Transcripts For CNBC Squawk Alley 20240714

June the answer is no. Zero new orders for the 737 max in june. So thats three straight months, june, may, april, with zero new orders for the 737 max and in terms of that max backlog, it actually dropped by three, as a customer converted three max orders theyll now be made at 787s. So they are not taking those as maxes, 787s. Total for the commercial Airplane Division at boeing, nine nets orders commercial airplanes for the month of june. So theres the information and you see shares of boeing ticking lower. Not a surprise, guise. We talked with Dennis Muilenburg at the Paris Air Show and he said, look, we havent gotten any firm orders, and yet there was the iag news about a commitment to buy up to 200 737 maxes, but that was not a firm number and thats why its not in these june numbers. Back to you. Phil, well be watching boeing once again help the dow sag a bit after we started to close this mornings gap phil lebeau. Techstop stocks rebounding from yesterdays losses, up more than 25 for the year, despite a strong start, our next guest says tech may have become too expensive. And thinks that risk in the group is increasing. Joining us this morning, bernstein senior tech analyst, toni sacconaghi. Good to see you again. Good morning, carl zp it was a good note yet. You still say tech is a market weight, but youve got to be more choosey within the group. What do you mean when we look at aggregate multiples for the technology space, on a relative basis, theyre at a 15year high. Theyre the highest theyve been since the bubble techs trading at about 21. 5 times earnings, forward earnings the markets at about 17. 5 times. At about a 30 premium, which is rich relative to recent history. So in aggregate, the tech market is relatively expensive. But what we observe is the highest growth, most expensive tech stocks, which we define as the top 20 of tech stocks on a valuation metric, those are particularly expensive relative to history and so we think that there is caution warranted, particularly among expensive stocks tech is more expensive, because investors believe growth will be better returns on capital are very strong, Free Cash Flow is strong so theres so merit to it, but its always good to look at history. And expectations for the highest Growth Stocks are very high and valuations are very high, relative to history. Tony, will growth be better im just looking at these notes right now. Earnings for the tech sector expected to drop almost 10 on an equalweighted basis over the next 12 months that doesnt sound better. On an equal we do have a lot of big names that are coming off verytough comps, a name like apple, for instance a name like nvidia, et cetera. And so there are a number of companies that, you know, had really great years last year there was a strong economic cycle. We had tax reform, et cetera so were seeing earnings in aggregate for the marketplace to be down, but theyre a little bit more down for tech and so that, you know, that is part of the reason why the valuations are more elevated i think over the next five years, investors expect much better Earnings Growth from tech and the Broader Market this year and next, thats not really the case. I want to get your thoughts on the payment space when we talk about high valuations, you take a look at paypal and square, up more than 30 this year, visa, mastercard, as well. Do they come down to earth in the rest of the year or keep that run going its very difficult to say in terms of making a sector call. Where we found that most evaluated valuations are particularly in midcap software right now. And so i think thats an area where, look, theres a move to cloud, there are very robust growth rates a lot of investors believe that run can continue, but when we look at relative valuations and we look at we have a metric called quality of earnings, which looks at persistence of Revenue Growth, persistence of earnings and margins, its really that sector in particular that screens highest to us tony, youve got market performs on apple, am i correct . And tesla . And ibm. What does excite you if none of these large names do you know, tech hardware is a very difficult sector. And so part of the reason why we have market weights on most of our names is structurally, theres simply less growth so we look for stocks that are ultimately beaten down and we found opportunities in the past with hewlettpackard inc. And hewlettpackard enterprise so really the trigger point for us is when expectations get overly pessimistic for i. T. Hardware stocks. Right now, thats not really the case in apples case, you know, our price target is 190. We would ideally like to see the price closer to 160 for us to really believe that thats an active trading call. At 200, we think expectations are relatively in line with where the stock price is tony, how do you game out these u. S. china trade talks, especially when you are talking about names like apple or tesla or some of the other hardware stocks yeah, look, you know, apple has very significant exposure, the most in our coverage universe, in part because chinas a big end market its about almost 20 of apples revenues and there could be significant retribution in an escalating trade war where china not only makes it more difficult for apple to sell its equipment there, but it also makes it more difficult for apple to produce things there so vendors that are like hewlettpackard inc. Or apple in our coverage universe that manufacture a lot in china and also have end market china exposure are the names that we worry most about and look, this has been a see w seesaw i think at the beginning of the year, people were nervous. You know, then there