Transcripts For CNBC Squawk Box 20240714

Closing down by 0. 4 the hang seng was off by 1. 1 . Then the shanghai was down by almost 0. 9 . In europe it looks like, again, a modest decline dax and the cac are relatively flat ftse down by 0. 2 . Italy and spain down by 0. 3 and 0. 4 if you check out the treasury market, you will see the tenyear right now looks to be yielding about 2. 019 . We do have breaking news on Warren Buffett he is denying reports of tensions between him and 3g capital and kraft heinz. Buffett said 3gs cofounder is a good friend and he plans to see lemann next month. He also plans to attend lemanns 80th Birthday Party in august. The report has been out about tensions between them. Buffett also expressed support for the ceo of kraft heinz reports of the tensions may have been sparked by kraft heinz underperformance. That stock down by 50 buffett says right now the biggest problem facing kraft heinz is that heinz overpaid when merging with kraft back in july of 2015 he said he paid too much and it will take time to whittle down 31 billion in debt at the company. You could reasonably be frustrated by underperformance and not have tension yeah. You can have disagreements with people or he said hes been a partner with charlie for 60 years. Not that they agree on everything, but they never had an argument. Theres been underperformance at kraft heinz as Charlie Munger pointed out in the may meeting, there were a series of deals. It was just the last partnership that was rougher at the time buffett said he could imagine another partnership with 3g. Lets talk about some news this morning iran slamming the Trump Administration over new u. S. Sanctions targeting the islamic republ republics people leader and other top officials. Irans Foreign Ministry says it amounts to permanent closure of talks. Rouhani called the sanctions idiotic and accusing the white housefflicted by Mental Illness washington said the new sanctions were designed to discourage iran from developing nuclear weapons. Home builder lennar just out with earnings. They look solid here the stock is up a bit. The Company Earned 1. 30 a share in the Second Quarter beating the consensus estimate of 1. 14 revenue also nicely exceeded expectations 5. 5 billion or so versus an estimate of 5. 1. Theres some other they talk about the backlog, which is down its at 19,000 new orders are up 1 at 14,500 deliveries in the Second Quarter are up 5 , which is a pretty good number. 12,729 the company did see just a 1 increase in new orders that compared to Something Else, andrew hackers have broken into the systems of more than a dozen Telecom Companies. The Firm Identified links to previous chinese cyberespionage campaigns and said it was likely a government, not a criminal group that would have capabilities to do this kind of attack the Telecom Companies affected were not named but this is just the latest. We have more coming up on squawk box. The quest to transform the American Energy market we will talk to the author and subject of a new book called superpower. I read it a couple months ago. As we head to a break, heres a look at the biggest premarket winners and losers in the dow. Welcome to vietnam which has been slowly stealing manufacturing production from china for a decade, now theres a trade war and tariffs which has oppele asking can vietnam become the new china thats all day today on cnbc oh, wow. You two are going to have such a great trip. Thanks to you, we will. This is why voya helps reach todays goals. All while helping you to and through retirement. Can you help with these . Were more of the plan, invest and protect kind of help. Voya. Helping you to and through retirement. Welcome back a new book explores one entrepreneurs crusade to build a power grid to carry wind energy across the country. Its called superpower. Joining us is the author, russell gold Michael Sculley is the main subject of the book. Just a back story, Brian Burrows sent me a note a couple months ago and said you have to get this book. This is like the real thing. I love a great yarn. This was that. Im happy you were here. Because i really enjoyed this book as a great sort of summer beach read, even though you probably didnt intend for it to be that way. Ill take it. Theres lots of stuff in here that is really important about the power grid and whats going on in the energy world today so thats the other reason we want to have you here. You wrote the book, but i want to go to the subject of the book for a moment i want to understand the state of power grids in america. You tried to build a power grid. Didnt work. Its going to work. Our piece has not yet worked it seems we are spending time and energy thinking about how to restructure the energy world and we think we need to get to new technologies, all sorts of things you say thats not true at all this is not about technology we have the technology. All of this exists. We got it thats the part i didnt understand before i read this book so weve got this grid that we built to do a certain thing it was basically built around cities and we had coal plants, gas plants, nukes fairly close to cities. Now we have these resources spread out across the country. Wind, solar, everything else. The job is if we want to tap these resources, we have to build the grid to go with that but get to the technology piece. Ive always thought theres always been a big issue about battery technology, how do you store it how do you move it across the country. How do you attach different grids. We know how to do all these things we know how to generate electricity really cheaply we can generate solar for 2. 5 cents. Wind for 2. 5 cents these are numbers without tax credits. We know how to do this we need the grid to get it to where people are so when you started this project, what inspired you to look into this issue why him . Why this story what were you trying to get at i read several books about Climate Change i found them all depressing. You read them and think theres nothing we can do. I wanted to write a book about what i think might be one of the most important parts of this energy system, thats transition we have hundreds of wind farms that need to be built. I wanted to write who is doing it part of it was your argument was it cant even be about climate. Business its an investment story. To make the investment, what does it take how much money are we talking with how Much Technology are we talking about . Walk us through what has to happen here. Yeah. So building the grid is about planning, permitting and paying for it and we know how to plan it we have these smart people all over the country who know how to plan it. We have to permit it thats the hard part we have a set of fairly antiquated laws that have not kept up with the exciting developments on the generation side you guys talk about you write about and youre involved in the politics of this. You think youre being blocked by political people for political reasons. Yeah. So unfortunately weve gotten ourselves in this fix in this country where an allenergy thing has become political and not economic if theyre economic, renewables will win but when we get renewables will win on the cost yeah. Because you can bring the cost down to to, you know, 2. 5 cents a kilowatt hour. Is this only in places where the sun is bright or where the wind blows a lot even better solar locations, it will be less. Worse wind locations more. But its all sort of in the hunt of well under 5 cents a kilowatt hour whats natural gas now . If you generate electric power with natural gas, its about 2. 5 cents. What do you make of luelon musks attempts to put solar things on roofs, but to have batteries in everybodys home . Im sort of i spent 25 years doing Central Station power. I think this is about scale. Its about networks. And if you think about other things, telecom, other industries, scale and networks are what get you they bring down costs im not a big rooftop solar and battery in the home person if you want a battery in your home for when the lights go out, for when theres a super storm sandy, great thats the perfect reason and application for a battery at the house. If you want to run the country, you have to talk about centralized big wind farms, big solar farms. Last question, in terms of theres also a danger component. There was a fire in arizona. The more you bring these batteries closer to peoples homes and neighborhoods, then you have a problem, you have a problem, a real problem. I think we can figure that out. Thats not to russells point, you know, we have to run really big cities, giant industries and for that you need scale. Were not going to get there by putting panels on our roofs. We thank both of you. The book is called superpower. Its a sorry of success and failure. Appreciate you coming in thank you i dont know if weve done justice to the drama in the book thank you. All right. Coming up, its been a hot start to the year for ipos yesterday was rough for a handful of newly public companies. We have a full run through of the big losers coming up next. Woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. They were able to restore my good name. If you are under attack, i recommend calling reputation defender. Vo theres more negativity online than ever. Reputation defender ensures that when people check you out, theyll find more of the truth, not trash. If you have search results that are wrong or unfair, visit reputationdefender. Com or call 18778668555. Welcome back to squawk box. Time for the executive edge. Check out this chart showing yesterdays big drop for some hot ipo stocks zoom video, beyond meat all dropping zoom dropping 11 . Shaving 2 2. 8 billion beyond meat falling 8. 5 dropping its market cap by 7 700 million. Uber, lyft, cloudstrike and pinterest also fell. Another successful launch for spacex overnight the companys falcon heavy rocket blasting off from the Kennedy Space center in florida a few hours ago. On board several satellites, an atomic clock and the ashes of more than 150 people experiments on board are designed to show space flight by light is possible. A former astronaut and others had paid to have part of their remains, their families paid to send part of their remains how big was it . Size of a bread basket normally its not, its bigger or smaller i was looking this up, something i saw on elon musk did you read that, sorkin . Mixed something up with red moon with mars or something i dont know i was going to look at it. This is elon musk mistaking blood moon for red planet in a tweet . Right you didnt see that . Hopefully he knows a lot about the solar system he had tweeted out something that said occupy mars but maybe had i dont know, the image was the blood moon the image was from a blood moon as opposed to mars. And it looked like he did it accidentally not a big deal, i dont think, right im giving him a pass we make mistakes all day speak for yourself. Lets get a check on a couple of big movers gold and bitcoin should always look at these two together theres 1,433 on gold we need a longerterm chart. Thats a multiyear high, i think. Up 15 and then bitcoin, bitcoin trades a lot. Look at that see, that is a multiyear high on gold. Up above 11,000 now. We should look at a longer term one of this probably should where is tom lee he was on earlier today. Hes not far off now from his you think this will keep going and going and going . Not sure what to think. My thing now is it has a value i dont know what the value is the issue, this is clearly like i dont want to say a momentum stock, but its a thing where people think the train its one of those things where the train is leaving quick or its not volatility. In or out. Sorkin, the amount of the amount of data that was the blockchain that exists right now that covers all the bitcoins that are around, you know how much bigger it was than three, four, five years ago its growing i guess you divide that network by what you think its worth but interestingly the cost to mine these things they cant mine them anymore. Its too much. You can mine them the existing where we are, its much tougher. At least the layman should not i was going to mine a few this weekend. Decided not to the cost of mining had come down to 5,000, 6,000. Then that would be the Intrinsic Value of it. It should be there, its not. I was thinking how is when i was a believer in the greater fool theory of bitcoin rather than you can actually send a unit of digital work across the internet, itwill be something thats possible to do. Though both are possible. If the Intrinsic Value is far below where its trading you could have both cases playing out, where theres value to it. You still have to believe to get at this point it seems more like gold than a currency. By the time you spend it, it could be worth 20 more. It could be easier down the road to trade. Each bitcoin doesnt need to be worth 400,000 or 500,000. You can do a thousandth of a bitcoin. A kernen is what people thought it should be called. Theres a movement afoot to name a certain number of there is a movement by you . No. No well, im supporting the movement that was started by it came up virally. They liked one of our comments yesterday who one of the winklevoss twins really . Did you invite them on i did not you can just reply back to him. Dont want to beg hes been on both of them have been on. If we cant get tyler or cameron on, well have wilf on, the third triplet, right we made him an honorary winklevoss we will speak to ben misric today about the billionaire crypto coin people that is coming up later. He thinks his book caused know see red im still not on facebook, ben your book about facebook did not get me on facebook so your billionaire all right when we come back, the United States and china have been sparring over trade. One big winner could be vietnam . Carl quintanilla is there. What do you have coming up for us today becky, good morning the trade war does mean vietnam sees a chance to steal some of chinas manufacturing thunder. But how much is riding on the g20 this weekend well talk about that when ctiesivfrxonnu le om hanoi. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Or trips to mars. 4. 95. Delivery drones or the latest phones. 4. 95. No matter what you trade, at fidelity its just 4. 