trading up, that's near the higher levels we have seen through the course of the morning. right now up 305 with the s&p up 30 the nasdaq up by 99. mike santoli, thank you for being here today we'll see you on "closing bell" later today. all right. that does it for us today. join us tomorrow right now time for "squawk on the street." >> grn monood morning, welcome "squawk on the street. we're live from the new york stock exchange carl quintanilla has the morning off. we get started with what promises to be an interesting week aren't they all? look at futures as we open for trading half hour from now those futures have erased big losses overnight and as you can see, the market is looking higher, of course this in part on news out of the g7 summit. president trump saying china called u.s. trade reps and asked to get back to the table for talks. that said, the editor of china's global times, who is fairly influential in these things, followed saying in a tweet that

both sides did hold phone talks adding recent contexts don't have the significance that the president suggested. president trump and treasury secretary mnuchin were asked about that report and here is how they responded. >> i don't know what you mean by that low level, the vice premier is low level, i don't think so. what is the position of the gentleman who was quoted in the newspaper today? >> came out with a very significant -- and we communicated -- >> the vice premier of china that's not low level. >> i agree the statement that was spoken before me was -- are you ware of the calls happening? >> president trump and his french counterpart emmanuel macron will hold a joint news conference, perhaps as soon as half hour from now we'll see. when it is held, of course, we will go live to it

a lot to digest this morning i guess first thing i would share to you to bring it back to the markets, making my usual calls this morning of a number of asset managers, you get a resounding theme, which is this is an untradable market, can't take meaningful exposure, no way to handicap the next headline. what do i do >> that is absolutely right. i think that's perfect i struggled with this too. i realize that people who sold last night, down 300 people who bought this morning up 300 they really don't know what they're doing. and it would be far better to just recognize that the manufacturing economy is slowing, the consumer economy is holding up and if you decide you want to trade off tweets, off the prc, off phone calls, off no phone calls, you're just doing exactly the opposite of what investing is that's just a way to -- that's buy high, sell low i think what we have to do is step back and just say, we don't know what is going to happen we know that the president is

determined to make it so that the chinese have a weakened economy and our companies move out. that's his determination whether there is talks or not. that's what he wants i think you have to take him seriously and be careful if you own the companies that have a lot of exposure. have to accept the fact they have a lot of exposure numbers come down. you have to accept the fact if you're related to manufacturing, because of all of the turmoil moving to indonesia, moving to malaysia, it may not be safe to move to vietnam, so give it up, own what you can, accept the fact there is volatility but don't think you can play the volatility. >> does that also mean that at least based on the conversations i've had and that money is not going to go into the market -- there is going to be a more substantial cash position amongst those who normally would be for lack of a better term fully invested. >> i think the real struggle here is do you buy a company with a stock that yields 3% based on dividends, treasuries,

comparison that's what i think the market is up against. the answer is 3, maybe 4%, maybe it is 5% given the fact that you have tremendous volatility on manufacturing side but let's think about what happened last week it was last week target reported a great number that's not going to be taken away it is not supposed to happen because of the tariffs someone might say the next round of tariffs to hurt target, target comes out and says i'm using target as a metaphor, it won't hurt us. what i end up thinking, if we get jobless claims and we get unemployment that goes up, i will be more negative, but right now i think -- i didn't like the way the president said who is -- >> that was one of president's many tweets. >> that was a shame. >> friday, i believe. >> that was a shame. because xi, he may think that xi is a great person, but even though i think powell should have been more about how we got lower rates, i don't think it is fair he's a patriot

he's an american but i do think that when you take away what happened over the weekend, you do recognize that the fed is not necessarily the friend of the investor so that's why it may be 4%, maybe 5% but i think that's the dilemma people face, to be on high quality companies with good stocks it is not tweets that is not how you invest >> no. particularly even when there are debates whether phone calls were truly made or not made and you have -- you have chinese trade officials hoping for a calm resolution. i want to get back to that for a moment. >> the chinese lie look, you can't -- invest -- try to figure out whether bristle myers is right. >> i will say, listen, we all try and it is very -- not as though we're talking to the chinese leadership, at least i'm not. i doubt you are. understanding what exactly is going to be next, particularly from the chinese perspective is important, but largely unknowable that said, we can all do our best to talk to people we know

have good relationships there. my read from those people is they think the chinese may be done for a while they may be pulling back for a bit and saying we're just going to let this play out for a bit before we really try and re-engage. maybe the interdependence between the two economies may be made more stark and real if we wait a while and watch things decline. we'll see. i don't know if that's the proper region, seems to go in the face of what the president is claiming here in terms of phone calls. but it is hard to imagine they get anywhere given things only ratcheted up in terms of tensions. >> my read is that, remember, the g7, what do they say to the president, most of the companies in the -- most of the countries in the world, three quarters of them trade with china. the pressure he's under to make it so the rest of the economies don't fall apart is pretty great. the pressure -- he didn't want to crash i know this. he did not want the market to

crash. >> trump. >> trump >> yeah. >> the pressure -- specifically crash. so he certainly is under pressure if he cares about the stock market on friday, didn't care about the stock market at all. >> and make jokes about some third level candidate who pulled out of the democratic primary being the reason for it. >> i do think this, david. the president genuinely believes that the one thing the chinese can't handle is unpredictability he almost -- he wants to be as unpredictable and wiley as possible because if they think he's crazy, then they might want to do a deal very conscious about the fact that elizabeth warren is now the front-runner, read the new york times, warren versus trump. >> warren is not potentially going to be any better the idea that if you take some time and if the economy worldwide does start to decline, but you get people to understand there is true interdependence here, can't just be discarded, i asked that question any number of times, how bad is the pain in

china. there is significant pain. that said, you're talking about 1.3 billion people with a savings rate of 70%. they can get through it. >> we're talking about how big -- 19 trillion economy trump thinks we can get through it what i think is don't think -- >> we are getting through it so far. >> the stock market is going to react because number of cuts sends stocks down. let's use the paradigm of emerson versus bristol-myers bristol mai myers does something positive and we close. i have kevin johnson on tonight. if we tells me that coffee is taking share or they see any diminution in profits, but if business is as usual -- >> we wondered about would the chinese go to sort of a an

asymmetrical response, boycotts, pushing nationalism, that doesn't seem to be where they have gone yet. nobody should have been surprised that they responded with tariffs they have done that every time but they seem very hesitant to push the boycott and nationalism button. >> interesting the administration was hoping that the narrative on this morning's show would be about the big japanese deal. which didn't lower tariffs on their trucks and cars. but did make it so that there is a lot more agriculture i think they felt that this was going to be what we talked about. obviously we got derailed in terms of what we're talking about because of the tweets. and the doral, which was an odd comment, i don't know if you heard that one. >> i did. >> doral is why the talks might go well. the president being facetious, you say to yourself, all right, this is a lighter president in terms of, like, hey, we're all going to go to doral he's talking like you and i are talking we all expect it is obama. obama was all about showing

tremendous respect to our allies the president was like, hey, they're just allies. that's all they are. as if -- that's -- he has a different view than any other president in history jefferson was the first guy to say, you got to respect him. even adams, you got to respect him. this president doesn't care. >> back to the economy for a moment, we did get u.s. july durable goods orders up 2.1% that's new orders for long lasting products. >> that but reeses the -- >> that was well ahead of what had been an expectation. a lot of it seems to have been due to civilian aircraft and spare components that was up 47, almost 48% in july from a month earlier. nonetheless, it was -- if you're looking for sort of a reflection of underlying business investment, not bad. >> no, not only not bad at all, but surprising though i still won't touch manufacturing. i think that these companies have to move their supply chain. david, let's face it, you're not -- you don't -- if you were

to start building things in malaysia, you couldn't do it in nine months. i know the president feels adamant that if companies had taken them seriously, they would have had a chance, maybe as much as 15 months to move the supply -- david, we were about to have hasbro on, hasbro can move a toy factory, but it is hard tomanufacture a seove a se factory. >> it is not as though you can pick the phone up and say, okay, move it to vietnam let's -- as we wait news from the president and he continues to move markets around the globe, let's get to bob pisani for more on the broader markets. >> good morning. happy monday seems look a long time since jackson hole seems lu s like a long time sine sunday morning futures, 80 point move in the s&p futures. better than 700 points the bottom down here, sunday, and then here, the president doing some tweets about china negotiations starting, still trying to find out extent of

