Transcripts For CNBC Squawk Box 20170717

1. 4 hang seng was up, and the kospi up in europe, things are relatively flat. Dax is down. And the cac is weaker. Crude oil prices on a tear this morning it is up again with wti trading. Can i say hello to everybody. We havent been all together awhile, kind of nice comfortable pair of loafers im wearing sneakers today. Theyre more comfortable than loafers. I dont feel like you have to do much to look better i can come in. Sneakers and no socks this is like sweatpants, when seinfeld wears sweatpants, youve given up. Let get you to the morning headlines. Heres whats going on in Corporate News peltz fighting for a board seat at prak tore and gamble. Theyll launch a proxy battle. Hear about it within moments my expectation is hear about it coming across the sec with a filing in a moment the move would make p and g the largest to face a proxy contest. Last week they rejected the request to name mr. Pelts a board member he is one of the biggest shareholders, second biggest roughly holding 3. 3 billion worth of p and g stock they agree on some steps, cost cutting, management restructuring. Isnt seeking breakup of the company thus far in this instance seeking one board seat and mr. Pelts suggested that if in fact you want a seat, you wouldnt be replacing somebody, he would then say add another seat back to the board he is trying to do this in the frie friendliest way. We have seen how a friendly mr. Pelts can turn less friendly if numbers dont work out the way they are at the moment, he is very supportive going to talk about amazon it is working on its own messaging app, called any time according to report from aftv news would focus on messaging, voice, video calls and photo sharing, give users ability to apply filters to pictures and videos it is an effort to take on messaging apps like Facebook Messenger. Whats your thought about that, joseph did you run into bezos out there, he looked all muscular, has the high and tight hairstyle. There was a tweet made its way around with a picture from 10, 12, 15 years ago, he looked different. He didnt have a personal trainer back then. His hair is different. And it said i sell books right next to it, theres a picture of him all jacked with the sunglasses on, i sell whatever the f i want. I sell books, next to it, i sell whatever but it is amazing. He does sell whatever he wants. He totally got a trainer or something. He looks good he looks great. He is the richest man in the world. I thought he was approaching the richest. Now officially this morning i got out of the shower, Still Standing there in a towel. I ordered three things off amazon in the space of 60 seconds. Boom, boom, boom can we go back. The reason i thought that, used to write these stories someday in the future people will be shopping from living rooms in their underwear i was shopping in a towel in 60 seconds in the bathroom because i ran out of shampoo, needed that, realize i need socks for kyle and organic baby food about 4 00 in the morning maybe. Whose in audio. You have the turtle sound . If i say i got out of the shower and i was just wrapped in a towel, you hear they would play that disgusting mating but you its different you dont have that button dont know where it is isnt it labeled let me try it again. I got out of the shower. Buck naked thank you. Lets finish up a little of the news this last story just a little bit cue the turtle sound no okay a little of whats going on on the agenda this morning, have it on the list for you. Results from nine dow components when 60 companies in the s p, netflix out, and later this week, bank of america, goldman, sachs, j and j, morgan stanley, american express, microsoft, visa, General Electric see if there are earnings calls like jamie dimons great conversations about whats going on in washington as to the economic data, monthly Empire Manufacturing survey out today. Tomorrow, import prices in home builder survey wednesday, housing starts. Thursday look for the philly fed survey. Unilever advice with who are mel to buy reckitt barrens thinks whirlpool could gain 35 they say the stock is a bargain priced at 192. And posting record 10. 4 jump in vehicle sales. The rise in part to well timed china suv launch and renewed push in iran big story for me, im early on a lot of things. Some things i dont want to be early on im early on the bacon craze pushes up pork belly prices 80 . You know why theres nothing bacon doesnt go with talking ice cream. Remember you were upset about bacon and the chinese. Early america first, antiglobalist shouldnt be cornering the bacon market. Who is getting the margin i dont know what happens happened it is mostly demand based. A lot of people arent as worried about fat as they used to be. Protein diet youre allowed to eat some of that. I havent eaten anything in two weeks. Looking good. It is done wednesday. Scarsdale. You remember, like i say, someone killed that guy. Talking about the doctor. Someone said you know what, its horrible. All of that grapefruit juice crappy toast that low carb toast. I have coffee. The worst is when you have to have fruit for lunch almond milk could not have been on the original scarsdale diet it wasnt around. When you go off this, theres like a two week bridge not getting much better and then go back on it supposedly, but you realize i dont always need tote titos with cheese, dont always need these things you can have whenever you want. Biggest thing i found your husband is wasting, goes down the drain better watch it in the shower. Biggest thing is not snacking i agree my typical life is grazing there are so many good things. Dont try that, look at these pretzels you know whats good, american cheese on a pretzel. Have you tried that . Ever heard of cheese on a pretzel . Were going to graze on politics this is our own pantry. Senate republicans are delaying action on the Health Care Bill as senator john mccain is recovering from surgery. We have some of the action from the weekend. Good morning. John mccain having surgery to remove a blood clot over his left eye not clear how long he will be out. It is clear that will effect the timing of the Senate Health care vote republicans have 52 senators, two senators who are opposed to the measure publicly, that means they dont have room for error whatsoever need john mccains vote, presuming he would be a yes. Theyre going to delay things. Wait and see how long it takes john mccain to recover from surgery. Rand paul, one of two senators who is opposing the bill says that could be bad for long term prospects of the legislation heres what he said. I think the longer the bill is out there, the more conservative republicans discover it is not repeal. And everybody will discover it keeps the fundamental flaw of obamaca obamacare. Meanwhile, conversation continues about donald trump jr. s meeting with russian attorney jay sekulow, the president s lawyer was on television over the weekend talking about the meeting. Said the president was unaware of the meeting said no specific statute was violated by the meeting. Also said if the meeting was such a bad thing, secret service would have prevented it. I wonder why the secret service if this was nefarious, why the secret Service Allowed these people in. The president had secret Service Protection at that point, that raised a question with me. After that, secret service put out a statement saying in fact donald trump jr. Did not have secret Service Protection at the time of that meeting, so they would not have vetted anybody that would have gone to meet with him at trump tower so thats where we stand as the week begins today, the president wants to focus on made in america agenda, having an event on the south lawn, spotlighting products made in all 50 states as the white house continues to roll out theme weeks this is going to be made in america week the other news i read over the weekend was that, in fact, the administration has its act together on its tax plan, more than has been reported thus far. They told us they have, but theres some kept sichl, now we may have it. There was criticism when they released a one pager months ago, that was the extent of what the plan was as i have been talking to officials at the white house, they say theyre carefully going and vetting all of this on capitol hill before they roll out the official plan. The reason being they dont want to do a repeat of the Health Care Debacle where they couldnt ge the bill passed, they didnt understand who was for which elements of it, who was against. They want to be sure they have all of that buttoned down on capitol hill before they push forward with a tax bill later this year. They say they can get it done by end of the year, we will see if votes are there. Great to see you. Lets get back to broader markets, hitting up a piece i saw this morning here it is joining us, chief investment strategist at Raymond James, and northwestern chief investment strategist the article says stock market poised to ride stellar earnings to more new highs. I think thats partly what we have seen, jeff south, that there are good feelings about this upcoming earnings season and what we have seen,and thats why the markets are trading at new highs almost every day. Is this one of the sell the news things, good news about earnings already in the marker . What a run it has been on the first half of the year yeah. It has been quite spectacular. Two dow theory buy theories. I told the story to brian sullivan, in the book reminiscence of a stock operator people wanted to know what to do, would ask him what they should do. He would turn to the side and say you know, it is a bull market thats all investors need to know, probably has years left to run. He lost all his money and committed suicide, didnt he no. I thought what happened to Jessie Livermore thought he did Jessie Livermore lost his money and took his life. I dont know. Im looking for a better ending for me and all the viewers that is a great book market advances as far as it can. With as few people believing it as possible. Andrew here every day helping us the train now, how far does it go how far south. Washington washington is it. Right now it is not in georgia. Youre in south jersey like so many people, youre going to be right sooner or later. You throwing in the towel. Tell me what youre doing. You know the greatest thing i saw you tweeted to somebody mad for the piece you wrote. Yes. Andrew wrote a 2,000 word article how the market sucked and was going to go down because of trump minute he said that, andrew said you didnt read the article. I said at the end conventional wisdom might be wrong. 2,000 words this will happen, and one sentence maybe this isnt going to happen, thinks he is covering it that does not cover the bases. Using 2,000 words why it is going down, one sentence about conventional wisdom, that doesnt mean you were right. Thats a longer conversation. But i read that the poor guy yelled at him, i guess you didnt read the article. Only the top of the article said what the conventional, doing what the conventional wisdom, maybe it was wrong that was the purpose of the article. Were you the guy tweeting him . Hold on youre mr. Frog or whatever the guys name is . No. Twitter guy called mr. Frog or something no. Im not i am actual squawk. I have friends that thought that was me. Following that person the whole time. At least he tweets occasionally trends good morning. I have had cheese on a pretzel before it is good. Like a cracker it is great they make Cheddar Cheese filled crackers. They make those. Those are good so fattening you might be able to have one per day. Brent, tell me whether earnings will be good enough to continue this upward momentum i believe so i agree with jeff, i think we have room left to run. I think it takes a recession to knock the u. S. Market down i dont see one of those on the horizon any time soon. I think the Economic Cycle if you look out to have something to recess, you have to have something to excess doesnt appear theres much in excess so i put this economic recovery into context by suggesting that everything that people think will happen from a textbook perspective will eventually happen it takes longer to get there because the scars were so deep, people we hafd in a restrained way and had policy geared toward making the world safer, some could argue slowed down growth i believe theres room left in the tank for the u. S. Economy and u. S. Market to continue to move higher. Made that point last week, if you look at everything at face value, good jobs number but no wage gains wage gains, near term it takes away some worry about Profit Margins being squeezed as wages start to go up suddenly the ten year looked like it was on the way to 2. 5. Again after that falls back down at 2 30 low rates, low inflation. Jeff, it is hard to look at this stuff if youre a simple ton, you would say things look good, i should buy, if you dont get too complicated. Yeah. I think people overanalyze and overthink the situation, not many of us arntd that have seen a secular bull market, last 14, 16 years i think people are would he fully underinvesting probably right. Number one, were scared to buy during the election. We thought there would be trade wars or whatever then goes up and up, and people cant buy now. Thats what they say, i cant buy now, already moved too far right one of the biggest questions is how to prepare im sorry. I was going to say one of the biggest questions is how to prepare for the next downturn. If you look at the aai bullish sentiment survey, we nochd the 32nd week of bulls which is a record back to 1987 when low bullish sentiment is out there and the economy is doing well, you have equity market gains in the next 12 months, expect that to continue. Hard to argue the market is cheap. In the short term doesnt make a lot of difference. You should get to a tv, stay where you are. Tech analyst, did she say august increasingly significant chance for pull back in august does think thats the case standing by long term target which is higher from here. Thank you both. Appreciate it. When we come back, a beloved cartoon bear has reportedly been black listed in china. We will tell you why next. It is winniethepooh. And Monkey Business at the Box Office Weekend movie score card straight ahead squawk box will be right back. We, the people, are tired of being surprised with extra monthly fees. We want hd. And every box and dvr. All included. Because we dont like surprises. Yeah. Like changing up the celebrity at the end to someone more handsome. And talented. Really. And british. Switch from cable to directv. Get 4 rooms with hd, dvr, and every box included for 25 a month. 