekom and for sprint. all those parties in there, about both the capacity agreement, how much capacity actually would be available to a -- to dish in this divestiture that we have been discussing and as well how much ownership by another company could dish take in for this wireless effort again, 5g. what is interesting here is there is still optimism, i think, that they're going to figure out a way to get there. but what i'm also picking up, jim, deutsche telekom is leading the charge against some of this push they're getting from the doj. not as much t-mobile t-mobile and deutsche telekom,

not necessarily on exactly the same page even though deutsche telekom controls t-mobile. give me some bullets on that. >> again, deutsche tell, from what i understand, feels as though the goal posts were moved in terms of things already agreed on, in terms of the divestiture package and the various things going along with it, these sort of -- a limit to some extent in terms of how much the investment could be in this vehicle from an outside party and this capacity agreement in terms of how much they would actually have available to them. doj pushing hard a lot of questions here, we'll see whether they get there this week, last week my checks, they were hoping to, but i got to check again. >> shoot down the google. >> the google -- the new york post, we reported a lot of what i reported last week, added on that dish was talking to google, google tells us these claims are simply false, google is not having any conversations with dish about creating a wireless

network. that's a google spokesperson telling that to cnbc so -- but as for the other things i related last week, they're all accurate >> t-mobile -- >> did bring up the idea of would a google or amazon have interest in investing in this vehicle. >> very strong. >> it has been strong. which is interesting if you're t-mobile or the germans, you say, no, forget it, and the doj says we'll sue you, do you terminate do you terminate the deal thinking, i'm better off in the competitive position i have now than really arming a fourth competitor with capital, with the nationwide network, with the great capacity agreement, with serious partners i don't know the answer because then you leave sprint out there as a wild card, a damaged sprint so a lot of things swirling here meanwhile, verizon gets downgraded by citi because they -- they kind of bring this up

they say, you know, the valuation risk reward is much more balanced given rising uncertainty over the future industry structure and therefore the opportunities for multiple expansion have narrowed, stay focused on different -- >> it is really at&t the winner here they go up all the time. it is clearly bottoming again. that may be the ten-year this downgrade, citi, stock is -- industry pricing quite the opposite of what we thought was going to happen. >> maybe it is benefitting from ownership with entertainment assets i don't know. >> they are doing interesting things looks like they're collapsing mad magazine. >> yeah. i used to read that. >> i love mad magazine. >> i loved mad magazine, yeah. >> speaking of history, we have a moment today, celebrating -- not celebrating but remembering four years ago from this very set. take a listen. >> welcome back. while we were in commercial break, traders here at the nyse

in really one moment just said, whoa, as a group, and started running to various parts of their posts. you can see these screens that are on the posts all around the floor, now saying no quotation for just about every stock that we can see from post nine where we are i've never seen this happen. >> took about four hours for trading to reopen. >> yeah, one more nail in the coffin of that -- we just -- the fragile nature of the asset class has just been -- really, all the exchanges, nobody really at fault, but i think people just kind of feel like, how can you put your -- how do you put your life savings in something that doesn't open for four hours. i think that's been a continuing theme ever since the flash crash. just people don't trust the class. they trust the etfs. >> we saw the prints, things were down. >> yeah.

i mean, celgene. >> different day, sorry. >> that day you were at the main headquarters >> that was james bullard, the comments on friday, and then sirius satellite and he's come around to being, i think, the most reasonable person in the fed, but, look, i always feel that the etf-ization can't be the notion of individual stock risk, give up on almost all stocks is not in line with what millennials want to do i think millennials want to buy stocks but have been discouraged by the notion of the -- the stocks can blow up like that >> nobody is stopping them from buying individual stocks >> no, but come on, etfs now more than -- >> etfs are much of what the market is now. >> yeah. >> that makes some of us pterodactyls and stegosauruses stegosaurus? >> actively managed mutual funds are a rarity

they're not. there is still plenty of money in them, of course >> i worry about this market, the companies that have gone public they're not in any index if they go down, no natural buyer. >> right, right. >> notice how easy apple was to slay isn't that -- >> apple down over 2.25% >> rosenblat, wow. >> we don't talk about rosenblat often. >> rosenblat, morgan stanley know what i mean >> i always know what you mean. >> one reason for the weakness at the get-go. down 59 on the dow to bob pisani. bob? >> just back from a week in france, i can tell you they would love, love to have the jobs report that we had on friday they are still struggling with slow or even no growth right now, the damage 3 to 1 declining to advancing stocks. it is about tech to a lesser extent about banks here tech down there, this was a historic high. the s&p sector, friday, historic high so don't cry for the tech. banks also weak. you see the defensive names,

