Transcripts For CNBC Squawk Box 20240622

Of the s p 500. Just about a half a point higher. We are going to be hearing from travellers United Technologies verizon and many more out later this afternoon. Its all about tech. Beyond earnings here the other big stories were watching this morning in greece today the government submitted a bill needed to officially start talks in the rescue package. The Prime Minister has until tomorrow night to get the measures adopted in parliament. Increasing year over year last month but only slightly. This shows how a slowing economy is hurting Investor Confidence and in Corporate News out today, the ceo was stepping down. This comes after an independent investigation says he was aware the company was inflating his profits over a number of years. Ibms earnings top which normally happens but revenues fell for a 13th straight quarter. It had to be because of the stronger dollar. You dont get revenue drops of 13. 5 . I dont know what organically it was. The strong dollar continuing to weigh on the company and as we talked about yesterday, what do you call them . The lower margin things. Empty calorie revenue. Empty calorie revenue getting rid of that and the full calorie revenue trying to bolster. Trying to spice it up. We heard that one analyst did not minutes words about missing out on the cloud in the early stages and the challenges that the company has to try to reinvent itself again every ten years. Well talk in the next half hour about imb. These are so hard to read. Oh my word. Look at that. Where is buffet, 175, average cost 164. Thats 164. Is that 9 . Thats going to be rough on the day this morning. I dont like the name and really not big anymore. Is it still blue . You can find bluer chips. Thats for sure. Back in 2011 i believe when warren started making these purchases i thought his average was much lower. I thought he was down in the 159s or 160s . No. But still the dow suggests it would open lower by 30 so all the decline in the futures have to be almost exclusively ibm. Its right around here. Like we said yesterday people pointed out to me that he continues to say hes buying it but hes not using both hands with the amount of financial wherewithal he has. Qualcomm may consider a break up. The company is expected to conduct the strategic review. Hedge fund Janna Partners is pressuring qualcomm to spin off its chip business from its profitable licensing business. I bet its 170. He began by 2011 at a price of 159 on average and then he bought some more at about 167 and then at another time about 173. So it has inched up. I am still trying to figure out if theres a number on what his average Purchase Price was. I dont think its 164. But shares of indian i. T. Services provider rising in early trading. The Company Posted Quarterly Results and announced it won more large deals in the latest quarter. Raising its dollar denominated revenue estimate for the year as well. Lets tell you about other Corporate News. Shake shack disclosing a secondary offering. The fast food operator will not receive proceeds from the transaction. Shares falling late yesterday on that news. Also a mixed quarter from sap. Revenues better than expected but earnings were at the low end of forecasts. The main reason a jump in newer lower margin Cloud Software delivered by the internet. So the empty calorie issue back in play and then first data filing for an ipo. They took first data private for about 29 billion in 2007. Theyll continue to control the company after the Public Offering but that turned out to be a win after quite the moment which it wasnt and now its come back. Its good that youre talking about calories and all of these things today on tune up tuesday. You have no idea whats coming today. Squawk box, who has time you got six jobs. You got this job. You write your column at the new york times. You got your book and you have no time to workout. None. And kids. And kids. So you need a 30 minute workout which were going to this is a 30 minute workout. Thats the short workout . Im looking for 4 minute workout. How much time do we have between commercials. You can have sex twice. Bingo was his nameo. Wow. Shall we check on the markets this morning. Or invite whoa thank you very much. All right. Lets show you the futures for it. Pretty indecisive trading this morning when it comes to the futures. When you look at the dow almost all of that has to be the premarket of ibm. S p 500 flat and the nasdaq higher again today. Fourth day in a row for a record. Gain of 6 points right now. Well show you whats happening in europe. Its a mixed picture over there. Call it flat across the board with portugal lower by about about. 5 . As for asia overnight, stronger across the board but nearly 1 in the nikkei the hang seng was higher by. 5 . Look at oil creeping back above 50 after the commodity was below 50 yesterday for wti. First time since april. Brent was at 56 and natural gas is at 284. Ten year yield right now is at is that 257 . 237. 257. Thank you. Dont even say that. We havent been there in awhile. How do you like the sovereigns in europe. Thats true. Mixed picture from the dollar. Its stronger against the yen and pound weaker than the euro. Now that youre back joe huge rise in the dollar last week or so causing this route in commodities. Speaking of which, look to the right of the chart here in gold. Off the cliff. Lower by another buck after yesterdays decline. Five year low and really speaks to the entire route in commodities over the last couple of days as weve seen the strength in the dollar. Were going to do an interview. This should be interesting. We have a long delay but you ask questions and you wait and its that simple. Hes known for thoughtful answers. The swiss pharma giant hurt by a stronger dollar and weak performance and joining us as i said the companys ceo, joe, its good to see you. We usually meet on your home turf in davos but the stock is indicated down about 104 after closing at 106 after a slight miss in terms of 106. 5. In terms of earnings per share. Can you explain the results to us . Yeah you know in time of great currency fluctuate what you have to do is look at Constant Currency growth and i feel like we had a solid quarter. We were up 6 in sales, Constant Currency. Profit was up 6 . We had nice margin improvement. If you look at margin improvement, below the line things that were more difficult to forecast like associated Company Income and some hedging gains thats where there was a difference versus consensus but when you look at our results the best part about the quarter was the innovation. We just got approval to launch the new Heart Failure drug. This is a drug thats proven to reduce cardiovascular death by 20 and hospitalization by over 20 . We shipped this after we got fda approval and we think this is going to be a multibillion dollar drug for the company. Of course. I was headed to that drug as well joe because i dont think people we hear heart drugs we hear about them all the time like with statents and this is different. One out of five people could have what is known as the potential for Heart Failure which can come i believe after a heart attack or after having a lifetime of high Blood Pressure your heart gets weaker and weaker and weaker and its one of the leading causes of death and up to this point all you can do is treat the Blood Pressure side of things right . This is the prime treatment for Heart Failure, right . Thats correct. Theres very few therapies for Heart Failure. Its a devastating disease. Many patients dont live past five years of diagnosis so this drug is proven to unload the heart and lead to higher success rates. Lower hospitalization rates so this is something were excited about. The whole industry is excited about this because its one of the biggest cardiovascular break throughs in the last ten years. Its a drug that we have said will be a big important growth driver for novartis and were happy to start to market it in the u. S. The previous standards were much more invasive like getting a pacemaker in or in the worst Case Scenario you get a heart transplant or assist device or something. Whats the standard of care right now when it gets really bad . The current standard of care is ace inhibitors. It helps unload that burden on the heart and these patience are able to feel better. Theyre able to live longer and theyre able to stay out of the hospital. So, you know heart fill your is a disease that impacts 26 Million People around the world. Particularly in the u. S. Theres about 6 million patients that have chronic Heart Failure. Many of those would benefit from it and, you know this is a drug also that we think can help lower the total cost of health care because the average hospital stay when a Heart Failure patient goes into the hospital is over 11,000 and we have priced this drug at about 12. 50 a day. So about 4,500 for the entire year. So its getting a very good reaction and were just very enthusiastic about what its going to mean for the company. Sounds cheap when you say it like that but thats one of the criticisms is that the Current Treatment is 1 a day. This is like 12. 50. Weve seen cancer medications that cost 80,000 100,000 and up a year. But still this is quite a bit more than what you will get some bush back even on 12. 50 a day. Yes definitely more than the current standard of care but at the same time you have to look at the benefit we bring. Novartis is a unique company in the space. We have not only an innovative pharmaceutical business that introduces new oncology drugs and break through therapies but we also have an important generics business because we believe while we are fundamentally pro patent because thats how medical science advances but we believe when the patents expire its our responsibility to offer low cost versions through our generic divisions and we were able to laumplg launch a new generic drug for multiple sclerosis. We were able to develop this drug and get it approved through the fda and thats helping our generics division. It had margin growth of 260 basis points partly because of the launch of this new ms drug helping to lowest the total cost. You think its possible it does 5 billion in global revenues within what five years . Well weve said that it should cross the 5 billion mark. We havent given really a time frame because we said thats probably going to be the peak sales but the important thing is theres two type of chronic Heart Failure and we have only gotten approval in the first type of chronic Heart Failure. Its called reduced fraction. Were also testing the drug in a phase three Clinical Trial in the second type of chronic Heart Failure and if were successful there it could double the potential size because theres just as many people with preversepre preserved ejection fraction and thats plenty to think about as we plan going forward. Okay. All right. Joe, jimenez thank you. We appreciate it. Dealing with the long delay. We can put a man on the moon. Thank you. But i think skype would be instant. Its like 170 isnt it . Correct. Why do you disagree with me . Why do you challenge me . Why do you challenge me on ibm. You were right. Its in the report. Its about 170. Thats exactly what i said. You were correct. We spent all this time just dealing with your own im telling you youre right, however i want to make one point theres a 3 dividend on the stock so it matters if youre trying to figure out whether he made or lost money so far. Just putting it out there. His original point was why do you question him. I know that. Novartis 284 market cap and you just heard that the most hospitalizations in patients over 65 Heart Failure. What can help prevent Heart Failure . Any type of exercise. Exercise. Tone up. Tone up tuesday. Stay in shape. Exercise. Stay tuned. You have no idea whats coming. Were going to be exercising on the set. Do you know where were going to go to exercise . No where. Can i show you. Over there. Over there. Oh my god. Thats pathetic. Did he do that . He did that. Just do it naturally. Im going to save ourselves from ourselves. Coming up a 170. No buffet paid 170 a share for each share upon average of ibm but theres a 3 dividend. A 60,000 pick um truckp truck. Why ford is betting Consumers Want to take luxury to a bigger size. But heres a look back at this date in history. The mercedesbenz summer event is here. Now get the unmistakable thrill. And the incredible rush of the mercedesbenz youve always wanted. But you better get here fast. Yay, daddys here here you go, honey. Thank you. Because a good thing like this wont last forever. See your authorized dealer for an incredible offer on the exhilarating c300 sport sedan. But hurry, offers end soon. Share your summer moments in your mercedesbenz with us. Welcome back. Making headlines, ford launching a new luxury version of its f150 pick up truck today. It could sell for more than 60,000. Its been a huge seller for ford over the years. The truck will be a step up from the current f150 platinum. The new models Standard Features will include a multicontour massaging seat. Ive been trying to figure out what that is. You can get it in a mercedes. Im worried you would fall asleep while youre driving. So relaxing. Right. Ive been in a mercedes when