was a truce for 90 days, and people kind of forgot about trade and it reescalated and now, obviously, we have some important meetings later this week. But, you know, already stocks in particular the two that i mentioned are highly exposed to china and very sensitive to a daily flnews flow around those talks. Tony, is there an opportunity in the ridesharing names like uber and lyft. No exposure to china uber has an investment in dd, but theyre still trading below their ipo prices and if you believe uber is ultimately going to be a megatap, theres a long way to go. How are you looking at these names . Yeah, i dont cover uber specifically, so im remiss about commenting on valuation. But look, part of what we see in tech in terms of rising valuations is were seeing market acceptance for stocks that have littletono earnings, but expected very high Revenue Growth and its difficult to say what might change sentiment on that weve had a strong growth rally in the marketplace, meaning Growth Stocks have dramatically outperformed lessexpensive value stocks and thats been the case across the market for the last two and a half years its also been the case across tech its very difficult to know if and when that pendulum might shift. Right now, theres tremendous momentum and acceptance for growthoriented names. Theres tolerance for companies that arent generating earnings or cash flow, but that can easily shift sentiment whether we have any underlying cracks, we could see more of a flight towards safety. So on balance, we are recommending that investors look more towards highquality, lessexpensive names, and look to trim positions in stocks that have higher valuations, whether they are stocks that simply have no earnings or whether theyre stocks that have very, very highly valuations. Lastly, ibm closing its 34 billion acquisition of red hat this morning now that the deal is done, whats at stake now for ibm . How does this play this is a big bet by ibm. 34 billion dwarfs its largestever acquisition, which was just over 4 billion ibm is clearly making a big bet here this is all about execution. Red hat as garnered a reputation of being an independent switzerlandlike swoftware vendor so the challenge for ibm is how do you challenge that in the marketplace so it continues to partner with other vendors, other cloud vendors, yet at the same time extract synergies. Because ibm paid a significant premium for that asset and the premium is based on the fact that ibm can benefit more from that company than it can do so alone so thats really the challenge the deal closed today and the imperative for ibm is to try to strike that right balance, where it can remain a switzerland, yet ibm can extract revenue synergies to either accelerate the growth rate of red hat itself, and or accelerate the products that ibm else along side of red hat going forward. Hey, tony, before we let you go, we love having you it does feel, though, like you want to downgrade something, youre just not ready to do it yet. Can we expect some downgrades from, when you talk about high tolerance for no earnings, i mean, are you going to change your rating on tesla in the coming weeks you know, look, im really not comfortable talking about specific ratings as a group, my stocks have generally underperformed yeartodate now, in some cases, earnings have come down in the case of tesla, so thats warranted in many other cases, earnings havent changed all that much. So on a relative basis, if valuations go down, im, you know, directionally more positive and weve publicly stated, we have a market perform rating on dell, you know, the stock is down from over 70 to closer to 50 in the last couple of months. Its still not quite at our threshold and target price, but to me that actually makes it more attractive. Its a stock whose earnings have actually gone up a little bit, but on a relative basis, the stock has underperformed significantly. So i wouldnt my stocks are more value oriented and if anything, i think investors should be looking more at valueoriented stocks rather than running away from them. Yeah. Certainly, the focus of your note yesterday, which everyone should take a look at. Tony, thanks for expanding on it today. Well see you soon thanks for having me. Toni sacconaghi. When we return, as we mentioned, ibm closing its deal for red hat this morning what the ceo told us earlier and what it means for the future of ibm is it enough to satisfy tom siebel were back after a quick break i think theres reason to be concerned about ibm. Ibm, i think, is a Great National treasure, okay . And they missed the cloud. Im not sure how you missed the cloud, but they missed it. And they seemed to have missed ai advertising aside, doing a lot of good advertising around watson but there doesnt seem to be much there so i think theres reason to be concerned about ibm, and im hopeful that theyll figure it out, because if ibm were to disappear from the planet, it would be a sad day of your in. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. You need decision tech. Xfinity mobile is a designed to save you money. Whether you use your phone to get fit or to find the perfect gift, youll use less data with a network that automatically connects to millions of wifi hotspots and the best lte everywhere else. So you save hundreds of dollars a year on your wireless bill. Xfinity mobile has the best network. Best devices. Best value. Simple. Easy. Awesome. Click, call or visit a store today. Its that time of year again. Welcome back to squawk alley. We are getting ready to unveil our 2019 americas top states for business rankings, our 13th annual report on state competitiveness. Well reveal this years top states tomorrow morning on squawk box, but today, we are looking at some of the crucial issues in this years studio and scott cohn is live in the top state, which hes keeping a mystery for now, were all over here guessing, a look at the important issue of infrastructure scott . Yeah, it is important, morgan you know, in the 13 years weve been doing this, it seems to get more and more important every year, particularly as the president and congress cant seem to get together to talk about it talking about it separately. So infrastructure this year carries about 350 out of our 25 total points in top states thats a little less than 15 of the total. And with the inaction from washington, some states are getting creative theyre partnering with business including one venture that our top states teams visited, smack dab in the middle of the country. Reporter its a port on the pr prairie. This is oceanfront property in the middle of kansas. Reporter edgerton, kansas, population 3,500, 30 miles outside of kansas citi and home to Logistics Park kansas citi, an inland Port Shipping goods around across the country and around the world in two days travel you touch 80 of the population, in three days travel, you touch 98 of the population reporter opened in 2013, the port has grown faster than anyone imagined, now employing more than 4,000 people, even as the state of kansas went through a budget crisis. It helps that the project is a Public Private partnership between the state and local governments, the nsf railway, and north point development. As long as they continue to grow, that feeds our palestine and represents a substantial outcome for everybody. Letting kansas capitalize on its location, like never before. It has taken this region as a whole into a completely new focus area of warehousing and distribution infrastructure that we hadnt seen as a huge opportunity in the past. Reporter a lot of states are talking about that, talking about location thats why for the first time this year, in our infrastructure category, were looking at what kind of population is within a days drive of every state thats one of the metrics well look at in infrastructure, among our ten categories of competitiveness and well see how all the states stack up tomorrow morning on squawk box. Here now is your next top states hint diabolical hint. Nuts to you. Nuts to you. You can read more about our top states study, topstates. Cnbc. Com, talk to us on social media usually the hashtag top states the stop states revealed tomorrow on cnbc well, that doesnt help me at all its georgia, scott, we know this nothing . Nothing. Poker face i feel like im at a disadvantage here being canadian that did nothing for me. Maybe its a fresh viewpoint. All right as we wait with bated breath, scott cohn, thank you, well continue to mull over that hint right there. A few years ago, we were all in washington, morgan, we were talking about that i did guess that one, but it was more of a logistics things and there were camera crews out and about. And speaking of inland ports, ive actually been to this port in the past to talk about intermointe intermodal, which is that exchange of goods and cargo we love when you say the word intermodal on tv between investors and transports okay, taking a look at the markets, major end dindexes comg off backtoback losses and lower again this morning here are the names trying to turn things around in the s p. Youve got advanced micro, dish network, and netflix up 7 this morning. A lot more squawk alley still ahead. Im sorry, 1 this morning more squawk alley still ahead. Dont go anywhere. 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. Ibm closing pits 34 billion acquisition of red hat this morning, its largest ever. Both ceos joined us earlier this morning on cnbc. Take a listen. This is really chapter 2 of the cloud. And many people thought, everyone thought was going to just the public clouds, but thats not what clients need chapter 1, they put a lot of client innovation out there. Think of it front ends of many systems, but then they bash into these back ends of all of their current i. T. , and that has to be modernized thats 80 of the workload still out there, Mission Critical work so this is going to allow us, and we are the only one that has a hybrid, multicloud platform based on open source which really simply means for a client, i have an existing house. I can renovate it piece by piece. I can write something once and put it on any cloud, public or private that i want. Shares of ibm currently down just over half a percent faber made the point earlier this morning, its rare that you see two ceos come on, on the closing of a deal, not just the announcement, just a marker of how important this deal is to big blue very, very important, right jenny remeddy has been trying for years to turn arent this ship first it was all about watson, now its all about the cloud and i was listening on the last earnings cloud, watson mentioned just eight times red hat 17 times cloud was mentioned 104 times. So ibm has done this shift away from watson and Artificial Intelligence based on some of the things that have happened there, fully into the cloud. And as tom siebel said earlier this week, maybe its too late, but well have to see. A hybrid cloud will be a unique position for them to be. And jon fortt has covered this pretty voraciously, that hybrid cloud is the now and it is the future. This is where the cloud is going. But it will certainly be interesting to see execution will be the key. We just heard toni sacconaghi, who covers ibm talk about this now comes time, roll up your sleeves, get down to business, find the synergies and continue to run red hat as, you know, a company thats been very