Transcripts For CNBC Squawk On The Street 20240714

Merger deal with pfizers generics unit. And disney domination. The studio breaking an alltime record for annual box office earnings, and of course, it is only july. So, theres a lot for investors to digest this week with stocks at record highs. Jim, coming off of those on friday, you were out, but a lot happened good to have you back. Thank you the starbucks calls kind of the emblematic of what happened this quarter. Starbucks had run big. So you had to figure, no matter what, how could it really move then it goes up big dollars because its better than expected, better than feared what were seeing are companies that we were worried about because stocks have run, and then the stocks do okay. So, this is a short sellers dilemma. Lets say youve been betting against companies because you truly believe theres been an earnings deceleration. If earnings just stay in line, the stock flies. If earnings are a little bit below, the stock doesnt do anything. Right. So, theres just this kind of bid underneath because of that and because of fed chairman powell, and everybody feels he can say tariffs, tariffs, tariffs, so he stands up to President Trump, but weve got to cut by a quarter. Well get to powell in a moment, but starbucks examples a good one because yp morgue goes to neutral today on what theyre arguing are peak comps and that the nitro implementation, were not going to have these oneoff quarters in the future. Nitro is unbelievable and it is ignite the afternoon day part but its brought people in for other things, including food and thats really important. Kevin johnsons got people eating there this digital situation, the digital flywheel, as he calls it, is extraordinary by the way, mcdonalds, same thing. I mean, notion of convenience. Youre starting to really squeeze little companies again delivery is such a powerful thing for burgers and for coffee oh, my gosh today, theres a ton of restaurant news. Goldman has a 100page report in which they initiate chipotle, mcdonalds, starbucks as a buy, and deutsch initiates dominos as a sell, in part on what youre talking about. Thirdparty aggregators like grub and uber are giving people choices in ways theyve never had before, and thats bad news if youre a delivery stream like dominos. I happen to have ill tell you, i think it was a very honest piece i had rich alison, who is the ceo of dominos, on and he actually blames some of the weakness on the Venture Capital companies willing to back a postmates, a Doordash Doordash is a genuine disruptor, because doordash has 300,000 restaurants. And if anybody can deliver, then dominos does have real competition. It had always been dominos versus mom and pops. Now you have dominos versus wingstop, very good wingstop dominos versus any chain, chickfila, i dont know. I dont know where chickfila is, but im just saying that everybody ships, everybody delivers and if you its just kind of like, its Like Department stores if you can deliver like amazon, same day, okay one day. Well, we dont have one day for food, but same day for mcdonalds people love that i cannot believe how people love starbucks delivered. Really bad for, like, the blue stones. Yeah. We asked Kevin Johnson a long time ago, how are you going to keep coffee hot in a delivery mode and he had some answers. Well see if that holds up as for earnings this week, jim, i know you just told andrew youre watching apple. Yes. But there are a ton of other huge names this week. This week is just one of those weeks where if youre going to go down, it better be this week. Thats why i say its a short sellers dilemma because you have so Many Companies but theres a piece today by the evidence lab, not just anybody, the evidence lab that ubs i shouldnt make fun of them because its actually quite good basically saying only 19 of the people are bullish on apple, down from 30 in april, basically saying that apple is going to disappoint and people are going to like it thats the way i read this now, if thats the case, what is going to knock the market down its not going to be gm. Its not going to be exxon if yes, if jay powell surprised us but that would be terrible. Surprise us with nothing or surprises with 50 im happy with how things are going, because as janet yellen said, why cant we keep having expansion . I thought that janet yellen, once again, was someone who distinguished herself as someone who shouldnt have been fired. Trump has to regret that i mean, he had the ultimate. She was so great this weekend. Live and learn. Then he has to go fire and get some independent guy i mean, what is with powell . Why doesnt he go with the braha program . Powell probably sits there and says, oh, boy, if i cut, the president s going to like it so much, but then maybe he wants a 50 basis point i think the president wants a 100 basis point. Of course. I dont think the president wants interest he wants to be like germany. Negative yielding. You cannot satisfy President Trump on this issue. He doesnt like hes the king of debt, as hes said in the past yellen spoke in aspen over the weekend and did give powell some coverage, jim says take a listen. Although the u. S. Is doing well, i would be focused on wanting to keep it doing well, to keep the expansion on track, and i think in light of the risks, i would be inclined to cut a bit. I wouldnt see this as the beginning unless things change of a major easing cycle. All right, so that last part is key, right . Right. Youd rather hear, whatever we get, if theres a cut, youd rather hear guys be happy for now. Yes, because that puts it so that you have this kind of put if things get bad, hes going to cut. If things get good, hes happy i mean, what its a great scenario for bull, because hes there trying to help you out lets say they go to 320 billion, put tariffs on those because the trade talks go badly. Or lets say the chinese invade hong kong. Lets put it out there because the chinese put out very, id say declarative statement against hong kong. The president s ready. He would like some tariffs i think it evens rudy against the trade talks this week. He loves tariffs he think that his base loves tariffs. His base also, i think, has been convinced that the chinese pay the tariffs. Like, you know, senator we know thats not true no. We also know that the impact on the consumer is not as strong as some had feared. No. We really no one thought that no one thought that you could have at the same you take a walmart. At the same time they keep everyday low pricing, theyre delivering it you know, they want to put it in your refrigerator i dont know if you want someone coming in like, i dont care, what do i have but in the refrigerator what, going to steal a painting . Great, have a painting paintings already not good. But i look at what theyre doing and say to myself, there you go. Walmart is lowering keep prices low and theyll put it in your refrigerator. Amazon, that quarter was incredible i thought that when you read through that quarter, what theyre basically saying is, list en, everybody wants same day, they want one day and well give it to them and you can punish us, but were going to figure out how to do it and when we figure it out, were going to be kings so, amazon would be king kind of like kipling. The bull case you draw on amazon, downgrade at u. P. S. Today, to hold on challenging macro, capex climbing. Some of the charts over the weekend from deutsch looking at global trade with an overlay of fedex three months in advance is not encouraging. No, but fedex turned out to be quite different from fedex u. P. S. Will tell you this fedex has the big capex spend cycle ahead of them. They think theyve already spent the money, and they dont need to do any more and im very encouraged. I thought the u. P. S. Quarter was fantastic. You want to make a valuation call, thats fine. This market doesnt like valuation calls. Thats like downgrading starbucks at 89. I would think youd applaud some fiscal discipline, right, on your target well these stocks are blowing through analyst targets. U. P. S. Is abneys terrific. One of the reasons i love abney is hes from mississippi and i met fletcher cox, the great, you know, he really is the sack king for the eagles theyre friends. And i saw fletcher cox on friday with the eagles, went like this for u. P. S. There you go i mean, fletcher cox may be a hall of famer. No, i think u. P. S. Is unbelievably good, and therefore, not worthy of a downgrade. Interesting on friday, i listened to your show in the car, and you said something to the effect of, when youre up 20 on a single name, youd like to ring some registers. Thats the case for a lot of names right now. Yes, and this is one of the most gutwrenching moments for discipline im glad you brought this up, because what happens is, you see the starbucks downgrades today i agree with the downgrades. I love starbucks, but up eight points but then again, lets say starbucks pulls back to 90. Are they going to upgrade . Well, the framing of the call from jpmorgan is they want clients to buy lower. Yes. So its not that theyre saying divorce yourself from this name entirely. I think the piece makes sense. Thats why i understand it, but i just think that its a great hedge fund call. I think its hard for an individual to Time Starbucks and i think that starbucks can go down, but when it goes down, you have to buy up and we dont know where it goes down and most individuals cant time it the hedge funds want to time it. Remember, Kevin Johnson had a buyback. He sat there, 51 he cleaned up all the sellers. They kept hitting him. Then he moved to 52 i talked about the buyback it was almost like, lets play trader they jammed you the short you know, the long side is banging them at 51 and then all the selling dries up and he moves to 52. He goes, basically 52 for a million and they drill him no more 53 for a million drill him and when they get to like 60, theres like no one left, and thats how you have that chart theres no sellers maybe today creates some sellers. Pfizer mylan announced a major deal combining its offpatent branded drug business with mylan terms call for mylan shareholders to own 43 of the new entity pfizer shareholders get the rest in the meantime, pfizer and mylan each had betterthanexpected quarterly earnings, 1. 