Lets get down to business and tell you whats going on this morning. U. S. Equity futures right now. Youre looking at a morning with red arrows. Dow jones would have opened about 46 points down. Nasdaq off 49 points off and s p 500 off about 6 points. But as you would say joe so goes apple so goes the dow. And the nasdaq which has been doing better recently and then yesterday anyone cares to be watching says the dow is getting crushed down 200. If you added it up it was like 140 at one point during the day. The vast majority of the decline. Right. Which made me think that maybe the dow wasnt doing so badly, the other 29 stocks. But then after the bell i dont know how microsoft will be received but apple has a long list i have written down every Single Person that told me that i never will have ever anything to worry about. That 49 billion in revenue is the birth right of apple. You know what they say about history, it doesnt repeat but it rhymes and ive seen a lot of stocks start on their way to a trillion dollars and theres always the left turn on the way there. Theres got to be some company hit the trillion. At some point. Apple had a market cap of 9 billion not that long ago. Its now 750 billion. It was great at 9 billion. Goes up stock splits. Goes up when it gets to 750 if youre going to get another double youre going to need 1. 5 trillion. Thats my only point. Thats the only point and its universally loved and priced for perfection and thats all i have been saying all along. I know nothing about whether it works and yesterday the guy who was that people that dont get this well why dont they get it . Why dont they want a 40 return guarenteed . And then they start coming up with these. I dont need to know why. I just need to know that in the past and you look at me incredulous a lot. Soon you are or later youre going to accept these things. Youre with me on uber. Youre going against the patron saint of bill de blasio. Of the left. The guy that the country is craving for a National Leader to bring his style of politics. Who said that . He has. Maybe he has. He thinks hes talking to other mayors. You need to run your cities like im running new york city. Into the ground. The only point on apple. Just dont trip over the guy peeing in the streets. Stocks dont move in a straight line. This one did. Until now. Ibm. Two days in a row of not so great earnings. Here we go. Another key vote in greece. Parliament is due to decide on a second set of reforms mandated for a bailout. Prime minister tsipras is facing a grower vote but its to vote on judicial and Banking Systems and not things such as retirement age or taxes. They did exclude farmers and postally fake farmers. That will be controversial. Do they have uber and athens . They do. So its allowed in athens but not in new york city. Hold on im not defending bill de blasio at all. It is in new york city. Cant you just take your arguments to the absurd like i do . All these facts its so complicated makes it less complicated. Just go with it. Its legal in athens but not here. Just say it. Back here in the states at t is nearing government approval of the directv deal. Tom wheeler is recommending the Commission Vote to approve the merger with conditions and the Justice Department says the deal does not pose a risk to competition. On the economic front housing is front and center today. Weekly Mortgage Applications at 7 00 a. M. Eastern time and our real estate expert will join us with more in the next half an hour. Here is apple. The thing is for fundamentals im on board because of am music. I love it. It changed my life and kids lives and its unbelievable but its something called streaming. Where you can get where ever you want whenever you want. I see it. Ahead of the curve. So that would make me more im all mac all the time. Have the iphone 6. We have four ipod. I have beats head phones coming out of our ears. Exactly. Good. Good. I was looking for something and the watch . No watch. Why wont they tell us if its so great. Why wont they tell us . Its weird. They told us in advance they werent going to tell us. They knew there was a possibility it wouldnt be so great out of the gate. Whats wrong with i dont understand. If you have information why not just share it . Early days. Current quarter revenue forecasts fell short some estimates and more from an analyst in just a minute. Another one on my list. Microsoft posting better than expected results on the top and bottom lines but the company took a hit from a big restructuring charge. A microsoft analyst also standing by to talk to us in a few minutes so that going for us as well. Yahoo earnings fell short of estimates and light of consensus in light of a company being forced to spend more money to attract users to website. Gopro beating the streets. A boost from strong sales in asia. And life lock dropping 50 after they were accused of violating a settlement with ftc in 35 states by continuing to make deceptive claims about its services. Lifelock. Their adds are great. Lifelock. They dont really do it. Assume that i know what youre talking about. Which ads . Lifelock effectively protects your identity your credit score, all of these things. The ceo did this great im going to publish my Social Security number right here to prove to you that we have so many protections. And i believe they have a Million Dollar guarentee. You pay a certain amount of money. Do you know about this . You do . Youre talking to an empty chair. There is someone there. Can you just tell us about it . Its not one of our stocks so probably not but they you know the fcc charged they violated an agreement they made in 2010 so thats never a good thing when the government is here to help. What you write on your hand why dont you put it in the apple watch. Youre still writing on your hand. Because i forget things. Sarah palin. She was cheating on things she didnt know. These are things i have to remember to do. Why cant you put the notes in the watch. Thats a good idea. Maybe instead of the time and everything else. Dan is here joining us now. A senior analyst. You have a watch too. He has the watch on too. He doesnt write on his hand. He puts his notes in his watch. What were seeing dan, is this not sort of something that you see when a stock is priced for forperfection. Everything is good. Were talking about just barely negative comments and yet 60 billion in market cap coming off. This is not new at all for apple. If its not new why is the stock down 9 points . Apple doesnt go down nine points. Its only the last year it hasnt done that. For ten years i have sat here on shows like this with you guys and said i think its okay but its one of the best performers. Im in a position where we have a longer Term Investment horizon. So am i happy the stock is down as an owner but everything that i heard on that call demonstrated to me that the business is Getting Better not worse. This is not a tiny company. Revenues grew 33 year over year. This isnt like microsoft was down i think 5 year over year. This was up 33. Put that speaks to the core of the question which is spectacular numbers like that the stock still falls is it priced for perfection . No the stock has always been more volatile than its earnings progression and not only did earnings grow or revenues grow year over year but earnings grew 5 4 41 year over year. It had an impact on the top line which translates to a roughly 72 year over year Earnings Growth if you back that out. Every single category of their business accelerated in the quarter. Services was up 29 versus 12. Do you think investors mispriced this company again . Absolutely. Its 12. 5 times earnings. Theyre growing earnings 40 year over year. The s p 500 trades at 16 times and maybe will grow earnings 7 year over year so absolutely we do. We think that eventually you know, its consolidated a little bit to joes point. A week ago it was 130. Today its 120. Its been consolidating since it was picked for the dow. Maybe well take it out of the dow and go back up. Thats the other problem. I would be worried if these numbers were going the other direction. If they were going in the other direction the entire stock would be cut in half. At six times earnings. You get the slightest this is a well run company with fantastic management team. Returning cash to shareholders. Growing earnings. Product acceleration so i see nothing but run way for the company and is it stock. Are you concerned that it grows ever more dependent on the iphone . When you look at the break down a year ago 53 of their profitability came from the iphone. Now its up to 63 . More and more and more its about only the phones at this point. So am is the only Large Tech Company that i can think of that has so many organically introduced product categories that they have to be broken out. They have the iphone they have the mac, they have the ipad. They have services. We dont know what the watch is yet because its in accessories. People complain about google and book and amazon dont break out enough information. They feel nice about it. They want to give us more information. The businesses are so large on their own that theyre separate categories and all accelerating in growth. What happens if we see a meaningful slow down in china dpichb that thats where so much of the growth comes from. I tend to agree as cook said on the call last night that he sees whats going on in china now a speed bump. So you know if you have 10 20 Year Investment horizon as apple can have they have that view. This quarter up 112 year over year but will they be selling more than in the past . They will. Why does it trade at a relatively modest multiple compared to other stuff out there . Why do you think that is . So the way i look at that is i dont care. I have to accept that. Its not going to change but if earnings continue to grow and i still have that 13 times multiple but earnings are 40 higher then i have a stock thats 40 higher. So i rely on a Good Management team great product cycle, certainings growth and the rest take cares of itself. Is there any discounting mechanism in the stock market that you cant know at times what the future holds so youre basing everything you say on whats already happened or whats happening today so you never know when a stock is not acting right. You say the market doesnt understand whats going on. A lot of times the analyst doesnt understand whats happening in the future. Its watching guys like you looking at the past and its been right for ten years. Its been a great run for ten years. We think that a Good Management team produces good track records. So i look at an opportunity of other things we can invest in. Three months ago i was defending google. Three months later google is all right. Well see retraction in Companies Like alibaba. We cant look at this on a quarter by quarter basis well lose our minds. We have to have a focus on the future and everything that we see in our work and service with the consumers looking at what other people are doing in tech the runway is getting longer and the moet is getting wider. Not the other way around. Thank you for coming in this morning. Well turn our attention to the other tech giant of the morning. Microsoft with Quarterly Earnings and revenue topping analyst expectations. A bright spot for revenue, the companys commercial Cloud Computing segment grew 88 year over year. Good morning. We talked about all the good stuff. Do you worry about the legacy businesses and what that means . People should be worried at some level. They have been declining slowly over the last few quarters. Part of that is because last year there was the refresh but the other reason is lessening of demand. Well see how that transitions over the next year or so but slight worry there. Is that ultimately a more valuable business than people buying Microsoft Office on their own . Yes. Its clear theres a lot of value there and the idea that people can pay overtime gives them a lot of flexibility to buy other Microsoft Services and thats what the company is starting to see. People arent just buying office. Theyre also rolling it in with exchange and dynamics. So overtime revenues will be a little weak in the shortterm because people are paying them. Stock is trading about 45. Whats your target on that stock. We have a 46 cap. Its going to try to get meaningful market share in that phone hardware system. If they shut that down entirely our fair value moves up a couple of bucks. To what. 50 . 48. It doesnt look like thats going to happen. Not in the near term but certainly theyre making noises about were going to serve our target markets there and reducing the lineup. If youre looking at the other side of the business theyre starting to offer that to other platforms. Now available for android and skype is out there. Office 365 is out there. Theyre making moves in that direction. Well see what happens over the next year. We appreciate your perspective this morning. Thank you. Thanks guys. Well talk to you. Coming up a jeep hacked while driving on the highway. Shocking video and what the company is doing about the vulnerability, thats next. First as we head to break take a look back at this date in history. 