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. Welcome back, everybody. Winniethepooh has reportedly been black listed in china reporting the cartoon bear was blacked out from chinese social media ahead of the countrys 19th communist Party Congress this fall. No official explanation was given, but the ft decided observers that said the crackdown may be related to past comparisons of the president to the fictional bear those comparisons began in 2013 during the chinese leaders visit with president obama a photo of the president next to a picture of winniethepooh, the most censored image of 2015. Cut out a little. The arms, if you have a bigger picture, the arms are identical, the way theyre swinging on both gentlemen. Look at what joe is holding. Cover of the fp it shows that. The height difference is sort of the same and the expression. I dont know the legs are in mid step look at the president s right leg and tiggers right leg it is so close the funny thing is the idea of complaining and saying we wanted it blocked, never heard of this until today. I know. Calls attention to it, now we all know about it. Thats sort of like seems minor for a guy of his stature. Wouldnt Pay Attention to some of these things. Right although being on a diet, poo is pudgy, so i can see where maybe you dont want to look like pooh. You also want to swing and have your entire nation ban the image. Tigger is thin. Lean and mean. And president obama doesnt hate this comparison, tall, thin. Id take it you wouldnt mind being sure. Lions, tigers. Great story. And im with ann coulter on this i wasnt going to say it. Immediately what i thought of when i saw this,it was delta when you said i dont know if you know who i am, delta, but i better get this fricking seat, or youre going to have hell to pay with my million twitter followers. You did say it i did not you tweeted tell the ann coulter story, tell the sore kin story later. I did not threaten anybody. I saw your tweets what did you tweet. Years ago. Only about a year ago years ago they told me to tweet at the service people. I wrote them and said please dm me direct message me. The way you said dm me or youre going to have hell to pay. I did not say that. Dm or youre the sorriest mfs. I didnt say that said better to keep it as a private matter, dm me. I think you said if you would like to keep it a private matter i didnt say if i read this, i thought for her to get i thought she had more important issues to stand up for this is all about her and about how much money are we talking about. Conservative author ann coulter has a bone to pick with Delta Airlines over the weekend on a flight from laguardia to west palm beach, florida reassigned from aisle to window seat, she railed against them on twitter, calling them the worst in america she took a picture delta said it will refund colter the 30 that she paid for the preferred seat and called tweets about other customers unacceptable and unnecessary. She took a picture. Someone said this other individual got your more room seat because of for a reason. She took a picture of the poor woman, said this woman was not fat, large, she was not there is no reason for her to get it instead of me. Youre with her though from your past history. There were things she wrote on twitter i thought went too far. If you get an assigned seat and pay the extra for the seat, you should have the seat, and if you dont have the seat, they should give you more than just the money. First of all should give you the money back and move you if thats the case but do it in the nicest way. There are times we had seats switched around. For the family. Left a fiveyearold in the back i dont know why the other passenger was moved around. Then they have to try to accommodate you. Hell has no furry, baby in first class, what did delta do to you that caused this blow up. There was no blow up. They bumped me from the whole flight thats what happened then they said the quickest way to deal with it. Upgrades for a year nothing, very little out of it, a meal voucher or something. Coming up. Ibm tackling Cyber Security, launching a new mainframe that enables one click encryption for data and security. Good morning u. S. Equity future up. And s p up a couple of points. The s p now, having a look at it there, talking 24. 59. It was up big last week yes say it goes to 24. 60 were getting into significant gains that you probably dont want to miss meantime, we had breaking news to bring you this morning peltz is seeking a board seat at proctor and gamble in an sec filing out this hour trian says they have excessive bureaucracy and cost structure, says it is not seeking to break up the company or replace the ceo, david taylor, not seeking to replace any of the current nine directors trian owns 3 billion of shares. Second largest shareholder, makes them the Biggest Company to face a proxy contest. Ibm launching a new mainframe today, believes the new system is a break through in how Companies Think of data encryption and can protect from cyber threats. Joining us, kayla bar low, Vice President of Cyber Security at ibm. Thanks for coming in. Thanks, becky how are you today . I am good i know that Cyber Security is a problem. Were hearing the headlines every day, i didnt realize how bad the numbers were how bad is it . Absolutely. If we look at 2015 alone, 300 million records lost and most of which were americans. Think about that for a second. We start to lose this data, it is out there, our Social Security numbers, mothers maiden names, those cant be easily fixed like your credit card what we did with the new ibmz, we added ability to do encryption at line speed this is a 400 increase in encryption this is one of the chips what this has, little thing about the size of postage stamp, has 14. 4 miles of wire on it 6. 1 billion tran cyst tors think about what you can do. The entire mainframe can process 12 billion transactions a day. Put it in context. Lets say cyber monday is an example. Probably about 30 million transactions processed globally on cyber monday. One of these machines can process 12 billion transactions a day. The problem is that all these transactions we do on a daily basis, most arent enkriptd because it is too complicated . Thats right. Only 4 of transactions are enkriptd the primary reason is not only is the math complicated, but processing time too expensive on traditional x 86 hardware. What this allows us to do, imagine youre a bank or travel company. You can process everything you see and encrypt it all all at speed without performance degradation. That means they have to use, lot of companies are on ibm servers, they need to update to the correct server 87 of all credit Card Transactions today occur you talk about health care records, americans are concerned about that but look at it and think a lot of transactions that take place for me are in a small Doctors Office theyre not going to have one of these servers. They may not, but where does that record go, to the Insurance Company and various levels of processing the challenge is that if bad guys get access to that data, then they have access to hundreds of millions of records. This allows them if they get access, it is gibberish, they cant read and process and is useless. At the end of the day, this is about changing economics for the bad guys theyre all entrepreneurs. 445 billion industry every year if i make it harder to break into a system, youre going to spend time somewhere else. How much does the new server cost these things cost around a half million, at least to get started. And they go up or down, depending on the number of transactions a company may run and their unique configuration theyre about the size of a large safe, 6 or 7 feet tall contain 24 of these chips. Theres obviously a lot of cooling and 24 of these little things. Again, look how small. Does it come in that tan color or can you get it in gray or theyre more gray one color. I think theyre one color not a lot of demand for fancy colors. I always ask that question. What color do you want it i like some selection what i was getting to, when you talk about the numbers you threw around, theyre just words and i dont think we understand what 12 billion means on something that size. Come back to Machine Learning and give it time, 5, 10, 15, 20 years, starting to wonder when you have that type of computing power, when you actually have computers doing things that we cant fathom we wont be involved with thinking up the new stuff, the computers that we originally made will actually be designing things we have no conception of. It is not that far off it is not the thing to keep in mind, as more data moves to the cloud, what powers that cloud what will ensure that everything you put in that cloud is inside a safe that bad guys cant get gray colored servers. That will solve that. Kill you to make a tan one . We will take a look maybe paint one for you. Blue. We like blue. Thats nice you said make them gray when you were ibm when you made them blue didnt that occur to anyone . Nice colored gray muted gray. Whats interesting, when you open this up inside are all of the electronics. One of the things we are worried about, things like insider traps. If you reach in to touch that process, you dont get electrocuted it breaks the server, throws out the keys, makes it useless you have to go back. Nobody can hack into it you cannot. If you physically try to get into this, like insider threat, it will toss its keys and becomes a giant brick. Thats something, like you guys have run into problems where people on the inside tried to hack things. Our job isnt so much to think about problems we see today, what are the problems we may see in the future, make sure we can prevent all those thank you for sharing with us today. Appreciate it. Thank you. Stuck inside the server see the guy stuck inside the atm . Yes great story. Stuck inside an atm on the receipt, kept sending receipts, saying help me, im stuck inside, they would laugh finally someone said someone is stuck. Was it a maintenance guy or thief . I didnt hear the story. Maintenance guy kept sending out receipts. Got him out. Yeah. It was a story last week it is one of those and nobody got hurt stories not getting stuck with a tan one. Blue might be the way to go. Trying to decide on royal blue, light blue years ago wrote a story why computers are that color. You did back in 95 i am getting old there was a pan tone color that doesnt have after image you look at a screen and look away, certain colors track with you. But that sort of tan taupe color doesnt come with you. Doesnt move with you. There are laws in countries, germany has restrictions on what color things can be in the data center, no idea why. All regulations. As we were speaking, blackrock is out with numbers. The asset manager earned 5. 24 a share for the second quarter, below the consensus estimate of 5. 40. Revenue was below forecast the Ceo Larry Fink says significant cash remains on the sidelines, but that investors have begun to put more cash to work so far replacing people with machines hasnt helped black rock well see. Not a big replacement starts like that, slowly it happens. Elam musk says all of us are going to be replaced by artificial intelligence. Bill gates shares some of his concerns coming up when we return, the political effect on the markets. Joined by roger altman and then senator more os oh will be here. And dean of the Columbia Business School. And served as adviser to george w. Bush. Stay tuned commercial Real Estate Company cbre out with annual tech trends report, showing where the biggest tech job candidates are found, where companies are moving to hire them. According to the report, tech job creation grew faster than the prior two years. Tech companies represent 20 of all leases signed for office space in the u. S. Today, up from 11 in 2011. Joining us to breakdown some of the results, spencer levy, head of research for the americas a fascinating report we think of Silicon Valley as the tech. Center of the world. Youre showing lot of other places people are getting money and opening offices. San francisco and traditional tech areas are strong. We are seeing tech demand is so strong, companies have to move out of traditional areas into smaller markets, not just here in the united states, also seeing canada and toronto and vancouver. How expensive it is to do business in Silicon Valley. Less than you think from the following sense. The key limiting factor is concentrations of highly skilled employees. People are willing to pay for that yes, cost is clearly a factor, people pay up into the markets that have concentrations, many of them are in Silicon Valley or in universities. Can we talk about toronto, vancouver phenomenon, which is to say so many Silicon Valley Companies Set up offices there in part to take advantage of talent if you will, immigrants that are not given a green card to work in the u. S. And as a result are sending u. S. Employees up there in terms of trying to get the culture and everything together. Certainly immigration is a part of it, canadas immigration laws are somewhat more liberal than the united states, and they have a somewhat higher percentage of population in the Tech Industries because of it. Theres another factor that drives people to canada, thats the weakness, relative weakness of the canadian dollar, 75 cents on the dollar to the u. S. Dollar, makes cost of operation and availability of labor together make them attractive choices. Showing three other cities worth talking about, indianapolis, pittsburgh, detroit. These are cities that historically were hard hit and not thought of as necessarily tech centers, but seem to be on the make for sure. I was in pittsburgh yesterday driving from the airport, from downtown it is tech company after tech company or bio farm a company after another. It is not hard to see why, not just cost in the case of pittsburgh, it is carnegie mellon, pitt, graduating a high number of tech employees or tech graduates, and thats driving people to pittsburgh a low cost of living with that makes them very attractive detroit and indianapolis have similar characteristics of having great education complex, and low cost of living, making them attractive choices not only to hire but places for people to live. Spencer, if you look at Square Footage costs, say you want to open an office in one of the three cities relative to doing it on sand hill road, whats the distinction i think the most expensive places are clearly in San Francisco and new york but looking at just the cost of occupancy, thats substantially lower in those markets could be looking at cost of occupancy in pittsburgh versus San Francisco and cost of labor on top of that might be also a third less than you would see in San Francisco or new york. So overall occupancy costs could be 33 below and final question. Is it the big companies, the facebooks and googled that open outposts in these cities or straight up new startups starting in these cities the short answer is both. I would suggest any city looking to grow with some of the large, terrific Tech Companies you mentioned also needs to put aside space for innovation space for smaller companies. You see the combination as the right answer. Great to see you. Fascinating stuff. Thank you when we come back, netflix is set to report Quarterly Results after closing bell we will tell you what to expect right after the break. And right now, a quick check of whats happening in the european markets things are mixed today, although you can see that the ftse picked se uince last time we checked. Ftp sixtenths of a percent. Squawk box will be back. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back to squawk box this morning the online streaming giant netflix set to reveal Quarterly Results right after the close today. Investors going to be taking a closer look at the companys subscriber growth as competition continues to build from amazon and hulu joining us right now to tell us what to watch ahead of that report, senior media and entertainment Equity Analyst at cfra research. Your head line, sir, what do you think were going to see sure. First thing is to watch for the subscriber growth which investors are very interested in hearing about. So the guidance suggests acceleration this quarter. We slow down last quarter. Second thing is i think the International Expansion thats the whole story. Exactly last quarter we started first time profits and international segment. This quarter they got into a modest loss. But at one point i think its going to be how theyre getting traction in some of the most recently launched markets. And lastly i might add cash burn is always something to watch so i was going to ask you, do you care about cash burn do you care about how much theyre spending on content these days or do you say to yourself they have so many emmy nominations that came out last week, well take it and use that as market. Put that in the Marketing Budget you know. I think that you know, you always care about content. Right. You know, theyre spending a lot. Thats the given talking about the return investment, he can justify that in terms of the traction that theyre getting. You talk about emmys, you see how theyre closing ground on hbo. I think investors are starting to get a sense that netflix is becoming more disciplined in terms of their contept youve seen them pull the plug on shows that are not working. Right overall i think that much of the content remains sell voted you can justify it, you know, the traction theyre getting in original content, in the marketing related to that, completely emmy nomination how important is this to make sure so many other places are getting content these days how important is it to still be [ inaudible ] becky i think that its getting a lot more difficult to break through. So its not just, you know, netflix. Amazon, google, everyone is ratcheting up their content spending and were seeing that continuing to grow. So i think to the extent that content and selected content is important for branding, i think its going to help to distinguish and differentiate, you know, these services and i think we see the race now shaping up between the socalled haves and the havenots, and content is going to be the main differentiator think about the haves, the leading streaming services over the top, second tier, you know, cbs, showtime, hbo, and then youve got all the niche players that are going to, at some point, to congregate over, you know, around what content availability so reed hastings, and i think he was joking but he really shouldnt have been, said his biggest competition is sleep remember that comment . I do. Thats who were competing against. Do you look at amazon as the single biggest competitor . Or is it the traditional players, the hbos of the world and where is hulu or Something Like that sitting here i think, you know, the Major Players are not only competing against themselves headtohead increasingly but also against other forms of enterta entertainment out there. So dont forget that, you know, pay tv, traditionally, is still by and large the largest platform for Television Viewing out there. Right that remains a viable competitor but overall i think youre going to see the competition yes or no you want them to clean up the password situation . So many kids 18 to 24 are now using each others pass words on these Services Good thing or bad thing . Maybe its just great marketing. Password sharing is something the company has swept under the rug. I believe its become more and more of an issue now that the company is kind of reaching that tipping point. Right in terms of the international versus method. That could be more of an issue in an International Market great to see you. Well look forward to those numbers later this afternoon thanks, andrew. Coming up, markets in focus were going to talk technicals with Katie Stockton and later the prospects for Health Care Reform in the Senate Senator John Barrasso will join us at 8 00 a. M. Eastern. Stay tuned at fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Wall street looks to kick off a new week with the dow and the s p sitting at alltime highs. We will talk technicals and set up the trading day straight ahead. Trade with china the first 100 days of talk is in the books. A look at where the u. S. Stands is coming up and the uphill climb for automakers when it comes to selfdriving cars. Why consumers say they dont trust the big three when it comes to a. I. Development. The second hour of squawk box begins right now live from the beating heart of business, new york city, this is squawk box. Good morning welcome back to squawk box right here on nbc. Were live at the nasdaq marketsite in times square im Andrew Ross Sorkin along with becky quick and joe kernen. Take a quick look at the futures this morning, after weekend away dow looks like it would open up higher about 33 points higher. S p 500 would open up about two points higher and the nasdaq would open 17 points higher. Heres the headlines right now were watching shares of asset manager blackrock. It came in below estimates with quarterly profit of 5. 24 dollars per share but Ceo Larry Fink says cash is starting to return from the seedlines widely watched Earnings Report is set for after the close today when netflix comes out with its quarterly numbers. The Company Expects to report profit of 16 Cents Per Share on revenues of nearly 2. 8 billion. Investors also going to be carefully watching subscriber Growth Numbers just one economic report on todays calendar, with the new york fed out with its latest Empire State Manufacturing index. At 8 30 well bring you those numbers. Later in the week a number of key economic reports including housing starts, we get jobless claims, the fed index and the index of leading Economic Indicators and then png to talk about a little later because nelson peltz ran a contest to get on that board. And other stocks to watch this morning, include amazon, reportedly working on its own messaging app called anytime according to a report from a. S. Tv news where this was generated it would focus on messaging, voice and video calls, and photo sharing, and would give users the ability to apply filters, to pictures, and videos the move comes in an effort to take on messaging apps like the one on Facebook Messenger or whatsapp and barron thinks that whirlpool could gain 35 next year they think the stock is a bargain despite gaining about 90 since the end of 2012. And as i just mentioned investor nelson peltz mounting a fight for a board seat at Procter Gamble launching that proxy battle to jumpstart p gs lackluster sales growth it would make them the Largest Company to ever face a proxy fate just last week they rejected trians request to name mr. Put to the board its roughly 3. 3 billion worth of stock nelson peltz will join squawk on the street for a cnbc exclusive at 9 45 eastern time the white house is reportedly moving forward with tax reform axios says that the Trump Administration will start pitching its new tax plan as soon as next month the administration hopes to get a bill finalized after labor day. Sources say that the president will Start Building nationwide support for a tax plan by barnstorming the midwest states that he won in november. A lot more coming up on the washington agenda and what it means for business thats straight ahead with ever core chairman and founder roger altman meanwhile, manning a make cover for epcot. Among the changes a biggest presence in the park for disneys franchise characters. Which is kind of interesting because thats not what you think of with epcot, which is also getting some new attractions, including guardians of the galaxy roller coaster, and a ratatouille themed ride. The company made the announcement at the expo in anaheim. Its an effort to attract younger fans epcot, by the way, is twice the size of the Magic Kingdom but gets far fewer visitors. Theres not very many rides there. Theres a lot of food and drinking there the world, all the different go to paris, go to china, go to mexico, italy right disney also announced it would had a tron themed roller coaster at the magic ding com. Shares of disney yeartodate up less than 1 lagging most of the dow. Other dow components, and lagging most the major averages. Theres nothing worse than epcot was kind of a future world. Remember, like 25 years ago. And now now we are in the future and the future world looks like its really dated dated and we need epcot has some issues with that especially back at the back. You go through the one that walt disney loved so much, the ride about the future where you kind of go around and they talk to you, its really hilarious when you get to watch whats supposed to be in the future. Right that car ride was cool that you go on it there . I think it was oh. Very cool and also the one where youre in the like seat, and youre flying over landscapes. California or something its called soaring. Flies over california. And kind of even get, you know, go down, you go over the end of a cliff and you go oh you sort of, thats how you feel so it was cool also, lets take a look at what happened at the Weekend Box Office war for the planet of the apes topped the box office this weekend. The third film brought in 56 million in north american ticket sales. Thats according tocom score also, spiderman homecoming dropped to second place. It brought in about 45 million. It doesnt get old. Superheroes no, apes taking over, you know, running things is it going to be the apes that take over for the computers . Your call. Good point. Good point probably i would predict probably the computers quickly evolving into because of genetic engineering, right thats possible gmo. Last nights season premiere of game of thrones. They just call it got had social media buzzing. Fans erupting in anger when both of hbos Livestreaming Services crashed during the season premiere oh, my goodness this is the second year in a row that the services went down as mlt attempted to tune in. The service was down in both the u. S. And latin america until about halfway through the episode. Its not clear exactly how many viewers were affected at this point. By the glitch. Too late i missed the last two seasons. So you werent aware that the servers crashed. I will just say one thing i was telling you about now in a period of watching these movies because im on a diet, theres nothing i can drink, so we watch this young victoria and there was an actress in it 1993, circe. Lena petty from game of thrones 20 years ago before i didnt even think she was old enough 23 years ago. Or maybe it wasnt 1993. Might have been a later one. Because i watched two of these period young victoria and some other. Remains of the day which almost won eight Academy Awards but yeah, lena heady a young who is that i know her i know her figured it out. You look at me like a blank look youre not a game of thrones you know what i only watched the first couple of game of thrones and then my wife got ahead we were trying to do it together. And then, i dont know where i went, but somehow she two, three or four and she just somehow you havent seen any of it . She got so far ahead and i could never scotch her and then ive been behind the whole time have you seen i need to i watched the entire first season and then get his head cut off in the first season i saw that. I didnt get there. Dont, dont no im going to get there. I need, you know kids were watching. Ruined the entire did a couple of the kids were watching. I dont know what youre talking about. All right sean beam all right im going to do this so that you dont hear anything else from him spoilers on this weeks wall street agenda, were going to get results from nine dow components, and more than 60 companies in the sfund netflix as we told you is out after the close today and later this week well be hearing from bank of america, Goldman Sachs, johnson johnson, ibm, morgan stanley, american express, microsoft, visa and General Electric in the meantime lets take a technical look at where the markets stand right now. Joining us is Katie Stockton, chief Technical Strategist at bcig thanks for being here. Just so people know, you do have a pretty bullish outlook on the markets still, even though we continue to see the s p 500 rise, youre at 2640 for your intermediate goal . Thats right. And its actually why im bullish. Because it keeps working, right . Theres good momentum behind the market we see breakout after breakout, the consolidation that characterized the s p 500 for several weeks has now been resolved to the upside so that yields a shorterterm target of about 2510, thereabouts and thats within the framework of the broader 2640 target. What is shortterm and what is intermediateterm when we talk about this 2640 in intear mediaterm is that the end of the year . It depends who you talk to. To me shortterm is days to weeks and intermediate term is weeks to months. We have seen, as you mentioned, this broad gain, not just the s p 500, this was the dow just sitting at a record level. The russell 2,000. The transports, the dow transports are there and weve seen it globally, as well. It really has been broad based. I think thats an important takeaway about it. Weve seen lots of leadership behind technology, which was weathered very, very well. Lots of momentum, obviously given way to improved momentum with the oversold balance and the likes of the f. A. N. G. Stocks so i think thats as well to follow through over the short and also over the intermediateterm. People get worried when we get into the summer. Volatilitys been incredibly low but you do say that the chances of volatility coming back really rise as you get into august. And you wouldnt be surprised by a bigger pullback. Usually it happens when im on vacation. So thats why i think when are you going on vacation mid august. Get ready, right do all technicians care about dow theory or is it depend on the technician as a technician i dont care that much on it. How do you decide so the transports, someone on earlier said there were a couple of dow theories, breakouts last week that are significant in terms of extending the bull you dont thats not i dont think so. Also the transports have really gained relative strength so if anything thats a bullish thats what i mean. They broke out in a bullish way. But you dont think the confirming indicator at this stage but not as significant as like i dow theorist. I dont usually use divergences in my work because they dont tend to be great timing devices but i put them in the good to know camp, especially with the tenets of that theory, really acting change with the economy yeah, exactly in terms of a major pullback what are you talking about usually im in the 3 to 5 range. And it depends where support is at the time were looking for that pullback. Right now support for the s p 500 is around 2400 thats the previous breakout point. If we do see a follow through which the breakout last week would suggest, then well put that about 2450 which would be again sort of that previous area of resistance. For anybody thinking, should we buy in every time hes been on for the last year, because the 5 pullback is not going to be anywhere near where we were when you were on a year ago. It reminds me 10 above where they were worried about it in the first place. In 2013, if you remember that, the pullbacks were very shallow and short lived. Had you waited for that 5 , we probably wouldnt have gotten your opportunity so i think you wanted to stay with the momentum indicators, and try to hire. If we see a pullback that is greater than 3 to 5 , lets say 7 , 8 , 9 pullback, do you reassess everything at that time as youre saying, look, we hit these new highs and that makes you remain bullish if we start to pullback bigger than you had expected, would that make you reassess its constantly being reassessed for me. I look at the markets from a bottomup perspective as well. With that if i start to see a lot of break joins, meaning stocks taking down the 50day moving averages or support levels, thats when i get nervous, because that mean that that breadth or the Market Participation isnt there. But as long as its really limited to maybe one Leadership Group for example thats driving that pullback, then i think the market can usually survive that. What about the ten year 2. 