Transcripts For CNBC Squawk Alley 20170711

And we also want to welcome our guests for this hour joining us this morning from londons Nyu Stern School of business professor Scott Galloway and from one markets, cofounder Kate Mitchell were watching shares of amazon. 14 hours into prime day. 14 hours into prime day. The company is saying the echo is the best per foming bestselling item for the day. Marked down by 50 its not just amazon were seeing deals across ebay and best buy mark things like ipads, lap tops, smart watches down by 47 . Lost the script. There kate, when it comes to amazon, is there a point at which the sort of dominance of u. S. Retail sales and disruption of the brickandmortar Retail Business stalls out . Well, its hard to see in a day like today i mean, these guys continue to impress me and theyre using prime day which is the day that they for prime users only have what are like black friday deals available on all kind of products and greatly expanded the number of products this year. And on top of it, you can only get them if youre prime ghaes . Were all getting everyone is getting signed up. The app is trending high on the app store. It always peaks a few days before a day like today. And again people all signed up ready to go in advance of back to school and christmas sales. It is hard to be a brickandmortar retail in the face of that kind of customer acquisition. At the same time, kate, i cant help but looking over at best buy and at walmart. Theyre not calling it prime day. Theyre calling it summer deal day or various it ragss of that but they got good deals when it comes to tvs, best buy is cutting prices on certain apple items which amazon tends not to directly carry. Might this somewhat get away africa amazon thing and become a new National Shopping holiday . Well, its very well could be i think the edge that amazon gets is not only do you sign up for your 99 and the people that tend to do that buy twice as much as others so they become repeat customers, number one number two, you noted the sales of echo. They extend this opportunity if youre an alexa user so i will be prompted post the time the sale is over for even most online prime customers, today myself to turn on and see if i can start to buy from my alexa which is getting me trained and ready for that christmas sale i think its smart for best buy and other retails to play in the game but theyre celebrating on amazons birthday. Yeah. Scott galloway now is with us. Nyu. You have been a good analyzer of amazon you get credit for predicting the whole foods deal, scott. We keep hearing that its not just about getting the 99 per year subscription when it come to prime day fwz the ecosystem. How do you interpret that . What does that mean to you first off, good to be with you guys yeah this is really youre entering into a relationship amazon decided retail is difficult business the Better Business is software where we have reoccurring revenue. And now more households have a reoccurring revenue relationship with amazon in the form of prime than voted the 16 election or have a land line phone so theyre basically throwing a bunch of freebie wlz, you know, you shop at best buy which by the way is an incredibly well managed company. But dont get the season two of transparent when you shop at best buy so theyre creating all sorts of ecosystem and hooks to lock people into this reoccurring revenue relationship and theyre also fighting unfair they have cheaper capital. They can just throw more resources at these types of shopping days and any other organization that being said, scott, did you mention retail is hard i wonlder if Bigger Picture for if were looking out a year, a couple years as they get into in a bigger way grocery the things that are left for amazon to disrupt are the bigger and harder things versus what theyve done already is that the case well i dont know i think theres a lot of low lying fruit and a lot of prey. Amazon is using the Retail Business sort of as a trojan horse to establish a very strong relationship with the 58 million wealthiest households in america and arguably in the americas such that they can sell them a variety of other things whether its film and service to other people who want in the households, whether its media amazon is about to become not only fastest on line growing retailer but the fastest off line retailer in grocery and may be the Largest Consumer segment in the world clocking in at 7 au 7 50 billion a year. We have never seen a company in my view this strategically dominant with this kind of momentum lets move on to snap shares are getting smoked again this morning falling below the ipo price of 17 Morgan Stanley did downgrade the stock from overweight to equal weight and the disclosure note Nbc Universal does own a stake in snap but when it comes to 27 ipos, theyre the far from the worst from the group that distinction goes to blue apron. Actually blue apron the fifth worst performer down 23 from the ipo price of 10 a share other names down as much as 55 any ipo futures in the pipeline . Absolutely. I think when you talk about blue apron and snap, you have very similar kinds of stories to look at there very difficult for blue apron to have gone public in the face of amazon having just bought a whole foods. The question there is do they have a entry that somebody bigger and smarter like amazon cant copy same issue with snap the user growth has stalled. The daily active users has stalled out. Why . Instagram and facebook is able to, you know, replicate what snap has done. And