Transcripts For CNBC Squawk Alley 20170629

Delivery service blue apron going pub tlolic today. We talked about the ipo and the future of Online Grocery people care about quality thats why, quite frankly, Online Grocery as a share of offline grocery is a challenging thing. There have been tons of players trying to bring Online Grocery, you know, penetration up historically that hasnt been successful quality is so important. And because we run this virtualicly integrated supply train and involved agriculturally and manage our own Food Manufacturing centers and Distribution Network is one thing that allows us to offer Higher Quality food at better prices and grow the overall online share joining us this morning, good water capital cofounder eric kim as well as ydavid seeberg g to see you both. David, we know the challenges that theyre coming to market with not just the revised pricing more aggressive and also the idea they somehow got amazon a couple fridays ago how do they deal with that they got amazon look, its all about getting to scale n my opinion, i see challenges for them getting to scale. I think the dominant players in the space are going to realize the opportunity here and jump in and be able to take advantage of it so theyre spending a tremendous amount of money now to acquire customers. They need to get the scale very, very quickly thats what this model is predicated on. Its really that simple. I look at whole foods. The acquisition by amazon and whole foods, amazing acquisition. I mean essentially they can come in and compete in the space like kroger is going to as well, offer a very high quality product at a discounted value for what theyre selling it for. And just completely take over this particular part of the industry so i look at it and say i really question if they can get there its only going to be a matter of time before we can tell and their success is predicated on scale eric, i wonder what you would even define as scale for a company like blue april ron. What i mean fwha is when you look at the business and exactly what is required for them to execute, its not particularly virtual, right they have relationship with farms. Theyre sourcing produce, theyre putting it in box anes d delivering it. Its kind of after a certain number its free money so how you would think about the Business Dynamics here yeah. I think that its helpful comparison is blue apron or E Commerce Companies or the snapchators facebooks of the world. E Commerce Companies like blue apron are selling wigets how profitable is each sale youre doing there is a lot of hype around blue apron but as just mentioned, its about how do you get to scale and scale efficiently . They went from a positive operating profit of 3 million in q1 2016 to a negative profit of 52 million in the same quarter this year in 2017. Now a tloost is driven by the fact that it grew marketing expenses 138 but revenue only grew 42 in that same period so in this very competitive dynamic, now with amazon and whole foods coming in, its really about getting to scale in not a Virtual World but through physical goods that they have to package up they have to make profitable not just on the first purchase from a gross margin perspective but over six months they have to pay back the marketing spent and make this a lifetime value, positive customer over that period as well yeah. We asked eric whether or not there was a sense of urgency not just because of amazon but some of the other competitors if the space, companies that are not public yet like sun basket s consider y. They went so aggressive on the pricing to get this thing to market do you think is the dynamic where youre driving and you see a yellow light and you have to gun it to get through the intersection i think theyre gunning it here theres a couple reasons why as mentioned, its a 1. 3 trillion market only 1 is online right now. Of that only two billion is for Meal Kit Delivery at this point. So its very relatively naysent market the reason theyre going public is so they can get their story out. There they have one million customers. You have to compare that to amazon that on prime alone they have 80 million customers plus or minus it hasnt been report the exactly by the company yet our calculations are that amazon prime is about 80 million. They need to make this a mass market phenomenon. I think it really does come back to are they able to zmal are they able to retain customersen that ipo really is fueling the marketing costs. If they dont go public, theyll run out of money they really had to raise this money to continue to support the company. The cash flow has been negative for the past couple years. So its going to be a couple more years until they turn a profit so they really needed to go public at this point david, whats your read on this deal in terms of what it says about investors appetite for startups, for ipo ss . Theres a lot of price discipline on the low side so what do you think it seays fo the market as a whole . Look, i think there is a lot of skepticism especially on the Technology Side on where these names are going to come public you see a lot of the private transactions look