Transcripts For CNBC Squawk Box 20170629 : vimarsana.com

Percent. In europe also seeing a bit of a mixed picture. The ftse is higher, up by 0. 3 points in france, the cac is under pressure in germany, the stocks are Weaker Crude Oil prices up yesterday for the sixth session in a row this morning up once again up 21 cents to 44. 96 blue apron pricing an ipo last night, 10 a share. Thats the low end of the reduced range the Company Announced yesterday, well below the estimates of 15 to 17 a share. Blue apron raised 300 million ahead of its debut on the New York Stock Exchange later today. Thats a third less than it had hoped. Staples going private. They are being bought basic moth by Sycamore Partners they will pay 10. 25 a stair r. Share f share for strappal staples the buyout comes two years after a federal judge blocked staples planned merger with office depot on antitrust grounds. There was a deal when it came to supermarkets, would supermarkets now be in a stronger vthanks to amazon lets talk banking. The fed clearing capital plans for 34 of americas biggest banks. The move prompting many of them to announce new dividend increases in buybacks. Citi doubling its Quarterly Dividend to 32 cents a share announcing a 15. 6 billion stock buyback program. Jpmorgan also announcing its biggest buyback ever at 19. 4 billion. Morgan stanley announcing plans to raise its dividends by 25 . 25 cents a share bank of america announcing a 1 billion buyback. Shares of the big banks, everything up, up. Citi group up 3 its all up with the exception of jpmorgan, which is not up as much if you look at the charts yesterday, they were up through the session yesterday, every one of these spibking in the after hours. This is jpmorgan as michelle pointing out, rising through the day. Some coming from negative territory. After the bell is when you saw the spikes its obviously something well talk about throughout the morning. What is curious, we had on a bank analyst yesterday on power lunch, i said what percentage of your coverage universe will raise dividends because of this he said 100 maybe the numbers are bigger than people expected the u. S. Unveiling some enhanced security measures for flights into the country designed to prevent expanding a ban on laptops and carryon bags there will be increased trace detection and better screenings of passengers. Also higher security around planes and expanded k9 screening. The wait times at security could get longer the new measures could take effect in three weeks. If airports and airlines agree to the standards, it would mean you could take laptops on the plane. The Trump Administrations travel restrictions taking effect today eamon javers has more on this and some of the other top political stories. Good morning. The Associated Press got ahold of a state Department Cable laying out the new travel restrictions earlier this week, we had a Supreme Court decision that allowed part of the president s travel ban to go forward until the Supreme Court hears a case relating that later this year. In the meantime the state department and various Branch Executive agencies have to come up with new rules for travelers. So as of right now the state department putting out these new rules for travelers from the six muslim majority nations. The Supreme Court allowed the ban for travelers who lacked bonafied relationship with any person or entity in the United States the applicants must prove a relationship one issue here is whether what counts as bonafied in terms of a family relationship. Were told what doesnt count as bonafied are grandparents, grandchildren, aunts, uncles, nieces, nephews, cousins, brothers in law and sisters in law. So your brothers and sisters in law may feel bonafied, despite that theyre not entitled to the waiver under this travel ban as it is being implemented today. Also we have the visit today at the white house of the south korean leader. Hes coming to talk about north korea and some difficulties there. Moon jaeinwill have a working dinner with the president. Theyre calling it a working visit not really a state visit so some issues the white house expects to come up today include north korea, the Nuclear Threat there. But china, trade and sanctions also on the agenda the president of south korea, president moon, will lay a wreath at Korean War Memorial he told a very heart felt story yesterday about the fact his parents had been rescued by United States marines during the korean war in an event he called the christmas miracle. He said he wouldnt be here without those marines. He paid his respects to the marines yesterday. Were expecting that tone to continue through the day today at the white house with President Trump. Eamon javers, thank you you bet on todays agenda weekly jobless claims are out at 8 30 a. M. Eastern time. That comes along with th third and final estimate on First Quarter gdp. Growth expected to remain unchanged at 1. 2 . James bullard will speak this afternoon in london. On the earnings front, walgreens, along with conagra and Constellation Brands after the close, micron and nike will be the big ones back to the broader markets. Joining us is julian emanuel, u. S. Director for u. S. Equity at ubs, and brit schutte from northwestern wealth manmanageme. The banks, huge news coming out about this you knew you would see some increase in dividends and buybacks stocks are up significantly. Is it more than people anticipated . Possibly, i think you moved into a market thats more reactive they trade on that day based on the news of the day. So theres less advanced trading on some of this news i think so. A lot of people moved away from fundamental analysis that seems like a good time to be in fundamental analysis. Absolutely. What do you see that maybe the algorithms have not seen yet . What is your best yet . We are in the bank stocks, we like value stocks over Growth Stocks we have moved money towards the International Markets the past few years because theyre cheaper. Are you talk europe or emerging markets we have a position in the eurozone and emerging markets. Theyre cheaper and their economies are Getting Better i dont see michelle reporting from greece any longer, or not as much. I was thinking this morning i havent mentioned greece so long they have a debt payment coming up, but they papered that thing over with taxpayer money so we can all relax. I think the event risk coming down has been a big part of whats happening in the eurozone when you say its cheap, give me your definition youre looking at a forward pe multiple there forward pe. One comment i get is that the trailing 12month pe doesnt look that cheap relative to the u. S. I say do you realize eurozone earnings are half of what they were in 2007 suggesting a reversion to the mean is possible they have to go up no, they dont have to go up, but remember the eurozone unemployment did not peak until 2013 they are further behind in the cycle than we are. Theres room in the tank for the u. S. Economy to move forward in general, eurozone is much further behind how about you, julian lets start with the financials again what do you think about thenys news we heard yesterday . Very encouraging. The biggest thing aside from the news yesterday is that the investors were uncomfortable with the yield curve flattening. Its like the thesis coming into the year was discarded for us that was really a bit overdone what you have seen this week is the Central Bank Rhetoric that actually many may have thought would affect the front end of the curve, but basically its actually affecting the long end, thats where the length in the market is and this whole idea that central bankers believe that inflation is still out there and is something that needs to be considered you think the yield curve is basically not an indication that were looking at a potential recession coming down the pike no, no. Our work shows you have to get the 210 relationship going flat, where were nowhere near there i look back to last year when the yield curve wases becausically wher was basically where it is now. They were not concerned about the shape of the yield curve but the level of Interest Rates. Thats now a tailwind. In fact, you know, it does seem to be once again this setup where you have had financials underperform its a very good entry point you think yields are definitely coming up not massive rise. But definitely gently. Were looking for 2. 40 in the tenyear at the end of this year 2. 65 next year nothing great. But thats going to be supportive for financials. You say a greatme entry point so dont worry about a dip, put money to work in the equity market you have to be selective. Theres no question about it if you look at the broad market there are lots of pockets that are high valued. For Us Technology has been an area where people have showed discomfort we think thats going to be an ongoing transition, leadership away from technology over the course of the summer its not a permanent thing its just a cooling off. But financials have been forgotten. And we think when i look at the oneyear, some of these stocks are 50 , 80 , theyre not forgotten they have been. You had that initial rush off the election, and think about where we are in terms of tenyear rolleds from where we were one year ago. We were basically trading at 1. 4 in the tenyear thats a major change. Did you not think yesterday would happen the way it did . The numbers are better. Meaningfully better meaningfully better there was no question that the general outcome was expected you mean the capital ratios by the fed meaning you translate that to bigger dividends than you already expected exactly again the stocks are reflecting that investors have been sour on this space for the last three, four months are there particular banks that you like or go ahead and buy across the board this is one of these situations where, you know, keeping it simple is probably the right way to think about it. The monsters seem best to us the issue with the regionals they have moved quite a bit, and they, to a certain extent will be dependent on potential policy reforms, Infrastructure Spending to boost lending we have not seen that come through as much yet. The monster banks, the one complaining about a lack of volatility in the market in terms of asset prices and trading revenues, we think thats likely to change. Brent, how about you. I know you are focused more internationally. You like those markets better. What about our equity market as a whole . Sure. Broadly speaking going forward, the u. S. Equity market is more towards range bound largely because evaluations are high i know theyre not a great shortterm timing tool, but they matter to magnitudes longer term one thing i can tell you is that the u. S. Economy has gas left in the tank i dont think were in danger of overheating or recession is imminent typically keeping it simple, if the economy is higher a year or two from now the equity markets are higher especially if youre looking at incredibly low yields in the bond market. Julian is right on when you said draghi spoke, buzz letting yielwas letting yields move higher if you remember, people were trading financials off of what happened in the tenyear treasury on any given day. Do you think thats the case, do you think draghi will let yields go significantly he walked it back big time. At some point were towards the end, we crossed the Tipping Point of where Central Banks have will be buying less bonds in the future. The fed will let the Balance Sheet roll off the ecb at some point announces tapering the bank of japan at some point has to follow suit they had a big impact on the end of the curvement. Itwhen Interest Rates are gon higher, they say buy financials. But were not about the overall market because the overall market may not look like a great value. Every time financials go up, other areas were not sure about is there a way they can rise overtime longer term the economy moves forward. In the shorter term you have a push pull, yields moving higher because the stock market maybe on an absolute basis doesnt look attractive. So i think the stock market marks time longerterm, i define longer term one to three to five years, the u. S. Economy pushing forward will take equities with it i think that is largely what the fed would like to have happen. Thats why they talked down the market a bit they have a lot of mandates. They were talking boun t inge stock market doesnt that make you worried . When we used the phrase irrational exuberance, what happened the market ripped for the next three years. To be early is to be wrong, right . Yeah. Gentlemen, thank you very much we appreciate it thank you coming up, Meal Kit Delivery service blue apron priced at the bottom end of the ipo range last night hours after lowering that range by 38 well talk about the appetite for ipos get it it wouldnt be cable if we didnt have puns the importance of timing and going public next. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Yeah, and i can watch thee bgame with directv now. . Oh, sorry, most broadcast and sports channels arent included. And you can only stream on two devices at once. This is fun, were having fun. Yeah, we are. No, youre not jimmy. Dont let directv now limit your entertainment. Xfinity gives you more to stream to more screens. Welcome back to squawk box. Some folks outside getting some food this morning. Blue aprons wall street debut is today the ipo priced at 10 a share. The low end of the range it will trade under the taker aprn, joining us is kathleen smith, founder and manager of the ipo focused etfs Renaissance Capital. Good morning to you. Good morning. What do you think would you buy this thing we think this pricing for blue apron is good for ipo investors. The ipo market is doing its job of price discovery so going down was the right decision it discovered a better price for blue apron meaning more accurate we think this will help the ipo trade well today it needed this discount. The larger question, should Companies Like blue apron even be going public . What does this say about wr here we are in the cycle . We see no reason why blue apron should go public, but the real issue is evaluativaluation, andn companies are in the pipeline. So valuation is the issue. The ipo market is absorb a company whats not earning money, but if youre not earning money you shouldnt get a premium. How mauch has to do with competition and then whole foods and amazon to me, it looks like there was competition before that howhole amazon whole fos issue did not help, and also what theyre spending on marketing and soj of the treme s didnt look good if you believe the home kit Meal Delivery is important, then blue apron is a leader in the space well see. Theres a lot of competition, with all these companies theres tremendous competition look at screen now. If we can bring that back so she could see it woi. Wow i knew there were a lot. Theres double the number i thought. Doesnt that make you think this whole thing is not really partially you look at the screen and think theres a big industry there you also partially look at it and think, man, maybe theres nothing there. Right . Thats the proverbial issue will you have with the stock today. What do you make of the private so Many Companies that held off for so long that are desperately waiting. Theyre all on the tarmac waiting to take off. Theres a lot of delays. Theres a lot, because in the private market theres excess capital as seen by so Many Companies trying to battle out to do the same thing because of that theres excessive valuations, and the ipo market has some rational players in it. The ipo investor will not accept those companies at those evaluations. Valuations is that a harbinger of things to come when you think of uber or lyft . Is every one of these a different case you want to look at them one by one, but it is a harbinger of things to come we think some of the reason is the ipo market returns have been good for investors in the ipo market the issue is that the ipo market now is different than its been in past cycles right now the overall stock markets are trading at alltime highs. Yet the ipo market is a fairly rational place why is that . We think its because individual investors and advisers have abandoned investing in stocks. They are investing in indices. So that the Retail Investor who might have been a part of the irrational exuberance that can build up in the ipo market is not there. We have a set of investors in the ipo market who are the smart players, institutions. Have you looked at uber and seen what the market right now values it at, the private equity market versus what you think it would be worth if it went public now . The last round for uber was about 70 billion close to 70 billion we know shares have trade well below that when they had these issues from an ipo perspective, i think lyft should move forward. You think lyft hshould go first . I think they would be smart to do that and i would because of the lower valuation the uniqueness of the business, i think investors are very interested in whats happening with the ridesharing economy. They believe there is such a business first to get to market will have an advantage . We think should thats typically the case in the ipo market you get the best price the idea that the Weaker Crude Oil<\/a> prices up yesterday for the sixth session in a row this morning up once again up 21 cents to 44. 96 blue apron pricing an ipo last night, 10 a share. Thats the low end of the reduced range the Company Announced<\/a> yesterday, well below the estimates of 15 to 17 a share. Blue apron raised 300 million ahead of its debut on the New York Stock Exchange<\/a> later today. Thats a third less than it had hoped. Staples going private. They are being bought basic moth by Sycamore Partners<\/a> they will pay 10. 25 a stair r. Share f share for strappal staples the buyout comes two years after a federal judge blocked staples planned merger with office depot on antitrust grounds. There was a deal when it came to supermarkets, would supermarkets now be in a stronger vthanks to amazon lets talk banking. The fed clearing capital plans for 34 of americas biggest banks. The move prompting many of them to announce new dividend increases in buybacks. Citi doubling its Quarterly Dividend<\/a> to 32 cents a share announcing a 15. 