95 per online u. S. Equity trade. No matter what you trade, at fidelity plike. Zelle. To conveniently makesend money sier, to your babysitter. For overtime. Or pinacle, to tap into your organization in the office, on the go, or in the stopandgo. Pnc make today the day. My ideal cloud . It has to work like air traffic control. Its gotta let new data integrate with data from our existing systems. Be able to pull from reservation platforms built 20 years ago. And also be able to use apps to book superpersonalized trips on shiny new phones from the future. Plus, i need freedom to move my workloads wherever, whenever but manage it all from right here. And thats the cloud i want. Simple, right . Expect more from your cloud. Ibm cloud. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning welcome back u. S. Equity futures at this hour are really quiet i dont know, its not dog days, but feels doggish. Down a point and a half on the dow. The s p down a little over 2 nasdaq giving back about 13. Quiet session yesterday. Apple is announcing a big expansion in seattle with plans to put 2,000 employees in two towers blocks away from amazons headquarters the Company Announced squatal would the site would be a key engineering hub. And fedex filing suit against the u. S. Government saying the new restrictions on huawei are hard to follow. The company has apologized twice in the past month for misrouting huawei packages. Huawei and other Chinese Companies were placed on a u. S. Export ban list in may fedex says this places an impossible burden on shippers to know the origin and content of packages warner media hired ann sarnoff to hn namedbe ceo of war brothers at t acquiring Warner Brothers as part of an 85 billion purchase of time warner last year the former ceo resigned from the studio in march following a report that the married executive helped secure roles for an actress with whom he had an affair. Sarnoff will report to john stanky. Companies are racing to vietnam to produce goods with tariffs looming on china Carl Quintanilla is there now. What have you found since you landed in veetd nietnam a lot is riding on g20 this weekend. Will we get a move to tariff all chinese goods to 25 its driving interests in American Brands in vietnam as a hedge, this Company Already makes ford focuses, brake cables, all of that. Jpmorgan looked at retailers and the estimated price hike you would need to offset a move to the full 25 this assuming no mitigation from a vendor negotiation, nothing from forex 21 at costco. 18 at best buy. 17 at walmart and target. Its no surprise the factories here are in the catbird Seat Companies calling and say can i add to my longstanding order we went to a Company Whose line is ringing off the hook. The question for vietnam is where will they find the workers to make all this new stuff vocational schools are a big deal here. The government has a goal of training 2 Million People in vocational schools china has been doing that for two decades. They have a huge army ready and waiting. We talked to one professor at the school on whether the vietnamese want this training. A lot of them still want to follow the academy system, go to university to learn with the cost with five years or four years. So its not easy for them to choose or to change to a vocational system. So thats why its still lacking people to work in the high skill area all day today well take you inside the factories in vietnam that are seeing activity well show you the ports, talk about whether or not they can move the stuff out of the country if they can make t and what if theres a deal at g20 or sometime in the next few weeks, do all of vietnams dreams of taking that mantle from china go away a lot of Coverage Today live from hanoi thats what i was going ask about. We spoke with the head of brooks running shoes, he said he moved his production out of china, trying to get into vietnam before they were full, there would be a time where vietnam couldnt take more additional players trying to come in. How complicated is it once you moved your supply chain . Do you think its likely people would switch back to china if there was a deal to come its not an easy thing its not like flipping a switch and saying were moving here no. Its so complicated, just to get the vendor, find the inventory, get the distribution youre right, its hugely complex. You have to consider your category do you have Pricing Power . Whats price elasticity like in that category . I would think on things like shoes, footwear and apparel its easier than in hightech work you are relying on workers that have high skill level. But its a key concern for vietnam. They had already been stealing share from china because chinas labor costs have been going up over time. So vietnam could argue, hey, you get a deal on your labor here. Now that samsung is here, they added a new cell phone factory, wages here are beginning to creep up its an interesting story. I would not want to be a supply chain manager these days its complicated is the labor component almost equivalent if they crept up in both markets well, chinas got migran coming into the cities to work this population of vietnam is 95 million of people, a portion of that in manufacturing. They dont have nearly the available work force to get people to come in from the countryside. And vietnam is the worlds Third Largest exporter of rice they will not give that up to take a chance that working in a sewing factory will be a life long occupation. So theyre trying to manage their risk as well carl, thank you well be watching through the day and look forward to the reports coming up. Carl quintanilla in hanoi ahead of the g20 meeting allergan has been going up recently on the notion that there will be some type of a breakup. Now apparently a bshbbvie is ne deal to buy allergan for its more than takeover rumors 188 in cash and stock. Its at 1. 29 its been up its been up from 1. 29, that was already up a bit on breakup news its a 40 premium on mondays Closing Price its a huge deal, 60 billion. Its not a deal where we say if you include debt, this is a real 60 billion. They have humira, the worlds top selling drug but the end of patent protection is coming. The eyelashes exactly to get those long, luxurious eyelashes, which ive never i have not tried that. Ackman was born with beautiful eyes he was beautiful. Any way wow coming up, more on squawk box this morning. Well talk about that potential deal and keep our eyes on when and if it gets announced the Home Construction etfitb had its best first half since 2012 after lennar beat this morning, is housing set for a summer heat wave you want to be part of . Well get you ready for the high stakes g20 summit stay tuned, youre watching squawk box on cnbc. Welcome back right now its time for the squawk planner chair Jerome Powell will be speaking at a council on Foreign Relations event at about 12 30 p. M. Well hear from the new york, atlanta, richmond fed president s today. Lennar reporting quarterly reports earlier this hour posting a beat on earnings and revenue. All of this is coming at a time when the Home Builders are expected to face pressure in the summer months. Lets find out how the housing economy could affect the broader markets. Joining us is lenlellen hazen ad campbell ed, what do you think . How big of a factor is housing on this . How much does that play into the economy . What happens with Interest Rates so low yeah. I think housing is a source of strength within the u. S. Economy. It had a bad year last year. Given the higher Mortgage Rates and the salt cap and the impact that had on certain areas. The fundamentals of housing are good you know, prices are higher, but theyre not excessive relative to rent and to income. If you look at the supply demand vu fundamentals, the Housing Vacancy rate is low and housing i think continues to be a source of strength for the u. S. Economy. Ellen the numbers in may were great numbers. June so far have not been wonderful. We do get some more numbers on new home sales later this morning. How much are you waiting on these numbers . After what we saw in the Fourth Quarter when housing was very weak, as ed says, were looking at both orders as well as some new home numbers going forward. The double headwind of the higher home prices which made housing less affordable and the higher Interest Rates took a number on the Home Builders. If you look at lennar they improved from orders down 4 in the First Quarter to orders actually up in the quarter they reported this morning. If he look at the evercore isi home builder survey, that has shown sharp improvement. So were looking at whether or not the extent to which Home Builders are improving throughout this year will have a better impact on the broader economy. How much of this is housing and how much of this is what happens in the Global Economy and what happens in the trade talks . So much of housing is tied to Interest Rates with so many sovereign bond yields negative, it is very difficult for u. S. Interest rates to remain where they were last year. So consumer Housing Demand is affected by a lot of things. With the real wage growth were seeing that helps. With low Interest Rates, theres no question that that helps as well im sorry, i mean more in terms of what the market is looking at right now whats the most important factor for the prodd ebroader marke . Yeah. Theres a lot of cross currents in the broader markets. I would say on the negative side theres the escalating trade war, rising geopolitical risks Global Economic growth is probably the weakest weve seen since the financial crisis and the u. S. Economy is still relatively strong but slowing. But on the other side weve got global Central Banks now easing their liquidity fire hose ready and in place so that is reducing some tail risks. Lets talk about the catalyst this week. G20 meeting. President xi, President Trump sit down and talk. Nothing is cemented in terms of a deal, but it looks like theyre at least talking once again. What does that mean for the markets . A good scenario for risky assets is we get some sort of detente, a trade truce ahead of the president ial Election Year and then if we have that in the context of still decent valuations and dovish Central Banks, you have to remember that 16 Central Banks cut rates during the Second Quarter, that could be a good scenario could be a good scenario meaning you would expect to see stock prices go up yes yeah, i think so ellen, you agree with that . I think housing is important to your point earlier. The consumer is about twothirds of the u. S. Economy. As weve seen, business fixed investment has been soft so the corporate third has been relatively soft. You saw Jerome Powell mention that in his prepared remarks you need the consumer to be strong housing is a big part of consumer if we can see animal spirits improve because of more confidence about trade and more confidence about detente globally, that will help the economy. You expect the consumer to be much stronger in the second half of the year than the first half . If real wages keep improving, that should happen weve seen real wage growth for the first time in the last few months sorry, in the last few years. We are seeing wage growth now in the 3 , 3. 5 range that should help what numbers would you be watching to say this is a big difference, this will mean more than the market anticipated and the market will go up because of the numbers were seeing here . In terms of wages we want to see it stay above 3 in terms of gdp in the 2 handle range. In terms of what the consumer is doing you think thats the genesis, the spark for the next move up in the markets i think it has to be. People are concerned that the consumer is getting increasingly concerned about what inflation might happen but youre not concerned about that less so at moment ellen, thank you for coming in ed, thank you. Its out. Its official its real. Amazing abbvie is down down about 4. Thats unbelievable for allergan do you why 45 premium . What it took. If you look at most of the big pharma transactions taking place, this is above the average premium that theyve captured. Typically theyre capturing between 20 , 25 you tell me, maybe theres some drugs coming up. Maybe allergan what i dont know is whether theres a couple of drugs on the horizon that i didnt realize humira was the biggest selling drug i thought lipitor. Who was here last week was it Scott Gottlieb talking about humira being the big one from theed have advertising perspective . I have been watching those ads. I dont need any of it sold abbott labs which was split up, remember myles white, all the stuff he did now putting Something Back together. Allergan, amazing. Allergan was its own story saunders went through the whole rthing, the conversion. Because of the tax code if you remember was involved in the theyve all been involved in all sor sorts consolidation. Brent promised this is a big win forbrent. Promised to send me some stuff. Thats the takeaway involves needles to the forehead and things. Im thinking what about right here people get it there, too i dont know, joe you look at me like, yeah, i understand your situation. You know, ask not for whom the bell tolls, sorkin it tolls for thee. Were a Global Community i get it. You think you have a few years. Before you know it all right i just hope you its all about the hair so just protect and guard that coming up you got some here is that preempting any problems that are not preempting. All right coming up, bitcoin continues to surge up 25 last week. The house meets later today on fintech and digital token regulation well talk to one of the members getting ready for that hearing as we head to break a quick check of whats happening in the european markets right now theyre alrel d. That is jarring. Are you okay im okay. Your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. Theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. Before the break, we told you about the deal news that just crossed, abbvie is buying allergan for 188. 