Transcripts For CNBC Squawk Box 20170727

Today. Thank god youre here. We have some news comcast is reporting and when you report on a company like comcast, there are many Different Things that people watch. Not necessarily the bottom line number but let me give that to you any way. Earnings per share, 52 cents that was up almost 27 year over year it was 3 cents ahead of expectations consolidated revenue grew 10 . 9. 8 to 21 21. 2 billion. That is above expectations of 20. 855 consolidateded revenue was one of the things that people might look at, but maybe more so is ebita growth Strong Revenue and ebita growth increasing by 10 . First half ebita growth the best in six years a lot of this, sorkin you see the main cylinder . Squawk box. Part of it. Film revenue up crazy Nbc Universal, outstanding quarter according to the company, grew ebita by 20 Comcast Cable delivered what the company is calling a great quarter is a strong balance between financial growth and solid subscriber metrics you watched this over the years. What do we need to look at in terms of ads highspeed internet ads those are the ones people care the most about. People will look at video subs down 34,000. But thats for the most part, there were a handful of quarters where i would argue this is close to flat. There were a handful of quarters they were up marginally, people thought that was remarkable. Theme parks up 15. 6 revenue to 1. 3 billion higher attendance and per capita spending on the success of harry potter and hollywood the openings of minion park in japan, and volcano bay in orlando. The ebita for theme parks up 17. 3 to 550 we went over most of the metrics in Comcast Cable cable revenue was up 5. 5 to 1 billion. Cable ebita up 5. 4 to 5 5. 3 billion. Anything else . What do you think of this talk that comcast should buy verizon . The report from yesterday came out while squawk was on i think that its not going to happen the wireless business is a terrible business. Yes so the question is whether you need it streej it strategicy defensively at some point. If you look at sprint and tmobile, do you let them merge s that a bigger bite five years from now or smaller bite i think you have five years. I dont think you have to do something right now. I do think longterm, if you own the pipe, you want a wireless option you need more of a wireless option tofrnlgt your point right now we saw theyre able to raise prices still actually increase the number of broadband consumers. Verizon has to lower prices. The churn is terrible. You dont need to be in that business why do that you dont have to you have time. I think time is on your side now. The problem is you never know when time wont be on your side. Thats the harder part to figure out. What i find most interesting about this issue is actually nbcu has a product that they could use on their own for wireless except the government doesnt legal them we have spectrum that was given to us because of the titanic remember all of this broadcast is done over spectrum that could be used for ovther things if the government would loosen up the rules they have about it you wouldnt have to go out and get somebody elses spectrum thats another subject. Thats my free market utopia down the road. Remember when ge was selling nbc . That network was mired in it was in fifth place it quietly has become number one. Three or four years or something. Quiquietly. While youre competing with this new content finding it in different places talking to the producer about how kids view media. My kids dont have a show on tv that they tune in to you mean at a certain date or a certain time they watch netflix, youtube and not on a tv. Did you see fate of the furious . I havent seen any of those theyre great so campy minions, thats what we did i watch old movies. I dont know in media deal news, viacom reportedly out of the running to buy Scripps Networks that leads Discovery Communications as the sole suitor scripps and discovery have agreed on a price believed to be at least 90 a share 95 maybe even. Everything needs to be finished before the deal is done. Everything is expected to be finalized in a few days. Facebook shares rising to an all time high based on better than expected numbers across the board. Jowl jew Julia Boorstin joins us now. Advertising surpassed expectations revenue grew by 45 to 9. 32 billion, earnings growing 19 cents higher than expected i spoke with Sheryl Sandberg last night, the coo about where theyre pushing to drive revenue next our goal is to be a platform for content advertisers. Were making early investments and kick starting the system to get video views on facebook. On the call last night, Mark Zuckerberg talked about potential business that messenger can generate down the line were starting to put some ads into the product just to see the basic parameters on how that performs how people like the ads or they dont. How they work for businesses get an understanding of that. Zuckerberg warned that the ad volume on messenger would be very small but its important to get businesses to use messenger to interact with customers. Thank you very much for that. For more on facebooks earnings, we want to bring in an analyst from mones cristi harden co it seems like it never ends. The street was looking for 43 growth in advertising. They post 49 it doesnt stop. So is there anything youre worried about with the company yeah. A couple things you have to consider right now you could be operating in an environment of peak margins. As we move towards video, theres going to be a rise in content cost associated with that when you look at amazon and netflix spending a combined 10 billion, at what point is Mark Zuckerberg willing to go to compete for those tv audiences so the news feed is maxed out. They cant stuff more ads. Unless they charge more for the ads. Video, when Sheryl Sandberg says episodic video viewing, does she mean episodes of television . Charging commercials like we do on a tv network . Exactly its two prongs. One is the shortform content theyre trying to do, which is on the cheap the longform more premium types of experiences we will startiversary th promotional data plans the average revenue per user has been slowing for four quarters so they will need new levers like video to yuf soffset the decline. What do you think the stock is worth . Theoretically you can make the case for at least 25 higher from here. Im neutral rated becaus af aforementioned risks, but its not that hard to sharpen your pencil in terms of a value play, how do you compare this to google to snap, we have not mentioned snap yet. Yeah. Or even twitter i think google is without question the most favorable risk reward tradeoff it is trading ten times ebita. Numbers continued to grow. Commentary from them on the new growth levers like youtube and hardware will be and the cloud are bullish. When you consider facebook, theres more risk to the story there as it relates to the margin on snap, well have to see on august 10th. Is julia still with us . I was going to mention the Regulatory Risk on facebook. We saw the fine that google paid we know about the potential overhang of other fines or payments that may have to get made to satisfy regulators in europe where do you see facebook . I mean, i think a lot of the risk that facebook faces on that is related to the multiple, and could be driven from amazon. I think amazon faces the greatest risk. If you see greater scrutiny placed on amazon that could translate to heightened concerns on facebook. We want to switch gears to amazon youve been writing about Regulatory Risks in the wake of the whole foods deal what do you think will happen to amazon honestly this could be the first trillion dollar company. Theres very low risk for the ftc to not approve this deal if they do rubber stamp it as yes, theres very little to stop this have you read his piece he thinks its not a good idea for them to approve it. You think this is you think this is a transformational deal for amazon. Amazon will say privately, no, no, no, its a small transaction. Hopefully it will help consumers. Well run it independently you dont believe any of that . No the argument is its only 2 of growth stream. Heres the play. Once you enter into that, what you do is you drive Gross Margins to virtually zero on the food side. Another deflationary component of the economy, which will drive more and more demand and touch points for the consumer. Then you go to prepared foods, an 8 800 billion industry, which is bigger than grocery that they can tap into the restaurant market then with the rollout of 5g, better ability to predict preferences, which will drive people away from brands and more into privately labeled goods, making every product about function and price rather than branl brand. I talked about the depth of the energizer bunny now i will push back. Both of you should be excited about this isnt this what capitalism is all about . Isnt this whats called progress yeah, absolutely. Im pro capitalist i work in the Financial Services industry hes pro capitalist did you read the but his piece really raises a concern about this deal. Heres the way i look at it the internet has changed the game as Companies Get bigger, its better and better for the consumer you are Getting Better prices, better experiences, better data. The question is to what point is it better . For the consumer or better for society because so many people you think wont be working . Whats the negotiaative . You also have to think about tax revenue to jurisdictions, to local and federal just jury dictiric jurisdictions. Things i dont worry about. Lets assume youre right at what point is it the role of the regulate toor to step in . To believe youre correct, a regulator not only has to decide that thats happening now, they have to more importantly predict that this will happen in the future thats a much higher hurdle. I dont know if this is correct, all im doing is pose questions. I love when people pose smart questions. Totally novel idea for you. The way i print it in the report, i call it amazons contract with america. The contract is well let you get bigger as long as you give us better and better prices. Is that a good thing ultimately at the end of the ay when you think about retailers and whatnot, its all the way down the supply chain. When you talk about restaurants, its not just food its down to the seat. Down to the cow. Im trying to nail the harm harm is employment, loss of tax revenues to jurisdictions. What else . Loss of brands. So. So what . Well, i mean loss of brands im not can i add that i think you assume total success from amazon the brand its all going to be private label all i hear is Millennials Want to know it was crafted by hand from some individual in a developing country and it sounds totally ant antithetical to everything youre discussing that amazon will do to the world amazon has been nothing but good for society to date the whole foods deal may be a turning point and people need to consider the broader implications of this deal. I agree there was a world before brands, before somebody wanted i hate to say its different this time. But you think its different the. Any time i say that im wrong, but ultimately the internet changes the equation. And its just to be considered i shop on amazon i have so many brown boxes im on prime i think its a great conversation i think they are important issues the question is what do you do about them we will continue if anything we will continue to talk about them if you havent read his piece, its very interesting when you say this guy thinks amazon is going to a trillion dollars, buy, buy, buy its not, you have a hold on the stock. I have a hold on the stock. If it goes through, theres nothing to stop it. Why do you have the hold . Because youre seeing escalating conversations and growing chorus of concern on the regulatory side. That could impact the multiplei will you upgrade it i cant say that now. You have some company with people that have mentioned one guy who has not been right in 10, 15, 20 years about anything short said to short amazon at 1,000. I wont mention names, because he would love to have his name mentioned. But he shorted 1,000 he just tries to get his name out there. Im telling you, worry when youre in the company with this guy. He has been wrong no one is talking about shorting this guy was at 1,000 over the next 12 months, are there opportunities that could appreciate faster . Thats the premise im just warning you. Youre on the wrong side with this clown im hedging effectively who is the clown . I would never mention that would make his day believe me hes invisible basically cant get on tv anymore i wouldnt dare short amazon. Especially not until the print tonight. If you say never goes back and checks what he say no one else does either. I dont think he manages much money. Thanks. Thanks. Coming up, Senate Republicans i know who it is. Thank you the next step possible skinny repeal. Kayla tausche will explain what that means next. Whuuuuuat . Rtgage offer from the bank today. You never just get one offer. Go to lendingtree. Com and shop multiple loan offers for free free . Yeah. Could save thousands. You should probably buy me dinner. No. Go to lendingtree. Com for a new home loan or refinance. Receive up to five free offers and choose the loan thats right for you. Our average customer could lower their monthly bills by over three hundred dollars. Go to lendingtree. Com right now. A used car, hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Welcome back to squawk box. Big movers in europe to tell you about. Shares of astrazeneca having their worst day ever after the companys experimental lung cancer drug failed a major test. Shares of the Pharmaceutical Company are down 6 . Shares of diageo shooting higher after the Company Reported better than expected results. The Company Announcing a 1. 9 billion buyback. The ceo of diageo will join squaux stre squawk on the street later this morning. Shefrn she said shell said. Im sorry. Youre supposed to describe companies in female form thats hurricanes companies, you should do it shell says profits triple last quarter despite a pullback in oil prices. Europes Biggest Oil Company reporting revenues of 72 72. 1 billion in q2. 4. 