Transcripts For CNBC Squawk Box 20140714

Consumer relief. And the story in the times are both talking about benghazi and that sort of led to a different settlement. Did you see this . No, i saw jon voight talking about this. Can we build some roads with this . I dont know, how are we going to build roads . Both parties believe we need to raise the party on gas leap. Didnt we collect like 50 billion . We are collecting a lot of money. Where is all the money going, do we know . Thats what im asking. Get some bridges the tax thing. Its the whole tax thing on whether we should lower taxes or higher taxes for the roads. Why wcant we use the 50 billion that we just collected . I dont know how it works. What is the department of justice going to do with it . I think they are going to give some of it back or something. Maybe a new Computer System at the i. R. S. Would be good. That might help. Maybe the cloud. Tell me about what does benghazi have to do with citigroup . So they were about to settle at a different price. Yeah. And then benghazi happened and the Justice Department said we cant even talk to you right now. We are in the middle of this thing. We are in the middle of the talking point for benghazi about the movie. Thats how they came to the 7 billion. Anyway, a flood of Quarter Results are said to hit the tape in the coming days including a number of major tech companies. Of the ten s p sector, the tech sector has the highest projected growth earnings rate at 12. 3 . Meantime, financials have the worst earnings forecast with a decline of 3. 5 from a year ago. From earnings to the economy, fed chairman janet yellen is delivering the Humphrey Hawkins testimony. They will listen for hints on when the central bank will begin to tighten. They released last week the buys. And also we are talking about what is in the papers. Get a copy of the new yorker today with monday morning in a minute. But theres the first real long interview with janet yellen in a long time and well take little pieces away from that. The humphrey haw kkins tuesd and wednesday is delivering i dont know if jack lew thats what youre going to hang on . He may not say that much. Stan druckenmiller will be on, chris christie. Carl icahn will be on. And we have a mystery guest. Right. Toward the end of the day at 5 15. Youre not that excited about this one. No, im not. Do you know who mr. Guest is . I do. Hes not a mystery to you. Its not. Its a mystery to me. And Whiting Company is buying kodiak to become the largest producer in north dakotas shell. And aecom company is acquiring urs for 56. 31 a share in cash totaling 4 billion. A report on friday that urs had talked with rivals and buyout firms about a potential sale. The company is under pressure from activist Jana Partners to op enhance shareholders. Its a german company. Anyway, another more tax dollars are headed there. And more tax dollars are headed to germany to build a soccer team. They dont need the money, apparently. Who is the sub, by the way . And shire is ready to recommend a new 53 billion takeover from abbvie. The two are in detailed talks. And chocolate maker lindt is buying russell stover. The price is not disclosed but this will make lindt the number three manufacturer in north america. You know, i just took my pen and i barely i touched it ow, the tip, oh oh oh soccer, ive seen too much soccer. Ive seen too much. Im giving you a yellow card on that. Theres a lot of flopping, theres no question. Its still a beautiful sport. It somehow started sometime where you were rewarded for faking an injury. And it got to the point where everybody if you dont fake, you will never have anything happen. So no matter what, im watching and they do it in the replay. And seriously, i see the toe of one guys foot barely touch the toe of another guys foot and he falls down. And they are in agony. They show up for about three our four minutes and go to something else. And then i see the same guy, they never show him get up but the same guy tears by going by like nothing is wrong. This is one of the things, where did i read it . This is it now, the glow of it and it is finally going to come here and be just as popular. You will read that every four years. As long as they stay with the faking think of football. They have to score a few more goals. Do you remember when joe thiseman and his leg split in two . And he moaned and groaned and had less agony than your average soccer guy. I mean he was a true hero. It is beautiful, i watched all of it. Okay, all right. It takes a village, i know you think that. But this is part of the europeanization of america that youre afraid of . No, but im just saying i watch how excited the crowds are and everything. And if they could visit and see some real sports, see some college ncaa hoops and watch a couple of those games hold on. Thats like acting central. More in the nba, though. Im talking about the excitement of march madness. I know, but in terms of the s. A. G. Awards these guys get for their dramatic acting. Faking is not unique to soccer. Oh, please. If theres anything soccer does great its that. But really, i waited three hours. I watched the previous game, too, where argentina beat it is all mush now, but i watched a lot of 00 games toward the end. So we finally did get a goal. And everybodys really excited. You watch the crowds. Its like they wait a long time for that. I think if they were exposed to a sport where there was stuff happening. It happened the entire time i think that when i took the kids to the pool i went running and came back and didnt mess a thing. I went and did some yard work and didnt miss a thing. I saw all three of the great goals. The australian goal with a 90yard pass. And i saw the columbia goal. They are good. Germany got seven of them against brazil. If you can watch soccer, you can watch the first month of Major League Baseball and not be bored. And all of Janet Yellens testimony to the house and senate and not get bored. You are here. You look like a Soccer Player now. Thank you. The one thing they have going for them is the demos. Those guys are all handsome and happening, are they not . Across the board. All of them. And they are very fashion forward, too. They look good. Are we okay with the germans winning . They are whipping everything now. They have been borrowing money. They have low employment. They are kicking our spies out and still making great automobiles. I thought they imposed the argentinians most of the game and then they kicked them germany is not purely socialist but we are not wanting a purely socialist economy to win anyway. You should be able to pay off some of your Foreign Debts if you are going to win a soccer game. What a beautiful country brazil is, isnt it . Beautiful. They have some of the sets for espn that was not a hardship assignment if you are an espn anchor. Should we officially talk about him . We are joined now with more from ben after his sports analysis. Im happy to keep talking sports. We can talk sports but you put together your money morning this morning leading with two things. First of all the yellen piece in the new yorker that i mentioned earlier. Is there anything valuable . Theres insights into how she views financial regulation. She obviously takes the view that for a long time we have trusted banks to regulate more than we should. She wants more regulation. But theres nothing r revelatory. You get to know her. Did you get your subscription to the new yorker . I have a subscription to something called the next issue which is like the netflix magazine. I get guns and gardens. Thats an odd mix. Not really. Not in the south its not. And have you seen that article over the what was that article about . Just about having to do with summer barbecuing and things. I just i saw that article, you saw she sat down for a series of interviews. And this is her first opening up to a journalist. I personally wish that would have been me. What do you think of the qe . They are still slapping the labor market and believes theres more room for the fed to run with easing monetary policies. Lets move on to another issue. Xm bank, what is going to happen here . I think it will get extended and will probably get extended in a continuing revolution. The government has to get funding past september 30th and it will come down to the last minute for that. Democrats said they will tack on xm to that and dare democrats to knock it down. Xm doesnt cost anything . It turned a profit of a billion last year for treasury. Joe, are you on board with xn. The journal has a piece that you need to listen to. The journal now has a piece that says boeing does not need the xm bank to survive. They would argue that airbus gets all that support from from the far right field. And thats the Koch Brothers who feel that way and spend a lot of money with republicans. We have a big xm guy and i dont follow him on twitter but saw in retweets just captivating this. Whether it will get extended or not, i think it will. It does lay bear to the division between the Republican Party establishment and the roundtable chamber folks who want it to be extended and the tea party. I dont think it is crony capitalism anymore than other nations that support their capitalism. Take it away from boeing and airbus has a huge i think i want to be supportive of the xm bank, dont think. Liberals are supportive of it. But what about you . Where are you . It is like youre probusiness and you should be supportive of it. Unless you are profree market. Im procapitalism. I am interested on your views, joe. I dont have a far right on why it is crony capitalism. If airbus has how many countries are represented . Like three of them . And they are also their individual manufacturers in all three of the countries are going to get support. The fact of the matter is 37 billion or whatever in lope guarantees and loans it made last year, a lot of it goes to small business. A lot goes to boeing but these are mom and pops. They say it goes to rich i think they are worried about the dubai airlines. They buy it at a discount. We were talking about the treasury, this settlement that they will have with the benghazi thing and all this, where does the money really going . Its going to the Justice Department, a lot of it. What does the Justice Department actually do . I would hope that they would somehow get it back to the victims who bought these securities. Jp momorganjpmorgans settle lot of money now. Its a great piece to work on throughout the course of the day. How much of the 7 billion goes directly to the justice . Its in the piece that tells you a number. 4 billion is not in cash. So the rest is in cash. Right. So 3 billion in cash. Theres 3 billion in cash. Thats a lot of cash. And he wants to do highways with it. The Highway Trust Fund is another big issue in washington. Thats about to go bust. Take that money and then you dont have to do the ridiculous pension smoothing. This whole xm thing almost reminds me of lets all sit and read the papers. Thats what we are doing this morning. It just reminds me of the defeat of cantor and the s p 500, that was a big setback for every company in the s p 500 because he was probusiness. The far right libertarian wing of the Republican Party wasnt enamered with cap nada. The journal says in other words the private economy is ready, willing and able to provide trade financing for foreign customers to buy boeing jets. That boeing would be just fine without it. That may be true. I dont know if thats true. Thats an assertion. The republicans should start if they are truly free marketers, they should start embracing the free market in this case, too. Thats the argument. Okay. But say you were in North Carolina with a business where you make pickles and want to sell them to consumers you heard about my costco jar of pickles . Yeah. But you want to sell them to somebody in germany. Now you are referencing germany again. Or anywhere in europe. The customer on the end, are they getting the market to support share imports of u. S. Exports supported by the xm bank . You can make the case from boeing that there will be free Market Solution to support that. Im not sure you can make that case for small to midsized businesses in the u. S. If you are probusiness, you have to be supportive of the xm bank. Why would you want to unilaterally disarm . Im with the chamber. The question i have on it is it does seem like unilateral disarmament if the u. S. Would get out of the export finance business. Other nations are not going to follow suit. They want us to unilaterally set examples for the world and other respects. You do that here yup laterally. And just because the euro socialists are supporting air s airbus, i dont know if that will hurt jobs of course it will hurt jobs. Because i dont know it would. Any time you see or hear that the Government Action is needed to support the jobs, i dont believe thats the case. If you are for taking all the money from the settlement. That never does support you. Building roads and bridges makes perfect sense. But if the government spends the money on roads and bridges, thats employment that will follow from that. So the idea the government doesnt support or create jobs is not true because it does. You may not like the jobs or think these are great jobs but they are jobs nonetheless. I guess that the new york state other than illinois and the top states for business and the public to see. Kansas had some tax cuts and they found something a problem in kansas but said it is clear that all states need to use every tool of government to nurture growth. And that these tools require money. So that was the conclusion. The problem is the kansas cap is where they were to the point where they didnt have enough money yet. And there were a few things the economy needed to do. Seven is a good number, not 50. Are you leaving . I guess i am. You can hang out if you want. I feel sort of odd sitting in beckys seat over here. Im more used toll its okay. You may do whatever you want. You have the darker shirt and the lighter stripes. It was dark. I dont like to wake my wife getting ready for the show. As much as i want to look my best, it is early. So she didnt cook you anything this morning . No. You havent gotten things quite squared away in the white household yet. We have a separation of church and state. And authorities. The morning is also a lot of people think that at night its a good time for good conversation and catching up on thats what i was talking about. At 3 30 a. M. You are very aware in the morning, ready and raring to go. I have read these things but never experienced it, clearly. Ben white, thank you. The former air show is taking off. Im telling you. Phil la brebeau is there with ae of guests. Join us at 6 30 a. M. Eastern time as im going to press the right buttons. And earnings season is kicking off with citigroup today and tomorrow jpmorgan and gold man sa Goldman Sachs. And on wednesday