24 a share in cash and stocks. Thats changing as abbvie shares move around. Its about 63 billion joining us on the squawk news line, wall street journal reporter jonathan rockoff. Broke news of the Abbvie Allergan deal have you got a feel for why the premium was so high . I guess its nice and friendly and we hate arguing and stuff like that, but is it really worth 45 to make it a nice, friendly deal . Thats a really nice premium, but remember, allergan was going to sell for 150 billion to pfizer not that long ago thats a lot of value in the company and i dont think that ceo Brent Sanders was going to pay a premium to sell off a company with a crown jewel like botox and other aesthetic treatments both companies have been looking for new sources of growth, and if the combination provides that, the premium would probably be justified. Is it somewhat defensive for abbvie everybody its the state of the industry for the past 20, 30 years, and patent expiration, so humira, when does that go off patent its already off patent in europe and lower priced version, we call biosimilars in europe, and abbvie negotiated deals with drugmakers in the u. S. So those rivals can start selling these in the u. S. Starting in 2023 it is defensive in the sense that abbvie really needs to find new sales to offset what its going to lose from humira when it faces bio similar competition in the u. S where is the growth with allergan i know that, you know, a lot of it is cosmetic, but we think botox, but what else is there that is so attractive . Thats the challenge that allergan has faced and why it was probably available for sale, is that its botox business has been doing really, really well the company also has a variety of other different lines, neurosciences, but its stumbled to find new drugs, to discover new drugs that can propel new sales in those areas, and thats why those shares have been off their peak, you know, from the pfizer days which i talked about earlier. Abbvie is now down almost 9, so no longer anywhere near what was the price they quoted, 188 its only 167 on allergan is this worse than theyre expecting, do you think, jonathan it will be really interesting to see how the market responds to the deal because strategically the two companies are different. Abbvie focuses on specialty drugs like humira and cancer treatments, while allergan is, you know, best known for botox and these aesthetic medicine treatments the deal speaks to just how hard it is for companies of the size of abbvie and allergan to find the kinds of sales that would drive growth thats why i think were seeing this deal right now. Also probably why investigators a investors are trying to sort it out. Were going to run out of time as we get to the top of the hour congratulations on skoopts and hope to talk to you soon when we return, counting down to the big g20 meeting where President Trump will meet with chinas pridt aesenxind get you ready straight ahead squawk box will be right back. Tension rising with iran, President Trump hitting the Supreme Leader and other iranian officials with new sanctions details and the Market Reaction minutes away. Trade in focus as we get closer to the big g20 meeting a preview of what you can expect coming coming up. The bitcoin rally rolls on, the author of bitcoin millionaire ben mener is here to discuss the phase, as the second hour of squawk box begins right now. Looking high and low dont know where to go live from the beating heart of business, new york, this is squawk box. Got to double back good morning. Welcome to squawk box here on cnbc im Andrew Ross Sorkin take a look at u. S. Equity futures at this hour dow looks like it would open up marginally higher, s p 500 also looking to open lower at 1 point and we have a major m a transaction in the pharmaceutical world this morning, joe yes breaking just moments ago, abbvie announcing a deal to buy allergan, good old allergan. 188 was the stated price before abbvie shares went down because its cash and stock. If you do the math now, obviously its well see when its all said and done how abbvie some of this is arbitrage now its down 5. 75. It was about a 45 premium those prices, its about 63 billion and its a lot of it has to do with botox and a lot of it has to do with just all these companies, always have these patent expirations to try to replace selling drugs you know. Im looking at the deck and they say this transaction will be immediately creative to earnings, expect to attribute 10 over the first full year of the combination and expect 2 billion of pretax synergies and other cost reductions. They say that will happen in year three they say they will be able to do that while leaving investment and key growth franchises untouched. We will have to watch all of this. The company would still be based in dublin . It looks like that way. You know, im literally, this deck is you can see how many pages were at least 30 pages, 28 pages, into this. Give me a little more time and well see where we get in the meantime we have breaking news on warren buffet this morning buffet denying reports of tensions between him and 3g capital which is the companys partner in kraft heinz buffet says the 3g cofounder jorge lehman is a good friend and plans to see him next month and plans to attend hemanns 80th Birthday Party. He expressed support for the ceo who takes over on july 1st reports may have been sparked by kraft heinz underperformance the stock down more than 50 over the last 12 months and by accounting problems at kraft heinz. Buffet says now that the biggest problem facing kraft heinz is that heinz overpaid with merging with kraft back in july 2015 and puts a lot of blame on himself and said he paid too much and it will take time to whittle down roughly 31 billion in debt. Interrupt for one second to answer your question, upon completion of the transaction the company will continue to be incorporated in delaware and have principle executive offices in north chicago, illinois, where they will be based Richard Gonzalez will continue to serve as the chairman and ceo of humira or through the humira loe event in 2023. Abbvies board of directors will include two allergan Board Members including Brent Saunders. It would have been an inversion if abbvie was headed to dub bin. Do you do an inversion with new tax laws. You know, if andrew had his way people would still be moving the tax law made it easier for people to stay here now. This almost looks like allergan coming back, baby, come home this is the return. Nobody likes needles in the forehead but a lot of this stuff is instead of a scalpel. A needle is better than a scalpel. Were all trying to look better, fillers, all these things. Needle in your eye is another. What product they have on the deck. Tell me. Not it could be taken youre looking at me sculpting for get rid of like fat. Yes without cutting you. Yeah, thats supposed to be some kind of do it from the outside somehow, they heat you with lasers or something. Supposed to be breaks it down. Supposed i dont know. Nothing is painless just im looking through the deck. They have a lot of products here. Lipo, nothing could be worse than lipo. On the list here. Oh, yes lipo is horrible. Im going to put you im going to get a cocktail of these things for everybody here youre generous for you to say everybody. I know what youre saying. At least youre not at least wasnt about e. D. Or something. Only because the opportunity didnt present itself. Were not talking merck or pfizer all right President Trump ratcheting up economic pressure on iran with new sanctions. Joining us right now on this, its good to see you good morning. So yes, the latest round of u. S. Sanctions on tehran are targeting irans Supreme Leader as well as top officials of the Iranian Revolutionary guard. Now these are aimed, of course, at targeting tariff financing globally, already 80 of the iranian economy is under sanctions. Irans president husan rouhani lashing out at the latest move by the white house saying these new sanctions are, quote, desperate and doomed to failure as well as outrageous and idiotic. Extending the hand of friendship it seems once again is the National Security adviser john bolton he said all options are on the table. Listen in. The president has held the door open to real negotiations to completely and verifiably eliminate Irans Nuclear weapons program, its pursuit of Ballistic Missile systems, its support for international terrorism, and its other maligned behavior worldwide. All that iran needs to do is to walk through that open door. Reporter all iran needs to do is to walk through that open door according to the u. S. National security adviser john bolton, speaking there from jerusalem. Hes not the only u. S. Official here in the region over the weekend as you know, the u. S. Envoy to iran, brian hook, visiting in the uae, mike pompeo making a visit to saudi arabia in the uae and the president s soninlaw jim cramer ared kushr alongside Steven Mnuchin this is the brainchild as you know of the president s soninlaw this is all about bringing an economic solution to the peace problems here in the middle east essentially what weve heard so far the palestinians refusing to come, the israelis not here either i have heard from a lot of my contacts here in the gulf arab countries that say theyre here to listen but whether or not this is going to do much to move the issue down the road is a bigger question. Theyre calling it like a Marshall Plan or something i dont know i guess its worth a shot. Its been years and years and years. It just seems so intractable money doesnt solve everything, does it . It makes things easier sometimes. Hadley, thank you. China is in focus this week. President xi is getting ready to meet with World Leaders at the g20 summit and eunice eun joins us with more where have you been . I know. Ive been here but unfortunately not talking to you guys i guess you guys arent as interested in the g20 as i am just kidding in the run up beijings messaging to the g20 has been very consistent for the past couple of weeks, and essentially the message has been that china feels that this whole process with the United States has been unequal and unfair the Foreign Ministry today reiterated that point saying that china is a victim in the current trade restrictions the vice commerce minister said yesterday that trade talks need to be based on Mutual Respect and state media was reiterating that the vice premier spoke on the phone with his u. S. Counterpart Steven Mnuchin and Robert Lighthizer at the invitation of the United States. And that is quite revealing that china is very sensitive about appearing as though it is an unequal partner. There wasnt a whole lot of detail in the state media about the what the two sides discussed. I did speak to a source familiar with the chinese side that said that chinese are still very much stuck on the idea that china would have to not be allowed to retaliate if the u. S. Decided to impose tariffs and also that china is still stuck on the idea that this of how much the u. S. Wants in terms of the size and scale of the purchases either way, both sides appear to be downplaying exactly how much progress can be made at the g20 most people here believe that the best that people can hope for is a truce or as a china daily state paper described as setting a different course. Thank you very much we will talk to you a lot this week joining us with more on the expectations from the upcoming summit Senior Adviser william reinsch, the National Foreign trade Council President and duff and phelps Chris Campbell who is former treasury secretary in the Trump Administration how much is riding on this a lot expectations are big we have to find some way of getting to a deal with china and i think china knows that, which is obviously why the president will meet with their president expectations are high. I see why the white house is trying to downplay the expectations but everyone is looking at this and expecting the president to walk away with some kind of a deal. Bill, we heard from eunice, in china expectations are the best they can hope for is the truce. What do you think the best Case Scenario is . I think the chinese are right on this. Theres not enough time in the next two or three days to deal with all the issues, most of which you just identified, which are the same issues theyve been wrestling with for the last six months, expecting them to solve all those problems in the next 72 hours is unlikely what the best outcome here, i think, is handshake, smiles, agreement to go back to the table. Trump does not impose new tariffs. Then we go through this again. , you know, chris, eunice laid out those difficulties that are there. China not wanting to buy as many products as President Trump is going to want, but the bigger issue being no recourse, that this is going to be a unilateral deal that the u. S. Can decide if its working or not and walk away from. We spoke with kevin rudd, the former Prime Minister of australia, close to people on both sides of this situation, he says in terms of buying more products, the chinese may cave on that but doubts they will cave on the issue of whether or not theyll have any way to turn back if they think theyre being treated unfairly. My experience with china in the last four administrations in washington, they do a lot of talking and we the United States are the ones actually living by the rules. I think its actually more than fair of us to expect and demand that we be given the latitude to be able to protect our products and our markets when necessary i think thats not an unrealistic expectation or demand on behalf of the United States i see from chinas perspective as well, but clearly we have a long track record of keeping with the rules and they dont. If thats the case, why should we even care about a deal that they agree to now if theyre not going to follow it anyway, if they dont like it they do what they want if we have the opportunity to unilaterally defend our markets and products they would say you have the unilateral right but turns around and tit for tat all over again. Maybe they will just say yes, and go along and do whatever they want like theyve been doing for years. A long track record of doing so i think that we have to protect we have to pretend theyre good actors and work with them as good actors hopefully they will become you know, accept the other large economies in the world and start doing things the way that should be done in a realistic way and law abiding way. Bill, you used to represent the National Foreign trade council. In terms of what weve seen happen to trade how unnerved is business this by and if a deal is reached we feel great about this and lets move on i think you have to separate short term from long term. If theres a deal reached everybody would be happy, big market bump. The question is where will we be a year from now . Will the chinese comply . Is it a good agreement i think long odds on both of those. Companies always like certainty and to the extent that an agreement will provide some, they will be happy i think that its hard for me to see a deal that will solve the fundamental problems which are not the ones you mentioned the fundamental problems are we want them to reduce their subsidies an we want them to stop discriminating in favor of stateowned enterprises, to become more of a market oriented economy. Theyre not going to do that you know, i think that is in the end where this agreement is going to have going to be difficult. The president can accept something weaker then well see what happens. Chris, we have Carl Quintanilla in vietnam this week and hes been watching kind of the boom that vietnam has experienced as a result. How have the tariffs been in terms of pressure on china and do you think that that will be effective getting them to the table . Its. Significant. Were talking to our clients telling them to look for alternative sourcing, vietnam one of them. Vietnam will be a big winner if china doesnt come to the table quickly. China has to have access to the u. S. Consumer and u. S. Market. Without that they cant experience the growth they need to continue the job growth they need for their folks so theyre going to have to come theres pressure internally to come to the table and get to a deal i agree with the other guest that likely not going to happen in the next 72 hours, but i think we will start trying to find a way to find where the landing zone is and start, you know, trying to get that factoring into that landing. I want to thank you both for your time today. Thank you coming up, the dow creeping ever so close to a new alltime high the futures this morning up about 4. 