Transcripts For CNBC Squawk Box 20240714

End up taking away some services i want to know when we start suing European Companies to get back what they steal from our companies. Every time you get a 5 billion charge against an american tech company, lets sue them back which ones . Take s. A. P. Thats the only one they got they basically legislate innovation out of their business in europe. Well dig deeper into this. Its something the markets are focused on you think election cycles end . I think well go through an intense 18 months. Get a week off. Do we get a week . This cycle it will be about bashing tech it wont be about bashing healthca healthcare youre a good outsider looking in you have great oil and gas stuff. Good miners. You will blackberry for a while. That seemed okay you had a little tech. You admire what were able to do down here. Im a huge investor down here i know. I think the biggest trade opportunity in the next five months will be taking u. S. Dollars, converting them to canadian you would have to beloony t do that. Ive done that. I think the government there will fail. I think the existing socialist government will get kicked out in october it will be a boost for mining bazne businesses thats interesting. Youre not shy provocative you get that from the sharp elbows you need on that other show im just saying if youre looking for trading opportunity, Canadian Dollar was 73 cents last month now its 76. The chance trudeau survives i think is zero. Kevin is with us for three hours. We have a lot to dig through with him lets look at the u. S. Equity futures. The yesterday the markets were down slightly. Loss of 23 points for the dow. That was the first time the dow was down in five sessions. It was the first down day for the zep the s p in six sessions. The dow yesterday did set an intraday high before giving back some by the end. The s p futures indicated up by 5. The nasdaq up by 15 points overnight in asia, youll see the nikkei was down by 66 points that was a decline of a third of a percent. Hang seng was slightly weaker. The shanghai was down 0. 20 . In europe, where there is some active trading taking place, you will see a mixed picture modest advances and declines, but the dax and the cac are slightly higher. The ftse is weaker treasury market, same story weve been watching for a long time those retail Sales Numbers from the government were stronger than expected yesterday. This morning the tenyear is yielding 2. 1 . U. S. china trade war is front and center again this morning after President Trump said that the worlds two largest economies still have a long way to go on trade, even suggesting that the u. S. Could still impose a new round of sanctions we have a long way to go as far as tariffs with china is concerned if we want we have another 325 billion that we can put a tariff on if we want. Were talking with china about the deal i wish they didnt break the deal they had. We had a deal where china opened up, we had a deal where intellectual property thef would be taken care of the question is whether the threat of new tariffs will move this along woo youve been supportive generally of this tariff approach, correct . The upside of settling a deal with china the next two years is so good for s p and my situation is everything i make thats a hit domestically that i make in china gets ripped off within 90 days isnt part of your argument that the u. S. Economy has been much stronger and has been able to withstand the repercussions of this . You would think if this rhetoric stayed on that we would never get a china deal, the s p would correct 20 , 30 i think my attitude s i think theres others like me, keep squeezing chinese heads until you open up the middle class to sell, i want that. Let me litigate when you steal my stuff would you do that even if our economy was not growing the way it is now . No, i wouldnt do that. Thats the balancing act. Why not do it now no matter how you think about trump or whether you like him or dont like him, this is the first leader to have the you know whats to face these chinese guys im a huge advocate for fixing this now lets look at what could be moving markets ahead of the trading day. Economic data at 8 30 a. M. Eastern time the june read on Housing Starts on the earnings front we have bank of america, Pnc Financial and bank of new york mellon. On the backs of hearing from Goldman Sachs yesterday and so many others. After the closing bell today well hear from ebay, ibm, first of the f. A. N. G. S, a report from netflix. And its another busy day for tech regulation. Facebook executives will be heading back to capitol hill once more for a second day of testimony over the libra currency the European Union launching a formal investigation into amazon now and how it uses data from third party merchants. That was part of the conversation during the testimony yesterday on antitrust. More fines could be ahead. Were also tracking the fallout from President Trumps comments that he will be taking a look at googles dealings with china that was prompted by calls from facebooks board member, peter thiel. Then later today, g7 ministers are meeting in france. They too have tech regulation in their sights well be monitoring developments and bring you updates as we get them the price of bitcoin fell sharply during the libra testimony yesterday. Now sitting well below 10,000 its erased most of the gains it added shortly after Facebooks Libra digital coin was announced about a month ago. Still not in the buy range for sorkin no. You were 3,000. Under 5,000 anything under 5,000 im disciplined at 3,000 under 15,000. To me watching the testimony yesterday made me think the reason why congress is interested in libra, they think it has a chance. The second that bitcoin becomes a stable anything and has a chance at real meaningful taking over the dollar or taking over something i think Facebook Libra is right for regulation, bitcoin is unrelatible. Thats the issue. My worry as a bitcoin investor, im not one, but if you were is whether you think that the government, which is not going after bitcoin yesterday, but if it ever got to a stage of escape velocity, that they would try to put that back into the bottle. You think all the attacks coming from congress at this point or from the administration are because they worry about the reserve currentry, and the dollar currency and the dollar i think thats part of it i worry about keeping it afloat my problem with bitcoin is what does it solve when you transfer money, whenever you transfer money, it takes it to zero. The reason it doesnt work for that solid reason, youre down 11 in 40 minutes that eventually, its are you saying thats if it ever became stable, then it might actually be used as a currency in which case i think the regulators could potentially step in and say you know what . We cant track this. We have this problem, this problem, this problem. By then it will work. I think thats what is already happening. I dont know much of it is protecting the monopoly of the u. S. Currency bitcoin you cant track down because you cant find it. If its a company like facebook you can. Its not libra and bitcoin are so different. You didnt think so when they first came out they are different. Underneath it is a more broader idea that we regulate banks like crazy. We regulate anything that has to do with the movement of money. They are looking at libra now. They have not really dealt with bitcoin. Think of the problem libra solves its such a brilliant idea heres why it will work. You dont think it will work. No. Heres why it will work it will work like paypal or lets take mexico, canada and the United States. Im an investor i want to put on a trade with mexico and canada to get north american exposure today, which i tried to do last month, i want to move a large amount of u. S. Dollars into canadian do you know how much pic shfricn there is to do that . I have to find a trader, buy the index in canada. With libra, the potential the canadian government agrees to monitor it, the u. S. Agrees so you think it is good i do. Theyre basically saying regulate us. So that i can say ill put 5 million into this currency ill move a million up into canada a million in mexic i never have to leave leeb brachlt i can buy the libra. I think libra could get regulated and work jpmorgan is trying to do Something Like a libra santander. Theres other people doing this. You will see lots of these things its not in jpmorgans interest to do it because they clip me 20 basis points. Thats the same argument that mastercard is involved in this, too. Let them compete. They all will be. Will they be regulated . I think its no coincidence that libra is based in switzerland. Will they be regulated like a bank my dad is swiss, my step dad, he told me today that they have not even talked to facebook yesterday. They will become a bank youre back to one a digital gold, one is a Digital Currency. You can use it its like paypal thats what it is the other one has inherent value in the no. Im not mad that r. I. M. , you dont do a lot for us. But looking at who came from canada we love you. Shatner. Yep both ryans, remember both cories both ryans come from ryan . You know the two. I dont need to spell it out. Ryan gosling, Ryan Reynolds Ryan Reynolds yeah. Both of them mike meyers neil young yep wait. Michael j. Fox. Joni mitchell it is a keanu reeves yes keanu reeves. Donald and keiffer sutherland. This is an awesome list howie mandel thank you, canada. Thank you. Its wonderful. Thank you when we come back, amazon prime day is in the books. Well bring you the latest on the big sale and how amazons competitors fared with their own sales. Right now as we head to break, a look at the premarket winners and losers in the dow. Justin bieber intel is up by a half percent. Well be right back. Moving is hard. No kidding. But moving your internet and tv . Thats easy. Easy . easy . Easy. Because now xfinity lets you transfer your Service Online in just about a minute with a few simple steps. Really . Really. That was easy. Yup. Plus, with twohour appointment windows, its all on your schedule. Awesome. Now all you have to do is move. That thing. [ sigh ] introducing an easier way to move with xfinity. Its just another way were working to make your life simple, easy, awesome. Go to xfinity. Com moving to get started. Amazon sales bonanza wrapping up hours ago. Courtney reagan has been watching this and has more its been a long 48 hours deals galore. It ended three hours ago. Amazons prime event we dont know how the full thing wrapped up it was the longest by 12 hours amazon has told us so far that worldwide sellers, predominantly small and medium sized businesses saw the biggest 24 hours sale day in amazons history. Amazons first 24 hours of prime day sales were 79 higher than last year according to ereceipts Adobe Analytics says they saw a 64 increase in sales versus an average monday in july compared to last years 54 growth on prime day. Even the niche retailers saw a 30 increase on online sales based on an analysis of pain views, the echo show 5, Fire Tv Stick with alexa remote and kindle paper weight were the top sellers. It makes sense because those were drastically discounted on amazons sales day events. Walmart during prime day, the page views there indicat instapot, the apple watch 3, the vizio 54 inch 4k tv were the big sellers. When you have a big peak and a swell of packages coming through the system at the same time, deliveries could be slower you need to tell sorkin about the exchange we did. The shoe store. You know about this mens shoes i should have known what is this saks is spending 60,000 square feet of 800 sneakers its 6,000. 6,000 square feet. So the fashion sneakers, luxury sneakers, theyre 895. You get two pretty hot. Theyre sort of a gateway drug into other categories. Luxury stuff. Then you can get your designer jeans, your designer tshirts im in. Im wearing mine im the wrong guy im the wrong guy for that segment yesterday. Still got those no, they finally fell apart a break through on the exchange yesterday is joe wore a jacket youve been pushing the jacket for so long he looked fabulous. It took 20 pounds off you. Everybody was watching and said my gosh the guy looks fabulous i must have looked emaciated. You looked good look at the jacket thing im shot switching it out mr. Wonderful tells the truth. Im still wearing lululemons. Back to the lululemons today and i got a zipper for my wallet check you out full suit i wore a full suit. Im doing the exchange today. You dressed up yeah. Okay. Back to amazon charlie is here wondering. Charlie oshea is here from moody moodys. What kind of sneeshg sneakers a wearing . How did the competitors fair . It doesnt matter if its profitable you have have 60 million prime members in the United States, try to keep them happy the best deals on prime day are always the amazon devices, the gateway to the ecosystem, which locks people in. Some things we focussed on early was the delivery issue i live in bucks county theres an amazon flex warehouse down the road from me. There were 220 rental vans in the parking lot of the mall which is almost like a staging area a couple nights ago thats the last mile for amazon. Thats what theyll rely on for next day delivery. There are bound to be hiccups. This is the test for holiday and see where the kinks are. I dont even care if the stuff is late that i bought. I used to be an impulse shopper, im not in the stores anymore. One thing that i saw is that amazon is offering 10 to prime day shoppers who hand over their data if you let them track you on the websites that you visit, which seems like a rare stupid bone headed move on amazons part to be getting in the middle of all of this at the same time were seeing this regulation focus on privacy. Why do this . Data is key to everything customer lists companies that didnt mine it properly companies trying to mine it to death. I think that its still evolving youre in the governments cross hairs right now. I know. Not just from regulation from congress but what youre seeing with the big agencies that are investigating them why do this now . Good question i dont have an answer for that right now. Because consumers dont care. Consumers want the discount 10 yes yes, you are. Why dont you pull a walmart and say you will get the everyday low prices, the best price i will offer it for you. I think consumers feel amazon, facebook, theyre taking our data any way ten bucks sounds like a low price, but as long as you give me something for it, sure. Ill give it to you. Youre taking it any ways. I own my data, i should be able to sell my data they are selling their data to improve the general marketing but theyre selling the data, knowingly selling it i would have no problem with this its great to bash these companies, but the consumers dont give a damn. I dont think they could. Charlie, is there blowback that comes from this its similar to credit card breaches in my mind. They happen, and people say oh well Credit Card Companies take care of you if the information gets out there i know what i am, but i dont want to go cheap you can have my data, but 10 bucks . 