Transcripts For CNBC Squawk Box 20170801

A gain of 115 points expected if we were to open here s p is indicated up by 8 points. The nasdaq up by 31 points overnight in asia, youll see that the market theres also ended higher with the nikkei up a third of a percentage point. The hang seng up 0. 8 . The shanghai up 0. 59 . And the kospi up 0. 84 in europe this morning, you will see similar moves. Gains across the board there the dax is up by 0. 55 so is the cac. Ftse up by 0. 8 . If you check out wti, crude oil, 50. 27 wti for july broke a fourmonth losing streak. Had its best month since april 2016 look at the dollar index, the dollar index saw its worst month since 2016 dollar is stronger against the euro and yen trading at 1. 1813 and the dollar yen at 110. 34 fifth negative month in a row. Lets get you through some big stories. The s p 500 will start excluding companies that have multiple classes of shares. The move bars snap from the index. The Company Offering new investors a class of common stock with no Voting Rights. This is a big deal everyone will get kicked out . That are already members heres the important part. If youre already a member of the s p 500, you will not be affected that includes alphabet and burke slir hurricane matth Berkshire Hathaway this is more of a move to try to tell new companies were not doing this anymore so, if youre going to pursue an ipo, this may change the dynamics of Silicon Valley you waare left out of indexe. Theres all the money in indexes. If youre not in an endex, prin, youre playing on another level. Hbo says hackers stolen upcoming programming according to Entertainment Weekly the theft includes a script for an unaired ep today episode of game of thrones. Ew says the hackers have posted episodes of ballers. We get a trio of economic reports. June personal income and spending is out at 8 30 eastern. Followed by the july ism Manufacturing Index and june construction spending, both out at 10 00 a. M as for earnings, look for results from pfizer, phillips 66, sprint, a lot of people focusing on sprint after talks with charter, tmobile, under armour and xerox thats before the bell after the close, we will hear from apple thifrnlg thifrnlg can we make a pact here . Its august 1st, lets slow down a bit. Lets enjoy every day of august. I would like that lets not look back and say its labor day how do you do that . I dont know. I dont think its possible. Im just going to take a deep breath and hold it august 1 st august is a great month. Summer is great. I dont want to have to go through another winter my choices are not great for not doing that can you just good luck with that easy. August are you meditating . I havent can i use that as an august. That could be your mantra. We will go to kayla you know, were not breathless, kayla. Our top political story, anthony scare moochie smoochg scaramucci is out. The name can be worked a bunch of different ways. When it was all said and done, i will tell you it made sense to me, given watching all the general kelly commentary about how strict the chain of command was going to be, it seemed like scaramucci could survive, but looking back at the unbelievability intervieunbeliee interview, it was inevitable that it would happen we talked about general kelly being this new person, a new force within the white house where the buck would stop going forward. People talk about the New York Post cover, the survivor title is outdated by two people. The start date was moved up to july 26th, because there was a worry within the west wing that people who are not fans of scaramuccis would try to sabotage his hiring. This is the third west wing departure in less than three weeks. The statement regarding scaramuccis resignation echoed a desire for a clean slate, but this time for general john kelly, the new chief of staff. Press secretary Sarah Huckabee sanders said the new yorker article also played a role in this i think the president felt the comments were inappropriate. Scaramucci has been silent. Sanders says he does not have a role in the administration at this time. Skybridge declining to comment on whether he will rejoin the company which he founded and is selling in order to comply with ethics rules to join the administration the buyer of his business, hna, has told reuters the shuffle does not affect the sale itself. The administration trying to regroup after a healthcare loss and ahead of a tax reform push not to mention a continued stream of stories about the russian investigation. Last night the Washington Post reporting that it was the president himself who dictated don jr. s original statement claiming that the meeting with a russian attorney was to discuss adoption policy. Thats not the case. There is the parlor game about who could potentially take this job. When scaramucci was hired before, part of it was the president s frustration that the press office took so long to fill that role of Communications Director, which had gone untilled for about two months time so sean spicer i thought was still around until august 15th so they he is he was at the west wing yesterday. Hes in the press office thats why i thought scaramucci wasnt starting until the 15th so they started him right away and spicer stays any way yes but Sarah Sanders was asked on whether scaramucci had taken the oath office. He was in office, and serving as Communications Director, but not all the books were checked i have questions around the sale of hna. Hna says they will continue trying to complete this deal do you think that changes at all. Weve seen news around hna and the ability for them to get money, bank of america and others not wanting to do business with them what are the Tax Implications for scaramucci will it affect how a transaction like that will be taxed . Unemployment insurance . On the hna part specifically, i had a conversation last week with a person familiar with the transaction who noted the sky bridge purchase is a small one for hna. They are paying cash for it, they dont need to borrow. The banks they we s were havin about this, even though they were paying out of their own pockets. There was a piece in the f. T. Where executives from skybridge were talking about the fact that if Anthony Scaramucci was at the white house, he wouldnt be touching investors money, that was to put at ease the transaction going through. In terms of the tax treatment, normally i dont know about this specific case, because its going to come down to the nuance here, whether he was granted that favorable tax treatment in the first place, a lot of these jobs require a minimum number of days on the job, call it a year f youre selling stock or assets thats why he wanted to keep the xm bank. He may still. A lot more to talk about. Kayla, thank you very much we will continue this conversation joining sus sarus is sarah faga. A cnbc contributor sar sarah, was there any other choice i dont think so. If you think about general kelly, the way he conducted himself throughout his professional life, you think about the way every member of the military conducts him or herself, i didnt see how Anthony Scaramucci could report to general kelly or report around him one of the things thats been fascinating about this particular white house is that the relationship, the longterm relationship to some degree, the loyalty of figures in the white house and the president matter they matter deeply to some degree Anthony Scaramucci had that. Unclear whether kelly does, at least now. I think thats a great point. Donald trump has a lock history of people exiting and reentering his orbit. Roger stone, famous political consultant, exiled for a while but nothing would surprise me relative to the way trump order the his staff. Just because Anthony Scaramucci is gone today. I dont think hell come back to the west wing, but he may be back in a prominent role in government at some point down the road how do you think the west wing will change over the next several weeks, if it does at all . I think yesterdays move, while probably the right one for the staff and kelly, it was an opportunity for the new chief of staff to say im in charge there are new guardrails around how this west wing will operate, and you will operate within those guardrails there was a point that Jarrett Kushner and ivanka trump will report through general kelly, at least through their official capacity whether that happens, how long that lasts, that remains to be seen already buried in a new york sometimes story, a sentence that suggests that these guardrails that general kelly may be putting on may be too constricting for the president what will happen when the president is tweeting and general kelly is waking up and reading it i thinks that an open question general kelly certainly knows that donald trump conducts himself in a certain way, and it works for donald trump at least it has through most of his career to some degree a leopard doesnt change its spots but can he create a structure that at least stops the infighting produces a more productive staff. Everybody marching in one direction, which has been the biggest challenge for President Trump. President trump clearly recognizing this isnt working for him so he made the move. Is this a pivot or have we seen this movie before clearly its a pivot this week the president recognized over the past 10, 12 days, this wasnt working this was unsustainable his administration is being talked about with the likes of nixon and carter he doesnt wanted that he had to pivot. The question is will he remain disciplined and allow general kelly to put together structure that works, and get President Trump out the small things of running the white house. We heard him making this person an assistant to the president , demanding this person be hired in the office. He has much bigger fish to fry certainly. The other question of the morning we lates to what kayla was reporting or rereporting from the Washington Post. These allegations, i guess, that the president was responsible for the original statement that went out from donald jr. Will general kelly be able to prevent that hopefully general kelly needs to prevent those things from happening if this white house is to rally around tax reform and truly turn the corner, not just on the staffing but on the policy making, too. Which is as important. The president should not be writing statements, certainly they should be approving them, but oftentimes they dont need to approve them. That should be left for the staff. The president should be worried about policy regarding north korea, tax reform through congress, giving his speeches and what hes saying relative to the important policy matters of the day. Writing a statement from his son, maybe being dishonest about it what that does for the special counsel, gives him another line of inquiry, all of that is why this west wing and president is in the situation hes in today. Sara fagen, thank you when we return, an earnings beat by an oil giant driving the stock higher that stops our list of stocks to watch. Later apple reports after the closing bell well tell you why the iphone Sales Numbers could mean more to analysts than the top line or bottom line numbers. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. You are loved who knew that phones would starentertaining us,ng . Getting us back on track and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing Xfinity Mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save when you choose by the gig or unlimited. Call or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network, designed to save you money. Welcome back to squawk box. We have some stocks to watch bp topping expectations despite a drop in Second Quarter profits. The company says oil and gas output increased by 10 as it started production in a large oil field in the north sea sonys operating profit jumped three fold in the Fourth Quarter on strong sales of image sensors. That business recovering from earthquake damage is suffered a year ago sony shares up 35 this year, but they are lower today honda reporting a better than expected First Quarter profit as strong sales in asia offset weakness in north america. The automaker is raising its fullyear forecast that stock is up 0. 6 . 5 the u. S. Equity computer chor features. Dow looks to open up about 112 points higher. Nasdaq set eight new records in the month of july. It was responsible for 59 of the dows advances for the going all the way back to may. The greatest our greatest manufacturer is doing so well. The market cap is almost a third of facebooks now. I mean, its really coming into its own. Look at that. I know you cant use boeing to look at somebody elses vacation pictures or anything Strong Demand for airplanes how you are going to get to places to take your stupid facebook shots, if you cant fly there. Yeah. If you cant fly there can we get our priorities straight jason pride joining us now and covering the economic angle is Michael Gapen from barclays who is used to being called on first, because hes 68 its like look at that guy im not doing that were all the same height here the chairs are just adjustable he says this is not fair. And were not playing basketball you know what you spoke to me. Your notes, your notes spoke to me are equities too expensive here . Listen to this valuations are a challenge becoming a larger challenge. Evaluations now sit at the top level historically historically these levels hold back returns limiting gains, restricting further appreciation and rising values as a result we expect equity markets to continue climbing quite inspiring, right no. Youre right youre right about all those things, valuations usually are not enough to stop something from happening we actually have done the historical analysis on this, we looked through the data. We found when youre at the line between top and Second Quarter valuations that generally returns are limited. You get 1 to 2 less per year, but they dont go negative you have to get to the upper end of that, the top 10 , you have to get to 23, 24 times earnings before you start seeing a high probability of negative returns coming to the market on valuation basis. Markets, theyve passed two cycles we got to this level and they basically rode this level for five years in both cycles. We can get here and stay here and the markets can climb with the underpinning of Earnings Growth six months ago if you made this point, people would have benefitted from listening to what youre saying it would have been another 20 tacked on in an already expensive market well see if it continues. Maybe youll stay too long at the party, but this is the right attitude to have for the last couple years the one counter balance, it does make you vulnerable to