Transcripts For CNBC Squawk Box 20240622

Bolstered by hopes of a deal in greece with greece. 11,200 the level there. Italy urging 2. 5 . Portugal up about 2. 8. Heres the big stories the market is watching today. Greece of course. Athens sending a new package of reform proposals to its creditors asking for 59 billion to help cover its debts until 2018. The Greek Parliament will vote on the plan today. Meantime leaders from the imf, the eu the ecb and euro group are set to confer on greece in the next hour. A live report from michelle in athens in just a moment with all of the latest there. And then we will be joined by former ecb president jeanclaude trichet. Another big story this morning and all week china. Stocks there rising by almost 5 overnight. The big drivers, hopes for greece but also perhaps more importantly the various support measures being announced by beijing this week. More from our colleagues in asia a bit later on this half hour as well. Also watch oil today. Prices are likely to fall even further pushed down by what it is calling massive oversupply. This rebalancing is likely to last well into next year. Heres a check on crude oil right now this morning. Wti, firmer by just about three quarters of 1 as is brent. So on both side of the atlantic we can seeing crude a little bit firmer but joe as we have seen every single day can bring a new trading pattern. Theres really no near term pattern we can look to to say here is where it is going and Even Companies havent been able to predict well enough to hedge. Which crisis to point to . China, greece iran because were going to get a deal or not going to get a deal. Good morning, angles. Its totally lost on you guys that intro music. As soon as you said it we got it. I was going to say austin powers. That fits too. We were going to do some threes company. We can do that later we know about threes company. I started the hour by tweet chg ing which is a really millennial thing to do. Earlier this week magnum pi was in the news and we played that theme song. Were going to come together on common ground. Taylor swift apparently. Youre going to see her tomorrow. Im seeing her tonight. Im seeing her tomorrow night. Im sad ill miss you. I knew a guy that was dating a longer lady and they were on a long ride together and they decided to sing to pass the time. The star spangled banner was the only song they both knew. Well find some common ground. In this millennial whats your favorite taylor swift song . Red. I only know a couple. You have a day to study up. Loving you guys is like driving a new mazarati down a dead end street. Now ive got you together. This is fun. Youre doing your normal schedule . I appreciate you joining me on closing bell. Its going to be great. Im going to try to get there. As for the broader markets check out the euro this morning. What does the euro want . What does germany want . No wonder they want to keep it in the eu. Its up today. Well see whether theres anything to this. Dont you guys think it looks pretty good . Did you see my tie . This is uncle sam but dont you think there will be some can kicking today after all the kicking weve seen up to this point. Im surprised they dont make a version of that tie with mario draghi. They do. You had to love wolfgangs comment about how he was going to trade with jack lew. And he said theres no way this works without a hair cut but we dont give haircuts but theres something they can do. Its all about the language. Its all about the language. The same thing today. Its not that different. The proposal from whats been out there in the past. Right. But there is i dont understand the referendum when youre going to not live up to it and not appease the far left. But the central peace was that greece wants Debt Forgiveness and they were running a primary Budget Surplus and had come through the worst of the downturn. All the worst were there. But now theyre saying as soon as next week we will start raising taxes. We will cut our pensions. But they get a little bit of debt relief dont they . I dont know if thats enough. Thats going to be the central question. Going home to the greeks to say is i got debt relief and forgiveness. Theyre not in a strong bargaining position at this point, right . This is not four years ago. The first time it came to the floor you could argue Systemic Risk and thats not happening this time around. Lets look at the other markets. It was disappointing yesterday the way it was enable to hold those 200 point gains at the open. Cramer was saying dont believe this right from the start. What did we end up . 30 points. Did either of you you probably dont get up early enough to watch this. Did any of you see the market cap of apple yesterday . What did it pass . 690. It fell the other way. 784. I said its hard to grow to a trillion and all the analysts that come on here and say its going to double again. From 784. Thats 1. 5 trillion. It doubled already to get up to 784. My contention is no matter what you never know why something doesnt workout. But do you know what today is . Its the 7th birthday of the app store. The app store has only existed for seven years if any company deserves a 1 trillion valuation its apple. But thats a small revenue. Its a Hardware Company through and through. Who bullish on apple has not acted at this point. A lot of hedge funds sold out. Remember when it was the most known stock on the street. Microsoft at 600 billion and sis coe at 600 billion. Its tough to go from 600 to a trillion. Sure. And you dont think apple can close that gap . No i think its hard to grow to a trillion and i think that in hindsight we never know why it doesnt happen and right now the idea is that the penetration of the iphone and the rest of the world is so small, we never know how that doesnt workout. That the price for perfection price. Something comes a long. Somebody else steve jobs isnt around anymore. But did you see 90 million units. But this was in the story in the journal yesterday. He back in 07 said i dont think that. At 780 whenever analyst comes on and says theres no way this is not cheap, why did it go to 690. You know, joe, thats the market. Thats what happens. The market dictates over fundamentals sometimes. For more on greece plus the dow hasnt moved since they added it to the dow. Another curse. Overseas, steve is in frankfurt but lets begin with michelle because we did have a lot of you round out. Youre the third i dont know if youre jacqueline smith. I hope that these guys have at least seen one of the movies. I said to kelly and he said i said dynasty, handsome nothing registered. But you should tell us whats going on with this deal i think. Okay. So heres the proposal they submitted last night. Heres the proposal they voted on last sunday. Theyre incredibly similar. Tax hikes. Pension reform the ones last night slightly more lenient in what theyre requesting however what is significant is the greek government agrees to the same fiscal targets when it comes to a primary Budget Surplus. How much more revenue do they generate over how much theyre spending on government and by virtue of agreeing to the same numbers theyll have to impose deeper austerity than they originally wanted to because since the referendum was announced the economy has gotten clobbered. So youre going to have to do it some way. Thats what the big discussion is on greek media here today. Will they be trusted . Thats one of the key questions over the next couple of days. Does anybody believe the greeks . I want to highlight to you one sentence that is both in the old proposal and in the new proposal. It says the greeks will quote, implemented in full the 2010 pension reform law. Its 2015. Why would you need to implemented the 2010 pension reform law. They havent done it yet. Thats one of the complaints about the greeks is consistently the greek government two or three governments ago, they havent been able to carrie through and implemented fully the reform process. The political process has already been done here. The Prime Minister has gotten to the office early. A lot of the Party Members have gotten to the office early to begin discussing the proposal. The former finance minister is still a member of parliament. So he is going to be involved in all of these discussions. There could be excitement there because he always makes things interesting. Creditors will review the proposal today. We expect to get a vote today as a show of good faiths by the greeks and the communityist party is going to hold a protest this evening. They dont want to be in the euro period. That is not surprising. We dont expect it to be large . I want to talk to you about this thing where he says that the greeks deserve a hair cut because my understanding is the rules of the new Bailout Program say if your debt isnt sustainable, you dont qualify. I almost wonder if hes saying it for reasons but i dont want to cut you off. Go ahead steve. Thanks michelle. That was part of a process that started yesterday with them kind of changing their position a little bit. Making positive comments about the possibility of changing the greek debt but first the political reaction has already begun here in europe. In france president hollande making positive comments about the greek points higher posel calling it serious and credible and kwuzing the words courageous where the germans have been neutral to maybe just a little bit positive. A german official this morning told cnbc these are the first steps in the prior actions demanded by the creditors. Lets see how they continue. He said it was very important for the prior actions to take place as in the vote in Greek Parliament in order for the German Parliament to accept these. We talked earlier today with the school of management and he talked about this tightrope. If finally merkel and the european lets say policy makers will give in. This will also finally conclude that mr. Tsipras will finally leave the stadium as the winner and this certainly is really complicated and is a big problem to digest for the normal people. What we have here guys is a german population that does not support Additional Support give backs to the greeks but at the same time, what you hear on the street here is they dont want the euro experiment to fail. They dont really want greece to leave the euro zone so what we have here is a proposal by the way where twice in what we see is they say they want to remain part of the Currency Union and by the way theres no mention in there of Debt Forgiveness. Now this notion of what they could give them a write down of the debt is probably off the table t. Two things that could happen, a lengthening of the maturity and or a lowering of the interest rate. Those might fall under the terms of a nonclassic write down that the germans could possibly stomach. Joe. Right, steve. Thats what we were talking about. Just exactly what is meant by air cut and semantics and everything else. Steve, stay tuned. Lets continue our discussion on the greek kai sis with someone who has seen this play out firsthand. He is the former president of the ecb that signed off on the greek bailouts in 2010 and 2011. Great to see you. I love the backdrop. I was just there a couple of weeks ago and i guess my first question is you have seen it all over time and the way this latest can i call it a drama . Weve called it a greek drama, the way we have seen this unfold and i dont know whether its a term used in france but in terms of all of the posturing has this been about on par with what we have seen . It seems like its even been more convoluted for us to play out. Has anything surprised you about how long its taken and the different turns and twists . Well first of all i would say that we have had over the last six months a succession of happenings of extraordinary games of chicken and its about to terminate. Very fortunately the deadline is now there and my understanding is we have to remain cautious but the new proposal made by the greek government are demonstrating to have an agreement. But clearly, clearly we have something which is very different from what was, you know the position at the moment of the referendum. We have always said and cynics would say that both sides would take it to the very end to try to extract as much as they can for their respective sides and that may be the case and that it happens. But to view it cynically certainly we have gone through a lot of trauma to finally get at what people thought would happen all ahong but at this point the end result will be a positive outcome . No i was very prudent. The problem is the problem of trust. Do the friends of greece that are the other europeans and also the International Community will trust that the program would be implemented after all the changes of positions we see in the past. What makes me listenreasonably confident but prudent is that the people of greece clearly demonstrated they didnt want to leave the euro. That they understood that they had to remain in europe. And that was clearly the results of the referendum because the no vote meant in the presentation of the government yes to europe yes to the euro but we want to have a negotiation that would be as much as possible but now they realize that to have the approval of the other democracies in europe and probably in the world they have to present a good plan. A plan which would be credible and we are at this stage. But do you really think mr. President that the no vote at the referendum was a yes vote to europe . Do you think that the greek people understood that. Because this entire situation second based on trust and history doesnt provide a very good example for the greeks being able to follow through with promises to the ecb. No youre absolutely right. This is the real problem. Is the government credible in its new promises and new pressures . But in regards to the referendum i was very surprised because my first understanding of yes and no were yes to europe and to the euro and no to europe and to the euro but very very soon the government said no the no vote doesnt mean no to the euro. It means we want to negotiate as hardly as possible the program and the help of the european. But had he said no vote means no to the euro the no vote wouldnt have triumphed. Just a simple question. Is greecing to to get debt relief . If so how much . First of all the main problem is the plan. Is it a good plan . Is it consolidating the solidity of the Greek Economy. The Greek Economy was about to grow at 2. 