well have stan druckenmiller, one of the greatest investors live. Well have more squawk in just a moment. At every ford dealership, youll find the works its a complete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. All right. We are taking a look at what exactly is happening in the northeast today. We have quite a lot of moisture in place. New york city, you could be seeing some thunderstorms. Lets break down exactly what is happening in these severe ingredients because thats going to be a big concern for us. Lots of moisture just trucking out of the south. This cold front, this is the one bringing that polar plunge. All that cool air to the midwest. And eventually into the northeast. But first we need to keep an eye on the front because thats where well be watching for the potential of Severe Weather today. In fact, new york city, the capitol, you have a risk of seeing damaging winds, hail or even an isolated tornado as we go throughout the day today, especially through the evening. Lexington through paducah and memphis, we have the risk as well carrying on through arkansas. So we have a large swath of storms here. Lets break down the timing of exactly what to and tis pate. This morning most of the rain is through kentucky and west virginia. But look what happens getting into your afternoon. Whenever youre headed home from the commute, watch the storm approach philadelphia and d. C. Where we could see again the very gusty winds that could be damaging. And theres that potential for an isolated tornado. Its a small one but it is at least in the forecast. Heres what we are looking at overnight. Look at new york city up next as we go throughout the evening hours with dinner plans tonight. Make sure to stay on top of the forecast so youre prepared for the storms that we could potentially see. And were going to be watching this through tomorrow as well, joe. Great. Kate, thank you. We appreciate that. Have you been on squawk before, kate . I dont think i have been on squawk before. Im a newbie. A lifelong dream, basically . Clearly. Yes, a lifelong dream established. I was not here working at the Weather Channel as a meteorologist. I wanted to be on squawk. Run with the bulls, appear on squawk box. I got it. Thank you. Its downhill from here, folks. Downhill. Great to see you again. You cant go back to the farm now. A big wave of Quarterly Results this week. What should investors expect . Joining us is the director and head of the global market. Financial, citigroup, what to expect . Goldman sachs, a tough environment, huh . Its a tough environment. No trade and volatility. Thats part of it. Youll have some of the settlement issues impact the earnings. What do they do in interest what do they do with the Bond Division . Its tough. Its tough. Thats absolutely right. We just put out a piece about that. If you take a look at, for example, the cycle right now where people should be investing, you have the largest demographic in history. The boomers are trying to find yield and are forced to stay in equities because they cant live off of what they get in fixed income markets. And i think you have to look theres a series effect but you do have to look at what the fed has done over the last several years. You have over 4 trillion in the Balance Sheet and basically the market doesnt dictate Interest Rates anymore. The market is out of the Federal Reserve dictates Interest Rates. We dont live in a world where for price discovery, you are not sure what weird things are happening because of that. And thats interesting because the genesis of this is you were basically taking and solving the real estate problem and keeping people afloat. And, you know, but the other side of it, now youre still kind of punitive to people who need to have a more normalized yield curve to try and basically make ends meet. But its like the 70yearold person that still has to be allocated into equities which helps support equity evaluations. You have a lot of misappropriations because theres a better risk of return in relationships. Thats good stuff in your case. Here we finally have the s p to earn 117. 90. So we can get an exact multiple for where we are because some say the multiple wont be going up anymore. So it will be all earnings. What is earnings . Well start with the bottom line, what is that supposed to be . We are looking for 6. 5 from the analysts but youll probably get close to 9. 9 . What about incoming quarters, do they continue to do that . You have to because the expectation for the year is doubledigit quarter at 10 . We dont have to. You say we have to to support the market where it is today. Thats right. Thats where the market mentality is. And revenue is going to be up 4 . You actually think thats good. Well, its certainly better than before with the longterm average of 6 . Its moving in the right direction. Weve had negative, anemic top growth. We are moving up. We are halfway to where we should be. We have gone from 2 to 4 and hopefully we can continue to see it. Now the problem is a lot of that comes from the consumer. The consumer, the downside of that is Consumer Prices on things going up. If you look, Consumer Discretionary is a large contributor to the earnings growth. The materials and energy growing 38, 12 and 11 respectively. So thats telecom, materials and energy, right . Thats right. The only one we have talked about is financials declining 1. 1. Thats important. That is important. Still a big component but not as big as it used to be. So far 22 Companies Reported 64 of the expectation. Thats correct. And you expect 64 to be the number for tho the quarter . Its early, but theres something going on here. The revenue is even better at 72. I dont think there was a lot of sandbagging last quarter. So when i say theres a boom coming, probably not but it supports the view that you have a general economic, you know, progress forward and so people who are worried about, you know, the weaker gdp numbers, this is kind of going back and favors the unemployment number. But you but this is and important earnings season. I think it is. For the bull market. I think it is. If it doesnt, we have a problem. Thank you. Youre welcome. If i were you, honestly, i would take the p out. Yeah, but i dont work for those guys anymore. Theres a price for everything. It looked like it had been your company and now you went on to another company. Now thompson without the p is just another name, right . But it is s p capital like you. Im a guy like you. Me, too. For one of the best services in the history do you not use them . No. It is mindblowing. It blows your find . Yes. You need a life. I do need a life. Coming up, ebay could soon be partnering up. And town and country travel is going to join us with the hottest luxury trends. Is that you or me . And phil lebeau is going to join us from the air show. The highlights from boeings ceo. And heading to the break, well look at last weeks winners and losers. Be back after the break. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Good morning. Welcome back to squawk box here on cnbc. Im joe kernan along with andrew ross sorkin. Becky will be back tomorrow. Futures indicate a nice jump this morning where we could conceivably be back above 17,000 on the dow which we tried to hold last week. It could have been worse, but it was a down week and we ended below 17,000. Still below 2,000 for the s p. A deal has been struck for a portfolio of drugs. Mylan will get a few drugs from abbott labs. One thing about this, im looking through this and they dont seem to be referring to anything here that would suggest that this is a possible aversion. From mylan . Potentially because these are your products. There was talk prior to this announcement that this would be structured as an aversion. They are not suggesting in a statement that is a structured version. They dont talk about that but i just want to put that out there that people were talking about this over the weekend. I dont understand. By buying the drugs they would the drugs were over there. Reuters reported over the weekend that these guys were in talks and one of the issues was about restructuring as an aversion. They dont seem to be indicating that they are doing the aversion, but theres a call later today. Pfizer never came out about the aversion piece until they got two Conference Calls in. They didnt mention a thing and now they are like, sorkin we could be wrong on that. And maybe the reason it doesnt say anything about the aversion is they are like, shh. And here you are. I emailed a source and they have not admitted to it in a statement, but i have been emailing somebody that is involved in this transaction. You are trying to reign on their parade today. No one would have known. The ceo of mylan, heather, i love. Shes terrific. However, it is less terrific shes up veinverting the compan. You are judging and assuming. I say it makes it harder for her to compete. Shes an advocate of tax reform. As a good citizen, we need to figure out a system. We need to figure out you just want to what i would like to do is get real tax reform. Thats all i want. You want it, too. We both do. You have come around. We can hold hands together. No. But i wouldnt hold my breath for that. In the meantime, what if what if they have more money to develop more drugs instead of these are generics. I know, but even that, generics is helping with the overall Cost Containment efforts for health care. Its a place for generics and in general, companies would probably spend the money better themselves, right . Reuters would avoid shareholders. I dont disadpree with the intent of what youre saying but im also saying we have to hit the roads and pay for schools. Somebody has to pay for the stuff. Citizens do. But instead of as long as youre watching carefully the way its spent, because every dollar should be spent as if it was your own. And the government misspends money atrociously. Im not going to blame heather. I love you said you liked herless. I didnt say that. I love heather. Shes a remarkable ceo. Im frustrated that she would feel compelled given the situation to have to go abroad and structure an aversion. You are tiptoeing there. Okay. Well talk about other stuff this morning. Business leaders at the farnborough air show in hampshire, england, is where billiondollar deals are being made and relationships are starting. Phil lebeau is joining with us the latest. Good morning to you, phil. Reporter good morning. Theres always a big announcement at the very beginning and this year it goes to airbus. As expected airbus announcing lit launch the a330 neo to compete in the wide body segment. Youre talking about planes between 250 to 350 passengers. They are going after the 787 dreamliner. Earlier we had a chance to talk the to the airbus ceo about how much demand there is in that segment given the fact that the dreamliner racked soup many orders. And you have the 835 there and he says they would not have launched this if they didnt have Strong Demand and an indication of strong orders already. This is very typical but after ten days or two weeks of active marketing of this product, we get all of the big names of the company to select this aircraft it will really be a big success for us. Reporter the news was not lost on boeing which today will be flying the 7879 dreamliner here at the Farnborough International show. Boeing says it has more than 1,000 orders that it racked up since the plane was first announced for the dreamliner and it believes theres not only enough demand the dreamliner market but overall the ceo does not believe we are looking at a bubble in commercial airplanes. The numbers say we are not. I mean, you look at our we track deferrals and cancellations below historical averages right now. There have been some other deferrals and cancellations in the industry. I think others would have to answer to those trends, but we see ongoing Strong Demand. And were going to produce to it. Reporter one other story getting a lot of attention, the f35 from Lockheed Martin was supposed to make its public debut here at the farn borough international show. It will thought be flying today, not flying today. And theres questions as to whether it will fly earlier this week. Earlier in an exclusive we talked to the lockheed ceo after the engine fire in late june, theres questions on when the f35 will fly. She says it will fly at the end of this week. Im certainly confident they are going to go through a discipline process. They always do. This is normal for any Aircraft Development program. They will go through a discipline process and get to the root cause and we are hopeful its in time for the aircraft to be here. Reporter so those are some of the stories that are getting a lot of attention here. One other thing, andrew and joe, our audience is interested in the Export Import Bank and whether or not it will be extended. We talked to jim mcnerney about this and he said if it is not extended boeing could lose orders. If export very import is not extended, theres a chance customers around the world will say they go to airbus because they can get financing through that. Back to you. Phil, thank you for that. Appreciate it very much. Joe, one little thing. I just got the first take of the press release on this mylan deal off dow jones. We didnt get the rest of it. And you said in the structure they are setting it up this way, but think about this after the break. These guys get huge amounts of revenue from medicaid and medicare. Us taxpayers are paying this company. This company is a beneficiary of you and me and everybody else and now they are leaving the country. Think about that one. Im not that interesting in that but im more interested in if they are buying a couple more specialty drugs that allows them to this is they are based in europe, the drugs are based in europe. What about the drugs they get from here . They will pay taxes on those here in the u. S. But only on the drugs where the revenue no. What ends up happening in these aversions is, well talk about it after the break, people move where the debt load is so they can basically take a deduction in it. Technically, yes, mylan is there it is. Talk to your Democrat Friends act tax reform. Talk to your friends about tax reform. Why dont we go to 20 . Well get to something reasonable and do it. Fat chance. Coming up, the hottest trends in travel. If you are super rich, where would you go . And startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure. Thanks to startup ny, businesses can operate tax free for 10 years. No property tax. No business tax. And no sales tax. Which means more growth for your business, and more jobs. Its not just business as usual. See how new york can help your business grow, at startup. Ny. Gov thank ythank you for defendiyour sacrifice. And thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. When we come back, the hottest trends in travel. Some of the hot spots where money is no object. And coming up on wednesday, we have delivering alpha. Many big guests at the conference this year including nelson peltz. Thats wednesday, the 16th. Joe will be interviewing stan. We are back in just a moment. Squawk box returns. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Habeing able to pay as we goo rawas crucial for a start up. S. Having to fork out a lot of money up front was risky. You can launch a feature really quick, and if the feature doesnt work, we havent lost anything and we can have something up and running in days. And this would not be possible without the cloud. We are now supporting over 25 million users each month. Ideas can be tried and tried again on the ibm cloud. The ibm cloud is the cloud for business. Welcome back. With the travel season now in full swing what are the years hottest trends in luxury getaways for the uber elite . On your set this morning is talent and country travel editor at large. Shes also overseeing the revival of town and country travel this magazine, travel the best magazine this fall. Theyre going to do it twice a year now. Its terrific to see you. Weve got to go through some of the things folks do and the super elite wealthy supposedly are doing. You love the name town and country. Theyve had a huge resurgence. And a disnantz new yorker. I will get you a subscription to guns and garden. What about guns and ammo. Dont go there. I do want to go with something called give and go. This is a new sort of travel trend apparently, joe, when you sort of do philanthropy while youre on the 1 vacation. Well, so let me just give you some background. First of all, travel is really booming and even some of the merely affluent are spending an average of about 10,000 on a trip and theyre doing this several times a year. Is that two people . Two people. Or a family. I think it varies. I cant speak in such detail to it. And then the truly affluent are absolutely pushing the envelope on, you know, theyre really setting the demand for truly specific experiences. What kind of price tag is that . The skys the limit. Right. And your 10,000 is not flying private. No, it is not flying private. Thats more normal travel. But you asked about the give and go. Yeah. So one big trend is nonprofit travel. People want to feel good about their luxury. They want to spend the money this is like guilt vacation. No, this is incredible experiences some of them. But for instance some of the money might go towards a Charitable Foundation or here in africa, in a very luxe safari camp. Some of the money could go to educating children about the importance of conservation in the local villages so they dont grow up to be poachers. So you can feel really good about this. Is this about giving money, i thought i know people who have gone on these vacations. They go on the vacation and do some kind of Public Service while theyre there. There are various ways to look at it. Thats volunteerism. One has to be very careful about Companies One chooses because theres a lot of green washing involved. But sometimes its just choosing a Hotel Company that you know does the right thing. When we teased this segment we talked about the brando. What is that. Oh, my god. Thats where i want to go next. So, it is a new resort. Yeah. Marlon brandos private island. Theres now been turned into a very sustainable resort. 35 villas. Its about 16 miles from tahiti. You have to take a charter plane to get there. Its essentially the dream of the south pacific. Whats the whats the nightly cost . It is about 2500 per person to 74 pund per person. Depending per night. How many rooms you have in your villa. Theyre from one bedroom to three bedroom. Can it be too remote and too quiet . Never. I think that is actually wait a minute, i think the tom hanks when he was castaway might say theres a little bit too little here for me. Have to take his tooth out. So there are the luxury i mean, that looks too small for me. You ever heard of island fever. That might be the place you get it. Two or three nights never. Do we know what the staff to guest ratio . I dont know exactly. Its usually very high. Like four per person. Walking on the beach with a sherpa next to you. I know what youre looking for. Who greeted Marlon Brando in mutiny on the bounty. Youd like about 800 on your staff, right . Thank you. I just like the ratio is ski. We had two issues, glamping. We have glamping. You know about glamping, joe . Like gloaming . Its a terrible word for a wonderful experience. Luxurious camping. Glamour camping. And then finally you need to weigh in on my favorite issue. Whats that . First class travel or Business Class travel, should children be allowed babies, toddlers. Babies be allowed on the plane. Thats all i need to know. Yes. They should be . Yes, because increasingly people travel with their families even on business trips. It inconveniences andrew. Theyre loud. They might throw up. Well you just have to go into first class or fly emirates where you have a pod essentially where a door that closes and you can be in your pjs. I agree with the door i think thats a nice way to go. The Malaysian Airlines doesnt allow toddlers. Right. Malaysian airlines they also say people be hung upside down and feet beaten. Theres can they survive in steerage with the animals. I dont think so. I think thats the wrong attitude. This was klaras premiere on squawk and on tv. You did fabulous. Thank you. Just call me when you travel tips, im the girl. All right. Stocks that performed better after Quarterly Results. Them. So when my moderate to severe chronic plaque psoriasis was also on display, id had it. I finally had a serious talk with my dermatologist. This time, he prescribed humiraadalimumab. Humira helps to clear the surface of my skin by actually working inside my body. In clinical trials, most adults with moderate to Severe Plaque Psoriasis saw 75 skin clearance. And the majority of people were clear or almost clear in just 4 months. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Make the most of every moment. Ask your dermatologist about humira, today. Clearer skin is possible. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. Could help your business didavoid hours of delaynd test caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Check your speed. See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business. Built for business. Welcome back to squawk box. The dawn of a new week on wall street. Earnings about to shine bright upon the markets. Which stocks are ready to win this season. The game of global risk. Hot spots. Shock waves. And tests of economic strength. How worried should investors be right now . And Kaiser Permanente is the largest Nonprofit Health provider in the country. A first on cnbc interview with ceo Bernard Tyson about the future of health care. The second hour of squawk box begins right now. Good morning. And welcome to squawk box on cnbc im joe kernen along with andrew ross sorkin. Becky is off today. Shell be back tomorrow. We have results the set ment. The citigroup settlement, 7 billion. Thats official. Were also expecting some results, as well. Attorney general holder in calling a mortgage conduct egregious said citigroup knew about, concealed serious and widespread defects in its precrisis mortgage business. The Justice Department and citi announcing a 7 billion settlement today, and were seeing it right now. It will be a total of 4. 5 billion in cash. And 2. 5 in consumer relief as a result. Its going to take a Second Quarter charge of 3. 8 billion pretax, pretax, and the cash portion consists of 4 billion civil monetary payment to the doj and the consumer relief it agrees to provide it by the end of 2018 which is actually the smaller part of now citigroup has resolved substantially all of the legacy issues regarding the rnbc and cbo investigation the companys been under. Were waiting for results from citigroup. The stock is up 20 cents on this news on the bid. 4720 out of 47. 40. I like that chart. I like that chart because if you think its at 47, you need to see that chart to remember its actually at 4. 70 is really where it is. Did you see there was a piece in the f. T. At lunch with vikram pandit. When was that . Over the weekend. Friday maybe . Friday . Friday friday i did get an f. T. But no i had to leave right after the show. Sorry. Lets tell the viewers about some takeover deals. We should just call them inversions. Like another day, another inversion. British Drugmaker Shire says its will to recommend abbvies latest takeover bid to shareholders. The improved bid worth about 53 billion and coming just four days after the talks between the two companies. The company that spawned abbvie also in the news this morning. Here it is. Just happened about a half hour ago abbott labs selling a portfolio of nonu. S. Drugs to mylan for 5. 3 billion in stock. Theres been a lot of speculation this could eventually turn into another inversion deal. Its not even speculation, it is what it is where mylan would move its tax home out of the United States. As you know i have problems with this. And the other piece of it is all of us taxpayers, medicare, medicaid were paying this company and now theyre deciding to leave us. And they will ultimately figure out ways to pay less taxes. They will pay taxes in the United States, but on the stuff they sell here but clearly not nearly the same amount, and then all the shenanigans that people use back and forth about how to move that money. So, i dont know. I know youre fine with it. I dont know why youre fine with it. Im fine with it because its all legal and under the law. And if they want to prevent this from happening, obama, instead of the government needs to do something about it. Grandstanding on all these issues that seem to me of lesser importance. I agree. We need tax reform. I would be using the bully pulpit to load on Corporate Tax reform. Id have done it five years ago before i did obamacare. I probably would have led on Corporate Tax reform. The economy would be better off. If i can get you the rate down to lets say 25 . I dont even think he wants to go hes not going you want to go to zero. There are republicans who want to go to zero. Larry wants to go to zero. I would go to 20 pop would you take 25 at this point . Get rid of all the loopholes . 25 puts us in a better position. Were one of the highest in the world. Im not sure 25 would stop myran and thats sort of the rub on all of this. Youve got to go much lower and figure out how youre going to pay for the roads and everything else. Back to earnings season. Dominic chu has been getting up early and coming on the show and running the numbers and hes ready to talk expectations. Dominic. You know how much i love you guys, right . We love you. Thats the reason why i do the Earnings Reports for you guys early. Lets start off with the top five. We scanned the s p 500. Look for over the past four quarters and the companies that perform the best on average the day after earnings. These are the ones that give out big earnings pop right after the Earnings Report comes out. So number five on our list is chipotle mexican grill. Its up on average about 8 over the last four quarters. Now remember, a lot of these have one or two big Earnings Reports that skew things. Chipotle last fall reported revenue was up 18 from the same time last year. It opened 37 new restaurants in that quarter alone. So a growth story helping to drive one or two Earnings Reports there. Helping to really push those numbers. Number four on our list here is Electronic Arts, the video gamemaker. Its up on average about 9 the day after earnings. Back in may, Electronic Arts last may surged more than 20 in one day on investor confidence, and at least a turnaround for this particular company. Those shares up big over the past four quarters. Now facebook, this stock soared after earnings last summer posting strong results, investors got more ambitious, and more optimistic about their mobile ad business that means on average over the last four quarters its up 11 the day after earnings. Number two on our list, pitney bowes, old world industrial Type Services company, in january, pitney bowes said that revenue was driven by strong performances, Digital Commerce solutions and enterprise sector. That stock on average up almost 12 the day after earnings just in the last four quarters. And our number one s p 500 earnings standout the day after earnings is Green Mountain coffee. Now known as keurig Green Mountain. It was up 26 in february. Remember that was the time that cocacola said it was buying a stake in the company. It reports earnings so this stock Green Mountain coffee on average, andrew, joe, the best performing s p 500 one the day after earnings at least over the past four quarters. Thank you, dominic. We also got to talk this morning about bardier just announcing a new customer for its highly anticipated and delayed c series. It is Chinese Airline boom places letter of intent for 20 c100 aircrafts. Phil lebeau joins us with more. Good morning to you. Good morning, andrew. And loom placing that letter of intent, if you will, for 20 Cseries Aircraft with bombardier means that theyre up to almost 500 orders and commitments, letters of intent for the new cseries. Bring in the coo of bombardier, and you said you were going to get up to 20 customers hopefully by the end of this year at youre at 19 how. How optimistic are you as continue to slowly but surely bring in these orders . Phil, were very, very excited with the announcement we made this morning. As we said were looking to have about 20 customers by entering service and about 300 firm orders. As you just mentioned we have 495 commitments now. 203 firm orders. 19 customers. So, were very confident that were going to achieve our goal. Youve heard the criticism that there have been a lot of issues with the cseries. The most recent of which is the Pratt Whitney engine, and the issues with the cseries engine. What exactly went wrong there and how confident are you you found the problem behind that engine failure . First of all we have found the problem. Weve been able to determine the root cause. Working with pratt in collaboration right now. We put in some modifications in the engine and were testing as we speak. The engines are in testing right now and were validating the solution to make sure that everything is okay. Of course safety is our primary concern so we want to make sure that we found the correct solution to the problem. Still on target for the first delivery in the second half of next year . Absolutely. Our entering service is targeted for the second half of next year and we feel confident well be able to get there. Obviously airbus and boeing get the lions share of the attention here. What youre doing with the cseries is trying to go into the lower end of the market in terms of size and passengers. Are you finding robust demand there . You have a lot of letters of intent but do you believe that market can grow as quickly as some of the larger areas . Absolutely. Our Market Forecast says there will be about 7,000 airplanes sold in this segment over the next 20 years. We feel its an underserved segment, and thats why you optimize an aircraft for this segment. We absolutely feel confident it will be there for us. Guy hachey, the coo of bombardier on a day they get another relatively large letter of intent commitment from a customer out of china. Guys, back to you. Okay, thank you, phil. Phils going to be back with us live from the air show in the next hour. Coming up at 8 00 a. M. Eastern hes got an exclusive interview with the coo of United Technologies. Bringing high tech to the hospital experience. Kaiser permanente the countrys largest Nonprofit Health plan just opened its new Oakland Medical Center and the coo is going to be making his cnbc debut after the break. Delivering alpha is this wednesday. Squawk box will be doing the show from the conference live. Many special guests, including lee cooperman. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Offers end july 31st. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Welcome back to squawk box. Making head lines, ebay reportedly plan to announce a partnership today. The New York Times says under the deal, sothebys will be broadcast live on a new section of ebays website. The partnership is expected to expand to eventually include things such as onlineonly sales, and teamed auctions from other sothebys houses. Can you say it . Lock your jaw i cant do it. I cant do it. Lock your teeth and say sothebys. S. A. T. Bies. To me sothebys doesnt go with ebay for some reason. It does because its an auction. Not really. Seems downmarket. If this is the auction spectrum it seems like ebay is over here and sothebys does this raise ebay or lower sothebys . I think it lowers sothebys. Okay. We got filings i cant do it. Regulatory filing shows a group of 27 top executives investors in alibaba can appoint another two directors to the companys board once it goes public on the new york stock exchange. The Group Includes cofounder jack mau. It would expand the board from 11 members to 9 to help the group strengthen investor control of the board. So best control for the shareholders. More control for the board. I dont know what we want to make of that. Lets talk about health care, Kaiser Permanente is the countrys largest Nonprofit Health plan and just opened its new Oakland Medical Center which integrates high tech into the hospital experience. With us now first on cnbc is Bernard Tyson the chairman and coo of Kaiser Permanente. You spent a billion bucks on this thing. Yep. The question i have is actually less about oakland itself, and more about what you guys are doing with technology. I see youre wearing the jawbone on your wrist. Absolutely. You have Electronic Health records that are shared. Yeah. Can what youre doing actually be integrated across the country . Meaning it works in a closed system but the holy grail for health care is to get this to work everywhere. Good morning. Absolutely we believe that it can for the entire country. We have almost 10 million members on the Electronic Medical records thats all integrated across the country. Were able to aggregate data up to look at how were performing against health outcomes. Weve demonstrated that you can improve quality of care with good information in front of our providers. And were also working on lowering the costs. And so, were a big believer what is the capital cost to make that work, though, initially . I mean you put a Huge Investment in. It was a couple of billion dollars. But, its worth the investment. What we are seeing now in terms of the returns are Higher Quality care, and were lowering costs. We can look at outcomes. We can deal with the individual and with the population. So absolutely, its worth the investment. Whats holding us back from your system being integrated with a Cleveland Clinic and the mayo clinic and mount sinai here in new york and nyu . Well, unfortunately, most of the Health Care Industry is still in stovepipe type of arrangement. What was unique about Kaiser Permanente is that we integrate all parts of the Health Care Delivery system inside of the four walls of Kaiser Permanente. So were able to bring everything to the. We could have done kaiser and skipped the aca if we could have somehow instituted that nationwide. I like what you say here bernard, im not sure what you mean. We asked you about obamacare and you go we are a lawabiding company. Therefore youre working to implement it. What if you werent law abiding you wouldnt want to implement this thing . Weve been a longterm supporter of access to care for everyone. Thats not necessarily obamacare. Well millions more are covered today. I understand. Because of the Affordable Care act. As you pointed out we needed to transform absolutely. And its doing it on its own. Its not doing it because of obamacare. But in fairness were talking about the first year of the implementation. So we think it is headed down the right path. Theres a lot of work to do. For this thing to get theres some things that can there are still some things that pay very careful attention to, in the future here. And well see, obviously, where we got our fingers crossed for how its going so far. But but i think were demonstrating at Kaiser Permanente that in the 21st century you need a 21st Century Health system. And thats what were building. And, to the extent that people now have access to care, to get inside of systems like Kaiser Permanente, through the front door, we think thats a good thing. Tell us though just about the cost. Im looking at theres a report in colorado you have a big business in colorado. Youve had double the signups that you planned. Yeah. Means theres a, theres a lot more hands on deck to do this. But, what does the cost look like for you . Well, you know, we still have work to do to better understand the costs, obviously. Because in most cases this is a new population, in which they havent had coverage before. Now, in the Kaiser Permanente system, it doesnt take us long to start really gathering the information, because of the technology that we use. And so it will probably take us a couple of years to really understand the risk profile and the cost of thats what im talking about. When you think about the risk profile and the cost for you and the cost for the system and i think what joes referring to is how much are we ultimately going to be paying as taxpayers . Whats scary is how are we going to tell for much of it youre paying already. If someone gets sick, they get care. But unfortunately its in the most expensive part of the health care system, the emergency department. As we found out because of one of the unintended consequences of obamacare, its caused a shortage of doctors, which has caused more people to utilize the emergency now than even before. So, what was supposed to bring people away from the emergency room is actually caused more visits to the emergency room, where its more expensive. All these things can happen, right . Theyre unintended. How are we going to tell people that they cant have certain drugs in the fight your or procedures because not everyone can get the best care available because theres no way to afford it . How are we going to tell people that . Well, im not sure were at the point where were saying were going to tell people you cant do that. I think that we have to look at how do we deal with all these issues in a very integrated way . Were right now having these kind of debates, as you know, with specialty drugs. On one hand its a wonderful thing. Because we have the opportunity on the other hand it costs too much. How are we going to get you saw the situation at the v. A. , and those arent bad people and no one wants to treat our veterans like that. But you know there arent enough doctors and the reason there arent enough doctors is because the demand has far outstripped the supply available at the v. A. How do we keep the entire system from going down the same road . How do we get doctors to come in and well, in the 20th century, the doctor was the centerpiece of everything. Were demonstrating at Kaiser Permanente in the 21st century, is that there are other Wonderful Health professionals who can actually help to provide care as needed. Second thing is, were demonstrating at Kaiser Permanente that the venues of care can be very different. Last year we had over 14 million Doctor Office visits virtually. It was done through the computer. These are members who have voluntarily said i prefer to talk to my doctor through the secure messaging system. Thats made available because of the Electronic Medical reports. And the ability to have the information. Be nice to finally find one of these things that can transmit, you know, pacemaker data and all kinds of stuff. Oh, thats coming. It is coming. We have a center in oakland, california, were experimenting with that. That is coming. You need to invest in sensor companies. You do. The question is how far behind these guys lead by a square mile are the leaders relative to everybody else. The question is how do you get everybody else to the same place that you are with the capital that youve spent . Well, i think if this if the citizens in this country continue to keep the conversation in front of us, the health care is unaffordable, and we, Kaiser Permanente, can demonstrate change, we will bring the rest of the industry along. But back to joes earlier question though about all these specialty drugs and the cost, who is supposed to make the final decision . Well, right now, its in the hands of the American People, and all of us. But whats the right answer . The right answer is that we have to solve, too. We cannot leave populations out because they cannot afford 85,000 worth of drugs so we have to solve it together. Right. And thats what were working on. Bernard we got to run but just because its in the news tis morning, talking about tax inversions, all these medical companies leaving the country to get lower taxes. Do you have a view on all of this . I stay away from that. I do have a view that specialty drugs are too expensive and hopefully well continue to work with pharmacy industry to lower the price. Because there is a price challenge. And should there will be price controls . I dont know what the right answer is yet but i know that its priced too expensive. A politically correct man, bernard. Thank you for joining us this morning. Appreciate it very, very much. Coming up, comedian and tv star tracy morgan recovering from a deadly accident involving a walmart truck. Now he is taking legal action against walmart. That story is next. And wicked weather expected from the midwest all the way to the east coast. A closer look at the this socalled people ar invasion. Going to be so cold, you know why, because its so warm, wreaking havoc on the summer. Squawk box will return in just a moment. Being able to pay as we go was crucial for a start up. Having to fork out a lot of money up front was risky. You can launch a feature really quick, and if the feature doesnt work, we havent lost anything and we can have something up and running in days. And this would not be possible without the cloud. We are now supporting over 25 million users each month. Ideas can be tried and tried again on the ibm cloud. The ibm cloud is the cloud for business. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. Welcome back to squawk box. Comedian tracy morgan has been released from a rehab Center Following a critical motor vehicle, a crash involving a walmart truck and his lumpo bus left him critically injured. Now hes suing walmart saying the retailer knew or should have known its truck driver was not in compliance with regulations designed to avoid driver fatigue. Shifting gears, you a mets or yankee guy . Mookie wilson was playing for the mets, i was a mets fan. The mets have won eight out of ten. I nope. Have you seen the reds . Not seen the reds. But theyve been doing okay. You know whats happening on wednesday . Right . The allstar game. So were at the break. The reds have now cut their margin, where theyre between milwaukee 1. 5 games. They enter the allstar game 1. 5 games out. And you know who what theyre doing friday, saturday and sunday . Theyre playing who . The yankees. Friday, saturday and sunday . This week. Im going to go. Youre going . Are we going to the . Are you not inviting me to come with you . Do you suggest that i root for the reds and wear absolutely. Only so you get heckled. Im afraid. More squawk in just a moment. Looks like were about to board. Mmhmm. Im just comparing Car Insurance rates at progressive. Com. Is that where they show the other guys rates, too . Mmhmm. Cool. Yeah. Hi. Final boarding call for flight 294. [ bells ring on sign ] [ vehicle beeping ] whos ready for the garlic festival . This guy bringing our competitors rates to you now, thats progressive. Good morning. Welcome back to squawk box. It is official. Citigroup agreeing to pay 7 billion to settle u. S. Government investigation into mortgagebacked securities. That bank, theyre going to take a related pretax charge of about 3. 8 billion in the Second Quarter. Citi set to post Quarterly Results before the bell this morning. Also, we got a bit of deal news. Acom technologies will buy Urs Corporation for 4 billion in cash and stock. Urs stock holders will get 33 per share in cash and about three quarters of aecom shares for each share that they now hold. Another deal would create the Largest Oil Producer in north dakotas shale region, Whiting Petroleum will buy kodiak oil and gas for 3. 8 billion in stock. That deal will lift it past the current production leader continental resources, which of course is controlled by billionaire harold hamm. And we didnt talk about all the inversions going on this morning but this mylan deal with abbott labs is something else. Also the violence escalating in gaza. Eamon modine joins us with more. Good morning, guys. As it has been for the past several days overnight tends to be the most intense time of the day for that israeli shelling of gaza. Yesterday some serious developments are having humanitarian implications on the ground. The Israeli Military began warning thousands of residents that live on the northern part of the gaza strip that they needed to leave their homes or risk facing injury. Israel is stepping up its campaign to stop palestinian rocket fire out of gaza into israel. And so that sent people very much running for their lives. 