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tv   Squawk on the Street  CNBC  August 27, 2018 9:00am-11:00am EDT

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that and be larry kudlow. >> i needed the voice, as well. >> i wish they didn't use it so much throughout the movies i love the movie. >> it's unbelievable. >> he broke his ankle. i know he was limping thank you. thank you, melissa you're a workhorse you're working way too much. and you. i'll see you tomorrow. make sure you join us tomorrow "squawk on the street" is next ♪ good monday morning. i'm carl quintanilla with david faber. final week of august begins. futures up after friday's closing high it looks like we may have some news regarding a potential bilateral agreement with mexico. plus, the halo continues europe is solid.
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10 year 2.82 road map begins with signs of trade progress futures set to rally at the open the s&p and nasdaq building on friday's record highs. tesla is sinking in the premarket. investors reacting to musk's plans to take it private and possible breakthrough in nafta negotiations an announcement is expected to come within hours. but, first, to the markets this morning. getting a boost on news that talks concluded. an announcement is expected today. futures pointing to a higher open s&p and nasdaq on pace for a fifth straight month of gains as the nasdaq closes in on 8,000 and left with a debate today, mike, whether it's a head fake, a break out, and whether it needs to be ratified with better volume this week. >> you consider it a break out i know people are focussed on the fact not only did you finally get this tantalizing move to a new high but it was a weekly close at a new high nothing standing in the way.
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what does it mean? to me, it means nobody who bought stocks at the index level feel stupid now. on a net basis, you think things are probably okay. i think, also, if you look at the indications of where big professional money is positioned, it's not necessarily positioned for big up and away from here. maybe bullish now. i don't think in terms of sentiment but how people are positioned it's a workman like rally that got us here. you can pull it apart and say, yes, light volume. yes, the percentage of stocks at a new high or dissipating in the rally is not impressive. kind of a defensive tone in a way. but with that, you got here. and up 7.5 percent year to date on the s&p 25% earnings it almost seems like all the offsets to the good news we've kind of used them up the trade stuff we've been living with forever. it lost the capacity to surprise in a negative way. >> and powell's speech about
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being gradual and practical. i guess more than anything else, david, it will be interesting. his point about having gas in the tank and running out of excuses, so to speak. >> yeah. turkey is back open but no one is talking about that. >> that was weeks ago. that was a day story or a couple of days. when you look at the nasdaq comp up over 15%. the conversation in the last couple of weeks whether or not faang can continue the leadership an article today in the journal talking, really, about the loss in the ten cent buy part of it i didn't pick up as much. >> right. >> i didn't know that many hedge funds managers alibaba has been that's a reversal last week. netflix had a good week last week now back up again 87% for the year. >> yep. >> a significant percentage gain over last week momentum there shifted. >> we went from complaining that the market was too dependent on faang saying the market is clicking toward new highs.
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faang, at least as a block, is not working all that well. it's doing enough. again, i think it's kind of the market is doing enough to keep the uptrend moving i think you can take and twist it around, also, and say, look, earnings are up 20 to 25%. s&p is up 7.5 year to date s&p is really up 3% since we got our first earnings glimpse of this year in january it's been about growing into the evaluation. >> sure. >> and those offsets you know, compressing things meanwhile, yields remain lower than most expected at the bottom of the duration of the 10 year yield. that's another trade that is crowded. people betting there's yields going to go up it just hasn't happened. >> interesting to hear this morning. >> there's some suspense here about december 60% at this distance is not a slam dunk. we're watching tesla
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elon musk changing course saying he will not take the electric car company private. the billionaire entrepreneur explaining his move to remain public in a blog post on friday. tesla shares down nearly 9% from the peak on august 7th when musk tweeted he had funding secured for a buy out. there's a few wrinkles one is lamenting the loss of public shareholders. but, also, maybe some blow back from investors he didn't quite expect specifically the saudis. >> we've spent a lot of time talking about, obviously, the difficulty if they tried to follow a traditional buy out route. it's interesting to note it wasn't that way they were going to try to consider taking this company public but rusing the amount of shareholders below 300. they would have reduced their filing needs
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it would have been potentially almost quasi public. and certainly as a public debt issue or it has certain filing requirements nonetheless, you know, according to the published reports out there, they were making progress, at least, in rounding up some level of money but as i've mentioned many times, the level of difficulty still was quite high what one does wonder is whether or not if musk had been serious about this, as parentally he was from the beginning why he didn't keep it quiet, investigate many of these questions they were then trying to answer once it had gotten to the public realm, and then perhaps gone about seeing for it was something he wanted to do and gone for the normal channels of thing bringing a potential offer or some sort of transaction to his board, which would have set up a special committee. perhaps it would have leaked at some point you can imagine a scenario much would have remained in the private realm. perhaps would have come to the same conclusion and we wouldn't have known about it.
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>> sure. >> as probably a better outcome for shareholders and for everybody. what we know is that elon musk is an emotional guy who seemingly is kind of having a interesting time, to put it lightly. >> yeah. it's been a fascinating story to follow on one hand, you had to go down the track to say it's the ceo of the largest shareholder of the company. you have to take it on face value to a certain degree. and as a good faith intention, and say is this feasible practically, at the same time, you have to deal with the real possibility that it was just kind of this eruption of wishful thinking that he could be private. >> that's one of the kind theories about how it happened. >> exactly. >> and you know what do we know now? what did this do it necessarily didn't do anything positive for the company. i think the possibility that there was a lot of capital, at least willing to potentially be put to work to try to take this company private in some realm, even though, by the way, getting
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that role of two-thirds of the shareholders was -- never realistic. and he seemed to have learned that but what we know is that the "new york times" interview that jim stewart did was something, to say the least mr. musk was also in new york. i've heard from jeffy epstein the well-known asset manager who had an interesting life. and, you know, when you think about where musk is emotionally, i think and what i've heard from some of the people who are at least involved in the process, i don't know, i don't know that you aren't a little worried about his continued leadership. >> what is fascinating it leaves the stock near 300 which has been a battle for a long time. and essentially with a lot of people saying he was going to steal the company. you have the bulls out there say that the outer edge of bullishness is out there. >> the popularity view of tesla
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hasn't changed for a closer look at musk and tesla. we'll bring in gene muenster and raji gill. thank you for trying to help us navigate gene, you were on august 14th, and you saw a 50% plus chance of it go private deal in 3 to 9 months is this a surprise >> carl, i bumped it up to two-thirds potential as we heard more from the saudis i was wrong on this. i think it's still true that the company should be a private company. that said, it's just simply not in the cards it sets up for what i think is going to be one of the most dramatic stocks over the next few years. it's either going to be significantly higher or lower. and i don't think there's any in between to the tesla story over the next couple of years. >> and can you tell us directionally which way you're
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going? >> i'm definitely on the upside. this has meaningful upside i believe in the product road map and i believe in elon musk albeit it has been tainted over some things. he has to earn back some of the trust, but i believe this is probably the best road map of any company around electric vehicles, autonomy, the storage, the solar, all of that really is this secular theme and i think tesla's leadership will play out. i think what we're going to see the company move to a cash flow positive position. it might not be in the september/december quarter i think it will be in enough time to get the company velocity in the next year. >> let's say none of this happened and you woke up today and the stock said, you know, 3.16 it's 60 or $70 below the high from over a year ago and it was trading on the hopes for what they can do in terms of production what do you know about demand?
