Transcripts For CNBC Squawk Box 20170614

Shanghai composite was down by three quarters of a percentage point. In europe, some early trading there, at this hour the bulls have their way the dax is up by 0. 6 . The cac is up almost by 1 the ftse up by 0. 4 . If you look at crude oil prices, crude was up yesterday settled above 46, this morning at 45. 87 big developing story. Londons fire commissioner says theres been a flub of fatalities in a fire that broke out overnight in a high rise apartment. Fire fighters still working to put out that blaze which quickly engulfed the 27Story Building in london. Londons mayor says question also have to be answered over the safety of those towers some residents in the building say they had been advised to stay inside in the event of a fire in another part of the building so no smoke alarms or sprinkler systems set up the fire took place on the fourth floor and spread rapidly. Someone wanted to close it down years ago this building yeah. I immediately its a fire at this point with everything happening in london thats what i thought of, but at this point, just a fire horrific and scary. Another big a firish story, if you enjoy my segue, Corporate News youll be walking on egg shells i wont be walking on egg shells uber board member David Bonderman resigning from the board after what he made what was described as an inappropriate comment. At the meeting bonderman cut off Arianna Huffington trying to jokingly say that more women on the board means its much likely theyll be more talking. That was the comment bonderman since apologized but his comments immediately came under yes, squestion as thr discussing the findings produced by eric holder into the companys Corporate Culture. Holder offered 50 ideas to improve workplace culture, including reducing alcohol use we talked about that mem move that went out before the party they were having, some of which talked about alcohol separately, uber announced Travis Kalanick will take what is being described as a temporary leave of absence no exact date for when he will be returning well talk more about all of this in just a bit with an expert clearly, you said im on egg shells i dont feel like im on egg shells lets hear your comments then i think right now in the valley theres a remarkable sensitivity around all of these issues okay. Rightly, by the way there you go. Clearly an issue at uber. I think in the moment of what was taking place yesterday, the particular choice of words was particularly tough now, were those did all of this mean he should resign from the board . That seemed to me to be an aggressive step to take. But given all the signals theyre trying to send to all these people, maybe the timing. What i dont know is aryiann huffington, i gather just from what ive read she laughed she chuckled you think she was offended i have to assume, given all that wastaking place, that there was some ill will about it at that time prior no. In the moment. Yesterday, i was talking about you get if you have a Huffington Post sensibility about everything you do, you obviously would never say that thats for sure. His sense of timing was not the best the Huffington Post, there are in society there are probably people that are here on terms of how politically he correct they are, and people here, and some people in the middle that was obviously on the continuum, that was dont path of being politically incorrect on a normal day im glad youre able to say that this is the egg shells im talking about. No, no. On a normal day, you could say that and somebody might be offended that you said that some people might laugh, some people might not. Im not sure it would rise to this occasion. But on a day when the meeting is talking about Sexual Harassment, the culture of the company, its an acute issue i will be agis. Hes 74, not in tune with the current you im 60 and i dont think things through i dont think thats agist. The guy comes from a different time and youre also not quite address qui a quick. Youll see i did this on the air, on power lunch when the recommendations were coming on uber had a problem, y needed to take steps they made them change the name of the war room to the peace room one of the most ridiculous things i heard i thought it was a joke when i heard it everybody has a war room right im sensitive. I have a wife who happen to be here today blakes here . Blake is here my experience is they both talk the right amount of time they never talk too much, never too little we agree. We agree. You just walked those egg shells well, my friend thank you in just saying that in a lighthearted way means im not taking it seriously. But its a context story. In this particular instance. Its a context story. On todays economic agenda may retail sales and cpi released at 8 30 a. M. Eastern. Followed by April Business inventories at 10 00 a. M the feds statement is due at 2 00 p. M janet yellen will hold a News Conference 30 minutes later. There she is right there you can get full coverage of the decision on power lunch. In washington news, attorney general Jeff Sessions denying Campaign Collusion with russia and said he would maintain a safe distance from the probe into the election interference Kayla Tausche joins us now with more more than 2 1 2 hours of questioning attorney general Jeff Sessions declined to discuss his communications with the president , but he was emphatic that he had nothing to do with the russian interference in the election. The suggestion that i participated in any collusion, that i was aware of any collusion that would hurt this country that i served with honor for 35 years or to undermine the integrity of our democratic process is an appalling and detestable lie Sarah Huckabee sanders says from what the president saw he thought sessions did a good job. In response to a question about whether the president as some of his allies have suggested, would seek to fire the special counsel bob mueller, she said while the president has the right to do so, he has no intention to do so there could be a new legal challenge for the white house. Nearly 200 democratic lawmakers filing suit alleging violation of the emollients clause today the press is seeking access to meetings on healthcare after reports that the president told senators yesterday that their bill needs to be more generous than the bill he apparently called mean john thune said the president is fine with us taking a different direction with what the house did. The president s 71st birthday will be on work force week yesterday a white house contingent visited wisconsin where the president and that group toured a Technical College and he then made remarks at a fundraiser for scott walker interesting note, back stage at the event, the pool reported that the president said we were negotiating with a major, major manufacturer of phones, computers and television, and they would give scott walker a happy surprise sometime soon were waiting to hear what company that is, joe i like that the president sometimes usesed a jek tuses adjectives a couple of times was that a direct quote . That was a direct quote it would be help ful ifhe said company headquartered in san diego, with x amount of dollars. And it is his birthday today . 71st birthday is it also flag day did you know that . I didnt know that. That could well be the case. Is this trivia hour . He has his flag tie on for you. Coincidence i dont think so thanks to Kayla Tausche. Senator thune will join us at 8 40 a. M. Eastern. Well talk about whether the senate is really thinking about doing anything ever. But they did have a meeting about obamacare. Now they have direction, make it less mean less mean less mean. Thats nice. Nobody wants to be mean. Definitely not. On top of all of that, we have the fed wrapping up its twoday meeting today. The markets are waiting to see how it will reduce the Balance Sheet. Joining us is steven richutto from mizuho securities, and carcarl carls charles cham beampbell. Steven, is there any chance they dont raise rates . No, theyre going to raise rates. The markets will look to see if theres new direction in terms of the Balance Sheet i dont think theyll get much in terms of the statement. That may come out in the minutes. Were trying to figure out why the market doesnt seem more concerned that the fed is moving up its timetable for shrinking the Balance Sheet. Will that have additional impact other than just raising rates . The Federal Reserve when they were doing their quantitative easing, they felt 5 500 billion of reserve would reduce the rates by 90 basis points on the other side of the equation, you look at where the tenyear note yield and where it s 2. 20 nobody would be upset if it raised up to 2. 50. Charles what do you think anything es happenilse happenin the surface . Will we wake up and say this is ang iss an issue we have the tenyear at 2. 20. We have stocks at alltime highs. Which one is right . What is each market looking at and each investor looking at . The bond market a janet yellen fade are moving glacially slow everyone cut rates going into recision with the exception of australia. They then had to reverse after raising rates, then cut again because they went back into a double dip or slowdown the only three that different, the bank of england, federal receive and trcentral bank of hg kong the yellen fed is cognizant of that Inflation Expectations have come way in if you look at the gauge of inflation, its at lowest level in a year and a half if you look at the ism, down 8 points month over month. So fed Inflation Expectations are low now. Stock market is saying corporate earnings have been much better than expected. They continued to do well. Pmi reports look fairly decent, healthy. So the economic back drop is constructive so youre saying both markets could be right at the same time. Its not that the bond market is signaling you are long equities at this point . Im long equities steven . I always have equities in my portfolio. Im a bit overweight bonds ive been grabbing yield, i think thats a Good Alternative to taking risk in equities equity markets look okay but they are expensive they are expensive even relative to forward earnings. Im more cautious in that environment. I yanked the poiunderstand the s no reason to limit the equity exposure, but where do you limit the dollar that youre putting in thats the question investors have been asking for months and months you missed 15 in the equity markets. I know its impossible to ring a bell at the top. Thats correct. Is there an argument to be made that because rates are so low and not expected to rise soon that equities you would be clipping coupons for eight years to get to what the market has been doing for six years. But i could lose that very well, and the valuations are thats always the if. Its always the if, but its an important if. Its nice getting 5 rather than 2 . Im not losing as much as you consider, and im getting price appreciation look at where corporates are, high yield performances have been, theyre comparable and there are a lot less risk factors in there i would think on preferred stock theres more risk if rates go up . Im not expecting a major back up in rates but if they d its like an eternal bond i dont know your yield, if rates were to double, your preferred stock is going down. I dont think rates will anywhere near double not if the market corrects, but if the rates go up look at the Political Risk in washington we have a president not the leader of his party. We havent done anything on tax reform oh, okay. Theres a lot of risk that is still imbedded in there that needs to be taken out. He would have taken out 2018, and i think 2018 is coming up soon so you think the market is up because of the president s agenda how much of the premium in the markets now are because of things that are expected to happen in washington, charles . The market is not discounting and expecting tax reform theyre not expecting the healthcare reform. Who is the leader of the party now if its not trump . There is not a leader theres no leader of the party. A lot of people think they are. Who is the leader of the Democratic Party theyre as confused as the Republican Party gentlemen, thank you. Those are both sides of the market, appreciate it. Your horoscope coming into play here. Coming up, uber board member David Bonderman is out after he made whats being described as an inappropriate comment at a staff meeting. Well talk to a Crisis Management expert next when squawk returns usaa gives me the peace of mind and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. The future isnt silver suits anits right now. S, think about it. We can push buttons and make cars appear out of thin air. Find love anywhere. Hes cute. And buy things from, well, everywhere. How . Because our phones have evolved. So isnt it time our networks did too . Introducing americas largest, most reliable 4g lte combined with the most wifi hotspots. Its a new kind of network. Xfinity mobile. Welcome back to squawk box. Ubers culture problems continue even as kalanick agreed to take a leave of absence now David Bonderman is resigning after he made an inappropriate comment at a staff meeting, the same day the Company Released that report on a culture of Sexual Harassment and gender bias joining us for more is eric desmal good morning to you. Good morning. Weve been talking about it all morning, late yesterday. Did he have to now were on to dave bonderman. Given the sentence that he said around women talking more and sort of the jokey way we understand he said it. Did very to resign probably. Look, it is an aggravating catalyst and whenever you have somebody Say Something that causes people to be on cable tv talking about it, rather than the Company Going about the business of fixing its problems, its a distraction. I found in situations like this companies simply dont want to be in the position where theyre trying to explain what a person said so the easiest way from a to b is to step down and get it out of the news. How acute in terms of what you think he said at the meeting, meaning had he not resigned last evening, would we be talking about this for a week or more . You would be talking about it for the next couple of days, looking at it in the context of hold everys report. If this had happened during a retreat that had no timing intersection with the release of this report, we would be having a different conversation it would be one of those dumb things that people who are not in tune with the culture say the fact it happened on the same day as the holder report is the reason why were talking about it if you look at the holder report, historically i had a ceo say to me once, the person who takes the company from 0 to 10 million, from 10 to 100, from 100 to a billion people are all different people and the holder report is about them saying theres a raging debate on twitter and Silicon Valley related to the bonderman comment and the decision to resign in large part because some people say has Political Correctness gone too far when youre a business how do you weigh the public issue in this particular instance, hes a board member, with whatever value you think he brings to the company, versus whatever damage you think that comment made . Thats the findme mefundamentaln that somebody needs to ask in this case it was asked and answered and he resigned look, my personal view has Political Correctness gone too far . Yes. But im not paid in these situations to be an arbitrator of the culture im paid to help make problems go away. If the reality is a company in a controversy simply does not have the spine in 2017 to fight a battle on these grounds. Companies are simply not able to withstand twitter battles in 2017 the question is do you want to go to war over defending bondermans comment, or do you wanted to go to war to take a company into the next generation i think the answer is straightforward. The latter if lets say he was a key man at the company i thought hes a hes on the board. How often do they meet hes a billionaire 74 Board Members are sort of there as its like a parttime thing. After this happened i was like, you know, im out of here is what i would do. Im just gone. I can help the company, i dont need it. Do you think a key whether its an operating guy or someone in an important position, do you think they would have left that quickly . Probably not. A board nmember is different. One thing ive always been uncomfortable with, in