By a fraction of a percent crude oil, this is the one weve been watching very, very closely. We have wti down by 1. 6 brent it down by 1. 5 . This is quite a rebound from the lows back in june. We are up by 12 from june 21st lows so staggering move in just a short amount of time weird. Weird to see the dow so strong and the nasdaq so weak thats been happening more the nasdaq had been stronger on a relative basis then the rotation happened. I dont know what it means. Maybe its healthy this is scary and not healthy. Maybe the meeting is good, but the reason for it frightening. The u. S. Requesting an emergency u. N. Security Council Meeting today after north korea tested an Intercontinental Ballistic Missile. The missile could put all of alaska, so mainland i dont know if you call that mainland, but pretty close late yesterday the u. S. Military said u. S. And south korean troops fired missiles into the waters off south korea in a show of force back that way apparently it can reenter the atmosphere and maintain the integrity of the nuclear tip device thats there. They succeeded this was like another major milestone for what they are able to do. Also looking at the way they showed exactly how this fired it went for 40 minutes right 37. It went up and down like this but if they if you put it out and put the apex here, it could reach anchorage. Now we are within within range. Im afraid to call him a madman hes so insane. But theres a guy who has potentially he could press a button are we the markets at new highs every day, are we living in some type of denial the geopolitical risks are those things that we know are always there, and they dont matter until they do the question is is this the thing . Is this the change that suddenly makes it something more real to the markets . We have seen these events tip equities, tip the economy before in 19990, 91, with the gulf war, at the time Alan Greenspan was warning of a possible recession. That event hurt confidence and the economy enough has it did contribute to a recession and the downturn in equities this is something we have to watch incredibly carefully while the Economy Today is not vulnerable, it is not growing so strongly that theres no risk. To your point on valuations, the equity market is not crowded but the valuations are high this could lead to some profit taking it is scary. It seems this just seems different. Its not easy to resolve either with putin, you have a guy maybe hes evil, kgb, but hes not going to do something who knows. It almost seems different when you talk about north korea we had Evelyn Farkas on on monday, she still thought russia was the biggest threat trump is going over to see putin. They can talk about north korea almost as being aligned against what could be really destabilizing globally with north korea. I dont know whether russia is our biggest threat right a military response to north korea is so difficult because it almost guarantees that you have a lot of casualties in south korea. 35 miles away exactly japan, our ally right south korea is going to be hit if this escalates. China prefers not to have akz send t south korea and the u. S. Aligned. Well, we have a jobs report thats what we do. Thats going to be a market mover. What about wage gains thats why it is all surreal sitting watching great fireworks yesterday. And the entire community is there at the high school flags, and great music we cherish this. And i dont know if we can just take it for granted that its always going to be as easy thats what i i didnt sleep well the eu approved italys 6 billion state bailout of banca monte dei paschi this comes after bmps thats what i will call it from now on, agreed to a major overall including transferring bad loans and capping pay for senior managers. Volvo says that every model from 2019 onward also have an electric motor this will make it the first traditional automaker to stop making vehicles powered solely by an internal Combustion Engine i was kidding, they have a couple cars that are not that ugly i was like they talk about the old volvos they used to look when they were saf safe those boxy scare vol yy squa i still dont like them but the safety. Theres a lot of safeguards, i dont know if on the tests whether they outperform. Theres been strides made. A lot of Car Companies, yes a lot of Car Companies are safe you dont need to drive a boxy swedish whatever it is its another competitor for tesla on top of jaguar, mercedes and audi which all have cars why cant bmw bmw and mercedes figure it out that is what scares me about the tesla thesis if you have the good german automakers and others even ford and gm, why cant how do we know that theyre going to own that electric car market forever . We dont know that. The stock says they are. They have a first mover advantage. And they got elon musk. On the space company, watching those takeoffs and landings, whether r whatevateve him, its extraordinary to think we can reuse space equipment for the first time in history. Andrew is not here. He cant stop me i look at elon musks hair and think this guy if you look he was bald. You look at him now, so he can do anything. True genius reflected in a mans quaff. He was basically bald and now has a full head of hair. Thats the business you like the reusable rockets. You like the hair a lot of people can do that to regenerate and have a full head of hair after being bald, that speaks to me. A backup plan, huh . Yeah. I think i made it this far if it happens now, its you will go with it i do go with it its very full. Little combover lush, joe now to todays top political stories. President elect trump will leave for poland this morning for his second foreign trip since taking office Kayla Tausche joins us now with a look at the agenda where is eamon is he stuck in ireland did you see his tweets i dont have the full background on what the delay was. He is on his way to hamburg, which is where the g20 meeting will be taking place later