use more resources like amazon can with blue apron to replicate what snap has dovenlt i think users are pausing. Where are the new products what are they going to do . Once you go public, you know, you have to perform and show can you consistently deliver growth and do so in a way that distances yourself from your competitors and i think both blue apron and snap are challenged in that way versus amazon and facebook. That said, i think there is still an opportunity there but i think the pricing is a heck of a lot better with snap than it was at the peak. Scott, it appears to extend even beyond those two. Im looking at nutanics. It is down to 19 a share. It was up around 37 Cooper Software is down 29 where et started and yet just below the ipo price. Is this just in vestors shying away from a certain brand of Newer Company beyond all of the great points that kate just made i thought kates analysis was the right one. To a certain extent, its better to be private right now. Youre not subject to the scrutiny of the Public Markets i would argue cnbc stake in snap is about to be just crashed. To kates point, you have two of most agile well resourced companies in the world who have set their sights amazon doesnt directly going after blue apron but the first thing Mark Zuckerberg thinks is he must wipe snapchat from the face of the planet the last thing he thinks when he falls to sleep, must wipe snapchat from the face of the planet i said publicly, invest in snapchat is like driving drunk s is something no responsible person should do youre handing your money over to a 27yearold with no rights in the stock, three classes of stock, a company that did 400 until revenue and lost 500 million. And by the way, has the most Agile Company in the world spreading snapchat like peach as cross every property what can go wrong . This is this company is in my view the most overvalued company in the world right now i would point out its not cnbc that has the take it is Nbc Universal. A lot of things you just said would have applied to facebook when google was breathing down their neck after they went ipo not all of them. Ill grant you that. Hold on you got to give me facebooks metrics, they never had a company putting it out of business facebook immediately brought in cheryl sanldberg and adult management and adult supervision. The metrics were always off the charts it was hugely profitable and growing much faster than snapchat all right lets broaden it out to blue apron just a bit we did talk to the ceo when the company went public on the strategy take a listen on that day. We wanted to build the kind of company that could be a Public Company the kind of Caliber Company that is going after a big enough opportunity with a long enough orientation and ambitious enough business plan. And so thats really been the strategy since the very earliest days what went wrong here, kate . You know, its its tough to know. When you think about the breadth of the market and again we just talked about some real big ones here i think its hard to see yet where that strategy is that makes it that large of a market. Theyre competing against, you know, if you think about what we need to put on our tables every night, so many alternatives take out home delivery, you know, all those things they find that the droppage of rate meaning i sign on but i turn pretty quickly. I try ut a while and i stop using it consistently. It is relatively high with blue apron. The sustainable size of that market i think has yet to be proven i think its interesting when you look at this market, what you do see by the way, we talk a lot about the companies with a lot of competition, perhaps minimal size markets i think one of the other big differentiators is cash burn and again, i think scott did a great job of pointing out the contrast with facebook which was doing so well preipo when you look at the companies that have performed well this year, Companies Like mealsoft. 70 year over year growth avs last year and converging on cash flow break even, i think youre in the stage of there is a real have and have nots on the size of the market, barriers to entry and cash burn. It makes investors nervous. We have to leave it there thank you for joining us to talk about the hot topics today scott gallo way aa way and scot mitchell. Phil lebeau is in chicago with a story this is a expansion in the Service Component at tesla this is important given the fact this company is essentially going to double the number of tesla vehicles on the road worldwide if it hits the Production Target for 2018 so heres what tesla is doing. It is announcing that it is going to be expanding the number of Service Centers that it has around the world it has 150 right now theyre adding another 100 and another 350 mobile service vonz. Those are are for rural areas and locations where they may sflotno have a high density of vehicles. Keep in mind, a lot of this is important as the company prepares to rollout the model three. First deliveries starting at the end of this month. And then theyre going to quickly ramp up production through the end of this year and then all through 2018. That 2018 Production Target for tesla, a half million vehicles put that in perspective. Right now if you take all the tesla vehicles that have been built since the Company First started, youre looking at roughly 230,000 vehicles so theyre looking to more than double that as you take a look at shares of tes l. A. La it has been a rough month. It up is 3 today after a very rough last three or four weeks for this stock