Transcripts For CNBC Squawk Box 20240622

With our rulses to suspend trading because we wanted to make sure that nyse stocks wouldnt be negatively impacted. Trading on platforms other than the floor was uneffected and despite the halt nyse consolidated volume which captures trading across all platforms was heavier than normal due to the Global Market sell off. Speaking of stocks lets check on how todays session is shaping up. U. S. Equity futures looking for a bounce back after the big sell off yesterday. Dow futures implied with an open plus 150 points. Heres big stories were watching today at this hour. Well start with china. Beijing taking drastic steps to prop up its market there. Along todays move banning shareholders with large stakes in listed firms from selling. It closed up nearly 6 . Elsewhere, south korea rates overnight but did have the countrys Economic Growth forecast. And then of course have to keep updating you on the situation in greece. Meantime germanys Central Bank Warns that greek solvency should not be increased more from our colleagues overseas in just a moment as we go toward sunday with some optimism i guess. I still think they do it. No they do a deal and both sides get to say yeah were doing something. I never thought they were. But Stranger Things have happened. It sounds like its going to come down to whether theyre allowed to restructure debt which germany says no and the u. S. Says they need to do. U. S. We dont like the a word in this country either. The administration. So the shanghai we know already its not 6 we dont have to worry about that. When you ban selling its really only one way it can go right. But when were watching europe its like hey you know if it starts selling off later in the morning its like our futures off. So were done. We got that in the bank. 6 . 6 . The question is will it bounce or is there finally some sort of trust in the authorities there to clean this up . Boning up and studying up on how the whole stock market rise is. It was done to become more free market oriented but then you see how much theyre involved in orchestrating this big run up. They said might be a problem here when stocks didnt rise on the president s birthday. Its like wait a minute. Somethings wrong. Can you imagine saying that here. If our market didnt go up on president obamas birthday. When is president obamas birthday . I dont know. Theres a problem if he calls up jack lew. We got a problem here. Were having a big party at the white house tonight and the market was down 150. August 4th its coming up. Thank you. Im not even going to say that. The birth certificate. Donald trump brought that up in an nbc interview. Even my face cant even my eyebrow cant move. Earnings fell short of estimates hurt by lower Aluminum Prices but revenue was better than expected. Company has been trying to reduce its alliance on legacy commodities and ceo on cnbc yesterday. The business showed real resilience in face of all the head winds. Prices dropped 22 over the course of this year and then when you look at productivity and cash excellent. You put this together and see all of this has been done by many day in and day out working tirelessly on getting the transformation of this company down. Obviously you saw Aluminum Prices there were a problem and Commodity Prices the other thing that had people concerned, selling off with the chinese stock market and combined with the other stuff. Crazy day. United. United. The wall journal homepage and then the new York Stock Exchange. The glitch. Which if you hadnt been able to trade on all of the other exchanges it would be like china is down. Where would we be . But there would have been a panic. If you decided im out of here you could have been out of there basically and that definitely helped. Among the other stocks to watch, shares under pressure after the company cut its full year guidance blames the negative effect of a stronger dollar and challenges in eastern europe. Ibm you heard at the top of the show, the Company Announcing it made working versions of an ultra dense computer chip that has about 4 times the capacity of the most powerful chips that are currently being sold. Getting a lot back today. Thats how it looks now. Futures pointing to a higher open. Sharply there so. 144 points on the dow. S p with an open of 19 points. That continues to be a closely watched story where the volatility is unbelievable. Particular particularly. Thats been the way of the world lately but japan and the hang seng are higher as well. Crude oil and other commodities have been closely watched because of concerns about whats happening in china. That is getting a lift as well. The ten year note yield. We have fed speak today. 224 is the yield there. Take a look at the dollar as well. Euro dollar 110. Its been an interesting story because of the safe haven trade as well. The picture is at 1161. A slight decline at this hour. Janet yellen speaks tomorrow. Watching that. Our team of global reporters spanning the world to cover the big market stories. Jeff is in brussels following debt negotiation with greece. Michelle is still on the ground in athens. Lets start with eunice in beijing. Thats right. I can tell you guys how the government here orchestrates orally oralor or rallies. The Chinese Media is saying now youre seeing the National Team at work. We did see the results of that. The market rallied by 6 they also told senior managers that they couldnt sell shares for the next six months otherwise they would face severe punishment. Today we Learned Police were investigating what they called malicious short sellers and in the past couple of minutes they came up with results saying they have 12 Financial Institutions as well as other individuals who had been engaging in who they call illegal acts. All of these managed to relieve the investors here because they feel comfortable at the rally but theres a lot of caution and anger directed at the government. We saw protestors in small groups but outside of the Regulatory Office and a lot of the investors were telling us theyre still unclear where the market is going to head because more than half of the Companies Listed here still have their share suspended and for that reason everybody is waiting to see whats going to happen when those shares resume trading. Now to jeff in brussels. Thank you for that. The european markets are getting a break today because we dont have any more negative News Headlines on the story. The greek banks in trouble. Its not big news. Everybody understands that and theres other reports floating around from sourced officials saying the four big banks will have to be reduced to two. All of this part of managing the message as we come up to really what matters this weekend whether greece remains in the euro zone. They have to deliver proposals explaining how much pain theyre prepared to take before the close of today to give the leaders and euro Group Finance ministers the opportunity to study them before it takes place on sunday we did see funding over a three year time frame. That would suggest theyre coming back to the table as honest brokers but the tougher question will be how prepared is mr. Tsipras to impose cuts on state benefits and significant hikes in taxes. Let me send it over to michelle in athens. Lets talk about one of the key issues when it comes to those negotiations with greece. Now were hearing from jack lew and Christie Lagarde if they think its a good deal. They own over 300 Million Euros to the world. They owe more debt now than their previous debt restructuring. You can only understand it through. Look at that number. The other debt 194 billion for a total of more than 300 billion. We couldnt list it on the full screen. One of the true things he said as the minister of finance was greece never got a true debt restructuring. They ended up with more debt. Thats not how its supposed to work. He never told you the other side of the story. If greece had not accepted this deal all the cuts and budgets he never wants to make they would have had to make them overnight because greece ran a primary budget deficit into late last year and still is now so they needed bailout money so they took that money and that way they could keep employeeing people thousands of people would have lost their jobs overnight. The austerity would have happened within months and would have been far more brutal. Now christine he guardlagarde saying there should be a hair cut. They say you know what is amazing about the imf is they insist theyre a super senior creditor and everybody else should take a hair cut except for them. Now hes getting ammunition from jack lew of course. What is also incredible is when they both say oh the imf says we need a debt hair cut but they dont agree with anything else the imf says they want to pick and choose what theyre going to do and finally youre probably wondering why on earth are the germans so unwilling to talk about restructuring . What is obviously that huge problem. When you look at all the debt the greeks owe, that 194 billion thats the most concessional. The greeks dont have to start paying that until 2023. At almost 0 Interest Rates. So the germans and everybody else in europe says why are we talking about that debt right now . Why dont you do some reforms . Why dont you get your economy going and when you do your prior actions we can talk about extending maturities. Its incredibly complicated and unbelievably political. You can approximate sure that will be a key issue as we go into this weekend. And michelle in your heart of hearts what happens . Your current probability for a grexit i still think theyre going to get it done. Dont you . I cant guess at this moment. Moment after moment when they could have gotten a deal done and they didnt do it. 50 50 is the easiest. The tone was much better than weve seen before but you have to see the list of prior actions and those are all the things they promise theyre going to do. Theyre going to do those first prior to getting the money. So lets see if they do them. If the drachma was worth 33 euros would the quality of life of the average greek be worse than if they agreed to some of the austerity if their currency was worth a third of the euro . Its probably a choice between two different devils, right . Youll have a lower income under austerity but if you go to that youll face higher inflation because this is a country that lives on imports and you cant buy as much so everything on the shelves becomes much more expensive. No matter what. I should have held up the communist news because their headline today says agreement or drachma everybody is going to lose or suffer because its either inflation or an internal deval you wags. I know its because it always has it on the cover there. Just trying to help. Trying to get your props for you. I have a question quickly michelle on the cash situation there. The temptation for ious. We have seen this in emerging markets during crisis. Is anything going on with that . Theres some reports that people are already talking about parallel currencies and the lines are so long and greeks are putting their money in chanel purses. Whats going on . The local paper of record reports theres preparations for an iou system and when you talk to people within the government they say, look its only natural to begin preparations because for the first time we get an admission today that they said we have enough cash for the atms until monday. We havent heard them discuss when they might run out of cash until this point. That would suggest you have to come up with another thing that you can use as a proxy within the country. The question is how do they decide to implemented those ious . Do they use those to pay the government workers . Or do they use the ious simply to mimic deposits in the bank . For both . Do they use them to pay arears. All of those choices lead to what is the value of that currency and how much inflation greeks see on the ground as a result. Theyll have tough choices on that front. Okay. I feel bad we didnt talk to eunice. We get 6 and its like oh thats all fixed. Hes there. I know she is but i feel bad that were still so greek focused and get a 6 balance in china. The big worry is that the government loses control. All the other stuff werent working. They regained a little bit of control. The way they do it over there should be able to maintain control. If you tell people you cant sell anything its going to be hard for the market to go down. To your point in an exchange i had yesterday he makes a similar point that the political fall out from whats happening there is much more important than the financial fall out because the ability of the party to step in with any reforms financial or otherwise is questioned as they try to do whatever it takes here and the market still goes down. If they throw everything they had at it it probably still needs to go down more because it went up so much and you just got the four classic signs of a totally overheated you know margin debt. Record of any country ever held by Retail Investors and trading volumes. Some say they can do more. Why cant they step in like japan did. They really are. And maybe also the concerns about whether the market slide there is so heavy and then now we should be very concerned. Maybe thats why weve seen our stocks sell off as overdone as well stocks here didnt participate. Why should it be on the down side. Its scary to look at. Feels different coming down. New York Stock Exchange is closed. United flights are grounded and it all came together. 