3 billion more than expected Deutsche Bank shares are under pressure after revenues dropped 10 . The fixed income trading business underperformed. Thats a bank in the spotlight a lot lately Senate Republicans falling short of the votes needed to repeal obamacare for the second time in 24 hours leadership is working to pass a stripped down skinny repeal. Kayla tausche joins us with more on what that means and whether it will pass. Theyre getting creative here skinny repeal would repeal the mandates from the Affordable Care act and the medical device act, but still require a fuel agreement at a later date. When the cbo scored a similar bill in the past, it found 16 Million People would be uninsured. A senior democratic aide said the cbo told lawmakers that premiums would rise by 20 the likelihood of passing appears slim, with a group of bipartisan governors urging to write lawmakers to work with governors to solve problems that we can all agree on. The white house spent yesterday celebrating a deal to bring a new foxconn factory to wisconsin. The deal will bring about 10 billion in investment. The possibility of up to 13,000 jobs when this investment is complete, foxconn has the potential to create more manufacturing jobs than weve seen in many, many decades chairman, i thank you for your investment in the American Worker they appreciate it they will not let you down at the white house the president was flanked by House Speaker paul ryan, chief of staff Reince Priebus, and his soninlaw, that would seem to provide university between the white house and lawmakers despite reports overnight of potential infighting and palace intrigue at the white house. What is the latest with smooshsmoc scaramucci he was condemning a leak of his financial forms, showing what he made and what he was worth this year. But in the tweet where he talked about contacting the fbi and the Justice Department about the leaks, he tagged Reince Priebus which led some to believe that he was going to be notifying the fbi and the Justice Department about Reince Priebus, which there have been reports that scaramucci believe reince has been out to get him. The fbi was contacted about investigating reince, but then scaramucci tweets this morning, nope, thats not correct i want to read you the exact tweet. He said wrong, tweet was Public Notice to leakers that all Senior Administration officials are helping to end illegal leaks at reince45. The timing and the content and the people you tag in the tweets in the history, supposed history between those two. A lot of intrigue. You how about you, with your timing youre a genius. Genius genius when you went down there i am not going to dispute that all right did you catch her joke . Chances of repeal are slim i like that fat chance we talked about one of our you remember j. W. Wald, our friend he said he pointed out that skinny isnew adjectiv for everything skinny margaritas, skinny bundles. Great minds. Coming up, wall streets fear gauge trading at an alltime low. Well talk strategy as we head into the busiest day of earnings heres a look at yesterdays s p 500 winners and losers hatter ] [ intense music playing ] its here, but its going by fast. The opportunity of the year is back the mercedesbenz summer event. Get to your dealer today for incredible onceaseason offers, and start firing up those grilles. Lease the gle350 for 579 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Im the one clocking in. When youre clocking out. Sensing your every move and automatically adjusting to help you stay effortlessly comfortable. There. I can even warm these to help you fall asleep faster. Does your bed do that . Oh. I dont actually talk. Though im smart enough to. Im the new sleep number 360 smart bed. Lets meet at a sleep number store. Note no welcome back, youre watching squawk box from the Nasdaq Market site in times square look at u. S. Equity futures at this hour the train continues to go towards washington boy, have i not been on it the dow up another 9 points. Looks like it would open 9 points higher. The nasdaq 30 points higher. The s p 500 looking to open 3 points higher. Stocks to watch today pay pal raising its earnings outlook after reporting results that top analysts expectations users of pay pals venmo platform transferred 8 billion last quarter shares of Buffalo Wild Wings taking a hit in the premarket. The Company Reported earnings 66 cents a share, well short of 1. 05 analysts were expecting. Stock is off almost 8 company blamed high chicken wing costs and operating expenses fed is complaining about a lack of inflation, there it is. Whirlpool cutting the fullyear outlook after reporting a drop in the Second Quarter profit the company says it is weathering a sales decline in europe and a higher tax bill dollar has been quite weak verizon is reporting 1. 07. Thats on a gaap basis, on an adjusted basis, 96 cents thats the number to use thats in line with expectations the adjusted number excludes special items, acquisition and integration related charges associated with yahoo in the Second Quarter Verizon Wireless added 614,000 post paid net additions, including 358,000 net phone additions. It said it built on momentum since the launch of the verizon unlimited plan in midfebruary the Customer Growth exceeds analyst expectations a srelease theres a Strong Quarter in adding and retaining wireless customers. Did you see a revenue number on this verizon revenue, 30. 55, above the estimate of 29. 9 the stock up a bit right now well go into some of these. We have churn and all kinds of metrics when we mention verizon. At this point, after its all said and done, its up less than half a percent softbank has been busy over the last three months. Barely a week has passed without reports of a new investment by the 93 billion vision fund. It is in shared space work Space Company wework that investment was lead by softbank, a Chinese Private equity firm. Softbank is leading a 2 250 million funding round in startup slack. That brings slacks valuation to about 5 billion softbank has taken a 5 stake in ro roomba maker irobot and considering an investment in Uber Softbank bought alphabets ro t Robotics Division boston dynamic in june. They have some robots that look like animals that are really moving theyre cool. Lifelike lifelike is the word lets take a closer look at the markets after hitting the record lie thigh trifecta. Joining us is knnoah black steen and j. J. Kinnahan. I look at him and i see the vix. Thats what we always talk about with you, joe. It hit an alltime low again does it still matter is it telling us something do we start to value the information were getting from it less . I think, joe, its working theoretically as its supposed to okay. Everything i always learned about options is when the market goes higher, theoretically slol untility should go lower because theres less fear. When we go down, fear comes back into the market. Whats different this time is for so long the bigger groups were buying vix protection what i understand is happening with people now, theyre saying were going to buy less. Theres less demand for the protection right now what theyre saying is were willing to take a 30 or 40 risk on the vix because well be buying it at 14 or below theyre willing to do that for so long they were buying protection and getting punched in the face month after month after month as these options went out worthless its sort of a showme move. People realize the risk is that everybody may be heading for this same door at the same time if we have some skoort of sellof as much as theres all this political intrigue every single day, you guys have a great story to report every day from d. C. , the market is saying it doesnt matter its all background noise. The things that truly matter are earnings were in the middle of a good earnings season so far i could make a case for the vix, but it makes me nervous i could make a case why its so low. You have Interest Rates on a historical basis still so low. They may be going up but still so low inflation is under control globally you have synchronized positive developments on economies everywhere, stock markets, earnings. But it worries me because its a measure of complacency you dont know whats coming half the time. You dont know why you should be nervous. Like i said, the problem for many people is that door will get small when everybody heads for it at same time. Again, if people are willing to take that risk, right now they are, if they lose 40 , 50 , youre at a 15 or 14 level, thats still low for the vix noah, you point out that the rally has broadened recently do you worry about the vix and complacency . Should we just not keep it still p simple, stupid and keep buying i think the market is broadening i think if you earnings, you have stuff gapping up and down. Individual stock volatility is still. There the hedging programs are all interesting for the macro tourists and those people, but individual stock vol is definitely there thats based on earnings were moving into a much more earnings driven market you can use options, i guess, if you want to hedge individual companies. You know, thats not what i do im focused in on individual companies. Theres certainly volatility in individual names its refreshing what you said, earnings driven market the fed made a decision yesterday. Have we mentioned anything about them their decision was no decision no decision but there was a time the Federal Reserve, the day before, the day of, the day after we would be parsing everything they say. The tenyear is stuck i hear this over and over again. Buy vol. Buy volatility its cheap its a big trade that a lot of people want to put on. Do you think about that . Is that something that the average person at home should consider doing no. I think in terms of what i do, i try to buy companies that have the overall ability to grow over the next number of years look at what facebook has done since it went public and how much wealth was created there. Buying vol, selling vol. Its an interesting thing. Im not sure its for the average investor its not for me at all i would rather search for the next facebook or netflix fli ill leave the vol selling to somebody else. Im not sure how to make money doing that michelle, what i would say on that, i think people can buy volatility but again, its not that hard a concept, if you buy options, youre buying volatility overall. But people are trying to pick the low. Catching the falling knife is not a good game for the average retail trader. Thats what we do is talk to retail traders all the time. The one thing i will say is occasionally i hear people say i will buy im nervous about my stock. I will buy a bunch of puts to the down side. So i get protection. Not the worst idea but if youre nervous about a stock, why are you longing the stock . One thing that retail traders have to take away there this market, if youre nervous, lighten up in your position. Thats what professionals do all the time look for other things to do rather than trying to pick tops and bottoms. Yeah. We dont need bottom picking oh. Oh that took me a second the second he said it well played, joe. You have to hang out well enough well done well played thank you, gentlemen. Then this next story, i immediately thought straight to the gutter. Why would someone go on dancing with the stars. I dont know. Should we read it to them i think he would. Can we explain whats going on first people know dancing with the stars wants to waltz with sean spicer. Sources telling page 6 the dancing competition show reached out to spicer about joining. Rick perry competed last year. He was voted off in the second week he looks like he would be a good dancer why would what are you paid to be on dancing with the stars f not enough. I think you get 80 you get a lot. For a short amount of time . If you stick it out long enough, do you get more . Do you want to pause . Theres no way. No way you would, right . If they asked you . Im such a bad dancer yeah. But that wouldnt matter for you. Youre not that great at this, but you do it every day. My gosh im so glad i woke up this morning. Came in. Tucker carlson usually you think of it at end of you hugged me yesterday you gave me a hug. You did he gave me a hug. We hugged why im not sure. You must have felt bad about something. No. No se no seriously, the Mainstream Media think sean spicer is somebody to laugh at now theyre setting him up here to have him laughed at more. Does he know that . Did you tell him . They wanted to get lochte . Is it worth it when youre the butt of the joke and you dont realize youre the butt of the joke what about you i would never go on dancing with the stars. Really . I thought there was a lot of money in it. You look at maybe trying to reposition your brand. He was in government work now hes doing Something Else i think he said no . We dont know . If you dont know what page six is, thats the gossip column of new york city a finalist makes about 345,000 on dancing with the stars. I dont know what you get fryar to that. You have to be good work hard. This is according to the internets. I dont know if its accurate. 1 125,000 to participate in the show is the baseline you can step it up after that. Hey coming up when we return, we have an earnings alert Procter Gamble set to report at the top of the hour john moeller will be here first. And then well talk about foxconns plan to build that 10 billion plant in wisconsin reed cordish will join us. Then we will talk to wisconsin Governor Scott walker. Im going to go dance with the stars now. Time for the executive edge. If youre selling your home right now you may see the highest profit in a decade diana is in washington to explain why. I dont know what im going to do tell me. Two reasons here you go. Home values have shot up quickly in the last few years and homeowners have stayed put due to the recession add it up, those who sold in q2 of this year saw the highest profit in a decade on average 51,000 that represented a return of 26 on the previous Purchase Price again, that the highest in a decade all of that according to a new report from adam data solutions, which also found that home owners who sold had been in the home just over eight years thats the longest tenure going back to the year 2000, which i guess is when they started tracking this. So with all that profit, why are more people not selling . Because theyre afraid they wont be able to find or afford Something Else to buy. Part of that is because cash is king the share of cash sales in q2 increased annually for the first time in four years nearly 29 of all Single Family homes and condos were cash, up from 27 a year ago. So, where were the biggest profits . San francisco, san jose, of course seattle and denver, which have high demachbd annd and exty low supply homeowners are being put longest in san jose and San Francisco also but itsso expensive. You will boston, providence and hartford back to you. Wow prof providen providence i like providence. No dancing there. Would you do it well ask this question of all guests. Diana would do great pushups of the stars no dancing yeah. Weve done that. Weve done that i mean one of us. Youve been one of us right youve been training, too just in case theres a rematch i havent been. You havent i need to thank you you are not overfat at least youre not overfat. You know overfat, half your waist has to be half your height bmi thing yeah. You measure your waist, it must be less than half your height okay. Hes like so far under. How are you doing im right on the on the cusp. On the dancing with the stars diet. If i go eat something, im over if i dont eat anything, i stay under. Starvation is an option coming up, the cnbc iq 100 is an index of the 100 Large Cap Companies best using technology with their own proprietary Technology Business is up 20 since the election well break out the index leaders next. And were expecting reports from Procter Gamble and twitter at the top of the hour rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. I think getting them close but making sure these are significant cuts. Their coverage estimates we believe are significantly in error. When they work on the numbers on how much something costs, they do a pretty doggone good job. Are you at this point a proponent of single payer. I think eventually it will happen. This is a great day for American Workers and for everyone who believes in the label made in the usa. The cnbc iq 100 index up over 20 in the last year. Joining us to break out the index leaders is david martin, founder and ceo of mcam, helped cnbc develop this index. You only make it in this index if you have a lot of your own intellectual property patented that you benefit off of. Yes and if you actually have anticipated where that future margin price is going to actually make a difference, so its not just having the property, its actually anticipating where you need to have property to take advantage of market opportunities. In other words, using it. Yeah. Theres a lot of people that defend things. This is about going after new opportunities and making sure youre anticipating the market. So terradyne which i think of as a testing company, best performer, up 20 for the quarter. Yep why so terradyne is in this space we like to refer to as augmented intelligence theyre look at ways both at the manufacturing level and at the product level they can integrate sensors Intelligent Manufacturing processes. Theyre bringing stateoftheart both manufacturing and utility into applications where the market actually can use those kind of things to make smarter devices, smarter manufacturing lines, and then ultimately have better testing, sensitivity measurements and Everything Else so they have actually anticipated where that miniaturization, smaller, more intelligent device is going and they have actually won big, because they actually saw where the market is going. Amd, advanced microdevices, a name everybody has been familiar with so long when it comes to chip manufacturing, they come in number two theyre up 16. 