17,000 palestinians have now taken up shelters at u. N. Schools that are being converted into these types of refugee camps or makeshift shelters. U. N. Officials say they dont have enough resources to cope with as many as 300,000 people in terms of what they expect to be displaced as a result of a ground invasion. This morning some significant military developments. Hamas military wing claim to have launched three drones into israel, over israeli airspace before the Israeli Military shot it down. And on the northern border between israel and lebanon, lebanese sources there say that two rockets were fired deep into israel before the Israeli Military responded. So it gives you a sense that as this conflict drags on there could be the concern that tensions spill over across borders elsewhere. Here the death toll continues to mount. 170 palestinians killed in the days of fighting and there have been a few that are able to get out as a result of the u. N. Evacuating foreign nationals. Guys, back to you. Ayman, thank you. Lets get more on the situation in israel. Plus the challenges ahead for china, brazil, portugal, and more joining us now is vice chairman at Kissinger Associates and former Goldman Sachs International Vice chairman. Also a former state Department Undersecretary for Economic Growth energy and the environment. Also with us, Michelle Carusocabrera our chief international correspondent. Both of these people love hillary like who do you think loves hillary more you or he does. Probably you. Im a great admirer. And you are i admire her, as well. You do . I have different issues on policy. If she is elected, where am i going to be sending my postmark date . Where will you end up being ambassador . Whats your job . I have no idea. What do you want . Im not lobbying. Im not asking. I just want her to be elected. Good for the country and good for the world. And good for hormats, youre not going to say anything. You like to go to malta . You and i will consult when the time arrives. The journals piece, an arc of instability, unseen since the 70s. It was like david lenharts piece last week, andrew. The president unfortunately, through no fault of his own, has got this economy thats not cooperating. And, through no fault of his own, has got this arc of instability. He got in at the wrong time, and a lot of things just started going wrong through no fault of his own michelle. Can that head line in the journal today really struck me as well. An arc of instability unseen since the 70s. Ouch. What else happened how come both things are happening, its weird, isnt it . Coincidental . Its very unfortunately. Ayman gave us a heads up on what happened in israel and gaza over the weekend. Let me show you in general foreign policywise it wasnt a great weekend for the United States. The deal with iran looks like its on the verge of failure when it comes to their nuclear program. The israel gaza situation continues to be very, very hot. It looks like iraq is still getting ever closer to disintegration at this point because it looks like the kurds are trying to pull out as we long suspected they would. Maliki wont leave despite everybody telling him to do so. Finally what i was struck by, putten in the western hemisphere. Russia going to visit cuba . Argentina striking deals with christina concernner, something that 20 years ago was of course, inconceivable. I think he feels so emboldened he can come into our backyard and do this and thumb his nose at us. Thats one of the interesting parts of this that he now feels confident enough in his own area that hes going out and trying to develop these ties. And of course he took advantage of the opportunity to have a talk with chancellor merkel, and our relations with the germans, as you know, particularly with the chancellor, have not been very good. So putin is now feeling a much stronger position. On the other hand he still has a lot of issues in ukraine. Sure. And he doesnt want to push further in ukraine, in part because he probably doesnt feel he has to. And in part because he doesnt want tougher sanctions. Because their own economy, the russian economy, is in poor shape. But he is very proactive. And we shouldnt forget the fact that theyve put military planes into iraq. America pulled out. They have now these su25 planes that are going there to help the iraqis in dealing with isis. What do you make of this head line . An arc of instability unseen since the 70s. I think it is true. Why is it true . I think its true because first of all, for Different Reasons you have different types of problems. The South China Sea issues. Korea. You know the spirit of my question, is it a failure on the part of the United States to not take a more leading role in the world . I think there are certain areas, for instance syria, where the United States did make some major mistakes in the way we dealt with the issue early on. Ahha. So thats where hillary wanted to be much more activist. And i think whenever it goes off topic i think it also goes to credibility. Thats the second point. The other is a lot of these things, iraq at some point was going to have a problem. The United States had to pull out. And the kurds wanted to establish a much stronger entity there which theyre going to do. Theres this radical movement isis thats billing up. And then you get the bombing of israel by hamas. Why are they doing this . In part because believe it or not the iranians have cut hamas off tom friedman had a commentary. Is it beyond our control . Meaning, we keep saying are we to blame . So, you know, are we to blame . Or are there so many extraneous and sort of exogenous factors that we i think it would be a great mistake to assume that were to blame for all this. I think theres specific mistakes that are made. But i think no ones really saying that. Theyre just talking about theres a vacuum in the world but the question is, what role are we supposed to play . Not every single one. You dont think we could have had a positive effect on any of these situations if we had a more possibly. No, no, possibly. But we have this sort of ego maniacal view that everything that happens over there the american competitionalism thing has to do with us. Thank god we learned were not exceptional. Iraq, no one wanted to stay in there. Iraq had its own internal forces that were at play and when we left, that gave strength to those forces. You have isis. I dont think theres much that we could have done its not just that we left though, right . President obama from the beginning when he makes the big speech in the middle east and says were a different country and basically says were taking the gloves off, everything it emboldened anybody who had been suppressed for decades. He always says times when were going to be out and they have to wait it out and they know exactly when setting deadlines was, i think, insisted upon by the American People but of course when you do set the deadlines some of these other groups figure we have an opportunity did you like our 5 for 1 swap . I was very surprised at that. Very surprised. Does that mean you liked it or you didnt like it . I wasnt no i didnt particularly like it at all. So there are some i didnt think the timing was good, either. It gave a very bad we wanted to get this guy back. It gave a very bad signal. Finally you would say there are you may have made a few mistakes. Not may, did. But i dont think you can blame this whole series of events on that. I think there are a lot of internal forces in the middle east. Countries have tried to steer that area in the direction they want for decades. The problem is the United States needs to remain involved to a degree, but it really doesnt have as much influence, and in the past we havent had a great deal of influence, either, over a lot of foergss. There are internal forces that are bigger than us and bigger than other countries that try to influence them and were seeing isis is one of them. And youre seeing also it makes strange bed fellows but there are opportunities here. Totally strange. We dont know what to do. These terrorist groups are a problem for china. Theyre a problem for russia. Theyre a problem for iran. Theyre a problem if we had helped the syrian rebels, wed be now hearing that those are the guys that are isis anyway. So thats what happened in afghanistan. We helped rebels, and what happened to them. Can we real quick, can you explain why stocks, i mean, are as immune as they have been . No, he actually cant. No but im just curious you might have a take on this. The fact is the interesting thing is, if stocks were to be affected largely because the impact of all this on energy, and its had so far very little impact on energy, living in production, believe it or not but its remarkable that the market has not cared about any of this. All of this instability, and nobody seems to i think because collectively the market can look back and say weve got through the 70s, the 80s, weve seen israel over and over again. If it does hit energy, the market will not be so immune. The fed is still in emergency comization mode with the economy youve got the fed moving in the right direction. Energy, because most of the oil in iraq is in the southern part of iraq not yet affected by this. And libyan production is up a little bit. So if this spreads, i think it will have an effect. But so far, remarkably little. As bad as it is, and its not going to get any better. Someone, andrew, tweeted in a video. Yep. Of if in the office if it was a soccer game. And theres like normal Office Workers and theyre walking by and one guy just barely brushes a persons arm and they go down, and theyre in agony. And theyre screaming. Can you imagine in normal life if there was soccer flopping. Like i was reading, i got a paper cut earlier, i would have had to leave. I would have had to leave the set. You would be all we do this every day. And the paper would have been given a yellow card. A yellow card. Or a red card. This is hilarious. Its about a sixminute video that someone sent in. Other people have noticed. I think they need to acting . Yes, the flopping. It hurts the game. Its constant. Its are you suggesting while bob hard mats has been telling us all this interesting information youve been youre outing me on not listening to everything a guest says andrew . You think that works . I know you pay rapt attention. I am. So he can do two things at once. I can. And ive been emailing. I actually paid all my bills. Okay, bob, thank you for being here. Thanks for having me. I cant practice pronunciation. You know me, a polar invasion is on the way in the heart of summer. Its a bit unusual, yes. And we are going to talk go the Science Behind the weather event that apparently is going to grip the nation over the next couple of days. Tomorrow on squawk box, pimco chief economist Paul Mcculley is our guest host. Plus earnings from Goldman Sachs and jpmorgan. The cadillac summer collection is here. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk box this morning. See how the market is setting itself up. We had a couple of Earnings Reports plus some merger deals this morning. Dow looks like it will open up higher about 75 points. S p 500 up closer to 8. 5 points. The nasdaq looking up, as well. Were going to be getting getting citi but we also had a number of mergers already so the analyst spirits are out including some inversions. Making head lines 2 1 2 years after it crashed off an italian island the cruiseliner Costa Concordia is being refloated today. Removing the 112,000 ship has already cost nearly a billion dollars. Air being pumped into large metal boxes attached around the hull of the ship to slowly bring it to the surface. That process will take about a week. The wreckage will then be towed very slowly to genoa where it will then be scrapped. A major cold snap making its way over to the east coast this week right at the height of the summer. Lets get more on the Science Behind from a industry expert. Joining us is William Happer a physics professor. So many Different Things to talk about. A polar vortex has to be really cold. I dont even know what i never heard the term polar vortex until this year just sort of to explain how a cold winter can fit into the overall notion of a planet thats warming. It almost seems made up to me. But whats happening right now with this cold weather . Well, this is a very normal outbreak of cold air. It doesnt happen every year, but its by no means unprecedented. There have been many years in the past with summers just like this. Well, we havent there hasnt been anything thats been unprecedented, professor. And i was reading some of your comments about now that we have satellite data we have a lot more knowledge in the last, i dont know, 30 or 40 years of weather events than we ever did which makes it seem like theyre all more frequent or unprecedented when were able to notice them. One thing that i noticed was in the typhoon that was over in hainan, remember that, we called that the strongest storm ever because satellite data showed that it was 200 Miles Per Hour but none of the ground stations in the philippines that had monitored that typhoon, and all the previous ones, none of them got above about 150 or 160 miles an hour. So the satellite data caused all the major News Services to call it the strongest ever when, in fact, on the ground it was no more than a garden variety typhoon. Yes, thats one of the problems were facing. Is that weve only had satellite data since about 1980. And so were making all sorts of generalizations on the basis of data thats not correlated with anything that weve had in the past. Let me get right to the crux of the matter, because, you are a physicist. You were one of the physicists early on that described the greenhouse effect of Carbon Dioxide. And that eventually it could cause an overall warming in the climate. But the models that were designed at this point have not really accurately predicted what was going to happen. Do you still have you changed your hypothesis on co2s, and i do always stress that its Carbon Dioxide. Because they constantly call it carbon to conjure up that picture there, of black smoke. But how do you explain that if co2 is at 400 parts per million that were not seeing the same type of inyees in Global Temperatures . Well, i think that people have grossly overestimated the ability of co2 itself to cause warming. Of course it will cause some warming but if you look at the models they have all sorts of positive feedback built into th them. They dont take into account clouds very well. So a slight change in cloudiness can completely compensate for anything that co2 can do. So the models themselves, what were the feedback . Because theyve heard that they use the water vapor as a feedback. Thats the biggest greenhouse gas, and they use that to try to forecast do they have a vested interest in the models having, you know, higher warming prediction . Yes, of course, they have a vested interest. Because, if theres not very much warming, co2 is very clearly a benefit. If you look at the past history of the earth over most of the time since the higher life theres been much higher co2 levels than now. They point out you constantly hear since man has been around co2 levels have never been