Goldman sachs. Some pretty harsh words. We have details on that coming up here. Reversal that continued from the session on monday. Really tech has beenleading the marke again today, but underperforming over the last month. We have a debate on which names in the sector are worth buying right now. And President Trump criticizing china for its economic relationship with north korea in the wake of north korea launching that icbm over the weekend. Were going to take a look at what the president s rhetoric could mean for u. S. Companies doing business in china. Thats momentarily but first, you saw it here on cnbc the fed releasing minutes from its most recent meeting in june there seems to be some debate among the fed members about when the fed will actually start reducing assets on its Balance Sheet. Joining our closing bell exchange, we have with us, peter from the Lindsey Group steve from stewart frankel, and our own Rick Santelli is in chicago. With a fine tooth comb no real surprises. We do see disagreement there about future fed policy as it pertains to the Balance Sheet, yes . I think everyone in the committee wants to reduce the size, its just a matter of when the timing is. We have to remember that backdrop leaves in february. I have a feeling that they want to get this process started sooner rather than later to give her some time to hand baton off to whoever replaces her assuming shes not going to be there. Most importantly is none of them seem really worried about the process. They think by communicating to us what theyre going to do, how that is going to limit any impact and i think that is going to really be the market issue and whether thats going to be the case or not. I think its not going to be the case i think its disruptive regardless of how many times they tell us theyre going to do it steve, you agree . I do agree. And i do think theyre doing what they normally do, just floating that trial balloon, but, if you have gdp or look at any other Economic Data points that have been weakening or perceived weakness i dont know how you could deal with the backdrop. There is no inflation. So youre talking about a Balance Sheet that at the time will probably be two trillion. When you start to really look at that on a monthly basis, starting from ten billion, ratcheting up to 60 billion, how is that not disruptive with the backdrop in the market but i think the market hasnt absorbed it i might take issue with your characterization of the slowing here look at the pmi of the data we just put out it was strong. Okay. So you have one offs here and there i think its just in a precarious spot that they put themselves in. Rick, did i spot a slight, i dont to want call it a steepening of the yield curve there after the fed minutes came out. You know, it looked like strong word. For the most part yeah, it reversed out, but youre absolutely correct, there has been more speedening than flattening since the 26th when everything started when every ten year, all throughout europe and the u. S. Was up at least 20 basis points from that point in time, from that monday close. So, i think its significant, as far as the Balance Sheet goes. Nobody knows how its going to turn out we can all talk and nobody can discuss these issues better than peter, but we just dont know. And we also dont know if their words are going to lead us to actions. But i certainly do believe that if you cut away through things that i dont think matter anymore, data dependent, inflation, i think theyre nervous about asset bubbles. And i think they ought to be, and they have a great track record in history creating them. They have a poor track record trying to prevent them, and i do think that thats the issue. And how that affects all the Global Dynamics of other Central Banks, who knows, but i could tell you this, i would think that over the next few months, no matter what Central Banks do, i think theres a propensity for Interest Rates and equities to continue to rise we could debate to the breath and extent of velocity, i think that dynamic remains in place. In that vein, peter, i was going to ask you that very thing. Do you think like steve said the feds at risk of tight sboong a slowdown, or do you think to ricks point, theyre not doing enough to tighten against this environment . Well, theres no question theyre tightening into a slowing fizz of the expansion. I mean, 1. 6 gdp growth in 2016 and decide to ramp up the rate hike cycle historically, they lead to recession and i have no reason to think this is going to end anywhere different hey, steve, we should acknowledge the action of the oil market, and thats a highlight that so much for that eight game win streak that they had. They gave much of it back today with the 4 decline here, what do you make of that . Right, if you look back, it was up 10 from june 21st, it bounced after that key level 42. It didnt get down a level traded down to 42. 