10 at least compensate me for it im worth more than that can you make more than 10 bucks off it i dont know. All of these companies yesterday only half of them participated in the discounts down to 30 less we got a big lift in sales we make no money but the real issue is we dont get the data we dont get it. Amazon gets it most of these companies that are small, early startups, they are trying to figure out a way to get you after you buy the product to register. I have one that is big that does cat dna. For 99, i will do the analysis on your cat, tell you what it will die from, where it came from i dont buy this kind of thing its a hot product you swab your cat in the mouth with a q tip, you send it to me for 99 bucks, this is a huge hit. So we have to get the data you dont get your katdcats dn unless you set up the account on the server i love this business, but its a Good Business of how a company can fight back to get their data charlie, with amazon, what do you tell people . Is it your favorite or is there anybody else amazon won the online battle. Walmart and the rest are fighting for second place. One key thing during prime day is you get the free ride you get the free ride the buzz amazon creates you want to be the second click. If youre walmart, target, best buy, any of the other brickandmortar retails, you want to be next. Maybe you get a shot if youre next if youre next you have to be good all of these guys have upped their games immensely. Pure online retail, amazon won walmart is still dominant, a half trillion dollars in re knew, theykne revenue, theyre the dominant retailer right now coming up a progress update from one of elon musks side products this one wants to attach mumen p processors to the human brain. Well give you the details after the break. And we are expecting quarterly numbers from bank of america. Thats coming up at 6 45 a. M. Eastern time you do not want to miss that well bring you the numbers and reaction from wall street straight ahead were changing whats possible every single day. , and if you run a business, that means a lot. We create Financing Options for your customers. To help them get the things they love instantly. Our data provides insights into what your shoppers have already bought. So you can offer them what they might consider buying next. Our financial and Tech Solutions are changing whats possible in all sorts of ways. So, how can we change whats possible for you . Mind Reading Technology might soon calm from the realm of Science Fiction to fact elon musks latest side product, they plan to drill holes into the brain and attach a tiny processor that can attach to a smartphone via bluetooth i volunteer what . He wants to do trials within the next year. Musk says the company is planning to equip its first human patient with that technology by the end of next Year Technology would mean huge improvements to the lye lives of people suffering from severe brain injuries, but the Company Still needs to get fda approval. They have been doing this to mice, others are trying to do Different Things with implants to help you. His ultimate ambition is to take this beyond brain injuries and to literally speed up your brain recall, your ability to access the internet when you first talked about it, i thought you were talking about no need to have a wireless bluetooth. So in the shortterm its around health i think longer term elon musk has spoken about his ambition to effectively hook you up to this computer i dont care what his longer term ambitions are if you can help people who need it. His approach is very different than some of the other others it involves drilling holes into your brain. If it was an optional, wow, i dont need my bluetooth anymore thats what i was thinking. No, but thats his ultimate goal not a great idea to cross the blood brain barrier in general if this model is really less around helping people with brain problems thats a tough one. People that have nerve disorders or shaking, that can be controlled. Ablation. What happens when you take a shower do you short out how much risk do you have when you have wires coming out of your head . If you have no hair like i do, thats pretty strange. They should work on fixing that first, i think. For those afflicted. I agree with you, joe drilling a hole in your head is probably not a great idea. I would look 30 if i wasnt afraid of needles in my forehead i would look 30. I dont like getting a hair cut. I dont like cutting my nails. Its like Howard Hughes yes elective surgery is like what . Theres going to be a scalpel . Theres a scalpel on me . Its not like life threatening any time you pierce the brain you get micro strokes. Im an investor in a Company Called nono, they are using molecule to stop stroking during brain surgery. Little ones coming up, stocks to watch including planes and trains but no automobiles reminds me of john candy another canadian was another canadian i miss him so much two out of three aint bad morning movers next. As we head to break, here is a look at yesterdays s p 500 winners and losers through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Content on their endless quest, to nowhere. S, run hopelessly in their cage. But perhaps this year, a more exhilarating endeavor awaits. Defy the laws of human nature,at the summer of audi sales event. Get exceptional offers now. Welcome back to squawk box live from the Nasdaq Market site in times square. Good morning welcome back u. S. Equity futures have been higher yesterday markets were down, but just slightly. Dow down by 23 points. That was the first time in five sessions the dow has been weaker the s p was down for the first time in six sessions this morning dow futures are up by 26 points s p futures up by 2. The nasdaq up by 7 1 . 5 a few stocks to watch. Csx shares are under pressure. The Railroad Operator cutting revenue guidance for the year, expecting a decline of 1 versus an increase of nearly 2 csx citing Economic Uncertainty as this industry is dealing with the fallout from trade tensions. That stock is off 7. 5 . Shares of Seattle Genetics are trading higher the biotech reporting a wider Second Quarter loss but revenue jumped nearly 30 beating forecasts led by the sales of its drug for classical hodkins. As well as tcell lymphoma i will take a quick look at the market cap here. See what kind of company were talking about. 10 billion and nu skin shares are falling sharply. This is a Marketing Company that sells personal Care Products and dietary supplements. They are cutting Second Quarter guidance citing chinas campaign to review Health Products being sold there lets show you whats going on with monster beverages. This follows a report out of london that the British Health secretary plans to ban the sale of Energy Drinks to all kids under the age of 16. Before yesterdays close the stock was up 34 this year of course that raises questions about whether folks in the u. S. And other countries may look to do similar bans. That would impact a bigger swath of the beverage world. Coming up, one more stock to watch, shares of united approaching a 52week high well dig into the companys results next didnt cocacola at one point want to buy monster . Ahead of our interview with oscar muz,no well talk with him at 8 00. Squawk box returns in a moment my experience with usaa has been excellent. They really appreciate the military family and it really shows. With all that usaa offers why go with anybody else . We know their rates are good, we know that theyre always going to take care of us. It was an instant savings and i should have changed a long time ago. It was funny because when we would call another insurance company, hey would say oh we cant beat usaa were the webber family. Were the tenneys were the hayles, and were usaa members for life. Get your usaa Auto Insurance quote today. We run right into these crises, and we do not leave until normalcy is restored. Wed been working for days on a site in a storm devastated area. A family pulled up. It was a mom and her kids. Everything they had had been washed away. The only thing that brought any kind of solace was the ability to hand her a device so she could call her family and let them know that she was okay. vo there for you when it matters most. Join us and get up to 650 when you switch. Thats verizon. Welcome back United Airline shares are trading slightly higher in the premarket. Joining us to break down the companys Earnings Report, fill lebeau is with us. Good morning good morning, for united investors there was not a lot to complain about when you look at the Second Quarter results they beat on the top and bottom line and when you look at some of the numbers within the numbers, whether it is pretax profit margin, whether it is the prasm, they all raised their lower end of the guidance. But they are not detailing the exact impact of not having this 737 max. Remember, they have been grounded since the middle of march and united has 14 of those in their fleet heres uniteds max plan this will get a number of questions on the call today. Its off the schedule at least through november 3rd i have to be honest with you, very few people in the Airline Industry believe this plane will be flying by the end of the year the 2019 capacity is up 3 to 4 previously it was up 5 to 6 . They have 14 in the fleet that are grounded they were scheduled to receive delivery of another 16 this year that may not happen. Theres a good chance it could get pushed well into the First Quarter of next year as a result united, as you look at shares, has said it purchased 19 used 737700s, theyre not detailing what they paid for those airplanes, who they bought them from. But theyll start taking delivery in december that speaks to the fact they have capacity plans. They want to make sure they have the planes in place. Well talk with oscar munoz engs cl exclusively at the top of the 8 00 a. M. Hour you will want to hear what he has to say about the max and the state of the airline business. Domestically, demand is rock solid in the u. S the question is internationally. We talked with ed bastion from delta last week, he said there are some areas there that are not soft but worth keeping an eye on thats what we want to talk with oscar munoz about. Well ask about the transatlantic business as well percentage of business for united that is international now . I would have to check my guess is overall its about 35 to 45 , somewhere in that range. It might be more but the domestic business is really on fire right now not just for united. Also for delta american, all the airlines are just seeing great demand right now the economy, as far as airlines are concerned in the u. S. , its great right now phil, the Load Capacity has been incredibly high at some of these companies. Is that because demand is so strong and because some of these flights are grounded a combination of the two combination of both you have Strong Demand right now. They do not have a ton of pricing power. They have a bit of pricing power. Were not seeing fare wars putting people on these planes more than anything else youre looking at the consumer both in terms of Leisure Travel as well as Corporate Travel, thats what is driving the high load factors in the u. S all right okay. Want to get over to bank of america and get to bank of america earnings leslie picker has those numbers. Andrew, it looks like a beat on the bottom line coming in at about 74 cents a share compare ed with 71 cents that analysts were estimating there. On revenue, they were in line with revenue estimates of 23 billion. Now sales trading revenue was down about 6 . That was offset by gains in the consumer segment where revenue rose about 5 . Revenue was higher in the Wealth Management segment which was boosted by asset apreepreciatian Brian Moynihan in comments in the relesion oase saying our vif the economy reflects the activity by one in two american households which we serve which points to a steady growing economy. We see solid consumer activity across the board with spending by bank of america customers up 5 this quarter over the Second Quarter last year. The firm took in 75 billion mother in deposits in the quarter. Net interest income, that came in at 12 12. 2 billion in the quarter, up about 3 from last year return on assets was over 120 basis points return on equity above the firms cost of capital coming in at over 16 . Back over to you all right if we round up the estimate for revenue, its 23. 2 it looks like 23. 1 stock okay, right . Lets get some reaction from peter boockvar, a cnbc contributor, mike santoli is here and kevin oleary is here solid but not remarkable. Most of the earnings per share growth for these big banks are coming from buybacks its a flattish performance. Consumer strong has been a consistent message the Wealth Management business should have been a tailwind. The interesting thing is the market doesnt seem to want to pay up for that if you look at how Morgan Stanley trades. In april the bank came out and said Net Interest Income is not going to be strong the stock is still trading slightly below where it did in april. Its steady but not necessarily remarkable these banks dont have a lot to of surprises in their performance anymore on a quarterly basis. The Real Investment case is theyre shrinking themselves by buying back a lot of stock you know, sending cash back to shareholders boockvar, youve seen them all now, most of them yesterday and today. Anything jump out at you its the Net Interest Margin pressure with the inverted yield curve. Thats the biggest challenge and i think also investors are looking at what is the fed going to do . Are they going to cut rates a multitude of times over the next couple of years to american banks, then face the same issue that japanese or european banks face with the disappearing yield curve . No u. S. Banks are much better off with their higher Capital Market exposure, Asset Management and other ways of making money i think thats a concern the Japanese Bank stock index is down 90 over the past 30 years. European Bank Stock Index is down 80 since 07 because of what theyir Central Banks have done to the curve. I hope the fed doesnt go back to zero and doesnt do the qe stuff because it would have a major impact on bank profitability. Its a different revenue number thats above. One revenue is 23. 1. The other were using is 12. So oleary, i dont know, do you have any companies where youre opening accounts at cats, bank of america, or anything weird . I havent owned financials in three years. Do you bank at bank of america . I do. I do. They have been regulated into being utilities now. I dont see the case for buying of equities, you make 2. 