5 this year according to the imf. Now probably minus 3 . So the time that has been lost over the last six months is absolutely terrible in terms of growth. And now they need to reestablish a competitiveness. Thats important. The debt outstanding is much less important than having a credible plan with good level of competitiveness as soon as possible. Does that mean you i trust that taking account the im sorry, does that mean youd be comfortable with giving them debt relief more than half of the outstanding debt if they agreed to the terms that you just discussed . No. Certainly not and i dont think that you will find anywhere in europe governments and parliaments ready to do that. What can be done without in my opinion real principle of the debt diminishing but you could have a longer term for the repayment and you could have lower Interest Rates and that of course is what is important because what is important is the service of the debt. Year after year. So it seems to me that they are way if there is a good plan if the plan is credible and if the plan is implemented theres probably ways to alleviate the service of the debt which is what is obviously needed. Mr. President , we compare the European Union we have states here and we have some states that need a little bit of help. And we feel like a wrun i dont know. And watching this all play out and as an american just watching it we always come back to the notion that theres no real concerted Fiscal Authority over there and when germans still feel like germans and greeks still feel like greeks that the idea that youre willing to help as a union and give what needs to be given, it just doesnt seem it seems like more work needs to be done. Will this make it easier to have better consolidation of fiscal authorities . Because now portugal italy, spain, they all know its going to be a tough one for them as well. Will this be positive and cohesive . Well first of all, greece was more or less following the steps of ireland and portugal and spain in some respects and i said at the beginning of the year the imf was considering that greece was now back to growth and job creation with a growth of 2. 5 . So the efforts that have been made the efforts made by the others through great difficulty and great pain which is normal when you start from a situation which is dramatically negative. Minus 15 of the gdp of current account deficit minus 15 of the gdp of fiscal deficit. So greece had worked a lot and greece was about to grow so the problem was the change of government and the maturing time for the government to realize what was the real world. What they really had to do if they want to succeed and succeed means growth and jobs and growth and jobs means confidence and of course capacity to inspire confidence not only in europe but also in washington because the International Community is also a partner in this very dramatic case. It seems to me that its history in the making. But until now if you consider what has been the resilience of europe, of the euro area of the currency itself in the worst crisis since world war ii one has to admit that the resilince had been quite remarkable. It is is perhaps likely that greece will remain in the euro area and no country would have left the euro area over the last seven years after lehman brothers. Not only that. The 15 countries so four new countries entering into the euro area. So it means something in terms of stress test of the euro area of the concept of the single currency. Yes. It means also that we have a lot of hard work to do and i hope very much that we will do all the lessons from these experience and continue to do the hard work which is badly needed. Mr. President , thank you. Thank you very much for all your time. Beautiful, beautiful day. We can see in paris today and once again thank you. Beautiful shot. Im kind of a i do love that your affinity for paris. Despite not liking the french. I love the french. How about the french philosophy. I have a little problem. You caused a fire storm after that interview. Coming up another volatile trading session in china overnight. Stocks closing up nearly 5 . A live report next. But first as we head to break heres a look back at this date in history. 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. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. Welcome back to squawk box. If youre just waking up this morning. Heres how we stand in the markets. U. S. Equity futures are farmer by a wide margin. The s p would be up by 21. The dow up 164 points. The nasdaq would open by 46. The open could reverse or slightly weaken that trade depending on what news we get out of europe and how asia has traded. There are some data points in asia that we are watching. Especially car sales for june. Lets go to asia and our colleague adam who has those numbers. Adam. You saw another very solid day for the Chinese Market. The authorities rolled out to stem the decline in the broader equity markets that up until wednesday saw almost 4 trillion u. S. Dollars wiped out today was another solid day but 1,300 companies are still suspended from trade. So interesting thing will be when they come back to trade for the markets. So obviously it amply identified the gains we saw in the Chinese Markets today, particularly for the big blue chips and there were only six counters down in negative territory. They might finally be playing ball with the european creditors. That helped in a wide range. However, yes we did get car sales showing the early signs of the stock market route beginning to effect the number two economy and next week is going to be a big test for these markets because were getting q2 gdp and fixed Asset Investment and retail sales. Back to you in the u. S. Thank you. Appreciate that report this morning. Happy friday. Coming up its friday over there too, right . Almost saturday. Friday night. Okay. Confusing isnt it . Yes. The toilet doesnt flush no. It doesnt. I can confirm. You can confirm. Youve been to a wrasia. When its winter here its summer there. Still unconfirmed. Why ted cruz is upset with the New York Times this morning. This is a great story. The paper keeping the president ial hopeful an author off its best seller list. That story next. First as we head to break a look at yesterdays s p 500 winners and losers. 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 hello. I am technology that is changing investing forever. I am a fully automated Investment Advisory service. I can help you choose the right portfolio. Monitor it. And even rebalance it. Ive been called innovative. Revolutionary. And just plain smart. Id blush at the compliment if i could. But i cant. So. I wont. Say hello at intelligent. Schwab. Com 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 . Selfdeprication is what its all about. I would never switch seats and i did. I dont know why. What did you tweet out . You called us a millennial sandwich. Youre putting it back on me. They made me sit here so that we could be were said millennials. Is that safe to out you as not a millennial. No, because both of you also said that its unclear what a millennial actually is. I think its a state of mind. Its a state of mine. But Even Companies themselves cant agree. Theyll put it from 1978 to 1985 or 1990 or something. They say generally its people ages 18 to 35 because thats the mind set. L. L. Cool j. Says he thinks like a millennial. Ill go with that. I think like a millennial. Therefore you are. Which might be a stretch. I was going to really go off on this but now you sort of they have a way of making an excuse. They have a way of making an excuse. So ted cruz has got a biography and it has sold 11,854 copies in its first week. Its called a time for truth. That is more than 18 of the 20 titles that appear on the New York Times best seller list for the weekending july 4th. In fact modern romance is number two on the list. It sold fewer than 10,000 copies and ted cruz sold 11,854. So theyre not going to put cruz on the New York Times best seller list and the person that was asked to explain why not said our goal is that the list reflects authentic best sellers so we look at and analyze not just numbers but patterns of sales for everybody. I was going to just say you know, the New York Times usually at least tries to have the pretense of they dont even try that much anymore but lets say that they just assume people give them the benefit of the doubt sometimes that theyre still like a journalistic newspaper. Newspaper. That theyre actually a newspaper organization. I dont think i think entire paper is an op ed page at this point. What they choose to put on the front page. The way its structured. Theyre not the only leading newspaper accused of that. It all looks like but in this case i was going to say they don even have the pretense. They arent even massacre raiding as a news organization. Kayla you say that they have revised. They have updated the story. It was wrong of the spokesperson to not provide more details up front about what constitutes a authentic best seller if thats your policy but the updated story said that the best seller list the count is basically just mass market sales. It doesnt include what theyre calling strategic bulk orders. I dont know if thats books purchased by a campaign to give out at rallies or books purchased by the publishers to be used at universities for teaching purposes but theres all sort of bulk orders that books go through and i didnt know that the New York Times didnt count those. I wonder whether they have excluded Hillary Clinton or someone on their side of the aisle. I wonder if that would be excluded in the same way. I hope everybody is out there doing the work right now to see for every political memoir of some sort. But also conservatives have made it. It doesnt appear to be a blanket policy. They dont look at the irs scandal. Yes they do. You cant lump all journalists yes i can. Do you see the story this week. Deandre jordan so its free agent season in the nba and a situation where you have steve balmer with a guy in the room trying to keep him to stay at the clippers as opposed to going to the Dallas Mavericks and tweets were the way people were following this story. You had players on the clippers saying they were coming to texas to try to keep Deandre Jordan to make this decision to keep him on the clippers and it worked and he took less money to stay on the team. So you can imagine for cuban and the mavericks theyre upset about missing their chance to get this guy signed. Youre up to speed on the lebron story. So hes there. Cleveland now. I saw that. Two years. 