30 again under or back up i think its going higher yields yields will go higher right a bit of a consistent view on that in that theres some good support for the 10year around 2. 13 and resistance is around 2. 65. So im looking for about 2. 65 in yields it could go back down to 2 10 i dont think it will that is the part around 2. 13 okay. I thought you meant 2. 30 so it could go below 2. 30 again but not likely i mean, it could obviously do anything it depends on how the operator is set up right now it looks higher to me katie, want to thank you very much for joining us. Thank you good to be here. When we return, former deputy treasury secretary ever core founder roger altman is going to join us. And china trade talks hitting the 100 day mark a report card on that progress and look at the Telecom Sector which had its toughest, the worst performing sector of the year find out why and whether or not those stocks are perhaps a buy right now. Stay tuned youre watching squawk box right here on cnbc. 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. Welcome back to squawk box this morning Majority Leader Mitch Mcconnell postponing a vote on the gops latest obamacare replacement bill after senator john mccain had unscheduled scourgery over the weekend. Eamon javers joins us with more on the bill, and the timing of everything eamon . Yeah, good morning, andrew. The timing of everything, as you say, is unclear due to that surgery for john mccain over the weekend. He had a blood clot removed from above his left eye not exactly clear when hell be able to be back in business. And because the margin is so tight, Republican Leadership has postponed the vote for now more or less indefinitely until they can get a full complement of senators in there to vote they have two senators on the republican side whove indicated theyre opposed to the bill because they have 52 senators overall. That doesnt leave them any margin for error at all. Heres how Susan Collins describes the handicapping here. Shes one of the senators who opposes the bill she said ultimately its going to be a very, very tight squeeze. They have eight to ten republican senators who have serious concerns about this bill and so at the end of the day, i dont know whether well pass. Meanwhile the president tweeting some grievances about Media Coverage over the russia situation over the weekend jay secokulow, his attorney wasn television over the weekend and said ultimately what happened with the done jr. Meeting that was revealed last week wasnt illegal. The meeting and what took place at the meeting, based on all the information that you just said, is not a violation of any law, statute or code so the white house today wants to focus on made in america week they have a theme week coming up the president s going to be reviewing products made in all 50 states at the white house on the south lawn later today here in washington. They had these theme weeks in the past they havent been able to necessarily focus all of the attention on the agenda that they want to focus on, but clearly this is a white house that wants to put a flag in the ground here in terms of the agenda, talking about issues they want to talk about, the president very much frustrated that the russia story continues to dominate the headlines. And reading that piece and fred barnes, republicans arent team players gop senators who defect from Obamacare Repeal will hurt themselves, their parties, and the country. And you hear that thats what the president s been tweeting. The president s saying im sitting here in the white house with a pen ready to sign it. You do hear some frustration from republicans that the president , you know, he was in paris last week. Yep a ivanka trump was out west, along with her husband you know, the key players here havent been really out there mounting the fullcourt press to defend this effort and to push it across the finish line so you wonder whether the white house could have done more here to push for this i dont know what to think. You know, huff post is panicking a little bit theyre like, its been a week and theres only two, and nobody else has come out and said theyre not going to do it so theyre panicked. And its been a whole week of pressure where you havent had that theres only got to be one more and it hasnt happened. So i dont know. You heard Susan Collins there in that sound bite say well, shes and shes out but she said eight to ten oppose it or are inclined to oppose it but you just dont know whether thats real until they actually come down to vote. Right, exactly. Cornyn, you know, is the same kind you know, sort of out with the same type of warnings about, you know, you break i have seen a lot of people eamon say, boy, you watch the democrats when they have something they want to do. They they all stick together like glue. And think about if someone with obamacare, they couldnt afford to lose a single vote either, back then, remember, ted kennedy and scott brown and all that stuff. Yeah. It was really they would if they go all a bus together in a cliff, theyd still theyd stick together even if that was going to happen. Republicans not so much, which makes you wonder about about the difference between the two parties that way they know how to fight on that side they really do. They know how to stick together. Republicans are like, you know, i went that way. And its not well, and also, you know, i think the interesting difference that weve seen over the decades is that there are no democrats who are going to support this, right . It used to be that both parties had some crossover voters. There were democrats who would vote with the republicans, there were republicans who were moderate, northeast republicans who would vote with democrats, and over time that has simply eroded the parties have become more and more purely ideological, and so when youre trying to pass a bill like this right now, with 52 republicans, theres not a single democrat you can pick off. In the old days, when i first came to washington, you could sort of plan on scooping up a handful of the opposition party, and then you could lose some of yours, and you build a coalition. Nowadays it just doesnt work that way still amazing how much it matters how these decisions affect your chances for reelection. You know what i mean thats what has been brass tacks, thats what it comes down to thats exactly what it comes down to. And if youre a republican why why do these people want to be senators so badly . They get good tables at restaurants . Whats so great about staying at wouldnt it be better to do something you believed in, and if you dont, damn the torpedoes, come what may and if i dont get reelected ill go do what i used to do unless you feel like im here to represent my constituents and my constituency does not want me to vote for this thats what they fall back on a lot of them cant go back and do what they used to do because theyve always been politicians. A lot of them dont have any other career to fall back on this has been a lifelong thing for a lot of these the public view of this has changed pretty radically, and i think every one of these senators is sitting there trying to figure out what their constituency thinks and what they feel like they can actually support and what they cant. Well thats right the question is whether the consequences of voting for it are worse for them than the consequences of voting against it yeah, but its still about, you know Obamacare Repeal happens and then you see all these negative headlines and people losing their health care, in those states, do those senators want to be carrying those headlines into a Reelection Campaign . Thats a consideration the other consideration is, if we dont do the thing that we promised our political base, how is that going to be for us in reelection for something and then Public Attitudes seem to change based on polls, which we know about anyway, then i dont know, are they going to fall back on that but theyre also in the meantime going home to their districts and hearing from people yeah, the plan to go in there and scream at them all right, scream at roger joining us now roger altman, evercore senior chairman and founder, also former deputy secretary under president clinton. Been awhile roger. How are you . Good to see you. Good morning. So, lets talk, since youre a, you know, you know all about Interest Rates, and the fed, and everything else, are you surprised at 4 unemployment or whatever, with no inflation . Have you efsh seen an economic back drop like this . And is it demographics or globalism that makes it so strange right now, that theres all these cross currents its very rare. But i think what the data is masking is the degree to which so many of the jobs being created are paying less than the jobs they replaced and thats one reason, although there were many, that inflation is so weak but if you really think about that, its also a reason why weve seen such an upsurge of populism, and such anger among voters, because so Many Americans, the majority of americans, are seeing wages and incomes that are lower than their parents did. So at one level, labor markets are healthy in terms of the actual number of jobs. But at another level, in terms of wages and income, they arent you know, roger, we alluded to this earlier, that longterm, people warn about stagnant wages for the middle of the population, and income inequality can eventually have dire consequences for a society. But, nearterm, a lot of people worried about Profit Margins peaking. Because of wage gains eventually eating into Profit Margins i mean, companies except that wage gains wage gains just arent arent strong so, but the margins can remain, then, and all the doomsayers, the Profit Margins had peaked and were now going to start coming down, that may not happen we may continue to see great Profit Margins so the markets might continue to go higher, even with no wage gains. No well, it may be it may be, joe, that the share of gdp going to capital as compared to labor ticks down a little bit but its close to record highs and its just a fact, wage gains are very modest. Yes, average Hourly Earnings are ticking up at about 2. 4 annual rate over the past year. And thats good. But if you look at things like real median household income, or real wages per capita, they are down from the levels of 15 and 20 years ago and thats why so Many Americans are having a hard time making ends meet. When you look at that fed survey of consumer finances, and you see that 40 of americans could not meet a 400 emergency, that really tells you something about the financial conditions of the American Household yeah, its scary. Roger, do you think the fed has things under control in terms of finally unwinding . Do you think theyre going to do this in a clean way that doesnt disrupt anything i would never seen an experiment like the one thats coming up presumably this fall when the fed starts to actually sell down its 4 trillion surplus holdings of treasury and mortgage and other securities. Weve never seen an experiment like that. Its, to me, a fantastic high wire act as to whether the fed can do that, and ultimately later the European Central bank can do that, without disturbing the structure of Interest Rates and yet. Right i dont think anybody knows the answer to that but i think theres a good reason to be concerned about it. Roger, real quick, when ceos talk to you about whats going on in the markets relative to the economy and whats going on in their own business right now, do you say, look, theres so much liquidity out there youve got to still ride the tiger or do you say the fundamentals dont make sense right now well, andrew, the fundamentals are decent. I mean, if you look at, for example, janet yellen said at the end of last week that in terms of household spending, and in terms of business investment, to name two things she mentioned the fundamentals are good and the fundamentals on growth itself not terribly exciting, give or take 2 . But very steady. And the prospect of that continuing for a long time is pretty good. So, the fundamentals are pretty good, Business Confidence reasonably good. And thats one reason why you see stock prices high, and transaction levels pretty high thanks, roger thanks, roger well see you again soon dont be a stranger. When we come back were going to talk china the first 100 days of trade well talk about that and much more squawk will be right back. re. Look at us. Look at us. Its so nice to get out of the city. Its so. Quiet. Is it, too quiet . Its awful. Yeah. Feel at home, pretty much wherever you are. Tmobile is americas best unlimited network. And the wolf huffed like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Good morning, welcome back to squawk box right here on cnbc were live at the nasdaq marketsite in times square among the stories front and center at this hour, citigroup set to unveil changes to its high end prestige credit card. Wall street journal saying citi will raise the signup bonus for the card but raise the amount customers must spend to earn that bonus. High end cards offer generous travel bonuses have become an increasingly competitive part of the credit card market of course, some of the deal with the Platinum Card and jason morgan said speaking of the journal, dow jones hit by a data breach, 2. 