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about their ability to meet that demand and the ability for them to remain kind of in a decent financial position from this point >>well, putting aside, you know, his plans to go private, which were premature, and i think questions his credibility. i think his credibility already is raised to begin with. and the fact this situation has occurred mikes me think the credibility continues to be under pressure given his track record so putting aside that, we were a very bearish on the stock. we believe that the man is not unmatching with production and we think that the gross margins are going to be under pressure as we get into 2019 we think the battery packs are very expensive for the base model versus the $35,000 model we don't think they can make profit on that high volume car we also there's going to be gross margin pressure on the
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model f and x due to more competition. and the $7500 tax credit is also expiring next year. >> so, raj, to the point of cash flow positivity, if it doesn't happen in the back half of the year, even if it's a little bit late to gene's point how does he explain it away? >> it's going to be extremely difficult. i mean, if you go back to his past transcripts, he has said on several occasions he would be profitable going back to 2014. he has said that he would not have to raise money and he ended up raising money if you look back in the last two years, he's raised over $8 billion from the capital markets in the form of debt and equity last year he said he was going to produce 200,000 model threes and he produced 2700 in the second half. he also said that the gross margins on the model 3 would be 15 to 20% in q4 of last year it ended up being a negative
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margin so, you know, there's notion that he's under pressure or he gets unfairly criticized i think is a false notion. his market cap is $55 billion. it's equal to that of gm. >> yep. >> gm sells 10 million vehicles -- >> can i interrupt i got a question. >> last point, gene, quickly. >> i fundamentally disagree with the demand piece i think the demand for model three is going to escalade as more get into the market that will get them to profitability. >> we're going to talk about this in the future, guys we got to keep it tight today. thank you very much. we appreciate it another look at the premarket on this monday morning. "squawk on the street" frback i minute congratulations. thank you. how many kids? my two. his three. along with two dogs and jake, our new parrot. that is quite the family. quite a lot of colleges to pay for though. a lot of colleges. you get any financial advice?
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a live shot of the u.s. capitol this morning flags at half-mast as we're awaiting a moment of silence here at the new york stock exchange and the nasdaq in remembrance of arizona senator john mccain who passed away over the weekend after a battle with brain cancer a six-term senator from arizona. a well-known vietnam veteran i love one of the quotes attributed to him "i hope those mourning my passing will celebrate a happy life lived in a -- continued success is the hope of the world. >> yeah.
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>> for decades he's been out there. he has a few memoirs he's been distilling this view of the world a. >> it will be a busy week. but here at the nyse, here is a moment of silence for senator mccain [ moment of silence for senator mccain ]
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to helping your company reach its goals. u.s. bank -- the power of possible. welcome back to "squawk on the street" live from the financial capital of the world joining us morning mark cashen to help kick off the final week of august as futures are hinting at additional gains. >> good morning. yeah, no it looks like it it's really intriguing that when we get anything that looks like beneficial on tariff and trade talks, the market rallies and intriguingly the president's legal wows don't seem to have any market affect yet. so we'll see how long that continues.
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people are already -- that if president gets legally handicapped in some way, that the vice president is still there and the policies, theoretically, would continue. >> yeah. with nothing very particular that the market is hinging on in terms of an economic agenda that might come down the road that could get impaired except for the hard line on trade, which the market doesn't seem to like that much. >> absolutely. and mohamed el-erian on your station earlier said that he thinks that there may be as high as a 65% chance this works out to a beneficial end that the tariffs are generally reduced and trade improves. >> and the same way the market responds positively to the headlines. it doesn't potentially respond negatively to, for example, lack of progress with china we didn't really see much of a back up last week after those low-level meetings didn't appear to go anywhere either. >> yeah, no. that was kind of intriguing.
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i think just generally still have hopes this is posturing i guess, david, as long as somebody didn't slam the door and walk out and say we're not coming back. i think the process is low but ongoing. i think the president may be disappointed pau disappointed because there was some sense to get it done by the midterm election but the market is satisfied at any progress. >> characterize we know volume is going to be light this week how light? >> it's going to be very light it may be the lightest of the year going into labor day weekend. you know, kids -- people with kids thinking about going back to school, et. cetera. so any chance to sneak in a little holiday this week is right there. so i think this could be possibly the lightest week of the year. >> does that take away any validity with what is happening, at least, today? >> well, volume adds to validity but you have to look at the
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calendar and say, okay, i can't expect high volume you have a bank holiday in london today. >> last couple of weeks are just looking at what the dollar was doing was pretty good tell for how stocks are going to respond. dollar index is down off the highs pretty well from a couple of weeks ago soft again today is that, you know, kind of a causative thing? is it related to turkey. i think it's that and reinforcement from both powell and mueller. the fed looks a little more dubbish than people thought. the networks and the currency, too. and if rates aren't going to go much higher, that will help stocks. >> all right thank you for that we'll talk you in a bit. kayla is in washington this morning looking at the h headlines. good morning >> reporter: good morning. early word from a mexican
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official this morning that in mexico's view, at least, talks have concluded and agreement had been reached between the u.s. and mexico on key issues and that announcement on the resolution of those issues was expected midday with then canada expected to come back to the negotiating table and reengage this morning, as the delegations were arriving at the office of the u.s. trade representative, the mexican dell indication on the record was a bit more i dco. take a listen. >> you may imagine that whenever we're ready now we're going to deal with the legislations we don't want to disclose anything because -- until we finish with the positions of canada will not be able to disclose. >> no comment from u.s the white house said it has no update at this time. we'll keep you posted, carl, as we get more. >> kayla, what is your thoughts
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about david's point a moment ago sort of contrasting the seeming progress with mexico versus china and maybe even the eu. >>well, apple and oranges as far as the trade issues go, carl nafta was something that the business community and largely the republican establishment had not supported the administration's positions if they were attacking on nafta so it is a very popular resolution to reach on nafta and one that a lot of people here in washington want to see done very quickly. by contrast, china is an issue that they say has a lot of open-ended issues. structure issues that will take a long time to fix and the administration seems to have patience to invest in that fight for the long-term. >> we're watching it closely kayla, talk to you in awhile let's get to the opening bell. [ opening bell
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[ applause ] >> i think the tech last week reasserted itself a little bit in particular, as david would say, netflix which had been down so far off the highs i think we're in the zone where it feels like a little bit of a bull market again. even though we've been in one. i think those stocks are probably going to be there not just the volume people are focussed on, but the breadth of participation. it's been a little bit sub standard in terms of how wide spread this has been so this is one thing to look at. you don't want to necessarily kind of talk down the legitimacy
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of it. >> i know if jim were here he would disappoint to ksu, kansas city southern. if there's a nafta or mexico trade play, that's the name you think of first. >> it is and one he mentions many time. the stock is up 2.4% this morning, carl. yes, jim would probably mention that tesla is down, guys, but not very much. 1.3% look to be down a bit more, perhaps, before we open. 3.18 it's trading about 102 below the price that musk apparently pulled out of the air. >> right. >> roughly 20%. >> yeah. he kind of rounded up to a better number. >> yeah. but not down very much and to your point, netflix is up again. so adding market cap at a rapid flip. >> when it comes to tesla, i wonder there's so many ways you can kind of view how it played out. one of which is, look, was
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volkswagen ready to write a big check? did you have other long-term investors saying, fine, we'll be your strategic anchor? i don't necessarily think that was a done deal. obviously the statement the blog post that musk put out the other night, he was careful to say i still believe there was funding available in the deal. he almost has to say that. >> right having first said funding is secured. >> right it's an issue for him in terms of being nvinvestigated there's talk, guys, about the possibility of a pipe private investment and public equity given the talks they've already had with silver lake would there be a capital infusion that came in in that form would they conceivably at tesla expand the board perhaps increase oversight a bit. i don't know the answer. >> yeah. and debt maturity is coming up there's nults and bolts things that need to be dealt with.
