Good monday morning. Welcome to squawk alley. Were at post nine john fort is live at one market in San Francisco what a morning, guys, for the first day of the second half of the year not only is the dow set a record high, transports setting the first record high since the beginning of march but you have the ten year at 234, above levels that they said were critical. What does this say the dow, the transports, financials, its coming to some degree at the expense of the big cap techs. Seems like a first of the month effect june if you remember, june 1st, market was up. 75 you have the 2430 in the s p 500. You closed june below. That it seems like a rush of money. People looking for that rotation to continue into july. Does it count on a shortened session . I it this prices count do we have a majority i dont know exaggerated on some level in term of the magnitude of the lift especially after the open certainly got our attention well see if we get any followthrough after the holiday. Joining us this morning from palo alto, cofounder roger mcnamy and Kate Mitchell on the phone. Well start on our topic roger, youre still in the market second half does your playbook change at all because we crossed into july no. Carl, i got to believe that this is a time where investors need to make sure they own the stocks theyre prepared to own in a correction because i do think that the environment that were in has so much uncertainty it in and, you know, not kind of little uncertainty but things that could go really wrong and really dramatically change the way we perceive market valuations you know, i dont know when that starts i dont know when it comes i think you want to use the market strength to just make sure that youve got the right portfolio mix just in case things are not so good Going Forward. You are referring to tech specifically im looking at going toll dashgs 924. Yeah. For me, tech is where i live so i think its particularly important in tech. Ways so incredibly strong through the First Six Months of the year and at the same time, i think this is really a market wide issue. Yeah, you know, its interesting, roger tech at least the big stocks like f. A. N. G. Are going down similar to the way they went up which is all as a group and seemingly not because of individual headlines this seems like a flow story where money is moving to and from i think thats true and to be clear, i think that were in an environment where traders dominate and, you know, that means theres no way to tell where the top is and from where i sit, you know, the news flow could have scared the bejesus out of the market any time over the last three well, lets say over the last five months. And the markets been remarkably resilient. The quality of the scary news coming out just getting more intense all the time the market may decide i dont want any more of this for a while. The report you just had about restricting laptops on transatlantic flights, that is sort of thing is just part and parcel to Larger Program going on that seems designed to restrict our interaction with the rest of the world, our trade with the rest of the world and the market in the long run is going to have to reprice downward if there is less global trade. Yeah. Kate, i wonlder if you go that far. Roger calls some of the headlines scary and indeed for every alphabeteu headline, i mean there are things to worry b on the other hand, i mean, youre looking at microsoft today, for instance, is going to reorganize the Sales Organization to take more advantage of cloud do you consider the headlines we got scary . Well, i think they are in that, you know, Technology Companies are the leaders when it comes to globalization because our products are ultimately all digital i think some of the concerns we have both with potentially sort of putting up areas from a trade perspective, some of the animosity around the world, i think some of those geopolitical things that are going on i think and the questioning of the United States leadership in the conversations, i think filters its way back through some of the Tech Companies and weve been talking about the f. A. N. G. S for a while. I think san overdue correction i think it is amplified by the general certainty geopolitically and then moving back into what were seeing happen in the markets. I think its a retrenchment. I think theyll find footing they are more likely overpriced at the peak. I think they have to find the trough thats interesting perspective, guys. Were going to watch the trades obviously as the week goes on. Switching gears a bit. Silicon valleys culture is under attack again another investor apologizes for inappropriate behavior towards women. Dave mcclure writes in a blog post this weekend, while id like to believe im not a bad or evil person, regardless, its clear that some of my past actions have hurt or offended several women. And i probably deserve to be called a creep. Kate, where does this end . When did the episodes end . Well, thats the right question to x the revelation starting with uber, the story with bianary and now there is a cascade of individuals cominging forward, women susan fowler starting with uber, three women with respect to the venture firm binary and now women standing up and talking about their experience with dave mcclure. Unfortunately, one would expect being part of the industry that these things are isolated and theyre not. I think it speaks to this just Good Governance all Public Companies and large investors out there expect companies to be well governed, well managed, and not be reckless in behavior this is just unacceptable overall. So increasing levels of conversation the conversation started probably two or three years ago within the industry. Remember, we have roles within our firms. We also sit on private boards. And as the ceo of box erin leafy said