5 dividend yield. With rates going down, its hard. Return on assets in this sector has been abysmal. This is where you put money to guy. Im not just speaking of bank of america theyre about the autos they have trailed the you know, the s p by a lot and its because we do not allow these entities to use their one tool that made them great leverage we have neutered them. They have been neutered. Like spaying your cat. With good reason. Back to cats. How we got into trouble thats capitalism theres volatility in capitalism. No bailouts in capitalism. I would have let them go bankrupt we killed this sector, we killed it theres no good reason to put money to work here theres many other sectors in the any that do better than the banks. I feel sorry for them. That is also though the case for why you can more safely own them if youre really concerned about the fact that this cycle might not have too long to go. I think that the stocks were penalized along with much of the market for this sense out there that oh were kind of sliding towards a prerecessionary part of the economy the banks should be okay, as bank of america buys back 11 of the shares. Thats the utility what is leveraged but financial energy. We have been talking about the sector getting Leadership Back in for three years, its dead money. It hasnt happened. Well, it wont happen in next three years. Might not. Well, leverage can allow you can to make more money in the operation of your business its not just painting a better financial picture. Financial engineering. We let other sectors its Balance Sheet how come the banks cant do it anymore because we learned what was that, peter . The banks need help on the yield curve. Is it regulation or is it the fed . Well, regulation no question has sort of limited their earnings power, but right now i think its the fed and the yield curve. Yeah. Thats a great business, right i think we have overregulated them look what happened to the european banks with all the regulation. They didnt recapitalize. They didnt write off the bad loans. But theyre walking dead over there. Okay, thank you thank you, peter, mike and kevin. Youll be with us for the rest of the show. You are a they raise libertarians in canada right . Probably well, you know im a little right wing of attila the hun. Thats from growing up in pseudosocialism. Well, the truth is i kind of grew up in boston. Well, whats the difference the republic of cambridge. I love the place, but now its too cold. Peoples republic im a miami guy now. Do you like beer . I do. I like beer all right. Thank you, coming up what did mccarthy say yesterday, i like bitcoin. My viewers are like, does he like beer . Never ferc that. Much more on bank of americas report must we . Plus well talk food delivery wars and the announcement that is shaking up the industry at nt. Welcome back to squawk box. Food delivery wars heating up. Mcdonalds announcing its using doordash for deliveries in houston later this month this is a blow though we should mention to ubers relationship with the burger giant because ubereats had been the only Company Delivering for mcdonalds in the United States. Doordash isnt public but shares of grubhub and waiter both fell sharply yesterday. Looking at uber shares down just marginally because were going to see what kind of impact this has long term. When we return, the united shares up more than 15 just in the last two months. In the green again this morning after strong results that were posted yesterday well hear more on the quarter later on in the show with uniteds ceo, oscar munoz. Coming up next, barney frank chngigalk about regulati b te stay tuned to squawk box right here on cnbc Johnson Johnson is a baby company. 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. Tech under fire. Facebook heads back to capitol hill for another round of grilling on libra and Privacy Concerns. Do you trust your currency so much that you and your team are willing to see 100 of your compensation be paid to you in that currency . Whether i would trust all of my assets in libra the answer is yes, i would. Meanwhile, amazon also feeling the heat as european regulators launch a new probe focused on the use of merchant data iac making a big bet on the car sharing business the ceo joins us to talk about the companys stake in turo and why peer to peer car rides can be as big as the rental business. Plus a breakdown of the Market Movers including bank of america as the second hour of squawk box begins right now. Live from the beating heart of business, new york, this is squawk box. Good morning, everybody welcome back to squawk box here on cnbc im becky quick with joe kernen and Andrew Ross Sorkin the dow future run by 15 points. The nasdaq up by 6 1 2 housing data later on this morning and see what that brings us as well. A couple of things to tell you about, bank of america, they reported quarterly profits of 74 cents per share, 3 cents above estimates with revenue also beating forecasts. The results were helped in part by stronger Retail Banking performance. Separately Mortgage Applications fell 1. 1 . That happened last week. According to new figures just out. It was due to a drop in new purchase applications with refinancing activity actually rising on the other side so trying to make sense of that. Also restaurant chain tim hortons is the latest to add beyond meats burgers to their lunch and dining offers. This comes just a day after the announcement that Meal Kit Company blue apron not what theyre about to do but what happened to the stock. They would add meat burgers to the Stock Options and that sent it up 35 . Like adding dotcom to your name. I dont get it. I know that blue apron story quite well the problem with the Business Model is that their Customer Acquisition costs are higher than the lifetime value. Because it take an hour and a half to make any of the things but how is beyond meat the fact theyre selling beyond meat change the dynamic it is a penny stock so you get a big story. Thin flow. Im not trying to belittle the company, but theyll probably go to si roe is what i think that happens or be remember, plated was also in new york city it was a competitor to blue apron. When amazon bought whole foods the reaction of albertsons was to buy plated. That needs to happen to blue apron by somebody who has brick and mortar. Brick and mortar, not another so they combine plated with brick and mortar and that works and the poor guys at blue apron are flapping in the wind they need a grocer partner i dont know who it will be. Joe, lets move on here at a hearing yesterday on the hill, the lawmakers searched for explanations from apple, facebook, amazon and alphabet. Now, from the executives over app charges and data privacy and if google demotes search results from its rivals. How long do you need to summarize what happened, because we dont have all day. Do your best. Give me about a minute, joe so this hearing was part of a broader investigation into the house and to big tech and to antitrust and the practices, favor their own products and services, using their platforms to gain an advantage over their rivals lawmakers are worried that the tech giants are creating kill zones that are crushing startups sometimes before they can get off the ground congressman of colorado pointed to whatsapp as an example. You can understand skepticism because when a company owns four of the largest six entities, measured by active users in the world, in that industry we have a word for that and thats monopoly or at least monopoly power. The Companies Argue that congress should take a broader view of the Competitive Landscape that they play in a Global Market with rivals all around. We face intense competition for all of the products and services that we provide to name a few examples, twitter, snapchat, imessage, skype, telegram, google, youtube and amazon offer photo and video sharing, messaging, advertising and other services that compete with facebook. Becky, one thing is certain this wont be the last of the antitrust hearings in the house. Back to you. Thats a certainty. Ylan, thank you very much. Lets bring in the man behind dodd frank. Barney frank is here of course our guest host this morning is kevin oleary both are cnbc contributors and barney, thank you for joining us today. Youre welcome. What do you think when you hear about the move afoot to regulate technology. Does it concern you . I was there when we did the first regulation, people forget this in the late mid 90s, i was a ranking democrat thats when we adopted the rules for the internet at the time and specifically absolved them from liability for things they carried and instead said if someone claims that they have carried something that infringes on their Property Rights, they have to take it down i say that because our frame at that point was intellectual property the regulation we did do in the 90s, i dont remember privacy being an issue or but that issue was protecting intellectual Property Rights which i think we did well. 19 yeah, what the bill said is if youre a holder of intellectual property and its violated you have to notify the carrier and they have to take it down they couldnt have possibly checked all of the intellectual property what we have is a whole new set of concerns so thats why, yes, it makes sense to look at the regulation i know that the existing regulation wasnt dealing with this set of issues i think the Privacy Concern is a real one for people. Particularly with regard to children and especially since efforts to kind of shield the children are frustrated by the fact that the children here are the adults in terms of understanding whats going on and the other one is antitrust i think theres a legitimate argument there for restricting the big ones from snapping up startups which they explicitly do to prevent future competition. Im with you on privacy, but the consensus that we often hear around the table is that privacy doesnt matter if consumers dont care. Well, let me ask you this do you see a lot of politicians being concerned about privacy . Yeah. Because it do you think they woke up one morning, by the way, im worried about privacy. This is one where there arent any preexisting ideological drives for either the left or the right or the democrats or republicans. Frankly, i think some of the privacy stuff is overdone. People should be more careful what you put on there. If youre getting ads you dont want to read, dont look at them but i think the Privacy Concern is driven by the constituents. Do you think the answer i mean, its interesting because oftentimes the answer to all of this is supposedly break the companies up but somehow that relates to the privacy. I dont think thats the answer to privacy. I havent looked at it as much, i mean, but no. I think the argument for i wouldnt say break them up i do favor at this point restricting them from buying up future companies. Yeah. Forget about privacy for a second but a im intrigued on your idea of antitrust and breaking things up. I dont want to break things up i just said that. Go back to the 80s. Ibm was the behemoth it was buying everything it was buying anything that moved. Look at it today its a shadow of itself. Technology and the market takes care of these behemoths. They get lost. Not all of them thats also a kind of mindless approach that your analogies can be overdone. There are great differences between what were talking about today. I dont see i like the market solving i dont think we have to regulate or break it up. I dont want to break it up, but i do think that the market works better when there are more participants in the market now i understand the argument you make, but its an argument against all antitrust, not an argument for tech. An argument for if the market does everything then the problem started with tom sherman with the sherman antitrust act and then it was urged on by the radicals, William Howard taft and theodore roosevelt. But the difference but the fundamental difference of antitrust you cant let that question of the size and and of the degree of competition be entirery up to the market. But if you go online to amazon it has to compete with alibaba, a Global Player so its a different environment. No, ibm competed. No. I think the the only the yes, the world is global. So almost any question of competition becomes the whole world. But so youre saying now, given globalization we dont need antitrust law anymore. Please answer that do you think we need it or not i look at europe, i see no innovation i see stifling in every sector there are no amazons there because regulators regulate all of the nothing to do with the question i asked you which was specifically about antitrust and you obviously dont want to answer it. Were not talking about the regulations. All the success in america we take away what made the country great in first place thats my whole point. Yes, you have to deal with that. Have you got background no, im a capitalist who invests in companies let me go back to the question you dont want to answer do you think because of globalization and International Competition we dont need antitrust very much anymore in america . Im not talking about other regulation i think for instance, this notion that you dont have hate speech, im all for allowing people to engage in hate speech. The whole purpose of free speech is to let people you want people to be involved in hate speech . I dont care if they are or not. In the sense of legally. I think this law in germany you cant deny the holocaust is wrong. But do you think its wrong if facebook or twitter or somebody like that were to make a commercial decision, its actually a free market decision. Free market has to do with the government with private what private individuals do, if you want to have people if you want to have a guest on here but when you hear people say the platforms have remarkable control, you hear this by the way more on the other side of the aisle on your side, you know, they say somehow facebook and twitter and others and the president has said it, the president has publicly come out and said that twitter has effectively made it harder for conservatives to reach their audience do you believe that and b, should they be allowed to do that thats part of the whole argument that i believe the owner of the platform has the right to do that if you want to have guests on here who say whatever they want to say, thats your business i believe in free speech and no, i dont think i would not have the platform, if i was running the platform i would say, wait a minute, you said its too hateful but thats not the government. I dont believe there should be any government restriction on that i will say that thats another argument though. People who are afraid of censorship by the platforms for the antitrust thing im talking about which is if one company owns all of the platform then its not a constitutional issue, but a platform issue. So your argument is concentration of platform thats your no, in one case again, you dont want to answer me. No. Can i ask my answer is no it depends cant be accessed because there are different Business Models so cant have one view for antitrust. Me question to you is do you think now that we have globalization of the whole economy we dont antitrust anymore . No, that i would never say we dont need antitrust. You wont say it, but you believe it. Heres what ill say. The