6 billion stock buyback program. Jpmorgan also announcing its biggest buyback ever at 19. 4 billion. Morgan stanley announcing plans to raise its dividends by 25 . 25 cents a share bank of america announcing a 1 billion buyback. Shares of the big banks, everything up, up. Citi group up 3 its all up with the exception of jpmorgan, which is not up as much if you look at the charts yesterday, they were up through the session yesterday, every one of these spibking in the after hours. This is jpmorgan as michelle pointing out, rising through the day. Some coming from negative territory. After the bell is when you saw the spikes its obviously something well talk about throughout the morning. What is curious, we had on a bank analyst yesterday on power lunch, i said what percentage of your coverage universe will raise dividends because of this he said 100 maybe the numbers are bigger than people expected the u. S. Unveiling some enhanced security measures for flights into the country designed to prevent expanding a ban on laptops and carryon bags there will be increased trace detection and better screenings of passengers. Also higher security around planes and expanded k9 screening. The wait times at security could get longer the new measures could take effect in three weeks. If airports and airlines agree to the standards, it would mean you could take laptops on the plane. The Trump Administration<\/a>s travel restrictions taking effect today eamon javers has more on this and some of the other top political stories. Good morning. The Associated Press<\/a> got ahold of a state Department Cable<\/a> laying out the new travel restrictions earlier this week, we had a Supreme Court<\/a> decision that allowed part of the president s travel ban to go forward until the Supreme Court<\/a> hears a case relating that later this year. In the meantime the state department and various Branch Executive<\/a> agencies have to come up with new rules for travelers. So as of right now the state department putting out these new rules for travelers from the six muslim majority nations. The Supreme Court<\/a> allowed the ban for travelers who lacked bonafied relationship with any person or entity in the United States<\/a> the applicants must prove a relationship one issue here is whether what counts as bonafied in terms of a family relationship. Were told what doesnt count as bonafied are grandparents, grandchildren, aunts, uncles, nieces, nephews, cousins, brothers in law and sisters in law. So your brothers and sisters in law may feel bonafied, despite that theyre not entitled to the waiver under this travel ban as it is being implemented today. Also we have the visit today at the white house of the south korean leader. Hes coming to talk about north korea and some difficulties there. Moon jaeinwill have a working dinner with the president. Theyre calling it a working visit not really a state visit so some issues the white house expects to come up today include north korea, the Nuclear Threat<\/a> there. But china, trade and sanctions also on the agenda the president of south korea, president moon, will lay a wreath at Korean War Memorial<\/a> he told a very heart felt story yesterday about the fact his parents had been rescued by United States<\/a> marines during the korean war in an event he called the christmas miracle. He said he wouldnt be here without those marines. He paid his respects to the marines yesterday. Were expecting that tone to continue through the day today at the white house with President Trump<\/a>. Eamon javers, thank you you bet on todays agenda weekly jobless claims are out at 8 30 a. M. Eastern time. That comes along with th third and final estimate on First Quarter<\/a> gdp. Growth expected to remain unchanged at 1. 2 . James bullard will speak this afternoon in london. On the earnings front, walgreens, along with conagra and Constellation Brands<\/a> after the close, micron and nike will be the big ones back to the broader markets. Joining us is julian emanuel, u. S. Director for u. S. Equity at ubs, and brit schutte from northwestern wealth manmanageme. The banks, huge news coming out about this you knew you would see some increase in dividends and buybacks stocks are up significantly. Is it more than people anticipated . Possibly, i think you moved into a market thats more reactive they trade on that day based on the news of the day. So theres less advanced trading on some of this news i think so. A lot of people moved away from fundamental analysis that seems like a good time to be in fundamental analysis. Absolutely. What do you see that maybe the algorithms have not seen yet . What is your best yet . We are in the bank stocks, we like value stocks over Growth Stocks<\/a> we have moved money towards the International Markets<\/a> the past few years because theyre cheaper. Are you talk europe or emerging markets we have a position in the eurozone and emerging markets. Theyre cheaper and their economies are Getting Better<\/a> i dont see michelle reporting from greece any longer, or not as much. I was thinking this morning i havent mentioned greece so long they have a debt payment coming up, but they papered that thing over with taxpayer money so we can all relax. I think the event risk coming down has been a big part of whats happening in the eurozone when you say its cheap, give me your definition youre looking at a forward pe multiple there forward pe. One comment i get is that the trailing 12month pe doesnt look that cheap relative to the u. S. I say do you realize eurozone earnings are half of what they were in 2007 suggesting a reversion to the mean is possible they have to go up no, they dont have to go up, but remember the eurozone unemployment did not peak until 2013 they are further behind in the cycle than we are. Theres room in the tank for the u. S. Economy to move forward in general, eurozone is much further behind how about you, julian lets start with the financials again what do you think about thenys news we heard yesterday . Very encouraging. The biggest thing aside from the news yesterday is that the investors were uncomfortable with the yield curve flattening. Its like the thesis coming into the year was discarded for us that was really a bit overdone what you have seen this week is the Central Bank Rhetoric<\/a> that actually many may have thought would affect the front end of the curve, but basically its actually affecting the long end, thats where the length in the market is and this whole idea that central bankers believe that inflation is still out there and is something that needs to be considered you think the yield curve is basically not an indication that were looking at a potential recession coming down the pike no, no. Our work shows you have to get the 210 relationship going flat, where were nowhere near there i look back to last year when the yield curve wases becausically wher was basically where it is now. They were not concerned about the shape of the yield curve but the level of Interest Rates<\/a>. Thats now a tailwind. In fact, you know, it does seem to be once again this setup where you have had financials underperform its a very good entry point you think yields are definitely coming up not massive rise. But definitely gently. Were looking for 2. 40 in the tenyear at the end of this year 2. 65 next year nothing great. But thats going to be supportive for financials. You say a greatme entry point so dont worry about a dip, put money to work in the equity market you have to be selective. Theres no question about it if you look at the broad market there are lots of pockets that are high valued. For Us Technology<\/a> has been an area where people have showed discomfort we think thats going to be an ongoing transition, leadership away from technology over the course of the summer its not a permanent thing its just a cooling off. But financials have been forgotten. And we think when i look at the oneyear, some of these stocks are 50 , 80 , theyre not forgotten they have been. You had that initial rush off the election, and think about where we are in terms of tenyear rolleds from where we were one year ago. We were basically trading at 1. 4 in the tenyear thats a major change. Did you not think yesterday would happen the way it did . The numbers are better. Meaningfully better meaningfully better there was no question that the general outcome was expected you mean the capital ratios by the fed meaning you translate that to bigger dividends than you already expected exactly again the stocks are reflecting that investors have been sour on this space for the last three, four months are there particular banks that you like or go ahead and buy across the board this is one of these situations where, you know, keeping it simple is probably the right way to think about it. The monsters seem best to us the issue with the regionals they have moved quite a bit, and they, to a certain extent will be dependent on potential policy reforms, Infrastructure Spending<\/a> to boost lending we have not seen that come through as much yet. The monster banks, the one complaining about a lack of volatility in the market in terms of asset prices and trading revenues, we think thats likely to change. Brent, how about you. I know you are focused more internationally. You like those markets better. What about our equity market as a whole . Sure. Broadly speaking going forward, the u. S. Equity market is more towards range bound largely because evaluations are high i know theyre not a great shortterm timing tool, but they matter to magnitudes longer term one thing i can tell you is that the u. S. Economy has gas left in the tank i dont think were in danger of overheating or recession is imminent typically keeping it simple, if the economy is higher a year or two from now the equity markets are higher especially if youre looking at incredibly low yields in the bond market. Julian is right on when you said draghi spoke, buzz letting yielwas letting yields move higher if you remember, people were trading financials off of what happened in the tenyear treasury on any given day. Do you think thats the case, do you think draghi will let yields go significantly he walked it back big time. At some point were towards the end, we crossed the Tipping Point<\/a> of where Central Banks<\/a> have will be buying less bonds in the future. The fed will let the Balance Sheet<\/a> roll off the ecb at some point announces tapering the bank of japan at some point has to follow suit they had a big impact on the end of the curvement. Itwhen Interest Rates<\/a> are gon higher, they say buy financials. But were not about the overall market because the overall market may not look like a great value. Every time financials go up, other areas were not sure about is there a way they can rise overtime longer term the economy moves forward. In the shorter term you have a push pull, yields moving higher because the stock market maybe on an absolute basis doesnt look attractive. So i think the stock market marks time longerterm, i define longer term one to three to five years, the u. S. Economy pushing forward will take equities with it i think that is largely what the fed would like to have happen. Thats why they talked down the market a bit they have a lot of mandates. They were talking boun t inge stock market doesnt that make you worried . When we used the phrase irrational exuberance, what happened the market ripped for the next three years. To be early is to be wrong, right . Yeah. Gentlemen, thank you very much we appreciate it thank you coming up, Meal Kit Delivery<\/a> service blue apron priced at the bottom end of the ipo range last night hours after lowering that range by 38 well talk about the appetite for ipos get it it wouldnt be cable if we didnt have puns the importance of timing and going public next. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security<\/a> helps protect business, from the largest Financial Markets<\/a> to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Yeah, and i can watch thee bgame with directv now. . Oh, sorry, most broadcast and sports channels arent included. And you can only stream on two devices at once. This is fun, were having fun. Yeah, we are. No, youre not jimmy. Dont let directv now limit your entertainment. Xfinity gives you more to stream to more screens. Welcome back to squawk box. Some folks outside getting some food this morning. Blue aprons wall street debut is today the ipo priced at 10 a share. The low end of the range it will trade under the taker aprn, joining us is kathleen smith, founder and manager of the ipo focused etfs Renaissance Capital<\/a>. Good morning to you. Good morning. What do you think would you buy this thing we think this pricing for blue apron is good for ipo investors. The ipo market is doing its job of price discovery so going down was the right decision it discovered a better price for blue apron meaning more accurate we think this will help the ipo trade well today it needed this discount. The larger question, should Companies Like<\/a> blue apron even be going public . What does this say about wr here we are in the cycle . We see no reason why blue apron should go public, but the real issue is evaluativaluation, andn companies are in the pipeline. So valuation is the issue. The ipo market is absorb a company whats not earning money, but if youre not earning money you shouldnt get a premium. How mauch has to do with competition and then whole foods and amazon to me, it looks like there was competition before that howhole amazon whole fos issue did not help, and also what theyre spending on marketing and soj of the treme s didnt look good if you believe the home kit Meal Delivery<\/a> is important, then blue apron is a leader in the space well see. Theres a lot of competition, with all these companies theres tremendous competition look at screen now. If we can bring that back so she could see it woi. Wow i knew there were a lot. Theres double the number i thought. Doesnt that make you think this whole thing is not really partially you look at the screen and think theres a big industry there you also partially look at it and think, man, maybe theres nothing there. Right . Thats the proverbial issue will you have with the stock today. What do you make of the private so Many Companies<\/a> that held off for so long that are desperately waiting. Theyre all on the tarmac waiting to take off. Theres a lot of delays. Theres a lot, because in the private market theres excess capital as seen by so Many Companies<\/a> trying to battle out to do the same thing because of that theres excessive valuations, and the ipo market has some rational players in it. The ipo investor will not accept those companies at those evaluations. Valuations is that a harbinger of things to come when you think of uber or lyft . Is every one of these a different case you want to look at them one by one, but it is a harbinger of things to come we think some of the reason is the ipo market returns have been good for investors in the ipo market the issue is that the ipo market now is different than its been in past cycles right now the overall stock markets are trading at alltime highs. Yet the ipo market is a fairly rational place why is that . We think its because individual investors and advisers have abandoned investing in stocks. They are investing in indices. So that the Retail Investor<\/a> who might have been a part of the irrational exuberance that can build up in the ipo market is not there. We have a set of investors in the ipo market who are the smart players, institutions. Have you looked at uber and seen what the market right now values it at, the private equity market versus what you think it would be worth if it went public now . The last round for uber was about 70 billion close to 70 billion we know shares have trade well below that when they had these issues from an ipo perspective, i think lyft should move forward. You think lyft hshould go first . I think they would be smart to do that and i would because of the lower valuation the uniqueness of the business, i think investors are very interested in whats happening with the ridesharing economy. They believe there is such a business first to get to market will have an advantage . We think should thats typically the case in the ipo market you get the best price the idea that the Retail Investor<\/a> islooking at indexes. Is it fair to say theres not dumb money on the street anymore . Sefsh a smarter investor yes thats a very good point i hate to say theres dumb money, but its true when you look at the ipo market, if you jump in and put in orders at the open valuation its a better thing for the ipo market we see it in our etf products have performed well because we think the pricing has been good. One interesting example is so far this year the average first day pop of the 72 ipos done this year, less than 9 during the internet bubble those first day pops were between 0 a 50 and 70 . A perfectly priced ipo does what goes up a little every day. Not so much in a day . You have to figure out demand you talk about investors getting smarter, but what about the leaders of the Company Going<\/a> public getting smarter you look back at internet stocks, the pops, you say that ceo was stupid, you left so much money on the table i look at facebook, they sucked money forward the way it traded after it went public that is the smartest thing they could have done. Its smart to do, but its hard to do when you have a market of irrational exuberance. They could have priced those ipos higher. After the first couple they could have, but the banks were trying to reward their biggest clients and get them something cheap that they could flip were in a particular ket now where that aftermarket buying is not affecting that fast flip. We have the lock up on snapchat coming up that will be fascinating thanks. When we come back, President Trump<\/a> will be looking for cooperation on north korea and china later today when he meets with the president of south korea. Well tell you what to expect next and later the president s push to open Energy Production<\/a> in the United States<\/a>. We have an interview with the interior sector ryan zinke whoooo. Youre searching for something. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if there was a single site where you could find the right hotel for you at the best price . There is. Because tripadvisor now compares prices from over 200 booking sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Chances are, the last time yoyou got robbed. An, i know i got a loan 20 years ago, and i got robbed. Thats why i started lendingtree the only place you can compare up to 5 real offers side by side, for free. Its like shopping for hotels online, but our average customer can save twenty thousand dollars. At lendingtree, you know youre getting the best deal. So take the power back and come to lendingtree. Com, because at lendingtree when banks compete, you win. The power of 100 of the worlds top companies. The power of a proven 15year track record. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment<\/a> objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back youre watching squawk box live from the Nasdaq Market<\/a> site in times square. Good morning welcome back to squawk box on cnbc look at u. S. Equity futures at this hour. The dow looking like it would open 21 points higher. The s p 500 up by 3 points nasdaq off about 9 points as we get ready for the blue apron ipo. President trump will meet with the south korean president today. At the top of the agenda north korea and china. Joining us is james stravitas, dean of the Tufts Fletcher School<\/a> of business and an nbc news analyst he has a new book sea power the history and geopolitics of the worlds ocean. Great to have you here wonderful to be with everybody. The u. S. Has a new president , south korea has a new president. This south korean president is on the opposite side with how to deal with a lot of things with the United States<\/a>, how will this meeting go we should consider how this new south korean president got into office. It was a watergate like event. The previous president is incarcerated president moon kind of walked to a challenging domestic situation, trying to bring the country back together. That impacts the meeting with President Trump<\/a> in that moon needs to project strength, we have an alpha male president , he will be trying to project strength though disagree on some policy approaches to north korea. It will be a challenging meeting. When you say he came into the office because of the watergatelike situation, do i perceive you saying that this guy got evicted because it was an antivote against what was happening on the other side, when it comes to policy the koreans themselves are more attuned to the way the u. S. Would handle china not at all the South Koreans<\/a> want a diplomatic, economic approach to the North Koreans<\/a>. The americans, President Trump<\/a>, general mattis, secretary of defense are more interested in a very aggressive approach theres gobbing to a concept in how dwwe do that im surprised the South Koreans<\/a> are not more concerned i think were concerned because what weve been trying has not worked thats right. But the South Koreans<\/a>, its like ham and eggs the chicken is engaged the pig is committed if youre south korean, the missiles come flying and hit your country, so you really dont want to get in a shooting war. You want anything to resolve this yes so they are because its a binary situation. For them it really is all the polling, 80 of the polls in south korea say the South Koreans<\/a> want diplomacy, economics, engagement. That makes sense. Theyve been in this position of being in imminent danger for a long time. Its just coming to the point of being imminent danger for us now that it hit the u. S. Screens of the u. S. Decisionmakers, those decisionmakers are a bit up against each other President Trump<\/a> expressed unhappiness with chinas performance relative to north korea. Is he right to do that he is china has not just walked the walk they talked the talk given us the verbal signals and diplomatic signals that they will put pressure on north korea, and they have all the levers to do that. Why dont they . The ultimate objective is to keep the pa indianapoleninsula d they dont want to see korea unified. Theyre afraid if they put pressure on this young leader, kim jongun, hell fold and theyll wind up with a unified korean peninsula, which from a chinese perspective is not a win. Why because theyre concerned about a mras sieve economic miracle, like we saw in germany. Think of what happened when east germany and west germany came together you create a juggernaut in europe the chinese do not want a strong korea correct historically they dominated that peninsula. Theyre concerned about a luge free market economy next to them over time theyre so much bigger in every single way dont you have a strong region it is, but think about how china pushes on the smaller, weaker neighbors, including vietnam, the pill phonehilippins the chinese are playing the long game if youre playing the long game, why not worry about somebody being a Nuclear Power<\/a> outside your border. Im shocked more people in the region are not concerned about that indeed. Again, chinese says to themselves is how can we be the broker in this region . How can we control the 80 of slippi in shipping that flows through. We hear about the importance of saving face i would think when they see what the North Koreans<\/a> constantly thumb their nose at everybody, including the chinese, that theyre not embarrassed by their inability to contain this guy. No, because they have fundamental geopolitical objectives here which are different than those of the United States<\/a>. Its the divided peninsula you want to focus on people have come in here saying i like keyian stocks. I think you buy them now because its binary. Nobody can allow this to happen. If the worst Case Scenario<\/a> doesnt happen, everything looks cheap. I agree with that i think that the election of president moon adds to that theory significantly so what should the u. S. Do right now in terms of Foreign Policy<\/a> we should started with china. The administration is doing that we have to get china in the game secondly we have to get president moon on board with taking an aggressive Economic Policy<\/a> thirdly, we need to hedge against something dramatically bad happening. Thats missile defense, putting in the thaad Missile System<\/a> in the south. He doesnt want those things. He objected to the fact they were put in place without his department of defense telling him about it. I think youll see coming out of the meeting today, he will discuss comfort with the deployment of thaad. Thats the third critical thing we should do there thank you thank i coming up, pat toomey will have an update on the healthcare reform bill. We and bank stocks jumping after the fed approved plans to buy back stock and raise dividends well run down some of the bigger win sgleers and laners youre watching squawk box. Ta tune stay tuned well beack a bin moment. Stay d well be back in a moment. At johnsons we care about safety as much as you do. Thats why we meet or exceed 15 global regulations for baby products. And where standards differ, we always go with the toughest. Johnsons. Welcome back to squawk box. Opening arguments began yesterday in the fraud trial of Pharma Bro Martin<\/a> shkreli in court. His lawyer, ben brafman, said shkreli may be crazy, but hes definitely innocent. He also quoted lady gaga saying though he is odd, he was born this way meg tirrell asked him about that reference. Can you tell us about the lady gaga defense in there no, i think i said what i wanted to say in the courtroom why quote her so many times the quotes fit. With all of these lady gaga references, do you risch martin had more of a poker face im happy with martins face exactly the way it is. Thank you. Did you see his face . Yes he smiled. He liked the joke by the way, any of the courtroom drawings that meg has shown from these things, they have him drawn with a huge smile on his face. Yep brafman has done a lot of work for interesting people. Including michael jackson. That was one of his clients. We will get a live report from the courthouse later in the show time for the executive edge. The white house and Republican Leadership<\/a> have been insistent that tax reform must be comprehensive. Washingtons speak for changes to both individual and corporate taxes. That has Companies Like<\/a> tiaa and t. Rowe price and consumer groups worried that insent tcentives te for retirement might get chopped. Ylan mui has more. Retirement savings are worth about 5 584 billion in federal revenue through 2020 former representative jim mccurie said piggie bank is hard for lawmakers to resist. Retirement security pot of money is pretty big in the United States<\/a>. So if policymakers are looking for revenue to do revenue neutral tax bill, for example, its a lodge wagical place for t look hes with the save our savings coalition, that includes consumer groups and Financial Companies<\/a> you mentioned earlier. Theyre odd bedfellows but making their case today to lawmakers on capitol hill. Among the proposals theyre worried about, limiting deductions for 401 k s and ira, limiting the cap how many one can contribute and creating a new after tax universal savings account. The white house said it would preserve the 401 k deduction, but they are concerned there is wiggle room in those promises. 75 of workers in the private sector have access to a Retirement Plan<\/a> so lots of people could be affected by any changes to the system. Back over to you yeah. The ainbility to reduce the amon of taxable income you have because you can divert it to a 401 k is a reason people do it. Larry fink and others raised the issue that were not saving enough if you took tax policy away, i dont know what that would do. Disincentivize people to save and make them more reliant on other forms of savings which are questionable on whether they will survive at the same time, you lower the rate enough, people save it comes down to the idea whether the government should be using tax policy to incentivize. Anything. On any level. Thanks. Thank you. When we come back, senate gop leadership will be spending the Independence Day<\/a> break trying to convince colleagues to sign on to the healthcare reform bill pat toomey who is in favor of the legislation, he will be joining us next to talk about the changes that might be necessary to try to get the bill through. Right now as we head to a break, a quick check of whats happening in the European Market<\/a>s. The ftse is up the cac is down by three quarters of a percent. Thats extending the losses we saw a bit ago. The dax is down by a third of a percentage point sawbo is ing quk xgoto be right back rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network<\/a> to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. At crowne plaza we know Business Travel<\/a> isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. 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. Stocks to watch today, dow chemical and dupont reaffirming plans to close their merger in august they also announced plans to spin off parts of the company, combine the company within 18 months of the deal closing this despite what we heard from one activist investor who says he doesnt want that to happen shares of pier 1 tumbling after the Company Announced<\/a> a major miss they had revenues it of 409 million last quarter, 12 million short of expectations. The stock is getting hammered. H m posting a 10 increase in pretax profits, the company saying positive results thanks to continued expansion and tighter cost controls. That stock is higher by 1 President Trump<\/a> expressing confidence that republicans will get the votes needed to pass their much anticipated healthcare legislation joan jo joining us is republican senator pat toomey who worked on the legislation and is firmly behind it thank you for joining us today thanks for having me. You have been surprised by your colleagues reaction to the legislation . Not terribly surprised. Weve been having this discussion several times a day every day for many, many weeks now. I think we know wher everybody is no big surprises in that sense, but it has revealed what i think is a path forward. So hopefully well find a way to get this done. To those of us on the outside, it looks like the effort has been more and more splintered the more people hear about it, the more they read it, the more they get the cbo score so if you see a path to getting there, can you kind of fill us in on how that happens yeah, first of all, the cbo, weve discovered increasingly what nonsense it is. For one, theyre using a base line thats a standard of comparison and a set of assumptions that come from march of 2016, when we know so much has changed in the insurance world since then its extremely inaccurate. But putting that aside, heres what i think is the path forward. Our moderate members are concerned that were not going to spend quite as much money on medicaid as obamacare did and they would like to see us spend more money well, one area where theres a pretty broad consensus that we could spend some more money is addiction treatment. Because its hitting so many areas of our country so badly. On the other end of the spectrum, our conservative members want to see fewer regulations and more freedom, so that we can have a more competitive, lowerprice market place for individual insurance and i think there are some reforms that could still find their ways into this bill that will achieve that. So, look, im not pretending this is easiest. If it were easy, we would have been done many weeks ago, but i do think theres a path forward. We heard from mitch mcconnell, who the day before yesterday laid out, made some remarks at the white house who said, look, we have two choices. We can either come together as a party and pass this legislation or we can do it the other way, which is to sit down with the democrats and try and come up with a bipartisan approach on that he thinks that, obviously, the gop would be in a less of a pulled position to be negotiating some of the things it wants to see happen in that situation. Was this an olive branch to the democrats or more of a threat to the gop senators who dont sign off . I think its an honest warning, but its much worse than the way you just characterized it, because obamacare is completely failing. The individual markets are in a free fall. In my state of pennsylvania, 40 of pennsylvanians on the individual market have a grand total of one choice. Increasingly, there are counties across america where there are no choices so this is failing we can let it completely collapse and let people lose their insurance, so if we cant get this done, were going to have to turn to the democrats and theyre going to insist on an obamacare bailout throw a whole lot of money at it, no reforms, nutting medicare on a sustainable path, and that would be a terrible outcome. And a failure for the republican party. Weve made a commitment were going to get this job done, move health care in a consumerdriven direction instead of a governmentcontrolled direction and we owe it to the American People<\/a> to follow through are you frustrated, senator, that republicans are not more interested in dealing with medicaid i mean, when you look at entitlement spending in the United States<\/a>, most agree that this is where the problem lies when it comes to dealing with the budget down the road and the republicans have been championing that that is where we really need to control spend. So it seems very counterintuitive that that side of the aisle is now fighting for more medicaid spending look, it is frustrating youre absolutely right. Theres no honest person disputdisput s that all of our budget problems come from the big mandatory entitlement spending programs medicaid is now the biggest net spender on that list, growing at a completely unsustainable pace. And you know what were doing is were doing this in the most gentle and responsible way possible no one loses eligibility, no one gets thrown off, no money gets gutted from this program we slightly slow down the rate at which it grows eight years from now thats the right way to do it. But there is a limit to states for medicaid for the first time but becky, youre absolutely right. But for the first eight years, that limit is allowed to grow so much that its very unlikely a stay would bump up against it. Its only after eight years when we curb the rate at which it can grow, that were modestly bringing this under control. And we have to the alternative is a complete fiscal disaster. So if this pushes off any of those curbs, is there a chance that this legislation passes and that eight years from now, or six years from now, as that deadline looms, that congress picks it up again and says, wait a second, we cant have these severe cuts coming in right now. Theyre not severe cuts, its a slight reduction in the way the program grows. But if theyre bumping up against those limits and the state says, we dont have the money to fund that stuff is there a danger this gets unwound . Absolutely theres always that risk and thats why guys like me who are fighting to make this a sustainable program, were taking the risk that well be able to hold on to these reforms for eight years when, lets face it, everyone you know, every governor wants more money. Its great, free money coming from washington that he gets to spend. So all the pressure will be going the other direction. Senator, if this doesnt get passed, at what point do you wash your hands of it and try to move straight to taxes i dont know. I havent thought about that yet. Ting theres still a path forward. And i think, by the way, virtually every member of our conference wants to get to yes obviously, its much harder for some folks than others but we certainly havent given up senator toomey, i want to thank you very much for your time thanks for having me. Coming up, big u. S. Banks passing the second part of the feds stress test, gaining approval for stock buybacks and dividends. Stocks getting a big boost well give you the details next and show you whats