Transcripts For CNBC Squawk Box 20170714

Market site in times square im kelly evans along with joe kernen and melissa lee we have the dow looking at a tiny gain, same for the nasdaq the dow closed at a record high yesterday. Overnight in asia, lets scan the landscape. I think the kospi was at a record high yesterday as well. Some green kind of following on from our semi strong day yesterday. Gains of about a tenth of 1 as for europe which is still trading of course, you can see some differentiation ftse 100 and dax lower ftse down more than a quarter of 1 and finally a look at crude which has been holding levels of 45 and 46. Its up about and a halfhalf a t in washington, Senate Republicans are battling for votes within their own party after he releasing their latest Health Care Bill two gop senators will not vote for the bill, that means Mitch Mcconnell has to convince every one of the 50 remaining republicans to vote yes or the legislation fails. The new bill keeps some of obamacares taxes on the wealthy and includes 45 billion to fight the Opioid Epidemic and another 70 billion to stabilize the Insurance Markets and help lower income americans pay for coverage the bill also sets up a new fund for exchange based high risk plans. Meantime President Trump is in france this morning as weve heard. Lets get to eamon javers who has the latest on the trip reporter good morning. The president is there for bastille day the actual parade is still going on right now in paris. They are having an elaborate reception for the president. You can see the military bands there playing, all of the full pomp and circumstance here laid out for the president of the United States on his visit with Emmanuel Macron in france. Yesterday the two leaders had a News Conference and talked about a whole range of issues, including the idea of what happened involving russia. Heres what the president said yesterday in terms of don trump jr. s meeting with a russian attorney who was proffering allegedly information that would help the trump campaign. The president portrayed that as business as usual. Ive had many people call up, oh, gee, we have information on this factor or this person or frankly hillary. That is very standard this politics politics is not the nicest business in the world, but its very standard where they have information and you take the information. Reporter on air force one on the flight over, the president talked with reporters for about an hours time initially that was all off the record, but then the white house decided to put out some about excerpts of what the president said including the moment that the president described his facetoface meeting last week in germany with Vladimir Putin in which the president pressed putin twice he said on the issue of russian meddling in the u. S. Election in 250016. He said that putin said absolutely not twice, that is that putin denied that he had interfered in the u. S. Election twice. And then the president said what do you do, being end up end up t fight . Then i brought up syria. So the president saying that he sort of pressed putin as far as he was comfortable pressing him and then moved on to the topic of syria in that meeting last week they also talked about steel tariffs as a possible way to go here talked about trade he talked about north korea and once again he suggested that the russian meddling in 2016 of wasnt necessarily a guaranteed fact he said it could have been china, could have been north korea, they are also very good at hacking so a lot of subjects swirling around this president s trip to france, but you see some of the parade route going on there in paris right now. I dont think it would be a fist fight i think it would be judo judo, right putin is very good at judo if you believe the press machine. I dont think it would be fi fistacuffs ive seen him on a horse that was i love those shots. President trump went too a military academy, so maybe he can handle himself pretty well he must have picked up a thing or two there i couldnt help but think when i sea hesay hes a goodb being im talking about my German Shepherd, right hes a 39yearold man. This is an interesting factoid. As a father, i dont think they ever outgrow being your boy, but when i see splik tha Something Like that, ceasehes o boy, being its like im talking to my dog. Donald trump you jr. And Emmanuel Macron are the same age. They are both 39 so i dont think the president would call macron a good boy, but when youre a father, you get certain privileges you had to love the bromance yesterday. These are two politicians you wouldnt necessarily see as fast friends and suddenly they appear to be fast friends if i was like an on thpportut and i thought about what the United States can do for you if you are on friendly terms and if i were to assume it was four years and then even think, you know hes not over here watching the mainstream medias take on trump and his chances, et cetera. And if it was going to be eight years, i think i might just as a i wouldnt care i think i might have the same sort of reaction to a lot of that wouldnt you just to cover your bases absolutely. It makes strategic sense for france they want to be close to the United States militarily, in terms of trade and culturally. All of those things matter a lot to france particularly with the isis threat that is gois going that they need some input from u. S. Intelligence on, u. S. Military around the world. All of those reasons make it important for france to be joined at the hip with the United States as they have been for a decades. So u. S. Domestic politics, you can imagine if youre a french leader, you look at u. S. Domestic politics and that i is that but ive got to make sure that we keep this relationship so many so many lsolid. But there could be a down side in france to seeming too buddy bh buddybuddy. Bocobama was very popular in europe i dont know if that is a badge of honor this obamacare thing, just in rand paul and Susan Collins, youve gota got the whole th sums it up the moderates that no matter what they get, they wont like it and then you got someone be who is so far out that wants to just clean repeal and just pull the rug out from everyone. So the whole thing there and it just gedepends on everybody inside that is a metaphor right there the president said yesterday, you pull over a couple on this wing by adding some things and then you lose some on the other Side Health Care is a difficult issue and its not getting easier. And i have another going that is a male, but hes 12 and hes small and i immediately thought of the German Shepherd and i feel guilty now. They are both the boys. You cant play favorite with children or dogs thats right. Anyway, thanks to people who are like we didnt care i care. I didnt say if youre goint them, i want pictures. Breaking overnight, this is hard to understand hawaii controls everything a federal judge says no to the travel ban or at least parts of it a hawaii judge has eased some restrictions on the travel ban remember the grandfather, grandmother thing. The ruling says the u. S. Government cannot deny entry of grandparents and certain other People Living legally in america. Justice department declined to comment on the ruling. They have said in the past that the travel ban is grounded in immigration law. An at t is reportedly planning to shake up its management ranks after it completes its deem tal for timen warner Randall Stevenson will become executive dhchairman he will oversee two guys that we have had on and known for a fairly long time stenke is very tall, and hell be media and then donovan who ive had conversations in the past about trying to understand the way these little squigles that are out that you cant see go into your phone and show you a movie. Its really amazing if you told someone 100 years ago gee that little squigles will come on to this little thing, they would say its impossible because our senses dont allow us to pick up any of that spectrum. But it is amazing to try too understand so amazing people are still concerned it might cause cancer or something but all possibilities about existential possibilities. Like beam me up kind of thing . Going back to the at t restructure, does it remind you of a Certain Company that we might work for thats what they said, being a be kin kin to comcast distribution and then the media. Most interesting thing about the potential reorg is that direct tv move to the telecom side of the business and it had been on media so they are flipping that in order to allay concerns about with competition well see if it works. Do you want to gee bao back i remember somebody was going to try too like spectrum information that was going do into a device. And its impossible. And now my kids are like my wifi is down, this is how is is this possible how can we live like this exactly the stuff that comes my maps that comes from a satellite so i know where where are to go you went to harvard, so you understand how all this works. Clearly im still really, really to me its like magic. Because across the river well, in 1939 they didnt teach us a that was a joke. Laugh. I know. You werent born, that is obvious. Last month at t said it was confident that regulators would approve the acquisition by the end of the year, but yesterday are seven consumer groups urged Jeff Sessions to block the deal on grounds that it will lead for higher prices. I see great cases made for on lower prices maybe a they have a they have a case for higher bryces now back to the broader markets. Innovation happens as soon as it develops. They think employees of the competing companies because the u. S. Standard is does it hurt or help the consumer and the european standard is there competition or does it block it its the 24th record close of the year not every day, but a lot of days and the nasdaq is on pace for its best week since last lets bring in david joy with us onset, siemian hyman for some reason, i always think simiimian simian. Prime mate type thing. There because the movie is coming out tonight is that skull island . Into, wwar of the planet of apes. Guylike me is more interested in war of the planet of the apps do people watch people watch to learn how do apple applications its like an app talent show kind of. That is weird anyway, hes head offen Investment Strategy at pro shares advisers. And for anybody to be in this business right now, david, you sort of have to have one foot ready to pretend that, yeah, im in here, but im wondering about how far things can run and that has sort of been what youve been saying in recent appearances on the show. Yet we keep hitting new highs. Do you think weve seen the lions share of gains for a this year or not . I said say yes. But i still think the market will go higher that makes no sense yes, would he se rk, weve seens share but the market will go higher you can say youre right into matter what about. I think the market will be up another 3 , 4 in the second half so the lions share of the returns have already are been achieved so we wont match the returns in the first half. But well do pretty well for the rest of the year i think so. I think the fed is really behind the curve. In terms of inflation, they are hamstrung and i think the markets are recognizing that and it means lower Interest Rates for a longer that is a pretty environment for corporate earnings growth. Do you agree with that . S earnings are here. We had over 6 of top line growth last quarter can and so far only 5 of the companies in. Were also heading for good Solid Earnings growth. But i do think you have to look outside the u. S. These days. The discounts in europe and the uk are about 50 on a price to book basis emerging markets are supported by a weakening dollar and at least sort of stable Commodity Prices so time to mike sure youre diversified outside the u. S. I think i have some emerging crap if youre in a target dated fund,s they stick you in all these international bonds. You toont just hadont just hav, but a lot of people dont realize. Talking about domestic equities, what do we with respect to the u. S. , of course part of the concern is that its been a tech led market nasdaq up twice the s p. Soi think there is unease there. And the thank think challenge it to the value side, that was expensive insurance. S p value inbe geks only up half the s p in the first half so if you are looking for maybe cheaper production insurance Quality Growth Companies that underperform just a little bit when the market runs, but offer a lot more down side is probably a good place to go there are two ways of looking at the market. Its doubled in 18 years which means that it hasnt gone anywhere really, 4 a year, or on from 666 at the financial dry sis lows on the s p, almost like quadruple. Which is the real thing to look at . Lows on the s p, almost like quadruple. Which is the real thing to look at . Sis lows on the s p, almost k quadruple. Which is the real thing to look at . Crisis lows on the s p, almo like quadruple which is the real thing to look at is the day of reckoning coming i dont think this economy is close to a recession we still have a lot of excess capacity and as a result, i think earnings can continue to grow. But i think over the long run you raised a very good point these concerns since 2009 are not what were going to expect on an annual basis Going Forward. I think you have to laook at it over a longer term spectrum. In addition to that, however, we already have an extremely will he Interest Rate regime. That is probably not going to be replicated again sos will, lower. By simple math, somewhere in the 6 to 8 range. So equities arent particularly expensive, but dont expect great returns. So you will be okay if the apr a ape is take over ive been preparing for years. That was a shocker, wasnt it one of the biggest shockers in moved have i h movie high schostory. Damn you all to hell, yeah. Yeah, he was good all right. David, siemian, thank you both sincerely. Coming up, much moreeves vn paris. Well talk to former state Department Official james rubin next for your heart. Your joints. 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. 