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>> there are so many areas it would have been a challenge. obviously the key one he recognized was inability to get so many institutions to convert from public to private but you had, you know, these calls spread overlays that require apartmepayment. his employment agreement which is based on the movement of the stock price would have been redone those are smaller coins but what do you challenge this would have been now it's no longer on the table. >> yeah. you were talking earlier, mike about other areas of tech making up for faang weakness. that's a work today as semis make a stand you'll see nasdaq on your screen as we watch for emotional nasdaq 8,000 on the composite. >> sure. which is what, certainly -- yeah, there you go. >> yeah. semis it's interesting because you lost the leadership of the semis for awhile it was one of the bellwether
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groups they've also sort of reasserted themselves a little bit here well off their highs on an aggregate basis. as i said before, doing enough to keep the market moving ahead, and sort of offsetting some of the nay sayers >> yeah a & d, mike, it's a rocket it's pa . >> things have doubled. >> yeah. it's smallish so the stock kind of has this juice behind it. it runs in the streaks it's like $24 billion. it had been 12 >> it doesn't really capture that chart how dramatic the move has been. >> yeah. the past three weeks, really it's funny the general knock they exist at the pleasure of intel. well, that point of view has frayed over the last few months. >> it is it seems as if there's avenues in that industry where you have,
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you know, a tremendous amount of demand you hit the right product at the right time for the right at market and it's going to run for awhile. >> and, again, if jim were here he would be singing the praises of lisa. who has been at the helpl -- hel of their company. >> we mention the ksu in terms of mexico trade. some of the car makers are in there, too watching gm. caterpillar, as we said. ump. as we sort of take stock what a median benefits might come from at least calming of nerves. >> it's definitely been this kind of overlay of anxiety on the auto sector, for sure. it seems if it will be evolved the stocks are beaten up it's not as if they, you know, there's a high threshold for good news to work there. not too much of a surprise there. obviously, going to get, you know, yet another round of retail earnings this week.
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and because last week, really, the consumer picture kept things pretty much in a positive tone just the results even the individual change that faultered, you know, the top line was great the traffic was good i see gap one of the losers from last week is bouncing hard up over 3%. >> gap and l brands were a big loser last week. but otherwise favorable picture. we talked about it a lot during the course of the week for retail whether it was target or children's place or lowe's or kohls or tjx. >> i think the big question is the comment from the head of target it's the best environment i've ever seen in my career. whether that gets people just too convinced it's going to get better heading into the holiday.
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on the nasdaq i think a dozen names in the red overall there's a discussion today about whether or not we have a breadth problem. as we have the new highs the number of individual names at new highs is maybe less than you might expect. >> it is less than you might exec and certainly less than january. it fell apart quickly and repaired itself. but stocks have been left behind this is a lower momentum return to the old levels. it's pretty textbook in that way. there's enough of the bulls and bears in there the bulls say that's what happened you have the momentum peak but the market can make progress on the own merits after that once it corrects. and the bears will say, look, this is 2000 2007 you had the return to the high index level when you didn't have the strength underneath it. i think it's working, actually, especially the big caps and things like that you can't really say this is a
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fatally narrow market. >> twitter with decent gains as we get news that jack dorsey will testify september 5th in front of house energy commerce committee. greg walden of oregon wants to know more about how the company polices content as dorsey went on a bit of a media tour to help explain what they do how they decide who gets to spend it who does not who gets deleted. >> it seems as if the take away is it's responsive it's not, you know, a filter. you can spin it any which way. >> yeah. >> amazon at 19.14
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i thought it was curious over the weekend. some of the discussions among central bankers about whether or not individual companies albeit giants can help influence back road trends like wage growth. >> yeah. it's something we're going to continue to hear about the way to get at it is through anti-trust law don't forget that supreme court decision regarding american express not that long ago, which seemed to make it more difficult. it was about two sided markets seemed to make it more you have to prove on both sides of the market that there is a lack of competition that is harming the consumer that's where the things break down it's hard to make an argument that amazon is not benefitting the consumer to a certain extent you're going to hear more about the idea about the enormous companies even though they pay
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their own workers fairly well or they somehow stifling to a certain extent innovation. are they keeping the lid in a broader way on competition. >> right as you've talking, david, potus. looking good with mexico we'll see how the market responds to that so it continues that margin. and it actually that whole conversation about the dominance of the companies fits in with what jay powell was talking about, as well he doesn't want to say that these huge secular trends in terms of tech innovation these platforms that are powerful. keeping the lid on inflation maybe the economy is behaving
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differently than we're used to we don't want to get ahead of it with raising rates too much. >> a big theme coming out of wyoming. and record highs for the s&p and nasdaq and the russell we'll get to bob. >> good morning. happy monday and a nice open. it doesn't seem bombastic. not a lot of enormous news but 4-1 advancing advancing declinis it's the same theme when you get trade or reduction of trade tensions very, very similar, very predictive things happen. first, the dollar tends to weaken it's basically the exception of thursday with more trade tensions moving down it has a predictable affect of a number of sectors. we look at the global markets china tends to rise on positive trade days about 2%.