you go around the bend you feel the seat move and the sides come up too. Maybe thats it. Multicontour. Talking about massages i rented oh god holding my breath. If you go out of the lane a little bit it now massages your leg do you know what im talking about . Vibrates your leg to tell you to go back into the lane. Thats cool. You rented a tahoe. This was a couple of months ago. Like an suv. Like a big suv when we were doing that doc on the white collar criminals and you get a massage as you were if you started to veer out of the lane a little bit. Did you like it . It was a little weird. I wanted to turn it off. If youre out of the lane it knows. But it was sensitive to the point of even creeping out of the lane. Auto industry veteran doug betts joined apple. He worked for toyota and nissan before leaving chrysler last year. But some analysts said car manufacturing could be in apples future. Can you imagine . All right in an op ed this morning Larry Goodman and steven at the center for Financial Stability discuss fixing the feds liquidity mess. They argue it has produced lopsided positions increasing the risk of another crisis. Some proposals include lifting the feds fund rates to neutral levels and arranging new private sector liquidity facilities. Full disclosure. Who is that guy . My husband. Oh. So you would know. I would know. Probably right. Okay. You didnt that would be like 8 names if you cant take his name. My personal life i do. Do you . Yeah. Did you top line this or edit this piece at all . I read it in advance. Sneak peek. And you didnt marry a socialist did you . Was i ever going to marry a socialist. No. People said which paper i said come on which paper, it wasnt the new york times. He read your book. He must be he knew of you before no. Wait. Come on. No he didnt watch much tv. That made him very attractive. He didnt know you. Thats a good game to play. It is. All right. Youre like a blushing bride. Thats nice. I am. The time being the markets left greece behind to focus on earnings season and the feds next move. What can you expect this week. He is Senior Investment strategist at bmo Capital Management and Senior Market strategist at Morgan Stanley wealth management. Good to have you here. Thank you. Looking at the route in cod mod commodities it seems to say rates are going up for sure and Interest Rates are going up for sure. Its the indication of the dollar going higher and the fed hiking rates and pushing the dollar higher. Its a little bit of a hang over or leftover from the china growth scare. I dont think its long lasting. Were bottoming out on oil and the Precious Metals and its okay for stocks. This is a good thing for stocks. Lower oil is good. The iran deal is good for stocks. Its a risk been around for awhile. Are you saying the deal is good. I thought rates were headed lower because it was conjuring up fears of deflation again that maybe europe with this greece thing becomes less stable. Youre saying that because were going to need to raise rates that eventually the dollar gets stronger. You can look at anything both ways. Its all circular. The dollar goes higher and weakens growth and gives the fed more time and the economy slows down and the dollar weakens again. You would think gold would go up. You would think gold would go up but the news that came out the other day that gold reserves were lower than anyone expected the first time they reported that in five years was a shock to the markets as well. People were selling on that news. Weigh in here. Whats your impression on what the sell off in commodities is telling you about the rest of the markets and what you should do with asset allocation. Capitalism works. If you think about what happened to the five years prior to the financial crisis the world built excess capacity so i think its a net positive for the u. S. It creates winners and losers in the globe and its a positive for economy and you may start getting the consumer feedback that everybody has been looking for from Lower Oil Prices because people believe theyre more permanent. What do you do then . Do you say okay im not going to invest in gold mining here or Oil Production et cetera . Instead im going to go somewhere else or how does that feed into what you tell your clients . Sure i guess coming from a high level perspective you mentioned the fed earlier and thats probably the bigger game in town. We came into this year wit a rangebound transition year type of a market in the u. S. And range bound because the fed typically when they change policy you get a range bound market and more volatility and were probably right for that given the fact that the market is priced well below where the fed is at. In transition year more so because youre in a period of time where companies have taken little Economic Growth passing through the bottom line by holding wages and Interest Rates study and if we believe the economy is moving higher wages and Interest Rates are moving higher. If you think this year is range bound do you push in your klines overseas . Absolutely. At the beginning of the year we moved more toward euro zone in japan where policy is not looking to tighten and those economies are beginning to improve and absent the greece crisis showing signs of improving. A agree with brent there but i think were due for a catch up trade here in the u. S. The u. S. Is up 4. 5 year to date. Italy at all time highs. Japan also up 20 . So we have a preference for Global Equities over the u. S. But in the shortterm heading into the fed rate hike youll see a catch you trade in the u. S. Based on earnings expectations being too low. The bar is so low youll see companies able to beat it. Economic expectations also being really long. Good to have you on. Thank you for joining us. Oh boy. Coming up this mornings top stories but if youre like a lot of americans your work day includes long hours sitting in place. This is a business show but its also a morning show and we need to finally do this and that is a quick workout to increase your productive and i know you have seen seven minute abs and the guy is going to sell a tape for six minute abs. Were going to do it in four. Like we said we know you can do it in four but were bringing you exercise twice. Right to you. Tricks for keeping active. You can do this in your office. Avoid congestive Heart Failure. As we head to break. Exercise, please. People laugh at us in america. They think were fat. You dont need to be. Winners and losers come up. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . I wasnt expecting company. Just doing my workout. Tuesdays arms and back. You asked me to come by sir. Oh did i . Yes. Oh its a deep burn. Oh its so deep. Oh i dont know if you heard me counting. I did over 1,000. Perfect. If you think hitting the gym doesnt fit your schedule youre not alone. Nearly 80 of americans dont get the recommended amount of exercise each week but even if youre bound to your cube cal dont sweat it there are ways to master fitness without leaving your desk. You might look funny but your coworkers will be jealous eventually. Here with us is my trainer eddie flrane. You might think, eddie that this just looks like a weird ball. This will work. Amazing piece of equipment. Everybody should own one of these things. For at your desk instead of a chair. Take your chair away from the desk right there and use the ball. Most people sit in the chair every day and their postjurors is is horrible. So 20 minutes or more and you can increase your core. All day long or more. 20 minutes or more. Theres a couple of words. You cant use hate. Dont use hate and whats the other dont use cant. Theres no much thing as cant. Were going to show what the way i start out. Im going to do that. You give him the y. Do this 8 times. Out here 8 times. Everything nice and slow. Wants to keep his body steady. Ws and then these. Weights or no weights. This is for the lower back. People do not do enough for the lower back. All kinds of other exercises. Do about ten of these andrew. Ten of those. You can do two lower backs as well, joe. Im worried. And then go up. He can do a reverse crunch. Thats good. The hands behind the head. Do about ten of those. Yeah. Same thing for the lower back and walk it out. The last one for straight leg lifts. Walk it out. Do we have an ambulance . Straight legs. Mow you have to do something. For the stomach hes going to do a blankplank. Just a regular plank . But youre going to do it on the ball. This is advanced. Im not going to listen to him talk to me. Exercises for your stomach is the plank. Plugging him back in. Youre going to put this on above your knees and then above your all the way up. Above my knees. Above your knees with with that one. It will be on your ankles. And then this one has to be on your ankle. This is hardeman. What am i doing . Andrew like this. Quarter squat. Down down. Head up. Internal and external rotation with that right leg. Slow slower. In and out. There you go. Thats going to strengthen your hip 15 of those. 15 . Well you can do a couple. Thats fine. Now the last thing we do right now, face me a little sidewalk here. Spread them go from here to the other way. But the second step is going to be small. Little second step. Small step. Thats it. Do the monster real quickly. Like this. Straight ahead just like this walk walking wider with the legs. You can feel that. The last thing were going to do here is chords. Im going to show you this. All right. Take that. Ready. Simple thing you do in the office. Put this with both feet on there and to some bicep curls. Right to the top just like so. Quick work here. Feet together back flap. I want to go tricep throw back and just like that working triceps. This is great. You can also do shoulders. Yeah. So a lot of things you do with a band. These three things you can do at the office. That bould take 20 minutes and everybody everybody could do it. Joe wanted to challenge me on a push up a thon. Joe can do push ups all day long. Good form here. Ready. Yeah. Hit it. How many. I dont know how we top this. Lets see. When joe drops. 1,001, 1,002. Were not going to break until they hit 100. Theyre begging me to go to break but id like to see you guys suffer for longer so theyre slowing down. Coming up a big payday for nfl teams plus a surge in the polls for donald trump. Those stories and more when squawk box comes right back. Go to commercial. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Welcome back. U. S. Equity futures suggest a pret sy indecisive trade. Its close to the top end of the range. The dow would end up 22 points. And nasdaq would open higher by more than 8 points topping what we have seen now for a couple of days in a row. Making headlines, nfl teams each earn more than 226 million for National Revenue sharing last year. Much of it comes from the tv deals. It comes from results released from the greenbackpacky packers. Donald trump surging into the lead for the gop nomination. He has almost twice the support of his closest rivals but most of the calls were made before news of his john mccain comments that were widely known. Theres a huge difference between the polling data like the last day. Before and after. Yeah. So we dont know yet how its all going to turn out. Its meaning less. For now. Ohio governor john kasik will be the 16th major republican candidate to enter the 2016 republican race. Add that name to your list. Well split this. Because after you do he didnt get to talk about it but you have to keep the burn going. Five small meals. Recovery meals. It has to be protein and just keep it going. Were going to split this. My heart rate is up. People didnt see when we went to break, makeup came out almost like the life squad the minute we were done. There was a lot going on. Were you sweating . You didnt look like you were sweating. Andrew was sweating a little. I was sweating a little and the other thing remember they said i saw on a website that a woman got really upset talking about something, cosby or something and then it turned out that she had run from a place where she got some news. Thats a very frightening thing where you run from somewhere and if you dont have time to catch your breath. You panic because you cant catch your breath and i think thats it. Anyway, coming up, shares of ibm under pressure. Well get reaction from an analyst coming up next. When you get up to 50 off thousands of hotels with travelocity it means you can also afford to get up to 50 swedisher swedish massages. Making it the place to find a place for summer escapes. Go and smell the roses. Were not rich but we want to be able to enjoy our retirement. Futureadvisor has identified 9 best practices to help you retire sooner and with more money i was leaving a lot of money on the table. Futureadvisor uses awardwinning technology to give you investment insights once only available to millionaires. Just link your accounts and futureadvisor will show you how youre doing and where to improve. Its like our own team of Financial Advisors 247. We finally have a plan we feel good about. Get an instant assessment of your portfolio and a plan to fix it for free at futureadvisor. Com. Qualcomm may consider a break up. The company is expected to conduct a strategic review. Hedge fund has