recent years when you have a crisis, people get on cable tv and scratch their chins and they say do you think the ceo has to resign as if the ceo of united, a accompany with 100,000 employees, has to resign because two idiots do something stupid on a plane its ridiculous. Now we have this climate where getting rid of the ceo on a knee jerk basis is considered a good Crisis Management strategy we would be having a different conversation if we were talking about a key executive rather than board member. We cant be overly analytical. The reality is when youre working for a company under withering siege, and you suddenly find that 100 of what youre doing is responding to comments people make, it is simply too traumatic inside the company. Eric, i want to understand, are we talking in a bubble is this a conversation happening in the Business Community in Silicon Valley, do you think this is reaching customers this is the tech columnist in the New York Times today one way to fix uber, think twice before using it. Here we have a situation where all of a sudden this conversation has been happening to a large degree in the Business Community does it translate into the operational business or are we still in our own eco chamber i think largely its our own e echochamber. On one hand pundits are opining about it and then it becomes a problem. Rhyme n im not convinced that the issues at uber cause an immediate consumer revolt. But the bigger question is if theyre going to move from being a rambunctious start up into being a company that does business in washington, navigates regulation, things like that, i think there has to be a cultural change i see all the time just because you have activists and twitter people tweeting, it does not mean theres a business consequence. Glad you said twitter you kept saying cable people talking about it i think all of this is the stupid trending thing on you go there and you see anything can be there we talk ed about this before people in this business used to have a choice, is that a story is that not a story . If you think cofveve is trivial and stupid, you are forced to cover it because its trending on this stupid social media site twitter. You cant make a judgment about whether thats really news or worth covering but definition, if its getting that play on twitter, its a story. Theres also a bias to covering things as if they are crafts one thing you see is i get calls all the time when a company has a controversy. Somebody will say gravely to me, do youthink this company can survive . Yes. They almost all survive. The thing they dont survive is the shortterm twitter war you can do poorly in a shortterm twitter war but do well in the longterm a year after toyotas crisis, sales were up 73 . I remember the tylenol crisis people were taking it, keeling over that seemed like a crisis that needed to be managed. That happened in 1982, in a different time, under different roles. That shouldnt be the gold standa standard im not saying it should. United was a big deal. I dont know i have a question, can travis come back . Probably, but it will take a while. Appreciate your time and your perspective. You bet coming up, shares of h r block jumping in early trading after the companys earnings and revenue beat expectations. Well talk tax reform with the companys ceo, bill cobb before we go to break, heres yesterdays winners and losers snoe oh no. Schwab, again . Index investing for that low . Thats three times less than fidelity. And four times less than vanguard. Whats next, no minimums . No minimums. Schwab has lowered the cost of investing again. Introducing the lowest cost index funds in the industry with no minimums. I bet theyre calling about the schwab news. Schwab. A modern approach to wealth management. Briathe customer app willw if be live monday. Can we at least analyze customer traffic . Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Good morning welcome back to squawk box. A quick look at u. S. Equity futures at this hour dow looks like it would open up close to 30 points higher. Nasdaq about 14 points s p 500 up about 2. 5 points. Shares of h r block jumping sharply after a Fourth Quarter report that beat on both the top and bottom line. The company also announcing a 9 dividend hike. This comes ahead of the retirement this summer of h r blocks president and ceo bill cobb is this really a swan song interview . It sort of is with us, everything comes down to the february to april time frame. Had a good finish, great year, earnings are way up. Increased the dividends. Good time to pass the baton. H r block is one of the companies we talk about where you look at four quarters of earnings estimates, its like there it is theres the quarter you need to do well. I think textbook publisher, usually its a september quarter. Right Certain Companies do all their business in one quarter. The s p 500, were the most highly concentrate the revenue company. Are you yeah. We do almost 80 of other revenue in the Fourth Quarter ending april 30th. What happens the other three quarters is it like the maytag repairman . Everybody is sitting around . No, its like a sports team we actually start around march planning for the next season its one of those businesses where theres a lot of regulatory reform, tax reform. You have to stay on top of this. Get the systems ready for the following year so then you gear up like the season starts in january over the years you had a series of challenges really i would almost call them existential challenges you had to face, intuit or if there was tax reform, you can do it on a card that seems like it would on i have y obviate the need for h r block Everybody Needs help. The guardrail is im afraid of the irs, i want to pay the least amount or get my maximum refund. We found out during the obama administration, theres a good r reason to be afraid of the irs the irs is the Revenue Collection Agency for the United States 90 of revenues go through there. It is something that needs to be addressed, the technology and the system theres are embarrassing theyre antiquated even with all the talk of tax reform, something has to be done with that platform to enable that to sustain. Bill, just looking at the stock. It went from 37 back in the beginning of november down to 20 at the end of april. Is that because of the thought that tax reform was going to happen and it would significantly happen since that time it has come back up to 27, as it looks less and less likely that there will be a massive overhaul of the tax reform there was a lot of talk about trump, we were a foil for trump as an example he literally used your name yeah. And we had a bad season. When you have a bad season, 80 of your revenue in one year, its punishing we regrouped i felt confident we could do some things. I was here a couple months ago talking about ibm watson thats been a great advance for us we did do a big expense reduction which we needed to do to enable us to be so aggressive we do free 1040 ez forms in the offices. So a number of these items put together enabled us to get our margins. Were doing ebita margins of 30 . If you were to look at the externalalties, the biggest tlt tax threat is tax reform or intuit i think its intuit theyre a fierce competitor. Their number one in the digital space. Were number one in the office space. I think tax reform is real my sense in talking to members of congress and members of the administration, we said there is real tax reform that has to be done all this comprehensive talk is not the right way to go. If you go back to the reagan years, it took five years to enact comprehensive tax reform what needs to be done, it needs to be taken a step at a time you sit with your board, they must ask you, because you have to make investments, to handicap whether there will be tax reform in the next calendar year, you have to make decisions about all this when you have to sit there and make a bet, if you will, you have to make a bet probably more than people in the stock market have to make a bet whats your current bet . Our current bet we have to proceed as if something will happen but people will still need help. Take the healthcare debate were still talking about refundable credits to fund Health Savings accounts. People will be confused by that. Theyll turn to People Like Us for help i appreciate that point im wondering if were having this conversation a year from now, whether there will be a new tax code you have to deal with and whether you make a bet on that we make a bet, because you have 43 states that tax and all the municipalities were used to tax changes. We act as if there will be change and well proceed along with that. And if you can answer this question as a citizen plus with your business hat on, do we want the irs to have more or less funding for enforcement . Theres an argue mtd to ment to, for every dollar spent, you can collect 2 to 3, and billions are going uncollected. For your business it may be better if theres more enforcement then you have more business to do with the irs. I think its not enforcement, its technology. I think you can have better, you know, enforcement, if you will, if the technology is enhanced. Thats the big thing i talk about. Thats where you would spend the mo the money. Thats where i would spend the money. I would spend it on technology for the irs. I think thats a good investment okay. Youve been audited yet ive never been audited by saying that aloud im sure i have i have a quick funny story. I was audited. When i finished the audit, i was wrong, three days later i was named ceo of h r block can you imagine what that irs person thought i was audited. How did it go . I made 40,000. But i moved from l. A. Back here. They looked at the moving expense, and they were questioning whether you were allowed it lately they ask questions about agent fees unfortunately i they put a note in my file. I overpay so meaningfully on the estimates. I overpay throughout the year a lot. So i think im usually you just send voluntary contributions in to with a love letter usually. Yeah. Attach a love letter to it. I write the check. Put your money where your mouth is, you would send in voluntary, but you dont thats good company to be in. How hackable are the new Smart Devices . Well have a hacker. And Tim Armstrong is the ceo of oath, the new company encompassing brands from aol and yahoo and later the senate is taking on health qucare refm. Or senator john thune is working on that and he will join us at 8 40 whoooo. Youre searching for something. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if there was a single site where you could find the right hotel for you at the best price . There is. Because tripadvisor now compares prices from over 200 booking sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. The chairman of chinas anbang stepping down, the news coming amid a report hes been taken away for an investigation. Eunice yoon joins us from beijing. She has more on this story reporter thank you very much the big question in the Financial Markets here today was where is the chairman of anbang. We woke up this morning to anbang issuing a statement saying the chairman was no longer able to perform his duties for personal reasons. The company said that the Senior Management team would take over his responsibilities, and that the daytoday running of the company would be normal. But what wasnt normal is that last night local media was reporting that the chairman was hauled off by authorities last friday and he has not been heard from since those stories have been completely scrubbed from the internet here. And its been raising a lot of questions as to the fate of the company and whether or not anbang will have to be forced to sell some of its assets in order to meet obligations as well as the demands of its policyholders. Anbang has been an aggressive investor overseas. Most famous for buying the waldorf astoria for 2 billion it bid for starwood hotels, and it has been connected with kushner because its interesting in a property in manhattan the company and the chairman specifically is probably most famous for something over here, which is that he is married to the granddaughter of the chinese leader ping. Because he is so politically connected it sent a shiver of fear throughout the entire Insurance Industry when people heard this news. One insider had told me that the government is making strides and efforts to try to clean up the industry and what theyre seeing is that anbang in particular has been heavily involved in technically offering insurance, but that the insurance looks like alternate investments that yield high returns to investors but not protection because of that we dont know whether or not anbangs chairma has anything to do with this, but the government is frowning on this practice okay. Eunice yoon, thank you. Coming up, smart speakers. Door locks, other devices all making homes more connected than ever hackers are taking notice. Well talk to one white hat hacker whose firm gained entry into the networks through light he will tell you how to protect your home. Oh, white hat i heard of red hat and they also took over a smart toilet and shot water out of the bowl. I guess when someone was sitting on it. What a cruel trick thats next. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back, everybody. Forget home is where the heart is as more people buy into app controlled light bulbs, and popular speakers like the amazon echo home could be where the hack is. Joining us right now is david kennedy. Hes the founder and ceo of trusted us security, a cybersecurity consulting firm, and david, are we overplaying this when we start worrying about whats going to happen with the hacks or are we underestimating just how dangerous this entire setup is were introducing technology into every day of our lives. Everything from, you know, monitors we watch our heartrates all the way to, you know, smart toilets that, you know, control temperature when we sit down and use the bathroom so you look at these pieces of technology, theyre essentially black boxes that were putting inside of our homes, inside of our environments, and theyre absolutely vulnerable to attack and there are things that you can do, including eavesdropping on conversations, hacking the toilet to shoot water which was done at a security conference a few years back theres so many Different Things you can do with these devices and a lot of times they dont have a lot of security around them and theyre pretty trivial to hack. What have you found, things you can do aside from shooting toilet water at people theres quite a few things. Like the smart tvs are agood example where you can take control of the camera itself and eavesdrop on conversations weve done that specifically, as well as that was actually used by the cia when they were using smart tvs to eavesdrop on individuals. Theres a number of things you can do around the philips hue system which there is a flaw where they use the same encryption key across the board. You can hack into the smart light bulbs and get access to the network and eavesdrop on individuals. Theres a number of Different Things that you can do, as well as, you know, what other things have happened. There was one where someone had hacked in to a camera and you can actually listen to the conversation theyre having in the room and actually hear them talking, dad walked into a room and heard an unknown voice talking to his child in the middle of the night, from hacking into his camera. All the things are definitely possible and its not slowing down any time soon. You know, thats one of the reasons i didnt use one of these new baby monitors. I was about to and dan schulman at paypal convinced me that may not be the best idea but are the manufacturers of all these devices getting smarter about this as they realize the weaknesses that are out there . I think theyre trying to the problem is, is that manufacturing is a very, you know, specific type of process that they follow and introducing technology thats connected over the internet is a brandnew concept for a lot of these folks and so theyre really struggling with, you know, the actual security that you put around that, and its not with the times. Hackers are figuring that out and its definitely an avenue of attack the manufacturers arent building a lot of security even the amazon echo still use clear text not using https for some of their Software Updates Even Companies like