5 in the quarter. Yeah, so they moved away from just wholesale and they went into precision that was the smartest move they could have done. When in a world of Semi Conductors there was a glut, if we remember even 18 months ago or 20 months ago we were talking about this massive oversupply, moving into spaces where youre integrating analog sensing, youre integrating a bunch of precision sensors into intelligence on a chip, intelligence in a conductor, those kinds of things are why amd is not only soaring but why their outlook looks so positive, because theyre going to actually supply precision Custom Technologies into where the future of the internet of things is going. I remember i thought of amd as a commodity producer, just like copper and a copper producer, just like gold and a gold producer. If you go back to a few months ago when cnbc had the draft for picking stocks for the nfl draft period too, one of the things that we said was amd is going to actually have a beautiful surge this year, and cramer had this skeptical view and it was great to see yesterday when their results came out and people started talking about it, you actually start seeing people say, hold on a second, how did this sleeper come to life thats what the index is measuring, the sleepers that actually have those technologies that are where the market is going to go and not just where the market has been. And thats where amd has a strategic advantage because they have anticipated the future market. Applied materials this is the company that helps amd make the stuff. There you go. Theyre up 14 . Not unlike teradyne you have people that understood that being part of a supply chain is actually critical, so youre actually part of the Intelligent Machines that are making Intelligent Machines. This is that giant fearful thing that elon musk is worried about. Were anticipating where intelligence can be applied to make a more effective production line, a more effective device, a more functional utilitarian framework, is actually a smart thing. All of the companies weve talked about are near alltime highs or 52week highs, theyre all kind of in the chip space. Thats true right now. What is it about the moment right now that makes almost all these Semi Conductor companies in some form or fashion. Manufacturing has gone from what we call the rough robot, that giant device that actually welds and builds and Everything Else to the intelligent robot that gets into that smaller, more precise, more integrated chip design, Everything Else its the guys that are controlling that entire supply chain. Smart lines, smart products and smart augmented intelligence. Wow youre a smart guy thanks. Thanks. Thats why you invented the iq index good to have you on. Great to be here. Foxconn, electronics is foxconn, Taiwanese Firm investing 10 billion to have a manufacturing facility in wisconsin. Well talk to reed cordish about it, assistant to President Trump. And then wisconsin Governor Scott walker, big win for him. Squawk box will be right back. , good morning todays top stories, at least for us, earnings weve heard from verizon, weve heard from comcast up next, Procter Gamble. The companys cfo will join us live after the results. Plus tech talk facebook shares soaring for an alltime high on its Earnings Report probably about 400 billion now. Twitter gets ready to roll out results next well bring you the numbers and the instant analysis. And then a big bet on america. Apple supplier foxconn plans to invest 10 billion in the midwest. Well talk to two people with close ties to the deal, president ial advisor reed cordish and wisconsin Governor Scott walker as the second hour of squawk box begins right now. Announcer live from the beating heart of business, new york city. This is squawk box. Good morning, welcome to squawk box right here on cnbc. Becky is off, shell be back tomorrow we do have some earnings that are crossing the tape as we speak. Twitter results just hitting that tape. Julia boorstin joins us with the details. Good morning to you, julia. Thats right. Twitter beating expectations on revenue and earnings but its monthly active user numbers were flat from q1 at 328 million users. Analysts had been expecting monthly users to grow to 32. 5 million. Twitter did announce revenue of 574 million its down 5 from a year ago, but beat projections of 537 million. Twitter changed its accounting methods but said using comparable numbers they have earnings of eight cents per share. Twitter, despite those monthly active users that were flat pointed to daily user growth didnt announce a daily active user number but said they grew 12 from a year ago, which would be the third consecutive quarter of doubledigit growth i spoke to twitters ceo, jack dorsey, who stressed the importance of that daily usage saying they wanted to build something people use every day and theyre seeing improvements to the timeline, notifications and replies all making twitter more relevant. Dorsey telling me theyre seeing the impact of those improvements and that gives them confidence in twitters core use case i also shoek to tspoke to the co and he said video is twitters Fastest Growing business and they had a strong debut with its Digital Content at the new fronts theyre seeing the decisions they made last year to restructure, to close vine and to sell fabric are paying off. As for guidance, Earnings Guidance was on the lower end of expectations twitter forecasting adjusted ebitda of 120 million instead of 146 million. The stock is trading down 2. 5 well be listening for more on the Earnings Call which starts at 8 00 a. M. Eastern julia, so the stock had a great quarter in part because last quarter it actually surprised with a big increase in the number of monthly active users and also daily active users. Everybody was wondering is that for real, is that going to continue or is that a blip the stock is acting like maybe that was a blip. Yeah, absolutely. I think one of the issues is when it comes to monthly active users, it is a seasonal thing. You might gain one in one season and fewer in another wall street is interested in the monthly active user number but the company has been trying to shift attention to the growth of the daily users. They dont tell us how many daily active users they have, theyre just telling us what the percentage growth is so certainly a different messaging from the company as they try to stress that daily growth but i think theres still real questions about how big the potential audience for twitter is maybe this is a product whose core use case is to appeal to 330 Million People and thats about it, so i think thats really something thats going to be pressed on the call coming up. Sure, because it certainly looks like a much smaller number thanks to the facebooks of the world. Thanks, julia. Procter gamble is also just out with results. Earnings at this point, at the company a couple of numbers. Well use the adjusted number of 85 cents that would be above the 78cent estimate the net number was 82 cents. Sales, i dont know how this will play. Sales basically flat because of some negative currency effects organic sales were up 2 in the period and then for this is the fourth quarter, so fiscal 17 is now done, so now were seeing some comments from the company about next year, about fiscal 18 core earnings per share growth is seen at 5 to 7 , although Gaap Earnings per share down 26 to 28 for the First Quarter it will be the lowest organic sales for fiscal 18 this is the first report since activist investor nelson peltz launched a proxy fight against the company. Joining us now, john moller, cfo and a member of the cnbc global cfo council. So you had some currency headwinds in this case, john the dollar has been getting weaker why . As you said, we just finished our fiscal year so those were earlier in the fiscal year we had about 600 million after tax and commodities, but a strong set of results. We delivered or exceeded every objective that we set for ourselves over the fiscal year period about 2 organic sales growth is what we were targeting we delivered that. 5 or midsingle digit core earnings per share we delivered 11. 90 free cash flow, we delivered 94 it was a huge year of return to shareholders, 22 billion through a combination of dividend, which we increased for the 61st consecutive year, Share Exchange associated with the beauty deal with coty and Share Repurchase we also completed the important work to strengthen and focus our portfolio going from 16 categories to 10, from 170 brands down to 65, and so significant progress which were singularly focused on improving as we head into next year even further. Its hard to grow revenue for a company the size of Procter Gamble, is it not, john . You know, i truly believe that the best days for our company and the Consumer Product space are ahead of us. The fundamental drivers of consumption or categories are population growth and income growth, which are both alive and well, albeit with some bumps along the way. Also if you look at Category Development in different parts of the world, in the top 14 markets that we compete in outside the u. S. , Category Development, in other words, consumption per capita is only 18 of what it is currently in the u. S. These arent back waters, these are major companies. So theres significant opportunities to continue to grow this company. What is the whats affecting gaap next year we had a big gain this year in the transaction that i mentioned, which is the sale of 43 Beauty Brands to coty in the form of a split merge. So that gain sitting in the year that we just completed it wont be in next year how is the First Quarter, typically in terms of organic growth, thats the weakest of the year, organic Revenue Growth we expect it will be next year for several reasons one, Market Growth was much higher in the First Quarter last year than it currently is. Second, we took some price decreas decreases, for instance, in the u. S. And that wont annualize until later in the year. So the First Quarter will be a little lighter than the balance of the year but for the balance of the year were expecting 2 this year to 2 to 3 next year sales growth trying to increase operating earnings from 2 this year growth to 5 to 6 next year, which should yield, as you said, 5 to 7 growth and just continue to john, there are some nonbelievers i had someone message that really in six years there hasnt been a lot of revenue or Earnings Growth and andrew has pointed out the multiple a few times, and then youve got activists swarming around the company too. What puts you in a position to where theyre looking at, i dont know, steps that need to be taken to increase results well, first of all, we have lots of activism, as you would expect, inside the company as i mentioned, were in the middle of our biggest transformation ever as a company. The portfolio focusing and strengthening, significant cost reduction, productivity up and down the income statement, across the Balance Sheet 10 billion in cost savings achieved another 10 billion were working on currently to reinvest and fund that top line growth that were all looking for. John, just to the specifics of what nelson pelten has suggested and maybe theres Something Else, but they made the point that organic sales have grown just 2 a year, which they say is just half the industry average and the volumes are just a total of 3 , which compares to 15 compared to peers. What do you make of that well, first of all, if you just look at the quarter we just completed, 2 organic sales growth on the top line, the companies in our space that have reported thus far, thats well ahead of the average it reflects the implementation of the program that ive talked about, which is just starting to take effect and improve results and we expect that acceleration to occur as we go through the next fiscal year. One other thing real quick. What about on the r d side, because youre spending money on r d, but theres an argument to be made, at least by some analyst investors, that its not effective. That you havent come out with new products that really have been able to move the needle well, if you look at innovation in our space as measured by outside firms, level of new retail sales, for example, we have more new offerings in the top 10 and top 25 than most of our competitors combined things like tide pods which took a category that was declining and turned it into a category that was growing 3 . 