Transcripts For CNBC Squawk Box 20160714

Been pushing the stock markets to higher levels too. Its huchl nature, but you know you cant scott, you can confirm this for me. Youre on half time report and youre our market watcher. You have a bunch of smart guys, staide traders and stuff. You cant hit new highs unless youre very close to the high. Yes. If youre 2,000 points below the old high, you cant make thats awfully difficult. Is this your insight for the dwa . No, im trytology give it to the market people that come on whenever we get close to the old highs and say this isov overdon they get used to a tlad ugh range. When it breaks out. Its probably a reason that it breaks through old highs that its got some momentum. How many times did it get close before and fail. In the last two years, but. It failed almost every time. If it did all this turning and rotations, all these if its already built a firmer, nonfed induced base, based on 4. 9 unemployment and jobs growth, weve been through the earnings recession. Maybe were starting to come out of that. Im just not surprised. Ive been arguing. You werent here yesterday. Ive been arguing all week with. Himgs. Yes, every market person that comes in. The one thing there is a lot of right now. Uncertainty. Yes a lot of uncertainty right now. Tons. Exactly. We know wasnt there more before brexit . Now we know there will be a brexit. Yes, things are more certain. Yes. 180 points the s p is looking up 20 points. Check out what happened overnight in asia as well. The nikkei was up by 1 . Shanghai comp was slightly weaker. In the early trading there, again, on the sense that the bank of england will cut rates you can see the dax is up by 1. 5 . The cac and france and ftse up by 1 . Additional gains in italy and spain. Currency the yen hitting a threeweek low on speculation for more stimulus from tokyo as well. Yen at 105. 91. If you check out crude oil prices. Bernanke was in japan. The helicopter flew over to japan. The whole market started to turn around because of his meetings at the boj. But the yen didnt go didnt break 100. The pound got under 1. 30, but didnt go to par. I dont know. You know what my favorite, things are more certain. The thing im happiest about is Boris Johnson back. You dont want to waist a guy. Back in a bigger way than he ever was. Hes huge. You dont want to waste his jokes, his hair, his gary bu si sort of sensibility. I mean, i read that. I was like, yes. This is so and this other guy is a huge brexit guy. The guy is in charge of the negotiations. Yes. If theres anybody who says well see whether article 50, no. Theyre saying theyll take their time. They can get better deals just keep the eu twisting in the wind on all this. Theresa may followed through and said a brexit is a brexit. I love the queen. I dont like her son, charles much, but look at her here. Shes in buckingham palace. Shes so perfect. Where is she going . Shes on her way out. No, shes not. Ch shes so perfect put together at 90. Slooes a class act. Shes so cool. The purse perfect. She didnt need her purse. She was running out right after that, the greeting. Where is she going. You never know if you need a hanky or something at the last moment. Thats the way a proper english lady would have her purse. And shes going to marks and spencer. She would be you dont wear a murse. No. Who has that . Is that faber im thinking of . Scott, whats on todays agenda. Weekly jobless claims and june producer out. Lock hart, gorge, and kaplan speaking today. Its the kickoff for earning season. Delta airlines around 7 00 a. M. Plus looking for black rocks numbers within the next 15 minutes. Larry fink joins us right here at 7 00 a. M. Eastern time. So alcoa is not the kickoff anymore. Thats the artificial start. I agree. Financials are so important. I agree. Alcoa at 12 will always be. They did beat expectations so if youre looking for anything to hang your hat on. No, alcoa is not. All it matters is where Aluminum Prices are. These are important. Black rock and j. P. Morgan today. How is larry. Larry will be here from 7 to 7 30. We get a half hour to talk to him. Good. Also on todays agenda. Bank of england making cuts. Goal of boosing the economy. Moneta mo economist are looking for a record low of. 25 . And good news, just crossing the wires, eu antitrust regulator filing additional formal challenges against google. Thats a frud yen slip. Jeez. Nailing google. Another guy that sits there, i could see that. That is bad. Horrible. Freud yen. That was just news. Good news youre here and happy to be here. Yes. I feel a little giddy. I think you do. Well, you should on the flag ship show. The eu of accusing google of breaching antitrust rules. It also took issue with the way google conducts its shopping service. This adds to other charges by europe that google abuses its dominance with the Android System by forcing Telephone Companies to preinstall its search engine. Do you think its a coincidence, they did things really well. Microsoft. It was a similar issue. I know, but if you had a monopoly because youre so good at what you do, its now the eus job to come in here and decide that an American Company is so good at what it does that we need to cut them down. Make it more fair for our lesser brands to do better. I dont think. Do you . I should have added and bad news today, right . Yes, that would have been okay. That one for me. However, this was the downside of brexit. Youre no longer going to have uk sitting at the table to try to moderate some of these eu impulses. Or its the innate problem with eu you and well be glad. This is the first domino. Which you think is it. I do. Youve said that. Look at how its worked. Would you try to do that . Put them together. Without having other unity. They are either going to get deep into this or break out. Would you try it with how many languages and cultures. They got rid of english. The global language people use. Todays top story, the Chinese Group has held viacom for acquiring a stake. 49 stake in parra mount and the troubling thing is viacom needs the money. This comes as chief executive Controlling Shareholder deliberate overle paramount. Deliberate. Thats a nice way to put it. How about argue. Red stone has reportedly opposed the sale. It wont happen without their con sent. Wanted to purchase Legendary Entertainment in effort to expand u. S. Movie unit, but buys this and in one swoop. But theyve already changed national. Vehicle has changed the rules it has to be unanimous on the board. He has to sign off on it. The idea theyre continuing with this before they resolve the other issues at viacom is a little insane. Although to get him to sign off might be pretty easy. Youve seen his signature. Yes, i have. I think you could fake that. I was stunned when i saw this. You think youre actually going through with the sale right now. You have to get the rest of the stuff resolved. Stocks to watch. Were going to watch today. Just a suggestion. Is it mandatory . You make it mandatory. Should be mandatory every. Watch csx today. It reported lower Second Quarter profit, but it still beat forecast as lower cost help offset a 34 drop in coal shipment. 34. Thats railroads everywhere. 34 . The coal usage is down drastically. Why. The railroad operators Earnings Report was accidently released an hour early on wednesday, which happens a lot in this world for some reason. I figure you should know how to do it. Yum brand is reporting mixed quarter results. Changing the outlook. Talk about whats happening in china. There was a rebound in the first half. Jm smucker raising quarterly dividend. The maker of jelly. Goes by the name of smucker. Jif Peanut Butter and foldiers coffee will pay the dividend. Are you a crunchy guy or smooth guy. Full throttle, possibly krun which i. Low fat you can get used to. You can. How often do you eat peanut burt. Not much, but i like it. You know, its protein. Good for you. Antiox dant. But its yummy. As we mentioned one or twice today, the dow and s p 500 climbing to new highs. U. S. Equity indicating a higher opening for stocks. Dow up 167 points above fair value. S p up close to 20. Joining us right now is steven parker. He is head of solutions at j. P. Morgan private bank. And ed equiwho is portfolio man. Thank you for being here today. Does this make sense to you to see new highs and hower highs that are going to be set based on what we see this morning. It was surprising. We had the huge rebound and still going higher. I do think theres a fundamental explanation for it that is we finally finished the earnings recession of the first quarr. Were going to see about seven or 8 higher earnings in the Second Quarter compared to the first and a faster pace of growth. So the market acting in anticipation of better earnings in the second half. So weve had this tailwind of policy support from the monetary authorities. I think thats run its course and now focus more on fundamentals and we have good news. Or may not have run the course and we still get better fundamentals too. With brexit, they say theyre going to stay lower or getting messages while youre focus on me. What was that . Who was that . Some random call. Right. A lot of random calls at 6 in the morning. Maybe we stay longer because of brexit. And you do get a rebound. Plus youve heard that United States is a safe port in the global storm. I think were going to do okay. I think we we will have low rates. Be with us for quite a while. I dont think theyll stay forever. So i think well be okay and im not saying were going to get 10 returns forever, but pretty good year this year and continue to next year. Does that mean you would buy today even with the new highs. Weve been steadily buying stocks in the portfolio for the last couple of weeks. Do you agree steven. I think we can go higher in addition to some of the the fundamental factors ed talked about. When you weve seen Fund Managers raising cash. The monday after the brexit vote, there was ten billion dollars of redemptions from global tech funequity funds. Youre seeing money start to chase a little bit. What i think is really going to be important if this rally is going to continue, it cant continue to be led bay the sectors. Were going to need to see more parts of the market, the banks, technology, consumer begin to do better and take on more leadership. Lets talk about the banks because we do hear from both black rock and j. P. Morgan today. People are watching this very closely to see if theres an impact from the brexit to see what they can tell us about the future. Look, ive heard from a lot of analyst who say even at the concerns of low Interest Rates, with it the stocks look cheep. Do you agree. There is an opportunity no banks. I think what youve seen over the last two quarters is people have looked at banks and traded them simply on fed expectations and Interest Rates. Theres a lot of positive going on under the surface. What happened with brexit increases uncertainty. Theres always uncertainty, but the increase in volatility means the trading could be better and frankly when you look at the bank stocks when everybody is looking for yeerd. One of the things being under appreciated banks have a lot of run to start increasing dividends. Buying back a lot of shares and that could be the next place people start looking for income. Your thoughts on financials. For financials and many other parts of the market, i think the key is going to be higher Interest Rates driven by stronger growth as opposed to inflation. So we do actually get some good data readings. So i think actually there is some evidence that were going to get a pick up. Euro zone groet for china. Actually interesting the last couple of weeks that foreign markets have been more of a high play on u. S. Markets. Were up by half a percent. Theyre up by a percent. Were back being the engine that pulls global growth. As china slows down. People are more dependent on us, but a nice two or so, two and a half is i think enough to keep pulling the market forward and pulling the Global Economy forward. You both said something about how you would be buying even at these levels. Thats the first ive heard that. You guys are saying buy right now, both of you. One of the things to look at, one, i mentioned some sectors that are not at highs. If you look internationally, global stocks x u. S. Are down 15 . I think theres some potential to catch up there if the Global Economic outlook begins to just stabilize a little bit. Doesnt need to get a lot better. You both would buy banks . I want to read you something spr a note that came out yesterday. You tell me if you disagree with this. The headline is from a firm says u. S. Banks marooned. The pressures they face are structural and only in semz of operating models need to change is likely to lead to performance. We see limited upside. We would be looking to sell into any strength in share prices. Do you agree with that. As i said before you need to see stronger economy and higher Interest Rates in order to buy the Financial Sector with confidence. I do think thats likely to happen. Im not suggesting were going away from banks now. Its an area that will benefit. Why have we gotten to a point we only do china can do 7 and 8. Theyre different obviously. We used to do 3, 3. 