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. Can we at least analyze customer 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. Or a little internet machine . [ phone ringing ] hi mom. It makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. See how much you can save. Choose by the gig or unlimited. Call or go to xfinitymobile. Com introducing Xfinity Mobile. A new kind of network designed to save you money. Welcome back President Trump is wrapping a two day visit to france today attending a bastille day parade with president macron right now actually for an assessment of the trip, lets bring in james rubin sir, thank you for joining us. Happy to be with you. What do you think the implications of this visit are well, i think it is a big deal in terms of u. S. Role in europe and that is because under the british leader right now, who is so business sid hey heren worried about getting out of the European Union and because President Trump and the german leader are obviously not going to be joined at the hip, the fact that the United States and france will find new reasons to work together, to lead in the western world is an encouraging sign for all of us and there is a reason for that france has changed in the last ten years. You may remember back during the george bush days, the common word on the street was to on criticize france for not being with us. Yeah, i remember freedom fries. They are prepared to act internationally and they dont have all of the baggage that the british have and germany never wants to act international internationally. So there is a natural reason for the two to get along to what september are thexte really prepared to act will they be leading an International Coalition in too places struggling with terrorism for example . Granted they have been more proactive of literally, but they also problems back at home this new french president is really Something Different we havent seen a french are leader gather for example this much political power certainly in my lifetime maybe charles degall france has allege shown an act to act internationally even when things arent going well at hole so whether afghanistan, whether syria unhad we acted under president obama, french are regularly sending troops President Trump will have someone it used to be britain that was with us as the numberle one friend and ally in europe, but because britain is busy with brexit, because the iraq war basically destroyed their confidence, its very encouraging for the United States to have a Strong Military power. There are only two in europe, france and britain, and britain is out of the game so i think its good news for the United States to have a strong leader president in france has a lot of power, but look, they will be competitors, too, as you saw in their first heatle being and we meeting so well see hugh tow te friendship goes. Every relationship is a quid pro quo. So if were asking france for cooperation on a military basis, what are they asking from us i dont think yet the french other than having lost their first debate which was on the Climate Change agreement, i think president macron may imagine with a slow cultivation of President Trump he can explain from a businessmans perspective the market advantages of accepting the Climate Change truth and adjusting our economies to new markets. Perhaps he thinks with a clee relationship he can slowly but surely persuade President Trump who said things that make people think he might want too be pto persuaded. Who kneows. But its still good to sit together part of what is great about being the president of france and for a President Trump, its not having a fight with a fellow european who he has generally picked fights with and im sure if youre british right now, youre wincing. There were a few analysts writing about this, they said was theresa may even there i dont remember it. I dont remember anything happening with that. She is severely diminished in terms of power youre saying britain is struggling with brexit and other issues is that just a temporary sidelining of the uk from that sort of representing that or is this more of a lasting change do you think . Well, ill an american living in locndon and i certainly enjoyed it when britain was the leading friend of the United States and it certainly was during the period after 9 11 and through the iraq war but as much as brexit is a problem, the iraq car war is a problem. Britain changed after the iraq wau war. There was so much damage done to their confidence there are still reports about whether blair misled the country and that has damaged britains confidence internationally and so the choice in military terms is britain or france they are the only two countries with a big military. Turkey does as well, but they are sort of bogged down in that part of the world. Should i guess what im saying its into tnot just brexit but t is a big issue im amazed hoichl of tw many ofe is taken up by brexit. 99 of their preliminapolitical into figuring out how to leave the European Union they even have a funny phrase called nonbrexit issue, that is how big brexit is here you put that together with their loss of confidence on the military side and that is why can britain has been so silent and absent on the big issues youre right, it is a big change of the times. Thank you for joining us appreciate it. Probably worth it though when its all said and done coming up, disney unveiling a new model of its star wars land theme park about attraction. Well find out what analysts want to learn about disneys theme parks and movie plans next hey dad, come meet the new guy. New guy . What new guy . I hired some help. He really knows his wine. This is the new guy . Hello, my name is watson. You know wine, huh . I know that you should check vineyard block 12. Block 12 . My analysis of satellite imagery shows it would benefit from decreased irrigation. I was wondering about that. Easy boy. Nice doggy. What do you think . Not bad. At where instead of payinging wa befor middlemen,em. We work directly with family farms to deliver Higher Quality ingredients for less than you pay at the store. Get 30 off at blueapron. Com cook i like this song bastille song. Worked for us, so oh, this is different, but still bastille. What is this, bad blood . This is a better bad blood than stupid i agree covers are good what was the cover that they did of that other well play that one later i havent even said good morning yet. N now im saying it the 6 30 part of the show. Good morning futures are flat so you have to do the math and now were up two, three on the dow jones. Still down on the s p which is just a hair away from a new high and then the nasdaq up two todays executive edge, we have a closer look at the events that could move the markets june retail sales and cpi are both out at 8 30 eastern followed by Industrial Production, Consumer Sentiment and business inventories and ron kaplan speaks in mexico. Jpmorgan will be reporting in the next few minutes and then right around 8 00 a. M. Right whentrying to put an american in the finals been eight or nine years yeah, so now you have to root for him. There was a funny moment where someone said to murray in the press conference yeah, and he got accolades from everyone for stand being up saying yeah are first time an american has been in the quarters since yeah, and his mother was so happy. She said that is my boy. And then around 8 00 a. M. , well get reports from citigroup and wells fargo. It is the most wonderful time of the year when wolf gets to talk for like ten minutes about the intricacies of Bank Earnings Net Interest Margin, return on equity, book value in relation to its peers i mean, we all you look forward to that in a few minutes time ill have to put it on a loop for the rest of the day. Happiest good piest expopo s qui kicking off today. Are you expecting anything out that will move the took . Im not sure that anything will move the stock. Disney has been doing great with theme parks and i do expect a lot of discussion about what they are doing they have already put out a model of the star wars land. I dont know that that is investable, but certainly looks nice well look for a more information about new attractions, maybe well hear when when toy story land is coming in orlando. Maybe well hear about the popular tron ride in shanghai maybe coming to the u. S. Maybe well hear more about what is happening with some of the production on their movies han solo has been a source of consternati consternation, but certainly it speaks to disneys strong point which is movies, theme parks, h per dhmerchandise, not espn sfw. And also reported declines in their childrens channel. How do you assess what is actually going on here for their tv and cable business . I think what is happening is that disney is a tv network and networks are suffering from secular change which is that more interest is going to internet video and people find tv network bundle a little less valuable and that is a trend that will continue for as along as the eye can see so i think that for disney, what will be really important for the stock over the longer term is can they come up with some type of over the top strategy to navigate the change. Will they go direct with their big consumer brants, lids and what will happen with their direct over the top effort with espn if they get traction there, i think it will gee a long way to allying the fears about disney tied too a sinking ship. They made smart recent acquisitions could they do the same in tv . I dont expect them to be buying things in tv. I think their acquisitions have been a big content so what is the end in sight is thissing if this is going through a secular change, what is their way out . They did buy into bandtech and i think that is the way up, to make that not just the small thing, be but something that is big enough to matter and that has to be pretty big given how huge espn is part of the bundle Fee Structure all right, thanks a lot have a good weekend. Coming up, earnings season does kick off. Jpmorgan is set to report first and then wells and citi follow later. Well bring you the numbers and reaction on wall street. Plus Health Care Jobs and taxes in focus arkansas governor hutchinson joining us live from rhode island where ghovernors are ga gathering for a conference rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Mike pence and Justin Trudeau speaking at the National Governors Association Conference later this morning an joining us now Asa Hutchinson governor, good to see you. Well just talk about what happens at this, but i guess since ive got you here, the Health Care Deal came out. Mcconnell came out its all about medicaid and a lot of it has to do with all the states that at the time i dont know how you were supposed to say no federal government is dangling this in front of you, well pay for everything but as it turns out now, kind of looks like a foustian deal that were now dealing with based partly on the governors that accepted it. Do you acknowledge that . Well, my predecessor accepted the Medicaid Expansion in arkansas based upon a federal commitment that they would pay for 90 xft bathe expanded medi. As you indicate, the late eitstr version of the senate bill reduces to the traditional match which is much of less and its a cost shift to the states were anxious to see the cbo numbers that come out monday on this i expect from those cbo numbers that you will continue to see a significant increase in the number of uninsured swrult as a result of that reduced funding there are some good things about the senate new version of the bill it is a more Fair Distribution of federal money they have responded to my requests for more flexibility in terms of including the expanded medicaid in a block grant option for the states these are significant improvements its clearly a work in progress. So were still hopeful that they will be able to come to an agreement and something that works. Do you wish your predecessor had not accepted the medicaid i mean, the people that get help from it, and the it didnt hurt the state so it was a tough deal to turn down do you wish he had well, i wouldnt say that i wish that the federal government would keep its bargain. That is the frustrating part and this was a really bipartisan decision you had a democrat governor and a republican legislature, so it was a decision made in the best interests of the state of arkansas and i continue that Medicaid Expansion because it has benefited over 300,000 and kept the premiums at a reasonable rate never low enough, but not as bad as its been in the other states so a lot of good things out of this but we have to look at the future thousannow. And well create cost savings. I agree with the federal government that we need to do this and we are controlling the numbers of Medicaid Expansion by asking for a a waiver to reduce those numbers. So we are making significant reform, but just dont undercut us by becausing te withdrawing partnership. A piece in the journal oig that moderates got almost everything they wanted and they are still not sold is there anything that some of these republican moderates, anything that you could put in here short of, i dont know, keeping obamacare and strengthening it that would allow them to vote yes on this do you think this passes in its current form i think they are actually getting closer but the big worry again is that there is not any change in the reduction over time of the federal match rate for the Medicaid Program which shifts a huge cost to the states now, we can take some cost shift because if you give us flexibility, we can manage it better we can create savings. But this is too great of a cost shift and again, the cbo numbers will make a big difference on honest when th monday when they come out. And you ask whether they can get to a passage this is the proposed bill, but there are amendments that will be offered i know senator Lindsey Graham has some amendments that he is proposing. So we have to remember that we havent seen the final product and they are working and im grateful that they are listening to some of the governors i want them to continue to just listening to you, its the same with all these things the federal government doesnt want to have to be the bad guy in terms of reforming or cutting entitlements and god forbid the states actually have to reform entitlements nobody wants to reform entitlements and that was the genius of the original obamacare. You give someone an entitlement and you can never take it back politically and thats why were stuck in the soup. Thats an important point because i agree that this should not be a permanent entitlement program. It should be assistance as people move up the economic ladder, it should be a safety net but not a permanent entitlement. So in arkansas, weve asked for a waiver which im hopeful that will be granted that allows us to have a work requirement and that eliminates that permanent entitled concept and encourages them too move off of the medicaid and another big change in the bill is that it increases the support for the individual marketplace so it increases the incentive to move off head indicatmedicaid and gi someplace to gee go so great improvements. Give the states flex ability to move away from it. Do you think that this if explained properly could end up being something that doesnt hurt republicans in 2018 because right now, if they dont it looks like a lose lose. If they dont do anything, it will hurt them and if they do do this, you will hear about that people will lose Insurance Coverage what they mean is fewer people in the future would be choosing to do there wouldnt be a mandate and fewer people would be added to the medicaid rolls down the road, but they will use that as saying they will conflate it with people having Health Insurance taken away because no one holds them to the veracity of what they are saying but it will be tough politically. Youre seeing it already watch Chuck Schumer every day. It will be a tough political environment in 2018 and partly because ooirits simply fear of unknown. There will not be any sush citydy changes next year, but it is the concern about the until nine that allows the opposition to raise the scare tactic. So, sure, its a difficult political environment. I think everybody understands that and that is why they are really going slow and trying to get it right. We have to have a long education process for the voters so we diminish that fear as time goes on, you got to appreciate the way obamacare was implemented. However they did it, i think they thooufr exaknew exactly whr doing. People allege like giways li. And almost impossible to repeal i think they are chuckling about it thousand. How many times did the republicans say oh, yeah, weights weight until we get in there and then, oh, were sorry. Anyway, thank you, governor. Appreciate it. Still waiting for results from jpmorgan up next, millennials are living with their parents for longer. Our next guest says that is not a bad thing. Really depends on whose perspective. Youre a millennial . Er side,h you cant have kids if you live with your parents and then you cant glowheo t pkcant gro. You can have kisd and thds a parents take care of them. Its so. Quiet. Is it, too quiet . Its awful. Yeah. Feel at home, pretty much wherever you are. Tmobile is americas best unlimited network. 