at uber as an example and the price of lyft accelerating uber coming in based on the challenges theyre facing from a manage ment perspective. There are a lot of questions around the valuations of the private companies. Theres a lot of unknown variables. In this particular instance, i really say scale is important. And price obviously is super important. I look at blue apron and say theyre doing a lot of the leg work getting visibility out there. This ipo obviously super important to get visibility out there amazon, whole foods, they come in and eat their lunch in a period of time and theyre going to benefit from this increased visibility in the sort of packaging space and i think coming in and just take over. The dominant players win in this case i dont think a blue apron will be super successful once they really start to get the amazons of the world get involved. If thats true, eric, then who stands a chance, really . When you talk about raising 300 million is great obviously we know its a small amount compared to amazons war chest. Who can build scale to the degree david is suggesting is necessary . Well, its funny. Or somewhat eye ronnic that Companies Like blue apron are probably inspired by amazons scam tom get into e commerce, that they saw lots of offline sales. The 1 1. 3 trillion of offline sales. If you fast forward today versus three years ago, four years ago, five years ago when the company started, now theyre not just competing against off line players, its actually competing against very example amazon that probably inspired them to get into ecommerce to begin with. Theyre still with even with this lower pricing, theyre strayeding at a huge premium to grocers, Grocery Companies right now trade about 0. 7 times 2017 sales. Blue apron at the new pricing will be dhauouble. That ecommerce players trade at three to five times. I think they have a distinct advantage versus the traditional grocers. I think the ones the company that is going to give, you know, amazon a run for its money are actually the walmarts or the costcos or some of the more traditional offline players with large brickandmortar scale that then can use the omni channel approach to compete against amazon and use some of the technology enable ment that theyre seeing blue apron happen i think sets blue apron off as a potential acquisition candidate for the off line players that want to get to scale and compete with amazon. The battle of giants continues. Godzilla versus mothra well see where it goes from here good to see you both eric and david. Thanks so much. We want to get a check of the mashlg markets. The nasdaq giving back gains from yesterday you see the tech stocks down 1 . The nasdaq as a whole down more than 1 . Bank supz better than 2 the dow is down 56. In other tech news, its been ten years since the iphone made the debut. Shares of apple up more than 700 lets bring in john fort who is live at the aspen ideas festival and joined by a special guest. Thank you walter isaacson, president of the Aspen Institute joins me here the ideas festival has been going on for a couple days now a big theme and topic is article efficient Artificial Intelligence whether youre talking to siri, an Android Phone and talking to google you wrote the biography of steve jobs did he foresee this . One of the interesting things is ten years ago when he does the iphone, he had first resisted the notion of apps from third parties or outside companies being put on and it was around i think middle of 2008 that he finally gets pushed because somebody steve was a very stubborn person but he listened. Everyone around is saying you have to allow apps onest major revolutions wheef is this notion that an uber or an air b b or anybody can put an app or an iphone and there have been two things driving. That one is Artificial Intelligence where sort of the apple learns what you want or talk to it via siri or amazon echo the other sthing this notion that we can connect peer to peer as opposed to having to go through a big corporation. Thats what uber is all b i think the iphone in its very first year of having third party apps, meaning apps other people could put in, i think its a 2 billion kmechlt you disrupted how cities do transportation and how we do hotels, how we do so many things. Simply because we have an iphone it has a gps there is cloud in which people can store consumer data. And theres sort of an intelligence in the machine. We talk to peter orszag, former cbo director earlier this morning. There is also the chance that this phone could disrupt health care take a listen. What this object and things like it has done is moved us into a much more mobile distributed i. T. System including in health care, for example. So you can now get much more Health Information on your phone and it can also help your doctor interpret how youre doing from the Health Perspective compared to a decade ago. There is more Health Information presumably on your phone today than was in your medical record 10 or 15 years ago were only at the forefront of what will happen as these technologies evolve further. A big debate here is will thb a good thing or a bad thing . This