corrections. The corrections can be bigger when they do come. They may not still last, but they can come and those overpriced equities are vulnerable to that michael, does the is the disconnect between the market and the economy, is it closing or widening . Actually, i dont think theres a tremendous disconnect. So the economy is justifying whats happening i do. I think its more than the u. S. Economy. As we were discussing prior to coming on, the real improvement has been outside the u. S these are multinational corporations weve got growth in europe, that will be on par with the u. S. Improvement has been globally and synchronized, a lot of the global risk back drop that come away all of this in an environment where inflation is going nowhere. Any Central Bank Normalization will be slow its the u. S. And global back drop support these the fed is going up, but from low levels inflation is not a problem, at least in the pleimmediate future you have great employment numbers, the prospect for rising wages, they might not be inflationa inflationary you look at it all, why am i looking so hard to find a flaw the valuation argument is the one that should make you nervous. We agree its a position where a ri riskon portfolio will do weight, overweight equities should do well forward looking returns are pem tered by these v tempered by these. You can take a nuanced position the International Equities and International Space is where were seeing more improvement and driving growth at this point in time. They catch up to the u. S. In terms of Economic Activity the earnings are doing the same way. Weaker dollar will hurt that. Valuations are cheaper. But the weaker dollar could hurt that. Weaker dollar could hurt that, but the dollar is i need to know. I wish i would 68. I do i dont think i would be better at basketball. Hard to buy suits is it cool looking around and thinking look at me. Or do you stand near a wall because you feel like you stick out . Which is the more frequent feeling you have in new york, its better to be this tall, when youre packed on a train, you have more freedom. Do you ever foeel awkward . Yeah, constantly. Yeah im envious i would take it. I want it. Its not going happen for me. Shg doors are 67, so some downside im sorry ill get something for you next time okay. Coming up, earnings alert. Pfizer expected to report in the next 20 minutes. Well bring u osyothe results and reaction from wall street. Squawk returns in a moment hi. 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. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning welcome back u. S. Equity futures triple digit gains indicated at this point. Dow up 115 points, that would be a record that would put us above 22,000 s p participating after a couple of down sessions the nasdaq showing some good rebounds, if it were to hold where it is now, up 31 points. Venezuelan president Nicolas Maduro slammed President Trump as desperate yesterday after the u. S. Government slapped sanctions on the venezuelan leader the Trump Administration denounced sundays election as a sham vote and froze all of maduros assets that are subject to u. S. Jurisdiction americans are barred from doing business with the venezuelan leader critics fear rule also be changed to cement the socialist governments power in the middle of the night last night two venezuelan opposition leaders were taken from their homes by the government intelligence agency. They had been serving house arrest on charges of leading antigovernment protests and leading a coup against the president. Hopefully that makes you feel better, andrew, about whats happening here in our country. It was a tough week last week for you. Even though the healthcare thing went down in flames. It would be worse. He sounds like baghdad bob, i feel bad for trump and whats happening up there in the United States we have it going on down here in venezuela. Only four regimes that we i dont think thats a reasonable comparison. Thats okay. Im glad. Okay. Lets talk earnings. Apple will be reporting after the closing bell today many analysts are looking past this Quarters Number at the next product cycle joining us on the expectations from the iphone 8 and what to think about earnings along the way is neely patay people are thing lets get this quarter out of the way there was one analyst who put out a note, get the Third Quarter ouft of the way whats coming is the iphone 8. Yeah. Its the end of the iphone 7 cycle. If you look atriumer sites, they leaked a lot of information, firm wear firmware update. There are questions whether there will be a fingerprint sensor the design doesnt look as forward thinking as one would expected so not as different i think it looks different. If you look at the 7, it is not as beautiful of a phone as the Samsung Galaxy s8, but apple sells a lot of phones. The question is can they keep up the pace of growth, especially in a cycle where they are changing the design. The graphics of the phone the physical hardware just the phone itself is beautiful. The samsung 8 is beautiful. Its just a thing. Its beautiful. Theres no bezel to it it has curved edges. Its amazing however what we were discussing off camera, i apologize, boy genius its everywhere there are pictures of what is supposed to be the next iphone boy genius, hes 40 and bald now. Whole different topic how he can be a boy genius. Hear me out there are images so unfair. There are images hes on tomorrow. Maybe. There are images well ask him there are images of thi supposed phone dare i say, because i know tim sometimes watches in the morning, if thats the phone its unattractive. I would think its upsetting. For me, its the features i think thats the thing. Apples ecosystem is so powerful it has big bezels can you get that camera over here its a blank screen. No, it looks similar. This is what the boy genius folks have at the moment a phone, they say, is the phone. Now you dont think it is the phone. I think at this point in the cycle, were seeing leaks off the supply chain in china. Not the finished what makes this more accurate is, again, they accidentally release the firmware, which includes a graphic that looks just like that the question is can they continue the sales, no whether it excites the few people looking at the form of this before they go and buy it. You mentioned its a sticky environment. Is it something people will want to upgrade to and will it bring in new customers the things that are driving peoples desire for new phones is with whats samsung is doing, apple is doing, building tighter packages around larger screens so you dont have all this stuff around the edges that cut the screen size. Everybody always wants a bigger screen. Thats a curve thats been true for a while. The thing apple has been making better is better and better cameras. That reached a point where they can do augmented reality all kinds of demos happening it looks like there will be highend augmented realities with the new phone that will drive a wave of interest in what this phone can do and something android is nowhere near capable of doing. Even if its less attractive, you think it will be a better phone . Its hard to get people, particularly in the United States, to switch from android to the iphone. What is the better phone right now, if you could buy a samsung or apple phone if you are not on imessage, not locked into apple music, the s8 is probably the better phone. Those are huge ifs were all living inside the ecosystem. You look at apples other product lines, the apple watch is i dont see any here this is not an apple watch. Its a successful business because people buy iphones, that is the one product that can send an i messag an imessage. Will we see more watches . I think so theyll narrow it to health and fitness. Anything else were missing is there some other thing thats coming that were not talking about . I think apples big disadvantage, i hate to call anything theyre doing a disadvantage, their scale is successful because they own a bunch of stores and they are apple, but their ai machinelearning stuff is not yet at the level of competitors. What google is able to do is advanced compared to what apple is able to do. Make that real for us what do you mean everyone has a speaker now. Theres the echo, google home, apple is releasing the home pod. Over time the capability of those isis tant assistants important. Amazon has a massive lead there. Theres a 40 amazon echo both that they basically will start giving away for free and er is 300 and is not out yet google has a huge advantage on what its cloud can do, ai can do none of them have applapples b. The home ecosystem, theyll do fine, but they have to made that bet aggressively its unclear if theyll do it. Coming up a shakeup at the white house. Bill daley will join us at the top of the hour. Then President Trump has not given up on healthcare yet well talk to one of the architects of obamacare. At 7 30 eastern time, chief executive of American Made company snap on will join us on set. Stay tuned, youre watching stay tuned, youre watching quk xcnbc. In the first place. At cognizant, were turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. Get ready, because were helping leading companies see it and see it throughwith digital. Time for the executive edge. Softbank empire may be getting bigger sources saying the head of the japanese con dmrglomerate is not backing down on its acquisition of charter joining us is ed lee lets do charter first then well talk about the future of the empire. He wants charter. He wants it. I dont know if he can get it. Its way too expensive for him at this point. What is he talking about . There was a bloomberg article last night, saying he could make a bid with some bank stock, some other cash thrown in, and maybe not own it outright, but control it take a 51 or 55 , of course the charter board and john malone doesnt want to do it. John malone only does things that are tax efficient theres not a tax efficient way to make this play. Well sprint has bad balance sheet, a lot of losses you know, charter has debt on its books. Theres some kind of tax loss carry forwards you could engine engineer who knows. If its pitched that way to him, he may change his mind right now, its too complicated. What do you think is on the Shopping List for masa son he was attempting to buy uber, but stepped off of that because of the turmoil who is in charge who will be in charge thats a good question we talked about it yesterday, theres a question in the valley, very mixed some people think this is spectacular, because he will basically buy everything and let a lot of these venture venture capitalists exit thats the good side the other side is hell inflate the heck out of the techworld and it will end badly. I think the latter thesis is overblown. A lot of what hes investing in now, a lot of them are startups around the world all the competitors to uber in Southeast Asia and asia, these are home grown players is it unfair to say hes the most powerful man in tech . Yeah, because hes making bets yet, we dont know if theyll pay off. Hes powerful, he has a lot of money to spend if youre at a dinner conversation with people in the tech world, used to be people would be talking about people still talking about elon musk. Hes a huge factor. In terms of their own business, people are talking about masa son, what is he doing, what does he like we hear the same thing a lot in terms of we dont know what hes trying to do. Thats the reaction we get from other vcs or entrepreneurs in the valley softbank has been around for a while, so youre familiar with that masa son himself, its like i dont get his thing. The thing that fascinates me about this, he has such ambition, he raises the 1 100 billion. What is to keep sequoia or Marc Andreessen who is in the valley to do this heres the thing. Guys like Marc Andreessen or sequoia, these wellknown venture firms, when they go after lps and raising funding, they are tapping certain sources theyre used to doing. Theyre not tapping Global Sources the way mrasa son does is the fee whats the Fee Structure on this deal on his vision is that similar to what a 2 billion venture fund would be . I dont have a report, but its similar to other lps. Hes just minting money printing it. Hes printing money basically. Theres a lot of opportunities now in the space, whether its ai or Virtual Reality thing. Hes realizing he needs to jump into it. The one and only, ed lee. Thank you. Thank you say hello to cara for us. Will do. She was making hay on twitter. Profane i have to follow her, before she tells me, she says it on twitter. She said things like that to you . No. No sometimes shell have news, break it on twitter. I was like can you please write a story first before you write it on twitter. Pfizer reporting 67 cents adjusted revenue was a bit below, 12. 9 billion. Estimate was 13. 08 billion the range for the mid point of the year is up slightly. 254 to 260, street at 255. Revenue, 52 billion to 54 billion, better than the 52. 7. The shares as a result are up 0. 6 well talk to barbara ryan and a pfizer analyst at the top of the hour. When we come back, a potential disaster in crypt to curre crypt crypto currency has been averted. A quick check of the markets. You can see the dax and the cac are both up by a half percentage point. The ftse in london up 0. 