utilities, staples and reits holding up fairly well if you look at the tech names here, yes, apple is weighing on the s&p, as well as the dow. some of the nvidia and lam research, semiconductor names, intel weighing on the dow as well over the weekend, one debate, which is what is powell going to do during this testimony during the week here. we got a problem here with the situation with powell. that is the question of how urgent is the need for a rate cut for powell put up the next full screen there. we see the labor market strong right now. we got the low inflation, record expansion over all here. if that's not a victory, i don't know what is for mr. powell. the earnings situation, what is it going to look like in 2019? morgan stanley came out over the weekend a big call saying they didn't like the way earnings were, they think they're too high for the situation if you see here what is going on, 1.6% for the first quarter,

and basically flattish for the rest of the year a lot of hope around the fourth quarter, 7% number but they do have a good point. pmis have been weaker recently we have seen global growth basically slower than expectations outside of the united states. so the big question is are they going to be right on that and where are they going to go with that i want to get back to the point of mr. powell this weekend and that's a major issue overall here we don't know how urgent the need is for a rate cut some feel we need a new insurance cut. remember the central banks are still dovish overall the recession seems unlikely that a lot of people are concerned about. and, of course, we have concerns about trade in europe and china on slower global growth overall. these numbers here have been holding up well. this is probably going to turn positive and, again, we're looking at flattish, not a decline, if you're in the recession camp these numbers could go down third and fourth quarter into negative territory. nobody is betting on that right

now. morgan stanley is a bit of an outlier in their expectations. finally, i want to talk about deutsche bank because wall street is very concerned about this they're talking about laying off 18,000 people. a lot of people in the overall business of trading and it is very simple what happened to deutsche bank. when you have the rise of electronic trading, when you have problems with the overall market here, with indexing, the rise of exchange traded funds and fewer active managers trading, it is very simple what happens on wall street you get lower volumes and you get lower profits and that's why a lot of people have been exiting the business deutsche bank was a major player, but not the number one player and now you see consolidation in this industry going on look at deutsche bank, this was a positive initial discussion when they announced the layoffs. up earlier over in europe. now it is turning negative, down 6% on the day. even a major reorganization like that isn't helping this. this stock is $25 in 2015. that's what happens when you have major problems in your

bank equities isn't the only issue for them they have a lot bigger problems. but you can see, today, not moving the dial for them in a positive direction carl, back to you. >> bob, thank you. bob pisani this morning. to the bond pits, rick santelli at the cme in chicago. good morning, rick. >> good morning, carl. it has been a wild ride since before the numbers on friday with respect to the jobs report. look at a two-day of 2-year note yields we're in the mid-170s hours before the data hit on friday. even though we have given something back, we're at 1.85, 1.86, we have been higher, we're certainly off the low yields and we are unchanged, by the way, in 2s the further down the yield curve you go, the more damage that you see on the give back 10-year down two 30-year bond down 3. on the 10-year chart, in the mid-1.90s. we're still holding on to that 2% handle, which is a big

psychological area, especially at a time where everybody is looking at the minutes to the last meeting, also looking at jay powell and company and how they may deal with the environment of the markets, seemingly looking for more stimulus at a time where maybe jay powell and company will be reticent to allow it to happen at this point. remember, there can be many bigger issues down the road. look at what we're talking about with regard to the european banks. the transmissions, if you will now, bund yields, certainly are a bit higher basis point or two but not far from minus 40 basis points, the lowest closing yield in history, by the way the dollar index, maybe the one area that hasn't given anything back now it didn't close on its highs. it is up a bit today and also shows us how psychological some of the strong numbers are. ultimately the president would like a weaker dollar larry kudlow likes king dollar the people that are buying the imports, that are coming from

overseas, much would rather have a strong dollar and buy more of whatever it is that the demand is there for but ultimately, it is more about multinationals and so many of the s&ps are giving something back. jay powell and company will have to navigate some of those dynamics carl, jim, david, back to you. >> all right, rick we'll see you a bit later. rick santelli. markets on this monday morning, dow down almost 170 apple one of the culprits, back below 200 on the downgrade at rosenblat. we're back in a minute

got some weakness in faang ledpy apple this morning there have been other notes regarding tech arguing it's somewhat expensive we will get stock trade being jim after a break.

time for cramer and stop trading. >> can't underestimate the po s importance of pepsico tomorrow a little bit of a growth rate bump that was deserving of, i

don't know, ten points this has been a play on the ten year as much as people talk about tech and banks, this company reports tomorrow morning they have to make the number they have to make the number there is going to be an air pocket let's watch. you know, 6:30 tomorrow. get a sense. i am somewhat concerned because that could be the morgan stanley stock startover value. >> sure. >> but if they deliver the number, boy, you are dpsh. >> which they have a habit of doing. they sure do. >> what's on "mad" tonight >> a very exciting real estate investment trust el dorado merging with caesars and what happened to bruce linton at canopy and how well consolation did with the exception of the losses at canopy bill is a straight shooter they had a good quarter. by the way, you know what the most popular drink is? spiked seltzer sam adams has a --

>> i have not had a spiced seltzer. >> the 21 to 30, they have switched to spiked seltzer. >> something else i did not know until i sat down next to you. >> peel the band-aid off that. >> okay. we will see you at 6:00. dow's down 150 we are back after a short break.

♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla at post nine of the new york stock exchange sara has the morning off market with a little bit of weakness to start the week dow's down 150 on mostly this apple downgrade. watching deutsch as well and accepting powell later this week. >> apple leading the tech slide. the dow falling this morning as fed chair jay powell prepares to testify this week on capitol hill. >> another possible controversy brewing at starbucks we will tell you what has the company apologizing this morning. >> plus, deutsche bank announces massive job cuts as it rolls out a highly anticipated restructuring plan i will speak with former

jpmorgan cfo dave bronstein. his investment firm announced a 3% stake in deutsche bank last november. >> meantime, stocks down to start the week after the better than expected june jobs number perhaps dampening expectations president trump continuing to apply pressure over the weekend. >> like everything, they are not doing well and we're doing great. but we are putting an unfair playing field when they cut interest rates and pump in a lot of money which is just the opposite we are taking money out and interest rates have gone up. if the fed didn't do what it did or if it did even half, we would have the dow that would be -- we would have a dow from 5,000 to 10,000 points higher. >> meanwhile, his fed board nominee echoing that

here's what she had to say on friday. >> when you consider that more than half of american households are invested through mutual funds or pension funds in this market, i don't want the fed to pull the rug out from under them by taking a position that is not conducive to further providing the liquidity for this growing economy. >> so naturally this sets up us for an interesting two days of testimony for the fed chair late they are week. here at post nine now to discuss this is jpmorgan's chair of global research joys chang also the head of u.s. equity strategy of bank of america merrill lynch. good morning to you both. >> good morning. >> if the fed cut, would the dow be up 5,000 to 10,000 points more >> i think the market is still anticipating the cut i don't know if it's going to go that high. we think the fed will move twice in july and september because the concerns on business sentiment are still lingering.

looking at the second quarter data and even the third quarter we have lingering concerns on capex and business sentiment. >> why specifically do you think the fed is going to cut? later this month, how much would it cut >> we see 25 basis points in july and in september. and i think we see two factors at work. we have seen good jobs data, consumer confidence holding in, capex and business sentiment not keeping pace with that also more uncertainty around other parts of the globe it's not just the fed. in total, we think 19 central banks will be easing the second half of the year. >> that definitely puts it in perspective from a global standpoint do you agree >> yeah, i think that if we do see a 25 basis point cut in july it will be kind of an insurance cut. and i think that joys is right we haven't really seen the economic forces keep up with where we really should be in the economy. so what worries me a little bit is when you look at things like

capex guidance coming from u.s. companies, they've actually become very, very reticent to put plans in place whether that's because of trade risks or, you know, other factors, you know, is up for grabs. we see trends in the economy that aren't necessarily consistent with an environment where the fed would be able to stay on hold or hike rates later this year. it's reasonable to expect two cuts this year and i think the one thing that made me feel better about the data that we got last week was that if but look at the labor participation rate, it actually increased a little bit so wages decreased, which i think is a positive for u.s. corporates at a margin level so i think one of the big things for u.s. companies is that wage pressure has been increasing and companies haven't necessarily been able to price their products to keep up with that wage pressure. and what we saw last week was

that wage pressure is actually kind of stalling out a little bit as more and more people come to the market. so labor participation could actually be a boon to u.s. corporates. >> your point about capex, you have been on this for a long time it's finally actually coming to the fore from an optics standpoint, stock market at record highs, robust job market how do you cut in the face of that >> i think the downside risk is from the trade uncertainty we have gotten a reprieve with the temporary truce, but we need to see how the negotiations go you have auto tariffs in europe that will be in focus. the business sentiment, global capex, the futureinvestment, all of these things are dependent on planning ahead. and that's why i agree with savita an insurance cut makes sense here the fed has clearly signaled that as well so we are going to be watching the data very closely in the third quarter to see if we have more of a follow through from this but we are getting concerned that in other parts of the globe

there is quite a lot of uncertainty that lingers as well. >> over things like brexit or? >> well, there is brexit there's the continuing concerns that you have in europe on some of the fiscal issues there is still concerns that you have on slowdowns in other parts of the globe we have a central bank easing as a theme that supports asset prices we have seen a synchronized bond and economic market rally over the last quarter. >> second down day in a row for the s&p. we are close to these record highs that we hit middle of last week what happens if the fed doesn't cut later this month >> oh, yeah. i mean, i think the market throws a little bit of a tantrum. and that's what we need to watch out for, is that i think if we don't get a cut in july, the fed needs to be fairly aggressive in talking expectations down. so we've gotten used to this environment where the market

likes fed cuts that has been a big backstop for risk one of the reasons we are neutral rather than bearish on equities is you shouldn't fight the fed. when the fed is being accommodative, don't fight the fed. stick with the markets if we start to see the fed really dial back their easing program, i think that would be a negative for risk assets at this point. >> you just mentioned the synchronized rally in both bonds and equities this year how sustainable is that and what is the read through when you have a lot of market talk arguing that bond market is rallying the way it is because of increasing signs of weakness? >> well, one thing we look at in the bond market is the negative yields there is 27% of global government bonds have a negative yield. so there is that search for income that has been supporting the credit markets i think equities are probably going to do better here just given how much we have already