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 one in three americans between 18 and 34 are still living at home but millennials staying under their parents roof could be a good thing for them and the economy so says a senior really at the r. Street institute who wrote an oped titled kids living with their parent longer, its a good thing. Hello, sir, and why do you say so hi, thanks for having me. Well, i think its important to recognize that the millennials arent pioneering a new low in the way that theyre living but rather getting back to a tried and true american tradition of intergenerational living this is a pattern that was very common throughout the country for decades. Until about world war ii and then we got a very anomalous situation where we built a very weird housing stock. But People Living with their family and drawing on mutual support is, in fact, a very old and timehonored tradition jonathan, how old are you i am about to turn 30 do you live at home i do not. But i did. Until how recently . Oh, just for a few months when i was home from college okay. So why arent you living at home right now . Well, i have a job here in d. C. And thats what took me here but there are a number of people that i know who get a lot out of being able to help their parents, help their grandparents, who live with them or people from bigger families who can come home and help their parents take care of the little kids and the other siblings jonathan, i dont know whether you got your own bank account yet. Hopefully youve done that, but jpmorgan, 1. 82. Wow you know, 1. 82 thats over the high end. Yeah it is. 1. 58 close to a new alltime high where the stock is trading. I think its been as high as i dont know whether its 94. 51 its been as high as that revenue is also above so 1. 82 versus estimates of 1. 58. And the revenue 25. 5 billion wow looking for 24. 96 thats a net number of 7 billion we need to look at the revenue on a managed basis, which is the apples to apples comparison with the consensus revenue number thats 26. 4 so on the revenue side, weve seen, by the way, jpmorgans share price in the premarket double its gains on the release of this earnings, and see what kind of impact this has, obviously, on the rest of the group. But trading, thats going to be a key line that were going to be looking through for the press release. Remember marianne lake the cfo recently at a conference said the trading revenues would be declining about 15 in the Second Quarter a lot of analysts have been ratcheting the revenue estimates down based on the trading revenue line well see if that comes to fruiti fruition the same markets revenue was down, amid lower volatility and declining activity but theres no number yet. Expecting the decline was guided to down 15 15, so theyre saying so anything better than that could be upside for this and of course this is going to be, you know, a lot of ripple effects for the rest of the group. Citi is going to be reporting in about an hours time and goldman on the trading revenue, remember last quarter that was a huge miss on goldman. And so, well be looking for anything and by the way for that First Quarter jpmorgan was up 17 i think. Exactly so theres a huge disparity goldman was certainly the outlier of the group when it came to that miss. And jpmorgan shares up more than 1 . But think about how much theyve dipped into this now theyre doing what a 19. 5 billion buyback over the next year after the stress test results were out they were rumored or reported to have been involved in looking at worldpay that uk payments acquisition. Right so theres been a sea change just in the last couple of weeks since those results maybe looking back again for this bank for the First Time Since the financial crisis these are a lot of a lot of important junctions. Yeah, in the release jpmorgans ceo said the consumer remains healthy. Mmhmm. So get more color on that and what that means in terms of loans and of course commercial and industrial loans that has been a key area of banking that has been on the decline for this year. Theyre living at home. So the millennial consumers. Yeah. Is jonathan gone . I dont know. But i think he has a point, by the way. That its a good thing . Yes theyre in their basement on, you know for a certain amount of time using the parents wifi. But, joe, you graduated saddled with student debt, you might have a different perspective on these things. No ones paying their student debt i paid my student debt. Well yours was worth it jonathan, by the way, if youre still here the thing that i liked about it, i was just going to say i think the child care costs, look if youre a millennial youre going into one of the most expensive, theres a lot to be said for having your own mom and dad. Im not saying they have to do the work all over again but thats a big advantage, dont you think . Oh, yes, absolutely being able to share a variety of tasks around the house does help and its important to note that just because youre living at home doesnt mean that youre absolutely dependent you can charge a little bit of rent you can be adult but, you can also be able to have a, you know, good approach i lived near my grandfather for a year that was the best year of my life thank you so much for joining us this morning good to talk to you. Thank you still ahead much more on jpmorgans earnings beat which is sending the stock higher premarket. Former microsoft ceo Steve Ballmer jos nt. Inusex weve got new survey data on how americans feel about transparent Government Data. baby crying slow jazz music fly me to the moon and let me play bell ring wall street waits for earnings three big banks rolling out results. Weve heard from jpmorgan. Up next, citigroup getting a group on Government Data former microsoft ceo and owner of the l. A. Clippers Steve Ballmer joins us for a special interview. Well talk about his latest venture called usa facts, plus get his thoughts on the president s economic policies and what they could mean for business any of them ever become law. And governors meeting to discuss the nations trade and jobs policies. Governor chris sununu of New Hampshire will be our special guest 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 here on cnbc were live at the nasdaq marketsite in times square im melissa lee along with joe kernen and kelly evans lets take a look at how futures are shaping up at this hour. We look to be adding across the board here keep in mind the nasdaq, this would be the longest winning streak since at least may. Looking at about one point at the open, the dow looking higher by 14 and the s p 500 looking higher by just a fraction and of course jpmorgan going to have an impact on the moves today. Looks like the bank just reported some strong earnings. The beat on the top and bottom line wilfred frost joins us now with more on these numbers. Wilf kelly, yeah, the beats very much coming more on the bottom line than top. Revenue a bit of a beat 26. 4 billion versus expectation of 25 but the eps, the leading part was 1. 82 expected to be 1. 58 heres the key line, they say it was primarily driven by the net impact of rising rates and loan growth partially offset by declines in markets. A growth in the Net Interest Income because its better Net Interest Margin because of rising rates is the key reason for the beat but as we said there, slight disappointment in markets. So trading overruled, down 14 this was forecast, of course, about six weeks ago by all of the banks that trading would be down, and jpmorgan basically within the range of what was expected, fixed income very much leading those declines, down some 19 equities only down 1 . Thats worth focusing on briefly, because that will bode well for Morgan Stanley. Within Capital Markets, Morgan Stanley has 52 of its revenue from equities. Jpmorgan 26 of the investment banks coming from equities Morgan Stanley should bode well because of the high exposure to the part of Capital Markets. On the loan growth, which was decent 8 yearonyear for jpmorgan 2 quarter on quarter. Thats a relative bright spot for them looking at what jamie dimon has said, were also pleased to announce increases to our capital return plans, of course, the seacar results were fantastic for the industry and on the earnings car, want to hear what all of the ceos have to say about that because it puts any quarters returns in perspective. A sea change of what theyre able to do with their capital following ccash a couple of weeks ago. Despite as high as 1. 3 or so, and now its given back some of the gains what are some of the key holes in the information obviously you get a release and a lot of color on the Conference Call what are some of the key things standing out to you where were lacking detail well, bit more time to go through the numbers. I think loan growth is up decent amount we need to have a bit more look at the provisions if theres any concerns there as i said, definitely comments on the capital return plans, and what if thats a oneyear thing or a real change moving forward. Definitely those declines in Capital Markets, is something of note that thats going to continue, because we need that that had been forecast its a big decline particularly the fixed income but it had been forecast but clearly over the last two or three quarters trading has been something thats benefited the whole sector is this a one quarter thing, or is it something thats going to last a lot longer . All right, wilf, thanks for checking in. Jpmorgan shares now down premarket. Some other stories making headlines this morning following an upbeat day for Retail Stocks thursday, the governments latest read on retail sales this morning. Economists are looking for an intess of 1 fns in june following a drop of 0. 3 in may. Fiat chrysler is issuing two separate recalls involving 1. 3 million vehicles worldwide they involve potential fire risks and inadvertent air bag deployment the company is aware of two potentially related accidents but no injuries. And arconic is facing a deadly lawsuit over the grab fell towers last month shareholders are accuse the producer of defrauding the shareholders over the use of flammable panels, arconic declined to comment on the suit. Former microsoft ceo Steve Ballmer is now a big numbers guy. Always was but in a different way. His latest project usa fact is an exhaustive database as government information as part of his aim to make the u. S. Government more transparent. Usa facts has launched its first poll on americans desire for trusted facts and unbiased information and Steve Ballmer joins us now you launched on tax day, right perfect. We did. We did people want to know where their money goes and crashed, too, didnt it so many people wanted to look at it we had a little problem as i was sitting in this chair. Thats exactly right but were up the power of squawk box. So you are addressing these governors at the summer meeting tomorrow in d. C. , right, saturday morning are you doing that yes are you nervous am i nervous, no. Not particularly you got your speech ready i do. You practiced it . I actually did practice im not a prk tisser but i practiced this one i have to ask you, are you going to like run back and forth like a raving lunatic like you used to do at the microsoft meetings you have to adopt your style, joe, to your audience. Sales people need to be excited. Governors, maybe a little different. Please do that to these guys. Please maybe we can get something going, somewhere so, you know, i was just looking at some of the stuff and i want to this is an allegory for what were talking with. In the large annual report you released in april, what a government is supposed to do is secure the blessings of liberty, education, entitlements, programs for civil rights, economic mobility, environment, and agricultural programs and we all degree with that but weve got to walk the line between providing as much as we can without skrug all the future generations by doing so much that theres nothing left for any of them, and thats where we are right now. That is part of securing the blessing of liberty to our posterity. How do we do this do you have some ideas how we can do this . You cant always give everybody everything they want like europe. You cant be an entitlement state cradle to grave. But these are tough times were in right now to explain that the way i frame it, and its a little mathy but let me say drns people will understand. Our government is trying to maximize outcome for its citizens, but with a constraint. Theres a constraint you can decide the constraint is for the budget to break even as a business guy that kind of makes sense to me. But thats what were about. And making the tough tradeoff between people, between programs, you know, thats kind of what the democratic process is all about i looked at just as an aside. I looked at microsoft stock. Either you set that company up for the greatest future in the world, which is what i do believe, steve, i actually do, or, they were so damn glad when you left look at that stock the reason i bring it up is that youre starting to like trump yet . I am politically neutral how but i am, hold on, i do believe that we all should be grounded in the same fact set. And one of the things that is troubling to me, and its not troubling me about the president , or anybody else, particularly is we cant and thats what gear really trying to do at usa fact. I do believe in our poll shows that people believe that if were all grounded in the same facts, it is very helpful in terms of Decision Making by politicians, and the ability to find Common Ground among citizen. I was talking about as a former ceo some of the progrowth policies that this administration is trying to get passed are those what do you attribute the 17 gain in the stock market to . Frankly i have no idea. I really have no idea. When microsoft stock was very low, i had no idea now that microsoft stock is high i have no idea the worst Case Scenario didnt come to pass, did it, steve . Were not down the market didnt crash no, of course, it did not it was supposed to. Forget the of course. It did not but explaining why okay. And i believe, look, are we in a market bubble or not . I dont know im silent on it but where multiples are, et cetera, you could be a little worried. I killed myself in the late 90s when i said i thought the stock market was overdone and we got a hiccup down the next day, and i kind of alienated myself from every money manager friend i have im going to be silent about whether i think were in a bubble since 1999 the market is a little more than doubled so, you know how to do youre a genius you know how to do the rule of 72 whats 18 years, 72 divided by 18 should be almost about 3 times and whats the market up 2. 5 yeah, so youre talking about 3 or 4 a year. This is if you go back to the depths of the financial crisis, you know, thats a much bigger gain but you go back to 99 this is not necessarily what something you wouldnt expect for stocks over the longterm to return no. But you have to look at whats happening with gdp growth. Gdp growth for periods of this, for parts of this period have also been more modest. Right and the question is really what can we expect what will productivity growth look like . Im not a guy who says oh, productivity growth is going to go to zero but i do think it is episodic as we get invention computer was an invention whose real impact whether in phones or pcs or anything else really pumped it in the 2000s and were still innovating from that invasion when will we see the new ratchet up again no prediction but you can look at kind of whats happening and then you can lay historical events on it and thats an important factual thing. How long you going to be here i wish you could stay longer i think an hour okay. But are you going to be here half hour. Youre not going to be here for rick mulvaney. Our budget secretary he wrote something called mag anomics. Make America Great economics half the people in the world say population growth and productivity, that the lack of population growth and the toughness in the increase in productivity means we cant grow faster than 2 theres a lot of other people who say for population growth you bring people back in the workforce and for the productivity growth you get corporations to start investing in plant equipment instead of buying back their stock, and finagling with, you know, not making longterm investments and productivity comes back and 3 to 3. 