03 beats by 8 cents on the mylan side. You said nobody cares about this a few moments ago. Mylans stock was in a permanent down trend, you thought. And then they do this. Its almost like, you know how occidental did that stupid deal where they took 8 money from Warren Buffett the fact that pfizer even thinks that mylans going to exist is a really big deal. And mylan, did they get a good deal i dont know they doubled down on the worst part, but ive got to hand it to heather presh. She now has pfizer Heather Bresch, ceo of mylan, was watching her stock go down, and it was selling the pe is like lowest and people dont like generics. Suddenly, she does this deal and people say, you know what, pfizer doesnt think theyre idiots pfizers willing to partner with Heather Bresch. So, mylan comes out, gets more bang for their buck on this one . Yeah, and they got the up look, theyre the margins are not great, one, generics but i think that Heather Bresch is able to say, you know what, you think im awful . Pfizer partnered with us so cover your short. Thats true youve got that. Got to hand it to her. And sanofi beating and raising their guide, one of a string of raises. I think lillys going to do that i think mercks going to do that i think this is a week where youre going to love pharma, except for the fact that if you think Elizabeth Warren is going to win because in her new her position paper that she released, shes basically calling for Drug Companies to make no money. This is true. Because if you get a drug, a cancer drug say from italy, thats what theyre going to sell them for here from bristolmyers, forget it theres no profit. Theres just no profit, you know but Elizabeth Warren is calling for its very different in terms of if she becomes president. I think shes calling for a downturn of 20 . In the market yeah. It sounds about right, yes. Well, thats what shes going to give you. But if you dont lets say youre a worker and you dont earn any stock, what do you care but i read that position paper last night in preparation of being on halftime, and i read it and said, all right, okay, she doesnt want anybody to really make a lot of money, but thats what she wants. Right. Shes even talked around china and the president yeah, well, well get a debate this week there are some pieces out this morning on how the dems are sort of punting on china tariff, like dont have any better answers. They dont. Its really interesting because its a very workerfriendly dont forget that nancy pelosi didnt say anything bad about the tariffs. Yeah. By the way, Kamala Harris comes out basically with a plan that is not singlepayer you know, Elizabeth Warren i was in italy recently shes got an italian plan for our country, you know . Italy. Italian. Italian plan raised a fair amount of money. Shes going to win in iowa. I think shes shes a shes just a wow one, you know a spark plug but i do enjoy her because she tests capitalism, tests the basics ken langones probably not going to give her any money would be my guess. My guess, too none from ken. But there were two guys, they think she has it won engels would say shes coming, but shes not there yet. Shes a work in progress. When we come back, the lion king extending disneys Box Office Dominance well tell you about some truly staggering numbers coming out of the Domestic Box Office today. Take another look at the premarket coming off the record highs of friday. Have a big week ahead. Back in a minute your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. Julys not even over and disneys broken the annual box office record, almost 7. 7 billion in global revenue, including over 5 billion overseas, the first time any Hollywood Studio has passed that threshold internationally in a single year. The new version of the lie gron king is on the verge of passing 1 billion this week disney now has the five biggest movies of the year, avengers, marvel, captain marvel, toy story 4, lion king and alladin. Their combined share of the box office is 41 . Universal has 14 . If you look at the piece about moffettnathanson about cord cutting today, you would say i have to sell disney. Then you look at those numbers and as you say, john carter, all is forgiven. Youve got an annuity stream of movies so, what you have is weekends. If you look at weekends as your eps, like, how many lets say you miss a weekend, your stock goes down. They are doing when they come out, when their movies come out, they win the weekend, and so, therefore, i genuinely believe that iger has accomplished what i know he wanted to do five years ago, which is own almost every weekend they put out own every weekend they put out a movie. Therefore, you can finally put an earnings stream to it and a multiple so its not just disney plus how did the stock get to 145 . Some of it is disney plus, but some is a recognition, okay, they have a movie this weekend, theyll win and the big profits are there. Can you imagine if china would still china limits the number of movies now. Theyre a bunch of communists over there they do love their hollywood movies, though. Yes. They do. They do and i think they love Disney Disney works i mean, iger everyone was so focused on cordcutting espn i dont even care anymore really, its not youre saying the disney plus strategys not material to the overall stock picture. No, i think the disney plus, espn plus, and the movies make it so that you think about, i dont worry about espn proper anymore, which is really amazing because all we ever used to listen to is, when they dropped the bomb on espn, like they would go on, were great, were great, oh, but espn lost subs, but dont worry about it now the Conference Calls should be if i have to orchestrate his Conference Calls, which im perfectly willing to do its about how movies are no longer at episodiepisodic when you put a movie out, you can put a multiple on it because were going to do x, and above x, you can raise numbers so, iger did it. By the way, mini died, the voice of minnie. A saw that. I think we all know the voice of minnie. Then theyve got parks. I dont know if you noticed, for our parent, parks are coming up on a third of operating cash flow i assume the pictures not that different over at disney. No. Look, its a juggernaut. It doesnt whats incredible is no one believed it was at 105, 110, 105, 110 and that got it going. I tell anybody, at the april analyst meeting, you stay tuned. Stay tuned nobody believed it then he has the meeting and suddenly people go, igers a genius he was a genius at 105, 110. He didnt become more of a genius he was a genius, but he wouldnt get any credit until he laid things out and now hes doing even better than expected. I wish we would start wearing that under that shirt, i know he feels that same way. The striped shirt, thats not the iger we all know iger doesnt even wear a tie what im so aggrieved about i told him about it i said, look, ill speak to him about the shirt, but i have no juice i have no juice. Theyve got to change the shirt. Well watch disney today. What a story its been. What a story. Coming out of the weekend well get the mad dash and countdown to the opening bell. One more look at futures as we brace for a slew of news over the next five sessions dont go anywhere. As your life grows, so do your needs. And with bank of america and merrill, the benefits you get can grow, too. As a preferred rewards member, you can enjoy Priority Service and exclusive discounts. So your growing life can be more rewarding, too. What would you like the power to do . What would you like the power to do . indistthat was awful. Tering why are you so good at this . Had a coach in high school. Really helped me up my game. I had a coach. Math. Ooh. So, why dont traders have coaches . Who says they dont . Coach mcadoo you know, at td ameritrade, we offer free access to coaches and a full education curriculum just to help you improve your skills. Boom mad skills. Education to take your trading to the next level. Only with td ameritrade. Seven minutes to the bell. Lets get cramers mad dash, watching pay pal today. This is one of the great fintech stories of the era guggenheim takes it to a sell. On the call last week, i have to admit, paypal was a little ill use a term i typically dont with dan shulman it seemed like they were a little cavalier because they lowered 2019 guidance. I am a huge believer and i think this is another one were talking about. I picked this apropos of what youre saying, which is, isnt it discipline, given the fact that they lowered numbers, that you say sell the stock i think the stock has room to go down but in the end, if you look at what facebook wants to do with libra, well, what you really want to do is you want to buy square or paypal and say, look, these already have an established way to be able to move dollars around the world. Wed like to add another currency so, before you sell paypal, remember, this is a franchise that cannot be duplicated. They have problems with this just talk about venmo not making a lot of money they talk about brexit they talk about how this is the ebay separation of paypal. I talk about dan shulman being a genius, raney being a fantastic cfo and a franchise thats unassailable so, go sell it what do you do, buy it back at 108 you mentioned libra visa didnt give us much on that who knows if square will when they print this week. I know that theyre partners. I would hope that facebook has one of these companies say, you know what, this is something that were looking at. But right now, theres the i would say the reception was tepid . I liked it what do i know when i was at goldman sachs, people would have killed for me to make that kind of basket, craft that basket. Here theyre offering that basket to everyone in the world, but its no good its no good if square did it impossible i dont know. Its an impossible burner were going to talk about beyond meat as well, which reports tonight. Well get the opening bell in about five minutes ngowadot ay. We all feel, we all love, we all cry. Its part of being human. Sonoma county declared a homeless emergency in 2018. You have to know the individuals youre serving to understand their needs. Working with ibm watson we can bring together data spread across dozens of departments. That gives us a fuller view of the people we serve. Dear tech, dear tech, we need to look after everyone in our community. And we want to help our fellow human beings. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in two minutes, as we said, really four big things this week the fed meeting, u. S. china trade talks abo will resume in shanghai, a jobs number and earnings. And now the president , jim uhoh. Whos been talking about the fed all morning long said the fed raised way too early and way too much their quantitative tightening was another big mistake. While our countrys doing very well, the potential Wealth Creation that was missed, especially when measured against our debt, is staggering. We are competing with other countries that know how to play the game against the u. S thats actually why the eu was formed and for china, until now, the u. S. Has been easy pickins the fed has made all the wrong moves. A small rate cut is not enough, but we will win anyway. Well, look, i think there are a lot of people who are involved with, say, ill give you something electric power, a large distribution power company. There was a deceleration in electronic use think about that what a great gauge thousand to h thats how i used to gauge china before they hit those numbers. There was in a huge swath of america less electric used, and it wasnt from conservation. So, i think there is a genuine case to be made that things have decelerated at the consumer level, even though we know spending i think we have to divorce spending at walmart and target from how things are really going, and instead looking at illinois tool works, who said autos are down look at 3m autos with down big. You have these businesses that are terrible terrible so, i think President Trump can make a pretty good case. Cover of the ft today is all about china autos, where ford was down 27 in the first half you saw industrial profits there down 3 . Wow i mean, ford would have been a buy if it hadnt been for china. I feel bad about ford because ford had really kind of protected itself no no one can protect itself from china. China is the weak link with so Many Companies so, i think the president can make a pretty good case. But lets remember that the slowdown is not just because were long Interest Rates versus the rest of the world. Its because tariffs. Which is something you want powell to say. If im powell, thats the cover. That way, you can stick it to the president subtly, but the president s come after him in a way thats just not fair the quantitative, yeah, they have a huge amount so they sold some bonds look, if i were the president , id be recommending a 1 trillion 30year make america great. Thats a great idea. The journal reminds us that after the first increase in 16, thencandidate trump said we were in a big, fat bubble. Right well that was then. That was then and this is now. I mean, geez. I mean, hold something he said three years ago against him . What are you, like urging for consistency . Whats that about . At the big board, tidewater celebrating its merger to form the largest operator morningstar at the nasdaq, independent research and pitchbook, data provider to private and public equity markets. All right, jim, so, whats important to watch at the open, at least i think beyond meat, because beyond meat represents this eras its this years tesla, okay tesla being now Morgan Stanley again cutting numbers. What is their thing . Like, its i dont understand what theyre saying in terms of cutting numbers and, therefore, still kind of liking tesla if we get a number if we get beyond meat doesnt blow away the numbers, i mean, its a 13 billion company. I happen to personally like ethan brown very much, the ceo and i have had dinner with ethan brown, using beyond meat and the meat tastes like short rib, caramelized, incredible. The burgers are amazing. He has a case to be told and so, lets understand that this is a big food company that is not just millennial, its pretty much everybody. If you cook it right, its real good now, maybe youneed a professional chef to come to your house i joked about that with ethan, but i had it last monday with ethan, and i was proven to be too much of a skeptic. You can make a lot of different kinds of dishes. Do you know that i had beyond meat lasagna and it was killer thrks pa this is part of your meal . Yeah, i wanted to put that on the longshoreman recipe. My wife is a little bit more skeptical, but i thought the beyond meat lasagna was killer killer thats all good, but i lot of people need experiences like yours to have sales grow into this multiple. Thats a good point and i know theres a lot of short sellers. Half the float is short. But i think that ethan brown is on almost its a pseudo religious cause. Remember, its a delivery. Ive got to give you his line. Right now, we have this weird Delivery System for protein. Theres grains theyre eaten by cows which then let go a lot of methane gas, and they chew it up, they add fat and you have it. So, how about cutting out cows and going right to the grain its a Delivery System its Vandelay Industries bypassing the middle man. Or the middle cow. Yes, bypassing the middle cow. By the way, millennials, theyre on to cows they know they release a lot of methane. They dont like cows i mean, the millennials, they like certain they like cruises. They dont like cows i mean, i felt bad about i mean, chickfila. Lets get them in there. So, i do think that ethans going to tell a compelling story, no matter what, and people will be surprised they should let them be open to lockup, but he has got more things in the pipeline he is going to have beyond meat steak. Thats going to love athletes love it hes got a bunch of athletes who own stock in it who are going to be great proselytizers while i think the stock has obviously gone up too much, ethan brown may be oh, boy, i am going to say it the elon musk of meat the elon musk, without those weird tweets ethan brown is elon musk i love that ive got to use it now, of course, ethan elon would hate that, but he doesnt tweet anymore, so he can be a free fire zone. Yeah. Well, thats an analog thats going to live the ethan brown yes. When you look at what hes done with proteinbased foods, elon musk. Elon musk. Like going up against some other big, entrenched interests. They dont have the religious zeal and impossible burger . Gmo. Yep. You tell me that a millennial, if they find out theres gmo if its gmo, you know what it is . Its plastic its water its groundwater, just boil it and even more than 3m. So, i do think, oh, 3m, that was not an interesting quarter, but i do think that people are going to be surprised when they hear what ethan those say. It is tyson, no, forget it you know what it reminds me of did you know mcdonalds used to own chipotle yes. Well, here we go. This is chipotle it could well be. By the way, chipotle one of the big gainers today as goldman adds it to their conviction list incredible. Ncd got the target upped at evercore to 235. I thought that Conference Call, personally, i loved the Conference Call. It was a tech Conference Call. Easterbrooks so cool. Starting to bother me, hes so cool. Evercores point is the most expensive and difficult parts of the u. S. Turnaround are pretty much done. Thats very true. Hes done this and youve got the refranchising. What i loved about it is he likes to go in australia, theyre ordering by kiosk, almost 50 theyve got the partnership, the Delivery Partnership theyve got it hasnt even kicked in yet how great u. S. Can be simple menu. He did, some people were saying, the franchisees didnt like the last change. Give me a break. Easterbrook is making its a tech vehicle hes very smart. You know the other thing goldman mentioned today, which you know, the names get knocked because of labor pressure. Right. Costs. Wendys but goldmans point today is that its lowend wage growth thats feeding comps, because a lot of people who make wages at the low end are highfrequency customers, and thats a big reason some of these comps are beating. Well, thats why walmart is doing so well. That, too, yeah. Dollar tree, Dollar General i like the comps call so much because easterbrook orchestrated a terrific worldwide call. He throws out one of my favorite moments was he just says, i was in italy they love mcdonalds in italy. Now, italy, having owned a place there, theyre uniquely involved with food. They think foods very important. Chef nassimo, chefs table how many of the chefs tables are so great dario was another one, dario with meat. Uhuh. Easterbrook says what they really like in italy, big mac, fries, diet coke were going to talk to kate rogers more about what restaurants are seeing this week jim, last week, the biggest outperformance of the s p over the dow in five years, as i mean, people are pointing obviously to boeing as one example. Yeah. I mean, boeing i get up this morning and theres some engineer from 30 years who says that boeing i dont even want to repeat his charges. Theyre so bad but they you know, boeing is stuck in the mud a lot of the companies that are being hurt by tariffs are in the dow and not the s p. The s ps got a lot of Domestic Companies in it. But the dow is those are Great International companies and thats not what we want right now. What do we want what do we want right now . Are we back to looking for if thats true, then why the russell . Why cant the russell get unstuck . You know, i dont know. Thats a good question i think that may represent the American Electric power energy, or Paychex Paychex would tell you theres not a lot of business formation because h higher wages, because of the minimum wage in a lot of places but people s p has a lot of tech, and the dow doesnt. I mean, i thought that the alphabet call, not talked about enough the alphabet call was about the cloud. Cloud services, management there. The new guy is unbelievable. That was a great call. It was almost like ruth porat said, i hear you you dont want us to trash our stock anymore. He actually mentioned you on friday morning did you because of your complaints about googles opacity in recent quarters. Ruth porat clearly listened maybe she talked to anthony, her fabulous husband, and came back and said maybe cramers right. No, that would be so maniacal, its scary thank god my wife doesnt know what channel im on. I thought alphabet told a great story. And they really were granular about where the moneys being made and youtube. Thats the largest tv station in the world. Finally they mentioned it. Finally that stocks not done going higher its going to be a technical breakout soon. We had the reacceleration in google, the reacceleration in facebook today the journal comes out and says that the overlay of mutual fund and Hedge Fund Ownership of the top 50 names, you see this piece yes, yes. They all own the same stocks. They do im with stephanie link today on halftime. She loves talking about theyre all closet indexers. And yet, we may them a fortune then when you layer on the 401 k fees, ive been working on a piece about 401 k wow it is such a bad its bad they charge you for the 401 k they get you on the fees for the mutual fund. No wonder you underperform the index. If im in a 401 k , which is just the index, because they cant beat it after all the fees. Yeah. I mean, the fees are ridiculous i want to have an i. R. A. With no fees, but i look at whats going on, and i say to myself, are they overweighted banks . No, theyre underweighted banks, so now the banks are moving because theyve got to buy the banks. They didnt like the banks. Absolutely. The only thing theyve been right on is oil because fossil fuels, millennials fossil fuels. Right, right. Finally, jim, before