5 points stay tuned, youre watching squawk box on cnbc coming up, your morning movers an bitcoin on a tear lately were over 11,000 how much of the move in the cryptocurrency is connected to facebooks announcement or is it Something Else well ask the author of two billionaire books at this point, the bitcoin billionaires ben mezrich joins us squawk returns after this. Welcome back to squawk box. Im dominic chu. A check on some of the morning movers grub hub up just around 3 or so roughly 5,000 shares premarket volume the Online Platform for food ordering and delivery was upgraded from a buy to a prior neutral by analysts citigroup. They acknowledge reasons to be cautious but they like the possibility for bigger deals and restaurant chains down the line. A new compensation construct for delivery drivers and better trends for the overall food delivery industry. Those shares up 3 shares of microsoft still the most valuable publicly traded company out there with a market cap just over a trillion bucks shares are modestly lower premarket around 18,000 shares premarket after analystsed a jefferies did boost their target price from 90 to 80 keeping their underperform rating on shares price close to 137 right now. Wrong so far and continue to believe the stock is overvalued with High Expectations for its azure Cloud Platform we will end on shares of kellogg down fractionally on premarket volume downgraded the cereal and package food maker from underweight from a prior equal weight they cited a deceleration in sales growth for key cereal products and tougher comparison after pretty successful product launches for things in snacks like cheeseit and pringles wavy variety. Want to get to the big story of the morning, a mega merger, abbvie buying allergan, the price tag, 63 billion joining us is the managing partner at douglas and associates, and a cnbc contributor. Mike santoli is here, cnbc senior markets commentator your thoughts on the transaction and what it means in the grand game of dominos among the rivals and competitors of these companies. Sure. What theyre waking up to. Yesterdays headlines was bristol. Is that going to get delayed now this big merger coming too this is about growth we are at that stage hold on, is this about growth or savings combination of both keeping your earnings per share and growing your share cutting costs, which theyre going to do and finding other product. Youre doing this because youre looking to keep your multiple up and keeping you want your stock to actually go up. At this point were so late that all these ceos this is not going to be just pharmaceuticals but other sectors you will see this because as you find more and more ability to merge, i think thats where youre going to see more action. You look at the premium on this transaction what are we saying, 45 plus . Thats thats substantial. What does that tell you that means its scarcity of deals. Ceos will be looking for opportunities and those selling will ask for more and more premiums this will be an interesting game going down the road. I wouldnt be surprised in any of these deals thau see other suitors coming in too. Other people will get left out. I would argue to you, im curious where you land on this, mike, down 8 , which is what abbvie is looking like right now. In a traditional transaction, as they set up their positions, if youre down 4 , 5 , thats all within range. Yeah. 8 says Something Different it might actually explain why the stated premium at the preopen levels was as high as it was. Maybe they thought there was room to come down. Abbvie has been in the penalty box. Stock down off its highs street doesnt love the stock at the moment if you look at how analysts are set up with it also i think that that premium mostly stock, i mean cash rather, cash is free and easy to get for these big companies, so thats not the issue i do think you have to remember allergan was over 300 stock four years ago exactly at what price would they have been willing to sell if not at the premium if youre Brent Saunders is this a win or loss its a is this a look weve taken this as far as we can ride this train and now we have to get off . Its a relative win and, you know, also part of that is, you know, you have a valuable asset, this huge pool of revenue thats not subject to the kind of medical billing wars because its a lot of outofpocket beauty products. Thats valuable in this market right now. You can pick your partner as well. Thats interesting. Even as drug prices the tremendous piece, its out of pocket largely. Its not going to get squeezed. Dont have the regulatory pressures on this going into an election season where there will be a lot of focus on pricing. Even today were going to be talking to alex azar, the head of health and Human Services, about new transparency on costs that he wants to see from hospitals and Doctors Offices. Absolutely. I want to go back to the point youre making about the sort of are you calling this an end this feels like an end of cycle kind of transaction where youre running out of room to grow and what youre going to do is start buying growth, if thats the argument youre making investors are looking at barbel strategies now. The Growth Stocks doing well and the dividend stocks doing well where do you fall into this if you are a ceo. You think in terms of m a were going to see big m a. I do. And you think were going to see big m a not just in pharma but across the board. Because as you see a little bit of a slow down economically how will you sustain your multiple. The read for the public and for the shareholders is, this is a positive view of great confidence in the board room or this is actually a negative . It seems what youre suggesting this is a negative. Every company is on this treadmill where they have a certain period of time where they have patent protection and have to replenish. Thats an industry remember, abbvie was, you know, out of abbott. They come apart and come back together m a has lagged probably the volumes you would expect given where the overall value of the market is right now. This isnt aol time warner in 2000. Cash is free as you mentioned. Interest rates have come down. Why start using your stock when you can borrow money. Mortgage rates are so cheap and going to help home sflisz companies are flush with cash. Add more cash to your Balance Sheet and cover your ebitda coverage and that gives you the ability to have a transaction. Thank you for helping us through this mike, thank you as well. Coming up when we return more on squawk, she launched back in the late 90s to find a cure for her daughters pulmonary disease. Martine will be here to tell her story and talk about the deal of the morning, abbvie buying allergan as well its a conversation you dont want to miss as we head to a break, take a look at u. S. Equity futures right now. You should be mad at airports. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. But were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. We like drip coffee, layovers from the day youre born and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Author ben mezrich talks about the crypto phenomenon, Facebooks Libra launch and much more then more of the president s latest sanctions against iran. Will that move ratchet up tensions is it time to buy big tech a look at whats working in the space. Squawk box will be right back. Of savings and service. Whoa. Travis in it made it. Its amazing. Oh is that traviss app . Its pretty cool, isnt it . Theres two of them. Theyre multiplying. No, guys, its me. See, im real. Im real he thinks hes real. Geico. Over 75 years of savings and service. What do advisors look for dont just track an index, help me meet a clients need. Is the fund built to sell or built to last . Etfs are only part of a portfolio. So make it easy to explain. Give me a quality fund that helps me get clients closer to their goals. Flexshares etfs are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Mega deal. Talking about Something Else, im not going to live forever. Anyway, a mega deal in the back to the pharma industry, abbvie buying botox maker allergan for 63 billion our next guest knows the area as well as anyone, martine rothblatt, chairman and ceo of United Therapeutics, started her company in the 90s to cure her daughters pulmonary disease and not only did they succeed in finding a cure for what was then an orphan disease, its a Public Company with 14 fda approved drugs. We dont have that much time i want to talk about the neuroblastoma treatment because thats totally separate from pulmonary, from what the United Therapeutics was initially and a Small Cell Lung Cancer possibly therapeutic as well. They want us to talk initially about abbvie and allergan, which do you have comments on that i think its very exciting. Im a big believer in blurring the areas between different medical segments and here youve got pharmaceuticals bleeding into cosma pharmaceuticals to be healthy you have to be healthy wholistically. Feel good about yourself, free of disease this blurring is interesting. Thats interesting. Youre here at the nasdaq for the lbgt Leadership Conference hosted in honor of pride month youre one of probably the best known transgender ceos in the world i would say without a doubt. How has that affected just your whole career at this point yeah. Its been no problem its not a very big pond to be a big fish in, so right. Its easy on that front but, you know, i feel really fortunate actually just to live where theres so much acceptance of lbgtq individuals and im reminded of robert hineline, the Great American authors statement that 95 of the worlds problems would be solved if people just minded their own business individuals Sexual Identity or gender identity its their own business now that weve allowed people to mind their own business the economy is moving forward. Youre positive about the progress, but theres still more in the workplace that each person can do in your view in terms of understanding and empathy and just accepting people for who they are. Were all works in progress i have other people, my transgender community, still murdered you remember the cases this year from i believe in dallas and theres still great amounts of discrimination against lbgtq people. Its better. Its Getting Better as long as we focus on things like pride month activities i think that will keep the momentum going forward. How often do you get phone calls from people who are inside big business, big article in the New York Times this last week about mauve duvally from goldman sachs, was mike duvally prior, and sort of the transition, what that process is like inside of a major wall street bank . Do you get calls from people thinking about doing this or want to do this and anxious aint h about how its going to go down . Not so many calls i get random emails here and there. I thought that article in the times was awesome and Great Respect for goldman and how well, theyre handling transitions of this sort its happening more and more, as is natural when you feel safe in an environment to be yourself, more people become themselves. I mean, you started i dont know if everyone knows, founder of sirius xm. Yes. And one of the great entrepreneurs right here. It popped in there was an anecdotal story about how you actually came up with that idea. That was back in the early 90s. Early 90s before my daughter developed her illness. The funny thing for this day, still more people come up and talk about transitioning and calling me, more say martine, sirius xm has transformed my life than the people saved with our medicines. I get more hugs from sirius xm than our medicines. Thats amazing. Tell me, just for my own knowledge, neuroblastoma, horrible childrens disease. What is this therapeutic and it seems totally different than anything you developed initially for the lung disease it was an opportunistic chance, its a buy logic, our first biologic it completely cures neuroblastoma in half of the patients that have it. Since this is a rare pediatric cancer it makes me feel happy there could be a kid, 5, 6, 7 years old, has this terrible disease, takes the medicine half the time it never reoccurs five years later it doesnt come back they live a normal, regular life to me its a blessing. You cure yours daughter yes she still takes her medicine. Her disease is under control. Theres some there have been addon therapeutics that are similar to what your daughter had. Like the hiv space and the antihypertensives. You need to sometimes combine different medicines together to get a better outcome a lot of diseases are caused not just by one thing, by two or three things you need two or three different medicines to keep the disease in check. Whats the secret to being able to come up with this developmental pipeline to have the research and development and have it pay off . Whats the environment i think the secret for us, we love what we do. We have a huge passion for making the world a better place and helping in the area of life and illness in particular. We do constantly get people coming to us saying they developed a new treatment for this, developed a new treatment for that we look at all of them we have an open mind with the Regulatory Oversight and what were facing right now with medicine, what needs to stay the same and what needs to change what would be most helpful, do you think, for Drug Development with all of these concerns