5 is possible. Okay. Usa facts. Org, you will find the following. If you take a look at whats happened with capital investment, by u. S. Businesses, and ill include r d because thats an important part of investment no matter what tax policy weve seen, it more or less increases linearly over time it does not spike up it does not spike down i wont draw a conclusion. But the question is can that really be simulated. Is r and d the same as building plants and longterm deployment of assets no i said both. You can look at the r d increases, and the capital equipment. Nothing affects it . You go lack at it but i would say a line charts how it progresses. If you take a look at the number of people working, per working number of jobs per working age population, pretty steady growth. A bump up. A bump down. Theres the economic upturn, downturn of 2007, 2008 and now, again, a steady up. But if you put a if you had excel, my favorite spreadsheet i dont even know what that is great microsoft product but if you used excel and said hey give me a curve bit. The curve bit is going to look like the line. It may not reflect as much government policy as some people would speculate. Ill tell you that and people, you know, Alan Greenspan went from, i dont know where he is now hes a hero and then people, you know, blame him for certain things but, like a rorschach no im not going to say whether hes a hero or but Interest Rates have gone down. Yeah, but hes done and capex has not gone up. Hes done work where he has shown that the more capital of a society that is earmarked for the public, for government spending, that that takes away from what is spent in the private sector on capital on usafacts. Org, you can put the government you can take a look at what hospitals to government capex and private capex ten you can take a look at that. And rather than blah, blah, blah, im not meaning you yeah you are. But blah, blah, blah, i would love to, for you sometime, just assemble the picture that shows whats going on with Interest Rates, capital expense, government, nongovernment, r d, and what steve, when youre spending money, in a part of society that usually has no accountability, and doesnt have anyone, you know, watching the ps and qs and whatever, where a cynic would say 90 cents falls through the cracks, by definition if you have a profit incentive that makes you watch your ps and qs much more closely its going to be a better use of capital why is that not why isnt that just obvious to you it might be a right thing to do again i dont speculate. Let me highlight a couple things if you look at where government capex goes, it goes primarily into about four areas. It goes through the military, into military equipment. You can speculate on whether you think thats valuable or not it goes into roads and bridges and the like a lot of people would say hey we continue to improve and expand that but reasonable people can disagree it goes into schools most people would probably maybe even to a fault would say hey everything we do with schools is a very good thing. So then ask the question, where is the part of the capital expense project because youre talking about the capital expense budget thats the one joe just said. Again im not going to cross around you could also talk about what goes on on revenue but joe talked about cap next going to government specifically and im not going to argue for more or more less. Thats not really my point right my point is we should be grounded in the same fact as pardon of the debate thats really the only thing im trying to im a partisan i dont know if id say i give a blank check to education. The way that its been done up to this point. What we spend, and the results that we get. And that may be, you know, a reasonable opinion i just hope that people debate it, people can take a look i mean if you take a look at class sizes all these facts, you know, all these facts spreadsheet yeah, exactly thats what im about. Im not going to try to tell you a is better than b. But the facts allow people to draw different conclusions from the facts and were just back to where we started but were so much better off having people i mean, look, if the real difference in spend is, you know, 2 , we shouldnt have a religious argument we should just find Common Ground and if the facts really say were 50, 100, 200 apart, okay people are going to have to make their own speculation. Why take the molehills and make those into mountains lets stick to the real mountains so we can have the democratic process you might because if you look in todays political milieu or whatever you i dont want to speak french you did a pretty good job i do speak some french if you look at what the far left considers to be facts, and what the far right or even middle right, and middle left what they consider to be facts, maybe its good that youre doing this, because they have totally different facts. Alternate facts on both sides of the aisle. You take a look at our survey and what people will say is they do believe, in the poll, representative across the country, democrats, republicans, everybody, says we will make better decisions, our politicians will be more trusted, people do believe today this was probably the most stunning one, question, do people generally agree on the facts even if they have different beliefs. No 52 of people say no they say basically, look at the let me give you just one other. People need to use the same data to have an informed debate about the future of the country. 88 of them say that and yet most people would say they dont have a common fact base, they prefer facts to anecdotes, and they think most of the information that they get on government spending, et cetera, is biased. None of that is a good is a good situation for people coming to Common Ground all right were going to have much more with Steve Ballmer right after this break meantime, we do want to squeeze in this break and still ahead were going to be getting more on jpmorgans results. The stock is slightly negative in the premarket in just about 40 minutes or so were going to get citi as well as wells fargo stay tuned youre watching squawk box here on cnbc. Welcome back to squawk box. Lets get back to our special guest this morning, usafacts former, microsoft founder Steve Ballmer. I want to pick up where we left off on the its not that important in terms of the data, and the steady line over time when it comes to capex by businesses, and r d spent, it almost makes you want to draw the conclusion that it doesnt matter what policies are in place, as we are debating very vigorously health care because we perceive that as sort of the gateway to tax reform it almost makes no difference. Well, accountants of course will do their own analysis im a business person. I just look at the history that is whats available to me to look at and, i was not heartened by that i didnt expect to see so little correlation between the things that are controllable by government, and the outputs to the economy. I just did not expect to see it. In a sense you could think about it this way, is all the money thats being borrowed with low Interest Rates, is it earning into capex or not you take a look at the numbers, and again, i wont talk to causality but it doesnt seem to be can you go over to europe, and go back and do all the just the facts numbers on europe for me, and explain to me why our gdp for 40 years grew 40 or 50 faster than their gdp . If none of this stuff matters. If cradletograve entitlements, and percentage of gdp, you know, much higher on government spending, if it has nothing to do with growing wealth and prosperity, why are they why did they lag so much for four years . I didnt argue that something in the aggregate of policy here doesnt have a better mpact than something in the aggregate of policy in europe. Thats not my point. All i talked about were some numbers and how they vary over time i want you to go down to venezuela and look i started looking at what it would mean to do switchbacks. Com. Cuba. Go there and try to do it. But believe me, as hard as it was to get government date to understand it, assemble it, make it simple to understand in the u. S. , whoo, im not starting any place out of the u. S. Any time soon we got to ground on our own issues and our own problems. I just want to talk about basketball does that make me a bad person no. We were going to we were going to do that did you watch the espys . Im wondering about lonzo ball hes going to be your home he is the l. A. Guy. Youve got the clippers. Okay hes going to the lakers youve got the logo. But hes been doing well in these games lately hes had some good games. Hes a rookie in Summer League and you cant tell much. I mean, obviously hes a great player and i have a lot of confidence in our team. And in the battle for l. A. Go clips so you see it as theres only one l. A. Team. You think the clippers are going to be it the heritage is all on the lakers side and yet weve owned them the last several years what about j. J. Reddick great human being played in philadelphia j. J. Actually last night here in new york hes got the podcast going. No, hes a great hes a talented guy hes been a wonderful clipper for the last four years. And, you know, i wish him well we had a very nice dinner last night. You no. I bet if you stood up on top of a very large platform or jumped on a very springy trampoline youd get there than i could jump. Are you kidding me . What were you going to ask about the espys . Did you see no. Opening monologue did you watch . I didnt. I didnt i mean i was like i had to change i was so uncomfortable. But he also eviscerated the knicks, what peyton said about the knicks porzing porzingis, whatever his name is, he couldnt believe the disarray in the New York Knicks and hes from latvia. If that tells you anything, that anyway it was porzingis is a heck of a player ill tell you that. Can i switch gears and talk to you about twitter youve been an early investor in twitter, and shares have been doing quite well this year, actually up about 18. 5 or so. Whats your perception on how the company is doing today, versus about a year ago, and do you think snap makes twitter look that much better . Good question im the latter i wont chent. Why not bought i dont really know. Youre not an investor in snap at all . No, im an investor in microsoft index funds, twitter, and then a few private things that fit whats going on with twitter. Why is it twitter is a very good asset. I continue to say twitter is a very good asset. So improving the product some, and improving and making the monetization better, and the companys been on top of both those things, and the market understands that, and it is now getting reflected somewhat in the stock price. They still have their work cut out for them and their path could be way up relatively sort of gently up or something else. And you know, its worth worrying about no matter what twitter does, its going to be the same thing, it doesnt matter. Twitter is just going to ive given up on everything after talking to you oh, no, joe thats wrong. Nothing matters thats wrong. Let me say what matters. Innovation in this economy matters. Youre right about that and microsoft is a model of that, obviously. Thank you, though. Thank you its great having you please come back very lively and fun. Coming up, a New Hampshire governor chris sununu will talk trade policy, jobs and other topics front and center, well be right back. s advocate but. I kind of feel like its a game changer. I wouldnt go that far. Are you there . Hes probably on mute. Yeah. Gary wont like it. Why . Because hes gary. phone ringing what . Keep going yeah. laughs voice on phone its not millennial enough. There are a lot of ways to say no. Thank you so much. Thank you so were doing it. Yes start saying yes to your companys best ideas. Let us help with money and knowhow, so you can get business done. American express open. Good morning and welcome back to squawk box here on cnbc were live in the nasdaq marketsite in times square and among the stories front and center this morning, were about an hour away from the governments latest reading on inflation. This is going to be a key one. The june Consumer Price index is expected to show a tiny rise, a tenth of a percent thats from a decline of a tenth of a percent for form ma the year on year number will be report, fed chair janet yellen and other fed officials have been emphasizing the importance of pushing inflation back up towards its 2 target. And thats why it will be in so much focus today meanwhile, roku is aiming to go public before year end the maker of streaming media devices has reportedly hired underwriters and there could be a confidential ipo filing within a few weeks. Roku is said to be seeking a valuation of about a billion dollars. And honda will unveil the latest version of its popular accord model at a detroit event today its seeing a host of newly updated models rival toyota is about to unveil a new version of the camry later this month nissan and hyundai have updated midsize models in the work is that really news . I guess these are like the bestselling cars on the planet. Ever, yeah. Jpmorgan beat the streets estimates on top and bhot up line joining us is Gerard Cassidy head of u. S. Banking strategy and large cap banking analyst at rbc Capital Markets. Great to have you with us. Thank you looks like a pretty strong quarter. The roe, return on equity was the highest in the last quarter trading. That was what marianne lake had forecast about six weeks ago what do you make of the stocks reaction premarket i think what youre seeing, first of all, i think that as you mentioned the strength and the profitability, the roe reaching double digits, again another real positive for the profitability for this company, but they did guide down in their future net interest revenue number, so that number was reduced by about 500 million for the full year. And so that certainly is affecting the way the stock is going to be trading today. Why woo they guide down on that net interest revenue. I think their loan both has lowed a bit. Jpmorgan has put up remarkably strong loan growth and it slowed down this quarter. The Net Interest Margin which is very critical for all the banks came in lower than expected due to higher funding costs. So i think thats the reason that theyre guiding down on the revenue. Managers revenue for the year i believe that your estimate going in was that the average big bank would have 6. 2 increase in Net Interest Income for this quarter how does jpmorgan size up and how does what jpmorgan is saying translate to some of the other banks . I think another bank this morning report, Pnc Financial had very strong numbers. The regional banks as long as youre going to hold back on yourexpenses on the funding cause youre okay. With jpmorgan its obviously universal bank they had growth year over year of, in the Net Interest Income area, that was strong, but wasnt Strong Enough looking at the credit loss, if the provision was down 1. 