markets are efficient at solving all problems if you let them so no antitrust laws . Because you dont seem go back to that you did to the banks you dont like volatilities no i didnt like aig being able to sell contracts which they had no ability to finance so when the day came, they went to the Federal Reserve in 2008 and said, were 85 billion short of meeting our obligations that the market let us occur and then a week later they said, oh, we forgot. Were 170 billion yeah, but their bankruptcy had consequences for others in the system. You never tested that you saved them for no reason thats the way i look at it. Im trying to tell you thats the volatility i didnt like we have no problem with the volatility as long as the people who take the obligations on have the money to pay them off. In this instance, do you think theres regulation that comes forth . Is this more than sound and fury coming out of congress right now . Yeah, theres a coming together in the sense of the censorship which again is not legal censorship the more platforms you have, the less you have to worry that there is a silencing of any particular view point by the private companies. That is another argument so i think that might bring people on the left who might just not like concentration and people on the right who want more diversity not to allow part of an issue . If you think facebook is censoring too much then you dont want facebook to own all of the vehicles. They dont. Theres so much competition. Who said they did advertising dollars right now are on facebook for one reason they have a very great geolocking future. But if you think that theyre unduly censoring i was actually asking a predictive question here. I think youll hear the right saying we dont want facebook to have more control because theyre unfair to us i was making the argument when i was asked do you think theres grounds for people getting together an actual bipartisan issue in congress right now. Yeah. When you look at dodd frank now, do you think that there are things that you want to change or are you happy with the changes that have been made to this point we have been watching Bank Earnings coming out. And the banks while theyre continuing to grow the growth is not has not been up to par with what it has been before regulation could be the fed too. No, thats yeah. Im glad you said that because people said to me, well, ban earnings are down. You have heard me cite my mantra henie youngmans how is your wife compared to what . What are we comparing the earnings to . If you compare them to the earnings before 2008 and 09 then you the call about earnings that are illusory these are not because of leverage specifically because aig was yes. Because aig was selling contracts that it turned out they were 170 billion can i answer your question dont ask it if you dont want an answer. Aig was allowed under the laws to incur 170 billion of liability which they couldnt pay off, which then caused serious reverberations maybe not a crisis as you say, but serious disturbances. But they should have gone bankrupt. Its the people they owe the money to i was perfectly happy to let them go bankrupt and the new rule would let them go out of business but the problem is the innocent purchasers of the contracts you cant protect everybody in the capitalist society. I cant protect everybody, but you cant protect nobody. No, its wrong to pick a sector, automotive sector is badly managed. Would you protect any sector from the bankruptcy of the institutions would you have anything other than let it go theres fdic available, it was already there before you put these regulations on it. No, had nothing to do so my point is your point is wrong. No its not wrong. Had nothing to do with aig. You cant protect every mistake managers make in a capitalist society you said that thats what you said they were poorly managed and they lost people money, so what i say. 170 billion that had disruptive effects on a lot of innocent people and had 170 billion is a rounding error in our economy im sorry, its not that much. It could have survived by going bankrupt. That attitude in which no. People being wiped out, all the people who had done with aig the companies that were wiped out by that, i admire your calm in the face of their disaster. No, look, i also had exposure to aig debt. Should they have gone to zero i would have lost that, but i had diversification including most people with pension plans. I dont like the government saving you dont think we need antitrust at all. I didnt say that. Yes, you did. You didnt admit to it thats what you said. Barney, im i asked you a question though do you think there should be antitrust laws yes, i think there should be. You wont corner me on that. Im unhappy, i got to meet the guy who took the earnings out of banks forever. Thats who you are. Thats so silly because the fact that the banks are earning heres the fact i didnt regard my job not to thats the unintended consequences what we had was a responsibility to the economy and the argument that what we did in any way jeopardized the economy i think is clearly wrong. The fact is that i dont have any particular governing interest in the profit level of banks. What we want to do is to have the banks being able to provide the funds for private sector needs without potential problems i dont think you can argue that anything we did has interfered with the growth in the economy. Gentlemen well leave it on that note. Barney, thank you for coming in today. Barney frank again kevin is staying with us, but barney has an oped out this morning on how consumers can protect themselves against Credit Card Debt part of cnbcs Financial Wellness and Education Initiative called invest in you, a ready, set, grow. And its part of the partnership with the microinvesting app. Check it out on cnbc. Com it has three things to protect the consumers with Credit Card Debt. You missed me. Wasnt that great barney is looking over at me, like youre okay, joe. For a second a little bit. The partnership with acorn, is that the acorn that no no okay. Different acorn. Acorns, but not acorn i felt some fond glances compared to when you looked at oleary. Compared to what. I had to explain who henie youngman was. I lost my wife in the wishing well who knew it worked okay. Im using the other line which is just answer my question coming up, iac making a bet on the car sharing marketplace. Taking a stake in turo a peer to peer company that lets you rent companies and well speak to the ceo of iac in a moment check out the futures at this hour dow looks like it would open up ten inpots higher. Stay tuned, youre watching squawk box on cnbc moving is hard. No kidding. But moving your internet and tv . Thats easy. Easy . easy . Easy. Because now xfinity lets you transfer your Service Online in just about a minute with a few simple steps. Really . Really. That was easy. Yup. Plus, with twohour appointment windows, its all on your schedule. Awesome. Now all you have to do is move. That thing. [ sigh ] introducing an easier way to move with xfinity. Its just another way were working to make your life simple, easy, awesome. Go to xfinity. Com moving to get started. Time now for todays aflac trivia question. Which european country doesnt officially have a capital city the answer when cnbc squawk box continues but not when to use it. Do i use aflac when the kids get slime in the plumbing . No. Thats home owners insurance. Slime in my motorcycle. No. Thats motorcycle insurance. Slime everywhere . Ughhh nooo, theres no insurance for that. Do they help when i have bills Health Insurance doesnt cover . Yeah thats it aflac gross guys. Get help with expenses Health Insurance doesnt cover. Get to know us at aflac. Com it all started under this buttonwood tree. Twentyfour people came together to sign an agreement that created the stock exchange. Just the right elements coming together. It started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. It started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever. It started with the markets, bringing together steel and buildings and silicon and medicine and rockets. We believe the possibilities of life and investing are greater when we come together. Its why for eighty years weve connected ideas with technology, data with inspiration, investors with solutions. So that every day together, it all starts again. Now the answer to todays aflac trivia question. Which european country doesnt officially have a capital city the answer switzerland. I know davos geneva, zurich is in the german part. Oh. Over 20 of them. You learn something on squawk box every day. You do. Some days. Welcome back to squawk box. The futures right now are a little bit higher. No small feat given the series of new highs that we have seen in recent sessions, up 11 on the dow. Nasdaq indicated up five or so and the s p indicated up about half a point. Okay iac announcing a 250 Million Investment in turo we talked about it here on squawk before. It makes iac the biggest share of turo. Joining us through to discuss the news is the ceo of iac how did this come together and why are you a believer it is a 60 billion market. It is absolutely changing. When you think about personal mobility, the look at what uber has done with ride sharing. Look at bike sharing, scooter sharing theres still a piece in the market where long rides, multiday rides that you want your own car, store your things in the car, where you want a specific kind of car, that is still a huge market thats i think meaningfully underserved by the existing rental car company. You can book it through the mobile app its so incredibly easy and convenient. What are the lessons like zip car . They havent had the success that people expected first of all, it was a while ago. The consent of sharing was concept of sharing was new i think people have gotten much more comfortable of lending their things out and borrowing things from others and the technology has gotten better in terms of how you can share it. How you can access the car and the liquidity because zip car was one pool of cars basically owned by zip car turo is distributed cars its from peers so the size 400,000 vehicles in the network nationwide, actually globally now in multiple companies. In terms of what you can do with the iac platform of other companies to help accelerate their growth, what are whats the next step in all of this its more about shared learning, lessons that we have learned in consumer marketing and building marketplace and building apps. We talked about synergies is not a big deal in iac. Its a dirty word. Its not that well push it through one of the products but we know what conversion can look like we know what success looks like. We know how to spend marketing dollars. We know how to spend the marketing dollars very efficiently. Thats areas that we can help turo. In turos case have you invest at time when Customer Acquisition costs have been solved all of the platforms i look at them and get the opportunity to invest in them, theyre saying, dont worry, scale will solve it for us. But we dont make money on the customer yet we are spending on the market acquiring customers then whats the attrition rate is that already resolved for you . I think its mostly resolved but theres still work to do its a very positive gross margin right now thats a step ahead of some other platforms. Customer acquisition costs, ltd exceeds the acquisition costs. The question for us is how big can you scale acquisition and still maintain the ltvs or get more efficient and thats what well learn with this capital. And i look around at all of the different platforms that are trying to get into the arena somebody like an airbnb even offering the services. Whos got the advantage . What does it mean for turo heres what we love about turo is scale makes the product better for somebody to come in to get to 400,000 vehicles, 10 million renters i think that takes a long time. I think turo has been at this for eight years. You cant just build that kind of scale overnight you cant build that liquidity in one particular market a lot of our businesses think about personals. Think about home services. What matters is very local market down to the zip code liquidity because thats what drives the convenience for the consumer the better product you can offer. Thats why we love turo. You dont think the airbnbs of the world can take this on in a meaningful way i think it would take a very long time and a lot of capital and it would be a meaningfully worse service for a long period of time. Should selfdriving cars come in to these zip codes, like in metropolitan areas this does not affect your business no, i can argue its good for the business there already times that you want to drive your open car on your own trip. By the way, you could share selfdriving cars too. There are selfdriving cars in the concept of ride hailing and in the concept of the car that you own that you dont have to hold the wheel on. So the real model you have to rely on consumers to be the capex. They buy the car. Thats right. As long as they have the ability and liquidity to do that its a very interesting model because youre not spending a lot of capital on the actual asset. Right its great for somebody who owns the car. The gentleman who drove me here this morning i was telling him about it wow, i can make money on my car in the week im not using it it costs me 35 a day to own that car i can make that back. Absolutely. This is like youre chartering your plane. I think i like that. Joey, thank you for coming in this morning thank you very much. Kevin, hell be here for the rest of the show. Coming up, well break down bank of america earnings and talk libra and security concerns squawk box will be right back. 