2 million subscribers to the wall street journal and other services had some of their personal information exposed in early june however dow jones said it immediately remedied that situation and says it has no reason to believe any of the information was stolen and today is the day brexit talks begin in brussels. The representatives and their british counterparts begin to discuss terms for britains eventual exit from the european union. Well be watching that one closely. The 100 day mile marker in trade talks between the u. S. And china has been reached and Kayla Tausche has a report card. And status update on the progress i i confess i didnt realize that it was 100 days kayla, you have no life. You were following this. How did you know that . Someone tell you that or youve been counting down joe at this expanded meeting in maralago in april when they announced a specific 100day plan it was pretty easy at that time to look ahead on the calendar and say where exactly does that land then when they published the actual nuts and bolts of what they were calling the Early Harvest of the talks in early may it said specifically a lot of these things were going to have to come to bear before july 16th, 2017 thats when the two leading economies were trying to have completed a whole slew of the items. Most of them were in the works for years already. Among the items we saw Fresh Movement in the face of the agreement, first u. S. Companies began last week exporting beef to china and then on poultry trade the u. S. Is seeking comments on a new plan to pave the way to allowing cooked chicken imports from china its less clear how a may meeting of chinas Biosafety Council that was scheduled as part of this agreement turned out. The group was supposed to weigh eight product applications from u. S. Companies but we still are not exactly sure where that stands exports of liquefied natural gas to china from the u. S. , which were already taking place, those have continued as part of this deal now, the focus of items concern u. S. Access to chinas Financial Services industries to underwrite bonds, settle trade, and begin licensing reviews for electronic payment processes firms have had access to Chinese Markets for years and its a positive sign china would want to begin these processes but it could be years before they do have that access the biggest trade action that we could see this week, though, isnt on the list. It is impending u. S. Action against steel dumping. Commerce secretary wilbur ross last week briefed lawmakers on the administrations efforts which could come out as i just mentioned this week. The president told reporters on his way home from paris that he is looking at paris and potential quotas on steel but it didnt sound from that transcript like he had made up his mind yet all right, kayla, thank you very much. Its been an issue weve been watching very closely. Were going to talk more about it right now for more on this and what it means lets bring in john rutledge, chief Investment Officer with Global Consulting firm sapanod and gordon chang is a columnist and author of the coming collapse of china gentlemen, thank you both for being here first up lets talk a little bit about this 100 days. Lets talk about what this means and john, lets ask you first. We have been looking for some concrete things to develop weve seen a few, but maybe not as much as some had anticipated. How would you rate all of this well, becky, these are 100 trump days its like dog years. You know, so we have more time its really unrealistic to expect any meaningful trade events to take place in 100 days same is true for the north Korean Nuclear situation so we just got to contain our expectations here. There are small things, as you said, and theres the story about the steel tariffs which have huge political advantage. But, not an awfuls been done. It will be in the next 100 days. Gordon lets start with trade and talk about north korea, too. When it comes to trade, where do you think we stand just in terms of the relationship between the two countries. There was a lot of rhetoric that got thrown out in the election, and the very early days, but it seems like were working to the a little more closely. What do you think happens from here well, you know, during these 100day negotiations, theyre sputtering, and the number of news organizations have talked about, and i think trade relations are going to get testy for a number of reasons. One of them is that President Trump clearly linked trade to north korea. The chinese had disappointed him on their efforts to disarm pyongyang, and so i think that hes going to take it out on trade. And also youve got to remember that the republicans face 2018 in places like wisconsin, pennsylvania, michigan, the chinese have been dragging their feet, especially on credit cards. This has really been unacceptable and although i understand the need to contain expectations, weve been doing that for decades. And its really gotten us nowhere. So i think that the impatience is really important right now to show china that we actually are going to defend american trade interests and if we dont do this were going to get leaders who are more antitrade than sanders and trump. So i think right now is a good time to get china to hold to its trade promises john, gordon is of the opinion that look, the reason china has been so successful is because its trading partners have allowed it to develop these predatory trading practices over the last couple of decades as you just said, he thinks patience is running thin, do you agree with that assessment well, of course i think that weve weve got to concentrate on opening markets, and it would be good to do that faster rather than slower its also true that the trade account is exactly the mirror image of the capital account and when capital tries to get out of china, it has impacts on trade, as well and the numbers that just came out had imports rising 17 annual rate in china, and exports 11 . Both big numbers so, the recent story is really chinese growth returning and that growth returning is having a big impact on their imports, including from us, especially agricultural imports. There was some of those same numbers also showed that chinese trade with north korea increased in the first half of the year. And that came to as a surprise to a lot of people including the president , who was tweeting about that, too. So, john, lets go to north korea thats just what progress are we or are we not making . Le not were not making it. You know, ive actually worked in north korea on more than one occasion and it is an abysmal, abysmal place. Its gotten worse than the fact taken over and not going to get better until this family is ultimately removed from power. Which i think will happen sooner or later chinese trade with north korea has always been there. Especially Oil Refined Products going into north korea china has been helping i dont understand why china has been so slow to put pressure on north korea. I understand there are historical reasons why thats difficult. But this is not in chinas interests whats happening right now. Gordon, does china understand that no, i dont think they do i mean shortterm, you know, theyve been weaponizing north korea by transferring kwipt for their Ballistic Missile program, and probably technology for north koreas most advanced missiles theres also new cooperation which is really important to us. And so theyre weaponizing north korea to destabilize south korea, japan, and us, and so i think the Trump Administration is starting to lose patience with this. You know, china shortterm gets a lot of benefits from north korean provocations, because we stop talking about trade, south china sea, predatory trade practices, all sorts of things and you know, at this point, weve got to stop this dynamic, and i think the Trump Administration is, indeed, on that road. Meaning you think what comes next from the u. S. An ultimatum i think that were going to start to sever larger chinese Financial Institutions from the Global Banking system. The Treasury Department did that on june 29th, with a Small Chinese bank i think theyre going to go after a larger banks because theyve also been involved in Money Laundering and you know, all we have to do is enforce u. S. Law, and we can have a big impact on the chinese financial system, the chinese economy, and the chinese political system, and i believe that the chinese understand that trump recognizes that, which means that were probably headed for some pretty dangerous territory with the chinese, as both sides start to confront reality. John, how do you see this playing out this year . Well, i think theres more difficulties coming, too, as garden does. The problem is, the administration here doesnt have the manpower in state department and in commerce to actually engage in the work and push that forward very much. But, i think u. S. China Growing toward conflict is a story were going to see and were going to talk about for a very long time. Its a very difficult time part of what we see, of course, is xi is assuming an authoritarian position inside china. The internal politics are changing im sure you saw pu has been removed from chinese internet over the weekend because there were jokes by pooh, meaning winnie the pooh winnie the pooh there were jokes about xi resembling pooh. So he controls the internet in his own vanity so chinas changing. In a bad way let me ask you both very quickly, how secure is xi in his position and john ill start with you hes more secure than you might like him to be democratic reforms have been completely rolled back since hes beenin power. The media has been shut down the internet has been largely shut down. And so, his personal power has grown, along with the along with the courage of bad players and politics theyve also purged political enemies. And so i think he is not in danger from the party insiders, and most of what we see here is moves hes doing in the name of worrying about political stability inside china all right gordon, very quick answer on that yeah, hes more secure than winnie the pooh. The other thing, though, is that hes riling the political system by trying to move it back to a oneman system a maoist system and that is going to roil politics and destabilize xi jinping in the final analysis gordon, john, thank you both for your time this morning thank you pleasure. Coming up, could automakers face a bumpy road when it comes to selfdriving cars and a new study suggestion that drivers might not trust them when it comes to developing a safe car details straight ahead cant imagine id take a nap being selfdriven. No. Not there yet. And then a closer look at telecom winners and losers is now the time to buy that beaten down sector well find out baby crying slow jazz music fly me to the moon and let me play bell ring welcome back to squawk box. Among todays top corporate stories investor nelson peltz is mounting a fight for a board seat at Procter Gamble joining us to break down some of this is john feeney who covers p g for Consumer Edge Research john, this proxy contest means what in your mind . Good morning. Evolution, not revolution. I think this represents peltz engaging with management for a longterm solutions that are breaking down bureaucracy, and therefore improving shares, Getting Better returns as opposed to some of the more drastic changes weve come to expect from some other activist campaigns and other Management Change so you look at this and say its a catalyst, though . I mean its funny, because nelson peltz when he comes into these things historically starts out as friendly but they dont always end that way. Good point. I certainly i think hes smart and demanding. And i think this is a beginning, not an end but you have to remember, hes been engaged with management for a few months i think hes its think hes properly identified the issues here and theyre not going to be fixed overnight. But if he was truly happy, do you think hed need a board seat well, its certainly one way of assuring you have a place in the conversation i think this assures a longevity for his participation in this stock, in this story, and influencing it in a positive way. And i wouldnt note any kind of hostility in that seating. What do you think the stock could be worth well, i mean, we have a neutral rating on it because i think its trading at about a point above its longterm average. I could certainly envision situations, you know, with better with better improvement, you could with better sorry, top line trajectory you could make a case it should trade at or above its alltime highs in valuation. But where we stand right now i think its fairly valued and would you encourage shareholders to put peltz on the board . From what i can see, since hes properly identified the issues here, and the pace at which they should be addressed, yeah, id say i would. Okay, john, we appreciate your time. And we should tell you that nelson peltz is going to be on our air at 9 45 this morning on squawk on the street. In the meantime the rules of the road are changing for traditional automakers last week a published report detailing the obstacles facing the industry from Driverless Cars to Ride Sharing Services leading many established players in the dust according to that survey consumers are more aware of selfdriving Car Technology from google and tesla than the traditional automaker. When drivers were asked to name a car with selfdriving Car Technology 55 named tesla, 20 named google but only 12 could name a traditional automaker equally troubling Consumers Trust Silicon Valley much more than automakers. Among those surveyed 41 say they would trust a Silicon Valley company the most for Autonomous Vehicle software, only 16 said they would trust a traditional detroit manufacturer the most so, could these numbers mean a bumpy road ahead for automakers when it comes to selfdriving cars joining us is bob lutz, former vice chairman of General Motors, and a cnbc contributor good morning, bob. Good morning. So, this is the big question. The big question is, should we be well, should we be trusting the valley over the technology thats coming out of detroit. Well, of course not the usa today survey is relatively meaningless, because all it does is measure what the American Public believes today the American Public is always way behind the times you know, they dont educate themselves well. But in this case, who is behind is Silicon Valley behind or ahead of the times relative to detroit . Well, lets put it this way everybody is at about the same place when it comes toll autonomous Car Technology. But autonomous Car Technology, its an integration of sensors, software, maps, digital maps, and so forth into one unit. And that the suppliers of that are going to be numerous, theyre going to be various global companies, probably some european, some u. S. , some chinese, and in many, many cases, the automakers themselves i dont think you could claim that anybody is ahead of General Motors right now, for instance, when it comes to Autonomous Cars in that the cadillac ct6 is going to be launched in september, and it will have like fully autonomous capability, not only with a bunch of invehicle sensors, but also with down to 4 inch precision digital maps of the united states. Bob, hold on, but just back up for one second. So you think that the Autonomous Vehicles that we talk about and have seen on this air, when it comes to what google or thank you called waymo has been doing, are not more that gm has the same technology . Oh, absolutely. Absolutely gm has the digital maps. Gm has the hardware and software they dont make it all themselves no Automobile Company is going to make the stuff themselves theyre going to buy it from various companies that do the integration. But this is not Rocket Science Autonomous Vehicles, i hate to say this, but theyre relatively easy to do and theyll get perfected over time now longterm, they are a huge danger for the automobile companies. Because when we get to stage four, which are standardized, modules that can fit in to a highspeed train, on the freeway, when we get to that, and you just dial up your module, then we have a problem because nobody will give nobody will give a darn what brand of module shows up at the right time at your house as long as its clean and nice and does the job and car ownership will decline to almost nothing. And at that point, the value is no longer going to be captured in making automobiles, making automobiles is kind of like, nobody wants to be nokia, where they had a commanding lead in the handset market, and then all of a sudden handsets didnt matter anymore because the value with these handsets given away free with the Cellular Service and all of the value was captured by the content providers. Thats why youre going to see automobile manufacturers trying to move downstream right General Motors investment in lyft General Motors investment in maven, and so forth. Because, that is where the value is going to be captured. But the sort of branded automobi automobile, oh, wow i have a bmw and you only have a chevrolet that is absolutely going to go away bob its a much longer conversation and i want to have it with you. Because i did not appreciate that you think that gm is on the same page as or even more advanced in some cases from the others but we want to have you come in at some point. Okay, great thank you, sir. Great too see you what are you mad at him you didnt appreciate that no, im not mad or you didnt understand. Im saying i didnt coming up the telecom appreciate that the Telecom Sectors been hit on twitter disagreeith m whi already im sure hes a big gm telecom is down more than 15 yeartodate compared to the over all s p which is up nearly 10 and its the worst performing sector in the past week this month this quarter this six months this twelve months, and year to date why, people are worried about the growing price pressures in the industry, particularly with the price battle in the wireless business the losingest sector is made up of just four companies with only one in the green yeartodate level 3 communications up a little more than 3 , and he links it to century links bid and optimism of level 3s ceo chasing the helm the losers, verizon tumbling nearly 18 Raymond James points to a second year in a row of no Earnings Growth in verizon in addition to a strategy that investors question at t playing 14 with morningstar telling me it boils down to industry tightening, competition which teg finegativy impacted verizon and at t. Landon, thank you when we come back, washington watch senator john bar osso will join us right after the break to talk about health care, tax reform and much more. In the meantime take a look at the futures. Theyve been higher through the morning, even with the s p 500 and the dow sitting at new highs. Right now dow futures up by 26 off the highs of the morning s p up by close to 2 the nasdaq up by 15. Summer sizzle. Investors feeling red hot as the dow and the s p sit at record highs. This weeks test, a flood of corporate earnings proxy fight attention proctor aer gamble. Activist investor nelson peltz wants a seat on your board plus taking communication to a whole new level one smiley face at a time were celebrating world emoji day 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 becky quick and Andrew Ross Sorkin a couple of familiar we work together, right, on this show . And were finally all here at the same time. Which is nice. You know what nice to see you weve been on the show for a long time. We had a roving group last week. All right you were on vacation. Everybodys we have a lot of talent futures right now take a quick look our indicator, up 28 on the dow. Up under 2 on the s p, 15 on the nasdaq 2. 