7 stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. I love you, basement guest bathroom. Your privacy makes you my number 1 place. To go number 2. I love you, but sometimes you stink. New febreze air effects with Odorclear Technology cleans. Away odors like never before. Because the things you love the most can stink. And try febreze small spaces to clean away odors for up. To 30 days. Breathe happy with new febreze. All right welcome back, everybody. We have a followup to a story we told you about yesterday. Today is a crucial day for the future of bitcoin. Sim ma moody is here and she has more on all of this. Hi, becky, good morning following a month of disagreement over how to scale bitcoin a Software Upgrade will activate in just about 2 hours time if a lot of owners take this option, bitcoin will diverge creating two currencies. Anyone who holds bitcoin before the split will likely hold coins on both exchanges after the split. But make sure your exchange accepts bitcoin cash coin base says it will not support the new currency and to ensure bitcoins price doesnt see a huge thing coin base is suspending trading activity today to avoid disruption thats the equivalent of Td Ameritrade or Charles Schwab saying were halting trade on all stocks thats crazy. It is crazy believers in this new bitcoin specifically from china say in order for the Digital Currency to rival paypal, visa and other digital platforms, these updates are essential. Also point out that thomas lee at fund strath who sees bitcoin hitting 55,000 in five years says essential banks are incorporating bitcoin, then it will gain more legitimacy and thats why Software Upgrades like this are needed meaning that this may not be the only time that its taken out for an entire day . Thats exactly right. More as we were discussing yesterday, are expected to happen just as more demand drives the Software Upgrade to actually happen i dont think i saw but seema tried to live, was it a week i did i lived a week on bitcoin. Incredibly hard because there are not enough vendors that accept a bitcoin there were like two french restaurants on Lower East Side definitely went back for a couple meals since that was the only place that actually accepted it. You would expect more in manhattan. A place thats full of different restaurants. You would think we were a bit more savvy but yeah, your story, and you understand the reluctance or the slow adoption, and it is still in infancy still the early innings seema, thank you very much. Seema mody okay, now to sports the olympic torch coming back to los angeles. The city has reached a deal with the International Olympic committee to host the 2028 summer games that agreement clears the way for paris to be awarded the 2024 olympics part of the deal, the ioc will advance 1. 8 billion to l. A. In recognition of whats now going to be an 11year planning period, and to increase youth sports programs. L. A. Has hosted the olympics twice before in 1932 and 1984 we should say 1984 was, i believe, the most profitable olympics in history. Historically, most of these cities have lost enormous amount of money, and part of the pitch that l. A. Made was actually the sustainable and reused many of the things youre looking at a shot of the coliseum right there, and the coliseum will play a major part in that olympics when the 2018 olympics are . Excuse me do you know where the 2018 in seoul. South korea yeah. Right next door are they thinking about that at all you know, its for south korea its always been a binary situation. Right they may or may not wake up tomorrow i cant i thought about this i cant imagine oh, good. I mean, im i mean i cant imagine its coming up. Its 2018. Then tokyo. Then paris not much further. Coming up reaction to pfizers earnings were going to dig through the pos thn alt. Ats next. Anys i mean they call him the whisperer. The whisperer . Why do they call him the whisperer . He talks to planes. He talks to planes. Watch this. Hey watson, whats avionics telling you . Maintenance records and performance data suggest replacing capacitor c4. Not bad. Whats with the coffee maker . Sorry. We are not on speaking terms. At where instead of payinging whaa befor middlemen,em. Aker . We work directly with family farms to deliver Higher Quality ingredients for less than you pay at the store. Get 30 off at blueapron. Com cook good morning. Another big white house shakeup after just ten days on the job, White House Communications director Anthony Scaramucci is out. We have the latest out of washington, and reaction from former white house chief of staff bill daley straight ahead. A summer stock sizzler wall street rally remains red hot as we kick off a new month were breaking out your august playbook and previewing this weeks jobs report plus tool talk with the ceo of snapon. A closer look at manufacturing, infrastructure and jobs in america. The second hour of squawk box begins right now live from the beating heart of business, new york city, this is squawk box. Good morning welcome to squawk box right here on cnbc were live at the Nasdaq Marketsite in times square im Andrew Ross Sorkin along with becky quick and joe kernen. Take a look at the futures right now, got a lot of earnings to talk about in just a minute. Impacting all this the dow looking like it would open up higher again it is hot, hot, hot. Up to about 110 points maybe 111 points right now nasdaq will open higher as well over 25 points higher. The s p 500 looking to open close to 7 points higher tell you whats making headlines at this hour on the first day of august, automakers will report their july Sales Numbers and theyre not expected to be up. The analysts surveyed by ed monlds expects all major automakers to expect sales to climb. An overall 6. 2 drop in u. S. Sales. The days highest profile Earnings Report is going to be coming up after the closing bell thats apple theyll issue the fiscal Third Quarter numbers expected to show profit of 1. 57 per share on revenues of just under 45 billion dollars. But of course, everybodys waiting for the Fourth Quarter, when it comes to apple and its new phone this year. And then the big news of the morning, the s p is going to begin excluding companies that issue multiple share classes this takes effect today. It doesnt impact existing s p members with multiple classes like alphabet and Berkshire Hathaway but one company that could be affected is snap. Which has a class of stocks with no Voting Rights snap went public in march. Hit a record low in yesterdays trading. And this may have a big impact on how companies approach governance in the future at least thats what the goal of this new index is about. And as we know, given the rise of etfs, and algorithm trading, you know, so much of the index, being an index matters in a very, very big way a lot of money gets funneled into the index you get bought automatically if youre in the index. Which means you dont get bought automatically if youre not in the index. Right we talked to a number of Value Investors who will say the funny part of this new world is you almost have to buy a company thats not in the index, and part of the goal in terms of the value play has to be believe its going to generate so much money and do so well it will get into the index right all right. All right lets also talk about todays top political story. Anthony scaramucci is out as White House Communications director serving just ten days on the job joining us right now is bill daley. He served as white house steve of staff under former president obama. He is now managing partner at arjentier capital. I dont know whether to call you chief of staff or secretary or i think bill is better. We still with bill for now. You have worn a lot of different hats in washington you have seen how the white house works, you have seen ow administrations work with john kelly coming in as the new white house chief of staff what do you think of this particularly with his first move being to oust the Communications Director well, i think it was an obvious move for a whole host of reasons. One, scaramucci proved he was not a Communications Guy with his tirade last week so i think kelly sent a message. But its also probably the end of the gong show of the last ten days and ive got to say, i dont think theres been a worse ten days of a modern presidency in quite awhile, like President Trumps had the last ten days. So i think kelly brings at least some order, in theory, everyone says theyre going to report to him, through him, pardon me, but you still have some very large players in that team who have strong opinions, and capitol hill, who is a well respected military person, of course, has gotten a lot to prove in that he is now in the thick of the political game, which is washington and what the chief of staff has to do is mapg the politics, not just in that building, but more importantly, in the city of chicago, and on behalf of the president and his programs for the nation so its a very different job and a very different sort of route that kelly must traverse through than he has been in his entire career lets talk about just chain of command because that is something that hes very used to. And having that put his legs in the white house will probably help streamline a lot of things, maybe focus the president s attention on the big thllses thh wants to get passed, correct in theory, thats right the question is going to be with kelly and the last military person to be chief of staff was Alexander Haig who basically oversaw the end of the Nixon Administration the last year and the question for kelly is, is he just going to have the chairs on the deck of the ship in order and stable. Or is he going to try to steer with the president , this ship through a very difficult sea and so im not sure what its going to be. And right now, i think he made a good move with scaramucci. But, now the president s got to not only be more disciplined himself, but theyve got to get some things done and theyve got to get a program, if you go back through the president s programs and his campaign and his ideas, almost none of them have been acted upon and most of them, major impactful ones, must be done by congress and thats a place where kelly has not had a lot of experience, and the president seems to be stumpageing around with his relationships, not only with his own party, but absolutely having no relationship with anybody or anything to do with the other side on the hill i mean we could give the white house credit for what it has already accomplished and thats getting a new security justice nominated. Yes and deregulation, which were two big issues that they have made some substantial progress with right but the next issues have to be health care, tax reform, how do you handle those and that does include well, infrastructure, and the nafta agreement, and are they going to renegotiate that . Are they going to cancel now one great thing about having kelly there is if there is, god forbid, a crisis in Foreign Policy or military expertise, kelly has that so with north korea being such a vital concern right now, kelly brings a lot of experience and a lot of expertise in that arena which is very helpful for the rest of the white house staff who have very little, if any, experience except mcmaster, of course, as National Security council. Bill, yesterday we talked to Ken Duberstein a little bit about what he found to be some of the most difficult things in the job of chief of staff. And he just pointed out he was dealing with reagan coming out of the iran contra scandal and trying to get things focused and bring up approval ratings. What were the biggest struggles that you dealt with as white house chief of staff and what did you learn from that what kind of advice would you give coming out of it . Well, my advice would be to go somewhat slow now, thats difficult for kelly, because theyre in the middle of a rather chaotic period of this presidency but theyve got to pick their fights and the president has to pick his fights and not be at least seemingly fighting with everybody, including his friends in the Republican Party so i think kellys got to reestablish a strong relationship with the hill, reince priebus, who had a Good Relationship with speaker ryan, obviously was pushed out, and i dont know if theres really bad feelings on the hill for those who liked priebus, and liked the fact that he had been part of the quote establishment. Youre talking in paul ryan in particular . Paul ryan the speaker of the house who was close to priebus so whether kelly has some cleaning up to do with that relationship, because without ryan, without mcconnell, its very hard to imagine the president putting some coalition together on the hill to get real things done. And when you talk about regulatory reform, the real sort of reform that the president has talked about getting done still has to be done by congress not through executive order. You can only do so much with executive orders and we saw that with president obama, and they can be undone by the next administration. But the real impact has to be done with major legislation. And that looks like its very difficult, health care was a debacle. Infrastructure rollout was a debacle. Nothing happened the trade area the wall, all those things he promised, none of them have really, whether i agree with them or not, have been acted upon and so the president s got to use this as a restart, and thats going to be very difficult to do, i think i mean, what it sounds like youre advocating is kind of pivoting from health care and switching to tax reform and infrastructure, am i right to read that . Yeah. I would say that because the economy, which is strong, and is doing well, is where the only reason that the president s ratings in my opinion are even where theyre at even though theyre pretty pathetic today because theres a perception, and a reality, that the economy is doing well. Obviously much better than president obama had to deal with when he came in. So, if that begins to get weak, then youve got a very, very tenuous situation for this administration so i would pivot the tax reform. But, becky, theres a reason tax reform, major tax reform has not been done for 36 years its hard thats because its really hard and they think health care was difficult and complicated. Wait until you deal with tax reform its a very difficult thing. And the president must be intimately involved and have the knowledge of this, and thats difficult watching this president to expect him to do that but without that, its a pretty heavy lift for any administration bill, thank you for your time have a good day appreciate it all right back to Corporate News phaser Quarterly Results just out minutes ago. Registering mixed quarter. Drugmaker earned 67 cents a share, one cent above estimates but revenue was below forecast barbara ryan, founder of barbara ryan advisers joins us now with more on the results. I was thinking about all these different major pharmas, barbara and ten years ago, i think, you know, when merck was having problems you said you almost saw it as a bond proxy, had a nice dividend if you want to play innovation, and drug development, can you go to these Major Companies anymore, or should you just say, look, i got to go to biotech these are just, you know, big conglomerates dealing with patent expiration and i cant play innovation with these guys . Would you do it with pfizer . Yeah. I mean, you know, given the growth that they just put up, and will over the next couple of quarters, youre absolutely right. It is essentially a bond they return to shareholders about 8. 