Twotenths percent. In europe this morning youll see that right now the daks up by about a half percent aj point cac and ftse up. Spain is weaker. Crude oil prices, down last week this morning up, had been higher earlier, looks like it is down 32 cents a busy week of economic numbers. Jobs on friday today, may consumer credit, tomorrow wholesale trade numbers. Wednesday, beige book. And yellen testifying. And thursday before the cincinnati Banking Committee june cpi thursday, and friday, retail sales, cpi, Industrial Production on earnings fronts, pepsico reports tomorrow results from big banks friday, jpmorgan shares of Orient Overseas popping after china Cosco Shipping announced a takeover deal for the shipping company. This deal makes the company the worlds Third Largest container liner. And wanda selling theme parks, selling tours and projects to developers for 9. 3 billion. The sale expected to cut debt pile, strengthen case for listing on the main land after it was delisted from hong kong last year. Apollo getting club corp, months after the golf course operator announced retirement of its ceo, club corp previously said it decided not to pursue a strategic transaction. That sale didnt result in offers for the country President Trumps Foreign Policy is in focus in washington, following that meeting with putin friday we have more on a lot that took place over the weekend good morning. Secretary of state tillerson and other senior officials stress the focus of the relationship is on moving forward. One way they considered doing that gave many pause President Trump tweeting sunday the u. S. And russia would form an impenetrable Cyber Security effort to keep things like Election Hacking guarded, after saying putin vehemently denied meddling in the 2016 u. S. Election despite u. S. Intelligence evidence showing the opposite. At least four republicans slammed the move, not mincing words in doing so. Nebraska senator ben sass calls it in explicitly bizarre, says russia is not trustworthy. President trump tweeted the effort cant happen. Some close advisers like the treasury secretary on abc this week defended the president s move this is like any other strategic alliance, whether we are doing military exercises. Despite the administrations other accomplishments at the g20, inclusion of preferred trade and climate language, russia continues to dominate the news cycle New York Times reporting the president s son met with kremlin connected lawyer last year who claimed to have damaging information on Hillary Clinton, but a lot of this, andrew, coming from the president s own messaging and his continuing to bring the russia topic back into the fore the question, theres so many questions. Where to begin i think the largest question is who do you believe and when are you supposed to believe them thinking of steven man uch en, went out as the good soldier he was trying to do sunday morning based on the president s tweets, finds out maybe the president had a change of heart. There have been several cabinet members and close advisers who have gone out on a limb, defending something the president has said only for that not to be true he is the latest example you remember Vice President mike pence going on face the nation saying mike flynn never discussed possible relaxing of sanctions in conversation with russian officials, that ended up not being true when asked on that same program whether any of the Trump Campaign officials met with russians, he said of course not. There are a handful of situations and growing of instances where these advisers are going out and seemingly defending the president , defending his positions, only to be caught flat footed in hindsight. One of the reasons may be the response here is what Lindsey Graham said, weighing in on President Trumps meeting with putin yesterday on meet the press. Well, when it comes to russia, i am dumbfounded, i am disappointed, and at the end of the day hes hurting his presidency by not embracing the fact that putin is a bad guy who tried to undercut our democracy and he is doing it all over the world. One thing when the democrats say it, another when the republicans do marco rubio tweeting about President Trump meeting with Vladimir Putin saying partnering with putin on Cyber Security unit is akin to partnering with assad on a chemical weapons unit kayla, the other question is what to make of the New York Times report came out yesterday, what does it mean, or does it distract or continue to distract from the ambitions that the president and administration are pursuing quickly, two points, andrew first on the response of the senators that you mentioned, the most common refrain has been this is like the foxes guarding the hen house here there are a lot of people coming out, being critical. These are lawmakers whose votes the president will need. The farther he distances himself from their ideology and from their ability to publicly support him, the harder it will be for him to have substantive conversations on things like tax reform and health care where divisions are only crystallized. The New York Times report about trump junior, perhaps the starkest take away is the difference between the statement he and his legal Team Provided saturday about that report compared to the statement they put out sunday the saturday statement said that meeting was strictly about a law related to adopting russian children and u. S. Russia relations, then he changed and said this person had information that would be in his words helpful to the campaign, seemingly acknowledging motivation for the meeting. If youre bob mueller or someone investigating, that perhaps makes you scratch your head more doesnt do much to bolster the case that there is no there there, if that is true we will leave it there. Good to see you. Lets talk markets and the economy, kwekt Portfolio Manager at jpmorgan, covering the economy, jim osullivan, seems like we say wow. I was expecting 9 for the year, were at 9 already. You posed that same question, what do you do with that you say markets are like a shark. They have to keep moving you have to decide what does it do from here i think we continue to think markets are driven by good news. Good news on the earnings front. Earnings grow, valuations are expensive, when you compare them to history, remain reasonably valued with fixed income and cash i think of markets being largely relevant, equities wind up being the better relative asset class to invest in. Kind of the way youre going is i like it, you say all right, i was looking for 9 for the year, we already got it. What about the next six months instead you say over the next year works its way higher. You have another six months to get, so in the next year next six months sideways. Youre not saying we think above 9 it can get above 9 , but effectively speaking whatever were trying to invest money, not trying to look at what happens tomorrow or the next 30 days and 60 days, comes back to i need to be able to move it, get invested and try to not respond to every particular small data thats interesting. Investors dont move on whether theres six months left in the year, most of us look at longer time horizons. How i finish up on my calendar year, i cant try to tie it back to portfolio you can make yourself crazy, chase your tail. I can chase my tail trying to respond or react in that case to whatever the most recent flip in data versus expectations i dont think that necessarily helps my clients in terms of trying to take perspective still a reasonably good economy, not great but good generating earnings and equity valuations are reasonable against what i can do with my money alternatively. I have a dog that does do this he is very smart you think they dont know it is their tail he knows it is his tail, still likes it and gets it he does catch it once in a while. And i love it. Like republicans with health care, they caught the bus, they have no idea what to do. Hoping i would get to you, relax, see you there i will be right there. He is waiting patiently stay long here. Do you like tech, banks, small caps, big caps which way to go. So much to work with there. We like technology, continues to reinvent itself thats been a story of where the economy has gone story where the economy will go. Banks, we increasingly like. We think they can benefit less from i think the issue of banks is less of a top line story. In terms of loan growth, interest margins expanding and cost control stories one second. With andrew, tesla had a rough week then i read it today, couldnt help to say just the sentence itself tesla sales in hong kong came to a stand still after a tax break for electric vehicles. I think thats the big question. What does it do without the break. Model 3 is coming, he is tweeting pictures of it. Interesting on the more expensive model s there was an argument to be made people buying those cars didnt care about the brake when you get to model 3 which is more important, much more important, the game may change because you have customers who should be more price dependent thats the conventional wisdom as you know, conventional wisdom is often wrong so no wage gains. That was the take away, even though 222 was pretty good, but people say when youve got Global Labor Market where you can always go there if you need to if things get too expensive, thats different you can go to machines as we automate things, there are extenuating factors why wages arent going up, inflation is low. 2. 5 wage gain, if theres no inflation, that might be what you have to deal with. Up to a point looks like the trend is clearly down, you get more pressure. Only a couple months ago went through most estimates of full employment, arguably not supposed to get significant acceleration until you go below the estimated full employment level. The employment rate is down. 180,000 a month, labor force growing 1 a year. You get more and more pressure average yearly earnings is not the final word look at tax receipts theyre growing 6 year to year for withheld employment based tax receipts take out 2 for hours worked, it is implying 4 per hour. When we see that, that true picture is not that wages arent growing. Weight of evidence is that wages are starting to accelerate we will get the eci end of july, that will be another data point. Average yearly earnings doesnt capture everything i would say even average earnings will show more signs of acceleration in the next six months. Does that mean the feds have to step up more rapidly . Game plan is to move once a quarter. The next move is Balance Sheet normalization in september rather than rate hike. Theyre viewing that as a tightening. The market i think is not expecting the feds they have very little price stand. If you keep getting 180,000 a month unemployment, it is pretty unambiguous that the rate keeps falling. Were getting 1. 5 growth, but given demographics, 1 labor force growth, unemployment goes down a half point a year is it enough to push up wages or not, thats the debate as it goes down, you get more evidence from a fed perspective, numbers are Strong Enough to follow through with Balance Sheet normalization in september come december, we have more employment reports cpi numbers will look stronger and those things will matter. 222, two years ago, thats what we do is it a bigger number because it is getting tighter a year or two from now, you cant do 222 a month i think you can keep pushing the Unemployment Rate down, with the consequence of wage pressure i expect unemployment drops below 4 . What do you think the rate could be, went up like a tenth or something. It has been flat the last two years. Go back to 70 no chance unless you allow a bunch of young people to immigrate, not going to happen. We have seen this drop in the last ten years because of demographics some may be cyclical. What about the people 25 to 54 some of those coming back the last two years even with them coming back, overall Participation Rate is flat theres a secular down trend even flat Participation Rate is strong given the secular trend thats what we have been seeing. If you get flat Participation Rate, again, trend in labor force is anything less than 1 a year 180,000 a month unemployment is 1. 5 a year. Working three and four jobs take andrew. He is here then he has New York Times, and deal book, and billions. Theres things i know youre doing i dont know about, too, i know how you operate another sequel or book coming. Backup plan when can he get down to two jobs maybe not being paid enough wage increase needs to go up im not sure i like the way youre thinking not jack cafferty. Still not and you show up, i go you are not jack cafferty. At least we have Jesse Eisenberg coming on which im excited about. Who . We dont have Jesse Eisenberg . No. Waiting for mark zuckerberg. A book with a title we cant say on television. I want you to get involved with this interview. I promise i will. Because it may be they didnt prosecute anyone because you needed a crime to prosecute. Say the ceos in the financial crisis should have gone to jail. Which ones. Give me a list of names. Jamie dimon jessie will get them there he is. Doesnt look like him. He is not even an actor. Anyway, thanks coming up, Jessie Eisinger amazon is gearing up for the biggest sales day of the year. Details after the break. And top of the hour, get you ready for the summer of hell thats right amtrak repairs begin at penn station, busiest rail hub. Amtrak ceo joins us top of the hour squawk returns with that and more in a moment jessie ice in injury at fidelity, trades are now just 4. 95. 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 amazon prime day kicks off 9 00 p. M. Eastern time tonight last years prime day was the biggest day ever, and this year amazon hoping to top that milestone. Heres what to expect. Amazon offering more than 100,000 deals in over 30 hours in 13 countries. Last year some of the most popular deals included televisions, kindle e readers and tablets and fire tv sticks average price was around 30 prime day is for prime members only based on latest numbers, amazon has a lot of shoppers subscribing to the 99 a year service. If that trend continues, prime subscriptions could top paid television subscriptions in the United States by next year i have searched amazon for movies, that means i am a prime you dont know youre a prime member. Do you get the boxes outside your house every day i dont, but you see them you dont need to be a prime person to get boxes. To get them in two days you do and if youre a prime member, they ship that tv for free all kinds of stuff comes for free with it you pay for this. Netflix, do you ever pay for anything no. Its different. Depends how you are consuming. I believe youre a prime member, but you could be accessing movies not on the prime membership depends how youre accessing it. Looking for episodes. Netflix is annoying, every time i look for a movie to watch, they give me 40 like the one but not the one i want to watch. You would be happy in that case to pay for the bun one i want. 3. 