been pressuring them to spin off the chip business from its profitable patent licensing business and were on earnings watch this morning when the company is said to post results before the bell and then this afternoon all about headliners. Apple, microsoft, technologies and gopro. Dow would open lower, nasdaq slightly higher. The companys mixed quarter disappointing investors. Big blue posting profits that topped expectations but revenues declined for the sending shares down about 5 . So is there hope for big blue to make a big comeback . Here to break down the numbers, joe farise. Good morning to you. We talk about morning to you. We talk about empty calorie revenue. At least thats what ibm has talked about. When the revenue number comes down, they say dont worry. Should we worry . I think you still need to worry. They take about 27 of their revenue growing about 30 . What they dont talk about is the other 70 of their revenue which is declining double digits. Even though you see lower numbers on the top, core business continues to decline. And thats the real issue with ibm. So we would continue to worry about that business. Its slowly tweaked down. Its nice to highlight the stuff thats growing, but we still see a reasonable decline in that business. In terms of growing to the extent they can grow maybe full calorie revenue, if you will question of course is whether theyll be able to do that faster to offset the lower calorie revenue. Can they do that and if they cant do it organically, is there Something Else you want them to do . Yeah. I dont think i dont see it turning in any particular quarter any time soon. If you run through the basic math, again, if youre seeing 30 of your business growing 30 and youre still not growing, that means the other 70 is declining at a pretty rapid pace. And that decline continues. So they need to stymie the business. Its going to be in a number of quarters. We have the returning to growth some time in the next year. That growths important because thats going to help the multiple move in the right direction. We dont see it happening any time soon. You dont see it happening any time soon. Sounds like not the next quarter or two but maybe the next year or two. Its possible in the next year. Again, one of the outliars here is what that core business is going to decline. Its continued to tweak down. Let me look at the position of ibm here. If youre right and you actually are a longterm investor meaning more than six months if you can get to that point which youre saying you will if youre saying that will impact the multiple longterm this is a good investment . I think youll have to see that turn. And im not sure exactly when its going to be. If you look at the last three quarters, again, that core business has continued to decline or erode. Thats not the sign of a business thats turning around. You need to see stability in that business. You need to see the Strategic Imperatives continue to grow 30 plus. And its a very tough thing with a company of this size to pick which quarter that is. What kind of target would you put on the stock . We put a 10 multiple and 160 fair value. 160 fair value right now. Then just going back to the organic versus inorganic. Is there an acquisition youd like to see this company make. There has been talk this is one way to speed this process up. Certainly anything in cloud or any of the digital fields would be positive for them. Particularly something that brings them a little bit further into the fray and helps them from a competitive advantage. I mean the whole services backdrop, the software backdrop its all moved to the digital field. Anything they can do a boost the Strategic Initiative growth rate is where id be investing. I think theyve done the proper theyve taken the proper methods. So theyre making the right steps. Theyve got certainly a lot going on. Its a very large company. But anything kind of focused on some of the newer technologies which grow a lot faster in the core business gets them to an agate growth rate quicker. I dont know if youve been following this debate weve been having whether Warren Buffetts made money off this deal just yet. But with the dividends, i was trying to do math earlier. Looks like he could have made a billion dollars already. Is that possible . Its possible. Hes certainly a smarter person than i am. I think the dividends definitely paid off for him. Hes made a good bet at a reasonable level. It probably stays around these strike prices or these prices for quite some time. So if he can hang in there and the Revenue Growth goes in his direction, hell make more. But its been tough for him for sure. The convertibles with goldman and ge hes getting 10 . So hes got a 3 people dont buy appreciates the underlying assets. It might cushion the undercover calls. Its not worked out in the way he had hoped. I mean he would disagree with that. But well see. Buy more people buy a lot. Buying more and more. Then they can buy as much as they wanted. We will see. Coming up this mornings top stories. Thats straight ahead. And then were going to talk tech. The numbers you need to know when apple opens its books this afternoon. Stay tuned. Squawk box will be right back. 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 . What if there were only one kind of dog . Then it would be easy to know everything about that one breed. But in fact, there are over three hundred breeds of dogs. Because no one can be an expert in every one. An app powered by ibm watson will help vets tap Specialized Knowledge in the cloud for every breed. And whatever else walks, flies or slithers through the door. Ibm watson is working to make medicine smarter every day. Three dow components set to report this hour. Results from travelers, United Technologies, and verizon are coming up. Well have the numbers and reaction from the street straight ahead. Amazon getting some competition today. Jet. Com launching this morning. The Company Plans to undercut from other retailers. How long can it operate at a loss . The ceo and cofounder join us on set. And power demand is spiking in the northeast. Forecasters call for a Third Straight degree of 90degree temperatures and high humidity. Its so damn hot. Milk was a bad choice. The heat wave sparking transit delays and Power Outages but relief is in sight. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box right here on cnbc first in business worldwide. Im Andrew Ross Sorkin with joe kernen and michelle carusocabrera. Becky has the day off. Joe is looking at a picture of himself. On twitter. I didnt know you were looking like that when you were working out. Thats quite a bod there. Thank you. Its not that different. Two dow components just out. Travelers reporting earnings of 2. 52 a share. Only travelers can Beat Estimates by 40 cents on the bottom line on lower than expected revenue. You never know. The Insurance Business is difficult to manage through but also the accounting involved is horrific. United technologies earned 1. 73. 2 cents above estimates. Revenue was slightly below forecast. The company in the profit of selling its aircraft unit to lockheed martin. Lowered operating forecast in part to reflect the sale. And i remember when we had the new ceo on. They do tend to get things out of the way. I think wehen we had him on they were talking about things slightly below the previous estimates. Thats at 109. Down about 1. 3 this morning. Can you read . Down by 1. 48. The market was trembling because it was below 2. 57. Yeah. I cant read that. One year its down, what . 5 . 3 . 3. 52 . Says the voice in my head. You can look here. I cant even see that there. I only wore one contact. Me too. And yours works . Maybe i need a stronger precipitation. Earnings topping estimates for i be rks m. The stronger dollar continuing to weigh on the company. Ibm has been selling lower margin businesses when we look at the decline in the futures this morning for the dow, a lot of that is ibm which is lower by nearly 9. What about the dog that was wearing glasses . What about the dog wearings glasses . You know why . No. Insurance would pay pay for contacts. Bingo was not his nameo. Qualcomm may be considering a breakup. You guys just got together. She was so nice. The companys expected to conduct a strategic review. And the ceo of toshiba announcing tanaka is stepping down effective today. An independent investigation found he was aware that the company overstated its operating profit by 1. 2 billion over several years. Toshiba is expected to restate earnings and overhaul the board of directors and will likely face hefty fines. And, joe . Oh okay. The nasdaq hitting a record high for the Third Straight session. The focus now turns to earnings and for the most away from greece and china. Checking the futures at this hour dow jones is down because of ibm and the 5 drubbing that those shares are taking. But the nasdaq not necessarily still feeling the glow of google. But that was quite a session and quite a move. And that stock, joining us on set is Bessemer Trust principle and investment strategist. And Research Head of cross asset strategy. You and cross asset strategy we do cross training around here. Yes. I saw that. Crossfit too. There was another time joe, when the nasdaq i remember it got to 3,000 and that seemed like a really high level. It went to 5,000. But were back here now. Its a different five. I think its a different five than weve seen in the past. I do believe markets here can move higher. If you look at tech stocks today relative to what they were in the late 90s obviously a very different environment. If you take a look at the nasdaq, its also a very different index than what it was just several years ago. I think overall tech stocks can do relatively well. Youve got a pretty strong consumer today. Of course were seeing consumer Balance Sheet look much healthier than in the past. Youve got this windfall from lower prices. The consumer in turn will go out and spend and that can in turn support tech stocks in the market more broadly. Youre glad that the greek situation you said earlier in your personal life you were in greece for a month. You had no personal life. You sound like my husband, yeah. He never came over or anything, huh . We met once in london. I would have met on one of the islands, right . Exactly. But living on 60 euros a day, these two are not going to not with their lifestyle. She brought her travelers checks. Once its out of the way, you said we can refocus on what were seeing now. Earnings. And earnings might be okay but the dollar is going to hit revenue for all these multinationals still. Weve got a bit of a preview of that in the first quarter. Yet it was a Solid Earnings season. There still is a lot of potential. Basically we think were on track to have our assumption is that basically dictates the pace of gains. So its not the type of returns weve had for the last six years. But still a better place to be in stocks than in the alternative. The euro is back to some two or three month lows. Is that reflecting greece is staying or the feds going to move in september. Is a move in september in the dollar already . Or would the dollar go up . Our base is it would move in september. It is . I think so too. Nobody else thinks so. There are quite a few economists on the street. The market is more focused on the number. We dont see the dollar moving all that much further. I think with greece out of the way, its really more about the greece is back in a month, by the way. What do you mean . Oh please. No the can has been kicked. So tell us that. Tell us. Okay. What happens . This deal is set up they have to do everything perfectly. And the historical facts would show greece cannot get close to executing perfectly. I mean negotiating the deal could go badly. If theyre smart, whatever they put in front of him day one, hell sign. I doubt pit. Then theyve got to execute on the plan. The grexit scenario hasnt gone away. No. But hes receded somewhat in probability. From the market perspective, the key point is the ecb is there in the stands ready to do whatever it takes. They have the willingness to do so and the tools. Thats what the market has been focused on. Why we didnt see much more of a setback. I agree with that. I do believe that greece is going to come back. Its a matter of time. Simply if you just take a look at the amount of debt that the country has amassed. Unless you have some meaningful restructuring, i dont know if theres any political will to have that happen. I think its a matter of time until it comes back. But youre right. Youve got the ecb there in place. Prepared to step in do whatever it needs to do to sort of protect the integrity. Joes question is a good one which is the weaker euro. Is that actually because greece is staying . Right . Its a function of greece staying there. But again, all eyes are now focused on the Federal Reserve again. Now weve finally got this noise behind us, people are saying september is back on the table. Youve got two major Central Banks moving in complete opposite directions. I suspect that will continue to put pressure on the euro. All right. So what . Both sides. Sort of got scared straight i think. On this yeah. Shes saying so its not going im ready to i did a radio