Artificial Intelligence surge into society getting any closer to answer heres with people talking big ideas . Couple things talk about what peter just said, you know, i think health care has not yet been distributed as much as it should be health care and kindergarten through 12th grade education are the two industries that need much more disruption i have my auctioner, the Hospital System in new orleans that has all of my dat yachlt and it starting to work. But its still very hard for me to have medical records that transer if i think you have a privacy issue. But for me that, is overblown. I think we really do need to be able to share our medical data around and if i had a system that would say count me in, id say, yeah, count me in take my data and use it to help other people figure out what works and what doesnt as for the bigger revolution as to whether Artificial Intelligence will cost jobs or create jobs, im in the optimist camp were sitting in colorado. The governor just spoke, talked about the 2. 3 unemployment rate, the lowest of any state in 40 years thats because they have a surge in technology here so even though ever since they created the loom in england, people thought technology would put us out of work, the data doesnt show that. Do we need guardrails on this highway though when were talking about moving quickly in this direction of Artificial Intelligence youre optimistic. I wonder, are there certain protections that need to be put into place do we need certain canaries in the coal mine to triger in case things are going in the wrong direction . Yeah. I do think though that its dangerous to put too many regulations and guardrails and i think you need have a lot of transparency one thing i would do if i could wave a magic wand, and we talked about it with this is on cybersecurity and on anonymity online with howard schrow, one of the inventors of the internet theres a problem inherent in the network. You know where every packet is supposed to go you dont know where it came from you had a Ransomware Attack its hard to know where that came from. I think if you have a secure internet, we have to get over some of the privacy concerns and say people who want to should be able to opt in to an awe thenlt indicated secure internet where every package you send is encode wtd origin, not just the destination. The pc had the rise in the late 80s. The smart phone didnt really rise until the mid 2000s are we expecting another smart phone like revolution too soon or might it be a decade and a half from now before we see it we talk about this all the time im often on the show saying whats the next big thing . And that is google glass or the watch. Its not even quite, you know, hello alexa, put on my play list im in the City Planning Commission in new orleans. It will change how you design cities we havent in ten years almost to the month since the iphone had anything that totally transformed our lives. Its ten years to the day january 29th wow. 2007. I was there you were probably there thank you for joining us, walter, as always. Mike, back to you. All right, john that can go a little while longer before my life is transformed. When we return, well bring you the latest from the global sib area tack as the virus continues to spread to 60 countries. First, take a look at rite aid wall greens cancelling the floon bite company, opting instoed buy nearly half of Rite Aid Stores you see rite aid there down nearly 25 wall greens up marginally. People thought this deal was a needed rescue of rite aids business mo ua aeyrit te this. Companies around the world continue to strug frl this weeks Ransomware Attack which spread to 65 countries joining us right now, Charles Carmichael with a cybersecurity Securities Group and ed strauss, founder of the Cybersecurity Firm strauss freeberg. Gentlemen, thank you for being here ed, what do we know based on what we can tell about the motivation of this attack . It is about financial motives . It is about disruption you know, thats one of the key questions. Even though there is a financial kpoen nent terms of payload looking for r looking ransomware that, may not have been the main purpose if you look at the geographic impact where they hit and start to reverse engineer the code, it looks like the disruption payload was more significant than the ransomware payload associated it with so that tells us the objective might have been different than financial. Any guesses just watch the world burn or disrupt logisticors what one thing you have to be careful of it is may nobt one thing. These are sophisticated adversaries. So there can be a kpoen hasnt it makes it look like randomware so you think of it that way. Thats highly evolved at this point . It evolved to that point, whether it happened here requires more analysis stepping back and looking at the features we just discussed will help us more intel generally jenltly determine what might be. That includes input from Law Enforcement and intelligence communities. Clarlz dharles do, you agree that assessment . I do agree with ed. What is clear is were seeing what appears to be the first wide scale attack against the economy, the