47 million. Thats a lot of money. Thats more than your last. Thats a lot of money. Do you have anything . Or what is it . A one has an egg and one doesnt. I was going to talk about album releases but with we talked a lot about politico. And speaking of best sellers read the journal, theyre talking about the new harper lee book. Amazon saying the most preordered book on the website since the 2007 harry potter release of deathly hallows. My kids are excited about that too. Is this me . No its you kayla. Coming up a do or die weekend for greece as we have been talking about all morning. The future of the euro zone hanging in the balance. Will creditors come to athens rescue again . A former imf official will join us on squawk box up next. Greece submitting its proposal for Economic Reforms setting up a euro zone show down for sunday. Penning a piece calling for the u. S. To intervene over greece. One of the global repercussions of the greek drama. Lets speak with the former u. S. Executive director at the imf and policy fellow at the wilson center. Thank you for joining us. Thank you for inviting me. I want to begin with the comment our guest makes in the wall street journal today where he says this is the imfs fault for going lenient on greece a few years ago. They need to get a tougher spine to prevent this from happening with other countries again. Is the imf part of the problem here . They were faced with very difficult challenge back in 2010 because greece was in a lot of trouble and they didnt have their own firewall established at that point so the imf membership came to the support of greece and in my board come mens and every review i insisted it was important that the europeans reaffirm their strong support for the euro zone partner which they did. Of course greece is saddled with quite a bit of debt. As you have seen from the analysis released a week or so ago is insisting that the future for greece has to include debt treatment to reduce the heavy burden on the economy and weve seen quite a few comments accepting that will be part of the discussion. He was indicating there could be discussion. He wasnt precommitting anything so its been tough for the imf but theyre looking to be part of the solution here and to help the greeks and the europeans find a way forward. When we hear talk out of germany that theyre not going to accept hair cuts on greek debt should we view that as political posturing or do they mean it . They dont want a face value reduction but theyre willing to to much longer grace periods and repayment periods which do have the effect of greatly reducing the burden on the Greek Economy to repay these debts. Ideally it would be better to have face value. Reduction in the outstanding debt but im hoping there will be a signal to the greek people that the burden will be lighter for the next many years and the imf had to bailout a lot of countries and came under fire so adopted a harsher position as saying after 2003 kind of broke that position in 2010 with greece when it said a high risk of spill over. So theyre going to exempt greece from this exceptional access rule. Should it be written and should congress as theyre conditioning whether they should reup with the imf should they make support contingent on not breaking that exceptional access rule Going Forward . That would be wonderful if it were that straightforward to deal with the country but let me give you an example. Back in the early 2000s brazil was in a bit of trouble and had high debt and many public commentators were saying that brazil needs to restructure. Brazil was telling us was telling the imf no were going to honor our debts and take the add justment measures and guess what brazil did that honored its debts and did not restructure them. So its difficult to say to a country we dont believe you that youre not going to pay your debts. But other countries, whats the magic number thats the cutoff point . Thats very difficult to determine ahead of time because we have seen what countries have been willing to do. Look at what the three baltic countries did in terms of economic adjustment because they were bound and determined to be able to move into the euro zone so you can see what countries, if the political drive is there, what they can achieve. Thank you for joining us with your thoughts this morning. Appreciate it. Former u. S. Director of the imf. Okay. Not a millennial sandwich. This is a friend of mine. Doesnt look like that. Looks like take your daughters to work day. Do you know theres now take your mom or take your dad to work day. I think thats lovely. I do that. Ive brought the parents by the office. My daughter is 15. Shes a millennial. I have been mistaken for being here grandfather. One time. The person had really thick glasses. Anyway they were like bottles. Coming up while greece remains front and center theres another potentially market moving headline, iran and those nuclear talks. That story and the implications for oil markets next. 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 want bladder leak underwear that moves like you do . Try always discreet underwear and move, groove, wiggle giggle, swerve, curve. Lift, shift, ride, glide hit your stride. Only always discreet underwear has soft dual leak guard barriers to help stop leaks where they happen most and a discreet fit that hugs your curves you barely feel it. Always discreet underwear so bladder leaks can feel like no big deal. Because hey, pee happens. Get your free pair and valuable coupons at always discreet. Com welcome back to squawk box. Negotiators hitting another road block on Iran Nuclear Talks missing an already extended deadline to get a deal done. And john kerry saying while the u. S. Is in no rush to get a deal done negotiations will not drag on indefinitely. President obama made it very clear to me last night you cant wait forever for the decision to be made. We know that. If the tough decisions dont get made, we are absolutely prepared to call an end to this process. Lets bring in greg pritty. Greg, those comments come on the back of comments we got from the president this week saying the chances of a deal are now lower than 50 50. What sort of posturing is the secretary of state and the administration doing at this point . Well i think what we saw earlier this week is the iranians trying to use the ninth of july deadline that extends the review period to 60 days as leverage against the u. S. We were essentially by extending friday through the 10th we were essentially saying this doesnt matter to us. They tried to back us up against that deadline. I think that secretary kerry was saying was were not going to be pressured. There looks like theres been a lot of progress. Yet the administration and secretary of state says were not going to negotiate forever. How long will this go on . We still think were going to stay in vienna a few more days. The likely move is youll see a deal within the next week or so. Give the iranians some time to have a facesaving interval if you will after this. They were essentially trying to shoot for an end, this issue of the arms sales restrictions. Thats not something the u. S. Is going to concede and beat them on. So i think were going to kind of give them time to climb down from that. We probably see something next week. But if we dont, that doesnt necessarily mean that the talks will definitively end. This could possibly drag on longer. So you think iran will climb down from the pressure that they have ratcheted up recently to lift the embargo. Because now we have russia saying wed lift it too. That would seem to be putting more pressure on the u. S. To actually make a decision. Well, russia and china both side with iran on this issue and would like to sell them arms. And so this is something were you know i think the pessimistic way to look at this is iran is trying to win the blame game in something great powers side with them on. Would like to sell them weapons. But we still think theres a better than this is not a slam dunk call. Its more of a 60 40 call. We still see the most likely outcome. We still think that both sides want a deal for their own reasons. And, you know were just trying to get out of that deadline pressure they were trying to use against us. Meanwhile people who have been following the oil market as a proxy for how these negotiations will turn out have been very frustrated this week. What tea leaves, if any, can we read with the fact that crude on both sides of the atlantic is firming up this morning . Well as always we have multiple variables at work here. Yesterday the big story was the rally in chinese equities. You know that and greece at the beginning of the week i think the kind of Bigger Picture with the oil market is that last week its been my view for quite a while that weve been primed for a correction. The rise in the ring count at the end of last week should be particularly concerning for bowles. It says were at a price level that actually may be starting to stimulate a rebound in activity when you need u. S. Production to come down. We probably are going to have a decline in u. S. Output in the second half but were still looking at an oversupplied market. We appreciate your time this morning. Have a great weekend. Thank you. You too. Greg priddy. Coming up this mornings top stories. Can a lastminute deal in greece get done . Well get you live reports. Take a look at futures. Dows up 179 on the hopes. Squawk box will be right back. Ah 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. 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 . Market alert. Stocks in china rallying for a second straight day. U. S. Features sharply higher. Well tell you whats moving markets straight ahead. Hopes for a greek bailout rising. The government submitting a new reform for bailout proposal but will it be enough for eu creditors . Live reports from athens and frankfurt ahead. Oil prices arent done falling yet. Thats according to a new report from the International Energy agency. Well tell you whats putting pressure on crude and how long it will last. 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. Welcome back to squawk box here on cnbc, first in Business Worldwide. Im joe kernen along with kelly ef evans and kayla tausche. The shanghai closed up 4. 5 . European equities also rising. As you have heard by now if you were on twitter or watching us greece did submit a reform for bailout proposal. American equity futures are up now 181 points. Closed up only 30 as so many days when the initial news seems positive and then you start hearing second guessing all through the session. Well see what happens today. Weve got a lot priced in now. And ive got the kick the can tie on. Theyve risen since earlier in the morning though. So there seems to be a lot of hope at least into the futures market right now. For more on the events moving global markets, cnbcs reporters are spanning the globe this morning or this afternoon depending on where you are. Michelle carusocabrera is on the ground in athens. Steve leisman in frankfurt covering the german reaction to the proposal. And on the asian markets, adam is standing by in singapore. Lets start with michelle in athens. The new proposal weve had time to go over it. It is extremely similar to the proposal that the greeks voted no to just last sunday. Near capitulation when it comes to pensions. Heres whats significant. They agreed to all the same fiscal targets. Because of the capital controls and their strangling of the economy, theyve lost so much revenue. Theyll need to do more austerity measures whether it comes to budget cuts or tax increases just to meet the same target than if they would have accepted this proposal a couple of weeks ago. Today the Prime Minister is meeting with his party. Hes going to address lawmakers later. A vote later today then we expect a protest tonight. We expect that to be quite small. They have never wanted to be a part of the eurozone. Lets go to Steve Leisman in frankfurt. Thanks. Let me give you the commentary were getting from around the continent. In italy, the Prime Minister says hes more optimistic than he was before. In ireland the Prime Minister says all the eurozone leaders want greece to stay in the euro eurozone eurozone. Here in germany one of the democrats says this is a very important step towards. In france president hollande calls it serious and credible. Officially the government is neutral on the proposal hasnt made a real comment yet. We got one comment that was slightly positive. Lets go to adam in singapore for whats happening in asian markets. Adam . Thanks very much steve. We saw very encouraging session for the asian markets on this led by the gangs we saw on the shanghai composite. Another rally taking the rally up for the second straight day. Emboldened by the arsenal of policy measures beijing released. And the rally was broad based. Ended the day in negative territory. But there are many questions left unanswered as 1,300 companies are left untraded on the shenzhen and shanghai composite. We have securities news talking about some of the Big Insurance Companies that had been deploying cash to buy up stocks in the stock market that had almost wiped out 4 trillion u. S. Up until wednesday. They said to the tune of about 18 billion has been bought in the equity markets helping to support the overall moves. However, the threeweek selloff in chinese stocks has already begun to take a toll on the number two economy. Thats right. We got data out today showing that autosales have dropped for the first time in more than two and a half years. Down 3. 4 . Next week will be a litmus test because we have data coming out to give us a better clue as to the health of the worlds number two economy. Back to you in ste states. The chart june 12th to now is stunning to say the least. Adam baktihar thank you. For more were joined by kevin rudd. The president of the asia society institute. Hes just back from a trip to asia. And you speak greek or just read greek . I speak chinese and i speak no greek. Can you read a little greek . Well you know little bit of biblical greek maybe. But not a lot. Then we should focus on china. But dont speak mandarin on us right now. Ill try not to. I dont know whether were surprised by the extent to which the stock market is being manipulated by the Chinese Government. But im spriessurprised that when they succeed our market goes up and say yeah thats really good manipulation this time. Dont let anyone sell. Use the central bank to buy shares. Of course we dont do the fed almost does that. Maybe not. But should we be surprised that were on board with manipulating markets. I think the question weve got to ask putting it into context is is it unprecedented for governments to intervene when youve got a large stock market volatility . I remember in the Reagan Administration it was done. And a marvelous thing called the price stability mechanism. And then most recently hong kong in the late 90s after the Asian Financial crisis. This is not unique even with chinese characteristics. But is it less correlated therefore with the underlying chinese economy because it maybe it tells us nothing about whats happening with the chinese economy. On the way up or down. Well its the other point in terms of context here. Said the chinese arent unique in interventions. And remember it is a communist country which serves publicly and that it runs a oneparty state which will intervene when it so chooses. But on your point of the real economy. I think thats the valid point for this whole explosion on the commentary about what this actually means. The truth is it plays a relatively small role in the overall context of chinese Financial Markets in general and the economy more broadly. Theres a debate about strength and sustainability about the growth that cannot sustain 7 . Theres a big debate about all that. But frankly the direct connection between stock market volatility where youve got basically the ratios in china that get whacked, the market responding and responding too rapidly. Invented the animal spirits as a notion. Guess what. They dont stop in the west. Theyre in the east as well. And the government intervened. But the actual link with the real economy and real Economic Authority is thin. Cannot be equated with the New York Stock Exchange in the overall robustness of the u. S. Economy. One thing i dont understand though, if im the chinese leadership is why they decided to take this moment to take the selloff which was inevitable instead of saying to people the market goes up the market goes down. Thats how it works. They indicated it was panic when it was going down. That everything was going great when it was going up. So if you read every time people talk to the chinese on the ground theyre understood this impression this is a market with this meaning. Thats a problem for them. Well the point i would say in response to that is stand back from it all, put it into historical context. This is an economy in transition. 