90 of the growth in the laundry category in north america has been driven by unit dosed detergents another example is always discreet, a female incontinence product. Our objective was to bring a better product to the marketplace and double the rate of Market Growth in the category, which weve done in the u. S. And done in europe. So there are many examples i think the cutting back on innovation at a time like this would be the biggest blink of all time its something we need to continue to invest in and drive. He brought up some other sometimes theres a metric that really stands out. Nelson peltz hammered this a lot. They have a 40 price advantage in these big categories. Youre number one, and yet your margins arent better than the other guys that really stands out why is that . First of all, our margins last year, for example, on an aftertax basis approached 17 thats second highest in our industry over the last four years, weve built margin 270 basis points on an operating level 620 basis points excluding Foreign Exchange profit per employee is up 45 over the past fiveyear period so were going to continue driving top line, were going to continue improving the margin with a Productivity Program that we have in place and were going to continue leading this industry. So that criticism is essentially wrong, you think the notion that we have a margin thats lower than the average is definitely wrong. Oh, no, he just thinks it should be higher than where it is considering all of the advantages that you appear to have. First of all, if you have a product why do we have higher price points in some categories . Its because we have products that carry higher advantage and preference for consumers often those products require more cost to produce theres better juice in them and so it doesnt just because you have a higher price doesnt automatically translate to margin. To the point of being able to grow margin, fully agree and thats what were fully committed to do. Did it bother you when he talked about how what a large percentage of the employees have been at the company for so long . Youre a 29year veteran of the company. You seem to sit right in the Square Center of that kind of criticism where he thinks there should be far more turnover and new blood coming in from other companies. First of all, im thrilled to work with a team that i work with its a terrific group of people, a terrific group of talent top to bottom. There are many situations where we can improve that talent profile by selectively hiring from the outside for an experience that people arent getting here i do that repeatedly in the finance and i. T. Organizations where we dont have a skill that we need or where the skill set is better outside, by all means we need to be open to that option but again, this is a fantastic team that i work with. A lot of tough questions today, john. I might as well get it all out on the table the reds, 19 below. 500. Theyre horrible theyre horrible i think its 2019 that we need to be looking to, joe. God almighty. And tell them dont bother. Okay. Look, and theyre not the worst. The giants are even worse and then the phillies are worse. But i dont know pitching pitching, right . Youve got some hitters. Football is not far away. Oh, good. Oh, good, that makes me feel better the bungles. Okay, thanks, john we appreciate your answering all of the questions today well see you next time. Thanks great, thank you. You had to know they were coming, right . Thats okay hes here. I give him a lot of credit. Coming up, tech talk twitter topping estimates this morning following the beat by facebook last night. Well talk about both companies with an analyst, next. Hey youve gotta see this. Cmon. No. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Welcome back to squawk box this morning foxconn announcing a 10 billion investment in wisconsin. President trump praised the deal yesterday. When this investment is complete, foxconn has the potential to create more manufacturing jobs than weve seen in many, many decades chairman go, i thank you for your investment in the American Worker they appreciate it they will not let you down joining us right now to talk about it, assistant to the president , reed cordish, hes also part of the office of american innovation. Good morning to you, sir thank you for joining us congratulations on the investment how did it happen . How did it come about . Thank you so much for having me on. This was the culmination of many months of negotiations and discussions, negotiations that were led by our office but personally involved the president on multiple occasions to attract a company of this stature to return manufacturing to the United States it took a full team effort and thats what we did. You talked about 10,000 construction jobs over the next four years to build this and then workers that will be paid 53 or close to 54,000 plus benefits you say it could eventually employ 13,000 workers. Is that just in wisconsin or are we talking about investment thats much larger across the country at this point . Well, both is really the answer the stats that you just said is just in wisconsin. Thats what foxconn expects to reach just in wisconsin in the coming years ahead, but they also then fully expect as part of their overall ecosystem theyre creating to grow to other states and create thousands more jobs in that effort. Just to clarify one point, the headline number that was talked about yesterday, 10 billion that foxconn is making investment, is that in the United States broadly or is that in wisconsin itself, because thats a lot for one factory. I want to be very clear its 10 billion in wisconsin itself yes, thats a lot for one factory, but you have to understand the size of this factory. This is multiple lambeau fields. This is a factory that would be equal to any that we have in the United States and any that we have that there are in the world. Its a gen 10. 5 fab, which makes it the most absolute Cutting Edge Technology and one of the largest sized factories in the world. By my math, and you can tell me if im wrong, foxconns total property plant and equipment worldwide is 10 billion well, foxconn is one of the most Successful Companies in the world. Theyre a fortune 30 worldwide company. And their holdings are immense so i dont want to call you on your specific math, but they are more than capable of doing this. They have plants that are similar in china and in japan, so this is nothing new for foxconn. This is just their most stateoftheart technology. But they have done this and achieved to this scale before and theyll be successful in the United States. In fact, theyll be more successful in the United States for a variety of reasons. Reed, one of the existential questions that so many in the country talk about when it comes to jobs is robots, and whether robots will take peoples jobs foxconn employs tens of thousands of people but they have also been a big proponent of using more and more robots. Have you had conversations with them about that . Well, i think what you have to look at is this is an example, and this is a clear demonstration, that we shouldnt fear advanced manufacturing, robotic manufacturing, skilled manufacturing, because it still creates thousands of jobs. Someone still has to run the plants, someone still has to control the machines, and theres still plenty of labor needed to run plants like this but this is where america can not only compete, but we can be dominant globally in advanced and skilled manufacturing. With the policies of the Trump Administration and with the strength and skill of the American Worker and our technology and innovation, this is where we can really dominate. Hi, reed, its michelle here. The president said a couple of days ago that tim cook, ceo of apple, had promised to build three factories. Foxconn does a lot of manufacturing for apple and theres questions about whether he was talking about these instead or should we expect apple factories in addition to this foxconn factory. The president is completely committed to our best companies manufacturing in the United States our buy america policies where the federal government and companies that receive substantial incentives from the federal government will now buy American Products and are required to buy American Products as an example of that hes had productive conversations with apple to that end, but ill let him handle those questions. This foxconn announcement, although theyre a major manufacturer for apple, is separate from the conversations with apple oh, great, okay so it is separate, okay and the other question im selfishly curious about, when youre negotiating these types of things and trying to bring in investment like this, how much of the conversation is about expected tax reform in the country . Youre right, theres in reality, theres not one Silver Bullet that leads a company like foxconn to decide its time to come to america, theres multiple factors belief that we will pass tax reform is certainly part of it, so is belief that well pass a major infrastructure bill and, yeah, were going to do that but its also the deregulation, its buy america, its commitment to fair trade agreements we havent had in decades, its a comprehensive belief that this administration and President Trump has the back of American Business and the back of American Worker. And in terms of just the timeline, how quickly will this roll out how quickly will they start digging . When will all of this be measurable to some degree . Theyre going to start right away even while they are gearing up for Major Construction of the large plant, theyre going to start making investment in the state of wisconsin, starting to set up people and infrastructure that starts almost immediately and then you will also see the start of construction in a very quick fashion. This Company Moves fast, theyre aggressive this negotiation for the size of it both with our with the white house but also with the state of wisconsin has moved very rapidly in fact they said that we are they were shocked by how nimble and how quick the administration and the state was. And, look, to me the most important part about this, and this is where i wanted to go with this, if this works, when an announcement like this comes out, what kind of forcing mechanism do you think this has on competitors in terms of really trying to create the type of ecosystem for advanced manufacturing that we talked about . Thats a great question what i think is it gives everybody the belief that america can not only compete but can be a major Global Player when it comes to electronics and advanced manufacturing in general. I think that the sign that samsung im sorry that foxconn, a global leader, will lead to Companies Like samsung and others to start looking at america. There are so many benefits to manufacturing within the United States this is a great signal to these companies that they can not only succeed here but be incredibly prosperous here. Reed, congratulations i hope youre right, 10 billion is an extraordinary amount of money. We love having you on and look forward to talking to you again soon. Thank you so much. Still to come this morning, wisconsin governor, scott walker, he will tell us how important this foxconn deal is to his states economy and some of the promises he made about job creation in wisconsin. This is a good day for scott walker. Plus, earnings, we will shift now into overdrive with the reporting of all these the ceo of an auto parts maker joins us with his companys latest results stay tuned you probably know this, but youre wchg quk xn atinsawbo o cnbc shes nationally recognized for her compassion and care. He spent decades fighting to give families a second chance. But to help others, they first had to protect themselves. I have afib. Even for a nurse, its complicated. And it puts me at higher risk of stroke. That would be devastating. I had to learn all i could to help protect myself. Once i got the facts, my doctor and i chose xarelto®. Xarelto®. To help keep me protected. Oncedaily xarelto®, a latestgeneration blood thinner. Significantly lowers the risk of stroke in people with afib not caused by a heart valve problem. It has similar effectiveness to warfarin. Xarelto® works differently. Warfarin interferes with at least 6 bloodclotting factors. 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Its important to learn all you can. To help protect yourself from a stroke. Talk to your doctor about xarelto®. Theres more to know™. Good morning, welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Among the stories front and center this morning, twitter posting better than expected earnings and revenues. Shares, lets take a look at what theyre doing right now initially they seemed to be lower. In the premarket theyre lower by 8. 5 trading at 17. 91 joining us is victor anthony, internet analyst at ages capital. Good to see you. Thanks for having me. Why is the stock down if the earnings and revenue are better than expected . We have zero user growth. Facebook reported 70 million new users last night so thats one, zero user growth. The ad growth was better but still declining. So negative 9 owned and operated advertising growth is still better than negative 11 in the First Quarter, so no user growth, declining owned and operated advertising and massive gaap losses. So the stock had a great run for the last three months because last quarter they did actually have a rise of, surprise, in the number of users and people were wondering if that was a blip or if that was going to hold on now monthly active users, 328 million. Flat and when they talk about daily active users, up 12 but last quarter was up 14 so decelerating rate of growth. And revenues are still down from a year ago are they ever going to get back to 700 million . Its an improving trend i do have a sell on the stock. I wouldnt buy it, i would buy facebook but the trend is improving from minus 11 to minus 9 maybe that depose to minus 7 next quarter and turn positive in 2018. The advertisers i speak with are still somewhat lukewarm. Theyre not getting the return on twitter that they are on facebook and other platforms. You have a price target of 12 and its at roughly 37 thats brutal. Facebook do you want to no, go for it. Facebook stuffed as much as they can in terms of advertising down the news feed people look at so now theyre expanding. Its good enough. Listen, they reported last night, this is probably the 12th consecutive quarter of outperformance no other company i cover has done this. Im not even aware of in imedia or ten nochnology company that done that. 49 fx advertising growth. Significant, amazing at that level of scale five years ago, 2. 5 of advertising revenues mobile. 87 last night massive execution. Google and facebook combined generated incremental 12. 5 billion of advertising in the first half of 2015 that just speaks to the ad shift thats under way both companies are dominating. Theyre clearly getting that from twitter and other online platforms, traditional platforms as well. So then messenger they talked about last night, thats additive. Because theyre going to start advertising voe via messe. Whatsapp probably starts in 2019 significant optionality. China entry. Are you worried them spending money on content when Sheryl Sandberg said they want episodic viewing . In other words, people to watch tv on facebook thats way harder. We do that for a living. It is its harder. Its expensive. It will take them a while to get this right, but theyre invested against it significantly. I think theyll get it right at some point but its a way to keep people engaged on the on the platform, given the fact theres multiple other avenues out there for users. So i think its the right thing for them to do, though. Do you have anything . Are you on are you one of the 2 billion . Im on facebook, oh, yeah ive got two profiles on facebook. Are you on there all the time i go on once or twice a day. Once or twice a week. If the thing pops up with little thing on it, you know, on your app. I could make it two billion and one, i guess. What about snap snap, they report in about a week and a half. I actually think the user numbers will be much better than what the street is anticipating. Some of the tracking data ive been looking at has been quite positive, so i think they beat on the user numbers. The advertising is still lukewarm but its not negative and so all is not doom and gloom for snap post this lockup you may see some stabilization in that stock. The interesting question then becomes from just a pure valuation perspective, given where facebook is and google or alphabet is and given where twitter is, is snap a value play i wouldnt go that route, not at all its still trading even at these levels probably nine or ten times sales. Twitter i think trades around four and a half times. Youre still waiting . Im still waiting im at a hold on snap, sell on twitter, buy on facebook i buy on facebook all day. I think its a better performing platform the 18 to 24yearold audience i think is captive astra zeneca, the shares are having their worst day ever. This is after an experimental lung cancer drug failed a major test meg terrell joins us now with the details. 