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here in the united states, you get predictable series of reactions. number one, chinese internet stocks tend to rise about 2% kwbe is a good example in that sector emerging markets agreer inicage tends to rise. that's happening metals and mining stocks, aluminium, steel, copper stocks tend to rise about 1%. again, the same situation happening and then you see health care doing well semis have also been rising independently. that's another major factor in the rise we've seen. not a lot of break outs. that's something interesting because we're still waiting for
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the 200 to 250 new highs on the new york stock exchange. hand really happened modest break outs in tech. not a lot of big break outs. the strength is in the rotation we've been seeing. we mentioned for a long time low volatilitynames. and then at the same time just in the last week or so, as we mentioned with the return of semiconductors, we've seen some of the big momentum names come back sisco and amazon and netflix and visa have done better. you get rotation a day like today we have 4-1
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advances back to you guys. >> thank you we'll head to the bond pits and check in with rick santelli in chicago. >> good morning, david one week of 10s everything you need to know we go down in the low 80s and we come in. everyone is keying in off the next chart the end of may, the closing yield. right around 278 or 279. traders say that's the area. we have a lot of support in the 280s but we have been spending a lot of time in the lower portion of that with the known variable that there's an awful lot of unhappy, nonprofitable short positions looking for higher rates. if you look at bunds, 30 basis points pretty much see it all there we come down and tinker in the 30s and it holds
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even though the bounces aren't large. seven basis points when you're at 30 it represents a significant portion of what you get with regard to yield finally, look at the spread between 10:and 2z. friday we closed at 18 and change obviously a new fresh august of 2007 we'll call it 11 years since it's been that flat. we're hovering about one basis point steeper at 19. we can say nothing is going to change the look of the chart that comes out of jackson hole the fed seems to be baked into the ideal they're going to move but not too quickly. and finally the next two charts dollar index july it's like from the end of july, august didn't really happen we had the top and the head and shoulder formations that bob talked about it vanished we look at the dollar yaun same is true for the chinese currency. >> back to you. >> all right talk to you in awhile.
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as we go to break, take a look at the top performing stocks on the s&p this morning "squawk on the street" back in a moment to. let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.
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record highs if are the s&p and nasdaq as we expected ab announcement as soon as today surrounding the u.s. and mexico's nafta negotiations. we heard from the president tweezing a quote a big deal. following comments from fed chair powell saying the central bank is committed to further gradual rate hikes joining us now is mark zanny good morning. >> good morning. >> we were in the part of the cycle where the economic news comes in pretty good and then now maybe some progress on trade maybe the fed saying, you know, we might not have to go that much farther is that removing at least some of the potential obstacles there? where does leave us, in terms of the growth picture in the back half of this year?
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>> well, the growth picture for the remainder of this year in most of next year is very good i mean, we have a lot of fiscal stimulus going into the economy. that's deficit and tax cuts, deficit in government financed d government spending. so that's a lot of juice i wouldn't be surprised if the gdp is clo gdp -- growth is 3% for next year. >> and the fed is starting to sound as if it doesn't feel as if it's going to be reflexively more aggressive if the unemployment rate keeps going down what does that mean? does that mean there's a potential for the economy overheat i overheating? >> it has a good chance of overheating, the fed script is two more rate hikes this year, four next year
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that's reasonable, but my sense is that's probably not going to be enough. if you have a 3% unemployment rate the odds that the economy is going to overheat are high. i call this a boom period, i mean things are going universally in the right direction. this is when people start making mistakes, when problems develop in the financial system. i think the odds of something going wrong in this period are growing. #. >> what would i guess get most of your attention that things might go wrong, do you think it's bad trade policies that could interrupt the happy story, or it is financial markets that might start getting a little bit reckless >> my sense is trade my guess is the president will pull back on his trade war if it looks like it's doing any damage to the stock market or the broader economy. as long as the stock market is
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high and the economy is strong, he's going to dekeep pushing and pushing, but as the rate hikes go on, he'll do something else besides pushing the fed war. there's this old banking adage, if it's growing like a weed, it's probably a weed if you look across the financial system, what's growing like a lead is lending to businesses that are highly levered already, low ratings, a lot of leveraged death growth is accumulating in that part of the economy so if i had to put my finger on something down the road, that would be it. >> "the wall street journal" looks at that corporate debt and says it's 3.4% over ebida. it does that make it easier to tick >> if you look at the averages,
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you go, no big deal, no problem. but it's on the tails of the distribution take the growth in subprime mortgage lending back before the last crisis, at the peak, subprime mortgage debt totaled about $3 trillion, if you add up all the leveraged loans and the bonds outstanding, it's 3.2 and rapidly rising, so if you're just looking at averages, you won't see the problems that are developing >> and what triggers that concern makes it more of a potential issue. does it have to be rates going up >> yes, a lot of this debt is adjustable rate, so as the interest rates begin to rise, the cost of this debt will begin to increase. on the other side of the stimulus, as you move into the next decade, interest rates are
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going to slow quite dramatically there's a lot of script to be written between here and then, and regular lawsuittors can res. but if i had to pick something to look at today, this would be it. >> watching the credit markets as usual mark sandy, from moody's thank you very much. "squawk on the street" will be right back, don't go away
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coming this thursday, a big interview you do not want to miss our becky quick will sit down with buffet ahead of his winning dinnering at the live foundaonti auction. dow is up 208, "squawk on the street" the back in a moment you always pay your insurance on time.