these new restarted negotiations, you can see the big move we had up here. the problem the markets are having now is figuring out who exactly is showing up and where are the negotiations we don't know. you saw on friday an angry president trump talking about china as the enemy and then on monday, talking about the great leader xi over in china. who is showing up for negotiations the big question, the only one anyone cares about, is the timing right for a trade deal? we have become political anal t analysts at this point it is not clear at all it is not clear if the main participants know if the timing is right for a trade deal. how is everybody else supposed to know? that's the problem the trading community is having right now. you got a situation where it puts pressure on stocks, you sell into the rallies at this point and even the bulls are arguing we're range bound at this point that's the bullish position. part of the problem is it is hard to argue a rotation play here because the safety trade,

you know the the rereits, they e been outstanding performance this year overextended, most at historic highs utilities show up on the new high list. and they're overbought you can't say let's rotate into defensive names. the cyclical names, the deeper cyclical names if you take a look, true technology has outperformed there is your one performer. s&p up 13% this year deeper names, industrials, banks, certainly underperforming, energy, a complete disaster. deeper names, hard to argue let's rotate into them they're lower priced because we have so much trade uncertainty if you assume it is hard to get a deal, it is hard to make that. the rotation story is harder to make at this point for the market that's why the bulls are arguing we're range bound. one thing is for sure, this year, it is living up to its reputation s&p is up about 13%.

a lot of comment about the volume on friday we had very heavy volume in two main etfs. that's the spider etf, spy and russell 2,000, iwm volume was 2, 2 1/2 times normal one thing i want to point out, these instruments are so big and so liquid now that they are themselves separate markets. they're used by the active trading community to hedge so on friday, if you look at the volatility, the etf, you look at what is going on with that, the volatility index, you see the big spikefrom 16 to 20, what happens here is people are reaching for protection. they're concerned. they're buying puts. who are they buying puts from? buying it from the dealer community. the dealer community is now long markets and to protect themselves, they go out and use these etfs the spy and the iwm. my point is, etfs are used

tactically by the trading community to go long and to hedge the market situation so you see big volume on days when we're down. that's largely because of the trading community going out and protecting themselves using puts overall. right now, we'll see how the market opens, very interesting day. guys, back to you. >> bob, thank you. up next, jim's mad dash, we are counting you down to the opening bell we got about 15 minutes before we get the open here at the nyse significant turn around taking place in the futures at least. we are now looking for a far higher open given some of the comments from the president about the potential talks with the chinese. we're also waiting, by the way, for president trump and emmanuel macron there joint news conference at the g-7 is coming up we trust usaa more than any other company out there. they give us excellent customer service, every time. our 18 year old was in an accident. usaa took care of her car rental, and getting her car towed. all i had to take care of was making sure that my daughter was ok.

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rick joins us from chicago >> everybody has been talking how wild it is and indeed, distance in some of the moves very large but treasuries for the most part still rather orderly everything on the curve right now is down one basis point. because we briefly extended our losses from friday's volatility. and what is fascinating here is you look at a two-day chart of two-year note yields, had the same intraday low as tens did, look at one week of tens right at 144 the difference is that currently

right around 147 is the low cycle close for two year notes we're now at 152 cycle close for ten year note yields is 153. right where we're hovering we're hovering at three-year lows should we close a smidge below that level and keep in mind, look at one week of bunds, treasuries were steady eddie until friday where they dropped down and they're recovering a bit bund yields have been much more stochastic, much choppier. during the volatility friday, bunds largely missed a bunch of that with regard to their time zone, and indeed they're actually up a bit. they never really moved into that minus 71, 72 area that is the historic low yield it is not a huge cushion, but it shows that there is a bit of divergence here. we want to pay close attention to the difference between tens and bund yields. it gives us a better way of handicapping some of the trade volatility, creating a flight to safety more in u.s. treasuries

finally if we go back all the way to july of 2016, so many things on this chart, it was july of 2016, we had the second of two bubble bottoms, the first in july of 2012, right at 137. you see on the far left of your screen but having set that as well, we're still hovering not much above that level in the low 150s and many traders think it is going to be trying to challenge those long-term support levels finally, the dollar index, another steady eddie, look at the dollar index, similar to 10s, not a lot of volatility, dollar is more in extreme upper end of the 27 month range or ten year note yields extreme at the bottom marching along steady for the most part. david, jim, back to you. >> rick, thank you, rick santelli at the cme with the bond report. we got ten minutes before we get started with trading at the new york stock exchange. let's get a mad dash in ahead of the market open.

apple. >> thoughtful piece by jpmorgan talking about tariff related earnings risks do exist, there is a decline in the build materials what it costs to make an iphone, a decline in d-rams and that means even if there is a 10% tariff, won't be that bad. even if apple had to absorb it what they don't talk about enough, the watch, which is growing incredible and i think one thing i got to start talking about again, revenue stream of service. because what this -- the iphone service revenues are going to continue to grow, all i'm saying is that you -- this is the stock that is most footballed, so to speak, because they have a lot of china exposure, there is no boycott what matters to me is that i didn't think that the decline in costs would be that positive for apple but we should realize that all these companies in the semiconductor world are under pressure and that is in favor of

apple. >> margins expand enough to offset the 10% tariff. >> exactly i should have said it that way exactly right. and so that makes jpmorgan more positive i know the stock acted horribly on friday. i know it is the stock that reacts the most. i think what this piece is saying is stop thinking that this is -- don't react so heavily anymore because you're not thinking about all the other good things. i like the piece because that's how i feel that service and watches could eventually come -- and, david, tv could make it so that apple iphone is less than 50%. >> all right we got -- we got president trump and french president macron set to hold a news conference from the g7 summit in france. we'll bring you live coverage. up with more look at futures before we get started with trading here more from post nine when we come back ♪

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you're watching cnbc's "squawk on the street. we're live from the financial capital of the world we have an opening bell going g to ring in less than two minutes from now deterioration in the relationship between china and the u.s. with increased tariffs from china on u.s. imports there and the president's response by moving up a percentagewise existing tariffs, getting kind of mad then today, or this morning, in france, saying there is some phone calls that indicate that

the chinese want to do business. >> we have not seen a rollback of what he said. >> right. >> i think that's the most important thing. if he had said, look, i'm going to -- what i said on friday, run the table, walk those back, said the same, maybe we will, i think what happens is people say, you know what, there could be movement here, there wasn't. still no purchase of anything. i think that your earlier comments about siege are right i think maybe there are people in china who think you could have a recession here. >> yes. >> a lot of people come on our air. >> i believe we recognized china under the nixon administration. >> i think the idea that we won't be discussing exactly where we are a few weeks from now. so let's forget that and recognize manufacturing is

weaker, the consumer is -- that's the thesis. >> all right we're going to get an opening bell and jim and i will start to get to some of the stocks we're watching as well this morning. here is the opening bell you can take a look at the real time exchange back at our headquarters a lot more green there over at the nasdaq, tcf financial, a michigan based financial holding company doing the honors >> twin cities financial i'll tell you, david, we are -- on friday afternoon, there was a sense that the bull market is over and we have dealt with that forever. the bull market is over. the last four weeks have been very disconcerting to those who buy the industrials. and i think that's correct i think the industrials numbers are coming down. >> you do? >> yes. >> you think that because -- >> because i think that it is not dhchina, it is the rest of e world, people don't realize how china has ingratiated itself and

played globalization to the point where if you are a country, any country, you're more worried about china's economy slowing than you are about anything else. and you wish the united states would stop it so china would still buy things and that's what i think is menti mentioned, china is being hurt china may play a long game all of the trading partners don't play a long game i think they're very concerned and they're frozen someone was recommending the emerging markets i couldn't think of a nicer place to be. emerging markets need china to go into higher gear. that's not happening going into lower gear. keeping it above 6%. >> it would seem to argue then that when it comes to equity markets, we're still the best show in town >> well, the ones that -- i keep coming back to yield the strongest group, the reits, the reits are overbought, but reits offer tremendous -- there is guys who are fighting to recommend reits and still haven't moved. like veitchy veitchy is -- so you have this

