rate and should be lower than them yesterday, highest dollar in u.s. history, no inflation, wake up, federal reserve. such growth potential, almost like never before. we'll end on that. two seconds. two seconds for a -- >> you hired him you hired him. >> i can't putt either join us tomorrow "squawk on the street" is next ♪ it's been one week since you looked at me ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. it has been a week since that big sell-off futures getting a bounce on the stellar results from lowe's and target as the market reat react the president. watch germany and unprecedented 30 year auction at negative 11 basis points

is this a turning point for yields around the world. we'll get fed minutes later on today. road map begins with retail earnings, target and lowe's soaring in the premarket on their results bucking the downward trend in retail. >> one week since the dow's 800 point drop we're close to recovering the losses we'll take a look at the wild ride over the last week. and what you can expect next. >> as the september 1st tariffs aapproach, we'll take a look at the companies that may be in your portfolio with the most exposure first up, target set to open at all time high, lowe's surging on the better than expected quarterly earnings, revenues and comps. digital sales drove more than half of the growth in q2 comps lowe's reporting positive comps in all of their geographic regions in the united states and outpacing depot for the second consecutive quarter. >> we got to focus on execution. and risk taking. both marvin ellison at lowe's

and brian cornell at target took big risks. some people say they blew up the way they do business a lot of people didn't like the way he was doing it. let's forget the previous people at target. i just am blown away by how many things cornell has done right. whether it be buying ship, whether it be many formats, motorcycle thinks you can do more than one format who can do that his urban format, he's putting stores up in urban america and it is working. you know who else is doing it? marvin ellison he got rid of a lot of people. they were impediments. every single category, every single geographic area, ellison, this was one year it took. one year and people are betting against him. because last quarter wasn't that good i am just in awe of what ellison has done. >> what explains the difference between the execution there and at penny. >> i think penny was -- like i

said, little less than macy's, lost cause, because these are all -- they're about one thing they are about balance sheets. and these companies had balance sheets, so they can take -- do experiments, it can try new things, and, well, let's just say that the balance sheet at penney is what keeps them back the people have a vision, do they have the money? lowe's had the money it is watch, and i'm trying to figure out how to do -- it is walmart, amazon, target, it is costco, it is home depot, now put ellison in, maybe the w science -- silent, i don't know. marvin, i really -- i look at what was good. mill work, paint, appliances, appliances were very strong for home depot carl, i come back. where is the recession

is it just in the yield curve? as brian monahan said. >> people are trying to use these to extrapolate 14 trillion in personal consumption expenditures to 100 billion in revenues here. you think this represents all of american retail? >> 23% of -- according to home depot, 23% of the economy. and these are very housing related and don't spend your money on -- houses going down in value. >> the reason you chose that watch, acronym, a couple of months and a brilliant call, is because you knew these were the ones that would steal share. >> i visited them all. i was blown away the new targets, they are as exciting as when you first went to target when you were younger. urban target with the third floor being school uniforms of the neighborhood, with the first floor having the freshest produce, consumables, produce,

not from china, not from china. >> right. >> i'd like to focus on target. >> why not i'm ready. >> the stock, as you see, just extraordinary. the conference call still going on and their digital sales up sharply, 34% mr. cornell talking about the question he gets a lot in terms of the ability of the stores to fulfill higher levels of digital sales within the existing square footage. he makes the point that last year the stores fulfilled sales accounted for an average productivity of just over 300 a square foot. you do the math, every additional billion dollars of store fulfilled digital sales, so you're coming to the store to pick up, would raise that productivity by $4 a foot. so double last year's $5 billion in digital sales, and fulfill all of that extra volume in the stores, average store sales productivity rises by just over $20 a foot this is a key here that i think

is worth focusing on >> why is that >> why is what >> why is that so super charged? i have the answer. >> what is it? >> the clock of the store. much of the afternoon at a store has been a vast wasteland. now because of the pickup, 3:00, 4:00, 5:00, busy, this was dead time, can you imagine how brilliant cornell was? he realized there is no one -- he took me to a store at off hours, it used to be a bowling alley. now people are there they're shopping they're stopping with consumables. they're stopping at the starbucks. they're going to cvs it is incredible store is crowded in the afternoon. >> because of people picking their stuff up. >> yes >> 450 locations more than 00 buck higher than

their average for the chain. >> and shipped is better shipped is an outfit that bought for half a billion just been a brilliant acquisition. when you go to the brand-new stores, they are breathtaking, they are exciting, they have got bargains when you talk to cornell, he says, this is the area that we're destroying bed, bath this is the area we're destroying pier one. this is the one we're taking on walmart in fashion this is the area we have better produce. it is breathtaking i've been to this small format in philadelphia, the larger format in brooklyn, you know what he's doing? he's targeting neighborhoods this is a man that is so in tune with our country he is targeting neighborhoods that a lot of us felt would never come back in terms of just the vibrance and he has seen it happen, and some of it he doesn't like to talk about they build soccer fields everywhere one of their community initiatives. soccer fields.

they are so in tune, their managers, young managers, from the neighborhood, incentivized, it is america. and it is america, the good part of america that we don't think about, don't talk about in washington it is the -- remember the term rainbow? which i liked, by the way, it is kind of positive i liked rfk, i'm a dreamer he's doing it. he's saying, you know what, these two income neighborhoods these people deserve great stores and we are giving it to them i salute brian cornell as being what we're looking for in this country right now. a leader who is just thinking about what is the right thing to do in neighborhoods na ha s tha been left behind not only does he say -- i don't know if anybody does business council, he lives it i had a cup of coffee at starbucks, just bleown away

it was like when howard schultz talked about the third way if i were not as employed on tv, i would just sit at target and just look. amazed, the vibrance. >> we have you here, you're on the clock. retailers setting the stage for a positive open on the street today. it was a week ago that stocks experienced their worst day of the year that 3% drop with the dow tumblitumble ing 800. since then, they recouped all the losses from that sell-off. becky asked moynihan about it a few moments ago. wouldn't talk about specifics, but what do you think, we learned how much was technical. >> i loved what he said about the yield curve and how the yield curve changed the tune of what people thought. now, i look at target and i look at lowe's and look at costco and walmart and amazon home depot i say, you know, guys, those people are not responding to the inverted yield curve we can talk them into negativity and there is -- on all the

conference calls, there is a lot of questions about tariffs the companies with big scale will eat the tariffs home depot a great lesson about 1%, the whole thing, of their business these are companies that are ready for 10% tariff bring it on. they figured it out. their numbers are including it and aren't these america what is america? >> what is america >> i don't know, my america and your america may be two different things >> people shop in this country people have homes. they have families they don't just use grubhub. a lot of people don't just sit there and play call of duty and -- >> we're going to pretend kohl's and macy's don't exist. >> i went over kohl's nine ways to sunday. i liked kohl's goss did say some things in spring that were more bullish than what she delivered. margin contraction macy's, i don't have anything to say, my mother said if you don't have anything good to say, don't say it

urban outfitters, i don't have to say it, the ceo said it, it was a bad quarter. they have this thing called nuli do you know nuli you rent them and you return them and you might like some, you buy them it is doing very well. this is that rent the runway, the whole subscription economy that people my age think -- subscription, isn't that what we get "time" magazine, benioff nuli and it is an interesting website you can go and trial i think you should trial t millennials don't have closets they don't have closets. they have hallways they need these. >> door men then to take all the packages going -- >> that's a big issue new. you would rather have a doorman than a bedroom a bedroom is sacrificed by boxes.