guys, back to you. All right thank you, phil. I guess those services changes are going to be important to make sure the Customers Service and satisfaction numbers stay up absolutely. Its not uncommon in the Auto Industry for all automakers regardless who they are, you always hear the executives say we want a clean launch it doesnt always happen even the most established automakers have a rough launch if you have a rough launch, you want the service senters in place to deal with the potential problems as quickly as possible. All right thank you, phil. Now lets send it over to meg for a quick market flash meg . Were checking out shares of amicus that is soaring this morning on the news that fda said the company can file for approval of the rare disease drug based on existing data. This reverses an earlier request from the fda to run an additional late stage clinical study. So amicus up 28 on this news. If there is any evidence that dr. Scott gottlieb is taking president trumps directive to the fda to speed drugs through the approval process while perhaps this it is, guys amicus up 28 on this. Expects to file in the fourth quarter. J. P. Morgan says this could shave two years after that process. Back over you to, john. Thats quite a pop. When we come back, the countdown to the stop state for business continues with our scott cone live from a mystery location in the u. S. We all have our guesses. Much more on amazons prime time push what it means for the stock. And later, the nfls advertising fumble losing two key advertisers ahead of the Upcoming Season well discuss that when squawk alley returns markets are mixed around the flat line this morning you see the dow narrowly lower s p 500 flat nasdaq outperforming slightly. Investors look ahead and big bank earning thats begin later this week. For more, will hes bring in the chief Investment Officer at bemo bank gentlemen, thank you for being here interesting that fed chair yellens testimony comes tomorrow at a time when investors are trying to absorb this rise in bond yields around the world. A lot of questions about whether Central Banks are looking to get a little bit more aggressive even in the absence of inflation stre trending higher. What do you think we might here out of january he will yellen tomorrow that is use to investors and figuring out where it goes if here . Central bankers around the world delivered the more hawkish tone you can see this in the market the forward curve has priced in almost an additional rate hike over the next two years than it did just a few weeks ago theyre outpricing at 2 1 2 more hikes. Fwhaut is still a far cry from what the fed is sen tilling in through the dots which is seven more hikes over the next two plus years so it wouldnt surprise me if the fed chair continues its more hawkish tone because its ironic that the fed is hiked three meetings in a row now since december of march, and june and financial conditions have actually eased instead of tightened. Normally that is not what happens. And certainly thats not what happened over the previous few years. So i think the fed is testing the waters for a hawkish path forward. Other than real rates going up 20, 30 basis points in the last month or, so the market seems to be okay with that. And, jack, you know, financial conditions easing in the form of stock market an all time highs low levels of financial stress, credit markets remaining strong. Is that something that you think that yellen is going to look at and say, look, thats our reason for getting more aggressive, not necessarily to fight inflation just explicitly to kind of put the markets back in check a little bit yeah. I think thats it. I mean its remarkable the fed has tightened three times over the last year and a half or so and yet, financial conditions are easier now than they were 18 months ago 18 months ago the fed funds rate and the inflation rate were identical. Now the fed funds rate is 1. 25 and the inflation is 2. 25 somewhere in there so i think that what the fed wants to do is its projecting a still growth environment, tighter labor market with eventually some wage growth. And what it wants to be able to do is tighten on a trajectory that is shallower than the acceleration of the economy itself in fact, leave the market in a financially easier position in the future if they get the financial conditions they expect and as an investor right here, is it enough forlets sa u. S. Equity markets that Global Growth picture looks okay and that yields remain low weve been kind of feeding off that for a while we look into 2018, are we going to need Something Else whether policy or Something Else to keep markets supported at these levels well, right now Earnings Growth is pretty robust. Q1 was up 14 from a year ago q2 obviously is about to get reported here. The earnings season is right upon us. So fate estimate is about plus 7 and there is upward drift during earnings season. And for calendar year 2017, its plus 11 or 12. That is coming off easy comps. But its a pretty robust earnings environment if that continues, then that allows the market to be slightly overvalued were running at about 21 trailing to 21 times trailing earnings, 18 times forward earnings which is higher than normal but without an earnings catalyst, i that i could be maintained so my eyes are on really two things seshlgs things it is china, can they keep the credit party going and b, the fed, how much are they going to keep pushing the markets into a morrow bust hiking pattern well watch both of those thank you very much. We have news