31 on the 10year. Kind of interesting. It had been, looked like it was headed back to higher, or after a brief runup, you guys werent here for that jobs report, were you . I was you were here muted wage gains came right back down a big corporate store youry to tell you. Trians nelson peltz seeking a board seat at Procter Gamble would be the largest activist attempt in recent memory joining us right now on the squawk news line is nick modi who covers the stock for rbc capital markets. How do you think about this, nik . What hes looking for is very consistent with what we were thinking, right . No breakup that doesnt really make sense for p g. No change in ceo i think david taylor who took over about two years ago is doing a great job. But he wants more immediacy in terms of Earnings Growth the problem is this, is that proctors basically been pruning its portfolio trying to get more focus in terms of what it focuses on, and that has driven earnings, you know, pressure in addition to all the fx head winds that weve seen and large cap Consumer Staples, no company has grown earnings because of the fx situation so whats possible here i just dont know i dont think it makes sense i dont think its going to change anything if he gets on the board. The sense of urgency within the companies has elevated since david took over. Not a catalyst for you . Not really. Obviously you have to go through a very extensive proxy battle. Second, even if he gets on the board im really not sure how hes going to all of a sudden miraculously make fx headwinds stop so would you tell shareholders to vote against him . Well, i i dont thats really not my place. But i just dont think its going to make a big change in how p g is going to deliver on its financial commitments. I mean the companys been cutting costs pretty aggressively weve seen a lot of Consumer Staples companies, including pepsi and coke and colgate and kimberly cut costs aggressively, but the fx situation has wiped out all of those gains so productor is not unique nick at 87, its trading at a p e of 24 times. Does that make sense thats where weve been caution. We say 24 times thats a lot. That is a lot for this company that isnt a f. A. N. G. Stock look, think about this. Clorox is trading at a premium to p g, okay which also is insane. Yeah. So, we are in an environment where we have a lot of weird things going on because the etf market has become so dominant in terms of moving stock prices right . So its a low ball stock, high yield, a lot of these stocks have performed well and you go back the last five years, i mean consumer sample stocks have done incredibly well despite very anemic growth and in a back it drop where rates are now starting to go up, and the stocks are still trading weve got to start asking ourselves the question, what is really driving the valuations, and i think theres a lot of but, its the 3 yield, number one, and its not trading at cocacola traded at 50 times earnings in 1999 i mean Procter Gamble is a stable i get it. Im saying 24 times. 24 times . 50 i understand what youre saying. But it is a i mean it is a blue chip and yielding 3 in a 2 10year environment if you could own google or p g it is what it is. I dont know but it is what it is and its there for a reason so this is like your all these arguments. The market doesnt und stand it shouldnt be here. I dont know, you know maybe it yunt. Maybe it should. Nik thank you for that. You dont want to miss this because nelson peltz is going to be on squawk on the street for a cnbc exclusive at 9 45 eastern sometime youll hear directly from the man. He thinks its undervalued. Even at 24 times. Lets talk about some washington news. The senate will delay a vote on the Health Care Bill whole senator john mccain recovers from surgery joining us right now is senator John Barrasso of wyoming, and senator, thanks for being here today. Thanks for having me. Lets talk a little bit about what this delay means. Does that make it easier or tougher for you to wrangle the votes . Well, were all thinking about john mccain this morning but ill tell you, he is a force. I was in vietnam with him last month. He will be back stronger than ever we need to delay the vote until he gets here we need all 50 votes as you know two senators have come out, republicans have come out against it, as have all of the democrats, and the senators that have come out against it have come out for different reasons. One saying it goes too far the other saying it doesnt go far enough were working to get to 50 with the mike pence breaking the tie. We are committed to do it. Its an urgency to do it because the key word, affordable, isnt there under the Obama Health Care law. You mention the two republican senators who have said that they will vote no. Thats rand paul, who as you said, it doesnt go far enough Susan Collins who thinks that it goes too far in terms of what it does to medicaid 33 but, we also hear that there are eight to ten other senators who have some serious concerns where do you stand with that group of senators at this point . Well, were working with closely with all of them when you mention medicaid, of course, that was a program initially designed to help low income women, children, and the disabled but with the Medicaid Expansion under obamacare, paying states bonuses for signing up ablebodied, workingage individuals that made it a lot harder for those people who it was initially designed for to get doctors. We now know that one out of three doctors wont take new medicaid patients because theres so many people now that theyve been dumped onto medicaid, and not the people it was designed for initially. But Susan Collins concerns have to do with those things that you do think of the original sort of mandate for medicaid and that is shes concerned about Nursing Homes not being able to function with this bill going through. Shes concerned about rural hospitals no longer being able to operate how i understand your point but there are people on medicaid that wrl never the people that this was intended to help, but how do you get to that same question that other senators are grappling with, what will this mean in my state will i have hospitals that no longer can operate will i have Nursing Homes that no longer can operate . Will i have children who need this who will no longer be able to get the funds those are absolutely key concerns and obviously coming from wyoming, where we have mostly rural hospitals, and i met with a number of hospital administrators over the past couple of weeks and over the fourth of july, those are huge concerns as you know, Zeke Emmanuel who was the architect of obamacare, he was being interviewed today on npr and hes written a book about obamacare and he said what we need, he said we have 5,000 hospitals in the united states, and we said, 1,000 need to close. I mean thats from his book. Well those are rural hospitals the 53 hospitals that closed already under obamacare are rural hospitals because it made it that much harder for Small Community hospitals. At the same time, theres a report out this morning in politico that the biggest hospitals, and the America Hospital Association Reports record profits from them so obamacare took it in the wrong direction, becky so, senator, the eight to ten in your gut, what is it telling you, that some of the eight to ten that really will break ranks, they havent yet, which is kind of interesting, i think, and then you read i dont know if you saw fred barnes piece in the journal about the republicans a lot of times dont stick together and that it will hurt the Republican Party and hurt the country if they, you know, if they dont get in line. I asked earlier somewhat cynically about whats so great about being a senator, where, if, you know, the specter of losing your seat there, and youre a senator, what is it you get great cable . Is it people look at you and say, wow youre a senator and they admire you and you walk through a place and heads turn what is it that causes these the keeping the job to be so much more important than maybe doing something that is philosophically in some peoples view correct what is it what do you like best about being a senator . You were a doctor. Youve always been a over the weekend, as you know, joe, most people call me dr. Barrasso or call me john the third thing is senator so, its a great privilege to represent the people of wyoming. I go home every weekend. What i heard this past weekend is, health care is not affordable you need to get down the cost. And the republican bill in your gut, do you out of the eight to ten, who is most likely to waffle and bolt . Well, you know, joe, every senator is going to get to speak for themselves were working with all of them to get people on board because this is going to be a completely open amendment process on the floor of the senate any republican, any democrat, during reconciliation, can offer an amendment to change the republican Health Care Bill once it gets on the floor were getting the 50 votes plus the Vice President to get it to the floor. To have that open debate the open amendment process, so that any senators concerns can be brought up and if they can get a handle orty of people to vote to support them it will be included in the new law. As a doctor, when is mccain going to be ready to come back to d. C. . Do you know . You havent done that surgery on a blood clot around an eye, have you . But how long does it take to recuperate well, hes tougher than most. Tougher than all so whatever the regular time is, cut it in half hell be back ready to join the fight. All right senator, thank you. We appreciate your time today. Thanks. You can ask a question you know, thats what al franken said when he was here, that its not the trap beings of the office that makes people want to no, its the representing your representing constituents and trying to help but cynically, you watch the way politics works, especially in the house every two years, they win one election and its already the next day theyre thinking about the next election, so which is why people like ken rangone want to see term limits. Thats what i mean. Another busy week for earnings, nine, count em nine dow koents set to report joining us kris teen short senior Vice President youre not short everything, are you christine . Oh, such a great last name for this maybe its right. No, not this earnings season, no i mean look were expecting another great quarter. Were at about 8 year over year bottom line growth a down pick from the First Quarter where we were at 14 if you really look at that number, if you take out energy, which is expected to grow 400 , year over year growth is only around 4 . And 4 is just about the 20 year historical average so i would say if you look at the real numbers, taking out that exorbitant Energy Number then you sort of have to ask yourself is this enough to justify current prices which are trading at about 18 times forward twelve months earnings with that said, banks really kicked us off on a high note on friday yes this morning we had blackrock kind of putting in a disappointing number but banks certainly gave the financials a boost on friday. What else will give us an indicator of the overall tone for the autonomy this week you know, i think weve got a lot of tech stocks coming up this next couple of weeks. Theyre expected to be, if you take out energy theyre expected to really be the lead sector this quarter 13 growth year over year. Drill down into that, is Semiconductors Semiconductors are really going to put up some high numbers this quarter. Micron already did theyre one of the main components with Semiconductors Leading them higher. And i think if you look at the opposite end of things, you know, Consumer Discretionary really had been a darling for the last two years, 2015, 2016 theyre expected to be the lagging sector, the only one expecting negative growth of 2 . If you look at some of the notes that have already been released from darden, from auto zone it really comes down to higher wage costs and i think thats a theme youre going to see continue throughout where we especially get to the retailers at the end of the season, and within a lot of fedex said its long so its not just Consumer Discretionary but i think youre going to look for one stronger dollar comments and two wage costs being discussed here well i think of micron as almost a commodity, commodity. What does that mean . What are whats strong . Global Technology Upgrades or something . Yeah. So, for if you saw the latest report on pc sales they were certainly down quarter higher memory chip costs, certainly helped micron, as the chips got more sensitive pc demand has fallen but they are one of the largest chipmakers i think you look across semiconductors names like nvidia, they make gaming chips, so that the chips that go within gaming consoles, theyve been very strong. And a weak quarter for gopro sales so they make camera chips. Theres a lot of different Chip Companies that we can look at within semiconductors and apple is always a big were always looking for indicators from skyworks and some of the apple chip suppliers, those all seem to be strong this quarter. Where where do you have Revenue Growth and where is it and year over year whats that supposed to be . 