amazon have security flaws when it comes to how theyre integrating this technology into our lives. Its going to be awhile before we see a big focus on security and take a lot of different types of hacks around the home for them to actually take it seriously and start to address it philips hughs awhile to address the specific vulnerabilities identified in its light system they released a patch. But were at the point where we have to patch light bulbs in our houses to protect ourselves. Thats crazy. What would you be telling people to do . Avoid these devices altogether or are there things you can do to make yourself safer if youre already using them if you have Smart Devices and youre looking at purchases some theres a few things can you do to try to help yourself. One is that, you know, these vendors release patches on a regular basis. So as a monthly routine, you know, go to these devices and see if theres a new update you can download for my light bulbs, thats crazy. I understand. Thats unfortunately where were at today for your toilets you can hack into the bluetooth these are things that can the technology we have to continuously look at whats going on out there david, does it matter if its the consumer version, or the pro version . Meaning i know people have like lutron light systems, theres a fancy version, the one you can buy at best buy. Yep is there a distinction or not really not really at all you look at like lutron, same technology they would implement on the lower side. Doesnt mean theres more security involved. A lot of cases the pro versions are more of the premiere services, and the more luxury ones and have less security in a lot of cases than the mass monetized ones would you ever have a wifi enabled lock on your door . I would not absolutely not no way good to know. David, thank you very much. Thanks so much, appreciate it coming up, verizons deal to buy yahoo is now done. Its in the this books aol ceo Tim Armstrong is now the oath ceo hes going to talk brands, layoffs, cybersecurity a sndo much more. Tim armstrong in the next hour so you miss the big city . I dont miss much. Definitely not the traffic. Excuse me, doctor. The genomic data came in. Thank you. You can do that kind of analysis . Yeah, watson. I can quickly analyze millions of clinical and scientific reports to help you tailor Treatment Options for the patients genomic profile. You can do that . Even way out here . Yes. Even way out here. Good morning a board member is resigning over a controversy comment about women on the same day that the Company Released its report on Sexual Harassment. Details straight ahead its decision day for the fed. What would an Interest Rate hike mean for your portfolio . We will find out when we speak to Morgan Creek Capital Management ceo plus making the oath Tim Armstrong on growth plans for the verizon subsidiary and the fate of Marissa Mayer now that the deal with yahoo has closed the second hour of squawk box begins right now live from the beating heart of business, new york city, this is squawk box. Good morning, welcome back to squawk box right here on cnbc were live at the nasdaq marketsite in times square im Andrew Ross Sorkin, along with becky quick and joe kernen the futures at this hour they are looking up quite nicely the dow looks like it would open up about 45 points higher. S p 500 up close to 4 points and the nasdaq up close to 16 points the Federal Reserve expected to raise Interest Rates quarter of a point at the conclusion of its twoday meeting later today. The decision will come at 2 00 p. M. Eastern time with fed chair Janet Yellen Holding a News Conference a half hour later Steve Liesman will have more on the fed in just a moment also investors will get a look at two key economic reports ahead of the fed decision. Retail sales, also the Consumer Price index both coming out for the month of may at 8 30 eastern time and expected to be unchanged for the month according to consensus forecasts. Also oil prices under a bit of pressure this morning take a quick look. The International Energy agency says the current Global Oil Glut will remain at least through the end of the year. The i. A. Saying that despite opecs Production Cut u. S. Production levels have increased, and theres already a high level of oil in storage wti crude right now down about 1 at 45. 94. A developing story this morning. Londons fire commissioner says that there have been a number of fatalities in a fire that broke out overnight at a high rise Apartment Building firefighters are still working to put out the blaze, which quickly engulfed the 24 Story Building in west london. At least 50 people have been taken to area hospitals. Londons mayor says that questions will have to be answered over the safety of the towers some residents of the building say that they had been advised to stay inside in the event of a fire in another part of the building other reports say there were no fire alarms in these buildings, no sprinklers, and that the fire spread incredibly quickly. Uber Board Members, board member and one of the Founding Partners of tpg capital, name is David Bonderman, showed some video of him earlier is resigning from ubers board after he made an inappropriate comment at yesterdays meeting on Sexual Harassment at the meeting bonderman cut off fellow board member ariane na huffington who i think was recommending a woman for the board saying it would be better when theres more women on the board, more women get hired by the company so he jokingly said one thing i know that it would mean is that there would likely be more talking. Bonderman has since apologized and resigned from the board. His comments came as the company was discussing, right in the middle of discussing a Major Investigation led by former attorney general eric holder into the Corporate Culture holders recommendations, highlighting nearly 50 ideas for uber to improve workplace culture, including reducing alcohol use at work. No at work events. Probably both. Would be good. At work or at work events. And preventing intimate relationships between employees, and their bosses separately, uber announcing its ceo Travis Kalanick is taking a trar leave of absence. It is fed decision day Steve Liesman joins us right now with a preview, and steve the markets have almost basically figured this is a done deal. This is amazing despite the weak gdp and lower inflation, the market really never wavered from the conviction of this hike coming today and the fed barely attempt to say anything. Fed chair janet yellen i think has some explaining to do at the press conference and also in this statement let me put out a couple yellen dilemmas one the employment rate is at a 16 year low but inflations been declining. The fed has been hiking, long rates have been falling and stocks are soaring heres the chart of the unemployment do we have the Unemployment Rate chart . What it would show is look at that theyre great in the back. Unemployment rate heighting a 16year low, 4. 3 but three months in a row now the fed has made no progress on the core pce, or the inflation indicator. Thats what makes, by the way, this 8 30 data pretty important. The retail sales and inflation data but economists say quote we think the main message will continue to be that the improving labor market is likely to justify gradual, but ongoing removal of stimulus. That means another hike is likely this year though not quite as automatic after today and plans to reduce the Balance Sheet should be revealed later this year. Not so much as tightening as normalizing rates. Doesnt really want to slow the economy, but would be happy to see gdp even increase. Keeping a wary eye, of course, on the declining Unemployment Rate what the fed really wants here is to get back or claw back what it can in the terms of normalizing rates while the getting is good, guys. A quarter point steve, you need a haircut, steve. Really . You know how you get you know on the sides. Yeah, its a little yeah, you know thanks, joe. Either that, or you know im still i know what you think i know what you think. You would be the most bad ass fed watcher in youd be like the coolest thing. Because kojak well when gary cohn does it ill follow gary should we talk more about that, steve . Well, you know, andrew, we seem to some people internally think thats news i think between you and me, and especially you, weve known hes headed should we say what were talking about . Read the email this morning, theres an article in the wall street journal talking about how gary cohn is leading the search, if you will, for the janet yellen replacement we talked repeatedly, steve and i have i think we knew that. On the air both about that and the prospect that oftentimes the person who is leading the search andrew. Takes the job you joked about this you were just going to do anything you can to try and make that happen . Im not willing it to happen. Im just suggesting that geithner never became remember when geithner was going to be fed chief. He never became it either. Would you give him credit if gary cohn does become fed chief . Not if he forces the issue by keep talking about it that much. You predict it and youre andrew. Andrew andrew, how long have we known that cohn was looking for the guy who was in charge of looking for the fed people and looking for the fed . I think its been months now, right . Maybe like a decade you think he could pick himself . I dont think so i think he then says well we dont have great options, maybe we want i dont know. Maybe he wants i dont know anymore. Very powerful suggesting its a possibility. Steve suggested it as a possibility. The wall street journal is suggesting today its a possibility. All right, all right. We respect them but theyre a little late to lunch on this one. Oh, god if it doesnt happen theyre not late to lunch. Thats true if it does happen andrews been the first steve stick around. I will. Lets talk more about lets talk more about do that talk more now about the fed chance of a rate hike at todays meeting and how it may impact the markets. Joining us now evercore isi vice chairman and Morgan Creek Capital Management ceo and chief Investment Officer i thought that was bourbon is you make bourbon too at morgan creek a little further north in kentucky is that a different are you in kentucky . No, were in North Carolina im pretty sure you guys make dont be shy all right we will see make movies theres morgan creek productions. Oh, there is . Thats right thats that would be cool all right. So, is there anything that could be surprising today in your view i guess if they didnt raise rates it would be a surprise what if they raise it and then in the comments is there anything i dont think theyre going to go very further very much further out. In terms of promises look, i think theyve been trying to get from out behind the curve for a long time. And we were together about a year ago and one of the things i said, i think becky almost fell off the chair was i thought she should raise it to 3 in september. And she should because you have to reload the gun. Theyve just been behind the curve. The whole reason to keep Interest Rates low was to recapitalize the banking business there were people that borrow fed funds are the banks. The banks are doing well theyve got excess capital so we could get higher short rates. Whats really interesting is what the long end is doing the long end is actually rates are falling. And so the curve is starting to get more flat, and could even invert thats the other central banks, right yeah, exactly but i just dont see why going to 3 would help that problem. It seems like they were right to be slow, and its been too much liquidity in the markets. And el vaithed by long rates staying so low that they didnt need to go higher is that not true steve, is that wrong or not thats your viewpoint, isnt it, steve . Then well get to chris . Is steve gone . No, im still here, joe i think thats right i think what the fed needs to do here, what mark is saying is that is soak up some of that liquidity. Thats one reason why you have these long end the long end coming down. When i talk to a lot of real estate guys they tell me that, you know, theyre being asked by banks to take more money now and but steve behind the curve or not . Ive i dont think so. I dont think so i think that when you have inflation thats low, youre still doing 2 of the economy. I really think this metric, and i really want to hear chris on this, theyre not tightening, theyre normalizing and theres a difference in that chris, theres no asset bubble in oil, thats for sure yeah, you know, look, i think that as steve said, the fed is trying to nudge its way back to what they think of as a neutral pasture on rates something closer to a 2 funds rate, which once you subtract inflation, when they get back to target would basically be zero Interest Rates adjusted for inflation. They think thats appropriate with the Unemployment Rate now, already below what they think is long run sustainable rates. When you look at Financial Markets, i dont think theyre trying to kill the stock market. I do think that they see very easy financing conditions in the market and that gives them latitude to keep nudging the funds rate up hmm so, looking for something exciting today, no one is going to give me anything. Are you a couple of things just to think about. I think its likely to be fairly straight down the line but look for a couple things the firstonis if they update formally their plans for the Balance Sheet rolloff the more formal that is today, the clearer that it is that at least they have the option to go on that in september, rather than in december secondly, just keep an eye on those outyear Interest Rates docs particularly 2019. I think you could see one or two people starting to just take those dots a little bit lower. When it happens it may be a 3re cusser that down the line of the next edition we could see more significant retreat on that 2019 horizon. Thats pretty confident in their plans very near term a lot less conviction as to where we go, you know, beyond end of 18 particularly through 19. You always one of your favorite things is terminal pricing and you used to think it goes there immediately you have a feel for what it is this time around and we get there and then it might go back down from there . What is it its so low. This is so different from every other cycle, joe, in that now weve never been in a situation where the fed itself is forecasting its own terminal rate and the fed has put that up at 3 we poll on that in our cnbc fed survey, know not the allamerica, in the fed survey, we poll on that and were running at 2. 8 is the average among our participants in that so, everybody has this idea, and youre right to point out the failure of my theory here is that theyre not pricing terminal rate in now there are other aspects that are keeping down on that my question is sort of a drama today to me is when does the fed get concerned about this conundrum the way greenspan was. Remember they were hiking rates, the long end didnt respond and then everybody comes back and blames the fed for not hiking rates enough, and then really fomenting the housing bubble, because rates werent high enough i wonder if theres some people on the fed who are saying you know what . On the one hand we need to push a little further, a little harder on the brakes in order to make sure we dont have that same problem again and then you have another group of people that were sort of the old dove crowd that say you know what ive got three months of declining inflation, im not getting towards my goal, maybe i need to stop so theres this sort of developing schism on the fed thats not a problem yet all right, so mark. Yep youre like out there okay. On what . Equities are totally overvalued theres going to be a recession. Trumps like hoover, instead of hooverville we see trumptown so, i want you to go on record for this, so next time youre on if it doesnt happen we can laugh at you, i think. So tell me sure. So how overvalued is it, and theres going to be a recession this year or next year you said this year you know, beginning of the year we said it could happen this year. I think its probably more likely in the First Quarter of did you have an s p target at the beginning of the year . We thought the s p would be flat to down this year from where . Where was that from where it began so, wow, your clients still hanging in there well, years not over. A lot can happen in the fall the markets 85 overvalued to fair value you look at fair value on any number of calculations, were around 85 mrs above that that doesnt mean we have to go right back to fair value you can stay overvalued for a long time. Lets say you think the market is going to tank by 85 no, no, no. You go back to fair value that would be a call. So i understand what hes saying it happened over time flat to down for the year so youre talking about a 10 no what is it, or at least a 5 or 8 correction, and then maybe below that is what you think is going to happen before the end of the year. I think its a long process you look at 2,000 youre giving yourself more time no, no. Our original commentary was that we were valued like we are in 2000 were not quite as extreme but were pretty close were the second highest overvaluation in history and so if you remember 2000 you had this last push in the summer into the fall where we get into real levels of high valuation. You look at some of the stocks out there with, you know, quad digit p e ratios, the average p e in small cap stocks is in the 80s if you include the companies with negative earnings so if you look at all of that, were high level valuation housing wasnt that bad. It was down about 9 01 was down about 12 . 