we get to bob, on china trade. We talked to kudlow friday a couple amazing things. One is he says dont expect a grand bargain out of china. Nope. And the other is the revelation of this meeting they had at the white house about ways to weaken the dollar, which apparently navarro, if you believe politico, got slammed by the president. But the fact that i dont believe it, by the way. What does this mean i think navarros being in a unique position as being what the president really likes navarros not going to go down the elevator mnuchins going down the elevator. Youre not making youre saying if one were to go down an elevator, it would be ma nunumn . Do they have elevators in the white house because the president loves the prentice setup. I think mnuchin needs to watch his back navarro has the case that the rer rest of the world is hurting us, especially china but he doesnt want more trade he is goldfinger he doesnt want bond to talk. He expects it to die . He expects it to die they hate china. So your expectations of talks this week . No, just push. Id rather bet on i think that they as long as they keep talking, the president gets the average to go higher and he wants the dow higher than the s p. The president s not focused on the s p. Hes probably hurt by the dow. Im not kidding you know he never talks about the s p . I can think of maybe one time, maybe. Hes deeply committed to the dow. I think china can go on forever. They can go on forever its fine. By the way, im told the white house does have elevators, so, we got that. They do oh, my mnuchins going down navarro will be there. Navarros not getting in a cab. Todays the day where the dow is up and the s ps lower. Lets get to bob pisani. Good morning, bob. Good morning, guys. Europe mostly up asia mostly down lets just call this a flattish open you see that split over that carl was referencing lets take a look. You can see why, because not a lot of clear directions. Market leaders been semiconductors recently, flattish health care flattish here. Consumer staples here, a tenth of a point is fairly flattish open in materials here not a lot of divergence between the highs and lows today broad rally, though, overall remember, were ending the month here with the s p up what, 2. 7 , 2. 8 , equalweighted index is up almost as much if you take a look here, technologys been the key leadership group, but we also have strength in Consumer Staples stocks that are up 4 , besides tech banks are also up 4 this is the leadership kind of an odd trio of sectors to have leadership industrials also up. Health cares lagging. Energys also lagging, down about 1. 5 but overall, this is a fairly broad rally. I think the important thing is whats moving the markets, the three factors that were moving the markets last month are essentially whats moving it today the dovish Central Banks and the belief that the feds going to continue to cut rates, even if its only a quarter basis point. There will be more indications that there will there will be indications more are coming. Secondhalf earnings are not collapsing they are still coming down a little bit, but flattish is still the key word here. Theres no wholesale two months ago, there was bears out saying were going to have a wholesale decline in estimates for the second half of the year. That has not happened so far and no blowup in china trade notice i said theres no blowup . Its no longer you dont need to say were going to have an imminent trade deal. The markets seemed perfectly happy with just ongoing negotiations now so, you dont have to have an imminent victory just keep talking and nothing is blowing up seems to be sufficient for the market this is sort of a change in the attitude over a couple months ago. I think you should note that in terms of the china trade, too. Overall for the market, its amazing how little is oversold keep saying, well, 17. 5 forward earnings, but not a lot is ridiculously oversold right now. The s p is at a historic high, but the advancedecline line, which is the most important thing i watch, is still at new highs. Thats an indication the market is healthy right now volatility, im not seeing big selling pressure out there from anything right now thats another key to how the markets doing whats missing were not getting a lot of new highs. Id like to see a few more id like to see a lot more breakouts, a few hundred here at the nyse thats not happening, but thats quibbling. Tomorrow, if you look, is there any frothiness out there a little the semis are a little frothy, micron up 20 , kla tencor and the Semiconductor Capital equipment names all up strongly, but dramatically oversold . No, not yet. Anything really doing well how about the ipo market i know its been exciting the last couple weeks, but the ipo etf we watched, historic high again today. Look at that move up, 44 or so on the year for the historic high the important thing here is were hitting breakouts in a lot of these names for example, uber over 45 once again today over its initial price. Guys, back to you. Thanks, bob pisani. Lets get to the bond pits as well rick santellis back at the cme group. Good morning, rick. Good morning, carl. You know, if i look at the yields, theyre all a couple of basis points lower, but the twoyear in particular over the last couple of days you know, on friday were close to 1. 90, here we are at 1. 84, down a couple, so we keep coming back trying to stay in the low 1. 80s range. As a matter of fact, since the last fed meeting, a tenyear note yield is pretty much at the same spot as it was on the 18th june one week of the dollar index continues to look like a ski slope going up, not down, the left side. But fascinating there is, is that with all of the volatility mario draghi brought into the markets early thursday morning, it indeed affected the currency markets, but it certainly didnt alter trends as a matter of fact, with regard to the euro versus the dollar, hovering now at the lowest levels on a closing basis since may of 2017. And guess what, the dollar is hovering very close, about a fifth of a cent away from the best levels since may of 2017 as well, and thats predominantly because a majority of the dollar index is, you guessed it, vat valuation of the Euro Currency finally, when we think about china today, because of the delegation thats enacting reenacting these talks, energizing them again, potentially we see that the dollar versus the chinese currency has started to move up. As a matter of fact, its at a monthtodate high it would be the highest level since the 19th of june, should it close at current levels carl and jim, back to you. All right, rick thank you. Rick santelli. Three major Restaurant Brands just had very Strong Quarterly results, but they have more in common than just robust sales. They also have fairly new ceos injecting life into the brands our kate rogers at hq watching some of that today hey, kate. Hey, carl thats right with their own styles, all three ceos are successfully transforming these businesses. So, first off, at krnsionz donldz, Steve Easterbrook has been at the helm of mcdonalds four years, taking the brand through a dramatic turnaround. During his run, the stock has gained 118 . He first added allday breakfast, updated restaurants with kiosks and table service, launched a Delivery Program now with uber eats and doordash, set to bring in about 4 billion globally, and made major tech acquisitions to enhance the Guest Experience now, over at starbucks, Kevin Johnson has been focusing on driving sales in two key markets, the u. S. And china. Since johnson took over in april of 2017, that stock is up nearly 70 . This thanks to beverage innovation, growing the business with the Nestle Global Coffee Alliance and expanding digital with more than 17 million loyalty members now. But the biggest gains here, theyve come from the newest ceo in the bunch, brian nicol, who took over at chipotle in march of last year under his tenure, that stock has rallied more than 140 niccol came in after a string of food safety issues at the company. Hes added a loyalty program, nationwide delivery, driven the business dramatically, up over 100 the past two yaurz and sped up service in restaurants with second make lines for digital orders all three stocks are also seeing big gains this year. Chipotle in particular is up 86 so far year to date, guys. Back to you. Very good stuff, kate. Yeah. If kates with us kate, ive got to tell you, when i listen to what you said, i totally agree that niccols done a great job, but you have to believe, starbucks, 120 billion company. 1 comps last year versus 6 , 7 7 , yep. Lets call it 7 . Kate, cant you make a case that in the end, Kevin Johnson took his Technology Background from juniper, grafted on great coffee and personalization. Hasnt that been an amazing move by a large cap certainly, jim. And if you take a look at what they just did with brightloom last week, it seems like theyre just Getting Started because theyre going to Start Licensing that mobile order and pay to some of the licensed locations around the globe, so that programs only going to get larger and larger from here. Youre so right adam brotman, who used to do technology for starbucks, has moved over and hes running that brightloom i would put my money on brotman any day of the week. That is going to end up being, believe it or not, i think an ipo that were all going to want can you imagine . Amazing kate, thank you for that thank you. By the way, Kevin Johnson joined us on friday. Yeah, it was fabulous. Out of the quarter. We talked about the companys growth in scale. Take a quick listen. Growth at scale for us is all about focusing on the most important things and then executing with discipline. And thats whats driven our results. Certainly, q3 was a very Strong Quarter for us, but growth at scale is more about driving predictable, Sustainable Growth for the long term. And so, much of the work that weve done over this last year has not only delivered results, but its laid a foundation, i think, for Sustainable Growth against our growth model wow, see, thats one of the reasons why i wouldnt want to downgrade it i love the discipline of a guy who downgrades, but then i listen to that and i think its replicable i think theres much more that Kevin Johnson can do i think people are rediscovering starbucks. Thats important and remember, last year at this time, it was the that was when the really, he is saying, listen, we can do crafte 2 of that 7 comp was digital kevin did an amazing job, and i think people have to recognize it aint done. Yeah. People are figuring out there is a lot of innovation in what we thought was a tired space. Not true. Not at all. When we come back a closer look at beyond meat ahead of the results after the bell tonight we talk with stu leonard jr. Who runs the grocery chain, always tons of interesting insight. Dont go anywhere. Thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Quadrupled their money by 2012 . And even now many experts predict the next gold rush is just beginning. So dont wait another day. Physical coins are easy to buy and sell and one of the best ways to protect your life savings from the next financial meltdown. [narrator] today, the u. S. Money reserve announces the Immediate Release of u. S. 