highly repudiated, which probably explains why you have both ceos on and will it grow revenue again, finally they had a few quarters where they actually grew revenue, but the trend has been shrinking meantime, annual alan and Co Conference kicks off tomorrow. So who are the newer names that will be there . Julia boorstin is there in sun valley, didaho, with a look the alan and Co Conference here in Silicon Valley isnt just for media moguls and tech titans to talk about potential mergers and attend panels of thought leaders, its also where those power brokers and other deeppocketed investors learn about the next wave of innovative startups, such as youtube, that was featured here before it was acquired, or the likes of s. N. A. P. And uber, whose ceos were here long before their ipos on this years list of attendees are airb b, uptake, zip line, and biotech company, ginko bioworks allen cos inclusion of these startups shows where they value innovation rekur rekurgs pharmaceuticals, Flatiron Health has a tech platform, which is aiming to fight cancer and kallyope biotech makes connections between the gut and the brain. And there are two firms that provide Womens Health issues. And what would a gathering of billionaire investors be without some flying cars the aviation startups are electric air taxi company joby, which can take off and land vertically and personal company, kitty hauk there are other startups that are focused on Artificial Intelligence, virtual reality, a Bitcoin Wallet called zapo, so well have to see which of those entrepreneurs are sought out and spoken to by the likes of jeff bezos and softbanks massa san, who we also expect to be here. Guys, back over to you if one thing is for certain, i think scott cohn is probably not in idaho, because, julia, that backdrop is just breathtaking so thank you for being it is very beautiful here, morgan thank you for bringing us that report and i know youll be bringing us more headlines over the next couple of days. Julia boorstin european markets are set to close momentarily. Seema mody joins us with a breakdown of todays action. European stocks trading lower despite larry cud lowe telling cnbc that the u. S. Are in talks to move forward on a trade agreement. Theres one stock in focus today in europe and that is german chemical giant basf, cutti intis profit forecast, citing the trait dispute between the u. S. And china and growing weakness in the Global Automotive market. It now expects earnings to decline up to 30 this year. Notable weakness in the chinese auto market. And you are looking at shares of other european chemical producers trading to the downside on basf news. Now lets also talk about airlines coming under pressure after the french government announced it would introduce an ecotax on outbound flights air france strongly disapproves of the tax shares of air france, easy jet, and ryanair all falling about 3 to 4 on the day the uks privacy watchdog planning to fine Marriott International 199 Million Pounds or roughly 123 million over last years breach of the starwood. The hotel vowing to contest the charge shares of marriott down almost 1. 5 on the day. Carl, back to you. Thank you very much lets get to sue herrera this morning and get a news update. Dow is down 93 good morning, sue. Good morning, carl. Good morning, everyone white house counselor Kellyanne Conway telling reporters that President Trump hasnt spoken to or had any contact with billionaire financier Jeffrey Epstein in years and years and years. The president told me this morning that he hasnt talked to epstein, doesnt think he has talked to him or seen him in 10 or 15 years. And he like everyone else sees these charges, the description of these charges against epstein as completely unconscionable and criminal, disgusting, really British Ambassador to the u. S. , kim darroch found himself uninvited to a white house dinner last night honoring the emir of qatar. He said he would no longer deal with him calling him, quote, a stupid guy european regulators ordering inspections on some a380 super jumbo lines after some cracks were detected in wings on the Worlds Largest passenger aircraft but the company confirmed that small cracks were found, but said the air worthiness of the fleet was not affected youre up to date. Thats the news update this hour back downtown to you guys. Carl sue, thank you very much. When we come back, Virgin Galactics public plans. What Sir Richard Branson told us earlier this morning later, youtube is back on fire tv. How the dispute between google and amazon came to a tv. S p almost went green. Down two points. Were back in a minute but wera 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. Welcome back to squawk alley. Weve got a big commercial space deal to tell you about today Sir Richard Bransons Virgin Galactic will merge to create the worlds first and only publicly traded human space Flight Company proforma enterprise value, 1. 