280 points isnt that bad. Joining us is bill stone, chief investment strategist. Bill out of all the things we just mentioned is what is the most concerning and if nothing is and you think we ought to buy it tell us that then. Its hard to wave them in the sense that greece is in and of itself so asmall but it has you have to give it that the contagion risks out there. I think china at least in the longer run is the one maybe that deserves that much attention because it is the second biggest economy in the world. The question is whether there is any real connection between the Financial Markets and the economy. You can make a good case and you talked about it there that is you know what it was going up like crazy and we know the economy wasnt doing well and that was the recent time. I remember clients coming to me and saying shouldnt i own chinese stocks because back when the economy was doing really well and i would run the numbers and they had no correlation with with each other and in other words chinese growth and chinese stocks and you continue to have these worries but you to look for or maybe make that second step to say theres some sort of possibility of contagion. So far i have to say there is a possibility. I just think in both cases its not the likely case. Once again we can Start Connecting dots which makes it even more ridiculous. Connecting dots to what the fed does in september. All of this really scary stuff happening in the world and all we can do to bring it home is say it could make the fed less hesitant to go up a quarter point in september or wait until december or maybe put it off until next year it comes down to that with traders in this country . All that matters is is free money forever . Thats why we look at all of these extraneous events to see how it effects a quarter point or not or the timing of a quarter point. Ridiculous. And it certainly figures in you know . Every number you run in terms of in the history i think thats why its so looked at is that theres typically a sell off around fed moves but youre right. I think theres a little bit too much. We are global now. We get the dollar stronger when we already have head winds during earnings season the fed actually has to consider currency when its deciding if the rest of the world is weak and youll see a huge spike in the dollar if we raise rates and you already have that head wind with foreign currency and they have to worry about that also. Earnings season comes and everybody is low on revenue. Its crazy. Yeah i think theyre going to spend a lot more time i hope anyway focussing on the Bigger Picture around. Again who knows how greece and china plays out Going Forward here and theyll be watching that data but right now weve seen the nice snap back in the u. S. Economy and we seem to be on that path. Thats what i wish they would actually focus on is getting i think the fed is partly to blame here too is we need Growth Initiatives in this country in terms of cutting back on regulation and getting off of zero Interest Rates and the Companies Start using cash not just in a Financial Way but start using it to do what theyre supposed to do now. Thats the real issue. Its better than the rest of the world but were on hold to do things we need to do while were watching the fed dealing with the rest of the world. Yeah it certainly for all of us if you asked me would we be closer to normality at this point i would have said so. It does get to be a bit wearing to frankly spend all of our time on maco events and not as much on individual company work. Thanks bill. So yesterday Bernie Sanders said the real Unemployment Rate was 10. 5 . Thats not because we trended toward socialism already a little bit and away from private sector solutions. It would actually be better to go even further down that road to deal with the 10. 5. Is that what you gleaned from that . Actually more government answers to deal with the 10. 5 unemployment unemployment. Theyre not only ones. We cant do what Everyone Wants to do and talks about doing. We cant even do that you cantlay the blame, i dont think, at the feds feet for the reason why growth isnt where it should be. Theres a number of things that could have been done that have not been done. The effect of staying at zero has caused this but maybe youre saying its not their fault they had to stay at zero. Im not disagreeing with that. I dont think if they raise rates well get better growth. Thats a theory. It is a theory. I dont dismiss it. If money isnt going where its supposed to go to do whats necessary longterm, theres a problem. Its capital being misallocated by Holding Prices at a level where they wouldnt normally go. Wages or prices. I do think the fed has had to do more than it and a lot of others would have liked it to do as a result of others not doing anything. But the benefits when did the benefits of qe end and zero end . Years ago probably. So just a chance of there being something negative is not worth taking. Coming up another win for an activist investor. Plus why yahoo is betting big on sports and taylor swift shakes off a streamsing controversy. 1989 is the fastest selling album in more than a decade. But first as we head to break, a look back at this date in history. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Xco0 welcome back. Making headlines today there adding two directors including a partners nominee to their broad. Well talk a lot about activists next week at delivering alpha hosted by cnbc an institutional investor. The Company Unveiling a version of its Fantasy Sports mobile app this week. It lets people wager real money against friends and in bigger online tournaments. Yahoo will keep about 10 of the entry fees. And in Entertainment News taylor swifts 1989 is now the fastest selling album in more than a decade. The album topped 5 million sales in the u. S. Alone. Shes coming to the tristate area this weekend. Duh. Are you going . Sounds like youre going. Im not going. Im going to be away. I had tickets but sold them for a significant profit because they keep skyrocketing. Youre going . No. I dont believe you. Did you have to get them from a scalper like sarah. With your daughter . Daughter and son and wife. So i got that going for me which is nice. Youll be very on trend. I went to the last one. Ive done this already. Here im going again. I love her. Love her. But theres a lot of teeny teeny boppers around. Right. Have you done this . Anything like this . No. Not yet. Do you want to stand in for me . No. Because you cant. Im acting like im not excited. Im acting like im not excited. But her songs are great on the new album. I havent heard a lot of the new album. I was at the red i cant believe i know this. I was at the red tour. That was a good one too. It was. And its a good song. Thats what loving you is like we have pepsi earnings. I want to bring you earnings alert here. Looks like a beat for pepsi reporting their Second Quarter results early here. Im looking through the numbers. The expectation was for 124 on pepsi earnings coming in nicely above that. 132. Organic revenue growing 5. 1 . A lot of people look at that organic revenue number. Revenue also coming in at 16 billion. The expectation was for 15 and the shares are reacting positively up 2. 25 . Gross margin increased for pepsi. That was actually the 12th corner in a row. They have been able to expand that gross margin measure profitability. If you go through the numbers it looks like the beat for profits comes down to pricing which is something youre seeing in a lot of the consumer names and that is theyre able to price higher adjust the package sizes of the frito lay chips and beverages to get more revenue out of that. Theyre dealing with currency pressures like everyone else. Russia is an important market for them. So is venezuela but they warned up about that. Theyre also raising 2015 outlook. Originally it was a 7 . Now theyre expecting the growth target to be 8 . Thats the key. Solid quarter. Thats what wall street was hoping for. Price hikes plus cost cuts. Productivity. Plus expanding Gross Margins. Then you get the ability to raise your outlook for earnings which they have done. Thats why the stock is reacting in the manner at which it is. Youre seeing flat volumes so the key is the pricing and productive across the space. Pepsi has been executing well on this. Got snacks. They have snacks. People are drinking less soda. I dont think theyre eating fewer fritos. No they probably are. Doritos. They had a bad wrap where everything kills you or youre worried about it. Did you see the guy the other day that lives on bacon and eggs . Hes like 112 or something. Protein, low carbs. Do you remember when smuckers bought the Peanut Butter company . That made sense to me. But salty snacks and soda. Sal at a snacks and soda. People are snacking more instead of big heavy meals so the snacks are right. But theyre snacking on tofu chips or something. Kale. Sorkin. Who doesnt love kale chips. Kale chips. Coming up controversy this morning about hollywoods walk of fame. Well tell you about that. Next first though as we head to break a look at yesterdays s p 500 winners and losers. When youre not confident your companys data is secure the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. 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Get connected. Get insights. Get optimized. Might as well right . Just keep going. This is red. Loving you, scott youre really excited about this. I hope the glow translates through tv. Because this is not fake. Do i pretend im not excited and people know im excited or do i pretend im excited and people will think im faking that im excited. Im excited. I didnt know you were going. Im going. You are impressive. Good seats. Were in the pit. You have to move from the seats to the pit. Do you dance . No i dont dance ever. I dont dance, shop, or karaoke. Welcome back. Controversy about hollywoods walk of fame. Despite calls for their removal, bill cosby and Donald Trumps stars remain in place. The Hollywood Chamber of commerce announcing that they will remain. Saying theyre awarded for professional achievements and not for a celebritys politics philosophy or irrational behavior. Civil rights leaders are expected to hold a News Conference later today asking the chamber of commerce to remove the stars. Speaking of donald trump he is losing business deals and now he is getting combative in an interview with katie while doubling down on his comments that sparked so much controversy. Were taking mexicos problems. Mexico is beating us on trade and theyre beating us at the border but mexico doesnt want to take this. So what do they do . Send our stupid politicians and we have sanctuary cities and nonsense. Its a disgrace and if i didnt bring it up you woen evenuldnt even be talking about immigration. I have been to the border three or four times over the years and i have many people that live around the area. Im going to arizona this weekend where they want to talk to me some people say im the most popular person in arizona because of my stance. When was the last time you were there. Probably three years ago. If you havent been there in three years how do you know its bad then and its worse now. It was terrible then and its worse now. Its worse now than its ever been. With we dont even have a border. People are flowing through like water. There is no border right now. Got a little combative at times with our nbc reporter. He is obviously defensive and blunt. I mean golf tournaments now are trying to run as fast as they can away. You need to have walked the entire length of the border to have an opinion on this or can you maybe have read or have some feeling that maybe theres a problem with the border . Do you really need to be there . That was your gotcha question. So you havent been there. That was just a snippet. I watched it. It was combative. But thats what you would expect. Dont put me on the spot. But even fellow republicans are bashing him for those insensitive comments that he made. You have to admit. Right. Everybody in this day and age, you saw i wont say anything about cosby or trump at this point because i know better with twitter and everything else. I suggest you do the same. Did you see whoopi yesterday . I read about it on twitter. Dont come to my house and kill me. Getting like Death Threats because she said something that wasnt totally negative about cosby. Im not going to say anything either way. Coming up chinese stocks bouncing back overnight but the story isnt that simple. Beijing slapping curbs on selling. The details when squawk box comes right back. When a moment spontaneously turns romantic why pause to take a pill . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. 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With startupny, qualified businesses that start, expand or relocate to new york state pay no taxes for 10 years. All to grow our economy and create jobs. See how new york can give your business the opportunity to grow at ny. Gov business pepsi shares are on the rise this morning. Earnings and revenues topping estimates. Also raising the eps outlook. Stock is up 2. 