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welcome back nasdaq hits 8,000, almost at the same moment that the dow hits 26,000 although the dow is not at record high. we have not seen 26 k on the dow since february 2 and nasdaq is something 8 k is g
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we have never seen >> i do think people are, you know, looking at the way last week finished, the broader s&p 500 gets to a new high, nasdaq had a more recent new high and a weekly break out on the chart. nothing to stand in your way and i think that you have people at least trying to play for a followthrough. one of the reasons for that, by the way, might be last year, which in august is really when the market took off. the market, on august 18 of last year was only up 8%. >> and august is historically the weakest month of the year. >> last year you had a wiggle down in august and not as much of a moment in september >> i assume we're going to
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attribute this to some degree exclusively. health care, bioeffect and consumer related big growth companies, not value stocks, not deeply cyclical sense, at least not in a broader sense as of yet. nasdaq, we talked about the overall market being dominated by fang, it's in the nasdaq. >> and you also talk about the comparable s&p gains on the year can be explained by simply the moves in microsoft, apple, amazon, netflix, it's certainly the biggest uns, microsoft apple and amazon >> so the absolute totals of market cap added, on the other
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hand i'm looking at the equal weight on the s&p. it's not just only a few things working, it's just those things working well have has outside impact on the nasdaq >> and despite what yields have done, goldman-sachs is the leading dell component >> what's interesting about the caterpillar bowi caterpillar, boeing, they're in a trading basket when you get a scary trade headline, they bounce. and it looks like you might have peace on the trade front and when you look at gold man, the stock got cheap for goldman, so it seems like it's just playing along. goldman not being strong with the overall market at new highs would actually be a pretty conspicuous issue to the down
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side >> netflix again up over 4% at the beginning of last week i was talking about how it was not even close any longer to disney's market cap. because remember, of course, for some time, we pointed this out when it passed disney in market cap. now it's closing in again, it's worth $5 billion amazing move up. now up 95% for the year. >> an upgrade, friday, it was down 15% off its high, and people are able to kind of see their way toward a resumption in some growth, i guess and you did have this little news story about how they're encouraging people to stand up to the netflix acquisition, people think it could be a 1% gain for revenue, so they don't have to pay that tax when markets are making new highs, everyone gets to be a glass half full type of investor on some level. it should be pointed out, though, right now today, global markets are outperforming the
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u.s. it kind of seemed like we were set up for that. because the u.s. set out for so much, because if you think that the economic picture is better and the economic activity is converging with the rest of the world. the etf is up well over 1%. >> the mexico etf, since the beginning of july, july 5, that was up about 2.5% a moment ago as for the pending news, we think regarding an announcement with mexico, both the times and the post now are saying they agree to revise key portions of the 24-year-old north american free trade agreement >> you're no longer talking about tearing off nafta, you're no longer talking about just having an aggressive posture for the sake of having an aggressive posture. you're trying to come up with some kind of a deal. in fact, with more on that,
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those nafta negotiations do continue in washington this morning, negotiators are talking about potentially a deal here's kayla in washington what's the latest, what do we know now >> reporter: mike, we have been reporting since this morning that mexico has been optimistic and has suggested that a deal could be announced midday. now we have the president tweeting just a few moments ago saying abig deal, looking good for mexico the president over the weekend said that a deal with mexico was getting closer by the hour now some optimism coming from the u.s. side of the negotiating table. mexico's economic minister this morning said they were working on hammering out the final issue but relatively coy about a deal what might be happening. a mexican official texted me earlier this morning, talks were having perceived to have been
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concluded with an announcement coming midday today. we still have questions about the particulars of what such a deal would be, the two sides have negotiated on the content requirement for cars that are produced in the nafta countries. that was something that was in the -- trade was also discussed when a big delegation from the u.s. went down to mexico right after the mexican election in early july so we'll see exactly what gets resolved and whether any particulars are actually announced today, carl, because legally the u.s. can't enter is into a new bilateral deal with mexico without notifying congress, without entering into a big procedural to do that would take at least 180 more days so this is expected to be just broad contours of a deal there would be a precursor for a three-party talk with canada over the weekend, that after
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u.s. and mexico worked out it's own issues, that we expect to happen at some point during the day today. >> that was my question for that foreign minister, what can we expect with canada how does the mechanism work? are they going to be present this deal and they're going to have to say yes or no? and it's a completely separate negotiation and then you get somewhere with them and then you have to go back to mexico? >> the u.s. and mexico were farther apart on issues like how to resolve disputes among parties, whether the w.t.o. would play, whether there needed to be a wage ceiling or a wage floor for factory workers in this country what the cultural outlook for this was some anger about certain american produce companies and farmers about mexico, seemingly dumping things like oranges and other types of produce here in the u.s.
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so there were a lot of issues for the u.s. and mexico to work out and canada always held that once you guys close those gaps then bring us back in and we'll see where we can figure out a deal there are still some very serious issues between the u.s. and canada, specifically on the dairy front. but it is expected to be a shorter to-do list, but whether it's a short enough to-do list to finish by the end of the week, is that's still an open question here. >> kayla in washington today meantime, it is the end of a volatile chapter in corporate history, elon musk scrapping efforts to take tesla private. joining us chairman and ceo bill george is with us, a professor at harvard business school and cnbc contributor phil lebeau >> y you think the priority is really stemming the brain drain,
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bringing in experienced ceos and cfos >> exactly i think everyone's glad that elon musk got away from this going private thing. it's been a huge distraction for the last three weeks elon's biggest problem is not the shareholders what he needs to do is build an operating team around him. he's probably the most brilliant inventer in -- i think he needs a partner, a ceo or cfo, one like mike ford, he knows the business he has some guys and gals in there who really know the business, particularly on the operations side, to say that he's going to the operations to fix the operations, he's got top executives, and he also needs to get his numbers in order which go hand in hand. he's got to get his numbers
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together because this cash trading and continuing large losses is a real problem and he hasn't demonstrated that he can consistently make product or profit >> their communications chief as of last night is going to leave next month >> sarah o'brien is leaving that job, i don't think she's the first one and i don't think she'll be the last one much like donald trump, he wants to be his own communications chief, he will send out tweets about what he believes any time of the day or night. that goes with that job. there is a huge need at tesla for the type of leaders who can run things operationally, who can assist elon, j.b. straw is there, the chief technical officer. they have got some talented people there, but they have also
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lost a number of talented people so that's what they need in terms of taking the next step. remember, this is a company that's getting more complex, not less complex, but more complex as they look at adding a factory in china and other facilities. >> what about the board of directors, is there an ability to havemore governors on the board, or do you need a brilliant founder of the type that mr. musk is >> he's got to make this transition, he can't continue just with an inside board, former executives and just his brother. he's got to bring in professional board members that's been done at apple if they want to go in this direction, they've got to do it. i think they need experienced automobile people, there's private equity people, there's venture cap. there's not really anybody who understands the automobile industry there's plenty of talented automobile executives out there. i think you have to have
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somebody that knows the global business and really understands it they had a great car in the model s, now everyone's getting into it, so he set the standard. but if he's going to do it they need to get their finances in order and they need strong people no one can do it alone, and that's the weakness of entrepreneurs, look at steve jobs, the difference it made when tim cook came up as the operating executive that made apple go that operation has gone so smoothly even after steve tragically passed away, because of tim cook, he knows the business if there was a tim cook in the auto business, i think there are a couple out there, could really give him the freedom to go off and explore spacex and all these other ventures he has. he could be mr. outside, somebody's got to be the inside person >> one of the ironies of this whole episode is that it seemed as if elon musk was motivated by
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shutting out the shorts and get away from that scrutiny of the bears on wall street who kind of take apart his strategy and his business so after this, they're probably going to be more emboldened out there. the scrutiny of every production target and every move on the balance sheet is only going to be more intense now. >> i agree it will be more intense. you will no doubt see really two arguments going forward from here you'll see the bulls who will say look at market production, we're going to be profitable the second half of the year, and the bears, they're more emboldened, they're coming out and saying, you've got an sec investigation and whether or not elon musk, that board and the company can change, and you have a number of questions about do they need to raise more capital so you have the yin and the yan
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that's going >> you have to perform, when you perform, the shorts go away. so phil's got it right >> bill, phil, thanks, guys, we'll talk a lot more about it later on bill george and phil lebeau. record highs, the nasdaq blowing past a historic mark of 8,000. plus long-time consumer ndvocate and former presidential caidate ralph nader will join us "squawk on the street" is back "squawk on the street" is back after this that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab.
