Similar gains by the cac in france, the dax up by 0. 3. The tenyear yield has been hovering near the lows the yield sitting at 2. 172 . A little higher than where we were this time yesterday crude oil down again yesterday after being hit hard the day before wti is up by 19 cents. Still below 45, 44. 65 we have a couple big stories were watching this morning. Russias Defense Ministry checking to see if an air strike in syria killed the leader of isis unconfirmed reports say that the leader al baghagi had been killed in air strikes. An upstate on steve scalise. He is in Critical Condition this morning after undergoing more surgery yesterday afternoon. Is he expected to need multiple operations to stop the bleeding and repair internal organs he was shot in the hip at a congressional baseball game on wednesday. New this morning, china removed 27 restrictions on Foreign Investment and free trade zones. Chinas free trade zones enjoy loser trade. They specify areas off limits to foreign capital. We had an idea it would happen, but we were afraid to say it baghdadi has not been confirmed other places happened in may mmhmm. Still dont know. Its like the 15th or something. Its june. Remember the other day i thought it was may. So well talk about snap in a second so our big fed is hiking rates mueller is investigating obstruction of justice today yes ended up down 14 on the dow yes near the highs of the days we were down about 80 points in the morning before things opened how about tech . Technology weak but i think it was materials that were weaker its like a beach ball. More like a helium balloon that pops back up every time yeah. Youre thinking under water trying to pull the beach ball under water, it never goes under. Watching shares of snapchat. I see all kinds of acronym or slang, snap crap, i see all these names for snap i know we own not us, not me personally comcast i think our were in at 18 were in at 17. Were in the at ipo price. So the stock dropping to 17 in yesterdays trading yeah thats the price set at the ipo in march analysts have warned about snaps high valuation and slowing user growth. They warned snap may never become profitable. Is that true they said that before this is as much about the valuation at the ipo as well as how much facebook via instagram has taken so much. I thought if you aggregate eyes if you aggregate eyes, do you need to be profitable can you just pretend to thats yahoo we thought if you aggregate enough stuff and have enough buzz, but it has to be monetized or does it not im not sure it does theres been Companies Like amazon, jeff bezos was give an huge amroupt oount of theyre not building out anything amazon for the longest time was getting that was not an aggregating that was an aggregating everything selling to distribution centers. He continued to grow the number of customers at a rapid pace the whole time. Whats happened with snapchat, there has been a legitimate slowdown we would always say to ourselves up here, we dont understand snap because were not part of the generation the Younger Generation is doing it we dont get it. Were not joining at all the Younger Generation, thats whats happening here. No why you are looking at him . Hes older than you are. What supposedly. What have people migrated to from snap . Instagram but instagram was before snap but facebook has done such a good job with instagram they have taken absolutely. Facebook has done a phenomenal job with instagram it doesnt matter if youre an older generation or Younger Generation, when people say youre not going to be profitable for a long time that does not get people excited. It is much different than the amazon model with amazon, bezos laid it out and told people from the beginning dont think youll be here for shortterm profits. Were building Something Big and over a long haul snap may be trying to do that. Whether theyll win the same patience from investors is the question lets first see twitter the eventual winner, i think, is the one that has the dog ears on your picture, and a instagram now who doesnt want to do that instagram has it. They do to me, the valuation is based on the dog faces you can put on your selfies who doesnt want to do that . Dont you just do that once and say, ive done this . You cant build a Company Never gets old. Thats the thing vomiting that rainbow. Whats that you go bleh it turns into a vomit rainbow. See, thats new to me so this keeps Technology Keeps up its not just dog ears they keep putting new faces on every day theres something new. Im embarrassed that you know this for you. Im embarrassed that you dont. Really . You spend your time . Okay dupont and dow chemical won antitrustrust approval to merg under the conditio that the company sell certain Crop Protection products and other assets the companies have clearance from europe, china and brazil and are awaiting approval from a handful of Companies Including canada and mexico. Time for our daily check in with washington with eamon never know dont get so excited. You dont sound so excited. You never know whats coming here never know whats coming from the beltway. President trump is headed to miami today where he is expected to roll out a new cuba policy. And it doesnt roll it back completely, does it . Yeah. Tightens up a couple things can i still go if i want to if i pretre prete pretend not as an individual people to people, you cant