5 billion. Shareholders of sch, which is a Public Investment sfleevehicle l own up to 49 of the combined company and social capitals pal happ pa pa palahapatia will become chairman this things looks like a Software Business under the hoot, even though its flying people to space. So this is, i think, a really compelling risk reward even taking a general step back, i think ive had a really good track record of being a little bit ahead of some big trends, whether it was the transition to amazon or backing bitcoin, things like slack. And i generally dont put my own principled capital on the table unless i think theres a really compelling risk reward and i think im doing that Virgin Galactic is a Space Tourism company charging about 250,000 to take customers to the enl dge of space that is a service it expects to begin offering with 600 Million People offering 120 million in potential revenue. Those people already signed up and another 2,500 people apparently expressing interest according to branson palaha palahapatiya expect to become profitable by 2021 and in the next five to ten years, it wont just be about trips to the edge of space, but this could also be about hypersonic travel around the world. Key question for right now, with vg poised to be public before years end, is this a turning point in commercial space investing . Human space flight, keep in mind, incredibly challenging vg has had their share of setbacks, as well. But as chad anderson, the early stage of space angels tells me, this is a company thats making great progress theyve already been to the edge of space twice, but still building a product that can be more difficult to do as a public company. Quote, time will tell how theyre able to manage a human Space Flight Development program on a quarterly time horizon. And that we havent seen this before and there are certainly a lot of potential upsides, but also, perhaps, less margin for error. Regardless, guys human space flight, the tourism piece of this is definitely a big, highly anticipated area, because its not just Virgin Galactic, also Jeff Bezos Blue Origin thats working on this and spacex is doing their own Space Tourism ambitions, working on those as well something he said, really caught my eye, my ear. Looks like a Software Business under the hood is that true i would have never thought that about the Space Business well have to see i mean, it definitely got a lot of attention, particularly in the Space Community this morning. I mean, keep in mind, this is still a wrr business, space is still very hard. And i think a lot of that will hinge on them getting those toouss up to the edge of space, how quickly they can do it how many aircraft and spacecraft they can roll out and basically the price on those flights being able to drop and the scale being able to increase that is certainly one s1 im looking forward to the risk factors thats the insurance costs. Thats going to be an issue. Skpubs something really interesting this morning you said, theres actually more demand than supply, right . They can actually afford to be pretty choosey about investors, which i thought was really interesting. Well see another case in point would be elon musks spacex, which is privately held, but since december has done three rounds of funding and they have said, the ceo of that company has told me in the past that that is a company that can afford to be choosey when they take on new investors. There does seem to be growing demand, even potentially pentup demand for some of these types of investments, as some of the, what was once sort of seen as scifi or even farcical visions of these space billion nars now actually become reality. Within the next year, hes right about that ive said it before and ill say it again, space is the next internet well, from space to potentially the next internet, bitcoin, right, is the krcrypto craze back Bitcoin Trading up over 200 as investors continue to monitor facebooks move into the market with libra, already facing some early regulation scrutiny, but how much is crypto filling the void left by the traditional Financial Sector joining us now, coinless cofounder and president , Andy Bromberg andy, thanks for joining us today. When we talk about regulation, filling the void, this was really interesting to read that theres been comparisons to what weve seen this week, the big layoffs at Deutsche Bank thinking that maybe this could benefit cryptocurrencies in some ways how does that play out i think youre absolutely right. I think what were seeing here is that existing Financial Systems are struggling a little bit and going through these booms and busts and crypto may be countercyclical there so were seeing this bitcoin runup and broader cryptocurrency runup. I think thats inaddict ty dica what were going to see moving forward. Thats a really exciting concept to have crypto as a hedge against broader economic downturns. Weve been talking about all week about even with a cryptocurrency like libra, if you want to call it a cryptocurrency so how does it get there it still seems like were a very long way off i agree, it feels like were a long way out and the lead was right, space may be the next internet, bitcoin and block chain may be the next internet too, but that means its at its earlyiest stages just yesterday the s. E. C. And finra released a joint statement detailingsi detailing some of the open questions they have around cryptocurrency and thats a big step forward, but all of these questions need to be resolved before we get to a place of finality here andy, i want to go back to this idea of crypto and bitcoin as a hedge against other asset classes. How much has that contributed to the runup weve seen recently in the prices of bitcoin and some of these other cryptocurrencies and how does that play out as you get more coins that are asset backed and being seen as utilities, for example yeah, i think thats a great question i think, again, were in the early days of this asset, so that means we see big booms and big busts. And a lot of that is driven by the narrative around the space when we start to see momentum like we did in the past month, it starts to drive up more and more as more interest pours in i think as the space matures and we see more assetbacked tokens, well start to see that even out a little bit right now, the crypto space is highly correlated. We see bitcoin rise at the same time as etheorem and most other tokens do and fall at the same time so i think that uncorrelation