5 Revenue Growth is the expectation. Again, down from First Quarter where we were at 7 . You know its a little easier to predict revenues youre not going to see outlandish numbers but its within tech where 8 is the current expectation but overall metered revenue numbers and thats something we always comment on because you have the kind of crazy earnings numbers, you expect companies to be, but you know, not as Many Companies beat on revenues and that number doesnt change as much where you might have 60 to 70 of s p 500 Companies Beating on the bottom line only 50 weeting on revenue. Thats something were certainly tracking this season as well but in regards to the banks reporting on friday almost all of them beat revenues except for wells fargo so far we did actually a lot of revenue beats as well. And the outlook for most companies will be onwards and upwards . Were actually seeing a decelebration in growth in the back half of the year so only about 7 growth for the third and Fourth Quarter i see those numbers pull back a little bit as they often do youll see those pull back as we end this earnings season theyre quite inflighted at the combination of the year. I think one thing that were looking for is commentary on tax reform i think youve seen those numbers come down as thats become less likely this year and will be pushed out into 2018 but right now, its still very high single digit growth but again, those numbers are starting to pull back just a little bit great thank you. Thanks. Is that name christine short for short . Yes okay. You you know, just wouldnt take it christine long. Coming up, when we return, snap or should i say osnap shares of the messaging snap dropping below their ipo price an analyst on if a bounceback is possible and former cea chairman glen hubbard is going to join us to talk all things economy and why last nights game of thrones premiere left some fans furious. Stay tuned youre watching squawk box right here on cnbc. Most etfs only track a benchmark. 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 this morning we are watching shares of snap they are now below their ipo price and more trouble could be on the horizon many of the backers will be released from their lockup restrictions that expire in less than two weeks permitting them to sell out of their positions joining us brian white Senior Equity Research analyst at drexel hamilton. How much more do you think this stock has to go, either way . Well, if you look at facebook, it had a very tough four months. Right the stock bottomed exactly four months after its ipo. Okay. And it went down associated with the lockup . Associated with the lockup. So it finally bottomed out, and then started to go up. You know, snap, here we are just over four months and stock is down about 48 . Facebook was down 60 during that time. Okay. So you think this is a great buying opportunity i think it is a great buying opportunity. Weve covered a lot of companies that have had lockups and they tend to bottom out around the lockup period. But what do you think the stock is actually going to be worth then well, we have a price target of 30 so if you look at a lot of very High Growth Companies in the first three years after an ipo, they traded 9 to 22 times enterprise value to revenue. Remember this is a 100 growth company. I get all of what youre saying except for the fact that facebook is arguably eating their lunch, which is to stay when you look at what instagram is doing with Instagram Stories and all of that and you also recognize that it seems, at least for the moment, that snapchat cant grow out of its demographic, you know, how much room is there really to run . So, i think theyre definitely feeling some pressure absolutely right the market is enormous for mobile advertising so its about 66 billion based on ibc going 196 billion in five years it doesnt have to be winner takes all. I mean i think this is a market just like every market and you know, snap is only a billion Dollar Company maybe this year. Right . Look at facebook its 38 billion right . So, they dont need to and you have this are they in the same league this was always the problem with twitter. Everybody thought that twitter was eventually going to become as big as facebook that was the promise, if you will is this a onetoone messaging app, which is what it does so well, or is this Something Else . I think its different. Right . I think its a totally different we call it a platform for the imagination right . Its a tool that you can go in there, and do a lot of cool different things, get engaged with it, and they can sell advertising to you without you feeling like they are. Right . The advertising is very engaging right whether its a lend whether its a discovery story and there are also, remember, very focused on a demographic. Right . So thats a great thing, because advertisers want that demographic. Very tough to reach. In 27 of the worlds population, and facebook is very broad. So i think advertisers are going to work both with facebook, theyre going to work with snap. Theyre going to work with google and just like, you know, the ceo of snap or twitter who do you give it to at these current valuations i give most of it to snap you give most of it oh, absolutely. Brian thank you for coming in thanks a lot. Appreciate it messaging apps like snapchat are revolutionizing the way that People Community indicate. Today we mark those changes with world emoji day. Eric has more on that story, and how do you actually get a day declared around the world . Thats right. As ridiculous as it sounds, we are here talking about world emoji day because in the iphone theres a calendar emoji that says july 17th because thats the birthday of apples product from 2002. Emojis reflect the changing nature of communications for people and business. We went from the phone to email, email to text, now were going from actual language to just pictures consider on instagram the majority of people use emojis, theyre officially 2666 emojis in unicode standard that will always work, plus countless unofficial emojis introduced by companies, brands, celebrities, you name it. Corporate examples dominoes lets you use emojis to order pizza. Chevy put out a press release completely in emojis Goldman Sachs did a Research Report on millennials. Twitter charges companies a million bucks apiece to get customized emojis. Their customers include coke, pepsi, starbucks and disney. Snapchat spent 100 million for a company that turns your face into an emoji. The reason behind all this Academic Research shows theres more user interaction when you use emojis i know it tuneds crazy but just wait a couple decades for the next generation to be in charge like your kids, will cnbc even need words anymore we just going to be doing stories just pictures of the little bank, the bank emoji. The up arrow, the dollar seine the little yen stack of bills. Who knows what could happen. I know its crazy but this is the fourth year now that hey had world emoji day from the founder of emojipedia. So thats how they declared it world emoji theres this emoji movie out theres an emoji movie. Facebook says about 5 billion emojis are used every day on their messenger app. Some opera house is doing their operas in emojis like its a little silly but its true that most people use them, and theres more interaction there. So for businesses, thats why theyre spending all this money. You did a good job. I really tried to put it together when you said, its ridiculous but here we are talking about emojis i was going to say, no, here you are talking about emojis do you know about the emoji movie thats coming . I dont know much about it. I try to focus more on the business side of it. I know my kids are getting excited about this emoji movie its more for your kids [ everyone talking at once ] there it is can we get the camera height right here and there it is. I have a hard time imagining i think its turd. Thats what youve heard . Thats what ive heard, too i was excited about the lego movie. I felt like that was my generation this generations lego movie is emoji no my kids like the lego movie. Theyre more mature theyre not going to get sucked in your business the village is lord business okay you havent seen the latest one. With emojis, like if you dont see that well close up, andi do okay close up, but if you dont, you can sort of make out words but i never know whether someones smiling, or unhappy, or what is straight across for the mouth just ambivalent . Thats like one of these . Yeah i dont get anything out of this. I dont get anything out of these. If you use an iphone if you do less than three emojis in one text theyre much bigger so you can see them thats key youve got to do three or less okay. Otherize its theyre really small for me, too, yeah. Like i said, nice to see you. Good job im glad you came up with this, suggested it and begged to do this story thats right. Coming up this morning, top stories plus a new report on the state of the economy, and then former cea chairman and Columbia Business School dean Glenn Hubbard will join us on set. Hes been rumored as a possible replacement for fed chair janet yellen yoreatarco of that gy hn u wching squawk box on cnbc rain is an amazing thing. But as you get older, 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. 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. Good morning and welcome back to squawk box here on cnbc live from the nasdaq marketsite in times square. Among the stories that are front and center this morning, we are watching the shares of dow component Procter Gamble, Trians Nelson Peltz is seeking a board seat at procter. He says the consumer giant has a bloated strukter and costs hes not looking to replace the ceo or any current board members. Well hear from nelson peltz when he appears on squawk on the street at 9 45 a. M. Eastern time bank of mark mel lon has a new executive chief officer. Charles shark who was formerly the ceo at visa. He replaces the ceo who will remain as chairman through the end of the year. And watch for the latest numbers from netflix, after the closing bell, and now happening this afternoon. Analysts predict netflix will report quarterly engs of 16 cents a share on revenue of nearly 2. 8 billion. Theyll also be keeping a close watch as they always do on subscriber growth. A new report on the economy this morning suggesting some good news for workers. Steve liesman joins us with the details. Is this Wage Inflation finally starting to i dont call it Wage Inflation. I call it wage growth. We can talk about the difference a little bit later but that check with your raise might finally be in the mail a new survey from the National Association for business economics suggests that wages are already on the rise. 47 of the 101 businesses surveyed said theyre hiking wages up 8 points from last quarter and the second highest reading weve had since the end of the recession the same percentage that they expect wages to rise in the next three months and employers are saying it isnt easy to find workers 35 saying its difficult to hire, 27 say no difficulty, and 20 didnt try to hire and 18 dont know but, take a look at the strategies being used by this 35 . 22 are rising pay to find workers. 19 are training internally. And joe theres your 10 are automating more instead of finding workers. And 4 are actually lowering requirements for the job businesses also reporting positive outlooks for sales along with Capital Spending. Offsetting some of the wage pressure, fewer firms are reporting rising material costs. So the profit outlook remains positive whats the difference again between wage growth and inflation . I dont like to have the idea of rising wages being called inflation so its just when they go up with productivity when wages rise oh, why am i even talking when the professor, the guy who is like the dean of was i close . Youre doing great an ec econ 101 thats all i can do is 101. I cant say anything more. Why are you talking becky asked me a question nice enough to not ask okay. We are joined by i realize we have a better Business School dean glen hubbard. Is that sort of a personal thing that steve has with that or is he on to something with not calling it wane inflation . As long as productivity is growing and wages rise thats a good thing we should be celebrating were looking for wage growth. Its only when wage growth really outstrips productivity for a period of time that you have trouble i think this is good its a sign the labor markets tightening thats a good thing, not a bad thing. We need to do more to bring people back into the workforce but thats a tougher problem is it a different what is it, 4. 7, 4. 8, is it different this time around theres some nuance that sounds really low and like labor is really tight but it doesnt seem like thats the case well, it is and it isnt. I mean the labor force is tight by people who are actually in the labor force. The question is all the people who left the labor force demographically baby boomers . No. Thats a part of it. Some people were just discouraged and left the labor force. We can get them back were not going to get them back in a month. Say its half. About half thats the best studies that are out there. But that means half we can get back were not going to get them back with Monetary Policy but we can get them back with better work support policy and tax policy can we, this is the big question now, can we actually get 3 by either population growth somehow, or i dont know, if we i dont know how we need to handle Immigration Reform i dont know how that plays into it and can productivity increase with Capital Spending, like by corporations yes, some of all of the above. We can grow at 3 . Its not easy. But it takes a few things. We could have to get is it well we can we have to get productivity back we have to get about half of the lost Labor Force Participation back the nondemocrat graphic part back and of course, immigration would help a lot but we can do those things but they would require very different policy mix than the one representing youre not drinking koolaid. No, you can definitely do it. Its not easy. But we can definitely do it. Better than denying it. Im not sure i have setting you up as i said its very difficult to do, and the current immigration policies do not lend themselves to increasing population and also, its unclear to me, and i think its unclear to a lot of people that government policy can really affect the key factor which is productivity it can help. But as janet yellen said the other day, getting a few tents out of productivity from a program is a success its huge getting half a point or a point is pretty much about Capital Spending the thing that this Business Cycle was different in was the collapse in Capital Spending that has been the biggest explanation of the decline in productivity better tax policy can help to turn that around we can do this even if you say you think thats why it is that businesses arent spending i think its a big factor i think regulation of tax policy are very big factors in the productivity slowdown. And tax policy can help there. Tax policy can also help with hours worked but weve got to actually do it. We cant just talk about it. I mean, jamie dimons comments were just vintage, i thought last week, especially coming from a democrat you know what i mean he could actually say that progrowth can actually work do you think theres a whole group of economists, and people with skin in the game, that they have to go back in the last eight years and they have to say, yeah, we did screw up some of our policies were detrimental to growth . If we can grow at 3 the whole narrative about it being impossible suddenly goes up in smoke. Right and theres a lot of people with invested interest in saying that 2 is the maximum we can do right now. I think its hard to get people to go back and say i made a mistake. An