5. Why cant we do that . You dont think any policy mistakes and regulation. I dont think its impossible, joe, but the simple facts is this. The growth of the labor force over the next 20 years. Everybody is going to join the labor force has already been born is going to be 1 pkts slower than it was in the prior 60 years. So that alone will reduce growth expectations compared to what we used to have. So its not that we cant do better than 2 . We can. For a while, but to say whats the rate of goet, its more likely to be 2 something than 3 something. I think we should strive for better things. Whatever it takes. We can do three. This is the United States. We should have the best policies. I agree with that completely. Were going two with this horrific business environment. Some people would differ with that. A lot of new regulations. A lot we have the highest Corporate Tax rate. A lot oi wafs we could do better. Certainly we shoulder reform Corporate Tax. Nobody disagrees with that. Probably think were not capable of reforming. Then we only get two . The total amount of taxes corporate is going to change. When the germans come over. Youre doing that. Ed, steven, thank you guys. Thank you. The guy that watches the movie. Thats good. Coming up, donald trump running mate pick just a day away. Were going to bring you the latest from the campaign trail and a new swing state poll next. Former governor kevin war isssh going to join us. How do we see polls where theres a ten point difference in what the pollsters come up with. A lot of polls out there, different methodologies. Theyre not all done the same. Has generally been worse for Hillary Clinton in this campaign so far than the mare is polls. Obviously we have a lot of confidence in her is and think they have a good track record. In either case were looking especially in the wake of the bad week Hillary Clinton had after the fbi report with james comey criticizing her carelessness and handling sensitive information. We have a tight race nationally and in the Battle Grounds. Take a look at the surveys we did with her marist. You look at ohio. No republican has won the presidency without winning it. You have a deadlock. Tie race. Large number of undecided. Then you go to pennsylvania another democratic leaning state that donald trump wants to target with his message. Hes particularly focused on the rust belt. Shes ahead by 9 percentage points, but as you suggested the poll that came out earlier in the same day showed a very, very close rate in pennsylvania. Theres no doubt that these Battle Grounds as we enter the conventions are in a tight situation and this is a competitive race. Donald trump is now honing in on his running mate. We expect to get that announcement tomorrow at 11 00 a. M. Thats what he tweeted yesterday. The two finalist from all the appearances that we have, our former House Speaker Newt Gingrich and mike pence. Both of them donald trump has met with and campaigned with in the last few days. As you and i discussed yesterday, i have assumed or believed that mike pence was going to be the choice, but i understand from talking to republican familiar with the debate that jarred kusher in who was the soninlaw huge influence on this campaign is pushing Newt Gingrich. The almost donor who wants to help the republican ticket up and down the ballot, but has not written checks yet. Hes got sot influence. Either double down or play it safe. If he picks newt, newt is smart. Smut has at ton on him. I said, doents you think a ticket between matching you and donald trump would be too hot for most people. It would be a twopirate ticket. I was referring to pennsylvania. You knew i was. The other thing is do you know the multiple of dallas spent in those three swing states on Hillary Clinton hit adds against trump versus vice versa. Its like 501. He hasnt spent any money and its that close. That is true of swing states in general. She spent a on the of money. He hasnt. She has not spent money on television in pennsylvania. Thats one where democrats pennsylvania is an interesting state. Its a big target. Its one presumed to be a big battleground. One democrats have won six times in a row. The belief is that its one of those internal teases for republicans where they can get close, but not get over the line. Donald trump is going to test that theory this year. We have to go. Thats what they keep telling me. Theyre panicked. Ill tell you why we have to go because when we come back, gary player is just one of five players to complete the grand slam. Gary will join us to talk about the british open teeing off today. Right now as we head to break, take a look at yesterdays s p 500 winners. And watch the markets today. Futures up big and dow in triple digits. They may want the latest products and services, but they demanthe best shos theyre your customers. And by blending physical with digital, cognizant helpingf the largest u. S. Retailers meet tir demands witmore sponsive rail mode. Ones that transcend channels and locations, anticipate expectatis. Creating new ways to engage at every imaginable s a new day in retail, and togeth, were building the store of the future. Digital works foretail. Lets talk about how digital works for your busins. Welcome back to squawk box, everybody. This is cnbc. First in business worldwide. U. S. Equities are sharply higher. S p futures indicated up by 16. This comes after the s p 500 and the dow set new records once again yesterday. Nasdaq was down yesterday, but it is indicated up by 36 points this morning. Overseas in europe youre seeing var similar thipgs as the expectation in half an hour the bank of england will lower Interest Rates and that will help things out so you can see right now the dax is up by 1. 4. The cac is up 1. 4. The ftse up. Were just getting black rocks numbers in. Its a good sign. This is the first of the big financials to be reporting. Came in with adjusted earnings. That meets the raised expectations from overnight. Also came in with revenue right in line with expectations. The opening round of the 145 ownership championship is underway at this hour in royal trun in scotland. Three golfers are tied at top right now at five under. I literally mean right now. Not for long. Looks li s bubba. Ross fisher is at four under. The tournament being broadcast for the first time by nbc sports on the golf channel and on nbc this weekend. Im kind of happy about that. Im trying to get used to fox. I am. Im trying. I like the tracking. Its hard work. Its hard. Joining us now to talk all things golf is the black night. A physical specimen beyond relief. A grand slam player. I want to talk about you for just a second. At augusta this year, they did not show where you hit it. I think in deference to jack. Can you tell me how much further were you like 80 yards. I could tell from the expression on his face, he would you say like i dont want to do this with gary player anymore. Have well, hes got to get used to it. He outdrove me for 40 years, now its my turn. I said listen im going to increase my situps. When mine goes by yours. We always tease each other and we have had a great friendship through the career which has been highly competitive, but in the meantime, weve been understanding towards each other with great love. He has a couple of hips, i think. Artificial hips and hes got some, you know, he doesnt need excuses obviously, but i could tell from the look on his face. It must have been at least 50 or 60. Let me ask you another question about yourself. The goal in life should be shooting our age. When is the last time you didnt shoot your age . Like eight years ago, 12 years ago . When was the last time . I average 70 now at the age of almost 81, but i mean really if i may boast and say extraordinary condition because i work out and eat properly. I average 70. I beat my age. Eventually on a bad day i beat it by six shots. One of the things that excited me listening to your network is how well the banks are doing. The dow is all time yesterday. We have the bank who sponsor our gary player invitation in new york and in london so im so happy to hear the banks are doing well because i mean, they help us raise a lot of money for charity. Thats right. Gary, scott said he had a Research Note from barrenburg bank. Lets get to some of this stuff. Who you do like at this point in the open thats going on right now and so many good players. I dont know if it matters who any of us like. Who is peaking . Dustin johnson certainly. Well, joe, and becky, and scott, you have to understand this is a different major to all the other majors. This is the most difficult one to win. Here we are standing in a beautiful morning and playing in wonderful weather. This afternoon there might be a storm and he shot 81 in the prime of his life. So this the weather, the draw here is a very big factor. You cannot pick anybody to win here. Please believe me. Its almost impossible. One thing i wanted to get to and then well get to the olympics and things like that. Womens golf is unbelievable. I dont know if you saw the ladies open over the weekend. I was watching almost the entire final round and theres one player, park, who is smaller than you. She hits it 320 yards and its not the equipment i dont think. The golf for golfers are just unbelievable to watch. It really is. You have to hand to it the korean women who are the best in the world. They have had a work ethic behind ones imagination. So im a great fan of womens golf. I was a bit disappointed hen the lady won the u. S. Open that they didnt even know her name. That was so sad to see that because womens golf to me is vitally important in all or charitable days we have as many women as men. They do such a great job. They come out there and look after the clients and i tell you what, they can really play. Really exciting for me to see this. Its exciting for me and also makes me realize i guess im not an athlete or something because they play a lot a different level. Theyre not human. We know the guys are the same way. Theyre playing some different games. Guys like you. Lets talk olympics quickly. I think you understand personal decision not to go down there, but there is a little bit, scott and i were talking earlier, we just remember guys in baseball and other sports, hall of famers going off to world war ii for a couple of years for their you know, its different. I understand, but to bring home a gold maeld for your country would be an attractive thing and sell officially i wish the top players were going to be there. Its such a disappointment to me. I would have gotten a rowing boat and row reside over. Just figured out in america, the greatest country tht world. 07,000 people get killed by guns and murder accidents. Its absolute nonsense. I think what they should do is have amateurs play in the Olympic Games golf wise because they would really hold it in high esteem to win that gold medal. Do you think zika is just an excuse for this though . Well, its obviously an excuse because its nonsense. I mean, i live in africa and they have malaria which is 1,000 times at this stage more serious than zika. We dont not go to african states because theres malaria. As i said, youve got more chance of being shot by a gun in america or being killed by a car. They have sezika in united stat right now. Theyve had a few cases. You do have zika in america. Its not just isolated. They were cases transmitted from overseas and brought back here. But you have it there. Yes. But i do think its an excuse. The fact remains its very sad when you want to represent this great United States of america and win the gold medal or my country, the players who have withdrawn as well. Im going fly back to south africa monday to go to a dinner and im going to be in the village of rio being captain of the team for two weeks. I mean, they talk about the skj. My schedule is way more severe than any golf proplaying golf today. Ive still traveled more miles than any human being thats ever livid lived. I dont go for all that. We must have respect for peoples opinions. Theres no more freedom of speech unless its politically correct. You Say Something wrong today, youre crucified. Rory mcilroy gave his opinion here. Its terrible to hear the way people are talking. Thats his opinion. I dont agree, but lets let a person have freedom of speech. Before you let you run, will tiger come back in any meaningful way and have a chance to win another major . Im a big tiger woods fan. When tiger woods plays, there are more people, the media is greater, the sponsors are happier, but he has a monumental challenge ahead of him. We are talking about a man who is on his way to being the best player that ever lived. Whether he will achieve that now on not is debatable. The greatest gift to be bestowed upon a person is adversity. Lets hope he accepting the challenge. I hope you come back for the pga. I dont know if thats in your schedule or not, but if you do, please come into the studio. I would you say going to say bring your work out regimen, but i would never do it. I would like to know i want you to get a i want to know what it is. I want to look at it. You would like to know what. I want to know what your workout regimen is, but once i see it i know im not going to do it. Thank you gary player. We hope to see you in the studio soon. Im a big fan and star struck. Thank you. A quick remainor that golf channel are air nearly 50 hours of live coverage from the ownership championship from the first tee shot to the final putt another must see here on nbc. Theres a rumor that theres places you could if you were really an avid person, you could find it now. Im actually looking down here at j. P. Morgans numbers. Check this out, folks. J. P. Morgan coming in with better than expected earnings. 1. 55. Revenue also better than expected. 24. 4 billion versus the 24. 6. This is a big deal. People had been looking at black rock this morning. Looking at j. P. Morgan to see if there was going to be any fallout from the brexit. See what theyve been saying about the future. These two, two for two, black rock coming in line with expectations and j. P. Morgan beati ining expectations. Thats kind of what weve been seeing, anticipation of better earnings coming into this. Maybe thats part of the reason you see stocks picking up and hitting new heidi cruz. Its that in combination with the expectation for more quantitative easing. Again, a few of the comments coming from j. P. Morgan on this. Both whole sail and Consumer Credit quality remain very good. Again, were still waiting to hear what j. P. Morgan will say about their actual operations in london. How thats going to be impacted. If you run through some of the numbers. The Corporate Bank revenue. Commercial banking revenue of 1. 