happening in premarket trading and next, President Trump<\/a>s interior secretary will join us live from the white house to talk Energy Develop<\/a> on u. S. Lands. Squawk box will be right back. If you could book a flight, then add a hotel, or car, or activity in one place and save, where would you go . Expedia. [woman] we did it. [man] were campers. Look at us. Look at us. Its so nice to get out of the city. Its so. Quiet. Is it, too quiet . Its awful. Yeah. Feel at home, pretty much wherever you are. Tmobile is americas best unlimited network. Markets now, tech stocks in focus after the nasdaq has the best day of the year we have your trading day set up straight ahead energy ceos meeting at the white house. What it could mean for oil companies. And athletes and activism. Former tennis pro james blake is here to tell us about his new book and tell us all about his false arrest experience. The second hour of squawk box starts right now announcer live from the beating heart of business, new york city, this is squawk bo. Good morning welcome back to squawk box right here on cnbc were live at the Nasdaq Market<\/a> site in new york city new york city joes got the day off. Take a look at futures right now. Dow is up, as is the s p 500 nasdaq looking off a little bit this morning dow up almost 28 points. S p 500, a little over 4 points. And nasdaq off about three points lets get you caught up on whats making headlines at this hour President Trump<\/a>s travel ban taking effect today, amid some uncertainty over exactly how its going to be implemented that ban allowed to go ahead on a temporary basis after the Supreme Court<\/a> agreed to hear the white houses appeal of lower court rejections the ban applies to travelers from six predominantly muslim countries, but exempts those who have a relationship with a person or entity in the United States<\/a> speaking of travel, enhanced security at airlines measures taking effect today or actually rather within the next three weeks. According to u. S. And european officials, they will apply to flights arriving in the u. S. From 105 countries the measures do not expand the ban on laptop computers. A lot of people talking about that, but will involve more extensive passenger screenings and if youve got a dollar and a dream, dont bother to pursue it in illinois. Because an ongoing budget dispute, the illinois lottery has now stopped selling powerball tickets because it wouldnt be allowed to pay out prize money. If no deal is cut today, the states lottery will have to stop selling tickets for another multistate game, mega millions. So if joe is here, he would say, youre never supposed to play anyway becky and i like to play because if youre not in it, you cant win. Thank you exactly and youve got to have a dream got to have a dream. Speaking of dreams, blue apron pricing its ipo at 10 a share last night thatses the low end of the reduced range and well below the estimates of 15 to 17 a share. Blue apron is valued at about 1. 9 billion just two years ago, the company was valued at 2 billion in a private fundraising round analysts say potential investors were concerned about blue aprons marketing costs and possible customer turnover the company will trade on the New York Stock Exchange<\/a> under the ticker aprn. I think last hours discussion with Renaissance Capital<\/a> was very interesting she think this trades pretty well because they finally got it down to a price more reasonable have you tried munchery. I love munchery and use it several times a week but thats not like blue apron, because they bring you the food munchery its already cooked and you can order two hours in van blue apron i found was very unflexible you have to cancel its a subscription model, not a permeal model and you had to cancel way too far in advance based on our lifestyle of you never know whats going to happen i still got to figure out which is the one that has the tom brady diet Tom Brady Gisele<\/a> diet im sure google knows i will ask google or alexa. Wheres alexa when you need her. Purple carrot the control room dave rooney coming up with purple carrot. Lets get you caught up also on a big courtroom drama taking place downtown opening arguments began yesterday in the fraud trial of pharma broth, Martin Shkreli<\/a> in court, his lawyer says, shkreli may be crazy, but definitely innocent. He also quoted lady gaga, saying that even though hes yodd, he have born this way can you tell us about the lady gaga defense in there i think i said what i wanted to say in the courtroom. Reporter why quote her so many times i think the quotes fit. Reporter with all of these lady gaga references, do you wish martin had a little bit more of a poker face i am happy with martins face exactly the way it is. Okay thank you. Were going to have a lot more throughout the day on that case its own soap opera taking place its a reality show in the morning, people are getting ready, they may not be looking at the screen, the next time we play that video, you should look, because what happens to Martin Shkreli<\/a>s face as he asks that question about poker face, he obviously doesnt have one he starts to grin in a big way its funny prior to this, he represented Jared Kushners<\/a> father, michael jackson, puff daddy. Is puff daddy still called puff daddy . I dont know. Salvatore sammy the bull so hes got a real list there of controversial individuals. Controversial individuals breaking news just out from walgreens and riteaid. The two sides have replaced their merger agreement with a new pac that involves walgreens buying 22 hurkz stores from riteaid. Walgreens will pay 22 billion in cash from those stores cancels a divestment to exchange riteaid stores to freds this is the week we were expecting an ftc decision. Freds was going to be buying 850 stores, because they would be required to divest 1,200 riteaid stores in order to get this deal done that was already the expectation going into this. There had been questions as to whether or not freds would be able to come up with the 950 million in cash. Freds just wednesday put a shortterm shareholder poison pill plan in place to try to thwart any takeover events whale this thing was happening that stock is now down 10 again, this would have made freds the third biggest of the Pharmacy Companies<\/a> that are out there. So this is going to be really interesting to watch action in this stock today and action around the other two, as well it comes as a bit of a surprise. The ones theyre going to be buying are mostly in the northeast, the midatlantic and then in the southeast. So up and down the eastern seaboard those will be the properties the that walgreens is picking up under this alliance. They say that they expect it to be accomplished rather soon. And they expect it to be accretive to walgreens lets see, they expect it to be accretive in the full first year after the closing, in terms of adjusted earnings per share. Got it. In the meantime, 34 of the nations largest banks are getting the green light for buybacks and dividends Kayla Tausche<\/a> joins us now with the Financial Stress<\/a> relief and some big gains for many of these banks as a result, kayla and for many of these companies, a longtime company. This is the first time the fed did not object to one of those capital plans since the financial crisis the fed saying seven years after these stress tests were put in place, the banks now finally is have sufficient capital and can give all the money they earn back to shareholders there was one bank the fed did find some issues with. Capital one passed conditionally, meaning it has to resubmit its plan to the fed by the year end to show improvement in its risk management, but it can go ahead with its plans in the meantime for that reason, capital one was conservative in its announcement it said it would lower its buyback plan and keep its dividend unchanged that was the only one. Jpmorgan announcing a 19. 4 billion stock buyback program. Thats the largest by a bank on record and it edged out a record that had been set yesterday, just minutes earlier by citigroup, when citi said it plaped to repurchase 15. 6 million in shares. And and and citi doubled its dividend. But its still below the payout before the financial crisis happened the 34 banks announced capital plans that represented large rises. Of the companies that announced specific rises, about 28 on average. A senior fed official said banks will now be able to pay 100 of net earnings to shareholders that compares to 65 last year so becky, for investors that were waiting for those payouts, they waited with bated breath, yesterdays announcement must have made them happy, although there are critics who say perhaps this isnt the right piece of capital well see. In the meantime, weve been looking at these stocks and they do look like they are significantly higher once again this morning kayla, thank you so much, Kayla Tausche<\/a>. On todays agenda, there are a pair of economic reports and plenty of bigname earnings, as well weekly jobless claims are out at 8 30 a. M. Eastern time that comes along with the third and final estimate on First Quarter<\/a> gdp. Groe growth is expected to remain unchanged. Also, st. Louis fed president James Bullard<\/a> is speaking this afternoon in london. And joining us now to talk markets and how the banks capital plans could play out for stocks, joining us is hands olsen, the head of Financial Strategy<\/a> at stifel and steve reece is here, global head of equity strategy at Jpmorgan Private Bank<\/a> good morning to you. Good morning. Help us did you think that the stocks were going to rally the way they did . And did you think the capital plans were going to be as aggressive as they are well, theres been some talk that the fed was going to be taking the regulators were going to be taking a much more accommodative position towards the banks, give them some relief and that kind of relief, i think it would manifest itself in a good move in the sector. Right i guess the larger question is, where are we in the cycle . So is this the move has the move been made or is there no, banks still lag on a yeartodate basis we had very High Expectations<\/a> for the ccar heading into it we upgraded the sector back in march and we were pleasantly surprised to the upside. You had companies doubling the dividend, doing record buybacks. And the stocks, theyve recovered in the last week, but theyve still lagged on a yeartodate basis so how much more movement do they have . It really comes down to the erp earnings, and the earnings will be driven by Interest Rates<\/a>, driven by deregulation, and you have the capital return thats going to reduce the buybacks and your dividend. So i think well see banks opening up to income investors youve got yields now at 2 , 3 . Thats going to sort of open up a new buying base. It really comes down to the Earnings Growth<\/a> hands has me worried were towards the end of the cycle here, though is that what your trying to suggest . I think the thing is, when you look over what, the last 72 hours or so, youve had the ecb, the bank of england, and certainly, the ongoing narrative from the Federal Reserve<\/a> is suggesting twha ining that we ae beginning of sort of a more unified monetary pivot, from much more accommodative policy to the beginning of normalized policy and you certainly get that with shrinking the Balance Sheet<\/a>. If this continues to play out, right . If its not a feint, traditionally, were about eight years into this rory, this is the third longest on record, you know, its getting long in the tooth. And one has to start, you know, being you have to be on the front foot and you have to start thinking about the cycle basically turning. It sounds like, dont fight the fed, in other words. Yeah, dont fight the fed all over the world, basically. Right, you were in a sea of liquidity. The tide seems to be going down, now. But the economic imbalances arent there valuations are a little high, but theyre not stretched, and the Earnings Growth<\/a>, were going to kick off the Second Quarter<\/a> earnings season, i think its going to be really good. Plus, you still have the benefit from potential tax reform in 2008, which were not giving up on i think its too early to step away from u. S. Markets yes, i think weve got most of the return weve expected for the year, but look at financials, look at technology, look at health care. There are still pockets of value and theres still an upside case so just because you see future strength in the financials, you know, historically you look at the financials as, theyre one of the leaders of the market. If the financials are moving higher, the overall market moves higher and people have forgot the effect of higher Interest Rates<\/a>. We havent seen that in years. Decades we havent seen deregulation. We havent seen a real pickup in growth globally. So i still think there is that upside case to earnings, which is really how you have to play the market here with the valuations where they are. It is interesting to note, this notion about regulations is just fascinating, because thats where the real relief can come if you look at productivity in the United States<\/a>, if you look at capital investment, and you lay that over the growth in the cfr, which is the code of federal regulations, its compelling cumulatively, youre looking at 1. 4 million regulations sitting on top of the commercial landscape. That has a depressing effect on productivity if you get any relief we are getting relief the ccar, which are rolling back without anything from the white house. They have done 17 different votes in congress which have reduced thousands and i think youre going to hear that from companies when they start to report in the next year youll hear a positive tone coming from the Banking Sector<\/a> and a relieved tone coming from the income sector. But then your case that were towards the end of a cycle would suggest maybe we have some more room to run. Which is the larger point is how do you get the economy back to, closer to a 3 growth rate and the conversations revolve around population growth, revolves around investment and the like but the core of it is, if you make it difficult for companies to invest to capital reform, to commit the capital, because they dont know the rules or the rules are too onerous, they dont do it, right they buy back their stock and pay off the dividend and that comes at a cost and the cost is growth thank you, guys great to see it cra is the Congressional Review Act<\/a> theres Nothing Better<\/a> on a hot summers day than a cold beer, right . Landon dowdy has the story behind the beer stocks and the summer sizzle. Good morning. The saying goes, sell in may and go away. But now may may be the tame to buy ahead of a july 4th holiday. At our partners with kensho, we found historically beer stocks sizzle from june 1st through the end of september, far outpacing the s p 500. Constellation brands soaring at 17 on average molson coors serving up an average return of 10 . Both of those trading positive 100 of the time boston beer gaining more than 6 on average ab up 4 and all of those compared to the s p 500, up a little less than 2 on average. And a large part of it is the significant seasonality of beer sales with the summer months contributing an outsized portion of beer volume for the year. The summer months are also a way to get good visibility into a companys jourunderlying busine, particularly the track of popularity or new or seasonal launches so, michelle, as you stock up your fridge for the fourth, it may be the perfect time to stock up your portfolio with the same. Guys, back over to you landon, cheers. Thanks when we come back this morning with morning, the importance of diversity and Business Organization<\/a> at 7 30 this morning, American Petroleum<\/a> institute ceo ja jack gerard will be meeting us from washington. And later, pro tennis player james blake is out with a new book well talk about athletes and activism and his own personal experience in isth arena stay tuned youre watching squawk box right here on cnbc we asked people to just go about their day to try a new feature from match. So sara, what did you do today . I grabbed a coffee. Yes, you have to do that. And then i checked out a new art exhibit. So now, you have the match app up open up the missed connections tab for me. Okay. It shows you people youve crossed paths with in real life. Oo, i crossed paths with josh near pine street. Maybe he was at the gallery . Maybe he loves art . Imagine what else you have in common. Hes cute. Id like to find out im on the edge of my seat. Match. Better ways to make a real connection. Start for free today. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Welcome back to squawk box this morning take a look at the futures right now. Dow and s p 500 looking up and the nasdaq has turned itself around as well nasdaq had been in the red a little bit earlier today and the dow looks like its move higher as well about 37 points higher and s p 500 looking to open about six points higher. This morning kicks off Morgan Stanleys<\/a> multicultural leader conference. The vice chairman of Wealth Management<\/a> and senior client adviser at Morgan Stanley<\/a> joins me now youre starting something called things Morgan Stanley<\/a> Multicultural Innovation Lab<\/a> yes what is that . Im very excited about that this is an accelerator for multicultural entrepreneurs and women entrepreneurs, wales you need to be multicultural, a woman, the founder or cofounder or cto weve identified a huge market inefficiency less than 3 of intercapital dollars going to multicultural entrepreneurs. We want to provide capital, content and connections to help accelerate their growth. Why do you think theyve been overlooked they traditionally have not been in some of the traditional circles it takes to get into vc. And they have not had access to the Angel Networks<\/a> with sob part of it is a lack of visibility. Part of it is a lack of having those networks and if you can raise the level of visibility, hopefully you can attract the capital to these entrepreneurs. What do you think of what happened at uber well, i dont want to make a comment on that, because i think there are lots of things that happened there but i think with respect to these entrepreneurs, they have highgrowth ideas, very good ideas. People say all the time, they cant find em and with very little effort, going out on the market without broad marketing, we found well over 100 entrepreneurs in five spots. So that argument that you cant find em doesnt exist so, for example, i dont want to say which companies weve chosen, but theres a Great Company<\/a> that focuses on facial recognition. Theres a Great Company<\/a> that focuses on plain language with respect to how it impacts your ability to invest. Theres a Great Company<\/a> that will revolutionize the way we develop, as women, in corporate vir environments, at your fingertips, for example. So Great Companies<\/a> carla, do you think the end result is still who you know and how you move up in the world i think who you know does matter, but thats a huge reason we want to play in this space. Given our global reach, we know a lot of people. Institutional networks, family, offices, High Net Worth<\/a> individuals. So we can help the who you know problem. Because, yeah, thats certainly part of the issue, becky when you say its the who you know thing, but why do you think its not the who you know. To the extent, is it a its not a skills gap, be what i was going to say on the who you know piece is how do you actually get to know them just through this network . Part of it is our reach and who we know with respect to who we know institutionally and who we know as individuals and i think that weve been able to tap into that market, because we do have a focus on multiculture clients and multicultural strategy. Because we have those relationships and networks, we can reach there and find those entrepreneurs. I think people do it digitally. And you will be able to do it digitally. In fact, one of the companies that weve looked at will give you that capability going forward. And today, one of the things were going to do is present a pan of multicultural entrepreneurs, which was the hit of the conference last year. You asked me about that, andrew, last year. I told you i would report on it. And ill tell you, that was one of the top panels that we had. And in fact, there were corporates in the audience that ended up doing business with some of these multicultural entrepreneurs. Therefore, scaling their business now, you have to ask the question, would they have been exposed to these entrepreneurs, had it not been for their attendance at this conference last year . Im really excited about the business that could come out of todays conference marks are at new highs. How are your Wealth Management<\/a> clients feeling . Positive they ought to be in a good move. People are feeling pretty good about the market environment. Theres nothing to tell you that theres going to be any interruption of corporate performance, really. Clearly, theres still some uncertainty in the market, but overall, i think people are positively constructive, let me say that and so what are they deciding when it comes to allocation and the opportunities that you provide . Are they going u. S. Equities, going overseas what are they doing . We certainly have been recommending continued involvement in the u. S. Market, as well as the European Market<\/a> in particular. Thats certainly what our economists and our strategists are recommending are they as interested in alternatives, like uber, which you guys helped out with i would say theyre interested in the u. S. Equity markets, michelle. As well as the European Market<\/a>s. And europe in particular, looks as if it is positioned for, you know, a good run here. Yeah, we had a guest on earlier this morning who suggested the exact same thing so well, carla, its great to have you on. Really appreciate it thank you were excited about it and a quick programming note. Melissa lee will sit down for an exclusive interview with Morgan Stanley<\/a> chairman and Ceo James Gorman<\/a> at the companys multicultural conference on the closing bell today, 4 00 p. M. Eastern time okay, coming up when we return, acpas Energy Secretary<\/a> jack gerard in washington today. Take a look at oil at this hour. Well show you some wti crude right now at 45. 21 as we head to a break, take a look at u. S. Equities future we are in the green across the board. Back in a moment what do you think shes reading . Reading down on times square on a lovely morning good morning welcome back to squawk box here on cnbc were live at the New York Times<\/a> market site the merger between walgreens and riteaid has been called off. Now instead walgreens is going to buy about 2200 riteaid stores the cancellation of that deal negates the sale of Rite Aid Stores<\/a> to another chain, freds. The stock option is much more conservative than the kneejerk reaction we first saw. Freds is down by 23 this morning. Thats because freds was set up to buy 865 stores. Ed after this, that would have been had to be divested. They were going to have to divest about 1,200 riteaid stores freds was planning on buying that with 950 million in cash there were questions about whether they could come up with that amount of cash. In the meantime, they put in a poison pill yesterday to prevent a takeover, because they said they knew there would be some stock volatility around any decisions like this. But that is a pretty swift setup for this and clearly the divestitures that were going to have to be done because of what they perceived to be issues with the doj, which goes back to the whole thing weve been talking about, the way the doj looks at retail, is it antiquated are we going to look back at this and say, they should have done it. And amazon is going to come in and be providing so much of what these others do because the way it was set up. Walgreens, number one, riteaid number two freds was set up to be number three. But it would be really interesting to see what market share amazon has out of Something Like<\/a> this. And when you read or even walmart and when you read the oped page today of the wall street journal, they point out that the intervention of the doj did when it came to the supermarket sector and its now the supermarket sector weakened, and therefore a very strong amazon able to exert so much more power, because of divestitures that were forced within the supermarket industry, as well. So does whole foods have any drugstores does whole foods have any drugstores not the once ive been in i dont think so, right im just thinking whether these folks are all about to be amazoned when this is all over the drugstores . I think so, yeah look, they do so much of the same sales the stuff in the drugstore, theyre making a lot of money on is a lot of times the front end of the drugstore im wondering if you get the pharmaceuticals going, what happens . Amazon wants to sell everything to everybody, so it wouldnt surprise me if they move there thats complicated trying to do prescriptions via the mail. Think about the opioid problems were having, how were talking about how thats a massive problem. If youre sending drugs through the mail my pbm has almost essentially forced me to move to mail. And theres a company in new york city now that is just one big messenger service. That just brings it directly from yeah, in an hour or two, theyll bring you the pharmaceuticals. Is that cvs caremark thats forced you into these are not drug dealers. When you look at the structure of the way you eventually you want to pay more if you want to show up you can go to a cvs and get it, but if its a longterm yeah, exactly, 90 days and blah, blah, blah ill get to name that company in just a second but in the meantime, a key Earnings Report<\/a> ahead this morning with dow component nike is going to be reporting after the bell heres whats expected nike to report profit of 50 cents a share on revenue of more than 8. 6 billion. Those are the numbers to beat. Nike shares have languished over the past year and made some concerns about increasing competition. And we cant get away from it. Amazon has announced its going to hold its third annual prime day on july 11th the event begins at 6 00 p. M. The prior evening. Expanded to 13 countries this year, adding china, india, and mexico part of a push to get more people to sign up for prime. The Company Offering<\/a> free trials of the service for that day. The fed clearing capital plans for 34 of americas biggest banks. The move prompting many of them to immediately announce new dividend increases and buybacks. Among the highlights, citi doubling its Quarterly Dividend<\/a> to 32 cents a share and announcing its biggest buyback ever jpmorgan announcing its biggest buyback ever and Morgan Stanley<\/a> announce plans to raise its dividend 25 to 25 cents a share. Bank of america announce a 12 buyback. Shares of all the big banks moving higher. This is premarket trade, so gains of 3 and 2 across the board there. I want to show you whats going on with the euro, as well, which is now at 1. 14. Its been a pretty sharp mover the last two days, as a result of what mario draghi said two days ago and even though there were leaks from the european straggle bank, trying to walk it bag, you still see the euro powering higher at this point President Trump<\/a> set to speak today on what the administration is calling u. S. Energy dominance. His energy and interior secretaries and the epa administrator writing this week that includes getting government money out of the way and pushing for an all of the above Energy Strategy<\/a> joining us right now the jack gerard, the president and ceo of the American Petroleum<\/a> institute. Jack, what does this mean in laymans terms what should we expect . What i expect today as the president promotes energy once again, as you mentioned, he uses the word dominance he wants to take advantage of the renaissance weve experienced 19 last decade here in the United States<\/a> and i expect today hes going to touch on our even greater potential to export both lng and crude exports since 2010, we have doubled our exports in the United States<\/a> and the real value here is we create domestic jobs, these are highpaying jobs we build domestic infrastructure and were allowed to capture the global market. So were optimistic with the president s leadership as he makes energy a centerpiece of his Economic Recovery Program<\/a> that were going to have some ore opportunities. So were angst to hear what he has to say today jack, are we actually importing how much oil do we import in Barrels Per Day<\/a> . Its down significantly, down to less than 30 overall there is still some import taking place, but export wide, we set a record in february of this year with over 1 Million Barrels<\/a> a day of crude oil and thats unique, as you know, it was only a couple of years ago that we were allowed to do that, after the congress with great wisdom looked forward and said lets lift this wan on exports. This allows us to not only impact the global markets, but allows us to create those jobs here at home as we find new markets for our product in a cos costcompetitive way lets talk about that the reason we banned the export of crude is because we wanted to make sure we were using everything we could ourselves rather than being reliant on the middle east or anywhere else to try to bring our energy needs in we wanted to make sure that we had more of an America First<\/a> sort of policy for a that perspective. Its interesting to see how that has kind of changed. Can you do those things, National Security<\/a> and selfdetermination and also have exports going out at the same time absolutely. In fact, what it allows us to do is opens up a freer market object global scale. All you have to do is look at the gee owe Politics Around<\/a> the world today. You watch what opec has been doing, watch what other producing nations have been doing, and thaeyre having to react to our ability here in the u. S. It was really driven by our Technological Advancements<\/a> with fracking and drilling where many people will be surprised to know the u. S. Is the Number One Oil<\/a> and natural gas producer in the world. And its changed those geopolitics such that it benefits our National Security<\/a>, it benefits our domestic economy and and now we have many friends and allies around the world saying, you know, we would like to wean ourselves off those other nations that have been providing this energy and we would like to work with the United States<\/a>. It was Just Announced<\/a> recently, gary cohn, the National Economic<\/a> adviser to the president said one of the first shipment went into poland. And as the president travels over to europe and around, there are many nations saying, look, give us your energy. Lets work out our Energy Relationship<\/a> and i believe it will help secure us from a National Security<\/a> perspective well into the future i guess the goal is to do two things first of all, to not artificially hold back Energy Prices<\/a> you dont want to see the spread between wti and brent get too broad. And that way it allows us to produce more without the prices coming down so significantly that we have to cap some of the wells. Is that the whole point . Yeah, thats the hope and expectation. As the market becomes more free on a global scale, youll see that spread continue to close. And its closed significantly, as you know, over the past half a dozen years since weve been producing so much here in the United States<\/a>. But in the global context, once again, the real beneficiary here are customers. Look at the United States<\/a> today, aaa estimates the average consumer saves over 550 a year at the gas pump because that vast supply has put downward pressure on a gallon of gasoline its also estimated, the experts say, that every family now saves over 1,300 a year just in their home heating and cooling costs so you couple that with job creation, opportunity to build infrastructure, recent studies shows in our industry alone, over the next dozen years, theres a potential trillion dollars, thats a t, 1 trillion in private investment, just to build Energy Infrastructure<\/a> so as the president focuses on this and he gets rid of the unnecessary barriers, if you will, to freeing up our economy,ic were going to see some great things happen in energy and its a great benefit to the American People<\/a>, to american industry its bringing our manufacturers home its a win, win, win all the way around so were pleased his focus has been on energy we look forward to hearing great things today hey, jack, thank you for joik us oday. Thank you, becky, always good to visit with you. Coming up, retailers are having a tough year. Now it looks like some budget cuts proposed by the Trump Administration<\/a> could make it even tougher for the sector. Details up after the break and later, athletes and activism former tennis pro james blake out with a new book on why athletes take on social causes this after he was tackled by a Police Officer<\/a> he will join us in just a bit. Squawk box right back. Now for todays aflac trivia question which three president s died on ly 4th the answer when cnbcs squawk box continues i thud go to the thothpital. There goes the airfair. I dont think Health Insurance<\/a> will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management<\/a> firms in the country. Discover how we can help find your unlock. The answer to todays aflac trivia question. Which three president s died on july 4th the answer, john adams, thomas jefferson, and james monroe. Welcome back to squawk box this morning a couple Retail Stocks<\/a> to watch this morning shares of pier one tumbling after the retailer announced a major miss a full 12 million short of expectations and stamples is going private, being bought by Sycamore Partners<\/a> for 6. 9 million. Its the largest leveraged buyout this year i wish we could show a stock chart of staples for a longer period, because theyre almost getting it on sale its a bit of a discount, if you know what i mean its been a long, sort of tortured story becky . As if retail wasnt having a hard enough year, the Trump Administration<\/a> budget proposes big cuts to s. N. A. P. Or the Food Stamp Program<\/a> sale a number of retailers, grocers, and other stores count on. Courtney reagan joins us with a look at how the retailers could be hit by this the retailers are relieved the tax adjustment may be off the table. But the budget includes a bigger tenyear 190 billion cut to the food stamp benefits, and that should make foodselling retailers a little nervous retailers dont normally divulge the food stamp sales, but Alex Partners<\/a> has some estimates given exclusively to cnbc so we can quantify it. The retail consultancy says the proposed cuts could result in a collective 70. 7 billion sales declines in over a decade. Superstores and supermarkets account for over 80 of all the redemptions. Thats the group thats the most vulnerable, standing to lose 57. 5 billion, especially the biggest super center of them all. Alex partners says walmart gets 18 of the food stamp redemptions. So at the current rate, walmart would see a 7 billion hit to sales over seven years funding redemptions will hit target second hardest. The biggest grocer to get hit is lowpriced german player, aldi Alex Partners<\/a> estimates a 4. 4 to 4. 9 billion hit to its annual sales kroger will see a sales loss of 3. 6 to 3. 9 billion and searsowned kmart will see a hit of 1. 9 billion. Some other disposable income will get diverted to pay for food, so there are ripple effects beyond retail. The retailer have definitely had a tough time but 70 billion is a lot of money. I dont dispute that over ten years. But its a little bit of a relief that it actually isnt that much. U. S. Retail sales in just one month, 473 billion, in a month. So 70 billion spread over ten years doesnt sound like, walmart, 12. 