2 billion that drawdown was in energy but there was a net build, because of consumer, mostly driven by cars. Can he extrapolate that . Especially after the comments jamie dimon had in the release that the consumer remains healthy . Yes, i think what were seeing in cars is that credit losses have been unusually low for a number of quarters for the industry and as you might recall, the improvement in credit was quite strong in credit cards, and now its starting to normalize and therefore we should expect the Consumer Credit losses will start to normalize, and they need to build them up. But as you pointed out, there was stronger credit in commercial which offset that buildup in the consumer side of the house. And last quick question, gerard, what is the one outstanding question you still have about jpms quarter i think what we really want to zero in on is the loan growth and the funding costs. Are the funding costs going to continue to rise at a rate that maybe is faster than expected, which would affect the Net Interest Margin. And then again, wheres the loan growth going to come from for the rest of the year gerard, thanks for your time. Appreciate it. Youre welcome. Gerard cassidy of jpmorgan shares down 28 right now. Governors from around the u. S. Meeting to discuss the challenges facing their states and the administrations policies, klug our next guest from the Granite State lets bring in governor chris sununu a republican of New Hampshire. I know so many sununus i know all of you. Never too many sununus, joe there cant be too many its particularly, i think, timely that we had governor hutchinson on earlier, and even this meeting, given the backdrop of what were trying to do with health care, governor, and i will say that, you know, the separation between the federal government, and state governments, is like maybe the Biggest Issue here with the whole medicaid issue what rt we going to do how do we do this . Well, i got to give the Trump Administration and congress a lot of credit. They have reached out to governors. They have asked us as the implementers of their platform legislation what we want to see, how its going to impact our states, so thats a great first step i think thats a big departure from the Previous Administration ive been pretty outspoken in the last version of the senate bill it just wasnt practical for New Hampshire. You know, when youre looking at 1. 5 billion of costs to my state in particular over the next ten years. We dont have sales tax. We dont have income tax thats just not practical. So what we have to do is kind of keep pushing, making sure id love to see this come to the floor. Id love to see the debate happen obamacare must be repealed theres no doubt about it. It has to be reformed. One thing that i think a lot of people miss in this conversation is theyre looking at reforming obamacare, which is critical, and basic medicaid entitlement reform kind of pre2008 type stuff. So when you put those two things together, i think theyre really conflating two separate issues my argument is to take them separately look at obamacare reform look at entitlement reform both of those who have to long, substantial arguments and bring them to the floor of both the house and the senate, but when you put them both together the cost implications are huge to a state like New Hampshire wed really be in a position much worse than pre2008 and as an advocate for New Hampshire and an advocate for my constituents we have to make sure they understand the Practical Implications of what theyre proposing. Is that one of the reasons were in this mess that states that signed on, thinking that it, you know, doing the right thing for the, you know, for their constituents, for the state, for Everything Else, but makes it much tougher when you need to try to reform an entitlement, you know, when youve been on the you know, when youve been a beneficiary of all that largesse, you cant roll it back oh, sure. Thats why were where we are right now. It was brilliant strategy by the democrats. It is you said it, i was watching you earlier and you hit it right on the head it was very well played by the Previous Administration, when you hook people into these very large entitlement programs now it has had a lot of benefit. We were faced with and still face a substantial substance misuse crisis in New Hampshire our economy is one of the Fastest Growing economies. Theres huge business potential in New Hampshire very high quality of life in spite of the crisis. But a lot of folks have been able to receive a lot of health care that they normally would not have been able to receive. Given the substance crisis but what you do have to understand is what are the costs at the end of the day. Is this affordable for states . For some states it might be a very good deal i believe it is. For states like New Hampshire, its a challenge now theres 26 billion that theyre throwing on top of it, thats interesting i laughed at some of the democrats in washington who say its an insignificant amount of money. I think thats incredibly insensitive to taxpayers thats a huge amount of money and can impact a lot of people very, very well. How thats going to be present and distributed we have to get into the details we havent seen details about that distribution. So that will be interesting to see whether that makes it more affordable, and enticing for some states like New Hampshire the Opioid Crisis, i dont even remember in the 36 times that republicans that werent in power repealed obamacare, that was never brought up a single time i mean, obviously its gotten worse, its a terrible situation. I just dont understand how that became attached at the hip to obamacare reform, and i is it it almost seems like it gives moderates a way to be more stubborn because they just dont have the political courage or will to do to make the hard choices. Yeah. You know, i dont think it was just crowbarred in there as a give back to moderates i really dont believe that. I think when they looked at what the impact of expanded medicaid in particular were, to states like mine that have been on the forefront of the Opioid Crisis they realized that for governors like myself, this is very significant. And thats one of the swabtsies that will be most severely impacted when youre looking at recovery programs. The high cost of the Indirect Health care, whether it can be a heart valve or liver or nancy reagan, just i mean this has been going, the scourge of drugs and addiction and recovery and all those things, that i mean, this is 50 years old. And its being no front and center because its a political football with, you know, with obamacare well, i guess the challenge you a little bit on that, joe. What were seeing with opioids is so different than anything before its not like cocaine, its not like crystal meth, its not like marijuana. Its a whole different level of addiction that requires a new and modernized way to go about it whether youre youre right. It has its own dynamics which means it has its own cost implication. Doesnt mean that the federal government needs to pony up a check every time but youve got to give states flexibility youve got to give states the ability to implement their way, and that kind of flexibility is in there we like that a lot you do like you didnt support the first Senate Version what about this . No, i did not what about this one i think how the 46 billion is going to be allocated has not been specified and id love to take a look at that. And that really could offset a lot of the cost implications that right now are not practical right youre not to come to the floor youre not voting on it anyway but were talking about it. Were talking i understand but im wondering whether, and you probably are representative of someone like Susan Collins i look at that, youve got Susan Collins youve got Susan Collins well youve got her and then youve got rand paul. And that like youve got the whole universe covered in those two. Well, im probably right in the middle lets put me there you think it goes you think it even gets to where it can be debated i hope so look, some of the best stuff ive only been governor for six months but ive learned very quickly some of the best stuff comes out when it hits the floor, you have the debate, you talk about amendments. You talk about how to make the plan better. For people who say we shouldnt even be getting this to the floor for debate that makes no sense to me. Lets get it out there so the American Public can have better input. So senators and even some of the folks on the house level can have input because the house needs to have input as well. This will have to go back for a vote in the house. Youve got to make sure that debate happens in a constructive, positive way, thats the only way were going to get obamacare reformed. And that is the utmost number one goal focus on the goal of reforming obamacare, again my message is take out some of that basic entitlement reform which probably should happen, but in a separate bill. Youre conflating two issues youre making it too cost breaux hibbive as a single bill and again make sure youre listening to the governors and those that are going to implement this Program Going forward. So i guess youre close to canada or something . Is that where the oot comes from, does it filter down from there . Do you say eh . We have wicked. Everything in New Hampshire is wicked awesome canada is our number one trading partner in New Hampshire and we maintain youve got to speak the language, i guess. Well, i think we still speak the same language. The only time we have contention with canada is hockey season thats about it for New Hampshire. Do you think your father is a right wing nut case . Or where are you on the spectrum are you like where he is or seriously, because he is what does he tell you . Does he tell you, hes lost you . Did you just call my father a right wing nut case . What are you doing i got to go home to thanksgiving dinner, joe. I didnt say it i was asking you, whether you think your father is no of course not. No do you think hes a little bit do you think hes a little bit too reactionary i mean you dont seem like no. He failed with you, i think because im not reacting i think my father did an incredible job the conservatives are doing an incredible job making sure this comes up as a forefront issue and we cannot let it go. Youre the youngest governor. Youre the youngest governor i am. Ive been told you are still in that maturing phase anyway, governor, thank you. Say hi to all the other sununus, and good luck. Thank you coming up, we are expecting earnings from citigroup shortly. New findings from the iea showing investors poured more money into the Energy Sector and at the top of the hour, omb director Mick Mulvaney will be our guest. Theres a denture adhesive that holds strong until evening. Fixodent plus adhesives. Just one application gives you superior hold even at the end of the day fixodent. Strong more like natural teeth. Citigroup just out with rules. Look at the top and bottom line beat, but wilf the stock is down about almost a percent right now. Wilfred frost here with the numbers. Literally just hit, melissa eps beat 1. 28 the expectation was 1. 21 revenue 17. 9 billion, the expectation was 17. 3 lets have a look at a couple of the other top things on the page return on common equity, excluding the deferred tax benefit looking at close to 10 . Thats pretty good for them. Theyve been building from a low base and theyre highlighting on the front page, returning 18. 9 billion in capital they of course were the big winners of the seacar results a couple of weeks ago. I need to dig down into a bit of the other things to find out exactly why those share prices are down 1. 2 . But on the top and bottom line they did beat. Wilf, thanks a lot. Of course its important context to keep in mind the price action of both citi and jpmorgan prior to the release of the earnings going into the earnings for the past three months, jpmorgan has been up about 10 , citi up about 15 . So these stocks have really run hard up into these numbers well get you more details as we have them. All right. Meantime, mobile Energy Investments have dropped more than 10 since last year and according to a new report out from the iea this week among its other key findings investors poured more money into electricity last year than into oil and gas for the First Time Ever lets bring in executive director of the iea. Good morning to you. So, its funny you mention this, i was just reading somebody say that in the uk, in order to support the demand for electricity theyll need six Nuclear Power plants by 2030 and they can barely get this current one to turn on so, this move to electric will have a huge drain on our resources in terms of just providing electricity. And where all thats going to come from, right how is that going to affect overall fossil fuel . If you look at the investment budget every year, how much in our entire Energy Industry spends for oil, gas, coal, renewables, electricity, since 100 years for the first time, investment in electricity meaning power plants, transmission, distribution, is now higher than oil, less gas, less coal, put together. In the past oil and gas was number one now electricity took over as number one mainly driven by the investment in renewable electricity in renewables is there a good thing investment is happening because that will help to bring the cost of producing electricity down or is the fact that its happening in renewables meaning its going to push prices up until that becomes more economical . There is one good news here, we see more renewables which is good for the environment and everything, but the fact that Oil Investments declined substantially last year is an alarming news. You look at the numbers, 2015, and 2016, two years in a row, global Oil Investment declined sharply. Is that because theres such a glut of supply right now does there need to be, you know, record high level of investment simply because now were faced with a different last the crisis were not high enough for incentive for investors. So 15 drop, 16 drop, everybody was waiting in our report, what do we say for 2017 expectations our expectations are, unlike the hopes of the oil industry, we do not see measured rebound you do not see a rebound this year unfortunately not because the first time in the history that we see 2017 Oil Investment Oil Investment. But different in to that. You see two different pictures one in the tradition supplier, such as middle east, russia, africa, the investment are rich or flat. But, u. S. Shale, 50 increase 2017 in terms of Oil Investments. Okay, 50, 50 percent increase. In in u. S. Shale is that from just last year . Compared to last year, 2017, our expectation is how that kars with the peak because weve also had a pullback in the last couple of years much higher than last year, and the reason here is that the important point here is that we see two oil markets. In u. S. Shale oil big increase in investments whereas flat or weakening in the rest of the world. And this is something important to underline when you look at the future ive heard even some of the oil industry blame the Capital Markets or blame investors for saying stop giving capital to u. S. Shale because its causing a glut its, you know, harming prices for everybody else and not allowing anyone to be economical is there some truth to that . Or is it the case that for u. S. Production, it is more attractive, and does have a better return on investment . Dynamics changed compared to two years ago. Two years ago, in order to one barrel of oil to make money in u. S. Shale you needed oil price about 70. 70 and today its about 45 so they make money. So the break even has gone from 70 to 45. Exactly and we did in seven years of time we have seen if u. S. Shale oil production, all the Shale Oil Production in the u. S. , reach 4. 