out of washington yeah, lets get to our john harwood on pretty revealing emails from Donald Trump Jr these are the email thats he exchanged with an acquaintance of his with ties to russia, the Miss Universe pageant, donald trump mentioned this over the weekend setting up the meeting with the russian attorney who provided information or attempted to provide some information Donald Trump Jr. Released all of the emails. They do not appear beneficial to his case, however. In the email his friend Rob Goldstone says this information that the woman is going to provide is part of russia and the russian governments support for donald trump also the russian attorney was identified in these emails as the russian government attorney. Now one of the things that people tell those on the wrong side of a scandal situation is put everything out perhaps Donald Trump Jr. Is putting this out to try to get ahead of criticism or other news stories. But on its face this is information that supports the allegation or the idea of collusion between the Trump Campaign or potential collusion between the Trump Campaign and the russian government john, the thing that jumps out at me aboutthis is one lin in particular from the last page and this is goldstone apparently writing, the prosecutor of russia met with his father this morning and in their meeting offered to provide the Trump Campaign with some official documents and information that would incriminate hillary and her dealings with russia and it goes on from there. I mean, that seems theyre claiming the russian government then wants to help the Trump Campaign it is clear to you why Donald Trump Jr. Thinks that this kind of is good information for the Trump Campaign side of this story . No, its not. As i said before, this does not appear to be exculpatory information. His account of this meeting is, one, there wasnt such a meeting. Then when he acknowledged that the meeting took place, he said he didnt know who the person he was going to be meeting with and then it was mostly about adoption this makes clear this exchange of emails that he was told that this was a representative of the russian government this is the db what Robert Muller is investigating. What the senate and house committees are investigating and i do not see how this helps the story from the white house or from the trump family no, it doesnt look good. Trump jr. s response if its what you say, i love it. Especially later in the summer john harwood, thank you. Want to show you the Market Reaction seeing stocks dip a little bit lower. They were sort of relatively unchanged to weakening were looking at the s p 500 now down about. 4 as you just saw, the nasdaq as well it goes lower. Down a quarter of 1 market implications are never easy when you talk about politics i will note, though, the last time we saw that big Market Correction that was after some revelations about jim comey, this idea of lack of stability or certainty about whether the Trump Administration will last or will face legal questions. And whether you have, you know, different branches of the government in permanent war and basically building towards some kind of a climax its a good Market Reaction with this news breaking. There it is the yields definitely backed off. You soo he that close to 40 basis point loss in the s p 500 all in the last few minutes. I mean is it this idea . Because last wim we brought up questions about whether it was an obstruction of justice case, it is this idea that impeachment odds go up and thats where the market starts to move . Yeah. I do think, you know, that the i mean nothing is quite a smoking gun. What are we talking about here but basically, as things get closer and closer to the things that the Trump Administration is consistently denied, right, which is cooperation with potentially the russian government and the campaign, then it becomes a little tougher to try to skirt this certainly moves the story another notch. I mean very clearly at least in this email someone communicating with Donald Trump Jr. Is claiming to have somebody from the russian government who wants to help Donald Trumps campaign who has highly Sensitive Information flying in from moscow. This isnt somebody, you know, whos perhaps got a russian background who lives down in georgia. He is saying that theyre flying in from moscow how this didnt come out early when there were so many questions about the Trump Campaigns communication possibly with russia its a bit of a head scratcher, especially considering Jared Kushner was also going to be in this meeting yeah, there is the jump in the vix. The volatility and fear gauge where you do see, as we say, mike, pretty sharp reaction to this again, its damaging its revealing the question is about the legality. What does itten into Donald Trump Jr. Is not a member of the government Jared Kushner has a position in the government so the question is if hes the main point of contact if there was misconduct on his part, does it extend beyond that . As an investigate torre matter, right . As it carries on if here we dont know. Monitoring the Market Reaction for you here as we do, financials are the worst performing group in the s p 500 right now. They were before on somewhat lower yields this morning. Al no turned behind financials you got telecom, real estate, materials, most sectors are in the red right now. Energy is bucking the trend just a bit on slightly Higher Oil Prices but technology took a turn the nasdaq was higher earlier in the day. So well continue to monitor nashgt reaction. And monitor