7 billion over ten years. They did 485 billion last year, right . So the percentages are pretty small. Thats excellent context. I think the one thing that some are a little worried about is what if we go into an inflationary environment what if gas prices go higher and then there are other hits. What if Health Care Costs<\/a> go up. And those are some other compounding worries to the situation, but the context is important. The interesting part, stuff from other things will get diverted if these are core staples, that money might get replenished, but its the other Discretionary Income<\/a> that gets taken away. Thats right. When we spoke to people about it, consultants said its really hard to know exactly which categories get pulled out of it. Its often a little bit from everything so you could see some ripple effects that are maybe harder for us to put our finger on, but something to watch over time thanks, courtney. Thanks. The trump budget plan putting a spotlight on the Food Stamps Program<\/a> joining us now is Rebecca Valles<\/a> with American Progress<\/a> good to have you here. Thanks for having me. Tell us what you think about the proposed cuts when you look at the two competing versions of the gop plans . Well, i feel like some great points have just been made i think a lot of people have focused how important nutrition assistance programs like food stamps are for struggling families when wages arent enough or when they lose a job but its also a significant part of retailers bottom line, which is something worth keeping in mind when we think of impacts not just on families but also on the economy. And a big part of why that is is because every dollar spent on food stamps actually translates into almost 2 in economic activity, when families are spending their food stamps dollars in stores and their communities, theyre putting that money right back into the local economy. Well see if these Food Stamp Cuts<\/a> that trump has proposed, which is equivalent to almost a third of the entire program, really massive cuts, were going to see families not just stretched even further, trying to put food on the table, but also to the economy. The Multiplier Effect<\/a> you cite, rebecca, is one thats almost always applied to any kind of Government Spending<\/a>. When people want to cut the defense budget, people say, what about all of those defense jobs and the Multiplier Effect<\/a> there . What federal Government Spending<\/a> does for a particular business isnt really necessarily relevant to the underlying question of whether that dollar should be spent in the first place as part of government outlays, right the second order of consequence on a retailer lake waike walmar shouldnt necessarily be part of your thinking. Is the s. N. A. P. Program effective . The s. N. A. P. Program is incredibly effective not only does it promote poverty cuts in the shortterm and it mitigates hardship for families who are struggling when wages arent enough or when they lose a job, it also promotes economic mobility in the longterm. It helps kids cognitive development, helps them thrive at school, and it also promotes improved employment outcome in adulthood. Its incredibly important in the shortterm and in the longterm. Its a conundrum we have discussed on the show a lot, which is, there is a high correlation between poverty and obesity for some reason pch and theres a high correlation between s. N. A. P. Program participants and obesity, higher than the regular population, than the rest of the population. Do you want to subsidize food when obesity is the problem . Its a question weve grappled with here. What do you think . Its such a great question, and it really plays on actually sort of a myth thats out there, that somehow, poverty is about bad choices or that people who are receiving nutrition assistance are making bad choices with the food. Actually, a study by the u. S. Department of agriculture makes very clear that families that turn to nutrition assistance dont make choices with their food budgets that are all that different from families that dont need to turn to nutrition assistance so actually, Research Shows<\/a> that if what were interested in is helping families make healthier food choices and helping families be healthier i read that same study. And i agree with you, the general conclusion is that its very similar, but the second most purchased item was sweetened beverages, which was a big overindexing on the part of people who are in s. N. A. P. Versus people who are not. I mean, were talking about limiting how much soda you can buy in new york city for the last couple of years would it be better to say, you know, you cant buy alcohol, you cant buy tobacco, maybe you cant buy sweetened soda when youre on s. N. A. P. The study were both referring to actually found that sweetened beverages were a large part of not just what was purchased by families who turned to nutrition assistance, but also other households, as well so not a difference there. But i think its important to know that Research Finds<\/a> that actually, boosting nutrition assistance benefit s for familis is the best way to help them make healthier food choices, because healthier food can often be more expensive than junk food that can be a lot cheaper and that can lead to that obesity that youre talking about. Rebecca, thanks for joining us thanks for having me. Okay. Coming up, when we return, a false arrest inspired former tennis player james blake to pen a book about athletes and activism hes going to join us right after the break to discuss and then at the top of the hour, secretary of the interior, ryan zin zinke will join us to discuss the administrations energy etg thomofheeoofeck woos meinwi se t cs the nations Biggest Energy<\/a> companies. Squawk box returns in just a moment Flexshares Etfs<\/a> are built around the Way Investors<\/a> think. With objectives like building capital for the future, managing Portfolio Risk<\/a> and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment<\/a> objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. A used car, the future isnt silver suits anits right now. S, think about it. We can push buttons and make cars appear out of thin air. Find love anywhere. Hes cute. And buy things from, well, everywhere. How . Because our phones have evolved. So isnt it time our networks did too . Introducing americas largest, most reliable 4g lte combined with the most wifi hotspots. Its a new kind of network. Xfinity mobile. Welcome back to a busy times square this morning. James blake is here. His false arrest in 2015 made national headlines, shining a light on the issue of Excessive Force<\/a> and providing inspiration for his new book we want to bring him into the conversation right now james blake, former pro tennis player, who is now author of ways of grace stories of activism, adversity and how sports can bring us together. James, we want to thank you for being here pleasure. Thanks for having me lets talk about how this book came about and those headlines. Yeah, obviously, it was an unfortunate day, i never would have thought Something Like<\/a> that would have happened to me or should happen. And that is what got me thinking about it, was, i dont want this to happen to anyone else an athlete, you try to kind of brush things off and say, im tough, i can take it so i wanted to not think about it but i thought about, what if this happened to someone i love, someone i cared about. And i wanted to stop it and speak up for those who dont have the same voice i had. I was fortunate to have a lawyer who could help me, an agent who could help me find out who these officers were and luckily, there was a video. If there wasnt a voob wiideo, n this whole case would have been much different you were standing there waiting for a ride to the u. S. Open yeah, which seemed as basic as could be with the story they told and luckily the video showed that i was telling the truth and the cops had said that there was i wasnt in cuffs and it happened in less than two minutes and they were investigating whether there was Excessive Force<\/a>, got shown to be inaccurate but if it wasnt for the video, they probably would have stuck to that story and i wouldnt have as credible as i am, against five cops. You resolved the claim. Resolved it, yeah, just last week are you happy how it was resol resolved im very happy with how turned out with the city of the networks they started a fellowship. Therell be two threeyear fellows who will help try these cases coming out of law school so more than 50 of these kind of cases, last year, didnt reach conclusion so people lost interest, didnt have the funds to hire a lawyer or whatever happened did they try to fight you how did you get to that settlement how hard was it . There was compromise and it took two years, which from what im told, dealing with a bureaucracy in a city as big as new york, is actually quick. How quick something happened in two years. But on the other front, we were fighting to get a disciplinary hearing from the officer himself. That has not happened that happened without as much success. I never found out what happened. They kept adjourning the hearings when i was trying to come here, i was going to fly from california to be at the hearings and they kept adjourning them and made a settlement and havent told me what happened. Did you try to hold out in terms of your own settlement relating to that, though no, i was just trying to get that done and accomplished as quickly as possible. I wanted to get a settlement because i never had any intention of suing the city, of getting of personal gain out of this incident im fortunate enough to have made a living doing something i love, so i didnt feel like it was appropriate for me to try to increase my net worth on something that was that i can use to help others instead of helping myself how did you go about finding and talking about the people in this story youve written a memoir before, but this is different. It was a totally different book writing experience than before it was writing about myself and my story and about other stories that inspired me and inspired so many others, and talking about the landscape of activism and how much athletes can make a difference in society. And how they can make a difference for a positive effect and theres so many stories, negative stories about athletes these days and i wanted to show, theres a lot of positive stories. There are a lot of ways that athletes can do the right thing in this world. It was just something that meant a lot to me. And i kind of interwove a few of the stories about myself and billie jean king. Probably my most inspiring to speak to in this ive known her for a long time, but i learned even more just talking to her about this book it was interesting to interview someone like her and find out how much of a difference she really made on womens tennis and tennis in general. Shes such a trailblazer james blake, the book is ways of gce tnkra,ha you thank you when we come back, Scott Sperling<\/a> is joining us for the hour utensils, even made custom donut cutters. Wow all with points. Thats how i created the ripple the doughnut in a doughnut in a doughnut. Suddenly its everywhere. I mean, it really took off. What will you create with your points . Learn more about the ink business preferred card. The energy agenda. President trump pushes America First<\/a> policies in the industry a first on cnbc interview with interior secretary, ryan sizink, straight ahead blue apron pricing its ipo at the bottom end of the range plus, a milestone for the iphone today apple is going to reinvent the phone its been ten years since apples flagship product hit the shelves. Well talk about whats ahead for the tech giant, as the final hour of squawk box begins right now. Announcer live from the most powerful city in the world, new york, this is squawk box. Good morning welcome back to squawk box. Were live as the Nasdaq Market<\/a> site in times square im back with becky quick and michelle carusocabrera. Joe is off this morning mr. Sperling is joining us first, a quick check on the markets. The futures right now are in the green on the dow and s p 500 the nasdaq has slipped into the red again. Its sort of waffled back and forth. Dow looks like it would open up about 44 points higher s p 500 up close to seven points higher but the nasdaq down about four points it had been up about four points, it was down four points. And thats where we are. Todays top corporate story, the merger agreement between drugstore chain walgreens and riteaid has been called ff instead, walgreens will buy riteaid stores for about 5. 2 billion. The cancellation of the deal negates the planned sale of some riteaid stores to another chain, freds, which is off by a whopping 20 riteaid is off about 21 and walgreens is higher by 4. 5 . Joining us on the squawk news line is john ransom. Good to have you here. First, tell us what happened why do they have to do this . Well, this deal first got announced nokt of 2015 so the ftc has been torturing them for going on two years. And it was pretty clear for all the rumors and all the late requests for information that they were going to sue to block it so i think walgreens beat a tactical retreat and likely focused on the stores that wouldnt be in dispute okay, so clearly, the to companies thought they were better together, and now theyre not going to be. So what does this mean for a walgreens boot stock or a riteaid stock thats getting hammered by 21 . Keep in mind, its only a 3 stock, so a decline of 84 cents is meaningful. On a scale of 1 to 10 for a walgreens, this is a 2, a 3, its less than 5 of earnings accretion. My guess when you layer in the snr synergies, theyre paying about 6. 4 times eebitda. For riteaid, its Thermo Nuclear<\/a> war. If you look at their numbers, their ebitda is declining in their store base and if you look other than walgreens retail, i cover a lot of sectors, retail drug is the toughest sector i cover. The average companys ebitda is down like 20 this year. And look at rite aid, their Gross Margins<\/a> were down. So theyve got to entrench and figure out a way to grow this business and right now only walgreens is figuring out how to grow this business and its a. M. Allso looking e Thermo Nuclear<\/a> war for freds. When you look at how difficult this sector is and when you look at whats happening amazon and whole foods, do you think its proper for the ftc to torture the company like they did . Well, i dont want to get an audit, so ill be tempered in my comments, but, yeah, i think this was pretty irresponsible to take this long just to say no. You know, i used to get told no a lot quicker. Should they have said yes well, heres the thing. What they did, and not to bla belabor this, but what they did is they didnt let the potential buyers look at this as script files. They made them think about it as retail drugstores. And there were potential buyers, but they probably wanted to close a bunch of stores and move the scripts into some other locations. Thats the rumors we had heard but they took a very narrow reading of this and they just took forever so, again, the biggest victim was riteaid, because they were kind of on a shelf for almost two years while the ftc but john, five years from now, when the world is completely and utterly amazoned, are we going to look back at this the way we looked back at some of the we can talk about staples, which is also in the news, and that transaction with office depot, which in retrospect a lot of people think should have happened i had some experience in other deals with the ftc we edowngraded the stock the summer before the deal my experience its going to take twice as long as people think, and they dont like horizontal mergers. Under the prior administration, they didnt like horizontal mergers. Its not something we spent a ton of time on but let me make one quick point. I think the amazon threat is overstated, because its hard to get into the drug business but ill make one unsourced prediction completely out of my head i do think that these companies, and in my guess, its going to be walgreens, because theyre the most creative right now, they are find a different answer for the front end, andrew, and it will be probably some combination of Home Delivery<\/a>, of both prescriptions and that snicker bar. John, real quick, and we were tweeting about it with some people earlier this morning, theres a couple of these companies now, alto is one of them, casper in new york is another. These are basically just messenger Delivery Services<\/a> for pharmaceuticals. Do you think that they ultimately get bought out and taken over and folks like walgreens basically take them on yeah, its a classic thats a great point its the classic guys in the garage this is what people want, and i think the drugstores are going to be dragg eged kicking and screaming and doing some type of Home Delivery<\/a>. Remember, their average customer is their most profitable customer is a medicare customer whos on six or seven meds they still go into the store so because of regulation and because the customer wabase is older, this is not going to move as fast as a teen retailer or Something Like<\/a> that. But i think they will have to find some answer for Home Delivery<\/a> my question is, can you really do that and make more money . Or is it just a defensive move and you end up making less money deep the same sales . I dont think thats clear but teaming up with an uber or but, yeah, and ill tell you the other thing, just real quick. The biggest problem in this industry is not really the front end. Thats only about 30 sales. The biggest problem front end the combination of high copays and high drug paces. And you do have startups like blake who in some cases, you could have insurance and end up paying more money than if you didnt have insurance. So the biggest problem is, weve got to solve this yep, very good points but for the small group of people who are on expensiv branded drugs, the combination of high copays and a high deductibles is a real problem it sounds like you saw yesterdays show, john thanks so much for calling in on the breaking news, john ransom folks, it is energy week at the white house. The Trump Administration<\/a> continuing to push its push to make America Energy<\/a> dominant joining us right now is the secretary of the interior, ryan zinke. Mr. Secretary, thank you for being with us today. Good morning. Beautiful day in washington. It is its a Beautiful Day<\/a> here in new york city, too i know the focus is on making America Energy<\/a> dominant. Were already the number one producer of both oil and natural gas, so what needs to happen in order for us to be energy dominant a lot of it is infrastructure and in the department of interior, researches, if you go back to 2008, were about 18 billion a year just in offshore. Last year we were 2. 