seen in fixed income as far as the rally. on the equity market side, one thing i would point out is that we have been at other peaks where we have had higher bond yields, higher enflakes, higher pe multiples i think the current levels can hold here even though we are at a record high. >> finally, there is some who believe that we are getting -- it's inventory de-stocking from a temporary slowdown in consumer spending in q1 why is that not true >> i mean, year over year disbeleave that. i think that is not something that you want to double down on and assume is going to continue. one of the things that makes me feel better about the third quarter, if you look at the surprise indices like the economic surprise index is a level that mean reverts. these are in mean reverting factors. we are at low levels that typically improve over the next few months so i really feel like the second half is going to be about

watching the data. and i think joyce said this but it's wait and see. part of the reason that i think economic activity has slowed down is because of uncertainty around trade then i think that whether or not the fed is going to hike as aggressively as what's priced into the market is a key focus of corporations when it comes planning so i think that what we hear over this earnings season about future guidance is going to be even more critical than it normally is given that we do feel like we are at kind of a pause or a stasis in the u.s. economic environment. >> those coming earnings going to be a bigger focus in the coming days and weeks. thank you for joining us today. >> thank you when we come back, too little, too late deutsche bank announcing massive job cuts as it rolls out its highly anticipating restructuring plan david will sit down with former

jpmorgan vice chairman whose investment firm holds a stake. plus, what starbucks is apologizing for when we come back in a moment the dow is down 97 (indistinguishable muttering) that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade.

including pulling out of global equity sales business and cutting 18,000 jobs.

former jpmorgan cfo, head of global m&a at that firm, doug bronstein, now at hudson executive capital which holds a 3.1 stake in deutsche bank it's a position it took last november as you can see, he joins me now to explain why he is actually encouraged by these moves. >> good to be here. >> so i think you and i had spoken others said this is undoing 20 years of strategy. >> yeah. >> why is that a good thing? >> so what's different this time, and quite frankly, it's going to take a while for the market to appreciate it, is what christian receiving and the management team has done is actually refocused the strategic direction of this company to really participate in businesses where they have sustainable competitive advantage. and going back to basics for this 150-year-old company is ultimately going to be a very successful strategic decision for the company, its employees

and shareholders. >> those shareholders after the conference call seemed to differ in that view. >> yeah. >> what is it you feel you understand that perhaps they don't appreciate >> year over year worry about the -- i don't worry about the day-to-day trading and i focus on long-term value, like capital is long term so what the shoulders are scarred by that 20 years of moving in the wrong direction. many of those shareholders were literally left for dead by the side of the road what's different this time is these four really important factors. one is this change is a change in strategy. it's not trimming. it's not restructuring this is a strategic move for the company. the second thing that's different is they are changing the scope and the parameters of their investment bank. they are really going to focus in on those businesses that facilitate their corporate bank. so they are going to take

two-thirds ever the capital that was allocated to the investment bank today and turn that into one-third of the capital going forward. the third thing that's different is they are really getting at the heart of driving efficiency by exiting businesses and integrated their merger with post banks so of the 6 billion euros in expense saves, 5 billion of those are coming from merger integration and business exits and then the last thing, which is really important, is they are liberating capital to pay for this themselves. they've created this capital release unit the company will reduce its leverage by 20%. they'll increase their liquidity by 20% they will ultimately be in a position where they can return capital to their shareholders. >> they don't need to raise any new capital in your opinion? i mean, some this morning said they should have done more, they should have accompanied this

with a big raise of equity as well to sort of put to bed any concerns. >> to be fair, those same people today were saying yesterday, oh my goodness, they are going to have to raise capital, how terrible that will be. so, again, when you think about this business on the numbers and in the long term, what christian and this management team are doing is focusing on traditional consumer businesses, commercial banking businesses they are stable. they are not terribly sexy, but they are long-term profitable. and the capital that they're liberating from reducing their balance sheet will pay for those restructuring charges. >> so a large commercial european bank? >> yeah. so what's really hard for the research analyst community to understand is, for the last 20 years managers have been telling people, compare me to jpmorgan compare me to goldman sachs. >> investment banking as you

know has high margins when it's working well. >> well, it does if you are a leader in those businesses where christian is taking the investment banking business is focusing on businesses where he has a leadership position. 75% of the revenue going forward will be in businesses where they are one, two, three, four or five. >> of what's left -- >> of what's left of the investment bank. >> those people say you are in or out can you be a investment bank without with a global equities business you know this well to a cfo, don't you need corporate solutions that sort of span the capital markets >> so i actually hail from a company in jpmorgan chase. chase, the original business, was a commercial bank that built an investment bank around its strength fixed income, structured finance, fx trading to go with their corporate clients