5 Million Barrels a day which is an iraq in seven years u. S. Shale oil to the markets something very important to underline together with shale gas, of course so what this has done is quite predictable. Its now sort of whats happened to Natural Gas Industry where there is expectations prices were going to be high, a ton of investment and now prices seemed to be at now at this permanently lower plateau. For oil maybe the same type of thing is starting to happen. In the meantime, with all this cheap, plentiful energy, there is this huge push towards Renewable Energy how did that compare on a cost basis right now with these other alternatives the good news is, renewables are also getting cheaper for example, solar in last five years, the cost of solar declined by 80 . 80. Costs of wind declined theres a big decline. China, u. S. , European Countries are the leaders of clean energy. Right but chinas i mean if you talk about electrifying electricification in china, so much of that still comes from coal even in the u. S. , in the midwest, a lot of that source is still coal so thats going to undermine a lot of gains that have been made towards, you know, the whole point of electricity is to try to get to the enewable electricity, right, and not coal powered electricity. We have to find renewables are very important last year more than 50 of new power plants were renewables other 50 coal plus gas plus nuclear plus oil put together. So lots of renewables are coming mainly as a result of getting a cheaper. A lot of headlines in there major shifts under way thank you so much for joining us this morning come something up one more big bank ready to report wells fargo is on tap. Well bring you all the numbers once they hit the wires. Lets take a look at how shares of jpmorgan and citi trading both out with earnings both beating on the top and bottom lines slight differences in terms of the business lines there jpmorgan down by a percent citigroup up 0. 4 . baby crying slow jazz music fly me to the moon and let me play bell ring 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. Thithis is the new new york. E . Think again. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov welcome back to squawk box as we get some big Bank Earnings this morning see what impact thats having across the futures which were looking slightly higher we indicated the opening a few moments ago. Again moving a little bit to the upside dow implied to open higher ten points nasdaq and s p edging higher, too. Coming up, omb director mick tethaney will join us afr e well be right back. 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. Thats why at comcast were hcontinuing to make4 7. Our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Earnings alert big banks roll out quarterly results. The numbers and reaction from the street straight ahead. Squawk box newsmaker, omb director Mick Mulvaney has a new name for trumponomics. Hell join us live pluts Perfect Place for felines. That makes me angry well take you inside a viral home thats raining cats, as 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 welcome back to squawk box here on cnbc, live from the nasdaq marketsite in times square im joe kernen along with kelly evans, and melissa lee. Becky and andrew are off today and the futures at this hour for most of the morning have been relatively quiet but up about 11 points now on the dow. Up less than a half point on the s p. Up about 8 on the nasdaq im trying to do all this at the same time. The estimate for wells fargo was 1. 01 and the Company Looks like 1. 07 its reporting you were, melissa, last time that first revenue number you needed to adjust it or something. Thats only for jpmorgan. Then 22 this is below then 22. 17 billion for wells fargo for revenue and the estimate was i believe 22. 466 that chargeoff 655 million provision for credit loss was 555 million. That net number if you wonder what 1. 07 equates to they made about 5. 8 million we already had citigroup from melissa. Why dont you take us back in addition to wells we have citi, we have jpmorgan all three banks interestingly beating on both the top and the bottom lines very different stock reactions in the immediate aftermath of the Earnings Release wilfred frost back at headquarters breaking the numbers down wilf guys, jpmorgan and citi both beat on the top and bottom line but the share price is declining, despite significant declines overall in trading in income, the performance does not impact as bad as expected for, jpmorgan for example, markets down 14 rather than down 15 as expected, and for citi the fixed income trading revenue was a little ahead of expectation. Of course, albeit still down in percentage terms so overall the Noninterest Income has beaten for all of these banks. The issue, and reason why were seeing that share price decline, is Net Interest Income but this is despite that rate hike that weve seen which meant we thought that would improve jpmorgans Net Interest Margin was 2. 31 . Thats a little lower than expected that was down to higher funding costs primarily. And loan growth for them also came in a little lower than expected 2 quarter on quarter and 8 year over year for shares have since declined, of course, because thats also jpmorgan because of lower guidance on that Net Interest Income figure Going Forward to 4 billion from 4. 5 billion jp also had a legal gain in there as well. Citigroup, ceo was keen to highlight their impressive capital return and that helps us put some perspective for these share price declines, because those results are fantastic for the banks. Also another bit of perspective of course is recent share price performance. As you mentioned earlier, so these results overall still solid, just expectations have run out and were looking at about a percent, we should say, on light volume of declines for these banks in the free market will fred, thank you. Meantime china is revising the way it calculates its gdp for the First Time Since 2002. The measure of Economic Growth will include health care, tourism, and the new emerging Economy Industries those industries typically refer to the high tech, or quote unquote environmentally friendly sectors and its unclear whether the new metrics will be used in the gdp numbers scheduled to be released on this upcoming monday night. And another day, another snap downgrade cowan downgrading. Shares are reacting right now down by 1. 75 . In washington, Senate Republicans are battling for votes within their own party after releasing their latest Health Care Bill nbc news reports that two gop senators will not vote for the bill which keep obamacares taxes on the wealthy and also includes 45 billion to fight the Opioid Epidemic and another 70 billion to stabilize the Insurance Markets, and help lower income that americans pay for coverage. The bill also sets up a new fund for exchange based high risk plans. And President Trump is in france this morning celebrating you guys familiar with that . Cone heads why they look different. They look different than most wow you look different quite a statement about france that was their line that they came from not because they just were from out of town yeah, anyway hes in france celebrating bastille day he weighed in on health care on twitter, he tweeted the republican senators are working hard to get their failed obamacare replacement approved i will be at my desk, in case they need to know, pen in hand president also tweeted after all these years of suffering through obamacare, republican senators must come through as they have promised lets get to our newsmaker o the morning and a wall street journal oped omb director Mick Mulvaney introduces what the white house is calling maganomics maganomics director mulvaney joins us this morning. Thank you for joining us, mr. Mulvaney, we appreciate it i really appreciate the dr. Evil mr. Biglesworth at the outset we have a lot of those. That and the coneheads in the first five minutes of the show exactly its all about pop culture you know the political environment at this point, sometimes we run for the relative comfort of popular cultural references. Its very tough, mr. Director, you know, you see it well, talk about your i want to talk about your oped because you know like anything else there are two entire groups of people that think we can either do 3 , or 3. 5 . There are others that think that the demographics are for whatever reason, a lot of them, you know, have a horse in the game because they were in power for eight years and didnt get anywhere near 3 so they got a reason to say we cant do it but there is a real debate going on about whether the Current Situation in the u. S. Can even allow for that so well get to that in a second sure. What about health care . Can we just do you think t t that, you know, the gops lost two already. Do you think that you can hold ranks with the rest to get 50, that pence can then bring it to the finish line . I do. Even though im here now at the white house and im not an elected office i was seven months ago, and i remember what the pressure was like to get rid of obamacare it was what i ran on it was what most people who are in congress now have run on for two, four, six, you know, seven years, and they have to do something. And they know that i think you saw that dynamic take effect in the house they had difficulty getting to it in march. But ultimately, were able to pass the bill. I think the senate is going through the same thing at the end of the day, im absolutely confident they pass something to repeal obamacare everybody has got an opinion, obviously the New York Times oped section, but the wall street journal oped section it used to be they would ascribe a lot of the or attach a lot of the blame to the conservatives for not going along with it. They are clearly they clearly have the moderates in their sights today, as being at fault here, that theyre getting everything they want, and its still not enough and that just might mean that they just cant admit that they theyre afraid of the political consequences for doing anything and do you think that that is the case and will they be able to come up with the political courage to vote yes on this the last part is yes. We will find the political courage over there in the senate to pass something. But what youre seeing in the senate is exactly what you saw play out in the house. The narrative was that it was the right wing, the Freedom Caucus that sank the bill the first time in the house. That was simply not true roughly half the Freedom Caucus would have voted for it in washington it was a combination of sort of center left in the party, and the right wing of the party in the house that had to come together to work something out and thats the same dynamic youre seeing in the senate. Just like they got it done in the house, i do think theyre going to get it done in the senate you know, you probably still have youre nostalgic toward the Freedom Caucus i guess what about leaving some of the obamacare taxes in and as for as maganomics, that is not maganomics, leaving you know, those taxes in your view could probably be better spent in the private sector. Yeah, listen, absolutely thats the case. No question. But a couple different answers first of all, yeah, i think theres a lot of folks who would like to get those taxes out. But if leaving them in is what it takes to get the bill passed, keep in mind getting rid of obamacare has a positive impact on gdp even left leaning think tanks have said theres a disincentive to work woven into obamacare so youre right on the taxes keep in mind we have a second bite at the apple as we try to take up tax reform in the fall maybe we get a chance to fix that later getting rid of obamacare is part of maganomics because its part of getting us to 3 growth i think reagan never did less than what did they average, that administration averaged about 3. 6, dnc it . 3. 4 average is it so different now in terms of population growth, thats the one part of gdp, and product it growth is it so different now thats what people say no population growth weve wrung everything we could out of productivity so its impossible to do any better than 2 why is that not true i get that a lot from the folks. Listen, face it, as you mentioned i think in your introduction, there is a group of people in washington, a nationwide group with a vegsed interest in not seeing us get to 3 because if we do its going to make the Previous Administration look really, really bad and have longterm political ramifications in the country. But, things are not that different. Yeah theyre slightly different. We are getting older, theres no question about that. But every time people push me on that issue and say oh, were a nation, folks dropping out of the workforce because theyre retiring, well never get to that level of product it again beale point out that theres almost 7 Million People in between what we call u3 and u6. U3 would be the unemployment level, the real unemployment level, u6 is sort of the marginal a attached or working part time even though they dont want to. Am 4r7 Million People who could enter the fulltime workforce tomorrow if we had jobs. Think about what that could do to productivity growth and what that could do to offset the aging of the population. Well, i guess and now we get to whether this actually happens that some of the maganomics initiatives that you want really ever come through and they all seem it seems to be one is dependent on the other, and thats dependent on the other and thats dependent on the other and its all got this political backdrop thats mired in russia and all this other extraneous stuff have you ever seen a political environment like this, director mulvaney i havent but ive only been here seven years so i still dont count that as a long time. Yeah we have to have a lot of things happen, theres no question theres a lot of stuff that we can do and will do by ourselves. Especially in the regulatory era. By the way, i dont think they get nearly enough attention when we talk about Economic Growth. Everybody moves immediately to tax reform, but theres things we can do in the regulatory realm that we think have a better larger impact on gdp growth than just the income tax the tax reform. Weve also talked about energy dominance. The things that we can do ourselves to help restore American Energy not just independent but dominant what that can do to Economic Health yeah at the end of the day were going to need congress to go along. We cant do this by ourself. But were hoping to lead by example, start to show people what you can do when you start to take the rates off. You start to unleash the American Economy you can make it great again and hopefully congress will get the message and come along with us you might get the conservatives, in the Freedom Caucus on health care. What about the budget . You say youre not an elected official but you have to be the whip. They want youve been asked to help whip the Freedom Caucus into supporting the trump budget yeah, meadows called me last night, and said were you going to call me to whip me on the budget i said no. And the people who published that head line ended up changing it yeah, i am working with the administration to try do get a budget passed. Why is it so important to us because of these arcane rules in the senate that if we can get a budget passed, it means we can get a tax package passed with only 50 votes. No budget and we need 60 votes and that means at least eight democrats, and you can noj imagine that the tax package will not look as good as if we have to get eight democrats to vote for it. So we are pushing the budget for one reason and one reason only, which is not one reason only but primarily we need it as that vehicle to get tax reform. Shouldnt be surprising that the omb director is trying do get a budget passed on the house and the senate i havent done the math on what leaving the obamacare taxes means for i mean how much tougher does that make a 15 corporate rate will it i mean if it were to all go through it certainly factors in to the consideration, i think what