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 . Kids are expensive. So im always looking to get more for my money. Thats why i switched from uverse to xfinity. They have the most free on demand tv shows and movies on all my devices. Its perfect for me because my kids are costing me a fortune. Im going to cabo [ music plays ] dont settle for uverse. Xfinity is perfect for people who want more entertainment for their money. Someone hacking into a car and taking control of it but now shocking video proving it can happen. Computer experts remotely hacked into an suv on the highway all with a laptop and now jeep offering a fix to a sunning vulnerable. Haley jackson has our report. What started as an ordinary highway drive quickly turned terrifying for Andy Greenberg as hackers took control of the 2014 jeep sending him to a ditch. They did this on purpose working with hackers to show how some connected cars can be vulnerable. It ceased to be fun. I can only imagine if the same thing was done to you without any forward earning how much fear that koul instillcould instill in someone. They hacked it to change the radio and pc and to kill the engine. You have to turn the car off. The two researchers believe as many as 274,000 vehicles are vulnerable. They only verified that on a 2014 jeep cherokee. Chrysler released a Software Update this month and says it has a team focused on identifying and implementing Software Best practices including Cyber Security for all vehicle content including on board and remote services. A bill would require that connected cars protect drivers against cyber criminals and have technology that can stop a hack in real time. It does introduce more ways to get into the vehicle but theyre working together to beef up security. Staying safer on the road keeping hackers out of the drivers seat. Nbc news los angeles. Well talk more about the story this morning with mike jackson at 8 15 eastern time. Unless he gets hacked on the way here. Unless he gets hacked on the way here. Terrible. They were kind of laughing as they were heading toward the ditch they were laughing because they knew the guy had took control and its just a ditch but can you can you lock the doors . Could you lock the doors and send someone over like an embankment . I have interviewed a Cyber Security of the future future crime specialist. Theyll have to worry about people driving your car over the cliff so that you die. At the moment to be cliff what it sounds like it wasnt actually turning you into the ditch. They couldnt control the Steering Wheel thats when we get into automated cars and once you get into automated cars where theres a computerized motion. They could control your speed. Right. Stereo speed, air conditioning. What if they accelerate you to 110 miles per hour. I thought that was just shutting down the engine though. What if they were to just lock it on the volume on to Justin Bieber and leave it on really loud. And locked in the car. It was hard rock. Britney spears or something. Hard rock. Pad hard rock or good hard rock . Very loud hard rock like 24 hours a day. Okay. Besides the biebs, who should we use besides him. Whats the worst thing out there right now . You used to give me a hard time for milly vanilly. All right. A wild after hours session for chi approximate, o chipotle. Beating estimates by a penny while missing on revenues. Joining us now to break down the results is matthew, Senior Research analyst that covers chipotle. Good to have you here. Thank you. Same store sales bothered everybody. People were expecting closer to 6. Sure it was a slight mess so the stock did violently sell off before the conference call. They explained that away as far as quarter to date july trends turned positive on traffic so there was a sign of improvement. That aided in the recovery and with typical Top Line Sales trends missing a little bit labor deleverage with a little bit of concern. Is that the waging of the minimum wage . Theyre seeing other inflationary pressures. Theyre taking up their rates because they want to stay ahead of the fast food rates out there. Service restaurants. So its a case where minimum wage is pushing everybody higher so they took their wage rates up faster. Explain to me a pork product. Its missing from a large percentage of the stores because they didnt like the way one of their suppliers was producing the pork. The pigs didnt live a nice life before they made it to your plate. So theyre jazzing that up and the u. K. Treat their pigs a little bit better before putting them on their plate so they found a u. S. Supplier to remedy that issue. 60 of their stores have the product back in there. Simultaneously they have tyken price on their beef products in those stores. The other stores 40 will be getting them by the end of third quarter. When everybody has a fulmen you theyll take up their prices on beef. We dont want to give them less product but take up price on this potential substitute product. Youre getting more product so theyll be getting that pork consumer pack and be taking price the pork problem solve wed go back to this same store sales growth we used to see . Whats the next hurdle on this . They were in historic levels of 19 same store sales number it had modestly negative traffic imbedded in there. Thats out of the way. They brought that expectations down. How do you derisk the story . Let it out of the bag. Manage expectations. Okay. Got to get all this new vernacular down. Theres so many pork producers in the world. Theres that few that meet their standards . But really . Theyre playing the game of being the best food product out there. Food with integrity. Others are saying theyre going to do products with no gmos theyre going to say zero antibiotics where we can do it. So thats tough. This actual pork producer allows them only when the pig gets sick so theres nothing there to enhance the size of the pig or early cycle of the pig. Wow. I dont know if every consumer gives them credit for it but its why the food tastes better and why the millennial can hit the jim after a burrito. Supposedly this guy beat it for 100 days and he was healthy. But the calories i was going to say theyre huge. Worst than a big mac. You overeat good pood youre going to gain weight but what theyre saying is well give you the ammunition to do what you want with it but its going to be the best product out there. Great marketing. People that know pigs theyre similar to dogs. They might not look like a dog but in terms of affection and being smart and everything else. Do you remember arnold. People pigs before. Long ago. No. Green acres is the way to be. Eddie albert. Forget manhattan give me that country side. Generational. I watched it in syndication. Zed is dead. Coming up can you hang out . You get all my references . What are you doing later . Can you read the teleprompter. Who doesnt love breakfast . For three meals a day it sounds too good to be true. Not so says mcdonalds. That story when squawk box comes right back. This is it. This i have heard. But you understand the term. We got work to do. We got work to do. I learn something new. You do. Yeah. Fork nork is where id rather stay. This is what you love. That was really no im saying what i love about this every morning is i get to learn something new. I love the story about mcdonalds potentially doing all daybreak fast. I want to be able to buy an egg White Mcmuffin at any time of the day and its made me mad for years that i havent been able to. Eggs benedict costs like 23. An egg mcmuffin thats the same thing. And 300 calories or less. 24. I could do this. Do it. The story is theyre considering doing it in october. No official word yet. But i am an advocate. But how do you fix it . Do new things or the things you do better or more. The service had gotten so bad. If mcdonalds had kept chipotle. I know right . And why didnt they. Was that a bad move . Maybe they suke seeded because of it. It gets a higher multiple because its not attached to mcdonalds. If it was still attached all the bankers would be breathing down their necks. 50 cent and this is a guy that i actually know. I know him. Its not heres howell i know him. This is oh gosh. We tried to find an old picture. This is probably three or pour years ago. I was trying to find out when that picture was taken. We were both wearing the head phones. He looks good in head phones. It looks natural to him. And i look awful. John kerry. I dont really wear glasses. Im not sure why im wearing glasses in that picture. Trying to look hipster. Anyway what are you were doing there . I dont remember. It happens a lot with you. Could have been anything. Hanging out. Just any given day. He filed for bankruptcy. He has. In part because he is involved in the lawsuit. We wont get into the details of the lawsuit but he now says youd think hes making money hands over fist because he has jewelry and all of this stuff, he says no thats all an illusion. I borrow the jewelry. I trade in the cars to get the other cars. I return half of the stuff and that the whole sort of facade of his life is actually not but he has huge income does he not . Thats the thing he said for example hes on the show called power on stars where hes the executive producer and stars of the show. He only made 150,000 for each season. We had him several years ago the noon show and he struck me as somebody who was incredibly down to earth and i said how do you manage . He said i wake up every morning in the house that mike tyson put into foreclosure and i regret it and wish i could do it all over again. Hes somebody thats come to terms with. I agree with you but hes had to have made some he had a stake in vitamin water. Early. And look at this the daily news by the way tries to give him a hard time. I dont know if you can get in on this. Theres two pictures of him. This is the south paw premiere. He shows up at court and wearing a c arkasio watch and its a different look. Know your audience. Was that before you were on squawk box . It might have been. He could do better with money. I have to go back and look at the date of when we spent some time together. Hes coming on. Youve seen them. Theyre amazing. They are amazing and i just love it. I like that progressive stance supposedly. Hes protecting the buggy whip union. Shouldnt it be regressive . Most of the time . Thats a very good point. Progressive is the wrong term andrew. You have to talk to your people and tell them theyre not my people. Theyre right down the street. I am a big uber fan as you know. Asking tough questions about iran this week. Doing push ups with you. Come on. Well you werent doing one for one with me. The bar always gets higher. You were two for every three. We have to go. They need to get to come meshmercial. Its not as bullish as some would like. Squawk returns with that story and more in a moment. Everyone loves the picture i posted of you. At t reminds you it can wait. 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. Xco0 on back to School Shopping and a revision to its overall sales expectations for 2015 and a hint its not great. Joining us first on cnbc and our ceo. Good morning to you, matt. Good morning. How are those push ups feeling . Im sore this morning and already asked for a rematch. You need some time. I need a weekend. You did okay. Im doing the urban mutter this weekend. Anyway. A longer story. We have to talk retail sales. Back to School Shopping season. What is it going to look like . Were looking right now talking about the revision to our forecast for the year. So back to school we think the numbers are a little bit down because people have replenished last year but the bigger story is the fact that we have revised our forecast and its like deja vu all over again. We did that last summer and finished the last quarter very strong. Poised for a lot of growth this year and as a result of economic and maybe political headwinds were announcing today were going to revise the annual retail Sales Forecast for 3. 5 this year. Thats what we had to do last year. Its unfortunate. Were ready to grow but we need help from washington and were not getting it. Gas prices are so low. What are you blaming this on when you say washington . Youre in washington. Were in washington and youre looking at the same things that the imf and fed looked at when they revised their gdp forecast for the year. Thats a big part of the input. Youre looking at Consumer Confidence and credit. The fundamentals all look good but in washington were talking about proposed increases in overtime recommendgulation in the federal minimum wage so instead of the things that drive growth like Corporate Tax reform and Infrastructure Spending and the fight over the trade deal that would have lead to a lot of growth were not talking about those. Were focused on things about redistribution and not about growth. So you completely refute this idea . Because we keep hearing the reason you raise the minimum wage is so individuals will spend more of it and be a boost to economic growth. I looked at the bls statistics last night. 1. 