ukraine it was fairly targetted in the sense that a tax software organization, theyre update process was poisoned most organization thats do business in ukraine were impact bid this so from my perspective and from my perspective, it appears to be a disruptive attack against organizations that do business in the ukraine and something thats really trying to impact the way of life out there. And what is that mean for how companies should respond i mean whether they do so in a one off basis or try to get the authorities involved. There is a combination of trying to get the authorities involved the reality is there is a number of organization thats were impacted in the ukraine as well as outside the ukraine and europe and the United States that were likely impacted from a Collateral Damage perspective and what theyre trying to do right now is trying to get back online so they can tint Business Operations so i think those victims need a really focus on recovery i think nonvictims really need to focus on preventing Something Like this from happening to them and do you think any of this i mean not just this one but the past few that we got inhibit the migration to thing os online, stuff that hasnt already been done or could be done in the future i dont think it will inhibit it i think it will cause them to be more careful looking at a more wholistic approach and understanding that you cant just tell the i. T. Department to make you safe because its impossible. They have a big part in preventing anybody can be hurt. Even if you have an interdependcy on another company and theyre victimized and you depend on them, now the risk profile has to be sophisticated enough and the analysis sophisticated enough to try to manage that kind of risk the new definition of Counter Party risk. Exactly charles, you know, whenever we get one of outbreaks, we hear about best practices, what companies should have been doing all along and raising this stuff to a board level s that all you can really do and basically play defense in a very generalized way . I look at i dont think were doing enough from a defensive perspective. I think, you know, a lot of people that hear about the types of incidents and for the period in time in which it makes the news, people talk about it they try to feel like theyre doing something about it but i really do believe there say lot more we can do from a preventive perspective an outbreak like this could have been mitigated through a number of different techniques and could have definitely reduced the impact to the organizations that had to deal with this all right Charles Carmichael and ed strose, thank you for your time. Well send it out to john at the Aspen Institute event in aspen. Hell talk with the all state ceo tom wilson first, we are continuing to watch blue apron this morning. Goes public earlier at post eight. Priced around 10 currently 10. 60 more squawk alley continues. Good morning, everyone heres your cnn nbc news update. President trump ridiculing the looks and temperment of msnbcs mika he called her crazy, criticized the show for poor ratings, and said she was bleeding badly from a face lift when the two tried to meet with him at mara lag yoe. The tweets received large con temperature nation from both sifdz the aisle. Msnbc said it is a sad day for america when the president spends his time bullying, lying, and spewing petty personal attacks instead of doing his job. Rupert murdochs attempt to land the major media was a set back 21st century foxs 15 billion takeover of sky needed to be scrutinized by competition authorities. Now that could mean a delay that would force fox to pay a special dividend for failing to get the deal done on time. And a new report from blue cross and blue shield shows a 65 increase in doctor prescribed opioids between 2010 and 2016 and medical claims for opioid abuse spiked 500 during that time period. Youre up to date. Thats the cnbc news update this hour back downtown to you, carl sue, thank you. Get the european close all right so european stocks extending the daily losing streak to three now on track for the worst day in nine months. Sectors most sensitive to higher Interest Rates are taking a hit on hawkish comments from central bankers. Now the euro jumping you can see the highest levels of the year surpassing 1. 14 that surge began tuesday when the ecb president s remarks on inflation were interpreted as opening the door to scaling back stimulus today you also got some data showing eurozone economic sentment rise together highest level in almost a decade so some movement there taking a look at the european bond yield which has been surging as of late, the german ten year, the german again, german ten year, italian ten year can you see there moving in trading to day some of europes biggest banks are among the bright spots in reaction to the u. S. Fed clearing capital return plans for our big banks here hsbc getting an extra boost after being upgraded by morgue an stanley to an overweight rating and we finish here with h m. The fashion retailer getting a lift after Second Quarter net profits beat expectations. But h m also saying major markets such as