Transcripts For CNBC Squawk Box 20240622

Relationship. The compatibility of the dna troubles me. Youre an expert in molecular biology. I didnt even take it that far its just the whole idea. Lions and tigers dont go together. Frog thats this big how do you know . Structurally it makes it very difficult. I go back to the bee movie. I dont know if you saw when a woman fell in love with a bee with Jerry Seinfelds voice. That was not going to work. The husband was jealous and the woman was those cross species things dont work, as you know maybe you dont know. Lets get to our top story. The markets getting set for the opening act. Where did you grow up . Fridays jobs report is the big deal but today we get the adp employment report. This is the gauge of private payrolls expected to increase by 215,000 for the month of july. That is down from 237,000 hosted in june. Checking on u. S. Futures they suggest a positive open. S p by more than 4 and the nasdaq by more than 12. Jobs will be one of the many big topics well tackle later this morning with Federal Reserve governor jay powell. That exclusive interview kicks off 7 30 a. M. Eastern time. Do we have you to thank for that . No, we have the southern company. Oh, okay, good. Weve had him on before but i believe, joe, this is the first time a Federal Reserve governor sat on the squawk set. So as is every day we will make additional cable history today. Fantastic. Isnt that great . Who was that . Lockhart . Yesterday. Unless something really changes. Right. So the ipo would be he dissuades him but excuse me quarter point. I was on the set yesterday. So Interest Rates will be a quarter point. No, actually, they will be 37 basis points. Its something you have to get a little bit used to. With china now . No, so you have to get used to this. Im worried. People are waiting for it. When you come here the current fed funds rate is like 12 basis points. When the fed moves it will move by 25. 2512 is 37. 2537, theres no difference. Its almost 0. Okay. Well discuss later. Disney, actually i was just just dont ask me any questions, okay . Im looking at the chart of disney. A three or four year chart versus the s p. Any of those charts versus the s p. Its going to look good, right . Its just going to tell the story that obviously cord cutting, the daunting future that all media companies, especially cable that theyre facing now that needs to be managed, none of that is new. So today were going to have a pull back and lets keep it in perspective. Disney shares taking a big hit. Magic king tom with 1. 45 a share. Revenue slightly below at 13. 1 billion. The company also lowered its outlook some what based on the strong dollar and the impact there on revenue but along with declining subscribers at espn and other things. But the rest of the cable operations continued to show gains. Its difficult now. They had previous deals set up and they get paid for on demand switches. But people obsess about one thing, right . And rich greenfield was here the other day and he was obsessing about this one thing. And he says we are going to see things like this happen but its not going to be dramatic over the next five years in his view so probably no over the top thats the reason the stock sold off, right . They said yesterday were not going to do that . No, this was a decline in espn and it speaks to the whole question of its not new. I know. But theres a question about whether they face this threat of people abandoning them. It was the same day that netflix well see how that all works out. I took off one day for my children when they were born. A guy can take off a year. For the babies. When they have a baby . Netflix was up huge. But thats a private sector decision. Yeah. Thats what they want to do for their people. God bless them. But i think it was up yesterday because they got their plans together for japan. But a 50 murder in the Second Degree market cap. Taking market cap away from conventional media but add up conventional media and theres some market cap to take away. If you added comcast and disney and time warner then youre at almost a trillion dollars. Right. But you dont want to take it from comcast. No. But were at netflix, not to overstate it, its not 50 billion. Its not a zero sum either. No. I know people in my family who are watching more tv. On netflix. Because netflix is there. I go home and i asked my daughter who is 15 on netflix and i say so could you ever see a day when you didnt have any cable and she said i could see that now with netflix. And my wife and i were like no way. I want to turn on some cable. Thats the thing. But she says she would look at yahoo something or other if she needed use. I said what if you needed this and this and this and she had an answer on the stupid internet for everything but for me its not going to be satisfying. Their anchor to the cable box is Sports Center and the only other reason they turn on cable is to watch now, we watch the yankees and the mets together but i think thats it. They dont have another connection to the game. Are they watching on a small screen somewhere . No, no, the typical way my kid watches television is with his computer in front of him. Thats awful. Theres actually three screens. Except for the two day fomc meeting when youre on. Are you kidding me . Yeah, dad, we watch, sure. They think its cool when the golfers come in. Disney chairman and ceo bob iger will be appearing on squawk on the street at 9 00 a. M. That will be a must see interview. Just to hear him and i dont know whether he was booked before the stock was down 7 or 8 . Do you know whats now telling . Think about what he said when he was here and he already knew all of this stuff, right . And when he says eventually espn does go over the top. Think of disney and what an incredible diversified with the theme parks and with the movies and star wars, its still 46 of the operating income or whatever. Chief Investment Officer and well start with ivan. You were a Financial Advisor when you had the hair cut. You went all the way. You shaved your head. Now arent you running the firm, basically . Research and Asset Management. Running research and Asset Management and we said who could we get this morning that follows disney that can illustrate the success. The potential success of going all the way instead of half or grow it and put it joe, as i said, these are the last messages of a once thriving civilization. So are you ready to sell the stock here . Not at all. Its a huge buying opportunity. Im actually shocked its down but ive said you never buy a stock for what just happened. You buy a stock for whats going to happen over the next few years. Espn and cable is going to get harder and harder to keep in the sweet spot. Whats going to happen is they have the best Movie Library ever. The sweet spot in action and adventure. More billion dollars franchises and tons of movies to come plus action adventure produces the most licensing revenue. Youre never going to have a harry met sally action figure or lunchbox but the ability to license that content is unbelievable. The biggest segment is nearly 6 billion, 5. 77 billion. In studio entertainment is 10 million. The tv product is driving so much revenue. Youre saying the movies will offset. Movies will be the key driver. Movies also drives tv viewership. As bob iger said netflix is a partner not a threat because disney produces content. Netflix is a platform to consume content. So for me that goes hand in hand. Dont they also have 1. 5 billion people that havent been to disney land yet . Is that going to happen at disney shanghai . Eventually. Disney land is pretty cool, is it not . Absolutely. 1. 5 billion. Id like to have the disney brand and the ability to build one of those in china. And see your movies and watch your channels. Heres what i was talking about. Total revenue for disney was up and overall Cable Network revenue increased 5 even with the did dollar so theres a lot of companies that would be envious of 5 . Report said fifa had the world cup. I think heres the key thing with espn. Aztec nolg allows consumers to negate commercials some of the most valuable content will be news and sports. Plus sports has the most engaged audience. Both usually watching sports on tv and interacting over the computer so i think that espn is in the sweet spot. They get a penny for it, dont they . Yes. Its not like the sports is out there as low hanging profit. The competition is so intense. We see bidding wars every time. Yes because the audience that watches sports is so valuable. And how profitable is it to own the nfl franchise. Do they make a lot of money on that . Absolutely. And the soccer. When theyre not around theyre going to start showing hockey. You will eventually be able to see whatever you want and this is new for me but saturday on College Football season, you know the four guys they have at the school where theyre going to hit, i just turn that on by just automatically and prevent Something Else from getting on first and then it stays on and the game is that much more. Theres four other games theyre talking about or five other games i didnt know i was interested in. Its a really compelling i just wouldnt bet against it. You . You can sit there on a saturday and i think you can watch like seven different games with the other networks. So you would buy it and i mean, its a big market cap company. Disney, 10 or 12 years ago, maybe longer, but there was some questions. It was down in the teens. So its had a big run. You dont think that the i think it will continue. Think the tubts that exist ahead of them are tremendous. 200 billion. Whats lumpier . The movie business or the tv business . I would think the movie business . Yes. The possibility for hits or misses are greater in the movie business however their history of hits is phenomenal. Much better. Even cheaper movies to produce such as frozen and theres the nemo sequel finding dori coming out. It just remains relevant. Right but i would still assign a lower multiple because they can be far more consistent. Yes but when the movie revenue ends i think the star wars movie is going to be the first one coming out. They think its going to make some people think its going to be 2 billion. Yes. This is a powerful franchise and then the ability to reap other benefits off of that from theme park rides to merchandise is just incredible. You dont run out of those either. Its the whole universe. Amazing. You never run out of it. Anyway, thank you. I think theres some expectations but i think this is just going to be an unbelievable blockbuster and then theres a movie every two years coming after that. I cant wait. Good to see you. You too. Thank you very much. Lets check on the markets so far this morning. The futures suggest we will get a positive open despite what were seeing in disney. Dow open by 18 and s p higher by 4 and nasdaq by almost 12. As for europe positive across the board except for the Greek Stock Exchange once again. Gains of more than 1 in germany and france. Greece keeps going down because the banks go limit down nearly every day so you need another day and we keep waiting to see where the banks are going to find the bottom there. The limit down on the banks over there is 30 and they have done that now three days in a row. Japan, higher by half a percent. Same with hong kong and shanghai lower by another 1 and 2thirds . Brent Still Holding above 50 at 5031 and slightly positive. 10 year yield. Oh, 2. 24 if im reading that correctly and the dollar right now is stronger against the euro and yen but weaker against the pound. 