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a long time voice for consumer rights ralph nader now taking aim at self-driving cars. in an editorial in the wol street journal, he writes driverless car legislation is unsafe at this speed joining us now is former presidential candidate ralph nader. this is specific to regulation committed by -- by allowing companies to sell potentially limble limitless numbers of driverless cars that would not be subject to safety measures how is that possible
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>> there's been so much hype about autonomous self-driving vehicles, poured out of the sill cob val -- silicon valley companies and the michigan auto companies, members of congress think this is the modern way to go, it's a solid way to go, it's going to replace drunk driving. these cars are only going to operate in the wild prairies of south dakota, instead of downtown manhattan with the pedestrians and the bicycles they're basically consumers are basically center for auto safety and advocates for highway and auto safety which hass insurance companies involved, who say, whoa, slow down here, you're not giving us enough consumer
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information, you're allowing hacking not to be regulated. th they're losing control of their vehicles due to some outside force, some criminal elements. but you have so many lines of computer code, it's a computer on wheels, it's extremely vulnerable to hacking. and it's not just one car at a ti time, it could be subject to hacking -- this legislation has got to be stopped. >> there is, as you say, there's a lot of promise, potentially in the idea of autonomous vehicles, fleets of vehicles for example, conceivably could transform so many different parts of society, and what many would argue as a positive way there's certainly lots of layers
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of regulation as well, aren't there, mr. nader not just at the federal level, but at the state and local level as well. >> the federal bill that passed the house and now is pending in the senate congress committee, pre-empts state regulation of autonomous vehicles, the states don't like that. and number two, it exempts up to a million autonomous vehicles from federal safety standards. it's a totally crazy bill. and now i'm communicating these concerns with the auto company saying it's your worst nightmare. if you get this bill, and you have hacked vehicles, and you have pedestrians run down by autonomous vehicles, et cetera, you're going to lose the public trust. and if you don't have the public trust, forget about driverless vehicles >> right, and what do you hear back i mean, clearly there is a liability issue here that people
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talk about, because obviously the driver will not be the one in control of the vehicle, one would expect that many of the companies that are experimenting and driving millions of miles with these autonomous vehicles remain very focused on having the highest level of safety, wouldn't you >> there's already been some fatalities and injuries and some lawsuits it's the strangest thing that you have ever seen, back in 1975, when i came out with unsafe speeds, they just weren't putting in safety devices, it was all style and horsepower now the problem is they're rushing to outrace themselves, the different companies involved in a very reckless manner. i mean for example, they're supporting a provision in this legislation which allows the companies to turn off and disconnect vehicle equipment remotely, right now, they can
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only affect your vehicle equipment if they get a government exemption, and there's the review process so this is crazy from the point of view of the auto companies themselves and i think that's why executives at toyota, nissan, ford, are basically saying, hey, you know, let's slow down here, because you don't get many chances to gain the public trust, you have a few crashes, motorists fear losing control of their vehicle to some remote hacking source. i mean that's a terrifying thing. and a new crashes and casualties occur, it's going to spread wildfire in terms i fear >> what about vehicle accident rates among humans are no picnic, and this might be even a marginal improvement over people who are maybe too old to drive
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or obviously impaired with alcohol, right >> the ideal scenario is long in the future, but this bill does not provide for real standards for people with disabilities, that's another problem of this bill and there are a lot of other situations now no one is against semiautonomous safety technology, like the autonomous braking systems, the lane changing protections, those are okay, because the drivers are still in control and so we have to distinguish between semiautonomous proven features that are already in cars and saving lives, preventing crashes and this autonomous driverless scenario, which is a long way. -- long way off. >> are there some scenarios, i know there were people that were able to hack into the braking
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system, and it wasn't even an autonomous driving system. i think the automakers argue would render them quite safe from the ability to hack them. >> we don't know that yet, because they only say that the car companies have to have a plan on cyber security we know that phoniness the technologists who are into this, say a plan, a written plan on a piece of paper sent by the department of transportation, you have to have cyber security standards, we all know that in other areas of our society and this idea of ending law and order, deregulation trump style, leave the people defenseless and environmental toxics and product safety, it's going to boomerang on the republicans, it's going to boomerang on the companies. you only need one disaster and
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people will say what's going on here, we need protection, we need law and order for these technologies. >> mr. nader, we appreciate you joining us let's get to our etf spotlight, we have bob pisani who's today's bell ringer of the etf managers. >> the big question is can you pick stocks using artificial intelligence it's all the rage on wall street right now. he's trying it himself, he's got one out, aitu. you've got 600 stocks, you picked one and you're outperforming the markets. what's the criteria in picking stocks >> we call 6,000 stocks every single day with the benefit of an artificial intelligence program designed by intel.