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Im gonna smash him heresright in the face. Kill thirteen guys in three seconds. Im gonna drop kick him. Him, and him. Thats face smash guy. Thats drop kick guy. Such a diva. Heres how its gyoure my sidekick. Aint nobodys sidekick. Hey boys. The fate of the world is in your hands and you cant even get along. Pretty disappointed right now. You want a sidekick . Im gonna find you one. See that guy over there . Hes too big. Look at you two. Bickering like a couple of old ladies. Woo jim, whats on mad tonight tremendous value in gold stocks sean boyd is a great spokesperson for the industry. You have to tune in. Gold bugs, pay attention. You always said i love gold. You do like to have some. I do. See you tonight mad money 6 00 p. M ait rae come back a dire warning agnsa te cut the next hour of squawk on the street. Dont go anywhere. Good monday morning. Im Carl Quintanilla with sara eisen at post 9 of the New York Stock Exchange david faber has the morning off. Watching the fed, the jobs number on friday a ton of earnings. Obviously, u. S. china trade. The four big dynamics as we start a busy week. Our roadmap, President Trump blasting the fed again saying, a small rate cut is not enough ahead of the Central Banks big decision this week. The Worlds Largest company, pfizer, combining its patent business with myelin what that means. And after the bell, up more than 800 since the ipo. What to expect. A big week for investors a few key themes the busiest week of earnings season with beyond meat today, apple tomorrow u. S. china trade negotiations are restarting the treasury secretary is in shanghai for those talks the fed Rate Decision is wednesday. And the july jobs report capping off this dataheavy week on friday weighing in, the ceo of cowan, jeff solomon here at post 9. Certainly huge in terms of event risk how are you feeling about the current market backdrop hitting record highs going into these risky events i think a lot is anticipated. If you look at whats happening with the fed, thats probably the dominant discussion this week for investors i think the quarter point rate cut is probably the most telegraphed rate cut in history. I would say people will key off of that, and indication the fed is going to be accommodative for the foreseeable future. Key off of the message that powell brings after he cuts rates about whether the market can keep going higher . He teed it up as something, we are going to try to to do everything to extend the recovery or extend the expansion, if you will thats an interesting choice of words because we really have never heard that from a fed chair before its usually about inflation and this dual purpose of the fed mandate. We are talking about extending or doing something to inoculate the economy from a potential downturn thats an interesting concept and i think thats new and the market has digested that. Doesnt he deserve to get challenged on the rebound in jobs, retail sales, durables, the things that came back from the q1 sort of shortterm slowdown slowdown i think he does he is also seeing things, particularly if you saw the gdp numbers in the First Quarter, thats not a blistering growth rate he has gone into the specifics of like Public Policy. He is saying we are trying to reach people at the edge of the economy. Repeatedly. Thats an interesting concept. Its a very populist point of view from a fed chairman we never really heard that before so its interesting to say Monetary Policy now has moved into the realm of really Public Policy and is that a result of the president going after him or after the fed, or is that just the way he thinks . I dont know. Well, i mean, i guess its different. But if part of your mandate is maximum employment, thats part of his point, right . Let the economy run as hot as it can. He is not really seeing inflation. We could debate about whether or not there is inflation in the economy. There are in certain sectors of the economy. Overall, things are probably in check. I would say we look at unemployment as the key headline figure you need to look at underemployment, look at lack of wage growth. There is a bunch of other things in here which would suggest that our traditional measure of unemployment isnt an accurate representation of the health of the economy or jobs market. I am not clear on, its widely telegraphed, its in the market, what the market does next is it by the rumor, one and done, we see how it goes, or this idea that powell is reinforcing his put and he will be there no matter what if things take a turn for the worse . Which one . Its hard to say. Our current point of view is that things are going to rally up and through the election or shortly before the election just as the fed is just going to be as accommodative as it can be. Looking at global rates, the fed is in positive territory there are a number of countries that are already in negative rate territory so you have got this strong dollar that acts as a counter balance in terms of growth so the fed has quite a ways to go relative to the rest of the Central Banks. Then when you look at what the other Central Banks have done in terms of intervention on balance, the fed has a long way to go to maintain the expansion. I just think that the market understands that whether they choose to use it or not that says itthe president sa not fair thats a political comment. The journal has a nice quote. In 2016 today, there will be a limit to how far u. S. Rates can diverge from global rates without triggering volatility in a much stronger dollar that earns exports. We cant be although yellen said the u. S. Isnt an island, right . We also have the tariff specter. So we have this countervailing almost on global trade it ties into what is happening with china, for sure we will get a better sense as to tariffs. The fed can be incredibly accommodative to essentially deal with the fact that you have got some global headwinds as a result of the tariff situation. What are the expectations right now for the trade talks . Kicking off in shanghai. Feels like expectations have been kind of lowered by the president and by wall street. Yeah, i think we had this whole discussion in may around this built up of expectations. I think when that happens the market says, you have to show me the market does that every time it has expectations that are not met. It takes a breather and says, okay, show me. So i think people will be looking for something tangible this week. I think its a low bar i dont know that we are going to get a lot of movement i dont think the markets necessarily if we got something, i think all of a sudden we have been talking about this, tail risk to the upside you could see a melt up or massive summer ramallly in the c of fed easing and surprise accommodation on china trade i dont think the market understands is expecting that. How serious do you think the president was friday when he suggested what many believe, that they are going to wait out the election cycle the chinese, that is. I think thats our base case. Why wouldnt they . First of all, the peoples republic is having meetings in october. There is really nothing for them to do ahead of that. Then we get into the u. S. Election cycle like why would they really, you know, why would they really go hard at trying to get a solution if in 18 months they could be looking at a whole different regime it makes sense to wait it out. Why wouldnt they . Thats our base case assumption, that they will deal with whatever they have to deal with. The president will be on the road for most of the year next year, you know, on his Reelection Campaign it will be by the way, it serves his constituents to be tough. If he has a deal, like he cant be beating up on china beating up on china is great political fodder why would there be a deal . I think thats what the markets is expecting again, i will say this hard to talk on the rationality spectrum when you think you have it figured out, certainly with this administration, something that happens surprise tweet. I never thought about that. Jeff, how does this filter around your business you guys were out with earnings. Looks like a Strong Quarter, especially in Investment Banking and markets. Talk a little bit about what you are seeing in terms of client activity and whats driving it. Yeah, i think so we saw this quarter was really filled with a lot of folks clearing out the backlog as a result of the government shutdown. So a lot of people hit the window in april that might have otherwise gone in the First Quarter in terms of public offerings. We had a slow down in may. In june we got a little bit of a window it shows there is a tremendous amount of capital to put to work active managers need to put capital to work. The greatest way to outperform the markets is to participate in new issues that works. When you bring highquality companies, they are lined up to do it. That is a good indicator of the health of the equity market. That was a big part whatever drove our quarter in the second quarter. Relating to markets, this shake out in the equity markets, and its been happening for a while, either you are excellent at research and trading individually or youre not, and i think the active managers are looking at their global wallets and saying we are going to shrink back to only do things for people, you know, only pay people that are actually helping us to move the needle. We have been saying this for a long time. Finally, m a, how does the pipeline look . Really good i mean, we do a lot of middle market, low middle market m a at cowan. The backlog has grown substantially for us the First Six Months of the year its the biggest its been for us in a long time, if thats an indication of anything so i feel like we have a really good run into the end of the year assuming we dont have any meaningful market disruptions. Jeff cowan, thanks for checking in. Good to see you. Jeff solomon i get that a lot. Its fine. Tim apple we are all in that mode. Its okay. He said thank you you didnt correct me. We have some pharma news with pfizer combining with myelin who else do we turn to but meg. This is going to create a brand new drug company in the United