35 years ago this was a socialist economy. State owned in its entirety. 35 years later its a mixed economy, on a road to transition to something else. We dont quite know what. Frankly Financial Markets are not mature. And i think as a result regulators are having their first burst of reality and what do you do with this sort of volatility. Im not discounting the fact these are very significant interventions, but i think we need to put into a broader context the fact that this is an economy and Financial System frankly in transition from where it was to where its going. It is in transition. It is evolving. There are all sorts of characteristics you can use to describe it. I think one of the worries, though, is in november the decision was made to link it more closely with the Hong Kong Market as well. Thus becoming the second largest. 6. 7 billion in market cap. So hong kong for a long time was thought to have a more mature Financial System. Does this bring that market down a peg . If youre looking through the lens of the last three months last couple of months since june. We had a correction of 30 down. South depending on what the numbers were overnight. I havent seen them yet. So if you frame that as the reality of losing 30 of values given that stock valuations are up about 120 . You can say, well i bought equities in the shanghai composite in june last year. And im 80 better off. This is the leadership under xi its attitude towards ngos in the country. I mean its tightened consolidated power, they know they cant keep it forever. Why not communicate that to people and tell them this message instead of suggesting theres something wrong when it goes down and something right when it goes up. I think theres two answers to that. One is what i was referring to before. This is an economy in transition. And regulating shall i say, large scale stock market volatility is not immediately in their tool kit. But learning on the way through. The second is taking the earlier point as well. What does it mean for the rest of the economy globally . Again i think Everyone Needs to take a mogodon and calm down. Its like a painkiller. Half puts you to sleep. The imf just put out its projections. It brought it down from 3. 5 to 3. 2 . But in blanchards statement, he makes no reference to the chinese stock market. Says its not relevant to the future projections of the real economy. In fact the revision down is because of a weak First Quarter here in the United States. So i think lets put an end to a broader context. Are the chinese on a learning curve . Yes, but lets never forget were dealing with a oneparty state. Sometimes here in the back of our head that this is just really a catalyst economy evolving into a democracy. Its not. It says its not. Thats why the state is going to intervene. Bulls in china say the same thing. They say they control everything but they know how to do it. They know exactly what theyre doing. In this history of the world, has a government a Central Government ever been able to command and control an economy without something coming home to roost eventually . How are they smart enough to allocate capital instead of the market place itself . Xi jingpings model is we can maintain in china which has strong central political control and allowed the market to dictate the resources efficiently. There is no precedent to that working. This is a unique experiment by the chinese leadership. So i think weve got to watch this step by step on this one in particular on the regulation of the market and its volatility. Its very much a learning process and economy in transition. But how this one turns out, i dont know. If you look at what they actually said explicitly in their major reform document two years ago which was their reform goal and program for the next ten years, it says the market shall perform a decisive role in the economy. Well, the chinese leadership has had had to confront right now where the rubber hit this road on that in the stock market. And theyve chosen the cautious way through. But youre right to point out there is no historical precedent for this working. This is xi jingpings approach. Will it work in the political economy in china over the next 20 years . I dont know. But i think those of us who just apply a 90 91 soviet playbook to this and just say it wont succeed underestimate the fact that the fact the chinese leadership is dealing with a relatively unique system. Okay. Have you had kangaroo meat . No. I grew up on an australian farm. I hear its tough and gamey. Thats why i dont eat it yeah. I grew up on skippy. Peanut better . No it was a yeah. So you didnt think i think theyre cute. But theyre mean if you mess with them. Well i remember my brother coming home when i was a kid on the farm and had blood streaming down one arm and really had an encounter with one. Theyre karate experts. Kick with both feet. Im not kidding. Six feet tall. Theyre body is a weapon. And they just go for you. Dont mess with kangaroos. Tastes like chicken. Actually, it doesnt. Tastes gamey. Im going to hold off. All right. Ive asked him and hes had it. I know him. Its not totally uncommon to do that right . Yeah. You dont actually have a chain of kangaroo. No. Ive id have problems with that. Thank you. And thank you for answering the last couple of questions. Thank you so much. Coming up china stocks continuing their rally overnight. Hopes for greek bailout deal are rising. Well tell you how the u. S. Trading week is expected to finish. And a deadline passed for Nuclear Iran Talks without a deal. Now extra 30 days to review an agreement. What could mean for negotiations. Plus a live report from brussels. Squawk box will be right back. In the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. Welcome back to squawk box. Among todays stocks to watch, gap. Downgrading frome inging to neutral from buy. A drop in same store sales. United continental says the profit margin for the Second Quarter will be in the lower range of its earlier outlook. Company is blaming the strong dollar saying it hurt demand from travelers abroad. And check out the shares of anheuserbusch inbev. A positive outlook pointing to the companys wide brand portfolio in its leading market position. Also on our watch list today, oil prices. The International Agency says prices likely to fall even further. Pushed down by what it calls massive oversupply. The iea suggesting this rebalancing is likely to last well into next year. And at 12 30 p. M. Eastern today, janet yellen will speak in ohio about the u. S. Economic outlook. Investors watching closely for any hints about the feds next move. Lets get a check on markets this morning. Scott nations joins us now from the cme in chicago. Were seeing futures very sharp in the right direction today into the green. Do you think that lasts throughout the day . I do because largely where we might get news from whether its china or greece is essentially going to be close for the week once we get to midday. Looks like the s p is going to move above the 200day average. That number might not be as important as it usually is because weve had such a quiet period. But weve been paying attention to that. 2075 is going to be the critical level. If we can get above that well break this high. But we have to get quite a bit above that. We will pay more attention to china than greece i think. People forget that the losses that the chinese stock market has sustained other the last 30 days are about 16 times the greek gdp. Thats really the problem much more so than greece. Thats perhaps the reason people are saying dont worry about friday. The real volatility could come on monday. Theyre closed for now. So theres not much to go on. Whats the margin of error come sunday night . Well the assumption is that the chinese stongts will be allowed to open next week. And a lot of stocks are closed and we dont know exactly what the leadership is going to do. Chinese leadership and the chinese economy in general is a bit of a man child. They have no idea of their strength. So theyre really playing this by the seat of their pants. Once we get to midday here we will start listening to janet yellen. She speaks from cleveland and is taking questions. One of those questions is going to be what do how do greece and china, whats going on there to factor into their calculus for a september or december rate increase. I now think september is never going to happen. December is probably 50 50 now. If traders thrive on volatility, traders getting into china the last couple sessions. What do you think happens next there . And is it dangerous . Is it an opportunity . How are you viewing it . Its still up nearly 85 over the past 52 weeks. Even though its come off by 30 . Theres something for everybody there. The problem is if you cant sell stocks, if the Chinese Government says we forbid you from selling stocks and you think youve bought a dip, how do you get out of that . So i think that the risk the transactional risk in china is staggering right now. I mean you would really have to be playing with a very small portion of your portfolio even as a big Institutional Investor if you wanted to wade into china. And how Many Industries have gone to china, tried to do work with chinese partners and felt taken advantage of . Now they have the opportunity to feel the same way. I think thats as good a place to leave it as any. Scott nations, our appreciations this morning. Coming up new warnings on popular over the counter painkillers. Details up next. Ah 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 . 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. New warnings from the fda about popular pain relievers. Warning labels on over the counter pain drugs like aleve, advil, and motrin will concern risks about heart attack and stroke. It used to say it might cause the risk of heart attack or stroke. New labels will say that they do cause increased risk. Especially in the first few weeks of use. The new warning does not apply, though to aspirin or tylenol. Very confusing. Isnt aspirin supposed to be good for your heart . It is in terms of its i think its a blood thinner. But longterm theyve done studies. Aspirin and a glass of red wine every now and then right . Whats that . Aspirin and a glass of red wine every now and then. Yes. And some kangaroo. Coming up the latest on iran and the nuclear talks. Iranian president saying the country is preparing for a postsanctions era. The political expert joins us next from washington. As we head to break, take a look at u. S. Equity futures right now. You total your brand new car. Nobodys hurt,but there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do, drive threequarters of a car . Now if you had a Liberty Mutual new car replacement, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. New car replacement is just one of the features that come standard with a base Liberty Mutual policy. And for drivers with accident forgivness,rates wont go up due to your first accident. Learn more by calling switch to Liberty Mutual and you can save up to 423. For a free quote today,call Liberty Mutual insurance at see Car Insurance in a whole new light. Liberty mutual insurance. Good morning. Welcome back to squawk box. U. S. Army unveiling a Budget Reduction plan is that will cut nearly 60,000 soldiers and civilians and reduce the active duty army to 150,000. That will be the smallest size since world war ii. Personnel Management Agency involves millions more people than estimated. More than 22 Million People were affected. Thats almost 7 of the u. S. Population. The u. S. Has identified china as a leading suspect in the hack. China has denied involvement. Fbi director james comey believes attacks were thwarted during the july 4th holiday. The red hot china auto market is now showing signs of stalling. Phil lebeau joins us from chicago with that story. Good morning. Good morning, joe. These are troubling numbers if you look at china and say, look. You at least have north america and china if youre a major automaker. China may not be a growth story. New numbers coming out from the manufacturers association. This looks at those manufactured and sold in china. June sales down 2. 