that high. Although mans only been around for 11 seconds out of a 24hour day if you date the length of the earth. The models at this point have not accurately predicted the last 18 years. Is that safe to say . Oh, yes. Theyve been terrible. I mean theyve overpredicted warming by factors of five to ten. Five to ten. So how much confidence at this point do you have in models that show a 2 increase in celsius over the next 100 years . I dont think anyone has any confidence in them. I certainly dont have confidence in them. Im immediately going to get mail that youre funded by exxon or by the hydrocarbon industry. Do you have any vested interest, any conflicts that cause you to have these views that many people would say antiscience or at least against the Scientific Community . Well, you know, i consider myself part of the scientifenie community. You must get a lot of flak, dont you professor . Dont you get a lot of flak . Yeah, of course. So what, you know. Thats been true forever. You know when galileo had his tiff with the church he got a lot of flak, too. Go ahead, andrew. Professor, i have some issues with all of this, obviously, because you dont believe in Climate Change, at all. You made a comment just a minute. Just a minute. Just a minute. I believe in Climate Change. Shut up. Sir, im open to all ideas. You made a comment back in 2009 comparing Climate Change to the holocaust. And my question is, are you suggesting, when you made that comment, that climatologists and climate scientists are the equivalent of hitler and nazis . I mean thats what seems like you were trying to say. You know, you know, i get called a denier, and anyone who objects to all of the hype gets called a denier. Thats supposed to make me a holocaust denier. You know, im getting tired of that. And the comment i made was the demonization of Carbon Dioxide is just like the demonization of the poor jews under hitler. Carbon dioxide is actually a benefit to the world, and so were the jews. How much money did you take from exxon over the years in the offs i havent taken a dime from exxon. I have not taken one dime from exxon. The foundation that you worked for didnt take money from exxon . You werent paid by them . I dont work for the foundation. Im a trustee of the marshall ins tight and im proud of it. The Marshall Institute for example stood for missile defense, which have saved a lot of lives in israel over the last two weeks. I mean i get no thanks to many of its opponents. All right, professor. We appreciate your time today. I get accused of i have no i put gasoline in my car. Therefore, i thats my vested interest in i do use gasoline. I do use im open to all these views. Do you think that any of the alarmists have a vested interest in this working out . I think a lot of people have a lot of vested interest in a lot of things. But i wanted to make clear he has a vested interest in this as well. A big week on wall street. Lots of Economic News to digest. Plus earnings from major dow components. Plus farm from the farnborough air show including an exclusive interview with the ceo of United Technologies. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. White chocolate loversividual. Dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their chocolate. We needed a scalable Cloud Solution allowing them to select what they are looking for. Now there is endless opportunity to indulge. Customization is made with the ibm cloud. The ibm cloud is the cloud for business. Take a look at some stocks to watch this morning. Apple is upgraded from overweight to equal weight at barclays. The firm says the ceo has solidified a strategy and regained the confidence of shareholders, presumably with that excellent buy of beast which everyone seems to like now, even the people that didnt at first. And what now you like it . And tripadvisor downgraded to neutral from buy have you seen tim lately . I might have seen tim. The analysts citing valuation noting that the 30 year to date gain in the stock right now. Right. Thats about the most you can say. Exclusive interview with the ceo of United Technologies and the ceo of alcoa Klaus Kleinfeld is going to join us live from farnborough. Kid hey dad, who was that man . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . 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Like all standardized Medicare Supplement insurance plans, they help cover some of what medicare doesnt pay and could really save you in outofpocket medical costs. Call now. With a Medicare Supplement plan, youll be able to stay with your doctor. Oh, you know, i love that guy. Mmhmm. [ male announcer ] these types of plans let you visit any doctor or hospital that accepts medicare patients. And there are no networks. You do your pushups today . Prepare to be amazed. [ male announcer ] dont wait. Call today to request your free decision guide and find the aarp Medicare Supplement plan to go the distance with you. Go long. Citigroup, the big bank that we wait for every quarter, is reporting results. And the companys better than expectations and the stock is immediately trading sharply higher on the news. Up about 1. 25. The Company Reported 1. 24. The estimate as you can see was 1. 05. The revenue estimate was about 19. 366. And it looks like the company beat the revenue estimate as you can see. 19. 34 billion versus the 18. 92 billion estimates of 300, 400 million ahead of that. The sources of the revenue beat the markets in trading wasnt as bad as the company had expected. Consumer banking, though, was flat. Cost of credit was a little better than expected. And for the first time recently, Citi Holdings was actually profitable. No comment anywhere at this point. I havent seen anything on the settlement on the mortgage settlement that the company talked about. Assets now at 111 billion. The Second Quarter net number includes a pretax charge of 3. Billion which we talked about based on that legal settlement. Posttax probably isnt one of the thing people sometimes argue about. They get some tax benefits when they make these settlements. Legal charge related to the cbo and the rnbs settles all claims. The loan loss reserve 641 million the results. Now weve got it at up 1. 55 right now. Up 3. 5 . Still want to know where all the money goes. For the settlement . Yeah. 4 billion goes back to 3. 5 billion goes to people, 4 billion goes to the Justice Department. Salaries, expenses. Hard drive destruction at theers. Irs. Weve got some other stuff to talk about including a flurry of monday morning deals. If its a monday its an inversion is whats going on really. Mylan labs buying a portfolio of drugs from abbott labs for about 5. 3 billion in stock. Company says this further allows it to diversify its assets outside the u. S. The ceo of mylan will be on closing bell at 3 30 eastern time this afternoon. The important part of this transaction, heather leaving the shores of the United States to go find a lower tax rate elsewhere. White petroleum buying kodiak oil and gas for 13. 9 a share in stock or 3. 8 billion. That creating the largest producer of north dakotas gas and shale. And Aecom Technology acquiring urs for 56. 31 a share in cash and stock total price tag about 4 billion. Ura has been under pressure from activist investor partners to enhance shareholder value. The other inversion, shire saying its ready to recommend a new 53 billion takeover offer from abbvie. The company entering talks after abbvie made a fifth bid. Again taking the headquarters, and everything else, the two are now in detailed talks. Also lets talk about swiss chocolatemaker lindt is buying russell stover. Price not disclosed. That would make it the number three chocolate manufacturer in north america. Earnings season is in full swing. Joining us is Charles Biedermann founder and chairman of trim tabs investment research, the trim tabs float shrink has beaten the s p by 15 Percentage Points since inception in 2011. Charles, do the underlying fundamentals, whether its gdp, or earnings that youre seeing, does that explain to you, does that justify where the market is right now . Or do you just point to yellen andco . It has nothing to do with the market. People think earnings are important. But prove it. Earnings have academically prices. Knowing future earnings. All there is in the stock market are shares of stock and money. And since Ten Companies have been reducing the number of shares outstanding institutions own 80 of the s p 500. So when institutions get cash in exchange for shares they have to replace their holdings. More money chases few ear shares. Lets see, what will happen then . So its as simple as that. The government really believes in free money. Your good buddy paul krugman says so. Youre talking andrew now charles. Yes. I was being facetious. Oh, its me. We havent talked in a long time. So i could you know. Exactly yeah my good buddy. So does this mean though, charles, without question that theres a day of reckoning coming or is this okay . Well, supposedly this bridge created by free money to boost the wealth of americans who own assets and also to give free money to the poor people to bring up their level, so that, you know, the poor are doing better now and the rich are doing better now with all this free money. Hopefully all this was done to at some point u. S. Economy would start greing more rapidly and the government wouldnt need to do this. Unfortunately were seeing income after inflation, wage and salaries of 139 million americans with jobs subject to withholding is growing under 3 the last few months. Were seeing another slowdown in growth. It was 4 , slowing to under 3 so were going to have another second half economic slowdown. The market doesnt know this. But the market doesnt care as long as Companies Keep shrinking the float. What does this say about the individual investor . Im looking at some numbers, 100 billion added to equity mutual funds and etfs in the past year, ten times more than the previous twelve months . 100 billion. Oh, etfs. Yep. Well, etfs are theres no knowing how much money is going into etfs is from individuals and from institutions. You should know that after inflation earnings are below 3 , individuals are not make iing enough money to generate money for investment. No real money has been going into the market over the past few years from individuals. If you look at your ratings, if you look at individual flows into the market, its not there. Our ratings are tied to volume and volatility. Youre right theres a lot of different ways to measure this. Did you you probably saw that piece that kevin warsh piece, former fed guy about this is a Balance Sheet recovery thats been orchestrated by the fed au. Joe, do you do you believe the government numbers . I dont believe the i think that its a survey. Its a survey of 15,000 manufacturers, once a month. Its a survey of 125,000 manufactures, you know, not manufactures, employers, once a month, with lots of locations but theres Realtime Data available, bureau of labor statistics doesnt want to look at. Thats income tax payments. They dont want to analyze that. And determine how many people are working, how much theyre making in realtime. That would be like why do we need to know that . We need you its been too long. Were going to have you back, charles, because well, i appreciate it. Youre one of the few f and n people that i remember way back in the day. I know all the way back. I know. We dont want to talk about that too much because that was like it was in the 80s. Anyway, thank you. Charles biedermann, we appreciate it. I got there in 1990. 1990. When we return, reaction to citis earnings out just moments ago. Were going to find out what one analyst is saying about the stock after the numbers. Check out the squawk box market indicator. Up next United Technologies, showcasing a number of new Aircraft Systems today in farnborough from commercial aviation to hightech defense, the companys ceo joins us to talk business. The global economy, and the future of flight. Being a keen observer of the world has gotten you far, but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Could help your business didavoid hours of delaynd test caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Check your speed. See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business. Built for business. Welcome back to squawk box this morning. Take a look at futures right now. We did have that Earnings Report from citi. 92. Dow looks like up 92 points. S p close to 10 points. Nasdaq up close to 20 points. Also we should say that citigroup shares getting that boost this morning. Earnings of 1. 24. Beating the street by 19 cents a share. Revenue topping expectations. The company taking a 3. 9 billion pretax charge in the Second Quarter for the mart settlement we talked about with the government. Were going to talk to a banking analyst in the next half hour to run through some of those numbers. Youre seeing the stock up 4 . Maybe our guys got a running now. Maybe its happening. Its tough to turn that thats like turning around look at that chart. Maybe this is a time. United technologies, major supplier for two of the biggest stories coming out of the farnborough air show. This morning the high price tag f35 and the much delayed cseries. Phil lebeau joins us with an exclusive interview of the ceo of United Technologies. Hello again, phil. Hey, jaw i want to bring in Louis Chenevert the chairman and ceo of United Technologies. You guys have a big role to play here and a couple of big story lines. Lets start with one that gets a lot of attention alcoa announcing a 1. 