States. Pfizer is essentially spinning out a unit it called upjohn which contains the best known drug brands that lost patent protection and combining with myelin it will create a Sizable Company yet to be named with sales of 20 billion next year. It marks the closing of a chapter for heather bresh. She is perhaps best known for defending the companys price increases on the epipen, an episode that contributed to the major decline the last few years. The management shuffle in the new company is likely to be seen as a positive as he said my alaskans executive team is one of the most out of favor in health care. Mylan chairman robert cory will be executive chairman of the new company. Michael getler will be ceo the president will stay with the new company as president the stock is rallying on the news its not up quite as much as earlier this morning gu pfizers stock is down the upjohn business was very profitable for pfizer. They reported revenue this morning that missed analysts assessments and lower the outlook forecast they are focused on branded and pricier medicines and vaccines carl, back to you. Fascinating look at business we dont talk about a lo whole lot. Thank you. When we come back, why our next guest says cutting Interest Rates could set the stage for a collapse in the financial markets. The Top Performing names on the s p. Mylan with chipolte, which is added to goldmans conviction buy list squawk on the street is back in a minute. Dev de four shocks will kill a man. Yeah, i think we can take five. You had to open your big mouth. Heres what im gonna do. Im gonna smash him right in the face. Kill all thirteen guys in three seconds. Im gonna drop kick him. Him, and him. No, no, no thats my guy. Thats my guy. Look at you the fate of the world is in your hands and you cant even get along. Your momma. [ screaming ] President Trump lashing out again against the fed ahead of the big decision this week Steve Liesman joins us for more. Good morning. Good morning. With the fed on the verge of giving the president the rate cut he has campaigned for for months now, the president tweeting in the past hour that is not enough. The president saying the fed has made all the wrong moves, a small rate cut is not enough but we will win anyway the president says the fed raised way too early and repeated that other countries are taking advantage of the United States with their monetary policies. All this underscoring the coming expected rate cut by the fed occurs in one of the most unique contexts in a very long time comes with a president calling for the cut daily, raising questions about whether the fed is being political, even seen as being political by cutting rates. It comes with the data showing a global slowdown but unclear how much the u. S. Is leaking and comes with polarized fed watchers a sagging Global Economy dragged down by a trade war and a domestic Manufacturing Sector on the edge of contraction are sufficient risks to warrant a 25 basis point reduction in the funds raise. Then r dq, since the june fomc meeting an easing in trade hoss till tease after the g20 meeting. A new record high on stock prices and stronger than expected payrolls and core cpi prices in june fed officials have done little to discourage Market Expectations of a rate cut then the jobs number coming on wednesday. Its adp, estimated to be 145. Nonfarm payroll north of 200 to 166, still pretty strong unemployment rates seem declining to a new 3. 6 record low. How big, the futures market trades just at 18 chance of a 50 82 chance of a 25 hold on. We have Morgan Stanley calling for 50 basis point cut jpmorgan sees it at 25, sara. I guess the decision is whether to go shock and awe. They see weakening coming down the pipeline steve, where do you stand on what the ultimate impact is of the president just hammering at the fed and saying they are not fair and mismanaging the economy and saying the growth would be stronger yes, we have seen president s criticize Federal Reserve chairmen in the past this is obviously a lot louder and more consistent. Do you think it has any impact i think it does i think its impossible to think the Federal Reserve exists in a vacuum i think it was possible to ignore one or two. I think there is a real danger, sara, that the Federal Reserve becomes in this major sort of political whipping post out there where the president could be remember, sara, on friday the president lost his 3 , right . They revised down 2018 from that three number that he was so proud of and was a big part of his campaign down to 2. 5 so he needs somebody to blame for this you could imagine now by the way, analysts are writing about this the president goes to rallies and starts railing against the Federal Reserve. In this context, its not hard to think about a fed that is acting at least somewhat in part to mollify the political will out there. Or the opposite and assert their independence i agree. It complicates it a lot. Its very complicated i dont disagree with your argument either. I just think that right now the path of least resistance is for the fed to cut rates here. Steve, thank you. Pleasure. Big week. Meantime, former fed chair yellen speaking over the weekend at an Aspen Economic Strategy Group meeting and does support a rate cut take a listen. Although the u. S. Is doing well, i would be focused on wanting to keep it doing well, to keep the expansion on track, and i think in light of the risks i would be inclined to cu a bit. I wouldnt see this as the beginning, unless things change, of a major easing cycle. Our next guest from Morgan Stanley is warning against any potential rate cuts in a New York Times oped. He writes cutting Interest Rates now could set the stage for a collapse in the financial markets. Good to have you back. Welcome. Thanks for having me back. You say our economy is hooked on easy money and its a dangerous addiction. So give me the scenario in which you think a cut would lead symptom trouble. Well, you know, if you look at recent history, what we see is this. All the big u. S. Downturns or global downturns are caused because of excessive asset Price Inflation. Thats what happened in 2018 with housing 2008 with housing. Thats what happened with stocks in 2000. Before that, the japanese 1990 downturn, the east asia collapse of 1998. The fundamental problem is when you get excessive asset Price Inflation. And i think that the fed and all of us are far too focused on very sort of outdated concept of Consumer Price inflation my point is when you have excessive asset Price Inflation, that leads to downturns. And we are getting there we are not fully there yet if we keep stoking it, higher stock prices, more expensive asset price markets we will get there and that will sew the seeds for the next downturn. Two things. Corporate bond spreads, we are not near that trouble land the other is that you got inflation, which you do reference in your piece, and the tough lessons japan learned. Why isnt 25 basis point at least warranted . You know, i think you have to step back here a bit yes, if you look at the immediate data, its about the fact that the Global Economy is weakening and the trade tensions are rising but where is the real Interest Rate today the real Interest Rate in the u. S. Today is just half a percent. That is very low by historical standards. So i think that this is about sort of taking the longterm view rather than getting caught up in the immediate term so my point is that we need to incorporate asset prices as well its not as if all the asset prices are excessively valued. But when you have 13 trillion of negative yielding bonds across the world, when you have the fact that the stock market is trading at the most expensive valuation save for the 2000 bubble that we had back then, you have enough signs of asset price overheating and that should count for something within a Financial Stability framework rather than just the fact that Consumer Price inflation is missing by a few 20, 30 basis points of the target well, central bankers can keep this going or a lofor a lo. They dont appear to be backing off. This year marked a new round of easing from europe to places in asia, china, south korea now potentially here in the u. S. This week. So how does it all resolve itself i am not sure that it resolves itself until we change the framework, which is we keep get excessive asset prices and when rates do go higher we have a massive downturn led by asset price deflation. Exactly the outcome that we want to avoid and you had a trailer of that last year, if you remember when the fed tried to increase Interest Rates, we had a downturn in the stock market and it slowed the economy down so i think the more we get hooked to easy money, the more the trouble lies ahead when we finally have to tighten money or when asset prices are too expensive and start falling under their own weight thats the lesson we should learn from what happened the last 20, 30 years. A report out today. They look at the average length of time between the first cut and the next hike. The average is 571 days. The median is 180 days so im guessing if we do get a cut this week, i mean, whether you like it or not, we are going to be within an easing cycle or without a hike for a very long time. This kind of analysis is based on very few data points. We can look back at a few data points and look at this. We are already living in a very unusual period when things happen its not like as if history has to repeat itself in a perfect way. So my point is this, which is that if you look at the immediate term 25 basis points, yes, you know, like it makes sense because things are weakening, but we have to look at the fact that real rates are already very low in this country today and how much can we keep lowering Interest Rates without stoking more asset Price Inflation. My feeling is that sooner rather than later this will come back to haunt us. So thats what my sort of plea here is, to look at the longterm framework. So, i mean, you have insinuated that central bankers are blowing bubbles in stocks and bonds. Is there any place that you dont see that kind of asset Price Inflation or bubbles being formed where you would be right now . Well, i think this is very much concentrated in the u. S. Because the u. S. Economy has decent fundamentals. So this is where the capital is flowing. So the international markets, in fact, are not that stretched as to whats happening in the u. S europe, japan, emerging markets, the equity markets are trading at 50, 60year lows on a relative basis compared to the u. S. This is very much in the u. S. Where this overheating of asset markets is taking place. There are signs of that internationally in china you have a lot of data blowing up i think