about cost controls at the same time i think one thing thats really important is to protect the intellectual Property Rights of the individuals and the companies who have developed these new, amazing cures, like this neuroblastoma one we were talking about a moment ago the treatment were developing for Small Cell Lung Cancer you could not imagine how many hundreds of millions of dollars it takes to develop these new medical treatments the fda rightfully requires us to do these huge Clinical Trials that span over many years and then the part of our company i enjoy the most is th manufacturing part, but to manufacture medicines, obviously, thats got to be done super, super clean, super, super pure everybody is in bunny gowns when you walk into the manufacturing space so you dont drop any molecule of your skin or your hair all that costs hundreds of millions of dollars. We have to give these Companies Like ours and others a chance to recoup that investment thats going to take a good 20 years in most cases. In a nutshell, the stock is down in the really 2019 was when it started. Whats going on with why the stock is coming down i think a lot of people are blinded by the fact that a kem of our drugs went generic. So people are blinded by the risk of loss of revenues from those generics and not focusing on the fact that those generics are first generation drugs for the treatment of these diseases. United therapeutics has several years ago moved on to Second Generation drugs the Second Generation drugs as i mentioned they take a long time to get through the pipeline and to get into manufacturing. But all of our growth is in these Second Generation drugs. Once the market gets tune to that i think the stock will recover. Theyre saying that you tried to preclude a generic from coming in, but your argument is they screwed up the filing for and patients wouldnt have gotten it if they had to depend on sandos Regulatory Filings . You must have been a lawyer in another life. I think you got the legal arguments down im going to leave that litigation to the lawyers. Okay. And then finally, we you know, came back from break and said im going back to praying im not going to be able to download your youre a futurist, you do sirius xm and United Therapeutics and all, First Electric helicopter to fly for 30 minutes and you didnt fly it yourself but you could have. I was in the cockpit. You were . I got the guinness book of world record for flying that. Anyway i love flying. The idea that we are a. I. Ourselves and downloadable makes me want to, you know, throw off the shackles of my physical body and live forever with my consciousness. Thats not going to happen in my lifetime but it will happen in the next 100 years. Its inevitable to happen because were leaving Digital Footprints and more and more parts of you are life. You can imagine a curve at the top part was that you had a digital footprint of every thought of yours in your entire life and at the bottom a caveman. Were moving all the way up to the top point. Do you ever think about the soul and whether we need to somehow transmit that as well . I figure you could clone me but wont be me. You could download me but it wont be me. Is there a soul . This is not what we usually talk about on squawk box . What do you think . Youre a soulless no. Do you i did write a whole book just on this particular topic of digital uploading and the soul no way. Virtually human. I should have known. You can get it on amazon. Virtually human. The peril and promise of digital immortality. Exactly on topic. The peril. The peril, just after 4 million years of things happening were going to miss this by like 50 years, really . What about he says the singularity hits in 2045 no way im trying to make it to there im sure youll make it to 2045. Not going to get a soul once its digital, joe. Not like you get it later. I told you hes mad because the avatar, ive taken his avatar. Im going to look like you, andrew, when im digital and that makes you i take that as a compliment. You do. Joe 2. 0. Your wife, you have a robot modeled after your wife . Shes getting more of a soul on her own shes got a humor, shes funny, shes engaging i refer to it as kind of like kitty hawk like 20 seconds of a soul and then it kind of seems more like a computer but its going to get from 20 thats weird . Cheating at some point somebody like your wife but not your wife. She likes it. She feels its like a sister or like a descendent. Sister wife. Its a stateoftheart robot too. It is i think the latest, weight called like Neuro Network programming. Never answers the same question the same way twice it learns. Its on twitter. I should say she or they whatever well, we got more to discuss, but we dont have time now a lot to think about. Yes. Thank you for letting me be here today. Thank you. Thank you for supporting pride month. Great to see you again. Thank you, martine. When we come back Facebooks Libra announcement, the bitcoin rally and the battle between washington and big technology, author and friend, ben mezrich will join us to talk about all of this. Check out foourts the futures a hour things havent budged much still waiting for the g20 bw futures down by 1. 5 , s p downy 2. 5 squawk box will be right back. R to invest in all the things that move us forward. Every day, invesco combines ideas with technology, data with inspiration, investors with solutions. Because the possibilities of life and investing are greater when we come together. Wanna take your xfi now you can with xfi advantage. Giving you enhanced performance and protection. When devices are connected to your homes wifi, theyre protected. Helping keep outsiders from getting inside. And if someone tries, well let you know. So you can stream, surf and game all you want, with confidence you can get coverage where you need it most. Thats xfi advantage. Make your xfi even better. Upgrade today. Call, click or visit a store. Welcome back senator Chris Van Hollen set to announce proposals for new taxes on the wealthy among the ideas hes putting forward a 10 sur tax on incomes over 10 million, elimination of the stepped up basis which cuts down the tax bill for inherited assets that gained value and raising the estate tax to 2009 levels to pay for fixing Social Security the maryland democrat will unveil his ideas at an event in washington later this morning. Another successful launch for spacex overnight the companys falcon heavy rocket blasted off from the Kennedy Space center in florida and 24 satellites for the u. S. Defense department and other customers were on board. One satellite, i cant believe it, about the size of a loaf of bread contains a large mylar sail that will use only light photons from the sun as a means of propulsion to a higher orbit. The experiment is designed to show that space flight by light is possible. Photons ive ever look into that its very odd. Its a how they its a duality of light a wave and a particle. Its massless and makes no sense. None of it and, you know, that the speed of light is different depending on your frame of reference, rel relativity and everything else. Were on this kick, can you go faster than the speed of light if two ships are going away from each other at the speed of light do you know how quickly they are going away from each other one times the speed of light figure it out. Cant move faster than the speed of light. A little hard to cant move faster i guess. Put your hand on something thats not physical. Bitcoin not physical. Above 11,000 this week maybe in part to facebook, at least that seems to have inspired some of the companys announcement of its currency called libra sparked a big move on wall street and debates on capitol hill joining us to talk about those things, ben mezrich author of the accidental billionaires and just released a new book, bitcoin billionaires the story of the winkles boss twins and their payoff. How are you youve become a bitcoin believer believer. Whats interesting is that the stock the price of bitcoin has moved so much even since your book first came out just a couple of weeks ago at this point but also in between all of this, facebook which was really the subject of your last book and sort of underneath this book is a big topic as well. Seems to have changed the game my question to you is, do you believe that the idea of libra, the idea of facebook putting everybody giving everybody a digital wallet will change the game for bitcoin or not . Absolutely. Listen, libra is a massive on ramp for billions of people to suddenly be using cryptocurrency suddenly everyone and your mother will have an electronic wallet thats the exciting part about libra. The scary part about libra is that its this company that none of us trust to hold our photos anymore is now going to control all of our money theres the mix heres a piece i dont get. At least as far as i understand it, today, i guess we dont know the answer and a little betting on whats going to happen, the facebook electronic wallet, if you will, im not sure thats going to be able to hold or trade bitcoin. Right. I may be able to use it for libra transactions, i may be able to use it for other kinds of crypto, i dont know what other kinds, maybe a wallet libra only if you will right. It may expose me to the idea of cryptocurrencies but if i cant really my mother is using the facebook app and she cant get bitcoin, im not sure shes ever going to get bitcoin. Heres the thing when im promoting bitcoin billionaires one of the problems people have is they have no idea how to get it, use it, anything like that what libra is going to do its going to engage billions of people instantly into how to use digital money and thats going to change the game. Ben youre right. You may not use bitcoin on your facebook account but in one word, the biggest appeal of bitcoin in one word. A lot of friction trying to use it and i will never be able to figure it out. No better than gold. Its better than gold. Im goegtsetting to a point. Whats the most important thing about bitcoin. Its decentralized thats the big right. Thats the biggest selling point, thats what makes anyone who is really zealous about it, thats it. This is not. This is zuckerbergized. Absolutely. And thats not going to do it for me it should trying terror into your heart youre right, its not decentralized. Im sure he doesnt like me. Facebook and uber and ebay will have access in the center of it to all of that data thats going back and forth and thats an enormous amount of data. No, thank you. Peer to peer, decentralized, distributed. Look at you become a are you a holder now i get it. I get it i have been told by smart people im in like somewhere between the fourth and fifth stage from intellectually curious to a believer and then the next stage is an evangelical. Heres the thing im not sure joe is appreciating and i dont know whether i like libra or not because its not out yet, i think when you think about the great challenges of bitcoin, the Biggest Issue is custody, right . And the Biggest Issue is i somehow lose my code or i lose my thumb drive, if thats where it is and i dont have my key, the game is over if youre my mother, im sorry to harp on my mother, if my mother loses the key and cant get at the money thats a problem in the sorkin household. Right. Unless bitcoin has that feature and the good news about libra, i think, again we dont know what its going to look like it Mark Zuckerberg has the sdmee hi mark. There will be an arbiter. You can tell me you dont like that arbiter and Mark Zuckerberg isnt the right arbiter, but there is an element there are Real Companies behind this and real places you can call when something goes wrong and that doesnt exist in bitcoin land. Thats true do you trust these companies is this the person you want to be trusting with your bank account, Mark Zuckerberg thats a question you have to ask yourself for little transactions, sure. Its going to make life easier and like visa without visa and like that. Its not the same as bitcoin i think youre right, theres still going to be a generational issue with bitcoin as we go forward but this is a massive on ramp and i think this and my book are the reason that bitcoin keeps rising towards the moon. Like to take credit. Can we mention one thing, how insane is it that Mark Zuckerberg launches libra right after the winklevoss twins launch gemini. Do you think thats a coincidence . The ultimate troll going on right there. Let me ask you a question, u. S. Governments, governments around the world, you saw the reaction to libra almost instantry in Washington People saying we have to press the pause button on this governments have monopoly on currency its one of the last things they have a monopoly and ability to control things with. The idea theyre going to let other cryptocurrencies flourish where people can send money untraceable, untaxable, seems to me at some point theres going to be a fork in the road or a conversation where there will be a major pause button being pressed. I mean, absolutely right. Listen, this is terrifying for governments, more than for banks. This is a form of money they have no control over they suddenly are getting to this battle with these tech giants over something that is supposed to be something the government has a total stranglehold on, money how do they regulate this . How can they possibly regulate something that is without borders, that is instant, that is controlled by these massive Tech Companies i think they have got a real problem ahead of them and i have no idea how they manage to do that okay. Ben mezrich, great to see you. Thank you. Author of bitcoin billionaires. When we come back warren buffet shooting down reports of tensions between him and Berkshire Hathaways partner in kraft heinz. His comments to cnbc coming up the deal of the day, abbvie buying allergan. We will speak to an analyst about the deal squawk box will be right back. A big deal in pharma, abbvie Buys Allergan for 63 billion in cash and stock well bring you the details and what it means for the drug industry. Transparency in the medical field. President trump press for more disclosure on health care prices. We are fundamentally changing the nature of the health care marketplace. Secretary of health and Human Services alex azar will break down the new proposals. Wiping out student debt. Some highprofile president ial candidates want to slash the bills of millions. Whos on the look to pay for it all . The final hour of squawk box begins right now wipe out live from the most powerful city in the world, new york. This is squawk box. Good morning and welcome back to squawk box on cnbc. Live from the Nasdaq Market it times square, im joe with becky quick and Andrew Ross Sorkin here today. Futures up, the highest levels weve seen for the dow, 13. 