7 Million People earn the minimum wage out of a work force of 150 million. So its not an unfortunate issue that we grow those wages but were talking about 1 of the work force so we ought to be talking about the other 149 million that we need to make sure that theyre working and growing and going to move up into other career opportunities. When you look at the forecast for the rest of the year in terms of the different stratta, lucks risk the middle discould be shops, who is going to get hit the hardest . We have seen and we have talked about this many times when we have been together that the issue is the economy. Winners and losers in every segment so theres out performers in luxury and discount. Theres a real fight for people in that part of the economy where their wages arent growing and those people will be helped most by an economy that grows. Not by a federal government that said were going to add this mythical pot of gold somewhere and tell someone to pay you more. That doesnt work. You saw secretary clinton say recently that a 15 minimum wage doesnt work everywhere. People realize this is not a fix. Its a bt of a red herring. We shouldnt settle for the only way to help these people is to raise the minimum wage. We should say the economy needs to grow. We can do better than 2 gdp. How do we do that . We dont do that by dividing up the existing amount we have. We say we want everyone to move up in their careers and to say youre consigned at the minimum wage for the rest of your career is this having any effect on you. No. Thank you, appreciate it. Thank you. Interesting numbers. Well talk to you soon. Lets get to megain washington with a news alert on biogen. Thats right. Were here at the alzheimers conference in washington d. C. Highly anticipated data coming out now. As they have gotten all the doses in the trial it shows significant reductions on the plaque in the brain and a slower og of the cognitive designs associating. Those on their own compared with placebo were not significant on two measures of cognition however they were highly significant when you look at the plaques so taken together the results are encouraging and saw what we saw in march. Theyre starting the phase three trials this year so encouraging update supports however not significantly significant on the 6 milligram dose. More updates on trials later today. 6 million is the high dose . 6 million is the second highest one in the four dose trial. 10 was the highest. They would hope for fewer side effects. I hope so too but when you do, you said it really effected the plaques but not cognition. Who knows whether that really will eventually its also a small cohort. Right. All right, meg. Were going to talk about that in the next hour with you. New signs in housing are coming back. But bad habits are they back too . Well have a realty check when squawk box comes right back. 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. Finally a crack in the tight lending we have seen since the housing crash. Interestonly loans are back. Yes. A mortgage once vilified for its high default rate is back but with a twist. Diana olick is going to tell us if this spells trouble again. Diana . Well michelle these are definitely different mortgages than they were before. But they are opening the door to riskier loan products once again. United wholesale mortgage says they will have an interestonly loan mortgage. Which is how in the boom got buyers into homes they couldnt afford. Buyers have to put 20 down. They also have to have at least a 720 fico score which is above the national median. They must have no more than a 42 debt to income ratio. And after ten years, they have to start paying principal. Borrowers must be qualified to afford the payments not just at the beginning but after those payments have adjusted higher. Still, critics are concerned these loans will be used for refinances. In which case the borrower wouldnt have to pay 20 down. They could just show they have 20 equity in the home. Now things get tricky especially with home prices appreciating due to tight supply. Lets say you get that loan now but then home prices fall back a bit and you dont have as much skin . The game as you thought. Well, its doubtful that they would fall 20 , but, you know michelle, never say never on home prices. Right . Yeah. No. Absolutely. Never had a national decline in home price sales. Oh, until it actually happened. Right. Tick by tick, right . These start to you start to see the defenses fade away. I mean is this the beginning of yet another one of these cycles . Well i dont think youre going to see the kind of really risky products. Only because federal regulators have put safeguards in place that you cant have those negative products that were awful during the housing boom. These are riskier loans. They had only been given to really High Net Worth borrowers over the last couple of years. Now theyre being offered to the masses. And just to give you an idea during the housing boom more than 10 of adjustable rate loans were these interestonly. And right now its about. 03 . Well see where it goes from there. I would guess so. Thank you. Seem okay right now. I mean people its still hard for some people to get a mortgage. Right. It is. Thats reflective of it. We cant be near back to the two years to go . I dont know. I dont know what anymore. When we come back weve got this mornings top stories. Stay tuned. Squawk box returns with all that and more in just a moment. Kids are expensive. So im always looking to get more for my money. Thats why i switched from uverse to xfinity. They have the most free on demand tv shows and movies on all my devices. Its perfect for me because my kids are costing me a fortune. Im going to cabo [ music plays ] dont settle for uverse. Xfinity is perfect for people who want more entertainment for their money. Apple getting crushed in premarket trading. Well tell you whats dragging down the stock. Thats straight ahead. New york city in a fight with uber. You shut that thing down and we are not going to be held responsible for whatever happens. Shut it off mayor de blasio wants to cap licenses for ride sharing fleets. Ubers general manager is here. He says if the cap goes to a vote ubers chances are not good. And that means serious consequences for consumers. Fire and brimstone coming down from the skies. Rivers and seas boiling. 40 years of darkness. Earthquakes, volcanoes. The dead rising from the grave. Dogs and cats living together. Mass hysteria and zach johnson is the champion of st. Andrews. The golfer joins us fresh off his victory in the british open. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with Andrew Ross Sorkin and michelle carusocabrera. Im Joseph Richard kernen. Apple down in premarket trading. Revenue above expectation. But Fourth Quarter guidance apparently disappointing the street. Were going to talk to an apple analyst in just a minute who will explain why the market is always so wrong and hes right about apple like the last analyst explained. And before we do that we have other stories were following at this hour. Weve got more earnings ahead. Boeing and cocacola. Well bring you those as soon as they hit the tape. Microsoft posted better than expected results on the top and bottom lines but the company took a hit from restructuring charges and low demand for its core offerings. Also yahoo earnings fell short of estimates. Current quarter Sales Forecast, light of consensus. Then theres gopro. Thats on the good side. Earnings and revenue beat the street. The camera maker getting a boost from strong sales in asia. Then if you go overseas weve got a vote in greece today. Youre the expert on greece. Parliament due to decide on banking reforms mandated by lenders for a bailout. The Prime Minister there is facing a growing revolt within his Left Wing Party over austerity measures. Lets check out u. S. Equity futures at this hour. Weve got a red picture. Dow looks it would open off about 44 points. Nasdaq down 50 points and the s p opening off 6 points. Lets get to meg tirrell. Shes got news on eli lilly. Lilly reporting new data on its alzheimers drug. From an extension study, the two big phase three trials appear to not have met their end points. They found there was a benefit for patients taking the drug who are in the earlier stages of alzheimers. What they did was switch the patients taking placebo and put them on the drug and compare them with the folk who is had been taking the drug a year and a half longer. Those patients while they benefitted, never caught up with the patients who had been taking the drug for longer. So those curves remain the same implying there is an effect here. So itll be interesting to see how folks react to that. We had biogen earlier today showing the highly anticipated dose did not meet significance. Youre seeing their shares trading down a bit in the early market right now. So a lot more coming to you guys today. Back over to you. Okay. Thank you. All right. As we mentioned earlier, shares of apple are sliding after earnings and revenue narrowly beat expectations. The companys forecast for the Fourth Quarter came in weaker than expected. Among the highlights, sales of iphones jumped 35 year over year coming in at 47. 5 million units. Slightly light of some whisper numbers. Ipad shipments were down 18 but still in line with expectations. The tech giant did not break out the apple watch shipments. Ceo timbook only saying quote, it has exceeded expectations. Good morning. Whats the problem with the stock . All these numbers were so great. To joes point earlier in the show, was this stock priced for expectation . The expectations were high going into the report. This was an expectations problem, not a problem of the numbers themselves. The analysts got it wrong. When i look at the chart, its been flat for i mean expectations, how high could they have been if the stock hasnt moved for six months . And i think this is the quarter in between iphone launches. Youre at the tail end. The question has been is this as good as it gets . There was a fantastic cycle and can they grow from here . And thats the bet youre making on the stock if you decide youre going to buy it . Absolutely. And its not a slam dunk. I am not people write in. In the old days it was the tazarians, aolians. They all fall in love with stock. And i have an iphone 6. Ive got an mac. I am not there. I have no idea. Im just saying the case the dogmatic case that nothing could ever go wrong, someone said oh so its going to go to six times earnings. I go, im not saying how do you know earnings per share can never ever ever go down . How do you know Profit Margins never ever ever go down . Theyd have to stop selling in china for the stock to go down. How do you know someone else doesnt eventually some day snsh. Home prices never go down for example, right . Couldnt someone make a better mouse trap some day . Obviously nokia, blackberry as you mentioned, over time. Right. Im not bearish. I just dont know. Every analyst saying the same thing. You know, the positives obviously the ecosystem is really strong. Once you get your iphone, its tough youre locked in. Youre locked in. Changed everybodys life for the better. Everybodys got a computer. Are you telling clients to buy this . We are. Really the bet youre making is the Fourth Quarter. Can you show some growth as you whats the chance though as you look at their forecast that you actually have year over year into a sequinential decline into iphone sales . One thing brought up on the call yesterday is only 20 of existing iphone users have upgraded to iphone 6. Thats still a pretty big base of users. You also saw emerging market growth. It was up 89 year on year. But the upgrade cycle is always different on the 6s or whatever you consider the distinction between the major shift which we just saw last fall and whatever is coming. Usually its the same body type a different chip. Its not, you know the earth shattering it feels incremental. It feels more incremental than what you sometimes see on the big changes. And the biggest change we saw was obviously the much bigger phones. Right. And the point is youve got roughly 75 of users still on the smaller screen size. And how many of those users dont have their upgrade yet that want to get the bigger phone . And you know with the regard in emerging markets, i think the growth there has been much better than anyone would have thought. And remember go back a year ago, year and a half ago, the talk was apple needs to come in with a lower price phone in order to sell in china. China more than doubled year on year. Good to have you on. Thank you so much. Earnings season has taken center stage, but risk overhang still looms large from greece and china. Joining us now with more on this and where the best Market Opportunities are. Paul ebner. I saw, i think, greek debt went from cccminus which sounds like me gpa to cccplus. But you talk to this one here and this is not necessarily a slam dunk. I put it im done with greece. Weve moved on. I have a nuance position. Were not done with greece. I just dont understand why it drives the market so much. I dont think it should. But it does. Do you follow closely enough to know whether this deal could totally fall apart . You know im in michelle camp. When you look how much this is driving risk in the Global Markets, its disproportionate. If you look at how this is going to affect businesses we put out a blog yesterday. We look for topics that are emerging in conference calls. If you look at the last quarter in the u. S. The amount of times a ceo mentioned the word greece its minuscule. Especially compared to the times they mentioned it in 2010 11 or 12. Its a big driver in the risk of the markets. You dont consider it when telling people how to invest . Its in the back of