interview that said stop thinking about greece. Im moving on. Moving on up. Moving on to the east side. Moving on up. No one wants to move on more than me. Okay . Id love for it to be over. I honestly was thinking about you for a month. Single hotel room . No. I had to switch a couple times. Nothing great, right . Its a decent hotel. Its a bed, right . Right. We were hardly in it because youre working until very late. Thats rough. And you were in athens too. Athens the whole time. Okay city. Its not vienna. No. Have you seen that crumbling building . Think about it. To your point, the next trigger point im used the vernacular. Whenever they sign the deal, if it looks like they may not sign or if theyre going to struggle about that hopefully they wont. Then theyve got to pass the first review. The imf has got to give their seal of approval. Forget this government. The imf has walked out on the greek government multiple times over the past five years over their failure to execute continually. Okay. All right. Sop both of you, youd buy tech and stay long. What about your cross asset Training Plan . What does that mean. Look at stocks and bonds. They belong in a portfolio. That used to just be asset allocation. Constructive. Thats a technical term. Market perform on it. Okay. Were going to go to break. Youre cautiously optimistic. You heard my joke earlier. Which one . Im going to tell it quickly. An atheist, a vegan, and a guy who cross trains walks into a bar. Just dont get yourself in trouble. How do i know this because each had told everyone in the bar the aforementioned after walking into the bar. Did i mention i ben white did that yesterday. First thing he said. I have a dog, its a rescued dog. Okay. I have two dogs. Neither one are rescued. You follow that account on twitter . The dogs about to die. Is there one . Is thats horrible. Uhhuh. Id be one of those old ladies they find 40 and all the feces. Thanks guys. Appreciate it. When we come back some analysts are warning that sales of the apple watch have weakened since the launch. Josh liptons got that story when we return. Then amazon. Com and walmart getting new online competition today. Cofounder and ceo of new retail site jet. Com joins us on the squawk set. And verizon set to report this hour. Craig moffett will join us to break it down. Squawk box returns in a moment. A new season brings a new look. A chance to try something different. This summer, challenge your preconceptions and experience a cadillac for yourself. The 2015 cadillac srx. Lease this from around 339 per month, or purchase with 0 apr financing. Welcome back to squawk box this morning. Take a look at the futures. They are down at least the dow is in large part because of ibm. Dow would open 28 points off. Nasdaq would open up about 8 points up and the s p 500 up about a point. We should also tell you shares of harleydavidson this morning getting a boost. Earnings topping estimates while revenues were roughly in line. Also got a bit of a deal news this morning. Horizon pharma offering for depomed. Michelle . Apple set to report after is the bell. Stock up almost 6 in the last week. But some analysts are cutting sales for the apple watch. Josh lipton here looking at the impact of the apple watch. Josh . Well, michelle were not going to know much about how that watch is performing when that Earnings Release hits. At least not immediately. And thats because apple isnt going to break out watch shipments in that report in the same way that it does iphones or ipads. Instead, apple is going to place that watch in the socalled other products category. And that includes apple tv and accessoryies accessories. So analysts are then going to have to try and do their very best to guess how much money they think apple is making from the watch. I did talk to Piper Jaffrays gene munster. Gene tells me he thinks apple sold 3 million watches in the quarter generating sales of 1. 5 billion. That would be about 3 of total revenue. Of course the more important question is how popular is the watch going to be in the quarters ahead . There you do have some disagreement. Analysts at Pacific Crest are telling clients that their supply checks indicate that component orders for the watch have slowed down. Its one reason they cut their fullyear estimate of watch units to 10. 5 million. Apple executives on the other hand continue to sound a note of confidences when it comes to the watch. Youve heard them describe demand as fantastic. Today investors are going to want to see if they can get any more color or insight from ceo tim cook about apples new product. Back to you. Before you go two things. When you talk about the quarters ahead, i start thinking about christmas and the holidays which are not that far away. I start thinking a lot of people might start buying this watch at that point. Is that something on this list. The price point is what . 399 . 399. Uhhuh. If you want a different band you add onto that. That seems like the price point, not for everybody. People who buy apple products when they come out if they want them. I dont know about that. Josh, whats the take there . I think to your point, andrew even those analyst who is are skeptical in the near term, they do believe apple has clearly demonstrated an ability to fine tune the hardware and software. A big point is going to be can they get more apps on this device . Youve already got twitter and uber. Now the point is can you try to convince facebook and snapchat . And also rumors already about a new watch, new hardware, possibly with a camera on your wrist. Also a new chip that might be wifi compatible so you wont have to actually have it always linked up to the phone. What do you know . Well listen andrew. I would certainly note this is the first generation. I would expect youre going to keep seeing different generations. There are reports you indicate about what could be coming down in the pipeline. And the excitement i mentioned gene munster. Genes response about the watch in the near term is somewhat new he blooes that the break would come in 2015. So hes already to your point looking down the road. His expectations that the product continues evolving from here. Okay. Its 4 15 in the morning for josh lipton. Yeah. Thanks for getting up dude. It is so dark there. Thanks, josh. Were going to talk to brian white from Cantor Fitzgerald at the top of the hour. So for 28 points not most of it is ibm. All of it is i bebm. Blame it all on ibm. It would be up 25 points if not for ibm. Should we explain people the math. Theres a multiplier for the dow you always have to know. Right now its currently 6. 6. For every dollar change b in the dow, multiply it by 6. 6. The dows only down 28. According to the futures. Coming up summer heat wave causing Power Outages in the new york area. Its going to be another hot one today. But relief is in sight. That story is up next. Plus an update on the explosion on the Spacex Falcon 9 rocket a couple weeks ago. Stick around. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. Hurry, before this opportunity cools off. Share your summer moments in your mercedesbenz with us. When a moment spontaneously turns romantic why pause to take a pill . And why stop what youre doing to find a bathroom . Cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in Blood Pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use. Insurance coverage has expanded nationally and you may now be covered. Contact your health plan for the latest information. Welcome back to squawk box. A heat wave is sending ing the northeast. Mayor de blasio declared a heat emergency for the city. Urging residents to take advantage of the cooling centers. First responders were kept busy. At least five beachgoers were treated for heat exhaustion. Whatever you do do not use uber to get tho those locations in new york city. You wont be able to. Do you have that on your are we going to do it now or later . So heres whats going on. And we have somebody from uber coming on the show tomorrow. But theres a debate going on in new york city right now. Mayor de blasio trying to shut down because hed like us to use whips and buggies. Hes going to limit uber to hiring 201 new cars. Right now, by the way, theyre adding 25,000 new customers every month or rather every week. And theyre talking about 10,000 drivers a year. Heres whats going on. If youre in new york city and an uber user can you get the camera on this . Right now you can see right here can they get there . Can you zoom into that . What im hoping they can do get in there. Control room is going to kill you right now. I know they are. But get in on this. Can you see that sort of . They want it this way . Okay. Thats the regular view. We can get a car in one minute. However, theres now the bill de blasio view. If you hit it right here. And there it is. No cars. And it says see what happens. And right there, de blasios uber. There you have it. Has there ever been a far Left Progressive politician totally in the throes of labor . Its amazing how that happens. Has this happened before where they would actually make all their decisions not based on the people their care about but for organized labor . In this case he have you seen that in history . In this case hes taken a lot of money from the taxi lobby over the years. They helped organize his campaign. What hes trying to do is they want to take a suspended year so they can try to figure out whats going on with Traffic Congestion in the city. They do claim that its actually harder to get around its true that Miles Per Hour in terms of speed. Because he enforced the lower speed limit across the city. He did that. Yeah. Maybe we should talk to him about it. Anyway. Were going to talk more about this tomorrow. Uber interestingly enough is advocating for congestion pricing which bloomberg tried before and unsuccessful. There arent a lot in the sax taxi union that he seems to think so. Thats why hes supporting them. We should have him on the show. He should get on the show. Weve had him on and he started talking about Warren Buffett. I said well Warren Buffett thinks it would be counterproductive to raise minimum wages. They blow things like that off. Oh he said that well we dont that part they pick and choose. Right. Anyway, we will see. I think this is going to happen in the next day or two. This potential vote on whats going to happen. I am so angry with this. You are on a key party blog yesterday. Im very comfortable. Joe and andrew. On a tea party blog. And supportive of you. I was reading questions about the deal. Sorkin. How original to raise questions. Were all trying. Coming up jet. Com. A new shopping site that hopes to ride out big losses while it gets a foot in the door. The companys Business Model counts on the ability to undercut prices. But without amazons suppliers. Well talk to the ceo mark lore after the break. 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. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. Welcome back to squawk box. Among the stories front and center, this morning gaming and leisure is buying Pinnacle Real Estate assets. The traction has an enterprise value of nearly 4. 8 billion. Also nike Ceo Mark Parker getting a 30 million stock award to stay at the company for five years. This according to a proxy filing. The amount is about ten times his normal annual share grant. And payment processer first data filing for an ipo. Kkr took them private in 2007. Private equity firm will continue to control the company after the Public Offering. In political news, a new pull poll out this morning. Donald trump is in the lead for the gop nomination followed by scott walker and jeb bush. It began thursday. Most calls were done before trumps comments on john mccains Service Record were widely reported. But the people that are big donald fans are probably not big mccain fans. Im sure they respect his war record, obviously. But theres still some lingering you know from the election and all. And hes gone back and forth. He was the darling of the democrats and then he was the you know hes been back and forth. Remember when the media loved him when he was a maverick . They called him a maverick. Then he ran and they hated him. Trashed him for two years. Then once he lost now hes just not a serious candidacy, right . This is publicity. With trump. Come on. If you were him, he would say 24 is would you go on for awhile . You say the jokes on the public. Like, i dont know. I dont believe it. Verizon is reporting at this point 1. 04 a share. And well look at how the stock is reacting. Just at first blush to that number. At this point its hard to tell. It looks like its up about 10 cents. The revenue number was 32. 2. Revenue number was 32. 45 was the estimate. And 32. 2 is pretty close. Now, sorkin are you up to speed on i mean youre you worry a lot about Companies Like this. The fios tv up 26,000. So its not down. Wireless retail customers up 1. 01 million and that is 4. 7 . So youre constantly looking for signs of cord cutting even in a business like this right . Or what are you and this is more wireless churn, isnt it . Im looking probably two years out into what were getting on video. Thats all. And video subscription. Whether people hold onto it. I dont think were there yet. Total revenue up. 153. So thats the yearly rate of yeah yeah. 153. 