6 billion thats a drop of 15. 5 billion in perspective, im also the keeper of our Nations National<\/a> parks. Were about 11. 5 billion behind in infrastructure. And when you drop 15. 5 billion a year in revenue, that affects negatively, obviously, your ability to Fund Infrastructure<\/a> to our parksand so, everyone love ours nations parks, certainly i do, and we want to make sure energy is part of that what does that mean by allowing drilling on public lands that will be a way of funding the National Parks<\/a> and making sure they stay afloat well, its certainly part of it and when you put 94 of our nations offshore holdings offlimits, the signals from the market are, in the First Six Months<\/a> of this year, compared to a previous year, the last year the Obama Administration<\/a> did about 11. 5 billion in onshore or 1 million. This year leases were 146 million. So the market understands that our some of our public lands, particularly offshore and some onshore blm lands are important for making energy more accessible but, look, you know, im a former military officer, too i can tell you, i would rather not see our sons can daughters go to war. Ive seen it, and certainly not being held hostage by foreign entities for our energy needs is positive environmentally, i can guarantee, its better to produce energy here in this country under reasonable regulations than what gets produced in countries that dont have any regulatory framework, middle east and africa, to name a few. Lets break that down into a couple of different pieces first of all, American Security<\/a> is certainly a huge issue that people have been focused on for a very long time thats why so many have cheered the increased production that weve seen in both oil and natural gas. But, you can talk about how we can eventually become Energy Independent<\/a> by doing those things, or you can do something else, which is to export oil and natural gas at a higher pace, in which case, were not necessarily producing it for ourselves. I know that those numbers we import have come down pretty significant, Something Like<\/a> 30 over the last seven years or so, or have come down to 30 of what were importing. But if we export more, wont that mean in turn were still going to be relying on others to make sure we can meet our daily needs for energy no, just the opposite but it does take infrastructure to do that not only can we be Energy Independent<\/a>, but the term, Energy Dominance<\/a> is what the president has said he allows us to look at, for instance, iran irans launching icbms, we should be concerned. Theres two approaches military or Economic Economic<\/a> is energy same thing with putting pressure against russia to subplant liquid natural gas in eastern and Central Europe<\/a> meaning that we go ahead and export our liquid natural gas to those european countries, so they can no longer be cut off by the russians every time they get upset with them . Absolutely. But we need ability to do so and this is a national decision, but certainly, infrastructure, making sure we produce energy wisely, responsibly. Im a boy scout. I want to make sure our campground is left in the same or better condition we find it, as the steward of our public lands, thats my charter but certainly, having Energy Production<\/a>, an Energy Infrastructure<\/a>, doing it right is part of not only the domestic policy, but national policy, as well secretary zinke, isnt it kind of interesting that when all of these things happen, you can release all the regulations and allow more drilling. Eventually, whats going to settle it are market prices, themselves weve been looking at wti below 45 a barrel and just this week, we spoke with harold ham from continent continental. I know hes been there talking to the white house, too. He says if the u. S. Drillers spend a lot more on binge drilling, its going to put us in a tough position, because he says below 40 a barrel, it just doesnt make sense, financially, for them to be drilling. Well, a great point and the Trump Administration<\/a> does not pick and choose winners. We dont favor any Energy Source<\/a> over another, but certainly having energy thats abundant, cost competitive, is certainly a part of it you know, Energy Prices<\/a> have stabilized i Pay Attention<\/a> to the markets, but that doesnt drive, you know, our policy ic regulations we need to streamline, simplify, and in some cases, strengthen and when regulations are arbitrary, then it doesnt give the right signals to the market, whether they can proceed forward. Because having a regulation thats arbitrary can put you in somewhat of a quagmire, if your sitting on the sidelines and want to invest or decide not to. Mr. Secretary, the impact of Energy Pricing<\/a> goes well beyond the industry itself. It obviously goes to the competitiveness of u. S. Manufacturing and our ability to offset higher labor rates with much lower energy costs. Absolutely. Swl so im fully supportive of drill, drill, drill and all of the above for energy the question is, once weve unlocked the ability to export, is what happens if prices start to rise again, well above 50 or 55, that the Natural Gas Market<\/a> equalizes across the world so we lose our Competitive Edge<\/a> there. Can you see a scenario where we once again clamp down on the amount of exports to keep prices in this country, particularly for natural gas, advantaged . Im a former geologist, and i say former, because i graduated in 1983 in geology but things have changed, even since ten years ago. Fr fracking is a game changer it turns out, not only do we have energy, but we have the most potential energy, and i have about 20 of our holdings offshore and we have more Energy Potential<\/a> than any ore region or country. A lot of it has been from fracking but i dont see it as a disadvantage i see it Building Infrastructure<\/a> and having the ability to export is important i think prices are stabilized, but youre absolutely right that having energy thats reliable, abundant, and Cost Effective<\/a> keeps us competitive, as far as a Manufacturing Sector<\/a> so the outlook is very, very good i think well have a reasonably low Competitive Energy<\/a> if we use our assets wisely. Thank you secretary, there have been many questions about the parks that youve been talking about and the monument designations that have been made, and two in particular bears ears in utah and the north maine woods, those monument designations. Do you plan to keep those monument designations for those areas or is that something that will be let go certainly in bears ears, my recommendation was made. Maine, we looked at, were pretty comfortable what our r s recommendation is going to be. And monuments over time have been an enormous positive step to keep our treasures in you know, as they are. But there are limitations. And its the smallest area kpat nl and occasionally, you do need to look at the executive powers to make sure theyre not being abused, to make sure theyre appropriate. The monument review, i look at three things does it follow the law does the local community, did they have a say . Did they have a voice . And is changing the proclamation or change in the best interest of the public and our country . I think were pretty comfortable on where were heading the recommendation in bears ears, which was, by the way, all federal land to begin, had a monument, has a Forest Service<\/a> holding in it, has a wilderness area in it it was all mostly a federal land and we made a recommendation for congress to do their part and look at lands within that to see whether they were better suited in a different class but overall, i think we looked at it very thoughtfully and have a very step by step approach secretary zinke, i want to thank you for your time this morning. We appreciate it me pleasure have a great day you too coming up next, pharma bro, Martin Shkreli<\/a>, a highprofile trial and lady gaga. One of these things is not like the other. Theres a story there, really, and you do want to eso isee it blue apron will make its debut later this morning competition in the kitchen is hot, hot, hot. Well talk to the ceo of plated, another Meal Kit Company<\/a> looking to dominate the industry dont move [vo] when it comes to investing, looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management<\/a> firms in the country. Discover how we can help find your unlock. At johnsons we care about safety as much as you do. Thats why we meet or exceed 15 global regulations for baby products. And where standards differ, we always go with the toughest. Johnsons. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . So we treat morning tv like radio, often we assume youre getting ready to go to work, et cetera but for this next story, you want to look at the video. Pharma bro Martin Shkreli<\/a>s trial getting underway and it opened with a bang meg terrell joining us from outside the courthouse well, finally getting a jury yesterday in the Martin Shkreli<\/a> trial, almost after three whole days of the selection process. After that, opening arguments got underway fairly quickly. The government started by laying out its case, essentially running through the eight counts of conspiracy fraud, conspiracy to fit wire fraud, to which hes pleaded not guilty then the defense started its opening argument not focusing on, of course, these they did focus on the charges, but really focusing a lot on Martin Shkreli<\/a>s personality. Ben graphman telling the jury, quote, once, is he strange yes. Will you find him weird . Yes. Martin shkreli is brilliant behind words also saying, geniuses are sometimes just on the other side of crazy and, as lady gaga said, he was born this way. We ended up catching up with them outside the courthouse yesterday. Take a listen to what they told us can you tell us about the lady gaga defense in there . No, i think i said what i wanted to say in the courtroom why quote her so many times because i think quotes fit. With all of these lady gaga references, do you think martin had a little bit more of a poker face i am happy with martins face exactly the way it is, okay . Thank you. Reporter so, of course, Martin Shkreli<\/a> known for his facial expressions in places like congress, where he pleaded the fifth when he was supposed to testify last year so were expecting a lot more drama today. The trial is going to get underway in just a few minutes this morning shkreli and his lawyer really should be arriving any moment here well bring you anymore news meg, the look on his face, he liked your face. He did he cracked a smile no poker face there reporter its possible, although social media indicates he doesnt no poker face there see you, meg thanks our guest host this morning is Scott Sperling<\/a>, also a Madison Square<\/a> garden board member good morning to you. Weve been talking a lot theres been some deals. Theres been a little bit of deal activity recently theres deal activity we have this Walgreens Riteaid<\/a> deal which broke apart, but now theyre buying some of these things we have amazon, whole foods, which seems to be upending the blue apron ipo, to some degree what do you thinks happening in retail right now i think what youve seen is the growth coming out of the bricks and mortar retailers, because of the obvious Movement Towards<\/a> ecommerce. We have to recognize that ecommerce, if you add up across the entirety of the retail sector, still in the 10 to 12 penetration range. So i dont think thats going to slow down. I think thats going to accelerate we can argue that things are going to stabilize, but i think its difficult for a lot of sectors in the retail side, particularly when you have highly competitive businesses. I dont think Grocery Stores<\/a> are going away, by any means i think the market may have overreacted, to some extent, in terms of the pricing of some of these large retailers, particularly when you look at the scale of whole foods but whole foods is a great acquisition for amazon it gives them the logistics and Distribution Capabilities<\/a> that they were lacking in a lot should the entire supermarket industry be in fear . I think every industry should be in fear im a big believer that we should all run afraid on any business in fear of amazon i think everyones afraid of amazon and you know, you saw the staples deal announced and tom always used to say that amazon, single handedly, destroyed what was a fantastic Retail Business<\/a> in staples, because they were able to price in a way that didnt result in profitability in that sector, and the market loved it and therefore, its very hard to combat so i think there are issues. Amazon has this incredible weapon in aws. Aws is one of the most profitable, greatest businesses out there. The cloud business. The cloud business. And it gives them great flexibility to suffer very low margins on the retail side, and funds everything so, i think amazon will continue to have the ability and the flexibility, stock market support for engaging to the extent that regulators have looked at office depot or staples in a particular way or looked at this Walgreens Riteaid<\/a> in a particular way, everything within the amazon world on a straight true antitrust basis would go through, because they own small parts of the market. However, given what you just talked about with aws and its ability to use that to fund other things, should the thinking about all of this be different . I think we need to take a step back in all of this antitrust regulated, government regulated, whether its fcc or the ftc and doj, and recognize that the traditional ways of looking at competition no longer work so whether or not its an fccregulated business, where it traditionally looked at all the legacy kind of media companies, the reality is, we have thousands of new outlets of information and you need to take that into account. If you look on the things like the retail side of the world walgreens, rite aid, clearly the big threat comes from ecommerce for many of these businesses it is true that pharmaceuticals may not be as easily distributed through the web, but i ordered bandaids the other day from amazon i could go to my local cvs, which i would normally do, but i was buying something else, and i bought bandaids so i think that you need to relook at how we evaluate antitrust in the context of the reality of technology we are going to continue this conversation with scott in just a little bit i want to thank you for being here and hanging out with us for the hour in the meantime, we have some breaking Economic News<\/a> coming in just a moment. Two key reports about to hit the table. Well bring you those numbers. And later, war of words reportedly escalating between walmart and amazon what the retail giant told thhekers about doing business wi t Ecommerce Company<\/a> stay tuned squawk box will be right back. Can we at least analyze customer traffic . Can we push the offer online . Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . Yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Welcome to holiday inn whether for big meetings or little getaways, there are always smiles ahead at holiday inn. Tget ready. Oh, no run for the breakout event. [ minion gibberish ] of the summer. Were going back to villainy. Despicable me 3. Rated pg. Welcome back to squawk box. We have some important data coming up. Its almost the end of the Second Quarter<\/a>, which means well be getting our last look at the First Quarter<\/a> on gdp. Were expecting the number at 1. 2. A little bonus today, about 2 10 worth. Up 1. 4, 1. 4. And if we look at the personal consumption aspect, 1. 1, almost double the 0. 6 last look, the price index, 1. 9, that eased back from 2. 2 and personal expenditure quarter over quarter is up 2 , 1 10 on the light side jobless claims moved up 2,000 from a slightly revised 224,000. And 1. 942 is last week 1. 984 million this week. Its up just a smidge. Maybe the biggest news, outside of the fact that q1 is a little better than expected, is that boon yields are up 20 basis points on the week mario draghi spoke, the retraction happened, the market looked passed it thats very important. Think about it Market Participants<\/a> like having a benefactor, what they dont like is having to deal with more of a Financial Reality<\/a> but it certainly seems as though theres something about the condition of r fed in europe and the Central Banks<\/a> around the globe that is changing, and you better stay tuned to cnbc to stay tuned with those changes. Back to you. Important watershed, potentially, moments, rick pointing that out. Rick santelli. All right, Randy Anderson<\/a> is Griffin Capital<\/a> chief economist. He joins us now on the phone any thoughts on the Economic Data<\/a> that rick pointed out before we move on though that bigger issue were talking about when it comes to whats going on with Central Banks<\/a> this is great news. I think the market will react it and react favorably to it. We expected q1 numbers to come in a little bit better they came in a lot more consistent with this revision than we thought earlier. You know, but were still looking for a gdp thats around 2 to 2 1 2 for the year. Were going to have good, solid growth i think were range bound in that 2. 2 to 2. 