Welcome to power lunch. A lot doing on the dow is up triple digits, although off the highs of date that is about 0. 06 of a gain. Take a look at abeBed Bath Beyond, the best day in almost two deck asd ades on its annount of a new ceo and Kayla Tausche is outside the room where it is all happening in washington today. Reporter and inside the ustr building just behind me, we are expecting that lunch is wrapping up and that some of the lower level officials are going to be returning for an afternoon negotiating session that were expecting to last about four hours. And then around 6 30 p. M. , the two sides will host a dinner that white house Officials Say is going to be a celebration of sorts. I was told last night that it was a rather fancy and special affair, were still awaiting the location on that one of course the main event is going to be tomorrow as we now know, President Trump tweeting that he will be meeting yet again with chinas vice premiere in the oval office he says that china wants to deal and raises the question of whether he does. But looking at past meetings where President Trump has hosted him in the oval office, it looks like that there would be a positive development nonetheless. On january 31st when leo was in the oval office, he pledged a purchase of 5 Million Metric Tons of soybeans by china of u. S. Product on february 22, that meeting led to a delay of tariffs on march 1 just a matter of days later. And then in april, during that meeting they were working out details of at that time a proposed summit between President Trump and president xi President Trump said at the time it was about four weeks away when they would be hammering out final details of a deal. Of course that never happened. Talks broke down tariffs escalated and now here we are of course there are about three dozen chinese officials in washington officials and principals were are smiling and happy when they arrived here for talks this morning. We will see if that mood continues throughout the day and tomorrow back to you. Kayla, thank you. The markets reacted to every twist and turn bob pisani is at the New York Stock Exchange to run us through it it started overnight really. Last night at 6 00ing and todays rally happened right after the open there it is, there is the president s tweet and that moved things here. And it contradicted earlier reports that the chinese officials may leave a day early. But the bar has been low, the market seems content with a mini deal for the moment that might involve buying Agricultural Products in exchange for no new tariffs. That is what the market wants so the usual trade related sectors all moved, materials, energy, industrial stocks are hire and utilities are lagging would to get us through to christmas, that is what the traders want to know it may well be enough to keep us in the roughly 200 point trading range weve been in with the s p 500 for most of the year and that range is 2825 to 3025 the problem is the truces can be easily broken and the market knows that and all of these truces do not change the fundamental narrative that has been developing for gone, that is lower growth, low yields, a defensive stock positioning like Consumer Staples, and overall lower earnings guidance. You have to reverse this market and narrativeand only a really more comprehensive deal will do that tyler, back to you so will the trade talks lead to an agreement or will both sides once again walk away from the negotiating table with no deal done . Here to discuss this founder and managing partner at bridge Park Advisors and also founder of reality check. Gentlemen, welcome two founders with us stefan, i was struck in my notes that you say among other things market economies and nonmarket economies of the scale of china and the United States may ultimately be fundamentally incompatible the chinese economy after moving in the direction of a market economy has moved sort of back the other way under xi jinping so if you take that statement and sort of back time it through the thing, there wont be any big deal this week and well be fundamentally in competition and maybe moving away from china for a generation yeah, i mean, it really depends on what you believe is the ultimate resolution of these trade frictions. And so if the resolution at least is a political resolution where we delay perhaps the tariffs, new round of tariffs that are supposed to come next us it, so you can imagine the chinese saying something around intakellectual property protection, but it wont get to the fundamental part which is the communist party going to give up controlling of their economy. And so i think that wont happen anytime soon and alan, you Say Something that sounds relatively similar, the trump administrations paramount goal is recoupling the u. S. Economy from chinas as quickly as possible. What do you mean by that just as stefan said, there seems to be a strong conclusion that has been drawn by the administration as well as by many, many outside specialists that the two systems are fundamentally incompatible, however deeply intertwined they are now, and that continued engagement at this level certainly does not serve u. S. Economic interests, it doesnt serve u. S. Technology interests or National Security interests and that in fact some kind of an unwinding, and weve seen quite a bit of that so far, is what the u. S. Policy ought to be seeking. And i think it is even more important to observe what is going on outside these current formal trade negotiations when it comes to u. S. China Economic relations because this unwinding has already begun whether you are talking about trade flow, technology flows, human being flows. They are all shrinking and we have seen so many of the side issues that