108 euro for every dollar and gold is lower again by another 6. Look at the right side of the chart. That tells the whole commodity story right there. Lets look at stocks to watch in todays trading. Lumber liquidators taking a big hit. They lost 75 Cents Per Share for the Second Quarter. The company says its been hurt by allegations of the safety of its foreign products and cant yet estimate its outlook. Crafts website operator etsy lost for its Second Quarter. However the shares are under pressure because of etsys soaring marketing expenses. Video maker Activision Blizzard is 5 cents better than estimates and revenue was well above forecast. It also raised its forecast as games like call of duty. First solar earning 93 krcents r share. Swamping estimates with revenue above forecasts. The equipment maker also raising its yearly outlook. All sounded good. It did, didnt it . Did you see the stock though . No. It looked like oil. What you would figure. New overnight, the New York Times reporting a private Equity Firm Silver Lake invested a billion dollars in Motorola Solutions. Theyre looking to broaden its portfolio of emergency Communication Systems and pretty serendipitous. Chairman and ceo greg brown will join us at 7 40 a. M. Eastern. Same day that we had that news. See, fortuitous people confuse with fortunate and it means by chance. It doesnt have a positive context. If something is your fort. Its not forte . No, thats a music note. So much to talk about. Coming up, making the cut. 10 men will be taking the stage, donald trump in the middle of it. And several candidates left out in the gold. The Great Expectations of this first of several debates next and as we head to break, check out this day in history. What if there were only one kind of dog . Then it would be easy to know everything about that one breed. But in fact, there are over three hundred breeds of dogs. Because no one can be an expert in every one. An app powered by ibm watson will help vets tap Specialized Knowledge in the cloud for every breed. And whatever else walks, flies or slithers through the door. Ibm watson is working to make medicine smarter every day. Welcome back to race to the white house in 2016 heating up as the republican gop contenders set to faceoff in a debate. John harwood has more. Good morning. Good morning. Fox announced last night the news of who was going to make their debate. That candidate cutoff and the big news was that john kasich of ohio, the home state of the debate that takes place in cleveland made the cut. Thats the story of the last month or so. He got into this race late. There was some deliberation in when he chose to get in because candidates typically get a bump from their announcement and that bump is who moved him past rick perry. So the candidates weve got are donald trump, jeb bush, scott walker, marco rubio, rand paul, ted cruz, mike huckabee, Chris Christie has also made the cut. He was somebody who had been on the bubble but he said he wasnt worried at all. Were going to make it. He did make it. Now dont necessarily write off the candidates that will be in that jv debate. They still have a big audience. So rick perry is going to have a chance to have a moment. Carly fiorina will have a chance to have a moment. The only woman in the republican race. Theyd like to have her in the main debate to try to advertise the diversity of their party. Lindsey graham and rick perry have been making the most antitrump case. They will have a chance to do that in their jv debate and, you know, this is just a first so we have a ways to go. I dont want to defend the kind of back room, cigar smoke filled political meetings where they sort stuff out but when you have 17 candidates arent some of the Party Operatives supposed to sort some of this stuff out . States exhibit it a sign that something isnt working in the two party system . I can get my brain around five but 17 tell mess that somebody hasnt made choices somewhere. Well, you know, the entry in a president ial race have gotten low. This is an extraordinary field in my experience. Because you have candidates who are serious politicians that had legitimate political careers who it is very difficult to see what their path is to the nomination. Yeah but jim gilmore was the republican governor of virginia. He ran in 2000. Didnt make it. And now its the fantasy that you do something or Say Something that strikes a cord. I think its positive. Who cares. Theyll be gone. Theyll be weeded out quickly. Whomever. Theyll be weeded out quickly and i dont see it as a negative at all. Its great. Most people on that republican side say we have a strong stable. Republican say what a strong stable of guys that have done actually some governing. A great bench with a lot of diversity by the way. No, thats true. Theres more serious politicians in this field that have a legitimate claim to leadership than we have seen in recent fields. So im not criticizing the field. What im say as good that jimmy carter and bill clinton were in much different positions. Jimmy carter wasnt. Yes he was. I was there. I was watching. It was like who is this guy and what possible chance does he have to be president. I wish we had time to talk about this journal piece on biden because you have talked about the obstacles to a biden presidency and make some really interesting points. Hes not going to be able to move in on her by going further left which is what Bernie Sanders is doing. Its not him. He cant do it that way. Its going to be hard they have similar policies, to deny the democrats the first woman president. That would be hard to do. So the only way the yourjournals he can do it is by pointing out her dishonesty which the whole party knows about but no one would say it. He would have to make a conscious decision to go at the track record of the clintons and he would probably loath to do that because youre kind of destroying a candidate. Youre giving the republicans their talking point. I dont think hes going to run, joe. Thats what i mean. He cant. That would be the only way he could do it. I dont think thats the reason he cant. But i think hes not going to. Pretty compelling piece. Thanks, john. John, you finally look at the journal page at some point dont you before you memorized every New York Times op ed. Give me a break. You dont even have to memorize it. It just oozes out of you, thank you, john. Joe, i dont have time to deal with this today. We dont have time to deal with it. But i will deal with it. Its 6 27 in the morning. What are you toidoing . Netflix rolling out a generous new policy for new parents at the office and a sticky situation ahead. Could we soon be paying 6 for a dozen eggs. As we head to break, heres a look at yes, its 50 cents an egg. Youre good. Youre good at that. You had to probably have seen this by now. Apple stock falling another 3 on tuesday. Now down 14 from its high on april 28th. Check out the usa today headline on apple. Theres the chart that you can see. Any stock that sells off like that is going to be a story but especially when theres so many the market cap was so big that you can immediately use these numbers. What do you think when you see this . You can use these numbers to shock people. I have been talking about it a lot. I know. Im wondering if when they do this is it like the death of equities on the cover of business week . Buy it. I dont know. My only point was that everybody in the world said its only 10 times earnings. Three quarters of a trillion dollars market cap and when you get to 784 billion market cap and everybody is recommending it with a 200 price target and you say its going to be worth 1. 3 trillion and they go well i dont even look at that. I look at it as ten times earnings and its cheap but that e in earnings, you know, its based on the iphone and its a Great Company and it they own it but you dont know. Between every single year are you willing to bet your life that those earnings come in where its ten times earnings . In other words . And people say exxon is not apple. I know that but exxon was making 12 a share and now theyre making a year. So at 120 it was at ten times earnings but now theyre making 4. Its not at ten times earnings anymore and if you knew that oil was going to come down you would have known that 120 was 30 times earnings. Who knows whether apple is cheap or not. They have to keep doing everything right. When youre at 780 billion and universally loved, Everybody Knows the story. Its priced for perfection. You said that yesterday. I dont need to know what goes on. I just know all these analysts never think about anything except whats staring them right in the face. Its the way most people act. What happen yesterday is most likely to happen tomorrow. All kinds of research. Thats the way people make decisions about the future. This is going to be the water cooler story of the day. I thought about this all along but i cant say it. You cant say it outloud but somebody from zimbabwe can say this. Hes a molecular biologist at wake forest and said the entire time i grew up we were scared to death. They cheered the killing of lions. Lions terrorized their village and came in and killed people. And a week and a half ago on certain places you would see some articles that said theyre scratching their head. Yeah, a lion was killed. Oh, yeah, well, whats the story . Gosh you never sent someone over when three villages were killed by a lion. And jimmy kimmel. Its a regal. This is in the New York Times. Wasnt sure whether jimmy kimmel thought it was a lion from the lion king. They are regal beautiful beasts. I know a biologist and he talks about this concept that biologist talking about. What it is is the kind of its when the Wildlife Conservation puts an elephant on its televise ad to attract people and what they do is cause us to make stupid decisions about conservation. Like, for example, preserving eagles in places where eagles were never indigenous. Doing things to preserve lions in places where it makes no sense. People get attracted by that. This fishing habitat that could be opened up if they could get rid of the eagles nest but the eagles were never there. Beloved lion. Some say it wasnt as beloved. As twitter thought. And twitter but it is this but if you want to have a conversation about big game hunting there are people that i dont understand wanting to theres a lot of animals i have a lot of hunter friends. Theres a lot of antelope around. But if you show my daughter a dead antelope she cant imagine that someone would take the life of an animal. I understand and somehow from this idea im supposed to seg way to netflix and maternity belie leave. If you have a baby you can take off a year. Paid. Come back. Part time, full time its one of the most Family Friendly and we thought there were others and this is now out there. Im not sure what the controversy is unless you say first of all this is up to them. Maybe its a sign of a tighter job market. The competition for talent out there and thats what they have to do to get people to come and stay. Thats a good thing. At least for the most talented individuals. I know the Obama Administration has been out there pushing these ideas and i think they would want the bill but that said do you a bill . Private sector wants to do it, its great. You guys both propose more persuasion on an issue like this. Do you oppose the government coming forward and pointing this out as something useful for business to deal with . Netflix is, at this point, things are going swimmingly. Not saying its a high but im saying that, you know, its sort of a symptom of how successful they are. And its great that theyre really successful right now but this could come a time when things arent always as easy and competition comes in. I think its ludicrous to let a guy take off for a year. How about a woman . A year is a long time. A year is a long time. I have to tell you youre most competitive employees are never going to do it. Ever. Its cool to offer it. Then you dont even mean it. Exactly. Go ahead. Take a year. I think its gone insane. Be careful what you want the government to put more on. Find out if it will pay to remain bullish. Squawk box returns in just a moment. Most people dont realize that were now in the second greatest s p rally in history and we are actually ahead of the 1990 rally and if the market continues to gain 11 basis points a day as it has the last six years, two years out or so, were going to be over 3,000. That was bullish investor tuesday on cnbcs halftime report. Is he right . Can we get the 3,000 on the s p in lets bring in the Portfolio Manager at qma. He says slow and steady. Also disagreeing is the president of the Wells Fargo Investment Institute and chief Investment Officer at the retirement division. The titles have taken away about half of the segment. So lets get to ed. What do you think about 3,000 on the s p. I hope that he is correct. The trouble is is that the fundamentals to get there, thats about 20 annualized return in a period where Earnings Growth is probably more likely to be mid Single Digits. So unless you get a big increase in evaluations, i just have a hard time making the math work to get to that big of a gain in such a short period of time. One thing thats interesting is the pessimism that permeates our discussion here. Nobody really has this discussion anymore. Its probably the sign of a talk when we Start Talking about what is that . What do you