99. I paid for one i did. It would be 30 off tomorrow. Last week i dont know, this might hurt, we had a guest talking about russians and did you see the americans called eastern promises, more about the russian, i forget the name of the organized crime. Very scary it was a look in london at some operations i looked it up and found watched an awesome movie last week despicable me. Whats the difference between the one eye and two eye minion does he act differently more clumsy . Theyre all a little clumsy talk about any time we can they are it was good i dont even say that as a company man. Say it as a viewer there are very creative people involved in these projects theyre different than us. I dont think i could do that. Is there a despicable 4 coming they set it up at the end very well. My kids will tell you, they know the plot line already. I hope they continue to do well tesla first model 3 sedan rolled off the Assembly Line elon musk tweeted out photos first model 3 headed for musks garage the board member was in line to get it but gave it up. It was a 46th birthday present thats pretty goodlooking looks like a generic sedan almost looks like, i dont know, more than that maybe a little better. Has similar styling to a lot of sedans you see nowadays. Last week musk said the first 30 model 3 customers get keys end of the month starts about 35,000. Half the cost of a model s you dont think that was 150,000. I dont think so. Thought it was in the 80s the contours and lines, the front just the front end. Then the back is sort of a lexus thing going onto me. When we come back earnings season kicks off this week pepsi on tuesday, Delta Airlines thursday, and big banks reports starts friday. We have your guide to Second Quarter earnings next. Later, Country Music legend charlie pride getting a Lifetime Achievement award. Thats tomorrow. He will join us first. He is in studio. As we head to break, take a look atlas weeks s p 500 winners and losers hey, ive got the trend analysis. Hey. Hi. Hi. You guys going to the Company Picnic this weekend . Picnics are delightful. Oh, wish we could. But were stuck here catching up on claims. But we just compared historical claims to coverages. But we have those new audits. My natural language api can help us score those by noon. Great. See you guys there. We would not miss it. Watson, you gotta learn how to take a hint. I love to learn. Watson, you gotta learn ho slow jazz music fly me to the moon and let me play bell ring good morning welcome back to squawk box. Look at u. S. Equity futures this morning. Dow higher, 18. 5 points higher nasdaq looking to open 21 points higher drivers in the u. S. Paying less to fill up gas tanks i experienced this myself. Latest survey shows the average price of unleaded fell a penny drop comes amid plentiful supplies of crude oil and gasoline u. S. Gas prices have fallen more than 15 cents since april. Youve never known high gas prices. I have not. Youre in sticker shock if we get back to prices we had in the past, 4 and above thats when i get the tesla electricity will be expensive by then. Do we have a tipping segment today . I think were going to. We are. We have one. Of course youre leading it i talked to rooney about getting it going you know it has been creeping up, 20 . 20 thats baseline. I thought 15 was good arent you up in arms . You have to bring it back. My question because i dont know the contours of what youre supposed to how much do you tip, do you tip the gas guy . No, not in new jersey saw somebody do that. I was going to talk about this later thought we had this segment. Did you pump your own gas it was a full service place. In new jersey in pennsylvania then saw a guy give the credit card, then give cash he didnt do the windshields i thought maybe i am being chins ee because i didnt tip. I already hadnt done it made me rethink the situation. That is no. That would be a big no tipping the gas guy . Maybe the world is moving maybe in jersey, does the back window. Were getting into tipping later. Meantime, Second Quarter earnings season kicks off with results from jpmorgan and other bank giants leading the way. Joining us, mike thompson, s p 500 Investment AdvisoryServices Chairman and managing director mike, we talk about what they think about the markets, they say it doesnt matter. All these other headline risks out there, we keep seeing strong earnings thats why the markets continue to chug higher are we going to continue to see good numbers. Yes, we will. Right now according to s p 500 gold market consensus, 6. 1 . Add in surprise of 2 to 3 , talking 8 to 9 before it is said and done. You have leadership, technology, double digit, 11. 1 . Financials, 7. 6 looks pretty good. Energy, a little bit of overweight 380 adding disproportionate, limited sector earnings looks good, next couple of quarters. Talking about probably 8 expectations now, then i think 12 and then 10 it looks pretty good on earnings. Some of it based on what we hear from companies. Others is what analysts themselves are expecting thats where you get surprises how often do you see a down side surprise on these scenarios . Unlikely. You never, ever want to overpromise and underdeliver this is not the type of market theres never a kind of market you want to do that. Thats part of the dna of ceos, the balance, that doesnt happen any more very unusual what laggards are there the biggest is utilities, down 8 . Thats a function of utilities areutilities not a lot of growth there. And risk off trade we are in a risk on world. The thing im a little concerned about is consecutive quarters we see in negative growth in terms of Consumer Discretionary. It is not a lot but a couple percent down down 2. 3 for this upcoming quarter. Because consumers arent spending or Consumer Discretionary measures, consumers are spending in other places. Good point. Retail sales continue to be pretty strong. What it is, people talk about structural changes, the way constituents are within the discretionary sector retailers are having a harder time it is migration to online. The way we measure it doesnt completely pick up the strength. Indeed. So in terms of where the market stands now, if you think theres potential for more up side surprise, do you think more likely scenario is market sees the numbers and rides higher again . I think the thing i find remarkable about this earnings is contrast between evaluations where growth are relative to earnings expectations and where value is relative to their earnings expectation value is trading about 15 times earnings has expectation of growth next 12 months of 12 , according to composite value. On the other hand, growth has expectations of 6 , trading over 21 times it is backwards. Usually you get a higher multiple with higher growth. Now it has way higher growth expectations seen this before in history. What youre waiting for is this reversion. It will happen the question is when right now people arent favoring companies who have great return on invest to capital theyre doing something else. Mike, thanks so much for being here pleasure. When we come back, the summer of hell starts today. Commuters in new york bracing for amtrak repairs at penn station, more than 650,000 travelers pass through each day. The amtrak ceo joins us to tell us what he thinks will happen. Congress back in session after july 4th recess. Senator pat toomey talks about the gop policy agenda, including the battle to replace obamacare. And later, Foreign Policy and focus, we talk to tom freedman from New York Times. Stay tuned youre watching squawk box here on cnbc you totanobodys hurt, new car. But there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do . Drive threequarters of a car . Now if you had Liberty Mutual new car replacement™, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. With Liberty Mutual new car replacement™, well replace the full value of your car. Liberty stands with you™. Liberty mutual insurance. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. New study out from credit cards. Com break out best and worst tippers. Coming in first, republicans at the top of the list. Northeasterners and men, democrats, southerners, women, and cash users, the cheapest when it comes to gratuity. More on results, bring in matt schultz, senior industry analyst at creditcard. Com. Talking about tips can we talk about the baseline we talked before how it turned into 20 is that real well, were not sure if 20 is the new 15 but at a minimum, it is clear that people see 15 as a floor, rather than a ceiling when it comes to tipping truth is, the median was about 18 . So it is somewhere in between. In terms of generous tippers, you talk republicans, what is a generous tip. A generous tip is above 20 we saw the thing ties all of the groups together that are best tippers, it is all about income. And may not come as any surprise that the more cash, the more likely to plump more on the table at the end of the night. There has been what might be described as tipping inflation creeped up faster in the sense you take taxi cab in major cities, they recommend a tip to you often times, giving you few options below 20 . 15, 18, 20. I have seen 25, 30, also seen signals at the bottom of a receipt where they lay it out in a new way. How much do you think thats pushed people to pay higher tips its a big driver and it is not just more tips, it is tips in different places. The coming of square and technologies that make it easier to pay with credit cards make it easier for you to tip more in places where maybe before you threw down a dollar, now maybe youre tipping more because it is easier to use your credit card because of the technology. Matt, i find myself being happier to tip with a credit card, maybe because i dont see the cash i also now hardly carry cash sometimes i go to the pockets, dont have cash to give. How much is that effecting things i think it is a thing everybody thats been in the situation where theyre rummaging through pockets to find a couple of singles to tip somebody, certainly situations where you end up not tipping because you dont have cash because credit cards make tipping so much easier these days, thats probably. What happens to the parking garage attendant that depends on that cash, theres no mechanism to do it with a credit card at the moment at least. Yeah. It is a tough thing. The truth is, the less they carry cash, the more they run into situations like that where somebody in the Service Industry may not get the tip. Do you think we should be tipping the guy at the gas pump . This was a question earlier. At a full service play maybe. If it is a business you go to, spend time there, person you see on a regular basis, when in doubt, go ahead and give a tip what about at a hotel when you are leaving for the housekeeping people. Thats one we asked about only a third tip the hotel housekeeper. What . Thats kind of an out of sight, out of mind thing but the truth is theyre in your personal space they can really help you out, do a good job of cleaning your room if you give them a little tip. Heres the thing. I always leave a tip at the end of the trip, i realize maybe thats not the best way to do it should i leave a little every night . You really should truth is, you get the best service if you left some every night. Doesnt have to be a fortune, even a little helps. This is one thing, called Chamber Maids . Is that a phrase you can use in the 18th century my question for you, matt, is this the pay of a waiter or certain types of businesses where tip is expected, the tip is sort of built into their compensation. In the hotel business, people, the housekeepers cleaning the rooms is built in. Thats one thing i wondered. Im not sure. Even if it is built in, the truth is that it is always a good habit to tip and when in doubt, go ahead and do it, chances are it is going to help that person out. And it will probably get you Better Service we are not tipping you, matt. Thats what he wants keeps hinting, none of the guests are compensated 5 is the new dollar for a tip yeah. The guy that gets the bags right away, parks the car gets five. Then the guy that takes your bags up to the room has to get more thanfive, then when you g out to get a cab, all he does is get you a cab. We havent talked about greasing the mater d. Charley pride is in the house, receiving a grammy Lifetime Achievement award tomorrow he joins us here first when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. I was listening to this stuff last night, and Country Music legend Charley Pride has been in the Music Industry for more than 50 years hes being honored this week with a grammy Lifetime Achievement award. Bestselling musician, member of the Country Music hall of fame Charley Pride joins us and my kids and my wife listen to it. And it is youve always you were born with a lot of talent, obviously. Beautiful. And theres something about Country Music, its americana. And your songs, im going to get emotional that im a little older, rolling on the mississippi, it brings you back to a different time and it was very nostalgic hearing it. Beautiful. Well im a prad igsal Country Singer i cut my teeth on people like, depends on where you want to start, my dad favored bill monroe and bluegrass boys, and we had old philco radio and thats where i saw it. He had all the knobs on the radio so whatever we heard is what he heard. And it wasnt people were like,000 you get into country. You make the point that theres only three kinds of music thats america, country, gospel, and soul thats what i experienced, yes. Three basic ingredients in american music, country, gospel and plus not necessarily in that same order. But, those are the three ingredients of american music. And when it started out, i mean you ended up selling more with your label, rca, than anyone that than elvis presley. I was second