8 billion. Well dig a little deeper into this report, but, again, two for two this morning in terms of strong reports from these financials. J. P. Morgan by the way up 2. H4 coming up, larry fink and kevin warsh. As we head to break, take a look at whats happening in european markets right now. Pretty strong. Ftse in london up just shy of 1 . Squawk box will be right back. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. T alternatives can taopportities that traditional assets cant. And even though theyre called alternatives, theyeye actually designeto help meevery traditional goals. Thats why invesco believes people should help meevery look past conventional models and make alternatives a core part of the portfolios. Translation . Goodbye 60 40, hel 50 20. Were going to recap the earnings that were out in just the past few moments. J. P. Morgan reported 1. 55 a shire. That was above estimates of 1. 43. Revenue was also above expectations. Continues as the dow component. Its confusing nowadays. Apple is in it. Att is out. Justin nicolino j. P. Morgan is in. Getting close to a not an alltime high. It was higher a couple years ago, but getting close to a 52 equal high. Black rock just reported in the last few minutes, adjusted earnings of 4. 78 a share was inline with expectations also revenue was in line with expectations. Im not sure that is a trade or not. I havent seen any. We have larry fink, the crow on ceo on to talk about this. Nbc is outlining the plans for the rio olympics. If you have cable, youll be able to watch every second live except for the opening ceremonies which will be on a onehour taped delay. That doesnt matter. Just pretend its an hour later. The other stuff youre going to see as it happens. This day and age were living in where im afraid to look at my phone, whenever i have the tv. I forget ive stopped it to do something and i come back and get an alert. And its likegod. In the last few minutes you know. It ruins it. But there will be a gold zone channel that jumps around to show the most exciting action as it happens. And a digital news desk that will update with highlights id say the last ten olympics. As we go into it were always worried. I remember going back to salt lake after 9 11. Back to atlanta. L. A. , too, when i lived out there. The traffic was going to ruin nothing ever ruins it and this is going to probably be with the coverage the greatest im excited. Nbc is showing where they are throw. Olympic athletes. The one you remember from 20, 30 years ago. Every day its like what am i going to do . Oh, yeah. Olympics. Then you realize theyve got 12 hours of coverage. Really should have, like, one of those balls to sit on. Medicine ball. Youre not going to do anything else. When we come back, we will have much more on jpmorgans results. Well have an analyst that covers jpmorgan. Plus larry fink will join us at the top of the hour to talk about his results. Then at 7 30 our guest host will be former fed governor kevin warsh. Squawk box will be right back. Mary buys a little lb. One of millions of orders on mary buys a little lb. This compas svers. Access by thousands of suppliers and employees globally. T wi Cyber Threats on theise, marys data could be under attack. With t help of at t, ansecurity that senses and mitigates cyber thats, their Critical Data is safert. Ving them the agility toe because no one kno like at. Op secure. Itslexus performance iny to streetl form. Htaking for a mited time get great offers on our complete line fport perfoance vehicles. Athe lexus golden opportunity sales event. Welcome back to squawk box. Prominent Brexit Campaigner Boris Johnson getting a new gig in Prime Minister theresa mays cabinet. In a surprise move, johnson was promoted to foreign secretary. He took a hard line in the Brexit Campaign comparing the eus goals to hitler and napoleon. He said he a not antieuropean. During a speech in london he sang ode to joy in german. I can read nobles in french. In spanish. I can sing the ode to joy in german. I will. [ singing in german ] you know it. The surprise appointment sparked a flood of tweets yesterday. Comedian Ricky Gervais tweeted, just when britain was starting to become a laughing stock around the world, Boris Johnson is appointed foreign secretary. Its going to be a hard road for the two sides of that campaign. Right. The elitist in every country is always the same. Comedians, actors. Ricky gervais is funny. Hes mean too. I wonder where he is on the political spectrum. Knock me down with a feather. When we come back this morning, a squawk box double play. Blackrocks larry fink will join us to talk about the earnings out in the next 25 minutes or so. Well also talk about the market rally and much more. Then former fed governor kevin warsh will join us on the feds next move and the brexit. From over 30 blion connected devices. Just 30 billion . A bold group of researchers and computer scientists in silicon valley, had a breakthrough they called. The machine. Ithanged computing forever. And its beepart of ever for the last 250 years. Everything . Everything this year, Hewlett Packard enterprise will preview the machine and accelerate the future. See star trek beyond. Markets notching a fourday winning streak. The dow and s p now sitting at newfangled, crisp, fresh, new alltime record highs. Will the Interest Rate decision right now from the bank of england keep the Party Rolling for stocks around the world . The breaking news and Market Reaction straight ahead. Earnings central. Financials in focus this morning. Jpmorgan and Money Management titan blackrock both out with quarterly results. We will talk the state of the market, investor, and much more with larry fink right now. And sthe special guests dont stop there. Kevin warsh joins us as well. We talk the state of the u. S. Economy and what a new president will mean for your money. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and scott wapner. Lets look at the futures. The bank of england, it wimped out. They did not cut. And as a result the pound is soaring. What did they decide . Wow. We shouldnt have listened to all of the you know, all of the dire warnings about what was going to happen. And, you know, maybe we dont need to cut. Maybe well be fine without cutting. There is the pound right now. Big move. Its a huge move in currency. Its a huge move in a currency single day. If traders in this country end up you know, were down 50 points from the highs or 60 points from our futures. If they sell because they dont get more heroin from across the atlantic, you know, more crack, whatever you want to call it. More accommodation, more easy money. If they use that as a reason to sell at this point, can you ever hand off the buying mentality to an underlying economy . Do you ever hand it off from the fed . What do you think about this . Larry fink is here. Im pretty surprised. Its okay, though, right . Its fine. We do believe the uk is going to go into a recession. I was in london last week. I was in edinburgh last week. I wanted to talk to leaders both political and Business Leaders. And in every case, the Business Leaders told me theyre not going to add jobs. Theyre pausing. If they need to add incremental jobs right now, theyre going to do it in the continent. And so were pretty convinced that brexit is going to cause a shortterm recession. Maybe longer depending on it. And maybe we havent heard the narrative from the bank of england, maybe we want to see evidence of a true slowdown. But a cheaper pound is going in terms of tourism did you see bookings from china . There was a 200 increase of people looking at visiting london from china. Now theyre going to have a more expensive pound. It was 1. 20. The conventional wisdom is it could stimulate growth. You were a total remainer beforehand. And ive noticed a lot lo of the remainers, either theyre hoping its not going to happen or saying maybe it wont. Theyre still sticking to how dire its going to be. We havent seen it be dire in the markets. Youre not going to see that evidence in the next three to four months. Dont pray for it. Okay . If it works out okay and turns out blackrock was wrong but what we are hearing from the continent, the regulators and leaders of europe are expecting us to move jobs from the uk. This is going to be a tough negotiation. I dont think we should underestimate the polar views on how this is going to resolve and we have always said ive said this to our employees. Were going to wait and see how the trade treaties work out. Yop what it means but i do know theres a pause related to business and business growth. Isnt it interesting that at a time where our fed is being criticized for having the market dictate to it how it should react in london today even though Market Expectations were for a rate cut, they dont do anything. They lead by the way they thought best. Not by what the market wanted them and thought they should do. Are you saying contrasting with our im saying, here, yes. What joe said, though. Theres a rocompliment, joe, yo should listen up. I dont even listen because im not expecting that. I know. So what it may mean is they were concerned how low the pound went and theyre going to wait and see. And if they did a very aggressive easing, maybe they dont want that at this moment. Theres not enough left. When we succumb to every waffle, we think maybe they know something. Maybe this em boldens people to think if the bank of england doesnt think its that dire, then theyre acknowledging my god its going to hit the fan. Whats going to happen . I dont know. But larry says theyre there thinking its going to be a recession. Its all your buddies. Its all the buddies who happen to be the ones hiring or not hiring. Were they probrexit . Anybody you know in the world probrexit . I know family members of people who work at the firm. But you know what im saying. Everybody that came on from blackrock. From you on down it was going to be the end of the world 37. Theyre not going to respond just to what doesnt slack. Im surprised with this. Just because their narrative but lets talk about what weve seen since brexit. Okay. Weve seen etf flows almost at record levels since brexit. Weve had 18 billion of inflows since brexit. However, were continuing to see outflows. So what that tells you is, youre seeing retail pulling money out. Youre seeing institutions who were short going into brexit. Short in equity. Short in bonds. And they all now are the dynamics are pretty interesting. Were seeing investors worldwide pausing. We have seen quite a large amount of money being pulled out of equities in the last year. Yet were at record highs. Thats a sign how much money is being taken out by banks and how much stock repurchases from companies. So the supply of thats one of the reasons were seeing this record level. So youre suggesting the highs were seeing isnt investor exuberance by any means. Exuberance only in the fact that so many people were short into brexit and underinvested whether its in equities and bonds. You look at the etf flows and where theyre coming from, its rebalancing their portfolios. If we saw inflows and mutual funds with etf flows since brexit, then i would say people are running back into the market in a more fulsome way. My view was even before this announcement by the bank of england, this rally in my mind is not i dont think we have enough evidence to justify these levels in the equity market at this moment. You say because not enough money because theres too much money coming out of equities . Too much cash on the pseudoline. On the retail side, theres still 15 trillion on the sideline. So were going to have to wait to see earnings season. Are we going to see the fundamentals of profitability increase. The s p earnings will be down about 5 . That was the street estimates. So it will be the sixth quarter in a row where earnings are down. Lets talk about earnings. Thats part of the reason youre here today. Jpmorgan and you out with earnings today. Also beat on the top line. You came out with very strong earnings. I wouldnt call them strong. They were in line with expectations. We beat by a penny. The evidence that we had so we reported record assets. 4. 9 trillion. Assets are up 4 year over year. And yet over the course of the year because the volatility and the average markets were much lower, assets were flat. And the other big issue for us was we saw as i said outflows out of equities and we saw huge inflows in fixed income. So youre seeing a risk off trade as we call it around the world. So the mix of our business from our clients have changed much more heavy investing in fixed income. Less in equities. Were still seeing flows in smart beta and alternatives and all that. But it was a tough environment because its tough for our clients. Thats what your comments reflect. Our clients are facing unprecedented challenges as they attempt to navigate the current investment environment. So Pension Funds in this country and most countries have 7 liabilities. Okay . Thats what theyre generally targeting. And theyre not of course earning that. So the deficits between are growing. Insurance companies have targeted liabilities that are much higher than what theyre earning on their assets. So the struggle longterm investors have is getting harder and harder. And so do they rush in and buy riskier assets . Is this creating a bubble . And, you know, as you know, i have been pretty harsh against where we are in this Interest Rate cycle. We have over 10 trillion of negative Interest Rates and growing. This is very harmful for savers, retirements, Insurance Companies. I believe more than ever before and i said this when i was in the uk last week to some government officials just like ive been saying here. We need fiscal policy. And i think the new Prime Minister kind of mentioned that. She said less austerity. The new finance minister said that, too, in the uk. I believe we have no choice worldwide of a large component big supply side guys. I mean, big time. She may be saying one thing to consolidate power against labor. Let me tell you something. 