5 points the other average, its mixed, the s p down fractionally, but has traded at new recent high. The dow trying to get there. The nasdaq indicated down about 4. Treasury yields were almost under 2 again this morning the tenyear at 2. 01 lets get you caught up to speed on the big mega merger of the morning. A pharmaceutical deal in the headlines. Abbvie gbuying allergan, the price representing a 45 premium to yesterdays Closing Price for allergan boy, would you have wanted to own the stock yesterday. The companys stock had surged on breakup expectations. Joining us on the squawk newsline, analyst i rina koefler. Help us understand this deal what it means for the company itself and the industry and whether there are other deals to be had after it . Good morning. Thank you for having me. So allergan has a dominant aesthetic franchise that has been rumored to be in play for a long time, pfizer was trying to buy this business several years ago. Its not surprising that the company is getting acquired now. In terms of what else is out there thats attractive, you know, in dermatology we have another company that we follow called dermira that has a buy logic for atopic derma tie tis that we view as innovative and potentially interesting to the space. Were watching other valuations for products like otezla. What does the premium say to you . Were looking at abbvies stock down 8 . We were saying earlier in an abba troj moment, you usually see the buyer on a good day down 3 or 4 . This is different than that, at least in the premarket right now . We have a note out today where we value the combined business as 171 it feels like the abbvie shareholders may view this as a little bit of a rich deal. But it is being done partially in stock and not all cash. And when you look at the synergies theyre talking about 2 billion in year three, does that make sense to you how much of this is a synergy savings story versus a growth story . We believe theres a lot of opx that can be cut out. They have a big pipeline in things like nash and we dont think a lot of these pipeline programs are going to end well, so theres a lot to be cut out of there there is certainly some crosscutting, crosscutting on sgna count as well synergy targets, without covering abbvie, are likely theres likely a lot to be cut out of the allergan business where you cant really cut is on the aesthetics piece right policy question for you, allergan, of course, based in ireland, had gone through whats known as an inversion in large part for tax reasons, looks like as part of the is combination becomes a u. S. Dom mow soiled company all over again. Okay. But u. S. Tax rates arent so bad now, so it shouldnt be much of a problem. You know, they have a dividend that they pay their shareholders so im not sure what happens to that theres other things that are interesting around this deal because they allergan has a partnership with ironwood thats very prominent so well see what happens around that as well. And when you look at the story as a Brent Saunders story, you look at where the stock was just a couple years ago, obviously much higher but they came down. Now back up, up. Is this a win, a loss . How do you measure his tenure . I mean, when he first came into the company, i thought he was a great fit for the business he was very much a dealmaker hes had very strong deal making with the sale of the business to teva a few whiffs along the way, notably kibela that said on the whole hes had more wins than losses. I think this was a difficult business to manage there was a lot of moving parts and maybe that part was a bit of a struggle, but on the deal making front i think he continues to shine okay. Were going to leave it there and thank you so much for joining us this morning. Yep stingicking with the sector, the Trump Administration taking a step to try to reform the Nations Health care system. Signing an executive order to help bring transparency to the health care pricing. Specifically, knowing up front when you go to a hospital what each test will cost. Joining us right now with more of the details is health and Human Services secretary alex azar mr. Secretary, thanks for being with us today. Glad to be with you thank you. Transparency has been a part of your mission, something youve been working for on a lot of different fronts. Explain how this executive order would work this executive order will go down as one of the more important events in the history of American Health care reform what President Trump is demanding is that hospitals post information based on their negotiated rates so that we and others have the information to shop and basically drive greater efficiency in the Health Care System but also that we require Insurance Companies to provide patients with information about list price, negotiated discounts, and what theyre expected out of pocket would be, before they get services then were also going to publish claims data, identified Patient Safety protected claims data from across the federal government that will be a rich pool of big Data Available to help systemic improvement of our Health Care System but also creating consumer usable tools so patients can really shop. It seems pretty straightforward, something Industry Experts have said would help with pricing. Why is it so complicated why is it so difficult to get this information out there well, a couple reasons. Most importantly for decades democrats and republicans have called for transparency of price and quality information, but the simple fact is, the various special interests who are embedded in the system they profit from the lack of transparency they have a good gig going here and they dont want it to end. Youre hearing them screech about the demands the president is making for this kind of patient empowerment. Its going to be a tough fight but the president and i are up for it and make sure we empower patients to be in control of their own health care. My message to the special interests would be, the current status of a nonmarket based approach in health care is not going to continue. And well either end up with a single payer government run system in this country because people are fed up or we can do things that will actually create a market for health care, create more affordability, create Higher Quality care with the patient in control at the center, treated like a person, not a number youre going to have to choose which side you want to be on there. You mentioned those screeching, are you referring to the Drug Companies suing you because youre trying to make Drug Companies actually put the list prices for their drugs in the advertisements that are out there . As you know on july 9th the president s regulation requiring that pharmaceutical Companies Put in their tv ads their list price takes effect that will be an important day for transparency also just insurers, hospitals everybody on the executive order yesterday are expressing their opposition to transparency, of price and quality information. I hope they will come along because i think they will see their customers, the patient, need this information. They need it in a usable format and they should be supportive of an empowered customer and patient. Never think its a good look for a drug company to say we dont want to be telling you our list prices but they are suing you saying this is part of their First Amendment rights what do you think happens with that lawsuit i dont want to comment on that piece of litigation but were very committed to this regulation that takes effect on july 9th and starting that day the American People will have very transparent information about the list prices of their drugs. We have a proposal through the rebate rule to actually empower patients so theyll even know what the negotiated discounts are on their drugs and theyll get the benefit of those negotiated discounts every time they walk into the pharmacy. A lot of changes in terms of transparency of list price and negotiated price throughout our Health Care System were going to create a real market for health care that puts the patient at the center, lets them drive towards Higher Quality and lower cost in the system you know, sometimes one of the reactions that you hear, youll hear, is that the special interests say, who is going to shop for Health Care First you cant shop right now because even i as secretary cant get this information thats why we have to make that available. 70 of Inpatient Services at hospitals are shopble. 93 of out Patient Services at hospitals are shopble. So we just have to empower with information and well create a marketer have the hospitals complained about the latest regulation . Well they have about the executive order. We have to put out the regulation it will be done through notice and comment rule making and well seek input and consider a range of options in terms of the level of transparency of negotiated rates and information and how to make that machine readable and consumer accessible for patients but i would say you can work with us or you can fight us on this but were standing up for the american patient. Year from now you think i will be able to say i need to get a mammogram, i should be able to see very clearly just by going on google or some app saying ewhats the best price, m Doctors Office or one of seven hospital nears me . Absolutely. Wide variability of pricing for diagnostic service among providers in the same area you know whats really going to be interesting, there is wide variability even at the same provider of the same service theres not much excuse for that. Why because if youre insured or not insured . Absolutely. Sometimes what you find, some of the data weve been looking at shows that if youre willing to pay cash for services, the discount is actually sometimes radically better than what Insurance Companies are able to negotiate with hospitals its because of these provisions and contracts, sometimes called all facilities provisions, its a take it or leave it. If you want to interact with this massive Hospital System you have to take every facility we have, no matter where its located but also you cant pick and choose and say hey, youre really good at hip replacements so you will be in network for hip replacements but lousy at heart replacements you have to take the whole kit and caboodle or nothing and that impacts Bargaining Power and theres legislative proposals that chairman Lamar Alexander is working on and this kind of i think thats why some are afraid of the transparency the president will require people may find out that some of these negotiators may not be doing that great of a job negotiating. The hospitals have got an lot bigger in recent years the health care, health Insurance Companies have gotten bigger and bought pharmacy benefi benefits managers, all teaming up even some cases with the pharmacies, cvs in particular with these situations, but all of these guys have tried to get bigger because they say its the only way to compete. Whats going to happen to them when regulations kind of strip back a lot of that is it not going to be a profitable sector or are there going to be some winners and some losers . Oh, theres a lot of profit being made in health care so im not really crying for them im concerned about horizontal and vertical integration and weve got to scrutinize those deals, those acquisitions very carefully. But i dont know how Price Transparency and quality transparency is just not the best thing you could imagine for a marketplace or for consumers and for competition. Yeah. I think we were really shaking up the entire system of health care by providing this kind of information and enabling a real for the First Time Ever real market for health care. Look at lasik eye surgery. Its one example, but its a case where every year, price goes down, quality goes up, why . Because you dont have payers and insurers in the middle transparent price and quality information and people paying out of pocket for those services its an actual market and it works. Yeah. They can work at health care. Secretary azar, thank you weve been really interested in all these changes that you are making and we hope to have you come back soon again and join us with the latest. Thank you coming up, president ial candidate Bernie Sanders looking to obliterate 1. 6 trillion in student debt we will make a full and complete education a human right in america to which all of our people are entitled. Sounds great. What could go wrong . The catch here, wall street is going to pay for it. When we come back well take a look at the true cost of student debt and what it would mean to actually wipe it out stay tuned youre watching squawk box on cnbc al hi everyone al roker here. As a guy with his own catchphrase, i appreciate that after 75 years smokeys only said. Smokey bear only you can prevent wildfires. Al but, im filling in because theres a lot more to report like when there are parched or windy conditions out there, you gotta be extra careful with things like burning yard waste. After all, wildfires can start anywhere, even in your neck of the woods. Go to smokeybear. Com to learn more about wildfire prevention. Senator Bernie Sanders unveiling a plan to erase 1. 6 trillion, why say billion when you can say trillion, of u. S. Student debt the president ial candidate cosponsoring legislation he says would eliminate all student debt within six months and make public colleges tuitionfree this is an issue that fellow president ial candidate Elizabeth Warren has been hitting hard calling for the cancellation of up to 50,000 in debt for 42 million americans. Back to senator sanders and the 2. 