where these different assets start to rise and fall on their merits will be really interesting as that starts to happen in the next couple of years. Andy, thanks for being with us this morning. Coinless cofounder and president. Well, still to come, instagram introducing a new feature to prevent online bullying well discuss that next. And later, why nintendo is moving all of its switch production to vietnam. Squawk alley returns after a quick break. The dow is down 94 lets get over to the cme now and Rick Santelli for the santelli exchange. Rick good morning and thank you. Theres one question that pretty much everybody wants the answer to in various forms. How good is our stock market and im very serious how good is our stock market one would think that jay powell and company, that that would really be in the foreground of all the decisions and processes that go through to try to nudge the economy on the right path. How good is the market i dont know that we know the answer to that many believe its all about the fumes. Its all about priming its all about the fact that sustainability is still something people question. If youre a poker player, sometimes its best to check to the highest bidder the Federal Reserve needs to focus on the big picture and the only way they can focus on the big picture in my opinion is to stay pat, to see the response in the market how much of what we are seeing on a daytoday basis at these levels is froth. I personally think that if the fed did nothing and kept rates exactly where they were, the markets may get jittery, but in the end, i think it would be okay but we need to know that as a matter of fact, the road to transparency started by Alan Greenspan has really been a bumpy road, because all of a sudden transparency is synonymous with all investors basically saying, what are you going to do . What are you going to do thats not transparency. Transparency is about the process, not the answer. And, all the micromanagement, seriously out there, if the stock market really is running on fumes and taking back december, is all of that important . Then i think we have more to worry about. Theres so much to demand in the globe. Maybe more of it comes here. One other thing. Theres been so much debate. Whether the feds democratic, i mean, seriously were not a democracy. Were a democratic republic were a bunch of independent republics. They were very focused not to make it a democracy. They wanted to also protect those that werent in the majority you know, the Civil Liberties and the rights of all individual citizens so what about the Supreme Court . Hey, anybody out there vote for a Supreme Court justice lately yet, i dont think its not a nondemocratic or undemocratic organizati organization we vote for people that pick them same with the Federal Reserve. Its as independent and democratic as it needs to be just, stay macro, because with global debt, china debt, central bank spleets, negative rates and a long in the tooth expansion, micromanagement is a done deal move on, look at the big picture. Carl, back to you. Thank you very much, rick art laffer on line one nintendo is the latest company to shift production out of skmoochina and into vietnam, saying it will move part of its switch console production to the country this summer. They say its intended to diversity risks and not to escape potential tariff hikes on the u. S. , but it is a trend we continue to see. One of the themes from our recent trip over there, which was largely about apparel in this case, but to see nintendo do it on the heels of what we know is happening between the u. S. And china is very interesting. Yeah, but you definitely talked tech, too on your trip. To me, the key was this y idea of diversifying risks. There are so Many Companies that are reconsidering their supply chains and wondering if they need to move some of that manufacturing around to other places in addition to china. And youve got to wonder if vietnam is really diversifying your risk, because the president has now spoken out about vietnam. They could be ripe for tariffs and tweeting today about india tariffs on american goods. America is that your next stop . The whackamole tariff game is certainly in place. Coming up on the show, quip cutting its teeth in the dental insurance game the ceo joins us right here at post nine after the break. Stay with us most of us dont know how much data we use, but we all know were paying too much for it. Enter xfinity mobile. Americas best lte with the most wifi hotspots, combined for the first time. When youre near an xfinity hotspot, youre connected to wifi, saving on data. When youre not, you pay for data by the gig. Use a little, pay a little. Use a lot, just switch to unlimited. Get 400 back when you buy the new lg g8. Call, visit or click today. Welcome back to squawk alley. Not knowing what youre paying for and receiving in dental care has become a frequent criticism. Ent enter quip works on a subscription sending you toothbrush, toothpaste and a battery. Quip cofounder is here with us now to talk about this welcome. Thank you so, an insurance alternative. What does that mean . So, were trying to really change the way that people think about dental benefits and dental care completely from the ground up so, i think for us theres a lot of issues with the space, a lot of transparency. You dont know what youre paying or getting. How youre covered and how your insurance may cover what youre paying for so, at the core of everything blow up that transparency and make everything very clear what youre getting and how much youre going to pay and then make the whole experience more like it is when you do Everything Else in your life nowadays using your phone