its really here in the u. S. Where this asset Price Inflation is a very serious issue. We might come back to this conversation one day appreciate it. Always good to see you. Thanks a lot. When we come back the ceo of ryanair blasting boeing over its 737 max delays , t lt repeat itbuwel play it for you next the ryanair ceo sounding off on boeing. Our phil lebeau joins us with the story. Good morning. Sara this has to do with ryanair during the Earnings Call this morning, early this morning. Ceo Michael Oleary was talking about the 737 max. Remember they are scheduled to get a number of them, many were supposed to be delivered this summer now they have been pushed into 2020 there is uncertainty about when the deliveries will take place here iswhat he had to say on the Conference Call about the 737 max deliveries happening next year. We are really expecting 58 aircraft for the summer of 2020. Thats now 30 at best. It may well move to 20 it could move to ten, and it could well move to zero if boeing dont get their [ bleep ] together pretty quickly with the regulators. This is why this is important. Here is the max plan from boeing at this point. Recertification flight and then a submission of the software fix to the faa approval sometime in the september timeframe. They are not giving an exact date shortly after that the idea is that the faa and regulators around the world will approve the fix, and then the max returns to service at least thats the hope of boeing in the Fourth Quarter but we should point out ryanairs ceo said, look, i was told over the weekend the Max Software Fix is going to regulators in october, not september. Thats why he has no confidence that this plane will be back in service in the Fourth Quarter. As you take a look at shares of boeing, now trading down 343, guys this is the crucial question everybody has. Will they be able to resume service, flights again with the 737 max in the Fourth Quarter as Dennis Muilenburg expressed last week as their plan at this point . Phil, your point about service is good. What about the production line we herd muilenburg comment last week gary kelly of southwest on friday told us, look, you have a limited number of places to park some of these new planes. Right they made it very clear. Dennis muilenburg made it clear if this timeline, the one we just showed you, if that slips much further, if its clear they are not going to be able to submit this in time to return to service by the end of the year, there is a strong chance that they may have to suspend production now, they didnt say they will officially do that if they have to push back the delivery timeframe, but thats one possibility they are looking at. That certainly would have a devastating impact on shares of boeing. All right phil, well watch it obviously, a huge drag on the dow last week. Time for our etf spotlight look at Consumer Discretionary ticker xly recovering nearly 31 from the Christmas Eve loads tech heavyweight amazon, all these antitrust concerns and the companys weaker than expected earnings last week, trading down 2 . Starbucks weighing down an jpmorgan cuts to neutral a large part of their thesis, sara, is about the comps not sure you can repeat a 7 u. S. Number once nitro is fully implemented. Thats not the message from Kevin Johnson, ceo from starbucks, when we talked to him after the earnings he didnt say dont expect this, guys he said we are in a new scale to growth mode and we are pretty confident with the results we are seeing and the Jurassic Park ti cup uptick in traffic they can keep it going. We will see. It has had a nice run. Yes. Over to sue herera for a cnbc update. Good morning, everyone. Heres whats happening at this hour four people are dead, including the gunman, 15 others wounded after the gunman opened fire at the gilroy garlic festival in california he has been identified as 19yearold santino lagan. Police say that they are now searching for another suspect. We have some witnesses reporting that there may have been a second suspect, but we dont know if that suspect was engaged in any shooting or whether they may have been in some sort of a support role for the person that we have accounted for. Iran releasing a video showing purported radio conversations between its navy force and a british warship escorting u. K. Flag tankers in the strait of hormuz earlier this month the revolutionary guard officer is heard telling the warship not to interfere or put their lives in danger as the pair military force seized the tanker. Hong kong police using rubber bullets and tear gas against protesters as another day of street matchrches stretc into the night blackclad protesters set off in different directions, clogging up major thoroughfares throughout the city. Thats the news update this hour back to you. Thank you very much. When we come back, beyond meat reports tonight after the bell take a look at this. Down almost 10 . Now its only up about 820 since the may ipo. We will talk about thealways chn neken grocery aiowr when we come back in a moment. Dont miss your golden opportunity to experience the luxury you desire on a full line of utility vehicles. At the lexus golden opportunity sales event. Lease the 2019 rx 350 for 389 a month, for 36 months, and well make your first months payment. Experience amazing. Or trips to mars. 4. 95. Delivery drones or the latest phones. 4. 95. No matter what you trade, at fidelity its just 4. 95 per online u. S. Equity trade. Welcome back to squawk on the street. Rick santelli live on the floor of the simi group. Bob, you know, if you are a vice chairman of kissinger associates, you probably know about Foreign Policy in china. You wrote u. S. Falling behind china on technology and innovation if we dont reset our priorities what should our priorities be, bob . Well, the chinese are investing a huge amount in support for their s. T. E. M. Graduate graduates. They are turning out a lot of s. T. E. M. Experts they are putting a lot of money into basic r d they are building a modern competitive infrastructure we are falling behind in all of those. The number of s. T. E. M. Graduates, our r d, particularly basic r d by the federal government, and the National Science foundation has gone down we are not Building Infrastructure its deteriorating we are so preoccupied with the negotiations with china. We should spend more time and attention identifying what we need to do at home to maintain our lead in international competition, particularly in modern technology. We are ahead now, but the chinese are catching up fast weve got to deal with the chinese i get all that. And its a wonderful oped we just separated 50 years since landing on the moon. So the space race, all the technology that came out of that and the Cottage Industries you brought it up in your article, the sbr state system under eisenhower i get it besides the delegation going to china right now, why ich is whyi wanted you on today, debt is growing really fast even in china, which is what you underscored doing good things. But if were paying for it all with other peoples money, doesnt that take away some of the good parts of it well, there are two things. One, how we use the money we borrow if were using it for competitive purposes to strengthen our competitiveness, thats good. The problem is a lot of it is not being used for that. And you put your finger on it. Over the longer term, if you are confident that rates are going to stay low and growth is going to continue to be relatively good for years and years and years, you dont have anything to worry about on the other hand, when you build up a lot of debt, if growth deteriorates and if Interest Rates rise somewhere down the future, then you really have to pay the piper. Then that debt comes home to haunt you unless its really used for productive purposes, which most is not at this point. So it feels very good now to have low Interest Rates. The problem is, if you borrow in china or the United States or elsewhere, and the economy weakens or rates go up, then that debt can be a problem and a drag on growth rather than a boost to growth. You know, since we are on the topic, and we are still shadowboxing with the notion of what could be agreed on as some kind of deal, grand or not, with china on trade, in the last 45 seconds or so one thing i have noticed, bob, im seeing a lot of stories about the chinese buying grain as the first step after everything weve been through in food at some point isnt necessarily something used as a bargaining chip, its an essential. And china is going to need to buy, Many Companies need to buy our grains there has to be more than a deal than just a good grain component. Finish this up, bob. I think thats right. I think grain and lng and things like that will give a boost to the economy, but what has been a contentious issue for some time are issues like intellectual property, trade secrets. So i think both sides have to be working on some kind of arrangement to protect intellectual property in particular, in part because we want to protect it, but in part also because china is now developing a lot of its own innovation a lot of its own intellectual property every time i go there a lot of chooerz say we want our intellectual property protected, too. So there are areas where there are some convergence of interest between the two countries. It just cant be buying things it has to be dealing with some common sets of rules or proceeds or norms but we are not going to settle this all at once. We are out of time. We have to leave it there. Bob. Doesnt shorten the process to only give us a grain deal. We need so much more. Longterm process, yes. Exactly carl, back to you. All right thank you very much. As we go to break, take a look at shares of apple. 