2 trillion plan for a moment. Its dubbed the college for all act. It will be entirely paid for by fees on the trading of stocks, bonds, and derivatives over ten years. This proposal completely ehim natsz student debt in this country and ends the absurdity of sentencing an entire generation, the millennial generation, to a lifetime of debt for the crime of doing the right thing. And that is going out and getting a Higher Education now for a look at how sanders plan could work, welcome ben miller former Senior Policy Adviser with the u. S. Department of education now with the center for American Progress action fund and james is a fellow with the American Enterprise institute and also a cnbc contributor james, ill start with you and be totally open about this because i think it would be great, it would be great, would it not be great if everybody was able to go to college for free and whats a half a percent on these greedy traders that basically almost sunk the economy ten years ago . I mean who doesnt want to do that what is the problem with this . I cant see one at face value, can you . Well, listen, i think right now, the democratic primary is kind of like, you know, those fifth Grade Student Council Elections where the kids are promising like Dominos Pizza for lunch, lemonade on the water fountains, anything goes thats what this plan is bernie has kind of turned this up to 11 and so he wants to cancel all the student debt including for the wall street bankers who have student debt. This is really a solution in search of a problem. To the extent there is a problem with student debt, its really on the low end why not have a targeted plan to help those people who are really, folks, maybe 5 or 10,000 in debt, went to college, didnt complete, thats where the problem is anything beyond that is really ideology which is what bernie said in the speech, that this is about making college free for all. Its a human right its really not about solving a particular problem ben, do you, at face value, do you think that senator sanders plan makes sense . I think its crucial we have some form of debt cancellation on the table our College Financing system is broken the original idea of a student loan was a financing tool for sort of middle or upper middle income families. Today a majority of people who borrow a loan at some point receive a pell grant, among the lowest income people in college. Were seeing is when you force debt on to those individuals, you end up with really bad repayment outcomes yes, we have major struggles with those on the low end where we have a Million People defaulting on a student loan each year and a minority of borrowers able to pay down a dollar of principle within three years, but real equity challenges when you deal with even at bachelors degrees we see a black or africanamerican individual gets a bachelor degree still has a default rate four times higher than a white peer as well as the fact that the typical black or africanamerican borrower has made no progress repaying their loan 12 years after college. You cant do a narrow targeting thing on the low end because we have problems that go everywhere. At center for American Progress, we have society has a lot of problems and were seeing a lot of programs with 22 or 23 candidates all trying to rise to the top, obviously a lot of promises are being made, even at the center for American Progress i figure you would go along with a lot of these, but is it does it get past the point of lets just have the discussion to where you actually think medicare for all, free college for all, free child care, it do you see that this is not possible . And do you think that people that some of the candidates know in their hearts this is not possible well, i think the discussion is about, you know, we need Big Investments in the middle income in this country and the lowincome the question becomes where do you think that money is best spent . Thats a different debate from whether or not we should take a couple trillion dollars from wall street and spend it on Student Loans versus take a couple trillion and spend it elsewhere. I mean in a world where we had a tax cut and jobs act passed with a simple majority in the senate, you can achieve something. You can free up potentially trillions of dollars and the question becomes, whats the better way to spend that to be clear, ben if ben was given 1. 6 or 2 trillion to spend he would not spend it on this plan. He would not spend it on a plan to eliminate the student debt of people easily affording their student debt, who may be well off. If we have a problem in this country were spending too much money on wealthy people and thats what Bernie Sanders would do maybe we need a better class of socialists in this country. I have a different question for ben, clearly the cost of a Higher Education in america is completely out of whack and what im worried about, actually, is if we were to pursue a plan like this where effectively wiping out debt, it only creates a greater incentive for universities and colleges across the country to actually raise prices it doesnt put any cost controls in place, it doesnt seem to be working to try to reduce that overall cost both for the country and for the student and individual. Or to make colleges more effective at what theyre doing in terms of trying to make you ensure youre qualified how does that prove value. Part of the problem i would say why weve had sky rocketing prices for Higher Education these days is because the government is making the loans that its making no. Thats actually not true the student loan cap for undergraduates hasnt risen since 2008 while tuition has gone up tons of time again the big problem we have here is basically we used to have ap understanding in this country that the state would do its job in supporting public Higher Education and its largely stopped doing that i think thats a key part that is in the sanders plan, the castro plan, the warren plan as well, establishing a notion that the federal government and the state those Work Together to cofinance the cost with a clear promise to students. The place where there is worries about cost control is more on the graduate end and to a lesser extent some types of private colleges and thats something that is easily fixable if you created some sort of accountability system that said were not going to lend more debt than what people are making on the back end for this, for their investment. We had, ben, what was that, rubenstein, on a billionaire, and hes like i told him about all these programs and what they were costing, hes like oh, you know, socially im a democrat and i dont really they dont really believe theyre going to do any of this stuff theyre saying this stuff. Were not going to do it thats kind of what i hear, right . Theres no way but its like, but lets have the discussion this is where we would like to get some day but i dont see is it productive to have these things that are never going to happen and talk about it constantly well, i think its a huge distraction because youre not actually talking about solutions which are one, affordable, two, would actually work and address the problem. So then it becomes theres a money tree in the backyard and we will go to the money tree its college for all, medicare for all, everything for all. The new green deal. We cant afford, you know, a tenth of that probably and then put them together and im telling you, modern monetary theory better work. Why are we taxing wall street just mmt the whole thingp. Thats a good point too just, you know, print it print. Which brings us back to bitcoin. Thats why if always comes down to bitcoin. Maybe we just all invest in bitcoin. That would pay for all of the debt ben and james, thank you, guys. Yep. When we come back more on squawk this morning, big tech under fire some of the f. A. A. N. G. Companies are finding themselves in the rare position of being criticized by the political left and right. In a climate like this, are harsh regulations inevitable thats the question. Warren buffet shooting down reports of tension between him and Berkshire Hathaways partner in kraft heinz an update on that when squawk box returns in a moment Johnson Johnson is a baby company. 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Jorge lehman want social media co come clean on how they are exploiting user data for profit. Which f. A. A. N. G. Companies are most exposed and the latest proposal to tether big tech. Carl quintanilla is in vietnam this morning and week bringing us the story of a country that could be on the road to becoming the next china vietnams gdp grew 7. 1 in 2018. Thats up from 6. 8 in 2017. Live report is coming up stay tuned, you are watching squawk box on cnbc. Welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Here are the stories investors will be talking about today. Abbvie is buying allergan in a deal worth 63 billion excluding debt allergan shareholders will get 188. 24 in cash and stock. That represents a 45 premium to the botox makers monday Closing Price. Analyst irina cough her joined us to talk about that deal we value the combined business as 171, so it feels like the abbvie shareholders may view this as a little bit of a rich deal, but it is being done partially in stocks and not all cash take a look the a the shares of the two companies as she mentioned partially in stock, not all in cash abbvie shares are down by 8. 5 and that will affect the overall pricing of the deal because again, its cash and stock allergan shares up sharply up 31 this morning Berkshire Hathaway chairman and ceo warren buffet is dismissing reports of tension with 3g capital, berkshires partner in kraft heinz he told us cofounder jorge lemann is a good friend, those reports may have been sparked by underperformance at kraft heinz and accounting issues at the food company amazons annual prime day will actually be two days this year the company says the prime day will cover 48 hours on july 15th and 16th amazon uses prime day to promote membership and its prime program with various deals available to only members big tech under fire more than ever these days with proposals to rein in the Biggest Companies from both sides now of the aisle in washington. Joining us on the potential impact to the f. A. A. N. G. Stocks, dan ives is managing director at webb bush securities and john freeman, tech analyst at cfra. Good morning to both of you. Good morning. Do you think something is going to happen here, that washington is going to do something that will have a Material Impact on the stocks . Right now the bark is worse than the bite. The street sees that in terms of the reactions, but it does feel like theres more pressure and the drum rolle is growing from the beltway to big tech. The broader worry its privacy today, but does it ultimately lead to more doj antitrust, the next step. Right now we think the bark is bigger than the it the is the issue that these Companies Get broken up or that they cant just acquire, they wont be able to acquire anything in the future or that cost of privacy and all of the tools that they have to put in place will be expensive . To the extent theres a discount on the stocks right now, its a discount for what . Yes so i think, heres the thing, i think that the different kind of risk that youre seeing now is what is worrying investors and, you know, perhaps sort of inserting a discount im not putting a discount in now, but boy, you know, with for example, with facebook, theyre not doing themselves any favors theyre really bad at lobbying and managing this Regulatory Risk in a relative to all of the industries that big tech has disrupted like cable and telecom and retail the one thing those guys are better at is lobbying. Facebook goes out and, you know, with this cryptocurrency libra, for example, just the timing was awful, i thought basically you can hear the you can hear the politicians, you know, and the legislators sort of quotation, first facebook allows its platform to be used by nefarious actors and arch enemies to interfere with the election and now theyre going to, you know, allow the same nefarious actors to pay for that anonymously with money that they dont even have to launder because its in a cryptocurrency i thought the timing was really poor. Hang on dan has been making faces as you have been speaking and trying to understand what youre trying to say. I mean, i disagree. You disagree. I think facebook went from the defensive to the offensive when i look at the crypto move, i view it as a smart strategic move for a company that is starting to innovate outside of the core Business Model. It does speak to a company on the treadmill and ultimately in terms of whats happened in the beltway, this was a smart move even though there will be regulatory swirls. What john is referring to at this point, given the timing and everything, effectively anything new they want to do may be limited, right, because the government is going to come in, whatever it is, whether its future acquisitions, whether its getting into a libra, whether its you know, im not going to read the i dont know whats in Mark Zuckerbergs crystal ball but whatever is next, is going to come with at minimum commentary if not testimony. If we look at the last lets call it month, as the pressure and the drumroll is there in the beltway, google has bought looker, one of the biggest acquisitions in cloud what . In terms of the looker cloud acquisition. Then you look at facebook with crypto it just shows these companies are beating their chest saying we are not going to be held down by the drum roll that were seeing in the beltway. I think thats just an important strategic move. John, real quick, i want to talk on the issue of breakup, because i think theres a misunderstanding in america about monopolies it is not illegal to create a monopoly that is right. Full stop it is illegal to create a monopoly legally, its illegal to main anyone a monopoly illegally. Thats right. Elizabeth warren or Bernie Sanders can wave a magic wand and break everything up im not sure is realistic. It isnt. Given the existing regulation. One of the things that heightened my sort of got the hair on the back of my neck up a little bit by the way, i have a buy rating we have a buy rating on google and facebook. We think theyre fantastic businesses but, you know, the with regard to the judiciary committees recent announcement, i mean they were talking about not just enforcement of investigating, you know, existing regulations or violations of existing antitrust regulations, theyre talking about crafting new legislation completely to quote unquote i think they the the language was Something Like to make sure that social media companies, you know, are in the, you know, in the best interest of the United States of america and so forth one of the things that i think gets lost here, this is the first time this is not like constituents that are mad about microsoft being unfair or microsofts competitors. This is the threat and power and influence that google and facebook have is directly on those people trying to get elected, those people writing the legislation to regulate them its more personal again, i have buy ratings on them, but i am starting to get a little more concerned with the Regulatory Risks, no doubt. I want to get both of your thoughts on the following. Bill gates spoke the other day, yesterday