say . Persuasive pessimism permeates. No, youre right steve. You know when you look at Cash Holdings of investors theyre at some of the multidecade highs right now. Investor sentiment is still negative and i think a lot of investors are still kind of recovering from theres a difficulty finding the value in the market right now. When people look at the bond market they dont get excited. When they look at the equity market they have 16 to 17 times multiples. Its fair values. Its not overvaluations. Where do i go to find that value . Its the opposite of your apple thing. No, i was listening to ed. Listening to you. If in the past if the end of a bull market you saw multiples extended to 23 or 24, 25. At the end, and if those previous bull markets you didnt have the possibility of five years of i mean, were going to have low Interest Rates probably for a long time. So you have 25 , even at 7 like ten year, you know, paper. Even higher. You have 25 multiples this may be a case where we havent 18 multiples right . No at the top of a bull market, yeah were at 17 or 18. So even at a much higher Interest Rate environment you still get 25. When the optimism goes crazy. Why cant the swing take us up to much higher. I think whats going to happen, this is a very unusual economic expansion and bull market and its going to last much longer than normal. Ordinarily you get hot and cold. This one seems like its going to last maybe another two, three, four, five years. Both the economic expansion and the bull market. Its just that i think the pace of change is going to be relatively slow. So the economy is growing to something. If joes theory is right that Everybody Loves the stock, that Everybody Loves it, then this market is the opposite of that. Everybody hates this market. It is hated up is whats been happening to this market. Yeah. Exactly. And six plus years into this recovery people are constantly looking for the top, right . Its worse than that. Six years into this bull market everybody wakes up in the morning thinking that we are going to crash. The notion that we are at some awful apocalyptic financial outcome. Its the latest things. So the whole thing is going to blow up. I think a bear market is relatively unlikely. I think its unlikely but a long slow expansion. Think about it this way. The psychology of investors today is dramatically different from the 1990s. Thats sure. But why is it different . Partially because of two bear markets but the aging of the investor class. As people get older, think about every Financial Advisor would tell you to sell your stocks and move more into bonds because the entire population of the United States and europe and japan theres a secular shift and thats why i think that Interest Rates have stayed so low. I wake up and i wonder what happened to optimism. People can identify like five stages in a bull market and it starts with fear and then it goes to disbelief but it always ends with like the 9th inning they talk about above 20 on the multiple. Why not this time . Why not 24 or 25 . Why do you think 17 or 18 at zero Interest Rates . This one is a little healthier. Instead of getting to the extreme and having a big crash this one will be long as well. Remember if you go back historically to your point, the sweet spot for equities are in a low but raising Interest Rate environment and low inflation environment and accelerating economy. So we have check, check, check. Thank you. Joe five stages of bull markets. 7 sta 7 stages of grief. 12 step program. And the quote from aaron altman a lot of alliteration from anxious anchors. Pun daants who pontificate. Now valued at more than a Million Dollars after surging from the start of the year. The ceo will join us to talk about its drug to battle adhd in adults. Squawk will come back in just a moment. Thankshow may i help you . S list. I heard i could call angies list if i needed work done around my house at a fair price. You heard right, just tell us what you need done and well find a top rated ovider to take care of it. So i could get a faulty light switch fixed . Yup or have a guy refinish my floors . Absolutely or send someone out to groom my pookie . Pookies what you call your . My dog. Yes, we can do that. Real help from real people. Come see what the new angies list can do for you. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Tricking out cars has made me millions. Superness, pharmaceuticals, makers of an adhd drug being fasttracked for approval, up until now attention deficit hyperactivity disorder medication has been primarily focused on treatment for children, but this new drugs are being designed to treat adults with adhd. The ceo joins us for an exclusive interview ahead of the company as Earnings Call later this morning. I guess we should do the necessary background work, and explain a disorder that many people probably arent even aware that exists. Yeah, thanks for having me, joe. The drug we are pioneers is for impulsive aggress in adhd. And impulsive aggress is a condition for which there are no products approved in the marketplace. Its a very critical medical need to the point of the fda gave us the designation the fast track, and were very excited to work with them to bring this medication to our patients. The product that we are developing will enter latestage clinical studies this year, so were very excited about moving this product forward into the marketplace. Its truly a novel treatment, and to clarify, impulsive aggression is a condition thats very widely prevalent in adhd. Were looking to treatment children, adlessants and adult patients, and were starting with this target population. Eventually we will develop the drug for autism, because autistic patients can be very aggressive as wells. Patients with schizophrenia, alzheimers, so forth, so this is a huge medical need for which there are no products approved in the marketplace. So what youre talking about, the impulsive aggress is not specific to adhd, its something you can see in other clinical settings, i guess . So is there a neurotransmitter involved in or a receptor or something . How do you mediate this . It is different than adhd. Its a neurobiological disorder. Neurotransmitters are involved. The neuroennal circuitry is is this is impulsive. In other words, these patients dont plan on committing certain aggressive acts, it just happens. They have outbursts of these aggressive acts that are uncontrollable, they are unplanned, and therefore they need something to help them. We need pharmacological interventi intervention. So then theres not a specific is there a specific brain center where this happens or something . Yes. The drug that we are working on works on the do that am dope a receptors. So if it i can imagine it would be off label, and it might just you cant probably give me an exact number for what the market potential is, but if it were to be approved, what does the market need . We actually have done Extensive Market Research and looked into patient cases, about 1,000100 patient cases among child psychiatry, child neurology and adult psychiatry, and looking at an incidence of about 32 of adhd patients have impulsive aggress. About 45 of autistic patients have impulsive aggress, and as high as 60 in the bipolar hear. This is a huge market. Obviously there are a lot of patients out there that could be helped with this kind of medication, and were starting the Development Program initially in Patient Population in adhd, and then plan to indicate our extensions. Jack khattar, thank you. I wish we had more time to talk about it. Maybe this what is a positive profile. Thank you. Coming up, an exclusive hour of energy and fed drama. Our special guest is tom fanning, plus a rare interview with fed governor jay powell. Squawk returns in just a moment. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Share of disney getting a slam. Comments from the Conference Call sent the stock tumbling. What the ceo said straight ahead. The top ten gop contenders set to face off in the first debate, while in wellknown hopefuls will be relegated to the pregame show. Well give you an idea of who made the cut. Will the fed raise rates in september . Well ask jay powell. He joins us on set in a rare exclusive interview. The second set of squawk box starts right now. Live from the beating hard of business, new york city, this is squawk box. Welcome back too squawk box here on cnbc. Im joe kernen, along with Michelle Carusocabrera and steve liesman. See, i think this is redundant. Why do i have to say that. Becky and andrew arent here today. Thats why we know. They could be off today, sick, or on assignment. It doesnt say any of that. We are here. Adp private payroll economists forecast an increase of 215,000 for the month of mailing it in. Thats the number they give us every month now. They dont do any work. Ah, 215. Its august. Down from 237,000. Checking on the u. S. Futures. Then europe was up across the board, and i think were feeding off that, even though disney will hurt the do you this morning. Its no small feat. There are some they were stalling so you look up at the prompter and start typing. But yesterday, in, you know, the great show that premiere last night at 10 00. West texas investors were interested in it, but you saw two on this side, and two on that side, and they called you a rose between thorns. Isnt that charming . Yeah, because are they hill billies . They call themselves hillb l hillbilli hillbillies. Do not underestimate people from west texas. Do you know Matthew Mcconaugheys brother . Youre no on brother. Im sorry i outed you. I tweeted out for people to watch it. Hes 16 years orlando, not brothers from a different mother, brothers from the same mother, 16 years and rooster has a kid, hes got a 40yearold kid and matthew is mcconaughey is probably 40, Something Like that. You missed it. Anyway, my point was they want nice things about you . Butch and rooster, flattery will get you everywhere. You want rose between thorns. Among or top stories, the rest of the white house in 2016 is heating up the primetime debate is tomorrow night. The candidates donald trump jeb bush, scott walker, mike huckabee, ted chris, Chris Christie, john kasich. Missing the cut former governor rick perry, and others. They will participate in a predebate before citing the expiration of the bank as charter and uncertainty about financing. Xleking the yore cease market, more volatility in china overnight, the shane high closing down look at that chart, wow, like a roller coaster. Joe was talking about how the european markets are doing okay, despite disney. The banks were a limit down. Deserve tore here. So youre going to be diluted in a big way. The question is just how much. Disney beating on the bottom line, but the shark down sharply. Julia boorstin to break down the results and news from the Conference Call. Good morning. Good morning, steve. The spike rose pretty much across the board, disney shares plummeted as the company lowered the outlook thanks to cutting and Foreign Exchange rates. They expect a 500 million hit to operating income in fiscal 2016. Because of modest espn subscriber losses, position, did from Domestic Subscriber fees. To high Single Digits to mid Single Digits, iger saying he does not expect to launch an overthetop offering, but rather will sell that content through other services, as they work to preserve the current ecosystem. We dont really see dramatic declines over the next, say, five years or so therefore were not taking what i call rad cat steps to over the top businesses, because we dont we just dont think its necessary. That said, there are new platforms that are launching, some multichannel and some is other types of platforms that on the multichannel front, they all want our programming. Iger said hes bullish on star wars, but tried to dampen expectations. They dont want analysts to get ahead of them. Thanks, julia. Our best host this morning for the next hour, runs one of the largest generators of energy, tom fanning joins us, hes also chairman of the Federal Reserve bank of atlanta, so you no lock latknow lockhartl these guys. We have jay later, right . Absolutely. Jay powell, so you can maybe comment on that, too. You dont have in coal in southern company, do you . We moved away from it. We still have some. Five years or so we produce about 70 of our energy from coal. This is a big company, could. We probably a similar amount of energy as the nation of australia. 