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. Mno kidding. Rd. But moving your internet and tv . Thats easy. Easy . easy . Easy. Because now xfinity lets you transfer your Service Online in just about a minute with a few simple steps. Really . Really. That was easy. Yup. Plus, with twohour appointment windows, its all on your schedule. Awesome. Now all you have to do is move. That thing. [ sigh ] introducing an easier way to move with xfinity. Its just another way were working to make your life simple, easy, awesome. Go to xfinity. Com moving to get started. So on squawk box the libra currency attacked yesterday on capitol hill politicians calling the company delusional and not trusted well break down the concerns, next then we break down bank of americas quarterly results. In the next hour, a focus on netflix. It is reporting after the bell today. Llhey open up about subscriber figures well find out squawk box will be right back. . Well. If you run a business, it means a lot. For starters, we provide you with Financing Options for your customers. That way, you can help them buy the things they love instantly and pay over time. And that turns them into serious fans. Hang on, theres more. Want Customer Insights . Weve got those, too. We use data to show you what your shoppers have already bought so we can tell you what they might consider buying next. And you can offer them the perfect products. That ceo gets it. From adding unique capabilities to your companys apps to bringing you loyalty programs, our financial and Tech Solutions are changing whats possible in all sorts of ways. So, how can we change whats possible for you . You should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. But youre not mad, because you have e trade which isnt complicated. Their tools make trading quicker and simpler. So you can take on the markets with confidence. Dont get mad. Get e trade and start trading today. But were also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. From the day youre born we never stop taking care of you. The reason we designed libra in such a way that facebook will only be one among 100 different members of the Libra Association and will have no special privilege means that you will not have to trust facebook well, except but mr. Marcus, you know better that that only facebook has access to 2 billion people and all to say that youre just one of many is simply is simply not true after peoples data and private messages have been stolen and sold after you have let russian bots try to throw the 2016 election with no contrition, i might add. After you have abetted genocide in Foreign Countries you really think people should trust you with their Bank Accounts and our economy, i think thats delusional. Libra raising concerns about privacy, data sharing and national security. For more, lets welcome security expert Richard Clark he served as white house counterterrorism coordinator under president clinton and george w. Bush and he became the First White House Cyber Security chief. The new book is entitled the fifth domain, defending our companies, ourselves in the age of cyber threats. Richard, thanks for joining us i think these companies are really eventually more allies than enemies, are they not or do we just need to be very, very careful i think we need to be very, very explicit, but we want what the standards are that were thinking they should live up to. There are no International Norms of behavior for social media companies. They say theyre doing the right thing now after 2016 whats the right thing we have a process in this country where we pass laws where we have regulations. If were going to say these companies should do things other than what they want to do on their own, then we should have standards so we can all agree on what those standards are and then we can have some Third Party Audit to see whether or not theyre doing it. Like a light touch is required would you say congress we had congressman frank on before, the main part of the the discussion, he was even talking about hate speech even hate speech you need a light touch on because of peoples freedom to express what some people think are crazy ideas. But but its better than censorship he mentioned in germany youre not you can get thrown in jail if you deny the holocaust. This country is not germany. I agree but do you think it agree should be a light touch i do i think we all should know what that touch is. Whos going to decide what the touch is. I think we have a process if the Congress Wants to set standards, they can do that. Are you comfortable with Congress Setting standards it does all the time, and you know that. I didnt say youre comfortable with it. Youre comfortable with it otherwise you wouldnt be drinking clean water or breathing clean air. Its a matter of what the standards are and how we get to them this question of libra they want to be regulated by the Swiss Financial Authority which is interesting. But theres an issue here, potentially, of a problem with Money Laundering so we have an International Group called the Financial Action task force which i used to work with it sets standards internationally. Why dont we ask the Financial Action task force to set standards for libra. So theres a path in your mind to getting a libralike Digital Currency theres a path an International Path we have trodden before to have like minded nations all the leading i find that very encouraging. To create standards for antiMoney Laundering. Let me ask you a question so libra which well separate from bitcoin, but because theyre two very Different Things however, bitcoin has moved higher a little bit lower in the past couple of days in large part on the back of this idea that libra is going to be a great success, get more people interested in this world, at least. As i was watching the testimony yesterday i thought to myself actually if bitcoin ever reaches some form of a escape velocity, all of them will be all over it, because theyre built in feature sets of it which is different from libra, because there could be more protections. Right so with blockchain and with bitcoin, with libra, i think we have to ask ourselves what is the problem were trying to solve . Why aside from making some people who thought of the idea money, nothing wrong with that, why are we creating this thing is there another way to solve that problem whatever that problem is they say the problem is the unbanked well, okay how can we address the global unbanked, not just those in this country. The unbanked and then theres the frictionless movement. He wants it for commerce. Theres legitimate theres the debasement of the currency by every central bank in the world which is the real libertarian fervor of the bitcoiners they dont want to be the only thing that you have shouldnt be fiat thats tied to nothing. Its not Gold Standard anymore thats the biggest thing. Thats fine and if the government has a concern and theyre beginning to say that concern is Money Laundering which finances all sorts of illicit activities around the world, lets have a dialogue about that. How do you do the libra thing and satisfy the standards we have had for 25 years on Money Laundering if you satisfy the standards on libra, you still have bitcoin out there. You still have Money Laundering with cash. Its a lot harder. But it still happens. Make a call on this what do you think happens to bitcoin . By the way, the g7 is making this a big issue libra, not bitcoin. Well, i think it will be a whole conversation i think it will turn into the larger dialogue about crypto and the question is which way it will cut. Theres a legitimate state need to worry about Money Laundering given its relationship to organized crime, to narcotics, to armed shipments to all sorts of bribery of officials around the world if the government can satisfy itself, whether its bitcoin or could it satisfy you . Id like to see what facebook has in mind for those roles. Heres a question i have as an investor. You asked me what problem are we trying to solve. I want to take 1 million right now and i want to wire it to london to buy five or six stocks in that currency, the british pound. Do you know what a hassle that is to do and this libra promise is i can simply keep the million in libra, send it over there, use that currency to buy those equities because im an investor i really like that idea. Theres fine. Look, all im saying its not just about libra, bitcoin or bitcoin, we Rush Technology to market then we worry about what bad people can do to it. After the fact whether thats 5g or quantum computing. When you say we, who are you talking about . We, this economy. We americans who invent things in Silicon Valley. Isnt that a good thing its a great thing that we invent them. A bad thing that we worry about the malicious use of them after the fact. But we dont know we dont know until we put them in the market. That is not true. Wow. If you brought any of these products that have Security Problems and security flaws to Security Experts before you brought them to market, those flaws could be identified. And in many cases they are. Thats a very slippery slope youre going on because if you stop innovation might never be developed. It never gets developed no, you make it really expensive to do it. No, thats all myth propagated by people who want to rush things to market. Oh it will stop innovation, oh, it will raise costs. Theres no empirical basis for saying that. Look at europe. Theres no innovation over there in tech because its regulated out of the economy. Theres a lot of reasons theres no innovation, not because theyre worried about built in security. So you saw what peter thiel had to say over the weekended about google where do you come down that . I think hes right. You think hes right . You think that google is happening on behalf of the communist party . Heres what i think is true google refused to work for the pentagon on our that is true. I think theres a real question about what it mean to be patriotic question in america today. I wont debate that with you. But if you turn around you work on Artificial Intelligence for the pentagon and you turn around and work on Artificial Intelligence in china and dont know what theyre going to do with that Artificial Intelligence, i think theres an issue there. Hold on do you have evidence that they were working on Artificial Intelligence projects on behalf of the Chinese Government . Theyre working on them in china. Do you think theres a real distinction . Quick question on this issue on stay with google if im the government and i want information from a company, like a telco or a google or a verizon or an at t, i simply subpoena them we have that system in place in america. So its really hard to tell me that google is not participating with the government. Google has refused to help the pentagon develop Artificial Intelligence. The project among others. Do you believe that every company do you think theres any argument to be made from a Civil Liberties perspective or Something Else that the companies that dont agree with what the government is doing should be able to stand up and almost in a civil disobedience approach articulate it and say this is how we have you should be able to do it do i condone it, no. I think people in Silicon Valley need to realize theyre able to do what they do in Silicon Valley because the United States government has protected them. Devised them a military what i dont understand is the argument that theyre working on behalf of the chinese when they were really the First American company on a principled basis to say you know what, we wont do business in china. But they are. Okay. Its longer debate thank you. Great debate. I appreciate it. Its a great debate. When we come back, we have a look at whats moving premarket. And united Ceo Oscar Munoz will join us for an exclusive interview. Squawk box will be right back. When it comes to your customers expectations, 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. They have businesses to grow customers to care for lives to get home to they use stamps. Com print discounted postage for any letter any package any time right from your computer all the Amazing Services of the post office only cheaper get our special tv offer a 4week trial plus postage and a digital scale go to stamps. Com tv and never go to the post office again mno kidding. Rd. But moving your internet and tv . Thats easy. Easy . easy . Easy. Because now xfinity lets you transfer your Service Online in just about a minute with a few simple steps. Really . Really. That was easy. Yup. Plus, with twohour appointment windows, its all on your schedule. Awesome. Now all you have to do is move. That thing. [ sigh ] introducing an easier way to move with xfinity. Its just another way were working to make your life simple, easy, awesome. Go to xfinity. Com moving to get started. Welcome back to squawk box. Im dominic chu. Another big day for Bank Earnings bank of mellon, the shares are really quiet which after they do everything from trust keeping to recordkeeping to Investment Management Services Posted better than expected revenues on revenues very much in line with estimates. Both profits and revenues were lower at the same time last year next up our shares of Pnc Financial which are quiet, relatively premarket after one of americas biggest regional banks posted better than expected profits and revenues. It was helped along been by an increase in the Loan Portfolio as demand for borrowing picked up there so then well end on shares of bank of america which have been moving between gains and losses premarket around 200,000 shares of premarket volume. Up now or down fractionally. They saw strength in the Retail Banking operations and guys, it continues that trend we have seen early on this season about relative strength in the u. S. Consumer andrew, back over to you. Okay, thank you for that. For more on bank of americas numbers we are joined by jeffrey hart, good morning, jeffrey. I appreciate you being with us look at the numbers, i mean, its very interesting i dont know if you saw the conversation that barney frank had with our own mr. Wonderful here about effectively how hard it has been for banks to make money and potentially being regulated out of business i think would be your argument. Thats exactly what happened. You look at bank of america earnings do you want to own this stock . I think you do. Look the big theme in earnings season for banks has been Net Interest Income. But the markets really missing half the story here. Its coming around, but theres lot more than just the yield curve. Yeah its difficult but what what we have seen from bank of new york and bank of america, Net Interest Margins have come in meaningfully lower than expected so the rates are hurting, but they have been growing average, Net Interest Income has been close to being in line and i think thats something that America Needs to focus more on when it looks kind of bearishly at banks in a difficult Interest Rate environment theres more to the story than just the yield curve. If you can buy bank of america, we had Goldman Sachs, had citi who would you buy . Im a fan of the big banks. You like them all i do like them all. But my question is very factual in terms of numbers. Why has this sector underperformed the Overall Index for year after year after year if it wasnt for what barney frank did to them in regulation. What other reason is there that they have so underperformed and shrunk as a percentage of the s p ever since they got regulated into oblivion, what happened to them well, thats been a big head wind, absolutely but were kind of to do point now where they have got the systems in place they have got the capital levels built. Its kind of factored into expectations so i think when you look at forward earnings expectations for the big banks where they have scale and it matters more than ever before. Theyre not as dependent on Interest Rates theres better Earnings Growth in the bank of americas of the world than the market is pricing in. Its interesting. You like citi and bank of america more than goldman . I think they can break out if you think the diversecation of their business and the new mix actually works. It becomes a function of the time line. If they make it work it will be a home run but thats were not going to get to the Strategic Plan until next january