81 the bank voted 81 to maintain the rate at 0. 5. Guess what the one was. Raise rates. What . The one person that didnt vote to maintain rates, theyre going to loosen in august. And also saying theyre seeing a you know, im going to give you a compliment here since you gave me one. Theyre saying activity likely to weaken in the wave of brexit citing a sharp fall in household and business confidence. And that some business may delay investment and hiring decisions. So thats what youre Central Banks have been bad predictors of the economy. You think . Yeah. Look at our fed. Our fed has gotten it wrong every on their outlook every time. Scary wrong. Worse than normal economists. Which is saying something. Which is why you need to hear from people who are actually on the ground speaking to the people doing the hiring. And were also seeing what investor appetite worldwide is. So i believe governments like the new government in the uk, ultimately our new government. We are going to have to respond to this anger. And this anger is if you dont respond to the anger, the inequalities, the jobs and skill gap problems we have. We dont address these issues, i believe the anger is going to get worse. And so im a huge proponent of a need for fiscal policy for infrastructure as i said before. And were saying it louder. And i believe this is the only way youre going to be able to create some of these jobs during this transition that were having in the world as technology is rapidly changing the work environment. So if we could get a builder in the white house. Someone whos been in the private sector. Whos done infrastructure. Fixed skating rinks. Done huge building knows construction. You walked right into that one. You would be behind this person 100 , im sure. Right . Is that what youre saying . No. Im talking about we need Good Government policy. Oh, youre kidding. Oh, geez. Wow. Okay. Were going to talk more. Maybe we will talk. Right, scott . Did he not just no, i dont believe i did. Okay. All right. Lets talk about the earnings from jpmorgan for just a moment out earlier this morning. Earning 1. 55 per share. Thats 12 cents above estimates. And check out other names in the banking sector. The results boosting the financials as a whole. Almost everyone other than Goldman Sachs are on the move. Up at least 1 . Analysts david hilder is going to join us with his reaction. Coming up, were going to have much more from larry fink, ceo of blackrock. Plus kevin warsh will join us for the remaunder of the show. Squawk box will be right back. Youre here welcome back to squawk box, everybody. Check out the futures this morning. They are still riding highs off our highs of the saegs of the dow had been up around 185 points. Its still up triple digits with 118. S p futures up 12, the nasdaq by 26. This is all coming after the bank of england decided to hold rates steady. That does come as a surprise to the market where youre seeing it play out with the pound. The pound briefly hitting a twoweek high of 1. 3480. Its now trading at 1. 3345. Youll see that right now, yeah, those markets have given back a lot of their gains. We had seen the dax up by 1. 5 this morning. Ftse was up 1 . They are now flat. The cac is still up by 0. 5 . The bank of england, this was a nearly unanimous vote to remain unchanged. The one vote going against it was to actually raise rates. But most of these say they do expect to ease in august. Well see. When i looked this morning and we were up like 160 in this country, i didnt immediately tie it to a it was 180. Yeah. I didnt link it to a boe thing. Then i saw later now we see. It wasnt just the hope. That took now were up 120. You never know how its going to end up the session. That whole 150 was not all easing by the bank of england. We keep hitting new highs here. Well see. Lets get back to larry fink, ceo of blackrock. When we went to break, we did talk about efficient markets. Do you pick and choose when you decide markets are efficient . Sometimes they are, sometimes theyre not, right . There are anomalies all the time. That our own predilections we decide when the market is anticipating something we think is going to happen. And you dont think we should be at new highs now. I dont think we should be at new highs. And we shouldnt continue to trade at new highs. As i said is the market not efficient in this case . No, i think were seeing just an extraordinary circumstance of the purchases. And plus all the stock repurchases youre seeing as reduction and investable assets. And youre seeing a massive reservoir of cash building up. Whenever you talk fiscal, i know when some people say fiscal they might mean cutting down on regulations. Cutting Corporate Taxes. They might talk about supply side stuff. When you talk about it, its usually canes yan. You think infrastructure in and of itself is going to be a huge additive to our gdp without doing any of these other things . No. No. I think we should be certainly change our Corporate Tax rates. We should look at eliminating some of the regulation. Im all in favor of that. What im suggesting and emphasizing infrastructure is because that creates immediacy in jobs. It creates jobs for where the families have left what i would say higher maying jobs. They are working in many cases two jobs. The labor statistics hides those types of facts. How about this. Both bernie sanders, Hillary Clinton, donald trump all have a new view, almost a neoview of global trade. When i think about it, there are people that argue that the higher minimum wage, it may hurt input costs for corporations. Yet it gives more people spendable income. Does it make sense to bring back higher cost jobs here, higher labor costs. Bring it back from lower labor countries and manufacturing, the kind of thing were hearing from donald trump, the kind of thing were hearing from bernie sanders. Would all the expendable, would that offset . Im a big believer in global trade. I believe the narrative that the United States is the largest exporter in the world has been lost in this whole conversation. Were the largest importer. But were also the largest exporter. When we import, we are the richest country. Theres a reason for the trade deficit thats good. Totally agree. I think we have miscast the problems we have. We identify that its global trade. Its offshoring and all that. I actually believe the fundamental problem that we were witnessing over the last 20 years and its going to actually accelerate in the next ten is how technology is changing the workforce. And were eliminating jobs that way. Two, as Technology Changes the component cost of manufacturing, as we know we need less human beings in the manufacturing process. The wage gap differential is not going to be as relevant in the future. Thats why i believe youre going to see more onshoring. That is our natural gas, our cost of energy gives us a unique advantage. Plus youre going to want to have factories closer to where demand is. Because the transportation costs. So i actually believe we are going to be in an era of onshoring which changes the whole global trade analysis. But i do believe getting back my fundamental views, we need to find ways to eliminate this anger. The anger from the obviously middle class, lower middle class who are fightened of their future, frightened of their childrens future. Rising of equity markets is good for people who have capital. Most of the people i talk about do not have capital. Theyre saving every day. And low Interest Rates for savers is a disaster. Theyre earning less. Theres a great article in one of the newspapers today, i think it was the wall street journal on the need to save more to meet your retirement needs. And thats what weve been saying at blackrock for over a year. Were miscalculating what low or negative Interest Rates are doing to savers. Think about europe. Most of the Retirement Savings in europe is held in Bank Accounts and in bonds. So the negative Interest Rates that were seeing in europe, the low Interest Rates were seeing in europe is actually harming consumption. Because you have to save more. Can i ask you about the stock market and the bond market where we are today. You said you dont think that the market should be at new highs. Are you saying then that the stock market today is over valued . Not fairly valued . I would not answer that because i dont have enough information. If we find earning corporate earnings better than the negative five thats been estimated, 5 . Then maybe the market place knows more than what i know at the moment and its anticipating youre scaring me. Blackrocks the largest Money Management on the planet and if the ceo there doesnt have enough information, who does . Theyre going up from here. Equities . No, corporate earnings are going up. Then it may validate these prices. What about bonds . Are bonds overvalue snd. I am worried that Interest Rates are going lower before they go higher. I have said internally and to our clients that i would not be surprised. Im not predicting it, but if somebody told me the 10year treasurys at 75 basis points, i would not be surprised. When you think about the differential where germany now have negative Interest Rates. You could buy the best bond in the world and have a premium. It makes sense for more and more foreigners to be buying our debt. So i think theres still more pressure for lower Interest Rates. And of course, lower Interest Rate is going to validate equity prices and can go up. The problem is we cant do that much further down. We go down to 75 basis points. At some point we are going to see the end of the 30, 40year bull cycle in bonds. And if we dont have corporate earnings to justify these lels when we see Interest Rate increases, then we have a structural problem. Youre not convinced that earnings have hit a trough last quarter. No. The last five quarters weve seen earnings decline. Weve seen multiples increase because weve seen earnings decline. And, you know, the trend is not good. Joe thinks earnings are going to start rebounding. If joe is right, then but the markets kind of betting on it a little bit that thats going to happen. Its one of the reasons why we are where we are. Im not sure theyre betting on it or its very hard getting back to Insurance Companies and hedge funds theyll make a negative return versus their liability buying bonds now. And so they may be buying more equities. And certainly, you know, you could buy some great dividend stocks. Where youre going to earn 3 , 4 . Thats a better investment for me than owning a 10year treasury at 130. Thanks for your time today. Thanks. Great to see you. Coming up, former Federal Reserve governor kevin warsh bb our guest and for the remainder of the show. Everything on tap. As we head to break look at u. S. Equity futures. Maybe a touch off the best levels of the early morning. Not too shaby though. Implied open plus 134 on the dow. Were back after this. Zplmplts all right. Among the stories front and center this morning were watching shares of delta air lines. Delta Beat Estimates by 5 cents with profits of 1. 47 per share. Delta announced a reduction in capacity in routes between the uk. Due to the falling pound and brexit uncertainty. You like that, joe . Theyre better with this music than without. It is. I listen more. I hear more. Im more perk up. Yeah. Im more excited about what youre saying. Theres no reason not to do this. He is the judge. You are. You are wapner. We are about an hour away from two key economic reports. Both from the labor department. The june Producer Price index and weekly jobless claims out at 8 30 a. M. Eastern time. And lets check the british pound after the bank of england surprised investors by leaving Interest Rates unchanged. Thats a pretty good move for a currency. 1. 75 moving the dollar. A stimulus move is likely in its august meeting. If that were to move just a little more and you look at the ftse and then the pound and then the u. S. Markets with b if you came you know, if you fell asleep for three months you wouldnt even know there was a brexit. You know what i mean . Everybodys still saying, no, no, no. Still going to happen. But just in terms of the market and now even the pound. I mean, the pound was about 1. 38, 1. 39 like six months ago, wasnt it . Were not far from this does not look like apocalypse now. It got down to 1. 