Dominating the weekend and it could be just the beginning of disneys total takeover. Power lunch starts right now and welcome to power lunch. Im melissa lee. The nasdaq, the big winner today with tech stocks taking the lead as chip stocks rip higher, and check out the dow downers today. Boeing falling after fitch cutting its outlook for the giant to negative. Pointing to the uncertainty around the 737 max grounding and Johnson Johnson taking a hit about 1. 5 as the Company Fights thousands of claims around its baby powder well have much more on that story much later on. Kelly. Thanks. The fed is entering its blackout period ahead of the july meeting next week, so there will be no more fed speak before that decision but its not stopping the president from weighing in he tweeted earlier today in favor of a rate cut, saying the fed raised rates far too much and too fast it appears the great rate debate is still raging. Steve, what the data reveals, to cut or not cut that blackout period applies to fed officials, not journalists. There are two powerful but opposing arguments out there to cut or to stay on hold. Lets look at the case for a cut. Research says act early, act forcefully when youre near the zero lower bound even sometimes it pays to surprise the market. Take out insurance against a trade war, brexit, capx being slow, and a debt sealing potential problem here adjust Inflation Expectations upward and you would be normally expecting a weaker economy if you were to argue for the fed to cut rates. How about the case for no cuts jobs have been strong. Unemployment is low. Consumer very strong by the retail sales report. Growth estimated at, take the first half average, youre above trend of 1. 8 . Core inflation, less than half a point below the target range besides low inflation, a data dependent fed doesnt have a lot of data upon which to base a rate cut growth looks solid outside of manufacturing. We think any rate cut is a mistake, but Jerome Powell has the vote to cut rates at the upcoming meeting, but he has some opposition with which to contend. Five are against the rate cut. We dont know exactly how they would vote, but five, of which two are voters you can see the v we have, and then you have some folks on the fed, barken and daly from fran nine seem to support a rate cut. And i believe eight of those have the vote, if you include michelle bowman, whose views we do not know. The market has pretty much decided the fed will cut 25 basis points fed funds futures trading at a 76 probability of a 25basis point cut, and one out of four folks or 24 say theres a probability of a 50basispoint cut. Of the eight that are for a cut, how many are for 50 basis points or is that unknown i did not do that calculation. I believe its unknown i dont knethat anybody has spoken explicitly about a 50basispoint cut i think there are some who could be convinced maybe rich clarita, maybe a few others could be convinced. A good question, i dont know that i can answer it steve, thank you very much. This week marks the second busiest week of Earnings Results and well get the results of tesla, amazon, facebook, just to name a few you put that facebook, amazon, alphabet, and tesla, you have faat bob pisani joins me with what to watch for. Tyler, about a quarter of the s p are reporting. I want to show you the ones i think will be the most important. Ill break with tradition and argue its not fang. Global industries are what i want to hear from. Take alook here. United technologies is in there. Caterpillar on wednesday, boeing, 3m on thursday 3m had lowered its guidance in april for the full year. Disastrous month there, was down, what, 25 in the month of may. Caterpillar also had a tough time, united tech. We want to hear whats going on with the Global Economy and the trade wars with them a auto nation. Companies have had trouble recently genuine parts was weak last week texas instrument, most of the semiconductors have had poor guidance 3m is there. Lvmh, the biggest luxury goods maker. Historically highs, rich people are doing fine, and we have amazon and alphabet. Where are we right now were kind of flattish for the year we do not see an earnings recession, not the data were using. Second quarter, up about 1 . Third quarter is down mildly and theres hope for rebound in the Global Economy in the fourthu th quarter. Thats why we have it up 6 . Put it all together, 1 to 2 Earnings Growth for the year, but that could change if theres any dire warnings from any of these big global industrials thats why im watching what they have to say thank you very much as earnings season kicks off in a big way, the s p is up 19 so far for 19 and Goldman Sachs says the gains might be in for the year is goldman right lets fire up a bull bear debate Peter Anderson says goldman is getting it wrong were going higher from here, and eric is global chief inve investment strategist with russell investments. He doesnt think the markets will go much higher from here. Gentlemen, have it peter, why dont you go first, and explain why you think things arent as bad as some others do. Boy, where do i start i mean, first off, when you talk about averages for Earnings Growth, i mean, that really distorts the picture, does it . You have to look at individual stocks the stocks that i own im very confident theyre going to have earnings that are greater than 1 to 2 growth over a year period thats a blanket statement that really catches a lot of eyeballs, especially now when everybody is insecure about where the market is headed thats easy to sink your teeth into