4 . Another day, another wild swing in stocks in china. Overnight the shanghai composite jumping. Still stocks plunged close to 30 in the past month and reports say the Chinese Companies have now lost market value. Here to walk us through what is next and whether we should be worried in the u. S. Bill adams, Senior International economists and designer of the Conference Board leading International Impact for china. Good morning. Thank you for having me on. Is the concern here that the policy officials are lacking credibility in their efforts to fight this chinese stock market slump or just the fact that its get sogting so out of control to begin with that can slow the economy. I dont think you could say that would be hike a 30 drop here in the United States or in another advanced economy stock market. The chinese stock market is much more volatile than other Global Stock Markets and in a lot of years theres very little relationship between what the stock market does and what the economy overall does or even what earnings per share of companies in the stock market do so i think for a number of reasons the volatility weve seen in the chinese stock market, both the big run up and last months correction are less of a concern for the Growth Outlook and for americans either considering investments or considering what business will do in china in the next year then it will be if its effecting our country. On the issue of what it means for inside china, i want to read you something that the wellknown investor sent me and i want you to react to it on the other side. The issue there is more political than financial. The Chinese Communist party and reform matters has taken a hit and thats significant to their economy. Do you want to react to that . I never believed before this correction that china was moving toward an entirely market oriented economy. Theyre pretty committed to a mixed income at this point with a large role for the state so they dont really have the same qualms that americans do about intervening in a Capital Market or their economy when they see something they dont like. But the point is they intervened and it didnt work. Why doesnt there seem to be faith in the government to have this under control and stop the pain . Well momentums is a powerful force. If you look at what kicked off the stock market boom in china its that they were opening market to Foreign Investment and if you look at what began the correction it was the announcement that chinese stock wouldnt be added to global indexes. We wouldnt get a big global reallocation to stocks. So on both ends its driven by policy announcements. Only one of which was made in china and i think that theyre, you know, its controlling the direction of stock markets for even consider even for the Chinese Government is a difficult task. The bounce weve seen overnight is a big bounce but comes after a large drop and come with a lot of stocks in china still suspending and Chinese Companies applying to have their stocks frozen so that the stock price cant fall further. All right. Bill thanks for your two cents. Telling longterm investors to stick with it. When we come back the hedge funds most exposed to the big sell off in china in the next month. Stay tuned. Well name names. Squawk box will be right back. Welcome back to squawk box. The turmoil in china and greece taking a big toll on some powerful investors. Kate kelly joins us now. A lot of turmoil in both of those areas, obviously. I know scott. You guys have been talking about it all morning looking at shanghai. Though they got a reprieve overnight. Making your head spin. Right. But the number of offshore investors in chinese stocks is still relatively small, theyre already feeling a bit of pain. The china index shows a decline of 3. 5 in june. The first time in some time and also trims the first half gains to 19 which is still not bad, of course. And of the major global hedge funds with exposure to chinese stocks, theres already some evidence of setbacks. One is ochziff. They have an asia fund called the asia master fund. The fund however, still up 12 year to date. Still there are some hedge funds that have been registering gains as well. Brevan howards up in late june. And Greenwoods Asset Management up about 2 for june as well. It will take a sustained pullback to erase the sizable gains these guys have made which in many cases are north of 20 or 30 given the euphoria in these markets for much of the beginning of the year. But it certainly gives Market Participants pause. Which is taking many measures to try to halt the carnage and maybe have a day of success. I dont know. Well, i mean look. We joked earlier. If you stop selling or say you cant sell the chances are the markets going to go the other way. My moneys on the government in this one. They haltsed a third of stocks on one market. Theyve also provided money for people to have added margin. It wasnt the easiest market for Foreign Investors to get into to begin with. Thats right. And the idea was to improve confidence and sort of support for these markets last year by allowing offshore investors to get involved. And many people did take advantage of it. Although in the scheme of things its still a minority. Obviously there were some great upside to be had. So some people took advantage of that. Some day you might be able to make lot of money betting against the command and controllability in the communist party in china. Up to this point youve lost every time youve tried to do that, youve lost. Theres a good journal piece on that this morning im sure youve seen. The point of the sort of difficulty of controlling these markets and the fact you can make it if they lose control, it can hit the fan. The journals piece would have been a lot better if it was down. But thats one day. Its kind of like the oil market slide. Well see if it continues. We had a reprieve there as well. I think well hear from some of these guys and women next week at delivering alpha about china probably. Absolutely. I talked to mary ernest yesterday. She said chinas a lot scarier to me than greece in some ways. Even if the issues are contained. You dont know whats going to happen. Got to read quick. Go. Coming up, this mornings top stories. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Xco0 emergency measures by china taking hold overnight. Stocks spiking after china banned large shareholders from selling their stakes. The ceo of allianz is here with a breakdown of todays Global Market moves. Were calling it the big halt. Remain calm internal technical issue halted trading for more than three hours on the floor of the new York Stock Exchange. Bob pisani here to tell us what went wrong. And earnings season is here. Pepsi out with numbers. Well break down the number and talk cola wars. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. Love this guy too. I wish he was opening for taylor. Im joe kernen along with sara eisen and scott wapner. Some new emergency measures by china having the desired effect at least so far. The shanghai composite rose 5. 8 after regulators banned shareholders from selling. It was the biggest daily percentage gain in six years. And it basically erased wednesdays selloff but not quite. Because if you go down 5. 9 you dont get it all back if you go up 5. 9 . Youre a mathematician. If you go down 50 , you need 100 to go back up. Oh. In the meantime why do you think i have this job . In the meantime u. S. Equity futures are rebounding as well. But were not getting it all back at this point. Were about 100 points shy. Thats a good start if it were to hold up. Up 165 points is what the dow is indicating. And nasdaq up 53 points right now. After losing 261 yesterday. In that weird trading session. Yeah. Earnings season getting underway here. Pepsi reported earnings this morning. Adjusted quarterly profit of 1. 32 per share. About 8 cents above what analysts expected. Also pepsi raised its forecast for the year to 2 . Revenue came in ahead of expectations and the Company Managed to expand its Gross Margins for the 12th quarter in a row. We did say currency would hit its 11 percentage points. The stock is reacting positively to the report. Its up about 2. 25 . Global markets again in focus today and cnbcs reporters join us from around the globe to bring us the latest. Geoff cutmore covering greek negotiations in brussels Michelle Carusocabrera in athens athens, and eunice yun. Lets begin by telling you we got a little under 12 hours left before the greeks are meant to put fresh proposals on the table. They need to come up with something detailed and credible as we go into another emergency summit on sunday which is being billed as the make or break as to whether greece leaves the eurozone. We know the greeks have already applied for an emergency loan over three years. That is under consideration by finance ministers even as we speak. But greece really needs to deliver over the next 12 hours or so. Otherwise patience will become frayed here and will not help their cause as we go into that sunday summit. So we are on deadline watch as far as this new greek package is concerned. Let me send it to michelle out in athens. Thank you, geoff. The greeks are waking up to another round of capital controls here in the country. They are no longer allowed to carry more than 1,000 euros cash out of the country if they cross the border. So up until now money could not leave the money electronically. Now it cannot leave physically either. Banking Association Says banks will be closed until at least monday. They say closed until monday. My qualifier, at least monday. The Stock Exchange closed until at least monday as well. Banking association also saying that theres enough cash in the atms until monday. Implicitly hinting at the possibility they could be running out. We havent heard them acknowledge that up until now. Greeks also reading in the paper today that maher row draghi told a newspaper its going to be incredibly tough to get a deal done. Lets get to eunice yun in beijing. The Chinese Media is invoking the image of a National Sports team saying theyre taking action. The government authorities said they had enlisted Stateowned Enterprises to stop selling shares. They also instructed senior corporate managers to refrain selling shares for the next six months or they would face severe punishment. The police have started investigating what they call malicious short sellers and just over an hour ago we learned that more than a dozen Financial Institutions as well as some individuals were found to be engaged in what is called illegal activities. Now, the investors here have said that they are still very cautious. Many of them are angry at the government and in fact we saw some protesters in small groups outside of the Regulatory Office today. The investors have also told us that theyre still uncertain because more than half of the listed companies here in china are still seeing their shares suspended. So many people here are still waiting to see what happens once trading resumes of those shares. Guys, over to you. All right. Eunice yoon thank you so much. Our thanks as well to Geoff Cutmore and Michelle Carusocabrera this morning. Joseph . Scott. How are you . Good to see you. Thank you. You too. We have a guest host we liked so much last time now two hours. Allianzs asset manager with the sunday deadline looming discussing outcomes with elizabeth corley. Our guest host for the next two hours. And we just assume you know about the u. S. , but you spent a lot of time in europe with merrill. I did. And asia. Thats right, i did. Before i was with allianz. Just a few years. Yeah yeah. Well, you were 6, right . I started really early. Exactly. At this point, out of take your pick they were like six things yesterday. Is it a pattern . Is there any single thing there that makes you that gives you any trepidation about the u. S. Market . It depends which part of the u. S. Market youre talking about as always. I think we felt that we talked last time u. S. Treasuries a little overvalued. Youve got o toe outlook of whatever comes out of the fed. In Government Debt in particular, weve advised clients not to go too close. Still some interesting corporate debt out there. Some very Good Companies doing great things. But in terms of the economy, i mean, the u. S. Yesterday we heard the minutes from june. I think its looking okay. If were going to have datadriven moves, then most is in the right direction. So its certainly, i think, Strong Enough to withstand small global shocks. The issue is whether you have one after the other and Political Action due to it. Theres been three or four well known guys and respected guys talking about the global debt markets being as overvalued or in bubble territory. And you just wonder could Something Like greece it always starts small. It was tsipras at one point. Isnt it possible that this could begin unraveling . Arent there a couple of roaches, you see a couple of roaches come out from underneath the cabinet, you know theres more. I dont get roaches in my house, but i know what you mean. I dont live in new york exactly. But i know what you mean. The question is is there a contagion risk from these things . Greece, probably not. Theres a lot being done by mario draghi over the past years. Weve seen most of those steps actually work. So we think theres a low risk from greece. But really low risk for the eurozone and europe. If its badly handled and we have a messy and prolonged action whatever it is. Whether its shadow currency a bailout, going back to the drachma, that could suppress European Growth and eurozone growth. But weve seen the recovery this year. Weve seen the resuming of some bank lending. We think europe is okay. Sorry to interrupt you, but if you didnt take a hard line with greece and then you embolden the other country where theres leftists. Like, theyre swarming in all these other countries. Like roaches. Yeah. In this country too actually. But theyre swarming over there. And, i mean portugal italy, spain. I mean if you didnt handle greece, if you gave them what they wanted could that even be more of a problem than just losing one country . Yes. Thats exactly right. And i think thats why, joe, everybodys saying and we just heard from geoff that mario draghi is sounding a word of caution. Thats why we have to be very thoughtful. We dont think theres going to be a capitulation from the finance ministers or from