this week, joe. The president leaving this morning for that second foreign trip hell arrive in poland this afternoon. Hes expected to make a speech to affirm the u. S. s commitment to nato and allies followed by that g 0 meeting in germany where he will meet with russian president Vladimir Putin thats the first time this bilateralist is taking place since the election that was the highly anticipated event of the meeting but now the focus is turned to north korea north korea after pyongyang launched that Intercontinental Ballistic Missile shown here according to north korean state tv the country says it could carry a Nuclear Warhead and it could reach the u. S. That emergency u. N. Security Council Meeting, that will take place later today after the u. S. And south korea conducted a joint Missile Launch in response to show the precision of those allies in being able to potentially launch a military strike now, President Trump is expected to take up this issue with president xi of china at the g20. He criticized the efficacy of chinas efforts to thwart north koreas ambitions and said perhaps a heavy move was needed from beijing now in response the president did not mention the issue tuesday night at a white house event for military families but he acknowledged that the u. S. Faces challenges i will always have your back. I will always under all circumstances. Our country is doing really, really well. No matter where you look, the economy is blazing on every front were doing well. We do have challenges, but we will handle those challenges hes tweeted eventually about wanting gas prices to be lower, about job creation under his administration, about the stock market hitting spintraday recors a week ago you might say the challenges that face the u. S. Are on a legislative front, but these geopolitical issues crop back up and quickly usurping any other discussion point thats our discussion this morning. You cant i dont know whether you call them black swans or what. Its leak the end of the world, if youre in cash, it doesnt matter maybe gold its hard to prepare for the end of the world it can only happen once, right . I havent confirmed that, but it sounds right. If you were a worry wart you would start worrying at this point. But i dont know if you worry about the overall economy if nothing does happen. All these legislative things look like gravy. Deraeg la deregulation, europe coming back the bo a lot of things are happening. I dont know if the market has the pro growth policies factored in i think they could go further if they get it done i think right now it may be gravy. Specifically with regard to the events unfolding in the Korean Peninsula theres some attention paid today to the fact that asian markets are largely sa sanguine on the back of what happened but theres activity in the Options Market where you might sensevestors are trying to prepare portfolios for a black swan event or something unpredictable to happen. Here in the u. S. , the fundamentals still appear good thats what we keep hearing about growth, corporate earnings, and about some of these agenda items happening behind the scenes. Theres still a lot of confidence baked in that washington can get some of these legislative proposals become behind the finish line theres a lot to get done. The clock is ticking, but for now bigger issues are at the front of table kayla, we will see you soon hope you had a good 4th. Same to you did you see any fireworks i did the fireworks in washington are pretty spectacular on the mall, with the monument in the back. Its a special view. Exciting to see that for the first time they play some music . A little bit of music beach boys, four tops, yeah. Great lineup have you heard this this insufferable katy perry song i am a fire work or something i didnt know who it was she was screaming. All the kids are singing the lyrics im like what is this . She says youre a fire work whatever. Youre a firework god, its just i cant believe what passes for the louder she sings, the better the song is supposed to be im getting old. Thank you. I sound like i sound like the people that used to talk about the beatles when i was young these longhaired kids back in my day music was youre the muppet guy in the balcony, joe i am. Tho that was a real snort. Not a sound effect it was. I need some diversions from worrying about the end of the world. Lets get back to the broader markets, joining us is mark chaiken and rebecca batterspate our guest host mark, you feel markets are in good shape t i guess it would take something unexpected to derail things . I do. Thanks for having me on. I think the transition from a feddriven bull market to an earningsdriven bull market will continue in the second half. The Second Quarter earnings due to start coming out next week will be very positive. Weve got some events in the Financial Sector which i think will help mitigate the weakness in tech that we saw last week. The jobs market, is it strong, full employment . Where are the wage gains are those coming will that give it another leg up is it still not what it appears to be in terms of people working a couple parttime jobs, the Participation Rate not baby boomers but people who could still work is that still high even though the numbers are coming from the government which always make them suspect, im a big believer in what weve been seeing in the unemployment numbers and rising wages and the jobs report. I think this is healthy. It shows the economy is growing. The labor market is tightening this is good and suggests we have a Strong Economy that we can count on in the second half. Mark, good morning. So you have this amazing background with your company in terms of looking at dashboards, indicators to help you figure out your view on the market and specific companies and sectors is there one or two indicators youre looking at now for the rest of the year that if they dont work out as planned you change your view youre fairly constructive