globally that's the business that deutsche bank will do going forward. it is very, very aa tracktive. it is profitable it fits with those million clients that christian talked about this morning in their corporate bank it sells a product to a treasurer, not necessarily a ceo, and that product is a very stable, low capital, high return business and i would add the remaining businesses that deutsche bank have, have leadership positions whether it's in the private bank or in asset and wealth management those businesses are very attractive, high ro e-businesss over time. >> thin the investment bank you are describing, the people who sell these services i would think are not earning nearly what your typical bank investor, m&a advisor, equity-focused banker making? >> yeah, i mean the core of that revenue is going to be associated with businesses that are technology driven, that are

driven by pure execution and low-cost funding i would add, by the way, this new deutsche bank, 85% of its funding is going to come from deposits the lowest cost of funding and from equity and ultimately long-term debt so they are shrinking their need for capital and liquidity, and that's going to make them more profitable as well. >> talk to peabout your view as a large investor 580 million euro investment you made last november end trust also as well >> that's right. >> part of that. stock was higher then. >> it was somewhat higher. but again, david, we think about value over a long term. >> what's long term from this date forward if we mark this as a significant moment where they finally kind of started to adhere to perhaps what you had been clamoring for six, eight months ago, how many years? >> yeah, well, this is exactly the man we had hoped that the

management would embrace i think christian and the team have done a really thorough job of coming to market with a well thought out, well researched, well executed plan the company trades today equate to five times tangible book value. 25 cents on the dollar the large european competitors trade between 0.8 and one times tangible large u.s. players trade 1.2 to 1.2. >> you never get to two times? >> that for us is not the objective, but 0.5 times, 0.75 times from where we are today is enormous upside. so as a long-term investor i'm focused on the long-term returns. i know i can't pick the bottom, but i know where we are today is not the top. and i think this management team is prepared to execute on this plan they have demonstrated their

capability to do so. and i think it's going to create a lot of value for the long-term investors. >> so those who would say my god, we have gone through so many management teams. we think that there are still holes in the balance sheet that hasn't been filled from back in the crisis because they never took the hits they needed to, what do you say? >> i say three things to them. management teams matter, right and so this is the right management team for this company today and going forward. second is strategy matters and the path that they've been sent on now is the right path for a long-term shareholder value creation third and most importantly is we benefit as shareholders today coming into this story we benefit from the pain that that balance sheet endured over the last decade. so the balance sheet jumping off point today is cleaner, well capitalized, highly liquid, and these changes are going to result in a lot of value for

shareholders who have more than a day's trading focus and are focused on the long-term value creation that i think this management team has set the bank on. >> doug, thanks for taking time today. >> it's a pleasure. >> doug braunstein, hudson executive capital. i'll always shake your hand. >> maphappy fourth. >> thank you. >> morgan, over to you. >> deutsche bank is down 5%. thanks. when we come back, starbucks saying sorry after an interaction between a barista and police officers goes viral we have the details on that. and getting a quick check on where the major averagesstand. starting the week off in the red with the major averages on pace for a second day of declines we are awaiting that testimony from the fed chair later this week tech communications services resqwkn e reing the losses mo "ua othstet" after this break hi walter.

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welcome back to "squawk on the street." now time for our etf spotlight today's weakness in tech stocks coming off fresh record highs last week but under pressure

today. the xlk down 1%. two top holdings, apple and intel among the worst performers on the dow so far. apple is now hovering around 200 bucks or just under 200 bucks a share after rosenblatt do downgraded keep in mind apple still up more than 25% year to date. the president speaking yesterday to some reporters was asked about the fed and the latest on china tariffs. take a listen. >> we are doing very well with china this week. most importantly we're doing well with the tariffs. we're taking in billions and billions of dollars from china. >> talks are set to resume this week between the u.s. and china. joining us to discuss jim stewart. welcome back good to see you. >> thank you. >> we will talk about tariffs and the fed from the president's

lens on tariffs. his point once again is we are collecting all this money in tariffs. >> you know, which is not the way to be thinking about it. collecting the money is like putting a tax on people. yes, the treasury collects money then that doesn't mean it's good for the economy. i don't think any economist thinks tariffs are good for the economy. it's on with china, off with china. the uncertainty is a cloud hanging over the broader economy which i think for the year is one of the reasons you have seen such a big divergence between a relatively pessimistic bond market and optimistic stock bond now he has thrown out new possible european tariffs, and my last name is stewart. i am of scottish descent i was particularly distressed to see what he wants to target is scotch whiskey i just want to point out, he has a golf course over there why is he it targeting scotland of all places?