15 . Its a huge move for as ttra zene zeneca this is a huge market and astrazeneca had been seen as behind in the immuno oncology race they tested these two drugs in previously untested metastatic lung cancer. The study did fail to show that this combination could slow the progression of cancer or death in these patients compared with standard of care chemotherapy, so youre seeing astra zeneca down quite a bit Bristol Meyers is testing a similar way and merck is responding favorably because keytruda is already approved this is reminiscent of last summer when Bristol Meyers had a surprising lung cancer result. That stock took a huge hit merck seems to go from success to success and you can see the difference and divergence in their shares so not a great day for astrazeneca on these results. Theyre going to have more on whether these drugs help patients live longer, but clear low not good news this morning on this metric. Bad news for everybody. When drugs dont work, its bad news for everyone. Especially some of the real intractable types of cancer. You told me we need to stay positive were making incremental gains, right . We do need to stay positive theres very exciting science happening. Theres a glut of immuno trials maybe this one didnt work but everybody is throwing everything at the wall here to see if something is going to stick. Were going to get big stuff out of this segment of the market. Yeah, weve seen incredible responses with immuno therapies and thats why so Many Companies are trying to test these drugs theyre segmenting the patients based on the tumor cells, what theyre signaling and is it the clinical trials, is it the drugs themselves, whats different about them companies are trying to figure this out we probably are in the early days. Thanks, meg. Lets talk autos, car component maker borgwarner out with Second Quarter earnings just a short time ago. The michiganbased manufacturer coming in 12 cents above estimates with profits 96 cents per share, revenue exceeding forecast joining us for a look inside the quarter and the companys emphasis on Clean Vehicle Technology is james farrier, the president and ceo. Congratulations on the earnings. Your stock has been on quite a run, up 35 just this year what do you attribute that do given all the questions about the Automotive Industry right now . Yeah, really, really good day for us, obviously another great quarter. And thats a big part of why theres been a runup in the stock. Its our Second Quarter in a row where weve beaten and had a great performance. And thats whats driving a lot of confidence, i think, with investors. But the other part of the story thats really helping us a lot is people are getting a lot of conviction about our future long term in the space as a propulsion leader for all vehicles, Clean Energy Efficient vehicles, whether its electric, whether its hybrid, whether its a combustion powered product. Thats what people are excited about, its what were excited about, its whats driving our growth on the top line and the bottom line. You see it in the Second Quarter and you see it in our long term performance as well so a really super place for us to be right now. What do you see going on broadly in the automotive space in terms of sales . Its about a 90 million thereabouts Global Market right now, which is a pretty big market compared to the historical base. What you get is a little cyclicality around the world the u. S. Market is a little down china and europe are a little flat to slightly up so were operating generally in a flat market, which is okay, particularly for a company like us which has tremendous growth above the market because of our content penetration of technology so it will be cyclical but we know how to operate in a cyclical business. Fundamentally were a Growth Company and we have a lot of excitement. In terms of electric cars, when do you think or do you think that electric cars will outpace classic fossil fuelbased vehicles . Yeah, we certainly see a rise for sure in electrification both hybrid vehicles and Pure Electrics. If you look at it now, a good way to think of it, about 5 of light vehicles are either a hybrid or electric vehicle if we take that out to 2023, it will be about 25 of that. I would say the vast majority of those will continue to be hybrid, so youll see about 3 or 5 Pure Electric vehicles and what were doing actually is enabling that to happen. Our role in life is to get the Propulsion Systems needed for those electric vehicles and hybrid vehicles, so thats whats driving the excitement and the growth for us as well as the industry. Given your excitement over electric vehicles, final question, what do you think of tesla . I think its a great company. I think they have done a lot to disrupt and bring innovation to the industry, which is what the Industry Needs and what its all about. They have got some great product on the street. I think theyre doing well and were happy to be part of serving the electric Vehicle Market all around the world and well continue to do that. James, we appreciate your time this morning. Congratulations on the earnings. Thanks. When we come back, weve got wisconsin Governor Scott walker. Hes going to join us. His state just won that big deal we talked about that will result in at least 3,000 new jobs foxconn headed to wisconsin. Were headed there as well with scott walk back in a moment. Time now for todays aflac trivia question. Which food chain licensed its First Franchise in 1955 . Xonnucnssqwkn bc ua bo cties swing. Ed int huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac you are loved i thyou never got the brakes looked at . L. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. Thats why at comcast were continuing to make4 7. Our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Now the answer to todays aflac trivia question. Which food chain licensed its First Franchise in 1955 . The answer, dunkin brands. Welcome back to squawk box. Foxconn is investing 10 billion in wisconsin, a job bringing thousands of jobs to the state joining us from madison, wisconsin, Governor Scott walker you had the u. S. Open finally, scott. What about did you do this or is just wisconsin a happening place right now . Well, were a happening place, were ready, theres no doubt about it we went back in 2010, wisconsin ranked in the bottom ten according to chief executive magazine for places to do business this year were up to the top ten, the first time weve ever been on that list, and so its years of building us up. Lower taxes, fewer regulations, building a better workforce, getting rid of frivolous lawsuits, all those things combined and just being in the right time and the right place were excited. For us its going to be up to 13,000 new jobs and a 10 billion investment pretty exciting. Good jobs. Yeah, these are over 53,000 per year jobs plus benefits. On top of that to build this this is not just a plant or factory, this is a whole ecosystem. This is a campus wide we call it wisconn valley because of all the high tech manufacturing thats going to happen this is going to be transformational for us. 10,000 construction jobs alone in addition to the 13,000 jobs created by the investment, were looking at 22,000 indirect and induced jobs its a pretty big deal for any state, particularly for wisconsin. It always helps when a state does a little experiment with either taxes or deregulation because then you can extrapolate that to the entire country, i think, in tax reform but sometimes the results arent as clear cut i guess people always point to kansas on the left, that kansas tried to cut taxes and it didnt work out right people would also say, governor, before this deal some of your efforts in wisconsin were falling short from your goal of, what was it, 250,000 jobs, whatever that didnt happen yet, did it they say this goes a long way towards closing the gap for what you promised to what was delivered. But what did you do and why did it fall short according to some people well, the bottom line for us is we have more people employed this year in our state than weve ever had before. In most of our counties across the state we have the lowest Unemployment Rate and a statistic you all can appreciate, we not only have low unemployment, the lowest statewide since 1999, in more than half the counties in the state the lowest ever is the Labor Force Participation rate were up just shy of 69 were one of the top ten states in the nations in terms of the workforce. For us we need to draw more people in. Ironically something that will require more workers will help our other employers when it comes to workforce because we think this will be a magnet and well attract talent from across the country and around the world. We think it will help keep our top graduates in the state which is good for not only foxconn and the suppliers across the state fueling this economic engine, we believe it will help other employers as we become an International Focal Point when it comes to hightech engineering and manufacturing. Governor, how much did you have to offer in terms of incentives you were definitely competing with other states. This is 3 billion. Its a combination, half of it goes for jobs. So as weve done before with other great employers, its all tied to performance. So they will start at 3,000 but eventually as this get operational be up to 13,000 jobs that billion and a half that goes to job creation has to be earned, so if they fall short of that, the states commitment is less but we are confident, as is foxconn that theyre probably not only going to meet but exceed that jobs number. The other part is capital. Youre talking about 20 million square feet. I was in washington obviously with the president and the Vice President , speaker ryan yesterday announcing this along with foxconns chairman, terry go thats about three times the size of the pentagon or for those of us who are packer fans, more appropriately thats big enough for 11 lambeau fields inside of that operational space and that new ecosystem we just think its dynamic we love the fact that these lcd displays, which are not made anywhere in the world outside of asia, now will be made in america proudly in the great state of wisconsin. Governor, i hope this happens and i hope it works the way its been described a couple of investors have sent us notes this morning who have taken a look at foxconns numbers and have wondered perhaps cynically whether this 10 billion headline number that we keep talking about is real or represents Something Else beyond just this factory given that their entire footprint apparently globally in terms of planting and equipment is about 10 billion and they spend about 1. 7 billion on cap ex annually. Can you speak to that . Again, for us, its all tied to performance we have a Capital Investment threshold, we have a job thresho threshold. Again, if it falls less, our commitment prorates accordingly to that. For us, if theyre more efficient in how they do that, we put up incentives in terms of the construction, a part of our deal, 1. 35 billion is in the Capital Investment the remaining portion of that billion and a half tied into capital is giving them, for example, a sales Tax Exemption like we did on the new bucks arena. But you have no doubts about the 10 billion number you have no doubts that about actual 10 billion no, i think thats solid on their part again, i heard a little bit of reed cordish talk before at the white house. He was a great partner Reince Priebus brought us in the day after the president and terry met. Weve been working with them and jared and the rest of the team to make this connection. Reed touched on this a little bit. Foxconn is looking ahead and realizing that this president with his trade policies, with his tax policies, with his infrastructure policies, they want to be invested in the United States not just in terms of locations but in terms of this type of manufacturing. Ray seen or ken osha. Theyre hedging their bets to make sure theyre made in america. Racine or kenosha the bottom line is both those sites are great. His team has been in for months looking at this. Theyre looking at what the best deal is. What i love is theyre just committed to wisconsin we had multiple sites from janesville, beloit, racine and k kenosha. Chinese manufacturing grew for a reason, it was much cheaper. Did you have any conversations with them about why it is that now is a good time to invest in the United States when the salaries at 53,000 plus benefits is i am sure quite high relative to what they would have to pay people in asia. What are the economics of the United States that brought them here now finally to manufacture in the u. S. . Did they talk about that at all with you yeah, absolutely. From day one, from the day i met terry and his team and Reince Priebus, the chief of staff to the president s office and the white house, they talked about time, talent and cost. We knew all the way through this is a process that we had to be good partners in each of those areas. We drove down costs being close to the chicago market but in the lower cost real estate markets that we see in wisconsin was a big benefit. Having a right to work state was a benefit. All but eliminated tax on manufacturing was a benefit. Part of it not only in wisconsin but in america theyre hedging their bets they want to make sure that their largest market for their products is protected if the president goes forward with aggressive trade policy to try to level the Playing Field so that its fair and free trade. They want to make sure they have got a foot in the American Market and the best place to do it is right here in the state of wisconsin. Governor, i think its great for the state and great for the country, i hope it works my question is now that you have it in the books, what do you do as governor to go out and try to bring more people and more companies to create a larger ecosystem given that thats whats made the chinese ecosystem work so well because they have been able to create the entire supply chain . Literally terry and i joked about this a while back but were labeling this wisconn valley because its not just about securing this one location or even this one ecosystem, its about building a larger one. So we think this will help us build a larger global focal point, a magnet to bring people into this region we think it can do for wisconsin what Silicon Valley has done for california, what the Research Triangle has done for the carolinas. We think we can really key off of that. In fact we become Silicon Valleys hightech manufacturing and innovation site to fulfill the products that they dream of in places like that and others around the world this obviously is a huge anchor for us, but we want to keep building off this and we think even with our discussions with foxconn, they want to continue to build you know, for them to be successful, they dont just make a deal and put it in place, they keep looking forward as to whats the next Great Innovation for them its not just entertainment, its health care, its automotive, theres so many ways to key in in this growing American Market and we want to be a part of it. Governor walker, thanks for coming on and thats great news for the wisconsin workers, we appreciate it, thanks. And i love the on wisconsin music on there, because were ready to go. Were rady for this now more than ever and were ready to bring more jobs so bring your business to wisconsin. Excellent well see you later, thanks. Coming up, this mornings top stocks to watch and then later, politics in the big easy. New orleans mayor michigan landrieu joins us with a look at why cities across america are paying close attention to the Health Care Debate in washington stay tuned, youre watching squawk box on cnbc hundreds of dollars on youmy car insurance. Saved me huh. I should take a closer look at geico. dog panting geico has a 97 Customer Satisfaction rating and fast and friendly claims service. Speaking of service . Oooo, just out. It was in. Out. In out. In what about now . That was our only shuttlecock. Take a closer look at geico. Great savings. And a whole lot more. Hey. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. Coming up, this mornings top story, including earnings from Procter Gamble. Weve got twitter, facebook and many others. Plus the garbage indicator, the ceo of Waste Management will join us. Youre watching squawk box right here on cnbc your brain 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. Southwest airlines ceo with Immediate Reaction to Second Quarter numbers. Will the resul what should i watch . Show me sports. Its so fluffy look at that fluffy unicorn hes so fluffy im gonna die your voice is awesome. The x1 voice remote. Xfinity. The future of awesome. The busiest day of earnings season under way comcast, verizon, p g and twitter among the big names out with results a rundown of the numbers straight ahead the skinny repeal. Senate republicans turn to a narrow path for reform the latest in the Health Care Debate is coming up. Plus an update on a rockin campaign kid rock speaks out on his run for senate and the democratic party. Well tell you what the musician said as the final hour of squawk box begins right now. Announcer live from the most powerful city in the world, new york this is squawk box. Good morning and welcome back to squawk box here on cnbc, live from the Nasdaq Market site in times square. Im joe kern an along with Andrew Ross Sorkin and michelle kbrus owe tod Caruso Cabrera the futures right now are indicated up again, but moderated to some extent, except for the nasdaq which has added to its premarket indication as far as opening certainly facebook is not hurting the nasdaq helping other Technology Stocks obviously and fang stocks. Facebook, is that the f in fang, andrew it is the f in fang lets get you caught up on this morning. So much to talk about. First up, twitter. We have the social Media Company reporting adjusted quarterly profit of 12 cents per share, 7 cents above estimates. Revenue also above expectations. User numbers, however, and thats what investors look at these days, the numbers were flat also Nbc Universal and cnbc Parent Company comcast reporting quarterly profit of 52 cents per share. That was four cents above estimates with revenue also being forecast one of the quarters highlights, a nearly 60 jump in film revenue. Youre looking at that stock up in the premarket right now dow component verizon matching estimates with profit of 96 cents per share. Verizon added 633,000 Wireless Retail customers during the quarter. That stock up about 3 in the premarket. And another big mover this morning, facebook. The social Media Company last night beating estimates by 19 cents with quarterly profit of 1. 32 per share. Revenue beat forecast as well and facebooks results driven by a boft ost in advertising revene on its mobile app. A big thing on the call last night inserting ads in new places, for example, on messenger we may see some of that. Do they ever work i guess they do. The ads yes. Weve talked about that. Have you i have personally baought ad when we were selling too big to fail. Has it induced you to buy a product . Yes, actually really . There is controversy, right weve seen some of for social media in general, some companies have pulled back because theyre not sure of the efficacy of what they are receiving from the googles and the facebooks and the twitters of the world. Especially the video world. Especially on the video side. All right, billboards still work people see them. Thats where i am. Thats where youre at . Have you ever seen a billboard and then gone and bought something . I have been made awareness of a brand that may have induced me later to pick that brand versus other brands, maybe. You know, marketers always say that you need to you have to have three touch points before someone will actually buy something. Is that true . Maybe you want to see it on the billboard, maybe on squawk box and then on facebook. All right thats a problem for me because i dont see anything on facebook so i only get to two p g also reporting the consumer giants product beat on the top and bottom line. Consumer products giant. Earnings did i said computer giants products anyway, it helped cost cutting measures we talked with john moeller. If you just look at the quarter we just completed, 2 organic sales growth on the top line of the companies that have reported so far, thats well ahead of the average and it reflects the implementation of the program that ive talked about, which is just starting to take effect and improve results. We expect that acceleration to occur as we go through the next fiscal year. All right lets get over to sara eisen she has trions response to p g. Just crossing, they point to the underperformance of Procter Gamble, says over the past ten years p gs total return to shareholders is less than half of its peers and it has been in the bottom quartile. They think they need to investigate the root causes of in consistent underperformance they do say while p g says its addressing the underperformance issue, shareholders have heard similar promises in the past and results have not materially improved trian believes p g can be a best in class performer but must take Decisive Action that goes above and beyond what it has announced, including changing its complex organizational structure and slow moving and insular culture. It goes on to talk about why nelson peltz would be a good addition to the Proctor Gamble board which currently has 11 directors. He has been involved with numerous successful turnarounds of Consumer Brands and businesses adding him to the p g board will help p g become best in class. They go on actually to attach a screen shot of the outperformance, according to them, with nelson peltz on the board of consumer companies. About 8 or more for eps and total shareholder return so a twopart statement from trian. The first point to continued underperformance shares and the earnings and a second part backing why nelson peltz should be on the board remember, trian owns 3. 3 billion of a 230 billion company with a less than 1. 5 . They want peltz to have a single board seat p g indicates its going to fight that setting up for a proxy battle. David taylor, the ceo will be speaking on the Earnings Call at 8 30 first public statements since this proxy fight went public, so it will be very interesting to hear why they dont want him on the board and how theyre defending themselves the numbers today was a beat on the bottom line but that was driven by cost cutting the top line was pretty much a match and pockets of strength in beauty but pockets of lower in grooming. Low margin business, global, currency fluctuations, i cant imagine. Weve watched it both from cincinnati, sara, for years. Tough to get the right ceo in there as well. They brought the old guy back, remember they couldnt find anyone new. And he i mean they went through a major cultural change, thats what p g would say. They spun out 100 brands to make it a leaner company. They havent managed to get the Company Growing again and the shares performing again. They also have underperformed the Broader Market and the Consumer Staples index so do they need to look outside . Interestingly peltz does not advocate for changing management hes backing taylor. Hes not advocating for a breakup as well, just wants the company to move faster with some of the changes like cost cuts and making the companies within the company operate faster and leaner and more efficiently. All the big executives, the ones with the big paychecks lived out near you in amberly village, right no, they lived out in indian hill im talking east side of town, not from im i always say that i had to walk to school uphill. Do you have graders on the west side of town . We have graders but also sailor park and pete rose and things like that anyway, thank you, sara. Waste management meanwhile is out with earnings the houstonbased trash hauler beat on the top and bottom line. The company says results are driven in part by higher recycling Commodity Prices and volumes. Joining us now, jim fish, Waste Management president and ceo its good to see you. Yeah, good morning, joe wheres steiner i talked to him via text the other day. Playing golf all the time. Playing golf, traveling a little bit. One of the things that he did we talked about a lot was its tough to make money when oil prices are this cheap with recycled waste he kind of lessened the companys dependence on that were you glad he did that before you took over . Thats one of the things he did well before i took over. Only a few things no, no, theres a lot i think oil prices have some impact on us, but were kind of agnostic to the price of oil because we have a fuel surcharge that acts as a hedge for us. To the extent that it correlates to recycle Commodity Prices, weve taken a lot of efforts to derisk the business over the last year. Economic activity is more important than anything else, isnt it it is, it is. I would tell you one of the reasons were really excited about earnings yesterday is because we organically grew revenue by 7. 4 in an economy thats kind of 1. 5, 2 so every financial metric was up by 7. 5, ebitda by 3 in kind of a slow growth economy. That says a lot for us. People need to pay you every week, dont they they have to that was the original brilliant observation, that everybody is generating trash you put your dumpster out there and youve got to rent that dumpster and it still works. Look at the chart, its still working. Its a great business. Its a great model. Go ahead. Are you working on driverless trucks so heres what i would say about autonomy we are going to have an Autonomous Vehicle in one of our landfills and in a recycle facility within the next 12 months theres a big difference between having it on an offroad vehicle and having it over the road. Its kid of like airplanes a dreamliner can fly pretty much fly itself, but when we get on it and look to the left, if theres nobody up there, were getting off. So theres a big sea of difference between technology and public perception. So theres going to be theres a truck on the landfill site. On the landfill, yeah we will have an Autonomous Vehicle on a test basis, its a dump Truck Driving on one of the landfills. Can you see a day and age not only where you have a driverless vehicle, but even some kind of robots that pick up the trash . That probably happens down the road its probably not in my career but that probably happens down the road were at the forefront of this but we think its a much longer term aspiration with collection because of perception on the public side and because of government regulation. Theres only three states that even allow Autonomous Vehicles to run. How easy is it for you to find employees people who want to the on the truck . Were able to ill say this were able to hire as many employees as we need to pick up recyclables and trash. But there is this thought out there that maybe the millennial generation doesnt want to drive trucks. Whats the cost of an autonomous truck like that well, we dont know really because its in test stage right now. But i suspect like anything else with respect to technology its going to be more expensive when it comes out initially and then the costs will come down over time. So youre going to as far as outlook, everything seems on track there too as far as the high end of your previous range as well . We gave a range so call it 3. 14 to 3. 