02 was down 22 you go down a lot lets say that okay, jonathan yesterday not on our show, later in the day, he power lunch oh, thats right. But we had been talking weve been talking with him about whether hes going to raise his target because he and he raised his target to 2600 i think hes looking for an additional 6 points. I think he said 2600 on the s p. So your stake and i dont know what you where you were before beginning of the year i dont know if you were were you bearish for 2016, as well . No its hedged okay if it goes to 2600 were up about 8 this year but if it goes to 2600 do you say at 2600 when would you capitulate what would cause you to say you know what . That was a bad call, its not going below 2250 im going to buy this market . What would cause you to do that . What i wrote, you mention the welcome to hooverville i wrote my letter that were actually tracking a very similar experience to what happened in 192829. And what i said is that we could get a bubble blow off top to 2800 so i actually think between now and septemberish we could see 2800 2200 you shouldnt have said flat to down hes up 8 for the year you want to go long, short to bad companies, short to overvalued companies the thing is when youre trying to protect your wealth, which is the most important thing, right . Getting across the finish line, not first, but youre protecting wealth, you want to be its okay to be three hours early but you cant be a minute late so youve got to get hedged in advance of the problem so if we have this blowoff top in the summer, very similar to what happened back in 29 or back in 2000 youve got to get hedged before it turns down. Well well see. That may or may not happen at this point and then youre just going to wish it stayed long or got longer at 2000 i mean its possible you could be totally wrong of course of course all right so far looking that way but well see whether were up as much as the market so why so youre if i had been your client, if i had been listening to what you said at the beginning of the year were going to be flat to down for the year i would not have been investing in stocks. But its only in june i understand that well i know i heard i havent seen in fact were very overweight emerging markets emerging markets up 16 all right. But fine. So youve been bearish but youre making money anyway were not bearish joe youre missing the point we believe the market is overvalued you shouldnt buy overvalued not saying youre bearish okay so youre youre telling clients youre going to be flat to down for the year youre bearish now if we go to 2600 like these other guys youre going to be wrong. Thats what a 4 move from here . From 2200 to 2400. I would have rather been telling people its going up but you know its your okay. Thats fine good okay. Come on back we will check this out to see if it happens. Coming up, oath ceo Tim Armstrong plus the feds decision on Interest Rates due out later today what it means for your money and bill daley is going to join us to talk trumponomics and later when its hot out nell talk about the brew busiss stay tuned youre watching squawk. You have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Tthats why at comcast,t to be connected 24 7. Were always working to make our services more reliable. With technology that can update itself. And advanced Fiber Network infrastructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Welcome back to squawk box. Verizing completing itzhak business igs of yahoo integrating aol, over 50 media and tech brands including tumbler and yahoo sports and finance. Yahoo ceo Marissa Mayer will not remain with the combined company taking a 23 million severance package which im sure were going to talk about. In the meantime we want to welcome Tim Armstrong. The former aol ceo now today officially as of yesterday officially the ceo. Good to see you guys. Were going to see you on the day within moments of the official closing but its good to see you today tell us what has happened. So what is actually happening in the past 24 hours . Sure, so yesterday i was in california, monday in boston, yesterday in california, the last couple days in california and were basically putting the companies together so the deal closed you have the formation of yahoo plus all the aol brand, housed inside of verizon. You have a billion consumers one of the largest mobile companies in the world and we basically, trying to get the clarity to our job impacts happening this week so were basically focused on that this week next week were in france for major advertising and then after that this summer a major product sprint, and so the companys been a year of the deal coming to the and i think everyones excited. Whats gained and whats going in terms of both the jobs, piece of this but also in terms of how youre thinking about these various brands sure, theres three areas of jobs impact were changing one is yahoo going from public to nonpublic so theres public lease forces second is tweaks just in terms of us around where i say redundant groups and resources, in general putting more money towards product and technology, next towards the back office functions. And third is where theres product consolidation. So if you look at areas like, you know, mail, or the home pages, those things where we have very similar teams, there may be impacts combining those products over time the brands will stay, but the back ends of those products will continue what do you want this to be if we had this conversation two years from now we really measure it . Sure. We have our 2020 goals we just talked about, getting to 2 billion consumers. Our belief is that if you look at the mary meeker deck that came out its not hard to see the pathway which is where things are going which is mobile media and mobile services. We want to be the company that leads the forefront of putting brands on phones and thats a very simple propositi proposition. Very powerful for, you know, the consumers. 3 billion additional consumers that are coming online and our entire focus is focused on being handson phones and putting Brand Marketing in peoples hands. Putting brands on phones. You do that without branding ire of the Justice Department like slapping them on every verizon phone that comes out without any competition that comes in . Youve got to use the Corporate Partnership without getting into a dangerous situation. One of the things we did announce internally yesterday was we are starting to load a product called app flash which will carry yahoo brands and aol brands on verize rn phones consumers have a choice. You can potentially load whatever service you want on your phone we will basically have Consumer Choice at the center of what were doing and i dont think youll have any issues where were getting over a line thats going to become a justice issue. I think verizon understands those issues very well and were very respectful of them. We want consumers to have a great experience we need to earn our way onto phones verizons not going to put things on phones that dont make sense. Were going to focus on that one just employee question because i know im seeing it on twitter, a number of your new employees who are watching you this morning, just to put a fine point in terms of layoff situation because theyre all kind of trying to understand it and i know its hard to explain it on tv true. Theyve heard all sorts of different numbers in terms of how many different total people are going to lose your jobs. Whats the total its roughly 15 of the company. Its mainly focused on us putting more resources towards the front end, towards the consumer whats the total number of employees . Theres roughly be about 14,000 okay. So youre looking at about 2100 impact overall. And again those are mainly happening this week. Were trying to get everything done we can this week and were spending a lot of time, our executive team is spending their i said this is people week next week well get the strategy and business this week lets get everyone settled and make sure that we help people find jobs across the economy question about sort of bigger strategy beyond, and i know you have a lot to do in terms of integrating this piece of the business, but we talked about it before, your boss and partner lowell who runs verizon has said he is open to all sorts of mergers and potentially buying even more content, much more expensive content, frankly, whether it be cbs, or viacom, or hes open for business to do anything where would you play in any of those type of conversations . What do you want to see . Let me just readjust that statement is lowell i think had said he was open, like any ceo would be, to doing anything. I think what he recently has said is were organically focused on pushing the ball forward in terms of the integrations that were doing at oath verizon has also acquired other businesses im sure verizon is going to be open to doing anything that made sense for the business overall but you know, our focus right now is getting really big digital scale, and were working on a number of partnerships with big media companies. But when you look out at just the landscape of how this is all going to play out. How much of the model of what at t and time warner are doing, or even what you are doing, was there going to be specific brands that to some degree may be tied to specific distributors how important do you think longterm that is going to be . Well i think theres, you know, our objectives as a business are clear and related directly to business models. One is we want to build brand people up. Thats number one, we want those brands to be distributed everywhere we would love to have them on at t, but to have them on tmobile, comcast, any of those places. Second is to build platforms that companies love. We want to have our services, whether its media or advertising show up on everyone elses phones, and distribution sources also so, half of what were doing as a business is actually building things for other companies as well. And the last is building a company that talent loves. And those three things are not specific to verizon. Its very helpful for verizon, but its specific to where the world is going, where the industry is going. And those objectives are kind of whats driving Value Proposition of the amount of data and information you get, from by being connected to a phone company sure. And how thats going to ultimately help on the advertising end. Sure. Just how important that that is and how youre collecting that data. Number one is, the amount of touch points we have without verizon involved is about over 200 billion pieces of touch point a day. So theres a lot of data we use to optimize our Services Every day your youre seeing what im looking for, what im searching for, what i want yes, what youre looking for, maybe doing email, looking at content. We have a lot of data today that we can optimize our business and personalize things on. The second piece is with verizon now we have that information if youve opted into it you can understand how Better Things on mobile so if you think about our core strategy underneath the entire strategy what it is, is delivering personalized information on an individual basis so if you look at linear programming, it goes through you know family level or even to a broader level our information is all personalized so everyone can have a and how is that comparable in terms of or advantaged relative to what the kind of information that google is able to collect with people who have android device, or facebook is able to collect if the app happens it depends by partner and how theyre set up like the way they think about it is verizons relationship is a total subscriber right everything you do on your phone in terms of the app usage, location data, those type of things are privacy protected and pii protected but theres a lot of valuable data so you look at mobile data and desktop data together mobile data is better than desktop data terminnistically your phone is with you all the time from our services weve been able to put a brand portfolio together that goes from tech to news to finance to sports and if we can deliver that and you combine that with our bring oath together from a structural standpoint, shes done an amazing job, were going personalize all of those services for you on your phone, on your ott device, on your desktop, and you know, verizon is a very powerful company in this space oath is a very powerful company. Over a billion users on the internet its this is a scale its going to take us time to put it together but this is a powerful, powerful potential for the future and i got to ask, you knew i would, Corporate Governance folks look at the severance package that Marissa Mayer got and they throw up their hands. Whats the rationale for it . Whats the explanation so people understand sure, first of all, one thing i say is i think marisa, we went a lot of time in the last year and theyve done an excellent job building a culture and product and Engineering Team overall and i think the results for yahoo have been very good for shareholders i think i wont comment on marissas package, specifically, but i will say a lot of those type of comp packages are done based on the situation the ceo is going into, and i, you know, marissa had an incredible returns on the stock over time so you know, her returns are probably tied directly to, you know, what her results were. And she also has a contract that she left the company so i, you know, theres a marketplace for that type of contract, and, you know in other words that contract was something that was before your time . Yes yeah. Theres no journalism entity here god bless her no, no, im happy for her really happy its good for her. Yeah. And by the way there have been a lot of Interesting Articles written about it, and the most interesting piece of it, actually, not to go off a tangent was just how the stock has actually succeeded now in large part because of alibaba, but that was how the metrics were but until we start, you know, figuring out like legislative ways to prevent things like this i say anybody that can get a contract with their people, their agents or whatever and they get a great contract and Something Like that happens, i go what a great contract id like to go i would like to have ended up going to yahoo i wish it would have been me. I will also say one other thing is if you go to almost any major corporation, everyone is trying to figure out how to get into digital and i think whats happening in sal cilicon valleyn terms of the stock prices, this is a very valuable space and industry is it bono bono. When you go back home in ireland you see the guy up on the big house on the hill you want to get that guy you come over to the u. S. , i want to be that guy. Right . I want to be that gal. Be marissa i want to be tim. All right we all want to be tim we all want to be tim congratulations how was your pay cut . [ everyone talking at once ] when we come back this morning the future is here selflacing shoes, inspired by back to the future fetching serious money at auction. Detas ghafr e eailrit tethbrk. Dad kinda walked into