strong ally of the u.s i want to oput it out i am very opposed. i would love to see these things resolved i would love to see a quote-unquote vi quote-unquote victory for the u.s. to end the uncertainty, whatever it is i think that has definitely been a cloud over future growth. >> in whatform do you think that will take is it just too dense to see through that cloud >> i think a deal with china would be a very big positive and any improvement i think would be greeted very favorably by the markets i think everybody agrees that there are structural issues in the trade relationship with china that should be addressed, that can be addressed. looks like we were close to a deal at one point. we are not going to get everything we want in one deal there is a lot of potential there. i am not involved. i don't know quite what happened in the last minute i don't think it helps to be insulting people or say we are going to humiliate you, crush you, that kind of language i think there is every possibility for a deal there. >> without getting to the tit

for tat dynamics about it, i think europe has tariffs on american bourbon, too. whiskey seems to be a war bet, i guess? >> yeah. they put the bourbon on, which is a big kentucky product. mitch mcconnell's state. they did that after we did something else and that's what gets, you know, that's typical of these things. you do one, then another, and it keeps ratcheting up and it doesn't help anyone. >> the other area that investors are focused on is the fed. what we hear from chair powell later this week when he gives his testimony to congress and what it means for a possibility of a fed rate cut later this month, especially in the midst of the swirling uncertainty and what it means for global economic growth and the effect on the u.s. >> i think the uncertainty is probably one of the reasons they will cut the employment report last week was a surprise it was so strong. but i wouldn't put too much emphasis on that the yield curve, which i think the fed pays close attention to,

is still not great it's inverted out to the three, five-year range, and it just barely gets flat when you get to ten. 30-year, that's not a prescription for a healthy economy. i think the fed would love to see a much more quote-unquote normal yield curve and the only way they can effect that is to lower the short-term rates, which i think there is a high likelihood they will do in july then all the weakness that came in, you know, the stock market in may and then the reports of global slowdowns, the low interest rates in-up, prak particular will i every other indicator is pointing to a slowdown i think jobs are, at best, a concurrent indicator they are not a leading indicator. they lag so i wouldn't put too much emphasis on that. >> what do you make of the president's constant job owning against the fed, particularly chair powell, and do you think it puts pressure on powell to sort of once again show the independence of that body? >> you know, i think powell has

said that he is going to ignore all of that static, and that's what he should do. he should not do what he is asking him do and he shouldn't do the opposite to prove that he is going to defy the president he and his colleagues on the fetd should be sticking to the data i think they probably are. i can't imagine that they wouldn't and i think that the job owning would be -- would have more impact, would be more interesting if it actually showed some understanding of the way interest rates and the broader economy work, which year over year see. i mean, maybe it's there maybe there is a case that, you know, needs to be made i am not saying it's wrong it hasn't been articulated i think that the president at this point lacks credibility here i think the fed has been right to completely ignore it. >> he would probably respond by saying after 30 years in real estate he knows somewhat how rates effect asset prices, right? his point about the market may not be entirely wrong. >> i am not saying it is wrong you could make the case that he was a little bit ahead he is sort of calling for cuts

and then the fed sort of came around he was a little ahead of the data there you know, again if he has got the data, a basis for this, i would like to hear a little bit more about it. the fact that he was a real estate investor for a long time, i don't know that gives me pause. real estate investors are notoriously bad at predicting the direction of interest rates. when you look at the boom and bust cycles in real estate, i think that pretty much - >> they are good at tax breaks though. >> they are great at tax breaks. >> we are going to learning more about rates later in the week. jim, thank you. >> let's get a news update. >> good morning. here's what's happening. federal prosecutors announcing sex trafficking and conspiracy charges against wealthy financier jeffery epstein. court documents unsealed this morning show epstein is charged with creating and maintaining a network that allowed him to sexually exploit and abuse dozens of underaged girls. the u.k.'s foreign secretary

says he does not agree with the views on the trump administration expressed by ambassador kim darroch in leaked messages jeremy hunt made the comment at a news conference in london today. >> it's a personal view, and there will be many people in this building who don't agree with that view indeed, i don't agree with some of the views that we saw in those letters. i said, i think, that the u.s. administration is highly effective. >> and conservative party leader kyriakos mitsotakis has been sworn in greece's new prime minister after his win over alexis tsipras his new democracy party won nearly 40% of the vote that gave him 158 seats in the 300-member parliament. that's the news update this hour back to you. carl. >> sue, thank you very much. when we return, quote, big currency manipulation game the president going after china and europe now

the former head of the imf's china division is with us to discuss. get a check on where the major averages are at this hour. dow back to close to session lows, 143 in the red back in a moment is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things that move us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions. because the possibilities of life and investing are greater when we come together. ♪

welcome back to "squawk on the street." the president attempting to use tariffs and sanctions to reshape the trade deficit landscape. now the ft is calling the president a, quote, pugnacious currency warrior saying he is weaponizing the dollar joining us is cornell professor a jarrett brookings. eswar prasad, also the former head of the china division thanks for your time today >> thank you. >> what exactly are you trying to frame here in terms of the dollar itself? are you saying its status as a safe haven is at risk?