when i put my firm together, i made it diverse because i didnt want to have to remodel my locker room later we need to follow the lead of people like erin and make sure as men and women that we dont let that, you know, become out of control again, that is not good for the health of these companies. Its not the kind of behavior that leads to good growth and solid, you know, opportunities Going Forward for employees and for shareholders in these companies. So its quite a conversation there is a lot of solution discussion going on right now between limited partners, venture capitalists and entrepreneurs. I think youll see a lot come out in the next week or two. Roger, its john fort here in San Francisco. How do you kind of impose a culture change in venture capital, an industry that has no Central Authority . Where does accountability come to bear . If somebody at your firm god forbid of the five leaders were engaged in some sort of harassment, how would the others know and how would accountability be brought to bear john, the first point i want to make here is that as a man in Silicon Valley, im not the perfect person to, you know, be opining. Kate has really got this issue totally nailed and from where i sit, i think an enormous amount of responsibility has to fall on the investors in funds i think they have allowed this behavior to develop. In the early days, massage any was so prevalent that there werent very many women. It is only in the last 15 years that women have become numerous enough in the population so that the kind of horrible behavior were hearing about right now could even happen. There werent enough women in the old days for the horrible stuff. I remember talking to carol barts who has been in the industry for decades about the sort of treatment that she got within the Enterprise Sales force and then as an executive i mean, this behavior has been around for quite a while oh, no, amen. Im not saying it didnt occur im saying the reason youre seeing so much of it now is women have made some progress in Silicon Valley there are enough of them now that you can get a person up there and get three, four, five people responding. Okay, you say to yourself, is that a one off no it turns out as kate said, there is a tremendous amount of this going around i think it search worse today than it was ten years ago. There are a lot more women in the workforce. And the men are behaving horribly i just think there has not been Good Governance inside the companies. Look at uber its not like we didnt know this stuff was going on at uber. Weve known that stuff is going on practically from the beginning. And it just this stuff drives me crazy because i do think that there is this, you know, unwritten rule that people dont talk about stuff like this and women have been victimized by this. I think people of color have been disadvantaged by analogous kinds of problems. Its to my mind Silicon Valley is it has a cultural problem right now that is so severe that almost needs a reset i think it starts with the people who have the money. They just have to say, look, im not going to tall rate this im going to force withdraw of my money and force the funds to shut down the notion can you take a lesser roll and lody move on, i dont think that cuts it i dont think that will change the behavior more than a 2. 7 billion fine on google is going to change the business practices. This is really deep and screwed up and drives me crazy the tragedy of it all, kate and roger, but ill direct this to kate, the fact its happening in an area that has been for so long considered to be the sweet spot of our economy when it comes to job growth and innovation and just moving america into the next century of progress no, its pretty its surprising and disappointing and humiliating i think for all of us at the same time. But i again think needs to be called out i think you hit the nail on the head there is an element of Cottage Industry were not ge and were not ibm and were not intel. We dont have a leader in the venture community. But i will say that the National VentureCapital Association which ive been chair of previously and i helped cochair a or cofound a Task Force Inclusion diversity three years ago. They did a blog on no harassment really standing up quickly and forcefully this is not tolerated. I joke and roger is right. There are few women in the industry and he said, you know, in terms of an industry i never have to stand in line for the bathroom, what i do even in the military and almost all of wall street has even better numbers, its 7 to 10 of the investing partners are women as we know from a study harvard josh learner came out with a study that said the owners of those firms are less than 2 women and, of course, all those numbers are a lot more than minority representation. So we have a way to go you wouldnt expect this in where we live. We should ab plbe applying innovations to this problem. I think with investors, roger is right about. That and with all the constituents out there and certainly as many entrepreneurs who are also infuriated about. This we need to put our Heads Together and put this behind us. John, if i can stick if i could just stick one thought in about this issue. We just elected a guy last november who entire campaign was based on abusive behavior towards women and abusive behavior towards almost all people who are out of power. And i think this is a now a National Issue i think Silicon Valley is in the hot seat for really, really good reasons. But it is a national will issue. Fair point. Next guys in what would be the biggest tech ipo since snapchat, drop box looking to hire underwriters mike, interesting. We just came off another big couple of ipos certainly one of the maybe half dozen thats been eagerly awaited out. There i guess i wonder exactly how the company will position