18 on earnings per share now well be at the top end of that range. Commodity prices make a difference for you, dont they they do, they do. Why were the biggest recycler in north america. You still do the recycling of the so he offloaded some of the waste to Energy Assets. Yeah, we sold our waste Energy Business two years ago. You still participate we participate. We signed a Service Agreement with the company that bought those waste Energy Assets and so they bring that material we bring the material to them okay. But it matters for your recycling business ifCommodity Prices are firm. You bet. I always used to joke around with steiner do you have kids two kids. So when a friend says whats your dad do and they say hes in Waste Management do they get scared do they think tony soprano . You really are in Waste Management, right . Well, i would tell you when the girls your kids dont get bullied. They dont get bullied. They think they said my dad works for the biggest recycler in america. Oh, not Waste Management. See, id go with the Waste Management. Id say my dads a garbage man. They say that too they say that too. God bless the whole industry. You only need have them go on strike for a week to see what happens. I mean i think theres doctors and then garbagemen. How about new york citywithout trash collection hows that going to work on the collection side, it is mostly men we have a number of women that work for us, but theres a physical component there that requires that a lot of these jobs are filled with men but were working to kind of move with collection vehicles, make them more automated so women can drive them too. And youve got new advertising. Have you seen it the dumpsters talk to each other. Right . That came out last year with the phoenix open golf tournament. Its still being used, isnt it it sure is. Do you like it i do. I mean how do you what do you do for Waste Management . You cant do the Waste Management duck. Thats already taken. Thats taken. Could you license oscar the grouch thats an idea. That is a great idea. You know what, youre creative. And then the taxpayer wouldnt have to fund pbs even less because they bring in more revenue. Oscar would be a great spokesman for you. Really good. Shes grouchy. Ill give you my address later for royalties. Lots still ahead on squawk box next. The battle for health care continues but this time it is a bit skippier well talk to neera tanden. Plus a war of words between a shoe company and amazon. Well tell you which ceo called the ecommerce giant pathetic. And later kid rocks vision for politics the musician is weighing a run for senate and this morning hes on a makeshift soap box we will explain. Squawk box returns in just a moment welcome back to squawk box. Making headlines, meg whitman has stepped down from the board of hp inc. , the move effective immediately. Chip berg will take over as chairman hewlettpackard split into two businesses about two years ago and hp inc. Is the printer and pc business. Hp enterprise is the storage company. Whitman and here comes the speculation right here. They reported whitman was being evaluated as a potential ceo of uber. You know, she snoknows polits part of this job is regulatory, part is a big Logistics Business shed be good at that. Im sure shes very comfortable but you could make a lot more money at uber. And if you really think about what ebay was, if you really think about what ebay was, ebay was a marketplace. If you really understand what uber ultimately is, underneath all of it its a marketplace thats the business. Similar to the trash business, the dumpster this is different. Not really. But theres certain businesses that really work well in this case its a market until and unless they all go autonomous and need to own all their own cars dont you think theres more upside at uber than Hp Enterprises . Right now yeah. Yeah, probably. Printing. Driverless cars. No, shes servers shes everyoneservers. Shes enterprise. Thats right, they split the thing. I think you could make more money at uber yes ipo that business . I think she should do it. You think she should . Should we call her tell faver to tell her. Tell her right now. Hey, meg, take the job. Do it. I also like ann finucan. Are they only considering women . Other story. The senate rejected a are they trying to be super pc and only looking at women . I think theyre trying to change the culture of the company and theyre thinking that may be one way to do it. The senate rejected a proposal to repeal obamacare lawmakers will vote on a sear reesz of amendments on a skinny repeal the president tweeting this morning, come on republican senators, you can do it on health care. After seven years, this is your chance to shine. Dont let the American People down exclamation point. Joining us now is neera tanden, president and ceo of center for american progress. She served in the Obama Administration as a Senior Advisor and helped write obamacare. Good to have you here. Just so our viewers know, a skinny repeal would repeal the mandates and also the medical device tax but the rest of the structure essentially stays in place what do you guys think of this well, its not really what we think. I mean the Congressional Budget Office has a score of a proposal like this and it finds that premiums increase by 20 both for people inside the exchanges and outside of them. So people who arent even really covered by the aca would face 20 premium increases as well as 16 Million People would lose coverage over the next few years. So i mean i think whats youre talking about a very specific skinny repeal or are you talking about the most recent on the yes. The cbo report on the bigger package . Yes i know its a confusing process because were discussing a proposal no one has actually seen, but the cbo scored a proposal like skinny repeal, which was eliminating the mandates, individual mandate and getting rid of the medical device tax as well as something on planned parenthood which we expect in the bill and thats what theyre findings were you know, i think most people probably recognize that health care is a slightly complicated topic. So the fact that the senate is basically looking at passing a bill tomorrow that no one has seen today, the public hasnt seen, legislators havent seen, its a little ridiculous. The most recent cbo ive seen is from june 26 where they do highlight that a lot of people would lose nsurance, but that because they think 15 Million People would just choose not to buy it at all. Right so there was a cbo score last night. The democrats asked to score a skinny repeal. In their findings, they found that there would be what they expect to be a 20 increase in premiums the president has said that we should have lower premiums almost every republican has said a condition of their support of a proposal is that it lowers premiums so you must like the other one that they thought about passing, right when you look at the june 26th, cbo they say that if they had gone with that package, average premiums for benchmark plans would go down 30 by 2020, so that would be good, right . Yeah, so i like a plan that does not drop 23 Million People from coverage. That would be one that forces people to buy, right no, that would be that would be one that forces people to buy. That would be one where you have a system where people have insurance. You know, i guess what i would say to you one that they have to buy it. You absolutely believe that individuals must be forced to buy insurance . I guess i agree with mitt romney and a bunch of republicans who are voting against all of these proposals that theres a system where you have insurance he didnt win. I guess this is a big question, which is do we really think we should have a system where premiums skyrocket, right, and we drop millions of people from coverage. Many people who just lose coverage themselves. Thats the question we have before us. And i think what i find fascinating is, you know, republicans have attacked the process for years and now theyre on the verge of passing a bill that no one has seen. Isnt that disturbing . Would a ceo run a company this way in which you discuss a proposal that could radically alter your business or your consumers or what your consumers or doing and no one has seen the proposal no one knows what it is except for 24 hours before youre supposed to vote on it wouldnt you be happy with the fact that medicaid would stay in place . I thought youd be thrilled with that because thats not going to get changed. I am, although i think whats interesting about whats happening in the senate is the Senate Majority leader is telling moderates that you can get skinny repeal and it wont touch medicaid but hes telling conservatives, dont worry about what you vote on tomorrow, what will come back from the house is going to get medicaid. And i think moderates have to recognize that in any negotiation with house conservative, they will be gutting medicaid, so thats the decision they have in front of them. Neera, the 20 increase in premiums is very troubling to you. Did some of the premium increases that youve seen over the last five years under the aca, did those trouble you, the 150 increases those must have troubled you as well i just to be consistent i find premium increases troubling. I think what you have to do is look at cbos analysis i welcome you to do it which is what would the premium be without the law, what would the premium be with the law. What we found under the aca is that premiums were in line or lower than what they should have would have been without the law. Thats what were finding in this proposal. And this is and this is could i just finish. Actually premiums have been in line with lower than what cbo scored in the exchanges themselves they had a rate check increase last year. We would get we are looking at greater rate shocks this year because of what President Trump is doing in not paying the Insurance Companies and jamming them but i think that what you see in the cbo score yesterday was that if the current law is allowed to stand, youd have premiums where they are and then they go 20 up from what republicans want to do im so sorry, weve got to go, but thanks for joining us. Thank you. Coming up you did a great job. Jobless claims and durable goods orders about to hit the tape were going to bring you the numbers. Welcome back to squawk box. We are just seconds away from jobless claims and curable goods. Rick santelli standing by at the cme in chicago rick, the numbers coming up in 15 seconds, sir. Well, you know, 16 seconds, a lot can happen in 16 seconds you know, we had the statement out yesterday and it took the markets about 16 seconds to figure out that there werent any changes. Rates are pretty much about where they were before the statement was read yesterday equities have gained a little, dollar index a little soft 244,000, andrew. We were expecting 240, that is up 10 from a slight revised 234 from last week 1. 946 million on continuing claims lets get to the meat of the matter june preliminary read on durable goods up 6. 5 , almost double what we were expecting if we look at last month, the minus 0. 8 ended up coming in a little bit better at minus 0. 1 now, remember, this is preliminary so this may change, but if we look at extransportation, you can see how much transportation kicked in, because it moves to up 0. 2, half of what we expected, and down 0. 1 on capital goods orders, nondefense exaircraft irate that as one of the most aspects of this number we need more power there but we did get a nice revision. Last month up 0. 2, its now up 0. 7, so up almost threequarters of 1 trade balance, which is a deficit, comes in at 63. 9 billion. Thats actually about a billion and a half less than we were expecting and sequentially following a minus 66. 3 billion, so i guess that can be considered pretty good news. On june wholesale inventories, wow, litany up 0. 6 when you look at inventories, i would think the biggest area you want to Pay Attention to are the retail inventories as well and those are up 0. 6 if youre making more widgets, that should give you better horsepower on your measurements like gdp but do remember these are june numbers well see, of course, if the making of widgets translates into the selling of widgets. Weve seen some pretty good earnings so far, especially from some of those fang stocks. Back to you. Speaking of which, thank you, rick santelli. A lot of meaty Economic Data there and well discuss more in just one second. Twitters analyst call is under way and Julia Boorstin joins us with some highlights. Twitter shares are trading down on the fact that it didnt add any new users in the quarter. Ceo jack dorsey on the call has been trying to shift focus to daily active usage, which grew 12 from the year earlier quarter. Dorsey saying that those gains indicate changes are working were shipping products faster than ever and this empowers us to build features that can enable strong future growth people are reporting significantly less abuse on twitter today than they were six months ago we take action on ten times the abuse of accounts daily compared to this time last year on the call just now, cfo and coo anthony noto also stressed the value of video on the platform, both for twitters users as well as its advertisers. By taking the video and bringing it onto the platform that people are talking about and cure 8ing below that video a timeline of the best tweets into an experience that makes the individual feel like theyre at that event is an incredibly powerful differentiator for us. Noto saying as they move toward 24 7 programming, they believe more people will watch twitter on their tv. That would give twitter a shot at more ad dollars with all those bullish comments about ads and daily i dont sayage, investors seem to be concerned by the lack of user growth twitter shares down 10 . Joe, back over to you. Lets bring in steve liesman, cnbcs chief economist. Steve, i guess you need to say we can do this any way you like i am the senior economics reporter. If you were chief economist. The thing that stands out to me is a nice durable goods number unfortunately, it looks to be driven not unfortunately, but it looks to be driven by civilian aircraft. I know you had a good profit number yesterday from boeing apparently they are making plenty of airplanes and shipping them the extransportation part not quite as strong and the investment part, look, i think beginning 15 years ago, one of the main valueadded on this number i told you was that its incredibly volatile. You were up 07 last month, youre down 0. 1 this is the last bit of data youre going to get to estimate that number. So we have had something of a rebound in Business Investment the fed yesterday upgraded its take on Business Investment. Thats going to be a key for Economic Growth in the months ahead, because we have had a real lack of it in the economy if we can get things going on the Business Investment side, that could help overall growth and also help productivity in the future and i think we want to bring in right now bill nelson. He is chief economist at the clearinghouse and maybe more importantly the former Deputy Director of the division of Monetary Affairs you left the fed in 2016, is that right thats right. So lets talk about yesterday. I think everybody got the message right yesterday. One is that theyre going to start reducing the Balance Sheet in september and two is were not quite sure about that third rate hike this year. I think thats right. Overall as you note, there were two big changes. There was really one big change. They indicated that that Balance Sheet rundown was going to begin relatively soon. They also said that they were going to only hold the Balance Sheet constant for the time being. Last time they said for the time being was in november when they said they would leave the target federal funds rate constant for the time being and raised it at the next meeting the signal is pretty clear theyll make an announcement for the rundown in september, probably with the rundown beginning in october at the same time, the rest of the statement was virtually unchanged. The changes were very minor. They said that 12month inflation was running below rather than somewhat below their target of 2 overall i think it was consistent with a continued message that there would be one more tightening, most likely in december but like you said i still think bill, i want to get to this Balance Sheet reduction. One of the things out there, one of the ideas is that the market is not paying attention. And when the fed actually does this, its going to frequent out eventually, Interest Rates will rise, take stocks with it. At the same time, every almost every mention by the fed of this coming Balance Sheet reduction has essentially been greeted by the market with a big yawn whats the right answer here is the market aware of whats about to happen and its not a big deal, or is the market going to freak out when the fed starts doing this i think the fed has done a great job telegraphing this change they have been communicating it for a while. They indicated what their plan was at the last meeting. Now theyre giving some signals about when the timing will start. Theyll start the timing its a very gradual rundown. I think overall theres good reason to think that the market will not overreact to the commencement i guess tenyear rates did rally a bit yesterday, partly on the announcement or the lack of the announcement of a date so it does seem like the Market Participants are paying pretty close attention to what the fed is saying. Bill, i want to turn to Something Else that you obviously you work for a group that is owned and run by banks, but yet youre also a monetary specialist and a banking specialist you feel as if the liquid tee rules in place as a result of doddfrank are hurting lending and hurting the economy. Explain, please. I wouldnt say liquidity rules are having that consequence. Overall the post crisis regulatory reforms have resulted in a much more resilient Banking System at the same time, there were some flaws in the way that they were designed that i think can be improved to reduce some unintended consequences, particularly ones that have made Monetary Policy more complicated. So id point, say, to the leverage ratio requirement, which is twice the International Standard it makes banks hold a lot of capital against riskless assets, like treasury securities and deposits at the Federal Reserve and that in turn makes it more expensive for banks to comply with liquidity rules so you support the idea that we can loosen up the banking regulations and provide more lending and not make the Banking System less safe i think that the banking regulations can be improved. I think there are changes that can be made that still maintain the resilience of the Banking System while at the same time encouraging growth. Bill, thanks very much for joining us this morning. Thank you bill nelson from the clearinghouse. Joe. Stocks to watch this morning, u. P. S. Is on the list beating street forecasts thanks to a jump in ecommerce. 