70 five years ago, now were in the low 30s, made a huge shift to natural gas and leading the renaissance of nuclear in america. So huge shift of natural gas, building new nuclear, one of the largest investors in solar. What would you have to do if these recent rules theyre rules. These are rules, not a law. See, thats really the big he does rules. I hope hes right. Heres the big deal. These rules may fundamentally shift how america makes moves and sells and consumes electricity. For the next 30 years. And be on. Without a debate and without votes. Thats the policy. You generally dont think about regulation, you think about congress. What we need to do, and people that have the lens that can adequately balance clean, safe, reliability, affordable energy, that needs to be congress. Lets say they rules went into effect tomorrow. What would you have to do . It would be an enormous shift away from anything that produces carbon. So away from coal and so you want to go to renewables. In fact from the proposed rule, we think they have increased by over 25 . Big deal. Schiff after from coal, probably to natural gas. Were going to have to build new nuclear. And i saw a scattergram of electricity rates around the world way up here, top right is like denmark, i dont know places where everything has to be the sun, even though its cloudy, and then were way down here, like really cheap this is a locally competitive market. Oh, man. And Energy Policy in the past has set off the notion of scarcity, now we have abundance. And move it up at the same time that oil is 45. You think about Energy Policy these days and people say, look at what europe is doing and then do the opposite is probably the right thing to do. Okay . Right. So what we should do to help the economy of the United States to grow manufacturing, grow personal incomes is play offense with energy. Export oil, export natural gas, export coal. All these people will have all these great jobs as the tidal wave is sweeping over new york, grounding everyone. Thats the offset. At the end of the day we have to have a north star in terms of how do we anchor or policy . What is the concept . The the concept is to grow the economy. Im afraid a lot of policymakers are coming down america and aspirations. Theyre trying to set a lower bar. Why are we satisfied with 2. 5 growth . Yes. Why . And energy is one of the ways to get there. Mike jackson was on yesterday or the day before, thank god andrew wasnt here, but we talked about prius sales. Theyre in the dumps. Watching whats happening with the hybrids and what . Its heartbreaking. Thats what happens. You dont move to renewables when its not economically feasible. Jackson and i worked together, hes a terrific guy also, but where is the growth coming in automobiles . Trucks. And suvs. Isnt that fascinating . Thats what happening when oil goes to 45. When is oil going back to 100 . Number one, we dont use much oil. But it affects everything we do with energy. So who knows . See, heres the other thing. I think we ought to export all this stuff. Im all for the value of being able to sell your product wherever you can get the best price, the best market, so why do we have limitations on old and gas . Can i ask one question . Is your position that we do not need to do anything about Global Warming or obamas rules go too far . Ive said nothing about carbon. What i have said is the people can we just were it kill you to call it Carbon Dioxide . Carbon dioxide. Show you soot going up into the air. The argument i have against clean carbon plant has nothing to do with Carbon Dioxide. It has everything to do with who is setting Energy Policy. In my view, its the one dominant solution in the American Economy where we have an enormous competitive advantage against anybody worldwide. Why dont we take advantage of that . My view is if we do Energy Policy right, we can lift all the boats, grow the economy relative to china, relative to europe, and really restore america to this place of prominence that it should be. The more accurate satellite data for temperature measurement doesnt show a lot of its definitely not what was predicted by the models for the past 20 years. A lot of people will just attribute for some reason we never think we had tornadoes or storms or droughts its the severity. Thats what people think climate change. Real bill brysons 1927. Here were talking about 130 years or something . But attributing more snow and less snow and more drought and less drought and more in every single thing that happens and saying its because of a joe, lets get off carbon for a minute and climate. Lets get back to the policy point. There is one more really important point. I keep talking about we need congress. Lets not forget about the states. The constitution was set up with federalist power and states rights. That was a long time ago. Yeah, but there is a lot of kind of law in practice where the states can decide the constitution is out of date. [ laughter ] maybe it is, but the the states have an important role. It was the 18th century. Things have changed. Anyway, thanks. Hes here the whole hour and moore. Mobile advertising has been the were going to talk to the ceo of criteo, and a rare exclusive with jay powell. And Motorola Solutions getting a billion private Equity Investment ceo greg brown will talk about the companys expansion plans. G strategies. My technology can help you choose the right portfolio. Monitor it. And automatically rebalance it. All without charging advisory fees, account service fees or commissions. That may be hard to compute. But im a computer. So trust me. It computes. Say hello at intelligent. Schwab. Com so youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. Media giants earned beatic estimate of 1. 03. Revenue also Beat Estimates by a 15 jump. Higher video game sales and tv licensing were particularly strong. All right. Instagram is the latest social media giant to ramp up tiesing. But consumer use of ad walkers is on the rise up nearly 70 . I need that. Apple even planning to launch a new app walking technology, a big threat to Ad Tech Companies lie criteo its add network is second only to google. Here on set is eric just so i understand what you do, ij searching the web, get a lot of ads pushed to j. Crew and kings lane, places where ive already shopped a bunch. Theyre finding me, youre helping them . We use technology to make ads that are relative and engaging so people stop what theyre doing, click on the ad and participate. When i read the details about your company, you direct ads to people who have already been to a site once before, trying to draw them back in, right . Thats right. We take the information that users share with brands and use that data to serve ads that will bring them back. I think its odd youre advertising to me where you may not have shopped, but looked at products. The majority of products we show are not the products we have seen, notsh product that we infer based on further knowing would be products you would be interested in. It sounds like a battle of an arms race here, right . Youre trying to do this. All these other companies are trying to help me block your ads. Is it a neverending battle . Were not concerned about if you think of it generally about the internet at large, users are very happy. Free content in exchange for advertising. That exists also in the app world where the App Ecosystem i dont think theyre happy about it. If you look at the data on what consumers dont like, its the very sdrurptive ads like popup or preroll videos. If its an ad on the side orring in like nav ads that are weaved into the stories you read, they are quite happy with those. The money you spent on r d is to improve your algorithms . It seems like the Business Models changing so much, direct sales of espn potential to consumers. We are spend about 5 to 6 are spent on r d. A big part of the Revenue Growth comes from more advertisers spending more money. It comes from improving the algorithms, so recently we launched a new verbs that improved the way we optimize. We optimize on the value of the sales and not just on a particular sale. We do these constantly. Stocks got hammered in the last year . Well, we went out at 30, were now at 45. We dont necessarily look at the fluctuations in the short term. We think weve got a great business model. You dont look at that flugt wait in the short term . We do look at it, but we dont think its that meaningful, in the sense we think things will then why did you miss . If you look at the results for q2. We beat expectations on the revenue and on the ebitda. So why the fall in the stock . Im not sure why that is, but we basically seven quarters in a row have beat expectations for the street. The potential for the company is enormous going forward. We feel quite good about that. Good to have you on. Thank you. Thanks so much. A rare interview with one of the five sitting members of the ferret reserves board of governor. Jay powell will join us. Well be right back. Time for todays aflac trivia question what is the average life span for a 1 bill . The answer when squawk box continues. Aflac . Aflac i thought you said this guy was the best . Oh, hes a horrible stylist. Gah . But hes the best at paying claims fast really. Mmhmm. Paid mine in just one day. One day . Yea. Aaaflaaaac in just one day, we approve and pay. One day pay, only from aflac. A new sea chance to tryew look. Something different. This summer, challenge your preconceptions and experience a cadillac for yourself. The 2015 cadillac srx. Lease this from around 339 per month, or purchase with 0 apr financing. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Now the answer to todays trivia question what is the average lifespan of a 1 bill . The answer six years. Welcome back to squawk box. Shares of liquidator, the flooring maker lost 70 cents a share, compared to the small profit that analysts had been expecting. Samestore sales fell 10 . The company has been hit hard by safety allegations regarding flooring products made in china. Coming up, a rare interview with jay powell, hell join us on is the squawk set. Well take timing, the economy and the bond market, and a lot more. In the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. Welcome back to squawk box here on cnbc, first 23 business worldwide. Among the stories front and center, investors looking ahead to adps july read on private Sector Employment, and economists predict additions of 215,000. Also out today, the june trade deficit, that comes in at 8 30 eastern time and the institute for the monthly reading on the Service Sector out at 10 00 a. M. Eastern time. A full plate today. Four cents below estimates, retch was also below forecast, though the cable programmer did see growth in distribution revenue. The results were impacted by a stronger dollar. A lot of International Operations that provide a lot of growth for discovery, and live by the sword and yeah. Southeast asia prepaerk for a supertyphoon, the enormous storm taking aim at china and taiwan. So far its the strongest storm of 2015, taiwan is expected to get hid by friday. Mainland china by the weekend. August typically a quiet month for markets, but the noise could turn up this week. We have a handful of key data on the docket. Fridays job reports. Lets turn to a fed insider for more perspective. A rare exclusive interview. Fed governor jay powell, and still with us is our guest, governor powell, thanks for joining us. Great to be here. Lets talk about how you characterize the economy right now. A real anemic first quarter, things seemed to bound back in the second whats your forecast . I would say the economy is moving along as expected. You mentioned the first half growth looks a little stronger now. The labor market needs to be strong, the more recent data have been somewhat mixed. The employment compensation index, as you know from last week was a little weaker than expected. Broadly speaking were on the same and inflation, which is still well below our target. More or less in line with your forecast for the year in 2015 . Yes, more or less, but remember weve got quite a lot of important data coming up. Between now and the september meeting, we have a raft of very important data. If you had to figure it out now, the september meeting were right now, would you be a guy who would be raising rates in september . Fortunately i dont have to figure it out now. Nothing has been decided. I havent made any decisions about what i would support. Were still working with the same framework, looking for some further improvement