9 billion in the first half of this year, through dividends and Share Repurchase the good news is that the innovative core was up 9 driven by products like igrant which has been enormously successful in cancer. But theyve got losses of exclusivity for vie rag and lyrica, nearly 7 billion and its like trying to grow through quicksand. And, so, at the end of the day, while pfizer will say, we have blockbusters over the next five years, the reality is, its hard to see how you move the needle given the size of this company so investors turn to whats the strategy to drive growth because at the end of the day, if youre going to invest a lot of money in r d we want the alpha associated with that we want the growth so what pfizer did turn to was obviously the astrazeneca deal which fell apart, the allergan deal which fell apart. Maybe now they move from the as in the alphabet to the bs in the alphabet and move to acquire bristolmyers. But the opportunity to break the Company Apart has really passed, because the older products, the essential Health Care Business as they call it, was down 12 in the quarter, and all the comps, like the parago, like the valeant, like the mylans are substantially reduced in terms of their evaluation, so the sum of the parts, doesnt work and add up to something greater than the single entity. So i think inevitably pfizer and its piereers will turn to m a as they always have right 3. 8 yield if you go back 20 years or so, i mean, stocks up from, i think 20 years ago the stock was at 27 or 28, wasnt it i mean at one point. Now its only at in the mid 30s. So just yeah, i mean, its clocked time here for a long time. You probably remember when they announced the wyeth acquisition they cut the dividend by 50 the stock went to 12 that was a huge gift and a massive opportunity. But you know, at the current prices, i mean, again, its a very low risk, high yielding bond, which is attractive. Right . I dont know. But its not a growth stock not really. Its not a growth stock well people like to diversify, right . They have bonds in their portfolio. Growth stocks. They have, you know with all the gains you have in some of your other stocks youve got to have some stocks in there that are losers, they diversify, i guess well, you i dont know. Why would you want to have who wants to diversify into that over the past 20 years . Nobody i dont need that to you know, if i need diversification well, people own, you know, municipal bonds. I know. I know so, you know, this is one component. Its not in the growth driver of your portfolio, but if youre elderly and youre living off fixed income, you know, owning pfizer is not so bad right . Yeah. If youre 25 years old its not a big idea right all right. Okay, barbara, thank you we appreciate it great to talk to you. When we come back, were going to be talking health care with upenns medical ethics and Health Policy guard dr. Zeke emmanuel will be joining us right after the break. Then at 7 30, manufacturing in the United States. The ceo of snapon will talk tools. The state of the economy, and much more. Right now though as we head to a break take a look at the futures. Dow is up by triple digits even after hitting a new record yesterday. Right now it looks like the dow would open up another 110 points which would push us across 22,000 s p indicated up by just over 6. The nasdaq up close to 25. Squawk box will be right back. Is this a phone . Or a little internet machine . [ phone ringing ] hi mom. It makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. See how much you can save. Choose by the gig or unlimited. Call or go to xfinitymobile. Com introducing Xfinity Mobile. A new kind of network designed to save you money. Quick stock to watch Quarterly Results just out from under armour, the company losing three cents a share. Smaller than the consensus estimate of a six cent loss. Revenue beat forecast. However under armour the fullyear forecast of 37. 40 is below consensus on a forecast but also announced restructuring that will result in charges up to 130 million this year. Were going to speak to an analyst about the results later in the hour. Looks like, i mean just from the stock chart, its tough to go up against nike they did great for awhile. Small, nimble competitor yep but the bigger you get the tougher it gets to go after well i think the other issue is that they were affected more drastically than nike has been in terms of the sports sales stores that have closed down and more of their outlets have been hampered by that. Nike has found a way to work around it not only by going direct to consumer but also by going through amazon and cutting some deals there but theres sometime sometimes its nice to be nimble and much smaller as youre taking on big other times the strength of being that large is an advantage bump in the road and President Trump continuing to urge the senate to figure out a Health Care Plan to replace the Affordable Care act. But the future of obamacare remains unclear. Joining us right now is one of acas architects, maybe the architect are dr. Zeke emmanuel the author of prescription for the future. Thank you, doctor, for being here great to be here. You have watched this all play out in washington i know that you have been very agitated and upset about the plans that have been put forth but i imagine youre happy that theyve been voted down. Yes what is the future . At this point. What do you think is going to happen i think that there are two time lines you need to look at we need to have a time line thats over the next few months, thats going to stabilize the exchanges. But primarily try to bring the premiums down in the exchanges for people that require some certainty. We dont have a lot of certainty. Requires guaranteeing the cost sharing subsidies. Requires some reinsurance. That will bring premiums down between 10 and 20 in the exchanges. You may want that but the other side, if you will if you listen to may want to bamboozle it so that it makes it even harder i dont know. Its not going to be good. And theyre going to own it. People are going to know that they did the manipulations they didnt do certain things to actually bring the premiums down real point is weve got a longterm issue here of affordability. We have to get the costs overall of the Health Care System down that needs to be the focus thats actually a bipartisan issue. And that requires changing how we deliver care. Right and that requires changing the financial incentives this is where we really need to focus. In two or three years we have to get these costs down weve had a plateau. We stayed at about 18 we havent gone up to 20 of the gdp. People thought we would be at today. But we really have to change how we deliver care. What my book does is to say look here are twelve things you can do to actually make Health Care Get rid of unnecessary care and make it more efficient and bring the pricing down thats got to be the focus mark cuban was on twitter yesterday, and in a twitter storm. I dont know if you saw this no. A democrat suggesting that single payer is not the answer and that getting rid of Insurance Companies full stop is the answer what do you make of that he might not have remembered bill clintons attempt to get rid of Insurance Companies and what that did to his Health Care Reform plan. Look, theres going to be an existential crisis if you get rid of Insurance Companies theyre going to throw everything they have, and they have a lot, at you that isnt the goal and that ought not to be the goal thats a total distraction the law again, let me keep saying this weve got to get rid of this Insurance Company, no Insurance Company issue. The issue is get doctors and hospitals and all the other people in the Health Care System to change how theyre caring for patients how easy are some of these changes . Theyre actually pret tis easy, its well, easy relative to what were talking about . Correct so heres one big issue. The federal government already in medicare is changing how they pay doctors and hospitals, by getting more to bundle payments, or capitation or to pay for performance for improving Health Care Getting the private sector to do that, too, so every insurer who does business with the federal government, either through the exchanges, federal Employee Health benefits, tricare, all of them, have them do the same thing as the federal government. Youre going to get a lot more signal to the doctors and hospitals you got to change your practices. Second, something called site neutral payments we know we have crises that are all over it drives me crazy. Theres no transparency as a consumer, even if i want to be price conscientious, its really difficult. The colonoscopy prices in new york probably vary by four to eightfold not eight percent eightfold. Youve got to get to a price plan youve got to get them down and more uniform and one way we can do this is something called site neutral payments right now medicare, i go up, im a cancer doctor, right, and you do a bone marrow biopsy to check how your patients are doing, if i do that at a Major Hospital over 1200 i do that in a Physicians Office about an eighth of that that makes no sense. Youve got to have one price no matter where you are doing it. These are various changes you could make that would have dramatic effects in incentive. I think another really good one is, everyone has to have a primary care doctor. And you have to recognize that doctor as your primary care doctor both in business, on medicare, and on medicaid. And that will create relationships, and i think create so you can track my performance. The Exchange Enrollment was too low, obviously yes versus projection and that put too many people in medicaid the expansion was well above what the cbo thought would be necessary. So suddenly medicaid has become this behemoth that it wasnt intended necessarily to be how do we should we just say medicaid is going to be it lets try to make it as good as we can make it and let everybody go into it or do you go back and try to rejigger things so that the aca worked like it was supposed to work because it didnt. Well, all of us thought that the exchanges would be much more active there are a lot we can talk about all of the mistakes made, the rollout of the Health Care Dot govern, we could also talk about the situation of allowing, and again im just as much at fault, the deductibles to go up so people like, this isnt a great deal, this isnt a great insurance product. We could also talk about the fact that we didnt do a great job of advertising i mean, i keep saying this, you know, google knows our income, whether were insured, where we limp and they can tell you what your exact price will be can i take care of myself at 75 still or do i got to cash in my chips im planning to live to 95 how many drugs you taking these days im not no, really we have does that mean yes good morning, everybody. Welcome back to squawk box here on cnbc we are live from the Nasdaq Marketsite in times square among the stories that are fropt and center today were going to be getting the latest personal income and spending figures from the government in just about an hour economists think personal income was up 0. 4 in june, with Consumer Spending up 0. 1 . That would be exactly the same performance as the prior month credit card losses are hitting a fouryear high thats according to fitch ratings. The average chargeup rate, the percentage of debt written off as a loss came in at 3. 29 in the Second Quarter the eight largest card issuers all say their chargeoff rates increase in which some say is a worrisome sign for the markets and the economy. And were watching the price of crude oil above 50 for much of the morning today. Still hasnt settled above 50 since may 24th but it did break above 50 yesterday morning for the first time in two months right now its just below 50 at 49. 95 a barrel. Pandora is reporting better than expected revenue in the Second Quarter the company said advertisers spent more on Music Streaming Service amid stiff competition however, pandora is trimming its fullyear revenue forecast bp topping expectations despite a drop in Second Quarter profits. The company says oil and gas output increased nearly 10 . As it started production in a large oil field in the north sea. And hbo says hackers have stolen some upcoming programming, and according to Entertainment Weekly the theft includes a script for an unaired episode of game of thrones. Hbo wouldnt comment on the specific content that was stolen citing an Ongoing Investigation by Law Enforcement officials but magazine said that hackers have already posted on broadcast episodes of ballers and room 104, along with a script or treatment for next weeks episode of game of thrones. Coming up the ceo of highend tool and equipmentmaker snapon talks jobs, politics and American Manufacturing the president visited a snapon factory back in april. Well ask him about the visit, and the companys relationship with the administration straight ahead. As we head to break, take a look at u. S. Equity futures not triple digits anymore, but theyre close for the dow. And the wolf huffed and puffed. Like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. 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Introducing Xfinity Mobile. It combines americas largest, most reliable 4g lte with the most wifi hotspots nationwide. Saving you money wherever you check your phone. Yeah, even there. See how much you can save when you choose by the gig or unlimited. Call, or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network designed to save you money. Earnings earnings of 5 Cents Per Share compares to an estimate of 1 cent loss. Matters in large part because everyones been looking at sprint or at least sprints been looking at others. Whether theres a merger in the work, potentially, masa son still apparently wants to buy charger, charger says they dont want to do a deal at the moment. Well see. All right time now for some cool talk. The president touting jobs in manufacturing. Even signing an executive order back in april called buy american hire american. That event was held at snapons headquarters in kenosha, wisconsin. Joining us now, nicolas pinchuk chairman and ceo at snapon inc. And its great to see you as it always is. Good to see you you have a great business, and you Service Basically mechanics through trucks that go out stateoftheart tools that you continue to develop mostly for automobiles sure. Thats 40 of our business, what everybody this about we have like almost 3500 trucks that go around the country and sell directly to the mechanics and they give them the best tools because cars keep changing so they need different tools all the time and the other thing about snapon which is kind of interesting, i think, is it kind of puts us apart, is that people buy these tools, they display the snapon brand, because its the outward sign of the pride and dignity they have in their work only somebody who is doing Something Special would buy a snapon tool and that is part of the value we bring. Youve got i mean, i looked through it, and some of your new products, youve got a quarter inch drive, 14. 