3 . Yes a decline. First drop in two years. Now, the full year sales expected to come in about 22 million, but the sales growth estimate has been revised lower from up 7 to up just 3 for this year. A couple of things happening here. First of all were starting to see segments in china and as a result youve got some consumers there saying they cut it a little bit. Maybe theyll cut it more. Theyre pulling back on whether or not to buy. Youre also seeing Sales Limited by congestion restrictions in big cities. Then you have this. The shanghai composite. Look what happened in the last month. Weve been talking about it on a number of other stories. But when you look at how much its fallen in the last month, it has a lot of people saying how many of these people in china have a margin call that has come due and as a result theyre not going to be buying a new vehicle. And for General Motors this is particularly worrisome. Last year they made 2. 1 billion pretax in terms of income equity in china. If it slows down a bit, how much of an impact might that have . We spoke to mary barra a couple weeks ago. Heres her outlook on gm. When you look at the china market there still is a significant opportunity. Weve gone from double digit growth to single to mid digit. We still see an opportunity. Were at a point right now where were laurgeing new vehicles coming out shortly. I think that will be an opportunity. Then when you look at what we have with chevrolet and more suvs coming when you look at cadillac. Were seeing real momentum there. I still think theres tremendous opportunity. We plan on executing to achieve it. I should point out ive talked with a number of people who specialize in the china market who are based in china about this. Almost all of them say gm is not the biggest concern there. Other automakers have far greater problems to worry about in china. Bottom line is this. The market is slowing down and that is worrisome when you look at how much the automakers have depended on china as really being a profit driver over the last four years. Yeah. Phil, i think thats an understatement. Well see how they open today. We appreciate you giving it to us this morning. Talks to resume today after the most recent deadline in the Iran Nuclear Talks passed last night. They will have 60 days instead of 30 to review any agreement. Kareem, were we making too much of this july 9th deadline . It seems like everything is a moving goal post in this negotiation. As you said it now gives congress 60 days oversight instead of 30 day oversight. But i think from the stand point of folks in washington, d. C. Theres not a tremendous sense of urgency. You know as time passes its not really changing lives in the United States that this deal isnt signed whereas in iran its a country which continues to lose hundreds of billions of dollars because of the economic sanctions at a time when oil prices are very low and theyre having to spend billions to sustain the regime of Bashar Al Assad in syria. So i think people feel the status quo benefits washington more than it does tehran. Earlier this week we got comments from the president that the chances of reaching a deal is now lower than 50 50. The fact this is getting drawn out isnt changing the lives of americans, but what happens if the u. S. Negotiating team comes back and doesnt get a deal . My sense is that its not a question of whether talks will succeed or whether talks will fail. Its essentially a choice between success or continued deadlock. The sides have made substantial gains if you compare things to where we were two years ago. So i dont think theyre going to tear up everything theyve worked on and go back to status quo. But they may well say, listen weve been at it for two weeks. We failed to reach a deal. Congress is already going to take 60 days to look at this. Why dont with go back to our respective capitals and reconvene in the coming weeks . If they dont reach a deal in the next couple days, i think thats one possibility that theyll take a break and come back at it. Kareem if this is so much more dear to iran then why is the narrative that every time it gets a little tough that kerry is willing to move the goal posts in irans favor . Why is the perception that were giving away the store in the United States if they need it so badly where we could negotiate tougher . I mean isnt there a chance that the president and kerry need this so badly or perceived to need it so badly for their legacy it overrides how much iran wants it . That certainly has been a perception or was a perception of secretary kerry that hes in search of a nobel peace prize. But i think to be fair to him, over the last week or so secretary kerry has shown theyre not willing to acquiesce and continue to widen the goal posts simply to get an abrupt deal signed. I think theres a growing sense that as much as they certainly would like this deal for the legacy of president obama and secretary kerry, that continuing to hold out is the prudent policy. At the end of the day, this is something that the entire iranian nation is waiting on the edge of its seat for this deal to be signed. And it wouldnt make that much of a difference in the lives of most americans. Karim, what did you make of the argument in the journal yesterday that president obama is establishing the necessary conditions for military action after 2017 under a new president if iran doesnt comply . I would say first of all, obamas biggest priorities were to avert an iranian bomb and avert bombing iran. I think by january 2017 both those boxes will be checked. If a deal is signed which kind of freezes irans program in its tracks and subjects irans program to more transparency, crowne you know, thats better than the alternative of iran moving forward. But there are never any perfect options. Youre always weighing it against alternatives. But it is possible heres what im saying. You read that piece and the authors are effectively saying you know that the point of this agreement is just to establish the terms for maybe a military strike down the road. What do you make of that . I disagree with that. Again, i think that if the alternative is iran continuing to put its foot on the gas and inching closer and closer towards Nuclear Weapons capability that likelihood is that would lead us to closer to military action than a deal which would freeze irans program in its tracks. Handicap this for us just before we go. You believe that there will either be a deal reached in the next couple of days or not at all. If there is a deal, do you think it involves lifting the u. N. Arms embargo. No i think the arms embargo and this is an issue within the p5 1 there is debate. But the u. S. And europe is opposed to that. I dont think that embargo can be lifted. But to handicap things its really impossible. What weve always seen in the past is deadlines are missed negotiations continue. And i think on a macro level, those points probably will remain. Or as reuters put it this week deadlines, red lines, bedtimes all being broken. We appreciate your time this morning. Thank you. Coming up a sign from the markets that a greek deal is close. Well extending the drop this morning. Peter spiegel joins us next. Stay with us. Greek Prime Minister Alexis Tsipras submitting a new bailout proposal. It will be voted on today. The sunday deal deadline approaching for greece. Peter spiegel is the Financial Times Brussels Bureau chief. He joins us from brussels with the latest. Youve seen whats in this bailout proposal. Is greece getting what it wants and will the creditors be satisfied . Is greece getting what it wants . It is basically the entire proposal that was voted down in the referendum last weekend. Basically regurgitated by the greek Prime Minister. It has a lot of people scratching their heads. Why did he have the big no vote if what he submitted now is almost the identical thing . For a lot of the creditors is although this is the same plan they had proposed to weeks ago, the bailout is over. As Angela Merkel said this is a new program. Were not talking about a bailout trying to finish one program. Were talking 70 billion euros in a new threeyear program. So you have to go beyond what was on the table two weeks ago. I think what well see on saturday when all the finance ministers meet is probably approval to open talks. But whether we get a deal in the ensuing week before a big bond payment is due to the ecb on july 20th i think thats still a question mark. It said the difference this time is theres some indication greece will get a debt relief. Germany saying it doesnt want hair cuts for example. Maybe were talking about maturity extensions. Maybe were talking about lower Interest Rates. What are you hearing that people think could happen to give greece the debt relief it needs to go home and say we did get a better deal . To be honest with you, its become a kabuki dance. Its all symbolic. Greek doesnt pay debt payments up until 2022. Its very symbolic. And the germans have said haircuts, you know face value haircuts on the eurozone loans are against the eu treaty. Thats never going to happen. Whats been talked about since frankly 2012 because it was originally talked about back in november 2012 is as you say. Extension of maturities. Theres a couple of big payments due in 2022 2023. You smooth that out, push out the maturities for big your decade. 50, 60, 70 years. You put on hiatus any payments for five ten years. There is no debt reservicing for the next few years. You get an opening at some time at the end of this program so private debt holders want to come in and take the place of official loans. So i think to be honest with you this is going to be largely symbolic. Its not really going to affect the overall debt limit. That will be something tsipras can bring back to athens and claim victory. I think weve heard a lot of sort of rhetoric and a lot of song and dance on this for something thats only symbolic. Were not talking about a serious debt relief or restructuring here. Joe, youre chuckling. No. I dont know. One thing i didnt quite understand, its costing more right . Than last week. Theyre in a worst position. Thats not helping either, is it . This is the other thing. The proposal that theyve submitted has the primary Budget Surplus targets that were in the old plan. So 1 surplus this year 2 next year, 3 the year after. Theres no way to hit those targets. One of the estimates i heard from a guy at the commission was theyre already having 3 gdp shrinkage this year. What the institutions are likely to come back with is saying everything youre proposing here we had on the table two weeks ago but your Economic Situation is so much worse now, you have to do more to hit those surplus targets. Now, can tsipras really now go back to athens and even go beyond what the greek people voted against . Its going to be hard politically. Today weve had a lot of buzz. The markets have reacted positively. The diplomats in town have reacted positively because its a complete uturn by tsipras. But we really havent heard from the imf. We havent heard from the germans. These are e the guys that a, drive this debate and b, have the final say. Largely been the french the delegations that have been enthusiastic about a deal for any cost for literally, two or three weeks now. I think we have to wait to hear from e the imf and the germans before we can say its good enough. I just dont think it is. A zero coupon century bond. Right. Didnt ibm issue that . Its basically what theyre offering them. One of the proposals varoufakis made was a hundred year bond. I should be there. That is unbelievable. So or maybe it matures in the hereafter which might not be so good. And its language now. So that would not be good. Someone pointed out to me someone pointed out to me that the british have paid off their last leased loan for the United States from the world war under tony blair. Thats not beyond the realm of possibility. Peter, we know its a long weekend for you. Thank you for joining us. Peter spiegel, follow him on twitter, everybody. Worried about a hundred year lease on your house. Seems like forever. First time they borrowed a bond youre leveraging our childrens future. Wait until we hit the singularity though. Singularity. You know what that is . Of course. Its all the buzz. I love that. Were moving very quickly in terms of youre going to are we talking about that now . No. Thatll be the tease. Talk about it later. Just wait until you hear what were talking about. Kayla and joe are going to the same place. Different times, different nights. But shes going with her friends. Shes not taking her niece to taylor swift. Youre just going for yourself. It was my choice yes. That is correct. But im going to another concert tomorrow night to cancel it out. Rolling stones. Excited for both and im happy to say it. You are covering the whole gamut. Wow. Big movers to close out the week in trading. We have your list of stocks to watch coming up next. And in the next hour john taylor out with an oped on the lesson greeces lender forget. Stick around. Squawk box will be right back. Are you moving forward fast enough . Everywhere you look, it strategy is now business strategy. And a partnership with hp can help you accelerate down a path created by people, technology and ideas. To move your company from what it is now. To what it needs to become. I take prilosec otc each morning for my frequent heartburn. Because it gives me. Zero heartburn prilosec otc. The number 1 doctorrecommended frequent heartburn medicine for 9 straight years. One pill each morning. 