it is very simple and easy to pay for pretty much Everything Else in your life and we feel if we can bring that kind of modern experience to the dental world and then add on that layer of price transparency, we can change the way people think about dental care. How are you able to provide transparency now a very notoriously murky and opaque area in terms of services and what those services actually are . We just work directly with the dentist. Over the course of the last five years wilding quip, the personal care side of the business we have 30,000 providers through that relationship. We have been working for years and what works for them and what works for their patient and what doesnt work for them and their patient and field a real direct relationship with them and the balance between what the patient should pay and what the Service Really costs and the dental Insurance Industry is a lot more opaque than even the Health Care Industry often the limits on profits and Profit Margins on kind of control or set in the same way as health care a lot of space in there to make something for both the provider and, of course, for the patient, as well. And, of course, i forgot what i was going to say i have a question 25 per month, right thats relatively more expensive and slightly more than what i pay for dental insurance are you trying to get costs down what will make people pay and people who dont have insurance . The core of what were launching is a platform. An app on a platform that doesnt have a monthly fee free to join, free to browse and what treatments cost in your area we set rates lower than the average rates in the area on top of that. So with quip care app you pay as you go for those rates or you can go for a plan such as quip care plus which is where you pay 25 a month and covers your preventative treatment within that cost. Are you trying to get that down was my question over time, i think were really looking from this launch and as we grow it to kind of see how its received in new york and then as we grow beyond that see how things go. We use an independent party to look at millions of transactions that happen in new york and across the country to work out how we can get to this 30 plus percent lower rate and, of course, were looking to bring in new ways and new plans and ways of paying down the line that open up the platform to more people. Whether that be employers or to individuals and whether it is insured or not insured people are, i think, generally nervous to switch dentists would you expect people who are onboarding to switch their dental provider . I think we look at it two ways, one, there is Nothing Better than a professional and the patient referral of their professionals. I think 80 of dental appointments are actually referred to from friend to friend and we see it the other way around we work very closely throughout the membership that we have already with the products to help us build that network through their referral with that said, were also working very hard to curate this network. This is a new way, although it is kind of modern way of dealing with services is very common in a lot of other areas of your life, in the dental industry its extremely offline i still get a paper bill in an envelope. Its crazy yeah. And happy birthday exactly so, we are really looking to work with the providers to understand how important it is to modernize the Consumer Experience and that will then kind of service them as the ones that can track those patients and keep them coming back. Simon founder and ceo of quip, thank you for joining us today. Thank you. Market continues to try to close this gap here. S p is down about three points of course ahead of powell rba ile tn re wee ckn sshathe mns. A new feature this morning allowing users to block online bullies and banning comments on posts and hiding those comments from everyone else but the commonter. Restricting will help users avoid escalating the situation by publicly blocking someone instagram plans to roll out and restrict soon following another an antibullying feature asking consumers if they want to post the comment in question. Instagram was considered safe considered to others but they are dealing with some of the issues that twitter has been dealing with for a while i wonder if that is the new head of insta out in San Francisco some really good reporting around this. That makes it seem like he is really serious why does he have this objective and does Mark Zuckerberg have the same thing for facebook. I think its real interesting. The company is willing to make decisions that people use instagram less if it keeps more people safe. Boeing where teenage users are concerned. We all know people who have been affected by it i think its also noteworthy that meantime you have the ruling out of the federal Appeals Court saying that the president , President Trump cant block twitter users either and that the First Amendment does not permit a public official utilize the social media account to do so so, in general, just seems like there is a bigger and bigger battleground here taking shape interesting decision out of the Second Circuit well see if this goes any farther. Lets get to the judge carl, thanks. Scott wapner front and center. The powell possibilities and what the fed will say on capitol hill tomorrow. Whether it will be enough to keep stocks climbing it is 12 00 noon, this is the halftime report. On the eve of key testimony on capitol hill, what will fed chief jay powell say and how will the markets react another wall street powerhouse releases its stock outlook. Which way do we go from here plus two big calls on two of the biggest names in the market. Apple and facebook the alim