the fact is that this internet economy, this was the quarter where everybody said, all right, i guess i got to spend a lot of money. kohl's did not spend it as well as i thought >> and target did. >> target spent it brilliantly shipped was so smart no one gives cornell any credit. i have a theory. >> i don't know about that. >> your original point about pal sheet, he could afford to do it, he's not busy delivering from a bbb rating. >> the family more or less controls the company. >> he has to get more statesman-like he hasn't been statesman-like at all. >> what? >> he hasn't >> mcmillan? >> not at all. too shy. doesn't tell a story well at all. >> what would the story be that he should be telling better? >> vibrancy to neighborhoods that otherwise have been left behind areas of the country that don't

have the -- >> goes back to my first documenta documentary, a long time ago now, debate about what they're doing, small town america versus the benefits there of bringing to people. that's moved on. >> they raised the minimum wage. that's the turn. i was going to give you a target thing. entirely. where is from? >> mcmillan? >> no, brian cornell he's a queens boy. he looks 50. >> he's from queens. >> he's from queens. that's why he's very self-effacing, like many of the queens people, as opposed to brooklyn people. >> we have on both sides -- >> self-effacing. >> lisa sue, self-effacing she is related to jensen huang. >> what? >> yes didn't know that, did you? >> you told me previously, so i did know it. i remembered it.

>> okay. so i told you beforehand. >> yeah. >> target is exciting. we'll go up to 1500 block and -- >> maybe the best day ever, if it is above 17.8%. but it will be an all time high going back to the ipo in 1967. >> is that fantastic we're back to the days when target was the place that you wanted to go when they got rid of dayton hudson. >> dayton hudson. >> they separated those two. >> one on each side. >> let's go. >> let's leave right now let's leave right now to that one. can i just go? >> no, you can't. >> i want to take you shopping right now. it is a field trip give me a camera you have a camera? >> i got to come back and do closing bell >> you're doing closing bell >> yeah. >> oh, david, get a raise. that's ridiculous. >> i can't take him shopping today. i'll get to shopping tomorrow.

>> you're going to move to the mad dash after a break we'll get the opening bell we're talking a lot about the consumer because that's where it is at. we'll get to toll and tesla and other names after a break. great presentation, tim. could you email me the part about geico making it easy to switch and save hundreds? oh yeah, sure. um. you don't know my name, do you? (laughs nervously) of course i know your name. i just get you mixed up with the other guy. what's his name? what's your name? switch to geico®. you could save 15% or more on car insurance. could you just tell me? i want this to be over.

♪ welcome back we'll get started with trading

in 12 minutes. we spent a lot of time in the first part of the show talking about success in retail for target and lowe's. perhaps not quite as much for children's place >> no. they had a 3.8% comparable store decrease in q2 versus a 13.2% comp increase last year when they were busy wiping out gymboree this is -- what is the dichotomy here pure mall versus strip mall versus stand alone and children's place, very good merchant i just don't know how -- she's integrating the gymboree set she picked i don't know how you fight the head wind of the mall. i just haven't seen anyone do it yet. foot locker reports at the end of the week, maybe they can. but the mall has become a vast wasteland. there is a pei, philip pennsylvania -- it is a reit,

that is going to open a brand-new mall downtown philadelphia they talk about the notion that frankly the -- there is not enough stores going into them. so there is this factor of, like, you have a jcpenney, anchor, sears anchor. >> do urban malls fare better than suburban malls or no difference >> no. the vacancies, david, are horrendous the vacancies in tanger are huge they all try to get pop-up stores and they try to make something happen but i would -- look at shopify shopify is created online, okay. what these companies want to do, brick and mortar, and what i'm -- shopify isn't that the exact opposite? >> if i want to sell, whatever it is, hawaiian shirts, i come up with it, figure it out, i mark et it, they do everything for me, i'm done. >> if you have an idea in your head, you're better than a brick

and mortar place anything this is maybe the great story of our time does anyone talk about it? no do you know why? they're canadian they're two self-effacing. i have to do it for them >> okay. shopify good children's place bad. >> look at the wealth creation there. adobe, sales force, everyone would have liked to buy them >> market will be high looks like it. ten minutes from now we're back aerhi ft ts.

another day of retail winners, last time it was walmart. today it is lowe's and target. that has futures close to session highs. we'll get the opening bell in just about eight minutes

you're watching cnbc's "squawk on the street" live from the faneuil cinancial capital o

world. busy wednesday morning as we watch not only the retailers talked about target a moment ago, jim, but the degree to which other companies are exposed to tariffs jpmorgan put out an extensive list of companies exposed to that they are calling stage three, stage four, just a few of them, dow, new corps, boeing, hog, whirlpool, tapestry you name it. >> tapestry, major focus, it is, like, these companies are very open on the call tapestry, i would say, troubled. pvh, troubled. whirlpool, little less than troubled but varying degrees. what you need is scale to be able to go and tell people, listen, we're not paying you go and you look at where countries are just -- wow. if you worked right now in vietnam, thailand, cambodia, i

don't know what the unemployment rates are in those countries, keep hearing those same names, home depot's call was a primer on how -- they said every single supplier, every one is moving out of china if you read that and you were the president and i'm not the president, i don't have any ambition of greenland at all, not like the louisiana purchase, but if you -- you might say this is the maximum point of leverage we heard the president yesterday, he was so adamant that there is no deal coming that i thought he eviscerated anyone. >> the beginning of his tweet said this morning, something about things going great what was the wording >> i think peter navarro -- this is it, peter navarro. >> doing great with china. >> meaning what? >> he's on the jay powell war path he would -- >> every day >> can you imagine if you're home, at the dinner table. >> we need to add up the tweets.

100 different tweets >> the frequency of powell mentioned in tweets, for sure. >> it is an obsession with him >> friday morning is coming around pretty soon here, jim. what is he going to say? >> i think that he is too much of a gentleman to get into this scrum here i don't think he takes the bait at all and i think he just says, listen, we'll do what is necessary as -- moynihan, bank of america's moynihan, he was very, very adamant that the whole yield curve should -- he went 100%, there are no -- no way to get income elsewhere. 30 year, german 30 year, you give it to him for 30 years and what do you get back not that good. savings bonds were better. >> get back less. >> get back less >> first auction with negative yield. by the way, to your point about moynihan, he did say a yield curve doesn't mean you have to go into recession. here is that he told becky a

moment ago. >> yield curve moving around, the punditocracy got going if you think about it, there could be two reasons the yield curve is moving around flight to quality, this is 80%, 90% of the yield in the world is available in the united states the money comes flying here because you give your money to someone, a thousand dollars and they give you back less than 10 years or someone a thousand dollars and give it back in more than ten years there is a great debate about that what it is going to come down to is what is going on in the economy. >> echoes of what kyle bass said yesterday, yes. >> 90% of the yield is here. and that's what he thinks. which a bit out of consensus, the rates could come down to as low as zero here because of the overall demand >> pimco getting defensive on bonds. get any kind of mild trade deal, you get a huge snapback.