the u. S. , china, and switzerland remain challenging. The stock down 17 so far this year so now lets send it back down to aspen for john fort back over to you thank you, dom. Live here at the aspen ideas festival joining me now the chairman of the u. S. Chamber of commerce and all state ceo tom wilson tom, thank you for joining us. Good morning, john. So two days ago the chamber put out a statement in favor of the senate bill on health care yep. Why well, first, what are businesses objectiveson health care s care the first and most important is we provide insurance to 177 million americans, 60 of americans get their insurance from our businesses. We have to continue to do. That as it relates to the government provided portion of that, then there are a couple things happen. The Affordable Care act is not sustainable today. It needs to be revised i think everybody agrees with. That we do think as well there needs to be a good transition plan so, you know, were where we are. We want to go some place else. This plan has about 112 billion of transition money. Its over like 2024. I dont know whether that is the right people or the right amount of money the dwlad there is a transition plan in there is a good thing. The other thing we like is there is more choice in less taxes in this so this gives people the choice to choose whether they want to have a mandate goes away and lowers taxes and given that americans spend onethird of the working lives paying taxes like we think anything less is good for the customers, good for the employees, so we like that part of it. The issue really is the 15 million under the cbo thing will not have insurance next year and what i dont know is apparently a large number of those are because they choose not to do it because the mandate goes away. So we need to sort out what that number is, what really happens so if its 12 million of the 15 million, just choose not to buy it anymore because the governments not making them then were talking about a three million person issue. Does it matter . Because the whole argument is there should be incentives that make people want to get it so does it mat wler theyre choosing not to versus unable to as long as theyre not in the system thats a problem. Isnt it well, its a problem if youre in the system and you cant afford your cost for your health care. Right. If youre a millennial and youre 26 years old and you want the extra 200 a month to do Something Else and you are willing to take the risk on your health because youre in good health, then maybe thats a problem for them we believe people should have choice so i think we need to sort out how much impact does the reduction of elimination of the mandate really have on the number and the cbo should give us that number you famously as ceo of all state raised the minimum wage to 15 an hour which a lot of folks across the country, seattle most famously, have also push ford 15 minimum an hour minimum wage at the same time, theres this concern thats being talked about here at the ideas festival that Artificial Intelligence is going to come in and knock out the low wage worker. Are you concerned about that because if the minimum wage is 15 an hour, wont it be easier for ai to cost those people out . First i think we went to 15 an hour because we believe that the if you pay the right amount of money youll get the right people were in the Service Business. Good people give good service. Our turnover has gone way down we had too high a turnover it wasnt that we needed to pay get the right people working for us because if youre paying people 12 an hour and they really want to make or should pay 14, they dont stay with you. We change that to work for us. As it relates to Artificial Intelligence, i think youre right. I think it is headed our way the pace of change particularly in the Service Business is going to be faster than it was in other industries and we need to get on it so our view is that the purpose of Business Needs to be expanded so weve been arguing the last fall i wrote stuff for the washington post. That was pretty controversial. You were arguing that businesses dont just exist to make a profit a lot of people disagreed with you. Milton freeman z when you disagree with a guy that won a pulitzer prize, you get there. But i think society expects businesses to create jobs. And our job is to create dignity through work and so i think businesses we need to embrace this because this is a great opportunity in Artificial Intelligence. Im not looking at it as a negative but at the same time, our job is to help people find more jobs. We actually just created, were in the proservice creating a group that works on job transition and creation. And so we can help our employees figure out how they cope with. This weve always done that so if you work for us, we used to do tapes and stuff. So youre helping them to do stuff that software cant do were helping them build their skills somebody thohas to help our employees, people in america cope with Artificial Intelligence. What skills we will to let some claim professionals go because we now use digitization to resolve cost on cars. Its easier. We dont have to