my swing. Huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced. Our senses awake. Our hearts racing as one. I know this is sudden, but they say. If you love something set it free. See you around, giulia the future isnt silver suits anits right now. S, think about it. We can push buttons and make cars appear out of thin air. Find love anywhere. Hes cute. And buy things from, well, everywhere. How . Because our phones have evolved. So isnt it time our networks did too . Introducing americas largest, most reliable 4g lte combined with the most wifi hotspots. Its a new kind of network. Xfinity mobile. Welcome back, everybody. President trump has a full plate heading into the summer. The Ongoing Investigation of russian meddling in the election, health care on the hill and the battle over tax reform those are just a few of the items on his agenda. Joining us right now is former white house chief of staff bill daley and secretary thank you for being here today great to see you thanks to you, becky. Depending on who you ask, you have an agenda that is completely bogged down with no hope of seeing light of day. Others who will say, yeah, maybe things are coming together and we could see some things that happen before the summer recess. Let me guess which side you take well, id say its more likely not anything major is going to happen before the end of the summer. I think you have such a short period you know, they take long breaks around the fourth of july, and then of course august, and youve got some forget the circus thats going on right now down there the actual reality of trying to get a Health Care Bill, or tax reform or something serious, these are as the president even said, these are complicated things and so far, not only are they diverted by the comey and sessions and all of the russia probe but just the sort of chaos that seems to be going on. Ringling brothers closed up a couple weeks ago i think it was because they couldnt compete with the circus in washington. Youre a former commerce secretary but youre also a former white house chief of staff, and lets put your chief of staff hat on for a minute if you were in charge of trying to wrangle things here, what kind of calls would you be making what would you be doing if it were up to you well, of course, the first thing you try to do is take the cell phone away from the president , which doesnt seem realistic. Because i think that sets a tone every day that is then forces the white house staff to react to so thats by cell phone you mean the twitter account . Yeah, the twitter account so its not going to happen. So, look it, theres no doubt the chief of staff is under enormous pressure to get something done and thats why the senate is moving, at least from what i read, moving forward secretly in some sort of Health Care Bill that they think will be a compromise just to get it done whether that can ever be matched with what happened in the house, which the president praised a month or so ago, and now supposedly believes it was too mean right to people of america. Remains to be seen but i think they just got to get something on the board you cant announce an infrastructure week and then have nothing really happen you cant announce tax reform, and just sit there and so i think theres got to be a sort of lets stop this madness, as best one can, because a lot of it is out of his control, obviously, priebus, but two things id do first of all, shut up everybody in the white house from talking so much and leaking so much. May be impossible. But if thats the case, then get rid of people. Make real changes inside because obviously most of the damage being done to the white house in my opinion right now seems to be coming out of the administration not by the democrats bill, isnt it possible that with whatever commotion is going on we could is i mean is there an argument to be made that whatever is happening at the white house is noise and that the thing we need to really focus on is whats happening behind the scenes inside the senate when it comes to tax and health care and that perhaps they can get their act together, without the white house, they can pass something interesting, make it happen with the house, and then bring it to the president at the end andrew, to be honest with you, i think thats unrealistic. The senate and the house dont deal outside of the town of washington which is driven so much by the white house. The idea that well just let the circus take place down 1600 pennsylvania avenue, and well be the adults that do the work, it doesnt work that way first of all, youve got a president whose popularity is tough and the senators and house members look at that, theyre only 18 months away from reelection. Theyre scared to death, i assume, in the Republican Caucus about whats going to happen, and that relates back to the white house. So you cant work in a vacuum. Because the president will lean in at the end. And if you have a bill that the president has a hard time wrapping his arms around, i dont know if hes just going to wrap around anything like he did the house bill, first bill, then the second bill, thats not leadership youve got to get some leadership coming here but if he is you just made the point that i think i was trying to make which he is prepared to wrap his arms around something that looks like a win. Hes in the business of trying to win, or at least appear to be winning. So if yes if he can effectivelyal how them to get their october together, put something together, he will wrap his arms around something that he can stand in the rose garden at some point if you believe the polls, that the house passed Health Care Bill is not popular at all, to wrap yourself around a bill that comes out of the senate thats as unpopular or more unpopular, just kills them all going to 18 and these members of the senate, more importantly the house who are up in two years, most of them, all of them, obviously, are going to be more sensitive to when this comes back to them and the president isnt up for another 3 1 2 years. So he has the luxury of sitting around, and embracing anything, and the senators and house members dont have that. Secretary daley, always good to see you becky, thanks very much byebye. All right coming up, the tsa requiring travelers to declare their carry on bags but taking out ipads and e readers. One company is looking tchgeo an that phil lebeau has that story after the break. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back to squawk box. Do you dread the idea of a laptop ban on an upcoming flight 3d Screening Technology may be the answer to your prayers but will the government buy it thats the question phil lebeau joins us where are you this morning in massachusetts, thats right peabody peabody. Just outside of boston these are the ann alogic imagine if you could give a c. A. T. Scan to your carryon bags this is their new carryon bag screening device that they are currently testing with the tsa and with Security Officials in europe look at the image that comes through as that bag comes out. Theyre able to maneuver this so that the tsa screener can see theres a knife, theres a gun, and see this red spot here guys . Up here, that is an explosive sim lant that was put in to where the battery would have been in the laptop in this bag now compare that with the current image that you see when you go through baggage screening. Its two dimensional not always easy. You dont see the knife, and its not always easy to see what might be an explosive sim lant thats one of the key advantages the ability to perhaps better detect explosives. So the machine does everything it examines the back using the algorithms, and displays an explosive in a bright red so that its clearly, you know, for the operator, they can have a clear understanding that something is dang vus in the bag. And as you take a look at shares of analogic with this technology that is being tested you would not have to take liquids, lotions, everything out of your bag theoretically, all of the bags and people going through carryon bag screening should move through the system faster because of this technology so phil real quick before you go, how quickly is this going to be available, and what does it look like in terms of orders at the moment well, theyre pretty optimistic that theyre going to get the approval from the tsa, as well as european Security Officials in the next couple of months and then its a matter these are a quarter million apiece then its a matter of procurement with the tsa budget, the European Security budget, all of the different airports around the world potentially over the next three years we will see hundreds of these machines rolling in to airports, not only here in the u. S. , but in europe and around the world. Thank you very much, phil thank you when we come back, as th craft beer craze gross brewers are looking for innovative ways to stand out we will speak to the ceo of harpoon brewery about th alnglascape. Thats next right here on squawk box. These days families want to be connected 24 7. Thats why at comcast, were always working to make our services more reliable. With technology that can update itself. And advanced Fiber Network infrastructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Nothing like on ice cold beer to get you through the summer heat. Helping us cool down this morning with his own brand of craft dear, danny kenary founder and ceo of harpoon brewery in boston good morning how are you . Good morning. To cool down but is it selfdefeating am i dehydrating myself when im trying to hydrate myself dont answer i dont even want to know. That is true though. But theres something about it in the summer, right its 95 water. Its all good. Right. Whenever the temperature is. Its always good. I like it really cold youre not supposed to, though you know, 38 degrees is kind of ideal but i think it depends somewhat on the style and your taste. Were beer not wine so we try not to have too many rules i wish it was colder than 32. But im told thats not possible well, we actually filter it around 30 or 31 degrees. So we do get it colder than 32 oh, he does we do down at the brewery. Because theres some alcohol in it so it freezes at a lower temperature. Its actually important to filter it below 32 so the craft beer that you have times when it beats everybody else and times where it lags. Where are we in this cycle were moving from a phase where were beating everybody else to a phase where were not and imports are doing better than craft right now and other style, some of the Super Premium beers are doing better than craft right now. Why thats generalized. Some are doing really well, others are struggling. What explains the cycle weve been around now for 30 years so its kind of typical to have those ups and bounce downs. We saw it before in the nineties where consumers had brand fatigue and theyre overwhelmed by the choice and they go back to what they know as opposed to trying the new how much of it is the millennials . A lot of it they are dominating the category right now. And so, theyve proven to be really loyal craft drinkers. But also very experimental theyre open to trying whatever is new, whatever is local and no loyalty . Well, not as much as at times we might like. And thats in a Consumer Product category is not all that surprising how important is branding, versus, and marketing, versus the actual product or i guess you have to tell me the product thats most important. Well ill tell you, youve got to have great beer right in the bottle or can but branding is more and more and more important. Back in the early days when there were 50 of us in the country, you could get away with your story about hey, were new, were local, were different than the mainstream brewers. Now, 5300 craft brewers in the country, branding is incredibly important. How do you differentiate yourself in terms of the product and the taste. What would you mess around with . Hops or great question. You know, its four classic ingredients, right so you dont have a ton to play with but within those categories the malt and especially the hops you do have a lot of different varieties. You can mix and match. And also we have a proprietary yeast, most breweries do, that interact with those ingredients. Does the quality of the hops, or malt, can you get better malt better hops . Absolutely. You can fresher, befter, yes. Without a doubt. And our ufo beers huckleberry the summer seasonal. So you can add other ingredients to beers as well, beyond the hops all right because people try to say vodka like top shelf vodka, its tasteless beer i can thats neutral consume food when its on the set . Whats going on here i dont think that its this is consumption doughnut flavor thats an excellent question. Do we pass that down pass it over. Niinthn we come back, well be fishg is up, and the power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Dday for the fed. Investors await a rate hike and potential market moving comments from janet yellen. Inside president Trumps Health care meeting. The commander in chief reportedly supports a different direction for reform were going to talk to a senator who was in the room coming up. Plus, more drama at uber this time, a wellknown board member stepping down after a controversial comment. Investor weighs in on the shakeup as the final hour of squawk box begins right now. H. Controversial comment. Investor weighs in on the shakeup as the final hour of squawk box begins right now. Le live from the most powerful city in the world, new york, this is squawk box. Good morning and welcome back to squawk box here on cnbc live from the nasdaq marketsite in times square im joe kernen along with becky quick and Andrew Ross Sorkin lets take a look at the futures. Indicated higher up 49 points, up 3. 5 on the s p, the nasdaq up 15 at this point. But, some other things happening here we do have some breaking news, folks. Were getting reports that multiple shootings have been reported near congressiona baseball game practice field in alexandria, virginia apparently there was a gathering of Congressional Republicans here a suspect is believed to be in custody and we are still getting updates on this. We will keep you up to speed as those updates continue to come in among todays top stories, it is fed day. The Federal Reserve expected to raise Interest Rates a quarter of a point were going to get the decision at 2 00 p. M. Eastern time. Weve got full coverage of chair Janet Yellens News Conference on power lunch at 2 30 eastern time also, boeing announcing a restructuring of its defense base and Security Unit the jetmaker will divide those operations into smaller units and cut about 50 executive positions as part of that move functions were responsible for nearly a third of boeings total 2016 revenue Mortgage Rates falling for the second straight week diana olick joins us now with more on that news. Diana . Who would have thought that rates would drop back down to where they were right around the president ial election. But that is the case right now and that had Mortgage Applications up another 2. 8 last week. All on the bang of refinances. Refis jumped 9 for the week, seasonally adjusted. That according to the Mortgage Bankers association. Apparently there are still some people left who havent refied already, possibly those whove finally come up from underwater on their home loans. Refinance applications have jumped 13 in the last two weeks. And the average loan size hit the highest in almost a year thats because jumbo borrowers can see bigger savings off every rate move and the summer can serial refinancers looking at the numbers because the average contract Interest Rate on the conforming 30 year fixed fell to 4. 