our mind engaging Risk Appetite. But its not a major factor. Its also not in my investment universe. So youre sleeping like a baby . Theres always things that keep you up. Right now its you know obviously apple. We had a position in apple so were going to lose a little bit of money on that. The thing im worried more about going forward, though is risk sentiment around the equity markets. Its been robust recently. Weve seen signs of that continuing robust over the next three months. Longterm equity markets are stretched. And when you look at the amount of money thats flowed into equities the last six months i think at some point people are going to start to question. So risk sentiment the last couple months has been not complacent. Thats correct. Before we got into the whole drama, the reemergence of the drama with greece those are signs of healthy risk in the markets. The question is the top now or are we still 18 months out . I remember this sort of feels this doesnt have to be a top. Thats right. And when we look at our Risk Appetite gauges they are robust. Are you saying people are willing to take risk . Thats topee. Isnt it . For the shortterm that can still drive some sentiment to drive the market further. So we do have a i thought you meant that greece and china had reinstilled some some skepticism into longterm goals which would be bullish. You meant that people are still a lot of ipos. Good sentiment is contraryiancontrarian. Thats potentially driving the market further. Okay. Instead of down. All right. We dont take a contrarian position on that. Not in the shortterm. In the longterm we look at valuation. Thats going to give more of a contrarian stance. Lets say our fund can go up were well below that. Were more like 12 , 15 right now. Should i think of blackrock as a multiasset manager now . Do you know where youre going with equities . Were all across the board. I was going to say. Weve got very strong teams and equities. So you say. I think the results speak for themselves. You dont look too big to fail. Ill leave that to what other people decide. One thing we find most exciting in times of our outlook in the markets is the that was very deft on your part. Look at you. You know looking at the trend towards building out smart cars or technologyenabled cars weve seen a huge trend among some chip makers. Although theyve been sold off the last couple weeks. That are levered towards building these smarter technology. Speaking of cars weve got to go because we have uber coming up. Excellent. Great to see you. By the way, weve got deal news at this hour. St. Jude buying thoratec. About 3. 4 billion. Should mention its a 35. 4 premium to the Closing Price on july 17th. 63. 50 a share in cash. Thoratec mechanical circulatory many invasive ways. I think they also do maybe some left ventricular assist. Maybe. But i know that company. So about 3. 5 billion . 3. 4 billion. In the meantime when we come back were going to continue our conversation about uber. Because new york is in a battle with uber and it is heating up. Mayor de blasio wanting to cap the number of new york licenses for the ride sharing program. Were going to talk to ubers new york general manager. Well do it after the break. Then weve got earnings coming up from boeing and cocacola. Well bring you those numbers and reaction on the street. Plus weve got gloom, boom and doom. Mark faber is going to be here to talk Global Markets and the fallout from the greek bailout. 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. Kids are expensive. So im always looking to get more for my money. Thats why i switched from uverse to xfinity. They have the most free on demand tv shows and movies on all my devices. Its perfect for me because my kids are costing me a fortune. Im going to cabo [ music plays ] dont settle for uverse. Xfinity is perfect for people who want more entertainment for their money. Welcome back to squawk box. The war over uber in new york city is intensifying. Tomorrows city hall set to vote on a bill that would put a cap on a number of drivers. Mayor de blasios comptroller stringer calls it nonsensical and arbitrary. Here to give us his take which i assume is going to be the same josh moore. He is the general manager of uber new york city. Nyc. Good to see you this morning. Thank you for having me. Put this in context. If this were to go through, what would happen to the company . Well 100,000 people take their first trip in new york city every month. And the cap would allow us to add 16 new drivers every month. And how many are you adding every month . Were adding a couple thousand every month. Theres no way that 16 new cars can serve 100,000 new yorkers. Let me ask you a different question. Do you think theres any merit and im an uber user and lover is there any merit in the city investigating or at least examining the impact of Companies Like uber on traffic and what its impact is on the economy . Absolutely. Weve been submitting trip data for the past six months. And the city has that data. On average we have fewer than 2,000 cars. Drivers work on average 30 hours a week. And so they have that data. I believe that this administration is intentionally misleading the public in not released that data. And the daily news which we gave all our trip data to yesterday took a look at it and they agree. But you think there is a public is there any public good or public argument about whether there are too many cars on the street . I think congestion is a problem in this city. Weve all been in traffic. But you dont think uber is responsible for that if. I think every car in the city of the 2. 7 million cars in the city every day, everyone is responsible for that. But the answer and the way to fix the congestion problem here is technology. Technology is the answer. Its not the problem. So a problem like uber pool which encourages people to share their ride that is whats going to get cars off the road. Putting an artificial cap on supply to study congestion which since actually the whole conversation has shifted from that. Every paper in the city has come out against it saying that doesnt make sense. The new york times, the daily post, do you ever see them agreeing . They dont. But now the mayor is talking about other things. The word congestion barically comes up in his oped. Now its other things. He said im not going to listen to a corporation thats in this just a make profits. This is outing him for what he is and for the misguided direction that that attitude takes policy. And you should just congratulate him. Theyre phenomenal. And it is weve heard danny glover and people in the past say that cabs dont go to certain neighborhoods. They wont pick up certain people. Uber does. Uber will do it. This outs him as a as the leading one of the leading progressives in this country that really advocates progressive policies. That hurt the people that hes supposedly tried to so let it go. This is great to out him. Search through august 31st when they explain de blasio back when he was the defender of the boroughs and suddenly changed his position on whether or not there should be more its about protecting entrenched union and labor. Which is what progressives are interested in a lot of the time. Regressives. Hes in accessibility but tried to block the green cabs which were 20 accessible. We sat with his staff and theyre talking about revenue nor the city. I informed them they pay sales tax. Which is more than yellow cab pays. They didnt even know that. Theyre misinformed. This is about half a Million Dollars in Campaign Contributions and nothing else. Right. So tell us this though. Chances that this vote goes through. Whats the breakdown . Elected officials are coming out saying this doesnt make sense. Its going to kill 10,000 jobs. Its going to leave people stranded. Should there be any limit . Or on any car sharing . We were talking about earlier that food carts, right . Theres a limit on the number of food carts in the city because people decide you know what . At some point we dont want every corner littered with a food cart. With a hundred thousand new riders every month, i dont think were there yet. But i have a vision for the future of this city with a million fewer cars on their own. Why do people own their own car and drive in . Why are 2. 7 million cars coming into the city every day . If theres a better option would they take that instead. Taking cars off the road is the right place to end up. Youre an advocate of congestion pricing . Yes. You are . Yes. What would that do to the price of uber . Im not sure. But some brinls are free and others arent. Before getting into the tunnel my parents would exit and take the queensboro bridge. Ive heard you charge people if you could figure out they are there. I am for a comprehensive solution for congestion rather than blaming one small piece of it. I think this is an example. Millennials, right . This could be the thing that pushes them to vote against, right . You hired David Plouffe here. It sounds like your firm in general probably views itself as some socially positive progressive movement. This is the leading progressive. Does it at least shake your conviction in identifying with that side of the political spectrum . This is what it results . It doesnt. And i supported him in the election. Thank you. Come on. This cap isnt about when youre making profits, are you embarrassed about it . Are you trying to maximize profits for uber and you feel okay about that . This is about contribution politics. This has nothing to do with his policy. Its always contribution politics. Affecting progressives . Only republicans have that citizen united. Right . [ overlapping speakers ] you agree with him, but you give him a hard time. This might be changing my mind. But this isnt about the people. Dont get angry. Its about people. This is about people and uber is about helping people. I couldnt agree more. You dont have to apologize for what youre doing. Im embarrassed for you. One last question. The gig economy. Thats the next leg in his argument which is to say hes going to suggest these jobs which you are creating are not great jobs. It seems people are googling things about uber and taking quotes and saying them. Here in new york city we dont have ride sharing. We have the same regulated industry here that actually makes the new york uber experience a bit different than the rest of the country. I think frankly his entire staff is completely misinformed. Okay. Thank you for coming in this morning. I cant wait to see David Plouffe dancing around this. Thank you. We like profits, we hate profits. He likes profits, my man. He does. I heard they try to maximize profits, this company. Thats so evil. Exactly. Well see whether thats legal. More after the break. Ah aflac . Aflac i thought you said this guy was the best . Oh, hes a horrible stylist. Gah . But hes the best at paying claims fast really. Mmhmm. Paid mine in just one day. One day . Yea. Aaaflaaaac in just one day, we approve and pay. One day pay, only from aflac. Why should over two hundred years of citi history matter to you . Well, because it tells us something powerful about progress that whether times are good or bad, people and their ideas will continue to move the world forward. As long as they have someone to believe in them. Citi financed the transatlantic cable that connected continents. And the panama canal, that made our world a smaller place. We backed the Marshall Plan that helped europe regain its strength. And pioneered the atm, for cash, anytime. For over two centuries weve supported dreams like these, and the people and companies behind them. So why should that matter to you . Because, today, we are still helping progress makers turn their ideas into reality. And the next great idea could be yours. Coming up cocacola and boeing set to report. Were going to have e the numbers next. Plus the dose of doom and gloom. Mark faber joins us to talk china, greece and earnings in the u. S. 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. 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 . We got an earnings alert. Boeing posting Quarterly Results. Phil lebeau has the numbers. Hi andrew. These are better than expected numbers. Earnings per share coming in 25 cents better than the consensus of 1. 37. That was after the charge that was announced last week. Everybody brought their earnings estimate down to 1. 37. Boeing coming in at 1. 72. Better than revenue expected at 24. 5 billion. Brings up the question why did boeing do better than expected . Record commercial deliveries in the quarter of 197 airplanes and Strong Operational performance. The guidance. This is importance because people were wondering what the new guidance would be. Its droply essentially 50 cents going down to 7. 70 to 7. 90 per share all of 2015. Again thats down to 8. 40 on the commercial side of the business. Record deliveries of 197 planes. 34 787s were delivered in the quarter. Thats better than the projected run rate of 10 per month. Cash flow. This is also important for investors. 3. 3 billion and they remain on target to have greater than 9 billion in cash flow. Guys, one last note. Operating margins, commercial operating margins 7. 1 oerlverall for the company at 6. 