kind of -- veitchy property, morgan stanley, increased defensiveness in expanding acquisition, upgrade to overweight, this is really a simil simile for this market what you need to do is find something with 4%, 5% yield. starwood has a big yield i think he's pretty bankable. >> there are quite a few significant yields out there, of course, always think of verizon or at&t. >> right. >> significant yields at this point. very different business models, though always important to point out. don't trade in unison anymore either. >> no. >> they trade very differently and probably should. >> how much can at&t refinance >> i don't know. i don't know we're going it talk about disney's streaming service, of course i think seen in contrast to a certain extent to what the plan is at warner which is owned by at&t let's start off with a deal that we both kept a close eye on. bristol-myers announces an agreement between celgene and

amgen. $13.4 billion. they were forced, as you know, having followed this closely to divest it. it had the effect of delaying the close of bristol-myers acquisition of celgene they get a good price. and the fact is the spread between what the deal was worth and where celgene is trading has closed you see it and bristol-myers benefitting a great deal this morning overall. >> dr. giovanni caforio, going back and forth with, you recognize bristol-myers, revenue stream has been challenged by merkel okay this deal, i thought they would get 10 billion max, i was very afraid that bristle mol-myers wd not be able to reduce the debt that they have taken down to get celgene. the stock was down 5 at one point. amgen is desperate for more

revenue streams until the cancer drugs play out, until repatha, cholesterol drug plays out, they have enbrel, new jersey win, and now tesla, big win, and what i would tell you is there is two winners here i really believe the winner may be the celgene people who now know the deal will close and maybe the deal closes by year end and that's fabulous. bristol-myers, yield 3.3 now my hat is off to dr. caforio people really sold him short really did feel he wasn't going to get a lot of money for this. >> strong price. they also are increasing what was a previously announced plan, $5 billion accelerated share repurchase, it is now $7 billion in part perhaps because of the overage so to speak. more money they got for this asset. >> i think -- >> they didn't want to sell in the first place. >> surprised >> they were surprised they had to >> like holy cow tesla, that's the nonrevlimid

drug but wow, good thing for everybody. my hat is off to caforio that deal will close higher numbers. >> j&j, later today, the oklahoma opioid decision is going to come. and there are many who believe j&j will get a negative verdict. level of damages though is going to be a key amongst how investors view it, where is the award, what will it mean, and, you know, of course, you go through the idea of appeals and everything else. do you have any expectations here and/or how investors should line up here >> i wouldn't touch it until after. i think the likelihood they will lose, i think people will panic, i point out the aaa nature of j&jachj j&j's balance sheet means they can handle this. this is the hardest one, you got

talc, that will keep playing out, opioid they wouldn't settle, they feel there is a small percentage, but you know how juries are they hate these companies. so the roll of the dice, i don't any how much is the judge, the judge, the roll of the dice here is just disconcerting to shareholders. >> speaking of judges, we were both not here on friday for qualcomm's win essentially. >> that was amazing. >> where the ftc's ruling against has now been stayed by the ninth circuit. and so for qualcomm, the shares of which were up on friday, prior to, of course, then the president's tweets, are rebounding a bit today as well but this takes a lot of the pressure off, they don't have to renegotiate anything with anybody in terms of that ftc, fascinating case, the department of justice has sided with qualcomm versus the ftc and now it is going to be decided in

appeals court. i think the arguments are set to begin in january of next year. >> we always hear president reiterated this weekend, that the government is -- the regulations have really been pulled back. this is the most aggressive ftc and the most aggressive ferc i have ever -- >> this was an ftc decision that was litigated, that was left over from the obama administration it is not like he's stacked -- the -- >> somebody had to recuse themselves it always has been a strange one for qualcomm but, of course, we remember it, qualcomm stock prices here has been dramatic moves on all sorts of ways, dramatic move up on the apple settlement, only to be followed not that much later by the negative ruling by judge co, now stayed >> right i actually am -- i can't believe, david, this is -- how many times, i know the ftc, the ftc, david, has gotten exactly

the opposite of what president trump would be saying. basically saying, hey, listen, we're going to be as aggressive, you would think they would say, listen, we're done we're not pulling back >> in the case of qualcomm, we said the national champion 5g, the strategy of 5g did you see the huawei came up with an ai chip and saying it is equal to what nvidia -- >> not supposed to happen. not supposed to happen and in jensen huang, another thing we talked about -- >> interesting to note the advance innovation coming out of china, that's another part of why companies here may feel a need to be there to some extent. >> exactly rightin nvidia has this deal, they say on the conference call, jensen huang says that deal will go through. >> just waiting. >> just waiting. >> wait and wait and wait. that's the question.

>> there is big news, a guy in brazil i follow for oil. the next pipeline is now open for the permian. it is a cheap -- it turns out the pricing is inexpensive not a lot of tariffs the world will be flooded with oil in the next six months from the permian. >> you've been talking for a long time about the lack of pipelines, but the fact they were being built, where does this oil then get taken, this new pipeline where does it come from and go to >> it can go everywhere. not -- can it go to china? i guess so. >> what is it allowing for that hadn't been previously what leads you to say the world is going to be -- >> maybe you talk about 2 million barrels coming on soon and remember i told you that we're going to go from 12 million barrels to 17 million according to scott sheffield and pioneer. this is part of it remember, these companies, they wish they didn't have -- they wish they could hold back oil. they have to drill in order to meet their obligations they are not the saudi arabians. you're going to see a flood, in

the going to see oil rally think about all -- >> now they have more pipelines to get it to the export markets. >> important, exactly right. there is a backlog of ships. the port isn't big enough to handle the oil yeah, you're going to have the permian really be monetized and i just think the price of oil is going to go very low i'm surprised still 50s. i think it cracks. that's why i think a lot of the oil stocks are even worse. there was a very negative price target adjustment for apache down to 20 i got to tell you, you know what is going to look back and we'll say, what was one of the dumber things ever. >> what? >> the occidental buy. i think that could have been done at 50. >> low 60s where chevron said see you later. >> and the debt that was taken down by oxy, i think she should

come on to the show and talk about -- and how not to worry. i'm very worried >> you are >> yes because i think that warren buffett 8% money was an interest rate too far and when i look at -- >> not alone carl icahn agrees with you. >> i look at the citi piece on apache, similar to anadarko, they were lowering their price target to 22 this stock is in the 60s this is all in part because you can't flare as much as you would like natural gas. but the -- the pipeline also, where is the world going to handle a couple more million barrels of oil without the price coming down? and china is not using a lot more oil than it was argued that it has been same i think oil will be continually a horrible story for the market. >> yeah. >> finally, jim, let's look at disney they made a lot of noise on

friday all this about disney. and it was a coming out party for a number of the original series that will be part of that streaming service. they had their biennial fan convention where they unveiled a lot of things. we all know how central this is, of course, to the overall strategy at the company. it is going to be rolled out november i always think of it, just the time and effort that has been taken at that company, to make sure that everybody is on board. and that everybody has buy-in. as opposed to some of the moves that we have seen at at&t's time warner division in terms of how they dealt with what will be their streaming entrant now called hbo max very different and different price points too the question continues to be will it in any way take share from netflix or will it simply exist in its own -- >> i'm saying there is only so many -- the millennials can only

take down so many services. >> seven bucks a month that's all >> i want to be sure people understand j&j, the judge ruling, probably less likely that the jury -- the judge can be reasonable. >> right. >> i want to be sure everybody knows that just go back on disney david, there is -- here is my worry about disney the stock is going from 143 down to 131 it seems -- there had been a belief that the valley could be looked through the next quarters are not going to be -- >> last quarter was not a good quarter. there was some question there as to what in terms of the performance of fox division and how much distraction there was, and whether it could have been overcome. >> will that change this quarter? >> i don't know. right. >> stock is getting hit because i think people are starting to say i have a good game why do i have to be there through a series of bad quarters. >> yeah. >> we have to watch that we don't know. but i do think that the iger we

trust is worth trusting, but you got to be willing to take a lot of -- >> all right we overall have a market that is up about preponderate.8% on thep certainly sent a bit higher as a result of positive comments from the president about the potential for restarting talks with the chinese this after a good deal of heated back and forth, particularly from the president on friday we're also awaiting president trump and french president macron's joint news conference from the g7 summit let's get to eamon javers from france he has more for us >> reporter: we're running about an hour behind here at the g-7 in france. we expected that presser at 9:30 east coast time. we'll get it around 10:30 east coast time that's the information that we're given now. things are in flux here as the