pay somebody out to look at your car anymore. And one of the people said to me, you know, i wish i got on this sooner because i would like to work in cybersecurity im like were short 120 people right now in cybersecurity had we gotten ourselves organized, and i hold myself accountable for this three years ago, maybe he would have been in cybersecurity. You mentioned cybersecurity is the chamber active enough specific enough about what businesses need to do to prevent losing data in some of the types of attacks that weve seen over the past few weeks what are you dmog that arena the chamber is trying to bring people together. The chamber cant make companies do anything. The chamber is doing work. A number of the Financial Services organizations are bringing people to work. Companies like ours and others, were working with the government to try to make sure were aware of these things. That said, none of us are safe and i talked to one of the admirals who said youre either a company thats been hacked and now it or youve been hacked and you dont know it. So its an enormous thing. We need to do it to protect our country. Because its cheaper and more effective than conventional warfare. It will come our way tell me about your confidence that the agenda of this congress and this president ial administration particularly when it comes to tax reform is going to get done in a foreseeable amount of time i dont know whether youre time horizon now is end of the year, middle of next year, when do you feel confident, if you feel confident that tax reform will get done first, let me just start with do we need tax reform . And the answer is yes. Right. Weve been its like built up wax on a table. You keep putting more and more wax, eventually you have to take the wax off. We have to take the wax off. I think we need to one of our philosophies should be not to try to drive the economy through tax policy you know, we know that centralize Economy Economic plan doesnt work. Look at rush yashgs ussr we try to use our tax code to do this we need to clean up that. Confidence the ability to execute on is not so sure on one you know well, better than i, the disparity, lack of respect going on in washington and in the Business Community, its complicated too there are people who like the Municipal Bond deduction like financial sstss get who dont care so much about the r d tax credit right. People care a lot about the so what we need to do is Business Community and we want to in the chamber is trying to could dois lets bring everybody together tell us what you really are to have for your business to be solid. Lets work on a transition plan. But lets all not get hung up on keeping my last five cents that id rather not give back to the general pool so that we can get a lower rate. I do read into that that your confidence and congressional execution is trending down not up based on what weve seen thus far . It will be real hard to be positive about it since they had trouble getting things done. That said, you know, i think the good news is with all the trouble going on, you start to see signs of people talking about rallying together. You talk about individual centers, individual congress people, there seems to be a slight crack in the dike what i would like to see them do is rather than avoid the conversation and acquiesce to somebody else and assume theyre wrong, they need to listen to each other they need to understand each other. Most importantly, they should respect each other. Timeless advice tom wilson, head of the u. S. Chamber of commerce and ceo of all state. Thank you so much for joining us thank you. Carl . All right thank you very much, john fort watching the markets here. Dow is down 106. Very quickly, the worst day for the dow since may. Meanwhile, chicago mayor make Something Interesting comments on elan musk and transportation in his city. We have more from chicago. Carl this is an interesting storey a couple days ago the Chicago Tribune reported that Rahm Emanuels administration is having discussion with elan musks Boring Company, the Tunnel Company he believes he can bore tunnels quicker, more efficiently and would like to talk with the it is yif los angeles, perhaps chicago, other cities and at the time a lot of people sthaed is interesting. Well, to day our lizly picker sitting down and talking with rahm emanuel for a story shes having tomorrow on the finances for the state of illinois. Also asked him about the conversations between emanuels staff and elan musks Boring Company. Heres what the mayor had to say. I read about elan musk who i know from my white house days, et cetera, and other type of interactions talked about a kind of a deep tunnel for an express rail service. So i sent my i talked to people around him. I sent my they were accepted and sent my team out there to a group of people that work in the transportation, Public Transportation technology. They came back impressed we are working now on a date by the next three or four weeks weve got some dates were going to narrow down and come look at what we here in the city of chicago has. So there you have it. The next three or four weeks some representatives