73. Analysts that follow closely, they look at all these. Especially churn is one of the most important things. Here it is. We will talk to an analyst to get, you know a look at how all those compare to expectations in just a couple of minutes. But for now, the stock looks like its up a little bit more than it was previously. Ive got 48. 30 bid. 48. 50 asked. Weve got an interesting new guest to the table. Watch out amazon. Theres a new player in the ecommerce game. After a lot of buzz jet. Com went live this morning. This is a new platform that aims to give more power and profit to merchants. It has set its sights on a lofty benchmark benchmark. Lets hear from the man behind the commission. Mark lore. Hes the founder of jet. Com. Hes also the founder of diapers. Com and soap. Com which amazon acquired in 2010. Your partner that that was the brother of prooekeek bharara. How are you going to take on amazon . Not looking to take on amazon. But its a Shopping Club that allows you to save on everything you already buy. You can save 10 to 15 versus the lowest prices online. I interviewed you when you did fund raising on the halftime report. The tradeoff is im an amazon prime member im going to get this in two days. With you, i get it cheaper. You spend 50 a year and the idea is youll save hundreds dollars of year. But i dont get it in two days. I get it over whenever. You get all the Everyday Essentials in one to two days. What i dont get is how you can offer lower prices and still make a profit than amazon which is clearly built in infrastructure, has a relationship with the merchant in a way that you cant at least not yet. Two ways. First, we only profit from the 50 membership fee. All the profit we make on products we put back into price. All the commission we get from Third Party Merchants goes back into price. Secondly we built this proprietary technology that pulls cost out of the system. By doing what . Dynamically repricing products as you shop to reflect the true marginal cost of getting the product to you. The cost of getting the third product is dramatic based on whats your in basket. If we can get that in the same box to you, the shipping is much lower. Will i see that the as a customer . If i put it in my box first, would it affect it . It doesnt matter the order. As a consumer youre to pull cost out of the system. We make them all transparent in the form of low prices. So certain items will be considered smart items and have better pricing. Were going to steer you to those items. This is a wall street journal story that says there are products you dont sell or dont keep in inventory. So you have people at that are actually going out and buying them from other people and youre losing money on every sale that you do like this. Thats correct. Theres a small percentage of products today that were getting from Third Party Merchants that arent direct merchants on the platform. But thats simply a bridge to scale. So we know that were going to have those products on the platform soon and we dont b want to disrupt the Consumer Value proposition today. How much are you losing on every sale today and how long can it go on for . This is when you start thinking about the dotcom bubble. There were a lot of companies that would lose money on every single sale. Right. Then the market size is very different than it was back then. 300 billion online going to 1. 2 trillion in years. We know what scale looks like. What is scale . How long can you go . 20 billion. Youre at scale. The model is economically viable. And we know precisely how much how many customers doesnt that require . About 14 million or 15 million customers. And how much money do you have in the bank . Today . Because youre going to be burning through cash. 180 million today. And well need access to more capital. How much capital will you need to make this work . You look at jeff bayezos, hes not making money either. Investors seem to like it. Its an interesting company. The amount of capital we need is a fraction of the value well create when we get there. Have you spoken with jeff bezos. You obviously know him not recently. Does he have a view about this . I dont know. Go back to the Business Model for a second. How many years . Five years. It takes you five years to get your 20 billion in revenue. Then the opportunity is this is 1. 2 trillion market in ten years. This is the opportunity to create a multihundredbilliondollar business. So are you relying on taking market share from amazon or the fact the market is going to grow . Were going to add 100 billion online in the next ten years. As a population in the united states. In the u. S. Alone. Meanwhile you have amazon and walmart and others who are investing in infrastructure, getting the product to you, forget about in a day or two. Theyre trying to get the product to you in an hour. In five years from now, does this model look competitive . When youre getting the product faster thats expensive. Were trying to educate and train people. So building bigger baskets to save money. This is not going after ultimately comes to the original question which is your Value Proposition is that youre assuming customers will wait for certain products longer. And opposed to me i like everything yesterday. Theres 90 million households in america that dont have prime. This is going to be the fastest and cheaping shipping option for this. If i go on the platform right now, what am i going to see . Im there right now. What does it look like . Its purple. And whats on sale . Its everyday low price. Millions of products. The prices on the site are 10 to 15 below anything you find anywhere else. As you build the bigger basket the price wills come down. I look for things like sneakers. You dont have that. Theres a lot of stuff you dont have that i could get on amazon. The fashion category is launching in about two weeks. Right now you can save on all kinds of other sites. So we actually just send you to other retail sites out there to buy shoes and clothes now for the next couple weeks. If youre losing money on every sale i like that as a customer. Whats your average burn for each spend today . Its about today about 20 . 20 . Okay. Discount for everybody. And like i said the amount of capital we need to get to scale is the fraction of the value well get when we get there. We wish you luck. The more competition the better. You just finally came clean that you would hope any product you buy that the company is losing money that you buy it from. You said that. I like that. That you are losing money. Now you sound like bill de blasio. No. You just said it. I would hope youre losing money on the products i buy. Because it means i its all about you. Yes. Really . You dont Want Companies to remain profitable to hire people and grow the economy. You want them to lose money so you get a better deal. We talked about my cheapness. I cannot buy clothing unless its on sale. It upsets me to pay the full price. If its on sale, i feel better about the purchase. Cost ability is what leads people out of poverty. Its a deal. Everybody wants a deal. Its about competing globally and expanding. This is what americas made of. This is what we want. Youre like were likin and yin and yang. That symbol. I just want to get a deal. You dont want a deal . You want to overpay . You know who you are. Theres a gallant and a goofus. Hes going to overpay. Im going to get a deal. Busy day for earnings. We have your list of stocks to watch next. Comparison pricing talking here. Im talking here. Some of these companies are profitable. A closer look at leisure stocks and why cruise lines are big winners with more upside to come from the thaw in cuba. 40 of the streetlights in detroit, at one point, did not work. You had some blocks and you had major thoroughfares and corridors that were just totally pitch black. Those things had to change. We wanted to restore our lighting system in the city. You can have the greatest dreams in the world, but unless you can finance those dreams, it doesnt happen. At the time that the bankruptcy filing was done, the Public Lighting Authority had a hard time of finding a bank. Citi did not run away from the table like some other bankers did. Citi had the strength to help us go to the credit markets and raise the money. Its a brighter day in detroit. People can see better when theyre out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. And folks are making investments and the community is moving forward. 40 of the lights were out, but theyre not out for long. Theyre coming back. Let us look at more stocks to watch this morning. Chesapeake energy is e limb nat stock dividends at the quarter. Will save them up to 240 million a year. Travelers, we told you earlier, the dow component posted better than expected earnings. Although revenue is slightly below expectations. Travelers is one of cant tell if that stock is moving higher today maybe offsetting the drag that ibm has. Earnings and revenue at United Technology topped estimates. Thats not helping the dow either. So you factor out ibm and utx and some of the other components are trading higher. The company is in the process of selling their aircraft unit to lockheed martin. Helicopter unit. They have lowered in part to reflect the sale. Td ameritrade. Wolverine worldwide gave a down beat outlook in april. Coming up, dow component ver verizon is out in the last few minutes. Well talk about the impact of the 4 billion acquisition of aol. A new season brings a new look. A chance to try something different. This summer, challenge your preconceptions and experience a cadillac for yourself. Take advantage of our summer offers. Lease select cts models in stock the longest for around 399 per month. Push your enterprise and you can move the world. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. Welcome back to stocks to watch. Im going to spill my coffee. Its not called pilates. What . Pilates. I do it every day. I told you, though weve been discussing the gym. Those of you who saw us in the 6 00 hour saw us doing pushups. I saw this on tv why women love pilates. I said that person needs to be fired to spell pilots that way. Because they fly airplanes. Because theyre cool is why people like pilots. Right . But it actually was spelled. Yeah. Okay. Lets thats another reason why women wouldnt right. As we derail stocks to watch this morning. Financial earnings matching estimates. Revenue in line. Results were hurt by higher expenses. Also Horizon Pharma increased the takeover for depomed. And lex mark earnings, Company Giving weaker than expected guidance for the full year. Said it would cut about 500 jobs. And then bank of new york mellon the bottom line getting a boost from keeping expenses in check. Also shake shack now disclosing a secondary offering of up to 4 million shares of common stock. Verizon out with earnings. Joining us now craig moffett. We get so many different numbers. You know cash flow ebida, all these things. What do you look for to tell you how the company is executing . Whats the most important for you . Good morning, guys. Youre right. Its doubly difficult now because theyre going through the selling phones. That says you have to be careful with all of these earnings and ebida numbers because theyre all inflated by the accounting change. Earnings, for example, it looks like they beat by 3 cents. 104 instead of 1. 