in the labor market. And im going to be very, very focused on the today thea between now and the meeting, particularly the labor market data. I thought that 12 months ago, didnt we think it would be higher than the gdp going better than where it is . What do you mean about as expected . Thats true of almost all private forecasters. Were really just another forecaster on that. Gdp has tended to disappoint, but on the other hand more important measures of how well the economy are doing would be the labor market. The labor market has tended to perform better than expected. I was wondering about the september think, Dennis Lockhart set he would have to be dissuaded right now to not raise rates in september. When i heard your answer, you are less certain about september that Dennis Lockhart was yesterday. I told you the way im thinking about it. My approach hasnt changed, my thinking hasnt changed. What i think is appropriate is to wait and see the data. If youre going to be data driven, thats means waiting to see the data. So those will be really important. I just wouldnt want to speculate. Jay, pull the curtain back a bit. How will you make a decision . Talk about the collegiality at the fed and how you work with the districts and the fomc to make this call . I think we have a unusual, unique system with the Bank President s and the board. The Bank President s bring a level of diversity of views. They have their own staffs. They come in every meeting and have their own views. Its healthy to ear different views. We have a good discussion, good dialogue and come together around a decision. I think it works. If the employment picture has improved more than would be expected with the gdp numbers, so actually thats the true state of the economy, then why after nine years without an Interest Rate rise, why do we still need another months data to know to go to a quarter percent. If were so sure the employment picture is more representative that were in a better economy, we still need two more data points to go to a quarter percent, to make sure the economy is not in a stalled speed . Its been 6 1 2 years. Since we raised, its been nine. Fair enough. Thats pretty amazing. Its unique. Its never really happened. I dont think 65 of the country thinking were going in the wrong direction when were really at 5. 4 . The truth is i believe there is nor lack in the economy than 5. 3 would suggest. They are people working part time who want a fulltime job. If youre not in the labor market, youre not unemployed. You have to be looking for a job to be unemployed. There are definitely those people. Steve has been asking what the ped will do, and they say does it really come down to one jobs report . Isnt raising rates a momentous decision in i think what joe is getting at is this idea of you have all this weight of evidence over the past several years, and it either sends you that way or it doesnt. Is it really on the razors edge . The time is coming. I think most members at the fomc, at the june meeting believe it was time to raise Interest Rates. That time is clearly coming. When we do that, it will be if the economy continues to grow, it will be a prooz of raising rates gradually over time. So that will happen. You know, we have waited and i think been patient. I think thats been the right thing to do. I think the time is coming. Weve set up specific tests, which i mentioned earlier. When that test is met, well move forward. I think, you know, i think that time has come. Any negative effects from having kept Interest Rates so low for so long . Its a balance. Interest rates are a blunt instrument. For example, people who were dependent on their Bank Accounts and only earned interest, theyre not advantaged by this. But overall, the economy has a whole is advantaged by low Interest Rates. What would you say to critics who argue when Interest Rates stay this low for so long that troubled companies are able to roll over their debt over and over again, and therefore eat up a lot of capital that would be better deployed somewhere else . Ive thought about that issue and worked on that almost since i got to the fed more than three years ago. I would just say if you try to make the kay that low Interest Rates do more damage to the economy than help, ive never heard that made persuasively. You can say but on balance, its been a wise thing for the fed to have a highly accommodative policy in the wake of this very serious calamity we had. So to underline it, there are potentially negative effects, but the tradeoffs are worth it . I think they are. I was skeptical of quantitative easing, and i have to say the evidence is we havent had high inflation, we havent had destabilizing financial conditions. Those were some of the risks, and what we have had is a Monetary Policy thats been supportive of Economic Policy and i think its been the right thing. Everybody is focused on liftoff, how much and when, but i think trajectory is really important. Where will we be in three years . Whats your view on trajectory . Is the path of rates is far more important than the data lifto liftoff. The markets expect says is what matters. The reason is either the federal funds rate is what really matters is the entire curve. Companies borrow, individuals borrow, people earn interests, Pricing Matters so its far more important. So and i think its going to be appropriate that we have a pretty shallow path and raise rates gradually, but well see. The data will tell. With regular inflation, we have it down, we can measure it to a tenth of a degree. Has anyone done any work on measure actual asset inflation. Is it just a term . Is there a way to measure . Do we know whether its caused asset inflation, not just in the stock market, but is there a huge bond market bubble that is representative of all the dislocation . We dont know if things are going to be bad until it hits the fan, and will we look back on this like, remember greenspan was the greatest fed chairman in the world until it hit the fan after he left. How do we know . Our mandate is price inflation. Asset prices are different. Youre right, Monetary Policy does support asset prices. Is there a way to measure it . So, yes, and, you know, i look at that all the time. I figure out all this stuff the fed as i understand it doesnt care about asset prices, but they care about says tim ecrisk. They look at leverage, concentration, the extent to which there is concentration in the regulationed financial you can have rocking claris from the 19th zenchry go to a Million Dollars a chair if banks dont own it in a leveraged way that creates a risk, the fed doesnt care. I dont think finance assets are priced in bubble territory. The bond market could be globally, right . The bond market is pricing in very low growth and inflation. We have to get to one thing, this is the bond market and liquidity bond market. We dont have a lot of time, sorry about that, governor powell, but is there a liquidity problem in the bond market that makes you concerned about how markets would react to a coming fed rate hike . We dont really know. You have to distinguish between the treasury market and the credit markets where companies the treasury market, the real issue is that and this is not news, but moth people dont know it that High Frequency trader are really the majority of the trading, so there are questions about i think thats great in some sense, because Technology Makes thick cheaper and more efficient. In the corporate market, the issue is dealers have smaller inventory and the tact when theres news there will be bigger rate decreases than there my otherwise have been. Its something that people are concerned about, and i am too. What about the criticism because of fed policy, it pushed everyone into the same directional trade that, when you look at where everybody has positioned in their hunt for yield, that it that lack of liquidity can driven in part by the liquidity that you provided . That is one of the risks. Around the world Monetary Policy is highly accommodative, and it does lead to hurting, they say, and higher correlation of trades, because people are generally trading around what in banks do. It would be better from that standpoint to have a booming economy where Monetary Policy wasnt that way, but i would still say, you know, overall Monetary Policy still needs to be supportive of the economy. Why is growth still so anemic despite Interest Rates having been low for so long and so much quantitative easing . I think were still shaking off the risk aversion in the wake of the financial crisis. I think companies are not liar and investing in plant like they might have and households are still delevering. It was a historically bad event, and its going to take some years to recover. Fiscal policy has been absent, really, in helping to drive the economy back. It cant all by Monetary Policy. Thats the whole argument. What it comes down to. One or thing that people point to, governor is maybe one of the reasons we havent seen the plant and equipment investment in some of the other things that companies normally do is because of the the zero Interest Rates, too. You talk to companies, thats not what they say. They never say that. What they say is lack of demand and they dont need to invest. Would there be more demand if were talking about event risk globally. Greece, russia, the middle east, lack of transparency in china. The United States is not an island anymore. We are buffeted by all these changes around. Youre so nice, you cant say fiscal policy, you wouldnt like to bring up regulation and that the well, of course. In the last seven years, the explosion of how many pages do we have . Im getting told we have to end the interview. I want to for it to go on for another ten minutes. Who told you that . A bunch of folks in my ear. Do i ignore them . One thing, governor powell is the first fed governor to sit on the squawk set. As far as i know hes not running for office. I want to thank him for doing this and being subjected, a significant step forward in transparency. Thank for you joining us. Thank you for being here. And taking the questions even from joe. Its 7 44, the show goes ill go. You deal with them. [ laughter ] how can you be running out of time if the show goes until 9 00. Im told by the guys theyre wrong. Its on until 9 00. Oh. Governor, thank you. Omy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. 40 of the streetlights in detroit, at one point, did not work. You had some blocks and you had major thoroughfares and corridors that were just totally pitch black. Those things had to change. We wanted to restore our lighting system in the city. You can have the greatest dreams in the world, but unless you can finance those dreams, it doesnt happen. At the time that the bankruptcy filing was done, the Public Lighting Authority had a hard time of finding a bank. Citi did not run away from the table like some other bankers did. Citi had the strength to help us go to the credit markets and raise the money. Its a brighter day in detroit. People can see better when theyre out doing their tasks, young people are moving back in town, the kids are feeling safer while they walk to school. And folks are making investments and the community is moving forward. 40 of the lights were out, but theyre not out for long. Theyre coming back. Dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Welcome back to squawk box. New this morning New York Times reporting that silverlake invested a billion in motorola, broadening the Communication Systems, so this is that part of the old motorola. Joining us to talk about the Second Quarter results out earlier this morning, greg brown, chairman and ceo of Motorola Solutions. Always nice to get an endorsement from a wellknown name like silver lake. Greg, what is involved in this dealing just this morning, youre coming out with this . Right. We Just Announced it this morning. We actually have three announcements. Q2. It was a good quarter, revenue beat ahead of expectations, eps beat ahead of expectations, strong cash, record backlog, so really good momentum on the quarter. The second announcement is our intention to tender up to 2 billion of share repurchased. As you referenced. The big 1 billion investment. So weve been engaged with them over the last few months, the discussion and the agreement is all about Revenue Growth. So they will put a billion into the firm. They will have two Board Members come on to the board and they will extend and accelerate or strategy of record around growing, particularly in software and services, so an exciting deal this morning. In the software and services supports a lot of people dont even know what youre involved with, Motorola Solutions at this point, a Mission Critical communication company, things like critical communication for police and fire, that sort of thing. It doesnt seem high tech. It seems kind of low tech. What do you need to improve on . Its actually very high tech. They have of it this way were the worldwide leader in Mission Critical Communications Systems around the world. 