the headlines that are coming out of these emails. In the meantime, were also counting you down to the big reveal of cnbcs top state for business our scott cone is in mystery winning state. And joins us now maybe with some more clues scott . You know, we do this study. I start crunching numbers in february of every year i write all of the stories now i have to catch dinner for the whole crew this say big deal. This actually does start to get interesting though here now as we head into the top three states, these three states are separated by all of five points. So lets take a look at our countdown continues with state number three minnesota, the north star state is number three this year with 1615 out of 2500 points. Minnesota finished in fourth place last year. Minnesotas best category, education where it finishes number two with some of the best k12 test scores in the nation and quality of life. A healthy, happy, welcoming state. But minnesota is expensive finishing 36th for cost of doing business and 31st for cost of living it doesnt help that minnesotas top individual income tax rate is 9. 85 , the third highest in the nation the top corporate rate is 9. 8 the top state and local sales tax is 8. 325 . But this state is still thriving with the sixth best economy in the nation unemployment in minnesota is well below the national average. Minnesotas largest employer is the worlds renowned mayo clinic, the largest industry is health care. Remember, minnesota was americas top state for business a couple years ago and governor mark dayton said at the time that its a high value state for the tax thats they pay and that those taxes are targeted at the wealthy, nonetheless, minnesota is treading a fine line the next state which we will reveal during power lunch separated by just one point from minnesota. So that is all coming up oh, and where am i americas top state for business one more hint, buying opportunities. Buying opportunity the topstates. The website, topstates. Cnbc. Com. We want to hear from you and hear your guesses and what you think americas top states for business back to you. Scott, are you perhaps fishing for salmon you know, i i have to reveal that i am not a fisherman. I have no idea what im fishing for. That would be revealing though, right . Yes i am fishing for salmon you guessed washington state. And buying opportunity. Class being sounds john starting to put it together i was think jimi hendrix who is also from washington state. Scott is a clever guy whether we come back he is nodding any face. Great poker face. More on the market turn that we are seeing this morning. All major indexes are lower. This coming after that release of an email exchange from Donald Trump Jr. Reomg ditsw down triple gi mo cinup so new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Session lows for u. S. Stocks were seeing the market take a turn it took a turn lower coincided with the release of the headlines and emails from president trumps son, Donald Trump Jr with a publicist with ties to russia that does describe document thats would incriminate hillary and her dealings with russia and will be very useful to your father during the campaign. I love it was the emailed response from Donald Trump Jr. Ub search director of floor operations joins us. Market reaction to this sort of thing. What you are thinking . Well, it doesnt quite fit the full picture i mean, obviously, the dow plunged over 100 points. But i would have thought you would have seen a con current move in a flight to safety i would have thought youd see bonds spike a little bit here. The dollar do the same there would be a rush into gold. So its as if the stock market is the only one who believes that this is more threatening to the government than others think. But, you know, i think its a possibility. People are nervous they also believe that the more this russian involvement story continues, the less likely it is that were going to get all those things that people want. I mean, do you have the justice department, the house and Senate Intelligence committees all investigating whether any of president trumps associates had any ties or colluded with the russian government during the campaign and then you have Something Like this it keeps the story further alive. Obviously, mueller will be investigating this as well as everything else. Hes got a full plate now. Hes got everything to investigate. But so far its not watergate. Its hard to picture donald trump walking in and saying youre right thats enough. Im out of here. Highly unlikely. He likes to keep pushing it back and a lot of the spin doctors are making it look like hes a bit of a victim. And thats appealing to the people who voted him into office. Thats true i wond feer if the market says s is going to be the story for the for seeable futur forseeable future. Washington remains preoccupied with this. It torpedos at agendaa. You know, theyre all occupied with this. I mean, theyre on the razors edge trying to get any kind of compromise on health care, on tax reform they dont have a clear overwhelming majority on any of these issues and if people keep getting absorbed in all of this and each one of these things, it brings him a little bit less support among the republicans who with an election coming up would like to wash their hands some of of the issues they dont know if theyll be resolved by the time the election takes place. Sure. Art, is anything really going to spook this market i mean i do see it looks like gold moved on from, you know, 1208 to 1213, 1214 on this