only to el vils. Thats what they 32 number one singles 29 36, 37 four platinums, and i looked, and i listened to a lot of them last night and your voice, i mean that was a big advantage. You said you never really played guitar let me give you an example. You mentioned in my voice, i was in london. You remember the song called that old black magic has me in its spill . Billy daniels was the guy. So we were touring over there at the same time. So what happened is that i was off that day, i said im going to go and listen to it and man, his voice, i was 65 years old, booming out there like that. Hope when i get 65 my voice will be like that im singing now better than i ever did i just did a show night before last in shreveport, louisiana, before i came here. How do you save your voice. How do i what how do you save your voice . How do you do that i dont save it im just blessed with a voice your new album, grace. I just wanted the better album ive ever made im not just saying that to make money. Its really a good album i dont know why it took so long to get this Lifetime Achievement award from the grammys. I dont mind. Ill take it any time. So, you get tired of answering about, you know, as a ground breaker of black Country Singer yeah. But, just to ask you a couple of questions about it, you said that you were never did everyone ever heckle you, even back in the 60s in the audience i try you know, all these years, 50some years ive tried to come up with a quick, short answer im a longwinded talker i try to get it down sitting here talking to you guys, when i first started giving interviews and all, different records would say now charley, how did it feel to be the Jackie Robinson of Country Music. Or how does it feel to be the first colored country sing e charley, how does it feel to be the first negro Country Singer i said i feel the same, i dont feel no different. So i try to narrow it down to that and they say well which one i said thats four of them im Charley Pride. But you know, Jackie Robinson, thats sometime they start off with that. The difference in Jackie Robinson and Charley PrideJackie Robinson was specifically picked to go to the dodgers and break barriers nobody came to me. My understanding that i think gave the n word said sit down, n word and he says the reason i said that, youre going to get it a lot. He said because, but what you going to do about it youre going to take the bat, the baseball, and youre going to do it and you aint going to say nothing. Because you dont like it, nobody else going to make it heres what really i thought about this in the major leagues today, what percentage of americans, colored, negro, afroamerican, black are in the major league . What percentage you think it is now . Id say he paid all those deuce, and how many percentage you think it is now is it its got to be close to a majority, isnt it . What was that close to a majority isnt it . 5, 6, 7 . What . 5 or 6, 7 . Latinos are almost half now. So and you see, i cant nobody sit me down and said charley n word youre going to go break barriers im here by choice you also, we dont have time to talk about it but you were a great pitcher and you actually played against mickey or louie mays yes weve got to run. Great having you on. Congratulations thank you thank you for being here. Iounget him out but i got the others out the summer of hell commuters in and around new york city bracing for delays and cancellations at one of the nations busiest railroad hub. An update on the penn station project and amtraks ceo will join us to talk about the upgrades it is back to work in washington senators returning to the nations capitol after the july fourth recess with no deal on a Health Care Bill senator pat toomey joins us to talk about the gop agenda. Plus we introduce you to the Chickenshit Club i am not making this up. This is the name of the book the new book takes a look at the Justice Department and its failure to prosecute executives. He is here to explain as 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 this morning, they are looking up heres whats going on dow open up a little higher about 4. 5 points higher, s p 500 up 3 points and the nasdaq about 18 points. Also some headlines to bring you. Wells fargo has gotten preliminary approval from a california judge for 142 million settlement related to a sales scandal. That money would go to customers whose Credit Scores were affected when those fake accounts were created in their names. The deal still needs final approval from a u. S. District court judge. Also private Equity Firm Apollo global is buying one of the countrys largest golf course operators. Theyll pay 1. 1 billion for club core oldings or 17. 12 per share. Nearly a 31 premium over the Closing Price on friday. And facebook slashing the price of its oculus head sets. Although only temporarily. 3 the 9 down from the prior 598 the discount will be in effect for the next six weeks and i wonder if it goes even lower if you can get it on primeday tomorrow on amazon 30 off. Maybe well see. Joseph all right politics President Trump is backing away from his suggestion of forming what he called an impenetrable cyberSecurity Unit with russia the president tweeted last night, the fact that president putin and i discussed the cyberSecurity Unit doesnt mean i think it can happen. But, a ceasefire can, and did President Trump and russian president putin met on the sidelines of the g20 on friday trumps tweet yesterday morning about forming a cybersecurity pact with putin prompted backlash from some politicians in other political headlines the president s son, donald trump jr. , confirming that he met with a kremlin connected russian lawyer during the 2016 president ial election. The president s eldest son says that he was told that the lawyer had information that could help his father with the election his statement came after the New York Times reported that story, with sources saying that donald jr. Attended the meeting after being told the lawyers information would be damaging to Hillary Clintons campaign in his response, donald jr. Said that the lawyers information was nothing of substance and that the topic of conversation turned to the u. S. Adoption of russian children the president s legal team and his son both say that the president was not aware, and did not attend, that meeting and treasury secretary Steve Mnuchin says the administration now considering a tax increase on the wealthy the comments coming after reports surfaced that white house adviser steve bannon had been floating this idea as a way to pay for the tax cuts for the middle class and agencies this week mnuchin clarified the administrations focus for a tax plan but, again, the president s focus is a middle income tax cut, reforming the business tax system to make it competitive, and creating a tax simplification that will grow this economy no one in the middle class will have a tax increase thats our objective, absolutely and the secretary stated the administration aiming to release a full tax plan by september, once its all approved and up and running by the end of this year you remember when he first came on with us, before i think trump even won, he said that he believed that the wealthy wouldnt get raised on the wealthy, but it would not go down right so well see whether that happens. I remember the headlines. Yeah. Congress returns from recess today, so weve got that going for us and the senate is expected to focus on health care reform. Senator john mccain said yesterday he believes the bill to repeal and replace obamacare is going to die. Mccain said that support for the replacement has been eroding over the july fourth recess. He believes republicans should work with democrats to craft new legislation, and President Trump, though, tweeting earlier this morning, i cannot imagine that congress would dare to leave washington without a beautiful new Health Care Bill fully approved and ready to go well have much more on the gop agenda, taxes and health care. Just a couple of minutes with senator pat toomey everywhere i read its amazing because they go through all of the of the reasons it probably wont pass with different members of congress and then at the end they all say we think its 5050. The worst Case Scenario your read on that tweet a way to distance himself from it if it doesnt happen to say, look, im a way to put pressure on them, too. I dont know about that i didnt know what i didnt know what mcconnell was trying last week, either when he said, you know i didnt know whether that was a threat that were going to go work with, and fix obamacare, if you dont get it together, or whether he that one felt like a threat to me. The threat. If you dont we do i dont know how many times, andrew, and you said a little bit earlier, my only editorial comment, i dont know how many times we can say, wow, you expect democrats to say it but when republicans say it it means something and then we throw in a mccain or a Lindsey Graham comment and those two guys, one guy, you know, didnt win the election. And hes just so bitter at this point that this other guy did. And then Lindsey Graham, he didnt get 1 . When you did run dont be mad at me its not my fault you didnt get above 1 but rubio and to their names this is the party its its not a you dont believe its not a capital if you think the party to republicans in the senate [ everyone talking at once ] theres only 52 republicans in the senate. If they lose more than two of them believe me i know they actually got to louisiana they got a lot of guys theres at least ten of them louisiana guys thats why when youve got ten that are suspect, why do they still say its 50 50. Thats why mcconnell wanted it to happen before the july fourth recess. He wanted it to happen before everybody went back to the town halls. Mccain was always every democrats favorite, prior to him running for president. Then they hated him for the election then he came back, and now you love him again and constantly, as your model republican he is a republican. Rubio i think if you look at the party, there are many members of the party who look at the tweets and think that theyre not with the program i would say that politely. Well talk about it the trains running on time. If summer in the city isnt enough to get commuters blood boiling today, what the new york governor is calling the summer of hell. Track work at penn station in new york city will affect hundreds of thousands of riders. Wnbc anchor joins us right now he has more on this. Becky, good morning from penn station. So, this is it day one, summer of hell, as termed by our governor you see the crowd here this is the crowd, theyre boarding four trains at this point. Basically what theyre doing, theyre starting the track work today. Thats going to go for two months then what theyre doing is theyre taking some of the people who come here to penn station and theyre rerouting them to other places this involves really four different transit agencies new jersey transit, amtrak, the mta, Long Island Railroad. But you have people coming from all over a huge metro area, so theres 16,000 more people a day coming in to hoboken and then theyve got to find their way across the hudson river here into new york city and then you have people who are typically would go to Long Island Railroad from all the way in penn station, instead theyre going to go to jamaica so this is a big change for so many people trying to make it up to ferries and other things. But weve been hearing all week long, really, for a couple weeks now, summer of hell. Summer of hell you know, its a unique name but it is the governors name for what were going through this summer of hell not too hellish, though, which is good the people weve talked to so far say things are going okay. Theyve left hemselves a lot of extra time weve got ambassadors here amtrak ambassadors, trying to get people oriented in the right direction. These folks who are waiting for trains, its pretty much what theyve gone through all the time however, i want to remind everybody, this is day one, and the weather is great, and its the middle of summer so those are all factors that are probably making it a little bit more smoother than maybe a true test of like a wednesday afternoon when its raining. Day one from the summer of hell. Give it back to you now andrew is this the we dont know each other im a fan, ive been watching him forever. I was in new york forever. Is this the first time youve been on squawk no, youve got to remember, im now getting it done all the time, man. Sure you are. But i wanted to be here today. I wanted to be here for day one and see how it goes and its great to be out. Its alive in place at penn station especially early in the morning. Okay youve got a fan here. Stay dry as in not too sweaty. Were going to continue this conversation this morning. Joining us right now with more on the whole situation and amtraks deal, good morning to you. You heard the summer of hell youve got to hate that phrase well, we dont really think its particularly appropriate. But we like to think of it as the summer of renewal. But, your governor has branded that and it seems to have stuck. Okay but whose fault is it . The governors fault the governors fault that we are in this summer no. Thats a whole separate issue, by the way. Its just the fact that we have some essential renewal work that needs to be done in penn station and needs to be done on an expedited basis and the summer is generally a better time to do this kind of work, traffic patterns are down a little bit because of vacation and the like and we just need to keep although this is work that has been put off for years and years and decades if we hear it correctly. Whose fault is that . If you look back at the history of amtrak and as you know i wasnt much part of that history, there was a period where there wasnt much investment in the station at all. Amtrak started to catch up with the infrastructure renewal but its been a slower process than it should have been and, the time had come just to go ahead and get some work done. Its not that we need to assign fault here in terms of how we got to this place, but there was there is an ongoing battle between amtrak and the mta. Thats why i was talking about the governor right where does that stand right now . Well, we have a Good Relationship with the Long Island Railroad, and metro north. A good working relationship with the operating level. I