1 billion deal with you guys. When youre looking at the aircraft engine market right now, you believe that theres no slowing down at this point, correct . Phil, first of all, thank you very much for the opportunity to be here with you. Again this afternoon. If you go back a year ago, we had 3500 engine orders for the gear turbo fan that goes on different platforms. We show up starting 500 engine orders. By the time the show gets done well probably have 6,000 orders. The supply chain and strategic deals that go announced today with alcoa are very important to support the rampup of the production that were going to have in the next couple years. Yet two of your engines are at the center of questions people have. Lets start first off with the cseries. You had a very public cseries engine failure. A Pratt Whitney engine, you believe that you guys have found the root cause there and youre close to getting it certified again. Where do things stand there . Well, first of all, in Development Program it happens that you have a few things that these three address and the cseries engine is certified. We have basically an issue that we have done root cause on, and i think with the customer bombardier, were very comfortable that there were now developing the testing. Finalizing the testing so they could return to flight very quickly. Within a couple of weeks potentially . Within a couple of weeks absolutely. And bombardier, i think, shares our passion to make sure we sell these airplanes that have 20 better fuel burn. Lower emission. Meanwhile youve got the f35 which also has a Pratt Whitney engine. You had the fire in florida in late june. It was supposed to fly today. Its not flying today. May not fly at this show. What happened there and when will you feel that the dod is confident its ready to fly again . First of all the dod is one of our large e customer. We always work very closely with them. The f35, you know, im still hoping that it shows up at this show. I think theres still a chance. Bit you got to look at it from the macro level. Its going to be a very successful platform. You got eight countries part of the program. All services have agreed to buy the f35. It builds on a core. The Pratt Whitney core comes from an airplane that has over half a million hours. Its a very mature core. When you design such pushing the envelope with the propugs and aircraft sometimes you encounter things, and you want to find those things now, and we have and im very comfortable working with the customer, return those issues, return the aircraft to flight shortly. Louis, joes got a question for you. Go ahead. Thank you, phil. Louis, two things we talk about a lot is Corporate Tax reform and inversions. We had a couple today. Im thinking, if utx ever tried and inversion, i think congress would probably i think something would happen if we were going to lose Something Like a utx that you would domicile somewhere else. Even though we pretend to allow the flow of capital, and assets, freely in this country. I think that might raise enough eyebrows where wed actually do something. Do you agree with that that you couldnt do it. Would you be motivated to try . Is you nighted technologies at a competitive disadvantage because of the tax rate and the territorial system we have here . Well, joe, first of all, im the chairman of the Business Roundtable Tax Committee and thats the reason why i took that responsibility is to make sure that were at the forefront working with congress, working with senate to try to get tax reform which is really needed in the u. S. I think we have very good alignment amongst key leaders of the global businesses in america to do tax reform. And in my view, you know, all these speculation on inversions, et cetera, theres this false impression when you do an inversion also you go from things, the current tax rate to not paying any taxes. It is not true. In some cases the benefit is low single digit and rather i mean i think what americans need is true tax reform and thats why im sheerheading the whole effort on behalf of the Business Roundtable. Louis, what do you make of the debate over the xm bank, and some of the people on the right who suggest that this is crony capitalism at its worst . Joe, again, a very important point the exem bank discussion what the Industry Needs is a level Playing Field. Every country has different formula to support exporting their own product in the case of america its done through exem bank and i think they help create the level Playing Field and i know theres a Strong Coalition with several players to make sure that we have the reapproval of some of the regulations that support the aircraft for sales on exporting our products. Louis we talked with jim mcnerney this morning and he said if we dont get exem reauthorized boeing potentially loses orders. You talked with all of players in the aviation industry. What is the likelihood an airline in asia, europe or the middle east would not go with boeing and instead go with airbus or somebody else if they dont have exem, the exem bank there . I think this is why getting the approval for exem bank is critical and as you mentioned perhaps by jim mcnerney the manufacturers of Aerospace Product benefit from the financing thats offered through its customer by exim and i think customers have come to also expect that this is kind of whats normalizes, equalizes the sales of aircraft around the world. So they could go else where . They effective could go elsewhere but if the same support is not available from other countries. Louis chenevert the chairman and ceo of United Technologies. Youre the man in the middle of a lot of action at the farnborough air show. Thank you. Great, phil. Good start to the show. Awesome, great. Thanks for bringing us mr. Chenevert who we wish we always seem to talk to him at farnborough. I wish hed come in. It would be great. Hes welcome any time. Coming up, great. Coming up, my impersonation of flopping. Soccer flopping at the office. I was reading the paper and i got a paper cut and im still here. I just want you to know that. That im still here. Unlike actually that one guy got hit in the face and was bleeding all over the place. He got a stitch he came right back in. You didnt watch the game. I was on an airplane. With a screaming toddler. Actually with two screaming toddlers. My own. So thats okay . In coach. Sitting in coach. Okay. Plus citis i dont want you sitting in coach. It makes us look bad at the show. You are man of the people. Man of the people. Plus, citi stock isnt flopping after Quarterly Results. Well hear from an analyst in just a bit. Still to come, alcoa ceo Klaus Kleinfeld on the companys recent deal with airbus. And how the Companys Aerospace business is taking off. He joins us live from the farnborough air show right after the break. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening. They dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Give fans more then just the game with the ibm cloud. The ibm cloud is the cloud for business. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Dont cry for me argentina the truth is welcome back to squawk box world cups finally over. Germany beating argentina 10 in extra time. Celebrations in berlin and some rioting in buenos aires. That was a really good goal. I got to take off i went and ran and came back, but the games i watched toward the end, i am a soccer fan. Im kind of sold now, and im looking forward to watching it. But i do think that the sport has to do what can we do about the guys when they look like its a very minor, like they barely get touched by someone, and it just they get an oscar for this. What is this . Aaah are you hold on. Come here. Come here. I got a yellow card right here. Here you go. And youre getting a yellow card for just bad drama. Yeah, i cant read. I mean, he you got to take us out. They got to do something with that. Dont you yeah, thats nice. Coming up, this was the yellow card. This is the best we can do. Its a business yellow card. Did my slow motion work or there was you think theres a sag award in this for you . Their acting is bad. I deliberately acted bad, because per game someone should count the number of times the game is stopped. Thats why they have to add minutes at the end. The number of times that the game is stopped for a totally faux injury, right . And they have to do it because its the outcome of the game can be dependent on whether you get a yellow card or a red card or something happens. So they all have to do it. The level keeps going higher and higher and higher. Weve got to give you acting lessons and them, too. Anyhow when we come back a ceo does he know how to act . Alcoa. At the farnborough air show. I tried to act and my instrument is clogged. The largest supplier of aluminum, the planemaker giving us his assessment of the industry and the overall economy. As we head to a break take a look at u. S. Equity futures. Can get a 1,000 rsou turbocharged reward card with a new volkswagen turbo. So why are we so obsessed with turbo . Because theres nothing more exhilarating than a powerful ride. And you can get that in places you might not expect. Like the passat. And also in the funtodrive jetta. In fact, volkswagen has sold more turbos than any other brand over the last ten years. That is a lot of turbo. Vo hurry in and you can get a 1,000 turbocharged reward card when you lease a new 2014 passat s for 219 a month. [b ll rings] time and sales data. Splitsecond stats. Its so close to the options floor, youll bust your brainbox. All on thinkorswim, from td ameritrade. Welcome back to squawk box this morning. In the news, citigroup hosting better than expected earnings and revenue earlier this hour. The companys ceo said the firms businesses were resilient in the face of an uneven economy. Also we should tell you about apple this morning. Its been upgraded to overweight from equal weight at barclays. Firm says ceo tim cook has solidified his strategy and regained the confidence of shareholders. Also, Intercept Pharmaceuticals is rising in premarket trading. Isi group names intercept as one of several potential takeover targets for gill atsciences which it says has an abundance of cash to make deals. That however would probably not be an inversion and allergan just filed a new investor presentation. Check it out if youre paying attention to this transaction. Which it continues to rebuff buyout over valeants pharmaceutical. Future Business Prospects are unsupported and that its own businesses would be at risk under valeant ownership. We saw the ceo of that company on with jim cramer on mad money just last week defending its decision to try to block that takeover. And then we got sothebys. Lock your back teeth. Lock your back jaw. Sothebys. And ebay. Yeah. You want me to read that . It says your name next to it. I was trying to figure out what exactly that chart was weird and we didnt explain it. Sothebys and ebay reportedly plan to announce a partnership today. The New York Times says under the deal sothebys new york auctions will be broadcast live on a new section of ebays website. Its kind of interesting. They are auctions, right, and ebay you figure online. Youd farm that out to them instead of trying to do it yourself. Partnership expected to expand to eventually include things like online only sales and streamed auctions from other sothebys houses. I wouldnt just try to sell the 40 million stuff. Id want to be in the auction business if i were sothebys if i were running that company. Wouldnt you . I thought you said it was going to make it seem downscale. What was what i said at 6 00. You changing your view at 8 00 . I have a lot of different views. Depends. A regulatory filing shows a group of 27 top executives and investors in alibaba can appoint another two directors to the companys board once it goes public on the nyse. The move would expand the chinese ee commercial Company Board to 11 members from nine. It will help them strengthen control of that board. Okay. Up next, im looking at this by the way, im looking at the mylan deal. I want to talk about that when we come back. We had a lot to do. Oh, we should also tell you about citigroup. Citigroup reporting second Quarter Results just a short while ago. Lets get a little more reaction to the numbers. Join us is david helder, banking analyst at drexel hamilton. Good morning to you, david. Good morning. Give us sort of your quick head line view on what you see here. Well, of course, the big news is the settlement. And i think its very important for citi that they get that out of the way before going in to the capital and the feds approval process next year. In terms of earnings they were a little bit better than expected if you exclude the settlement. Investment banking was strong up 3 year over year. Equities more than fixed income. And theyre still in a very good capital position. Their common ratio is over 10 . In terms of the settlement, though, much worse than you expected . Better than expected . Theres a back story in the New York Times and the journal about how benghazi may have affected it . I think the 7 billion number had been pretty widely reported by the journal and the New York Times and bloomberg over the past couple of weeks. So i dont think the 7 billion number was a surprise. And i think the 3. 8 billion pretax charge was probably a little bit less than some had expected. I was thinking that the inkreemtal charge for the settlement might be as much as 5 billion so 3. 8 is fine. What is your target price on the stock now . Target price is 58. How are we going to get there . What has to happen . Because it seems like a lot has to happen to get you there. One thing citi is the only major bank trading below tangible book value, about 15 or 16 discount to tangible book value. I think as we see the losses in Citi Holdings, which the mortgage and other related assets that are being run off, as we see that turn from losing a billion dollars per quarter to making 244 million ex the settlement i think thats very important. I think over time citi stock will trade more toward tangible book value and like other banks eventually trade at a premium to tangible book value. Its mostly about getting the roe up and having the ability to distribute say 6 billion, 7 billion in excess capital next year. Can you give me a grade on michael corbatts performance so far . Id say b plus. He was belt a very difficult hand and i think his current focus on getting through the Capital Planning process will be a success. And i think at that point we could move him up to an a. Should we care about whats happened in mexico . Is that over . The losses are what they are. Its kind of extraordinary to lose that much money in a secured lending business. But clearly citi was the victim of fraud. And it looks like it was not only one or more citi employees, but fraud at one of the borrowers, as well. So the investigation will take awhile. But i think the economic consequences of that are done. Okay david were going to leave the conversation there. Youre watching that stock up in the premarket this morning. Coming up next, alcoa striking a deal with united tech earlier this morning at the farnborough air show. Ceo klaus clean field is going to join us after the big. Delivering alpha conference will be taking place on wednesday. Interviews and live lookins all day. Were going to kick things off right here on squawk box with leon cooperman, former white house chief of staff bill daly. Squawk box returns right after this. We do . I took the trash out. I know. And thank you so much for that. I think we should get a Medicare Supplement insurance plan. Right now . [ male announcer ] whether youre new to medicare or not, you may know it only covers about 80 of your part b medical expenses. Its up to you to pay the difference. So think about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they help cover some of what medicare doesnt pay and could really save you in outofpocket medical costs. Call now. With a Medicare Supplement plan, youll be able to stay with your doctor. Oh, you know, i love that guy. Mmhmm. [ male announcer ] these types of plans let you visit any doctor or hospital that accepts medicare patients. And there are no networks. You do your pushups today . Prepare to be amazed. [ male announcer ] dont wait. Call today to request your free decision guide and find the aarp Medicare Supplement plan to go the distance with you. Go long. Ability. Alcoas courting customers at the farnborough air show outside london this morning. The steel giant announcing it is the aluminum giant announcing it signed hey 1. 