youre skipping over is whether or not that tax package is going to be deficit neutral or not i think ive talked on this show before that in the white house we see deficits a little bit differently. We think theres a certain kind of deficit that comes from welfare transfer payments to regular government spending. Those really dont contribute much to Economic Growth. Theres infrastructure deficits that might come from infrastructure still a misallocation of capital but at least you have something to show for it at the end of the day. And then theres deficits that might arise from letting people keep more of their own money that is by definition a more efficient allocation of capital. So were willing to tolerate shortterm deficits. This is the budget director, supposed to be the biggest fiscal hawk in town, we will tolerate shortterm budget deficit if its part of what gets us to that longterm sustained 3 growth. Do you think that its possible to do this Obamacare Repeal and replace and not have political damage in 2018 i mean once it sinks in do you think theres enough republicans th that wanted that promise fulfilled. The other side they arent going to vote for republicans anyway these moderates im not sure where they think theyre going to lose all their votes. But if they dont, which is worse, not doing anything or doing something where the left is going to be able to say you pulled out the rug from disabled people its easy not doing anything is worse on both fronts. Its bad politically because you run on something for so long promising to do that and then you dont deliver and that hurts you politically. Lets not lose sight of the fact that if you dont do anything, obamacare stays. And thats one of the things thats been lost in this discussion everybody focuses on the cbo score about how many people might or might not have coverage under the new senate plan. What theyre ignoring is how many people are losing Coverage Today because of obamacare and how many people will lose coverage before the end of next week because of obamacare . Leaving it in place is absolutely disastrous, not only politically but practically. All the more reason i think theyll get something done in the senate all right director mulvaney, thanks and dont be a stranger. Great to have you on as usual. Hope to see you again, soon. Thanks, yall coming up big banks are out with earnings. A rundown of all the numbers and the reaction from an analyst right after the break. Plus, this is doable and its not just Jurassic Park can we bring back the woolly mammoth to roam the earth again . The greatest subjects and fascinating things to write about and this one im really on board with at 8 40 a. M. Eastern time later, i dont i do. If you love cats im the only one here im allergic. They have a very bitter taste, i think put ketchup on, its not as bad as you think if you love cats and need a place to live you wont want to miss this. An arizona home ive seen things like this these people have 60 cats they get arrested stay tuned youre watching squawk box on cnbc you always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. 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. Jpmorgan, citi, wells fargo and pnc all out with earnings this morning joining us now to decipher the numbers, the director of bank and equity strategy. Marty, great to have you with us let me kick it off with j. P. Weve had the longest time to digest jpmorgan. The stock down about 1. 5 . Why . When you look at the actual eps numbers, they didnt beat but they had a litigation that was a benefit. They also had low loss provision that was lower so those are two things that added about 15 cents to the eps number which are looked ats being very temporary. So youre not seeing at its core sustainable the quality of the beat wasnt as good the other thing that another analyst we spoke to earlier said was the Net Interest Margin was sort of disappointing. You would have expected it to be a lot better given the rate hikes that weve seen. Well when you look at theres a big difference between the Money Center Banks and super regional banks youve got to look at jpmorgan and citi and even wells compared to pnc pncs margin was up ten basis points over the last year or more the others were relatively flat. Balance sheets are different have more corporate deposits, versus pnc has more retail deposit. We think the super regional banks will show the strength for the rate rise that the Money Center Banks dont really get at this point forced to choose an investor at this moment in time would you choose regionals over some of these big banks, jpmorgan, city, wells . Thats exactly what we did. We downgraded the Money Center Banks and looked at the super regional banks and looked at things like suntrust or zion who had a lot of lunch to these three rate hikes to get that benefit and surprise on the upside at the same time a lot of people will say, its going to be 90 billion in buybacks and a lot of that is going to come from money sernted banks. Thats not going to provide some sort of catalyst or upsick we also saw jpmorgan if it had been successful with worldpay. What we saw this year was a distraction around all of the things around trump. It was the tax reform or it was going to be Infrastructure Spending that got the bank stocks up in general. We saw that pull back as the frustration built. Now what were looking for is the onetwo punch of capital in the super regional banks giving the bargen benefit were getting that now weve got the capital already. Their stocks in the Money Center Banks reacted to the capital so that is a positive. But they dont have the second, which is the Net Interest Margin which you get in the retail deposits in recreating that positive spread. You dont think thats in the stock . If were forecasting maybe a rate hike in december, and Balance Sheet normalization, Everybody Knows about that dont they theres a surprise everybody looks at the assets. What they forget about is this is really about deposits when rates were zero, you couldnt create any spread on deposits when you cant create spread on deposits, what makes a commercial Bank Different than a Consumer Finance company its going to be the fact that they have deposits that they can make money off of. With rates where they were you couldnt do that in this first 100 to 125 basis pointsof rate move it will be better than what people expect it wont be quite as beneficial because were start raising rights but right now were getting that benefit which is better than expected marty, thanks a lot lets turn back now to the broader markets. Joining us now is isabelle ilago from blackrock so, this morning were seeing a slight increase in futures is there anything from a top level point of view that youd emphasize about the Financial Results as were getting them . Well i think were in an environment where people expect moderate rise in Interest Rates and thats structurally positive for banks. So, in that environment were like financials. Theres going to be up days, down days, on a slightly longerterm basis, weve got a sustained expansion and this is an information in which financials can outperform. What about the popular kids the big cap tech names the platform companies, the ones, you know, the amazons, the facebooks that are up so much this year. So the Tech Companies again same story this is an environment look, you can think of it as tech, you can think of it as momentum either way you look at it. Theres a lot of tailwinds there. And youre right, theyve performed very well. Theres likely to be the occasional pullback. But the fundamentals are very strong the earnings picture is very strong, the Balance Sheet prospect is very strong. So were quite constructive. Earlier we had Steve Ballmer on who raised the specter as im sure youve heard many, many times about valuation in these markets. When people say to you, come on, you know, look at some of the multiples, and by the way for some of those popular names theyre not even at high multiples but there are packets to the social media names netflix that you could point to over all though is there a case to be made that things have gotten ahead of where the fundamentals for the economy and Everything Else are . So we dont think so. And in fact, you know, our sense is were in a bit of a new regime as far as Interest Rates are concerned. But theyre going to be permanently quite a bit lower than we were used to and that means you need to think returns, you need to rethink valuations when you discount earnings at a much lower Interest Rate you can justify much higher valuations we think thats the case across the board. Thats a real goldilocks youre saying were going to get just enough rate hikes to make financials attractive but structurally theyre going to remain low enough for equity prices where they are. Youve got to thread that needle there are risks but youre right the baseline is very much a goldilocks environment in which we think people should invest in equities, and up their risk taking. All right isabelle, thank you for gracias, thaus for joining us. Coming up retail sales and cpi are about to hit the tape. The inflation number is going to be really interesting this morning. Plus the lobster harvest and a record catch our Contessa Brewer is live in maine today contessa lobstermen are experiencing record harvests. Im confess is abrewer off the coast of maine well tell you how theyre opening new markets and creating new demand to keep prices steady Liberty Mutual stood with us when a fire destroyed the living room. We were able to replace everything in it. Liberty did what . Liberty mutual paid to replace all of our property that was damaged. And we didnt have to touch our savings. Yeah, our insurance wont do that. Well, there goes my boat. You can leave worry behind when liberty stands with you™. Liberty stands with you™. Liberty mutual insurance. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Welcome back to squawk box. Weve just spoken to jamie dimon. He was asked whether gridlock in washington could lead to slower growth, and he said, if gridlock goes away, we will growth faster but if it continues, we wont grow slow. Where he did say hes seeing improvement is in the European Union. He revealed he met president macron of france just a couple of days ago. He said theres been a sea change in the environment in france, france being rational, pragmatic and strong, and very, very good for the Business Climate and citizens of the eu he said he completely applauds president macrons approach. He revealed again a copy of the bond jpmorgan issued in 1915 to help fund france through the war. That was his gift and he said that president macron, quote, is clearly making france far more attractive for banks and business so, a clear statement of potentially what to expect in the future post brexit he was also asked about his comments earlier in the week about papering and he backed away and said theyre taken out of context and not predicting or worried about the outcome in and around normalization pretty interesting. U. S. President said similar things about macron. Very similar thats interesting were just seconds away from retail sales and cpi Rick Santelli has it rick all right here we go a litany of data points all for june lets start out with cpi, shall we unchanged on head line thats 0. 1 light 0. 1 when you strip out food and energy thats 0. 1 light and if you look at year over year core, thats 1. 7. So thats actually as expected just head line cpi and year over year perspective, 1. 6. That is 0. 1 light expectations whats note worthy there is that actually is 0. 3 lower than the last look at 1. 9 all right, lets look at some retail sales, shall we on the head line advanced read for june not good down 0. 2 we were expecting the number in positive territory we did get a couple of tenths better revision. Like many things we grade on a curve on this rescission down 0. 3 to down 1 pns still positive 0. 2 but still a negative number nonetheless. If you now strip out autos, autos is down 0. 2. Thats not necessarily good. Strip out autos and gas, its down 0. 1 the control group thats plugged in to data points is down 0. 1. So its all minus signs. Level not good here. The response in the marketplace, were looking at three basis point drop in tenths we do this data all the time usually the response strong weak is very minimal lately on head line shock especially considering its preopening ek times. Thats a pretty decent drop. 230 down to 227 is technically significant. If you think the data ends here you are wrong. 9 15 Industrial Production 10 00 well get our preliminary july read on university of Michigan Sentiment survey and the dollar index is taking it on the chin again when janet yellen talks about, hey, were going to import a little inflation. Yeah, weaker dollar, thats where its coming from id rather see my neighbor buy more things from Foreign Countries with a stronger dollar joe back to you. Okay. I see what youre saying i dont really think you care what your neighbor does, rick. But, i understand your point thanks, rick your neighbors are so far away do you even see their house from your the neighbors most interested in are wisconsin and indiana i keep thinking, maybe theres a move in the cards, of course, as we welcome all the wonderful opportunities here in illinois after that wonderful budget deal you waited over two years, what do you get no, no, no, kansas tried to cut taxes. Look what happened there raises taxes is the way to go, rick lets get to cnbcs chief economist steve liesman. Senior economics its been awhile. Since yesterday i didnt call you chief economist you called me chief economist. Tried to throw you off. I thought maybe 24 thursday cnbc had a chief economist. They did. Bill wallman and then you had another person, the woman with the chickens Kathleen Hayes . Marcy oh, thats right. We did i used to appear why dont we hand that title out more i dont know. Im not an economist your work is better than the economist sometimes my work is pretty good sometimes its pretty good i want to talk about this thing right here which is you have two things going in the same direction. You have the inflation coming in weaker than expected retail sales coming in weaker than expected. Its got to give a little pause here im looking at the inflation data and im seeing here, really muted gains for even some negatives. Obviously a big decline in energy we expected that a decline in vehicle sales vehicle sales prices 2. 8 down in gasoline but other things are down. Airline fares, joe get on the phone with andrew talking about him, minus 2. 7 on airline fares. Apparel prices down. Down across the board. Going now to the retail numbers, and you see also, broadbased declines here, and it may even be worse than it looks because you had a 0. 1 gain in Motor Vehicle sales when, in fact, we know the unit sales dropped that month. Could have been price issue. But then looking broadly, food and bench down 0. 4 gasoline we knew this was going to be down, down 1. 3 clothing down, Sporting Good down, joe. Its really hard to square with what we think we know about the consumer you can read the nonstore number yet the nonstore number is up 0. 4 drs 0. 4 for that, your expression is perfect. For that particular category which is always up, Miscellaneous Stores down 3. 1. Im not sure whats in that because we had a lot bit of bug, but Department Stores down 0. 7 as rick size says the part that folds into gdp down 0. 