have a Good Relationship with the mta executive team so, we continue to work together, and you know, its essential that we work together. We both have to coexist, and make penn station work but they dont want to pay rent for the months that theyre not getting service, Long Island Railroad well, they made that statement. You can look at that and say that over the past ten years, if you look at the Capital Expenditures at penn, amtrak, whichis the smallest passenger count, has provided 70 of the capital. To work in penn. So, theres a lot of conversation to be had about paying the good news from an amtrak standpoint is that Congress Finally passed an act in 2009 to secure them to work it out where all of the commuters will be paying a proportional share of operating and capital thats never happened before so thats good in terms of assuring more funding so that the infrastructure the money comes from the state so i just dont know it doesnt impact amtrak ticket prices, obviously. By the way, talking about ticket prices, theyve gone up relative have they gone up somewhat significantly in the past two years where do you think theyre going to go and how does that compare, for example, when you think about we talked about the excel la all the time, but compared to the delta, and united and american flying back and forth you know this is just like any other business in that we watch ticket prices, we watch supply, we watch demand. We certainly watch Airline Shuttle prices right . Because thats our primary competition. So we try to reflect what theyre doing, and to make sure that we have an attractive product and its a product that people will go ahead and pay for. What i was totally separate question on a totally separate topic okay. Relates to the cost of building tunnels yeah. Have you been following what elon musk is doing at all in los angeles . This idea that he wants to a boring company, he wants to bore tunnels underground im vaguely aware of it of course im aware of the hyperloop. Does this make any sense to you . Economically is there any way to make this work there are companies out there that bore tunnels today and have massive tunnel boring machines and its a huge infrastructure, you know, kind of initiative but, if youre going to go do that, you know, the bottom line for all of this is whos going to pay for it . Right . It is not cheap to bore tunnels under a big city or even out in the country, for that matter so, maybe it makes sense, but i always question who pace pays. What . I dont know, why would you want to move all that earth . Elon musk wants to move it because of all the traffic i know, thats in the city. Right but look at the subway system here, right, and look at andrew every waking thought that elon musk has doesnt need to be somehow hes spending money building i know, but i dont i know but god when you were out, we actually talked about his hair i think that was to have that much hair when you were that bald handsome man. Well i know that. But he has solved baldness so that to me that mars is one thing and hyperloop is another. But going from bald to fully hirsute. Thats what ill remember him as and thank you coming up, senators head back to work today with noth Health Care Deal as of yet. Senator pat toomey join us after republican agenda. Stay tuned the future isnt silver suits and houses on mars, its right now. 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. The senate is back to work today after a weeklong recess for the july fourth holiday. For a look at the top of their political agenda lets welcome senator pat toomey of pennsylvania, one of the key legislators working on that Health Care Bill, member of the banking, finance and Budget Committee. Senator, good to see you good to see you, joe. Long trip for you to get up here we welcome you on set today. Should you not take an august recess look, weve got to do what it takes to get this bill done. You would say dont do it if thats what it takes you know, weve been making this promise for a long time. Obamacare hasnt gotten better it is failing. And we owe it to the American People to fix it we read things, all of us, obviously. Yeah. And for some reason the perception is that the moderate republicans and the conservative republicans in the senate, the rift has been widening in recent weeks. Yeah, i mean, ill grant you it looks a little bit that way over the course of this last week but we get back into town tonight and we meet among ourselves actually a couple of times a day, typically, to try to get there theres a path to bringing the moderates on board look they want more spending, more Government Spending there is money in the way this bill goes forward that makes that possible. Conservatives want less regulation so the premiums can come down more in the individual market and theres a group of us that want to make sure we hold onto the reforms to medicaid that will actually make this program sustainable, which is not thank you. I think theres still a path im not pollyannaish about this. Its very, very difficult when you can only lose two votes and there may already be two that are irretrievable. Were in a tight spot. But weve got to give this every effort can you tell us who you think is irretrievable because those names change i dont want to say that. But were down to the point where we cant lose anybody. Saw a great piece in the weekend wall street journal about kasich and the way he has, you know, hes a medicaid guy, but he put in some reforms to the way that the other states would deal under a republican plan that really worked. It held down but then hes ignoring for political reasons or for whatever, hes ignoring the progress that he made before he wants to reform entitlements but then with medicaid, thats like anything you do is when he was chairman of the Budget Committee he advocated exactly the architectural reform that we have in place. And we do limit the rate at which the program can grow in the future recent years medicaid, per beneficiary spending in ohio has been well below what we allowed the growth to be at. But joe you know this program is unsustainable. Its out of control. Its growing at 6 , 7 pshs, 8 per year and nothing can grow faster than the economy indefinitely but senator, if obamacare is now above 50 , and the republicans plan is below 20 , it doesnt matter if you keep saying that, that its well except that its been wildly mischaracterized. Someones got to come out and describe what it does. We dont throw anybody off medicaid the fact that we just begin to curb the rate at which it gross. The fact that it would make a huge improvement in our fiscal outlook i think we actually pass this, people start to read more and more about it theyre going to realize can you respond to this real quick . A republican lobbyist, who is for the bill, says this in axios, the health plan has never been tied to the health of individuals. Abstract arguments about the policy value and ideological purity of legislation rarely work in the senate, concrete political ends are needed to create action. Its a great point, right i mean, what the democrats do so well is theyll take any failing program, but they will then find or invent a sympathetic person who benefits from it, and therefore it must be continued in perpetuity. Republicans will make an argument about how, well this is inefficient, this is unsustainable. Personalizing it makes it much easier to sell, and we dont do such a great job perhaps the reason its hard to personalize, because its very hard to find the individual on an individual basis who is going to truly benefit. No, its not hard to find the individuals who are truly hurt by obamacare in pennsylvania, premiums are up 120 deductibles are through the roof Small Business insurance costs have risen i mean its a complete disaster. We have 40 of pennsylvanians have a grand total of one choice and increasingly there are counties across the country where there are no choices, no insurance companies. So that is a failure and thats hurting people senator, as a realist, and define that just to get through, whats more likely, that mcconnell finally starts working with democrats to shore up the exchanges . And thats the eventual outcome or that theres a clean repeal and that you do this or are either one of those in the realm of possibility thai both possible. Right . Are they . Yeah, absolutely. Which is more likely . I think we still have a shot of getting 50 republican senators to vote for a bill. It will be a little different than the last version weve saw. Weve got a new version that comes out today. Well get new scores from cbo. And i still theres still a shot of getting to 50, mike pence breaks the tie you lose rand paul and ted cruz i doubt it. I think cruz was sign the alternative, though, is really grim. Because Chuck Schumer has told us what his criteria is. Hes happy to work with us as long as nothing gets repealed. The mandates dont go away taxes remain in place and medicaid stays on completely unsustainable fiscal train wreck. 23 we want to do that hell talk about bailing out insurance companies. The new version, does it appeal to the conservatives or well, see, theres an opportunity to do both so were going to get the specifics of a 45 billion commitment for opioid funding. Thats a big that will appeal to a lot of the moderates. Theres a lot of places including pennsylvania where opioid is a huge problem thats a big deal. Theres also a big push to have a change in the regulatory mandates, so that we can have the lower premiums that were looking for. People can have more control and more choices that will appeal to the conservatives and i think thats going to be quantified and scored so the hope is that this what about Susan Collins of maine who wants to make sure that people arent thrown out of Nursing Homes. Nobodys going to be thrown out of Nursing Homes but thats what shes been saying thats not the language im making up the elderly component is there something to make her happy . Im not sure. I havent spoken with susan about what exactly it would take to get her vote on this. But, look, theres been some mistaken characterizations, let me just say. What were going to do, if this passes, we will slightly curb the rate at which medicaid grows. I would defy anyone to tell me whats a more responsible way to deal with outofcontrol entitlement spending and if youre not willing to do that then just admit you want the country to have a fullblown fiscal crisis, maybe a great depression, and then i guess you plan to pick up the pieces at that point you want they wont sign up for that you want medicaid funding really to crowd out almost all other thats exactly. This is just arilt metic, joe. So its like when california finally looked at single payer and realized we can do it if we dont have any fire departments, any police, any education, any you wait for a crisis that forces draconian things. Right or do you slightly slow down the rate at which the program grows in the future so that our economy can keep up with it. Senator, thank andrew he was spending huge dough in your state i was in bucks county last week. Excellent i mean, his staff, and the whole entourage. And i mean all kinds of it was a nice country vacation above the in dppd. I live just north of bucks county okay. Beautiful. It is beautiful absolutely. When we come back this morning, blackrock Third QuarterInvestment Outlook with obglal chief economiesment officer richard turnle squawk box will be right back. Good morning, Everyone Welcome back to squawk box here on cnbc we are live from the nasdaq marketsite in times square among the stories that are front and center this morning, the latest spiderman reboot topping the Weekend Box Office spiderman homecoming drew 117 million in north american ticket sales, as well as earning a multitude of positive reviews. The movie is a joint production of stony pictures and walt disneys marvel studios. We have a fedfilled week ahead highlighted by Janet Yellens testimony before congress on wednesday and thursday of this week. And there are six other speeches by fed officials on the schedule aside from yellens capitol hill appearance oil prices are falling for the third time in four days. However, citi analyst eric lee says crude could be back to 60 a barrel by the end of the year. Saying accelerated demand and reduced opec supply is likely to push Prices Higher coming up, where to put your money to work. Well hear from the Worlds LargestMoney Management firm about asset allocations for their clients. A check of the markets after the break. And then theres a new club in town it is, can i say it aloud . Are we allowed to say this title allowed . I did Chickenshit Club. It takes a look at why the Justice Department fails to prosecute Corporate Executives well talk about his book in just a moment. Take a look at u. S. Equity futures. Back in a moment the future isnt silver suits and houses on mars, its right now. 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. Blackrock giving us a first look at their Third QuarterInvestment Institute outlook joining us from london to break down the highlights Richard Turnill is blackrocks global chief investment strategist. Richard, thank you for joining us i said youd give us the highlights ill hand you the floor for a second to give us the highlights thank you first of all, great to be here thank you for inviting me. We see three, i think, important themes driving markets over the next few months. The first is we believe sustained economic expansion one of which will continue to benefit many of the stocks which have been withered in the first half of this year. We think this is a time where investors should be rethinking returns. We see this environment of growth and low Interest Rates underpinning valuations in many equity markets and finally we think this is a time to rethink risk many investors have been nervous about investing, weve seen risk levels fall. Many investors underexposed to risk but our analysis suggests low volatility could be sustained. Overall we think it is a good time to invest in stocks, putting cash back into the market lets go to that, though. Why do you think the volatility is as low as it is given all the geopolitical issues and concerns that we talk about every day so what we see is that low volatility actually is normal. 