12,000plus systems installed. Think of those as infrastructure, the walkietalkies, if you will on the belt of a Police Officers or fireman, and all the encryption and security that goes with knolls systems. Its thats what we call incident management. Think about the software were talking about is specifically smart public safety. Think of a Police Officer at an incident. He or she has secure communications, which is what we do. Thats our bread and butter, but now they need to deal with the onslaught of information, analyzing data, video feeds, realtime information. How does that Police Officer take all that information in addition to the communications that we provide. It is then high software, high content, the development of an applications ecosystem, and i think silver lake is uniquely posed to help us do that. Not like listening to a Police Scanner anymore. Social media is just everywhere. Greg, tom fanning, good to see you. Were also a customer of motorola. One of the big challenges you always face is this transition of technology, perhaps flow to the 4g applications. Talk about some of the challenges you face in how you transition from one tuechnology to another. Thats a great question, tom. Good to see you this morning. Think think of our existing systems as the platforms that are installed. As we take on nextgeneration information and video, you need a fatter pipe and Software Content to complement and extend the platforms you stalk about, which is the Critical Infrastructure that we provide. We have an exclusive relationship with ericsson, so if you think about this, this is an extension of growth on top of the core business that we have. So we think were well positioned. Weve spent over 300 million of r d over the last four, five years to develop, tom, exactly what youre describing. I think this is a good Inflection Point for the company and were well positioned. Liesman, deploying a weapon from a sensorladen belt by a Police Officer causing immediate capture of an image or video from the officers wearable, or from the camera from a a building nearby, and then sent real time. Drones connecting a officers mobile device will be able to share aerial views for realtime information as theyre chasing someone or i didnt think of any of this stuff. This is very high tech, and exciting, and obviously pretty actionable and newsworthy given what weve been through the last couple years, greg, with, you know we want the police to be able to do their job, but we want to make sure its done in the right way. Good luck. Thank you, joe. All right. Thank you. It was great having glue coming up, this mornings big movers, list of stocks to watch, and later mark zandi will be here. Well be right back. When youre not confident you have complete visibility into your business, it can quickly become the only thing you think about. Thats where at t can help. At ts Innovative Solutions connect machines and people. To keep your internet of things insync, in realtime. Leaving you free to focus on what matters most. Wendys revenue also beat forecast. Coming up, were less than 20 minutes away from an early read on jobs number for friday. Increased by 215,000, but first the ceo of Spectra Energy is here to talk pipelines and oil prices. You are looking at two airplane fuel gauges. Can you spot the difference . No . You cant see that . Alright, lets take a look. The one on the right just used 1 less fuel than the one on the left. Now, to an airline, a 1 difference could save enough fuel to power hundreds of flights around the world. Hey, look at that. Pyramids. So you see, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. You know your denture can look but, when you eat tough food, the denture moves. Oh no this shouldnt happen. Try fixodent plus adhesives. Their superior hold helps your denture work more like natural teeth. And you can eat even tough food. Fixodent. Strong more like natural teeth. Fixodent and forget it. Outlooked s rich greenfield sounded the warning bell right here. Advertise seg really struggling. I think more and more people are watching content not using advertising. Now hes back to tell us what investors should do today. A bruised apple, the stock falling over 10 in the last month. Is the street changing the tune on the high flyer. The man with the highest price target on apple will join us to tell us why hes still so bullish. Breaking news on jobs. What about private payroll data say about the nations workforce. The final hour of squawk box begins right now. \s welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with Michelle Carusocabrera and steve liesman. Were less than 90 minutes away from the opening bell. Futures are are as high as beef seen for most of is the session. We did have jay powell say its still kind of dependent when there was a feel that maybe a september rate increase was what was going to happen either way. Believe it or not, the market will still go up if the crack addicts get another another two months of zero. That means stocks are worth more. Another 125 basis points is the reason to own stocks for ten years. What is were we going to look at . Europe was up, shanghai was down. I saw the ten year. Tenyear yield fell a bit. 225 again yesterday. 2 18, came back up in the wake of lockharts stuff. We were talking with tom fanning about the way the fed does its communications and whether or not it makes sense for different guys to come on and say different things. My point is the results is not too bad. The market generally ends up getting it right what the fed does. You think theres a better way to get there . Well, look, theres a rich history of the fed, really the last kind of generation, that it was around 1913, for heavens sake, where they put out a lot of independence among the different districts of the fed. Its a rich tradition where they say, you know, look, were going to speak our own mind and do our own thing. My reaction is i would love to know the full context of discussion, and you learn that later through the fed minutes, but the volatility of kind of one pin versus another. We got that today. I would real have someone say, look, were confident the commission is not one or two more numbers are going to once again make us worry. If theres a slowdown, were so uncertain that we were afraid to go the wrong way too early. I would rather have them say, look, were in a good place, we know we are, a couple numbers will not change what we have seen for seven years or whatever. Joe, remember as to what jay said. Its not about liftoff, its about trajectory. I think thats the more important. You were probably asking what the top stories are today, joe. Are there some . Let me tell you the top stories. Investors will be talking about. Were a few minutes away from private Sector Employment numbers. Looking for 215,000 new jobs. And the isms nonmanufacturing aka Services Index at 10 00 eastern, all that data more fodder for jay powell, who was with us just a few minutes ago. Still data dependent, not quite ready to commit to a september rate hike. Nothing has been decided, i havent made any decision about what i would support. Were still looking for further improvement in the labor market and reasonable confidence and im going to be very, very focused on the data between now and the meeting. Yet atlanta fed fed president lockhart said conditions were ripe for a september rate hike. Michelle . A few of the stocks on the move. Walt disney set to shave 50 points off the dow, but the revenue fell short, hurt by a strong dollar. The company also talking about subscriber losses at espn. Ceo bob iger will be on squawk on the street at 9 00 a. M. And spectra in reporting quarterly results. Here now first on cnbc to talk about the numbers is greg ebel. Good to have you here. Good to see you, how are you doing today . Good. Overall you reported a profit of 18 million, three cents a share, but down compared to a year earlier, but really a tale of two businesses in your company, right . Absolutely. Youve been hurt by the drop in oil prices. I guess if you looked at ongoing earnings, were actually up year on year, so there was an impairment charge. I think youre sigh some Energy Companies taking, cash generation up, dividend up 10 , youre right, when you look at whats going on out there in the energy sector, you might be surprised to see Companies Like Spectra Energy growing their earnings, but thats whats going on. Were building pipelines to take products to the demand market and low Commodity Prices mean the demand is actually quite strong, particularly in the case of natural gas, and particularly in the northeast. I know youre trying to build a pipeline through new england, where rate payers pay a lot more, and yet youre really struggling there. The environmentalists dont want you to do it. I think tom could probably speak to this as well. Almost anything you build these days is a challenge. As you might recall, we build a new pipeline into manhattan. Were in the process of building two pipelines through new england and proposing a third one, and theyre all needed. The reality is this summer already through our pipelines, to gaspowered generators is up up to 30 . Thats the reality. What would happen to the cost for consumers in new england if and what if it doesnt get built . If you look at the last two winters, its something to the tune of 3 or 4 billion it cost consumers by paying the highest price for natural gas of anywhere in the world. When you think about the cost of natural gatt in the supply areas in the United States, thats outrageous. You saw the exact same this Companies Like our actually overcome some of these great theories that youve seen in the latest announcements out of the white house be crushed by the reality of facts. You have to get infrastructure oat and i think investors will look at that to differentiate. We put 600 million of new projects in the service and added a billion to our backlog. But you talk about the need for infrastructure in america and talk about the willness of people to go forward on pipelines. If were going to move forward on things like this clean power plant, were going to need more infrastructure in a big way, so its important for new york city like you to be successful in getting a than do help folks like us. We put 70 projects in place since 2007, and about 9 billion. We have an execution to date under contract regardless of Commodity Prices, 10 billion worth of projects that will bring a lot of natural gatt and add about a billion to the ebitda of 3 billion. Look, your opponents believe in Global Warming, right . So they have this argument that your existence poses an existential threat to the world. I mean, do you have a good counter to that to say theres a better way to do it . I mean, they believe it. A lot of people dont, but they happen to believed it, and they happen to be in charge right now. So what do you do . I think you have to focus on the triple bottom line, economic, social and environmental bottom lines. And natural gas delivers that. There is a reason why emissions in this country are down over the last several years. Its because of the growing use of natural gas. Thats an indisputable fact. But theyre never satisfied, right . Yeah, they are. No, no, these critics, no, no, natural gas is bad. I want to ask a question of greg and tom, both, this idea that individual people put up solar power on their roofs, and some in some states they have the right to sell that back to the grid. How difficult when you plan these natural gas projects, pipelines, 20, 30year horizons on these things, and yet the problem is that plaintiff that Revenue Source may be unclear because of individual solar and some of the other things that go around, how much does that disrupt or for every megawatt you put on the rooftop you get a megawatt of backup fired by natural gas. Remember the way that pipe did not lines are built. Regardless of the price of the product, people sign longterm contracts. Why