9 . Thats part of the story today. The other part will come up later on. It is the first Earnings Call for new ceo dennis mullenburg. Well be on that call. Guys, back to you. Okay. Thank you, mr. Lebeau. Joe has been looking through coke numbers. The estimate was 60 cents. The first number the company gave was 71. But looking into the details, comparable number for that estimate was 63 cents. Because items impacting comparability increased reported eps by 8 cents related to a gain recognized in connection with the closing of the transaction of monster beverage corp. So call it 63 which is still 3 cents ahead of expectations. And they are responding they had a 41. 65 bid on it right now. Also worldwide case unit volume was up i think, 2 versus expectations of 1 . And europe was up 1 versus expectations of down. 7 . Thatd be a turn in that one. It struggled there for so long. Exactly. Weve watched them mix Quarterly Results from coke. Although the stock has you know, its been its not gang busters and its underperformed i think pepsi to some extent. But revenue was also above expectations. Revenue was 12. 16 versus expectations at 12. 06. So that was up also. So coke at this point looks like it could help the dow at least a little bit. When you look at the unit case volume you know cocacola growth is now still in the still beverages as i put it. Theyre now doing milk by the way. Quick comment from muhtar this morning. We are executing on initiatives and focused on driving efficiencies through productivity making decisions to excel growth. We remain confident that we have the right plan in place. And leveraging our brand portfolio together. My favorite brand. Coke zero. Growth of 6 . Its getting much i love coke zero. Because it has splenda rather than nutrisweet. It has a lemony taste. They try to make it taste like regular coke. And youre worried about aspartame. What about coke light . Thats the one with a little sugar in it . Why expend calories on sugar at all . I hear you get fat because of carbonation sometimes. Or it causes do you ever have crystal light . Im putting this dyed powder into water and drinking it. Thats probably going to kill me. I got to tell you. I just had their chocolate milk. It was extraordinary. Coke now sells chocolate milk. And it has double the protein, half the sugar. Interesting. I dont know about that. Milk for adults its not in the animal king doll thats not done a lot i love it. Its like being a kid again. Going to have some strawberry quick too andrew . Yes. Love that. Okay. You and the twins can have it all together. At a little table. As a family. Thats cute. Plenty of challenges and risks for the markets to deal with right now. Lets find out what our next guest thinks is the biggest threat to the Global Economy. And it says bearish here. I just think hes i just think hes just not pollyanna. He looks around the world as it is and sometimes gives us the possibility of worst Case Scenarios. I dont know whether that makes you bearish, marc faber. He might say gloom and doom but in between there is a boom. But it is two out of three sound bad, marc. How are you feeling today . You know the longer that the worst Case Scenario doesnt occur and that we sort of go sideways, maybe we work off some of the things that youve worried about in recent years. Is that possible . Or are we just delaying the inevitable . Well at this point anything is possible. But i would say the markets most in the u. S. Is on the high side. And basically the expectations are quite high. So if there is a minor disappointment as we saw in the case of apple, then the stock reacts on the downside. But what also surprises me for instance, we had record sales, car sales in the u. S. And there was a lot of hype about general motors. Stock down 20 . So something is not quite right. Number two, i live in asia and i see what is happening in the asian economies. I can tell you at the present time there is no growth in asia. And i think that some countries are even in a recession if you just measure off the peak. So with asia gone thats a driver of economic growth. We also have recession in brazil. We have in europe essentially anemic growth. It is no longer tumbling the economy, but its not growing at a healthy pace. And the debt overburden is still there. Hasnt been solved. In other words, lets say europe lends money to greece. Then greece has the money to pay the imf and ecb. Its basically uponponzi financed. But it will last for some time. You can call the actions of the central bankers around the world ponzi finance at this point. But if there was no demand because of the financial crisis thats the those are the two opposing viewpoints. There was no demand so we needed this. And the other one is sooner or later all the stock markets are up on devalued currencies. And sooner or later that comes home to roost. But i dont know. I dont know which finally happens, marc. Theres one thing that i want to point out which i think is quite important. Commodity prices have been very weak. And this weakness may have to some extent to do with supplies going up. But the supplies havent gone up that much and do not reflect the price weakness. The price weakness is because of weak demand. And when i look i was wrong. I thought the price of Precious Metals would have bottomed out. But when i look at the break in Precious Metals then im asking myself maybe this is the signal that they are strongly Deflationary Forces despite all the money printing by Central Banks. Yeah. Which makes us impotent to deal with a global slowdown given that we already used everything that we had in the last one. And then what do we do . Well they can increase asset purchases meaningfully. They can also start buying stocks and some Central Banks have done it already like in china. And i wouldnt be surprised if the fed havent intervened from time to time in the stock market either. And in europe. So there are still ways to boost asset prices. Okay, marc. You boost all of them at the same time. At the same time, i know. You run out of money. Last but not least because i can always get some interesting comments from this. Based not on Central Banks increasing asset values in the stock market but based on where the fundamentals of you just mentioned deflation and the possibility that growth isnt that good how overvalued are most stock markets around the world . And to get down to where it would be a more reasonable level, what kind of you still think 20 , 30 , 40 selloff . Well i think, i mean in the u. S. You look at stock by micron technology. Down 50 . The last few days in the u. S. Although the market went up with the exception of yesterday, every day they were more declining than advancing stocks. And the list of 12 months new lows was very high on friday. Over 200 shares makes 12 months new lows. And very few shares less than 60 make 12 months new highs. So it shows you a lot of stocks are already declining. There are more stocks now below the 200day moving average than above the 200day moving average. So i think in the u. S. The market could easily drop 20 to 40 . Easily. Now, other markets, they are already down substantially like brazil or emerging markets in general. So there the Downside Risk is lower. But i still think there is Downside Risk. All right, marc faber. Thank you. My pleasure. Thank you. The time keeps marching ahead. One of these days. Well see. Thank you. Coming up this is cool. Golfer zach johnson now has two majors among his 12 pga tour victories. The 39yearold, he may be from iowa, but i know he loves he has georgia on his mind a lot like i do. The british open he won it in a threeman playoff this week. Hell join us next. The list of golfers who have won major championships at both st. Andrews and augusta growing a little bit. After battling for the title in a threeman playoff, i think it started before that at the 2015 open zach johnson became the sixth player to win at both iconic venues. Joining us now, 2015 british open champ Zach Johnsons had a couple of days to collect himself. But i bet i can get you going again, zach and almost get you speechless. When i think about how much work youve put in i have no audio. Oh no audio . Lets try to get zach because i cant get him choked up if he cant hear what im saying. Thats your goal . Youre going to make him cry . This is like a Barbara Walters situation . Not my goal but i get choked up thinking about what these guys go through to have something. And then when you win this championship at st. Andrews after all this work you know the last time zach won i think was at augusta. But its been awhile and hes got his family now and everything. Knowing how hard he works. I know of this gentleman from a place in georgia. A special place called sea island where he works his butt off. Thats a place that i love too. I know what a good guy he is. I just think that great picture. Yeah. To see that happen. Gorgeous. Look at that little boy. I was trying to get him now im getting choked up thinking about it. Can he hear us yet . Huh . Not yet . Why dont we go to break . We can put a man on the moon and we cant get a guy zach johnson the open winner to hear us . Its always the audio. The hard part is so easy for us. We always have the picture. Zach, i just said so many things. You would be gurgling like a baby which i almost am. What i was saying i know how hard youve worked since winning the masters and i know where you work down in sea island and you have this great family in the meantime. And i can tell to win at st. Andrews and to win at that championship, theres no way you wouldnt just be overcome. But are you okay now or can i get you to start gurgling again . Youre going to have to really dig deep to get me going again. I mean im in a daze right now. Im in i dont want to say a state of shock because ipg im out of that. But you said it. Youre talking about arguably two of the most historic and i would say hallowed grounds on the game of golf. I mean im overcome with you know, i guess i just say honor. Because its exactly what it is. To be associated and be a part of that history and that part of golf is truly humbling. Your kids werent old enough to understand augusta were they . No. My oldest boy whos now 8 was only 4 months. So no. He was not. So thats part of it. Now im going to have a problem if i keep going on. Your putting and then 18 yeah thank you. I got some kleenex here too. But actually im thinking about my wedge game which makes me cry. Youre the best wedge player in the world. Im going to be down at sea island like in august. Youre not going to ask for a lesson, are you . Ill have to check my lesson book. But, you know im sure something can be arranged. Well have to see our schedules mesh. I dont know. If you try, i think i could mess up your wedge game. Thats the problem. I think it would go that way. How many wedges are you carrying now . Three or four or what . You know what . Ive always carried three. I can see both sides of it. I know theres arguments for four. And truly what it comes down to for me i mean thats obviously one of the aspects of my game that i practice the most because i have to. I have to. It has to be consistent. Its not like im going to be reaching every par 5 in two and then second. Thats where i can make up some ground. So you know, the 3 wedge has always been part of my arsenal. I can close them open them do things with them. I prefer that. At the same time, you know i can see the argument for four. What it really comes down to is where in your bag do you want gaps. Right. The putting, was it the most important thing was the first putt or was it the ten footers and less . I think that was what won the tournament. But you did hit that one on 18 which was i dont know. Youve got to tell us what you were thinking when you were lining that up. Sure. I mean yeah. In the playoff, the biggest putt i made was certainly the first hole. After louis makes a 15 footer whatever it was. I dont know what it was. 15 feet or so just to kind of you know keep the pace that was huge. It was also a bit of freedom involved there. So definitely the first putt on the first playoff hole was huge. The one on 18 its a funky thing. I know i made a pretty lengthful put there in regulation. I thought i had a good read on it. Slightly different angle. And, you know unfortunately it didnt go in. Your caddy knew then too. So great. Putting that up 15 with those other guys have been to play 17 was amazing. So this is this is going to mean some money. But moneys not really what were talking about for you, i dont think, is it . No. No. Fortunately it hasnt been part of the discussion for awhile. I say that only because im now a veteran on tour and kind of sustained myself out here. I mean it is my job so thats part of the business. I get that. However, its not motivation. It never really has been, quite honestly. Its just a part of it. I mean i play golf for a living. As a result some people think thats pretty cool. Zach did you have a dvr . Did you rewind and see the chip that Jordan Spieth hit. Flag out, that would have gone in. Yeah. How good is that kid . I mean, thats scary, isnt it . Yeah. I havent seen anything yet. I have it dvrd. Im going to get back to it at some point. I flew back with jordan. He made it apparent there was a good chip on 13 or 14 that hit the pin. Unbelievable. Then on 16 that should have you know had eyes and stopped and looked at the hole before it went in. Unbelievable. Right, right. He is you said it. Hes unbelievable in every aspect. On and off the golf course. State of the game is great because of you and jordan and rory. Jason day, what a classy guy he is too. I started crying watching him, too, on 18. Hes a great friend. You look at jason day and what hes done. Just when he tees it up and is healthy in majors hes always there. His name is always there. Its just a matter of time with jason. Great guys in golf like you. I wish tiger would play better. I hope he comes back, but the games in pretty good shape with guys like you. Congratulations again, zach. And i dont know maybe we can meet at the lodge or something. There you go. When were down there. You know just think about it. You can turn your back when im swinging. Just give me a couple tips. Anyway you bet ya. Ill have my glasses on. Congrats again. Thanks for having me. Coming up more earnings fireworks this week. Dom chu is going too crunch the numbers. Hell tell you which of tomorrows reports will be the most exciting to watch. 