80 of the time when the low volatility regime, and that low volatility really reflects a stable economic environment. Despite all the Political Uncertainty weve seen over the last year or two the reality has been the Global Economy has been remarkably stable. Global growth has been remarkably stable over that period of time so were in this low volatility environment. Were in this stable Economic Growth regime. When we look forward our analysis those that youre most likely to stay in that regime unless you either believe were going in to a recession, and we have seen no recession on the horizon potentially for several years. Or you believe youre seeing some sort of financial imbalance built up in the economy which could disrupt the low volatility regime, and again, you know, we dont see evidence of that today. So we think theres low volatility regime could well last you talk about sort of rethinking allocation, putting more money to work what are you in terms of outlook even for the rest of this year, u. S. Equities, versus international equities, where do you do it . How do you do it what do you think that what do you think the rate of return could look like at this point . So, we continue to Favor International stocks over u. S. Stocks we still think u. S. Stocks will do well. But we think International Stocks will do better. And thats because valuations are cheaper and International Stocks are giving you more exposure to this sustained Global Economic expansion over time were just starting to see flows coming back in to International Stocks but when we look further forward, i think many investors are still crowded into low return assets. Into cash, into fixed income, which are likely to give you zero in many cases negative real returns, after inflation over the next few years whereas we take a longerterm view, five years forward, we think prospective real returns, after inflation returns for equities could be as high as 15 or more over that period of time with potentially higher returns in areas like europe, like japan, like emerging markets i dont did you get a chance to see, there was a barrens cover story over the weekend about etfs and how it is changing the market one way or the other. Some say for the better, some say for the worse. Do you have a view on that i know youre in the etf business so were certainly seeing it, the etfs are a message in why investors can get access to equity markets and many typical retail investors, mums and dads, havent had access to the equity market in the past and certainly dont have enough exposure to equities to meet their longterm goals. And what were seeing is for the first time in many years, actually flows coming back in to equities via etfs, in 2017 and we think thats a trend that the world can sustain. Thank you so much for joining us this morning. Traveling through the airport and you walked by one of those bookstores and saw barrons you know, i go online on the weekends before the show do you look at barrons a node they put out on and its a fascinating article, because it talks not just about etf funds all right but just as importantly that the real winners, and losers, frankly, are those that are in the indexes or not you have to right and what that ultimately could mean to longterm investing for its shocking that there are more of them than there are for as widely held as those things are, they get a lot of those are very controversial yeah, and whether the whole thing can blow up. Exactly which is where i wanted to go with richard but we didnt have time coming up there are dance clubs, comedy clubs and book clubs and now we can add one more to the list ill say but ill say chicken Shih Tzu Club just to cover my tookous. Jesse eisinger joins us after a break to talk about this exclusive club and who is in it at the top of the hour Pulitzer Prize winning columnist m iean wtofrdmill be our special guest. Squawk box will be right back. Welcome back, everybody. Joining us right now is jesse eisinger, Senior Reporter out with a new book thats titled, the chickens t club. Why the Justice Department fails to prosecute executives. Say it again. Nope. Just once. Thats all you get from me jesse, thanks for being here today. Thank you for having me so your premise is that the Justice Department has gotten more and more timid over time and is afraid to take on cases that might be very difficult to prosecute which is why we dont see anybody, any of the ceos of big Financial Companies in prison after the after the financial crisis yes the Justice Departments lost the will and ability to prosecute the top Corporate Executives from the biggest companies. And its not just a financial crisis issue its not just about the big banks. We see their failures in retail companies, industrial technology, across the big corporations its a major problem why do you think that is, first of all, and second of all, my assumption would be that its because, sometimes its really difficult to prove any laws were broken absolutely these cases are extremely difficult. They take resources, they take time, thats no excuse i mean, Preet Bharara cant throw up his hands and say my job is hard. If you arent convinced any laws were broken the problem is they dont look anymore and dont prosecute in the right way anymore they used to we prosecuted enron, which on reflection seems like an obvious fraud but actually was quite difficult to prosecute especially lay and skilling, the two top guys there with no direct evidence against them they had to build that case slowly this is a skill set we had 15 years ago, roughly when we prosecuted all the top executives from enron, worldcom, adevil yeah, tyco but we dont do it anymore because they dont the evidence that would implicate certain executives that have not been prosecuted. So im not a lawyer, my book doesnt lay out a case like that right one of the problems is the evidence wasnt generated because they didnt look but i think that there were cases to be made against lehman executives, against countrywide executives certainly in the ceo business. I think dozens and dozens of but dont you think that prosecutors and journalists, and entire army of the public have every incentive in life to make their name by prosecuting these cases, by finding the evidence in this age of social media and everything else, by finding the information. Thats what i thought remember giuliani, lets put him on the map remember spitzer lets put him on the map they have a invested interest, sometimes i think, in being overzealous about pursuing things that they dont have any thats a very common argument, both that they have political mbitions, and that sometimes that leads to overzealousness. In fact, what put preet on the map is he got enormous credit for prosecuting wall street, the man whos busting wall street, the sheriff of wall street, when actually he did Insider Trading at hedge funds, a very different thing. He didnt take on systemic issues the incentives for the staff prosecutors at the department of justice are not to go after really difficult cases that will take years and potentially result in a loss settlements. They want settlements, exactly. And sometimes they are shakedowns you get that from the ceo thats the line what about the government guys that well the government doesnt prosecute. They can refer, carl levin referred stuff im talking about when they were complicit, in blowing up the housing bubble, as well. Well, i thats an ideological argument about sort of the arrangens of the bubble, which i dont particularly subscribe to i think andrew finds the ceos that deserve to be prosecuted and you call it three big to fail no, but thats the sequel to too big to fail. Why not three big to fail. I think that jesses book is terrific and very prodockive argument, i think very well argued having said that we disagreed about this because i do think authors and journalists and all sorts of people have had incentives to try to find the crimes but the exclusivity and making croppy investments and greed and overleveraged none of those things are against the law. Theyre just bad ceos. Right and thats exactly what the wall street journal editorial page and many argued about enron, this is just recklessness thought that they could take he thought that was his company. He thought he could take a loan from his own he found out he couldnt you know, walmart bribed in mexico, gm was covering up volkswagen was covering up, gaming the regulatory system were not seeing major prosecutions of the top executives although you might with volkswagen you might im skeptical that theyll get to the top i see your point when you talk about like countrywide or lehman why didnt somebody dig into some of the issues there. But when you go out to goldman i have a little bit of a tougher time with that because i know they were betting against some of what they were selling to customers but thats what they do. They take both sides of it by the way, goldman lost money so if you look at the chapter on Goldman Sachs in the book, what youll see is, that the s. E. C. Investigation was regularly thwarted in fact, they only wanted to charge fabrice civilly and didnt actually interview the s. E. C. Did not want to interview any of his bosses. So you have an investigation that was sabotaged and the one of the reasons why its sabotaged, and this is an email that i obtained, is that one of the s. E. C. Investigators says, well these guys are good people who may have done one bad thing. And thats an attitude that pervades the department of justice, and the s. E. C they think of Goldman Sachs, executives, and volkswagen executives, and maybe thats a lax attitude of these regulators, but i dont think that theres necessarily anything that goldman did wrong. You sort of said well thats an ideological argument. I mean the max taibbi giant squid mother jones the same people that are saying now were at the g20 throwing tear gas the same anticapitalist sentiment i could accuse you of. Its not just financial ceos, its all ceos, because theyre all trying to make a profit. Therefore theyve all got to be in jail. Im certainly not making an argument that all ceos should be in prison im just saying some of them let me ask you this i think thats ideological the whole idea that why arent there more people who are in jail over the sarbanes auction . Why cant you go after them if the Financial Statements are accurate and find out later how come we never prosecuted anybody on that . Its a good question. And jim is fraud hes a fraud expert. Whats happened now is the department of justice has become afraid, theyve also lost a lot of powers, prosecutors have lost a lot of powers and i try to trace that in the book and i try to trace some of the heroes who have gone up against a system from within. There are some prosecutors who know how to do this. Like Paul Pelletier is a hero in the book and he was thwarted regularly by the higher ups in the front office who want to do these settlements. Theyre much easier to obtain and companies have a legitimate argument, that theyre being do the laws have to change . Yes, laws have to change. There have to be many more resources given to prosecutors prosecutors should be paid a lot of money really what it is is that they need to change the culture and the incentive within the department of justice to allow them to focus on individuals, not settling with corporations you think Jeff Sessions is going to do that things are going to get unimaginebly worse im a big credit irof eric older and i think that Jeff Sessions will be probably the worst department of justice in our lifetime for corporate enforcement. Then youve got Loretta Lynch in there, too. Well i dont think lynch really covered herself in glory. I think that reno had you know, jeff you were around 20 years ago. Jesse eisinger was around way before jesse eisinger. So people say, you know, i said i thought he was going youre an original. Hes not an original i am. Ive been on cnbc this is my first time on squawk box. Ive been on cnbc 17 years he was in high school when you were on cnbc exactly and then he for ripping off he took over come on back. Jesse, thank you for joining us thanks so much for having me. Im out jesse would always fit in i think so. I think so thats great. Looking. Coming up jesse, thank you. The three big to fail, when we return the best states for business scott cohn ready to kick off our 11th annual report. Check out futures at this hour moving around a little bit this morning. S p 500 up just marginally back in a moment the power of innovative thinking. 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. A used car,g this information. Read it carefully. 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. Were getting ready for our 11th annual countdown of americas top states for business, which starts right here tomorrow with scott cohn. Its already in the top state. Texas which is still a mystery. For now. Texas oh, thats not going to help us that could be anywhere cohn. So it occurred to us, over many years of doing this, that at this time of the morning, in certain parts of the country, its not exactly light out yet, certain parts of the country, its raining other parts of the country, its bright sunshine. So i could just be messing with you. But yes, we are in the top state for business, were going to drag this out for over the next 24, 48 hours or so well tell you about how it works. But first a look at this study which is in our 11th year. Here is how we do what we do our exclusive study holds the states to their own standards. We measure workforce, quality, availability, righttowork laws, infrastructure, air and water, roads, and rails, who has the lowest cost of doing business, the strongest and most diverse economy, where can you find the best quality of life, the most technology and innovation, we look at education, kindergarten through college and beyond, business friendliness, the legal and regulatory structure, we measure access to capital, and cost of living 2500 total points, and the state with the most is americas top state for business so heres how it works, if you havent been with us for this before next tomorrow were going to count down the top five states, 5, 4, 3, 2, 1. Before that later today on the closing bell ill give you first of several diabolical hints about where i am will be a little bit more revealing than this. But not much and were interested in hearing your guesses interestingly, this year the most competitive since weve done this. The top three states are separated by five points so going to be interesting sticking with my guns since ive got nothing else to go with texas. Scott, thank you were going to watch through the day. Topstates. Cnbc. Com. Thank you, sir. When we come back, Pulitzer Prize winning columnist tom friedman will be our special guest. Thugmo oth ltlbihier roh stf e morning. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. When a fire destroyedwith us everything in our living room. We replaced it all without touching our savings. Yeah, our insurance wont do that. No. You can leave worry behind when liberty stands with you™. Liberty mutual insurance. Washington watch President Trump back from a meeting with world leaders, and tweeting about his high stakes meeting with Vladimir Putin. New york times columnist tom friedman joins us straight ahead. One down thousands more to go tesla rolls out its first model 3 and elon musk reveals pictures of the lower priced electric vehicle. Well show them to you plus get your digital shopping carts ready amazon getting ready to kick off its annual prime day and it could be the biggest one yet. The final hour of squawk box begins right now 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 the futures right now are just above or below flatline by just a small amount down 1. 3 points on the dow up a little over a point on the s p. The nasdaq stronger, up 11 points treasuries today, i think 2. 37 i say on the way in. 2. 39 2. 9030year Oil Prices Back above 45 last time we looked sorry. That did roll last week, right it rolled last weekend. Ice brent is 46. 20. Above 45 43 thats thats problematic at this point for, maybe for some of the oil producers. Some of the top stories teslas first model 3 sedan rolled off the Assembly Line over the weekend and ceo elon musk tweeted out photos on saturday night last week musk said that the first 30 model 3 customers will get their keys at the end of this month the model 3 starts about 35,000. At least 400,000 people have reportedly put down a deposit for that new car also, a little bit of deal news this morning, Apollo Global buying one of the countrys largest golf course operators. Apollo will pay 1. 1 billion in cash for club corp holdings. 17. 12 per share. Nearly a 31 premium over the Closing Price on friday. And apples market share for renting and selling movies is falling. According to the wall street journal the tech giant now has been 20 and 35 of that market down from 50 back in 2012 tech giant slump is a consequence of overall industry expansion like amazons push into prime video politics. Congress returns from recess today. President trump tweeting this morning, i cannot imagine congress would dare to leave washington without a beautiful new Health Care Bill, fully approved and ready to go senator john mccain struck a different tone yesterday he said he believes the bill to replace repeal and replace obamacare is in his words going to die mccain said support for the replacement has been eroding over the july fourth recess. He believes republicans should work with democrats, democrats to craft new legislation. President trump tweeting about his previous proposal to form a Cybersecurity Team with russia writing the fact that the president that president putin and i discussed the suber Security Unit doesnt mean i think it can happen. It cant but a ceasefire can and did President Trump and russian president Putin Meeting on the sidelines of the g20 on friday trumps tweet yesterday morning prompted backlash from other politicians including many republicans. Lets get to our special guest. Joining us right now is tom friedman New York Times columnist, and author of the New York Times bestseller thank you for being late. Tom, thank you for being here. Its great to see you. Great to be with you. On time thank you for not being late. Lets talk geopolitics because were just coming out of this g20 meeting a lot of things happening over the weekend, some other things not happening. How do you kind of sum all of this up . Well, becky, i put two stories together the u. S. china story and the u. S. russia story. Im a big believer that an International Relations leverages everything im happy to talk to anybody as long as ive got leverage on my side of the table. Whats been disturbing to me is it feels like this administration has thrown out their leverage before theyve sat down with these other two great powers in china, regarding china and asia this administration tore up tpp, the Transpacific Partnership trade pact that would have basically put america at the head of a 12nation free trade alliance, based on our values and interests, that contained 40 of the Global Economy. Id love to negotiate with china as the leader of such a 12nation trade alliance controlling 40 of the worlds gdp. With russia, theres a bill thats now passed the senate, 972, i believe, to sanction russia for its involvement in our election, the cyber hacking of our election, as determined by our intelligence agency, and this administration basically is trying to dilute those sanctions. Id love to negotiate with putin with those sanctions in my pocket and so whats disturbing to me is that weve got these two big power relationships, and were throwing away our leverage before we even really sit down and negotiate with them. But the tpp was thrown away tom, that was not just this administration that was the democrats as well as the republicans both candidates ran were on both candidates, im talking about Bernie Sanders and hillary, they both ran running away from tpp. Joe, i would agree with you i think its a travesty. An american travesty that we allowed this trade back that obama didnt defend it in the end, that hillary didnt defend it, Bernie Sanders is a socialist, i didnt expect it from him but the fact is, trump is the one who threw it away and hes a republican and i thought republicans would be more amenable to it right you know its interesting with russia, the idea of these sanctions that are coming through, this puts the Trump Administration in a rather difficult position because theyre very likely going to be picked up by the house, paul ryan wants to pass them rather quickly and put something on the desk yeah, i think its just really important that we take this seriously its clear to me that leading republican senators like john mccain, Lindsey Graham, really the whole Republican Senate leadership theres 97 senators is taking this serious. Democrats are taking it seriously. Russia hacked our election whether there was collusion between trump and putin, ive seen no evidence of that what is undeniable is russia was involved in our election and that goes to the really, the very core of our democracy it needs to be taken seriously, and this president seems to refuse to do that because he thinks it will take away from his issues you could say, ive heard argued, that the reason we want to meet with russia and talk to them about these things is that we think we can make progress on a place like syria and maybe we need their help on north korea just like we do with china and when you look at north korea that seems to be the most pressing issue that you could possibly point of all the hot spots around the world these days you know, becky, i was just out in korea a few weeks ago, and it really is the rubiks cube where you can never get all the squares aligned. The fact is that south koreas interests, chinas interests, russias interests, our interests, there really is no perfect alignment. Theyre also, nfortunately, theres no military solution that wouldnt involve possibly killing up to 80,000 americans, not to mention tens of millions, or ten Million People from south korea, or possibly others in japan. So there really is no military solution theres no real diplomatic solution i think the only solution is for the u. S. To keep unilaterally squeezing korea, squeezing the chinese banks that are doing north korea, squeezing the chinese banks that are doing business with north korea. We just have to keep putting the pressure on. You know, this regime in north korea, one thing we do know about them, theyre not suicidal this is a basically a monarchy that has that has kept itself in power over three generations. Thats pretty unusual. They clearly are not suicidal. And i just think we have to keep squeezing them but we keep hearing that this new dictator is not his father that hes a very different person to try and deal with. A lot of people called him crazy. They say that he didnt respond to any of the old leverage that used to work and that what weve been doing to this point has allowed them to get to the point where they my have an icbm. What do we do with all that information . You know, theres no question about it its been a bipartisan, republican, democratic, you know, process over 25 years, weve let this happen. Because at each stage south korea, remember, didnt want us to take military action. Right i understand and i think that there is really no good options and i think that basically we have to just keep tightening the screws everywhere we can i dont think theyre suicidal one thing about this new young leader, kim jongun in north korea, he turns out to be very smart. Because i think he quickly realized that the one thing that everyone could agree on is wed like this north korean state to stay standing but wed like to remove the leader. The people who could do that most effectively were the chinese so what did he do . He wiped out his brother and uncle, the two most prochinese leaders around, in his circle. And most prochinese figures so hes a pretty smart guy and i think all we can do is keep squeezing him what do we think about whats happening in syria, and then also in mosul, with iraq basically saying that they have pushed out of mosul, not that theres much left there. One of the things ive always believed about iraq is that or about syria, all these middle east countries, is that the really important story happens the morning after the morning after. You know, so the morning after we declare victory in mosul. Weve done that before you know at different times during the iraq war. What really happens is the morning after the morning after, can we put in place a structure there, where theres power sharing between the three parties in iraq, kurds, and shiites, all of whom participate in some way in bringing isis down and thats going to take the thats where the most important diplomacy is going to happen weve had a habit over the years of winning military victories there. But then losing the peace as we havent had a structure in place and a new civil war erupt. So thats really the big question in syria, i dont think theres any solution the country is completely broken its not going to be put back together its really about limiting the spillover damage im perfectly happy to work with russia on that, as well. Were not going to take our side out because again we dont have any agreed upon power sharing structure to put in its place. Over the weekend, john mccain described iraq and said that you should be thinking of this not as the beginning of the end, but the end of the beginning is that how you see this, as well yeah, i mean, you know, if you really step back, becky, and ask, now whats going on, you know, in that whole part of the world, i think the big divide in the world today, and this is the point i made in my book, is that its no longer north, south, east, west, communist, capitalist i think the big divide in the world is between the world of order and the world of disorder. And the fact is, all of the stresses and strains of being a state, which is so much easier to be a weak little state during the cold war, but as the cold war ended, superpowers werent ready to throw money at these countries. Theres just a whole swath of states starting from west africa and stretching all the way to the border of india that are really going to have a hard time making it. And were seeing a vast, you know, world of disorder erupting, and i think that the new Foreign Policy for america is how do we find islands of decency, islands of order, in that part of the world because wherever you find one, you find people gravitating to it people forget that the latest wall that israel built wasnt against palestinians, it was against africans in the desert, because israel as an island of order had attracted over 80,000 eritreans and south sudanese and they werent coming for the kosher food. They were coming for an island of order this actually happens everywhere in that part of the world. So i think its going to require really very different thinking about how we manage our Foreign Policy not just in the middle east but also whats happening with europe this is Angela Merkels big issue. Same thing. All of the disorder flowing into what used to be very orderly places you know, becky, if somebody is looking for a p. H. D. Thesis out there, i would recommend exactly how stupid it was for us to topple Moammar Gadhafi in libya and then leave the country open it had two vastly consequential events one is that we uncorked africa because libya and gadhafi in particular was a cork an africa and since he was toppled basically weve seen a Mass Movement from subsaharan africa, about 9,000 to 10,000 people a month the u. N. Recently estimated coming up through africa, trying to cross the mediterranean into europe. This is an africa issue, not a middle east issue. And at the same time we sent the signal to kim jongun, and every other dictator in the world, get a nuclear weapon, and keep it, because gadhafi tried to get one, we persuaded him to give it up and then we decapitated him that libya story has vast consequences, and if anybody is looking for a ph. D. Thesis, id recommend it tom, i want to ask you about a column you wrote recently where i would argue you took the gloves off the title was trump is chinas chump. You said far from being a savvy negotiator, he, trump that is, is a sucker whose shrinking u. S. Influence in this region is helping make china great again why do you think he is a sucker, if you will, and what do you think the implications really are . Well, you know, i go back to what i said about tpp, andrew. I was a huge tpp fan i believe it was a very important trade deal that eliminated some 18,000 tariffs on u. S. Goods, or potentially on u. S. Goods the fact is, we actually fleeced a lot of the Asian Countries in that deal. And the reason was why they wanted us there. They wanted us there to counterbalance to china. Particularly