so thats a longer time frame. To the extent that Capital Markets come roaring back thats good for goldman too but i look at the b of a or citi, you get some exposure there. But i think more near term potential for appreciation as opposed to longer term. Jeff, thank you kevin of course is sticking around for the rest of the show. Coming up, united ceo munoz is up after the break and Patrick Mchenry on todays hearing on the hill over libra and cryptocurrcienes squawk box will be right back. United airlines cruising in the latest Earnings Report well hear from Ceo Oscar Munoz. Time to buy or sell netflix . We debate for the streaming giant now that two of the highest profile shows are jumping ship. And why is the government so nervous about facebooks Digital Currency play . A second day of hearings on the companys libra project about to begin. Well ask a top lawmaker what he wants to hear from facebook as the final hour of squawk box begins right now live from the most powerful city in the world, new york, this is squawk box. Good morning, welcome back to squawk box here on cnbc. Live from the Nasdaq Market site in times square. Im joe kernen becky quick and Andrew Ross Sorkin and our guest host is kevin oleary, youre the host on shark tank . Yeah. Im an investor on shark tank. I put my own money in harms way. How many things you come in here with some of the whackiest stuff that you have i have many, Many Private Companies now. Do you have a hundred no. Im about just over 50 now. And most of the sharks have a similar portfolio but heres the interesting thing, joe an amazing index on how america is doing because theyre in almost every state and every sector i can report to you on a basis i have never seen a stronger economy in my life. Do you have a do you have a dna company that tests the owners of cats who dont have dogs which are far superior . Well, your cat dies after 12 to 15 years you get it cremated at the vet you send me the ashes and i send you back a 1 1 2 karat diamond do you like that idea . Yeah. I dont know what the hell youre talking about. Well, im telling you all kinds of innovation in america. Why do you want the cat ashes . Because you turn it into the diamond now and remember fluffy forever. Its a synthetic diamond . Its crushed from the dna of a dead cat. I said wacky. Im just throwing it back at you. All right lets check out very mainstream a lot of these things like the little thing you put in your drain and it collects all the hair. Very Profitable Companies they get ripped off by chinese. The market is up 17. 75. The s p up about less than 2 points this morning. Lets get to the stories that investors are talking about this morning first up, bank of america. Out with the Earnings Reported top and bottom line beats for the Second Quarter earlier this morning. Bank earned a profit of 74 cents a share beating estimates by 3 cents. Revenue was slightly above, and helped by Strong Performance however, it fell below the analysts forecasts about its down 6 cents right now. Amazons prime day sale is officially over. That event saw more customers than last year but amazon is drawing more complaints about shipping delays. Amazon says delivery may be longer than normal during peak events like prime day. And the government is out with the latest report with Housing Starts at the bottom of the hour analysts are calling for a 0. 1 jump in june. United airlines is beating estimates on both the top and the bottom lines in the Second Quarter. The Company Expects profits to rise despite the grounding of the 737 max. Lets get over to phil lebeau. Oscar munoz, ceo of United Airlines you had a fantastic result for the Second Quarter you beat on the top and the bottom line, you expanded the pretax Profit Margins and you have raised the lower end of your guidance when it comes for the remainder of this year whats working right now well, first of all, just to reit rate the commentary from the quarter, it was a record Second Quarter for us. And i think the thing were most proud of is the fact that we had a lot of issues facing us. We call them head winds. Politely but theyre difficult sometimes but our team has done an amazing job, not only overcoming the grounding of aircraft, weather, closing of air space in Different Countries so were really proud about the Customer Service that we have been able to provide along with the financial metrics and really happy to raise the guidance. One of the head winds is the grounding of the 737 max that you have in your fleet 14 of them for the Second Quarter in a row you guys have said, we wont say how much this cost us. Nor are we going to say what the impact is going to be for the remainder of this year dont investors have a right to know they sure do. I think that the best thing and the most important thing they need to know is what its doing for our full year Earnings Guidance as you know we just raised it. Were not trying to be anything other than no excuses thats something that impacts and its impacting a lot of other folks. We are confident in the network strategy, the Cost Management and the pride of our people and delivering that service. Again raising that full year guidance is an example i say proof, not promise. You have it off the schedule at least through november 3rd. But almost everyone says quietly, look i dont think it will be back on the schedule until at least the end of the year if not early next year. If your heart, do you actually believe that the max will be flying in the Fourth Quarter you know, i think the most important question or remark, you heard me say this before, you heard me focused on returning that to flight safely. Well let the regulators and all of the people involved in the process do their thing whatever time it takes it will take of course wed like to have it done, no one wants it more than our customers frankly. But its important that it be saved. Well let the process play out when its ready, well be ready to pivot and get it back to the marketplace. Im not sure if you saw the pictures online out of the renton area, liberty for ryanair used to say 737 max on the plane and theres one that came out, i know you dont have max written on the outside of the plane, but does this speak there has to be a change in the name because the public will be resistant to flying this plane . I think we have to be cognizant of our customers and their perceptions towards flying the aircraft which is why we said wed be very flexible and very transparent with that i said ill be on the first aircraft to ensure whatever comfort it gives to folks but as far as branding and name, thats for somebody else to decide. If something said to you, would you like to see them take the max name off, would you tell Dennis Mullen berg, take the name away . I dont think we have an opinion on that. I think we look for aircraft to be economic for our flying services and provide comfort for our employees and our customers. You bought 19 used 737 700 that youll take delivery of in december does that speak that you have Capacity Growth plans and whether or not you have the max which youre hoping youll have it, but you have to move forward with those growth plans . Thats true we have announced the 46 growth rate over the course of three years and in order to feel that we need aircraft the used aircraft we have been in the plan for quite some time. Nothing to do with the max grounding. We are always looking for our growth to be capital efficient we found that used aircraft can help in that regard. Lets talk about the markets that youre seeing right now domestically, business is very strong internationally, whats happening with asia . Were hearing from some in the industry theyre seeing quote unquote softness or pockets of volatility over there. I think asia as a whole is a great market for us, were up this market. Specifically i think the conversation is around china specifically. Right. We have been in china for a long time and we have found that companies who have been there for a long time tend to fare better than people who havent so we have seen that we have seen some volatility china specifically for us is less than 4 of the market so its significant but not we think of the whole asian market and that was very positive this quarter. Do you attribute that volatility to the trade tensions between the u. S. And china i think theres factors that drive demand and any kind of uncertainty always drives volatility i think thats probably what were seeing. One last question, domestic market you see strength in leisure and Corporate Travel is there any pause in the market right now that you look at and you say im worried about this or do you look at this and say this is about as strong as it can get. Not that it cant get better but this is really strong right now. I think across the world, we always have pockets of strength and pockets of areas that were concerned so were very careful and mindful of that. But domestically and i think heard some of the brief banter before about i think kevin talking about how he sees the robust market economy. Robust domestic market being that way i think we feel the same way in the near term. So right now again our ability to raise our guidance tells you a little bit of how were feeling about the market and what we felt in january when you asked me these questions oscar munoz, not only did they beat the street but they have raised the lower end of the guidance for full year earnings. Guys, back to you. Thanks for that, phil awesome. Coming up, libra in the spotlight. Round two. Fresh off a grilling in the senate i hear grilling in july and i dont know dont you . I think yum. Yeah. Different kind of grilling the head of facebooks crypto project is set to meet the house members this morning in case they ever decide to develop crypto which they arent going to at this point after a break well speak with congressman Patrick Mchenry, from the Financial Services committee to get his views on libra and the technology or the lack thereof. Stay tuned youre watching squawk box on cnbc welcome back to squawk box, everybody. Facebook set to face more questions today in congress about its proposed cryptocurrency, libra. Ylan mui has more on that front. Well, good morning. Facebook didnt find many friends on either side of the aisle when it testified before the Senate Banking committee yesterday. Sherrod brown set the tone when he called facebook dangerous and compared it to a toddler playing with matches republican senator john kennedy accused the company of lying and both parties said they simply dont trust facebook with their finances or anything else. Trust is something you earn and facebook certainly hasnt earned it. What kind of faith do we have in libra can we agree that a banker should be trustworthy . I dont want goat into the technical issue, but i want to get into the trust. Theres nobody on this committee that trusts them. They can face a tougher crowd today. Maxine waters is circulating a new proposal that would prevent platforms with more than 25 billion in annual global revenue like facebook from developing a Digital Currency. The goal is to create a firewall between commerce and banking and the penalty for violations is a Million Dollars a day. So well see how much traction this idea gets among members that hearing is scheduled to start at 10 00 a. M. All right, ylan, thank you. Lets bring in our guest now, congressman Patrick Mchenry, a Ranking Member of the Financial Services Committee Good morning. I cant help myself, congressman. Now im on facebooks side its with me its the enemy of my enemy. I had plenty of complaints about facebook but the minute i see the smug, pompous, you know, the politicians involved grand standing its always the enemy of my enemy with me. There were some good points made yesterday or is it overkill, once again in grand standing no thats what its about i think theres a legitimate hearing to be had but we never have those, right . Get the cameras out of there, patrick. Wait a second arent you on tv, joe . This is part of your job come on. I know. But the issue here is theres a knee jerk reaction to kill it before it grows. Right . Theres a white paper thats an idea and theres a consortium of companies, some with better reputations than facebook currently has that are developing a Digital Payments platform and a Digital Currency. Interesting, right instead we have a knee jerk reaction to kill an idea look, the broad sense here im a friend of innovation im not a friend of a Mission Society where every business has to come to government with their hand out and say, can i do this . Can i bring in new product to market thats amazing. If they comply with the existing laws have at it i have got legitimate questions that i think need to be answered but this whole thing about yelling at facebook about trust, give me a break. Consumers are making a choice. Theres a whole slew of litigation about this. Right. Lets have a separate hearing about that thats fine. Right none of us here in congress trust facebook 7 of the u. S. Population trusts facebook, sharrod. Yeah thats generous. We just had a conversation with kevin oleary about whether all the possible pit falls of new technology need to be discussed and regulated before you develop a new technology and olearys point is there would be no innovation you isnt do ask for permission what is it forgiveness. Ask for forgiveness, to not you cant ever remember it. The most stagnant economy, you need to make sure we french if i the whole system here so you have a hand out to the government, can i do this, can i bring something new to the market the way we have set this up we have guardrails, follow the speed limit. You can drive whatever vehicle as long as its safe so lets get out of weeds here. Congressman, i dont want to get too far into the weeds but let me ask you this. Even though libra and bitcoin and others are completely Different Things one is a stable coin of sorts and bitcoin may or may not be a commodity or Something Else. But talk about the guardrails. We have lots of guardrails around money in this country banks have a lot of guardrails about how all of this works. Sure. So the question i you know, even though im fascinated by the innovation of this stuff and i want to see where it all goes, the question i have ultimately is given the monopoly that our government has had on its fiat currency over all of these years and the issues around all governments have a monopoly over their currency so lets they typically do. Were not special or different. No. But long term do you believe that regulators and politicians like yourself will allow the emergence and the sort of of these new types of currencies if they dont look a lot like the regulations and guardrails that we currently have around fiat currency and money well, i think theres no capacity to kill bitcoin even the chinese with their firewall and their extreme intervention could not kill bitcoin. A distributed ledger full and open in the essence of bitcoin is a first mover in this space, the developer of this technology of blockchain. Can