Plus what to exfrequent the market over the next six months. Hes making some unexpected calls from foreign leaders lots of news happening on the auto sectors today plus the new tesla model set to hit the streets at the end of the month. First up its the first trading day at the second half of the year. Futures pointing on whats likely to be a low volume day. Market slows today due to the 4th of july holiday. Well get a few notable pieces auto makers will be out with june sales throughout the hour and the president tweeting about the state of the markets and the economy. Wages will start going up. It has never been stronger actually pointing to a narrative that some believe will be written in the second half if we finally start to see another kind of reinflation trade. Or if they dont. Theres actually movement. Its incredibly dangerous im superstitious to tweet about how high the market is the same to me is just tempting fate. Why over saying its like peace for our time and i think its dangerous. The journal, the top of the journal today is about the dollar about six years down 5. 5 they say investors are confident that other economic recoveries are surpassing growth in the u. S. When you saw whats happening last week, especially in the wake of what mario draghi said or didnt say et cetera. It drew 20 basis points in a matter days. Its a huge, huge move central bank is able to be less acome day tif and that speaks to exactly where your asking. I also wonder 6 and you have to wonder is the flip side of that part of the increase in the stock market the stock market rises theres really some change coming out of the Trump Administration so i dont mean to start circling back to that a lot is predicated on the story this morning even talking about changes with tax cut hikes on the wealthy also talking about they still want to go big on tax reform and make that happen i dont know if the trump tweets are helping health care happen or helping tax happen. Its going to be a sense of doubling down today. And a tax rate for the wealthy that begin with the 4 to pay for more aggressive lower and middle income tax cuts, pushing for 15 corporate and then this line that some say resigning if he concluded the tax reform. What has mike santoli said. Hes worth 2,000 points on the dow. He is kind of seen as the kind of stabilizing force that represents what its wishes are for lack of a better way to put it if you feel like that weight shifts more toward the seat i dont know if theyre quite as excited about that prospect. It was part of the administration committed to revenue neutrality which removed the shackingels of what they could do speaking of putting downward pressure on the dollar those headlines arent going to help. Finally well watch as we said oil today hasnt had 8 days up since the end of 09. Back to the end of 09 they had ten days up its coming off the best week of the year but the worst half since 2015. We saw rig counts drop last week for the First Time Since january. I know we spend so much time obsessing about opec im not sure we should anymore because clearly lets remind everybody opec is talked to. The government says a and they do exactly what it says but here in the United States they do what theyre going to do based on what the price of oil is doing. We see rig counts go up and being determined by us im impressed were up 8 Straight Days because of that. Every time it starts to get a little traction the capital goes back into the market and that continues again. Happy 4th guys jeff do you believe the second half is going to ring different than the first. I think your dollar point is a strong point and weaker dollar should pick up Industrial Production in the second half of this year. Come in well above what people think. I think in the stocks were going to continue. Youre not worried. Im not worried about that. The underlying economy is stronger than the governments figure suggested i traveled all over the country is strong. Strong business will tell you things are strong so im still bullish. I have a feeling thats going to happen a lot this hour. But what about you same question about Interest Rates. How do you interrupt their moves here so, you know, theyre still so low, not whats going on from a central bank standpoint. At least in our data one of the things that were watching sin inflation data is starting to turn inflation data. Nothing that should be alarming but to see that two and a quarter range. Tweeted the 232 is a critical level. Its the worst month since november we had a flip flop do you think thats going to be more permanent. We do expect more volatility. Theyre talking much less about supporting growth and financial conditions much more about asset prices and it wont show up in the markets probably until we get meaningfully into the second half were probably a little bit more cautious because of that reason exactly. What about you in terms of the rotation we probably saw outperform growth for the first time in ages is that a play book for the second half or no . I would favor value over growth a strong recommendation on the financials and so far its played out well. How far would you ride that, jeff not to bring this all just as a trade. The fundamentals changed quite a bit there. The pay outs are up big. Theyre relative to the market multiple. Trading below market multiple. Could trade to 2. 5 times trading 18 times forward earnings actually they think it falls to 17 what do you think for the whole s p . I think 20 multiple on the s p makes a lot of sense to me. Why because if you start if 1990 at the beginning of the year and were still okay then whanchts do you think. There would be probably a slow leak. If you see Interest Rates as a sub city tutor in equities both on the shortterm rate and ten year we expect a grind higher. More and more people are able to meet their financial goals and they may pay a lower price we should fit in moderately to slightly lower. It really hinges around what they see in a ten year yield how much do you pay for earnings depending on what youre going to get in the bond market. Which was in absolute certainty. The s p can earn over 150 per share. And to this point that fixed income is an alternative i sit on the board of two endowment funds and theres no way to get to our mandated 7. 