13 . Jumbo rates are even lower home buyers, though, not as thrilled Mortgage Applications to buy a home fell 3 for the week. Theyre almost 8 higher than a year ago, but buyers are fighting high prices, and still a tight supply of homes for sale affordability is really hurting and even low rates arent helping enough back to you guys thank you, diana. Appreciate that. So, are politics irrelevant for the markets . Right now to talk about his recent oped titled why there is no trump slump on wall street. Hes the chief global strategist at Morgan Stanley and the best selling author of the rise and fall of nations. Thanks for being here. Explain your thoughts on the market well i think theres so much conversation about politics and we wantto believe thats what going to impact markets. We saw that for one day in may but my basic thesis is that in developed countries such as the United States, the impact of politics on markets is really minimal. Compared to what happens in emerging markets exactly what happened in brazil. In brazil, around the same time we had this impeachment of the president and the market fell by 15 in a day and its still struggling to recover. So thats the basic thing, that in countries such as the United States, institutions are so strong, were almost in a postdemocratic society where the role of politics or the role of one leader to impact the state of the nation is very limited. I understand your thesis. But if youre looking strictly at the stock market indices, and you see where the markets came on the day that donald trump was elected, the day after trumps election to now, youre talking about up 15 plus for some of the major indices. Exactly but i think that has much more to do with coincidence the Global Economic data i understand the Global Economic data is part of all this higher corporate earnings is part of all this why did it happen the day after the election right pap because i think that that seems like more than a coincidence. But i think thats part of why it took place. Look at the market in the internal of the market you see that all the globally Oriented Companies have done much better this year than the domestic Oriented Companies. And i think that if you look at the falling stock market, the falling stock markets have done much better than the u. S. Stock market has done this year. So i think that the yes, is it a coincidence but also because the markets are sort of waiting to believe the moment the election was out of the way. But i also look at the the terms of the market, theyve changed a week or two after the election there was a lot of buzz about what trump would do. Do the expectations have been weeded out of the market yes, if we do get some positive prize out of d. C. , in terms of something along those lines that could have upside surprise my bet is politics is irrelevant for this market and the more you focus on that the more youre likely to be distracted by the wrong factors. Which is why any of these hearings in washington or anything else just seems like noise to the markets absolutely. So you know, theres a lot to be worried about in this market you know like trading at the highest valuation outside of the tech bubble of the late 1990s. We havent had such calm in the market for such an extended period of time in recent history. I mean the vix hasnt closed down below 10 so frequently in at least two decades so this is a lot to worry about. I just need to break in right now. We do have some breaking news to tell you about were getting reports that multiple shootings have been reported near congressional baseball game practice field in alexandria, virginia congressman Stephen Scalise was among those shot a suspect is believed to be in custody. White House Press Secretary sean spicer has said both president and Vice President have been briefed on this news and we will bring you more as we get it. But a shooting at a congressional baseball game. I think it was a congressional baseball practice. Taking place this morning taking place this morning where they were all out at practice when all of this happened. Obviously very concerning story and we will continue to bring you updates as we get more on this okay. Were going to go to break and after that well return, and going to talk to a senator well be right back. Whoooo. Youre searching for something. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if there was a single site where you could find the right hotel for you at the best price . There is. Because tripadvisor now compares prices from over 200 booking sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Breaking news, folks we are getting reports that there have been multiple shots fired near congressional baseball game practice field in alexandria, virginia apparently, according to reports, there were a group of republicans that were there practicing at the time a suspect is believed to be in custody. Among those reported being shot, though, House Majority whip Steve Scalise. We are still getting a lot of different reports that are coming in. But according to at least one of the congressmen who was there, he was saying that there were 50 to 100 shots that were fired there were others injured along the way. Again this is very early in all of this. We are still trying to get reports on some of these situations but, sean spicer saying that the president has been briefed on that situation and we will bring you updates as we get them. Okay. Uber board member David Bonderman resigning from the board after he made what hes described as an inappropriate comment at yesterdays meeting on Sexual Harassment at that meeting bonderman cut off fellow board member ariana huffington, jokingly or trying to joke, saying more women on the board means its much more likely there will be more talking. Bonderman has since apologized and as a result of all this has stepped down this came after the announcement that uber chief Travis Kalanick handing over the wheels while he takes an indefinite leave of absence. Does this mean innovation will take a back seat joining us right now an early investor in uber so, lets just go through all of it we can talk for awhile we could. Are you satisfied, unsatisfied, with what took place yesterday visavis travis taking a step down, and this report yes so our view is, look, we would like travis to be at the company. I dont know if its in the ceo role or what the board is obviously way more familiar but he is product vision year however i think probably a recent part of the reason hes taken the time off, lets remember the guy did just lose his mother and almost lost his father the family has got to be a complete and utter mess. So so what kind of person youd like to see someone else come in as the ceo no, look, without knowing all the facts and details i think the company historically has built a business by running into markets and getting in there, and just going in. Now if you look at what theyre doing with austin, theyre getting in these camps and they got back into italy, theyre working much more political, you know, kind of, you know, in a political way. Right and so i think youre going to see more of that. What i think they need to bring on more people like the professor who joined from apple. Youre going to see more and more of it this David Bonderman situation. Yep whats your take . David is a personal friend. Hes actually a mentor to me he has built an enormous hes built an enormously successful regarded Investment Firm with lots of women. He is sincerely apologetic about this that is not his character. But it is a zero tolerance environment my question is, zero tolerance is this as Political Correctness gone too far well see thats obviously one concern that we would have for the board, is just make sure youre not you know, you can like is the Company Better off or worse off for David Bonderman not being there as a result of this i think they had to make that decision and im sure theyll replace david with another partner who is very, very good, as well. And the other piece of this is, how much do you think the conversation were having here among the Business Community, and perhaps in the press, translates to whoever is using the app out on the streets theres an article today in the New York Times saying if you want to hold the Company Accountable for all of this. Yep go use lyft or juneau or Something Else you think thats real . Zero this is actually speaks to the power of the business model, and the service. I think the vast majority of americans, actually people in the world, want a service that gets them from point a to point b very quickly, and cheaply as possible, and if you look at the credit card data, you look at think reported their, you know, they disclosed a bunch of their numbers, the business is continuing to grow lets talk about just the operational aspect of this business and the valuation. Yep so right now a private 70 billion valuation. Correct one day they will have to take their numbers public. Of course and we will see what happens there. Yeah. Does a 70 billion valuation make sense given that the company from what i understand continues to lose money . Is the model as defensible as people thought when you got in originally i think absolutely it is. I think that i think that we probably thought the company was going to be profitable sooner than it is but if you actually start to dig in to it and realize where theyre spending a lot of capital, and look at the economics we believe they work very well. Were fully invested in early 2015 and we would buy more stuff now. Okay. I would love to have a longer conversation with you about this and we will have you back. Absolutely. Thank you folks right now, some breaking news. Lets get to an nbc special report with more on this crawling into the outfield he was bleeding profusely according to congressman brooks who was also on the scene there. The eyewitness, mr. Brooks also telling us that the shooter appeared to have been hit by gunshots there are still a number of things we do not know. Among the outstanding questions, is the suspect in custody . Was the suspect perhaps even shot on the scene there . Did he act alone this is an area, now that appears to be appears to be somewhat sufficiently under control to a certain extent. Okay and i think we have somebody who might be able to shed some light. I think i have on the phone charles halleren you were just on your way to work out and you passed this scene, do i have that right . What happened . I came upon the scene when all the police cars were arriving i came in a side door because the front door was blocked we came in to the gym and people were visibly shaken, one woman i worked out with generally next to me named amber had been leaving the y and someone took the first shot at one hit the glass, went through the glass, and went through another interior piece of glass and into the pool area. You were entering the y. How close is the y to the baseball field can you give us a sense of how close this was 75 yards. Its adjacent. And what have you heard from other witnesses, and the young lady you just mentioned about what happened here this morning . She said she thought some of the shots might have even come from Law Enforcement but wasnt sure because they were shooting at the shooter and took the shooter down and there were three bodies out on gurneys that they were attending to and then a chopper came and pulled at least one of them out of there we cant see who anyone is so we cant confirm anything about whether it was members of congress, shooters, staff or whatnot. But it was her sense that the shooter had been shot by police . Yes, she said he was down, yes. Charles, the scene right now, where you are, can you tell whether this is a situation that appears to be ongoing or can you tell whether this is a situation that seems to be under control right now . My first thought was that its under control, and it probably is. But theres mayhem out there looking with all the Police Vehicles and fire vehicles theyre probably just being prudent making sure that theres not another shooter. But people are inside the y. Some are already working out, trying to go about their day they wont let anyone leave the y until its all clear charles thank you for calling in and telling us your story we appreciate it and send you our best we want to go back to tom costello as i understand youve been speaking to another witness. What have you learned . Im speaking with a witness right now. Can i ask you name katie what happened what did you see i was getting out of the car with my dogs to go to the dog park and i heard really, really loud popping sounds. And i knew a Baseball Team was practicing at the baseball field, and everybody started screaming, hit the ground, hit the ground and a bunch of the players ran behind the big trees but i was in the middle of the field so i just laid flat in the field, and the sounds were getting louder, but they were coming he was walking across the field towards all of us. The gunman was . The gunman. And i was screaming to someone help me, i have my dogs and i cant get behind anything but they couldnt, because nobody could do anything. And then Security Special agent pulled out a handgun and tried to shoot back, and shot her and she fell on the ground the shooting suspect was a woman . No, no, no, no, no. The agent was a the suspect im not sure but i think the agent was a woman. Im not sure about either. But she fell on the ground, wee were also i crawled [ indiscernible to the car and i laid as close as i could under the car and then the police and whoever came and get it under control. Did you notice members anybody who was shot in other words beyond the officer did you notice anybody else shot . There were a couple of people injured that they took out on stretchers the person who was the Security Guard they took out and other than that im not sure who was who i didnt even know it was anybody famous until the investigators just told me and the gunman, you say the gunman was also shot you believe . I dont know. They said thatthey captured him. Tom let me just tell let me just tell the anchors in new york that you are very youre shaking. Its hard for you to control right now because youve seen something very traumatic and i would imagine youre just grateful that you got out alive . It was you never think Something Like thats going to happen to you, and it was terrifying, and also it was even scarier that i had my dog children with me so im very glad that all of us are okay savannah, im going to kick it back to you very traumatic experience. Shes shaking and difficult just trying to hold it together right now. Youve been watching an nbc news special report. Were now going to take over this local story that will have National Implications about a shooting having happened in alexandria and a congressman among the victims after this incident that started a little after 7 00 this morning. Well fill you in on the details that we have at this point we know that Alexandra Police have shut down an area of east monroe avenue just off route 1 jeff davis highway in alexandra after a shooting at simpson field in that area we know that the House Majority whip, a congressman from louisiana, has been injured, has been shot in this incident we can tell you a little bit more what we know about him. Heres some more information about congressman the congressman from louisiana Steve Scalise. At this point as we take a live look, though, this is outside of simpson field. You can see Emergency Response there on the scene a louisiana House Majority whip chairman or congressman scalise is also the House Majority whip, and he was among those shot. We also have concerns that two Capitol Police officers were also shot. They were wounded. This was likely a practice. We understand this was a practice that was happening at simpson field. A baseball game scheduled for tomorrow the congressional baseball game that we all hear about annually happening is scheduled for tomorrow this practice was happening on the field. It would have been members of congress as well as possibly some of their staffs with them at this practice we dont know which side of the aisle, if you will, they may have been on but nonetheless we know that this representative, two Capitol Police officers, who were a part of the security detail, were also shot here. You heard from the nbc news reporting that someone said they saw a rifle. Another congressman said he saw a rifle there on the field, and then saw congressman scalise crawling across the field and bleeding profusely you may have also seen some of the video in the last few minutes of a kept. I believe that was a u. S. Park police kept landing on the field there, very likely being used as a Medical Transport for someone who was hit in this incident more information about Steve Scalise. He is the father of two children report on the shooting in virginia again we are following this very closely. But for those of you who are just waking up a gunman opened fire on a baseball practice where there were many congressional aides, and congressmen who were there who had been doing this. It had happened near a congressional