but as part of a licensed tour group you can. Get yourself on a cruise ship, off you go. Its a Beautiful Island i had someone trying to talk me into going there i guess theres a lot of art down there its beautiful. Great artists. It is fabulous. I was there two years ago. Fabulous . Fabulous. Its really striking its unlike anything else that you will see in the caribbean. Because its frozen in time frozen in time and crumbling since the 1960s. Great so when you walk down the main streets in havana, there are buildings crumbling into the streets. Who doesnt love that. Alongside buildings that are fixed up and are great its a weird mishmash of everything over the past century, including the cars. 15 , 20 of the cars in the streets are old 1950s american cars its a fascinating place to go my advice to you is dont eat dinner at a black market restaurant in old havana, which i did. Because dinner was great. The aftermath not so great they still are working on sanitation, water cleanliness. So its a mexican like montezumas revenge. Fidels revenge thats scary. It can last a couple days. Eat dinner on the cruise ship, walk around havana until they get that fixed. Its a problem i will leave it there. Early morning people may be having breakfast you can only order beer, you cant have a mixed drink theres ice. You can avoid the water but it gets you just have the rum straight, youre good. Okay. I thought you said just get the runs i did. I did not say that. I did not say that i might have been referring to that but i did not say it. My head was in the same place. This is a tough segment out of the gate. Do you have substantive stuff to say i do. Do you want me to say it yes, please im not sure. Some days i wish you wouldnt. We got a briefing last night from white house officials who walked through some of the details. The president will announce the plan in miami later on this morning. Let me call up some of the bullet points here they will prohibit Financial Transactions including transactions incidental to travel a couple other points, they wanted to strengthen the statutory ban on tourism to cuba, which has never gone away. But this is the one we were talking about. But the individual people to people travel will be prohibited so you cant say youre going for any reason you want to, you have to be on a licensed tour group. Theres no change to the embassy status here that will remain in place from the obama reforms also there are a bunch of exemptionses to the policy carved out for specific industries, including exports of agricultural commodities, medicines, medical devices, air and Sea Operations that support permissible travel, cargo and trade. That includes the cruise ship business, joe. If you wanted to take a cruise line, you can still do that. Programs to build democracy. A couple other exemptions included in there. Internet and telecom, access for the cuban people, sending, processing or receiving authorized remittances those are the payments from americans who have family in cuba to their family members that will be able to continue. A lot of exemptions here not a full rollback of the obama reforms. But what the trump team is saying is that they think this was an appeasement policy towards the cuban government they want to redirect the dollars flowing from the United States away from the military and intelligence services, and towards a more broad based cuban economy. So the people who benefit here, airbnb, not so much the Big Hotel Chains that have done deals with the cuban military in order to license facilities down there. So you went from the cuban to the cruise ships where you also can contract they recycle the water or something they have norovirus crawling everywhere you have to tough it out. The result is the same. I think. Either in cuba or on the ship. How do they do that . Theres a lot of toilets, a lot of, like, water they use how do they know its it seems its scary. You would not go on a cruise, would you . I would go to alaska. I wanted to go tour alaska thats a way to see the glaciers you wouldnt do it. Theres 3,000 people using the same sanitation system when you fly, youre dealing with the same thing. You can fly direct to cuba. Youre off in six hours its not like youre trapped there for ten days you can fly direct. You can fly direct theres an interesting thing. You can still fly the flights american air flights direct from miami maybe not for long, right no, you will be ability to still fly. You cant do the individual you can fly direct to cuba, you can fly direct back. Theres been some cancellations. Spirit airlines canceled because there was not enough demand for people who wanted to go down all right because they talked to eamon. We learned a lot today, joe we did. This was educational. For people eamon, what happened yesterday afternoon on twitter do we know what was that the president started tweeting in the middle of the afternoon. We almost got through the segment without you we almost got done but hes my resident expert at the white house youre soul mate. The president had a block of unscheduled time on his public schedule where he wasnt doing anything sid suddenly we saw the tweets the president tweeted four times about the russia situation now we have a situation where the white house wont comment on russia the spokespeople there, official theres wont say flig about ru anything about russia. They