schedule bounces back and forth. but ultimately what reporters in the room will be wanting from the president is a little bit more substance to back up his statement this morning when he said that the chinese side had called the u.s. to start negotiations said the chinese wanted to go back to the negotiating table. he said this was a good thing for the united states. we got some skepticism from beijing on that. eunice yoon reporting that the foreign minister said they didn't know what the president was talking about or preferring to there was a well connected journalist who is connected to the chinese government in china who suggested that ultimately there are no conversations of the level to which the president was talking about. so we have been pressing u.s. officials here in france who are traveling with the president for more detail on what exactly transpired overnight they have not offered any detail the president has been pressed on it a number of times when the reporters have within able to get into the room with him at one point, he said, look, i don't want to talk about calls secretary mnuchin said there are high level talks going back and

forth, communications going back and forth all the time that's sort of where we stand as we wait for this press conference and these press conferences can be lively affairs here we'll have the whole world press involved and the question can hit any number of topics a lot of tension points here, all the world leaders in france trying to get through all this without any major blowup the way they had last year at the g-7 when the president refused to sign on to that communique angela merkel said it was depressing the way last year's g-7 wound up they're trying to have it not land on a sour note. they won't have any communique at all, not signing any joint statement at the end of this there will be no outcome the real meat of this is the negotiations going on behind the scenes and we'll wait to see what the leaders have to say in about half an hour's time now. >> as somebody who followed virtually every comment from the administration on trade and anything else, whether it be in tweet form or during press conferences, i mean, it has been very difficult from an investor

perspective to really ever know what is truly going on, i think. by the way, then trying to understand what the chinese leadership is doing is equally difficult as well. a lot of investors i know just throwing their hands up at this point in terms of trying to get some sort of sense as to what is really happening in these talks or nontalks. >> i think that's a sensible posture now. you remember where we were last week with this idea of we're going to go do more tax cuts and next day, we won't do more tax cuts this white house has been sending conflicting signals for over a week now on a whole range of topics. saw the blowup on friday as the president said he hereby orders american companies to get out of china or to consider it -- to look into getting out of china then the white house said, well, the president does have legal authority to do that under obscure 1970s law, but not going to do that over the weekend, we had the president suggesting in response to a question that he does have some second thoughts about the china trade war and then aids went out in front of cameras to

say, no, no, no, he's not softening his tone, he has second thoughts he wasn't tough enough on the tariffs on friday. and larry kudlow suggesting that the president misheard the question there has been a lot of mixed messaging here so i think if you're an trevinvr watching all of this, be careful with the different messages coming out we have seen them change almost hour by hour over the course of the weekend. >> yeah, we appreciate you staying on top of it tweet by tweet comment by comment eamon javers trying to make sense of it for us we'll be covering live that press conference from both macron and president trump when it happens, it has been delayed about an hour. any further thoughts >> markets don't believe -- markets believe the president is exaggerating or they would be up far more, we are down so badly on the front line i come back to say, listen, a

lot of high quality stocks are up, industrials are challenged here no matter what because everything that makes it so the world is slower cuts the numbers. cannot be bullish on the industrials. a lot of nonindustrials, high yielders that i like some tech companies -- >> are you going to put a portfolio of high yielding stocks for us that you think would make sense >> yes and it is because of what you just requested i have enough in my head that i should do that, i have been lax on that. i've been lax on that. >> i always come back to -- by the way, we haven't talked retail at all, after last week, all we discussed with all the different -- i tend to come back to macy's, which i know you'll say you can't touch it even at a 10.2% yield. >> i think macy's, so much of their -- they have not decided, they have not gotten away from the -- they need tourists. >> right.

>> keep hearing that what they really need is a much better strategy on the line. and i think they're hampered by being in the mall. almost all the mall stores are different than -- difficult. we're seeing a have and have not. macy's has -- they paid down a macy's paid down a lot of debt i think what's happening is it's just not interesting it's a yield play with very little upside. and i think that they have to demonstrate that they -- they have to pivot and somehow say they are going to go -- we are going to do what target did, become a different company they have to become a different company. that's very hard for everyone. >> any company, that's a very difficult thing to transform no doubt about it. >> it's hard you can't keep doing the same thing. that's not what works in this market i like kohl's. i was wrong. i thought the tie-in with amazon was different enough i was wrong. i think you have to suggest it's like a target, like a costco, like a home depot, which really,

you read the new book, not out yet, but i got an advanced copy, of what home depot, recognized, holy cow, we were behind they pivoted so hard i mean, you have to blow the company up. >> that's not an easy thing to do. >> no, it isn't, but target did it cornell did it. >> they did. and the results are quite positive. >> industrials rolling over here. >> we are watching the markets the s&p hanging in with a gain of 0.6%. that is down from the highs. you have seen the decline as well in the dow. we are waiting for president trump, french president macron who is getting ready to hold a joint news conference from the g7 in france we will have that live coming up right he o"sawonhe re."ren quk t

we are combining stop trading and the key to the markets, which i ask you around 9:31 but we didn't get to. what are both? >> friday salesforce was up ten. then it got obliterated. i think it was one of the best quarters from tech reacceleration of all lines. the stock would have been up big, online, if it weren't for

the consumsuena selling >> it hadn't been a great performer this year. >> and keep block is the co-ceo. a fabulous story of acceleration in almost every part of the business and tapo software not closed because of the british concerns. when it does i think you will see more good news there watch that i think it should be higher. i respect the fact that this market is treacherous. >> it's been flat for a year 12-month performance up -- >> yeah. and i think it's time. they had a good year last year this is a great year. >> there is a look at the dow. jim, what's coming up on "mad money" tonight >> we have kevin johnson we will ask about china. we ask about nitro have you had nitro

>> i have not. >> i couldn't sleep for two days. >> really? >> yes. >> it was like, you know -- >> well, that's normal though. >> it would be less powerful it's what the millennials want they like chicken and they like nitro. kevin has done a remarkable job, let's hear about china but cold drinks. people who drink cold things in the winter they like that petroleumpkin la >> they are moving the date? >> yeah. if you have to stay up all night for a football game. >> nitro, got it all right. i'll see you later. coming up, the trump/macron news conference live from the g7 in france. ♪ ♪♪

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welcome back to "squawk on the street." i'm david faber along with sara eisen. we are live from post 9 at the new york stock exchange. carl has the morning off this morning. and we begin, of course, with the markets. they are rallying well off the highs, reacting to seemingly every comment or tweet from president trump.

of course, he is overseas at the g g7 summit. an editor of china's global times is viewed as a direct conduit to the chinese government followed with a tweet saying both sides didn't hold phone talks and china won't cave to u.s. pressure president trump and france's president emmanuel macron are set to a news conference we will take you there as soon as it begins apparently, two questions for each gentleman, but oftentimes they go well beyond that. >> so president trump says you can say we're having very meaningful talks, much more meaningful than at any time, frankly, which led the market to rally, which was somewhat surprising after the news events of the weekend and friday. friday, the dow finished lower more than 600 points it was down 700 at the lows. the tweets marked a sharp escalation, followed up with

tariffs as he said he would after the market closed. >> increasing the exists tariffs by percentage points, right? >> correct throu threw the markets for another loop this weekend saying maybe he went too far, then walking it back and -- i mean, this is very unusual sort of volatility it makes you wonder what an investor is to do. >> many further hands up, the ones i have spoken to, who say it's a very difficult market in which to allocate new capital certainly. what you are going to do is not make meaningful decisions. you will choose to sit on the sidelines for a bit because you can't trade every headline, especially how they can be diametrically opposed within minutes. the chinese foreign minister spokesman told the wall street he is not aware of such a phone call by china to the u.s >> meantime, the chinese currency had an 11-year low. the fundamentals in china are weakening. they get hurt when the u.s. puts more tariffs on them

and overseas markets also, south korea, germany, these are export markets that depend on china and that get hurt when the u.s. and china have this trade friction i think one thing that potentially is encouraging for investors is the chinese continue to come to the table for talks, even though the tariffs continue to get raised and hurt their economy and pressure them. maybe that's because they are feeling the heat the best i can tell from all the currency and research notes overnight is they don't want their currency falling like this we are past 7.1 to the u.s. dollar that starts to raise concerns about what's happening underneath the surface about capital, all those sorts of bad things they ant want to avoid. >> this is not a science, but what i'm hearing from those who are having interchange with the chinese leadership is they may be happy to sit back for a bhienld sort of watch and wait and see how it plays out they want to emphasize the interdependence of the two economies. they want our political leadership to understand that, and perhaps it's going to take a