1 thap thats going to bring down this idea of where we are in terms of overall gdp depending on what happens with price dont you feel like in a way its still the inflation number thats more important . Even as big and as important as retail sales, we kind of know that story it goes up, it goes down but look its the cpi thing, did you see what the 10year did and this all after the results this morning i think thats important. I think you told the street that consumers were buying and going and buying like crazy theyd be like oh, i dont really care about inflation. Its this notion that you have that when we had a great discussion on this yesterday i thought which was, theres different kinds of inflation thaz inflation that comes along with productivity, technological change and inflation thats telling you theres a little bit of weakness in growth and i think thats a little bit of what this is kind of suggesting to us here from the street perspective, this is good you its good in that it doesnt move yellen let me tell you one very quick footnote to this which is joe was talking about my work. I came in this morning and john riding had a note that because of all the online sales he thinks that retail sales is not picking up all the Consumer Spending thats out there. And i went back to 1989, just this morning, but in the middle of my first cup of coffee, retail sales is revised up 60 of the time upward so john may have a case there remember the amazon tip last summer that ended up not happening. Not happening right. We need to go back and look at whether or not the internet is the source of this upward revision but you could imagine that the structure of the course of the data changes and the government oh, my god is behind the times, takes the data crunches over there. So maybe its not as bad as it looks. But its still not as strong as it should be and i think bottom line just to finish off here, is that it suggests that yelling was maybe right yesterday to say you know, were going to take a little time were going to take a look at the data and be a little more cautious about that next rate hike while the Balance Sheet reduction possibly proceeds apace. Okay good. Steve, thank you did you see balmer nothing that we do matters i mean, like the government does this, does that, the more government, less government, more entitlements, its thats what he said. I dont think thats right at all. No, you said that many times before though that for what . Obamacare didnt hurt lower taxes doesnt help steady line oh, no ive not said that at all, joe thats why youre ive not said that the all. I believe it matters a lot what government does and i believe the size of government should be limited and allocate that to government but the same size as so even under the obama years youre missing one of the things on health care joe which is one of the problems with health care is keeping the government controlled portion of the economy to a certain limit so theres still big parts of the economy that are subject to gains in productivity, thats the economic concept for the concern about the growth of government controlled health care is that you keep it tied to productivity now you are preaching yeah, well 2016 2016 was a sometimes i dont want to listen i know. 2016 was a record catch with 130 million lobsters contessa are we sure, contessa in mountain this morning casting a wide net for all these delicious details. Dont let the lobsters know what were talking about. Are you sure it was 130 . How do you know . I did catch some. In fact im not alone, because theyre talking about this historic catch, 131 million lobster. It was a big, big harvest. And, in fact, theyve had a number of these banner years, joe, but what theyve learned about a historic harvest is not always a good thing. In 2012, they caught all these lobster and prices just plummeted. China saved our bacon the price was at an alltime low, i think the statewide average was 2. 69. And we aggressively opened the market over there and it became very popular within the middle class. That very much saved us. So this summer theyre calling it almost twice that price per pound in large part because of all this growing demand in china. And chinas taste for lobster just keeps growing in 2010 look at this, the u. S. Net 1. 3 million worth of lobster to china last year, 84. 4 Million Dollars worth of the tasty crustation. It seems insatiable. At maine coast a lobster distributor almost half of their overall business now is chinese exports. They keep trying to open other new markets internationally. Lodgestics is a big obstacle but of course the lobster are delicate and the distributors have to control transit time, temperature and handling if there are american customers who worry that all this International Demand is going to drive up the prices, consider this, chinese customers are paying between 50 and 100 bucks in a restaurant for a 1. 5 pound lobster. Here in maine we pay 14 at the wharf. At a, you know, lobster shack. And then we pay 32 in a portland restaurant. If you have a bigger appetite than that, this bad boy, will set you back oh, a measly 70 bucks at a manhattan restaurant. Chump change look at him. Hes like three pounds you can work out with him, joe can you bring three back you see that guy tried to bring one on a plane contessa, weve got to go. But are big lobsters as good as average size lobsters in terms of tenderson and taste do you know . No. Im a true mainer. No, theyre not. The smaller lobsters are flavorful and tender the big lobsters have a lot of meat so if youre a hungry man, you know, you get a big lobster. Right do you have crabs, contessa yep, yep, we didnt catch any scallops, no but we caught crabs. Okay. It was awesome. All right thank you Contessa Brewer. Up next, the quest to bring back the woolly mammoth. The power of the nasdaq market. 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. Containing this information. Read it carefully. At where instead of payinging a befor middlemen,em. We work directly with family farms to deliver Higher Quality ingredients for less than you pay at the store. Get 30 off at blueapron. Com cook if only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. A number of sports team owners and commissioners gathering in sun valley and the future of the nfl is in the spotlight. Our Julia Boorstin is there with more julia . Hey, melissa. Three of the biggest names here tell us that the nfl is working to make changes to make this coming fall football season more engaging than ever and this is coming off a 9 ratings decline in the regular season Football Games this past fall now we caught up with nfl commissioner roger goodell, about his plans to introduce fewer, slightly longer, ad breaks one of our big efforts is to try to make sure that we make the experience, whether theyre watching on television or whether youre in our stadiums, make it a more compelling experience for our fans. And that means trying to do less breaks trying to make sure that were not overcommercializing, trying to find ways in which we can take down time out of the game and make the game focus on the action which is what the fans all want. New England Patriots owner robert kraft says he expects ratings to rise on these changes. While cbs les moonves tells us since cbs is paying over 1 billion a year for nfl rights, theyre happy to see the nfl change things up moonves also told us hes not concerned about the fact that amazon is going to be streaming thursday night games he thinks it wont hurt cbs ratings, and goodell says that hes optimistic that amazon will give viewers yet another valuable way to watch. Were very excited about it we think its going to be a great thing for our fans its a great platform. Its another way for our fans to engage for the game. And i think theyll bring a great deal to the nfl, to all of our fans well hear more about the changing sports business and amazon and all these players getting into it when we sit down with Casey Wasserman hes a sports mega agent hell also tell us about his plans to bring the olympics to los angeles. Guys, back over to you all right julia, those agents, parasites all of them. Thanks bestselling im kidding. Anyway. Talking about in case hes watching he loves that when he gets a shoutout. Author ben mezrich is out out with a new book woolly the true story of the deextinction of one of historys most iconic credit yours the race to resurrect an extinct species the woolly mammoth we already had a discussion off camera and i said, similar to Jurassic Park but not nearly as hard, you dont need to take the dna out of the agar and reproduce and you immediately said, well, it will be better because woolly mammoths arent nearly as mean as a raptor we love it. So youre already going to the end of Jurassic Park where things go haywire. The difference is Jurassic Park is science fiction. Theres no such thing as dinosaur dna it doesnt exist we dont actually know the genetic code of a dinosaur its too long ago. But the woolly mammoth only died out 3,000 years ago. There were woolly mammoths when there were people building pyramids woolly mammoth dna we actually have where did we get it from the arctic its coming up out of the ice, their tusks are worth a quarter Million Dollars a tusk wait a minute, it was warmer back then . The ice age was ending. The ice age was you guys got your facts wrong here right, right. They were in a warmer place and then were frozen this has happened before there have been multiple changes in the environment over time, its true. From what from woolly mammoth cars, you saw the flintstones. Yeah. Big side of ribs right, right, right so the woolly mammoths are coming up out of the ice scientists are taking the material they sequence the dna and theyre placing it into asian elephant embryos so an asian elephant gives birth to a woolly mammoth. Thats the woolly mammoth project. Going on at harvard. Its dr. George church who is basically the einstein of our time theres reason to do this, right . Yes its to save the world and so the permafrost is this giant ticking time bomb. Its this frozen permafrost that course the ring of the world and it contains within it more Carbon Dioxide than if we purned all the forests on earth three times. And it methane, too methane, horrible stuff and it turns out that if you can repopulate the tundra with learn herbivores like woolly mammoths, these russian scientists have proven this, they knock down trees, they push up the snow, they make the permafrost colder. It can make it as much as 15 degrees colder so the goal is to release a herd of woolly mammoths across the siberian tundra. It sounds insane i think the premise of Jurassic Park was probably more likely than any of this. An Amusement Park would be more fun but this is a real, good reason to do it yeah. In someones view. Okay, well, thats a different subject. So how many genes do you need . Well the harvard lab is trying to go for 23 genes. And that would do it . The shaggy red hair that you think of the woolly mammoth, the big tusks, the ability to live in the cold, because elephants dont really live in the cold. And things like that, right now in existence in boston there are three prehistoric woolly prehistoric woolly mammoth genes alive in ancient elephant cells. A few miles from where i live there is living woolly mammoth right now. Were very close to genes are being expressed in living in orga ninoids. I see what youre seeing. We can do this. The science is all there its just a matter of placing it into the asian embryo and having an asian embryo give birth to it how many you always pick the greatest subjects. You had how many that came along in the last two years . The woolly is everything to me the woolly mammoth is a big, good story, and its it is a good story. Theres something good about it. Hard to go from that to cats. House cats when we return, we may have found the Perfect Piece of real estate and jane wells got a look inside thats next. Michael, can we get this data to. . Look at me. Look at me. Look at me. You used to be the yes guy. What happened to that guy . Legacy technology can handcuff any company. But yes is here. So, youre saying we can cut delivery time . Yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. 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. 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. A property in arizona is redefining what it means to be a purrfect home. I was worried, jane. I thought this was one of those places where they find like 90 cats in some old ladys house and they shouldnt be there. This is not that no, this is like 9 million cats on the wall joe, this may be the most unusual home for sale in america. Yes, purrfect for the right buyer. Its called catopia. Covered wall to wall, floor to ceiling, with cat stuff. Now its on 20 acres the ultimate cat house in a remote area of the arizona high country. 240,000 but the listing has gone viral theyve had 3 million hits so far, just for the listing. And even though there were lots of news stories, we are the first camera crew thats actually come out here to look at this in person. So this was her master bedroom which is all cats. Liz keller, the realtor, says shes never seen anything like that the owner, a woman who is very shy, had this house built and began this sort of art project when her husband became termi l terminally ill and spent ten years and who knows how many thousands of dollars with these cat creations. But heres the deal. She only owns two cats every time you look at the house, you see something new and you see something overwhelming i would love to see it stay the way it is, only because you can see the number of hours that she put into this house. And the love she put into this house. It was a labor of love you can say, why would you list that it must smell like cats. Its a terrible listing. I feel sorry for the realtor to me, i think its a great listing. I love it. Now they have had a few showings, but notice offers yet. And if you are wondering, no, it doesnt smell and i am definitely allergic to cats and look, mom, no benadryl back to you. Jane, havent you if memory serves, havent you done other stories from a cat house before oh, no, no, oh, wait a minute. That was that was a nevada story. Now youre being catty. Thats good how many total cat pictures were there do you know . Heres the thing. If you look around, every time ive walked into the hour, and the realtor, liz keller, said the same thing you see something new. Something you didnt see before. A single one of those cats they had were one that would be glad to see when their master came home or would want to be friendly to the master or like the cats i know. They do you a big favor if they come over to you there are dog people and cat people, as you know, jane. Right yes, i know. Im a dog person, but i do love cats i just cant get near them or its a mess. I like cats, but i am allergic thank you, jane. Jane wells in the cat house in arizona. Coming up, todays top stories. Tenyear yield breaking two points rht nigow more than a oneweek low were watching that. Stay tuned since 1990, Consumer Staples have traded positively 90 of the time im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at Td Ameritrade. Final check on the markets this morning, and these are just the stock markets, but as melissa just pointed out, tenyear now down to below three. The s p indicated up another record indicated for the dow if that were to happen a record for the s p as well and the nasdaq and the tenyear now 2. 287 what does it mean . What is it all about i guess its still a global world in terms of Interest Rates, but its still but everyone from the banks that were expecting two more rate hikes, well, its flattening this morning. Thank you both. Have a great weekend pleasure is all mine thank you. Make sure you joino us on monda. Squawk on the street is next does it almost feel as nothin changed at all good friday morning. Welcome to squawk on the street. Im Carl Quintanilla and david faber. Jim cramer is off today. Futures just short of the flat line today well get highprofile upgrades of walmart and boeing. And rates and the economy. Europe is mixed, and the