4 for the year okay. What about the selloff going on in the european bond market that rick just pointed out . Yes, the yield has gone up for the german tenyear. But that just means its far less negative than it used to be what are the implications for the u. S. Fixed income market were still in a really low environment. Rates dont always rise in a rising rate environment. I think were seeing a lot of reaction to a little bit of noise around the country saying, listen, everybody in europe now has taken a little more or a little less dovish position, but i think given where we are with economic growth, the u. S. Kind of range bound in the 2 range for the year, relatively moderate growth, although strengthening growth in europe im still looking for a relatively low Interest Rate<\/a> environment as we make our way through 2018 all right, randy, thanks so much thanks for having me. Lets back to our guest host, Scott Sperling<\/a> scott, wii want to pick up wher we left off. We continued this conversation through the break. The idea of how the government looks at antitrust may be antiquated there are all kinds of changes afoot, where you could see broader interpretations of how this comes down, if you have a populous president or you could see narrower definitions and you could say, look, competition is just different today very different and so weve got to start looking at it differently. And as we were talking about, the power that technology has unleashed that is broadly held in terms of the ability of individuals to express opinions and news and to influence is much greater than it was and thats in relation to the fcc. Thats in relation to the fcc, for example the power of controlling commerce has now been concentrated in other hands. So google, facebook, amazon, three Major Players<\/a> who have done spectacular jobs of building businesses that truly exhibit dominance in their areas. And they have been building on that dominance and have created the Business Models<\/a> that are dramatically more profitable, particularly in the google and facebook situation, than much more conventional businesses that do similar sorts of things. And so the way to look at competition, whether its on the retail side or the media side of the world or lots of other industries, should have taken into account this evolution that has in many cases become revolutionary in terms of the nature of the Business Models<\/a>. We look very closely when we try to explore the direction that industries and subsectors will take on the impact of technology on those Business Models<\/a> over both near and longer term. Longterm, its kind of hard one of the things that we often say, over the last few years, maybe you havent seen a lot of change, but these technological changes often inch up on you and you get this false comfort and all of a sudden, you fall off the cliff in terms of the nature of the Business Model<\/a> and the profitability of that Business Model<\/a> and so identifying areas where were going to see Technology Working<\/a> for you is an incredibly important area of our business and looking for ways to Overlay Technology<\/a> as a tool to help Companies Get<\/a> to the next level of performance is also an important area so its a very different world today in lots of different aspects than it was in the regulatory authoritys need to really catch up with that. You know, i hear your point you can think of amazon and how originally, not just amazon, but all online retailers were told they didnt have to collect sales tax. Its been hugely in the news about whether theyre doing. Amazon will be picking up sales tax in nearly every state in the very near future but what you just said, your ability to predict the future, see around corners on some of these things, what do you see as the next big thing that we havent figured out yet . Well, if i knew that, i would probably be on an island some place in the South Pacific<\/a> tell us potential but i will tell you that what we look at is and weve focused a lot of effort on things that enable, are broad enablers of these trends so looking at businesses that can help ecommerce occur i cant tell you in fact, i suspect that most ecommerce players will fail or not be very profitable however, theyre growing enormously in terms of both the quantity and also the dollar volume of what their doing and even if an individual company doesnt succeed, being able to be infrastructure for those companies, whether its software, creating the facilities needed to enable the actual delivery of goods and services, the fulfillment side, these are areas that we think are incredibly interesting and are somewhat agnostic as to the economics of specific ecommerce logistics logistics is a big area for us can i throw you a curveball sure. If you were on the board of uber, would you fire Travis Kalanick<\/a> ohh, i dont know enough about the specifics. Clearly, the culture that was created there seems from the outside to be reasonably toxic in a number of ways. And i think the board did was very appropriately aggressive with somebody who was actually a controlling shareholder. By the way, who was not gone. Who is still on the board because of that controlling share. Right and thats not going to change and you know, you can attribute a lot of success of uber to the same characteristics that make him a very difficult ceo which is why i ask the question right thats clearly the conundrum, because he basically thumbed his nose at almost every law and regulation that had constrained that form of transportation. And im not sure anybody else would have done that exactly so let me ask you a different question, which is, at least in the valley, but you deal with it all the time, too, there has been a move over the past decade towards these dual class structures that give somebody like a Travis Kalanick<\/a> remarkable power do you think that that changes now . Meaning, if youre a venture capitalist or private equity person whos involved in some of these earlier and midstage companies, do you say, you know what, i cant do it this way anymore . Yeah, were not really supportive of that form of governance, that concentration of power, that where the shareholders who put up all the money really dont have the ability to influence this is true of so many exactly on the other hand, if youre in the startup world, i think thats a rule you play by in order to get into some of the most Interesting Companies<\/a> so luckily, we dont deal with that we dont, in our end of the private equity world and i can easily say, we dont support it but any lived in that same startup world where im trying to get into that really hot company, where you have this brilliant individual come up with the idea or execute the idea in a really effective way, maybe you just have to play by those rules. Okay. Scott, stick around. Weve got a lot more to talk about today. When we return, dinner is shipped. Blue apron goes public today its one of many, many Meal Kit Companies<\/a> trying to be number one. Were dwogoing that to talk to ceo of plated, a competitor, right after the break. And blue apron ceo math salzberg will be on squawk on the street today after the company starts trade its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back, everybody. Walmart is reportedly escalating its war of words with amazon words and actions, potentially, too. This is according to the new york post. The retail giant is sending veiled messages to Trucking Companies<\/a> that haul its merchandise from Distribution Centers<\/a> and stores, telling them that if they do business with amazon, walmart may not want to work with them this after walmart told vendors to stop using Amazons Web Services<\/a> or it could lose walmarts businesses but you can imagine the competitive juices are flowing if its true, what are they doing . I dont know. I dont know maybe its just a hypothetical, theoretical, right maybe blue apron is going to hit the big board today. Among the chief concerns about the company, the competition heating up in the meal by Mail Industry<\/a> or by shipping it includes Major Players<\/a> like amazon joining us is josh hicks, ceo and cofounder of plated, a Meal Delivery<\/a> company good to have you here. Thank you the blue apron ipo, they had to low terrier their offering p because there was so much skepticism among investors theres so many of you, youre just one example how competitive is the landscape and can you survive . Yeah. So i dont think its actually as competitive as people think not to say there arent competitors out there, but you know, todays an exciting day for the industry, right . I think, full stop, its the first big Company Going<\/a> Public People<\/a> clearly want the product. I know youre a user yep you see the grocery trends going down, right . Somebody shared with me recently that 2015 was the first time in history that more Grocery Shoppers<\/a> used the sort of hand baskets than the push buggies. And i think that tells you a lot about whats happening in the grocery industry thats a fantastic data point. And people arent going to stop eating, so its got to go somewhere. All right so i get lets bring up that wall screen i have the reason there are so Many Companies<\/a> doing this is that people want this kind of product. But how do you survive against all of those players if people are home watching, they can look at their screen, look at all of those companies doing what you do. So not all of those companies do quite what we do. And i think that is really our view on how to be successful in the food market. You have to understand who your customer is. And serve them well. Some of those companies do prepared food delivery, which ourcustomers use also. We think that customers today want to have a weekly routine that includes going to restaurants, right, we all like doing that once or twice or depend on who you are. They want to use takeout, right . Prepared food in some form or fashion. And they want to cook. The problem is that people dont know how to cook, necessarily or the Grocery Store<\/a> is a lot of time and a lot of effort and they really hate the portions they get from a Grocery Store<\/a>. But longterm, the cooking piece of it is going to get squeezed i mean, i recognize there are people who like to cook, but prepared food, people like prepared foods you can just directionally see how its going the amount of time people have to actually do all of this stuff. Have you thought about broadening your product line one day right now, focus is really important for us and yes, people are cooking less, but they dont want to not cook at all, right i know a lot of 25yearolds, first out of college, they do use, you know, takeout, saleless or others, seven nights a week but people dont want to do that forever. They like cooking. Not seven nights a week. We think those days are behind us culturally, but people do want to cook so if the ipo had gone better, i mean, lets see how it trades today, but if it had been able to price higher, youre not cheering on that its not doing well you would prefer blue apron to have done better would be better for your valuations, i think. Of course and we want them to succeed. Theyre a different business, serving a different consumer than us. And its really the first day. You look at all the grocery trends you guys know all the ecommerce data and grocery data. Are you afraid of amazon and whole foods . Right now so you saw that cross the tape, swallow hard, what happens . On blue apron no, on amazon and whole foods. What did you say, who did you call i thought it was great. You did yeah. Because that first off was a validation that either cant or wont build everything theyve been in grocery for ten years and theyre buying a Grocery Store<\/a>. This is them telling everyone that they must buy some stuff, they cant build everything, or at least they wont, right and we thought that it was a validation of, you know, omnichannel, right food is not like all things. Its not going to be totally online and its a validation that the grocery industry is being disrupted, right all of which are positive for us and they dont really do what we do and i would never underestimate amazon thats a crazy thing to do but theyre not doing what we do and, yet, theyve got a lot of o work to do to integrate whole foods. Meaning somebody like you might get bought for a big price, because its hard to put this together. Were not trying to sell the company, but thats certainly a possibility. And they might buy somebody. I think theyve got a lot of work in front of them to properly integrate whole foods its a big deal, even for them and a lot to integrate so i think, one cday, perhaps wish you the best of luck we do josh hix. Thank you and Matt Salzberg<\/a> will join squawk on the street after the day start trading. When we return, ed beg was one of the first people to get hihas t ogil smartphone hell join us next with that very phone at johnsons we care about safety as much as you do. Thats why we meet or exceed 15 global regulations for baby products. And where standards differ, we always go with the toughest. Johnsons. Hes one of the only four tech writers to get the iphone in advance i saw this yesterday. You david. Steve levey. Did you ever think ten years ago when you saw that phone we would be talking about it the way we do today. No. I have it here. Cracked screen. We still crack them today. No i mean, youll recall there was enormous type around this thing. Steve jobs of course showed it off six months earlier at mac world and then june goes on sale and everybody around the block it was nuts so there was certain interest in it but did i expect them to sell 1 billion phones and get to where we are today, i couldnt predict that. That seemed like an amazing piece of innovation. Yeah. Today people say, you know, how can you innovate the phone that much more you keep putting a new processor and you sell it for a little better, is there a major jump set to come . Well, you would like to think so but youre right. The fact is that phones today whether its iphone, whether its many android phones are really, really good. We get to a point, weve hit that wall so what comes next maybe well see True Wireless<\/a> charging not putting it on a pad. Like we just walk around and its charging all the time this company is work on that im not going to suggest thats around the corner but efforts are underway there certainly apple has already announced its intention to go big on augmented reality the idea that the digital blend with the physical. That will be real. Well see some innovations and design youll see an edge to edge iphone like we have already seen with samsung and others but its hard to like change the world. They change the world. You can argue they changed the world with this phone. Its not that easy to do otherwise we would be doing it all the time. Theyre coming out with this new he echo like Alexa Speaker<\/a> i dont like to say it too many times because people have them at home and theyre on right now. Is that an innovation to you. Its probably a very nice product, the people that heard the early version sounds good but siri needs to catch up to alexa and microsoft and then Google Assistant<\/a> google has done good work with google home. Do you think thats a better product . Which is the better product right now . Well, right now you could argue google because guess what is behind it, google you can search for anything by google on voice and thats nice but im also a fan of echo and alexa. Thank you its good to see you. You too. Come on back. I cant believe you have that thing. Does it still work it does actually a battery just died thats something id like to see improve. This is the actual phone. With not something to protect it. Yeah. But its heavy but, you know. Its small. Yeah. 3. 5 inch display. Now have the big plus version. Very different but, you know, little chunky but surprisingly not that heavy, you know. Ten years ago. Thank you. Sure. Up next, scott spurlings call on the ldspeanca ends on closing bell at 4 00 p. M. Eastern time squawk box will be right back. baby crying fly me to the moon elegant music and let me play bell rings [ light music playing ] youve wished upon it all year, and now its finally here. The mercedesbenz summer event is back, with incredible offers on the mercedesbenz youve always longed for. But hurry, these shooting stars fly by fast. Lease the c300 for 399 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. The power of the Nasdaq Market<\/a>. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment<\/a> objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Record size. That was in 06, 07. So what does this say about the transformation then by the way you have soft bank with around 100 billion. 10 billion. Saudi money. So what has happened to this business so, you know, look we go through these cycles the apalo guys we, very smart guys they do a broad range of things and prepare themselves for downturns and theyll be looking for different ways to put that money to work i do think particularly given the general frothiness that we sense in the marketplace for trying to buy private company which is is a reflection of some of the valuation me tricks being used in the Public Market<\/a> it may be hard to put those kinds of dollars to work without striving for returns or achieving returns that are well below the 20 targeted returns that is it going to be consolidation . Are they going to squeeze everybody else out is that what is happening here i think there are clearly large asset gatherers that are great firms that have decided that the model is to be able to deploy very large amounts of capitol, achieve returns that are hopefully 3 to 500 basis points higher than what the expectation for the s p would be and thats a great Business Model<\/a> and you have smart folks out there like apollo and black stone and gou goodbyes through the list of all the Public Companies<\/a> and then the industry will still have a lot of firms looking to deploy smaller amounts of capital fewer deals but being able to deploy them perhaps against, you know, as we do, middle Market Companies<\/a> where you can still apply in that 20 net return available. Great to have you. Thank you. Nice to see you. Good to see you. Michelle thank you. Later today too. Everyone have a great 4th. Happy 4th of july everybody make sure you join us tomorrow first. Right now its time for squawk on the street. Good thursday morning welcome to squawk on the street. The euro at a 14 month high and the bond sell off continues. Ten year yield is up 15 basis points the banks, the fed o","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia800607.us.archive.org\/10\/items\/CNBC_20170629_100000_Squawk_Box\/CNBC_20170629_100000_Squawk_Box.thumbs\/CNBC_20170629_100000_Squawk_Box_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240628T12:35:10+00:00"}