do you tilts complain about some of the this stuff thats going on on the individual level . Listen, were playing offense, in every bit of this. In fact center station, big scale solar is double the economic benefits that rooftop similar is. If somebody wants rooftop so elon musk does not pose a challenge to you with his wall of batteries . No, the Biggest Issue thats disruptive is not distributed generation, it is storage. We still theyd a material shift. Different kind of make, move and sell environment. Natural gas used to be okay, it was you know listen, it is still okay. But now listen to this. The president of the pipeline awareness network, yet another fossil fuel that were becoming overly dependent on. What does she think were going to survive on . To go from today to the future, where you dont use any fossil fuels at all is really crazy. We absolutely need natural gas to play a bigger role right now through, you tell me, 2050 . Beyond . Absolutely. Look, even in all the data that was put out, information that was put out by the white house, by the end of the time frame, the number one generator is from natural gas. Even in their wildest dreams, youre still going to have the largest producer of power. And natural gas is not going anywhere. Theres a lot of selfinterest in there. And you lot price of natural gas hurts them hugely from an economic perspective. But we need the whole portfolio. We bought a wind investment. Building this coal plant thats cleaner than natural. Turns coal into a gas . Yes, and we remove the co2. Greg, last word. Balance weve learned balance since we were kid. Balance is a good approach to the economy and your life, and definitely energy. I think its quaint that you refer to what youre doing as infrastructure, as if anyone is interest in private sector infrastructure at this point. Good to see you all. Thats so yesterday. Theres only one kind of infrastructure. And thanks to tom fanning for joining us. We just got started. I know, man. Thank you. Shopping online. Is as easy as it gets. Wouldnt it be great if hiring plumbers, carpenters and even piano tuners. Were just as simple . Thanks to angies list, now it is. Start shopping online. 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The Payroll Company adp saying total private jobs in july rose by 185,000 in july. June was revised down by 8 to 229,000. Heres the report we bring you every month. 185 is the number. Goods up 8,000, services up 178,000, theres the 215. So this comes in a bit like maybe in guys out there may say we may be a little heavy no nonfarm. And then if we go to the next board, well look at business size. Ed hate the market. Its not that. I dont like bad news. Thats the only thing. I think good news is good news. If we get based on what he ahead from governor powell earlier, fridays jobs report mirrors this one, accept becomes increasingly. I think the market is wrong to fear the increase. We could be doing the we maeve made that term. Thats the biggest last year resource mining and all the related this year theyre losing 15, 20k per month, and the other is manufacturing, outside the vehicle industry, which is booming, seeing lots of growth those are the two sources of weakness in the data. If you go back to 1015, add that to 178, youre up to 200 plus or minus, which is why youre off a bit. Last year we were getting 250k per month on average. Thats what we would be getting this near if it were not for the nonvehicle part of manufacturing. But i think fundamentally were still between 200 and 225k. This was light, no do you. Have we digesteded impact of the dollar . Have we digested what is going on, or is there more pain to come because of those two factors . More to come. This recent downdraft in oil prices, you know, means well probably have another leg down in the energy sector, more on lost jobs. I theo be would look so far weve lost 70. If oil prices say around 50 a barrel. The dollar effects take a while to play through. You would this it can last 18, 24 months, so the pall could play out into next year. Now extend that part, right . If the fell moves in september. You probably would get another leg down, and the dollar would appreciate further, and you could have another secondround effect, right . You know, if you look at the futures market for fed funds, it says 40 at least it did yesterday 40 probability of race hike in september, another 100 by september. Thats embedded in the value of of dollar. If they delay a bit, you know, maybe the dollar comes down a bit. If theyre aggressive, the dollar comes down a bit. But i think the fed will probably stick to that script. The current value of the dollar reflects that script. Mark, lets tack about growth real quick. And the first read, admittedly the only data in there. Does it feel like weve made an upward shift here . I think were in a 3 world, and i think with all the revisions, q2 will be 3 , and i think going forward, despite the dollar, bee spite oil, at negatives, i think were in a 3 world. There are additional sources of growth. Housing, for example, is kicking into a high ser gear, so thats juicing growth and offsetting the ill effect. I think netnet were already in a 3 economic already. Lets left it there, mark. Thank you. Maismt zandi. Go easy on that quarterpoint increase. No, no, i think if it is a 3 economy, it should note be zero . Disney is down 8, the market is up 56, so the data is were up tripledigits. If you take disney out. Coming up, the stage is set down 90 cents or show set for tomorrow nights big gop debate. How do you debate gop . Were going to tell you who made the cut, after the break. Later, disney taking a hit after revenue missed expectations, the company also reining in expectation for subscriber growth. As they analyst rich greenfield will join us. Squawk box is right back. s eg of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . The lineup is set donald trump jeb bush, scott walker, mike huckabee, ben carson, ted cruz, marco rubio, rand paul, Chris Christie and john kasich. The debate is set for tomorrow night could a ratings blockbuster. If you saw the hill lair injuil lair lair hilarious piece from the on onion. Under any context would you use the o word. I wont even use it now. I just wouldnt use it. You know no i dont know what it is. If you dont pay attention, youre ill write it down. My inclination is i thought thats what you meant. I dont know. Youre living under a i would use the fword for the kind of rock you are living under if you havent seen that quote. Without trump think about when he decides who his Vice President will be, whether there will be some publicity. He may appoint himself Vice President. Nobody could possibly measure up. It makes it more interesting. If i die, then im going to have myself resuscitated to be Vice President. Dyscindy adams piece. People who have known him for a long time like him. Hes a very loyal coming up, it could be a tough day for disney. Rich greenfield warned investors ahead of the results. And then apple falling 14 from its high in april, losing 113 billion in market value with soen Analysts Bullish on the stock, are they ready to change their tune . We debate in a bit. Everyone loves the picture i posted of you. At t reminds you it can wait. Welcome back to squawk box. Breaking news we have the june look at the trade balance, which is a deficit. I see the minus sign. Minus 43. 8 billion, darn close to expectations. Last month originally released deficit of 41. 8 was revised very subtly to 40. 9, so a smidge lower, but the big news was the weakness in adp, and the markets response. We still have, of course, ism nonmanufacturing Service Sector coming up, but if you look at what the s p futures have done before the cash opening in new york, a bit of a rally after that weak number. Its now become, of course, as it has in the past, if you look at the some of the last big data points, were going to give for the september meeting, they have to do with adps labor, and the weakness does have ramifications for the stocks today. A bit more of a rally. We were watching the short end to give a guide on fed and future possibility activity. Joe, back to you, buddy. Thanks, rick. We pointed out disney is down about 8, and thats 8 times 7, i think, or around there, is 56, so were up like 156, or 150 now, and yeah, look at that. Great minds, its in the teleprompter, disney set to shave 50 points off, the company beating expectations with the latest earnings, but revenue fell short hurt by a strong Dollar Company also citing subscriber losses at espn. Joining us on the squawk Newsline A Rick greenfield. We will continue our discussion. I want to look at a cusp the charts, rich, because i want to know, what is your rating on disney . Do you have a sell or a neutral or a buy . After it is opens at 1123 today im sorry, im looking at apple for a second, but i think its about the same price. Disney is about same price, yeah. Interesting what would you do with this stock at 112. I would stay away. We downgraded the stock in march. The premise was it was approaching full value, and it was going to be hard to get a really impressive return, so we downgraded from buy to neutral. And it obviously had been a good performer, but i think as you look at the future, the capable bundles we talked about on monday is starting to become unhinged. I know sudden love espn, but theres a lot of consumers, millions of consumers, who simply dont need that price value equation. Heres the thing. We are looking at charts now, and that story that youre telling, maybe youre starting to see small evidence of it occurring, and you even heard iger, maybe hes talking his book, but he says he doesnt see anything dramatic over the next five years in terms of the phenomenon just a year ago they werent talking about this at all, and in complete denial. A year ago the stock was 30 lower. You can be right what youre saying, but a year from flow, given star wars, given shanghai, all this other stuff, you have a glacial move in some unbundling, with millennia, whoever, thats enough to stay out of the stock. Well know in a year, in the stock is up to 140 by then, all this is just being right, but being wrong on the stock is not going to help. Sure. Were not telling anyone to short this stock. In front of the star wars and the unknown of how big or not the film is dug to be, its completely unpredictable. I would be matt at you if i acted on your march call. I dont know, 106 and 30, probably up to 112 . Missed up to 122 or whatever. I think its everything, but when you look at the performance of stocks like netflix and facebook, i think investors and viewers could have do better being invested in those growth companies. Netflix was up unbelievable yesterday to a new high. You would take money out of the disney and put it in netflix . Absolutely. When you look at the relative size the netflix versus disney, the absolute right trade for investors is to be buying netflix here, that is the future of television. They are replays lynnian Television Day by day, expanding their breadth of programming. In some ways disney is doing this to themselves. Theyre making netflix stronger with their television and movie content. Theyre teaching people to not watch linear television, and to not watch a. S. Supported television. Theyre also fundamentally changing consumer behavior, which is hurting the entire media sector. Remember, this is not just a disney problem. Look as discoverys results today. They had huge ratings in flat advertising. Time. Discoverys international. That was mostly the dollar for discovery. I meant look at the domestic numbers, despite huge ratings, they had flat advertising. Theres a fundamental change in consumer behavior. Except for espn, disney was up five in cable revenue, cable advertising . Disney had a very tough comp with the world cup. Still 5 . The reported numbers dont tell the full story. Disney had a very good quarter. Sports advertising is doing the best of all categories. Its the one reason why the one stock in the tradition so disneys market cap goes to veero. Time warner goss to zero. I think thats a bit extreme. This is not about shorting disney. Zerosum either. I think theres definitely shifts in value. I think right now advertising dollars are clearly shifting to platforms like google and facebook. Look at the performance of those stocks over the last year. Look at googles mobile business. You know, i think you really look at the way the bundle is changing, and consumers valuing the