the vietnamese and the japanese, countries that we really coddled in trade terms during the cold war because we needed their support tpp was actually a great deal. Obama never sold it properly, Hillary Clinton ran away from it after calling it the gold standard, which it was, and trump just threw it out the window i believe without even reading it you couldnt have made the chaens happier what would they rather today negotiate with us bilaterally or negotiate with america as the head of a 12nation trade alliance built on our interest and values that contain 40 of global gdp thats just really stupid. Thats throwing out your umbrella before the rainstorm. So, friedman, i got a 58 degree wedge oh, god its a tough club to hit, joe. Its working better, though and i open it a little so that it bounces on the heel, and do you have a 58 youve probably got a 60, dont you ive got a 60 but remember youve got to keep turning your body, pal. I thought you were going to say ive got a 60 but remember im good really, i thought thats what ive got one more question where do you go to a hybrid . And im not talking about a car. Do you have a 3 iron in your bag still . No i dont. I have a 5 hybrid, a 4 hybrid and a 6 hybrid and youre not embarrassed . Shows you how old i am. You are a little bit embarrassed. I see that youre admitting it sheepishly you know that hes not a hes not full of shih tzu hes like a youre a 6, tom . Yeah, thats what i am lately i love that i love that. Because youre you call a liberal 6 i handicapper thats like this does not compute. And im like a conservative 40 handicapper. All right. Take care thanks, tom thank you see you, tom. Coming up when we return, oil prices are under pressure this morning. And analysts predicting it could fall even further. We can tell you some of those reasons and just 100,000 deals in just over 30 hurst. Its no wonder amazon wants you to pull out your wallets tonight. We will tell you what primeday could mean for the stock youre watching squawk here on cnbc 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. Welcome back to squawk box this morning take a look at shares of costco. The big box retailer getting downgraded by beamo to market perform from outperform. They say Investor Sentiment driven by amazon fears may continue to overshadow strong fundamentals a u. S. Judge has given preliminary approval for a wells fargo settlement the bank will pay customers whose Credit Scores were hurt by employees creating fake accounts the settlement vochls claims involving customers or Small Business accounts. Credit cards and loans between may 2002 and april of this year. Wells fargo reached that deal in april. The bank still faces probes from federal and state regulators and several private lawsuits shares of Abercrombie Fitch taking a big hit the retailer saying that its terminated discussions regarding a potential transaction. Abercrombie also says it does not intend to comment any further on those now ended talks but says it thinks after a thorough review its concluding the best path to increase shareholder value is a progressive pursuit of its current strategy stocks down 16 as a result and more crude is coming online and President Trump isnt backing down on making the u. S. A global competitor. Jackie deangelis joins us now with more. Good morning good morning to you, joe. And thats exactly right look, late last week, and somewhat quietly, the u. S. Interior secretary signed an order to hold more lease sales and to speed up permitting to oil and Gas Exploration on federal lands. Now, unsurprising, but its believed that roughly 2,000 plus permit applications under president obama have created a backlog and the Trump Administration wants to clear the way. And the critics are saying that trumps spelling out the nations public land to benefit the oil and gas industry the administration would argue its streamlining an antiquated process in the interest of making America Great again, and the trump first energy plan. But no matter how you slice it, more oil is coming online. And the Trump Administration isnt backing down based on the daily fluctuation of crude prices that were watching this is a strategy that puts business first, it promotes survival of the fittest mentality and basically gets the u. S. To complete on a global playing field. Last week i was told were likely to see oil lower in the First Quarter of next year nan where it is now. Were talking about the 30s here and more people say they agree so the bottom line is that the mood coming out of the United States are more than even opec is going to be able to counter longterm. And becky we talked about this you know, opec promises the market something, they may stick to it, they may not. The Trump Administration is saying were doing this. Yeah, i saw some headlines last week from russia sounded like they were willing to maybe stick to some strict guidelines or strict production cuts, too they say that but do they do it in practice . Thats the question. So watch what we do, not what we say exactly thank you very much when we come back, the Smart Speaker saves the day. One device took a cue to call the police we have the details of the story next plus, how much does masters champ Sergio Garcia love his green jacket a whole lot. Ghafr e eaowt how we kn i rit tethbrk. Mpassion and care. Mpassion and care. He spent decades fighting to give families a second chance. 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For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Welcome back to squawk box. Facebook cut the price of its oculus Virtual Reality head sets and related gear consumers will be able to buy the headset, controllers and some games as a bundle the price tag, 399. Nearly 200 less than the previous cost. The lower price will be in effect for the next six weeks. So if you have this on your list, go out and get it now. Also, a Smart Speaker alerted Law Enforcement to an assault last week after a man allegedly threatened to kill his girlfriend according to abc news a new mexico resident reportedly had a firearm and asked his girlfriend, did you call the sheriff . The Smart Speaker recognized the voice command and then called the authorities. No word yet on whether it was amaz amazons alexa or google home or another smarthome device but i guess that offsets some of those concerns about privacy coming up this mornings top stories. Plus, Steve Liesmans economic mystery. Well tell you what it is as we head to break. Take a look at u. S. Equity futures. Which are still mixed as nasdaq is the strongest of the bunch up 12 good morning, everybody. Welcome back to squawk box here on cnbc we are live from the nasdaq marketsite in times square take a look at some stocks to watch this morning Abercrombie Fitch is under pressure in premarket trading. The teen apparel retailer issued a statement saying that it had terminated discussions about potential transactions those discussions again in late may after the Company Received expressions of interest but abercrombie now says its best path forward is what theyre calling rigorous execution of our business plan. They say theyre seeing solid compstore sales and continuing to refine and implement strategies for revitalized performance. Meaning theyre probably not seeing sales gains but they say they expect improved trends to begin in the second half of the year compared to the year before were also continuing to watch shares of chip maker rambus this morning. The stock soaring on friday after reports that it is working with an adviser on a possible sale and intel was downgraded to underperform from hold at jefferies, which also cut its price target for the chipmaker jefferies says that intel is at a significant disadvantage because of a big shift in the marketplace, socalled parallel Computing Technology a shot down by 1. 5 . And saw this yesterday, Sergio Garcia really, really likes his green jacket that he picked up in augusta so much so, its become a staple of his wardrobe. He wore it to a recent real madrid barcelona soccer game he also wore it to the Bmw International open last month. Also, was seen at wimbledon, as you can see there, sporting the jacket espn commentator, former fish told the wall street journal friends with sergio and whenever theyre facetiming sergio has the jacket on. Thats pretty cool. It is not everyone has done quite as much someone just had a baby and wrapped up his baby in the green jacket ah. A couple. But you can only have it for a year then youve got to put it in the locker back at augusta and its not necessarily theyre kind of boxy looking its been made by the same company for years i was going to say that looks pretty good on him but if you have one, especially sergio, who, you know, anybody thats watched his career for 20 years, i mean, he came close, been one of the best golfers for that long, and that was a really tough win at augusta over justin rose and playoff and everything else. So he, blood sweat and tears to get that thing got watching sunglasses, too, with the green tint. Nice. He didnt cry. I think i you cried at finding dori i cried a little bit when he didnt cry but he, you know, i dont think self v seve ever tried either but that was a big deal for him. So great okay, were going to solve an economic mystery right now because theres a big mystery in the economics world about why wage gains were so weak but Unemployment Rate is so low. Who is here to solve this mystery . Senior economics reporter Steve Liesman thinks he has figured it all out. I dont think its that big of a mystery when you look at whos getting hired. I just teased the whole thing as a huge mystery. Now youre no, no. I just think, look, i spent the morning and some of the weekend looking at Unemployment Rates by race, and by educational level and what you see is that a lot of the gains over the past six months, where this Unemployment Rate has fallen, have happened among first take a look at black unemployment has fallen from 7. 7 to 7. 1 even bigger gains, 5. 9 to 4. 8 . We can talk about the irony that minorities have done quite well over the past six months we can say who might be responsible for that or not. Now take a look at unemployment by educational level you can see a lot of the gains those with less than a High School Diploma down by 1. 3 Percentage Points. Just high school, down by what do you call that right here . 0. 7. 0. 2, and then for college or higher, almost no change at all. The Unemployment Rate is low and no change. Now youre asking what do you know about wages and education well we know quite a bit thats what im asking. Thats the question here you go. Earnings by education. If you less than High School Diploma, 504 Weekly Earnings. Then if you have a bachelors degree 1 156. So, what is it the high school is about 60 of the bachelors degree so and the other thing youll find is that team unemployment has fallen sharply here are some numbers. Black unemployment, 16 to 19yearolds down from 26. 9 in january to 21. 1 in june a five Percentage Points in fact, almost all of the unemployment gains are among those 16 to 24 years old isnt it more likely that they work in the summer. Whats that isnt it more likely that teens work in the summer they do but thats supposed to be seasonally adjusted. Actually almost all the gains, if you look at it, have happened amongst the 16 to 24 group this group comes in, less education. Fewer years in the workforce they is that because people who used to be working the minimum wage jobs are Getting Better jobs and maybe moving off of that is there any way to some of that could be hang. But it also could be, you look at those low Unemployment Rate for those with bachelors degree and higher than 2. 5 , you get to a point where okay, i cant find those workers. All of the anecdotal evidence we have from the people who sit in this chair day after day, the ceos, they say were having trouble finding skilled workers. What do you do you go to less skilled workers you essentially train them but you dont pay them as much as if they were skilled. And so what are we measuring average Weekly Earnings and the change between them. Were not measuring wage growth. You go to a different piece of data, which is done by the atlanta fed, its their wage tracker, its like people yeartoyear theyre running at 3. 5 . So quite a bit more. Steve if you look historically, im sorry to ask you this without any prep time for it, how long does it generally take after you start to get back to full employment before wage inflation. Is it taking longer than usual yes we had a chart on that friday, i believe. Im trying im doing this and im stalling just a bit. To see if they can bring it up i dont think they can what i found is that when you get down to this Unemployment Rate, this 4. 4 , wages are usually right about them this is a very unique time period where wage growth is not following the decline in unemployment its got a lot of reasons i mean there are excuses like global labor, obviously and machines right i want to ask you, theres some reallife experiments going on in certain cities that have gone to well above market yes wages for minimum wage. And were going to be able to find out eventually, in seattle or san francisco, ive seen some anecdotal stuff that there are job losses at the lower end from there. Are you a follower i have heard drnsz is that reflected is it too small to be reflected . I think its too small. Joe that is like the next thing on my list of things that i want to do. Theres a lot of research oh, now its your next thing. Now that i brought it up youre already thinking about this frying to get a trip to see not true. Theres a university in washington, that is studying the change in the minimum wage gap and one of the clever things they do, alan krueger oh, i talked to this guy. The guy in washington in Washington State its an interesting study i wanted to give it a little time before, you know, figuring out. One of the things, alan krueger did this, i think it was new jersey raised the minimum wage rate, he went to a border area, between new jersey and pennsylvania and studied the wage differential or the employment differential he did not find much impact from the higher minimum wage. There were a lot of studies out there, and we have another natural experiment going on right now. Washington wages are i mean the hours worked are actually down a little bit theyre down. Because the wages have gone up thanks, steve thanks, steve. Stick around stick around . Stick around. Oh, lindsay is there. Joining us now, chief economist at stiffle fixed income did steve get anything right, lindsay, that you can tell actually, he made some very good points. I think at this point, it is very clear that businesses are still heavily reliant on parttime, temporary, lowwage labor. So thats continuing to pull down the wage growth in fact what were seeing is that the vast majority of the modest wage growth that we are seeing is very segmented in the economy. These are particular areas that are looking for specific skills. The skills that are in high demand and very low supply so were talking about engineering skills, accounting skills, i. T. Skills. And in this case, employers are willing to bid up wages in order to entice employees in but its a very, very segmented portion of the economy one thing that i think steve didnt mention is the disconnect between the Unemployment Rate and the wage growth that were seeing the 4. 