little bit more of a sigh in the world economy before people truly can sort of get pack to the back to the table. >> eamon jabbers live from france with the latest on where we are with china. >> yeah, good morning, sara. here is the latest i told you that we were expecting to see this press conference between macron and trump at 10:30 east coast time based on the guidance that we have been getting now. we have a statement in from the white house press secretary saying the president continues to work hard on behalf of the american people and is still in meetings we will try to keep you posted on timing of this press conference so at this point not clear when that presser is going to happen. we were expecting it, as i say, about a half an hour from now. one of the question reporters will ask the president is can you give us more detail about this call that you say happened between the u.s. and chinese side overnight the president was pressed earlier when reporters got into

one of the bilateral sessions. they asked him to clarify or offer any more detail on those calls. here is how he responded to that question. >> we have had calls at the highest levels i don't want to talk about that. but the vice chairman put out a statement last night that was a statement and saying that he wants to make a deal and he wants -- >> reporter: so the president said earlier in the day that there was a call between the u.s. and china side. pressed by reporters, he said i don't want to talk about calls nobody that we have talked to have been able to offer details about who called who, what was said, whether there is a new timetable for negotiations that is question number one. there are to host of other questions. the bilateral relationship between the u.s. and france. the u.s. approach to the e.u the question of brexit so many questions to hear from the president on at this point right now not sure exactly when we will hear from

him. things are fluid here in france, guys. >> just to read into what you are saying, eamon, feels like the president is caught between wanting to go hard and tough on china and not wanting the market to fall apart. is that what the tension is? >> reporter: sure. well, he clearly has both imperatives in mind. you saw this sort of odd moment over the weekend he was asked if he had second thoughts about the china trade war and he said, sure i do, i have second thoughts about everything within moments white house press aides were scrambling to explain that a lot of people said, okay, the president is softening his stance on china. the way they explained it was two things simultaneous. one, they said the president didn't hear the question about whether or not he had second thoughts two they said what the president meant to say he had second thoughts about not being tougher on the chinese he should have gone harder on the tariffs on friday. two entirely different explanations for the way the

president responded. the bottom line is the white house didn't want anyone to get the sense that the president is backing off on the china trade war. then the comments from the president last night about two phone calls between the u.s. and chinese sides. the market liked what it heard there and is responding that now. but we will see whether the president can offer more specifics when we see him. >> for now we are in rally mode. dow's up 200 eamon, thank you how should investors be playing all of the twists and turns with the possibility of more presidential tweets and comments out of g7 on the way joining us cfra chief investment strategist you run a research shop. i mean, so are you guys trying to psychoanalyze the president at this point? i mean, what does an independent research firm do right now >> you take it purely from a fend mental perspective. i think even as we're

experiencing, we are having a top-down turmoil from the trade tensions, et cetera. should we end up with a more heated trade war, that probably would throw the global economy into at least a soft spot if not recession. and then what about those earnings expectations that we have for the coming year right now we are only looking for 1.2% growth for all of 2019, and that's well below the 5% when we started the year so i think the analysts are doing the best that they can by talking to management, getting some guidance from them. so the guidance they are saying is not coming from washington. the guidance is coming from management itself. >> what is your best read now on corporate confidence and business investment? we got a gerbil goods number there are some complaints underneath, but obviously the fed has been worried about capital spending where exactly are we in corporate america? >> i think we are in a good spot we could be a in a enter spot if we had some layerfy in terms of

what the trade situation is likely to be i think based on fed president comments last week we were -- they were probably setting us up for the possibility of their not cutting rates at the september meeting. we had three fed presidents say we didn't need it in july, we probably don't need to do it in september. economic data stronger than expected we had corporate profits, particularly on the retail side, that surprised to the upside i would tend to say that prior to that tweet the fed was sending out trial balloons that they would not be cutting rates in september >> bruce, we talked here a lot about the uncertainty from an investor perspective in terms of how you deal with the bab and forth between china, but also have a ceo perspective in terms of how you allocate capital. is that impacting your view of the overall market >> no. i mean, confidence is very critical to a ceo's decision-making process, and certainly the trade situation

and what the fed may or may not do is certainly impacting that confidence i would say this i was pretty impressed with powell on friday for two reasons. first of all, he hammered home the idea that the fed is an independent actor. two, more importantly, powell showed no sign of panic and, in my mind, that helps ceo confidence significantly the fact that he did not pan you can and did not indicate a 50 or 75% -- 70 point increase in the fed funds level i think is very significant. if you look at the markets on friday, as soon as powell finished speaking, the markets began to firm up it was only when china burst in raising the temperature of the trade tariff situation that the markets plunged. but the markets were pretty confident in what powell had to say.

>> sam, is there place to hide from all this in the market and say, okay, a, i mean, there is some fairly high yield paying stocks at this point, but as well are there sectors that are not going to be impacted broadly from this back and forth >> take it from the traditional perspective. when the tougoing gets tough --o your traditional staples, health care, utilities to a lesser extent real estate tend to hold up better -- >> even though they are getting expensive? >> in terms of a flight to safety, that's where they will go however, should we find a resolution to this trade discord, then people will be migrating out very quickly from these defensive because they are so expensive usually those that fall the most in a selloff are the ones that recover most quickly should the all-clear signal be sounded. >> bruce, what are you telling your clients as far as where to take exposure right now in the markets and how to hang in amid

the tweets and twists and turns? >> well, it's been the same for us for most of the year. we have been recommending defensive sectors ever since january and haven't really come off of that at all the irony about that is that the defensive sectors are the ones that have been on the offense and been showing gains actually, some of those sectors are up for the month of august we are sticking with those for the time being i think there is a sense that the economy is really critical to this environment. now, with that said, i think we need to take the longer view about the stock market we have been sitting in the same place basically in terms of the s&p 500 since january of 2018. i think that's simply a reflection of the deceleration of corporate profits if we are looking for a sustainable rally in the market, i think we have to wait until profits expectations and profit forecasts improve. i think that could happen later this year or early in 2020

>> finally, just quickly on the russell 2000 of small caps, it's been beaten up harder than the rest if you see optimism or light at the end of the tunnel with the trade friction with china, that would bounce faster in the market >> you would think so, but i believe if we don't get that bounce to go along with it, that that could be an early warning signal that there is more behind this problem this could be like april of 1998 all over again when it gave you an early warning two-year sprans signal that the market was headed for a selloff. >> wow sam and bruce, thank you very much. all right. our etf spotlight. consumer discretionary stocks had been outperforming industrials since the trade war. mike. >> yes, they have. that has become pretty, i guess, a pretty conventional wisdom type observation that the u.s.

consumer is strong the strongestist it in the world. industrials pressured by the global slow down and trade issues you see over a one-year basis clear outperformance by the consumer look at the equal weighted versions of these same sectors it's actually quite a different story, the equal weighted portfolio of industrial stocks have held up better than consumer stocks. why is that? if you look at the consumer discretionary etf, xly traditional one, it's one machine thione-third isson and home depot the average consumer discretionary stock has not outperformed the average industrial stock this points to the secular challenges in front of retail and autos and other parts of consumer discretionary even within a strong part of the market it has a relatively defensive tone and the markets

seemingly clinched up for something in the way of a slowdown or labor of consumer weakness on the way. >> thank you mike santelli. we will have much more on today's rally, how to play the volatility as we await president trump and french president macron's joint news conference in france. we will take you there as soon as it happens. ckquawk on the street" will be ba right dow's up 133 don't go away. memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life. - stand up if you are first stand up if you're a mother. if you are actively deployed, a veteran, or you're in a military family, please stand. i will tell you this, southern new hampshire university can change the whole trajectory of your life.