24 hours. Zero heartburn. 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 you are looking at a live picture of the world cup champion u. S. Womens soccer team about to be honored in new york. Team members will ride floats through a ticker tape parade. Theyll be the First National team to be honored with a such a parade since 1984 and the firstever womens team. Workers put the finishing touches on floats last night in new jersey. The parade is expected to cost about 2 million. City officials have said that about 450,000 of that cost will be covered by private donations and corporate sponsors. Among those nike and electronic arts. The city has taken to ponying up the remainder of the 2 million it will cost to put on the parade which is quite a grand gesture. We were talking earlier this week about how there was such disparity about what the womens team had garnered in not only prize purses and also ad dollars for what ended up being the most watched soccer match in history. Yes, it was. And i watched it by the end. But i didnt see germany. I didnt see the previous games. Its unfair i think, but i would liken it to the ladies final four. I like it. I watch the last game. Better than the nba finals for the men. Not better than the final four for the ncaa college hoops. No. Maybe not college, but i think the nba. There was a chart yesterday comparing it to super bowl or different football thing. Sponsors ought to be able to figure it out. Also you would think after the ratings came out on sunday night you would realize how immensely popular this team was and throw every dollar you had at it. Maybe they think its something that happens every four years. I dont know. Dont get it. Bravo for the city of new york for finding the money somewhere. Dont look another me okay. I watched. I think they might be by the New York Stock Exchange later today. Theres a couple of former soccer players. So keep an eye on this network for all of that. Very proud in new jersey. Carli. Yeah big story. The story in the wall street journal this morning, espn has shows sporting events are rising. And others want to get into e the sports game. Lets take a look at those. You can see up about 1. 2 . Disney has been on a tear guys. Thats what makes this interesting. It was often said espn was the juggernaut. Now its shown signs of slowing, disney is powering on. And also it was thought that espn would be the holdout, that they had all of the leverage against the cord cutting revolution that espn was still what people would pay for. And certainly it seems like their viewership is down. I think the journal said 7. 2 in the last year. May be the case that ultimately they do in a different form. But people will pay to watch their shortports. Do you have a prediction where olbermann goes . No. What do you think . You know better than we do . Maybe he should go across the street. Which across the street . To 30 rock . M. S. Bring him back. Interesting though. Because in the journal article, espn was going to cut costs was future contract negotiations for talent. Looking. Hes tough though. Hes a handful but brings in the eyeballs. Coming up on squawk box, scott sperling. Then julia boorstins exclusive interview with commissioner adam silver. Hes weighing on tech in the nba and skyrocketing team valuation. Stay with us. 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 . Youre driving along, having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . 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Athens submitting a new proposal before a do or die deadline. The cofounder of one of the oldest successful funds in america is here to break down the greek drama. Tells u us where hes putting his money to work. Scott sperling. Plus china rising or falling . What happens if the worlds Biggest Country keeps struggling . Will it take the Global Economy down with it . A major debate straight ahead. Then the nba embracing the cordcutting millennial. An interview with the commissioner. Time to tip off the final hour on squawk box. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc first in Business Worldwide. Becky and andrew are off. They will be back on monday. We are less than 90 minutes away from the opening bell on wall street street. Right now you can see futures are hanging in positive territory. Were slightly off for the highs of the market. S p if it were to open right now would have an implied open up about 23 points. Dow up about 175. The nasdaq up about 51 points. The volatile week weve had, well keep an eye on that. Were also keeping an eye on the markets in europe as we are waiting on some sort of decision on how this greek proposal will be handled. Germany for its part up 2. 5 . France up 3. 25 . Italy and portugal both up about 3 as well. Kelly says there seems to be some optimism at this point in europe. Yeah. Asia too. Here are the stories investors will be talking about. Greece sending a new package of reform proposals to its creditors asking for about 59 billion to cover its debts until 2018. Meantime european leaders will meet this weekend and as mentioned china stocks rising by 5 overnight. The big drivers includes support measures announced this week. Jim chanos warns more to come. As long as china adds credit faster than its growth the real story is months and years ahead. Back here at home stock funds more than 14 billion poured in during the latest week. And its been a volatile week for stocks. Dominic chu joins us with more on the big ups and downs, where we are and where we are headed. I mean kayla just pointed it out. If we open up 175 point, well be flat from where we closed last week on the dow. Were 180 down from last week. Thats a percent to the downside. If youre an investor and didnt look at your statements your 401 k s your brokerage accounts until now from last week you didnt miss much of anything. Look at how much weve gone. Were going through our unofficial dow pedometer to track the steps. It started off okay. Not so volatile early this week. By the time tuesday and wednesday came around we saw wild swings. Remember that day we saw the dow drop 200 points only to close up to by a hundred that same day . Huge swings. Then of course we saw china concerns, greece concerns. The New York Stock Exchange halting trading. Pretty much for three and a half hours on one day. And the dow down only to rise up again yesterday by 270 to get almost all of it back again. Then if we get 175 points today, were pretty much again back to flat. The point of this is we have not lost that much ground. Only about a percent since the end of last week. If youre an investor you take a look at those futures. If we close up if we open by about 180 points well have gotten exactly back to flat from what we closed last week. If youre an investor the week thats been yes its newsworthy but hasnt affected statements that much. If youre a trader on wall street and make your livings on transactions, this may have been one of the better times to see some of that business going. So again, an interesting week so far. Well see if these gains on the implied side actually fold in todays close. Back over to you. It all depends i guess. Thank you. Lets get to our guest host and hear his take on the Current Situation in greece and how investors should play markets right now. Scott sperling khl copresident and a board member of Madison Square garden. Among others. Thanks for coming in. Youre very welcome. We have guys that just buy and sell stocks and we ask them about these external events. And then theres from like yours which may be further moved from knee jerk reactions about uncertainty. The stock market sees china and our stock market sells off on china. You probably are even further moved from where it becomes less thats exactly right. Were trying to take a longterm view. Were trying as other people in our industry to identify a handful of Interesting Companies that we can buy, hopefully help build into something of greater value. And so were not as directly affected by the swings that were just identified. But i would say, you know as we look more broadly, we all need to get used to this. There are going to be swings caused by geopolitical events because were living in a world where geopolitical events are coming back to affect the Financial Markets. And i would say, you know what we need to do is put these things in context. So greece for example, people talk about the importance and the impact it has on europe. And it does. But by itself as we know greece is not a significant sized economy and therefore the fundamental flow through may not be that great. There are issues on both sides. You know clearly a very important element to the germans and ecb is the fact you dont want to set a precedent that will then ripple through to perhaps much more significant economies, spain, italy, and perhaps some others. You know i think were going to see daily ups and downs and swings. And i think just have to keep in context. Whats particularly galling is people use it here to put in their analysis of when the first stupid quarter point rate hike comes. All this stuff, all they do is to look through the prism of losing the free money. When i look at you, youre probably one of those people because private equity firms okay. Thats why you exist right now. Thats why companies arent we dont like free money. High valuations hurt you guys. The companies are getting it free. They dont have to invest. They can just play around with you. Free money, very cheap money is good for big strategics right now who want to do acquisitions. And thats a positive thing for the market overall and even for people like us. But when youre trying to buy companies, the fact you have very low cost capital doesnt always lead to a fundamental Purchase Price that makes as much sense. But its infuriating. Theres an asteroid headed for planet earth. How will this affect the fed whether they raise in september or december . Its like there could be a horrific i dont know, god knows. Some black swan. Hows it going to affect the thinking of the fed . Pathetic. The fundamentals were seeing is theres no inflation. The rate of growth is better in the u. S. Than almost any place else. Much better than any place in the rest of the world. But its not great. I mean were not growing 5 . Do you attribute any of that to the fed . As a consequence . I dont think its the fed and i dont think its that much europe. Europe a little bit in so far as may affect some of the export to certain economies. What i think its attributable to is theres lots of things that have gone on in terms of government overlay that adds cost regulation. And parts of the economy that i bet is a hundred basis points of growth. When you add it up its a significant burden. Where do you think that cost is coming from for the companies in your portfolio that are the most so its everything from the direct cost of different forms of regulation that you could argue may or may not be central to what good regulation should be which is protect the economy and consumers from abuse. Weve swung as you heard from lots and lots of people in the Business World too far in a lot of different ways. But i also think it has other effects that tend to mute the economy somewhat. Particularly in terms of the ability of the Financial System to continue to fund not things that are abuses but things that are, you know reasonable growth from a risk perspective. So were going to have john taylor on. Youre going to be here for that. So they ask him whats the best way forward for greece. And he said and im quoting here. The best would be for them to change radically Economic Policy in a progrowth direction. For example, this would include making it easier to start up businesses ruling out tax increases, and gradually reducing the size of government interventions in the economy. I want to ask him if i can copy paste that and send it off to president obama. I mean is that not something that might take us out of 2 growth . Well, it has worked in the past. Let me put it that way. No look at the future . Im just saying what a concept. I think thats worked in the past. What about let capital allocate itself in the private sector to where now, i will say we do see other there are other factors here that i think help growth but also make it harder in certain sectors of our economy, for example, on the employment side. So youre seeing massive productivity increases through the utilization of technology. We all know about that. But youre at the same time seeing massive changes through the Business Plans and the Business Models of a lot of Different Industries that had been reasonably large employers and youre seeing a substitution of forms of business that are not as labor dependent. And that is something were still going through and working through. I think net its a positive for the economy. But it does put more emphasis on making sure that we train people for the jobs that are available and that we where we need people. There are lots of industries that cant find enough employees. And they cant find people whove been appropriately trained. When we come back from break, can you update us on this ebay situation . No. You cant you got the details with you . Are you intimately involved with the firm and everything that goes on there . With our firm, yes. You are . Okay good. I just cant tell you. Yeah. Im not surprised. All right. We might just bring it up. But you dont have to say anything. You can, you know hows greece . Yeah. You want to talk greece. Just whisper to us. Remember when connie chung said that . Im sure that didnt work out well. It was on tv. Well hit the hot topics and you can nod or shake your head. Okay. Which way . Coming up as joe just mentioned, john taylor on why he says greece should never have received a bailout in the first place. And dont forget to keep squawking. Well chat about the stories in a few minutes. Remember to use keepsquawking if youre on twitter. Squawk box will be right back. 