in particular i should say, and he said that his biggest mistake at microsoft was letting the android mobile operating system from alphabet become the dominant one in the microsoft and that microsofts own Windows Mobile missed the top spot by a very small amount. Lets listen to what he had to say. We were distracted during our antitrust trial and didnt assign the best people to do the work its the biggest mistake i made in terms of something that was clearly within our skill set, we were clearly the company that should have achieved that, and we didnt. So the real question that i still have for bill is, was it not just as mistake but was it a mistake as a function of the fact that was he effectively distracted by the antitrust case that the department of justice had brought against microsoft . Yeah. Covering microsoft back then through the years, i think that they did take their eye of off the ball for a little and mobile was something that they underestimated in terms of where the market was going it was by the biggest strategic mistake of gates and ultimately bomber what nadella did, focused on cloud and that has taken microsoft to where it is with the doj antitrust issues, its a distraction and thats why these companies, you need to be laser focused innovate and that was something when you look back to the extent that were looking at the big f. A. A. N. G. Stocks who do you think has the greatest potential to become quote unquote distracted as a function of this. On the most risk a google or a facebook the least i put apple. If i had to put a spectrum there. I would say i would definitely say facebook at the top and then, you know, the other f. A. A. N. G. Stocks probably secondary. We shouldnt even have netflix on that list, given the conversation were having. Dan, john, thanks, guys. Thank you great to see you. No n in f. A. A. N. G. Its pending. Coming up, were going to check the stocks with the biggest premarket action this morning. And were going to talk markets ahead of the opening bell including some hot sector picks and where investors could feel pain next. 95 Million People, 6,000 factories in the garment business alone is vietnam ready to become the new china and is the threat of new tariffs whats going to get it there all day today on cnbc. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. You need decision tech. You still have service . Call the Insurance Company sfx [phone ringing] its them, calling us. Its going to be a week before they can get through on these roads shhh, sorry, i didnt catch that. I said ask how soon they can be here right now . Whats now . He says theyre surveying our property now theyre probably at the wrong house i dont see any hovering his name is hovering . Look up . By automating claims with Machine Learning and analytics, cognizant is helping Insurance Companies advance how they serve even hard to reach customers. Cool welcome back to squawk box. This morning take a look at futures ahead of the opening bell were less than an hour away from the bell ringing. The dow would open up about 20 points higher, nasdaq off 4 , s p off a point for now. Dominic chu joins us right now in time for breakfast with a look at some of the mornings biggest stock movers you have a theme going. I have a theme. Were going to make this the fast food edition of morning movers we will start with a slate of Quick Service restaurants, the qsrs that have been initiated with coverage by the analyst team at Credit Suisse. They have six new outperforms, three neutrals and two under performers shares of chipotle, very thinly traded premarket but one of those out performs that they have alongside an 870 price target, giving it the highest implied upside of the newly covered stocks they like its positioning for an omni channel Sales Strategy and the pace for digital orders and paying optionsp those shares a focus when trading starts. Theyre a little more cautious on shares of papa johns pizza thin premarket trading so far. The brand is still in recovery mode but activist investors, higher Short Interest and potential for unlocking value make it a neutral with a 45 price target to balance things out, shares of Dunkin Brands on premarket value as well. One of the two und performance, they have a 70 price target they like the stability of the Business Model and the veteran Management Team but see Downside Risks from lower Growth Prospects and already elevated valuation. Those shares off in early premarket trading. I dont know. Coffee supposedly makes you thin because it gets rid of the brown fat. I dont think thats in your Stock Movement for dunkin. Have you tried the whole thing, the bulletproof or whatever it is where you mix butter with your coffee instead of cream. We tried that a couple years ago. Butter people came in. Im not sure. I have to try it it was okay makes it less bitter. Supposed to be good for you. This is a first its in the post where i get all my news, but called the weight loss weight loss is a perk its about coffee and its how this is the first stimulating brown fat improved blood sugar control, the first time theyve been shown a way to get more brown fat. I dont know do we want brown fat we dont want brown fat. Known as good fat. Brown fat is good fat is it i dont know dom, check it out. Have a cup of copffee you dont have to feel bad about having coffee. One of the out perform ratings of that Credit Suisse report is starbucks. Maybe there is still a coffee approach to this whole thing if starbucks does it. Yes. Maybe. I could say that. Coffee, im telling you, i dont understand nicotine, i understand caffeine. I need it. What might be a contrary opinion on wall street these days, our next guest thinks the odds of a recession have actually gone down joining us now larry cantor, operating partner at Atlas Merchant Capital because of the fed or because of Something Else the fed is the big thing. I mean i dont think people appreciate how big this shift has been at the beginning of the year, people were looking at another 100 basis points of rate hikes now theyre pricing in 50 to 75 basis points of rate cuts. Its a massive shift everybody is talking about how the bond market and stock market are contradictory. I dont see it i mean, you know, if the fed is now cutting rates instead of raising rates a lot, bonds rally and stocks have held up pretty well i mean to me its more of a positive message the second thing is, you know, late summer, early fall, were going to go back to the debt ceiling and spending arguments my view, this is going to be resolved by more spending. I mean we saw trump meet with pelosi and schumer, they agreed on a 2 trillion infrastructure package. Thats not going to happen, but it kind of gives you a signal of the direction theyre going here no way in my view the white house and Congressional Republicans are going to allow tight fiscal policy, which by the way sequestration, remember that name, is still in effect today, so if they dont come to an agreement you get acrosstheboard cuts. I dont see that happening when i add that up and easing fed, and i think a lot of the slowing is just youre coming off of juiced up growth in 2018, juiced up by a massive tax cuts and spending package naturally now that thats fading youre slowing. What are when you look at people that are like canary in the coal mine for recessions, thats all they do for a living and ratchet up the 20 , 30 , some are up at 40 over the next 12 months. Right. Its, for me, its hard for me to understand there must be some metrics that theyre using in terms of retail or consumers, because you got unemployment is so low, you wouldnt expect a recession. Right. The stock market, unless its the fed, market doesnt seem to be forecasting a recession. But then the bond market, and there is crazy sovereign yields around the world that are negative, but that may not be us, that may be the rest of the world. And it may be inflation. There is all these it never repeats itself, it rhymes and it is hard to add up all the different factors that are seeing different things. You come to the conclusion, no recession. Right im sort of you sort of just saying my tune here. Bond yields are going down because of the change in the fed stance and look around the world. Bund yields are negative so where are you going to go we have now we have a Global Financial market and economy and so forth so i think thats it when you ask the question, why are people forecasting, i think one is whenever the Unemployment Rate has gotten below 4 , which it did over a year ago, youve had a recession within the next couple of years, and you probably know we set a record for the longest expansion. So people are adding that up they dont die of old age. Looking at the yield curve and stuff like that, and, look, caveat here, economists are not including me not very good at calling downturns, and the reason is you tend to estimate direct effects when something bad happens like trade, economists are saying maybe this takes a half a point of gdp, thats not recessions happen, especially in the last couple of decades. It is the indirect effects, the hit to the stock market, business sentiment, there is a lot of leverage in pockets we didnt know about, you remember aig. Thats what causes it. Thats pretty damn hard to forecast. Okay. I guess i believe you. I never really thought what about 2020 thats what im talking not even in no recession in 2020 . I dont see it. The big thing to me is heading into a president ial Election Year is that coming up thats relevant to trade. Trade is a risk. I think we have gotten just to the precipice of where this thing could get really nasty, so, for example, if they do the extra 300 billion on china, thats final goods the stuff so far is intermeet go goods. I dont see that happening and mexico would be to me, i change my view if we go that far on trade. What time does that start, andrew, tonight, do you know what . The debates what time thats tomorrow there is two. Is it not tonight i thought it is tonight tonight and tomorrow. Tonight and tomorrow, isnt it 8 00 . You dont know . I dont know. Past our bed time am i not going to be able to watch this i know you want to be up for this i want to see the one that biden is on. I think thats tomorrow. Tomorrow . I think thats tomorrow. Still hasnt dealt with that i mean he said some doozies. But thats really thats right . Okay anyway, larry, thank you yeah, great to see you. Earlier this morning we heard from Carl Quintanilla in vietnam about how companies are flocking to that country to produce their goods and how americas trade war is affecting local factories. Lets get back to carl in hanoi for a look at the increasingly competitive fight there for Skilled Labor and, carl, we used a lot of the stuff you talked to us already this morning for jumping off points for other conversations. What can you tell us now reporter that was a great discussion about that full 25 and the reason were in hanoi to begin with is to find out if American Companies really do see vietnam as a viable alternative to the china production we have been looking at for the past 20 years. Tng is a vietnamese textilemaker their clients are the big guys, nike, adidas, calvin klein they have never seen an expansion like the one theyre seeing right now they have 15,000 employees 3,000 of those were hired in just the last year lynn wynn is one of the managers he says the demand for workers is so fierce, though theyre in the apparel business, theyre having to get into the housing Business Building factories is one thing. There is building Affordable Housing for middle level managers trying to retain and keep workers so tng built an apartment complex, 186 units, beginning at 20,000, u. S. , city views, 60 sold right now and it opens in september. One of the Sustainable Business strategy is to build people and have people build our business in order to grow the business, more important for us to build home for the people than building a factory it is part of the development and part of the longterm plan strategy guys, just to give you a sense of wages here, average worker at that factory makes about 280 a month thats less than fox con reportedly pays somewhere in the low 300s a month but above the minimum wage for vietnam. So basically were left with a question, can they get these, workers, can they train the workers, can they keep the workers which is the exact questions we were asking about china about 25 years ago guys great shot behind you, carl got to tell you. It is it is great to see you all day. Have you been to hanoi, joe i have not. Andrew has been in the caves, been down in the not caves the tunnels ive been in the tunnels. Did you do that great place. Do you do that . Been in the are you going to we did. Yeah, were going to show it to you later on it is haunting the idea that you would run down there in the case of an air raid, yeah yeah. Okay. Were going to be seeing carl throughout the day be sure to catch carls reports from vietnam all day it is tomorrow. Tomorrow is the first one and then debate tomorrow. At 9 00. Wednesday and thursday. Stay tuned. Lot more on squawk box in a moment okay, a final check on the markets, thats the best levels we have seen on the dow, 33 1 2 points the s p up just under a point. And the nasdaq is indicated up fractionally the ten year note was right around 2 . 2. 006. Gold is a real feature it has been sharply higher recently, back over 14. Shares of abbvie, we can show where it is now. It moved around a little bit as arbitrage tries to set up their position this morning ahead of the open i dont know if we can get that stock up there now back up to 10 in terms of the stock being off. Thats at 45 premium for allergan and a lost people watching both the stocks today. The debates, they were randomly selected. Elizabeth warren is tomorrow night with cory booker and then the next night with biden and sanders and buttigieg and others it is 9 00 9 00 youll see the highlights. First they put the nba games at 9 00. I cant watch that and now this they do it just for you, joe. Early bird special. Make sure you join us tomorrow when they have the first debate tomorrow night. Squawk on the street is next good morning and welcome to squawk on the street. Im david faber with sara eisen. Were live from the New York Stock Exchange jim cramer has the day off Carl Quintanilla, he doesnt hes in hanoi. And hes got an in depth look at vietnams manufacturing boom and what it means for tariffs and u. S. Trade lets give you a look at futures as we get started with trading, 30 minutes from now here at the nyse we have the april s