>> i think that could be true. then we would be signaling worldwide growth, but those yields, they got to come up a lot. they don't happen overnight, i don't think. when you look -- the president has a point when the shortest rates are better you really don't want to do any investing, you want to keep it short here if you're from germany, look, this is when they should be doing 50 year treasury we should be doing 50 year treasuries the president could be so constructive he is just not constructive. you can't take -- jay powell is -- i'm going to use the word that my mother would say, is a distinguished person he's a member of the -- he's a community, a kind man, he's a good man, that's from apocalypse now. i don't know what to say i'm flabbergasted. have you ever seen a guy made more fun of who is not going to be -- look, i said once that

they know nothing, that was a statesman-like thing i wasn't the president the president of the united states >> by the way, at the big board, let's get this, biotech company lineage therapeutics at the nasdaq, cloud computing company appian, you're right, compared to the president you're statesman-like. >> they canceled a trip to denmark because they wouldn't sell him greenland. >> how much was he willing to put down the tweet, where he put the trump hotel -- >> you can borrow incredibly cheaply. he knows that. he knows that. >> someone hacked his twitter account? >> no. >> who would ever say these things >> really? you're surprised >> the president of the united states. >> this has been a while now not just tuning into this, are you? >> yeah. we had some doozies like harding. harding was a statesman. >> guys, leading the charge today, you'll see the best buys,

the dollar trees, even the deeres and cats. and the western digital. >> willing to spend. dollar tree, remember, they no longer have goods that are just a dollar that's very important. people don't realize how that was a major, major shift that they decided that gary philbin said just because we have dollar tree, we won't be limited to a dollar, now, 5 below is going to start having stuff that say little more expensive. that's making a comeback but, look, if you're -- i am not capable of saying how much positive you can get from these comps. they're just very positive and these are people who are not feeling the pain now, toll brothers, everyone was trashing toll brothers quarters. not as good year over year $800,000 house is their average now. people want starter homes. they're starting to move out of their parents house, right now they're not getting big houses

they get $250,000 horton houses, but they're moving and when you -- >> household formation is important. >> it is coming back maybe we're going to start having kids again. that would be dynamite. >> do need people. >> could use that too. >> we do need people. >> people who need people. they're the -- they're the -- the most wonderful people in the world, for brooklyn, she's from brooklyn barbra streisand. >> yes, she is. >> the brooklyn people, they sound off, except for the supreme court justice. ruth bader ginsburg. >> scalia was from queens. >> he was? >> yes >> distinguished jurist. >> yes, he was. >> he would never be -- did he talk about powell and golf this morning? >> he did. compared him to a golfer who doesn't have the touch. >> did you ever -- how much would your mother take the hair brush out and beat you if you did -- >> hair brush? >> if we said things that the president says about others, we might not work here anymore.

>> might i would fire me. it is just not -- i don't know >> we're about 100 points below the -- what we lost in that sell-off. >> isn't that amazing? and apple, look at apple what are you hearing about the credit card? they have been so tight lipped >> i know what they're saying about buybacks the journal has a piece today, apple, and amgen and cisco, three biggest purchasers of their own stock, slowing year on year and subsequential buybacks. >> my travel trust owns all three. i'm absolutely certain you look at them, they shouldn't be buying as much the stocks are -- apple, shouldn't be buying as much. they bought a lot at 160, 170. they're not on auto pilot. they're being a little more sensible amgen was a disaster they have one drug, enbril, jersey court said okay they have three big drugs, but they have an amovig, they have

repatha, that is a way to get your cholesterol lowered the hmos keep denying it the pricing is too high. got to cut the price of that and then they have a cancer drug they have a cancer drug in the pipeline that people think maybe the strongest ever >> are you unnerved by the slower pace of buybacks. do you think it is related to companies trying to preserve capital? >> i think it is related to companies that were embarrassed by how much stock was brought back by some companies and it was just ill advised i speak to the corporate treasuries of these -- i speak to all those companies and those compa companies are cognizant. we had chuck robins on i think they're hand over fist in the 40s look how the stock has been acting what i'm saying is that these three companies have become price sensitive. instead of just buying,.

he came back to 160, 170. >> as a percentage of their available catch or what they had typically done, are they going to spend less. will there be less support overall? >> i think that they can read the papers too there was an initial -- also repatriating for nothing you can bring the money back and buy back stocks? >> do you want luka to stand there and buy back stocks? he's a very smart guy. i talked with them many times. listen, guys, you should look at the price of the stock before you just buy >> i know. but how much of the market's

overall move over the last -- what was the stat from 2013, $2 trillion >> what should they have done with the money season two and the shield with -- put it all up the chimney? >> can't find any productive uses they had investors on their butts for saying return it to shareholders >> maybe the business round table gets them to stop buying shares and do capex, no? >> building soccer fields. >> that was a good plan. the capex that they're spending in retail is extraordinary their sales, their software. one thing that capex, overrated, what matters is giving money to service now. to workday giving money to software as a service. sales force. adobe. >> adobe, yes. amazing company. >> amazing. >> adobe. >> it has been incredible the

way they shifted their business model. >> you bring in adobe you don't need as many people if you bring in adobe don't need as much capital all the money is being spent that i see is on distribution centers. and auto -- you automated distribution center, honeywell, that's where the money is being spent. warehouse, distribution, but the capex, what are they supposed to do buy tractors >> this is the difference between now and when kodak was the giant. needed to spend a lot of money to go. >> the only guys spending money are the guys trying to figure out what to do with all the natural gas when they build the pseudo refineries to try to separate the liquids from the natural. we exported $6 billion cubic feet yesterday >> this completion of a new pipeline that will increase our exports and we'll be the largest exporter. >> by far. >> of oil and related products

>> we'll pass everybody. david didn't believe it when i said 17 million barrels in the next four years. >> that is a shocking number >> it is from the guys, from sheffield. look why you to think the oil stocks go down good news and bad news because there is too much oil. look at exxon. >> too much of a good thing. >> permian is pumping 5.2 million yesterday. >> reminds me of solar energy and now tesla as walmart sues them over alleged widespread negligence for related solar panel fires. >> that was suboptimal. >> sometimes you forget they bought solar city. >> yeah. i'm not going to play solar city. >> shares are down over 2% i guess that may be one of the reasons. >> you think that -- >> i do. >> i'm going to agree with that. >> are you >> yeah. >> other than, yeah. >> we had ron baron on yesterday.