bundle. I think its getting harder to see why you have to be a multichannel capable subscriber unless you absolutely have to have sports. But i think. Its so heart as an investor to understand whats going on. I think its easy to value a speculative Pharmaceutical Company than it is whats going on in media. I think what these companies have tried to do is diverse fit across technological platforms so you didnt have to make choices, but i think what rich is saying thats not 100 true, you are not insulated from change by owning the bundle of Media Properties that is disney. I think the sum of the parts is probably at least worth rich, do you have kids or something . Three girls, 12, 8 and 5, let me tell you, the best way to reach them is there instagram. I know. My daughter said you could just live with netflix . She said absolutely. I have gave her ten reasons why she couldnt, and she had an answer for everyone. I want to go home and turn on the tv and look around, i do not want to go to a website on a small little screen to find out my news. I dont know. We think its a different generation. It is, and thats affecting these companies. Remember, kids are coming out of stanford and m. I. T. , and the last place they want to go is to viacom or to disney or to to time warner or discovery. Engineering students want to go to netflix, google and new startups. Media companies are far, far behind in technology and its becoming a more visible problem. Nobody is using their app. Nobody is using the tnt app or discovery app. Your kids are using netflix. I dont like what youre saying, but [ laughter ] we hadnt noticed. Iger we have a hashtag that we created, good luck bunding. The stock is down today for its been out since march. It had nothing to do with it. Okay. Rich, anyway, thanks. Well have you on again. Iger leg on. 9 00. Chrysler reporting a performance figures. Phil lebeau has the numbers, plus a look ahead to tesla which reports after the bell. Hey, phil. Hey, joe, ill give you a couple minutes to cool off. Two of my favorite characters in the auto industry, probably the two most provocative in terms of what they mike say during Conference Calls, because they both are holding Conference Calls today. Fiat chrysler, last week they released their Second Quarter earnings for globally. Now theyre going to agreed down with greater granularity. That means we get to hear from sergio marcione. He runs whats going on in the u. S. , and a lot of questions about where he plans to take this company, and specifically what hes seeing in terms of the demand going into the next year to two years for some of the key brandt like jeep. That Conference Call is coming up a little later on this morning. Then after the bell, this is the one im already get tweets and emails. What do you think well see from the Second Quarter for tesla. We will see a loss. We know the estimates are out there. Thats not as much of a focus as what were going to be hearing from ceo elon musk on the Conference Call after the bell, regarding the third and fourth quarters. These are the critical quarters. The back half of this year, this is where tesla has to show that its got what it takes in order to meet expectations. We said it all year long, the second half execution is really is the only story for tesla right now. Can they keep the model x on schedule for delivery in the Third Quarter . Getting the gigafactory going, guys, we will get a ton of emails from people saying aha, theyre burning more cash, this is what we expected from tesla, we know theyre going to burn more cash. How much more . And will it spook investors . A lot of good story lines after the bell. Well have those numbers later today. We will be watching, phil. Thank you. Whether we return, there have been a parade of bulls on apple. With the stocks recent sidelines. Analysts are ready to rethink their love affair . The man with the highest priced target, 195, will join us next. Sg. Apple is a Great Holding for somebody who is looking for growth in their portfolio on a safe xwaz. Those arent even the ones weve talked to here. We have one of them, but there are a lot of bulls there, been a lot of bulls on the street, not too many bears. The stock is down 14 from the high on april 28th. Despite the recent slide, the highest is 195, and the man behind that number, brian white, managing director and global head of technology for cantor fitzgerald. Without looking at any fundamentals or anything about china or the iphone 6, thats always been my point, a 784 billion market cap, and, you know, for it to double again, in the stratosphere, and the answer that i always got is that on a valuation basis, price to earnings, that it was still cheap, and my only point was that everybody is aware of that, yet its still at ten times earnings. Everybody knows that. You say that, so theres something somewhere someone is worried about something. I dont know whether this is the start of it, but why not just assume that maybe you have a Rearview Mirror mentality, like all analysts and just take a step back the Merrill Lynch guy did. He went to neutral today, based on iphone 6, based on, you know based on whatever caused it, its going to be down again today. Why not take a step back instead of doubling down . I mean, look there will be analysts that jump ship heerp. Were staying the course. I look at apple. Lets go back five years ago. They had 2 share, today its ten. Im talking all of mobile. Its a very small percentage. If you look at pc its still 6 . If you look at china, china is a baby. And so, yeah, is there a slowdown . China . We know that. They grew 112 last quarter despite growing trends. They are nowhere in tier 3 through 5 cities in china, absolutely nowhere. So china, and theres only 12 lte penetration. China is still a monster on the horizon. Im telling. India hasnt even started. Not to mention we have a new product category that got off to a slow start, but we have two people there on set with their apple watch, and i think well see is lot of it in the holidays. If i were to tell you there was either in this country or in china, someone somewhere that saw this how lucrative this business was, and leapfrogged in Technology Beyond with the smartphone. I dont know, maybe android, i dont know what it is. We never know what leapfrogs it. Remember the flip felony . I cant believe motorola is not number one anymore. It was a great phone. Blackberry, whoo changed my life. Do they have people at apple that will keep them on top the next ten years. How do you know that . I think the difference between apple and all these companies is number one, apple has always done hardware and software together. Those companies, they somehow stumbled into the handset market, didnt know much about software or consumers, by the way, and they couldnt make the leap to the smartphone. Apple, with a history in pcs, with the mac, knew hardware and software very well. They knew the consumer, knew the cachet of their brand, so ill say the fear around apple is always they turn into those companies, and i think thats dead wrong. I think all those competitors are falling by the wayside s. Falling by the wayside, and its going to be tougher. Tomorrow its going to be tougher. 2017 it will be tougher to compete. They have to only take what they have now and have greater penetration into markets that are wide open. You dont count on them coming up with another great amazing gizmo to succeed . I think they will. Whats on the highsen . Apple watch is ramping, its still a baby. I think it would be huge. Theres a lot of media stories about something with the automobile, totally makes sense s the tv is a nobrainer, so we think first you start with streaming, but ultimately they could have an entire tv. I think thats longer term. I know its not in the next couple years, but longer term i think that makes sense. So theres a lot of parts to the economy that apple that are turn into computers that apple can capitalize on. Everyone gets caught up, you know, the smartphones are weak, or this is week. You know what i think your question what . They institutionalized the genius that was steve jobs. I think tim cook is great, but thats a good question. I dont know if anybody is the thing about valuation that gets me is to sell to put it with a revenue list, 48 billion . I understand with microsoft maybe, or google, but thats not an annuity. They need to hit it out of the park every day, and the stock is priced for perfection. When you do valuations, you know, if you make 20 a share one year, three or four years from now you could be making 5 a share. A lot of companies are like that. S p trades at i would rather have google, search, i dont know, who knows. Well see . I know, but in the past i wonder fundamental analysts ever got out of stocks like cisco or any of the stocks on the way down. The story was intact all the way down until it wasnt intact. Those companies controlled a percentage of the market. Apple does not. Thanks for coming on. 1 13 today, i think its going to open. You can do it right here. You want to go to neutral . We do not hit the panic button. Up next, jim cramer from the new york stock exchange. As we head to break, heres a look at how the futures are trading right now. We got a bad adp number. Mark market loves it. Lets get down to the new york stock exchange. Jim cramer joining us now. Were looking forward to the bob ieger interview. He laid it out there saying there were subscriber losses. He put it front and center so then we have to address it. I think a lot of analysts arent as aggressive as greenfield but i think netflix at 50 billion is undervalued in terms of opportunity. I dont think the bundle is going away. I think the Company Needs to have more Shanghai Disney and reduce the amount of cable. In the same way they had to reduce the amount of broadcast when abc was growing. I think thats what theyll do. Theyre buying a bunch of stock and i think theyll be buying back stock aggressively. And, jim, were not talking about shanghai or star wars but lets talk about the problematic portion. Thats the bundle. Iger said no dramatic moves before people exiting espn over five years. Maybe hes wrong, but as a result he said theyre not going over the top but they reserved the right to do so if they need to. Is he misjudging the next five years . I think its glacial. I also think we can talk a lot about the other networks. Espn is a must. Are people still watching it . Its clear from the hours that he says are going to be increased that the draft kings and the fantasy teams, people watch the games they dont need to see. But today is the bears day. Let them have their due. Thanks, jim iger is going to join them. Paying for something online is as easy as a click of a button. But how safe are you. Well go where they are trying to make mobile purchasing safer. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. 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Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. Josh limiten is live in vegas at the black hat conference. Reporter joe, the mobile Payment Company square is the one making headlines. We caught up with the hacker behind all the fanfare. She tells us she was able to physically modify the reader who merchants could steal credit card information from customers. The hardest part was the encryption bypass. Being able to turn such a twused device by consumers into a credit card scammer so easily is a pretty big risk for consumers. Square says this hack does not pose a legit mat Security Risk saying the Square Register software contains a number of security precautions. If our encrypted readers are damaged, they will not work with square. The mobile payment space in general is exploding, expected to surge from 52 billion last year to 120 billion by 2017. It is a crowded space with players like apple, google and pay pal all looking to capitalize in this industry. No surprise hackers are taking notice. Your smart phone has become a pretty big target. Mobile Cyber Attacks last year jumped four fold. Thanks, josh. Make sure you join us tomorrow. Squawk on the street is next. Shares of disney set to shave about 50 points off the dow at the open after earnings last night. Were going to talk to bob iger in a minute. Good wednesday morning. Im Carl Quintanilla with jim cramer and david faber. Disney asaid futures higher has adp comes in light. June revised down. A lot of big movers today. Tenyear climbs almost to 2. 24 as the trade gap widens and oil is trying to peek at 26