01. They got out of the accounting change, last year got 7 cents out of that. About 5 cents of that is the increased reliance. It makes these things very complicated. Do you still look at wireless ads, internet ads, fios ads, all those things . How are those numbers . Well lets go to andrews favorite topic of cord cutting. Both numbers are light. Hard to say what that means yet. The Second Quarter is always weak. But suggesting as we have feared we could see something industrywide here where court kwuting is starting to accelerate a bit. Its much too early to say that. But well look at that for the whole industry. But broadband also a little bit light. The retail churn was good. That was the best number so far. The churn rate of. 9 compared to the consensus of. 99. That is truly a seller number. Their wireless business operates very well. The challenge for verizon and frankly for everybody in this industry is that the industry is in a price war. Interestingly what rerverizon has done this quarter is shifted away from discounted pricing. But theyve gotten more aggressive in promotions. Right now theyre offering 300 dollars for a new customers. And then 200 for a phone. A year ago that number was about 100. So you might have seen some stabilization of the price war in Service Prices its just shifted to promotional prices instead. Craig, were talking about apple is going to be out with earnings this afternoon. But a lot of speculation about whats going to happen this fall and potentially a tv product and what that means for an over the top perspective. Whats your sense of whats coming and what thaes going to mean to Companies Like verizon. Its a great question. We really dont know. When Sony Playstation announced their video products earlier this year people sort of yawned and said its about 50. Its mostly the same channels you get from cable. And if thats really the best they can muster its not terribly interesting. I bet if apple released the same thing, peoples reaction would be entirely different. Even at the same price point. And theyd say, wow, thats really something. So some of it is just the brand name and whatever apple does will generate a ton of interest. I think what isnt that historically theyve just done better at launching products than sony has for a long time. Apple does better at launching products than anybody. And the sex appeal of an apple product and the interface follow the customer e peerns really is different. How is that is that good . Which one . The 154 or whatever. Average revenue per unit. Well thats average revenue per account and its a little bit light. We havent dug into the number of units to see with whether its a number of units problem or a pricing problem. But the number is again a little bit light. Thats still a reasonably new number for analysts to work with. Weve been working with that number just for a year or so. And verizon is so unique in reporting it. Everybody is still getting their heads around how that number trends. These guys spend 18 billion in the year first half. Invested 18 billion in license and capital for future network capacity. And at t talked about, you know, with Net Neutrality and what happened, they were going to cut back. These guys still are spending a lot of money. They also spent 4 billion on aol and 9 billion returning to shareholders. But their lenchverage ratio is unchanged. Thats no small feat either. No. And verizons cash flow position is pretty good. They committed to paying down debt associated with the deal they did last year. So a lot of their cash flow is going to be dedicated to debt retirement over the next couple of years. But their cash position is actually pretty good. At t on the other hand they bought directv largely due to cover a cash flow deficit. If you look at industrywide as a measure of Industry Health the industry actually doesnt cover the dividends that verizon and at t pay. Especially if you include spectrum purchases which generally dont flow through the regular cash flow accounting. But the industry this price war may have been masked a bit by this accounting change i was talking about. But you cant mask it in the Free Cash Flow. And the Free Cash Flow of the industry is not very good. Verizon is the best of the house. Andrew if you love your ibm with its 3 , i mean 3 , you think thats all you need to make money. Thats 4. 15 . You might as well buy that. Probably has gone down less than your ibm. Try and offer both sides of the coin. 4. 5 is 50 higher trying to give you both sides of the story. I felt old during that interview. It used to be average revenue per unit. Of course the industry has evolved. Like shopping hungry equals overshopping. Isnt it beautiful when things just come together . Build a beautiful website with squarespace. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Giving your portfolio a workout. Tech stakes center stage. Which names will help you pump up your portfolio. Nice with the legs. Does apple have what it takes to stay at the top of its game . 1,001. And exercise in tech investing is straight ahead. Its the height of the Summer Travel season. We check in on the travel sector and find out why cruise lines and cuba could bring profits to your portfolio. And the Property Brothers stop by as the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with Andrew Ross Sorkin and michelle carusocabrera. Im Joseph Richard kernen. Three names. We are less than 90 minutes away from the opening bell on wall street. The futures right now, dow jones down 38. Ibm accounts for 48 points just by itself if you use the multiplier. Etx is also down. But the nasdaq continues to trade higher and the s p is up. Check out the europe markets. Fractional losses. Nothing to write home about. Did pretty well yesterday. Lets talk earnings. Among the big movers its what weve bb talking about all morning. Ibm, revenue fell short. The tech giant is in the midst of a significant transition it says towards businesses Like Cloud Services and security solutions. And thats weighing on the dow in a major way. Stock goes down nine points your pr person calls it a mixed quarter. The ibm Pr Department will come down. The stock is down nine points and im trying to give you both sides of the story. Someone wrote mixed. Thats fine. It was a the question is a year from now whether those empty calorie calories get made up by full calories in terms of better revenue. Thats the question. Now its for the Pr Department. Im just saying the stock is telling you it was a bad quarter. Yes. And it was the latest in a series of mediocre bad quarters. I think 13 quarters. Right. And down nine. Thats mixed. Mixed. In a market thats been moving higher. Theres ibm, a total outlier president. Its had a mixed performance in the last two years. As the worth performer. As number 30 out of 30. Just being polite. Earnings at United Technologies topping estimates but the company cut its full year forecast to reflect the sale of its aircraft unit. And then verizon, earnings coming in better than expected but revenue below con sensensusconsensus. Fios revenue increased by 10 . Then weve got earnings this morning at travelers beating the street. Helped by a significant drop in catastrophe losses. Swiss drug maker novartis fell short of expectations. But the companys chief executive tells us earlier that its new Heart Failure drug entresto could be a multibilliondollar seller. Entresto should cross the 5 billion mark. We havent really given a time frame because we think thats going to the peak sales. Checking shares of novartis. Down 1. 75 focusing on the number, obviously. Although its not far from if you look to the right, its had a big move. It has. And jet. Com taking off this morning with a proposal of lower prices than amazon. Guaranteeing the lowest price on more than 10 million items. We asked the cofounder about the competition in the space to win over pricesensitive shoppers. 90 million households in america dont have prime and this is going to be the fastest and cheapest shipping options for those households. So take prime out of the equation. This is an amazing value profit. Jet. Com using logistics to save consumers money. But the way they do that is by knowing when things can be shipped together. In other cases, customers may opt into different Payment Methods or agree not to return an item. But as we said during the interview, this guy is going to be losing money as he said on every single purchase possibly for the next five years. Needs to get to 20 billion in revenue to make the scale of the whole thing work. Hes got about 180 million in the bank. Depending how much hes going to lose on every purchase hes going to have to lose a lot of money to get there. Classic entrepreneur. He was so optimistic. I hope it works. For the cheapskate that is me i hope it works. The nasdaq hitting an alltime high. Ending within three points of its record close. Technology earnings are in focus today. Dom dom chu has some of the stocks to watch. All that workout with you guys made us think about whos going to be the big hitters. Yesterday we told you about what tho expect with apple. Apple over the last five years or so up after earnings. But these are the numbers analysts are looking for with regard to products. Iphones. We know iphones are the bread and butter of what apple does. This is the number. 47. 3 million shipments. Thats on average what analysts are looking for. Now, if you take a look at this. This is the honorable mention. We know watches are not going to be a bulk of what apple sells. Still a hot topic for discussion. Analysts looking for units shipped for watches. The big apple story here to watch this afternoon. The other stock we want to focus on is microsoft. This is a company here that does a lot of heavy lifting as well. According to our friends at the market data and Analytics Firm this is what were going to expect here. Microsoft has beaten earnings estimates in 18 of the last 22 instances since 2010. On average, though it posts marginal gains. Just. 2 the next day. Regardless of what the outcome is. And its been trading positive 64 of the time. This will be interesting because the last two quarters weve seen some volatility. Up down 9 10 after earnings. So microsoft could have some fireworks. And this is a company that doesnt report earnings until next tuesday. I want to throw up facebook because its pretty impressive. We all know about the stock moves. Its up 160 just again, over the course of say, its ipo to date. At one point it hit 17 bucks. Now close to 100. That means for perspective, this is great, its worth 275 billion. Which now makes it worth more than the disneys, the procter gambles, the walmarts. But now it has overtaken over General Electric in terms of market value. Yes, facebook is now worth more than ge guys. Back over to you. Thats a moment. That is a moment. Thank you, dom. We appreciate it. As we mentioned, apple reports its Third Quarter report today. Were going to hear from them after the bell this afternoon. Brian white is here. Hes got the highest price target on the street for apple. 195 a share. And he joins us now with his take on what to watch in this earnings report. At 195 a share, whats the market cap . Its just over 1 trillion. Youre still playing with the ts. Yeah. Law of large numbers. Good luck. Its amazing that this stock trades at ten times xcash. When we look at this were looking at gap earnings. There are no pro forma earnings. Most of my earnings their earnings are more than the gap. Thats really if you did have an apples to apples comparison maybe its eight, nine times. Thats amazing. Tell us what youre looking for this afternoon. Specifically do we care about watches or is that just a sideshow with whats going on with phones . So watches will get some commentary. Right . Probably wont get quantify kags. Theyre not going to break out the numbers. Its a luxury. Its icing on the cake. Probably wont get details but you can back into the details. Our view is in june watches were weak in taiwan. So apple watch got off to a slow start because of a component issue. You think theres a component issue. Thats whats really holding them back . There was a component issue at first. Its resolved. They only ramped in Nine Countries by midjune they had only been in Nine Countries. It got delayed. That impacted the supply chain. Theres so much anticipation about the watch. Is the stock going to trade off based on the watch even though the numbers are so small . Not even real numbers, right . Wont get real numbers. I think iphone will be the focus. And the watch is icing on the cake. There have been some new analyst who is have come out with reports or at least speculation that in terms of sales in china, that there might be a dropoff on though growth rate. I would say this. Last quarter, 71 growth in china. And its 29 of revenue. Is that growth rate sustainable . No. No. Right . Smartphone market in china actually is not growing. Its flattish this year. Slightly up or down a bit. So my take is this. You know youre not going to keep printing 70 growth but i do think youll print high levels of gloetgrowth. They became the number one in china. Thats the first time ever. So i think this moved a bigger form factor. The move with china mobile and also expanding retail distributions. Do you have any anxiety that come this fall when the phones come out, ipads come out, people are going to say i already have the phone. Im not going to the cycle the twoyear cycle, this could skip over this fall . Im not concerned because about 20 of the installed base in april had actually upgraded to the 6 and 6plus. I view this as a multiyear cycle. So many people have the 5, 5s. Theyre going to continue to upgrade. I kind of say, look this is a multiyear cycle. This is only the first iteration of a bigger iphone. Do we think the tv is here finally upon us . Streaming tv is very possible second half of the year. Clearly not getting a full blown tv. I think it makes sense, but not in the next few years. For a new piece of hardware. Exactly. Its definitely not in the cards. Slam dunk to a trillion. And everybody says that. So theres no one that doesnt know that. So thats a 40 guaranteed return. You say why wouldnt everybody do it . Its amazing its there. What is it thats not its for sale every day and its going to a trillion. You can buy any day you want as easily as you can. Why . The big misperception around app sl they are going to turn into the nokia, the blackberry the motorola of the past. Its incorrect. The whole world is moving to becoming a computer. Whether its our watch, phone, tv. Apple does hardware and software together and they can dominate. Thats what i think well see. Should put it up there now. Could be up 100 points today. People want them to prove it every quarter. Me too. Because its a gadget maker. Its not an annuity. Thank you. Coming up its the height of the vacation season so were looking at some hot stocks in the travel sector. Stay tuned for what can give your portfolio a boost. Have you met these two . No. Theyre babealicious. And theyre twins. You can have two. Word from the Property Brothers. Drew and Jonathan Scott will be here to talk tv show success, and what theyre seeing in real estate. Down, girl. Come on. Look, jamie, maybe we werent the lowest rate this time. But when you show people their progressive direct rate and our competitors rates you cant win them all. The important part is, you helped them save. Thanks, flo. Okay, lets go get you an ice cream cone, champ. With sprinkles . Sprinkles are for winners. I understand. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. Xco0 nearly 930 billion sparked from travel last year. Travel is about 10 of the nations exports of goods and services. So the vacation season is in full swing. We thought now would be a great time to shine a light on the travel industry and travel stocks. Joining us with his list of winners and losers Patrick Sholz at sun trust. Good morning. Im assuming every time oil moves lower, its bottom line good for travel industry. Absolutely. Its great for domestic Leisure Business and we definitely see this in our Hotel Research especially with midscale hotels, economy hotels. And we also see it in our cruise Line Research because potential customers have more money in their pockets to do something with. Maybe a cruise. Its got to be great for the cruise industry as well. Because oil is their highest cost. In theory. However, quite often lower oil costs are offset by foreign exchange. So it sort of is a wash when it comes to earnings. Do you ever collectively say im going to update the whole group because the price of oil is so much lower . Not so much. What happened last fall with oil, it was pretty much instantaneous. What i look more at are the underlying demand and Pricing Trends of the customers. What about cuba . Embassy yesterday. It was the big event geopolitically. But is that is it big enough to be meaningful to any particular company at this point in terms of revenue and profit . Not today. And right now you have Carnival Cruise lines that has one ship or one brand going there. Whats actually very interesting, makes a very positive headline for the Cruise Companies in the media. And this is an industry or companies that have really struggled the last couple of years with positive perception. Its all negative headlines. Its a real change that they had something positive in the headlines going for them. Whats your best. Nick the industry . Carnival cruise lines. Significant demand and pricing channel checks and they look strong for carnival. Whats really interesting, you can take a look at a stock chart of carnival. The stock is at the same place as 2011. Compare that to many other companies that are well above their 2011 levels implications that this company has a lot of room to run if they can stay out of trouble. Their ticket prices are still down 15 from 2008 highs. And part of that is theyve had some selfinflicted injuries the last couple years. As long as they can stay out of trouble, room to run. Proof all stories merge into one. Greece also matters to the cruise industry right . I see here in the notes. Because . You have travelers going to greece but theyve changed the rules. A lot more cruise ships can go there now, right . Question. But because theres some unrest in greece thats not the place i want to take my family on vacation at the moment. Additionally you have europeans who are worried about the overall economy. Saying maybe were a little less inclined to spend on a cruise. Thank you, patrick. Thank you. When we return is santa claus coming to wall street early this year . Thats next. Check out futures this morning. Still ibm. Were going to blame ibm all morning . Dow looks its responsible. Down 45 points. Nasdaq up 6. 5 points and s p up marginally higher. Squawk box returns in a moment. 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. [dad]i wear a dozen different hats doing small gigs,side gigs. Gig gigs. Quickbooks selfemployed helps me get ready for tax time. To separate expenses,i just swipe. Its one hat i dont mind wearing. [passenger] i work for me. And so does quickbooks. It estimates my taxes,so i know how much stays in my pocket. And thats how i own it. [announcer]stay in the flow with quickbooks selfemployed. Start your free,thirtyday trial today at joinselfemployeddotcom. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. Hurry, before this opportunity cools off. Share your summer moments in your mercedesbenz with us. Welcome back to squawk box. In political news today Ohio Governor john kasich will become the 16th major republican candidate to enter the 2016 president ial race. Meantime new poll out this morning getting a bit of buzz. It comes from the Washington Post and abc news and finds donald trump is now in the lead for the gop nomination followed by scott walker and then jeb bush. Heres the catch and its worth mentioning the catch in a big way. That survey began on thursday and most of the calls went out were finished before trumps comments had been made of course about john mccains Service Record were widely reported. So support for trump dropped sharply on the night voters were polled after those comments started to circulate. We will see over the next week as new polls are done where he is. How can we say polls started to drop the night after that . Apparently they were doing the polling so its higher than 24 before . Exactly. And it came down. Im ready to show this again if youre going to argue about this. You know well do it in a little bit. Pushups during the 6 00 hour. Your form the form matters. The form matters. Weve got to bring that up. Speaking of form mattering, dont worry. Theyre going to cue it up. Dont worry. In Corporate News Auto Industry doug betts has joined apple. No word from betts on his role for apple. But some analysts have said car manufacturing could be in apples future. Wow. Can you imagine . Joe . And check this out. Santas helpers from around the world gathering in denmark this week for their annual conference. They get together to meet people. Yesterday they visited eded copenhagens Little Mermaid. That was nothing like ariel. And then paraded through downtown town. They call it the Little Mermaid. Later this week the santas are going to tell stories to children and bake different treats. The worlds Santa Claus Congress has taken place since 1957. As youd expect it is always held in the summer which as you know is santas offseason. I think thats been there longer than the disney movie. The mermaid landmark . Yeah. What do you think the allwhite santa . I like it. Very fashion forward. Those are his helpers. It is the Little Mermaid. The Little Mermaid . Ariel . Maybe thats where it came from. Not that little. When we return a big week for investors as a wave of earnings are headed our way. Weve already heard from verizon this morning. We have an early earnings scorecard next. And then tomorrow the governments existing home sales data. We get an early read on real estate data and talk home trends with the Property Brothers. As we head to break, take a look at u. S. Equity futures. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Welcome back to squawk box. Heres whats making headlines this morning. Ford launching a new luxury version of its f150 pickup today. Going to go on sale later this year and could sell for more than 60,000. The truck would be a step up from its current f150 platinum. The new models Standard Features include multicontour massaging seats which im looking forward to. I googled that. I dont know what it is. As long as it doesnt put you to sleep. Chinas jd. Com is opening a new online site to sell goods to consumers in china. They plan to sell american goods. The new site will be known as u. S. Mall. And president obama is nominating Kathryn Dominguez for a vacancy on the Federal Reserve board. If confirmed by the senate her term would run through january of 2018. Is she dovish . Is she very if i had to bet i mean, if you really had to put money down today, what would you do . I dont know the history. I dont know either. But if i were forced to make a bet. Okay. Were going to look at this. Because youre ropeadope. You cant do that. This is not about bras. No. You count yourself. Im going to do me. Im on three. Three, four five six, seven, eight, nine, ten. 11, 12. Youre counting with me. 13, 14. Count your own youre going slower. Count your own. I get to 39. You get to 30. Then you start dogging it. Now im doing two for your every one. 21 22 23 24 25 26 27 see now youre really dogging. Were almost done. 29. 30. Now im holding. Youre ropeadoping. What are you doing . 39 to 30. But my form was very good. There was no difference in your form. You have to stay like a plank across the way. You didnt. I did. Earnings season in full swing. You were fatigued. Your muscles were toast. The s p 500 is set to report this week. If we take ibm and add in the industrials this morning, earnings are taking about 80 points out of the dow before the bell. 80 points. If you add those up and then you can add the travelers back in. Lindsey bell is s p capital senior analyst. So far so good with results. But as far as expectations. Because revenue is being hurt. You know earnings with improving. Theyre moving in the right direction, but revenue not so much. Its getting worse. Originally analysts were expecting about a 3 decline in revenues. Now were at 4 . Were very early in the earnings season and the multinationals are taking a hit. About 50 of the s p 500 earnings or revenue, excuse me comes from overseas. Okay. Thats yeah. The three that are down are taking 80 points out of the dow. Do you Like Technology . I mean the nasdaq should tell us that even dow stocks that are in technology are doing better than most sectors. Yeah. Whats interesting well the Earnings Growth rate is pretty weak. Now, that still has to impact in ibm from last night which on the bottom line was better than expected. But the multiple its trading at 25 discount to its historical average. Its trading at a 30 discount on a relative basis to the s p 500. Growth is only better than the Consumer Staples industrials energy and utilities which are all expected to see Earnings Growth decline or be flat for this quart everer. That just doesnt add up to me. As far as the Energy Sector if you were to you know the Way Companies say, well if you back this out, were actually here. What would s p be up if you took energy out . So Energy Earnings are supposed to decline about 60 for this quarter. If you take that out 60 . Yeah. If you take that out of the index, wed have growth of 4. 2 versus the decline were expecting right now including energy. Thats like a sevenpoint swing then just from energy. Thats right. Yep. How about banks . Banks . You know they have done very well. We got all large Money Center Banks out of the way already. This morning we had good results from some of the regional ones. The key themes here its expense control. Youre seeing robust m a market. Equities. That trading area is very good. Youre seeing respectable loan growth, too, out of the regionals. This morning fifth third and regions, 2 loan growth. Thats really good. And Net Interest Margin is stabilizing. I think a lot were expecting that to continue to decline. And the consumer is what . Gets a b, bplus what . Its supposed to have among the best growth in the second half of the year. So its going to be really we need to watch those closely. Unfortunately we dont get a lot of those earnings until later in the season. That would be the National Offset to energy right . In theory. In theory. But its been tough because retail earnings for the last month really disappointed. Down. 3 a enpeople were expecting up. 3 . Its been very up and down with retail sales. Wage growth just isnt there. Even though you are seeing payrolls that stay above that 200,000 mark a month. Its just its really questionable whats going on with the consumer. So we do need to get corporate earnings to get a better clue. What do you have . You have a number for the multiple for future . For the next year . Whats the s p multiple. Do you have it handy . Yeah the future its currently trading at 17. 