i at least ask you a question related to that. But my point is you cant kill bout coin, but new iterations of this that are trying to mimic it that are not fully distributed, that are not fully open, there are different mechanisms to kill it. But let me ask you a question in the United States for example you say you cant kill bitcoin, to some degree i agree with you, and some i dont coinbase cannot accept money from an american citizen that any of the wallets cant accept money, you would im not saying you shut down bitcoin, it would exist somewhere. The be sort of in a sort of a dark web kind of situation but it effectively would make it very, very difficult for me for the mainstream to use it sure. But i mean, how mainstream is that right now how mainstream is bitcoin right now . Trading at 10,000 but if it ever gets mainstream, ever gets to the do congress and regulator says you know what, actually in the same way youre looking at libra as closely as you are, this is going to happen at the g7 meeting as well, do people say you know what, we cant bitcoin will live in the shadows but, boy, it wont live in the mainstream thats the question that i have and thats the question that bitcoin investors have and thats why the price of it has come down in the past literally 48 hours so the price has come down to roughly 10,000. I havent seen what it was trading at this morning. Just below that. But talking about something that was a joke ten years ago that people were giving away for free not a joke, but people were giving away for free is now trading at 10,000 you have 21 million coins we get into that but the essence of bitcoin is what libra and facebook and corporates are trying to mimic. So what i want to understand is the nature of libra, the nature of the technology. Not just the white paper, not just the idea. And the idea of killing off new iterations of what is mimicking bitcoin and blockchain technology, thats you know, you could kill off something thats not a true open distributed ledger but something that is closed in, that is basically a commodity or a security depending on how its going to be traded and utilized those are different elements so i dont think can i ask you a question on behalf of investors . I want to ask you a question on behalf of investors. I dont care what happens to bitcoin. It is not an investable item for me because i cant transfer money without being allied in some ways with drug traffickers or whatever it is, and its not regulated. Heres my problem. I need to move millions of dollars around the world, okay, and there are hundreds of thousands of people like me that are fiduciaries trying to invest for others okay i dont have a vehicle that i can do that with without a tremendous amount of friction. I have to pay banks transfer fees, i get tied up with regulators who dont let me moe move the money because theyre trying to figure out who are my customers. All the rest of that your task today along with the rest of your colleagues to find a solution for that i can use. I need to million a Million Dollars to mexico, to canada its a nightmare for me to do that right now youd make our economy much more efficient if you could get a libra like product thats regulated that lets me move the money around the world. Theres the real issue at play here. Financial inclusion for those on the margins are the transfer of money is exceedingly high. So you have an immigrant who on friday evening judiciously sends money back to wherever he grew up hes paying Western Union 7 to 10 to move that money libra is a very different mover in that space to reduce the cost of those low dollar remittances. The Larger Movement of money globally, this could be a solution to that because its exceedingly costly and the Swift Network thats being broadly used is a very expensive one. And Older Technology so theres huge opportunity for financial inclusion, for low dollar and extreme cost savings potentially for high dollar movements of cash. So those are just two examples of wonderful opportunities the conflicting issues in congress right now though with yesterday is they want this operation libra to know everything about their customer, but not do anything with that data which is interesting because in order to comply with any Money Laundering you need to know a lot and in order to have the safety in knowing that facebook wont mess around with your private data they need to know nothing. So this is a tough conflict to resolve. Congressman, thank you. Back get back to work well be watching everybody to distinguish themselves again today. But we appreciate you coming on here first and you know, i was just nodding for most of the stuff youre saying so you have that going for you. Thanks. Audience of one for me, joe. Coming up when we return, faang earnings watch the first of the big tech giants getting ready to report earnings, yep, netflix well talk about it right after the break. Ou run a business, that means a lot. We create Financing Options for your customers. To help them get the things they love instantly. Our data provides insights into what your shoppers have already bought. So you can offer them what they might consider buying next. Our financial and Tech Solutions are changing whats possible in all sorts of ways. So, how can we change whats possible for you . Coming up some breaking chick data well get the latest read on Housing Starts just moments away. High turnover reportedly taking place at one of wall ndreets most well known hedge fus. Well bring you the details on that story when squawk box comes right back twentyfour people came together to sign an agreement that created the stock exchange. Just the right elements coming together. It started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. It started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever. It started with the markets, bringing together steel and buildings and silicon and medicine and rockets. We believe the possibilities of life and investing are greater when we come together. Its why for eighty years weve connected ideas with technology, data with inspiration, investors with solutions. So that every day together, it all starts again. Welcome back to squawk box. Rick santelli here breaking news our june read on Housing Starts and permits were expecting these numbers to be somewhat in the 1. 26 million area, a little bit light 1. 25 million seasonally adjusted annualized units is the starts and that follows sequentially 1. 265 so we definitely dropped off a bit. And the last look was revised slightly downward. Slightly downward. So that will put this about what, close to down 1 lets look at permits in the future 1. 3 million expected 1. 22 million seasonably adjusted annualized unites. That sequentially follows 1. 299. Shy of 1. 3 thats down over 6 . So these numbers are definitely on the weak side and lets keep in mind that Interest Rates and the Housing Market at that time had moved down they have moved up just a little bit since. But im a little surprised that the numbers arent a bit more powerful preopening equities are lightly in the positive and Interest Rates theyre back down again a little bit from yesterdays level where we close to 213, 214. We had bund yields looking as if theyd stick closer to minus 20 now theyre headed closer to minus 30 and rates will dip back a bit. Becky, back to you. Thank you great to see you. You know, we are in the middle of earnings season and bank out america out with earnings this morning and we have been talking about the financials a lot this morning because of our guest host today, kevin oleary. Kevin, your comments to this point have been that you dont own bank stocks, you wouldnt. It becky, i have to make a decision every day to deploy capital. I screen for turn on assets, every Balance Sheet in the s p 500. Some of the weakest are financials and so i select other companies because im a believe their Balance Sheets determine investments pick a number of years. The financials as a group, pick any index, they have trailed the s p by a long, long way. The reason i bring this up is because your comments have gotten the attention of jamie dimen who is watching this morning. Tell your guest host that we have outperformed the index consistently for firemen years i think he means five years but it selfcorrected. Im a huge jamie dimon fan as a manager. Hes a great manager i think hes been forced to comply with a very onerous regulatory environment. He said as much he said he basically has said you dont fight city hall. Why did you settle because you cant win. Not happening. I think its to the its to the point that its stifling innovation if dimon had freedom to compete globally, we wouldnt be having a libra conversation right now hed probably lead the charge on that. By the way, jpmorgan is working on their own stable coins. Thats right. He would not get fried again in front of politicians leading the charge in that space theyre doing a lot of interesting things but my point is maybe his stock is the best of maybe maybe has the best, you know, value because of him. Bank of america outperform today. They have outperformed. But as a sector, you would have been well served not to own any of the stocks in the last few years and you would have youre saying given the tail winds. My point id love to debate dimon is simply this since dodd frank did the lobotomy to this sector it hasnt been anything more than a financial utility servicing an economy. It was different before that he overregulated it. I will never change my mind about that i dont care that he saved aig i wish it had gone bankrupt. Thats not the same he basically performed surgery to save something that wasnt broken is my point. Although look, i understand your broad swath looking at the industry there are a couple of stocks that have outperformed in the last three. Hes right. Im an indexer so i look sectors. I create indices and look at sectors and trends and this hasnt been a great sector hes been a great manager so hes absolutely right to push back but im glad i dont own this sector i can find Financial Services all over the place i can buy credit cards. If you can buy three sectors what would you buy i love the way that health care has been bashed up preelection and some of the best Balance Sheets out there. I look at j j, a Balance Sheet of glory. You dont think thats going to become a regulatory morass. Since back in clinton days he was saying ill Fix Health Care for you, elect me. You never change anything after afterwards its too big of a sector staying on dimons point, he makes a fair comment i think he is the best manager in an overregulated sector and you would have better off not to invest in sector over the last few years than any other sector. Hes learned to hold his tongue too look at what he did for all of us jpmorgan did for us during the financial crisis and what did they get for it . You know its like, thank you, sir, may i have another he knows that but hes learned you know, hes learned he basically says it. Hes an advocate for the american economy, you know, hes remember how frustrated he was when congress was shutting down and all that stuff . A lot of i it was shakedowns and where did that money go . To the victims no. It went into the black hole of the government. I dont have to i get to have an opinion as an investor and as an investor i look at returns in every sector. It is not my favorite sector for the reasons i have made clear. It got overregulated, barney frank is he made a mistake. Thats what i think. Oh. Yeah i think you well, will you come well get back barney back in here i think barney loves me a lot after today. No, i think he loves me now relative to you. By comparison netflix, the results come as more players have announced plans to jump into the streaming market so what can investors expect to hear from netflix today . Julia boorstin has a look. A post emmy look. Thats right. No question that the landscape when it comes to streaming is getting increasingly competitive. So the big question is how fast netflix can keep growing the Subscriber Base and how much it will have to spend on content to do so. The big number in focus subscribers. Theyre expected to forecast another 6. 3 million for the third quarter. Ceo Reed Hastings is sure to be pressed about where netflix will fit into this changing streaming landscape. How much the company will have to increase content spending how much the investment in originals is paying off and how much netflix could suffer from losing license content to disney, hbo max and nbcuniversal as they prepare to launch rival services Raymond James said competitive moats remain strong. We continue to believe that they understate the value of scale and investment in new originals. Originals continue to ramp, threat flick should continue to increase but Andy Hargraves rating netflix sector weight, we maintain the upside is likely to be limited which is likely to prevent material stock appreciation when it comes to the emmy nominations, netflix lost the throne to hbo which yesterday brought home 137 nominations that was 20 nominations more than netflix we have how they do in the actual ceremony. Back over to you, guys nominations meryl streep would have about 40 oscars well wait a big night. You love those award shows right . Sometimes depends. September 22nd. You know shark tank has three nominations this year. Very proud we have won four times already. They never pick like best actor or Something Like you dont get your own nomination, do you or cuban or something . I did win something im very proud of biggest fail on television. From where . International award 2 million voters and im hated everywhere around the world. In austria, i was big there. They hate me. They do i was on a train in switzerland doesnt matter whether a couple came over to me and said everybody in austria thinks youre a really mean guy i said, austria . Who knew that shark tank plays in austria. At least they spell your name right. Yeah, they call me mr. Wonderful with an accent. Thats right. Well look at the case for netflix. Sy know vince holds more than 16,000 shares a 5. 