on cyclicals going into the second half of the year what would make you change your mind is it the yield curve . Technically driven inflation . What are you focussed on the most rebecca, i think the yield curve is an interesting place to start. It flattened out over the last four weeks that spooked everybody the reality is that a flat yield curve that doesnt invert is bullish for the stock market going forward. We saw the beginnings of that last week as Interest Rates started to move up what would spook me is if Second Quarter earnings disappoint analyst estimates. We had a string of not just earnings surprises but sales surprises. Thats a key factor in our multi factor quantitative model. I would be looking closely at both how Companies Report relative to wall street estimates and also guidance going forward. You know, you have a lot of companies that are benefitting from a weak dollar you saw the beginnings of that with nikes report on thursday where their International Business carried the company to better than expected earnings. Im watching analysts estimates. The trend of estimates, they typically key off earnings surprises. Thats why im so optimistic on the market with a target of 1505 to 1600 for the balance of 2017. Disruptive things happen. I think about retail the world is changing so quickly or media looking at that disney story. God. Kids are doing do you see it, they measure ratings for 2yearolds to 34yearolds. How do you measure im trying to figure it out what i can do to big bird how do we try to costumes. Thats the answer. Going after that demo i keep referencing back watching these fireworks. There were some kids, the fireworks are going on, im like what is that light i look, a kid was on his iriphoe with his fireworks i was almost going to grab the iphone and throw it. What are you looking at on your iphone while the fire works are going off . Will you be in the moment just for a second sorry, mark. Thank you. Thank you. You know what i mean its disruptive. Things are different i dont like it. Change is hard. Change is difficult go ahead. If you look at consumer discretionary, a diverse sector, you can see you have retail and amaz amazon, Electronic Arts and Activision Blizzard are doing well kids are buying, and you see that in the video game stocks. The money is still its not a completely zero sum game, you lose one place and its going somewhere else i understand that. Its tough if you thought disney would be the greatest company in the world forever. You read about espn. Those are the two pillars, the espn and the kids stuff, thats where the problems are its scary comcast has been the model for how to die vefversifdiversi. Theyve done a good job of combining cable with content are you available every day youre coming back, my friend. That was the most compelling thing youve said and the most accurate mark, thats our parent, you know that. I do, joe i hope you remember weve been doing this for 25 years, you and i. I hope i will be back. You will now. You will now, my friend. Youre with us until 8 00. Its a twohour sentence you got today. You made someone mad Chinas Central Bank says the countrys shadow Banking Sector lacks regulation. The pboc is promising to increase supervision and ensure the economy has no systemic financial risks. Eunice yoon joins us now here in asia, everybody in the financial world tends to go to shanghai or tokyo or hong kong to make their money but we spoke to one ceo raking in the profits on the farms. Reporter far from his posh beijing office, roger ying is meeting some of his best clients. We love coming down here. Its always a treat. Reporter the stanford grad from south africa founded a peer to peer Lending Company called pa flshgs ashp pandai the p to p industry in china has run into financial trouble to survive ying lends almost solely to people on the farms. When i look at the china economy, 1. 3 billion people. 300 million to 400 million have already been enriched. Theres 900 million other farmers who have been left behind by the mainstream Financial System we see the demand for farmers. Reporter in this village in southwest china, fu used to be a coal miner after getting injured, he wanted to try pig farming but didnt have the money in the countryside its hard to get money, he says even if i were to get a loan from the bank, it would be too small to start the business. Then the local village chief introduced him to pandai who approved a loan of more than 11,000. Rather than hand over cash, the Company Bought the pigs and feed in one year, fu expects to earn a profit of 14,500 after paying back the loan plus the 15. 5 interest this kind of lending may sound risky, lending to people on the farms who dont have much experience with modern finance in fact, pandai says their recovery rate is 98. 5 and in a country where Companies May or may not pay their deb back, these farmers are a good bet. The farmers, we find them to be honest, reliable and basic people they are just looking to improve their own lives out of poverty reporter good for a economy in need of consumers for future growth this may seem like smalltime finance, but theres a larger point for china. As the economy continues to slow down, policymakers need to find new sources of growth. It makes it that much more critical for china to bring those hundreds of millions of people into the modern Financial System and get them access to capital so they can invest in businesses, improve incomes, and eventually become a larger part of the overall economy guys eunice, thank you live from beijing. If you see any of the leaders over there, can you just ask them to try to help here a little bit with north korea. Just, you know, just yeah, you were talking about fireworks, the katy perry song i was listening to that last night. Oh. We were worried about a different type of fire work involving north korea. Oh, my god. Oh, my god is this it theres like a yeah. Theres another song i didnt like e