let's get back to u.s. trade. china tensions the impact on the markets. we are swroind by two china experts. sean king, senior vice president and former u.s. commerce department senior advisor for all of asia. also jeff moon, the president of china moon strategies, a former u.s. trade representative for china. jeff, give me your best guess as to where we go from here given everything we have heard over the last hl hou48 hours. >> i think the market is making too much of the call clearly, trump didn't participate. monsoon didn't participate if anything, there is something at the working level but really we americans assume that it's all about us you really need two sides to make a deal. and from the chinese

perspective, they want to put the substantive discussions on pause to october 1st they are preoccupied with their domestic celebrations of the 70th anniversary of the people's republic, which cannot include mention of foreign concessions they can't make concessions while there is pressure in hong kong that would encourage the protesters further beyond october 1st there may be a naur owe window between that time and the iowa state caucuses on february 3rd when the u.s. presidential election gets into full swing there is an apec meeting in november and a narrow possibility if both sides really want to make a deal they may in that window be able to do something. after the campaign season gets started, i don't see a deal before the election. >> yeah. plenty of people agree with that sean, you're a china hawk. >> right. >> is this the way you would go about prosecuting trying to get a good deal from china in terms

of trade >> wi would not. ev even if we get a deal, what does it mean? it's a dictatorship that doesn't let its own people vote or access facebook. why would we expect them to treat us fairly? it would not be up for a congressional vote i think we get too hung up on doing business with mainland china. trump orders companies out, but he doesn't give them options why did we leave tpp it was a trade version of nato against beijing. why is he picking fights with vietnam and india? i'm glad we have this apparently in principle deal with japan i haven't seen the details i but trump seems to be starting fires everywhere i am with him on china, but we shouldn't be fighting with our friends at the asame time. >> you are with him on the overall goal but the execution -- >> on a reality check for china. i think it's been a generational shift into china when u.s. manufacturers offshored production to other

asian countries in the '60s and '70s, we followed those suppliers into mainland china. this is part of an asia story, not just the china story so the genie is out of the bot the there. we need to be giving options around china tariffs in a developed economy requirel rarely, if ever, has to work he fleeds needs to be honest abo is paying the tariffs, and it's not beijing. >> 1.4 billion people in china the hottest growth market for so many american companies. they probably want a better playing field. they wouldn't want to have to deal with intellectual property theft and all these other issues, yet they need access to that kind of growth. so blwhat does tim cook do, a co of a multinational do if he was there. >> trump loves tim cook. he doesn't hire expensive lobbyists like me. you get what you pay for

if you are willing to do business in a country that doesn't let people access twitter, go to church, vote, or speak freely, i think you deserve what you get you should be looking at other options in china you sort of make the bed you lay in. >> i would love to get your thoughts, jeff there seems to be a great enter dependence between the chinese and u.s. economy, not just measured in the goods that go back and forth between the two >> yeah. truly, china is the greatest potential growth moorarket for y american companies china is the second largest economy in the world there is no way we cannot do business with them there is no way we could decouple as much as we would like to. we need to find a way forward. press forward with the industrial policy. but the tariff policy is coming to its logical end we cannot impose tariff add infinitum. i predict the next phase will involve us looking very

carefully and studying our access to the chinese market and imposing reciprocity on the chinese. limiting the access that they have and trying it equalize the deal that we made 20 years ago when china came into the wto, when china was a developing country, and make them live up to the standards and responsibilities of a developed country, which is where they are now. >> jeff, you and sean both are advising corporations here, getting paid to do so, how they should do business or navigate the current field. what are you hearing from senior management at some of the companies that you are talking to about how they should approach china, what they should be thinking about, and are the ceos throwing their hands up about how they should be navigating this? >> the biggest problem is on the american side. we have a president who is a short-term tactical thinker who is trying to get a win in each and every conversation and lacks

underlying principles or long-term voalues. we need stability on the american side. that's the biggest problem that they have. i think coming from the chinese there is the threat of retaliation. we have not seen the kind of retaliation that china is yet capable of and president trump underestimates the chinese can do a variety of things to block american firms and the discrimination that we see now will increase significantly. >> i mean, that's always a worried. sean, what about the rest of asia i mean, what is the relationship looking like now between south korea and china, japan and china? can china make up for lost business by getting closer to other trading partners >> china is pursuing a brick and mortar low level tpp coupled with the belt initiative china is annoying a lot of people in the neighborhood it's sad we pick fights with our friends.

vietnam is standing up to them japan has a dispute with them. south korea reeling from chinese sanctions over putting a u.s. anti-missile defense system. obviously, taiwan is totally going gen against the mainland trump thankfully has been strong for taiwan against beijing china is making a lot of enemies in the region of the a lot of countries are no longer sure where the u.s. stands. they are hedging bets. they are making side deals with china in case trump follows through on his america first principles and leaves asiaover all. >> where does that put europe? >> i think it's kind of yesterday's news. >> it's a pretty big economy. >> but in terms of geostrategic national security in asia, i am happy to see france doing business in the south china sea. britain is saying something finally about hong kong. britain did not give the people of hong kong democracy when they had the chance europe is absent on countering china and asia and finally they are saying something. >> guys, a lot more to talk

about. i'm sure we will get time in the future for now we'll leave it there sean and jeff, thanks to you both when we return markets well off their highs. we await president trump and french president macron's joint news conference. dow up 118 we were up more sharply towards the open down a few hundred points last night in the futures market. esent se live when we see the pridasoon as "squawk on the street" returns. e... e... and when those changes might help more people, especially those in retirement, i think it's worth talking about! so, aag is introducing a new jumbo reverse mortgage loan so you can now access as much as $4 million dollars in cash, tax free, from your home's equity. aag's new jumbo reverse mortgage loan can give you more tax-free cash than ever before find out more in your free aag jumbo guide. call

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president trump's latest round of tariff threats putting pressure on auto makers, already seeing margins squeezed right now phil lebeau with the latest. >> three stocks, all up fraction alley today, basically in conjunction with the rest of the market first off tesla. reported early this morning out of china saying the company would be raising prices a little sooner than expected due to the latest round of potential tariffs and then also coming up in december. remember, as you take a look at tesla, china is the growth engine at least in the next few years in part because they have got the new plant that's going to be opening up in china in

shanghai it's scheduled to open later this year. as we've talked about many times, china is the world's number one market when it comes to electric vehicles now let's talk about general motors this stock is up fractionally as well with gm, all about the chinese economy. china is the number one market in the world in terms of sales for general motors as that economy slows down, auto sales slow down, the concern is about what kind of an impact this has on general motors and bmw. the reason we are showing you bmw is because it has a huge facility down in spartanburg, south carolina they build sufrz many of them end up being shipped over to china. as the trade war escalates, the concern is you are going to see fewer people potentially buying bmws over in china guys, back to you. >> so, phil, that sort of raises the question about where these cars are produced for which markets. so when we get the tariffs back and forth on the autos, i mean some people said that european automakers get hurt more than

u.s. automakers because they produce here and ship back in china. i mean - >> true, and they ship to china. look, in the case of bmw, they used to do exclusively all of the world's suvs in south carolina and ship a good chunk of them to china now they are building the x 3 over in china. you probably have seen more production localize inside china as well tht future doesn't mean that they are not going to employ as many people in the southeast they are expanding spartanburg. the automakers realize as much as possible, they want to localize their production. the concern is, sara, as the chinese economy slows down because of trade wars or other factors, there issi going to be slower demand in china >> all right phil, thank you. well, we will send it to sue for a news update at this hour. >> good morning, everyone. here's what's happening at this hour we begin with the latest from

the g7 summit in france india's prime minister declining president trump's offer to de-escalate tensions france's president macron announced an aid package for fighting fires in the amazon saying $20 million has been pledged to brazil and its neighbors. here at home former congressman and conservative radio show host joe a walsh is the second man to challenge the president for the gop nomination in 2020 revealing his decision on abc's sunday show this week former massachusetts governor bill weld announced his challenge in april. and harvey weinstein has bleed not guilty to an indictment adding two charges of predato predatory sexual assault that trial was scheduled to begin next month it has now been pushed back to january. you are up to date that's the news update this hour david, back downtown to you. >> okay. thank you, sue when we come back former bb&t

ceo john allison will join us to discuss how businesses are reacting to president trump's trade tactics. plus, of course, president trump and french president macron, they are getting ready for that joint news conference. when they begin, we will go there live "squawk on the street" is right back er of your growing business. from using feedback to innovate... to introducing products faster... to managing website inventory... and network bandwidth. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

french president emmanuel macron has taken the podium alongside president donald trump. they are in the seaside town of biarritz. >> yes. >> on the basque coast. we will wait to hear from president trump any clues about that call or lack of a call with china at a high level on the trade talks. lots of headlines coming out of france and the g7. interestingly, china is not part of the g7, nor was it invited to this meeting as some leaders often are outside the g7 clearly, this is topic number

one for a lot of the countries caught in the crosshairs, mainly europe its export sectors that get hurt as a result of the tariffs between these two countries. the latest announced by the u.s. president on twitter friday evening. eamon javers is there live in france what can we expect, eamon? >> reporter: sara, what we can expect is an unusual format. we are told that the french president macron and president trump will do the traditional two and two diplomatic question and answer two questions from the u.s. media, two questions from the french media then president trump is going to stay and perhaps answer more questions. we are told to expect he might answer a lot of questions here so clearly the president has something he wants to say. he wants to deal with the u.s. media and take those questions on we don't know exactly why there was a delay here they have been running a little bit behind on the schedule we will just wait and see what

the president has to say you can expect the reporters in the room will ask about that call he says came in from the chinese side last night that he said the chinese want to get back to the negotiating table. we haven't been able to get more details on that. i think that will be question number one for the president here. >> what's your sense of the relationship right now between the u.s. president and the french president and some of his other g7 counterparts there, and how concerned they are and how much pressure they are putting on him as a result of this u.s./china trade war >> reporter: i think they may be taking pressure off, at least in public they are trying to really let trump be trump here and not force him into any situations where he feels compromised or put upon in any way. for example, they are not doing ak a communique they have had a lot of bilateral sessions the president has been meeting with a lot of these leaders one on one the president has attended or not attended any of the sessions of the meeting as he sees fit.