the heads of state this weekend. Hang on. Dont you own doesnt allianz have more than a billion euros worth . We have a greek insurance company. So matching liabilities with local currency is not a problem. In fact, you want to do that. So were not at all worried about that. The exposure is absolutely limited on a huge Balance Sheet and linked to known liabilities. So were not worried about that. You started out this conversation by it sounded like you were going to suggest while you werent worried about greece being an issue, you were worried about Something Else. Thats right. I was going to lead into Something Else which is i think the situation in china and emerging markets is a thing that should be front and center of a discussion. Todays news is reassuring. We had all the characteristics of a bubble there. Overleverage, huge issuance, stocks way out of control. So we were in bubble territory. Weve seen a correction. And it does seem that the government the state interventions have slowed that down. But what we have to understand is is this going to have an effect on Consumer Spending . Chinas on this longterm path to go from consumerdriven growth. And i think thats something we need to watch now. At the moment it seems okay. But i think thats the thing we will be watching and i think longterm china is a great buy. Right now we think if anything the valuations will come off more. Where it became a problem, how much would china have to slow . I mean so it wouldnt be any one thing to be an issue for the United States. If you look at the balance of trade for the United States its nicely diversified. Latin america you were talking about pepsi earlier. Latin america is highly relevant. Mexico is highly relevant. Europe is highly relevant. At the moment the Biggest Issue is what happens to the dollar rather than the economy. What do you think happens to the dollar . Do you think we can get back down to parity . Thats a great question. I think its been interesting to see how resilient the euro has been in the last few weeks which suggests that probably if anything, that the dollar is reaching some of its peak in terms of valuation. We think it might strengthen a bit more but we dont really see it going through much more than 1. 10 quite honestly unless theres a meltdown in europe. Are you british . I am. So who knows what happens with the uk i dont know in terms of the union over there. But the prospects for the euro if greece whatever happens with greece they do seem to realize now that there has to be more fiscal coordination. Correct. Does it last . If the uk says im out of here which i dont know whether you think thats likely or not, but are we getting into a point where we think that the euro has a better chance of the whole experiment working or less of a chance of working right now . Depending on your good point at the beginning, how they deal we the greek crisis. If they go soft in terms of trying to muddle through, its not just about greece then. Its about other countries which are exhausted from austerity even though theyve done the economic and labor market restructuring they needed to do. Assuming we end up in a situation where greece is contained and again, thats our core scenario this kpoub good for the euro. Whats the next thing they need to do to make it an actual union . Why would the germans want to bail out the greeks . We wouldnt ask that question here. Why do we help people in appalachia . Where people need help in this country, its a union. Its an actual union. Share debt market. We settled that awhile ago and now were arguing about this flag. But we settled that that were going to stay together. And i dont see it over there. Its like the germans are going, wait a second these greeks are living beyond their means. And the greeks are saying these germans didnt even pay back world war ii. Theyre all different. Theyre not the same. Theyre all very different. Are they a union . Its like the United States. Each state has its own economy which youve accepted that theres a transfer. Theres a transfer to have wealth and value and youve accepted that theres a reasonable fiscal collect system. The big issue for europe is if you look at the quality of the institutions in some of the countries, theyre not all at the same level of maturity. For example in germany, if youre bankrupt in germany, youve wellched on a promise. Its deem z as something you just dont do. Culturally writing off debt and moving on and starting up again even here in the United States is something you can do. Youve got cultural differences. And the bottom line for greece will be collecting the taxes on a respectable basis. Im afraid to use the word wealth. Is that right . It has something to do with wales. Dont use the w word. Dont use the w word. Okay. Theres got to be ood way of saying it. If you dont pay back your if you fail to pay your debts fully and thoroughly. Is that snap y i . Anyway, that was great. We appreciate it. Thank you. Shes here for two hours. I know. Hes trying to get rid of me. Someone who walks on egg shells every day. I do now. When we come back the new York Stock Exchange planning a normal open this morning after yesterdays big halt. Bob pisani will be here with what stopped trading at the new York Stock Exchange. Then china stabilizing the stock market. And pepsi out with an earnings beat earlier this morning. Well dig through the report with an analyst. Should you be buying the stock . All of that when squawk box comes right back. Welcome back to squawk box this morning. The bank of england leaving its key Interest Rate unchanged. As expected european markets mostly higher this morning. Take a look across the board. From germany to portugal theres a lot of green on the board this morning. Earnings news out this hour. Walgreens boots alliance. 15 cents above estimates. The company increased its full year outlook as well. Revenue did fall a bit short of forecast. Walgreens also raised its Quarterly Dividend to 36 cents a share. Were just over two hours away from the opening bell down at the new York Stock Exchange. Less than 24 hours ago the exchange was scrambling to resume trading after a technical issue atted trading for more than three hours. Bob pisani was in the middle of it all. Hes now with us and he joins us with the latest on the squawk set. The interesting thing is we still dont know what the problem is. They did release a Statement Last night that added a bit of clarity but not much. The nyse experienced a technical issue and consistent with our regulatory obligations the decision was made to suspend trading as we worked to identify the cause of the problem. The root cause was determined to be a configuration issue. Well, that settles that. Now that we know what the problem is. This is fancy tech talk. All of this is fancy tech talk meaning there was a server or hardware configuration that was not set up properly. Its a software problem. Thats the issue theyre dealing with right now. They are routinely given upgrades because of all the other software. There was an upgrade the night before. Right at the open we had connectivity issues. Meaning messaging traffic was having a problem. They supposedly fixed it at the open. I think what happened was in the process of fixing that problem, it created other coding problems. This is a problem with these complex systems where they have to interact with everything. Theyre not quite clear all the time on the outcome of trying to fix these things. So i think that is what caused the problem. So there are two issues that are really important at this point. Number one, can you keep these glitches to a minimum . How do you do that . The s. E. C. Has been trying for years to require all the exchanges to upgrade their systems regularly. This year they did institute a new systems testing and upgrades. I think the s. E. C. Is going to be investigating that to make sure that the nyse was in compliance. They are at a minimum, though, right . Were not talking about these types of things every week every month. Last one was what . Three years ago . There are little glitches that go on all of the time. This was an egregious example of what happened. It doesnt happen that often. Its amazing the systems work so well. The second thing is to make sure theres an adequate safety net out there. In fact, we saw that yesterday. Archipelago which is the electronic trading system continuing to operate well. And nyse listed stocks own others that continued to operate well. So essentially think of trading as a river and there was a rock that was dropped right into the middle of the stream and the stream went right around it essentially. Now, where i think the nyse floor adds considerable value is at the opening and close where they have a monopoly and thats why the floor is still important. So hopefully we dont have this debate flowing over. Were over that debate. You and i have been debating this for 15 years about the floor. To see where everything when you dont know where things are trading, you start wondering, you know if it had been if you didnt know where any of the big board stocks were, youd be china, this that. But seeing where they were made it so much better. The pent up selling didnt build up. And this was not the flash crash. I mean the important thing, this was a software coding error. We need to keep those how many guys yesterday said to you, united you know glitch there, wall street journal glitch. This has got to be a hack. Werent there conspiracy theories all over the way . You and i arent conspiracy theorists. But did that not go through your head . It went through my head immediately. The first thing i said was can you tell us what the cause is and can you rule out cyber attack . And they did quickly. Is it 100 ruled out . They made a statement that it is not a cyber attack. I asked the president of the nyse whether it was. He said it wasnt. Doesnt it make you think how unprepared we are if it actually were . Yes. I was out with some high level security people working for the federal government a little while ago and said whats the things that worries you most. They said the two things is an attack on the electrical grid and attack on the financial system. So yeah. That immediately went through my head. So i dont think its a crazy idea. Theyre 100 confident this morning goes off without a hitch . Or a glitch . They said all systems are operating fine. Im going to ask a boring basic ceo question. Why do a Major Software upgrade in the middle of the week . Normal practice it is done over the weekends. But sometimes there are new systems that come up and you cant avoid it. These things happen all the time and they go off routinely. Its fairly rare to have an event like this. Every once in awhile it goes through the complexity of it. It was similar to the trading operation that happened. That actually was a coding error very similar to probably what happened here. So we can keep these to a minimum but never get rid of them. This is a characteristic of complex systems. Youre going to get coding errors. Its going to happen. Upgrading cars upgrading stock trading systems, upgrading airline routes and things like that. All we can try to do is keep it to a minimum. I think the important thing is figuring out why the damage was so severe. This was much more severe than most of these have been. And this is an issue for the coding people to look at. What did they do . And i suspect when they tried to fix the initial problem, it created a kas katcascadeing series of other problems. The bottom line was the system worked. And the market people were not disadvantaged. At least in terms of prices. There were certainly some people on the floor that were unhappy. Its embarrassing, right . No, its not good for the nyse image. Not at all. All they can try to do is minimize it. There will be an investigation. I suspect the s. E. C. Will look at whether there was any violations here. And therell be discussions about it. Given this is a young team its a new team thats there, i think they handled it very well. Theres a certain seasoning you get with crisis management. I asked sara about it and she went, oh. You said that earlier, didnt you . I said it to you. Not on television. Thanks for letting us know that, joe. Did you hear anything he said at all . Obviously sara hasnt learned yet. Dont say anything like that. You know what . He said this was a tough day. That was an understatement. We were asking to have him on very early. I would like to have him on early, but given how tough it was to solve the problem, i know his attitude was he had to fix it. He came on with us at least twice. Farley. So bitter. You made another friend joe. Coming up i wish someone would talk about you think hes mad . I wish someone would talk about me like that. They never have. Horrific fireworks accident claiming do you believe this the digits of two nfl players over the fourth of july weekend. That story coming up next. I aflac . Aflac i thought you said this guy was the best . Oh, hes a horrible stylist. Gah . But hes the best at paying claims fast really. Mmhmm. Paid mine in just one day. One day . Yea. Aaaflaaaac in just one day, we approve and pay. One day pay, only from aflac. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Welcome to squawk box. Among the stories front and center this morning, victorias secret parent l brand fell short of estimates. The eu filing formal charges guest mastercard today. They want to know if theyre raising the cost of card payments. And ibm announcing it has made working versions of a dense computer chip. It has four times the capacity of the most powerful being sold. And we talked about this before going to break. Firework accidents reportedly claiming fingers from two nfl players. Doctors amputated the right index finger of new york giants defensive end jason pierrepaul. He refused to see members of the giants staff at the hospital yesterday. Even with the lost finger his career i cant imagine it would it says might not be in jeopardy. Well see. And a similar story from the tampa bay buccaneers. Cornerback c. J. Wilson also injuring his hand in a fireworks accident. His father says wilson lost his index and middle fingers. But neither one of these were as bad as the guy that shot one off his head. Why is this happening . I dont know. Its you know i dont even know what to say. I dont either. Because theres a lot of things you could say but its not funny because someones dead and another guy lost their im thinking about the nfl guys with these multimilliondollar contracts who are playing with fireworks. With their hands. Fireworks are pretty cool. Do you hold them in your hand . No. I dont. But i dont think youre planning on holding them when theyre going off. Youre not planning theyre going to explode in your hand. Maybe they need Better Safety warnings or something. The safety warnings are pretty big on the fireworks. Are they . Yeah. Are you kidding me . I had to go to indiana to buy the fireworks. Walk across the suspension bridge. I knew exactly where to go over in covington. You walked across the bridge . Yeah. I was 15. Yeah. I loved fireworks. Were both from cincinnati. Yeah. One thing we have in common. Moving on. Quickly. Thank you. East side of town though. Theres no rivalry. I grew up near where pete rose grew up. That says it all. On the west side of town. Home of the ice cream. You want to go down this road again . Its like a microcosm of the country. Oh, god. Moving on. Actor tom selleck is being sued for allegedly stealing truckloads of water for his ranch in drought stricken california. The local municipal Water District claims a truck tanked up at a hydrant more than a dozen times and hauled water to his ranch. The district hired a private investigator to document the alleged thefts. Its seeking an injunction barring selleck from taking any more water. The Sheriffs Department told nbc news they investigated the allegations but could not find any criminal wrong doing. The story was everywhere last night because a pi had been hired to investigate the pi. Yes. Pi investigated magnum pi. Was it for avocados. He has them on his property. He has a 20 acre avocado farm. He needs water. And a horse corral. How will we have guak without that . Exactly. Coming up china announcing more emergency measures to stabilize the stock market and gaining some traction. The shanghai composite erased the previous day selloff. Well talk to an analyst who says china could be poised for big gains. And as we head to break, look at equity futures. Looks like a nice bounceback at the open. Dow implied to open higher by 173 points. Listen up team i brought in some protein to help rearrange the fridge and get us energized im new ensure active high protein. I help you recharge with Nutritious Energy and strength to keep you active. Come on pear its only a half gallon. Ill take that. Yeeeeeah new ensure active high protein. 16 grams of protein and 23 vitamins and minerals. All in 160 calories. Ensure. Take life in. Why do i take metamucil everyday . Because it helps me skip the bad stuff. Im good. Thats what i like to call the meta effect. 4in1 multihealth metamucil is clinically proven to help you feel less hungry between meals. Experience the meta effect with our multihealth wellness line. We are back. Goldman sachs out with a report saying they expect a monster rally in the chinese stock market over the next year and thats partly in response to chinas emergency stabilization efforts. Overnight china announced shareholders with stakes over 5 would be banned from selling shares for the next six months. The shanghai composite spiking on the news closing up 5. 8 . Were joined by a china bull the former cio at global advisers. Good morning. Youre banning and stocks are going to go up. Thats the way to deal with it . It happened here in new york with the financial crisis. Six months . Ive seen it before. Why doesnt it seem to be working . Well it spiked percents today. Just today. Look how much theyve done in the past week. Despite what i said im not a big believer in the government trying to do something with the market. Just in general. Whether its in canada the u. S. , europe china. Im just not a big believer. This is a story of a lot of consumers weve heard the story moving from exporting to consumption. They were consuming real estate. That didnt work well. Now theyre consuming stocks. Theyre going to have a problem with that too. Luckily well see more foreigners come in because weve seen the stock connect and mutual recognition of funds. These new steps for the Chinese Government to allow foreigners to come in will more than offset the domestic investors. As the country tries to shift to this you dont think theres any fallout dramatically from a new breed of investor getting into the market and then watching the stock market essentially crash right in front of them and that not having ripple effects over the longer term . I cant answer that too clearly except for the fact youve had 150 runup. How much has an investment into the stock market . Last year the biggest product launched in china was used as a parking space in alibaba. When you look at the investor and ask them hows your experience been . Generally ive had my money in cash. Is there a longer term fallout maybe as someone like the well known investor jim chanos suggested the fallout is more political than financial. The inability of the Chinese Communist party to stem the selling in many respects will have much longer lostasting effects. I think that is true. When you look at the restrictions put out there, i believe that the china Security Finance corps, the restriction is not to allow selling or shorting of small cap stocks. My feeling is theyre trying to protect the Chinese Investor whos generally i hate to say it a bottom up picker. Very similar to a u. S. Investor during the tech bubble and crash who were also very new amateurish investors learning for their first time what does a bear market feel like and what does margin feel like after the fact. Thats a great point because a lot of this is speculative opposed to investing. But what about the whole policy on margin accounts and leverage around it . Id love to hear that. Is that going to shift now as a result of this experience . From what weve seen with the chinese policy makers theyre reactionary. The finger pointing has started. And complacency is something they cant do. So to turn off the spigot is something well likely see. Its something weve seen in the u. S. As well. Enron leads to something. Theres always going to be a reaction. I think its interesting that this made the front page of the New York Times in the u. S. Today. I mean finally people really starting to notice here and theyre starting to wonder what e the impact is. What would you tell people who, say, own alibaba or other chinese stocks that trade here or Big Companies that have chinese exposure . I would say get used to it because youre about to get more. If youre in a state pension plan or globally if youre part of a country that has a Sovereign Wealth Fund you are going to get more chinese exposure whether you like it or not. Ftse included china in the Worlds Largest emerging market etf. And S P Dow Jones will follow. Whether you like it or not, etfs any pension that has a policy allocation will increase chinese allocation. And ragt now i bet theyre jumping at the chance. So to your point and i thought the conversation you heard when msci was thinking about increasing the china waiting and things like the eem which the average investor is likely in was maybe a sign of the time. Okay. Maybe its gotten a little too hot over there. Right. Not a little too hot. Its super hot. Wasnt that a pretty good sign that maybe its got too much . Now were thinking of increasing the waiting on Something Like that where the average american investor can have more exposure to a market place like that . Thats i have to say thats true, but if i were to open up the magazines that whatever is the Time Magazine of china right now, wouldnt surprise me if it said end of the stock market which sounds like 1982 here in the u. S. And youre still a longterm bull . Yeah. I guess the question for me is is this the time . You said people should be piling in now. If you look how the valuations rode up they probably have more volatility. And were probably not at the bottom yet. Even though the interventions have helped sustain. Timing is important. My life as a hedge fund manager, i would say right now if you are in then you have to figure out do you want to commit for the longer term but if you cant chop off the arm to save the body. But if you are thinking right now i have had cash i was smart, then enter now. But now is not the time to buy insurance. The house is already burning. Richard, really interesting conversation. Thanks so much. Thanks. Richard kang. Pepsi out with earnings this morning. Stock is on the move higher. Well dig through that report next. Seriously . Youre not at all concerned . About what now . Oh, i dont know. The apocalypse . Were fine. I bundled renters with my Car Insurance through progressive for just six bucks more a month. Word. Theres looters running wild out there. Covered for theft. Okay. Thats a tidal wave of fire. Covered for fire. What, what . All right. Fine. Im gonna get something to eat. The boys kind of a drama queen. Just wait. Wheres my burrito . [ chuckles ] worst apocalypse ever. Protecting you till the end. Now, thats progressive. Verizon say neversettle. Tmobile agrees. Never settle for verizons overpriced gimmicks. Try the uncarrier riskfree for 14 days youll love it, or well pay for you to go back. Pepsi shares are on the move this morning. The company beating earnings expectations and also raising its outlook for earnings. Joining us now is ivan fineseth. Has a neutral on pepsi stock. Were you impressed by these numbers, the fact theyre able to still raise margins and also raise the outlook . Not really. The growth is really coming from their snack food business and the key problem is that their key carbonated Beverage Business is still flat slightly declining. More importantly the key measurements we look at we look at the economic profit still being flat. So youre in the camp that wants to split up the company, food and beverage which doesnt get talked about any more because he successfully got someone on the board . Yes, i absolutely believe they should do that. Theres no synergy is selling soda and snack food. The only thing is theyre consumed together. Arent we past that though . Theyve been able to prove that having the snacks business has been great because its balanced out the weak volumes of the Beverage Business. Theyre cutting costs with productivity and they continue to increase profits on pricing. And theyve proven that it is good. It helps leverage with the Grocery Stores to have both. Well from the operating standpoint of the business if one division is doing poorly and another division is doing well overall the company could be doing well. However, you want both businesses to do well because they are both key businesses. And the key dominant business is still they are a soda company. Or a beverage company. So what would it take to get you to like this stock . Or are you just not going to like it unless the spin off beverages . No. They dont have to do that. What they have to do is to allocate capital to have a rising return on capital. Because our key measurement and driver is that the biggest driver of increasing shareholder value is a rising return on capital. Over time their return on capital has declined from about five years ago, about 15. 5 to just around 6. 5 today. What do you think about the move to promote Hugh Johnston . Hes officially named vice chairman. Is that a succession move . Possibly. Overall i think its neutral. I dont think its negative. I dont think its that positive. More companies and more investors and regulators are calling for splitting different offices, so theyre combining it. But its a nonevent to me. I think its interesting because our analysts have a slightly different perspective than yours which is we like the diversification and the thoughtful way theyre handling the succession. What do you think about the move to speed up the north American Business . Doesnt that go against the snack Food Beverage split . If anything theyre going to consolidate around latinamerica as a region. Well latinamerica is a key growth area. So doing that may allow them to focus resources and management expertise in other areas. So its not a negative. If one region is doing well and another is doing poorly its going to have a negative effect on the stock. But it suggests there might be some synergies in distribution deals as sara was saying around the two businesses actually. Well but you see heres the thing. The snack and beverages, theyre not produced in the same factories. Theyre not even delivered in the same trucks. Both the frito products and Pepsi Products show up in different trucks. I think cocacola would be thrill Fire Department they had the business pepsi has now. Its a totally beveragefocused company. Yes. The other thing is they really dont do that much cross promotion. You would think theyd have coupons on a bottle of pepsi saying you could get a discount on a frito product. But my view coke benefits more from a sales of doritos than pepsi does. Interesting perspective. There are investors that still feel this way. Ivan feinseth. Is there a single snack that ends in s that isnt unhealthy . Theyre great. Unhealthy. Is there one that isnt great . Im not a tostitos person. With salsa . Are you out of your mind. I like the scoops. I like them. Cheetos. Tost tee toes. Fritos. We have a deprived life. We just get the doritos in europe. We dont get the others. Youve got to go to a great gas station in this country. I was just there though. You do have those toilets. Wow. Maybe i dont go into the same toilets as you. But its possible. They have little spray things on the regular toilet with warm water. Yes. Theyre unbelievable. And you got to pick a knob to flush. Which got me confused. I was afraid to touch anything. Equity futures slightly higher this morning. Were done with toilets. Goodness. Futures pointing to a rebound on wall street. Now up to session highs up 172 ahead of the open. At the top of the hour David Gerstenhaber weighing in on the bubble in china spp it a bubble and is it popping . And hell talk about the prospects of a grexit. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Thank you for the knowledge. Take the high road. Are you still on toilets . No. We were on streets. Go ahead. Alcoa has actually kicked off the unofficial start to earnings season last night. Earnings falling short of estimates hurt by lower Aluminum Prices but revenues were slightly better than expected. The company has been trying to reduce its reliance on its legacy commodity business. When we come back media executives gathering in sun valley. Aol Ceo Tim Armstrong joins us. Plus Steve Leisman just touched down in germany. Hell bring us up to speed on german Public Opinion on a possible bailout deal for greece. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Chinas market surging overnight. A new proposal on the table for greece. Add earnings to the mix and you have a recipe for wild swings on wall street. David gerstenhaber tells us where hes putting money to work and why he thinks stocks are headed lower. The Stock Exchange wardrobe malfunction. Ive never seen this happen. Yesterdays big trading halt should it alarm investors . And what it says about the trading system. Media moguls gathering in sun valley to talk business and make deals. We have Tim Armstrong as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Yes. It is. Thats what i mean. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with sara eisen and scott wapner. Becky and andrew obviously are off today. Were less than 90 minutes away from the opening bell on wall street. The futures are better if youre long than last time we checked. Up 174 on the dow jones after losing 260 yesterday. We had a day last week where we lost 350, remember . And were well below 18,000 on the dow. But well get some back today. Theres whats happening in europe. Those are all nice moves across the board. Scott, i mentioned yesterday when they put apple in the dow, i said theres going to be trouble. Look where the dow was. See apple yesterday . Apple was 122 yesterday. 706 billion. I argued now matter how great the products are, no matter how great the future is. Getting to a trillion is tough. 784 billion was the highest. 706. Itll bounce today probably. It wouldnt be the first Huge Technology company to go to the dow and have issues. Exactly. Or even worse, aig. If they hadnt added it to the dow, we wouldnt have had the financial crisis. Wouldnt have happened. Here are the stories investors are going to be talking about today. Chinese stocks actually rising today. The shanghai composite closing up 6 almost. Taking steps to prop up the market there. And among todays moves, the Securities Regulator there banning shareholders with large stakes enlisted firms from actually selling. Meantime the bank of england keeping Interest Rates unchanged. Policy makers trying to improve wage growth with more turbulence in the Global Economy. Then in Corporate News pepsi shares rising this morning. Earnings and revenues topping estimates. And the company is raising its outlook. Pepsi sharing up about 2. 5 in the premarket. If greece is to get yet ood bailout from the eurozone it will have to go through germany, that country first. And thats the country to which greece owes the most money. Some 68 billion euros. But we did see earlier, steve, michelle did a great report on what greece owes to others. But it comes later. Its in the 2020s of the 194 or so. Were playing this might be craftworks for you. Were not playing any dead. Were playing german industrial music. Steve leisman is in frankfurt this morning getting ready for this weekends big vote. We sent you over there. Thats good, steve. Can you is it palpable that somethings going on . Oh, yeah. Yeah, you can feel it. This is the place where if theres going to be a greek deal, its going to happen. I just want to tell you what we heard this morning. I love the way the guys at the control room get their kicks. Im here in germany and theyre playing whatever it is theyre playing at volume 11 in my ear. Thanks guys. Appreciate it. Turn it up. Now you want me to dance, dont you . Im not dancing. Sop heres the deal, guys. Germany is the place its going to happen behind me the European Central bank building. Sorry, no cheesy euro sign behind me anymore. Those days are done. But heres the deal. This has become here in germany and across europe and the United States about Angela Merkel and the choice she has to make between check in politics where only 10 of the german public according to the most recent poll supports giving greece any leeway. And her legacy. And i want to show you this cover that came out. And this translates at lady of the ruins. And shes standing you could see here on some greek columns fallen over. It says if the euro fails, then merkels chancellorship fails. It chastises her for the decisions shes made and the rise of the hard left wing in greece. Whether thats fair or not, i dont know. But this is being cast if she lets greece go then down the road there could be others who go. And the whole european experiment which was from her party where she came from was a big euro integration supporter here. At a conference just across town being put on by the bank. The Bank President had some pretty harsh words for greece. This is what ehe said. The greek government has not only walked out on previous agreements but has been widely criticized as an unreliable negotiation partner. K a little other a week ago it came to an end and the greek government has stopped honoring its payment negotiations towards creditors such as the imf. So guys what we were told today and i think michelle has talked about this this morning is that if the greeks dont submit a plan this is from a german official, then its going to be hard for them to meet on sunday. They need it in by midnight tonight for it to be reviewed. And the best way to end this is now we dance. Joe . Steve, were going to stay on this. I dont know if you can stay with us, but were going to stay on this topic. With us on set David Gerstenhaber our guest host today elizabeth corley. David, lets start quickly and just looking at some of your interview notes, to figure it out youve got to get inside tsipras head in your view. Kraeyeah. What about the notion he says well do three years and the pension and tax stuff. Just get out of this mess for now. Is that likely for sunday or you dont know . I think its impossible to call. He has been very unreliable in terms of what hes done thus far. And hes a wild card. Does it matter to the decisions youre making with the money you manage right now what happens to greece . It does. Greece is overhanging the markets. Its a relatively small part of the eurozone but it clearly is impacting flows of capital. And i think that defensive posture is probably appropriate. We have a checklist of items to go down. And then we want to get i want to talk to you about apple too. We were just talking about it. You were twitching over there as i was saying its tough to get to a trillion dollars. But china, they definitely are manipulating the market. If they can continue to do it probably would be fine. But the question is if it just gets too heavy for anyone to be able to hold up. But it worked today. Its come down a long way. It may be a little bit late to be panicking on china. Yeah. So yes, they can manipulate the market. Theyre trying to manipulate the market. And they had some success overnight. So its telling that you said maybe the worst is already maybe they already lost control. Thats why its down a third. Yes. No question. The the better short back then. Much better short back then than it is now. Now everybody wants to be short. It seems like it may be late. All right. I was talking about apple. I want to ask you one question. Because obviously theres no one in the world that doesnt know how cheap that stock is and how great its products are. I always ask the question who has not yet at 784 billion market cap when it was at 134 who had not acted on their bullish intentions at that point on apple . Who was left to buy it at a higher price from the people that already own it . Thats a good question. I dont have a good answer to that question. But youll stay in there. Just sooner or later it will out. Thats what a money manager decides. That sooner or later its going to be reflected is that its got great growth its at ten times whatever. No matter the technicals whether everybody already owns it, its going to eventually no i dont think its a matter of technicals. It hasnt done anything adverse thus far. Hard to grow to the sky though. No question. Theres no question. The suggestion is to your point that there are some funds, mutual funds who are underweight apple in terms of their overall weight. They need to get in. And as icahn has talked about, that creates in a sense the de facto short squeeze in the stock eventually which helps take it higher. How about that scenario . No i think thats a reasonable scenario. Its a large piece of the index. Unless you think the index is going down hard and unless theres any negative news on apple, theres no reason the stock should underperform. We do it less from technicals and more from fundamentals. We think its one of the strongest Consumer Brands in the world. Got extraordinary ability to extend beyond that. Coming out with a great product lineup still. Underperforming expectations. Theres ways you could paint a scenario for the future looking back three years from now where youd say, wow, we didnt we thought that the penetration of the iphone in Global Markets was so low that it only had one way to go and that was up. We didnt realize company a or company b or samsung, we didnt realize they were going to leapfrog technologically over apple. And it always happens to Tech Companies where you dont see it coming. I think thats right but their brand goes beyond the product. Its got a Consumer Trust element in it. If they wanted to diversify, if they started to anticipate they were maximizing penetration. What did we decide on the watch . Failure, no . But theres also things coming early. I think we shouldnt judge it in the same way we judge more classic what about google glass. I dont think they set out to make it a mass market. Sales have dropped off sharply. Virtually every headline thats come out over the last how many weeks has been somewhat negative about the watch. I dont think apple expected it to be a blowout kind of product. I dont think they expected it to be a dud. I dont know that its a dud. Look at the experimentation, you know. A lot of this is finding a Community Interested in something, listening to the Community Feedback innovating and getting out there. I think its interesting to see the way in which they bring the consumers into the development. Lets move on. So youre going to stay long. I am here to stay long yes. Im fine with you on that. How about airlines . We talk about airlines all the time here. I dont know if you watch, but i argue with andrew constantly. He says airlines have a spot and no one else can get it from the government. Youre able to charge whatever you want. So its basically unfair as far as competition. I argue for 20 years they had a negative effect on capital for 20 years. Correct. So finally all the legacy carriers go bankrupt we let them merge. Now were going to try to fix pricing. After we let them consolidate. Is it unfair theyre doing so well now . I dont think its unfair. Weve reduced the number of carriers to a handful at this. Oligopoly. Yes. And they havent added at the pace they might have. They have underperformed recently. And theyre such an easy target. Youve got airlines and people will say theyre making too much money just because their bag was lost last time or they had to wait on the tarmac. Its like cable companies. Had to wait with comcast. Whos going to take comcasts side in that when they waited for the guy and he didnt come between 2 00 and 6 00 right . Its an easy target. Are you worried about the collusion investigations . Not really. I think that its too obvious. Right. What i was saying you need to collude to come to the capacity . Doesnt every company need to even apple. You dont want to make so many iphones iphones. Its exactly right. These are cheap stocks. If you dont mind fighting the market, its probably a reasonable time to be long these stocks. So youd be buying delta, any of the others . I wouldnt buy them in any great size. What should you be buying in size right now . Can you tell us anything or need to buy it first . You liked japan a lot last time. I like japan. Were seeing stocks respond accordingly. And the economy is doing okay. Its not doing great, but its doing okay. They have quantitative easing in the system there which is keeping liquidity flows high. They have institutions which are shifting out of bonds and into stocks. And so you have a natural flow into the stock market in japan. I think the setup is pretty good over there. Okay. Got to go again. Thank you. All right. Appreciate it. Coming up the new York Stock Exchange shut down yesterday raising questions this morning about the stability of the nations high speed trading system. So could glitches and halts hurt americas Global Market dominance . We discuss that next. Everything seems to be running smoothly this morning. Check out the futures. Looks like a higher open for the board. Implied open for the dow of 175. Squawk will be right back. Can you spot the difference . The wind farm on the right was created using digital models and real world locationbased specs that taught it how to follow the wind. So while the ones on the left are waiting the ones on the right are pulling power out of thin air. Pretty impressive, huh . Now, two things that are exactly the same have have never been more different. Ge software. Get connected. Get insights. Get optimized. Verizon say neversettle. Tmobile agrees. Never settle for verizons overpriced gimmicks. Try the uncarrier riskfree for 14 days youll love it, or well pay for you to go back. Just want to bring in some breaking news here. Pg e got this done on the beauty brand. Going to sell 43 of its to this is part of p gs efforts to spin off a lot of underperforming brands. This is a big one. 12. 