38 for awhile. Right. When i went there in february, yes. I know exactly where it was. To like eight decimal points. I had pi decimal points. Lets check out shares of Jpmorgan Chase. Beating estimates. Shares rising more than 2 . More coming up in a few moments. Joining us now to talk the markets, the fed, and much more is the guest host for the rest of the show. Hoover institution distinguished visiting fellow and former fed governor kevin warsh. Kevin, it has been way too long since weve got to talk to you. Thrilled to have you. Great to be back. Thanks very much. Lets start we the news of the morning. Bank of england deciding not to cut rates as the market had been anticipating. What do you think about that with your fed hat on . I give Governor Carney a ton of credit. He immediately after brexit came out and said he wants to sit and evaluate the data. He wants to probably get to looser policies sooner. But markets were dying for him to move urgently. As joe just said, the great financial crisis from brexit continues as stock markets around the world continue to rally. So in three weeks, the bank of england is going to do what theyre supposed to do, theyre going to have a new set of forecasts, theyre going have some actual data. And i think markets are probably right in expecting the cut will come. Instead of feeding markets with every little breathless move, theres nothing wrong with waiting. A reasonably big deal to britain. Not obvious its a big deal to the rest of us unless youre a policy maker and you want to flood the markets with more fiscal and Monetary Policy. Help is on the way. You know, you made the point that youre giving props to the boe for ignoring the markets and what it wanted. Were you making any reference comparing them to other Central Banks . No. I just arrived. Im just here. Ive been gone for four or five months from the show. We read what you write in the wall street journal. I know becky reads it. I just didnt know you read it. You dont know if i read. No, i do. I dont put anything on the blogosphere. So i will say this. The rest of the world Central Banks were confronting economies that have been slowing since september. Were more troubled by developments. Im not saying they were rooting for brexit. I dont mean to be that cynical. But brexit is a very convenient rationale to provide more monetary support. Larry fink just said nothing we need now more than ever than more fiscal support for the economy. So help is on the way and the worlds Financial Markets recognize that. Financial markets are higher today than they would be if brexit didnt exist. But you think that the central bank, that u. S. Central bank is actually looking for excuses to not raise rates. You dont think its a case where theyre looking to raise rates. But everything that happens globally hampers them . So i must say i find their Decision Making in the last six or eight months a bit puzzling. I dont know if i could distill a theory of the case. One of my former colleagues tim geithner used to say a plan beats a plan. Well, beat nos plan. Theyve had plans and different plans. I think a strategy beats all of these plans. It is not obvious what their strategy is. I know to scotts point they say theyre data dependent. I dont know exactly what that means. Have they let the markets dictate too much to them rather than the central bank dictating policy . I think that point is right. I think they look to me and im going to try to be as sympathetic as i can. Theyve got a hard job. They look to me asset price dependent than data dependent. When the stock market fall it is like it did the beginning of this year, it was we better not do anything. Stock markets are now at career highs. I suspect when they meet over the course of the next ten days they will suggest oh now they look like they can be somewhat more responsible. I dont like changing policy meeting to meeting. I like it based on whats happening. And that has not been very convenient. The whole rationale was to boost asset values to conjure up some animal spirits in the economy. Everything theyve done has been about asset prices. Now watching them try to get out. Its all been asset prices. And theres no evidence really that they can do anything about the underlying economy. Other than hope it improves based on people feeling better about their houses and their stocks. So in the darkest day of the crisis, when markets were falling, i must admit trying to get asset prices up clear in the depths of 2008, nothing wrong with that. This preoccupation with your show and with the bloomberg screen and with stock prices the what . Oh, the bloomberg screen. You mean those little yeah. Devices on the phones. I thought you meant the tv. I was like ive never seen that. So that is not the right world view for central bankers at a time like this. The right world view is whats happening the real side of the economy. And the bad news is larry fink suggested, the bad news is the real side of the economy and the u. S. Has deteriorated since december. Quarterly earnings will now be down six quarters in a row. Thats the first time thats happened outside of a recession. So the fed had a long window to tighten policy, to raise rates. 2013, 2014, 2015. And it strikes me they missed that wide open window. Thats not a good thing. So you would not be raising rates right now if you were sitting at the table. So i wouldnt have raised rates in december. I find it odd that you had a window of two and a half, three years with the supply side of the economy doing better. Profits increasing. An economy that wasnt great but at least going in the right direction. I would have been much more worried in december than may. But i dont want to dodge it. What would i do now . The fed is sitting on 2. 5 trillion of treasuries. There is a scarcity of riskfree assets in the world. Theres no good reason in my judgment why those should be on the feds Balance Sheet. If i were chair yellen and her colleagues without a lot of headlines i would say we will be auctions these treasuries over to the markets. Here is the fixed schedule. Well o be doing it three or four months from now. Unless theres circumstances to the contrary. Theyre talking about renewing it whether that be on shortterm or longterm basis is. And know what knows what shortterm or longterm is. Why is that . Why is it theyre so worried about touching the Balance Sheet . Im afraid joes got this one right. Why does everyone always say that . Why is everyone always afraid to say im right about something . Larry fink just said that. Okay. Did you finish your thought because it i want to ask you something. This is about you, not me. No, no, im done. You have written in some of the pieces that i really like. You have argued that the fed isnt just not having a positive effect, but youve actually made the case that maybe its dampening Economic Activity in the sense that people dont do longterm investment because they can buy back stock. They can buy back mergers and acquisitions. How long have they been doing things that either are not helpful or actually how long has that been going on . So too many people, central bankers has beens like me, focus on the wrong side of the decimal point. Try to focus on exactly when policy should be. We should be on the left side of the decimal point. We dont understand the economy that well. You want to get policy about right, you want to look like you know what youre doing. You want to stay in your lane. I would say the feds policies have been running against Capital Investment. Discouraging Real Investment in property, equipment, and software for several years. And we should not be surprised why there is such a shortfall in Capital Investment in the economy. And its not because of brexit. Its not because of these other things. Its because the incentives for business to invest in the real economy isnt very good. Which is bad news for workers. Right. All of this is great news if you have a big Balance Sheet and larry fink spoke to this quite well. If youre trying to design a system to make risk assets go up for the half country that make risk assets, this is the optimal policy. Where im going with this is lets say the fed finally gets out. Lets say that we do some supply and Corporate Tax cuts. Lets say we cut back on some regulation. So the feds out of the way. We get, you know, some of these other things done. Are we stuck were doing 2 with all these problems. Are we we had a gust earlier saying we are stuck because of the aging population and because of technology. Were never going above 2 again. Can we do 3 , 3. 5 , 4 again . Absolutely. Thats what i said. So my friend Larry Summers comes onto your show and others and opines about secular stagnation. Let me get this right. The policies that he and the authorities advocated for all these years that were supposed to cause an economy to boom, those policies have failed. Rather than take stock, take a timeout and say maybe we should revisit other policies. They have a new narrative and its turn out we can never grow fast again. We should lower expectation. When i hear secular stagnation, i hear managed decline. They want to manage the decline of the u. S. Economy. The American People wont have it. The economy can boom again. We have failed in spite of our best efforts its still growing around 1. 5 right now. The economy can do much better and we should not take these mantras that our best days are behind us. This is like a symphony to me. You just said my friend Larry Summers. You guys go back and forth quite a bit sniping over the economic views. Do you see eye to eye on anything . Like me and my friend andrew. I am impressed by larry. I like larry. What im most impressed by is his theory of secular stagnation has become the group thinking. That impresses you . Its impressive he can dictate the debate that way. Zblec even though its fallacious . I dont think i think that the group that is in charge with these changes must be exhausted. The difference between a booming economy and weak economy are nicer airports, weve got a bigger problem. You dont think that bazoo bazookalike combined with what happened with Monetary Policy would have gdp maybe a much stronger than where it is today . Listen. We could goose gdp for a quarter or two. If larry could figure out a way to get the permits through jfk so that is a shovel ready project, will gdp look better over the next election . Maybe. But weve got to stop focusing on the next quart per. Especially at a time when rates are so low. You might as well be borrowing. When larry was saying all that stuff about how recently especially the last eight years how income inequality has caused the middle class and everybody to be so angry, i know he voted for obama twice. I know that. So these the policies that he wants to extend into two more democratic administrations are the ones that got us where we are right now. And it doesnt seem clear to him that maybe we need to do some try something different. What you just said. Wait, wait. Wasnt larry fink suggesting that there was zero fiscal policy combined with Monetary Policy . Hes talking about Larry Summers. No im talking about larry fink. Thats what he was suggesting. When he says fiscal, he mines cainsian stimulus. Thats why i said about cutting back on regulations and all these other things. Because just you know, on the front end being virtuous and expanding the safety net and free college and all these giveaway, it sounds great. But it ends up with the fed as the only game in town. The feds been the only game in town because nothing else has happened. But its just a vicious circle and it keeps getting worse and worse and worse. Thats kevin point. His point is you dont change the narrative and say suddenly were in secular stagnation. You say what ive been doing has not been working. Maybe try Something Else. What ive been doing by myself hasnt been working. Its congress fault. They have a theory and the theory is makes good sense in the feds models. The theory is we can just find a way to get people to spend more money then everything will be swell. That has been the theory through the end of the bush administration, through the obama administration. This is not about politics. This is about economics. I have a different theory. The constructive supply side of the economy needs to kick in and Monetary Policy has an Important Role to play. But it has been overpromising and underdelivering. If you could do one thing, youd cut Corporate Taxes . Or what would you do if you could do one thing . Get rid of regulations . I would support structural on the business side and Larry Summers last week said we should no longer do structural reform, increase spending so people will spend more money. I dont believe it. We have much more with kevin warsh. Hes with us for the rest of the program. When we come back, were going to go inside the numbers and talk reaction. Thats after the break. In the meantime, check out the futures. Jpmorgan chase up by 2. 