4 volt cordless ratchet that allows 35 foot pounds of torque output with an l. E. D. Flash light right here. Is that the one thats it you got it thats a good one. Thats a good one. Because i just wanted to say those words. Its like you actually knew it exactly. So you know a lot of these but the whole thing about this is, the thing about this is it allows the mechanic to get inside tight spaces. You look inside an engine, its harder and harder to get inside engine compartments. Thats what drives our business. Generally, our businesses are based on change, and the cars keep changing. Changing in ways that are mechanical but also changing in ways that are electronic and that to me is the weirdest thing like who can work on a car at this point with all the computer chips that are in them exactly theres more Computing Power on a car than the was the moon in 69. And the thing about it is, heres how it works. About 40 of the cars, 300 cars, 40 of the repairs need a diagnostic unit like this. 80 of new cars need this and we have the best one. In fact, you have all kinds of levels this one happens to be for the latest one for an entry level guy who is doing brake jobs and oil changes. But we have them all the way up to a mechanic who is only working on the jobs that appear on alternate mondays, you know and we have a record base. One billion records that tell people to say, if this is the symptom you see, heres whats happened, heres how its been fixed, 92 of the time so about is that a description 15 to 20 of our business, even though everybody thinks of us as a hand tool business, 15 to 20 today is Software Based training must be huge and we hear every day about the you know the employment rate would be even employment rate would be higher the Unemployment Rate would even be lower if we had if everyone was trained and you need to train a lot of people in this and youre actively involved. The seminal issue for our time of the American Economy is upscaling the american workforce. Whats happening is theres a competition for jobs theres two things going on, i think. One is, people arent getting the proper training out of technical colleges were trying to help that by working on a National Coalition of Certification Centers where schools and 85,000 certificates are telling people that these technicians are trained and these skills and you can trust it thats one so calling in the airstrikes on the education is important thing. But the other thing is, is people view mechanics, and welders, and machine programmers, as having settled for the consolation prize of our society. If you talk to people in Polite Company theyll say, oh, no. But when you tell them how would you feel if your son or daughter, niece or nephew told you they were going to be a car mechanic, you know what they think. They think thats what other peoples kids do right so the whole thing is these are the jobs which have created a society which we enjoy today, and so we need to restore the traditional american respect for the dignity of work. How do you do that . Well, one of the things is you get politicians, you know, to talk like that. One of the cool things about the president , when he visited, you can talk about the president , you have positives and negatives, but when he came to snapon, he said what we wanted him to say he said we honor work. We honor grit. We honor the men and women with their own two hands who turn their dreams into reality. This is exactly the things we want to do we want to have people talk about these jobs as what they are, national calling. Organizations like skills usa. You probably never heard of it 350,000 kids who compete at a local, state and National Level to celebrate the best welder the best carpenter the best car mechanic. Just like we celebrate the quarterback. Mmhmm. I mean, this is its an important thing you said it during the elections, this type of stuff, which is why he got, you know, why he got elected and why you see the other party at this point talking about, you know, maybe we need to appeal to some of these other people that voters you know, what is it called whats your better what is it called, better ideas . Better pizza, better ingredients . The new democratic rollout, what is it again . They got to call it better better something its all better. Better, better, better but obviously he tapped into this long before its an important thing we ask people, the National Association of manufacturers will tell you, when you ask people, 90 of the people say manufacturers are important. But only onethird will want their children to be in it let me ask you this, what if the internal Combustion Engine becomes obsolete you guys ready to work on tesla . Sure. That drive themselves weve got the tools if they drive themselves they need better adjustments, right . You want to be driving something thats out of alignment . You want to be riding in something thats autonomous thats out of alignment . I dont think so its not going to park itself. So this is great business. Change is our currency, actually because you innovate. Because we keep changing the tools that are already out there. What about the auto cycle does it matter doesnt matter. Its 300 million cars on the road what drives us is not how many new cars its the existing cars and how much theyre changing and cars do keep changing. Both mechanically and electronically let me ask you a different question yeah. Cars keep changing but they keep Getting Better built. Or we like to think that the build is better. Yeah, sure, it is it is sure. Is the build being better is that ultimately worse for you . Well, cars are getting older, too. The average car has gotten older. 11. 6 years now they cost so much more. Youve got to drive them the car park has gotten older every year since 1980. So we keep driving them longer and secondly the fact that theyre better built just means if we look at the experience since 1995 theyve only needed more tools to repair them. Because, the repairs are getting more and more complex. Okay. They dont break down as often but they get more and more complex. And you can see this in the traditional spending on auto repair its an interesting thing. You just had Governor Walker on coming back to the workforce development. And foxconn announced in wisconsin. National association of manufacturers said 67 of people, number one variable is the workforce, where to locate a factory. I decide on a workforce. Ask anybody in china if they have a positive or negative experience, it usually is pinned on the workforce well, wisconsin has a great rules. Community college is among the oldest network is among the oldest in the country, and they got places like madison, and you know, the state schools, but you also goes places in marquette and carthage and places like that we know, because were located one of our plants is located in wisconsin, and its a great reservoir of people. And this is why interesting getting a lot of twitters and stuff, and says we went from you didnt build that, to how about building it here and being proud of like you said. I think thats true i think the atmosphere, Governor Walker, whether you agree with him or not, was a bulldog in trying to support foxcon and thats an important thing. Politicians have to be the let me ask you one thing specifically about i was reading something where your margins are less than or at least the valuation of your shares arent as great because as analyst said that some of your profitability is because of the financing unit, the way youre dealing with receivables 13 to 14 of our profitability is a financing unit because because a portion of the things we sell to technicians is fairly large and we finance it through the credit company. But weve been doing that for 50 years. Thats the way youve been for 50 years. Actually everything is sold off one of those little trucks is on credit its either a big ticket item like a tool box, a tool storage box, you wouldnt believe it but it costs 5,000, 7,000, 10,000. It gets financed over three or four years have the bills gotten more expensive as the equipment has gotten more expensive . Its gotten more expensive, but technician wages went up 4 last year. And how much of the equipment costs has it gone up i dont think so. Not in terms of pricing. But the valuation has gone up. People love to have snapon tools. But the other thing is, even the small stuff, even the smaller stuff gets financed by the driver himself he boils it down into weekly payments and so snapon is built on the idea that they interact. These drivers go around, they call on the same 200 people, roughly 200 people, every week, and they know them if you ask a snapon van driver whos the tallest technician on his third stop on his route hell tell you, and hell tell you who his children are, how many children he has, who his wife is, and how much he owes him and what hes likely to buy next nicolas, thats the quarter inch drive, 14. 4 volt cordless ratchet. Did you bring in a exact manual torque multiplier for me i did is that it there . Unbelievable. You are unbelievable. Is that the we just acquired. You are a savant in terms of you guys cant believe. You see that thing, andrew that survives a five to one multiplication ratio and up to 740 pounds of torque im glad youre reading that please. Its basically what this does is we just acquired a company, you know, that has this kind of product. Because, autonomous cars, autonomous trucks, precision is getting more important therefore we have to tighten fasteners to precision and what this will do is allow you to take a torque wrench and put it at the back end put this up to the front end, 100 full pounds of force here. 500 full pounds tightening specific i didnt know you were bringing this. That is cool thank you. Thanks for coming in great to see you i enjoyed it. Great to see you guys. Loved that are you going to take those back with you . You do want them . I might want the cordless ratchet. Run away. Okay. Coming up weve got reaction from earnings from under armor the Athletic Apparel Company Reported earlier this morning. Were going to run you through the numbers and find out what wall street this about all of this after the break at the top of the hour dealing with north korea what options are on the table for the u. S. And its allies when it comes to dealing with the anfor r ip there and what it mes oueconomy. Squawk box returns in just a moment 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. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back to squawk box. Dow looks like it would open up about 1 04 points higher nasdaq up about 23 points. And the s p 500 looking to open up a little over 6 points higher becky . Athletic apparel maker under armour reporting Second Quarter results just a short time ago. The baltimore based company posting a smaller than expected loss for the quarter but it did give weaker than expected forecasting guidance it also announced a restructuring thats going to include some job cuts. Shares of under armour are down by 3. 8 . Thats off the lows of the session. They had been down quite a bit more earlier on this so, lets talk to an analyst about what to expect out of all these numbers, and what we can expect to hear on the Conference Call today managing director of u. S. Research at canafor ingenuity. What do you think of these numbers. Why this kind of erratic reaction from the street this morning . Well, you know, i think these numbers tell a few things. Number one, it tells us that the north American Market for Athletic Apparel is definitely a Challenging Market to be in right now. Theres a lot of promotions in the marketplace and under armour has certainly succumbed to that promotional activity number two it tells us more as we look into this more deeply tells us that underarmer is in a transition phase you know, for the past decade this business has been growing at a trajectory, you know, unlike any other in retail and i think its come to a point in time where that growth is now transitioning to a more profit focused, and a return focused business and that happens when, you know, that Maturity Curve starts to reach another level, and thats where i think under armour is right now. Clearly were seeing the focus, you know, the company took down their sales growth target for this year by about 100 million. You know, they took their estimates down theres a lot here to digest but the reality is, is that the things that under armour is trying to change, the things that led to its stumbling last year, will take some time to recover. And those most importantly are its transition from a north america focused business to a global business. Its transition from a performance focused apparelmaker to a broader lifestyle apparelmaker and its transition from a reliance on Sporting Goods to a multichannel business. You know, the company lays out this kind of change thats taking place, this restructuring that theyre going through and they look at it from pretty positive terms which isnt a surprise if you know kevin plank at all just talking about how theyre going from a u. S. Mostly apparel centric to a global Apparel Footwear and accessories portfolio. The way they see it is going from good to great operations. Do you see that . Transitions from good to great are never linear we do think that over the longterm this is the right path to take. I think in the wake of the last ten years of growth, theres been a lot accumulated on the business and a lot of inefficiencies in particular i think this is the pruning of the inefficiencies to make the company more smarter, more agile. And more profitable. Thats really what this is all about. In that transition phase, you know, there would be some bumps along the road i think this is what were seeing today so, you know, we love the brand, we think the brand has trajectory, and has broad global appeal certainly the opportunity to do so but, you know, in the interim, that transition will definitely be a bumpy one as it has been. Very quickly, would you be buying today when the stock is down no. Not right now. We need to see a little bit more traction before we think the coast is clear all right camilo, thanks for your time today. Thank you coming up, Anthony Scaramucci stepping down as White House Communications director. An update from washington just minutes away plus, the north korean threat. What options are on the table for the United States . And its allies squawk box returns after a quick break. For your heart. Your joints. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Livestreat the airport. E sport binge dvrd shows while painting your toes. On demand laughs during long bubble baths. Tv on every screen is awesome. The Xfinity Stream app. All your tv at home. The most on demand your entire dvr. Top networks. And live sports on the go. Included with xfinity tv. Xfinity, the future of awesome. Jerry garcias birthday today. The late front man for the grateful dead was born on this day in 1942. Hed be 75 today special events taking place. Bob weir putting on a special tribute concert at the red rocks today. And the San Francisco giants will commemorate garcia this thursday with a grateful dead tribute night at at t park when we come back, the latest on the white house shakeup Anthony Scaramucci out after just ten days on the job plus, the north korea threat and later the ceo of box is taking shopping to a whole new level. What if stores could predict when you will run out of toilet paper and already have it shipped to your house before you even realize it . Or order it . The ecommerce site rolling out a new feature that does just that well talk about that plus much more right now as we head to a break, take a look. Futures are still higher dow futures no longer up by triple digits. Looks like the dow would open up 98 points after closing at yet another record level yesterday s p 500 up by 5. The nasdaq up by 20. At blue apron, were building a better food system. Where instead of paying for middlemen, we work directly with family farms to deliver Higher Quality ingredients for less than you pay at the store. Get 30 off at blueapron. Com cook a market rally stocks point to strong gains as dow is within striking distance. The Trump White House shaken up again Anthony Scaramucci out as White House Communications director. I think anthony wants general kelly to be able to operate fully, with a clean slate, build his own team a live report from washington, straight ahead plus Martin Shkreli may still be on trial. But the pharma bad boy taking to facebook to weigh in on the moochs ouster well show you what he said as the final hour of squawk box begins right now live from the most powerful city in the world, new york, this is squawk box. Good morning and welcome back to squawk box here on cnbc live from the Nasdaq Marketsite in times square im joe kernen along with becky quick and Andrew Ross Sorkin lets get a check on the markets right now. Futures have been up for most of the morning. Triple digit gains indicated again for the dow. 104 points the s p indicated up 6 the nasdaq indicated up 22 were also watching oil prices which were finally above 50. Above the announced theyre not again down 31 cents but they had closed above 50 after more than a few months, where they had not. That would be a big surprise if it went 55, 60 thats not no, part of it is the venezuela story thats been pushing oil prices up the last several days see whether it gets any traction thats sort of the contrarian viewpoint now is that it cant go it cant go higher. Contrarian viewpoint is that it could go higher. Oh, right the consensus is that yeah. Coming up, lets talk about the stories of the morning this is the big one. The s p has a new decision out, its going to prevent Snapchat Parent Company snap from being included in the index. Now the s p 500 will start excluding all companies that issue multiple classes of shares these are new companies, rather, not ones that are already in the index. This decision represents a new emphasis by Index Companies on Corporate Governance companies with multiple share classes that are members of the s p index like alphabet will currently not be affected. This could be a major change in the way that new companies that think about going public in terms of what the setup looks like they say its in terms of shareholder rights right issues for these things because if you have two classes, generally one has much higher voting percentage than maybe buying a piece of the company but youre not going to be buying an equal vote in the company with those shares. Whats so fascinating about this moment is you have exchanges like the nasdaq, and the s. E. C. , and others, saying, well even we want more people going public. So well create less transparency in terms of when youre going to find out about some of the details, you can now do it privately for a long time. So theres a lot of things that are, i dont know, shareholder unfriendly, but friendly to the companies because we think that thats going to help improve the economy. Yet on the other end, on the business end, not the governments side but the business side, you have people like s p 500, s p and others saying actually from a gompance perspective we dont want some of these things. I think there are sort of two things moving in opposite directions it seems weird that all these companies are grandfathered. And the new companies that made these decisions thinking that they would be treated the same are now after the fact that seems a little unfair but, well see what happens. See if it actually changes the company. My guess is, it would. But if you were trying to decide how to form your company, and how to you wouldnt do it this way you wouldnt do it this way thinking youre never going to be allowed into the s p 500. The question is will s p at some point change its mind is this like say never mind you can go in. Or say forget it were not going to grandfather the rest of you in the rules can change. Its sort of like the mooch is in, the mooch is out you know, is snap in is snap out . This is going to be the question how about read up on your whole class of stocks im going to get excited about this, too you call it fascinating. Theres a couple of interesting things happening about both governance in terms of the different share structures everybody wants to go public but pretend theyre not going public remember al franken, how does this affect me al franken. Comcast is not affected, right not at the moment not at the moment maybe i wont look into it. It has nothing to do with me joe kernen unless youre investing in companies with actually does it have to do actually it does. It does. If you realize that comcast owns a stake in snap. There you go. For there you go. It will make snap less valuable. So as a content the expiration bigger deal but this could turn into a big deal if longterm this company if this company can never be in the index six degrees of separation on my radar now it can affect khcomcast. If if youre a value investor, if the s p doesnt change its mind it will never be in the index. It will take an entire class of shareholders and remove them from being shareholders. Thats a remarkable thing and the indexes have grown in for technical reasons because people will buy. You got to be in it to for an index fund but the money nobodys buying it i mean not nobody but very few people are buying into the individual stocks if you want access to investors. Every company is saying i want access to investors. This is effectively saying no you cant have access to the biggest pot of money that exists in the world thats a remarkable statement. Okay. All right lets talk about some other stocks to watch today as well. You can check out shares of under armour rebounding. The company lost three cents a share. That is smaller than the consensus estimate of 6 cents a share. Revenue beat the forecast. However, the athletic retailers fullyear earnings forecast came in below estimates i think 42 was where the street was. Company also announced a Restructuring Plan thats going to result in charges of up to 130 million this year the stock has bounced back it was down by 3. 5 the last time we looked at it it has been down even further earlier this morning the stock is bouncing back and we just talked to an analyst who said he thinks longterm this is the right play wouldnt buy it right now but he does say longterm this is what needs to happen for the company. And the top political story today, for now its only 8 00 for the moment. Anthony scaramucci i got to go to the twitter. Is there anything going on twitter . The white house hes out as White House Communications director lets get over to kayla tausche. Shes in washington. Dont i mean, you cant really charge your phone up and leave it somewhere, kayla, i dont think, in your new job i would keep that thing close. I have it plugged in almost all the time, joe, because constantly refreshing, constantly using it. To try and reach out and report. But as you say, the day is young. But the hiring of Anthony Scaramucci a couple weeks ago led to the resignation of sean spicer and reince priebus. And now his departure, the Third Administration official in three weeks, cites like spicers a desire to leave a clean slate. But this time its for new chief of staff general john kelly. Press secretary Sarah Huckabee sanders told reporters yesterday all the slates are now clean and that from here, all members of the west wing staff will report up to kelly thats a structure aiming to smooth over factions within the west wing. A tweet from President Trump yesterday touting the economy denied there was any chaos at the white house, but former House Speaker newt gingrich, who is now an adviser to the president , says trump, in fact, is tired of the chaos among his staff. Telling the wall street journal, quote, trump, of course, reserves the right to cause chaos himself, but he likes an orderly system. Thats how his golf courses work he thinks the cooks should be cooking, the caddies should be caddieing, but that doesnt restrict him as for scaramucci, sanders said he did not have a role in the administration at this time. Meanwhile, the company he founded and is selling in order to have taken a government job declined to say whether he would rejoin but there is now a large vacancy in the office with new details emerging about the president s role in john jr. s confusing statements on the russia meeting last month and ahead of a tax reform push that could begin as early as today with a Small Business event happening this afternoon, joe yes i was just making sure im following the general twitter feed nothing yet. Hope springs eternal though. You can be sure hes monitoring it though because that is where the president likes to communicate likes to let himself be known. Saw wilbur is back wilburs been quiet lately, kayla. Were going to talk about that now. Theres an oped piece there he is. Hes got a lot of irons in the fire right now thats for sure all right, thank you, kayla were going to tell you about one of those irons right now commerce secretary wilbur ross penning an oped in the wall street journal and what he calls the true free trade agenda the piece is titled free trade is a twoway street. The commerce secretary writing until we make better deals with our trading partners, we will never know precisely how much of our deficit and goods is due to trickery he also writes, the u. S. Is working to restore a level Playing Field and under President Trumps leadership, we will do so President Trump tweeting quite a few days ago, our foolish past leaders have allowed china to make hundreds of billions of dollars in trade a lot of questions, a lot of tough talk and then in the meantime, tensions remaining high after north koreas latest Missile Launch for more on this lets bring in bruce clinger. He served as the ceo Deputy Division chief for korea, and is now a Senior Research fellow for northeast asia, at the Heritage Foundations asian study center. Weve had some pretty dire proclamations. Things look increasingly tense with north korea and i havent found anyone who seems to have a good solution on what we can do to try and stop north korea from becoming a Nuclear Power what do you think . The Nuclear Power is already we think that north korea has 16 to 20, perhaps even more Nuclear Weapons, theyre medium range Ballistic Missile already is nuclear capable, which means south korea and japan are under Nuclear Threat today. And north korea continues to work on additional missile systems, the submarine launch Ballistic Missile as well as two different intermedia range missiles that can hit u. S. Bases in guam, a key note of the defense of the pacific, including the Korean Peninsula and also, obviously, the icbm which this secretary successful icbm test now extends the range of that icbm certainly it can reach l. A. , chicago, denver right now. Perhaps even new york and washington, d. C. So, we are in a situation where theres probably not much we can do. We tend to think that if we put pressure on china, china can cut off trade with north korea, and that will force the north koreans to the table but if we make them feel more cornered, is there anything to stop them from using the weapons they already have . Well, we you need to have sufficient defenses to deter and if necessary defend and defeat any north korean attack on ourselves or our allies. And a key component of that is Ballistic Missile defense. But also on china. The president complains that chinas not doing enough on north korea, which is true china is not fully implementing the required u. N. Sanctions. But the u. S. Can do things using its own laws that can influence the chinese banks and businesses that are engaging with north korea. The vast majority of all International Transactions in the world are denominated in dollars, which means they have to go through a u. S. Bank, regulated by the u. S. Treasury those chinese banks and businesses, they have to go through a u. S. Bank either through their own accounts or correspondent accounts so the u. S. , with existing laws, can influence those the behavior of those entities even if we put pressure on north korea, i guess going around and around in my head trying to figure this out, whats the best hope that we can reach, if we realize that south korea is going to face all kinds of massive problems if things get much uglier there. And as you point out, its our job to defend our allies, too. Right well, we have to use all the instruments of national power. But weve been underutilizing pressure when President Trump said north koreas the most heavily sanctioned, the most cut off nation on earth he was wrong the u. S. , the eu, and the u. N. Did things that to iran that we have not yet done to north korea. Thats why iran came back to the table for the nuclear deal whether you like the deal or not i was going to say thats why they came back. Are we faced with nothing but bad options here well, with as people have said, korea is the land of bad options but we cant throw up our hand and surrender so right now when people talk about negotiating, you know, weve been there, done that. Weve had eight International Agreements with north korea that all failed weve tried two party, three party, four party, six party talks. They all failed. And north korea has said from kim jongun down to every major component of the government, we will never, ever negotiate our Nuclear Weapons away i would argue that is under present circumstances when weve been pulling our punches on