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. My name is fernando gonzalez. Im the gas Service Supervisor here in Sonoma County. We moved up here 35 years ago and we just love it up here, its a fantastic place to live. Our function is customer support. Making sure that our customers are safe and thats the most important thing. We know we are part of a huge company but Sonoma County is our home. Sonoma county is our pg e. What were doing really means something in the community and its just a great, great feeling. Together, were building a better california. After a lot of we heard it called i call it a kabuki dance. Both sides calling the others bluff, could be a big weekend for greece. Maybe it works out for greece this time. Heres a guest on squawk box earlier this morning. The people of greece clearly demonstrated they didnt want to leave the euro. They understood they had to remain in europe because the no vote mept in the presentation of the government yes yes to europe. Yes to the euro. But we want to have a negotiation that would be as tough as possible. And john taylor penning a new oped overnight saying greece is not the only one to blame for the countrys economic distress suggesting greeces lenders have a thing or two to learn from grave mistakes theyve made in the past. John taylor is an economics professor at Stanford University and a senior fellow at the hoover institution. He joins us now. At the risk of the metaphor gets old, john but heroin addicts have drug dealers that enable them. I equate complaining about austerity to complaining about what happens with withdrawal. Yeah, its tough. But to blame the withdrawal on causing the situation in the first place is ridiculous. But there were a lot of enablers. Back in 2010 the imf, they had some pretty good procedures about not lending to countries with unsustainable debt. They did it anyway. The results have not been so great. Its why not go back and fix those procedures . That framework. So you prevent this bailout from happening again. This has been a pretty good case study in avoiding moral hazard. The ecb, the eu has held the line so it doesnt cause other countries in the same position. It doesnt cause them or give them hope they should do the same thing. Do you admire the resolve of merkel and the troika . Well well see what happens with the new deal. It sounds like theyre going to do some debt profiling. Well see. I think the problem really goes back to the period earlier where they got into this. Thats what i was writing about. Back in 2010. Then the bailout because of the private sector People Holding that debt able to get out. So in terms of what helps greece from here on out, i read your quote about progrowth policies. Is there a way to to get greece and tsipras to see the light in terms of doing those things and maybe not quite as much of what we think of as classical aus ter the ty . Can you do one without the other . Absolutely. I think thats one of the lessons behind the scenes. The greek policy on sometimes people call it structural i call it supply side has been very weak. They could get their act together. Thats the only way to go now. The current government is not talking about that unfortunately. Our current government isnt talking about it either, john. Yeah. Its a problem generally. Obviously greece is much more difficult situation. But i think theres a lot of countries sort of slip in. I think ours could do a little better. Thats for sure. Our growth has not been as great as it could be. Its a phenomenon which i think the more we talk about it the more we say lets get progrowth policies here. Lets think about how long it takes to start up a business in greece. Things like that. Regulation. Unfortunately these are referred to by our friend paul krugman as zombie ideas. The financial crisis of 2007 was a result of all the supply side economics of the previous 20 years, thats what im told. Yeah. Thats completely backwards. We had a good run in the 80s and 90s when policy started getting screwed up in more recent years we had some bad results. I dont see it that way. I say if we can get back globally but in particular some tough countries like greece we could do much better. Actually, theres some good stories. You know you see some better results in poland india, mexico. Theyre following some better policies at least trying to. Professor taylor what would you do about puerto rico . Well puerto rico basically have to face up to this problem of the debt. I think theres got to be a workout. Sounds like the debt holders are starting to get together and recognize that. I dont think there should be a bailout of puerto rico either. But its basically a workout. I mean thats what happens when you get in these situations of the private sector. I bring it up because many people bring up this half joking exchange between the finance minister and treasury secretary where they said ill trade you puerto rico for greece. Which problem would you rather have . Well theyre both problems. I think my sense is within that context, the imf make inging puerto ricos got a problem. But i think it can be contained if people are sensible about it. Youve got to have this workout. Youve got to have this reduction. And we didnt do that with the private sector back in 2010 in greece. And so the Public Sector is holding this and youve got this contentious debate between within europe. So i think we can handle this much better if were sensible about it. Professor, just the eurozone the euro experiment. Lets say we get, i dont know somehow we handle this greek situation. Youre still left with germany, this export monster that benefits from where Interest Rates are and youve got the rest of the members that dont do quite as well in these multi speed economies with no fiscal coordination. Isnt it just going to be one thing after another . One problem after another in the future . You know we always knew as economists that one size fits all is difficult for the whole area. Thats why its been so important to try to have more sensible fiscal policy. Regulatory policy. I dont think economists argued for it enough. We should have done more of that. But they can get to that i think. I think thats what theyre trying to do in the long haul. But i think it will work. Again, you have to have other ways to deal with these problems than just monetary policy. Theres only one rate for the whole eurozone. Professor how would you look at the totality of the eurozone . Growth has been better but not great. And there arguably has not been the deleveraging going on in the Financial System there that weve seen in our own Financial System in the u. S. What do you think the implications of all of that is as we look forward . I think for europe right now, their overall policies are back. Speaking of deleveraging dependence on the ecb is a still prob. Were trying to wean our dependency. Slowly but surely. But theyve got a long way to go. I dont think until we get back to like a more normal set of monetary policies that well be able to do that. Its harder for them because of this eurozone. It is a constraint. It is more difficult than the problems in the u. S. Okay. We got to go. Do you think for germany, do you think that its better for them to keep the euro low . Thats what i couldnt figure out. Is it better if greece leaves for germany or better if it stays . Because it seems i dont know. Im not sure whether the euro goes up or down after they get a deal with greece. Is there somebody subliminally in their mind . Politically i think theyd like to keep it together. Its something merkel has been in favor of. I think whats going to happen though, if this deal goes through, itll be kind of pushing the can down the road again. And theyll be reprofiling. And the key here is if greece can somehow maybe its just going to require a change in philosophy and greece can get back to sensible policies. We dont know that now. So i think its probably going to be more as they say kicking the can down the road and not the fundamental reforms were going have to get there. Right. Okay. You wore the right tie. Yeah. Thank you, professor taylor. Appreciate it. Coming up bill clinton and george w. Bush may not have such different political views. Maybe they do. Maybe like charnlging a lot of speeches. Oh no. Something else they agreed on. And what will teledrop in the Chinese Market mean for American Companies doing business there . Well discuss that in a bit. Coming up a shanghai bounceback. Will it last . Well talk about that next. As we take a break here check in on u. S. Equity futures. The dow looks to open up 177. Welcome back to squawk box. Heres whats making headlines on this friday morning. Investors will be listening closely to fed chair Janet Yellens comments today. Shell be give also personal computer sales or what we always call pcs they continue to decline. Gartner reporting shipments fell 9. 5 in the Second Quarter compared to a year earlier. Despite recent market volatility investors have poured more than 14 billion into stock funds this week. Thats the biggest weekly inflow since middecember. Of course its slight sli backward looking, kelly, but still an indication of sentiment, nonetheless. Finally signs of some money going into the market. Eurozone leaders meeting today to discuss the proposal from greece. The question is whether greece will implement those measures which includes austerity, cuts. Steve leisman joins us. Thats really the key question, kelly. I want to talk about this german dilemma thats out there which is to deal or not to deal on the debt. On the one hand if they dont deal, greece leaves the eurozone. Do other countries follow . On the other hand if they do deal, do other countries come forward and insist upon a renegotiation . We talked earlier today with york cramer. He said this deal put forward by the greeks is a bad compromise for europe. A best compromise would strengthen the position of the reform opponents in other countries. Think of the movement in spain where we have general elections later in the year. And i think this is very important. In the end its a fight about how the eurozone should look like. So they see this in grand terms here. You do this and maybe the eurozone falls apart. Or you dont do it and you send a bad signal to other countries. Or theres the pressure from the u. S. , the pressure from france and the imf all bearing down on germany to support debt extension and debt relief. It may be thats too much for Angela Merkel than she really wants to go up against. Kayla . Thank you so much Steve Leisman in frankfurt. Well come back to you often on that story. All throughout the day. Turning attention to china now. Stocks there bouncing back in the past two days after chrnz authorities took their most drastic moves to stop the leading. Folks like jim chanos are as bearish as ever. Hes warning more pain is to come. In his words, quote as long as china adds credit faster than its growth the real story is months and years ahead. Joining us now with his reaction John Rutledge and andy shia. Welcome to you both. John, let me just begin with you. Is this warning from jim chanos right . I think so. Ive never seen a bubble pop halfway. And this was fueled by maher ginrgins. And theyve thrown everything but the kitchen sink at this. I think this could go further. Its not something for american investors to try to take a grab at. Andy thats exactly what weve heard reports of people doing the last couple days. On cnbc weve had guests saying to us, look, we still like the fundamentals. We still think the uptrend is intact. Whats your diagnosis of the situation there . Well the market came down because it was not supported by the fundamentals. Chinas economy has been slowing down for several years. And we havent seen the trend changing. So the market rose by 150 on the hope the economy were to come back. It hasnt happened. So i think that the key there, the fundamentals are not there. And the government wants to reverse the trend, the government has to do serious Economic Reforms. So we can see the light at the end of the tunnel. Andy what kind of reforms are you talking about . If anything, this whole initiative was part of an effort to open up the economy. Now in part to support the market, theyre even going back on margin lending and extending that again. What kind of reforms need to happen here . Yeah. Whats wrong is that to think of the market level is the policy goal. And instead of looking from the market level, the economic fundamentals. Now, the problem in china is overcapacity. And insufficient consumption power of the household sector. So overcapacity means low profit margin. So the stock market is not going to do well. No