easier thing is looking forward theyre actually prague we dont get to 3 . Democrats and republicans can come together on Corporate Tax reform no they cant that deal has been on offer for several you really think democrats, you get a vote on tax reform not at a number like 15 . No a number like 28 . Even mid 20s or low 20s i think is possible, and you could pay for it so i think its a matter of figuring out what is the biggest impact on productivity and what can we get is there still a climate in washington that would allow a deal like that to happen where the two sides are working together, because it seems like the climate is so poisonous right now, that its hard for me to imagine any bill that both sides obviously it is poisonous anybody can look at that and see. Having said that, the stakes are so large here. It only takes a few leaders on both sides and they are there, who could come together. But the president would have to lead he would have to put out a plan and have everybody start shooting at it and he would have to put out a plan that would be something much closer to this bipartisan number like say 25 . Right for the sake of argument. Hes saying 15 if the president continues to say 15 that doesnt if you say it takes president ial leadership to get there youre not going to get there from 15 is hard just because its difficult to see how you would pay for it but for Something Like the border adjustment that seems if anything on political life support. Yeah. So the question being what would be a different plan. The administration is working on it when they serve up the plan, if it is sort of in the middle i think its got a good shot can we ask your opinion of the productry of fed policy here theyre on this graduate tightening path and reducing the Balance Sheet . I think theyre on the right path the bigger question for me is not the normalization. Its more articulating a framework to explain to the public what theyre doing. I think of it as a maintain and explain. Maintain something tell the public what your rule is what governors your actions, and then when you deviate, explain to the public and the congress why, weve seen the fed been doing that you cant talk about the Balance Sheet or where youre going unless you know what true north is can we also talk about the elephant in the room which is whether or not you would take the fed chair role if offered and has anyone talked to you about it theres only one person whose opinion counts there, his name is donald trump. I dont think thats interesting. I think what is interesting is the future of the fed. The administration really can remake the fed in Monetary Policy, lender of last resort, Financial Regulation and i think thats the real conversation to have one more, though. What do you think about somebody like a gary cohn who doesnt necessarily have the economic background that you might or somebody else might as an economist. Have you do you have a view about that i dont think economists have a monopoly on skills to run things okay. I think you need a diversity of talent in an organization at the same time, the feds hard its a very technical job. Right its not a political job. And so you need in that mix of skills a lot of Technical Skills can we follow up on that . Which is how would you remake the fed . Well i think if your question for the president is getting appointees who fit an agenda of articulating a clear framework and sticking to it hes made some very good nominations in that regard. I think its really a matter of articulating what kind of rules were going to follow, how were going to follow them and then explaining to the congress when we dont weve seen over the past decade or so a policy thats a little too ad hoc, at least for my taste, and leaves the public wondering whats going on. And leaves markets and the Business Community wondering where were headed its nice that you said that you dont have to be an economist to the head of the fed, instead of, you know, the other side of it is, autonomous, do they have any real world experience whatsoever . I mean should maybe we should be embracing the idea that someone who has actually had a job in the private sector could be running the fed because they actually i do think you need a diversity of skills not only on the fomc, but also as Regional Bank president s, many academics have a big footprint in business or finance, too. You think the you love the ivory tower in 1999, and 2002, they came up with a response to a deflationary zero lower balance environment. And then stayed easy for way too long and build up the whole bubble why dont we ask the expert here are you part of the are you in the camp that you think fed policy being too low for too long Led Companies to make a choice to do dividends and buybacks sort of said that, yeah thats why we have no Capital Investment no, he didnt okay. Im sorry i missed that the fed definitely had a period of money in the early 2000s that definitely helped precipitate the financial crisis i do think policy has distorted risk taking. In the economy i think one of the reasons for normalization is to get beyond that i think thats a view thats pretty widely shared among economists and among many business people. But going back to it, youve really got to articulate a framework that gets you there. You cant just say you think congress should pass this rule i dont know what you mean by the rule a rule. I dont think the fed needs to have a single rule. Okay. That governors it because after all we dont even know the intersect in that rule. We need to articulate a general way of thinking about the world and inflation or unemployment and when we deviate from that, as the fed, explain it thank you very interesting. Very interesting still ahead amazons push to take over the world. Up next, messaging and Meal Delivery later on squawk on the street dont miss an exclusive with activist investor nelson peltz youre going to hear about his proxy fight at Procter Gamble ap to keep our community safe. Before you do any project big or small, pg e will come out and mark your gas and electric lines so you dont hit them when you dig. Call 811 before you dig, and make sure that you and your neighbors are safe. 811 is available to any business our or homeownerfe. To make sure that you identify where your utilities are if you are gonna do any kind of excavation no matter how small or large before you dig, call 811. Keep yourself safe. Welcome back to squawk box everyone in the headlines this morning, amazon is stepping up its grocery game with plans to deliver meal kits to customers homes. The ecommerce giant registering a trade mark for a new service with the tag line, we do the prep, you be the chef. This comes just weeks after amazon shelled out more than 1 3 billion to buy grocery chain whole foods. People thinking that this was going to be the future sure enough it is. In other words the company is reportedly working on its own messaging app called anytime its said to focus on messaging, voice and video calls and photo sharing that gives users the ability to apply filters to pictures and videos. Very quickly back to this idea of amazon shipping these food kits as a result blue apron shares are down by about 7 this morning. Really . Wow. In other tech news, there are some very angry game of thrones fans this morning, both of hbos Live Streaming services crashed during last nights season premiere of the show. This is the second year in a row that the services went down as millions attempted to tune in. Its not clear exactly how many viewers were affected. By the glitch. Okay. Joining us right now to talk all things tech ed lee, recode managing editor and cnbc contributor is here. Lets talk hbo for a second. Yes what do you make of that . So, look, were entering increasingly a Digital World for all kinds of things. Your cable used to go out and youre upset now when your streaming goes out, youre not calling your company, youre thinking about hbo directly thats the thing thats interesting here for years and years, hbo sat behind the cable distributor. Cable distributor handled all of the marketing as well as all the customer complaints. Now when they have a directtoconsumer service, hbo now. Well who do i complain to . Chances are youre complaining to hbo thats another part of the infrastructure or the cost of running a directtoconsumer streaming service that should be factored in. Are they running it themselves or is that they are using bam tack but the thing is that youre not calling them as a consumer to complain about it. You need to know to do that. You just know youre buying this from hbo directly so thats a factor and i think for the longest time a lot of these guys when they were part of the cable ecosystem, they said we like working with the Cable Partners because they do all that work for us we dont have Customer Service reps now, its like, well where is that how do i, as a consumer, deal with it. Were going to be hearing, lets do a little bit of a roundup. Were going to hear from netflix. Yeah. In terms of its earnings. R a lot of emmy nods last week but they also spend a fortune on content. Are they spending too much too little i actually think theyre being smart about investing in content now so that its something that, you know, you can watch years from now right if you never watch orange is the new black you can watch it next year or the year after, its still fresh to you. So i think its a good thing to do theyve been cash flow negative for years and years. I dont see that changing. Their challenge is growth in the u. S. Is starting to slow down. Basically anyone who wants a netflix account probably already has one. Right so they need to really grow overseas thats a harder thing. Different markets, different rules. Different types of enterta entertainment. Different content right and you said well hear from them at the end of the day and thats excessive usage because it will be at the end of the day. So youre not using that as the band usage on squawk box. Because people use it like six times the proverbial end of the day. You used that in an acceptable way and i congratulate i appreciate it theyre reporting at the end of the day you didnt mean the end of the day. Blah, blah, blah what happens at the beginning of the day with all the people that say at the end of the day . Thats a good point, joe. Very good point. Ed, what do you do you think netflix will still take over target . Its traded like its a takeover target. 100 times forward earnings either they have to meet that with its growth, which its going to be harder for them to do, or someone takes them over if not necessarily because of doesnt but its another distribution play. Netflix is like another Cable Company in that way. 50 million u. S. Subscribers thats a huge market to tap into. Do you have a take on snap . Its a lockup period. Thats about to expire theres always a sell off. Facebook in its early ipo period after its ipo also had a long, long dip before it came back so i think jury is still out. I think whats harder though sbauz of facebook they need to crack into that market. Play a game with me im going to allocate you 100 now and you have to reallocate between snap at current valuations, uber to 50 billion and pinterest. All four of those are difficult complicated companies. I would probably weight it more heavily toward snap more than any others. I would not put any in twitter. Let me ask you another question we just talked about this amazon story. Amazon getting into the food delivery business. That was speculated but they actually applied. Going to start doing it. Blue apron down by 7 on this news blue aprons ipo got hit badly when amazon made the purchase. Is that warranted concern about a company like blue apron when you see amazon i do think so its interesting whenever amazon makes a move in the area you see that. Whole foods. The organic food suppliers were dropping because they knew they were going to get squeezed jeff besos is playing on a higher level i think its warranted the way to understand amazon as a Retail Business isnt necessarily to own inventory the way traditional retailers do its to hack the Delivery System thats their big play. Thats what amazon does so well they saved enormous amounts of time in my life. I hit three buttons on my phone and its done. You can get it within a few days a lot of other traditional retailers are saying our website needs to be updated. Its not about the website its how quickly and consistently you can deliver to the consumer thats the key thing. When you look at what walmart is doing do you think they have a chance its a different approach. Mark laurie i think hes a smart guy. He has a really forward thinking way. The better chance walmart has. Okay. Thank you sir. Any time. When we come back we will find out what jim cramer has fired up this morning. Hes going to join us from the New York Stock Exchange right after this d itself. And her paw wont heal on its own. Were all working forward to something. Synchrony financial can help your customers make it happen sooner. So she can plug into her dreams. And theyll have a new addition for their new addition. Whatever youre working forward to, even if its chasing squirrels, Synchrony Financial can help you get there. Even if its chasing squirrels, the power of innovative thinking. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Thithis is the new new york. E . Read 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 jim did you have an opinion about whether it was overvalued, under valued or fairly valued . I have been following this one i felt that proctor is too slow with the cost production. I didnt like the way they had done in emerging markets unilever has been much stronger in their marks that said, this is a very challenged group and you have to take out costs and you have to also be able to take share and thats a hard thing to do all at once you never go wrong but i think they can do more and i like to think if nelson comes in he can do what hes done to a lot. 24 times pe and clorox trading higher does that make any sense in the world this whole group is elevated because rates are so up. The group has been very overvalued as long as rates stay as long as they are these are bond market equivalents but proctor lost an edge they have not done well in a bunch of categories where theyre very aware of that but lets see what they have to say. I get a jegenuine sense that nelson would have been great for them if they put him on. Thanks. Well see you in a couple of minutes. Rother] any last words . [boy] karma, danny. Karma [vo] progress is seizing the moment. Your summer moment awaits you, now that the summer of audi sales event is here. Audi will cover your first months lease payment on select models during the summer of audi sales event. You on a perfect car,rch then smash it into a tree. Your Insurance Company raises your rates. Maybe you shouldve done more research on them. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Liberty mutual insurance. All right make sure that you join us tomorrow well be joined by the fatherson duo and plus discovery ceo are here big lineup for us hope to see you then its time for squawk on the street good monday morning welcome to squawk on the street. Futures are up after fridays record close and a jam packed week awaits us earnings season kicks into gear. Europe is mixed. Watch for ecb this week. Bonds pretty steady. Empire was a miss. Its the weakest in 8 months our road map begin with another record breaking run for the dow and s p setting all time highs will better than expected earnings send stocks higher