5 target return using fixed income. The only way is stocks. So 150 with tax reform and without it are you in the 130s where are you . Its probably around 140, 142. Wow thats a number considering 100 wasnt at a long ago. I know. I remember when we were kpieexc about the s p hitting 100 in earnings. Have a great fourth of july thanks for joining us on the session here. Youll be shocked to hear the president took to twitter this morning. Hes announcing he will be making call with foreign leaders and top trump adviser steve ban nonis is floating a tax hike, a big one on the wealthy. Good morning, the president is at his golf course in new jersey today but he is carving some timeout as you can say he is going to be talking to some of those folks. Angela merkel of germany and we will be going along with the president to see how thaun folds after a weekend where he spent largely on twitter criticizing the media this morning he teed up another tweet blasting the media he said at some point the fake news will be forced to discuss our great job numbers, strong she kmis, success with isis and the border and so much else that after this tweet over the weekend in which he retweeted an image of himself as a professional wrestler body slamming and punching a person whose face is replaced with the cnn logo the president critical of the cnn network. That tweet got a lot of reaction some of the president s critics said it was an insightment to violence against journalists some say it was the president ial equivalent of a prank phone call the president continuing to be fixated on his cable News Coverage also steve ban nnon has the idea of raising taxes on the wealthy. That would pay for midding and working class tax cuts a populous move by the white house if they go in that direction. Not clear how republicans would react to the idea for tax increases for anybody. So a interesting mix here this morning going into this shortened july 3rd. Well talk to you later this morning. What a weekend for political news june auto sales figures for ford toyota is out just now plus the weight is over. Tesla announcing its rolling out the model 3 earlier than expected we have details on that. Take another look at the premarket. Nasdaq coming off the worst week of the year but the best first rba ia nu 09 wee ckn mite it was declined to 5. 5 . Retail sales in line with expectation. As for toyota an increase in sales last month of 2. 1 expecting an increase of 0. 1 so ford and toyota reporting a little bit better than expected. Well get the gm numbers in about 15 minutes and dont forget later on today well find out what the sales pace is most believe it will be about 60. 8 million vehicles with these first two coming in better than expected we could get back to that 17 million mark though. Most believe 16. 8. Elon musk tweeted out the first model will be produced on friday when they ramp up producti production the first 30 molds will be at the end of the month on the 28th and then gradually increase production through the end of the year with the production rate hitting 20,000 for the month of december. Thats production rate doesnt mean theyre going to crank out 20,000 vehicles in december but remember they initially targeted production rate of 5,000 per week by the end ofdecember so theyre roughly in line with what they have been guiding the street to. Where are we on their efforts to get to half a million by next year in total . Theyre sticking with that. Theyre sticking with that as the Production Target for next year a lot of this continues on if they can continue increasing production. Tesla shares up another couple of percent. 72 year to date extraordinary i also want to ask you about this report that the Homeland SecurityDepartment Might partly resend the band. Whats going on there. They announced yesterday that flights out of abu dahbi have been cleared by the United States that their enhanced security procedures and they dont go into details about what they are but that those enhanced security procedures mean people flying to the United States and were talking about the airlines that those people, those passengers will be able to bring on their electronics including the laptops so i think were going to see this over the next several week where is youll hear from a particular airport primarily your larger hub and we have been clear. We have been approved by the department of Homeland Security. They have signed off on our increased or enhanced security and therefore people will be able to continue bringing their laptop and other electronics. Will we see a big up tick in the companies that make these things we went and spent time just outside of boston and they have one already being tested by the tsa. Different hubs around the United States one also being tested in europe. Theyre planning to ramp up their production and youll see that from the other 3d bag screeners as well. I think everybody realizes this is being pushed by the tsa and the department of Homeland Security therefore theyre going to be ready to increase that production well see you in a little bit for gm when we come back the second half play book on transports can they remain in rally mode after a good june . Today marks the first day of the second half of the year. Lets get a check on where the major averages stand for 2017 t. Both up over 8 nasdaq 14. Nasdaq 100, 15. 