>> there are two aspects to the weaponizing of the dollar. the first is the fact that the dollar is a dominant international currency in the world used for trade and financial transactions this gives the u.s. an enormous amount of power when it wants to invoke financial sanctions on countries such as iran and russia an even countries like china are very unhappy with the notion that they have to touch the u.s. financial system, the dollar in some way, which gives the u.s. enormous financial power the other aspect of the weaponization of the dollar is what mr. trump is invoking he has placed the head of the european central bank low because he argues it keeps the euro's value low he would like a weaker dollar, so that the u.s. trade deficit wouldn't be as high as it is right now. so both of these aspects i think creates earn concern -- concern. i think it's unlikely to be affected because there isn't any

alternative out there. >> what do you think the russians and chinese would use instead? >> one thing that is happening is the russians, the chinese are setting up their own payment systems which can talk to each other. russia and china can trade with each other more easily than in the past without using the dollar so the use of the dollar as an international payment currency i think is going to decline because of this weaponization of the dollar but the dollar's status as a safe haven, it's still very strong because american financial markets are still the biggest and most liquid in the world, and investors around the world, including american investors, seem to trust the u.s. more than anybody else. so that aspect of the dollar really hasn't been threatened yet. >> eswar, it's worth noting if you look at what happened in early 2018, the dollar index came off it started to weaken after this multi-year run and then the u.s. announced the first round of tariffs on china.

we start today take much more aggressive trade stance against other trading partners as well and since then the dollar index has rallied. so it's not like we're talking about a dollar that's not very strong right now i wonder how much the quote-unquote weaponization of it would do in terms of weakening it against other currencies in the midst of these trade talks that continue. >> that is a remarkable pattern about the dollar's dominance in international finance. anytime the trump administration tries to use tariffs or other ways of weaponizing the dollar or taking actions against trading partners or other allies, what happens is this creates turmoil in international trade and international financial markets. when there is turmoil in any financial market, everybody looks for safety the only place is to come for safety is the u.s. dollar. so all of these actions may end up paradoxically strengthening the dollar the other reality is that the u.s. economy may be softening.

it is doing better in terms of growth momentum than many areas in the world europe is having hard time japan is not doing that well china seems to be slowing down relatively speaking, the u.s. economy is in pretty good shape. the weaknesses may not be as strong as we tout thhought theye this suggests that there is still some room to go for the dollar to remain strong. >> how much credence do you put in the president's claim that the ecb or the chinese are trying to devalue their own currency and would you expect treasury to expand its list of manipulators? >> treasury is already taking actions to weaken the criteria that are used to identify countries as currency manipulators so many more countries could potentially be caught in the currency manipulation net. for china in particular, the notion of weakening the yuan is a dangerous ploy

capital out flows, spiral, it fades on itself. it happened in late 2014, early 2015 and so on i don't think they will play that game. for the european central bank having a weaker euro will be helpful in terms of fending off domestic -- or weakness in the euro area zone i don't think that's a primary channel they are counselling on. all of these measures to loosen monetary policy in other countries is going to get trump cycles up. >> that's an important dynamic it affects everything we talk about. eswar, thank you eswar prasad joining us. stanley crbucks is saying sy why the company is apologizing today. plus, apple under pressure after rosenblatt cuts to sell from neutral, saying it thinks there is less reward for ownership. they did, however, maintain their target of 150 and they say

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paul meeks is avoiding the group that made him famous "trading nation. more "squawk on the street" is coming up.

welcome back starbucks is apologizing to police in temi, arizona, an an employee in that city asked six officers to leave or move out of a customer's line of sight on july 4th a bachelor approached them about a customer not feeling safe because of their presence starbucks head of retail issuing a statement, quote, when those officers entered the store and a customer raised a concern over their presence they should have been welcomed and treated with dig any it i instead they were made to feel unwelcome, disrespected which is completely unacceptable. for me, guys, this kind of raises questions about who was

the customer that raised concerns about feeling unsafe with police officers in the store. also, worth noting these officers were paying customers but i just wonder how far and how big this, you know, potential controversy we've seen swirling around starbucks over the weekend would actually get >> well, the apology came quick. i imagine it won't be as severe as the situation in philadelphia last year. it raises questions about, i don't know, centralization of training something about management practices. if they do, in fact, give their store managers a lot of leeway. >> they had a day-long teach-in, right? >> that's why they closed business for a whole day. >> yeah. shares of tux not reacting. when we come back, a box office win spider-man far f "spider-man: far from home" bucking the end of fatigue in theaters richard gel fan with us next johnson & johnson is a baby company.