u. S. Pressure and u. S. Enforcement of our own laws bruce, can you tell me what you think the best Case Scenario is what we should be striving for right now . Well, i think if we could get them to an iranlike deal but we need to show not only is the door open for diplomacy, but north koreas been the one thats refused to go through that door. But, to induce that we need to increase the pressure on them to change their calculus. And also, you know, we need to enforce u. S. Laws by giving them in essence de facto immunity, not only north korea and china but from our laws, thats not furthered the cause. All right, sir, thank you for your time today. Thank you coming up when we return an Ecommerce Company that can predict what you need, when you need it. Bulk item retailer rolling out a new platform that brings ai to your shopping cart the ceo is going to join us next plus a heated debate in the economics world. President trumps impact on growth our resident economic reporter Steve Liesman has a rundown of the arguments at 8 30 a. M. And later, lyft is getting a disney styled makeover thats why youre hearing that sound track in the background. Minivans as in minnie mouse. Welcome back to squawk box. Check out the shares of sprint the Wireless Services provider earned five cents a share for its latest quarter compared to forecast of one cent of a loss revenue came in above estimates. Sprint added 61,000 net wireless subscribers. I saw this in the rundown and said oh, probably about sears because sprint would have been fon so it shows you that youre not not sears got to keep on top of these symbols and the changes. When an individual when a single letter comes up its in demand. Nickel a with allegheny. Theyre all different now. W were in a f. A. N. G. World now. Youre aging yourself i know. Were going to talk ecommerce right now ecommerce startup says it has a new weapon to take on the likes of amazon. Artificial intelligence bulk item retailer box rolling out a new future that uses Machine Learning to predict when you might need more of a particular item and automatically ships it to you no clicking is involved in any of it. Lets bring in box ceo and cofounder good morning to you. Thank you very much for having me. So explain what this is, and i thought that amazons doing something very similar yeah. With the little dash buttons. Yeah. Its really interesting. So you know, if you take a step back, you know, box we do everything in bulk 1600 items delivered right to your door so you dont have to go to the big Warehouse Club what we found over the last years is folks order eight to nine items for b to c order on average from us business to consumer order . Business to consumer. Now after about four years of data we now can see roughly when folks are going to reorder and when theyre going to run out. And so we piloted something called box consequencall ed box concierge where for btob customers you dont have to order unlike terms of clicking an order or a dash button, we click a box view because we think youre about to run out. The craziest thing is we write a note saying sorry if we took liberties with this and on the reverse we havent had any returns. You push it out without even asking thats right. So we ask you to opt in, of course, in the beginning okay. And from there on out so its like a subscribe and save program or not . It is like a subscribe and save program but its not a single item. Like you do on amazon. Right because were all about stocking up. You just say were going to send when we think you need it were going to send it to you. Exactly nobody returns it tend send it back to us its totally free to return it folks just end up using the item the Machine Learning algorithm is Getting Better and better you say from business to business but not for consumer, because how would you know if i was on vacation exactly so right now, for consumers, were actually turning it up to about 50 of our audience this week for consumers you still have to come in and interact with us we show you on your first session, hey, we think youre about to run out of these. And then you tell us, snooze, dont like the item, or dont like the price and so then we learn more about you. So that over time, hopefully one day we can then push that box view without you even so are you sending me an email saying hey i think you probably need x . Oh, absolutely. Whether its text or email well tend it to you at least for btoc. For btob its set it and forget it. Folks have really liked it the revolution has been our company being okay you dont have to spend three hours in the store anymore. You dont have to think about going to the store how we think about it is in the future you probably wont have to think about even what you want to buy at the store you know so meaning that you dont even think about driving youre just not thinking about it at all. What has it meant for your bottom line in terms of sales . Does it mean that you retain customers . You dont give them the option of going out and finding another vendor yeah, ecommerce theres three main factors all it is is how much money youre making for order. How often are the folks coming back and how much are you paying to get a customer . This absolutely helps the retention numbers. Without needing to come back were pushing that to you already. During commercial break when you first sat down wasnt off the record we were having a conversation about what the s p has decided to do, around companies with dual class shares. Yeah. And you were commenting that you only have one class of share. We have one class of shares have you thought about doing two . Yeah, so luckily our last company was a success, and so when we started this company, i remember thinking, i remember getting the advice that we actually had the leverage to potentially have a different, dual class voting kind of shares system, and cofounders and i just thought you know, if we are still at the helm and we deserve to be at the helm, we should stay and by that time we had so many shareholders and they decided we werent the best then we should go that was very idealistic of us four years ago so im still on the fence of whether we regret it or not but weve got great investors. Now you cant regret it, right . Yeah, well its not unless we dont want s p money. Doesnt everybody want s p money . This is like getting sovereign wealth money its a big move like when i was in the green room before i was just watching you guys live and just thinking wow, thats going to affect some legal documents in Silicon Valley starting tomorrow right okay thank you for coming in this morning. Thanks. Appreciate it am coulding up, lyft is heading to disney world and taking minnie mouse along for a ride well have details next. Annie anns is asking customers or did ask customers for their input on a new pretzel flavor the results are in its going to be a sricha flavor it beat out savory and sweet competitors including taco, buffalo wings, apple pay, and a pink lemonade pretzel. The Worlds Largest pretzelmaker will roll out the new menu item for a limited time this year i was suggesting tuna or clam. That would be ew. You know you dont have to pepsi, i got some fritos i got some jalapeno. Too spicy or fritos, which are good anything that ends in tos is good fritos. Tostitos. Fritos. Cheetos cheetos i thought thats not on the scarsdale diet i eat like two of them. You know what this is going to translate into . You like toes. I like toes, exactly. You know with almonds. You know, this is how insane diets are, youre allowed to eat some almonds once in awhile. Five . No, half. Half . You know how they sometimes youre allowed to eat like five halves instead of 2 1 2 . It sounds better, five halves. When we come back some breaking rsal iomanews. Peonnce d spending about to hit the tape. Squawk box will be right back. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at Td Ameritrade. Were just a few seconds away from june personal income and spending data. Lets take a quick check on the markets. Look at this yesterday the dow closed at another record it was its eighth record for the month of july. This morning you are looking at the dow futures indicated up by triple digits. If we were to open here, the dow would be well above 22,000 first time crossing above 22,000 if this happens. S p is indicated up by six points this morning. The nasdaq indicated up by about 20 points. Were also watching oil prices, which have been right around 50. Right now down by about 40 krepts to 49. 76. We were above 50 most of the morningen. Rick santelli is standing by at the cme. All right, becky. June read on personal income is a big disappointment goose egg. Unchanged. Nada we were expecting up close to half of one percent. If you look at last month originally released at up 0. 4. We end up with up 0. 3. We look at the spending side shall we looking for up 0. 1 thats exactly what we received up 0. 1 last month we also gained a tenth from 0. 1 to 0. 2. If we look at personal spending, real spending, it was unchanged. Deflator month over month, unchanged. At 1. 4 year over year on the deflator, following that 0. 1 increase to 1. 5 personal consumption expenditure, 1. 5 thats following a 1. 5 you know, as i look at these, i see that the personal consumption expenditures do not have a two handle. I get it growth, growth does have a two handle its probably why. The big story continues to be 118. 18 on the euro versus the dollar an unbelievable move to say the least. I remember when we were talking about 10 when it was at 110. A lot of people gasped at that now were hearing 125. I cant tell you where the top is going to be but i urge everyone to look at a fouryear chart at the euro versus the dollar 120 just jumps out at you. Joe, back to you yeah, that has been interesting to watch the whole dollar trade rick, thanks Steve Liesman is here. With the debate the economic world has about growth, i guess. On jerrys birthday. Yeah, whether or not the president is responsible for the recent growth. He recently took credit for the growth in the numbers in the Second Quarter so we asked a bunch of economists whether he, indeed, has had an impact. The answer, most see the Second Quarter as a bounceback from the First Quarter and say hey, these are early days for a president to have major influence on the economy but there could be some limited positive and some limited negative economic effects from the Trump Presidency here are the positives we gathered from them, deregulation, the stock market gains creating something of a wealth effect. Maybe a couple tenths of a basis points, over the next year this rise in Business Confidence perhaps leading to some Business Investment and the negatives, the policy uncertainty. The aca failure raising questions about tax reform immigration, and trade are listed as the negatives. The American Action Forum Think Tank says the end ofrising regulatory costs under president obama could be having a positive effect on confidence and maybe on investment. You can see some of these numbers. This is theircalculation based on government calculations of the cost of complying with new regulations. A lot of them, by the way, in the environmental side, including Something Like 164 billion dollars worth of finalized regulatory costs in the last year. And moving on, looking at some other whether theres a rise in Business Investment, is debated. It did go up in the Second Quarter. Take out mining and the result of Higher Oil Prices business spending actually declined on a percentage basis according to economic advisers jpmorgan says the u. S. Has been an underperformer globally maintaining a 2 average while the rest of the world is accelerating and its about what was expected before the election. Steven moore of the Heritage Foundation says President Trumps positive effect on confidence simple enough quote, hes probusiness but more said getting to 3 is going to take real legislative changes. And not executive orders i like that a fair and balanced take on the conversation in the u. S. Beth ann we left beth ann out because we knew she was going to be here to give us more information that wed carry on for the rest of the day. Lets talk to beth ann, a u. S. Chief economist at S P Ratings Services what do you think . You heard steve. Positives . Positives well, we ahad said after the elections we thought markets got ahead of themselves. We thought policy promises are not, you know promises are not policies were in a wait and see mode we did not expect we did not expect a lot of what was proposed to get through. At this point in time, all we expect is a minor tax cut, probably later, actually early next year at this point in time. No mention of Infrastructure Spending that was also on the campaign but theres no mention of that and that doesnt seem like thats a possibility the markets didnt listen to you, that they had gotten ahead of themselves. Yeah, well one other thing we mentioned on deregulation one of the things thats slowly getting the process of deregulation through is not a lot of people in the white house who actually sign the forms to deregulate one thing positive if were not seeing the deregulation getting through, businesses know that the bad part is over and even if we may not see some of this activity get through, no new regulations are likely i think that was a point that doug made. Its not necessarily the deregulation now, we can debate whether or not there is some and that may be already having a positive effect in the mining world, for example exoil you look at some of the Copper Mining apparently Coal Production is up quite a bit but the idea that the trajectory of increasing regulation appears to have flattened out is a positive for business. We havent necessarily seen it in the Business Investment numbers. And again, these are early days, and steven moore actually asked the question, should the president be taking credit now because, since he hasnt had a big effect, if things turn south in the Third Quarter, which theyre not expected to, by the way, then does he really want to be responsible for this train that he essentially isnt driving, and probably wont be driving for another year i would just add real quickly in terms of the impact of the presidency, you know, our growth rate has been around actually before the election was around for 2018, around a little over 2 , about 2. 3. Now its 2. 