3 more squawk on the street in a minute baby crying slow jazz music fly me to the moon and let me play bell ring [woman] we did it. [man] were campers. Look at us. Look at us. Its so nice to get out of the city. Its so. Quiet. Is it, too quiet . Its awful. Yeah. Feel at home, pretty much wherever you are. Tmobile is americas best unlimited network. We created the ripple the doughnut in a doughnut in a doughnut. Right away, it was a success. I mean, it really took off. What people dont know is that it all started with points from my chase ink card. I bought the ingredients, utensils, even custom donut cutters. Wow all with 80,000 points. What will you create with your points . Learn more about the ink business preferred card. Transports underperform the s p in the first half of the year but coming off a strong june is that the sign of things on come for the back half morgan has a closer look. Thats right. This could be the case the dow transports reversed course from the best performing index and now the average is neerg its all time high of 9639 a new high would be another buy signal for stocks so improve dag at a the possibility of Stronger Economic growth. A new traex charge during some weeks. Fed ex is exapproximate pekting to do something similar. And june truck tonage bounced back can it finally recover from a down cycle they have a big rule taking effect thats going to force them to electronically log driver hours that could help take capacity trucks off the road and raise rates. Also keep a close eye on rail stoc stocks they all rallied this year theyll face it in the second half and key growth areas like autos have started to wain and csx is expected to keep soaring. Thank you for that. Opening bell in just a moment. Thank you is what we say. But we mean so much more. We mean how can we help . We mean what can we do . We mean its our turn. To do our part. To serve you, for all youve done to serve us. Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at Td Ameritrade. One of only two shortened sessions for the year. Bob is here at post 9. What can we expect today i think the important thing is what were going to expect for the next few weeks i looked at the earnings over the weekend. We only got 5 of the s p reporting. 23 or 24 companies but the numbers have been excellent. Oracle had great numbers nike had great numbers fed ex had great numbers so we have seen these companies. These early reporters not only do better on the bottom line and the top line numbers the revenue numbers have been spectacular. We have a revenue drought for 2. 5 years. Nothing zero on the top line suddenly 8, 9, 10 Revenue Growth for these companies now you cant say we have Financial Engineering going on now you have real top line growth 90 beat on the revenue side that almost never happens. Typically its 50 or 60 . Relatively speaking the huge move in yields, the big jump goes almost 20 basis points. Im not ready to call it the reinflation trade back a little but oil, copper, ten year yield all moving at the same time. I think theres something to that we could talk about using bonds as a hedge against stocks after the bell here but i think its a little bit of that going on as well its the opening bell and the s p at the bottom of your screen undergraduate Investment Conference and at the nasdaq its the United States air force. Its 70th anniversary. More auto sales coming on and lets get back to phil. Maybe everybody had better than expected sales. Gm down 4. 7 the expectation was for a decline of 1. 8 so gm a little weaker than expected and when we get that later on gm believes it will be 60. 6 billion that will be the fourth straight month. Thats a pretty big miss relationship ti to the others. Any special factors that might be in play there. Usually when you look at these. When you see an auto maker come in a couple of Percentage Points lower than expected. Usually its because of that and Sales Program when they cut back on complete sales thats terrible. Theyre taken with a bit of a grain of salt month to month from the low 17 million, right . Now theyre in the low 17 million. Theyre in the mid 17 million. They brought that down for the entire industry. Their estimate for the entire Industry Sales for this range they brought down to 17. 1 where Everything Else was already. Thats not a surprise that gm brought it down. With all the talk about tesla today how is the chevy volt doing . Its okay but its limited sales. Youre primarily looking at sales on the west coast, california, oregon, washington, some states out of the east coast. You will see nationwide sales ramp up later this, its actually next month. Thats when well be able to say how much appetite is out there and then be able to perhaps compare that with the model three. And the model 3 are comparable customers and if those are two good cars. In terms of customer i think youre looking at different customers there. I think the person that is shopping for a chevy volt tends to be positive toward chevrolet. Tends to be a gm favorable toward general motors. The person that put down a deposit on the model 3, i think these are people that from the beginning looked at what elon musk and tesla are building and they say i like it i want it. They put a 1,000 deposit down a year and a half or 2 years ago before they had a chance to see what this is all about youre looking at two different types of buyers. Phil, thanks for that covering auto sales today. Dow is up 92 being lead by microsoft but otherwise, financials, goldman sachs, jp morgan, the ten year right at 230 as we speak. Thats the group to watch energy and telecoms are down double digits. With everything going on theres a lot of repositioning that might be happening thnchts. This is the big debate. We did see money coming out of tech they were down about 5 in the month of june. We saw that. The problem is its not quite clear who the rotation is going to everyone is cheer leading the banks. The banks were up about 6 in june thats an obvious one. We have ten year yields up we have banks allowed to raise dividends and buy back more stocks so they seem like the obvious ones but not much else oils not doing anything none of the Energy Stocks are. Retail isnt doing anything. Theres two obvious groups you would think might get a li