4 . Dow futures, hey, theyre back up to up 163. Forget about what the bank of england says. These futures are higher. Squawk box will be right back. Jpmorgan out with Second Quarter results a little over an hour ago. Calling in now on the squawk newsroom is david hilder. Drexel hamilton senior equity researcher. Welcome in this morning. Thanks very much. The market seems to like jpmorgan. Whats your take . I agree with the market. It was a good, solid quarter. Kbov consensus. Revenue was better than what the management had guided to largely because of trading especially fixed income trading. And expenses were pretty much in line with what theyd guided to. The tax rate was actually a little bit higher than what they had guided to. And they built reserves by 300 million in the quarter, reserves for loan losses. So id say a very high quality quarter. Loss provisions to your point up 50 year over year. But down sequentially. And its the sequential number that i guess is most important. And maybe does that have to do with the fact that Energy Prices have stabilized . Well, they actually jpmorgan actually built its reserves in oil and gas by another 235 million this quarter. But thats not as much as they added to reserves in the First Quarter. So yes, it is potentially because oil prices are higher. Again, i think they do their Credit Underwriting over a longer period than just oil prices for a quarter. But clearly the slightly lower provision versus the First Quarter is because the build for energy wasnt as big in the Second Quarter. Return on equity im sorry. Finish your thought. I was just going to say that trading revenues were better than they had guided to midteens on a year over year basis. Fixed income, currency Commodity Trading revenue was up 35 year over year. So that was a better than expected result. Equity trading about flat. Is it about over jpmorgan in the banks the banks have been working with lower Interest Rate ifs ar long time. Jm morgan showed their expenses in the Investment Bank were down about 1 year over year. So i think the banks led by jpmorgan have really built themselves, arranged themselves for the current economic environment. And if the market and economic environment is better, then they will have some earnings leverage to that. David, appreciate you running to the phone to talk about jpmorg jpmorgan. Thanks. Thank. When we return, we have much more from our guest host kevin warsh. Plus line set to go public. Japans messenger app will be this years biggest ipo to date. We have the details straight ahead. Also there are a few but growing fast home listings. Get this, theyre posting poke stops nearby. Were not kidding. It could change the value of your home, believe it or not. That story is coming up. Theres lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity whersmarte investors will always be. If only the signs were as obvio when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your pential profits. Fidelity where smarter investors will always be. Just real quickly. The dow jones corrected that there was one vote to raise. It was one vote to cut. My gosh. I was getting questions on twitter. I was saying no its from the they corrected it. Never mind. Dow jones fault. Dow jones. Dont listen to them. Anyway, lets take a look. Fortunately we listen to them. Look at stocks to watch this morning. Ubs upgraded procter gamble. Making all the right moves to boost the bottom line. Good movie. Right. Before risky business. But i think he was in the warriors too. Remember . That was a great movie. But investors havent yet rewarded p g. Who was the coach in that movie again . We got to go. Kree is selling its wolfspeed section. Scott. Coming up, much more from guest host and former fed governor kevin warsh. And later, using pokestops as a selling point for your house. Yes, its actually happening. Were going to get you the story. Squawk box will be right back. Breaking news. A central bank shocker. The boe catches the Global Markets off guard leaving rates unchanged. The dramatic Global Reaction is straight ahead. New this morning. A poll finds americans are scared of their president ial options. Well tell you why as we go live to the rnc meetings in cleveland coming up. Plus all those gamers looking to catch them all might give the value of your home is big boost. Well dig inside the pokeeconomy. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. The new song from bastille. Do you know what today is . Bastille day, im guessing. Yeah, its the 14th. Of course. Bingo. Welcome back to squawk box. Joe with parisian french history. I know alternative music better than eventual history. I know theres some guy i know its louis not lewis. Im joe kernen with becky quick and scott wapner. Our guest kevin warsh. And the top story this morning is the bank of england didnt do what people thought they were going to do because of the incredible apocalypse that were all living through right now after brexit. You know, the stock market and everywhere else. Anyway, they didnt rush to cut rates. They kept rates. As a result the pound was up. Now its up over 1. 7 . The euro a quick look lets look at the european markets. And early on they were up on the prospect of a rate cut. But now theyre almost back to where they were before that. And u. S. Equity futures which were up 180, they went on the dow they were up about 110 after the decision to keep rates unchanged. Now theyre back up about 160. We will have more from london on the boe decision in just a minute. But first lets get to the mornings other top stories including jpmorgan. The bank beating estimates on both the top and bottom lines. David hilder joined us earlier this morning. I think it was a good, solid quarter. Earnings per share were 1. 55. Thats above the consensus of 1. 43. Revenue is better than what was guided to especially because of fixed income trading. And expenses were pretty much in line with what they had gotten to. Id say a high quality quarter. Check out the shares. The street seems to agree that stock which is a dow component is up by 2. 25 . Thats a gain of 1. 44 to 1. 60. If you check out the other big banks, theyve been trading higher this morning as well. Citigroup up by 2. 4 . Jpmorgan and blackrock are the first to report. And the market taking this as a good sign. Blackrock posting earnings and revenue in line with estimates. Ceo larry fink joining us first on cnbc. He poured a little water on wall streets record rally. Here we are, were seeing investors worldwide pausing. We have seen quite a large sum only money being pulled out of equities over the last year. And yet were at record highs. This rally in my mind is not i dont think we have enough evidence to justify these levels in the equity market at this moment. Okay. That larry fink from blackrock right here on this set in the last hour. Now back to the bank of england. Surprising decision. Plus more Political Drama out of the uk. Wilfred frost is live in london. Wilfred, that is a surprise to say the least this morning. What we got from the boe. Reporter it was certainly a big surprise for markets. Scott, i would like to think it wasnt a big surprise to viewsers of Worldwide Exchange after the discussion this morning. Also keeping the stock of qe assets at 750 Million Pounds did surprise the market. The pound rallied more than 1 immediately after the decision settling around 1. 33 handle. The market had been expecting a quarter point cut. The bank of england did hint at such a cut in august. But many had expected it to come in july as you said. The pound has been up significantly over the last week or so. That of course much more down to Political Developments in the new Prime Minister theresa may not wasting time appointing her cabinet. Its almost completed. Shes been very bold. Thats really the headline. Not just on the appointments, on the departures as well. The former chancellor osborne the most profile name to get the chop. Also michael gove. We know the headline, the biggest surprise, that was Boris Johnson to the role of foreign secretary. Shes also not shied away from appointing over brexitiers. People she agreed with on that campaign. Davis getting the role of brexit negotiator. Shes also appointed a fellow female to the role of home secretary. Her former post. That goes to amber rudd. In terms of the safer bet shes gone with, thats the chancellor checker phillip hammond. Hes also suggested that it could be more expansionary than under the former chancellor. Wilfred, thanks. And whilst you were im going to start using that word a lot. Ive noticed. Does it make me sound like wilfred . No. Not at all. Lets get back to our guest host kevin warsh. You feel embarrassed when isnt it youre just a visiting fellow. Do you like when people just give you the term distinguished every time they say what you are . Are you distinguished snd. Well, not do you feel distinguished . I dont feel the show very much. Im not distinguished when i show up. Exactly. When becky invites me, i come. All right. Fine. So youre sexist and not gender blind. But youre a republican so that makes sense. Way back in 2011 you penned a piece with jeb bush, an editorial about how to spur economic growth. So it probably i dont know if you ever actually acknowledged that you and Glenn Hubbard were actually helping the candidate this time around and advising him. Did you ever concede that that was the case . So ill break that news here. Yes, in fact, i think jeb bush was a terrific policy thinker and i was honored to advise him. Okay. So unfortunately it wasnt the right time or environment for a third bush. For whatever reason. Are you advising anyone now on either side of the aisle . No. Do you have a preference as to which way we take this country from here on out . So i have a huge preference for policy. And i would hope that between now and election day theres a rigorous discussion on policy. If we continue policies that weve been pursuing over the course of the postcrisis period, we will be lucky to be growing at the rate of 2. 1 . Which was the growth rate in the economy from the middle of 2009 to the middle of 2015. The bad news is weve been growing at a lower rate. So we do need a regime shift in policy. And i dont know youd know better than i whos more likely to enact progrowth policies. Thats what i was dont throw it back to me knowing better than you. Youve got your own opinions. You just dont want to say them. Which is fine. So we cant use really the platforms of the two parties because i dont think anyone in their right mind thinks theyre going to do in that democratic platform what they say theyre going to do. If they were going to do that if they were going to do across the board 15 minimum wage. They were going to do Free College Education for anyone under 125,000. If they were going to make a public option toward single payer, if they did all those things would that be the wrong approach . We tried over the last six to eight years, weve tried statism, financial repression, crony capitalism, retreat from the world, isolationism. And these are the results that weve gotten. That was just off the top of his head and those are like the eight worst things anyone could try to do. Policy couldnt get worse than this. Dont misunderstand me. But weve tried policies that are looking at the next quarter, the next election. We tried to lower our gaze and expectations. The American People dont want to hear any of this. If you ask me to wander into politics which is not my area of expertise, sandersism, trumpism in my sort of view have a bunch of supporters who say were not going to take this kind of weak growth. And maybe the policy leaders who they are supporting have policies i like, maybe they dont. But i think thats the American Peoples way saying we are not for secular stagnation. We are not for managed decline. And if were going to lose, were going to lose fighting. And my view which is a benign view of the electorate is the American People are not comfortable being japan. Theyre not even comfortable being europe. They want to fight back. And theyre looking for leaders. Fighters, if you will, who are prepared to do that. And theres a huge window of opportunity, it strikes me, to inform that debate to fight with good economic policy. None of which we have been practicing over recent years. You off camera mentioned how tough these jobs are that all these people want to seem to get. Youre young. What are you best suited for if you do decide to serve again . I mean, ive had people have said kevin warsh for fed chief, ive heard. Or for treasury secretary. In a gop administration. Are you cut out for anything like that . I am best suited for the private sector. That is my highest best use. I hope i dont have to go back. We should not feel like there is such a limited bench of has beens like me who are the only people who can take these jobs. Youre 46. You are not a has been. I did ten years of hard time in government. Dont make me go back. What about other people that may not have been born in 1970 . Do you know how that makes people feel . Ive got a friend right now feels bad. This is not about age. This is not about party. This is about demographics. This is about trying some new ideas. However and i think we should try them. However, you said dont make me go back. Which implies which implies if you were asked to go back, you would serve. So if there was someone who wanted to radically reform tax policy, trade policy, Monetary Policy, the economic policies that can change economic growth. Economic Growth Matters because it changes productivity and changes standards of living for generations. If there were someone who wanted to do that, none of us who care about the country would say, oh, id never consider it. But i dont think im going to be going back in the next five years. So im trying to still only be 51. Exactly. In terms of the new neofree trade notions that we have now i mean, i have to i never thought it would happen. I have to admit im not ready to just say, free trade at all costs. Sooner or later the benefits will accrue back to our workers when we export more stuff. Im starting someone send me dan dimicco from new core, i used to argue with him all the time. I thought he was a protectionist. He sent me reagans quotes and comments on free trade. And there are caveats and stipulations across the board on what president reagan said. He wasnt just a blanket free trader. He was a person that if any other country was cheating, any other country was dumping, any other country was not reciprocating on fair trade, then we would take action. And i just wonder. Are you just a blanket free trader at this point or is there something to trying to protect our workers here . So i have very Old Fashioned views. I dont believe in zero sum economics. I do not believe that someone has to win and someone has to lose. I actually believe that when two parties this is economics 101. This is adam smith. And if you dont believe this, well, you think that the countrys been on the wrong path for 200 years. I think that when two countries or two people agree to do a deal, they do it because its good for both of them. And too much of the debate in the last months and years have been about, i win you lose. That is not how to grow the Global Economy. I have an incredible amount of confidence. I am not a secular stagnationist. I am not a declinist. And i think that the American People, u. S. Manufacturers being a great example, we can outcompete anyone. The things were manufacturing in the u. S. Are high value added products. Theyre happening on our factory floors because of the productivity, because of the capital, because of the enji knewty of the people on the floors. We can compete with anybody. And im not saying we need to get out of this. But kevin, suddenly globalists and statists are used in the same term used in the same sentence lately. And the last thing you are is a statist. We have tried retreat. We have tried statism. I think these policies havent worked. Just look at the state of economy. The look at whats happened to workers incomes. Is china taking advantage of us . China has a huge opportunity that we can take advantage of. The 11. 