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got some modest weakness to start this week. dow down 129 obviously, watching this downgrade of apple a lot of this is involving

waiting for powell later in the week as he testifies in front of the house and the senate wednesday and thursday "spider-man: far from home" blowing out box office expectations, bringing in $580 million worldwide in the first ten days in what weak summer season for movies overall, before this past weekend. ticket sales were down nearly 10% below the same time frame in 2018 joining us now to discuss all things movie related, imax ceo, richard gelfond what should we take as the lesson here in terms of the success of this latest spider-man sequel? >> i think the -- people are saying sequel fatigue. i don't think it's true. i think it depends on the movie. look at "avengers: end game. it's poised to maybe be the biggest movie of all time. this one did way better than the last "spider-man." if it's a good movie and that

team at disney that work with sony, they just keep turning them out and people want to go and i think the box office statistic is a little bit misleading, because they say it's down from may 1st, but if you look from end game through spider-man now, it's pretty much nra flat with last year. >> i've got some people saying box office for third quarter pacing up about 10%. >> you start with spider-man and going into "lion king," hobbs and shaw, and the rest of the year you have the final of "star wars," which people have been waiting forever for. you have "frozen ii," "jumanji" sequel there's a lot of good movies out there. >> i know you said you don't think there's sequel fatigue, but the fact that there are sequels that movie houses or hollywood is continuing to turn to and that is what's driving so much of the box office right now, how does it speak to or i guess why do you think there hasn't been more original content that's been big in blockbuster? >> i think it has something to

do with the structure of hollywood. the budgets are so big now, 150 to $250 million. i think people are reluctant to make big bets on new content but if you go out to next year, there's a chris noland movie that warner brothers is making which is a completely new movie. and i think you'll see more of that but i think it's the structure of the blockbuster business. if you're making such big bets, you want to have comparables >> is imax relying on blockbusters for success >> we are. and our box office this year is up 5%. in china, we're up 25% this year with the disney/fox merger, i think the movie business is betting a lot more on blockbusters and i think it's a good place to be making a bet. >> even in china, there's a bunch of theories about what what they could do to the u.s. if trade talks break down. one of them involves taking it out on u.s. entertainment companies. does that get talked about seriously? >> i don't think so. and i think for two reasons.

one, i think especially movie theaters are in malls in china and the chinese want to get people going to malls and shopping and i think the idea that they would let that go is not a good one. the second one is i think the chinese really like the fact that hollywood likes them now, so the chinese used to be the bad guys in movie, now they're the good guys. and i think they like being the good guys. so i think the whole soft power think, they're unlikely to retaliate in that area >> so you expect china and i guess sales in china to continue growing then >> china's been great. as i said, we're up 25% this year when i tell people that, they say, you must be wrong no, but the chinese consumer are coming out for movies, anyway >> richard, you think there'll be continued consolidation among the content providers among those who make the movies or is disney and fox the last one you're going to see? >> i think when you look at the

silicon valley/hollywood collision coming up, that's where you're likely to see it. apple has enough money to buy whoever they want, wherever they want i think it's unlikely among the big studios to consolidate, but i wouldn't be surprised if some of the streaming services at some point consolidate with some of the studios >> and you don't see those streaming services as a competitor for your viewer >> you know, i don't want to be simplistic about it, but there was a thing invented call the radio, the tv, the dvd, and everyone has said, that's the end of movies. i think because there's a new distribution window, streaming that it's the end of movies. i don't. and if you look at netflix and "roma," they wanted it thrown in a theater and the irishmen with scorsese, they wanted it shown in a theater people want to congregate and do social things and i don't think sitting in your living room with your parents watching your mobile device accomplishes those objectives >> will show you some of those movies that are being created by

the netflixes and amazons and streaming services of the world in imax? >> great question and the answer is yes weapon agreed earlier this year, a film called "aeronaut," which amazon is doing, to do an exclusive imax run to kick it off next year. >> richard, always appreciate you stopping by. richard gelfond from imimax rosenblatt did go to a sell, saying they see, quote, fundamental deterioration over the next 6 to 12 months, suggesting some weakness in iphones. and along with some other notes, there's a negative note about tech out of bernstein. >> and you mentioned earlier the morgan stanley note in terms of overall sort of saying weightings in equities should come down a bit. >> the worst performing sectors are tech and communications. it's not just apple, but the other big f.a.a.n.g. names as

well we're going to dig into that a little bit more in the next hour on "squawk alley." but russell 2000 transports also lower today, slipping back into correction territory freight data, keep in mind on that both from a trucking standpoint and a rail standpoint that continues to weaken and the context of this broader debate about the state of the u.s. economy and economic growth, that tends to be a leading indicator. >> transports have not been the favored child, although banks, you could argue, have been, at least in recent weeks. when we come back, "squawk alley" is coming up next we'll break down the big moves in apple so don't go away 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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good morning it's 11:00 a.m. at wework headquarters, 11:00 a.m. on wall street, and "squawk alley" is live ♪ i put a spell on you and now you're gone ♪

♪ ♪ i put a spell on you and now you're mine ♪ ♪ watch out ♪ watch out ♪ watch out >> good monday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan, deirdre bosa is here, jon is off today markets down about 138 we'll start with apple shares under pressure after some mixed notes on the street. rosenblatt downgrades the stock. shares down about 2.5% joining us to discuss, raymond james analyst chris caso and our own mike santoli is here >> i can tell you what we've got to say we've been cautious on it for a bit of a while and it's really driven by the iphone cycle last year's cycle wasn't very compelling this year's cycle, as we expect, it's not going to be very different. so, you knowki