matter how big the economy is. So all we need is to cut taxes dramatically. And limit investment. Decrease capacity expansion. So thats the fundamental change we need. Scott . I think you hit on one of the key things that we focus on which is the significant overcapacity across almost every industry in china. Yet the Chinese Governments done an amazing job at being able to manage the economy that is growing at rates that we havent seen in this country since the turn of the last you know, 19th and 20th century. In our 19th to 20th century we had enormous booms and busts that were reasonably uncontrolled. The Chinese Government was a i believe able to mitigate the booms and busts. So do you think theyll be able to manage through this capacity the needed capacity reduction . Or will the political pressures on job to create jobs and higher levels of income cause them not to be able to do that . John you want to take that first . Yeah. I mean theyre not capacity reduction is not their goal in their heads right now. Its political stanlt. And the reason theyre doing this policy where they chuck every idea in the river and see if it floats is because they cant stand the consequences of a crashing stock market. This is halting and slowing down reforms. The biggest reform of course is corruption. The biggest policy is trying to change the economys balance towards services. And open it up to the outside world. So this is setting china back really some time. And i think as andy said the stock market should not be controlled from the top. It works best when its controlled from the bottom. And andy what about that . And scotts point of overcapacity. How bad is it there . Obviously china is very vast country. Not accurate. I think we could see 20 to 30 of capacity is probably right. But the good news is the labor market is sound. Because the labor force is declining, not growing. And income is growing. Social crisis political crisis, its just not there. The issue is the government is too big. And the government lives on increasing investment. So this is really about reigning ing reining in the government. We need the lead toers make a determination that we need to cut down the government. And to expand the household sect perp china has great people because people are very productive. The income is low. Its not like other troubled countries like in the west where people have competitiveness problem. Chinese people are very competitive. I think chinas issue is really about reining in the government. Andy xie, John Rutledge thank you for your time today. Morgan brennan told us yesterday a ton of cabbage in china is costlier than a ton of steel. Wow. Who would have thought the fallout would extend to cabbage . Right . Up next we head to the allen and Company Conference where adam silver will talk about Live Streaming apps and how the league is cashing in on cord cutting. Julia boorstin will bring us that exclusive interview next. Squawk box will be right back. When you do business everywhere, the challenges of keeping everyone working together can quickly become the only thing you think about. 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. Seven out of ten Power Outages in the us are caused by weather. But utilities can now predict where the power will go out, within a few city blocks. Working with ibm theyre combining micro weather forecasts with detailed data from local sensors. To predict where outages are likely to occur. And send crews exactly where theyre needed, when theyre needed. Ibm analytics from the internet of things is making energy smarter every day. Welcome back to squawk box this friday morngs. The dow looks to open higher by 185 points. The s p 23. Check out shares of american airlines. The company reporting stronger than expected june traffic. The most powerful people in the world, meanwhile, gathering in sun valley idaho, this week for the annual Allen Company conference. Julia boorstin is there. Good morning to you. We caught up with nba commissioner adam silver in between meetings with both media and tech executives. He explained why sports commissioners are in such high demand here. We have enormous amount of popular content to distribute. So were talking to the tech companies, wireless companies. Theyre figuring out how to differentiate their services from others. One of the ways is with sports content. When it comes to maintaining the value of that content, silver says hes not concerned about streaming apps meerkat or periscope yet. He also said hes meeting with both twitter and facebook which the nba is partnering with. He says that social media has been hugely valuable for boosting the value of the profile of both individual teams and players around the world. Big markets have lost their advantage a little bit mainly because of social media and the distribution of our content. If youre kevin durant and youre in Oklahoma City he just signed last year one of the largest shoe deals in the history of sports. Thats because his games are seen everywhere. His highlights are everywhere. Its great for the people of Oklahoma City. But he has a global following. On the heels of lebron james agreeing to a 49. 6 Million Contract with the cleveland cavaliers, silver is thrilled what that means for the nba. I was moved in watching him during the finals. In some ways with the one arm tied behind his back because of injuries on his team. The fact hes continuing his contract in cleveland, its one of the best story in all of sports. Of all the panels here silver said his favorite one was the Fashion Panel with diane von furstenburg and sara blakely. Not just because blakely recently acquired a stake in the atlanta hawks. He is fascinated by Wearable Technology and the powering of brands. I love that. We were talking about Deandre Jordan. But it has a lot of people talking about whether there need to be changes to the Free Agency Period in nba. Did you get him to weigh in at all on that . You know he really wasnt interested in talking about that particular skirmish especially all the buzz about it on twitter. He did make a point saying hes very excited about lebron. Yes. Deflecting. Thank you. We appreciate it. When we return well head down to the New York Stock Exchange and check in with jim cramer. Find out what you need to be watching at the opening bell. Plus the stories youre buzzing about this morning. This weeks edition of keep squawking is next. Send us your thoughts. You know how to reach us. Well be right back. 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. 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. This morning we asked you to send us the stories that have you buzzing. Now its time to share some responses. Lets start with what some might call the odd couple. Two former president s coming together to encourage the leaders of tomorrow. Yesterday the first 60 scholars graduated from their program in which they studied president ial leadership and decision making. The president s avoided Campaign Talk keeping things light. Clinton and i are getting a little long in the tooth these days. This is the one month of the year when hes older than me. So speak for yourself. This is an old story. Theyre known as they call themselves brothers from different mothers, right . Who else can you possibly relate to if youve who else can you relate to if youve been president of the United States . Right. But in terms of being different as individuals, this is another thing where youre covering a lot of humanity when you compare each to the other. Are they rivals or are they teammates . Right. And i wouldnt even try to list the personal qualities of which i think theyre opposite of one another but there are, i think more than a few. Wouldnt you think . It shows humanity is supposed to transcend our politics. Wow. Right joe . Does it . I think thats a very optimistic note to leave that on. Is this me too . Oh it is. Okay. A lot of our loyal fans on twitter have noted spending the morning with two millennial friends. Kathy fratto defines the generation as tolerant nonjudgmental, compassionate, collaborative and bad at spelling. Why would you know how to spell when your electronic machines correct everything as you go . Do you talk to people . I was thinking about this. Im not sure if we are millennials. You own property. Im married and neither of us live with our parents. But de facto, and which is even sicker. You guys have the same birthday . We do. Its coming up as well. Beckys is the day before. But i think youre right. You said it best. Millennials is a state of mind. Im not one. I dont know. Youre going to taylor swift with all the millennials. And im excited. I have a 15yearold and a 13yearold and a wife that love it. Are they going with you . Of course. Efb everybody is going. Theres been a comedy routine where people try to deny that they love taylor swift. Thats very common to do that and then the minute you get away from everyone thats what youre listening to in your air phones. You knew every word of the taylor swift song. Yeah. Only that one. Lets get down to the New York Stock Exchange quickly. Jim cramer save us. Jim, what should our attention be focussed on right now . I think we should be focussed on jim stuarts article in the New York Times. The Chinese Communist party runs the country and if they dont want margin calls, there wont be. If they criminalize selling of certain sortings theyll win. This is about keeping regime in power. This is not about an election. It was compelling and made me feel better and i like the way the dollar is trading. The dollar has been going too strong. Today its much weaker. Theres some things i like today. You said yesterday, early on. I said fake out because the dollar was going on. Now we e have the dollar doing what i want it to do which is get weaker. You see the stocks underneath you. This is whats important. This time we havent from merkel. Earn wants to hear from merkel. I think the article, what he is saying is the bailout might work because the country is not a real country. Its a communist country. I message a few people yesterday. 690 billion on apple down from 784 on its way to 1. 5 trillion. Youre saying its just a bump in the road, right . I think look i listen to every word fillphil debo says. Its the iphone for me. The stock is down more than i think the iphone sales might be hurting china. 13 times earnings you can say thats why its at 13 times earnings but im not going to bet against apple like so many people i know who have not only given up on it but are saying the watch is a big joke. I wear it. Its not a big joke when it gets more software. Everybody is going to have to buy it because United Health is going to tell you to wear it. Theres a lot more coming up. Loving your show this morning. All right. Coming up guest host Scott Sterling tells us about his newest investment plays. Intending a higher open. Dow would be up about 202 points today. And joe is singing us to break. Squawk on the street will be right back. This is a great place to work. Not because they have yoga meetings and a juice bar. Because theyre getting comcast business internet. Comcast business offers convenient installation appointments that work around your schedule. And it takes done. About an hour. Get reliable internet thats up to five times faster than dsl from the phone company. Call 8005016000 to switch today. Perks are nice. But the best thing you can give your business is comcast business. Comcast business. Built for business. This has been so good for everybody that we may get back together. We hope to get back together with scott at some point. 2 trillion in m a . Is it valuations using your stock currency . What is it . Its all of the above. Cheap debt means large strategics are able to do largely accretive deals. I think there are lots of interesting places to be. If i look at the full range of things people can invest in i still think u. S. Equities happens to be one of the most attractive longterm places to be. Im not giving you Financial Advice but the rate of return over long periods there is very attractive and its a very liquid market. We like a number of sectors that add to the trends i was talking about earlier, the productivity so companies that help other companies do things more cost effectively. Health Care Services is an interesting spot. Our first investment. What about sports . Content is incredibly important and will be monetized in lots of different ways. Nba was able to cut a phenomenal deal with espn even though espn is under pressure itself. May or may not help the other side work. It just shows the power of owning content, sports being live content is very hard to replicate. What about owning a billion dollar enterprise unit out of e bay . You tell me. Is that a good thing . I dont know. Im not the one trying to buy it. Well see. Are you a rubio guy and not jeb . I like them both. I think theyre both very capable individuals, and i think the ability to provide the country with leadership that is again, somewhat centrist even though maybe on the conservative side of sen trystcentrist. I was a bill clinton supporter. I think he was good for the economy. Thats what we care about, growing the economy. Thanks, guys. Have a good weekend. Make sure you join us on monday. Ill give you a summary of the weekend. Squawk on the street is next. Good friday morning. Welcome to squawk on the street. Were at the new york stoxck exchange. Is it for real this time . Futures are up. Weve yet to hear from the germans or the imf