3 billion people you havent answered. Have we been taken advantage of in the past . I do not think weve gone to china with the capabilities, knowledge, and wisdom that we need and china needs so that we can boom in that relationship. I do not think that the advice we have been giving the chinese the last 15 years has been good for them or good for us. So if your point is, we in china could be both remarkably better off. Could the u. S. Be remarkably better off with an understanding with china, absolutely. Qualified success the way it was written . So the relationship between canada, mexico, and the u. S. Has been a boom for canada, mexico, and the u. S. Certain people have been hurt. Were waiting for them to be unhurt, i guess. There are no questions that economics deals in aggregates. There are no questions there are individual winners and losers. But we want a pie to be bigger, not smaller. And with a bigger pie, we will then have the wealth, the capability, and the confidence to make sure that no one is left behind. Damn. If youre not going back into politics, youre certainly being wasted. Because you just the hand mooum movements, the way you come up with that. You provoke me. Im not going to answer my questions anymore. Im going to scott and becky. Now i have to say kevin, stick around. I dont know if thats guaranteed right now. All right. Coming up, got to catch them all. Pokemon mania catching the craze. But could the craze impact the value of your home . Well tell you after the break. Welcome back to squawk box. Check out the big banks this morning. Shares are up across the board. Led by jpmorgan which posted better than expected quarterly results. But every bank stock while goldman was a little multed, thats where they are across the Bank Spectrum this morning. We all know that pokemon go is a fever thats been gripping the nation. Could it impact the value of your home . Seems like a stretch, but diana olick has the story. Whats really happening here . Reporter well, look, its still, you know, up in the air. But Real Estate Agents are willing to play the game literally for anyone out there searching im in chevy chase, d. C. And there are three polkgyms within a three block radius of me and several polkestops near me. Agent jay glazer held an open house at a 1. 5 million coop listing last night. On the facebook ad, it said, im fairly certain there is a pikachu at this open house so dont miss it. The question is did that really bring any of these folks in . I think at the oend the day me goal is to get as many people through the door and interested in the apartment. And ultimately if theres a pokemon obsessed person out there who also likes this home, then we want them here and this is the best way to attract them. Reporter now, glazer is not alone. This home in washington on zillow lists a new roof, new hardwood floors, tankless water heater and a pokemon go gym less than a mile away. And this one quotes no pokemon go features. Restaurants are already playing with this. The question is, did it bring anyone in and what will happen when youre able to pay for these in your home, in your list, in your restaurant . That could be a game changer. Of course it did get us there, right, to the listing last night . Yeah. Thats what im thinking. I think im in the camp ofr people who would be more impressed saying theres no pokemon go things near us. That would be a draw. Reporter that would be for me. Me too. You saw the tweet from arlington . No. Arlington national cemetery, please dont play pokemon around here. Oh, gosh. Just the idea that you had to look at your you had to tweet that out for people to figure out you dont want to play pokemon around arlington. Show a little respect. Thank you very much. When we come back, is teslas autopilot too much too soon . Thats what a new report says. Calling on the electric car maker to disable the autonomous feature. We have more details next. Welcome back to squawk box. New this morning Consumer Reports calling on tesla to disable its autopilot feature. Saying its too much too soon. They should issue clearer guidance to openers on how the feature should be used. This comes after the fatal crash of a model s driver who was using the autopilot feature. And scott, you yeah, i watch. I watch you. I like you. You talk about tesla a lot on your show. And musk yesterday said he was not going to disable it. And it does make sense to me if you live in l. A. And youre basically traveling at about a mile an hour if youre lucky in six lanes, you could use it there. Because all it has to do is go but what this guy was doing, how it happened. At least you have a chance to bring 70 to get down to 30. That thing was just full on. Part of it is users should always be engaged. The driver should always be engaged. If you are kind of cruising along, that seems like the problem. Thats why regulators havent said something. Ive been more stuck on the issue as you know of the disclosure of the whole thing. Whether the accident itself was material ahead of a secondary offering. Whether investors should have been given the opportunity to decide for themselves whether they thought it was material or not before they bought that secondary. You know what ive been focused on. And that is his head of hair. You have. Quite extensively. Right. Because ive seen he was going to be totally bald. And hes not. And if he has found a cure to that, i just put Everything Else on hold. I wouldnt build any more electric cars. If he can do that, thats a 2 trillion company, right . Right. And youre a buyer . Yeah right. Im a buyer. Of the stock. Of the stock. Not the product. Look at marsh. Hes like a chia pet. Its growing forward. You are a lucky guy. Im glad to be here for this substance. Its great. When we come bab, breaking economic news. Weve got jobless claims and the june Producer Price index. As we head to break, look at the u. S. Equity futures. Been up all morning. Since whe . Since now. Shes into tai chi. She found disc sports too stressful. Hold on. Let me ask you this. Whats she gonna like six months from now . Who do we have on aerial karate . Steve. Steve. Steve. And alexis. Uh, no. Just steve. Just steve. Just steve. Live business, powered by sap. When you run live, you run simple. Welcome back to squawk box. Breaking news. Were looking for initial jobless claims and our june read on ppi. 254,000 initial claims, unchanges from an unrevised 254,000 last week. On continuing claims, slightly elevated from our last look. Lets look at the ppi, shall we . Up 0. 5 on headline. Thats a bit greater than the 0. 3 we were expecting. And that follows an unrevised 0. 4 . Lets look at food and energy. Up 0. 4 here as well. We were expecting up 0. 1 . Year over year, 1. 3 . So everything about ppi is hotter than expected. And on the headline up 0. 5 , you know, that were going to have to reckon with. But maybe people will look more at the core up 0. 4 which is the highest level. Im not sure all the driving forces here, but i can tell you one thing. Nationalism is growing. Globalism is shrinking. Which one do you think is more inflationary . Back to you. All right. Rick, thank you. I dont know. I dont know what i think the answer is to that. Maybe Steve Leisman has an idea. I think that protectionism is inflationary, right . You reduce competition overseas and maybe puts tariffs on. Its good to do protectionism, it could be higher prices and walmart but it also could mean its potentially more jobs in places. Youve talked about it. More expendable income. It could be with minimum wage. But just so you know its balanced in the sense that there are some people who will benefit but also be a cost in terms of higher prices. You can have what you want, but everybody ought to make decisions on what the cost and benefits are. Ive got to talk about what i think is a potentially blockbuster paper being presented today in cambridge. It suggests that bernanke was wrong. Lehman could have been saved. The financial crisis did not have to be as bad as it was. Lawrence ball. Hes a pretty Prestigious Research associate and at the Monetary Fund which is to say no slouch. He has in a 218page paper the fed had the authority to bail out lehman and it would have worked. They said the hole was too big. The fed could not legally take losses on the loans. Heres the points from the paper. Theres no evidence, he says, that the fed did a detailed expectation of the lehman collateral. That the fed arguments on Legal Authority were incorrect. And that the fed took more risk with dear stearns. Fed officials have not been transparent about the lehman crisis. Their explanations rest on flawed economic and legal reasoning and dubious claims. We asked for comments from bernanke. Hank paul sent a statement. Ben bernanke, tim geithner and i worked as a team and tried hard to prevent a lehman failure. We could find no Legal Authority which would have been successful in saving lehman an insolvent Investment Bank in the midst of a run. I stand by every word in on the brink, his book about the financial crisis. They say the proof is in the market. They failed to step up and take lehmans assets in the crisis. They say aig was different. Its subsidiaries offered better collateral. If lehman could have and should have been saved as ball argues, it cant happen now because congress has eliminated the feds ability to do such bailouts while geithner, bernanke, and paul say they couldnt legally have 200 pages to tell us this . Its a detailed look at lehmans finances. Its part of every conversation that you have about the financial crisis ends up in a debate over the lehman weekend. Look. There were a lot of things that were happening. Did they examine very closely the collateral . Probably not they didnt have time. They did. We dont have to have this discussion. You know why . Because we have a guy who was in the room and there at the time on the set. And this was coincidence. I dont think kevin would have agreed to sign up for this the newspaper was coming out today. Had i known, i wouldnt have signed up. Did you look at the collateral . Could it have been legally saved . Have you seen the laurence ball paper . One is i havent seen the paper. Two is i would note it sounds like laurence ball came to this conclusion eight years after the decision. So after no doubt must have been exhaustive work which i take seriously. Policy makers in crises rarely have this time. This was happening over a weekend. Three, id say, steve, i dont even believe lehman was lehman. I think by the time we got ourselves to lehman weekend, this die had already been cast. The Global Economy and Financial Markets were poised to be tipped over. So i know that in the contemporary narratives its all about lehman should we and shouldnt with. By the time we have gotten there, post fannie and freddie the errors associated with that. I dont think it would have turned out to be the consequential moment that all the narratives and books said it would be. Really . Come on. Thats hard to believe. You dont think that if they had stepped in and saved lehman, that the financial crisis narrative would have been different . And let me pile onto your question. There was also the moral hazard question. I want to ask because the question scott asks is the reason we talk about this today. It has relevance for today. The next time it happens, if you have a big Investment Bank b, should the government step in and should it bail it out or should we suffer the consequences the way we did last time . I think these are great questions. If you go back to bear stearns in march of that year, you can see a transcript of the discussion we had in the fomc where there was a heating debate about whether the u. S. Was insolvent or not. My judgment at the time based on imperfect information was if we are going to bail out bear stearns, know that not the entire is solvent. Between march and the time we got to that fall, i think the insolvency of the Banking System was becoming more apparent to investors around the u. S. And the world. Once we bailed out fannie and freddie earlier that summer, it was more apparent. So i know this is just a crazy idea. Where do bailouts end becomes the question. They didnt, becky. If you look at what happened and how the Financial System was finally saved, the bear loan didnt really work. The billion dollar loan did not work. It took them to bail out aig. That didnt work initially. Took a second bailout. Ultimately it was the backstop by the u. S. Government of the entire Financial System that took to stop the run. Of capital the whole way down because he thought there was going to be a backstop. Fair enough. Look, were going to debate this thats fine when the you know what was hitting the fan youre telling me the times when they were most desperate they were, the heart of the crisis, youre staring the crisis in the eyes, nothing could have