wont even comment on the president s tweets about russia. They refer those questions to the president s attorney mean while the president is feeling free to tweet away on the subject saying he resents the fact that were not investigating Hillary Clinton and her team, that were investigating him. He feels thats problematic. He seems to have a sense of grievance about this its very emotional for the president. He feels he hasnt done anything wrong, doesnt know why this is happening and wants it to stap cle stop. So the white house has to figure out a way to do the agenda piece and do the russia piece separately theyre trying to do that but the president paying a lot of attention to russia thank you you bet there was our daily dose. You got it. You got it in. Lets talk about the calendar todays agenda, couple things going on a pair of economic reports may Housing Starts out at 8 30 a. M. Eastern theyre forecast to rise more than 3 after falling in april Building Permits expected to remain largely unchanged at 10 00 a. M. , the first report on june Consumer Sentiment also today well hear from dallas fed president rob kaplan because he will be speaking later this afternoon back to the Broader Markets. Futures at this hour right now we are in the green. Dow opening up about 37 points higher s p 500 up 5 points. The nasdaq up 12 points. Joining me is jason pride. Our guest host for the hour, joe terranov terranova. The train has been edging marginally edging back i missed the train okay. Marginally edging back . This week i had a if i was in f. A. N. G. Stocks, if i was technology guy, im trying to keep it limited so you got excited last friday when the f. A. N. G. Stocks went down, you said this is it the dow off 14 points the alltime high. Yes thats good pullback. Where i was going with this, we had a guest on yesterday who you were very skeptical of do you remember this no. Which guy . He said we thought we were on the precipice of a recession that was at the beginning of the year he said the s p would be flat to down. But then he said he wasnt bearish. And it was going to be he didnt just say recession. He said it wont be hooverville, it will be trumpville. Do you remember hoover not edgar this is where i wanted to tee up the conversation that guy has been good. It was supposed to be the first year of the reggen administrati reaga administration, down 20 everybody got excited last friday because the f. A. N. G. Stocks went down were working on 131 consecutive days where the nasdaq 100 is above the 50day moving average. We have not done that since 1995 some good things happened this week biotech was fine the credit markets, which people dont like to talk about high yield Investment Grade you saw a natural correction everyone has been overweight growth since march okay they paired back system of that while they pared it back, they bought financials. So straight shot to the moon . No. On average on any given year through history we had a 5 to 15 correction at some point of the time the majority of those years have gone on to be good years this is still the longer term cycle. Were basically nowhere near the end of this economic expansion so investors have to stay invested somewhat in the equity markets. To think there is not any correction whatsoever, no 5 to 10 pullback you dont know what will cause it you just know on average it typically happens at some point in time. Quite often by something that nobody sees coming whatsoever. Quite often for typically like some wacky sentimental reason. We had brexit. We had the nearterm correction on trumps election, the snap back multiple things could happen you see, exactly what jason is talking about the problem becomes that youre talking to longer Term Investors. Youre talking about a 5 to 10 correction will investors try to time that correction we sit here today, one month away from earnings, you really want to get out of the market after the earnings we just reported if youre a longer Term Investor where were finally seeing best earnings since 2011 . Now well get another round of them one month from now . This is more a trading event driven by a lot of algos play it accordingly. Were there times in the past when we waited for a 5 , 10 correction and its been two years how do you get back in. You get back in typically when you wait for the 5 , 10 . You finally get it and its above where you were waiting it comes down, its like you didnt buy here at 2316 it goes up to where it is. Comes back to 2400, youre still way above where you were this is not for you to come on and say at any time we can have a 5 , 10 correction, you know that everybody says that. Of course all right thats what i would say, too. I know. Every person in the world, we know that. If thats true how you position around it if it doubles you dont say ill take the equity position down, have less equities because im worried about a 5 correction you dont sound overly bullish. You said investors should have some exposure to the stock market you should have a full exposure to the stock market but you should have take a defensive posture within the u. S. Where the valuations are higher and the snap back could be harder. And you take your risk where there are better valuations. How much are you sitting on cash right now we have nominal amounts of cash 2 , 3 shyou should always have som cash, be ready to step in. Its about what