news. Its coming back down. This was supposed to be a slam dunk republican president , republicans in both houses of congress, tax reform certainly lets see what else we can get now with tweets like this coming out once again, emails but this time on the gop side, at what point if ever does the market get spooked with all this based on what was expected you can see in this move it is concerned you know, i think youre seeing not overwhelming selling there this is not a stampede by any point. But these are very thin markets. Theyre waiting on yellen. Weve been trading range bound nobody wants to make a big commitment and all of a sudden, somebody comes in and starts to sell a position there are fewer buyers there so you have an overly dra makt effect. Given the fact that bonds and other things didnt move, i think some of this has to do market i will liquidity for the summer the specific risk around politics that youre hearing, it appears this market moves and gets spook moored when there are questions about the future and viability of this administration than when there were questions about the president s agenda i mean every day when there is a setback on the Health Care Vote or anything like that, maybe mini Market Reactions. But not like this. Oh, number i agree. I think that if they come up and they cant bring something up for vote so this is not about the agenda in jeopardy this say bigger question about the uncertainty of the presidency i think you have to separate out. When they get up and they cant get a vote or they have to postpone a vote, i think what happens there is the market doesnt get entirely spooked because they say okay thashgsz a delay. Theyre still working on it. They havent band onnabandoned t this means theyre going to be consumed with this stuff and they cant get the other stuff back on the table. And also every time one of these things comes up, the republicans themselves give it the, i dont know how long i want to stay around for this with my election coming up. In the past its proven to be a buying opportunity we are heading into Second Quarter earnings and the market did back up really to a level that kind of hit last week at the lows, right . It was a reflex selloff and then the s p 500 bounced. It seems to your point, heart, a jumpy market but within this range. Yeah, no. It is somewhat range bound and particularly in the s p and nasdaq earlier in the week in late last week. You had an almost kind of Double Bottom effect built in there so if they hold here again, you might get a bit of a bounce back well, what will you be watching yellen tomorrow and then the rollout of Bank Earnings yeah. Obviously yellen we have a dovish report coming out shechlt may talk about holding off the rate hike at leaf until the end of the year and getting to see where things are. Im not sure that she will have a tremendous Market Impact although, if im right about the i will li ic lid ti here, she may be able to bring this back a little bit. Lets right to seema mody hey, mike european stocks trading lower with investors awaiting tomorrows capitol hill testimony from janet yellen. A muted reaction to Donald Trump Jr. s email exchange. Also grabbing headlines, german chancellor Angela Merkel making a blunt comment about the European Central Bank Addressing Business Leaders she said, were not yet where we want to be in terms of the ecbs monetary policy. Eurozone member countries are growing again. Germany, of course, has been pushing the central bank to scale back on stimulus lets take a look at the stocks on the move in europe. Pearson down after the publisher announced theyre selling a 22 stake in penguin, random house to joint venture partner, the 1 billion sales leaves him a holding in penguin bolstering the Balance Sheet the stock ending down 5 take a look at marks spencer, trading in the red posting a slower decline in quarterly Clothing Sales but disappointing food sales weighing on the staff. The new ceo says the turn around plan is on track by the way, uk retail sales came out this morning positive read. Warm weather and the religious holiday eve is said to have boosted sales. We finish with a couple of bright spots in europe we travel from tui announcing they sold the remaining 8. 5 million shares in Global Shipping company hapag lloyd they look to transform its Tourism Business that stock up just fractionally. Hapag up 10 on the day. Back to you. Thank you very much lets send it over to sue herrera with the news update hello, mike hello, everyone. Heres whats happening at this hour president tweeting hes working thoord secure los angeles bid to host the 2024 olympics it comes as an l. A. Committee arrived in switzerland to present its bid. Los angeles and pair ris competing to stage the 2024 and 2028 games we look forward to working together maybe not in competition but collaboration with paris to be clear were competing for 2024 the rules may change today were happy to answer the questions afterwards but in the meantime, we want to show our strength. The food and Drug Administration is wrapping up a two day meeting on opioids fda commissioner dr. Scott gottlieb suggesting that mandatory training be put in place with anybody allowed to prescribe or dispense the powerful drugs a scary night in indiana with reports of tornadoes and funnel clouds. Many of them caught on camera. Several counties in the central part of the state were under thunderstorm and flash flood and tornado warnings for the entire overnight. That is the news update. Youre up to date. Lets get back downtown. Sarah, back to you all right thank you. Still to come, more on amazon prime day well tell you whats at stake plus, checking the markets at this hour. Weve been monitoring session lows on the release of the email headlines bouncing back. Energy is the only sector that is positive now. Financials are down about 5 . 