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it narrows 6,000 downto 6 stocks. >> what'scriteria, is a value interpretation >> it can be either value or momentum, but it's based by stocks that it believes have the greatest short-term opportunity for growth and are being underpurchased by the market it looks at 10,000 to a million pieces of information on every stock. >> the stocks that you own the most right now, alphabet, texas instrument, amazon, brown foreman. and it changes all the time. so next month it might be completely different >> the machine is agnostic to the industry group >> the important thing is the dang algorithm changes and it learns and will change the stocks it's picking? >> it's learning depth of book, liquidity in each stock, the
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cost of transacting each stock, all of that along with millions of pieces of data. >> if everybody incorporated this technology, it's based on the idea that it's looking at information no one else is looking at this is the concern in artificial intelligence, everybody's using the same methodolo methodology. >> jim roberts is partnering where a company called global macros and you're picking global etfs but there's an artificial intelligence overlay on it >> it now picks global countries, it's a 30-day index that's rebalanced and all of it is based on artificial intelligence taking advantage of jim rogers' many, many years of
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successful investment. >> you're also in charge of the cannabis, you've been very involved in the etfs, the cyber security ones. >> we're doing well, we're an asset manager. >> etf managers group.com. now let's get out to sue herrera for our cnbc news update >> good morning, everyone. here's what's happening at this hour we begin with an investigation that is under way in jacksonville, florida today, when a gunman killed two people and then himself at a madden video game tournament. nine other people were injured by gun fire. the jacksonville county sheriff has identified the suspect shooter as 24-year-old david katz of baltimore. police confirmed that katz was
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in jacksonville for the 2017 madden games over the weekend, hurricane lane was downgraded from a hurricane, but some of those islands were hit very hard with up to four feet of rain. many highways remain closed, homes are damaged and dozens need to be rescued major new research helped contradict a long held belief about aspirin. for years doctors have advised patients to take a low dose of the drug to avoid a first heart attack or stroke but the new research suggests that such a regimen doesn't really help. it does not outweigh the risks for patients who have never suffered a heart attack or stroke and it was the second straight box office win for "crazy rich asians." it it took the top box office stop according to com score. it represents one of the biggest
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holds ever for a summer release. congratulations to them. that's the news update this hour, michael, i'll send it back downtown to you. >> okay, sue, thank you very much as we head to a break, take a look at the major averages at this however, the nasdaq blowing past that 8,000 mark for the first time, the dow back over 26,000 for the first time in months, you see the svp on t&p verge of 2,900 where it's never been "squawk on the street" back after this
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welcome back to squak on the street, we're live at post 9 on the new york stock exchange. you can see we are having a rally on all the broader indexes. the s&p for its part up .65%
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one big reason for that, the president this morning expected to make an announcement at 11:00 a.m. eastern time for more on nafta. more, kayla. >> reporter: we are expecting that announcement to come just in about 30 minutes time the white house tells the pool that the president will be making an announcement regarding trade from the oval office but the president tweeted just this morning, that a big deal with mexico on nafta is close. so what will this actually look like we expect the president to say that more than a year after nafta negotiations were begun in ernest, that the u.s. and mexico have reached a deal, have worked out a deal that are good for the american worker and the american economy. we should point out that this is not a deal that would be legally binding or legally enforceable in any way going forward from here, the u.s. will have to engage canada
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to work out some of those issues, ideally by the end of this week, that would allow these parties to have a deal signed by december 1, which is when the change over in mexican leadership happens so we'll see what exact tenants of the deal. we'll get some answers to that in just about 30 minutes time, as we expected carl, we have been reporting throughout the day, that mexico has said that talks have concluded between the parties and we'll see exactly where they have been able to find common ground >> that's right, kayla, just over 20 minutes, we'll be there to see how the president delivers this message for us on trade. thanks very much, kayla. joining us now for a closer look at today's upcoming announcement on nafta and stock market highs guys, good to have you, dave, you know, we got potential cooling of trade hostilities
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today, on friday, the markets seemed to think that fed chair powell sort of said he's going to be relatively moderate in the pace of rate increases, not really rush to any particular level. economy growing well, congre r,r looks good, what's not to like >> the news is already priced into the market as is with a 17 forward on multiples and earnings of roughly 20 the news on the trade side, i think the markets read powell is being dovish i'm not so sure he was that dovish, but that's the interpretation of the stock market if you're going to ask me what's not to like? maybe the surprise is, it might not be so much on the growth sides but it might be on the inflation side i was struck that the cover of the financial times quoting that three different fed officials say differences in their region are actually allowed to pass on
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cost increase to consumer. so i think in the next several months we might see an inflation scare get back into the market >> you think that inflation will force its hand >> i think the markets right now are quite, you know, i think feeling pretty good that the fed is going to continue on its gradual course the markets are already priced fully for a hike next month, and priced by 60% to move by the end of the year, and the big debate is whether the fed is going to go more, i think a lot of analysts think that the fed's going to be done after two hikes. the thing we need to talk about is the economy, and nobody's concerned about inflation. epi right now is running at 2.4%, what i'm saying that is what the market is not factoring in right now is the few inflation surprises to the high side i think that's what could shake
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the complacency. i think the stock market had its jitters at the beginning of the year after the bond market had it's jitters at the beginning of the year i think this is going to comecp couple of months. >> how much fuel do you think we have here? we obviously approach these highs in a pretty method aical way, not really with a burst of energy is it more likely that we see more volatility the up side? >> i think the market has done a good job of anticipating trade progress we certainly think there is going to be progress, but this has come a little bit quicker than a lot of people thought, and i think you're maybe seeing a little bit of chasing in here. but when you get back to the inflation topic, i think the bond market has it right i mean the bond market is saying we're not going to have a consistent surge in gdp, we're not going to have a big surge in
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inflation, our cpi number this year is 2.4, and if we're off, maybe it's 2.5 or something like that but we don't see an inflation surge either, i think the market right now is at fair market or a little bit ahead of it we have an earnings number of 3.2% out, that's a little bit conservative at the first two quarters the market likely has a little bit more up side, but i would not say a lot more upside. you know, mike, this is a time in the cycle, and when you have seen a run like this, this is when the chasing starts. and i think we could -- it feels like to me like we're in the early stages, we saw some institutional chasing in the middle of 2017 i think we're seeing a little bit more of that now let's face it, if these guys have any more of a benchmark in the stock market, they've got to be in this thing i but we're not a lot above fair
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market value or anything >> you're saying you're taking it down just a touch >> you know, our range was 2,800 to 2900 for year end for the s&p 500. obviously we're toward the top of that range right now. like i said, earnings number might be a little bit conservative our target might be a little bit conservative but i don't think it's a lot conservative and we certainly want our clients to stay invested when we look out over the next 12 months, i think you can see the index up, let's call it 5%, 10%, you tack on another 2%, so you're looking at a total return out 12 months, if that's the case and that's what it looks like to us, we still want our clients in this thing. >> guys, we have got to leave it there. thanks, guys you're looking at a live
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shot of the white house this morning, the president getting ready to make a statement of some kind regarding trade with xi amecond canada and nafta. "squawk on the street" is back in a moment.