from the Boring Company will come here to chicago and take a look at whether or not there is fizz built fees built between building a tunnel for high speed rail i find it interesting that rahm emanuel says, look this was fairly impressive with what were seeing in los angeles with the Boring Company we have not seen much more than pictures and a few tweets from elan musk. Otherwise, its all been sort of, hey this is what we would like to do with very little actual proof of what can be perhaps that will be changing here in the city of chicago. Yeah. Might be easier for you to get to ohare in the coming years. Please please when we come back, well go to brooklyn and get the latest the Martin Shkrelli trial. Financials trying to prop up the index. But a lot of other things especially tech have gone red. I cant wrap my arms around Boring Company coming to chicago. Listen, considering our financial straits, they should try to dig under some banks. Thats what they ought to do were going to talk about how Interest Rates moved up rather dramatically this week the sovereign vintage especially what it may mean for the future of rates hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade on the Halftime Report, financials are on fire those stocks higher. The banks getsing green light from the fed to return cash to shareholders our traders will give you the best bets in the sector. Goldman sachss commodity chief has a big call on oil. He said we may be finally near a bottom and your stock call of the day, the second best performing stock in the s p 500 this year, slapped with a sell. All that and much more when the Halftime Report gets under way at the top of the hour brian, thank you very much. A lot of stuff for you to kick around on the desk you see the markets mostly red it is tech stocks, especially large cap stocks leading the way down financials are up in any pronounced way it does seem as if the upside in yields and a little bit of a profit taking effect is corrective action in the big cap text is animating things you see small caps outperforming large caps there you see the nasdaq down another 1. 5 basically yesterdays bounce more or less undone in todays morning action lets get over to Rick Santelli in chicago for the santelli exchange. Thank you what an interesting week you heard all the commentary regarding Interest Rates as im speaking hopefully youre seeing a chart of our ten year notes. Because over the last couple of days if not the last couple of months weve talked about how right before the friday before to be precise, the fourth of november, until a little bit after the election the 14th of november how much so many markets moved including Interest Rates. Basically from the 170s into the 228 to 235 camp. Why is that important . Because the first impulse if you look at the move and we described this many ways, the first move impulse is to 226 as can you see, 227 there for a pivot on that chart, you see 229. A settlement bf 227 is significant. Also while im speaking, you want you to look at one week charts of some of the biggest sovereigns around the globe whether it is boonz up 20 plus basis points on the week ten year up is 15 basis points on the week. But youll see the same in france, italy, spain so what does it mean well, we all know as me as a commentator, investors out there watching, all the managers that at some point the benefactor of the markets is going to have to exit the crisis type programs that were put forth. How is it going to play out . I dont know we still really dont know but mario did open it up what i would suggest is its not going to be a linear scenario. We now as observers of the market should say check to the highest central banker because watching what is going on, its going to be interesting over the next several days and weeks to listen to the feedback of central bankers. Thats going to be key listen, speaking of fed, janet yellen a couple days ago made a comment. I dont mean to pick on her. Shes pretty confident were not going to see another crisis in our lifetime and we all certainly hope shes correct. But anybody who is a fan of ludwig and the us aindustryian school of economics may go to the wire because their answer to that was the following and ill read it to you before i tell who you said i had stability of the economy is greater than it has ever been in our history. We really are in remarkable shape. The United States is at the peak of its foremanance and history there is never a time in the United States when you had this level of prosperity and the way it spread over the last 10 or 15 years is unprecedented i certainly do give credit to Allen Greenspan for. That i think Monetary Policy is responsible for it that is late december of 2005 by the conservative god Milton Friedman goes to show you sometime even the legends dont quite get it right. Mike, back you to. No, they dont. Rick, thank you very much. And as we head to a break, take a look at some of the major financial stocks surging this morning. Bucking the market trend round two of the Bank Stress Test seeing everyone pass with no capital plans objected to for the first time ever. Be sure to stick