53, but bill, rotation if you look at the oil markets right now, you know, if you look at earnings Going Forward, the problem is, is that all of this Earnings Growth is coming from the energy sector. If we dont see oil stabilize, probably in the 50s, were going to have to take a big chunk out of that earnings Going Forward which could wreck the market as we see it right now. So, look at oil, look at rotation, if they continue to go in the back half of the year, you dont need oil to skyrocket to 85. You need it to stabilize around 50 and thatll keep the market in place and its not just crude, natural gas down nearly 4 down today, chesapeake, down nearly 8. Its ugly. They increased theyve production of liquefied natural gas. Thank you all. Appreciate your thoughts on todays market action. Good to see you. Now President Trump seeming to lose patience with china after north korea tested an Intercontinental Ballistic Missile. Trade between china and north korea grew almost 30 , so much for china working with us, but had to give it a try lets bring in michelle for a closer look at some of these economic ties between china and north korea, michelle. Kelly, the economic ties are deep, thats why u. S. Diplomats insisted the country with the most power to change north korea is china china has tremendous leverage over north korea first because of trade nearly 90 of north koreas imports and expert goes to china and almost all of north koreas oil comes from china chinas First Quarter exports to north korea up 54 over last year so china has plenty of direct leverage over north korea. Also has indirect leverage what im holding up here, this is an annual report from the u. N. Security council which says a team of investigators that do nothing but investigate compliance with the u. N. Sanctions on north korea this report is the most recent, it was out in february it shows that Chinese Companies provide the financial infrastructure that make north koreas Weapons Program possible i could show you many, many examples, in 326 pages, it appears more than half a dozen chinarelated Front Companies openly help north korea transfer money, provide financing for Foreign Investors or help the country export their arms which is a big source of revenue for them one example were marshal arts in pyongyang, it serves foreign clients with transfer services and the chinese currency investigators found guidelines issued in both chinese and english from the bank on how to transfer chinese wan and this is a plaque on the door, pictured here in korean and chinese, makes sense, and also english for foreigners the list goes on and on, question is, why doesnt china do more . Guys, a lot of people say its because theyre much more interested in keeping the Korean Peninsula divided rather than dealing with north korea and it struck me, the wall street journal today is calling for regime change in north korea. Which seems like a Significant Development given the history that this countrys had with regime change and perhaps what they view as lack of any real options. Yeah, absolutely. I think its because of the level of risk is now higher in you think they absolutely do have a missile that could reach the u. S. , particularly alaska. Are we going to see the chinese enforce the sanctions they claim as being members of the United Nations . All right something well ponder here in a moment thank you, michelle. Very interesting so if youre a u. S. Company doing business in china, should you be concerned with all of that joining us right now, sandra from beyond global first of all, with all that michelle has laid out for us right now, clearly china is playing both sides of the trade here what does that mean for u. S. Companies trying to do business over there, do you think well, u. S. Companies need to be concerned because really the administration hasnt demonstrated consistent thought through strategy i think the players here and their interests have been pretty clear so that china would not be on the u. S. s side without any doubt that was clear from the beginning, but i think u. S. Ceos has been clear to them that trump would be very unpredictable, it was clear earlier this year, even there ceos were concerned. Your group has a long history of trade between china and iowa, what direct impact have you seen thus far from the way that the Trump Administration is trying to handle the north korea threat ever since the Trump Administration took office, when we talked to our clients over in china, there has been a roller coaster ride, at first people were really concerned, and, you know, for possible trade war and then after the maralago summit, things are looking very bright and with the 100 day plan, a lot of our clients are relieved and they are all talking about the possible trade war seems unlikely understand there have been new development this week, but the sense is that when we talked to our clients in china, they felt like, you know, the Trump Administration is setting the stage and theyre wanting to enter into a new rounds of negotiation. Maybe things are not progressing as fast as he would like so theyre patiently waiting and hoping that two sides will sit down again and talk among themselves and figure out what the best solution for both sides. We were talking monday, even as the u. S. Is looking to china for help on the north korea situation, on the other hand, we have sanctioned one of their banks, we theres been what the chinese consider to be an encroachment in the South China Sea by u. S. Vessels. What do you think president xi is going to be telling President Trump when they get to hamberg this week . Whats that discussion going to be like do you think well, one thing is for sure, if trump goes beyond the bluster and actually institutes concrete measures, the chinese will retaliate. And i would like to draw your attention to the fact that steve bannon last year had said that the likelihood of war with the u. S. Involvement and war in the chinese South China Sea was very likely so, the fact that there would be possible escalation, the greatest concern is for u. S. Companies who actually produce and sell within china. Retaliatory measures could be more subtle or they could be more drastic, like price dumping and flooding the markets with goods or restricting market assets so i think that, you know, it would be the u. S. s interest to dial back the rhetoric and try to be a little more diplomatic it doesnt help to antagonize such a big player as china, the interest of china and the u. S. Are just not aligned in this respect when it comes to north korea. And well, you know, made a good point a moment ago which