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the bobbnd and gold rush are about missing the -- deep dive into the world of bitcoin and cnbc's new documentary "bitcoin or bust. she talks to a millionaire who says he's risking his life for the movement >> talk to me about who you see
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the threat is in terms of your safety who are you guys afraid of >> security through obscurity. so i can't talk about it. >> justin, aka crypto kid, throughout our filming about this stuff, he barely stopped talking and joking around, until we broached the topic of his own personal safety. >> there's a real threat >> are you afraid of being hacked do you think you're a target because people think you're a millionaire? because you're talking about disrupting government snsz. >> all of this above >> he wouldn't allow us to reveal where he lives because of fear of being kidnapped. >> what if somebody kidnaps you and says, we want x number of bitcoin and they're given that cryptocurren cryptocurrency, do they get away are they not traceable anymore >> i'm not going to answer that. >> because the answer is yes >> and that's just the tip of a
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very dark crypto iceberg >> what we're looking at here is a drugstore. so earning here is in bitcoins. >> oh, right, we have a grand opening special for heroin in this case. >> this is an executive security advisor on ibm and he took us on a security tour on the dark web. >> cyber crime is not going away, it's a $450 billion market today. and bitcoins and cryptocurrency does make it a lot harder to track the money trail. >> so it's a lot easier today to be a criminal and to not get caught >> exactly >> it i always say it's a cat and mouse game i'm not 100% who the cat and --m not 100% schur wure who the cat who the mouse is >> this is the hedge fund manager all the way to the likes
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of crypto kid, it runs the full gamut as to the believers out there and also those who see bit coin as a scam >> and the problem is the urn traceability and it's obvious it can be used all these different ways across the globe. is that going to be the fatal kind of fate of bitcoin? >> bitcoin bulls are going to say, a lot of criminal activity is fueled by u.s. dollars, it's just that bitcoin makes it a lot more friction list of using bit koin switch your card to a debit card that has no traceability on the dark web but in terms of government regulation, that is widely seen as what will be the determining factor of how widespread cryp cryptocurrency can be used and you described it as the ultimate use case of cryp
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cryptocurren cryptocurrency a society like the united states where there are so many payment alternatives, it doesn't make sense. but in countries like south africa of cash and transactions. it holds real promise there. >> does crypto kid have reason to be worried about his safety >> he showed us his bank account, so yes. there were a number of kidnappings within this space and the fear is that if you're held for ransom and ransom is paid, you can't trace where that bitcoin goes >> talk about a world that few people understand well it will be good for them to see this when it airs tonight. >> entertaining at least >> bitcoin, boom or bust, tonight, 6:00 eastern, 3:00 p.m.
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pacific. cn cnbc.com/bitcoin boom or bust for more bmware ceo joins us at the world conference you think this matters for stockholders look at amd. that stock up almost 6% on an announcement moments ago coming up on "squawk alley." you always pay your insurance on time. tap one little bumper and up go your rates. what good is your insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today.
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welcome back to "squawk on the street." mark sunderland. >> thank you for having me >> a unique fed chairman what were your thoughts about his performance, his speech, his general resume thus far as head of the fed >> you can only say he has been very successful so far, a very calm presence, a very reasonable guy. thinks outside the box, willing to consider a lot of information. when we step back and look what he has done, by end of september
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he will have hiked rates three times, equals what bernanke did in two years, short of what yellen did in five years he is continuing on with his plan and not being distracted by all of the noise around him. he did tell us about his own personality in that speech which i thought was insightful he admitted that he was generally a cautious person and takes in a lot of information and acts very reasonably but he does have a separate mode. if inflation expectations get out of control either direction, he would switch into a more aggressive posture then he cautioned we weren't there now. no signs that the economy was overheating. >> marc, when it comes to this president, the media and the president have a very strange relationship and i think much of
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that can be seen in how the press writes about what the president says about the fed, but many in the market and that i rub shoulders with think it isn't that big a deal, and jay powell seems very secure in his job, doesn't seem to take it as a threatening stance what's your read >> well, first of all i think we're a long way from when lbj called up bill martin, the chairman in the '60s and told him that soldiers are dying because he wasn't printing enough money that's what real pressure looks like i think that president trump has the right to make his opinions known. he is a former real estate investor, it is not surprising what his opinions are on monetary policy. i think he is unhelpful to his own cause because when he is publicly criticizing the fed, makes it hard to stop at any one meeting. chairman powell made it clear it is not going to alter the plan overall, and powell is smart enough to not get in any name calling. >> you hit on something that i
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think is excellent what you are saying is that you don't think jay powell feels threatened by comments much further from that. you think he is taking it in stride but the president is doing himself in many ways a disservice because it sounds to me like jay powell is not going to speed through any damage caused by normalizing rates to the up side. your final thought to that comment? >> no, i think that's absolutely correct. i think chairman powell is in a steady as she goes mode now. he's ignoring the president, he's doing what he needs to do president trump has the right to have an opinion but he is not helpful, it is not strategically the right way to go about it i would just end it with that. >> one other thought while i have you, marc, a lot is put on what the kind of normal rate should be. what is the neutral rate am i too presumptuous to think with many of my peers on this
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trading floor that that rate will be the rate that makes the yield curve act a little stranger than it has already, maybe various parts of the curve start to invert. would that be your read for neutral? >> i think there are two things. you get information from economic models and you get information from markets one of the things chairman powell also said is he is not religiously tied to the economic models of the fed, which is extremely positive. >> marc, i'm going to have to leave it there we had extra time and i appreciate your thoughts i would like to hear from you after the next meeting thank you, marc summerlin. carl, back to you. >> thank you very much. good monday morning. i am carl quintanilla, with jon fortt, morgan brennan at post 9. nasdaq hit an all-time high above 8 k, dow, 26 k for the first time since early february.
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all of this as we are awaiting the president, set to make an announcement from the white house on nafta, although details continue to shift around we're going to bring in kayla tausche on what to expect. kayla, set us off. what's going to happen in the next few minutes >> reporter: we expect the president to say there are broad contours of a deal between the u.s. and mexico. these are discussions that have been going on very deeply, very intensely in the last six weeks or so following the mexican elections that took place july 1st. the expectation is that the u.s. and mexico have been able to find some common ground on many of the issues that have been plaguing the relationship between these two countries and that once they establish that common ground, that canada can then rejoin negotiations and they'll be able to find some quick resolution on nafta. that being said, there have been no quick resolutions on many of the trade fronts, despite the
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fact that talks have been on-going on a three party deal since this time last year. talks began august 16th, 2017. at this point canada is not going to want to look like it is capitulating to the trump administration demands, despite the fact there's deadline at the end of the week for a tri lateral deal that the mexican outgoing president could sign. that said, we'll see what the president says, what ground they have been able to cover with the mexican delegation over the last several weeks, and especially important for markets and for companies, what it means for manufacturing, what it means for specifically automakers and that business because we know so many cars and car parts traverse the u.s., mexico border every day, every week, every month. look for a potential immigration element. something the trump administration had been discussing with the mexican delegation immediately after the election we'll see what the deal will entail

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