week, whether it be capital controls or banning people, so many different issues that could find their way into the trade talks Security Issues exactly huawei of course as well do you think that they do make their way into the discussions this week . Because when you read them, and you go item by item by item, it certainly doesnt seem like a very friendly way to start trade negotiations quewell and certainly from a political perspective, you have senator rubio amongst others, there has become on both sides of the aisle i think a bipartisan disillusionment with china. So you have that political disillusionment on the one hand and you have policymakers that are trying to have a more comprehensive complete deal getting done you have actually corporations that are very interested in long term planning. But you have Market Participants as was just suggested that are concerned about the volatility in the markets between getting from here to there so i think that is exactly what you will have for some period of time you will have continued volatility in the markets if you believe this is not going to get resolved anytime soon which it sounds like both of us agree is not going to happen. Could we find ourselves talking about these trade negotiations and seeing that all these various issues that you are talking about, that we are talking about here on set, have become negotiation chips i dont believe that they will be. Especially Going Forward and one reason is, i think that because of President Trumps political troubles, he has a stronger interest in reaching some kind of a nervecalming mini deal as it has been called than he had before i think once that Mueller Report was out of the way and we all thought that the impeachment threat was basically gone, he had a much freer hand. His hand is now no longer nearly so free. And i think that it is really quite clear that in terms of these larger structural issues, intellectual property theft, illegal subsidies, technology extortion, the chinese are in no mood to com indicaaccommodate h think are counting on waiting out the 2020 election. Wellnd kicking the can down the so if they actually get some delay on these upcoming tariffs, that will buy them some time which you seem to expect. The ones that are supposed to go in on the 15th wont it is hard to expect anything the gonegotiating strategy has been a bit confusing what i would say is i think that it is there is 0 that this gets resolved in a comprehensive way over the course of these meetings so now your other choice is well proceed along the path that has already been described which is increasing tariffs next tuesday and then a new batch to come in on december 15th i believe there is a decent chance that we will make incremental progress that allows them to come up with some political victory and as part of that, i might imagine a delay or are are a reward for this chinese negotiating team coming out of this meeting with the president tomorrow which i think both sides would view positively all right gentlemen, thank you very much i know well be talking about this one again turning back to the markets, stocks are suddenly taking a drop here off the highs. We were up about 80 points a moment ago for the dow, about 110 points right now but could a trade deal with china be the ultimate catalyst Peter Anderson and Scott Clemens are joining us peter, do you think i mean, it seems to me that no one is expecting any kind of quote unquote big trade deal with china ever at this point, right in. Well, it certainly seems to be pushed out. You know, weve been talking about this to some time. Weve used game theory, all kinds of analysis and i do think that this is going to be far more proceed tract tracted thane asked me about this say 18 months ago and i think we just have to manage through that. You have two choices as a portfolio manager, you can tell your clients that maybe they should go into cash and suffer through Capital Gains or plow ahead and try to find within this noise rational investments that you think will be durable throughout this continued volatility and i know that you have some of those but before we get into them, scott, im curious if you have the same point of view or if you think everyone has gotten too negative and maybe the tariffs are delayed and we have a nice truce for a while. Well, you certainly could, but that is the whole point, to trade this appropriately, you have to actually get three things right you have to get right the proposal from country a, china or japan, the response from country bhchl, and then what it means for markets. So rather than are do that, id rather focus on the Companies Whose business modeling do not depend on a binary outcome such as well, things that are related to the consumer is where were finding it because the resiliency of the American Consumer and spending seems to continue at pace for matter what is happening in the white house. A couple examples in. Anything in Consumer Staples or discretionary, Business Models that sell essential products and services, loyal customers. Those companies arent immune from the trade dispute, but they are at least inoculated against it peter, i know for you it is data security, data storage, Senior Health care do you think those can be the ports in a storm ive spoken on this program several times about data storage and security so im certainly a big fan but the newer one that ive been focusing on is Senior Health care and believe it or not, i think that there are common themes in all three of these sector in that there is an undeniable growth rate. As seniors increase in population, did you know for instance 50 of people over 70 years old will develop vision and hearing issues and so that is a virtually