around for closing bell later on today when james gorman will join us teiehe cnbc exclusive inrvw. More squawk alley right after this 20th accept try fox. Thanks, carl. We hit this around 9 30. Real briefly i think this requires a little bit more explanation this morning because on the face of it it may not have looked as a positive for 21st century fox to have a deal to acquire sky deal, but it does appear to be helping it move closer towards that goal it could still take a while. Lets tell you what the news was. The secretary of state for cultural sport said she is, quote, minded to refer the fox offer for sky to the competition and markets authority. Now if that occurs, that could require another long review for the deal, but most importantly perhaps, the secretary of state also said she considers there are no concerns about broadcasting standards which would justify a reference to the cma. Its on other areas that she might want to reference it that means that fit and proper tests that had been a kerp for sometime for fox as to whether they would pass it, thats no longer an issue. They pass, thats not an issue off com, their version of the fcc signs that what they are faced with is the prospect that they havent made enough offerings to the regulatory authorities in the u. K. In terms of preserving the independence of sky news theyve already said they wanted to have an independent sky news Editorial Board with a majority of independent members who would appoint sky news those undertakings dont appear to be enough over the next ten days twenty First Century fox will make more undertakings focused on that area of concern. Perhaps they can do enough, thats ways to support cma so it doesnt get referred and they can close the deal more quickly. If they dont do that, then youve got a lengthy review that takes place from this new authority. Not new, excuse me, the Competition Markets Authority which means the deal may not close until well, it could be as long as a year from now guys thaerks kind of where things stand as you see, being viewed as a positive overall by the marketplace because that fit and proper test is no longer a concern. It seems to be much more one of editorial independence of sky news and timing for 21st century fox. A lot of media mna still in the wings. Well get some good stuff im hoping, carl. When we come back it is the ten Year Anniversary of the apple iphone well take you through the highs and lows and look back on the industry that changed the industry a t wld ckn mitendheor minutes old. A babys skin is never more delicate. What do hospitals use to wash and protect it . Johnsons® the number 1 choices in hospitals. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. It is the ten Year Anniversary of the apple iphone. Josh lip ton is out there in San Francisco with more. Hey, josh. Reporter carl, ten years ago steve jobs first unveiled the iphone an ipod a phone. And an internet communicator an ipod, a phone, are you getting it take a look at this original press release from apple announcing that the iphone was going on sale on june 29th, 2007 the device cost 499 and would be available at apples 164 stores ron johnson, who was then apples retail chief, called the iphone a revolutionary new product, but even apples executives could never have foreseen just how really transformative this product would become apple has now sold more than one billion iphones generating 734 billion of revenue the iphone fundamentally changed apple as a business. The mac and ipod accounted for 78 of apples total revenue in 2006 today it is the iphone that dominates apples product line representing 63 of total sales. Apples market cap sits at 750 billion. That is roughly ten times what it was at the iphone launch. The anniversary comes at a critical time for apple with iphone sales experiencing coming off their first year of decline. Guys, back to you. Fascinating look at industry that changed a lot and continues to change, josh. Appreciate that. Josh lip ton out west. We started the morning, mike, talking about apple and valuation and the degree to which the market still expects it to come up whether its an iphone or Something Else entirely. Yeah. Obviously unfair on some level but also in a weird way kind of a back door honor. I do think this year the market started to come on board with this idea that even if it doesnt create something brand new every few years that we never expected before, theres enough of a single business and you can respect the profitability of the ecosystem. Teklehaimanot doing the market any favors. No, the big cap techs are the big thing moving to the chief down side. Not enough of the money making thats why you have the index down. Watch the afternoon session and liquidity. Lets get to Brian Sullivan and the half and thank you, carl and mike and welcome to the Halftime Report everybody. I am Brian Sullivan. Scott wapner has the day off a big day for the banks. They are getting the green light to increase dividend payouts and share buy backs. Joining us for the hour, john najarian, josh brown who by the way was named number one most influential advisor by investopedia. Thank you to