you own and the amount of, number one, the beta that it has to the overall market again, as evidenced by the overwhelming attraction to growth, the type of stocks we had the last few months, if you feel its a defensive vie ivive environment you pear that back do you think there was a movement out of the f. A. N. G. Stocks if you assess whats going on in the last week, things are good oil prices are teetering challenging 0 bue ining 40 bucks that used to be a major concern for the markets. And you have a Federal Reserve that has given you another normalization in rates market digested it fine. Thank you guys. Thank you joe, youre sticking around sure. Good. Netflix hitting a new milestone. Details after this and jeff bezos asking twitter for help well tell you why after the break. Stick around, squawk box will be right back. Track your pack. Set a curfew, or two. Make dinnertime device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. Introducing xfinity xfi. Amazing speed, coverage and control. Change the way you wifi. Xfinity. The future of awesome. Welcome back the number subscribers in the u. S. Passed the number of cable tv sub scrub irs in t subscribers in q1. That does not include fshg ifios subscribers. In the new york times, at last jeff bezos offers a hint o his philanthropic plans. His Charitable Giving has been a mystery. Hes the only one of the top five billionaires in america who has not signed the giving pledge, and his charitable contributions have mostly come from his Family Foundation totaling about about one tenth of one percent of his future after being questioned, bezos tweeted that he is looking for philanthropy ideas at the intersection of urgent need and impact when he cashes shares of amazon right now, he puts them into spacex. Thats what hes been doing with this stuff into blue origin. Blue origin spacex is elon musk water he can do water it has to be for him, he says it has to be immediate. Hook the people up to clean water. Water homelessness, medicine education i had people telling me that if you to cure poverty, to just immediately satisfy the immediate needs, the daily needs, its different than growing an economy, growing an economy in places where there is poverty is i have a philosophical question about philanthropy. Do you follow the Warren Buffett model, youre a capital allocator, you try to make as much as you can and then give it later. Thats the point. Hes already about the richest man in the entire world. Hes already the richest man, but can he my guess is he would not want to let go hes still a young man. Bill gates got criticized. You really buy that which aggregating as much as you can while alive and just hoarding it until you die are the same thing no,no no. Not hoarding until you die but waiting over the course of time but its the end result, i keep it longer, and by the time i dont need it anymore, i give it away. Neither buffett or gates are dead theyre giving it away while alive. But they have never done all the way up but as a result they have billions of dollars. We should get robert frank to call into the show later or maybe he can come on its a big article today okay. Coming up, President Trump expected to roll back president obamascuban thaw. Well talk cuba, healthcare and tax reform with former senators judd gregg and evan bayh as we head to break, heres yesterdays winners and losers its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning lets look at equity futures at this hour. Theyre up again we had our big correction yesterday. Down 14 points on the dow. Hopefully you moved quickly and got in before the pullback jumped on that train. Every major asset class this year, only one down. Mlps thats it. Every or asset class is up across the board Master Limited past nerships, do you have a reason oil that makes sense. Thats what a lot of mlps are concentrated in. Good job, joe. Glad youre here President Trump will be heading to miami today to unveil a new cuba policy. He is expected to tighten the rules on americans visiting cuba and restrict some u. S. Businesses dealings with cuban firms. Lets look closer at the president s agenda and see where we stand everything to do with tax and healthcare reform. Joining us now is judd gregg and former u. S. Senator evan bayh. Welcome to both of you i want to ask you where you think we stand now in terms of tax reform and healthcare reform senator bayh were reaching the beginning of the end on healthcare its in the senate my guess is that the odds are about 50 50, maybe a little better that something will pass out of the senate. Its a struggle between the moderates who want to ease the cut backs onmedicaid expansion and the fiscal hawks who want to do with it more quickly. My guess is Mitch Mcconnell will probably get it done it will then go back to the house. The real key is that Freedom Caucus in the house. The most conservative members, will they accept the moderate changes those in the senate make if they do, you get a bill if they dont, obamacare will stay in place. You think this is something that will happen under what time frame . Before the recess for the summer before the end of the year the senate will vote before the recess theyll try to hash out the differences between the house and senate who knows how long that will take it will be the most conservative element, will they accept some of those things that the