1 billion deal to provide engine parts to United Technologies. Did i say steel . Did they really right that . I think they did but we meant aluminum. Phil lebeau joins us now. Is he talking about the world cup, phil . He must be theyre probably unbearable, isnt he . Has he mentioned it at all . Has he brought it up or do i need to do that . Klaus kleinfeld, chairman and ceo of alcoa. Has he mentioned it . Does he play soccer . Well talk about germany and the world cup in just a little bit. Believe me everybody over here in london has been talking about it. Well ask about that in just a little bit. Let me bring in Klaus Kleinfeld, chairman and ceo of alcoa. Very happy not wearing german colors. Lets talk about this 1. 1 billion deal between you guys and United Technologies, Pratt Whitney, when you look at the aircraft engines, and the drive for fuel efficiency, where are we on that scale in terms of being able to wring out more mileage fuel efficiency from the aircraft engines . I think were still going to have a lot to go forward. The a380 is just starting and weve got a little bit of dust here. So, the deal we sign today has a whole group of things. Were now moving into the fan blades with aluminum. With very modern aluminum. A new version of aluminum. We are going with our Metallurgical Solutions where no man has gone before and it helps directly in the efficiency because its going to be less weight, 36 less weight than a titanium blade and on top of it its going to be cheaper. Thats one part of the answer. Our acquisition that we announced about three weeks ago, thats another one where we go straight into the engine, where we go straight into the hot part of the engine, right . We is going to see our producer cleaning you up. People dont believe were at an air show until they hear it and see it. Exactly, yeah. All of that fuel efficiency. It is coming through not only in the demand for new aircraft but in the demand for new engines. Nine years of auto backlog at 77 growth in the next probably ten years, tell me any industry has numbers like that. Right in the center of innovation, leaders in Engine Technology components you know. Were bringing it to the next level. Im very, very excited. How much aluminum still remains in the fuselage of lets say your average wide body plane out there . I know theres a number of varieties. Right. Because the viewers dont know. The engine there is really almost no aluminum other than what we just talked about on the fan blade which is a new thing, right . Most of it is nickel alloys. Right. So, the fuselage when we came out with aluminum allies you saw when boeing and airbus made the decision for their work horse planes, they decided to go for allaluminum planes again and that was two years ago. So i think were pretty competitive. Youre competitive but in terms of there has been so much focus on composite aircraft, and composites being the future for lightweight and more fuel efficient aircraft. But the aluminums not going away. No. And on top of it when you look at the amount of material that we have on a 787, the composite plane is actually twice the size on what we have on the chip set of the 737. Its also because we are material agnostic. When you put composites to the with other materials you need to make sure you keep this things to the. Lightning strike. To have a fastener that leads Lightning Strike through it. It is unique. We came up with that solution and its solving a big problem. We were just talking to Louis Chenevert and i said how much longer does this boom cycle, if you will, or this upcycle for the aircraft industry, go, and he says at least the nextive to ten years. Do you agree or do you think it goes beyond that . I do agree. One of the growth of middle class in the emerging countries and people once they have basically the ability to feed themselves, get a house, they want to travel. Second one is the efficiency you mentioned. Also in the west people are going for new planes that are more fuel efficient. The engine had 50 better fuel efficiency. And the components that we are making are directly fitting into this. Klaus kleinfeld, chairman and ceo of alcoa. Real quick what did you do last night to celebrate germanys win . I got on a plane to come here. But i saw the game until the very last point did you see the goal . I saw the goal. And i have to say that i thought it was a great championship. We saw more fantastic teams. It was a great competition and it brings the world together like almost no other event. You know, i was very proud, and also the speed and a guy like messi, you cant keep up with him. Best piece of advice . Our photographers from britain he doesnt want to talk about the world couple. Guys, thats the latest from farnborough. Well send it back to you. Youve got to start thinking the way i think, phil. Not immediately Start Talking to klaus about that. I mean i guess youre just all about, i dont know, substance or something. Thats the first thing i thought of. I knew he would be joe were trying to keep the dust out of our eyes. I knew its an air show. Its busy. Tell him i just knew you know the germans are on a roll. And i dont like it, actually. Everythings going so well. They got no debt in their country. They got low unemployment. They got all these great things happening. Now they conquered the americas, north and south in the world cup. And you know, just dont get too cocky, klaus, all right . Just wait a second. The americans are on a roll, too. If you look at where we are investing. Were investing. Weve invested in just the last 18 months in virginia. Weve invested in indiana. Weve invested in ohio. And all of these investments are around aerospace. And aerospace has a net export, exported in the last year 71 billion from the u. S. This place rocks. I can talk about advance manufacturing where theres no other country that leads more than the u. S. Does. You know, so theres a lot of great things to say about what the u. S. Does and alcoa is helping on that. Thats what counts. Okay thats nice. That was nice. Youre lulling me you convinced me. All right. Thank you. Thanks, klaus. That team. Really was you know, he was just talking about messi. Messi had a couple of points, you didnt see it. There were a couple of times where he did get a chance to show how fast he was. And how he could handle it. He was amazing. Anyway coming up, jim cramer live from the new york stock exchange. As we get ready for a big week on wall street. Squawk box will be back right after a break. Tomorrow on squawk box, pimco chief economist Paul Mcculley is our guest host. Plus earnings from Goldman Sachs and jpmorgan. Squawk box starting at 6 00 a. M. Eastern only on cnbc. [ male announcer ] if you cant stand the heat, get off the test track. 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Dont cry for me argentina the truth is i never left you all through my wild days my mad existence lets get i crack myself up. Mac bumped into me. Jim, lets get the new york stock exchange. Mac bumped into me when he was handing me the script, and that was the if i was doing a soccer flop, thats what i dont you think they need to clean that up a little . You know in the nba you can get fined if they do a they, you know, look in slow motion after the game if they see that youre just totally full of it you can get fined. Soccer needs that, dont you think . I think the yellow card has to go to the guy who is acting not to the guy who did the hitting. Because we all see the when we see the rewind, we know that the guy was definitely not nearly bumped as much as you were. Exactly. Clearly youre in a lot of pain. I got a paper cut earlier reading the newspaper. Yet im still here. Am ihere. Did it bring did they bring out that red gurney . How many guys the nfl, i mean one thing, jim, when both guys going for a header and they they really do crack their heads, i worry about that stuff and im wondering, concussions and stuff like that, they hit heads so hard that make me worry, they need equipment they do the ridiculous stuff on their ankles and put them right back in after they get totally like a couple of coconuts. Didnt you sense a lot of the guys who had concussions were walking to the wrong side of the field after they got up . Yeah. One guy, they put him back in he was leaving later he was like whats my name . Where am i. How many fingers. No, when you hold them up, im ready. Germany, argentine na i dont know, which side . Which side am i playing for . Manchester united. I forget who i am. Citigroup, corbat, give extra credit give eman a. I look at, 10 billion increase in equity for basil. One of the things i like, out of nowhere the citi holding swings from negative to profit . I mean im this thing has been a drag for the company and now its positive. A lot to like here, book value, true book value 7 under. I can see the stock going higher. Amazing wells fargo get downgrading and citi acts great. Major turnaround for bankerser. Weve got to put that 10 correction on hold again, at least for today, jim. Not sure its starting here. We got a lot of people say its got to happen. But the market doesnt listen to anyone, does it . Listen to Klaus Kleinfeld, a mixed security deal on friday. He does this thing, im United States guy and United States looking good. My tribute to klaus, he seems to understand exactly how well the worlds doing. It makes it hard to look for 10 correction when hes doing the talking. Jim, how upset am i supposed to be about the mylan deal, this inversion . I thought abbott did well. Im tired of inversions. Obviously inversions are the way to go. Ill be talking to jack lew, delivering alpha, they say in the treasury its the republicans fault. Look, were losing jobs. Were becoming uncompetitive. Its a natural to fix. Who would be against this . Its ridiculous i want to fix it. It has to be fixed now. I mean you know its got to be fixed now and its not going to be fixed. Its a major loophole. Now if im in any other company competing, we talked about this with joe last week, youve got to do a deal, too. Its like youve got to call the problem jim, if you think everythings so deadlocked in washington, the question becomes, do you do a carl levin and block it, temporarily or not . Yes. I mean i think that jack lew will go along with that. Im sure. Ive got tell you, sometimes you have the irs make a rule and sue the irs, good luck. I know. Tell me about it. Jim, thanks. See you in a couple of minutes. Coming up on squawk on the street later today, reid hoffman, on squawk alley, preview of the major league allstar game. Cal ripken jr. , special guest. Preview of the big delivering alpha events. Squawk box live lookins and interviews, guests including leon cooperman, Bruce Richards and former white house chief of staff, bill ldaily and more. Ou , but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. White chocolate loversividual. Dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their chocolate. We needed a scalable Cloud Solution allowing them to select what they are looking for. Now there is endless opportunity to indulge. Customization is made with the ibm cloud. The ibm cloud is the cloud for business. Really. So our business can be on at ts network for 175 dollars a month . Yup. All five of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line anytime for 15 bucks a month. Low dues. Great terms. Lets close. Introducing at t mobile share value plans. With our bestever pricing for business. Investors delivering alpha confres, taking place wednesday. The biggest names in business and politics on hand. Kate kelly. Were two days away from the annual hedge fund confab and should be plenty to talk about end of quantitative easing, trouble making money with global macro, and where to look for rushes in the stock market. Keynote speech business jack lew, having the treasury secretary kick off the days proceedings. Carl icahn, hopefully will shed light on his latest plans for family dollar, among other investments and governor chris christie, speaks to us after a tumultuous year, accused of settling political scores by closing lanes on the George Washington bridge. Looking forward to talking with ken griffin, always news maker, in addition to managing 19 billion in hedge funds and running a major Market Making business, griffin has strongly held views about the banking business including a desire to see them broken up, that he shared with andrew at last years deal book conference. Glasssteagall actually makes a tremendous amount of sense. Its not appropriate for the Securities Trading operations in our country to enjoy the taxpayer support implicit in fdic insured companies. So the first thing i do is i pull the securities businesses out of the banking system. I would, in a sense, debank Goldman Sachs and morgan stanley. That notion becomes interesting in an environment where the Credit Suisse is considering spinning off a piece of its business and banks across the board, including citi, are seeing flagging revenue amid higher capital requirements. Citi, by the way, a Major Holding of citadels for some time, citadel trades in and out frequently, theyre always in the market for compelling, longerterm investments. We dont try to profit from calling the direction of the stock market. We troy to profit from picking individual companies that are going to outperform expectations of success. So were really in the single stock story. Which companies are going to have winning products, winning value propositions, that are going to create wealth for their shareholders that the rest of the markets not anticipating. Hope to hear more how theyre doing in the environment on wednesday. We should also joes talking to the one and only stan druckenmiller. You dont need to tease me. Stan, i dont need to give a last name, its like madonna. You picked icahn. I thought it was druck. Stan. The greatest investor alive today. Hes got a fantastic track record. He basically opted out, exhausted by the draw down, but never had a losing year, not running public money at duquesne. He was soros, really, when soros was great. Join us tomorrow, squawk on the street is next. Im on top of the world eye im on top of the world on top of the world, right. Congratulations to germany on its world cup victory. Angela merkel in rio. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. What a week, first full week of earning, 55 S P Companies on the deck, yellen on the hill. Boatload of news. Tenyear yields around 2. 53. Housing starts, industrial production, and more this week. And as for your mostly in the green and, yes, that includes