clearly, macron is now setting up a dynamic he will do the traditional press conference then we expect macron to walk off stage and the president to continue, which effectively allows the president to have the last word on what's going on at the g7 before he gets on air force one to head home it would appear that the g7 leaders, including president macron, are doing everything they can to not put the president in an awkward situation and to allow him to handle this event just the way he wants to handle it. >> did anything else come out of this g7, eamon that has caught your attention i know there has been mention of obviously a potential deal with japan, a trade deal, some sort of potential agreement in principle. again unclear exactly what that means. i know they wanted to seemingly talk about climate change and the president did not want to. >> reporter: right as far as we know, the president did not attend the session on climate change the agreement with japan is an

agreement in principle so there was a handshake here on that we will wait and see whether they can put pen to paper and sign the deal in the months to come the meeting with boris johnson was an interesting one for the president. boris johnson suggesting to the president very defer edgesly that the u.k. would prefer free trade. they don't like trade wars he says they have 200 years of experience of free trade that's created a lot of prosperity for britain he did in a very respectful and d tone of voice. they were watching that relationship the new prime minister in britain is viewed as somebody who is sort of ideologically or sim pat cowith this president. they are two national figures on the stage. they weren't able to come up with anything other than away nounsed that the united states and u.k. are intending to pursue a bilateral trade deal at some point after brexit

this president doing what he can to help bore johnson that we will be there after brexit. >> so following that over the weekend, and the pictures clearly president trump is joined by his economic advisor, secretary monsoon, treasury secretary larry kudlow, chief economic advisor how have they been answering your questions about the mixed messages that we're getting about china over the weekend >> reporter: yeah, sara, they came out yesterday to the media hotel. we are stationed about 25 minutes away from where they are. they made the journey out here to come and talk specifically to the media. they did a round of television interviews both tresh which secretary monsoon and larry kudlow yesterday on various networks and then a gaggle informally with reporters on camera to answer questions the main topic yesterday was this question of the con aroufun

around the president saying he had second thoutsds about tghtse china trade war. he said i have second thoughts about everything then they were at pains immediately to come out and say, no, he didn't have second thoughts about being too hard on china. he second thoughts on being too easy on china. so they are saying he is doubling down his commitment to continue with the trade war. we shouldn't read this at all as a sign that he is backing off. then asked if he was cleaning up after the president's mistake, he said we are not cleaning up after anything the reporting on it was wrong. so they have sfent a lot of time here trying to straighten out the messaging over the course of the weekend. that's the story line we have been following >> and again, eamon, your information is the president conceivably is going to take quite some time to answer a lot of different questions, which can always be fairly interesting and wide ranging, one would imagine, as well who knows what we can expect coming up here >> reporter: right, absolutely

and so much this, you have seen this in the reporting in the european press as well, is about the president's move what kind of a mood is he in the last g7 last year departing in a huff, refusing to sign the communique, tweeting angrily about the prime minister of canada, you know angela merkel calling it a depressing end to the g7 last year they are eager to avoid a repeat of that here you see them going out of their way not to have a communique, allowing the president to have his own press conference as well as the traditional two and two they don't want to have sort of an emotional blowup at the end here the president is set to go to air force one after this press conference we will see where we land. >> yeah, we will take the press conference as soon as we hear from president trump we are watching emmanuel macron, the president of france now, hosting the g7 giving the final news conference of the meeting

eamon, where is the u.s. on trade? they have blasted europe for being as tough as china, indicating he is going to soon focus at some point, keeps those auto import tariffs hanging in the balance. i mean, i wonder how that affects this kind of closed-door i i intimate gathering of world leaders? >> reporter: that's right. one of the fears on the european side coming into this was that the president was going to double or triple down on his threat to on german cars, for example. french wine. he says he prefers american wine, although he doesn't drink wine he threatened to do that we are not too far from bore co dou -- bordeaux in france all eyes focused on that is he going to drop new tariffs

or double down on the threats? we haven't seen that over the weekend. the president has been at pains to suggest each of these bilateral meetings has been upbeat and enthusiastic. he says he has gotten a lot of support from the foreign leaders in terms of the success of the u.s. economy so the president has been making an effort here to not make further waves in terms of the relationship with the europeans. we have not seen him talking about tariffs on french wine but you never know until you know with this president we will wait and see what he has to say in the press conference, which could be very interesting. >> some headlines from macron's comments saying he is working towards a meeting between iran's president, rouhani, and president trump, saying that could be achieved in the coming weeks. that's sort of what we have been watching without listening to it there was a meeting between rouhani and macron, right? >> reporter: that's an interesting wrinkle, david and there was some question about whether macron was going to invite the iranian leader here to the g7 to sort of participate on the sidelines

that didn't happen we did have a surprise moment yesterday when the iranian foreign minister showed up, zarif, in town suddenly there was this question are there going to be negotiations between the u.s. and iranian sides on the sideline of the g7 what we are told is that's not happening. treasury secretary steve mnuchin told reporters that the united states stands by and the president stands by his offer to negotiate with the iranians on the nuclear deal he pulled out of without any preconditions so they are sending a signal to the iranians who are here in town, we're open to talks. we don't have any indication those talks have happened yet. there is an invitation from the u.s. side that is relatively open ended no preconditions there. >> and we should say macron apparently -- you watched it but not listened to it, trying to arrange that meeting between trump and iran's president rouhani. >> merkel also talking about a big step noord talks wiforward iran the markets, we are off the highs of the session

dow's up 138 points. it's a broad-based rally looks a lot better than where we were on friday afternoon we have got every seconder in the s&p 500 -- sector in the s&p 500 higher technology is leading the charge semis are really lallying. communication services, consumer staples also doing well. industrials though kind of hovering between gansd losses. eamon, you know, after the crazy weekend and the fact that the pessimism yielded optimism yielded escalation yielded optimism again, where are we and what do we expect the president to say in these talks in a few moments? never mind, i think we are going to the president now. >> let's listen in. >> i want to thank you very much i think more importantly than anything, i wanted to come up here to say that because the job that president macron and your wife, by the way, who is a great

lady, bridget, would like to thank bridget. she has been spectacular spent a tremendous amount of time with melania. some of the folks who came in, some of the wives that came in, they had a great tour of the area it's a beautiful area. i want to thank you very much, mr. president, for the incredible job you did this is a truly successful g7. there was tremendous unity there was great unity. sometimes i read a little bit of false reporting and i will tell you there was -- in fact, we were -- we would have stayed fo another hour nobody wanted to leave we were accomplished a lot more importantly, we were getting along very well. seven countries. it really was the g7 and you have been a spectacular leader on this. i want to thank you and i want to thank the great country of france thank you very much. [ applause ]

excuse me. >> go ahead. no, no i just wanted to say i will take two questions each time. after what i will say good-bye to mu friend president trump i will leave the room for you to follow up. >> we could do two each and both leave the room would you prefer that? i don't want to have the president of france standing here while i'm answering these absolutely wonderful questions, okay so why don't we start with a question for france. >> four questions about g7 and u.s. relations. >> emanuel is going to have his own press conference after this. >> exactly. >> so that will be fine. go ahead to france. to france. >> reporter: thank you of course, mr. president macron, china was not on the official agenda, but it was certainly a big part of the discussions here