>> very much, very positive on his feet, within two years, i believe, he said it will be -- >> $100 billion. >> that's fabulous optimism like that. >> don't fear optimism wrap don't fear optimism. i thought that was a great rap how about the sucker punch, bringing up the quote that chuck did. you were optimistic. then larry to his credit, said, yeah, i got that wrong. >> he did. >> that was a very good -- chuck is fabulous. chuck todd it was painful. >> quick on this tech, i mentioned the other day, confirmed what we were reporting the other day, they did have this letter they received from apollo stocks getting hit on this with apollo said they're interested, but most recent talks have not been about that, but about apollo selling them and/or combining some of the stations or the stations that

they are in the process of buying, maybe in the form of rmt, nothing to report there stock finally going down on this from the company, the statement. >> what does -- why do they pick that name? >> i don't know. >> it is an oil service company >> it is like a pipeline >> yeah. >> they got to revise that. >> revise that >> yes, yes. i'm focused on tariffs >> on tariffs? >> because i think that jpmorgan piece got a lot of people worried. $600 then you have the tax cut. how about the payroll tax cut? >> it is not happening you need approval of the house >> the questions are would the house approve it, and on indexing, to inflation on capital gains, can he do it through executive order? >> isn't that amazing he thinks he can >> do we know he can't >> i don't know. the founding fathers weren't thinking of it they didn't have a line. by the way, the second amendment was about militia.

founding fathers, heck with them who were those guys anyway ev overrated. >> why not do the 50 year? i think he's afraid to do the 50 year paubecause we talk about it and then credit us >> mnuchin can do that. >> of course he could. >> what is mnuchin doing what has he got cooking? >> very busy >> busy? big, big department. a lot going on there. >> phone calls with dimon and corbat. >> signing dollar bills with the treasurer. which is more of an honorific. >> yes >> was it about how their atm is not working? >> he's on the case, he's on it. >> if he's on the case, he needs to do a 50 year. >> you've been sitting here talking about doing a long data bond -- >> not going to listen >> billion dollar whale, david. >> 60 points or so away from erasing last wednesday's collapse

let's get to bob pisani. >> happy wednesday, everybody. nice rally here. we have some vague talk about payroll tax reductions, but i think what is really mattering is retail earnings helping things overall that always calms things down. retail doing well. leading the pack, retail stocks, energy, banks, industrials, there is the classic trio of cyclicals doing well utilities lagging. that's nice to see when the cyclicals are all moving to the upside look at the retail earnings. what a number out of target. look at this here. 99 bucks, that's historic high, i believe. $99. lowe's having a great day. even urban outfitters, talked about third quarter same store sales trending positive. they're even up. urban outfitters had a terrible year, down about 30% best buy, no earnings from there. they're dragging some of the retailers to the upside. it is useful to remember, generally full year earnings guidance is the most important metric for companies, not always, generally a good way to look and retailers not bad for this earnings season.

affirmed their earnings guidance for the full year, lowe's, tjx, home depot, raised, target, walmart raised their full year outlook. good numbers overall for retailers. that's a positive sign overall for today, fomc minutes coming out. i have a problem with this, i'm in the sure how useful the minutes will be. this happened on july 30th and 31st this was before the tariff hikes was announced by the president, the new one for china, august 1st as i recall. this happened before the additional round of tariffs. that'sy thi why i think maybe t minutes will sound more hawkish than they thought. just take this whole minutes thing at 2:00 with a little bit of a grain of salt morgan stanley, jackson hole, everybody had the right attitude it is premature to expect a signal on the size of the fed's september move we expect the chair to maintain flexibility on size, reminding the fed will act appropriate to

sustain the expansion. that's the phrase you hear maybe not that infamous midcycle correction phase, but more like this, whether that's enough of the market, who knows. finally, on buybacks, a lot of discussion today here is 166 billion, last year, 190, that's a 13% reduction. okay want to keep an eye on that. want to remember something, we saw numbers last year for buybacks, we never have seen before, and not even anywhere close. take a look at the numbers here. this was the record year $572 billion last year, we had $806 billion see that this number is 40% higher than the prior record year. we never have seen anything like that the tax cuts, a lot of new money coming into corporations this year, if you double the number for the first few quarters, 740 billion, that's the second best year ever. in is a more normal number, $500

billion range. let's keep an eye on this. right now, these numbers are perfectly appropriate for what we have been seeing so far this year guys, back to you. >> all right, to the bond pits rick santelli at the cme group in chicago good morning, rick. >> good morning, carl. everybody is talking about it. let's get it out of the way at the top. yes, we saw 30 year bond yields in europe issued basically discounted, meaning you're going to get less back i guess you would say premium. but whatever the case, it is traveling down the curve we had a ten year bund auction now we have a 30 year bund auction. and these aren't good developments i would actually rather hear this is the end of it, versus this is the beginning. but as we line up to see what size weaponry we fire that liquidity gun in europe at the ecb meeting on september 12th, markets are getting ready for it hopefully we'll hear something about it from the jackson hole get together look at a 24 hour chart of 10s one week of 10s.

yes, we're up a bit on the day it is more of a consolidation move and it is global. look at 24 hour bunds, difference with tens, came off its higher yields quite quickly. if you look at a year to date of 10s minus bunds, it is narrowing. this isn't a good thing. we want to distance ourselves from the negative rates, be the magnate of capital around the world. let's look at the lqd, investment grade etf, inception date, summer of 2002, highest levels ever. many investors are enamored with the notion of investment grade, even triple bs, but at the end of the day, very happy with very small add-ones to already low treasury rates carl, jim, david, back to you. >> all right, rick, we'll see you in a little while. rick santelli, party time for jeff bezos with katy perry and rapper lil nas x at the post prime day concert for company employees

last night in seattle. that's some talent that's a get >> wow >> for your employee meeting >> cool. >> well, walmart does the same, they have a pop star or two show up at the annual meeting. >> yes >> maybe last year they had a big name this year. >> yeah. >> elton john has done it the past few years. >> i forget who it was >> elton john. >> i saw him >> farewell, yes. >> my favorite >> thank you to the booth for that -- for lil nas. we'll see if we can get back to where we were a week ago today we're back in a minute every day, visionaries are creating the future.

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we will get stock trading with jim in a minute. 7. we will get stock trading with jim in a minute.

time for jim and stop trading. >> analogue devices, adi, had a number that really wasn't great. and even a week ago, the stock

probably would have been down five look it's up. this is just, this market is so bipolar. a number that would have caused a decline in all of the semis produces an increase, and that just shows you to me a testament that, frankly, the market can't make up its mind i don't actually regard this as positive the reason is because what it says is the market can't make up, you know, day to day how do you game a market you can't trade a market where you get -- if you were short analogue devices you would have come in today saying, yes, yes, they blew it you know, the stock's up it's just an incredible market in terms of the days that it's up versus, say, last week. that's a very hard market. and i don't know how to explain it other than the fact that maybe it's so thin. >> a lot of traders feel the pain you are describing right now. >> the analogue device was not a great quarter. amazing.

invidia was bad until it was good, just like my dog is bad, now it's good. >> how about tonight, jim? >> okay, i want a strong stock called pay come. i have been trying to bring in all the fintech people and charles mars equinix. that's supposed to be the achilles heel of tech. let's find out data center, it's not the gym. >> data centers may take over the malls. they have good air-conditioning. >> there you go. >> jim, see you tonight. good hour. "mad money" 6:00 p.m don't go away. up 250 s&p back to 2926