209. Moving higher. Ubs hiked its target to 235 ahead of the earnings tomorrow night. One of the best performing dow components at the moment the dow is up 24 back after a short break lively music [student] my degree from snhu has helped me tremendously. The flexible class schedules allow me to run my catering business and be a mom and parent. Breakthrough at snhu. Edu. Is the market headed for a vix plosion . One leading strategist says the timer is ticking down. Find out more on tradingnation. Cnbc. Com more squawk on the street is coming up. Lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. The irs warning more than 10,000 cryptocurrency holders they may have broken federal tax laws robert frank joins us with more on the news that i think came out on friday, right it did, it came out on friday and caused instant reaction saturday morning bitcoin plunging following that announcement from the irs that it was putting bitcoin holders on notice for possible failure to pay taxes part of the concern is the tax liabilities the irs plans to send what it calls educational letters to as many as 10,000 holders over the next month warning them of potential tax liabilities, including of course any Capital Gains they may have acquired during the holding of bitcoin. There are three types of letters. One of them is pretty mild, it asks them to review their returns. The second a little stronger, warning of possible noncompliance and the third says that for one or more tax years from 2013 to 2017, we have not received a return reporting your Virtual Currency transaction, and that letter requires a response now, the irs wont comment this is the most interesting thing, on how they received the names of bitcoin holders since its supposed to be anonymous. Last year coin base notified about 13,000 customers that it was releasing certain information after the irs got a court order. Now, the irs arguing in that case there has been an explosion of billions of dollars of wealth in a few years from bitcoin with no reporting now, the irs launched a Virtual Currency Compliance Campaign last year to deal with nonpayment of taxes the agency is saying that Virtual Currency is an ongoing focus for irs criminal investigations, and the interesting thing about the irs here is that they only put out a notice in 2014 telling bitcoin holders that bitcoin will be treated as a property, which is taxable, not as a currency, which is not but they are now asking for information in returns before that, in 2013. So a lot of bitcoin holders here a little bit confused and probably not keeping tax records as they probably should have. I mean, its so interesting that they were able to identify people given what you said one of the appeals of bitcoin is its supposed to be anonymous. It seems like an area ripe for tax fraud because of that very fact i wonder how the requires irs i tracking that. Yeah, the Tax Liability the bigger is, hey wait, we thought this was anonymous the beauty of bitcoin is that no one knew who held it or how much, and the fact that the irs could get that data on that many customers in the u. S. , that i think is the bigger worry for bitcoin holders. I can imagine some bitcoin or crypto bulls, robert, arguing its one more step in institutionalizing this as a concept and that means its good it could. As a concept, yes. As a currency, no. Remember the irs has said its not a currency as far as were concerned. It is property and so i think if you are hoping that bitcoin gets regulated as a currency, at least with the irs, maybe not commerce department, but at least the irs said, no, its not a currency. Its a property. So that, yes, they are recognizing that people hold it and they are taxing it, but they are not saying its a currency. Robert, thank you. Thank you, guys. Over now to john with a look at whats coming up on the next hour squawk alley. Tmobile sprint, that news last week was a big deal closer to checking approved. At the same time dish gets this Amazing Network deal peter aterton, founder of boost mobile, that Company Nearly 20 arago foundserred. He is coming up on squawk alley. He is coming up on squawk alley. Ou he is coming up on squawk alley. Nd he is coming up on squawk alley. E. He is coming up on squawk alley. D. He is coming up on squawk alley. This is hals heart. And its beating better than ever. This is what medicare from Blue Cross Blue Shield does for hal. And with easy access to quality healthcare, imagine what we can do for you. This is the benefit of blue. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. One of the hottest stocks of the year, beyond meat, getting ready to report after the bell today. What we can expect. The stock is down about 5 going into it, but shares up 30 last week. Investors will be looking at the stock price after the earnings cross when the Company Reported the q1 earnings, the stock shot up more than 20 and that squeeze the out a lot of short sellers. Still Short Interest in the Company Remains pretty high. 16 of the float one caveat, it could be suing higher since the company is still in the lockup period. That makes beyond meat near the top of the list of recent ipos with the highest Short Interest ahead of uber and lift but behind zoom. That means the fees keep going. Short sellers are getting squeezed in a number of ways, according to Data Analytics firm s3 capital first, the stock price, which has gone up more than 800 since the companys ipo. Second, stock borrow costs are up 80 since may 31st. And finally, stock recalls, that could have the makings of a big short squeeze depending on todays numbers. I also talked to Jim Lebenthal of ser ty partners and said hes undecided whether to short the stock, but wont do it now while its still going up. He advises to wait for a catalyst, which could be todays earnings and wait for the stock to break before considering shorting it. Back to you guys as you read through these reports and we look through the numbers today, its going to be mustsee tv on closing bell, what is the big you went through the shorts whats the big bear case is it that the sales cant keep up with these crazy expectations or that theres going to be supply and manufacturing issues that the company cant keep up with the massive demand . Yeah, it seems like the company has addressed some of those supply issues. They say that they are well equipped to handle supply. I mean, the bear case seems to be that it might still be a fad. You know, lebenthal told me that his daughter and his wife are both vegetarians and they wont touch his stuff, because its geared towards meat eaters, but he says there is a case to be made for the fact that people might try it once or twice, but going back to eating just your traditional meat so well have to see if its a fad or something thats here to stay kind of a lasting thing aditi, thank you you bet Consumer Staples, especially food stocks, hitting alltime highs today. Beyond meat not the only one doing well in the food space this year. Leading the way, hershey up 42 this year. Costco is up 37 conning a gras up 35 . Joining us now, stu leonard, ceo, stu leonard jr. Hi, stu. Thanks for phoning in. No ones doing as well in the food space as beyond meat. Tell us a little bit about what youre seeing in your stores in terms of the action in sales you know, the sales of beyond burgers at stew leonards is following the stock grasp, if you look at it its just really hot right now but you know what i think it is . I heard you speaking earlier, its really about the plantbased products today Martha Stewart just hosted the aspen food and Wine Festival i was talking to her and she said, you know what, i said, whats the big trend that you saw out of there she said, plantbased. And so i think that beyond burger is just beyond that they came out with sausage now and were seeing it rock n roll here at stew leonards right now. Are people just curious to try it or are they repeat buyers . Well, you know what, theyre really curious to try it obviously, youve got to taste it it doesnt really have the chewiness of a normal burger, but, you know, if you put some ketchup and cheese and onions and tomatoes on it, you wont really know the difference so i think its just something people want to try and weve been doing demos at stew leonards and were just trying to get it in peoples mouths. And once they try it, they love it, especially the vegetarians and they just came out with a sausage, and you wouldnt really know the difference between the beyond meat sausage and a regular sausage. I was going to ask you, stew, how many categories do you think in meat that they can make some inroads, if now that ground beef is doing pretty well well, you know, i think that has made a big splash, obviously, going public and in the market and i mean, wow, i wish i had bought some stock when it first came out i dont own any now. But you know what were finding . We came out with a like a Cauliflower Pizza at the store and that trend were sealing more Cauliflower Pizzas than we are regular pizzas the same thing trader joes is saying that. They have a cauliflower rice that theyre running out of. And the other thing, my grandfather started in the 20s in the milk business, and if you look at our milk category now, 15 to 20 of it is almond milk and oatmeal milk, plantbased products so i think thats what youre seeing the trend and i think Martha Stewart is right when she said, you know, its going plantbased no, the ceo of chipotle this week, stew, said that di i me, they were asked about whether or not they would be adding plantbased meat to the menu and brian nichol says it doesnt fit with our food with our integrity because its too processed so i wonder about concerns about if its even healthier in terms of salt content and other issues thats always the tradeoff people make. Usually, if you add more cream or butter to something, sales go up, if you add more sodium to people, sales go up. If you add more sugar, sales go up but a lot of customers today are looking at these things and saying, i dont want that in my product anymore, so thats something people will have to trade off on youre getting a vegetarian product with no meat in it and look how many people are not eating meat today. Definitely a growing trend you know, whats amazing is the milk category, my grandfather would roll over in his grave if he saw how much almond milk were selling versus regular milk. So, you know, its just a trend these days and people, i think, will make a tradeoff between the ingredients and the no meat aspect of it yeah, a little different than early 20s stew, thank you for phoning in great profile piece in the eater, which every Grocery Store should be like stew leonards. Hey, just really quick, we started this juice tank for these new Entrepreneurial Companies and we just picked four finalists, sort of like shark tank a little bit, but picked four finalists and one of them is a meatless meatball. Stew leonard and they make that out of eggplant were out of time okay, have a great day thank you. Well have you on and definitely talking meatless meat many more times. Speaking of carl later on the closing bell, that will be the headline Earnings Report well get results, the Conference Call, a panel ready to break it down not many stocks that go up 800 plus percent from their ipo. I thought 10 was dramatic, but june 11th was down 25 huge swings maybe it was stew leonard cutting the losses in half could be. We love hearing omfr stew. Dows up 40. Squawk alley is next dont go away. Good morning its 8 00 a. M. At disney headquarters in burbank, california its 11 00 a. M. On wall street and squawk alley is live good monday morning welcome to squawk alley. Im Carl Quintanilla with Morgan Brennan and jon fortt at the