5 billion. The reason youre not seeing a whole lot of reaction is this was a long time to be rumored and speculated and reported on. That both coty would be the buyer here of the Beauty Brands and they were going to fetch a price around 12. 5 billion. That is a good price to pay according to analysts. And well continue to see p gs strategy. They have failed to really bring back top line revenue growth. We are counting down to the opening bell on the new York Stock Exchange where trading was halted yesterday. Good to see you. Broken markets. They left the end out. That was the name of the book, but dont worry about it. Whos counting. What is your take on what happened yesterday . Listen were in a technological world. Theres always going to be a software glitch. Theres no question. Theres Constant Exchange glitches. There was one on edgex. No one talked about it because its a minor exchange. There will be more of these. I think the new York Stock Exchange did a good job. I think tom farley in his statement, he mentioned the close was the most important thing for the Stock Exchange. Getting that across. The close. Not the clothes. Hes a good looking dude. You said it. Not me. Hey, no man crush here. But the bottom line is they did what they were supposed to do. But heres the thing. As a professional trader we traded all day long. We didnt stop trading. I traded on many. With that said im hearing an argument saying that fragmentation is good. But heres the difference. Theres competition and fragmentation. Right now there are over 40 Stock Exchanges. Of which five of these have less than 5 market share. Theyre irrelevant. We dont need 11 Stock Exchanges. We need closer to four or five. I thought we learned yesterday that we do. Not 11. I would take more than one. Because then im stuck in one spot. But maybe i can deal with three. Why do i need 40 dark pools . Why not have about ten . Unless youre coming to the table with something creative and competitive like iex is when they came out with their new system, why do i need a system that has a pricing rebate that flips around . Thats not what the market is about. Were trying to aggregate liquidity. I hear you but the genies out of the bottle. How are you going to put it back in . If anything, its going to go further the other way. The s. E. C. Has to stop issuing. But if you dont have 3 market share, you should not continue to have a protected market quote. Theres no need for all the fragmentation. Heres the funny part. A lot of High Frequency traders agree with me. Theyre theyred theyre tired of it. All types of investors are playing in the same pool not disintermediation where all of this noise goes on. Thats noise. Thats not what were supposed to be doing. And i think yesterday could be a good way for the s. E. C. To step in and say we do have an issue here. Fragmentation is not good. Okay . Competition is good. Theres a big difference there. Joe, its interesting earlier other joe was asking about the risk of cyber attack. Dont you think well see natural Competitive Forces squeezing out . The amount of security for other things is just going to squeeze them to the wall. Wouldnt it be better to allow that competition . We heard earlier they dont like institutions of governments intervening in markets. Im a free market guy as well and i would never say i want all this excess regulation. But exchanges are owned by three families. So ten of the exchanges are owned by three families. Theres no need to have four exchanges at one facility and in fact a lot of them are operating in the same data center right now. Its time aggregate liquidity. Then youre not going to see 200 share fails. Youre going to start to get chunkier stuff. Ive got to move stock theres a reason youre using the term family. You know what i mean . Are you implying something here . I like to use color a little bit. I see that. Am i okay . Are you okay with me . Ill take care of you. You think this will hit the typical investor . I think its a confidence thing. When you see a headline that the new York Stock Exchange is down its a confidence thing. Were in a 24hour news cycle. Theyll get over it tomorrow. They read the headline. It was halted. But one good thing the new York Stock Exchange did was they didnt halt across the board. Weve got to go. Should be more confident it works. Five four. Thank you kwb joe. Good to see you. Coming up, yahoo s big bet. Thats where at t can help. At t has the tools and the network you need to make working as one easier than ever. Virtually anywhere. Leaving you free to focus on what matters most. We live in a pick and choose world. Choose choose choose. But at bedtime . Why settle for this . Enter sleep number dont miss the final days of the lowest prices of the season. Sleepiq technology tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow only at a sleep number store. Dont miss the final days of the lowest prices of the season. Save 300 to 700 on selected mattress sets. Ends sunday know better sleep with sleep number. Yahoo making a bet on online gambling. The Company Unveiling a retooled Fantasy Sports mobile app. It lets users wager real money against their friends and on bigger tournaments. Playing its daily fantasy game is legal in 45 states. All but iowa arizona, washington, montana, and louisiana. Users can deposit up to 600 a day. Meantime paramount striking a deal with amc and cineplex. Theyll be available for online streaming and on store shelves just two weeks from the time they leave the theaters. The chain wills have to share a portion of the revenue from the film. Thats interesting. I think thats great for the consumer actually. Heres a good one for you. The russian government releasing a new psa this week. The topic of interest . A safety guide to selfies. Okay. We want to show you some of the pictures. Because they show some unsafe selfie shots like what would happen if you were taking a selfie of yourself on the stairs. Or mountain climbing. Or on a mountain you could fall. Stumbling down a cliff, falling off a boat getting hit by a train. The ministry of russia said dont do it there. Weve noticed the number of accidents caused by lovers of selfphotography. Its constantly increaseing since the beginning of the year. Dont stand on the edge of a boat and take a selfie. Or in front of a train. Or a dangerous animal. All right. Well get jobless claims on the other side of this break. Being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Welcome back to squawk box. We have an increase of 15,000 on initial claims from a slightly upwardly revised 282,000 to its current pace of 297,000. I can hear everybody out there shuddering as we get close to 300,000. Settle down. Most likely theres some holiday distortions here considering independence day. But in the grand scheme of things, having these numbers at levels we havent seen in a long time is a bigger dynamic. But many will be nervous were this close to 300,000. Well continue to monitor. If you look at a different timeline its hovering around 2. 34 million. That is up a little bit from about 2. 26 million. Splitting hairs to some extent. Yields moving back up a bit after a couple of challenges intraday off where we settled last year. Of course its mostly about stocks and with stocks its mostly about outcomes. And outcomes its mostly about people that have outcomes. The chinese in particular. But the market bounced today. Well see if that takes pressure off the notion that economies are exactly the same and reflected in totality by the level of their equity markets. Back to you. Thank you. Rick santelli. 190 almost the dow futures. Lets get reaction to the numbers here. With elizabeth corley. Sure you dont want to see jobless claims move up to 300,000. Its volatile. The trend has been solid. I agree. I think youre going to get noise around the trend line. And so we wouldnt panic around that number at all. I think if you look at e the other data. Driven factors coming out, theyre broadly positive. Homeownership is slower to start but the other data is pretty positive. Were talking so much about china and europe. The u. S. Sort of has been this island of prosperity as they say on wall street. How resilient do you think that is in the face of risks and not just from china and europe but latinamerica has been slowing down and other places. Russia has been impacted. Can it really stay strong throughout all of the global turbulence b turbulence . We think the u. S. Economy has the most resilience. Its fantastic the way its bounced back from the crisis. Theres been a lot of managementive Balance Sheets. Theres been restructuring. And youve seen real gains in the economy as a result of that. Theres still some scope to see further productivity improvements. And youve had very responsible management whether people like it or not from the fed which has remained very accommodative. When do you think the fed does move . Great question. It was interesting. I think you commented earlier in the show that looking at the june minutes is like it doesnt matter anymore because were in a new world. I think youre right. I think its very difficult to predict. Theres still a chance it could be september if the data suggests its supported. We know theres a split view. We know theres some who are very sensitive to International Developments and clearly if we see a bad july and bad august that could mean people are more cautious. Youve also got others. It was San Francisco commissioner John Williams who was saying this is around datadriven dependency within the United States. I think were going to see a very interesting discussion coming in terms of whats going to happen. Do you think its more or less likely that it happens in september. Let me also point out for those watching and listening that dow futures are up nearly 200 points now. Its amazing, isnt it . There was a bounceback due. I think you cant predict whether its more or less likely right now. Theres so many overhangs as to whether china is going to settle down and whether well see the eurozone muddle through on greece. Once you got more directionality on those things then it comes back to the domestic story. And then if the data is looking positive, the chance is still there. All right. Were going to hear more from you. I want to ask whether that means the secular bull market is over. Well talk about that in a moment, but weve got to move on here. Media moguls meeting in sun valley idaho. Our Julia Boorstin is there and joined by a special guest. Hi, julia. Were joined by Tim Armstrong armstrong. Ceo of aol. Of course this is where aols sale to verizon was hatched last year. Youve done this deal and you just told me off camera youre meeting with 70 companies while youre here. What are you pitching to them . Sun valley does a tremendous job of having people come and having a week we can meet with different people. Over the course of three or four days, my meetings break down to three big buckets. One is the software form and how we do sales and advertising. Second bucket is really about partnerships in the contents base and things we can do with the content companies. And the third is really just people that have interesting Business Models or research or whether its startups or large companies. And so i spend my time during the week meeting with those types of people. There are always deals that come out of here. What types of deals based on what youre hearing do you expect to see this year . Theres been kind of a very wellworn path over the last years here. I think today you basically see a complete mixing of the digital and offline people together. And i think linear and ott and really the video space i think is a tremendously hot space. Theres a lot of discussion about it. I think thats probably major, major topic here overall. To both traditional cable companies. For both digital and traditional advertising. Yeah. So our systems and why its interesting for us to be at sun valley is we have linear tv ads that were powering running in australia right now. We have content distribution happening right now in our system. When we look at the business were powering 30,000 or 40,000 other publishers. Video ads and content syndication. Yesterday