7 times which is a premium to the 15year average of 16 times. So a little bit above historical trends. And earnings are expected to be flat for 2015. But rates are zero. Yeah. Id say its still not notable. Not at all. Whats the average at the end of a bull cycle . Can you get about 20, 22, Something Like that . It certainly is a premium. I think the s p 500 has traded at 24 times on the high end over a longer history. So were not at irrational numbers. Were also operating at a completely different environment. Inflation is still low. Theres not a lot of alternatives to equity right now. Small caps is it better for small caps right now or large caps or can you tell by looking at the s p . Well youd have to look at the russell 2000 to get a better idea of the small caps. They have been doing better. I think youre seeing these multinationals really impacted by the so small caps are here mostly. Okay. The domesticated play might be the better one to continue with going forward. For the time being. Thank you. When we return, two special guests in studio will talk real estate trends and whether or not theres a bubble brewing in the home makeover market. Jonathan drew scott also known as the Property Brothers are here. As we head to break, a look at europe. A mixed picture. Were going to be back in just a moment. G different. This summer, challenge your preconceptions and experience a cadillac for yourself. The 2015 cadillac srx. Lease this from around 339 per month, or purchase with 0 apr financing. Welcome back to squawk box. The futures right now are suggesting a mixed opening. S p 500 would open flat. Dow would open lower by about 62 points as a result of a number of earnings from dow components and nasdaq would open higher by more than 6. Check out gold prices this morning. Theyve been getting clocked. You see a real falloff at the end there. But were showing you this chart because it is a fiveyear low for the price of gold. 1100 bucks an ounce. The u. S. Housing market on track to have its best year since 2006 according to realtor. Com. Sales of vacation homes have been heating up across the country too. Joining us to tell us if we should be worried about bidding wars, whether were in another bubble. I love bubble ts. When they bust you always ask for another one. Jonathan and drew scott host of the Property Brothers. Were glad to welcome you guys back. Thanks. Did you tweet out you were going to be on now . We have been. Yeah. We always are pretty active through social media. I think that was a tweet that just was sent. A lot of your people you know, the the golf channel we have a lot of overlap. We have some with you. But we got a million new not a million, but lots of new interest after you guys were on. Your people watching this financial show that didnt watch it before. They thought it was a train wreck the last time we were on. The elevator. And then we talked about who knows what will happen. But i love you started it with joe loves bubbles. And i also told her, who shes married now, guys sorry. But i told her you two guys are babealicious. So is it selfish to always want another bubble . Because whenever remember we never know until hindsight that we were in a bubble. And those were the good old days. Lets have another one so i dont get so i dont spend it all this time. Everyone always says we should have seen it coming. How did we not see it coming . We never see it coming. Everyone seems to think theyll see the same steps over and over. Like did anyone realize when we started having 100 mortgages that that was maybe a problem . And there were no previous back to the huge bubble crisis on cnbc we talked about a real estate bubble a lot. But people were crazy. Remember the real estate clubs . Yeah. The whole goldman sachs, the john paulson, the bank that had some issues they took the other side of paulson. They were still begging for it. Where are there bidding wars right now . Almost everywhere. Weve been working across the country. The big thing for us you can be smart in any market. Doesnt matter if youre at the top of the bubble, or if things are down you can make a smart investment. But the problem is so many people we snow they think they see an opportunity. Maybe theyre doing interestonly payments or Something Like that they pop in and still max out their budget. But theyre not thinking longterm. Theyre not paying down or if you overleverage to the point of where something happens that youre not ready for, all of a sudden theres a problem with the home and youve maxed yourself out, thats where they lose it. Where is there not a bubble yet that you think a bubble is coming . I think way up in canada no. It comes down to the numbers. As long as youre looking at the numbers, we have people right now who are doing fantastic. Were buying and selling real estate and its great. The inventory is really low. So generally when the inventory is low, you get people into bidding wars. Some people are afraid of bidding wars. They shouldnt be. Just understand what the value of a property is before you put the offer in. Dont let the franenzy make you overbid. In new york city that means you dont buy. Thats not true. What youre thinking its frustrating but what youre thinking about is market value is what theyre listing at. If you think market value is what its listed at then youre always going to be outbid. If you know what the value is and if theres a lot of sales in an area you know that price point. You also have to be more creative. Tough get in sometimes before everybody had a chance. What are you worried about breaking the back of this bubble if it is a bubble . Again, its the frenzy. I find you get a lot of people that come in and its a healthy market and people are making money and doing well. Then all these other people oh they jump on. Like, youre making money. I want to make money. Then this flood of people come in who are not educating themselves on how it works and theyre overleveraging themselves. Theyre putting down payments on credit cards. Theyre doing all these stupid things. And inevitably that makes it an unstability market. Though i will say the new 100 mortgages theyre doing, its a very different situation. Its not as easy to qualify for these as they were before. For wealthy people. Thats what theyre saying. But it starts somewhere and they loosen up a little more and a little more. Theres a lot of shows now getting in. This is going to continue on . This makeover bubble, i think that is a problem. We see a lot in every city we go to. There are a lot who have had diy jobs in new york. And man, the work is terrible. So people are buying these homes and the work is honestly i think hes talking about your career. Im talking about tv. Im saying theres there seems to be a bubble in makeover tv shows. This is what a lot of people dont understand. Our Production Company scott brothers entertainment, we produce a lot of stuff in food travel, competition. A lot of stuff were not in. Thats because were planning this is fading fast. So we need to have an ulterior plan. As long as people are taking it different, people love bragging about real estate. The spirit of andrews question is if there are so many real estate shows and that its going to peak. Right . I agree. People will always be interested in home shows because everyone lives somewhere. Everyone wants inspiration for your home. But i agree with you, there are a lot of shows that shouldnt be out there that are in that rem. Are they giving good advice bad advice . Some are good some are bad. The ones that will last are ones that people can relate to. The reason our shows have done well is because were not trying to be anybody else. Were just ourselves trying to educate people and help people and use language they can relate to. Wheres the growth in tv for andrew . Theres a new underwear modeling show. I saw the pushups. Actually tell me about i was going military style. You were like structured. I could see the military movement. He was like a ropeadope. His was more like an interpretive dance pushup. The pushup war. Theres the video. There it is. I want another round. Ill take you both on. There it is. Come on. Why not onehanded pushups . Twohanded are old. I want to know why babealicious wasnt going against you. We had another anchor who had an elevator in his house. Wapner. Where are the staff you have a wall you bought another apartment. Youre knocking out a wall for staff or something . Its the upstairs downstairs situation. Is that possible to do . Does your staff carry you upstairs and downstairs . How does that work . There is no staff. Joe gets in your head. Did you fire all the staff . That was really shallow. I say the five of us get together and have a pushup competition and we know who the true winner will be. Michelle. I dont want to throw this around. I know what hes going to say too. I was like dont do that. Good times. I think we should start a new show. If you want to be in the real estate game you have my sort of style. Thats right. Who didnt wear a tie last time and got grief. I dont often wear a tie. We went to mexico on a trip and he had a rolly bag and everything in 110degree weather. What is the name of my show . If youre the producers. Interpretive dance pushups. I think it will be you and me teaming up. Im going to ditch this guy and its drew squared. This just in, the shows canceled. Before it started. Thank you. Thanks for coming on. It was fun. There will still be a bubble next time we chat. This is not over. No, its not over. Its going for awhile. We try to find ways to make it more interesting. The real estate bubble is not over either. Rates will stay low. And people are renting. And people are selling. Im doing an institute on how to sell. You dont have to spend a fortune to maximize what youre selling. Theres a lot of stuff to educate people on how to do real estate right. When we return, jim cramer from the new york stock exchange. Check out the futures at this hour. Lower for the dow, nasdaq higher. Maybe a pushup rematch. Squawk box is going to be right back. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. S welcome back. Costco has taken out the online photo printing. A possible hack. Lets get down to the new york stock exchange. Jim cramer joins us now. I have to hear your thoughts on ibm because weve had the whole debate in a nutshell again that its good to get rid of low margin businesses and that accounts for the revenues, but it just happens again and again. You have to start wondering if there really is a plan at some point. I think theres a plan and i think the stra regionic growth did well. We know theres a decline in the legacy business. We know that to outrun the business for any company is very hard. I dont know why the stock ran up ahead. This is where the stock was ten days ago. Is the company a value play . Absolutely. Does the market want value plays . Absolutely lot. Even though i think pretty much they gave you a road map of what they were going to do, they did the road map x the india, russia china. I dont think software is as bad as people think. Dont they buy their own stock in the runup to earnings every quarter . Isnt that when theyre buying a lot of it and then they absorb the downdraft every time . I dont know when their window is to buy. I know theyve been consistent buyers. Its just a really hard transition. I was impressed with the strategic growth. I know that on the call people were really kind of oh my god, software is now week. On a value basis, the stock, i dont think Warren Buffett is going to say anything other than the fact theyre on plan and theyre trying to do a big transition. Bag log grew. But the stock ran up. People are saying i thought this was going to be an upside surprise quarter. Its not. Neither is q 3. Get used to it. This transition is going to take more than two quarters. Theres nothing there for a momentum player. Ibm does not have momentum. All right, jim. Thank you. Yeah. Coming up joe and andrew take their pushup competition to the next level. What if women did a pushup competition . You ready to go . I dont think viewers are. This is new. The science of the dad bod. Bring us your aching and sleep deprived. Bring us those who want to feel well rested. Aleve pm. The only one to combine a sleep aid. Plus the 12 hour pain relieving strength of aleve. Be a morning person again, with aleve pm. 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. Youre heard of the dad bod . Now new Research Finds science is behind it. The study followed men from adolescence for up to 20 years. The scientists found becoming a father was linked to around a 4pound increase in weight over the study period. In the meantime those child free had a onepound weight loss for a sixfootman. I never lost the weight from the first pregnancy or the second. Did you . You only had one pregnancy. Two kids one pregnancy. I never took off the weight. Not after the first one. Tried breastfeeding and everything. Didnt work. Didnt work . That Department Work at all. That was just painful. Theres the freshman 15 on squawk. If you do morning tv i found myself, i eat more because you eat more meals because were up at the earlier hours. You mimic breakfast, lunch and dinner and then youre up earlier. I have one friend that only eats for eight hours on any given day. Thats his latest day. Theres always a gimmick. Thats what youre supposed to do. Hugh jackman told me about that. That is so name dropping. Another great dancer. Another great broadway just saying. When he was training to be in wol ver reen he would not eat for 16 hours a day. You could have water or coffee. I asked. If you worked out. Including when you sleep. If you go to sleep, you can drink coffee. No milk in the coffee, and then so 24 minus 16 gets you to 8 hours a day. If you do that eat a few times but not a lot. Brian steel versus hugh jackman is not the same. Not yet, but steele is on his way. . Another intuitive dancer. Thats amazing. Was it a dance thing . No. Make sure you join us tomorrow. Squawk on the street is next. Good Tuesday Morning welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber. It is all about earnings today. Quite a departure from the recent obsession with china and greece. Premarkets a little soggy thanks to a string of revenue misses. Ibm will take points off the dow. Oil is up slightly but gold just