♪ good wednesday morning welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at the new york stock exchange. obviously, trying to work our way back to levels that we lost a week ago today dow's up 251 watching retail strength on the

lows in target now the president tweeting about negative interest rates in germany as they have an unprecedented 30-year auction at negative 11 basis points first economic data. existing home sales. for that, we turn to diana. >> hey, carl, existing home sales in july up 2.5% month to month to an annualized rate of 4.2 million units. that's pretty close to what the street was expecting the headline is sales were up 0.6% year over year. that is the first annual increase in 17 months. realtors are pointing at lower mortgage rates rates fell from 4.2% on the 30-year fixed the middle of my e to 3.8%. that's the period the contracts would have been signed median existing home prays $280,800 that's up 4.3% year over year. that is a price reacceleration

with lower mortgage rates, more competition and higher prices. the red flag, inventory 1.89 million units for sale down 1.6% year over year. we had been seeing inventory gains throughout thewinter and into the spring. now we are seeing them falling again. very low supply, especially on the low end. beco back to you guys. >> looks like the market likes the number thank you. stocks are in rally mode closing in on recouping the losses from last week's 800-point drop mike santelli is looking at the relationship between stocks and bonds and whether we should expect another pull back later this year. relationships sort of intact today. >> the last month it's been pretty much a lock step relationship lower yields have been a drag on stocks, although if you look at this chart of the month to date relationship between the ten-year yield and s&p 500 you can squint and see in the last few days it has loosened up a little bit so there has been this attempt

by stocks to sort of put distance between itself. why? probably because the ten-year yield has not made fresh lows. there is a little bit of a tension in this interplay because exhibit a or b in the case for stocks is, hey, look how low yields are and i do think that you see dividend yields and the earnings yield of stocks really looking flattered by the fact that ten-year treasury yields are where they are i think it's part of the support story. quality defensive stocks have held up the market you can try to see that stock market is attempting to say that if yields just don't go down from here, we're fine. by the way, when did this relationship start to get dramatic at the end of july when the ten-year went below 2% that's when the relationship flipped. it's not going to be the same forever. if we see yields go higher, if we get above, let's say, 2.25, 2.5%. >> who knows if we can do that

then you will see the opposite take effect probably, which is higher yields will be negative for stocks but we have a lot of room between now and that point. >> is it the levels that the market is watching that some of them indicate scary levels, or the speed at which we see some of these moves go down and on the flip side go up? >> i think the speed and the relationship with short rates. so the yield curve flattening is the other piece of it. that's what makes the market nervous, especially if they think it has any new information about where the global economy is going, which i think is a questionable case, right we don't know for sure if the yield curve is telling us that the domestic economy is in a risky spot right now. >> stay with us, mike, if you would. we want to discuss the markets jpmorgan strategist david lebowitz and chief investment strategist brian belski. maybe we should pause to read the president's tweet now. jealous of germany, payingzero

interest the u.s. far stronger and more important credit is paying interest and just stopped. i hope quantitative tightening strongest dollar in history. very tough on exports. where is the federal reserve is this be a careful of what you wish for, david? >> i think we need to recognize that negative interest rates, while from a cost standpoint may appear like a good thing, from what the message they send about the state of the economy and outlook for growth is not a positive so i think we are skating on thin ice with comments like that i would personally be in the camp of i look at the u.s. economy, i think things look okay today, i think there are headwinds to growth outside of the u.s. ten-year yields in my opinion should be a little bit higher. obviously, that case is precedented on the consumer remaining healthy, which is the most important thing to focus on manufacturing activity has slowed business investment spend something looking weak we are relying on the consumer to keep this boat afloat. >> david, people say given the

negative rates that now apply to almost 17 trillion, this is the only place to come therefore, yields will keep, over time, declining do you agree >> i think in the short to medium term rates can stay where they are, maybe edge a little bit lower, adding to the case you were making about the international buyers if you look at pension funds, you know, endowments, foundations, they are worried about this negative interest rate quicksand they are trying to lock in yeelgds given the concern if we are headed lower that will make funding their pensions and long-term investments that much more challenging. >> it would seem to be a positive for tequity markets dhou you get a return? >> that's what you were starting to allude to we are in this world where the equity market likes low rates. but low rates are a symptom of a weakening economy. i never really feel terribly comfortable where we are in an environment where bad news is good news for stocks the sustainability of that type

of trade is pretty limited. >> are we going to see negative rates in this country anytime soon >> no, i don't think so. good morning europe is the next japan that's why we're seeing negative rates there. the fundamental condition of not only what's happening in the economy, but it's been a slow and steady decline for ten years. no one should be surprised on what's going on there. from a perspective in stocks in august in the united states no one should be making fundamental decisions with respect to their portfolios in august anyway because august typically is the most volatile month of the year. i think david is spot on near-term basis, clearly the reason why ten-year treasurys have been so -- the momentum of ten-year treasurys are so strong is because of foreign buyers we had an intraday inversion of the yield curve and the market freaked out. we think ten-year yields should be higher given where the

economy is and where corporate earnings are dollar denominated assets will be in vogue for the rest of the year doesn't mean we won't have volatility, it just means that the u.s. remains a home for stability. i think that has really shown so far in the month of august. >> if we are waiting for august to end, mike, we have to move to september, which isn't a whole lot better it's seasonally worst. >> honestly i think there are signs that the fever for the moment has broken. it's trying to say at least this range can be an area we can hang out in in a little while you're right in terms of where you are going to get a verdict on all of these concerns about whether we are slowing in way that's more worrisome, you are not going to get it by september. so i do think that it's not about waiting for the seasonal tailwinds to kick in as much as it is to say if this has been a big overdone recession scare,

you have to look at each piece of information and see if the fed can please the market with whatever it does in september. >> you talked about the collapse in investment. we are looking at hours worked now down, rolling averages of payroll growth are slowing, and buy-backs today in this journal piece. how concerning is that >> i think for the better part of 2018 we were talking about how this was really just a shot in the arm that's why growth was looking robust from where we sit, slower economic growth, it's no longer a forecast it's a reality this is in line with expectations when we look at productivity and employment growth, we think grow in line with trend the buy-back thing gives me a little bit of pause. the second quarter earnings reports, two percentage points of the four percentage points of operating earnings growth on a year over year basis are from buy-backs. half of the lift came from companies repurchasing shares. the pace of earnings growth is slowing. the tax cut, it's no longer an

apples to oranges comparison companies, frankly, are just comfortable holding a little bit more cash at the current juncture i think over the next two days we get the flash pmis tomorrow, the fed tomorrow afternoon that will give us a glimpse of what the fed was seeing before the most recent escalation in trade and the pmis how companies are reacting to this ongoing narrative. >> i am trying to figure out the reaction of markets to certain news events like trade, which is still pretty uncertain, like monetary policy, which there is kind of this question about how aggressive jay powell is going to be. now fiscal stimulus. the fact that most centers closed lower yesterday on day when the discussion was about the white house cutting payroll taxes or capital gains taxes, did that say anything to you, the reaction >> it reinforces that everyone is so short-term mr. santore is right september is the worst month of the year bottoms are typically made in

september and rallies are defined in october i think we have a couple of bouncy months here, for lack of a better way to put it we are a tweet way from being down 3% or up 3% with respect to the fed, given the data we talked about on hths hit alone, the fed will have a hard decision with what to do with respect to lowering interest rates again because the economy looks like it's okay, it's not great but it's okay given the fact that the stock market, depending upon if we get a deeper correction, if the stock market maintains these levels, it's going to be harder decision for the fed to cut rates. >> hey, brain, i know it was a bit of a throwaway line when you said europe is the next japan. i would like to come back to that europe is an awfully large economy, obviously including germany, but other countries what do you mean by that >> over the last ten years, david, europe on a percentage basis with respect to world gdp has lost ten full percentage