at the g7. are you concerned that the trade war that exists now between the united states and china could harm the global economy if you are did you talk to president trump about is that? are you at the same time concerned if china's current trade practices go unchecked, that a decade from now we could be in a very terrible situation? >> translator: on this subject, we obviously had lengthy discussions. during the session the world economy yesterday morning on both subjects. the discussions underway between china and the united states of america obviously, as we clearly see, create uncertainty which disturb markets and investors and during the negotiations will create tensions, which is the case of any discussion we saw this on different stock markets with which we're

familiar now the question is to know what the result of these discussions will be, and that's why we considered that it was so an agreement be found between the two greatest economic powers in the world. president trump clearly showed us his willingness to arrive at an agreement we saw the positive and encouraging message that could be distilled from this if we see that things are moving our deep wish is for an agreement to be found between the united states and china concerning trade because i think that would be something positive for everyone neither the united states nor china is economically or industrially naive it has to be a balanced agreement that will be good for everyone, and we will be vigilant to see that it's good for the whole world in that context, our different parameters will be taken on board. that was one of the subjects of our discussion what's bad for the world economy is uncertainty, and the quicker

an agreement is arrived at, the quicker that uncertainty will dissipate. that's what we discussed yesterday, and that's the american president's wish. in terms of trade practices, i said earlier, for me the most effective way forward and the most strategic way forward in settling our trade relations with china is to develop trade, but also to ensure that that trade is part of international trade rules. the problems we sometimes had were very familiar with this with the chinese economy, it's a major economy where there has been lots of investment from the united states, european countries, canada and japan. the problem is respecting intellectual property, dealing with excess capacity, which sometimes unbalances some world

markets, and the ability to deal rapidly with conflicts we may have and with unfair situations. now, we are obliged to see that when this type of trade happens outside of wto rules things don't work very well and we are not properly protected when you follow wto rules the wto rules as they presently exist haven't allowed us to be protected on these subjects. so what we decided together yesterday morning was to accelerate with a very realistic agenda and to say we're going to change the rules of world trade so that everyone can have free and fair trade, balanced trade, and that the subjects which i have just mentioned which have sometimes been bad for our economies can be settled in an international framework which we wish profoundly to change. and we and our different ministers of the different contexts that we are putting forward are going to share these political goals and to my way of thinking the way to deal with the practices you have mentioned certainly the positive

agreements that will be arrived at and also the renewal of our international trade rules as we said yesterday morning >> translator: mr. trump, are you satisfied with how far the proposed wto reforms will go. >> no, i'm not. >> reporter: second to that -- >> we're getting there we're getting there. >> reporter: do you believe that china is sincere about what it said this morning. >> yes. >> reporter: or do you think that they are just trying to calm the markets and play for time, because our sister network the fox business network has been told by chinese sources that they have no plans on going back to where they were in terms of the negotiations this spring on intellectual property, forced technology transfer, ownership >> we'll see, john. >> reporter: do you interest u.s. that they are inn sear? >> i do. i think they want to make a deal very badly i think that it was elevated last night, very late in the night. i see an alert or you would call it breaking news and it was that

the vice-chairman, we are not talking about somebody from china at a low level, the vice-chairman of china came out that he wants to see a deal made, he wants it to be made under calm conditions, using the word calm. i agree with him on that and china has taken a very hard hit over the last number of months they've lost 3 million jobs, it will soon be much more than 3 million jobs their chain is breaking, the chain is breaking up like nobody has seen before and once that happens it's very hard to put it back together, you understand. i think they very much want to make a deal and the longer they wait the harder it is to put it back if it can be put back at all so i believe they want to do a deal the tariffs have hit them very hard in a fairly short period of time the united states will have collected over $100 billion in tariffs and i say it again, the reporters fail to -- the media fail to acknowledge it, but if you look at the goods coming in

from china, we are talking about china, not other countries, if you look at the goods they have a power that others don't have, but that power is only good for so long. they've manipulated their currency, they've devalued their currency and they have put a lot of cash into the system and because of that the prices have not gone up or if they've gone up it's been very little because they want to keep people working. if the prices go up they are not going to be able to keep people working, they are not going to be able to compete it's a brilliant market. it's a brilliant, brilliant market, the world market a lot of markets are brilliant frankly i think that china cannot -- i don't know, maybe they can, maybe they can't, i don't think they can do that, and i think they're very smart and i think president xi is a great leader who happens to be a brilliant man and he can't lose 3 million jobs in a very short of time and that's going to be magnified many times over and it's going to break down the chinese system of trade and he can't do that. so when you say do you think they want to

maybe they want to and maybe they don't, but i think they want to make a deal. i'm not sure they have a choice. i don't say that as a threat i don't think they have a choice in the meantime the united states, which has never collected 10 cents from china, will in a fairly short period of time be over $100 billion in tariffs. so i think they want to make a deal very badly go ahead >> translator: second question mr. president, you have just declared that you have created the conditions for a meeting between president trump and president rouhani. does that mean that france, for instance, might be a mediator in that meeting and more concretely, what did you discuss in terms of that possible agreement with iran? then a question for mr. trump. are you ready to lift or to soften american sanctions on iranian oil exports and would

you be ready to meet president rouhani? thank you. >> translator: on the first question, the terms of the discussion are quite simple, an agreement was signed in 2015, on july 14th, we call it the jcpoa and that agreement set forth guarantees for the international community, including the signatories of that agreement, saying that iran would no longer enrich urinian over a certain period of time i'm simplifying this, but up to 2025, in exchange for reopening many economic sectors and massive investment, largely made by the united states that agreement had a two-fold advantage, stability and security and also reopening economically speaking, which was good for iran.

this agreement also had drawbacks and shortcomings french negotiators in 2015 were the most determined and france was the country that hesitated most to sign this agreement because we considered we needed as many guarantees as possible president trump during his campaign made a commitment to those who voted for him to be more demanding and tougher because he considered that this agreement was insufficient, which caused him to leave it today because of the sanctions made by president trump the iran economy is having serious consequences and a serious slowdown and that situation very clearly is the aspect -- we might say the positive side of things from one standpoint it's creating pressure and, therefore, the necessary conditions to improve the terms of an agreement. on the other hand, it's leading to reactions in iran saying, well, we've signed this agreement, but those who have signed it are not respecting its terms and so we're starting

symbolically to enrich uranium and they risk that they're going to go further still and leave the jcpoa. so given the two goals that we have where are we going with this we need to be sure that iran will never get a nuclear weapon and that there will be no flare-ups in the region. so what we discussed very concretely was to see how we could improve, very considerably, in fact, build a new nuclear agreement with iran. president trump was very clear, saying that we would need a much longer time frame for it, that there needed to be surveillance of many more sites and this is how we can build a much further-reaching agreement in terms of our security demands. and on the other hand we need to convince the iranians to go in that direction and we can do that if we give them economic compensation of some form. if we make some movement in terms of lines of credit or

reopening certain economic sectors. i can't tell you today publicly more about this because anything i would tell you in detail will jeopardize the conversations we're going to have, but this is basically what we're discussing on the basis of our initiative there's also a japanese initiative, i'm talking in total transparency with the president, but we agreed on a strategic goal and i want us to go further in that framework and to make proposals. at a given point in time there will have to be a meeting between the american and the iranian presidents and i would wish that in coming weeks such a meeting take place france will play a role together with the other signatories who are partners in the g7, but after that we will need to create the necessary conditions because we will have the necessary visibility for this agreement to be signed and sealed and for this meeting within the two presidents to take place so i would rather talk about concerted initiatives and exchanges rather than mediation

because at the end of the day we have constant exchanges with president trump, i share his goals, sometimes we say we don't agree on methods, but i want to get there. i want to have an agreement. and i think there has been a true change. this morning president rouhani showed himself to be open to this meeting happening and president trump has been saying for weeks that he's been demanding, he's been tough, has put forward sanctions but i'm ready to have a meeting to make a deal i think we're making progress. i want this meeting to happen and i want there to be an agreement between the united states and iran and france will play the role it is meant to play together with the united kingdom, germany and all of the other signatory powers and the permanent members of the security council >> iran is a one tree that is not the same country that it was two and a half years ago when i came into office iran was the number one state of terror throughout the world. there were 18 sites of confliction in my first we