itself strategically in terms of what the long term place is right here is cloud storage, you know, enough of a commodity that its going to be hard to stand out . And what is the Business Model going to look like down the road it will be interesting to seat financials john fort, you have to be looking forward to that one. I am. So interesting box, we were just talking about, erin levy went public quite a while ago now and so all the comparisons are going to be between dropbox and box. We have that 10 billion valuation that dropbox got pegged at some years ago i guess it has been now. The question is online storage commoditized as it has been a hot commodity enough i know both of the companies try to pivot and say theyre platforms now but to what extent are investors going to believe that we just saw what happened with blue apron sometimes, you know, the stretched embellished story of what a company is really about doesnt get the degree of belief that an ipo needs. Yeah. Roger, kate, thanks for covering a lot of ground with us to day good to see you as always. Kate mitchell and roger mcnamee. To d. C. , a top trump adviser pushing to hike taxes on the rich steve bannon is telling colleagues he wants the top income bracket to have a four in front of it. Joining us this morning, the National Political reporter Jonathan Swan broke that story jonathan, great to have you on the program at long last welcome. Thank you walk us through if you can a little more of what bannon is thinking may be pivoting around. So steve bannon has long believed that the richest income bracket they should be paying for taxes. 40 or higher. He believes that should pay for middle and working class tax cuts this fits into a larger philosophy that steve bannon has which is the future of the Republican Party is down scale working class middle class voters, naem would have voted for democrats. He sees that as the future of party. Hes very hostile to what he calls the elite davos crowd. He sees the chamber of commerce, Republican Leadership wing of the party as the past not the future jonathan, there are a couple of at least davos crowd in the white house in the form of some economic advisors such as carry cohen. So what do you think is the reception of this idea how is it actually playing within the sort of policy at the white house . Oh, its playing terribly its got, i would put the odds of this happening vanishingly small. Hes been pushing this for weeks and weeks and weeks. I got a text message from a Senior Administration official who said we killed this thing two months ago turns out you didnt because hes still pushing it. Gary cone and Steve Mnuchin are not going for. This the president is inclined to raising tax onz the rich. He said this publicly. One thing the president does say privately and publicly is that hes always going to look after my people. And by that he means his base. One of his biggest problems with the first round of the Health Care Bill was that it wasnt good for his people. Now i think if you are going to bet on this proposal, its just about as close to dead on arrival as you can possibly be you never know with steve bannon he does still walk into the oval and talk to donald trump you can never be quite certain in terms of predictions with this administration. Jonathan, is this a reflection of where the influence of steve bannon is relative to others the administration and we mentioned cohen, mnuchin and what does that say im not sure it says a whole lot. Bannon sees his role in the white house very much as provocative is not the right word that trivializes it. He sees his role as pushing extreme unpopular position thats quite often he knows hes going to lose those fights he sees himself as the torch carrier for the nationalist pop List Movement that propelled donald trump into the white house. He is staking out the most hard line position knowing its going to be overwhelmed by people like gary cohen and Steve Mnuchin i will. 1 thing out. Last week we reported this there was a big meeting in the roosevelt room at the white house on monday over steel tariffs. Very hot, contentious meeting. Now Donald Trumps entire cabinet with the exception of wilbur ross, the commerce secretary, think thats it is not a good idea to have impose steel tariffs imports. But donald trump himself is very much inclined to do. This unless something changes, you would say hes poised based on our conversations with sources inside the room that hes poised to put tariffs somewhere in the 20 range on steel. Now that is a minority position push by steve bannon, wilbur ross, Peter Navarro and stephen sm miller you do see that minority get some wins. We saw them get a big win on withdrawing from the Paris Climate Accord so i think its deaf nuttily based on the issue i dont think you can make sweeping generalizations about the influence of any one staffer in the white house all right one last thing, jonathan how serious should we take your note about cohen considering resigning if he concludes the tax reform is dead well, i should be very clear about this these are people who know cohen and speak to him and this is very speculative but they are firmly of the view that once gary cohen realize thats he cannot pass tax reform, hes out of there. Thats the only reason he came to washington. He wanted to pass tax reform he doesnt want to pass timid milk toast tax cuts. He wants big transformational tax reform he wants 1986 reagan historic tax reform he doesnt want a little tax cut. Thats not why he came to washington jonathan, thank you so much good intelligence. Jonathan swan. When we come back, the new teslas are set to roll off the line lets see what is on deck for that company dow remains up 187 as Companies Work to recover from last weeks major cyber attack a new report says Nuclear Plants in the u. S. Were targete