but i will tell you this on individual basis, there are many, many stocks that look very promising, their valuations are good the fed funds futures market, all those things that are really distorting looking at the individual details and i encourage your viewers to look at the individual details of stocks and youll find some gold at that end of the rainbows implicit in what you just said, peter, is maybe a little hesitance about the overall market trend in other words, if i have to be very particular and pick certain kinds of stocks, that feels like a little bit of faint praise for the market more broadly. Am i reading you right well, maybe but let me just add this certainly, the trade war, im not turning a blind eye to that, so what im talking about are the large multinationals, if you have a short attention span, say, investment horizon of a year or so, i would stay away from those obviously because we know the trade war is going to continue there is no end in sight its going to be protracted. All things i thought, by the way, were going to play out anyway so thats the only hesitancy, is being more selective the days are gone when you just buy an s p etf and sit back and watch your profits let me turn to eric, and get a rejoinder there. Youre concerned about what you see in the Economic Data you are concerned that stocks are fairly fully priced. Tell me why you feel that way and what i should do about it. So we think theres a 1 in 3 probability that the u. S. Slips into recession in the next 12 months thats a pretty high probability out there, a warning sign. You have very low ceo confidence that collapsed in the Fourth Quarter last year and has not rebounded. That has begot low capx spending which has generated poor manufacturing numbers across the globe the global pmi in manufacturing is below 50 right now. The u. S. Is just slightly above 50 you know, i think the fed is going to cut 25 basis points because all the markets expect it and they need to do something to combat that negative kind of confidence channel thats coming through the ceos and i think thats largely because of trade i think the path for a big booming equity market is pretty narrow stocks are very expensive. Earnings are under pressure because wages are raising higher than prices and you have a reality where its a very thin line you need probably a trade resolution to actually occur for the market to really pop in the next year or so. So how do you invest and that doesnt seem likely. How do you invest if youre cautious in the markets . Where do you put your money . This is where being a diversified multiasset investor makes a lot of sense i dont know whats going to happen in the course of ineconomy in the next year no one knows actually. Theres a lot of uncertainty, a lot of highly valued Asset Classes out there. I think the best strategy is diversify your portfolio broadly. Stay close to your policy, to your Investment Plan dont deviate a lot from it, and hopefully that will ride out the storm better than making a precipitous decision that can only be right in a very narrow band of probability. Eric, thank you very much eric and peter, we appreciate your time today. And still ahead, oil prices are climbing today after iran seized that British Oil Tanker we have the latest details and what the tensions mean for the Energy Sector farther out. And disneys Avengers Endgame is the biggest fist omall time combine that with the lion king, can anything shake disneys Box Office Dominance power lunch is back in two 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. Technology executives from suppliers to huawei are heading to d. C. Today to discuss relaxing restrictions around doing business with that company. This as a report emerged that huawei allegedly helped north korea build out its Wireless Network. Ylan mui is in washington with the latest hi, ylan hi, tyler the president spoke about huawei this afternoon in the oval office during his meeting with the Prime Minister of pakistan he said that he wants the u. S. To be the Global Leader in 5g. All about huawei, i know all about 5g and were working on it, and we have companies that are now getting very, very strong in that department. Were going to have 5g, the best 5g in the world, just like we have Everything Else our Silicon Valley cannot be competed with. Theres nobody that can compete with Silicon Valley for the brain power or what we do. Now, trump said he also wants the administration to find out more about that report in the Washington Post that huawei helped north korea, but already, that is sparking bipartisan outrage on capitol hill. Republican senator tom cotton and democrat Chris Van Hollen have put out this statement saying that at every turn, we learn more and more about what a malign actor huawei is they also call for the passage of their legislation to tackle the growing National Security threat posed by huaweis efforts to dominate 5g theres no official word on whether the president will take part in that meeting with the industry executives. Well keep you posted as we learn more back to you. Thank you as we count down to the big meeting of tech executives, lets talk about what is in place. Tony and john, john is the one who cowrote the article reporting huawei secretly helped build north koreas Wireless Network. Gentlemen, great to have you with us. John, President Trump said he wanted to find out more about your report. Has anyone from the administration called . Well, we have been in discussions with a number of u. S. Officials in advance of this report. Obviously, we