1 so i dont want to blame the president for that, but i could say nothing has changed. Right, you tried to take my head off yesterday for a conversation similar to this this seemed a little more not at all. Your point was that obama, you give credit for the stock market advance. I said if you want to give trump credit for the stock market advance, great, then give obama credit for the stock market advance you give obama credit for or try to give nobody credit for anything which is it with you . I dont know. So obama i think you either which do you feel about president obama . I just think theres got to be consistency here. Continue to give credit to all the president s and say [ everyone talking at once ] right . We historically have given credit to the leader for whatever happens so then you must do it for trump then correct okay. Thats all no, no, but you werent prepared to do it. Guys the point that a bunch of people i talked to gave trump credit for the initial increase in stocks. Yep what they say now is that increasingly they believe the market is not trading on the presidency and they look at the trade and they see negative things happen to the Trump Presidency and they dont see the market selloff. And they do see the market reacting to earnings, to growth, and to dividends, and so, whatever was the initial impetus, it seems like the foundation for the trade is apeers to have changed given the dire warnings about the consequences of trump being elected, even if it was just for i agree with that even if he just broke even. It is true. And i reported that stuff from all said the same people, if the market were down 10 , 15 , 20 from the election, you dont think that they would blame that on trade, blame that on immigration, blaming that on trump . So its the same thing fair enough beth ann, so theres a lot of things coming out today about john kelly, about the Trump Administration now pivoting to democrats. Heres one from the daily beast, im sure andrew has seen this, thats the big alert goes off at the bailey beast writes a piece, right . I havent been an alert Even White House okay, trumps new chief of staff john kelly is making overtures to democrats. For tax reform so your idea probably makes sense with that because youre talking about 28 . Youre talking about something very small, very that would be barely move the needle for what people gary cohn would resign, wont he, sorkin he wants Something Big if it doesnt big he doesnt even want to do it hes not going to resign. Hes going to be the fed chair i dont know. Did you see one of our former anchors, i dont know what he does now, he was on, he wrote something at cnbc. Com. Thats like putting a gambling alcoholic in or a gambling addict into running a casino gary cohn into look the question about his own disposition, whether he he is a mover and a shaker he likes to do stuff its different than what the fed chair historically the criticism was that he didnt have the education, didnt have a hpd. Wasnt ray trained economist people forget paul volcker was not an economist right so would it help with 27 , 28 move the needle. I would say thats one positive thing is that if it is indeed the case that one side of the aisle is reaching to the other side to get some kind of maybe its not going to be comprehensive tax reform, but some kind of tax reform, that will be that would lead to a real big part of it. Something that could actually so anything if we could get 60 votes in the senate, youre going to need the democrats. And it could become more permanent. We see permanent not temporary as a real positive and that, i think beth were going to be out of time i want to point out the income number was unchanged but wages and salary go for strong 0. 4 . That was june. Real quickly we talked about this idea of the Second Quarter, does it continue in the Third Quarter . Youre talking about gdp groethd gdp growth. Were expecting were expecting gdp growth to be in the again kind of in the mid twos were not expecting any big bump thats a good number. If under potential is 1. 8, 2. 5 is a beautiful number. Good enough were saying about 2. 3, 2. 4 for the second half of the year. Thats a lot betters but count your blessings. While we have you here and i know this is totally off topic are you involved at all in these Corporate Governance decisions at s p regarding what goes in and out of what goes in and out of the index not at all. Not at all we had the big debate earlier about what this is going to mean not at all. No i do not out of the dow beth ann nobody tells me anything. Did you put visa and nike in there . Was that you i swear they tell me to leave the room you can leave the room now when they make those decisions. Okay. You know andrew in the clinton years, washington had a lot to do with the stock market rally gingrich go ahead anyway and congress the big debate thats taking place on our set, when we come back, mayors across the country are speaking out about Health Care Reform. They will be heading to washington to meet with congressmen. Were going to talk to one of those mayors right after the break. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. 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. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Welcome back to squawk box, everybody. In our headlines this morning, Athena Health has announced a series of Strategic Initiatives including the separation of the chairmans role. Jonathan bush will continue as the ceo but the board intends to seek an independent chairman the companys also taking measures aimed at saving about 100 million annually in costs although details have not yet been announced and its retained a search firm to fill the roles of president and chief financial officer. Mayors from around the country head to d. C. This week for meetings with congress on health care. Our next guest will be there lets bring in columbia, South Carolina mayor stephen benjamin, the Vice President of the u. S. Conference of mayors mayor, its good to see you. Youve been mayor for awhile in columbia, right . Ive been here many years ive been mayor for seven years. Im wrapping up my second term as mayor second term you seem to love that part of the world, obviously a lot of great things. In general, though, would you say that looking at the what the federal government is designed to do, and what your concerns are locally, wouldnt it always be great if the federal government just did everything for local government . I mean would you ever say no, no, we dont need help from the federal government i mean, you want the federal government to help as much as possible, right . You have to do that to represent your area of columbia. Im not sure if you try and pitch me a softball or what but i tell you what, American Cities want a partner the reality is that 86 of americas population lives in cities 88 of jobs are in cities. 91 of our american gdp is created in cities and metropolitan economies what cities want are a partner in washington, d. C. And weve seen over the last several years incredible destruction in washington, d. C. , its begun to affect our state capitols, as well and we want to just make sure we have a partner that allows us to continue this incredible american experiment. This incredible growth that were seeing all across cities and metropolitan areas across the country. A partner is what we need. Actually, mayor, it was the opposite of a softball i was kind of making a point, when you look at, for example, governors that took medicaid, and the federal government was, you know, sort of they entered into that deal where they could get 92 or 95 or whatever could you really look for governors or local officials to, if you were looking to reform an entitlement, is that the place youd look for someone to say, no, we want to put a cap on it we want to slow the growth of this entitlement because were not going to be able to thats not where you would look. You cant look to local politicians and say no, dont give me the money. Theyre going to want the money to keep on flowing from the federal government well certainly. Well, first of all, its always important to realize that money doesnt fall like manna from heaven from washington, d. C. These are our taxpayer dollars that go to washington, and yes we like to repatriate them back to the people who actually pay those dollars every april 15th in americas cities were seeing great fiscal management, incredible Financial Economic growth and in our city alone we not only have the largest gdp in our state but we finished five of the last seven years with a Budget Surplus weve been upgraded by standard and poors and moodys twice over the last several years we have the same tax rate that we had ten years ago but weve seen almost 2 billion in Capital Investment flow to our cities, and were seeing we enjoyed an Unemployment Rate lower than the national average. Across this country, mayors, republicans, democrats, independents, are required to balance our budget, required to run good, strong, healthy fiscal houses, and if we are able to share our message, as we will be doing on capitol hill with some of our senators tomorrow, our message of working together, working across the aisle, just to solve some of those vehiclesing problems facing america and health care and infrastructure and public safety, how do we make sure that if we are going to jump in to significant tax reform, how do we make sure that we dont destroy some of the things that are working really well like the Tax Exemption and municipal bonds. Theres a lot of work to be done, and our goal is just to try and work with the federal government to have a real partner in solving the issues facing americas citizens. Not all mayors are created equal. They dont have your you know, the positives that you just mentioned, theres a lot of places where that would be the envy of mayors and maybe some of the bigger cities that we think of, and i guess youd even say that in some of those cases, youd say, thank god the federal government is not run like some cities well we have weve had some really good opportunities over the last several years at creating an environment where Capital Investment feels welcome. When it hitsed ground you treat it right and it gross. And that works weve got to have good, strong policies that dont fall into the false choice that if youre probusiness you got to be antiwork. You can be probusiness and proworker create good policies that allow and encourage good Capital Investment and things happen. This discussion around infrastructure is something thats really important to us. We know the president made a promise. We met with him in december. That he was going to invest in american infrastructure. And we use this big word infrastructure, in reality were talking about bridges that are safe were talking about roads from our homes, our schools, and our urban corridors, were talking about water and sewer infrastructure that keeps our rivers and tributaries healthy and also keeps our families strong and growing in our city alone, over the last several years you spent about a half billion dollars modernizing american infrastructure, putting hundreds of people back to work. If, in fact, we accept the most conservative estimates as the 2 trillion in additional infrastructure needed to make america competitive on the world stage, some of those numbers go up to 4 trillion. We can put americans back to work its going to require the type of bipartisan, thoughtful partnership between state government, local governments and federal governments and the Capital Markets just to make sure that were working on solutions that work for everyone americas mayors are committed to making that happen. And nthats the message were going to be taking to washington this week. Mayor, thank you. Appreciate it. All good point. Thank you. Thanks for your time today. We do have i wonder where it doesnt necessarily mean the president was watching all the stock market discussion we just had, but he now is saying, donald trump, stock market could hit an alltime hig hi high again 22,000 today. Was 18,000 only six months ago on election day. Mainstream media seldom mentions. Hi, mr. President when we return, jim cramer will join us live from the New York Stock Exchange meantime, take a look at the futures as President Trump just said, we are in the green and looking up up 111 points higher the dow they are the natural borns enemy of the way things are. Yes, ideas are scary, and messy and fragile. But under the proper care, they become something beautiful. Going down to the New York Stock Exchange to say good morning to our good friend, jim cramer andrew, maybe were not Mainstream Media we are so focused on this new high, everybody says is that all you think about is new highs so i dont know. Maybe im not mainstream maybe im sort of other stream like upstream. If youre waking up this morning, have cash on the sideline, see were at new highs, do you say to yourself, im buying in or chasing the new highs, getting on the train at the wrong time, right time i think a ton of stocks just sold off last thursday when the bears came out and said this is the big break. Lot of Health Care Stocks are down, bank stocks are down tech stocks are down i think theres plenty to choose from because these new highs, a lot of them, mr. President sorry to focus on this, but from verizon moved up, boeing moved up any company that he attacked is a buy. Boeing, united technologies, Lockheed Martin is a buy he must be thinking about some other station. What do you think about this s p 500 station . You know what i have been with lots i totally like your idea that thats the biggest basket of money to flow in ceos who said every time the market is down, s p, my stock goes down even though im doing great. Its a little more mixed little more mixed. Interesting jim, were going to i like your theory. A lot of guys are not by the way, were almost at a new high. Did you know that . I did not. Oh, no. You guys talked about it all morni morning. We will see you do you think the failing new york times, which just had a blowout quarter is going to talk about it, though, or will that be fake News New York time. Made a fortune this quarter failing. Failing up. Thank you, jim. Failing higher. Well see you in a little bit. Martin shkreli is on trial thats not keeping him quiet on facebook 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. You are loved pharma bro Martin Shkreli is banned from twitter so he used his Facebook Page to chime in on Anthony Scaramuccis firing. In for Communications Director conspiracy to commit both securities and wire fraud. I didnt realize being banned from twitter must be painful for him. Hes a bro. What do you mean . Guy millennial guy. The way he talks, that broish thing we do so well. Here is squasquawk on the street. Good Tuesday Morning welcome to squawk on the street. Im Carl Quintanilla along with david faber and jim cramer on squawk on the street. Only about 100 points from dow 22k. Oil has held around 50 auto sales and ism headed our way today. Road map