7 all right. Well see you as well. Scott, thank you very much lets get to the cme group Rick Santelli has the santell exchange. Psychics, theres a science where oneandone always equals two. There are certain rules and theyre rigid rules. Economics, not so rigid. I think that central bankers have a problem their financial psychics are questionable and were really going to go to a psychics thought to frame this issue. The first thought of thermo dynamics its the law of the conservation of energy. I think we all had this in psychics in high xoochl its pretty easy. Energy can either created nor destroyed. Ill tell what you, there is a lesson to be learned in that first law of thermo dynamics that actually dove tails with what is going on with Central Banks. And the topic thats going to come up on fast money that jamie diamond brought up, what is going to happen . Well hell till you something. Just like energy, i personally think that you cant create the kind of productivity and growth that all these Central Banks want you cant create it or destroy it it is what it is all those policy moves just get transferred which is the answer to the first law of thermo dynamics when you turn a light on, you dont create something you transfer the energy. And heres the point that whatever positives were created by Central Banks after the 2008 crisis, whatever they are, last year it happened to be 1. 6 gdp look to europe minus 52 basis points in the two years. Whatever was created by Central Banks oh, and one other thing created, huge Balance Sheets huge stockpiles of negative securities lofty equity prices. Whatever those are, heres where the first law of thermo dynamics comes into place when they reverse it, its going to do. This i dont see any other way see, the issue is they thought that it would get us up here and that it would get a life of its own. You know, back in the old days when cars werent all electronic, the old 65 chevy is in the drive, you try to start it it would cough, you put starting fluid in it. It would stay running. It didnt. They deposit get idnt get it the too big to fail banks, they got interest on reserves they stockpiled it no matter which way you slice it, i dont see how Central Banks can think they can reverse this without the side of the mountains. And that is what jamie diamond is worried about back to you, john fort. Thank you, Rick Santelli. Were keeping an eye on amazon stocks as prime day continues. Its actually lower. So is best buy walmart outperforming both of them lets bring in aaron kessler, senior interne senior internent analyst at raymond james. Good morning to both of you. Ed, ill start with you. So others are sort of picking up on prime day, renaming it, copying it what actually is amazons advantage in having this day beyond the obvious they got it prime loyalty program. How is their fly wheel different from the other retailers well, wii think one thing thy have thats a huge advantage is an incredibly compelling suite of devices some of the best discounts today are things like the echo, the kindle, and what theyre hoping is that you buy these devices at great prices and that you continue to use them throughout the year these are things that are sticky and create an advantage that they have, versus other retailers. Eriaaron, its actually a lil less clear how the echo fits into this longer term. The idea of buying laundry detergent or a digital camera or something just by voice without having a screen in front of me where i can check prices is a little scary what is the amazon long game in tying the echo or the alexa to the buying experience . I would agree with that there is some benefits, if you want to reorder your laundry detergent, you could probably do that on the echo or alexa device in terms of new things, that would be a little bit different. But amazon looks at whats the engagement with an amazon ecosystem. So thats more to the point, versus just buying stuff through these devices. Whats your engagement overall with the amazon platform and is there a way that prime day can have a little bit of a backlash effect. It seems this year, last year, every year we point out that while the prices arent necessarily better and there are all these kind of limitations and you have competitors trying to take advantage of it, at least in some measure, are there risks inherent in the exercise well, certainly, the consumer can get frustrated by out of stocks, but ultimately, the consumer is still looking for a great deal you know, prime day gives them a reason to buy now. And so we think those are important threads that in this uncertain consumer environment, certainly, work for the current shopping environment all right ed and aaron, well continue to watch this story of course,ots lof upheaval in retail thanks for joining us. Squawk alley is back right after this the mercedesbenz summer event is back, with incredible offers on the mercedesbenz youve always longed for. But hurry, these shooting stars fly by fast. Lease the c300 for 399 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. I enjoy the fresher things in life. Fresh towels. Fresh soaps. And of course, tripadvisors freshest, lowest prices. So if youre anything like me. Youll want to check tripadvisor. We now