been done to save lehman from the government . So what im telling you in Monetary Policy in our first half hour and regulatory policy now is we need to move early because were already late. We need to move before these things are apparent and are crossing the media screens. We did mot move early in the Monetary Policy. We have fewer options today. We did not move early in regulatory policy so we had fewer options by the fall of 2008. To steves question, what about now. The history is very relevant in the sense of lets make the right decision the next time. Right. So i think two huge implications of steves story to the here and now. One is i believe that regulatory policy postdoddfrank, we have now created a handful of institutions at the top that are utilities. Fannie and freddie. And i dont think thats the right path. Second, what would central bankers do now . What would regulators do if they got the fateful call . By the way, i received that call on friday afternoon five times during the financial crisis. It always starts nice. How you doing . And it usually ends with, we dont think we can open on monday. So i take this question very seriously. I would have to walk down to chairman bernankes office is the law too restrictive now, kevin . No. I think what would happen now is if that phone call came in, the fed would have to make a decision and they could, in fact, bail out these institutions but not on a unique basis. They would have to bail out the Banking System which is what the u. S. Ultimately did. Thats what europe ultimately did. So if one believes that doddfrank is an antibailout provision, i actually think it is not. Youve created these institutions at the top. And in the event of a shock which is unanticipated which we shouldnt feel overly confident about our ability to predict these things, the entire Banking System would be the feds option to write a very broad set of guarantees with the treasury. Kevin, a man i spoke with at length and repeatedly during the financial crisis, im glad you were here to recap it. Thanks, steve. Thanks. We have breaking news from our kayla tausche. Shes getting off the call. You have been reporting about jpmorgan Second Quarter earnings throughout the morning. But i want to share with you comments executives just made on a call moments ago. Namely the comments about brexit and how it affects the bank. Jamie dimon the ceo of jm morgan chase was hoarse on the call saying he just returned from a trip to europe. He stopped in london and said that the bank will continue to serve its clients like it did in 2008, 2009 during the financial crisis as the situation gets sorted out. The bank did see what marianne lake, the cfo, calls a small positive trading bump during the few days at the end of june. Of course during and after that brexit vote. But she said that the Third Quarter could still see what is a seasonal slowdown that usually happens for wall street during the summer. She said that the preference for the bank would be to keep its European Headquarters in london. That london should still remain a viable Financial Center but that its too early to predict what the exact outcome of brexit will be. She declined to comment about any discussions with european regulators about applying for or transferring any banking licenses to other countries or other Financial Centers in europe. And said that the range of options for how brexit could play out given that the uk government is being put in place as we speak, perhaps the bank hasnt even thought of some of the options there. So certainly interesting to see a Company Whose Global Operations impacted by brexit saying its too early to say whether they did see a small positive trading bump at the end of the Second Quarter. Back to you. All right. Thank you so much. Theres Jpmorgan Chase one of the big movers of this day up nearly 2. 5 . Coming up, two new political polls out this morning. Plus the rnc rules committee taking center stage in cleveland today. Some delegates still pushing for changes to make it more difficult for donald trump to claim the nomination. A live report from the rock and roll capital of the world is coming up next. Welcome back to squawk. New president ial polling data out this morning. According to the latest ap poll, 81 of americans are afraid of at least one of the two major candidates winning the white house. 25 of those polled said it doesnt matter who wins, theyre scared of both. And the latest New York Times cnbc poll shows Hillary Clintons lead over trump evaporated since the fbi released details of the email investigation. A tie in the general matchup. 42 to 42 . And then then ill tell you 60 of voters said mrs. Clinton is not honest and trustworthy. Thats 5 more than the previous month. By comparison, 62 said they didnt trust donald trump. You have results from another poll. Rasmussen has been trump friendly. But it has trump 37 . They also have the nyt. There were polls that we were discussing yesterday morning on the show in Battle Ground states of what ohio, pennsylvania, florida . One had everything has tightened. Except for pennsylvania. One had hillary up eight. The other had trump up two or three. Thats why i asked harwood earlier today about which one. But its like watching a New York Times editorial piece. Actually chastised rbg. Ruth bader ginsburg. This is the New York Times cntimes times cbs. I think one equals seven between the slant between them. But to get tied is unbelievable. Im sure they went back and tried everything. Some of the people theyre calling i think theyre going whoa, whoa, whoa. Hold on now. Can i just let me ask you that again. And then they, you know when the nyt does it. Eamon javers joins us now outside the quicken loans arena in cleveland. Good morning. Reporter good morning. Were actually inside the quicken loans arena. This place is known as the q here in cleveland. Let me give you a look at the stage. This is where donald trump next week we assume will accept his partys nomination. Speaking on that stage there as you can see they are working very hard here inside the q. Still quite a bit of work left to do going into the weekend. As to who is going to be speaking on that stage next week, were now getting a list of the speakers for next week at the Republican National convention. Everybody scrutinizing it intensely to see whos up and whos down inside the modern Republican Party under donald trump. Take a look at some of the speakers they announced this morning starting with football star tim tebow. Also all of the trump children will be speaking at various points during the Convention Next week. Peter thiel the venture capitalist. Also harold hamm the oil and gas executive. And look at this. Newt gingrich the former speaker of the house and Chris Christie the governor of new jersey both possible Vice President ial picks, both on this list as speakers next week. But not necessarily in that wednesday time slot we think that the Vice President ial nominee will actually speak. Look whos not speaking at the Republican National Convention Next week and even not coming to the Convention Next week. George w. Bush, george h. W. Bush, the former president s. Former president ial candidate jeb bush. Former president ial nominee mitt romney. Former president ial nominee john mccain. And then mike pence. We put him on here with a asterisk, guys, because we do expect that pence will be at the convention. The others wont even be here. But pence not listed as a speaker. So if youre looking for a tea leaf here as to who the Trump Campaign might be looking at as a Vice President ial candidate, a lot of people wondering whether pences exclusion from the speakers list means he will be the Vice President ial pick and therefore speaking on that wednesday night slot which is still open. But as of right now, too early to say. It might just be a case of when this list was drafted late yesterday. And what time of day. This is a very fluid situation in terms of the Vice President ial pick. Eamon reporter rules committee is meeting today. Last ditch attempt, guys, for the never trump folks thats going on today. Eamon, real quick. I saw this this morning. Im sorry. Washington post. How the gop only has a few stars compared to the democrats. Listen to who the democrats have. They have a president , a Vice President , a first lady, and a former president. So theyve got i mean, that is pretty its obama. Its mrs. Obama. Its bill clinton is the former president. We know so of course. So theyre lining up reporter whats fascinating here about this list, if you look at this list to me guys, you see the trump family is taking over the Republican Party in terms of those speaking slots. The bush family who was so dominant in previous years, not even here. Thats a big distinction. Stop the presses. We know theyre not going to be. He said we went to war with a lie and he said about you know. And he called jeb bush low energy. Antiestablishment year. Will it hurt the democrats that they have so many establishment politicians on the stage . Bragging that hillary has a former president is not that big of a bragging point. Coming up jim claimer shes married to the guy. Exactly. Jim cramer joins us live. We get his tank on the boa, bank eengs. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry every third tuesday. We have Pattern Recognition Technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. Td ameritrade. Lets get down to the new york stocks exchange, jim cramer joins us now. Jim, you know, we live in we live in the short term, you know, maybe we make plans in the longterm but weve been talking about the market all week and then i saw this morning it was up 180 on my ride in here and i didnt realize it was boe, but then they didnt do it anyway and its still up 160. Something is happening here that not everybody has a handle on. No, i think youre absolutely right. I was watching this morning speaking about london, he said, listen, be prepared. It may not be a rate cut today. I said, okay, were saying if we dont get one the market will go down. I think youre absolutely right, there are other forces people are talking about here, a lot of money coming into the market out of nowhere or at least repositioning. I have to tell you im seeing even when a stock has a bad day like valeant, scott has ackman, theres no blow back away from that. Suddenly jpmorgan which had a good trading quarter is more important than what they do in britain. There seems to be a recognition what we do in this country does matter again and we have had a bunch of countries, whether it be yum or jpmorgan, this week has been good, its been light but good. Alcoa started look at how that stock is doing. Theres individual stocks that are doing well an against it the backdrop is kind of benign and we dont seem to be having a rate hike at any time in the year. So theres enough good to kind of make it so that people who were short or have cash on the sidelines feel theyve got to come in. All right, jimbo. Well see you thank you. Ill watch halftime today for ackman, he will pound the table for all of his stuff. Long hlf, short valeant, he should have mixed up the tickets. Coming up, whether more helicopter money is about to hit japan. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. Theres only one place where real and amazing live. Book a seaworld vacation package and eat free. Welcome back, everybody. Our guest host this morning former fed governor kevin warsh. Kevin, jim and joe were just talk about this idea that we came in expecting a rate cut from the bank of england. Markets are still up anyway. Part of that was we thought maybe we would get more stimulus from japan but obviously theres Something Else taking place here, too. Right. So brexit has brought forward the size, scale and scope and speed of more Monetary Policy. No wonder markets with up. Also brought forward fiscal policy. So i think it makes sense to Pay Attention to japan because there is, for better or for worse, id argue for worse, an incredible amount of group think inside this guild that i was once a member, now maybe a hair a tech. Just the Central Banks in general. The experts have had a theory of this case since 2009 the evidence notwithstanding. I Pay Attention to japan even if you are only focused on the u. S. Markets. Negative rates born in the academy, sounded like a crazy thing the first time you mentioned it on the set and its a bad idea whose time has come and that time is gone. The why you idea among elite executives at universities is helicopter money and it has a longer history and that is being taken serious in japan is a signal that the guild might ultimately embrace t i think it does matter. I think the reality ask . I cant pan gdp per capita for the past ten years has been better than the u. S. s, though more fiscal policy is coming which some in the u. S. Ly think is a better prioritization. Thank you for being here today, kevin. We appreciate it. Inks that, becky. I want to call your attention to shares of valeant. We told you bill ackman will be on the Halftime Report today exclusively around noon. Theres valeant today about 2. 3 . We had broken the news of that large stock sale by the former ceo. They are out with a statement that says, this is mr. Pearson, i continue to believe in valeant. We will have much more at noon. For now squawk on the street is coming up. Biggest tech ipo of the year about to take place today. Good morning, welcome to squawk on the street, im carl kint in a with jim cramer and david faber. A fifth day of kwans is taking shape, futures much higher, looking past the bank of england aez surprise decision not to cut rates. German dax back above 10 k. Bpi up. 5, the highest since may of last year. Our roadmap begins with the market set to open at those new