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. 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. Soccer. Top chef. Soccer. Top chef. [whistles] soccer top chef [shouting] disco [singing] say it and see it. The x1 voice remote, only from xfinity. Welcome back to squawk box. Among the stocks that were watching this morning, macys expanding sameday delivery to several new markets this summer. The retailer facing pressure from amazon. Now get your products in under an hour in some cities. Coming up weve got ceo mike jackson. And well talk to the Vice President of toyotas north American Group bob carter. Hes going to weigh in on the health of the auto market and the latest trends in car and trucks. Well also talk about hacking vehicles. Were back in a moment. 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 . Earnings set for todays trading. Boeing, coke apple, and microsoft moving markets. How should you position your portfolio in the weeks ahead though . Market veteran Liz Ann Saunders is here to tell us. Plus kicking the tires with autonation. From sales to gas prices to that scary cyber hacking of a 2014 jeep. We get behind the wheel with ceo mike jackson straight ahead. And the ftc takes on life stock. Getting locked on claims the company has failed to protect the identity of its customers. How safe is your online information . The latest on this developing story coming up. The final hour of squawk box begins right now. Live from the beating heart of business, new york city, this is quarterback. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with Andrew Ross Sorkin and michelle carusocabrera. Becky is off today. Shell be back tomorrow. Thursday. Kind of a long weekend. Yeah. Were less than 90 minutes away from the opening bell on wall street. The futures right now indicated down about 40 points. Europe all red except for portugal. It is up what is that . Is that. 03 . Thats hard to do. I think its. 01 . Wow. Look at you. I can read it. Because they moved the tv closer to me by about four feet. Awesome. If it was andrew i could explain his poor vision. Yours i dont know what happened. I need a stronger contact in the left eye. A little analysis on portugal this morning. Here are the stories investors will be talking about. Mortgage applications rising slightly in the latest week. Still to come this morning, existing home sales at 10 00 eastern time. Heart device maker st. Jude medical is buying thoratec for 63. 50 a share in cash. The stock ran up yesterday on reports of a possible deal. And at t is nearing government approval of its 48. 5 billion directv deal. Tom wheeler is recommending they vote to approve the merger with conditions. And the Justice Department says it does not pose a significant risk to competition. See, wheelers not a communist after all, mr. Kernen. I see that. And i am good for randall. Im not sure what goes into randall would be the ceo of at t, for those not in the know. Im not sure what goes into the analysis after that. Im not sure hes sure. Hed have to ask the president what he was thinking. Anyway a few stocks on the move this morning. Boeing earnings and revenues topping expectations. The company is cutting its full year guidance due to that tanker issue. Cocacola presented better than results and worldwide case volumes rose. Apple earnings and revenues were above the street expectations. Iphone sales topped most estimates but just by a little. And Current Quarter revenue, the forecast was short of the most bullish estimates. As a result that stock its parroted losses. Still down significantly though. Microsoft posted better than expected results on the top and bottom lines. But the company did take a charge for restructuring and low demand for poor offerings. Yahoo earnings fell short. In light of consensus, the company being forced to spend more money to attract users to its website. Gopro both above expectations. The action camera maker getting a boost from stong sales in asia. And computer experts reportedly hacked into a jeep on the highway all from a laptop from the comfort of a couch. Hold on tight. Chrysler which owns jeep is offering a fix to a stunning vulnerability that was illustrates here. The Company Released a Software Update this month saying its team has focused on identifying and implementing Software Best practices. And that will include boning up the Cyber Security for all content including remote the thing i cant figure about that, the wheel was turning. I thought they were shutting the engine. I thought thats what they can do remotely. You think they can change the speed of the car. The wall street journal said it controlled air conditioning, speed of the car. Looked like the wheel was moving without i dont see how that could but the wheel could move as it was hitting terrain. I guess. I dont know. I dont know. If they can accelerate the car on you thats enough. Right . Accelerate or turn it off in the middle of the highway. Meantime lets talk about another vehicle situation. New york citys comptroller Scott Stringer urging the city council to delay a bill that would cap the number of forhire cars in new york city. It would limit new uber licenses to 200 a year. 26,000 operate in the city compared with 13,600 yellow cabs. Ubers general manager of new york was on the show earlier. Weve been submitting trip data for the past six months and the city has that data. On average we have fewer than 2,000 cars below 59th street in manhattan manhattan. Because drivers work on average 30 hours a week. So they have that data. I believe this administration is intentionally misleading the public and not releasing that data. It appeared poised to receive a vote tomorrow. But mr. Stringer says the proposed cap is arbitrary. Hes urging the city to take a traffic study before considering a limit on the number of new car service licenses. This will make me ballistic if it happens. Absolutely. I mean, just over the top. I think its one of those things like the same way he alienated a huge percentage of Minority Community when he came down on Charter Schools. Then he realized im hurting the people. Millennials i think will go crazy as well. What i dont understand about this is why do they need to cap it while theyre doing the study . Couldnt they continue to let the cars continue to operate . Because he wants payola. From who . Whos going to pay him . Come on. From the taxi industry, yes. But hes already paid for that. You didnt understand the Charter School thing who he was beholden to there . Thats a tough one . No. I get it. Unions. I got it. But what im suggesting is why not study the issue without the cap. Why do you need the cap to study . Because facts arent relevant to him. Youre making it like i dont understand. Oh, youre being rhetorical. I see. All im doing is suggesting that would make more sense. All right. Got it. Your turn. Oh not your turn. Its great the uber guy was a big supporter of de blasio. Do you know anyone that was supporting him in that race. I know a couple people. Of course we know people. The only people that were were ones that you know thought that if they got in to be on their good side. No one philosophically are you kidding me . Yes. Are you kidding me . Its new york city. People voted for him. 600,000 people voted for him. Not a lot of people. Weve had guests who you know very well who maybe i wont even out who definitely voted for him. Yes. Because on the other side you had some guy named joe loda right . Im not defending it. Im just telling you you are defending it. Youre an easier mayor here too. We are in new york city. You know people are not allowed to urinate. You dont do that before you come in . In the bathroom. Weve been discussing shares of apple all morning. Those shares sliding. Josh lipton joins us now. Hes got more on the story, hes on the west coast. Good morning to you. Morning andrew. So apple ceo tim cook told me in an interview that the iphone is a runaway success, that the momentum in that business continues and that apple is taking share from rivals. So then why is the stock down so hard . Well apple did ship nearly 48 million iphones in the quarter. That was a jump of 35 year over year. But that was also basically just in line with expectations and for a stock that had run up some 20 heading into that print in line was not good enough. Iphone unit sales fell by about 22 from q2. And that was a sharper rate of decline than the past two years when sequinential sales fell by 19 and 17 respectively. Fbrs dan ives says that indicates that growth is starting to moderate for this current product cycle. Bulls now need to bet that the 6s expected this fall will attract a lot of new fans and that apple will also cut the price of the 6 and 6 plus creating more demand for those devices. Michelle, back to you. All right. Thank you very much, josh. Once again up early on the big story for two days in a row now. The tech titans not fairing well this morning. Is it a sign this market is getting heavy when it comes to the technology . Were joined now by Liz Ann Saunders. How are yo snuu . Good. What do you think at this point . Were a bit more neutral on that part of the market this year. Valuations, theres structure. Not that you need to go to a phase where earnings catch up. Earnings have been better than expected but thats because we had a low bar. Which is still where consensus is. But theres no question were in a very low growth period. I think thats contributing to this kind of running to stand still market weve been in this year. How long do you think that takes for earnings to catch up . Neutral for how long you think . A lot of it depends on what happens to the dollar what happens to oil. Weve had range bound. But we were at the lower end of the range recently. We broke out on the upper end. Thats changing for multinationals and the energy company. It was a big hit in the first quarter. I think until we go back to an established trend there and we also get a better sense of Global Growth, i think were in this choppy pattern. Speaking of Global Growth what do you make of the big selloff in commodities where a lot of folks would think are they signaling something to us . We just had marc faber say it about an hour ago. But we see this big route there. Is that telling us something about potential deflation or just the Global Economy in general that its discounting in something we havent seen yet . I think its telling you that Global Growth is slow. But i think its also showing you theres distributions in the holders of commodities. Theres weak holders of commodities. A lot of Retail Investors, chinese Retail Investors that are now underwater. Its not only in broad commodities. Its a Precious Metals. We havent yet seen the socalled strong hand step in on the buy side. So i think a lot of it is just market behavior and where people sit in terms of the losses they had and capitulation. Plus the super cycle on the upside ended in 2011. We think were in a multiyear period of this antisuper cycle. Not necessarily a longterm bear market. But you tend to see a tremendous amount of choppy nns and drawdowns at the time. Liz ann, we havent talked about this yet this morning. I dont know if you saw it. On the wall street journal, hedge funds gear up for big short. Aim for large returns from alternative funds. This is the liquid alternatives that have pushed etfs and such over the past two years. What do you make of that piece . I havent read the piece, but there and look. I think democratization whether through Exchange Traded funds or other alternatives have been a wonderful thing. It allows them to take more of an endowment approach. Opposed to just being stuck in the traditional bonds and cash. But it doesnt mean you wont get to excess at times. One thing weve been worried about this environment is that whether the fed has meant to do it, they pushed out of the spectrum. When you do that you have potential problems. Thats another risk we saw developing this year. I think its definitely something to be mindful about. When you see apollo oak tree, those are supposedly the smart fun. They made a lot of money historically on things like this. Does that make you worry . Do you say investors shouldnt be in those products right now . I think it makes me worry for some investors that have gone hog wild. Im not necessarily in the camp and im not