predictable you can model that and so if you accept that thesis, it is pretty clear that you should be investing in stocks in those industries. In terms of the broader markets, it seems like the uncertainty in the market will only persist if the baseline scenario happens and that is no deal with many things kicked down the road. I mean, the issue of capex and ceo confidence wont be resolved with that sort of framework in place. And so with the markets, 3 away from record highs at this point, is that enough to sustain us at these levels one of the things that worries me is the degree to which the woes of the manufacturing sector, which are in part driven by tariffs and trade uncertainty, begin to bleed through into personal consumption. Personal consumption is 68 of the economic equation. So to the degree companies decide to postpone hiring or expansion plans and that begins to be reflected in the report, he yes, it is a risk i think well get better insight into that as Third Quarter unfolds. Still exposed to the consumer at this stage because that is the heartbeat of Economic Activity that is not dependent on one particular outcan of tome of the disputes gentlemen, thanks and a news alert on Capital Requirements for banks lets bring in Steve Liesman yeah, the Federal Reserve right now holding an open meeting which is expected to vote on easing capital and liquidity requirements for smaller and medium sized bachks. This has been a very, very, very long time in the making. And now they are voting on the final rule it will become actual law, it reduces the Capital Requirements for those Smaller Banks and medium size banks, not really altering it very much for the larger banks it is also altering what is called the living will with a Resolution Plan of some of the biggest banks that have to file them and also the Smaller Banks as well. I think this is well telegraphed by the markets, so im not seeing any big change in the banking stocks but it is something that some Bank Analysts have said that investors need to factor into their investment thesis, the idea that some of the regulations is getting easier relative to the original doddfrank steve, thank you. Coming up, lebron james and the lakers playing in china without incident well tell you why so many players have suddenly gone silent on china. Plus apple shares nearing an alltime high, well talk to an analyst who just upgraded the stock. [spokesman] if youve tried college but never finished, group cheering snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu [phone ringing] how are we doing . Fabulous. I wonder how the firms doing without its fearless leader. You sure you want to leave that all behind . Yeah. Stay restless, with the icon that does the same. The new rx crafted by lexus. Lease the 2020 rx 350 all wheel drive for 439 month for 36 months. Experience amazing at your lexus dealer. Apple within inches of its all time high. Apple has been outperforming the s p 500 all year gaining more than 45 while the broader index is up about 17 to 2019. Lets bring in Sean Harrison great to have you with us. Weve seen a parade of analysts come out getting more bullish on the procespects of the iphone 1. What convinced you that there is in fact demand for the 11 . Is it the reports from the suppliers . What was it . It was two fold actually. Number one, it was our Industry Research that highlighted an increase in production in the iphone that we havent been able to say that for more than two years, so that is a clear positive and second, trends in china and outside of china are up year over year. And is there any concern, yo know, i understand that now hardware is going to be a tail wind going into the end of the year as owes possessed tooppose wind but are there other headwinds that are unknown apple was in the news recently for now removing the map app which was used by protestors to avoid police and im wondering if that zep uncertainty plays into the last quarter of the calendar year again. The comps in china are relatively easy. So sure there is iuncertainty. But apple usually doesnt change its viewpoint on demand unless it is pretty confident of what is occurring out there and in terms of the demand for the new phone, what is your forecast in terms of the mix of phones and i understand we wont get units, but the mix of phones will certainly help us figure out perhaps what margins could be like. So the mix is going more to the low end. Up side is more in the iphone 11 versus the other higher priced models so the cut in price apple made this year is actually doing what apple wanted, which is driving incremental demand and you also say that you like some of the suppliers is that already reflected in these stocks or no because a lot of them jumped on those initial reports. They have jumped. And broad com, texas instruments, all have high exposure to apple. And so i think the broadcast for the September Quarter or december quarter at least in terms of consensus estimates previously werent reflecting strong iphone demand it was a pretty meager outlook so weve had some jumps today, but i would expect probably as we go into earnings season maybe more of a follow through on that business as we see the true up side does about puncture the idea that people would wait for a 5g phone . I dont think so. I think this is more akin to the iphone 7 cycle the 6 s was a disappointment, and iphone 7 out sold a bit. So i think this is more of an underestimation of demand out there, maybe a bit of pent up demand, pricing helping the programs to stimulate demand as well and then still potentially more up side for the 5g in 2020 this is more of an interim bump. All right great to speak with you. Thank you. Coming up, Bed Bath Beyond shares, they a