instantly compare prices from over 200 booking sites. To find you the lowest price. On the hotel you want. Go on, try something fresh. Tripadvisor. The latest reviews. The lowest prices. Away from the nfl, heading into the Upcoming Season. Our meg terrell is back at hq with the details and that should be a clue that were turning to you, meg. Hey, sarah. This Upcoming Season may see some major advertisers missing from nfl commercial breaks and it all has to do with pharmaceutical patent expirations. Viewers may no longer see some of the most familiar brands from previous seasons ask your doctor about viagra. Specifically, those of Erectile Dysfunction Drugs like pfizers viagra. Thats because that product is approaching the end of its Market Exclusivity in the u. S. , facing whats known as its patent cliff, and ads may disappear as cheaper generic copies of the drug approach the u. S. Market. Viagra hasnt aired a National Tv Ad since may 15th, and the brand didnt participate in upfronts for the coming season. That means potentially big bucks lost viagra was a top pharma brand for the nfl, according to ad age with about 31 million in spending last season now, pfizer told us it doesnt comment on future marketing plans for competitive reasons, but thats not all viagras competitor, eli lillys cialis is also facing generic competition. Thats another 20 million or so in nfl spending according to ad age. In total, up to 20 million potentially erased from nfl ad revenue. The nfl told us it had no comment. Sarah, back over to you. Meg terrell, thank you for setting that up. More for on the nfl ad strategy, we are joined by mike jackson, 2050 marketing expert and cnbc contributor. Welcome, mike 50 million sounds like a lot. How big of a deal is it for the nfl and how big of a hole is that going to fill when it comes to hitting the right demographic with such a mass market pharmaceutical well, wiyou know, 50 millio, either way you look at it from a promotional standpoint is a lot of dollars being lost by the nfl. But at the end of the day, the best headline i saw about this challenge the nfl has with this upfront this year is theyve got rich people problems, because still, the average spot is anywhere between 500,000 and 800,000 depending on the time of the week. And while youve got see alice and the viagra challenge, fan boy and draft kings, if you remember, they were spending i lot of money theyve backed away from the huge dollars they were throwing at the market. And the softness and the auto category you add it all up, i still think that even though rate registration down, the nfl is trying to get a price, you know, range of like 4 increase this year and so while theyve got challenges, strategically, overall, i still think theyre in really good hape. I mean, we couldnt have expected viagra and cialis ads to have staying power that just lasted forever just for a few hours. Theyre bound to go soft eventually are there possibilities of hard liquor advertisers now, Something Like that, that the nfl just opened up to, that could give them a little bit of a boost . Beverage categories are always very strong, pepsi, budweiser, coors and those beer brands have always been there. Recently, youve seen some of the deaggio brands start to spend in sports. Like i said, i think youre going to have categories Like Pharmaceuticals and others kind of come in and out, but overall, i think the ad market for the nfl is very, very strong but i dont believe that theyre going to be able to command the increases that theyve had in the last five years, five years going forward. Mike, do you think that the steadiness of demand for nfl ads will continue if, in fact, last years ratings problems were not a blip yeah, thats interesting. Because the nfl rationalizes last years 9 , you know, decline, you know, obviously due to some of the Election Year issues overall, i think theyve saturated the market and theyve got some productrelated issues. If you look at the thursday night product with those silly uniforms, its not working very well and so, i think theyve got to really fine tune, you know, their kind of product approach but they also have major markets around the country, laike, i liv in los angeles and the nfl is probably not the most hottestrated brand as it relates to sports in this marketplace. So, theyve got some challenges going forward. Mike jackson, we thank you for joik us on th average viewer of nfl viewer was 50 years old that sounds like the age when Sexual Activity function starts to drop off . Other pharmaceutical products now going on patent, mike. Its all right, nfl, happens to the best of us. S p coming back quite a bit from the lows it hit right around the time of that Donald Trump Jr. Email that we were talking about in the hour gold also off its highs, so perhaps the market settling down a bit after those initial revolutions. It was a quick reflux, its come back. 4220 on the s p has been the level its hung around for a while now. Bottom of the range. That is it for squawk alley. Were watching the major averages, still not doing great, but off their lows again were going to hand it off to halftime back at headquarters. And welcome to the halftime report. Im scott wapner our top trade this hour, fed fears. The big warning today from jamie dimon that every investor needs to hear. The are the markets ready for the end of easing . With us today, joe terranova, stephanie link also with us, steve liesman, and from chicago, our own Rick Santelli lets begin with those comments today from jpmorgan boss, jamie dooild, ll