a private equity expert. I think for some investors the risk they have brought into their portfolio and i think what you see the individual investor doing versus what you see some of the owners doing does tell you theres a disconnect here. Liz ann, good to see you. Thanks for joining us. Thanks. When we come back oh go ahead. What if the gpad, the assisted thing that helps you park. The assistant parking. Yeah. Were going to talk about it when we come back because autonation outperforming the s p 500 so far this year by about 6 . Can they keep up the pace . Well talk to ceo mike jackson. Hes going to join us as our guest host next. Autonation reporting Second Quarter results this morning. Earnings falling 2 cents short of estimates. Revenue roughly in line. Our guest host this morning, autonations chairman and ceo mike jackson. Mike i look at the stock and it just, you know, keeps hitting new highs. I remember one other time we told you, we said something about shy of estimates and you went you know i tell these guys im going to invest in this. Im going to do this. They dont bring down numbers. Thats not my problem. Is that similar here . Its a record Second Quarter for us. Its a 20 increase in earnings per share. It is the 19th quarter in a row of double digit growth. And in that journey of 19 in a row, 14 of them beat estimate. We dont give guidance. Right. I want the freedom to change Investment Strategy and change expense structure. Whats the best longterm interest of the company. And in this quarter we accelerated in express since its been well received by our customers. And what we had said we were going to roll out in the entire year, we have completed 100 by june 30. Now it costs a little bit more to do that. But our customers have embraced it. Our employees have embraced it. I think theres a lot of benefit to not giving guidance. And just accepting sometimes theres going to be a little bit difference between what the analysts say and what we actually do. Because we havent told them a number. Then you can do that when your stock when was it 3 . 08 . Yeah. Were now at 60something dollars is a share. Thats one of the things we hear about. The quarterly thing and trying to hit quarterly numbers. Might be detrimental. Isnt that the most beautiful chart you ever did see . There is a price for quarterly guidance. During the quarter you have to constantly evaluate how youre performing versus what you said. Rather than simply running the company for the longterm. So you know im very outspoken where the economy is where the Auto Industry is. But im not going to be nailed on the cross of quarterly guidance. I think our shareholders understand that. I have significant shareholders that have been with me for 15 years from lampert to larson. It works. What do you see in terms of the breakdown . In terms of luxury lower end, middle . Well, theres no question. 2015 is the year of the trucks and of luxury cars. Thats all related to gasoline prices. The precipitous fall means people stampede to trucks. It makes luxury cars more reasonable. If you look at the year to date of the industry its up 10 in trucks. Passenger cars are down 1 . Luxury ford f150, how will it do . Its going to do great. They took out a lot of weight. 700 pounds. They improved the driving dynamics. Put in all these capabilities. Its a mobile office. What about the multicore massage seats . I think that first came on mercedesbenz. I dont understand the multicontour. Massagesing seats feel nice. All morning weve been showing video of this piece that this fella from wired magazine did where they hacked into a jeep and controlled the jeep. I dont know if you saw a chance to see what happens. They were actually able to turn off the engine. How much do you worry about that when you Start Talking about the connected world of things and especially vehicles . So first i think the Automobile Industry in principle has very robust encrypted technology to prevent this sort of thing from happening. And itll be our ongoing now wait a minute. I would be impressed if they didnt have physical access to the vehicle before their demonstration. If you have physical access to a vehicle rather than just some anonymous car driving, if you hack some anonymous car going by, ill be impressed. But if you tell me you had access to the vehicle beforehand so the only way you think they really got access to the vehicle was because they were actually physically able to go into it before. They had prior physical access to the vehicle. Now, i havent investigated the story. I dont know the people. But in all these cases, whenever they do these stories and you dig down, they had access to the vehicle in advance. That only makes me feel a tiny bit better. It should make you feel a lot better. Who knows what theyre doing . Anybody can wire a car to be controlled remote. If its parked in your driveway the same way the mob did out there. If the mobs coming to get you, theyre going to put a bomb. Theyre not going through the process you understand my point. If people can physically access the car, they can still hack it. Im sure it takes quite an effort. You sell jeeps . Of course we sell jeeps. Now, these folks say theres close to half a million vehicles on the road that need to be patched. As i said, theres a constant need to upgrade defenses. Im not aware of a single incident anywhere where an anonymous vehicle going by was hacked in and its behavior was affected. Dare i ask my favorite question which you know i always like to ask about a certain type of car, hybrids electric cars. With fuel whats happening . Its bad. Its bad. You have a small percentage of the population which is socially responsible and green with the economic means to express that. And i can put a number on it. Its 2. 5 of car buyers. Sit going flat . Going down . Its going down. If you look at the prius which is absolutely the standard for hybrids, its sales are down 15 this year. And have more and better priuses than ever. And tesla sales which is an attractive looking car in the u. S. I assure you are down. So there a absolutely a connection between the prices. Sales are down . In the u. S. Not globally. What inning are we in of 17. 5 million . I think we have two or three more years. And as long as Interest Rates are normal reasonable normal . Theyre not normal. Im not in favor of zero. The fed should begin increasing 200 basis point over the next couple years. Oh. Youre insane. Youre liable to say anything at any time. 2 . That will strangle you. The new normal. Okay. Mike, good to see you. Great to see you, sir. Thank you. So you got to do this Earnings Call. Okay. Fine. I cant play golf with you today. Tell em. Its at 64. Any questions . Right . Your wedge game does remind me of zachs. Weve got to go. Raising the minimum wage for fast food workers, is it the right thing in more on the state of the jobs market. Back in a moment. 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. 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. Coming up mike jackson talks jobs and then toyota introducing a hydrogen car. Uhhuh. Hydrogen. But will it fly with customers . Get it . Well speak to a top toyota executive. Squawk box is back after the break. 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. Heres whats making headlines this morning. The National Retail federation has cut its outlook for the year saying sales will grow 3. 5 rather than the prior forecast of 4. 1 . Pet products maker blue buffalo starts trading today on the nasdaq after pricing ipo at 20 per share. That was above the expected range of 16 to 18. Herbalife is seeking to find a twitter user who posted negative comments about the company. The tweets consisted of quote, thieves, pill pushing frauds and bullies. Deal news. Home depot is buying intraline brands. Home depot says it will update guidance to include the transaction. New york states fast food wage board is recommended to raise the wage. The commissioner is expected to approve it. Kate rogers joins this on what it could mean for eateries around the big apple. A 15 an hour recommendation from the board would be a significant win for the ongoing fight for 15 an hour within the fast Food Industry. Its also a unique case in that the recommendation would be strictly for one industry in the state. New york currently the minimum wage in the state is 8. 75 an hour. Its set to hit 9 an hour by the end of the year. The labor commissioner is expected to improve todays recommendation. But Big Questions remain here. Chiefly how the fast Food Industry will be defined. There are reports out there saying this would apply to both National Chains and local chains within the city. Now, the franchise is against raising the wages. Telling cnbc this is quote, a social experience that will drive jobs from the state. Wage advocates a win. But the action is needed at the federal level to raise wages for all workers. The federal wage has not been raised since 2009. Congressional democrats have introduced a bill that would raise that wage gradually to 12 by 2020. The biggest move has come from mcdonalds which raised wages at Corporate Owned Stores to 10 an hour by 2016. Back over to you. Thank you. Lets dig into the wage situation in america with steve leisman. Also our guest host today mike jackson. Want to take it on steve . What i thought i could do is tell you what the economists have cede about this issue. I know its counterintuitive. Its counterintuitive to the economists. What they have found over several generations of studies, in fact we are now up to what economists call the fourth generation of minimum wage studies is a negligible effect on unemployment. Where you would most expect it. On teens. And really whats happened here and i will say it begins with a 1977 study that came up with little effect. The next big milestone was krueger who did a brilliant study. There have been some studies that found effects. They did find an effect. But what theyre doing now is theres been so many studies, theyre into what they call met ta studies. Which is studies of studies. One more thing i want to say is they are now feeling as if the issue is so settled that theyre going back and trying to understand why doesnt it have an effect . And what theyre finding is a whole bunch of ways that businesses adjust. They adjust through greater productivity compressing wages at higher levels. They just do not find the effect. It seems to me when i read the studies, they really want to find because it should be there. The argument you hear over and over is if you raise the minimum wage those are the ones hurting the most. How do they achieve it . Well what it ends up being and let me just say, were only at initial stages of trying to understand why it does have an effect. But the its like you have a fire lit underneath you. And all of a sudden i have to be more productive. And the reason and i think mike would probably attest to this. Maybe youre shaking your head to everything im saying. He is. Im listening. The employer doss do not want to fire people and reduce their hours. There are several instances. There are price increases that could come through to make up for some of this. One study found for a 10 increase in minimum wage theres a 4 increase in prices to consumers. That was one study found. Real quick, what is the incremental shifts in how elasticing is it before you see a change . We dont know because we havent really been there. But youre right in the sense that joes going to say why not just raise it to 100 an hour . I dont need any studies. The minimum wage increases we have had have been modest. Lets remember, the minimum wage peaked at 8. 54 in 1968. It is down relative to what its been. I read about studies that the government does all the time saying really they study that . Theres one that says sharks are attacking humans baa uz theyre hungry. So that was an important study as well. Apparently these sharks i dont know. My point is the left talks about this, it has no effect. Ive heard it. The right talks about it theyve got dozens of studies that show it does have an effect. You come on of course im going to hear what the left has to say. And thats what youve settled on over the years. It doesnt give me any more whats wrong with Warren Buffett . Im going to let mike jump in. But i dont feel ive given you a right left thing. You never do. Ive done studies of studies and it seems to me what i started off saying is that the economists want to find it in effect and cant find it. By saying its we need to think bigger because the number of people youre going to help arent going to solve the employment issues in the country. Hows that . I believe there should be a minimum wage. And i think it should be systemically periodically adjusted. And i think this leaving things on index is a mistake. But all you have to do is the keyword you said is modest adjustments from time to time. Lets go to states that are aggressive. Were going to california. Dont bring that up. Were going to california. Dont bring that up. You end up with significantly higher prices for the consumers. Whether its the price of gas. Whether its the cost of an hour of labor for technical repair of vehicles. The list goes on. And if you want to take it to its extreme, if you go to puerto rico where theres a complete disconnect around the labor around the island and the safety net, you end up with workforce participation of 40 . So you know what happened to your study that showed there would be a million jobs lost for the right. And it was between maybe half a Million People. A couple other people get a dollar more. No. The cbo studies had a range of possible employment effects. If you look at the Regulatory Burden thats coming whether its going to be minimum wages done at the state level because the feds not moving or overtime regulation which according to the government is going to increase compensation by 1. 