points the u.k. alone has been cut in half, gone from 3% to 1.5% of world gdp. if you take a look from a fundamental perspective on who europe's number one trading partner is, it's emerging markets. both of those very big markets are showing fundamental volatility that's why the u.s., we believe, remains a home for stability we know from a structural basis with respect to political reform, immigration, taxes, social reforms, and just the consumerization of europe, they don't really make a lot anymore. that's a problem so given the fact that we have seen such a deceleration in fundamentals, it looks more and more like it's the next japan in terms of zero growth and negative rates for a while. >> i think what's interesting, bringing it back full circle, we started the conversation today talking about negative rates and whether or not these are a good thing. you look at the two empirical cases. it suggests that negative rates don't do much for underlying

growth. >> it doesn't necessarily mean the market sinks, radioet? >> exactly interest rates are a way of manipulating financial assets at the current juncture their impact on the real economies, the verdict is still out. >> negative population growth doesn't help. >> christine lagarde has a big challenge ahead of here. thank you very much. when we come back, we got this rally in retail today of the targeted lows up double-digits. at this stage it will be the best day for target in its history. later on we will check in with w'up32tone's byron wien. dos 2 don't go away. f your growing bu. from finding out what's selling best... to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition.

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no big week for retail continues with both target and lowe's soaring on earnings this morning. courtney reagan with more on the numbers. >> hi there. it's been quite day already for lowe's and target. right now lowe's shares ahaving the best day in a decade target on track for the best day ever target put up a strong second quarter across the board much like competitor walmart, target beat exceptions on all metrics including 20 cents better for earnings. target raising the full year forecast range by 15 cents the company is taking into account the first half of the year's results and acknowledging marketplace volatility is a reality when coming up with that forecast, including, of course, what we know about the tariff picture right now. and on a media call i asked the

ceo about the consumer in the economy. he said as i have said for some time we continue to see a healthy consumer environment consumer confidence is strong. there has been a reduction in fuel prices which we think is important for consumers. unemployment remains low and wages are growing. target's comparable sales 3.4%, strong traffic growth, too same day order fulfillment services, order pickup, drive-up and ship service made up nearly 1.5 percentage points of that comp sales growth. digital sales up 34% in the quarter. now, lowe's also feeding on all major metrics, adjusted earnings per share 14 cents better. comparable sales up 2.3% that total is weaker than home depot but u.s. comparables for lowe's were 3.2% that wasslightly better than home depot's u.s. comparable sales. now, lowe's reaffirms its

outlook. home depot cut its sales forecast yesterday as a comparison and similar to what we heard from home depot lowe's ceo note lumber deflation and weather were issues, but paint and pro shops were strong, which happen to be two of the strongest parts of home depot's yesterday, too sara, back to you. >> thank you. for more on what to do with these stocks, we are joined by mark astrokan. an $85 price target. also with us is ubs retail analystmichael laser, neutral rating on target, $86 target buy rating on lowe's with a $115 rating both stories were really strong. is this a management execution story on these two names, or something deeper about the u.s. consumer >> there are three things that are driving these strong results that we saw from both retailers.

it is a strong consumer, the foundationsful consumer spending are very solid. number two, there is a growing cas mu kassim between those well positioned retailers and everybody else the consumers being more discerning about who they are doing business with. that's benefiting retailers like target and lowe's. third. both management teams deserve a lot of credit for seeing a very healthy return on the investments and the strategies they put into place over the last couple of years in the case of target digital fulfillme fulfillment options prieftd brands lowe's, that's addressing the shortcomings both are seeing good trends as a result. >> so, mark, what stands out it's been a really good quarter, especially for a target and a walmart. is that a reflection of th consumer being more value conscious or just better turnaround efforts and less

mallex poesh you're for those stores how do you explain it? >> yeah, thanks. we think it's the consumer, frankly. we think the consumer is healthy. our survey we put out every month that has 600 consumers surveyed shows it's consistently healthy u.s. consumer spending environment. not only overall, amongst the largest retailers, walmart, target, costco, amazon, the consumer wants to spend. so despite the volatility that you see in the macro environment it doesn't seem to be having an impacts so far nobody can see what's happening in the future and the retailers are talking about some sort of caution on the future in tariff impacts. what we see so far, the consumer is quite healthy. >> if that's true, why can are spending intentions so weak, especially under the numbers >> we see positive numbers our numbers are consistent with what the u admonish numbers are. they are more positive than they

have been. so what we're seeing is that they are fairly constructive and we are also seeing that probably some help from the biggest retailers continuing to do -- to gain share our numbers suggest the biggest four retailers, 47% of dollar shares are accounting for 80% of growth you are seeing the biggest retailers getting incremental share from some of the smaller retailers. we think those trends l continue the big retailers doing better, and i think you can continue to see those big retailers continue to outperform. >> michael, hold on, i have a question for you we are seeing an extraordinary rise in shares of target they spent time talking about efforts in digital, specific as well to same-day fulfillment, in-store fulfillment is that something you see as sustain nl and perhaps why the stock should be up almost 20%

this morning >> yeah, david, i like your question because it's really all about sustainability from here if we dig below the surface of the digital growth, it's a more effective cost to fulfill than other forms of e-commerce. that growth, stability in the growth margin, expansion of the gross margin this morning. the fulfillment nodes, that should continue. how do they confront other challenges like the tariff situation? they noted that's going to be a 2020 issue and, two, there are categories that they serve that are still challenged apparel has a glut of inventory across the sector. consumer electronics suffers from a lack of newness so the fact that they are going to have to navigate that does present some challenge but what thaarget has shown for the last several quarters, they are up to the challenge. >> seems like you missed the move with the $85 price target

it surpassed that this morning are you a believer now would you tell people to buy >> we have been telling people to buy since the trading call. we have been fairly constructive on the stock the last few quarters now it's been pretty consistent in that foundation why we have been telling folks to be more aggressive into the quarters because our spending survey has shown intentions being quite favorable. i think the incremental surprise that the surveys can't pick up is that the gross margins and the sg&a leverage that the company put up were much more imf than i think people expected given fears around the soft lines shall the fact that this company is starting to leverage and perhaps even, if you take a step back and look at some of the other big retailers, you are starting to see the investment pationing slow and a bit of leverage as top line comps remain solid that perhaps the ebit march or ebit growth expectations out there six to 12 months ago are a bit light and

these companies can actually continue to row at a m mid-single-digit rate. >> courtney made an interesting point, which is lowe's out-comping home depot we haven't seen that in a while. not used to it is it something that continues >> sara, that's a good question. this is the second quarter in a row that lowe's out-comped home depot in the u.s now, they coupled that with better gross margin performance than they achieved in the first quarter leading us to believe that it is more sustainable. they are not just discounting in order to drive the sales we think that continues into 2020 and beyond. as we think about the stocks, we are a buyer of lowe's here it trades at a similar multiple on next year's earnings to target but should have a faster growth rate and be better positioned to challenges thrown at retailers in the coming quarters so we like lowe's at this point.