baseball game practice field in alexandria, virginia congressman Steve Scalise was among those who are shot he is said to be in stable condition but obviously this is still a story thats developing. Lets get john harwood to join us at this point hes on the phone. And john, obviously, these are early reports, but very concerning reports yes and ive just been listening to a phone report from congressman mel brooks of alabama, who was participating in the practice, who described in detail how this shooter with a long gun came out and started targeting people, including Steve Scalise, congressional aides, and two security members of the security detail. And it was a chaotic situation security detail answered fire with handguns. And eventually took the shooter down but, it was a horrific scene that he described. And one that appears to be over. In terms of active shooting. But the kind of tragedy that we experience every couple of years. Everyone remembers the shooting of Gabby Giffords in her district in arizona. And as horrible as you can imagine, this from what weve heard, again, with a gathering of Congressional Republicans who were there for this practice for the baseball game, and from what weve heard again, early reports, but 50 to 100 shots fired. Type of thing where you would expect there to be security that we have heard that some of the security people could have also been hit in the situation. Right this has been an annual baseball game democrats play republicans. Its one of the few feelgood events on the congressional calendar every year. They raise money for charity and each side has a number of former College Athletes and people who play so they were preparing for that game, which i believe is scheduled for tomorrow and so whoever decided to target this knew that there would be a large gathering of members of congress, perhaps republican members of congress, if that was part of the point at this baseball field right john, typically what kind of security does a congressman have im just trying to think about, given that there, i imagine, were several dozen congressmen and aides, how many other security personnel would have been with them most congressmen dont have any security at all. But members of the leadership have it. And so i imagine the reason that there was capital security there is one, it was gathering a large number and second because members of the congressional leadership were there the house speaker, the Senate Majority leader, other members of the leadership who have a higher profile do have some security, but the average member of congress doesnt have any all right, john, thank you very much. John harwood joining us on the phone with an update on the situation, whats been happening. Right now wed like to bring in judd gregg, former senator from vermont. Hes been talking to us some about this, as well. Were going to be talking to him in just a moment judd gregg obviously, former governor and former senator from vermont long time there. New hampshire from new hampshire, yes and senator, thank you for joining us today obviously youre not there, you cant tell us whats been happening on the scene, but tell us a little bit just about this baseball game itself what it is what they were practicing for, what happened. Well, the baseball game goes back generations its been going on since i think the middle of the 70s its kind of all in fun event where members of congress can get together and share some friendship and some camaraderie and get away from the partisanship republicans play the democrats but mostly house members, there are a number of senators some senators are too old to play in the game but there are a few senators who play in the game its always been sort of a very enjoyable event, and families attend, and there is a lot of practicing for it. I did play when i was younger, and we spent a lot of time practicing or at least the coach we had made us practice a lot so i suspect they were going to a practice this morning. Judd, in a practice like that or even the game itself, would have that been secured separately apart from those leaders and others that actually have their own security that would have gone with them . When i participated the only people who had security were the leaders. So your leadership goes down to the whip i understand that Steve Scalise may have been injured. He would have probably had security there im not sure now we know with the situation being the way that it was that maybe the sergeant of arms was security for everybody you know, judd, in a situation like this, you start to wonder how many people know about this obviously, probably pretty well known within the house and the senate but outside of that, its probably not publicized whats happening, where these events are taking place, if its just a practice right . Absolutely correct, becky the actual a lot of notoriety around it, they have a program, and local papers, roll call promote it very aggressively and a lot of people show up for it im not sure why they do but the practices, i cant imagine that anybody follows where the practices are unless theyre actually part of the part of the congressional family i mean, its too early to be jumping to many conclusions, but the idea that you have republicans it seems like being targeted here, i guess speaks a little bit to how volatile our political scene has gotten these days gosh, i would hope that that wasnt the case. And i think its really premature to make that assumption i dont know, and i wouldnt want anything to speculate on that situation senator gregg we want to thank you very much for joining us today obviously this is all happening around this congressional baseball game. That the senator was just telling us about this is a longtime event that has taken place over years, a feelgood event where both sides really get together and look forward to a little bit of sportsmanship. Eamon javers is in washington, and joins us right now with more eamon, what can you tell us. Yeah, hi, beck. Not at the scene so cant tell you much more than what youve been reporting your heart breaks when you hear Something Like this. It is so shocking, yet it is unexpected in todays washington and we unfortunately we see incidents similar to this time and time again my mind goes back to the Navy Yard Shooting of a couple of years ago. Weve had incidents on the capitol complex over recent years where weve had mentally disturbed people engage in confrontations with the Capitol Police the Capitol Police have actually fired shots at people who are coming in to the capitol complex. This, though, is different in a sense that you get the feel that this is somebody who knew where this practice was being held and that this was specifically targeted and left sort of random situation. But, far too early to begin to speculate on who did this and why. But theres generally a couple of possibilities somebody who is mentally disturbed. Somebody who has a domestic political agenda and somebody who has an International Political agenda and well have to wait and see and it was it was awhile before in the pulse nightclub shooting last year which i covered in orlando, it was awhile before we publicly knew who the shooter was and what the motive was there but in this case, you know, the police knew fairly early on what they were dealing with it may be the case here that they sense what theyre dealing with or not. Its very fast moving. Eamon, i keep bringing the conversation back to security and security personnel who would have been with the leaders im curious, how has security, and protecting Congress Members and senate changed over the last decade, or has it . Well, you know, it has changed. I mean theres elaborate security on capitol hill the Capitol Police are a big police force they travel with the members of congress they have a protective division which handles sort of the leadership, and in the case of mr. Scalise, that sounds like thats who was on the scene today, at least a couple of arm ed and uniformed Capitol Police officers nearby wherever he is that goes with leadership. But for rank and file members of congress, they have protection when theyre on the capitol complex but when theyre out in the world, doing their jobs, its not nearly as much. Particularly at a thing like this which is off campus, recreational, in a totally different setting. They would have a very small package of security with them. Sounds like thats what happened today. Security has been beefed up on the hill since 9 11. Even since 1995 when the gunman fired his way into the capitol complex and ended up tragically killing two Capitol Police officers they beefed up security at all the entrances to the capitol complex itself but still, congress is an open Democratic Institution they want people to be able to come in, they want to interact with the public. And thats the tradeoff. In a free society youve got a person thats, you know, thats willing to suffer the consequences of his actions. Its tough to stop every single thing thats going to happen eamon. Unfortunately. But this may change things you could have security for the 500 members of congress, i guess, if it gets to that point, could you not . 535 . Well, it becomes very elaborate, very cumbersome, very expensive. It gets in the way o their jobs just to be out meeting and greeting and talking to people and gathering a sense of what their constituents want back home and in washington these are people that have to be mobile they have to go to meetings all over the place you couldnt do sort of president ial level security for every Single Member of congress. It would be prohibitively complicated and expensive i think. And i dont think they would want it. They dont want to be a security there have been propose ams over the years to build a giant fence around the capitol, same they have around the white house and members of congress have said no every time even after 9 11, to that because they want the public to come, and see democracy in action and thats an admirable thing especially given that the members who are voting on those proposals know what the risks are theyve taken. Just to bring everyone up to speed again there was a situation with an active shooter who shot, its been reported 50 to 100 rounds at a group of republicans who were gathered, Congressional Republicans who were gathered at a practice field to prepare for an across the aisle baseball game for charity that was scheduled to take place tomorrow. In this situation u. S. House majority whip Stephen Scalise was shot there are reports that there were capitol hill Police Officers who were also shot. Msnbc is now reporting that the majority whip scalise and two capitol hill Police Officers who were shot appear to be in stable condition. Obviously a developing story President Trump is aware, aware of the congressional shooting and is monitoring developments lets bring in former fbi agent jeff lanza do you think this will cause anything to be changed, jeff, at this point or i just always hate to say its possible to do this and theres nothing you can do to prevent it thats not usually a good answer no. You never want to fall back to that position. I think immediately there will be some changes in terms of how they address things and whats the immediate threat going forward. But in the long run, as your other guest just said congress doesnt want the bubble. They dont want the security all around them and keeps them from the public, and would be unbelievably expensive to change things in that regard. We have to determine who was behind this as quickly as possible determine who was behind and what the motivation was. And then get a better understanding of that before they decide what changes should be made. Yeah. Would it be i mean, its impossible to could it come to the point where Everyone Needs to have at least someone in the area, when it just seems like it would be impossible to do that. So i dont know what the answer is well there isnt an easy answer to security in an open society that we live in. I dont really think in the long run were going to see any changes. And you know, where do you draw the line you protect 535 members of congress, then what about judges what about all the other people involved in our government at high levels you know, theres no place to draw the line. And so, i dont think were going to see any major changes and based on one incident like this happening all right former fbi agent, we appreciate your time this morning youre welcome. Want to bring governor former governor howard dean into the conversation good morning to you. This news, of course, terribly disturbing your thoughts, and weve been talking all morning about the security around our leadership these days perhaps even that was around you. Are we doing enough . Well, this is a really tough one. First of all, not that it matters a lot here but we really dont know much about the nature of what went on. Is this a crazy person that just targeted attempt at killing people because of their political views . We just dont have any idea just yet. At least i dont secondly, it is the governors for the most part have fairly significant security nothing like obviously like the president or something or probably not even as much as the majority leader and the speaker, but we do have security details and we are taking care but the members of the legislature dont and neither does a member of our national legislature, unless there are Death Threats which there have been for some people but i agree with the previous guest, i dont see how this is going to change greatly. Its almost impossible to protect everybody who serves and were going to have to figure out better ways to do what we do but its not going to make a huge difference to a determined person with god knows what they used for aweapon but it sounds like there were a heck of a lot of shots first of all we need to know more second of all i agree with the fbi guy, i dont see how we can fundamentally change this. When you were governor how many people did you have well, i just usually had one with me at all times although sometimes when we knew there were going to be problems we might have two or even we could muster a force, after unionsville which was the first of its kind in the country and very upsetting to people that was a long summer and i had to have security precautions that were really quite substantial. But generally speaking, when the threat level is low you have one person with you. And the threat level, i would guess, was very low for these guys who were playing baseball right right. All right governor thank you. We actually have pennsylvania congressman Ryan Costello on with us now. He would have been at the practice, but he missed his ride he joins us now on the phone it was an Early Practice this is i guess before, you know, before the business of the day. Try and get some practice in before this game is that the way it works yeah. From 6 30 to 7 30 is when the practices are and most members usually have to leave there around 6 00 to get there at around 6 00 a. M. So practice for an hour, and then takes about 15 minutes to get there and about a half hour to get home. So congressman we dont know anything about, you know, the motivation or the shooter or anything, but how many when was the practice scheduled who knows when youre going to be there it doesnt seem like it would be widely known, would it or would it . It wouldnt be widely known but obviously you know, were out in the open, and theres other people walking their dogs in the rest of the park surrounding the baseball field as you get closer to the game, you know, media people come out and do reporting, so if you really wanted to find out where it was, it would be easy enough to do. And the the security people that this shooter encountered, they would have been with with congressman scalise . Or are there other just ancillary security people at the practice ground . No. It was only because of him so members such as myself will i dont have a car down here so id hop in with brad winstrap and rodney davis they leave at 6 00 i wasnt there until 6 01 so i missed the ride. The membership sort of carpooled there. But Steve Scalise, because he had security detail, i think has two black suburbans, and three or four security people with him at all times and theyre there in the morning so you know when steve shows up, because the detail has to go right up next to the baseball feel there