5 billion but its 500 million of costs to the calculations. We live with everything in california already. Have to check overtime every day. Its not done on a weekly basis. Its every day. Were going to be down to checking it every hour with some technical people. And the cost for health care regulation, overtime regulation minimum wage regulation its massively inefficient. You did say it had an effect. It had an effect on consumer prices. Thats one of the possible effects. Were trying to figure it out. There was one study that found as i said a 10 increase of wage had a 4 increase of prices. So higher inflation and you end up with lower purchasing power for the individuals. In fast food theres no question a 15 minimum wage will prove the principle theres no free lunch. Unquestionably. Theres either no effect or maybe theres a negative effect. Why not focus on creating nonminimum wage jobs . Well first of all, joe, there are some theorized positive effects which is peoples standard of living goes up. You have ive seen that. Ive seen people say how can a family of four live on 18,000 a year when they could live so much more on 19,500 a year. I dont get your point there. Nobody stays in minimum wages very long. The issue of job mobility of labor force mobility is this notion of caring that much about it. But let me also point out that 1,500 to a family making 18,000 is huge. Thats big. When we spend all of our time on this and elections are based on this rather than how to create jobs and get real jobs not parttime jobs. Why not do both . Why not do both . Because theres better ways to go about doing it. Just sodo moderate increases and move on. All the increases ive seen mike, seem to be they know the employee increase tax credit would be why dont they do that then joe . Why are you arguing for it . Im not. I gave you a study. 15 an hour is not a modest minimum wage. Thats not. But most of them show theres not. Thats all i can tell you. Im sorry. You just present the facts all the time. I got it. Another explosive topic. You did. You thought the Hydrogen Fuel cell was a thing of the past . Well, now toyota is making it a reality. Were going to show you the companys latest designs and discuss fuel in the future next. And then check out the futures up this hour in the wake of earnings. You see the dow lower by 34 points if we were to open right now. Squawk box will be right back. Visibility into your business, it can quickly become the only thing you think about. Thats where at t can help. At ts Innovative Solutions connect machines and people. To keep your internet of things insync, in realtime. 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Hydrogen fuel cell cars are back from the dead and youre looking at toyotas newest version called the marai which means future in japanese. They can put in orders for delivery in 2016 today. Joins us is senior Vice President at toyota motor sales usa. And our guest host today is autonations mike jackson. Bob, im not sure are you sold, mike . Well, i think its very ambitious. Toyota is to be congratulated again for being a contrarian. Everybody said it cant be done and toyota said it can be done. And they have a lot of credibility on this issue. Because when they launched the prius, there was tremendous skepticism as to what that was going to lead to. Now they sell millions of them around the world. That sounds like kind of an endorsement, bob. What would your explanation be or your opinion be . I think its important to understand really what a fuel cell what a mirai is. It produces its own electricity onboard. So by offering that to consumers, the two major things we hear from consumers are limited distance limited range on battery electric vehicles longs long recharge times. And the mirai is a potential solution to those consumer concerns. Its a big week for us. We just put it on sale for delivery later this year. And were getting more of a response. Hows it being received . Very well. Just in the first 48 hours we had almost 500 customers here in Southern California come in, place their order applications for the vehicle. And we have about another 6,000 customers that just raised their hands saying im interested, tell me more. Bob this is mike jackson, good morning. The two biggest issues have been production costs and availability of fuel to the point where elon musk has called fuel cells fool cells. Fool. Any comments on those issues . First of all, this mirai and technology for us has been under Development Since 1992. So we have 23 years. And actually it was put in development concurrently with the prius. And over that time weve been able to reduce the cost of producing this fuel cell by 95 . In the future were confident we could bring it down more to make it a mainstream vehicle that transacts at a price range that is available for many consumers. Whats the price point on this vehicle . And will you make money off of each vehicle or no . Well were this is the first generation. So were investing in the future. We dont release any of the production costs of the vehicle. But our aspirations is that this could be the prius of the future. When you started with the prius, how much did you lose per vehicle . Thats proprietary, but we make an industry average profit on the vehicle starting with about the second generation. Bob, one other question which is mike and i were talking earlier. We were talking about hybrids which youve done so well with the prius. But were talking flat to down given the price of gasoline these days. Bob, if you look at toyota year to date great numbers and everything. Truck sales are up 15 . And prius sales are down 15 . You know the price of gasoline is a factor bigger than the industry. And were mandated to sell fuel efficiency. Were investing billions in fuel Efficiency Technology but this gas price determines what people buy. Mike youre clearly right. Truck sales and light truck particularly suv is the hottest part of the market. Small compact suvs like the rav4 and the ford escape is the hottest part of the segment. But we do see that very tra dramatically. I just filled up my gas tank and it was 4. 40 a gallon. Thats a recent spike. All of a sudden prius sales are hot in california. Not necessarily around the country, but i think the general consumers tell us that over time everybody does expect fuel prices to go up and fuel economy and the cost of fuel is a concern. And again going back to our earlier discussion again going back to california, the Regulatory Environment is such that consumers end up paying 1 a gallon more than anywhere else in the country. Its california. Thats a regulatory issue. Absolutely. Bob, can you speak to another issue weve been talking to mike about and throughout the morning. The video we saw of this jeep that was hacked effectively where a hacker with a laptop was able to cut the engine off and also change the, i think, the music and able to do some other things. How much should we worry about this as members of the public who are buying these vehicles . Well it goes without saying that safety for the Auto Industry and toyota theres nothing more important. We believe that we have very robust Safety Systems in our cars to protect against that. But were also working with all the industry and competitors to stay ahead of these type of hackers in technology to make sure the cars are safe. So we are confident in the work that we provided in the vehicles we have in the market today. But yet at the same time we believe more work can be done. Okay. All right. I dont know what to tell you. Whens the last time you changed the body style of the prius, bob . I know its gas prices, but youve got designers, dont designers, dont you . You just want everyone to know its a hybrid . It looks like a cheese wedge. Is it going to kill you to make it something that looks good . Were selling the third generation. Stay tuned a little bit later this year. We have some great news coming. Most successful hybrid in the world. By far. I think he just gave you a headline, a little hint that theres going to be a body change coming up. I hope so. I dont even like passing them. 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. These two oil rigs look the same. Can you tell what makes them so different . Did you hear that sound . Of course you didnt. Youre not using ge Software Like the rig on the right. Its listening and learning how to prevent equipment failures, predict maintenance needs, and avoid problems before they happen. You dont even need a cerebral cortex to understand which is better. Now, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. Whoa what are you doing . Putting on a movie. Im trying to watch the game here. Look i need this right now ok . Come on i dont want to watch that. Too bad this is happening. Fine, what if i just put up the x1 sports app right here. Ah jeez its so close. He just loves her so much. Do it. Come on. Do it. Come on yes awww, yes that is what im talking about. Baby. Call and upgrade to get x1 today. Were making claims about the identity safety claims. We have more on the story this morning. Good morning. Being harsh on life lock yesterday. Its a company that makes a variety of id Protection Services for consumers and businesses but the ftc saying its failing to live up to the terms of a settlement it made for 12 million. The agency is saying that life lock used false advertising that it protected Sensitive Information with the same safeguard as Financial Institutions and it failed to keep required records and it didnt set up a program to protect users records. It violated the state and federal settlement for 12 million. Life lock said theyre going to fight it. They said we disagree with the substance of the ftc ease contentions and we are expecting to take it to court. They will make the case its not the federal governments job to say what Data Protection standards have to be. A lot of critics will say the federal government doesnt know what to do to protect data. All right. Thank you. Now were going to go down to talk to jim cramer. I dont know if i can talk about apple anymore, jim. How about coke . That looked like a work in progress. A little traction there. That was better than people thought. A little bit better in north america. The thing i heard this morning was did i hear mike jackson say tesla sales might be down . In the u. S. I dont care about anybody else. The market isnt ready for that. That was a stunning comment as well as the ones about lower gasoline changes peoples equation act this stuff. If thats true thats not in the analysts numbers. Theyre all looking at 2025 numbers anyway. 2025 im not trying to do anything with teslas stock. Im just telling you in general selling electric and hybrids with gas at these prices is difficult. Tesla is on the verge of launching a new car which im sure will be a great success. Its great to hear sanity. I think the analysts have never pumped gas. They couldnt have. They wouldnt know its down much other than in california that you dont think about filling it up like you did an year ago. Its a great positive. Nobodys talking about it anymore except you, joe. We are seeing some weird technicals. Fewer new highs and im just wondering if its getting concerned. Yeah. But the banks can fill up for what tech was. We have mike jackson in luxury sales when we come back. 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. By the time Police Arrive on a crime scene they could have little to go on. A vague description. A single piece of evidence. A partial plate number. With an app from ibm officers can now access over a billion police documents to find hidden connections and identify potential suspects. Ibm analytics helps one hundred thousand officers work smarter every day. Mike jackson brought a toy. This is the refreshed m class. Its also one of the stars in universals Jurassic World movie. Lets talk luxury vehicles and trends with mike jackson. This is the newest Sport Utility from mercedesbenz. It puts the word sport in sport utilities. It starts at 60,000 and you can go up to 110,000. People love the high seating position. They want the style and driving dynamics of a sports car. This takes it to the limit. Its like a half suv but not quite. I dont like using that tomorrowterm. Its a dynamic design. There is a segment of the population that absolutely loves it. And luxury sales are up this year in the united states. Thank you for being here this week. Make sure you join us tomorrow. Squawk on the street begins right now. Half way through dow earnings this morning. Welcome to squawk on the street. Im here with jim cramer and jim faber. Lots riding on the open this morning as apple tries to defend key levels after last nights earnings. Couple that with boeing, coke and upgrade for exxon. The focus is on commodities. Copper,