>> thank you both very much. >> thank you. as we go to break, the dow rallying today, up 235 one week after the worst day of the year see ibaon thetrt"s ck in a moment. don't go away. ♪♪ ♪♪ ♪♪

patient talking about a potential payroll tax cut. eamon joins us with more on just how possible this really is. >> yeah, it's not possible, right? ultimately, congress has to pass a payroll tax cut if it's going to happen. democrats on the hill are not going to do that for donald trump going into a re-elect effort officials at the white house tell me that the president is considering a number of different tax cutting initiatives, some of which the president believes or one of which the president believes he can do unilaterally without grease so that might be more practical if he can get it over the hump earlier in the week the white house officials were denying the president was considering a payroll tax cut. yesterday the president said, you know what? i'm considering it what's more, i'm also considering indexing capital

gains. here's what the president said yesterday. >> a lot of people are talking about indexing for many years, and it's something that i am certainly thinking about i can say that a majority of the people in the white house at the level that does this kind of thing, they like indexing. so it is something i'm thinking about. payroll taxes, i have been thinking about payroll taxes for a long time. whether or not we do it now or not is, it's not being done because of recession >> so the best way to think about this, they are kicking around a lot of tax-cutting ideas at the white house not clear that any of them are able to move out of the gate here anytime soon. it's something the white house is broadly interested in the president said yesterday that he believes he can do indexing capital gains to inflation on his own without congress the idea there is one that's being pushed by grover norquist, the conservative anti-tax crusader, who suggested to me yesterday over the phone that the way to do it is simply tell the irs to change the definition

of cost under the law. he says you could do this immediately as the pretty of the united states. the president for now is siding with morequist and believes he has that authority >> could end up in the courts yet again. nobody talks about actual trying to spend money, for example, on infrastructure to to stimulate the economy? >> it's been infrastructure week around here for a long time. it's never gotten out of the gate again for that the president would need democrats on capitol hill i don't see democrats on the hill -- you know, they have talked about it. the speaker of the house has come here for meetings about it. but i don't see them willing to give the president any big wins going into his re-elect. they are batoning down the hatches on capitol hill. >> if he is able to pass through a capital gains tax cut unilaterally, i know that's up for debate, is that politically smart when you have democrats running on a platform of

president trump helping out the rich, giving tax cuts to the rich >> yeah. look who owns stocks and assets. it's the 0.1% at the top it's a huge hit to the deficit people talking about figures like $100 billion it the deficit. grover norquist and the anti-tax folks argue it would set off this wave of selling which would be good for the economy because there are sticky assets held by people fdecades. that would free up capital in the economy. but the democrats would hammer it, hammer it, hammer it as agiveaway to the rich. "etf spotlight." the look at the technology sector xlk. tech consistently outperforming the last month or so of the market volatility. tech-heavyweight apple up 3% in the past week of trading it is higher again today up

1.3% tech still the best performing s&p 500 sector so far for 2019 guys, in august it's been more of a defensive tone where consumer staples, utilities, and reitz have l reits have led the charge. >> no question about that. a news update from sue herera at hq. >> good morning, everyone. here's what's happening at this hour the top envoy to north korea says washington is ready to restart nuclear talks with north korea. steve biegun met with his south korean counterpart. >> president trump gave me and my team the assignment to restart working-level negotiations with north korea as agreed by chairman kim to successfully implement the four commitments the two leaders made in singapore. >> the vatican has acknowledged an australian court's dismissal

of cardinal pell's appeal. the pope spokesman made the statement in various languages for the press. he is the most senior catholic clear i can to be found guilty of sexually abusing children. the world tango championship the pair beat 40 rival couples the final day of the more flamboyant stage category will be held today. >> and you are up to date. that's the news update this hour back downtown to you guys. >> okay. thank you, sue. when we come back, blackstoneies byron wean does not see a recession. how he is playing the market ahead of the fed's big jackson hole gathering more "squawk on the street" is coming rhtacig bk.

dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world. but i feel like you have the potential to do so much more. can we build ai without bias? how do we bake security into everything we do? we need tech that helps people understand each other. that understands my business. we've got some work to do. and we need your help. we need your support. let's expect more from technology. let's put smart to work. ♪ ♪

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when the yield curve moved around, this means a recession is coming they say if you think about it, there could be two reasons the yield curve is moving around and that debate is taking hold. the flight to quality. 80, 90% of the yield of the world is available in the united states the money comes flying here because you are going to give your money to someone, $1,000 and they give you back less than ten years. and so that's why there is a great debate about that. but what's it's going to come down to is what's going on in the economy. >> bank of america's chief brian moynahan weighing in on the yield curve as a recession indicator. our next guest says he doesn't see a recession this year or in 2020 br byron wien joins us this morning, blackstone's vice chairman good to have you back. >> good to be here, carl. >> were you moved at all by this

inversion either on twos, tens, i see new lows on tens three month. >> yeah, when the yield curve inverts, you have to pay attention, but inverted this time because of the long end below the short end. ordinarily, the invention versi -- the fed tightens in an overheated economy and the short end goes above the long end. this time it inverted from the back end, and i think that is different. and the reason for it is there is so much liquidity out there that's looking for a place to park until the outlook clarifies. and so you have a lot of money created in the last decade central bank balance sheets went from 3 trillion to 16 trillion, and some of that money wants to hide out until the market outlook clarifies. >> all right you were with us on july 11th.

you said the fed's mandate is full employment and low inflation and we have full employment and full inflation so the fed needs to do nothing. do you still feel the same way >> that is still the way i feel, but that is not what is going to happen the fed is very sensitive to markets. it's worried about a strong dollar and it's already cut rates once. i think it will do it at least one more time. >> what's that going to mean for th >> so, i mean, i guess the question is, what does it mean for stocks does it help ease the pain, for instance, when we get trade headlines that the market reacts

negatively to? >> yeah. if you look at the market over the past week, stocks don't need any help they are roaring ahead without the fed doing anything now, maybe there is some anticipation that the fed is going to act, but i think the stock market is fine i think the economy is doing well you look at retail sales at walmart and target, this is a 70% consumer economy, and the consumers are spending unemployment is low. wages are rising so the situation right now is very favorable it may change. it could change abruptly, but right now we are in pretty good shape. >> byron, germany is floating deficit spending, fiscal stimulus we are wondering if draghi is going to buy bank stocks we are talking about the fed here the white house is floating tax cuts does all this feel normal to you? >> no.

i mean, nobody wants another recession. if we get into another recession, we're going to have a hard time getting out of it. the usual tools are fiscal and monetary policy, and we already are running a big budget deficit, and monetary policy shifted from accommodative to neutral to negative. i just don't think we have the traditional tools to deal with a recession. so the policymakers are going to try to defer the next recession as far out as possible, and that's true in the united states and it's also true in europe >> byron, speaking of trying to get out of things, whether it's difficult to get out of a recession, is it also difficult to get out of the condition of negative interest rates that we see in place in so much of the developed world right now in terms of its sovereign debt? >> yeah, i just don't think i should loan anybody money and not get paid for it.