have been working on it for several weeks, collecting all of this information. A lot of it leaked by a former huawei employee that talked about the years of secret operations between north korea and huawei in building their Wireless Network some of the officials that i talked to said that this might be information that the u. S. Government doesnt even have, and it might really shake the tree as one official said. So there is a lot of new information in this report, and it certainly could provoke a strong executive branch response, as its already provoked response you found huawei partnered with a chinese stateowned firm, panda international, and between the two of them, they worked over a span of eight years you mentioned this is something that the government does not know is it simply because youre the ones who managed to get those spreadsheets that were not released to government, and are you sharing those spreadsheets now . Yeah, absolutely. We published the spreadsheets on the Washington Post website. We shared this information with government officials and the Commerce Department has had an investigation into the links between huawei and north korea since 2016 we have also been told by officials that this investigation is ongoing we dont have perfect knowledge about what the u. S. Government has, but a lot of people thought this was very eye opening. Especially the information that we have about huaweis efforts to install bay stations and antennas and how far back it goes in the maintenance its done and the other chinese firms that its gone through, and the efforts to conceal these efforts. Obviously, north korea is one of the most sanctioned countries in the world. And so its likely that a lot of these efforts to conceal their activities were done to avoid sanctions. We have asked huawei, you know, a lot about this they say they always follow rules and regulations from different companies. They say they dont have a presence any more in north korea. But they would not respond to followup questions about whether the business continues, so theres a lot of questions that remain. So at the very minimum, huawei, i mean, you know, its interesting because you probably did this reporting in parallel to huawei being blacklisted and then huawei sort of finding a reprieve potentially from the white house. At the very minimum, you found that huawei helped north korea violate sanctions or get around sanctions. So sanctions are very difficult. Theyre very complex, and what constitutes exports control violations, so were going to leave that to others and regulators there are very serious rules on the books that come along with many penalties when it comes to sanctions violations and especially if it involves u. S. Components beyond 10 because there are u. S. Components in huawei technology. Were going to leave it to the regulators to decide whether or not it constitutes a sanctions violation. But certainly, there are a lot of analysts who have looked at these activities and say they raise a lot of questions tony, is huawei a National Security threat . Its either a National Security threat or its an economic threat, or maybe its both we hear conflicting views from the administration we talked to them. I can tell you that my firm, for example, over the past ten years have been approached multiple times about working for huawei to help them explain themselves in washington. What have you said to them . We havent accepted those my first calls were to friends in the Intelligence Community saying their problems arent communications problems. Their problems are these kinds of problems that john unearthed and the team at the Washington Post. And iran problems, and other kinds of problems. Those issues are there but you get conflicting signals from the Trump Administration as they talk about it you have the china hawks both within and outside the administration who are very, very concerned about the National Security threat from china. You hear the president , as he just heard him earlier today, where he sounds like hes talking about, you know, thinking about the american producers as national champions, and we want to see american 5g firms succeed, which of course, we all want to see american 5g firms succeed, but we want to make sure its fair and fair competition. Then you also hear him say things like maybe we can get some concessions out of the chinese and their negotiations if we go soft on huawei. So the messages are really conflicting. The tie to the trade war, that seems like a very troubling aspect of it because at this reporting holds true and the Trump Administration agrees with the reporting, et cetera, then it would seem that, you know, that sort of bone that they can throw to the chinese, thats off the table. It horrifies the chinese hawks in the administration and the senators like tom cotton and marco rubio and others when they hear whispers of that. That we would go easy on huawei in order to get concessions. Yeah, this idea of trading economic concessions for National Security concessions. We should have a strong line on National Security. All right is huawei effectively an arm of the Chinese Government . Thats certainly the view of the Intelligence Community, the United States, and some of our allied governments john, is that what you found . Certainly especially, you know, the hawks in the administration, the china hawks. They view the company and the government as working hand in glove. Obviously, its not that simple. Its a complex system in china, and the relationship between governments and corporat