1. 58. 11 cents above expectations. Revenue was above forecast the stock not responding mastercard reporting quarterly profit of 1. 10 a share, 6 cents above estimates. Bottom line got a boft frost fra 9 increase in the volume of card transactions. Thats too bad i guess were out of time. Buffalo wild wings, we were going to talk about that yeah, i guess well do it later. Higher chicken wing costs. I know. They refuse wing inflation. They refused to take my advice. Liesman, thats not in the cpi . I think it is in the cpi. I dont know how much of a weighting it has is it six or 12 that youre ordering spicy or not if science could deliver a gmo 8wing 8wing chicken. Why wouldnt you do this . Hes been on this. I have an idea. I mean you need one chicken for two little wings support it as a way to reduce inflation. Everybody needs a side. Do you know how many wings are consumed like on super bowl sunday thats a big strain on the chicken population why are you on that why not have an eightwing chicken if you can do it. It might actually be able to fly at that point. I still dont know what happens to the rest of the chicken. The health care is playing out in washington. Thank you, guys. Mayors across the country, they are also weighing in on that reform well talk to one of those mayors, this one from new orleans. Michig Mitch Landrieu will join us in just a moment. This is the new guy . Hello, my name is watson. You know wine, huh . I know that you should check vineyard block 12. Block 12 . My analysis of satellite imagery shows it would benefit from decreased irrigation. I was wondering about that. Easy boy. Nice doggy. What do you think . Not bad. Welcome back to squawk box. Foxconn is making a big bet in america. The company is investing 10 billion in wisconsin in its First Manufacturing plant in the u. S. We spoke to Governor Scott walker in the last hour. This is not just a plant or a factory, this is a whole ecosystem. This is a campus wide, we call it wisconn valley because of all the high tech manufacturing innovation thats going to happen this will be transformational for us 10,000 construction jobs alone in addition to the 13,000 jobs directly from foxconns investment, were looking at 22,000 indirect and induced jobs its a pretty big deal for any state, particularly for wisconsin. Wisconsins Unemployment Rate, by the way, is the lowest since 1999 but i think we have some low Unemployment Rates around the country. Whats the 10 billion, have you figured it out is it real it could be real. I genuinely want it to be real it would be great for wisconsin and great for the United States. I saw your tweet. The complicated part is that this is a company that spends 1. 7 billion on cap ex every year, foxconn. Right. It looks like their plants and equipment for their entire company is 10 billion the Tappan Zee Bridge costs 4 billion. 10 is a lot of money of the having said that, theres an intel plant thats going up in arizona. Looks like could cost 7. So maybe this is welcome back the realm. The giga factory that elon musk built in las vegas i think is 4 or 5 but 10 is a lot. We should i dont want to were professionally skeptical, but i want it i legitimately genuinely want it to work. Its also possible, right, that theres a lot in that number that legitimately gets you to 10, but, you know, when i think back to when i covered crime and the cops would always say that the cocaine street value was x, because thats the bigger number, but what they actually had why do you have to tell people that you genuinely want it to work why would anyone doubt that you want that to work . That says something. Because one of our viewers i saw it. Was skeptical and thought that i was being too skeptical lets get to our next guest. We have one of the great mayors of america on the program right now. Hes calling on the senate to scrap its Health Care Bill and work with the mayors and governors around the country to come up with a fresh plan. Joining us is new orleans mayor Mitch Landrieu good to see you, sir, newly elected president of the conference of mayors good morning what should happen at this point . Well, i mean if this wasnt so serious, it would be laughable watching the Senate Torture itself into a pretzel to try to figure out how to take Health Care Away from americans. I think most mayors, bipartisan, are very practical get everybody in the room, really let everybody talk, everybody bring their ideas, let the public opine about it and then get us to a good result thats not whats happening in washington right now so mayors across america, both democrats and republicans, are saying, listen, why dont you get together with some governors, some mayors, some other folks and lets start over again and see if we can put a bipartisan proposal together thats going to deliver on the president s promise, which was give more americans Better Health care for less money we dont think any of these options that are being discussed right now or the process thats being used is going to get us to where america can be healthy and strong. Mr. Mayor, the big question, of course, is just mathematically can you do that meaning can you do what the president has suggested . Can you make health care better, more accessible for more people and ultimately cost less well, let me say this other countries in the world have done that we have in this country struggled mightily to do it. Im a supporter of the Affordable Care act. It gave more People Insurance but obviously had some flaws so mayors would say fix the problem. Dont throw the baby out with the bath water theres clear low a way to do that unfortunately because of the senate rules or house rules only republicans talk to republicans and only democrats talk to democrats and thats not going to get us where we need to get us they should get everyone in the room, stop the shenanigans and get down to work. Mayor, what if the baby is the bath water what if it is the entire structure of obamacare is the problem . Well, its not i wouldnt say it that way. Its not the structure of obamacare. The Health Care Delivery system in the country has always been a problem. Of course bending the cost curve, giving access to more people creates problems. But the way that the republicans say obamacare was crafted, theyre repeating exactly the same mistake and theyre not talking across aisles. There are Better Solutions there are middle Road Solutions to the problem that could be dealt with but you dont just because you have to fix the private market, you dont take Health Care Away from 32 million american citizens thats not going to make us strong, its not going to make us competitive i just saw the interview with governor walker. I hope that new plant works in wisconsin as well but mayor, when you say take it away, when you read the cbo scoring, they say in fact the largest percentage would come from people who would just choose not to buy it so well, thats clearly that means you want people to be forced to buy it. Am i drawing a correct conclusion well, first of all, there are a lot of different ways to make sure that you spread the risk across the entire market youre talking about the problem in the private market right now. One of the things mayors are concerned about is there are Emergency Rooms being filled up because youre going to take away the medicaid expansion. So obviously this is very complicated. Its not easy. But the one place where its not going to get hashed out is in the individual caucuses in the senate where theyre talking about skinny or fat or big or small or this or that. It doesnt seem to be going anywhere the American People see this for what it is, which is an attempt just to kind of fulfill a Campaign Promise that should have never been made the way that it was made mayors would say fix the problem, dont throw the baby out with the bath water. If we have to go back and reconstruct the system, lets do that the overall objective is to make america strong by doing that, you have to make america healthy. It doesnt make any sense for american citizens not to have access to health care so we can actually do the kind of things that we need to do in this country. All right, mayor landrieu, thank you for your time here this morning unfortunately, we have to get to a commercial break but it was great to have you on from the beautiful city of new orleans. Thank you very much. Jim cramer will join us live from the New York Stock Exchange lget s ter this wel hitake on todays earnings frenzy. Well be right back. Your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. 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Because they let us focus on earnings going into the earnings season, this would be determined the numbers were better. Wed stop thinking about the fed, wed have to focus on individual companies and individual Company Focus has been right, the macro people, they may have to be lets say they are subservient and dont get in the way of story, please. When i watch at 9 00, what will take the lions share of your time for the Companies Reporting in the last 24 hours well, we have to focus on facebook because this is perhaps the greatest growth i have seen quarter over quarter in my career now, i know correctly you identified that we should be thinking about boeing and the size of boeing why . American is the greatest american manufacturer. It deserves a lot of time on our network. Facebook, two billion people, its an American People. Maybe were not celebrating these companies enough frankly the only constraint, only 7. 4 billion people in the world. They need more people. I said i could make it two billion and one, jim, but id top it out itd be time to sell i see why they need satellites there are whole parts of this i dont know, theyve got to put people theyve got to get people on mars go get musk. Because they need more people. This is an incredible story. Two billion people this product didnt even exist guys were doing facebook at harvard. Kind of selffulfilling, no ones having kids because theyre all in their basement having facebook. Its selfdefeating. See what i mean. Theyre not playing call of duty, i mean, thats wrong. House of cards really, theyre ordering Dominos Pizza and taking out from mcdonalds, mostly theyre hoping for red dead to come out. Good or bad that the vix is an alltime low, jim i dont like vix . I use afrin. So its not a measure much complacen complacency. People who talk macro okay, jim see you in a couple minutes. Coming up on squawk on the street, dont miss ups cfo rich peretz, thats at 10 10 a. M. Eastern time a big e commerce deliveries for ups. Well be right back. H . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac chances are, the last time yoyou got robbed. An, i know i got a loan 20 years ago, and i got robbed. Thats why i started lendingtree the only place you can compare up to 5 real offers side by side, for free. Its like shopping for hotels online, but our average customer can save twenty thousand dollars. At lendingtree, you know youre getting the best deal. So take the power back and come to lendingtree. Com, because at lendingtree when banks compete, you win. Welcome back, a new program from am distance to buy products from Third Party Merchants to bulk up its voirlt. They are buying at Retail Prices and says itll be able to deliver customers more quickly using the Global Supply chain. But the ceo is slamming the program as an assault on decency. In an email to the resellers, he calls amazons move a quote, pathetic attempt to create a back channel means to sell products not offered on its site, unquote. They stopped selling to amazon due to concerns over counterfeit products and unauthorized sellers. As part of that program, they offered to buy them from other retailers. Threatening his retailers, anyone who sales a single pair to amazon will be closed forever. Clearly, birken stock has had a lot of problems with amazon. On the flip side i talked to ceos who say that amazon is one of the best when counterfeit product goes up, you can call them and theyll take it right off. Ive heard Great Stories and in this case weve heard the opposite uhhuh. I used to sell those in boulder birkenstocks. Did you wear them i never wore them i wore them in college. Im not surprised. Did you wear them with socks on let me get this in. We know that kid rock is weighing a run for senate, but the detroit rocker offered his most direct comment about the future in politics in late night post on his website, musician said hell be scheduling a press conference in the six weeks. He also said if i decide to throw my hat in the ring, and hit does wear a hat, for u. S. Senate, believe its game on believe it kid rock announced an initiative to promo voter and the opposing party, writing the democrats i are shaten in their pant loons followed that by says, diggy, diggy, said the boogie, said up jump the greatest rock and roll songs of all time. Hes been planning that all show fantastic i know it, but i didnt know the lyrics weve got to go. Make sure you join us tomorrow squawk on the street is next good thursday morning, welcome to squawk on the street. Futures are steady as they chase for more record highs continues, it is the busiest day of earnings season, results from verizon, twitter, and of course, amazon intel starbucks tonight slight moves in europe this morning. The tenures has