8 million position in netflix and also with his point of view, shark tank host, kevin oleary. Dan, lets start with you. Why dont you lay out the bull case for netflix. Well, i think the big bull case is what you talked about before sheer size right now, netflix as you have talked about has 150 million subscribers at the current rate of their ads which is roughly about 5 million per quarter. By 2020, looking at 250 million subscribers which is a behemoth when you compare it to the rivals disney, fox, probably 60 to 90 million. You have got 100 million prime users. We dont know how many on amazon watch the shows, so just from a size perspective, i think thats where netflix has a tremendous advantage over some of these other companies that are getting bogged in the streaming side. Kevin, your take . Heres what i think is happening in front of our eyes disney stock was dead money, im a shareholder, for five years, sitting and languishing and then iger gets his act together on streaming. He hasnt made a dime on it, but he gives us the road map as a result of map, to me, came out of the netflix stock which has been kind of dead since disney i own both the stocks so im watching a passion play roll out because heres what i think happens. Im not sure, nobody knows yet, but whats holding back netflix stock if i had both services, im cutting the cord, do i buy them both . Or do i buy disney because im a family and i pay for that first . Does it slow the rate by which its adopted to new users, starting in 24 months and the markets reflecting that in the concern and the fact that content is being pulled. The friends and all that and the fact that netflix doesnt make any money and disney does. Is there room for two winners in this or even more i guess that would be my question because i get your point entirely as somebody with kids, disney is going to definitely be in the list of things i pay for. Yeah. Im just concerned many other investors are like me saying when the world is now two behemoths does it slow the rates of adoption of the original player which is netflix . I dont think anybody else can do what disney is going to do. I know andrew for sure will buy that service, i will buy it because im a fan of disney content and my own show, shark tank will probably end up on there too. Im going to buy it but i have a different one for you. I imagine the next two years what the millennials are doing, which is turning on and off these services will become a much more mainstream idea. Meaning, someone will have an app, whether its a banking app or Something Else, you know what, im watching homeland on showtime so ill have it for the next month then netflix because i want to see this and oh, now, maybe ill keep disney all the time to baby sit the children or do Something Like that. But theres a lot of movement back and forth. I thought that and i tried something last year. I bought a giant screen tv for my my place in miami and i said to my wife i wont buy cable for this im going to do it with all the streaming services it a nightmare, it is virtually impossible you cant do it. I finally called up the provider and i said, please give me cable. I have to watch football i have people coming over. I cant get the game. For that purpose, yes one other question for dan, i have a personal view which is friends and the office and everything else, everyone has this view, this is terrible this stuff is leaving and we cite the numbers, the millions of hours that people are watching it all seems so fake to me because both of these shows have huge libraries and its just hours watched. But i dont think its whats keeping people attached to any of these services. Yeah. I would agree. I mean, that was a big news story last week, the loss of friends and what would be the impact of the office on netflix and i think the biggest thing that drives it and obviously just the continuation of adding more content we know that netflix has the largest amount of commitment to that, 15 to 20 billion. You were talking about disney and what theyre doing what the fox deal, theyre probably 4 to 4. 5 billion. Amazon is probably 6 to 6. 5 billion commitment to content. As long as theyre putting that kind of money into it and theyre able to keep extending the series, i think its more about the new shows coming out and people getting latched on to those. Im with you. Than hey i have to catch my friends that were popular during the 1990s. Thank you for joining us today. Thank you, becky. We dont talk enough about this, the cost for disney. I think a huge amount of people will use the service, but the cost of creating new content thats going to be real. Lets talk about the Asset Management because its losing some key players the wall street journal reported about 20 Portfolio Managers this is serious have now left the Hedge Fund Firm just this year with at least five jumping ship to rival citadel this includes those who had worked for cohen for more than a decade he opened. 72 last year after he managed the outside money. Joining us is the journalist who broke that story rachael levy, Hedge Fund Reporter what does this say about whats happening inside. 72 when you talk about the longer veteran managers who have been with steve cohen for a long time. Yeah, thank you for having me i think it shows that, you know, a lot of the longer tenured guys, mostly guys who are who have left, you know, the changing of the guard of sorts at the firm. And this is an unusual level of departures for point 72. What about the returns at the firm yeah. So the firm relaunched last year it was roughly flat for the year doing a little bit better this year up about 9 through the first half but still trailing citadel which is sort of the big rival here. Right so heres the real question, lets just put it out there, okay so you know talk about athletes, you say the ones that were winning were using steroids, then they stopped using steroids then they werent as good. So the question is when you look at the returns of this of this firm and whats happening inside this firm, do you say to yourself what was happening before the heyday of success was a function of insider trader or was a function of brilliance i dont thinks for me to decide, to say definitive right now. Rachael, i have a question for you. I like reading your work 2 and 20 as a model. 2 and 20 which is so popular for 40 years now, whats the destiny of this in the next five years i am never giving a manager 2 and 20 ever again. Thats never going to happen the returns have sucked and frankly it hasnt been hedging its been leveraged that provided their returns the sector is really hurting now for performance. What happens yeah. I get asked this a lot theres definitely a topic of discussion in the industry i think that listen, the managers that perform well will probably still charge high fees and make a lot of money for themselves and for their clients. But there are definitely a lot of funds that cannot command 2 and 20 i think thats been true for some time now. Okay. Well leave the conversation there. Rachael, great reporting thank you for calling in this morning. All righty. Thank you so much. Coming up an early look at Second Quarter earnings based on what we have seen from the bank so far stay tuned youre watching squawk box on cnbc ni the Market Making overaggressive assumptions about easing in 2019 this is solve it from jpmorgan Asset Management im here at the Nasdaq Market site in times square with the Global Market strategist at jpmorgan Asset Management. The markets are pricing in a fed rate cut, likely two more by the end of the year, a done deal i think the cut at the end of july is a done deal. I think markets would react poorly if that didnt come through. Three cuts this year, that seems a bit aggressive were much more in the one to two camp. But theyre being priced into the market this expected rate easing. So what can investors do to protect themselves should it not happen so i think you want to avoid those parts of the Capital Markets that have rallied th hardest in advance of fed easing thats things like utility, consumer staples, high quality fixed income we are much more focused on providing the investors a bit more income than the average security but not so much theyre overexposed to the move in the rates. Where else do you see the disconnect i think the Asset Allocation needs to change. The stocks and bonds arent going to do it for you going forward. You need to embrace real estate and infrastructure that only not provide yield but diversification as well. Thanks, david. Thanks for having me. For more expert analysis search jpmorgan solve it online. Welcome back some notable analyst calls this morning, levis after a blistering first few weeks, 17 bucks a share in march drifted lower, since then shares down 2 or so premarket. 35,000 shares of volume. And analysts at Goldman Sachs saying the stock is a sell rating, it was a neutral, target price to 19 from 21. They say valuations are elevated versus peers and they have concerns about stagnant growth, Profit Margins and other things. Shares of apple fractionally higher so far. Just around 50 or so thousand shares premarket volume. Target price increase by goldman as well to 187 from 171 partly because of the Broader Market trading at a higher multiple to earnings as well and well end it on shares of hersheys, which are up fractionally, very thin premarket volume upgrade by goldman as well to a neutral from prior sell. They think hershey will follow mars in raising prices on certain candy products and those shares higher premarket andrew as well. Thank you for that. Joining us now, black stone chief investment strategist j joe zai. I think well see year over year earnings flat to maybe slightly negative and thats on top of a First Quarter where we saw Earnings Growth negative on year over year basis i think that makes for a clef Challenging Market environment for the second half. All the data we have seen on the consumer suggests that they are pretty confident, very strong jobs market will help the consumer tremendously. Not surprised by the consumer, but overall you have tough comps when it comes to earni iearnings you have the strong dollar and the Second Quarter, the dollar is relatively strong. Thats a pretty big head wind. So all and all where you see global weakness, some economic slowdown, you see some other factors that are suggesting that were in a late cycle pause, and you got a market now that is basically priced for perfection. Not even thinking about earnings all the markets youre still if you were advising jay powell now, you still think things are screwed up enough i know what President Trump wants, you would lower Interest Rates no, iwould not. You would not i dont think the fed should be cutting here. I dont think we have a growth problem. We have a slowdown do we need an insurance cut when the market is up 20 year to date and we have seen credit spreads narrow i dont think thats the time. But if he does and the expectation is he will yeah. Right thats going to do what or just so baked into it is totally baked in. Normally the relationship between the market and the fed is such that in the six months before a fed cut cycle, normally equities are weak and credit spreads are widening out after the fed cut, thats when you see risk assets take off this time it was completely reversed we had credit spreads narrow and we have a 20 plus rally on the s p 500. So this time the market chasing the fed saying you got to cut, you got to cut, you got to cut conditions arent nearly that weak retail Sales Numbers were strong too core cpi was a little higher than people thought. There is not necessarily the inflation problem when you look at core cpi, we see housing costs go up. Jump into this. We have been having a debate all morning and jamie dimon was watching the program and sent a note in as well, based on mr. Wonderfuls comment he would not own the Banking Sector jpmorgan outperformed this what would you do . How to ydo you think of financis you get a pullback, markets are trading off liquidity, not fundamentals, i do think we see volatility, i think we see a pullback, in the pullback, i would buy financials, i would buy cyclicals. The important thing here to remember is were not near the end of the economic cycle. This is not the beginning of the end for this expansion were not no. Were already in the 12th inning. It is the 12th inning i look at this as the same as my third graders baseball, which is really long innings, youre pitching 36 consecutive balls. Thats what 9yearolds do these last couple of innings could go a long time because if you think about what drives a recession in the United States, there is really only two things that do it number one, excess of some kind, whether it be businesses, business over investment or number two, wealth destruction, when households see the value of their homes drop or savings wiped out because of a big bear market, those are things that cause recessions, were not anywhere near there. Not everyone thought we were in the ninth inning. I know. Not everyone thought that you say were in the 14th inning i remember the s p 500 is not the domestic economy it is only 50 of the domestic economy. The rest is international. The domestic economy i think is going to surprise to the upside, thats my take thats my little private company index. The s p 50 from International Just drumming up private equity business for the new taskmaster used to be bullish all the time. Now it is all the liquidity and no fundamentals. Show me year over year positive Earnings Growth and ill show you a bullish story. How tough the comps are we have some Charter Financial analysts here. Are you a Charter Financial analyst . Lets get somebody from over here who might know something. Why were talking to you, i have no idea. There they are Charter Financial analyst. They know what comps look like. They know what comps look like. They dont look good. You have a view on domestic midcap. We have to go to cramer immediately. Theyre in the midst of a brutal earnings season. Good it see you, joe, thanks. To cramer down at the new york stock exchange. Lets get to cramer down at the new york stock exchange. Hi, jim. How are you . What do you think of banks, what do you think of bank america, what do you think of the markets . Bank of america is making more money making more money, Top Five Company profit in the world, to me thats not so bad the last gentleman you had on, i thought it was quizical, earnings going down bad, powell should do nothing. To me, powell wants to maintain earpin earnings momentum. You cant have it both ways, one reason why the tape is so buoyant. Every time i hear mr. Wonderful, im reminded there is good occurring. There is good that is occurring when the fed realizes it made a mistake, i cant go against the market he made a lot of solid negative points that make it so that powell, if hes watching, says, hey, i got to cut, im sorry right you look at the yield curve, where rates really are and theyre 50 base points too high. Doesnt matter anyway, thank you, jim we got just a couple of minutes. Kevin, thank you for being here today. Re has been wonderful having you thank you well see you tomorrow. Right now, time for squawk on the street. Pnc bank has technology to help make banking easier, like. Pnc easy lock, so you can easily lock your credit card when its maximum limit differs from its vertical limit. And clover flex, for when you need to take credit cards when no one carries cash. Or requesting a call to help get a new credit card one that hasnt followed the family goldfish. Pnc make today the day. Prpharmacist recommendedne memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Show me what you got time to shine good wednesday morning welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. Another morning of minimal premarket volatility as earnings roll on with b of a, csx, goldman cut league tating retai sell yields do drop as Housing Starts fall for a second month. Road map begins with big