i spoke to mcadam. And he said hes on the lookout for more acquisitions. I know verizons in a quiet period now, but what type of company would make sense for verizon . Heres the beauty. Im still learning. I think lowell is a great leader. He has a great vision for what hes doing. And i think from our standpoint you know our area is very contained. Within verizon were very focused overall. The broader verizon picture, theyve been methodical about what theyre doing. He has a vision for where things are in video and where things are going in video. Verizon is doing a good job about being at the forefront of where these things are. You dont have your eye on any accuracyquisitions . Were constantly talking to partners and companies and those things. We just did the verizon deal. We just did the microsoft deal which is global and huge. Were excited to work with them. So we probably did two of the largest deals in the entire world in the interpret space last quarter. Were in heavy digestion mode right now. How much are greece and china a topic here in sun valley . I think global economies are a topic overall. One nice thing in idaho is you get a world view. I think theres a lot of discussion about what happened in china early in the week in terms of whats going on with the markets in china. And, you know greece is on a lot of peoples minds also and how its going to affect the european economy. On both of those, a couple years ago people were wondering what the u. S. Economy was going to do. One of the things ive heard at this conference a lot is how strong the u. S. Economy is. And its nice to actually be see the country performing well the economy performing well here. And i think people have been fairly bullish on how the u. S. Is performing in the midst of the two bookends, europe and china. You have International Exposure as well. You have products in china. How concerned are you about that mark of volatility impacting your business overseas or having some trickledown effect . Our company is growing internationally. But there were things last year like the fx rates that affected business. That could be a headwind Going Forward. But the reality for us is the Global Economy is a massive opportunity. 4 of the population of the world lives in the United States. The majority of our business is in the United States. So we see the 96 opportunity. And also 96 opportunity to go global populationwise with 2 billion more people coming online mainly through mobile. Then the second piece is were in businesses that are both predicted mobile and video to really be 40 billion each. So 80 in the next three and a half, four years. So we cannot work fast enough to get your systems and people and talent. Our teams have done an amazing job of putting together a global platform. Bullish despite that volatility. In terms of the new York Stock Exchange trading being halted yesterday and you nieted systems going down and wall street journal. Com not working, do you think theyre a coincidence . I didnt spend time on it yesterday overall. But we are spending time on security. That part of the business is becoming a real business in the economy overall. And i think, you know its unusual when you see three things like that happen in one day. So i think everybody has watched that situation carefully and probably made calls into their companies to think about where things are at. But i think it was an unusual day yesterday. I know were out of time. Do you think the folks here are concerned about Cyber Security . Yeah. I think its a big subject. If you broke down some of the subject matters ive been hearing, its about where theyre going. Its about data and how to use it. Internet of things are coming. Interpret security is definitely you know, a topic, but i think the drivers are really wheres the growth coming from and then security is one of the things that is you know has to be a leg of the stool. I think its one leg of the stool. Not the whole stool. Tim armstrong, thanks fn ss for joining us here in sun valley. Appreciate it. Over to you. Thanks. Up next, is now the time to buy Chinese Companies . Were going to focus on some big adrs when we return. Welcome back to squawk box. Making headlines the European Aviation safety meeting in luxembourg today. The head is calling on regulators to share information beyond their own borders and help avoid attacks. Chinas stock market surging overnight in a volatile session again after losing onethird of its value since midjune. Trading here getting hit hard. Look at alibaba. The stock sitting near its alltime low going back to the ipo. Dom chu has put together a list of other chinese adrs and affected stocks here. Alibaba last fall was 120 stock. Now its fallen. Its down about 35 since there. If you look at the chinese stock market versus our stock market were looking pretty darn good now. The reason why, over the past month you know about the chinese volatility. The orange line, the s p 500, were down about 1. 5 over the last month. The shanghai composite, over a quarter of its value erased. Again over the past month. If you look at whats happening overall with some of these chinese stocks that are happening, at least here in the u. S. The ones that are traded in the u. S. But are big blue chip Type Companies in china. Jd. Com is down 16 year to date. Alibaba down 12 . China mobile down 12 . And baidu down 9 . This not from their highs. If you look from their highs, alibaba down from its high last fall. China mobile lost a lot of its value. That underscores the risks for these stocks. And of course a lot of investors look toward one to get the exposure. This is e the etf that tracks the listed in hong kong. Year to date its down 1 maybe. But since its highs over here its lost about a quarter of its value just again in the last few months. So chinese stocks certainly not for the faint of heart at this point. The question becomes whether that Market Sentiment changes in the next month or so. Back over to you. Great. All right, dominic. Thank you. Up next, jim cramer from the floor of the new York Stock Exchange. Futures right now are nicely higher. Last we looked. Somewhere up around 200 as far as a snapback from yesterdays drubbing. Stay with us. New york state is reinventing how we do business by leading the way on tax cuts. We cut the rates on personal income taxes. We enacted the lowest Corporate Tax rate since 1968. We eliminated the income tax on manufacturers altogether. With startupny, qualified businesses that start, expand or relocate to new york state pay no taxes for 10 years. All to grow our economy and create jobs. See how new york can give your business the opportunity to grow at ny. Gov business lets get down to the new York Stock Exchange. Jim cramer joins us now. Its great, isnt it jim, when china is able to manipulate it well enough thats fine with us and were going to go up on that. Any of it make sense . No. But i think that were trading one for one. I mean when you see china open and you watch the s p futures, theyre trading one for one. I think when it becomes mainstream, lead story in the New York Times today that all these defenses have failed when they have succeeded last night and when theres actual big money coming in from america. I know there were some big money buying the stocks that dom just talked about. Because theyve gotten from the point where they may have been at 30 times earnings to 15 times earnings. I was speaking about companied like baidu. They criminalize selling. But what about, jim, the companies that are American Companies that have been betting on china as a growth story like mcdonalds or yum brands or nike or even apple . Cdonalds or even apple. Last night on mad money, i talked about given there is such a huge preponderance of growth from apple in china, thats why apple was down so badly. The fears are still going to be there. The consumers are going to slow. I did some analysis how much young would be hurt by it. Expensive meals not a staple over there. Back to normal today, jimmy. Do we have too many places to trade stocks . Are we happy that we do . I think that competition turned out to be really great. We need competition everywhere if we want to do something. If we are share holders, we hate competition. Jim, want to get your quick thoughts on what looked like another solid beat on the bottom line, top line in raising Earnings Guidance . I saw the organic growth. I disagree with ivan. I think the combination of beverages and snacks works, because the supermarket loves it. They do more float and trading off those than the next 14 brands combined. Very good quarter. Very solid. Nice commodity lift. The prooice war in soda seems to be over. Decline in the rate of regular soda. Fritolay, new products great. Good quarter. He said the only synergy is you eat salty snacks and you are thirsty. The synergies involve the supermarkets. They just love these guys. And walmart. A pretty good synergy. I think chicken of the sea should buy hellmans. Can you feed the mayo to the tuna . You should be an investment banker. You have great ideas. This is no worse than some of their ideas. Smuckers and bread. We can do them all right now. Thank you, jim. When we return we wrap things up with our guest host for the last two hours elizabeth corely some final thoughts ahead of the market open. Tomorrow, former ecb president , johnclaude trichet joining with his view on greece that could keep them in the euro or not. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. You are looking at two airplane fuel gauges. Can you spot the difference . No . You cant see that . Alright, lets take a look. The one on the right just used 1 less fuel than the one on the left. Now, to an airline a 1 difference could save enough fuel to power hundreds of flights around the world. Hey, look at that. Pyramids. So you see, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. Hello. I am a fully automated Investment Advisory service. I can help you choose investments. Monitor them. And rebalance your portfolio. I can do a lot of what humans can. Except have a real conversation. If youd like that, you can always speak to someone at schwab. They arent algorithms. Try not to hold it against them. Say hello at intelligent. Schwab. Com i built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . An announcement from facebook. It has updated its controls for the new speed. They have expanded the options for controlling your own news feed, a topic frequently discussed among facebook users. It will let you prioritize which friends and which topics you want to see at the top. Stocks on the move. Equity futures claiming a sharper higher earning. Walgreens raising their full year outlook and quarterly. Coty is buying p g Beauty Brands force 12. 5 billion. Check out shares of netflix, raising 750 a share from 600. The forecast for stronger than expected worldwide subscriber growth. Lets get back to the guest host elizabeth corely global ceo of orleon investors. With we were talking about the u. S. Investors as the bright spot. It made me wonder. If you think this secular bull market in bonds, namely in u. S. Treasuries is over . A great question. You phrased it the right way. A secular bull market. It goes back to u. S. Treasuries and german bunds. Do they represent good returns . No. Does it mean we are going to see a massive shift out. Thats the key question. With the amount of capacity that seems to be available in the world, could you ever see a hyper inflationary spiral again in our lifetime . In our lifetime . Sarahs lifetime. Well you can never write off inflation. The way i think about inflation, an economist once described it like this. It is like the catsup bottle. There is nothing coming out and suddenly all over your phase. You face. You have to be very careful with inflation. Look what we are doing. If you had described what we have been through over the past eight years and they did say that, the printing presses, remember, the commercial. It has been nonstop around the world. They have been wrong. Is there such a thing as asset inflation. I think you have asset price support from very good easing. Asset inflation by the fed. I get worried. To your point. Lets look at the News Headlines. You saw mna and you are seeing Companies Buying back their stocks and do all sorts of efficiency measures except for growth. Longterm planning. They are op timmizing their business as much as they can. Is the risk out there . Absolutely. Creating inflation as opposed to managing inflation. Could we be in a 1015 year period where the highest Interest Rate we have is 4 . Coming down from the 8 9 10 . Never going below 6 people said, ever. As soon as you get to the point there is no return this is the new normal thats when it surprises you. Is this weather conducive to writing crime novels . This is perfect weather. Glooming coming down. People sit in. You have written how many . I have had five published, work on the sixth. Crime novels . Just on the side. Same person. Same central characters. There is a risk they die. They are quite bloody quite graphic, they are not cozies. What about sex . Thats in there too. The first book i wrote had four murders and two sex scenes and the guys said how did you think about the sex scenes . It is great having you. Its been fantastic. Thanks sarah. Thank you, scott. Welcome, joe. Lets go to break. Make sure you. Julia us tomorrow, squawk on the street. All systems are go. The ncse says a day after the nearly fourhour trading halt at the oldest and most iconic Stock Exchange in america. Opening bell is going to be rung by a company with the ticker hack. Thats interesting. Welcome. Im Carl Quintanilla with jim cramer and david faber