4 , 4. 5 as of late Unemployment Rate that we see doesnt necessarily reflect whats actually happening out in the labor market remember that still doesnt include the millions of americans that have dropped out of the labor force so really, if were looking for a correlation of sluggish wages to unemployment, i think at this point, in this type of recovery, we really need to focus on a broader measure that u6 measure that would include all of these parttime, temporary, discouraged, marginally attached workers. And then well see a much higher correlation between sluggish wages. So lindsay you mentioned parttime right at the top and im thinking about, were right in Obamacare Repeal and i dont know whats going to happen with all this but we see how difficult it is to do it but thats never brought up anymore. The overall effect of obamacare on the jobs picture. All we hear about are premiums going up and deductibles going up, and losing coverage, and the exchanges. We hear all about that but, as the bill has become more popular with the public, because it might get taken away, we dont talk about whether its hurt the jobs picture. There are companies or is there evidence anecdotally that there are companies that havent gone over the threshold where they would have to provide coverage and thats part of this absolutely. Theres survey after survey thats talked to Small Businesses and said why arent you hiring and in many cases they point to tax uncertainty. They talk about ample regulation, and top three is always, Rising Health care costs. The reason were not talking about it anymore as you mention, the bill may be becoming a bit more favorable or weve become fatigued with that talking point. But it certainly is an ongoing issue that were going to continue to face in the labor market, and Small Businesses are not growing, not hiring, you cant expect the economy to pick up much momentum i dont see it in the data. I mean i dont see differential, small, medium, either in i mean all of a sudden Small Businesses have been hiring. I dont really see it in the data as being a thing. One thing we do know is that there has been less Small Business less new business formation perhaps thats part of it but joe, i wand to ask lindsay, her take on things seems to sound like theres a lot of slack in the labor market, and you think the fed probably ought to let it run. I do think theres a tremendous amount of slack we talk about all of these work es that have dropped out we love to talk about the idea that oh, they were near retirement or at retirement age. But actually when you look in the breakdown its really 20 to 55yearolds that are dropping out. So these are individuals with a tremendous number of potential income earning years still left. And unless theyre independently wealthy, we do expect them to come back in to the labor force at some point, eventually putting upward pressure on the Unemployment Rate. Especially the young 20 somethings the young 30 somethings. Theres one more thing from the reporting that i did and what youre saying, which is that if you lack skilled workers, it means you have to train workers. And that costs money so isnt that short absolutely. Term negative for earning for companies in that they dont have the skilled workers they need well, it could be or they could be supplementing with other areas they could be importing labor. They could be outsourcing to overseas they could simply be bringing in two workers that are less skilled or maybe less productive to fill that spot. So there are temporary fills or gap measures that businesses can take to overstep that loss of high skilled workers availability lindsay, did you relocate to minnesota . Where are you from i did not i simply you catch me all around the country sometimes in california but you dont live there now . Im based out of chicago. Okay. So you have to resist that fargo dialect if we get from minnesota a lot. You sound you sound pretty normal no accent changing yet. No. Youre doing good. You betcha all right, thank you lindsay okay coming up next, it is almost dday for amazon and by dday we mean deal day. The ecommerce giant getting ready to kick off a big day of sales. Well tell you what to expect. Take a look at shares of amazon. Closing in o 100 srer ,0 aha 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. Containing this information. Read it carefully. We, the people, are tired of being surprised with extra monthly fees. We want hd. And every box and dvr. All included. Because we dont like surprises. Yeah. Like changing up the celebrity at the end to someone more handsome. And talented. Really. And british. Switch from cable to directv. Get 4 rooms with hd, dvr, and every box included for 25 a month. Welcome back to squawk box. Amazon primeday kicking off later tonight, and there are some huge sales expectations for the online retailer. Morgan brennan joins us with more this morning. What started as a 20th anniversary celebration has become an annual shopping event. Amazons primeday kicks off tonight at 9 00 p. M. Eastern with over 100,000 deals over 30 hours for prime members in 13 countries. Amazon doesnt reveal the number of prime members, but Consumer Intelligence Research partners estimates there are 85 million thats up more than 35 from last year. Now last years primeday was amazons biggest day ever. Bigger than cyber monday with orders up 60 worldwide compared to that inaugural year prime day. In 2016, amazons market share of online sales ended up 4 higher in july than the average for the rest of the months of the year because of prime day. Price ling found while last years deals were about 30 less than other sites there are exceptions and many of the deepest discounts are on amazon exclusive items meaning you cant price compare. Particularly fire tv, kindle and echoes were last years top sellers. Expect the echo devices to be a marquee sale item again this year and likely large tvs. Now amazon says the best way to monitor deals is through its app and also by asking alexa other retailers have tried to offer their own sales on or around prime day last year j. C. Penny did see 13 more shoppers make it through checkouts than on a typical day in july though kohls saw a 7 drop in conversion during its mid july 2016 sale it proves amazon is the king of the journal here they can create their own holiday. I need to apologize because i didnt realize about prime day until maybe two or three days ago. I actually made a couple of purchases over the weekend how much demand meaning do people know about this for months on end . No. Last year was the first time that i realized it was happening. Okay, yeah. So i left for vacation at the end of june, and i think the die or two before they told us when it would be. So i think on june 27th or 28th is when they told us that it would be on july 11th. So we didnt have a ton of heads up but this is the first year that its fallen between july 10th and july 15th. So if youve paid attention you might have guessed it was between that time. How many years do you think it will take for this to become the equivalent of what alibaba has done in november i mean it is amazons biggest day of the year. So for them i think that they got there very quickly first year was a little disappointing i think for some shoppers they said youre offering me sales on items i dont care about like a lawnmower and i live in new york city. But i think they figured out some of the kinks, satisfaction scores were much higher last year i dont know how long it will take to be as big as alibabas single day but for amazon its quite big. So now theyre just beating their own mark from last year. Thank you thank you when we return, jim cramer will join us live from the New York Stock Exchange. lget s kewel hita on todays top stories. Stick around squawk box will be right back. Is can we at least analyze customer traffic . Can we push the offer online . 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. [brother] any last words . [boy] karma, danny. Karma [vo] progress is seizing the moment. Your summer moment awaits you, now that the summer of audi sales event is here. Audi will cover your first months lease payment on select models during the summer of audi sales event. Lets get down to the New York Stock Exchange, jim cramer joins us now jim god, i sound like im, i dont know, on nightly news or something. I try to figure out, earnings are coming up and i happen to look down, youll see where im going to this. I happen to look down at ge, which is at 26 now, and then i looked at what happened last week and i saw some of the negative comments from jpmorgan and you know one of the First Companies, it is one of the First Companies to report an earnings season. Something not great happening there. Thats a 21month low. It is a sore point in the market the company is insisting that a lot of the negative chatter, including the jpmorgan sell, sell, sell last week will be refuted by the quarter and it will be happy when we see it the companys really out there saying that a lot of the stuff is just way too negative and wont see any of it happening this quarter to the most part and it will be pretty good obviously, they have the oil bet, but i think that they did the baker hughes deal and thats going to be positive, so lets see. The company is saying dont believe what you read or hear, you will be rewarded it is not as bad as the analysts say. And then as far as the earnings season thats coming up, when its prediction when its all said and done, will it justify stock prices, do you think, in terms of the last three months and the outlook yes it will yes yes, i think so, because were going to start with the financials thats a very important group. It will be good. Technology should be very, very good health care, they havent resolved any of the costs, obviously, and this company has made fortunes with this environment. Ill take those three. Dont really need anything else. Very good and then you saw the tesla, does kind of look like from the front, good looking car. Very good looking 35,000, this could do it, right . This could justify that evaluation if, indeed, that they can mass produce, then i think that the bears who were in control of it last week will be routed, but we have to find out if they can mass produce it. This is a total battleground we have the hong kong story that shows without the tax breaks things dont do well i dont know it is really an incredible bull bear tangle, and i think most investors shouldnt be there. Really . At 310 . I mean, down below it should, but it was up a lot, but when we see the model 3, i know a lot of people who put in the thousand i put in the thousand, but withdrew it when i realized you werent going to get it until 2019 ill tell you, for all the people that sort of lust for that model s, it is a beautiful car, ive ridden in it, it is beautiful, if you are lusting for something out of your price range, i can see why a lot of people wanted one. I totally agree i think its a great looking car. Lets see if they can mass produce it i put the money in, seemed too cheap. Get one of these, get rid of your other car i dont use my car all that much, but i got to tell you, i got frustrated that it looked like youre not going to be able to get wherever you are on the q, going to be too hard to get thanks, see you on the top of the hour squawk on the street. Up next, newspapers taking on google and facebook well tell you why right after the break. [woman] we did it. [man] were campers. Look at us. Look at us. Its so nice to get out of the city. Its so. Quiet. Is it, too quiet . Its awful. Yeah. Feel at home, pretty much wherever you are. Tmobile is americas best unlimited network. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. It was a super weekend at the box office for the latest super hero movie, spiderman homecoming took in an estimated 117 million in the u. S. And canada and another 140 million overseas second biggest opening for a spiderman film behind 2007. The latest reboot stars another frickn guy. This guys name ive never heard of him, tom holland, as spiderman aunt may keeps getting younger we went from i forget the first ladys name, then it was sally field. Now its marissa tome. Michael keaton is no longer a super hero, hes a super villain called the vulture like bird man straight from bird man then i had to get used to andrew garfield, now this guy. I wish theyd, i guess, everything changes this is the guy in the avengers, too. Theyve been building him up already. He was spiderman in the avengers he played the young kid, bringing him under their wings, iron man brought him in, tony stark. Then despicable me 3 came in second place. Im told theres only 48 different types if you change height, size, hair, size, 48 different combinations looks like millions real quick before we go, this is big news, newspapers are joining forces to fight google and facebook they want federal lawmakers to give the news industry an exemption from antitrust rules this would let the group negotiate collectively with the tech giants. The goal is to gain more leverage go facebook thats the story. Make sure you join us tomorrow squawk on the street begins right now. Good morning, welcome to squawk on the street. Im david faber along with jim cramer we are live from the New York Stock ExchangeCarl Quintanilla has the day off. Lets give you a look at futures as we head in from the opening bell kind of a mixed bag, lets call it, at this poin