wouldnt be an additional security detail knowing that there was going to be a group of congressmen practicing no. Thats correct your point is, as a result of Steve Scalise being there, was there security there yes. If Steve Scalise was not there, would there be security there . The answer is no there would be no security there. I guess at this point, no other congressmen were shot he was the Ranking Member that was there. I just i dont know, it could all be coincidental, obviously, but well, let me share this with you. So, theres would have been anywhere between 15 and 30 members there. And the other thing to note is theres probably about 10 to 15 congressional staffers that go there, that are, you know, younger, very athletic they pitch and sort of keep practice moving along. The managers on the republican side are both members of congress so all in, you have anywhere between 40 and 50 people there for practice doing various things and im sort of beside myself right now just we can hear that. Its very weird its got to be, yeah. You know, any type of conjecture in a situation like this is, you know, theres no reason. But Ranking Member, 50 people there, the Ranking Member of the congressional according to reports from a another congressman who was there whos been talking about it, he said that congressman scalise was playing second base when this happened yeah, so he plays second base i play shortstop my understanding is, it sounds ridiculous to ask which position because that would be pertinent. In the middle of an open field or i guess where you approach from and everything else, right this isnt about me but i would have been right in the line of fire, thats why im so shaken up because steve plays second, i play short we have a new third baseman this year because the previous one lost an election and in the outfield was doing the outfield, it was during infield, outfield practice so there was only three or four of us in the middle of the infield at any one time, and i want to say one other thing. If people say why the heck are those folks in congress playing baseball in the morning, this year we expected to raise 650,000 for Public Charities in the washington, d. C. Area, and its bipartisan, its a fellgood tongue in cheek type event but its fun just because you see members of congress playing baseball but its for a good cause, and this is the last day of practice. The game is scheduled to be tomorrow and then thats it for the year. Congressman next year well do it again congressman, youve been a representative in your district in pennsylvania since 2015 have you played at this game for all of those years oh, yeah. So, yeah this will be the third game and scalise used to play shortstop. And then i started playing shortstop and he plays this is, yeah, this is a fun game and every year, interestingly, if you read every year theres a couple new freshmen come in, and you know, some people dont play as much as they get older and dont play any more. They lose an election and retire and a new crop of freshmen come in and play different positions on the field have you spoken with any of the other congressmen who were there or the two who you missed the ride with . No. No so i missed my ride then i just got ready for work and went back to my office and was reading in my office for an hour and 15 minutes or so and looking up at the television in the background, and i see that somebodys been shot at this congressional baseball practice and i thought it was like thats weird and then i see then i see the field and im like did and then i see some video of members on their phones the guy who i saw on the phone, jack bergman on television, just from a distance, i was like oh, he drove me home from practice yesterday. What im seeing on television is where i should be right now. Congressman obviously were glad that youre safe. Thank you for taking the time to call us this morning obviously the story were following very closely congressman costello, we appreciate your time today again, folks if you are just waking up, if you are just joining us this is a situation where there was a shooter who was shooting at Congressional Republicans on a baseball practice field, they were practicing for a game across the aisle tomorrow that was scheduled to take place tomorrow with democrats, this was the last practice. It was taking place this morning from 6 30 to 7 30 in alexandria, virginia congressman Steve Scalise, majority whip for the republicans, was shot. Its been reported, weve been hearing reports that hes in stable condition he was shot in the hip there were other people who were shot there, as well. Tinge to get updates and reports on that. But, right now lets bring in michigan congressman jack bergman. He was at the practice he is still at the field now and congressman, a horrible situation. First of all we hope youre okay and can you tell us a little bit about what took place. Looks like weve lost the congressman. We will be back to him in just a moment weve been again getting updates about what happened here at this practice field, the baseball practice field where congressional members, republicans, were practicing this morning in an across we still dont know how many aides were shot, were they scalises aides . We dont know there have been reports that there were two capitol hill Police Officers who were also shot and who are in stable condition but yes, some reports from congressmen who were there say that there were 50 to 100 shots that were fired at a group that was standing in the open field like this. As we just heard from the last congressman who missed his ride this morning, who would have been there but missed his ride said generally there are 40 to 50 people there between the age, the congressional there was a handgun do we know that at this point . I dont know. So that would have had the guy would have had to have a couple of magazines, obviously i dont know how many rounds so that means taking out the last magazine putting it if its 50 to 100 thats reloading these are reports coming from congressmen who were there, and it could be confusing to try and figure out how many shots are actually taking place. Between 50 and 100 that would suggest reloading or that there were multiple guns involved. Right and we know that majority whip scalise had, do we know if theres one, two, probably maybe just one one security guy the majority scalise is the last rung of who actually gets the security, but hes the highest Ranking Member there, and maybe its lucky that he was there, too to have someone who was there to stop things from going further. Again michigan congressman jack bergman is on the phone with us. He was at the practice this morning and hes still at that field. Congressman, again, we hope youre okay. We are still trying to get reports of this, but can you tell us what happened. Well, good morning. Yes, im fine. Basically we were doing our normal practice. Batting practice, and first shot came from somewhere behind the third base dugout, and second shot came shortly thereafter, and by that time we knew it was Something Real so people started scrambling and lasted for about probably somewhere between four and six minutes. T scalises Security Team engaged very quickly, theyre the true heroes here. And we were very fortunate it could have been a whole lot worse. Congressman did you did you see the shooter . Was it a long gun . Were you able to tell . Did you see the shooter . I saw the shooter after he was down i went over and took a look at him. Probably about 20 feet away. But there was there was you could tell from there was you could tell from the sound it was a long gun. It was a long gun, okay. And also it appears i saw a handgun near the shooter just laying there. It appeared as though that it was the it was back, so it must have been empty so i dont know if he had both the long gun and the handgun. 50 to 100 rounds, thats not just the shooter that includes the security as well thats what im being told. Yeah, that was all around fired from both sides. From both sides, okay. Congressman, you said it yourself that this was congressman scalises Security Team who were the heroes here. Did you ever feel as a congressman that you needed security yeah. Yeah hang on just a second. Theyre trying to gather us here to get on the bus to get back to the capitol. Understood. A lot of chaos. Can you describe the shooter in any detail at all, congressman . Well, what i was saw about 20 feet, a white male early 50s. Medium to stocky build i could not confirm whether or not he was wearing body armor, but he was down. There were several of the you know, the security squad around him. But thats about all i saw. And sir, have you felt before this situation that you needed security in the past not at baseball practice. Yeah. It has to be a stunning and shocking thing. Because the whip representative scalise, because of his leadership position comes with security. And so thats why those people the security people were here today. How many people would have known about this practice . Well, its public knowledge, its in the paper every day. Politico, the hill so its this is not a secret practice we have been doing this practice thing here for two months. But congressman, who else was hit . Do you know . Aides or security individuals, do you know . Well, i know that one female Security Guard was hit looked like in the lower leg and one young legislative affairs guy from one of the companies. We have a lot of youngsters who come out and are support for us while were out here and he was hit as well. President trump just tweeting moments ago, representative Steve Scalise of louisiana, a true friend and patriot, was badly injured but will fully recover. Our thoughts and prayers are with him then theres another, a statement, the Vice President and i are aware of the shooting incident in virginia and are monitoring developments closely. We are deeply saddened thats actually from the white house, not its not a tweet we had both. Congressman bergman, you said that during the theyre in the process of trying to get everybody on buses to get them i guess back to the capitol. Is that the plan yeah, we normally we come over here early in the morning, i drove my truck over and brought three other members with me normally we drive back, but unfortunately my truck and some of the other vehicles are part of the crime scene here. So theyll be here until you know, the police are done with the investigation. Congressman, we appreciate you taking the opportunity to speak with us. We really do thank you. I would just ask one thing, keep these folks in your prayers today and god with us today. And you too were glad youre fine and im sure that youre shook up lets review, scalise is in stable condition after a shooting at a baseball field in virginia in alexandria. Where members of congress were practicing for a Charity Baseball game that is i think tomorrow and they were practicing from 6 30 to 7 30 this morning it happens every year. Republicans versus democrats mostly congressmen but i guess theres a couple of senators that show. A lot of the aides that are there too who are younger. Some of them have real athletic backgrounds. Exactly they pitch and several aides were also hit and police say the shooter is in custody and no longer a threat. So i guess youre going to be able to talk to this individual. And try to glean what the motivation is. Scalises presence at the field though, and this is important, apparently prevented the situation from becoming even worse. Hes the majority whip and he gets security. So security was present at the practice only because he was in attendance and anyone beneath him as the leadership goes would not have had security. So lets get to eamon javers and were hearing about some heroism from the people that prevented this from being much worse, eamon. Yeah, youre right, joe sounds like a Quick Response from the police that were on the scene there. God was with them this morning you hear the number of shots thats being reported. All this is preliminary, so this reporting will change over time as we get more accurate information. But its case that between 50 and 100 shots rang out on that open baseball field with members of congress out scattered around playing their position you just think that this could have been much, much worse actually given the situation it sounds like the shooter was shooting from a concealed position and you sort of speculate that maybe this was a situation where the shooter was firing from a great distance and didnt have the sort of accuracy or was in some way just not a trained not somebody who is trained to handle the weapons because it sounds like this could have been much, much worse if this security hadnt been there, and responded as quickly as they could and given how the members of congress were right out in the open there. Sort of one of the worst situations that you would have to defend if youre trying to defend against Something Like that. We heard they heard a shot and then they heard a couple more then that whens they realized something was happening. This is from the congressman the congressman that we were talking to it wasnt like someone came running up in the middle of the field and everybody knew what was happening immediately. They heard the shots first and then it was taking place from he might have been not right near the field, eamon. That might be even scarier, like a sniper yeah. If you have somebody in a concealed position like that, it will take the Capitol Police a few moments to triangulate and figure out where the shots are coming from before they can respond. They have to identify the threat and then they have to figure out if that person is in a crowd of other civilians. You know, oftentimes there are capitol hill aides, lobbyists, people who are out for a jog who come by and watch the practices. Let me cut you have were hearing from the police chief of alexandria, virginia. An active shooter, shots fired at 0709, nine minutes after 7 00 this morning. Here at the park on Monroe Simpson park there was a Practice Team event with the Baseball Team of folks that were representing some folks on the hill. We were there within three minutes. We do know that officers from the office of capitol Capitol Police as well as three officers that we had on scene arrived two of the officers engaged and gunfire returned fire. Beyond that we wont make any other statements until such time as we know whats taken place here on this thing its an active scene we have a lot of witnesses that were having to interview. We are collaborating with the Capitol Police, with the alexandria sheriffs department. And the medical with the Fire Department here in alexandria. We are working with the federal bureau of investigation, collecting evidence. We will try to keep you posted as we get more information right now well try to schedule a press conference probably about an hour and a half from now and give you an update right now, thats all we have. Ly add one other thing i will add one other thing. Five people were transported medically from the scene we will not give out their names or locations at this point or know of the condition of their injuries i wont take any questions at this point largely because you have everything that im going to release at this at this juncture, what i will do now i would like to ask the chief from the Capitol Police to come up and make a brief statement good morning. Can you speak a little louder, please. This morning we received a call via our communications of shots fired at this location officers who are on scene responded and engaged a suspect in gun fire. Very shortly thereafter, the Alexandria City Police and other units responded to assist and at that point, we were able to calm the situation until victims were transported to the hospital. We wont get into any details in terms of the investigation this is very early on. We will i want to thank the alexandria police, the Sheriffs Office and the alexandria Fire Department for their Rapid Response to the request for assistance in the 911 calls. I appreciate their Rapid Response and certainly it saved lives. One shooter at this point, were going to gather the investigators together and look at what we have and put this incident together again, its very early on, there are a lot of witnesses to be interviewed. Once we have more information we will certainly pass on whatever information we can to make sur