is the avenue for, you know, its not just americas responsibility, its just that we are their biggest target, if you will, and we are the ones seen as mainly doing something about it especially with regard to china. So if the u. S. Moves forward and we act alone, does that mean there could be risk that u. S. Companies lose business in china to say european rivals or mexican ones or you name it . Yes absolutely i thinkwe can already see that u. S. Ceos are more reluctant to take risks, make assessments, they take more of the wait and see approach and European Companies are all too happy to move into this vacuum and take over market share. They have their own concerns, for instance, the taking over of know how, say German Companies are strong in engineering for instance, they just sold a huge Robotics Company there and when German Companies go to china, typically what china tries to do, they dont say we want to steal your secrets, but if we give you the land, the options, but you have to disclose your trade secrets. Lee, what kind of do you trade with china the reason i ask, are you likely to see tariffs imposed what do you think that would do to the trade relationship . Oh, trade in Agricultural Products from seed to equipment. Well, at this point its really hard to tell, earlier on, several months ago, everybody was talking about that possible trade war. We did entertain the idea if that happened, we might see a tariff being posed on some of the good that were exporting to china. Having said that, and giving all of this tension that is going on right now, our governor actually is taking a all agriculture trade delegation to china, just in about, you know, two weeks from now and i think as president xi pointed out, the u. S. China relationship is kind of like a large vessel selling on the ocean. And there are storms from time to time that my impact, how smooth the ride is, but at the end of the day, economic ties and collaborations and agriculture trade among many other products, you know, in terms of our trading relationship is really the battle of stone for this ship to make sure that it wont go forward and go through the right direction. And i think were in the perfect example right now getting all of this situation and i absolute ly believe theres too much that we need two sides to come together and have a very constructive conversation to tackle all the issues. Thank you both for joining us today. Were heading to the close here weve got 44 minutes left in the trading session here mixed day. The dow was lower, now its up just a point s p is up two points and the nasdaqs come back label the today. Not a ton of movement and oil went down big today, down 4 . Thats the biggie for sure. Tesla shares are slumping. We will look at how much trouble that is headed in the model three release. Apple, alphabeting with all underperforming, you know that coming up, were going to debate whether now is the time to buy those laggards or if more selling is on the horizon. We to want hear from you you can contact the show via twitter, facebook, send us the email sissorwibcfit g cn, rsin bune wldde no follow through. The big rally we saw on monday, unless you count the nasdaq, its up 36 points, the dow struggling to remain positive. The s ps up about 3 and the russell is down nine points at this hour. And autoparts retailers are getting hit hard today just look at Oreilly Automotive its on pace for its worst day in history, down 18 right now Company Reported a miss on Second Quarter same store sales. Rising only 1. 7 compared to guidance of three to five percent Growth Companies cites head winds from a mild winter and overall weak consumer demand for that miss. Its taking other companies with it, advanced autoparts 11 , autozone down 9 stocks were already so skiddish now this kind of bad news is why youre seeing declines, but for the entire space look, whether theyre warranted, time will tell we know that shifting economics of the whole thing building out bigger fleets to service selfdriving car type fleets Going Forward, but thats all so far in the future that if you stick to just what they said about the quarter, you have to wonder if people are overselling it they have a double whammy on them right now, theyre not just in the automotive, but retail as well exactly both are struggling tesla one of the worst performers today last check, down 6 , weak deliveries in the first half of the year lets get to phil with more details. Kelly right now tesla is having the worst day since may, why . Lets look at the companies that the Company Announced after the close of trading on monday might have been lost over the holiday they reported sales that were frankly lackluster in the opinion of many people total of 22,000, just over 22,000 vehicles delivered. There you see the breakdown between the model s and x. The question has been raised by Goldman Sachs today, are sales of the model s and x plateauing. Look at their sales, each of the last four quarters, and you can see its been between 22 and 25,000 vehicles, and Goldman Sachs out with a note today saying you know what, we do think that demand for the s and the x are plateauing, and if you add in the fact that you might see a slower than expected rampup in the model 3, which will start in the second half of this year, then perhaps you could see margins coming under pressure and thats one reason they cut the target price for tesla shares down to 180. Tesla has not given full year guidance in terms of deliveries this year. It did say that it expects to deliver as many model s and x in the second half as it delivered in the first half. So, you know, put that together, youre looking at about 95,000 vehicles we dont know how many they expect to deliver of the model 3. We still do not hav