but that's where we are, and the reason for it is there is so much money around and that money is a little frightened about the outlook. >> gold has rallied, byron, almost 20% in three months what's your advice to investors on how much gold exposure they should have? >> well, i own some gold, and i think it wouldn't hurt individual investors to have a 5% position in gold against some kind of geopolitical or financial calamity so i would recommend holding gold, but i wouldn't make it a major portion of the portfolio there is an expense to holding it, and there is still growth available in certain pockets of the world. >> byron, to this overall point that you don't think the fed necessarily needs to or even should cut, if rates were to go lower as many people think they will simply from fund flows at

this point, will that actually be bad for the equity markets in your opinion >> no, it probably wouldn't be bad because, to some extent, it's already built in. so for the markets, it would probably be good but for the economy, i don't think it's necessary right now it may be necessary later, but i don't think it's necessary for the economy. the economy is doing well and it will continue to do well until it doesn't and maybe the rest of the world, which is slowing down, will drag us down. but right now we seem to be able to grow at about 2%. and for a mature economy growing at 2%, 1% inflation, 1% population, that's all we should expect >> finally, byron, the narrative for several quarters now has been the collapse in business investment not just around the world, but here in the u.s. do corporate managers, are they

now planning on migrating some of those pull backs from investment to employment to hours worked to buy-backs, to all the other kinds of things they'd like to spend money on? >> well, we are only at 80% operating rate there is plenty of slack capacity there is no reason to build a new plan corporations are spending money, but they are spending money on software to improve productivity they are not building new plants and equipment. and i think that's going to continue >> byron wein, thanks again. >> i look forward to being back. sticking with the trade story, u.s./china trade tensions sending american soybean farmers scrambling to find new buyers. contessa is in chicago where some of those farmers and buyers are hoping to meet their match. >> yeah, it's a kind of soybean speed dating here, sara, where

you have farmers desperate for a long-term relationship and agricultural suitors who have their pick of the global crop. you have 400 buyers from 50 markets around the world meeting here let's face it. at these price prices, they can afford to be choosy about who they are picking thanks to the souring trade relationship with the u.s. and china they have a billion unsold bushels of soybean that's a record. they are meeting at that trade exchange to see if they can make a match, but brazil and russia are very attractive competitors. the chair of the export council for soy, how much pressure is on to make a deal >> the pressure just is growing. it's mounting. as we approach the harvest, maybe three weeks away for us in arkansas and the south, at this point i have zero beans contracted i have never been this far along

in the year without having contracts locked in. >> reporter: you have a lot of buyers here today. i mentioned those prices at 862 a bushel two years ago before the tariffs went into effect it was more than ten bucks a bushel. that's a big decrease in prices, and to say nothing of the kind of midwest flooding that they had to deal with not just for the planting, but also for moving soybeans up and down the mississippi river, guys. >> i'm curious who the buyers are. are they american? and just how much of a buyer is china? and how big of a loss is that ultimately for the farmers can they actually make it up with meet ins like this? >> reporter: china was the biggest buyer of american soybeans, and they have been able to recoup about 50% of that but then the weather kicked in so right now they have only g got 35% of their exports going to other markets where it's going, they are trying to open up the european markets for american soybeans. taiwan, japan, these are big buyers here, and they are all

represented here today there is a chinese delegation, and i'm told that they are hoping that they can go back to their american suppliers, these farmers, and continue to have deals for the future >> contessa, thanks. as we go to break, keep your eye on tesla, moving lower and getting sued by walmart, alleging that tesla' repeated fires in tesla's solar energy systems walmart asking the s0 stores dow's up 210 hanging on to 29,020 back after this.

wild swings on wall street this month and one top money manager sees this market order becoming the norm. adgniocn.cor on trinatn.bcom more "squawk on the street" is coming up. more on

tradingnation.cnbc.com more "squawk on the street" is coming up. - at southern new hampshire university, we believe in education built for all people. - [woman] snhu was the best experience of my life. - [man] without snhu, i wouldn't be the leader i am today. - [woman] i graduated high school 19 years ago. i still finished. - [man] in the military, you feel that sense of accomplishment. that's what snhu is. - you will march from this arena and say to the world.. i did it. - [woman] you did it. i love you. - [graduate] i love you too. markets gone strong.

dow's up 213 or so let's get to the cme group in chicago, rip current santore with the santelli exchange >> professor john taylor of stanford, with another book out. professor, thank you for joining me today let's get right into it. not long ago previous fed chairs wrote an op-ed you sort of responded with an article called central bank independence is not enough why don't you tell us about that i think it's very timely as we get ready for the minutes today. >> it is very timely for a long time the law has not changed with respect to the federal reserve act, but policy has gotten good and bad. my point is you have to have a more independent central bank, it should be accountable that's why i think strategies or rules of how they perform is very important when they are close to that, things work well when they deviate, it doesn't work well at all that was the main point of that. >> yes

rules base, moving away from rules base, and you knew something about rules. at the beginning of the crisis when the central banks, particularly ours, got aggressive trying to deal with the credit more famous for, that this puts the federal reserve in the gray charter what did he mean by that is gray now the new normal >> well, i think what's happened now, there's so many people commenting at the fed and other places it's becoming confusing for a while, much of 2017, 2018 they were kind of returning to a more rules based policy. now it's a little uncertain. there's so much commentary the comments of voelker, that was really an effort to have a more rule like policy and it worked so if they could do that now, and i think they have been, but a little bit squishy at this

point. >> there's always unintended consequences the market used to have signals. if the economy it something and rates moved up or down, it meant something. it's hard to understand what the market is saying now with many of thoes feedback loops broken sovereigns seem to be completely void of any movement on ricing de -- ri -- the deficits are getting better it's sort of back warsd at this point. it's got to be corrected the low interest rate makes it'sier to do that here i would say there is an international aspect to this that's the purpose of this book i just wrote when people are thinking about the fed, they should think about the ecob and central banks, it is a global financial system how that operates is important it reflects the strength of the

dollar, the weakness of the dollar, and that's on everybody's plate at this point,spoint, s a -- excellent, professor, it's always a pleasure to discuss these issues with you hopefully we can have you back to discuss how much more strange agressive policies may lie ahead. >> thank you, rick santelli. let's send it over to jon fortt. >> commerce is in the spotlight. we're going to take a unique look at that ipo back in april. e-commerce company, just had earnings, the stock is tanking it's down 13.5%. we're going to look at gbalol e-commerce plus and minus coming on "squawk alley."

zs r eve. the number of 401(k) millionaires hitting a record high with 196 million investors reaching $1 million in their accounts

surpassing the previous record pretty good number i wonder what the holdings are in a lot of thoes accounts. >> more workers are contributing, which are also sort of -- >> wonder what that is as a percentage of overall fidelity accoun accounts >> sarah, it's a big closing bell coming up for any number of reasons. tell us about it. >> we've got some incredible guests today after the fed minutes which are out at 2:00 p.m. could give us a clue as to what the fed is going to do next ken rogaff of harvard university will be joining us at 4:00 p.m. eastern. we'll ask him about the chance of a recession he sees a 40% chance in the next few years. >> we'll find out why and why

he's a little more optimistic. the other big guest of the "closing bell" will be the only and only david fabian. >> i will be sitting right there. that's how we usually do it. >> i'll dust off the desk for you there. >> thank you. >> his afternoon nap is going to get cut a little short today. >> i'm going to start right now, start early. >> i wasn't kidding. >> when we come back, apple higher up 5% in just the past e oc, but how much more room dus thstk have to run. that's going to be a good topic that's going to be a good topic to kick off "squawk alley" or breaking new ground? three minutes. on the mercedes of your midsummer dreams at the mercedes-benz summer event, going on now. lease the gla 250 suv for just $329 a month with credit toward your first month's payment at the mercedes-benz summer event. mercedes-benz. the best or nothing.

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