senate will make. Many of these states that expanded medicaid have republican governors and republican leng lagislators, th will be sensitive to having people thrown off healthcare or fiscal burdens increased when facing elections correct you might have extraneous things like planned parenthood thrown in there like Susan Collins from maine might have some problems i think its better than 50 50 it gets out of the senate. A coin toss on whether something gets enacted eventually. It comes down to the most conservative members in the house. Senator gregg, thats a more optimistic read than i would haveexpected what is your take on things . I think evans analysis is correct. Let me put color on it i dont suspect viewers understand the procedural sort of intricacies of this situation. In order to do tax reform, they have to get a new rick ceconcilo bill they cant get a new reconciliation bill until they use the present reconciliation bill, and they have to get healthcare taken care of before they can take on tax reform. Thats the big enchilada so i expect some pro forma at the minimum healthcare bill done before the end of the summer then theyll move on to doing a new budget which will give them the new reconciliation bill which will allow them to move forward with tax reform, get the tax reform done by the end of the year just to clarify on that they have to have something passed on healthcare before they can move on to the new reconciliation we had congresswoman blackburn here yesterday, she was suggesting when it comes to tax reform, she thinks it is most likely to pass the house which is something slimmed down, more like tax cuts, not a massive overhaul which includes the border adjustment tax. Would you agree with that . I dont think the border adjustment tax will pass the senate and i dont think it will pass through conference. I believe well see a substantive tax reform bill. If they dont do that, how do they justify being the Republican Congress. The point is they cant have two pending reconciliation bills they have to complete one, get it off the table before they go to the next one. Before they can do a budget and get the next one up. They can negotiate the tax bill. Theres a lot going on now if you want to do a tax bill what has to happen is that Mitch Mcconnell and paul ryan have to sit down, work out the framework of where theyll make the whose toes theyll step on to get revenues, reduce the rates then tell senator hatch and congressman brady to move on it. Thats a much bigger headache than most people realize we feel the bickering and arguing taking place, and gently they will get to something thats a complicated recipe. Judd was spot on, but its somewhat more complicated than that i apologize for laying this on viewers so early in the morning, but they have to raise the debt ceiling in the midst of this thats not always a layup because the most con zefrtisera members will be highly reluctant to raise the debt ceiling. Democrats will say, lets see, normally we would vote for this. If we allow the government to borrow more money, it will go to tax cuts that were not thrilled about, why should we do that so theyll be negotiating about if we give the votes to raise the debt ceiling, maybe you reduce the tax cuts a bit. Even the treasury secretary said there may be a point where that could ab usefbe a youthfull correct theres no doubt that they have to put the debt ceiling up. You have to put speaker ryan to get a large number to vote for the debt ceiling, and it has to be a clean debt ceiling. They cant go into august without a debt ceiling, its not clear when you will hit that wall you certainly dont want to play brinksmanship with a Republican Congress on the issue of a debt ceiling that would be foolish. That would be cutting off your nose to spite your face. Judd went with the brinksmanship. I think its brinkmanship. No he just talked about multiple fronts. Brinks. Maybe theres more than one thats the only problem i had with that. Watching you two guys talk is kind of sweet. Its like from 20 years ago or something. Youre a democrat, youre a republican, youre going, oh, he is spot on with that he finishes, you go, wow, judd, couldnt have said it better myself whap what happened baseball game last night. This is why theyre no longer in they dont fit in there at all there are a couple things first judd and i are former governors. When youre governor, you have to make things work. The buck stops there. You have to balance the budget, improve the schools. I want to be a senator. Good tables at the restaurant. Trust me, joe, no you dont what i do have to do . I have to do less there than here were both governors, i say the second thing facetiously, we know each others families we know each others wives, i know judds son. When you get to know someone, you can cut through a lot of the stuff and find out what you can work on. You want to get to know Mitch Mcconnell, fine. You get to know Mitch Mcconnell. Real quick, both gentlemen there was a ceo of surveys taken in america do you know where im going with this do you like ceos now or do you still hate them . Hold on no, does he like them liberals only use ceos ceos in america including Ginni Rometty and steve swartz were asked to grade donald trump. 50 gave him an f. Yeah. 21 gave him a d. 1 gave him an a. I was going to ask both senators to give the president a grade. Thats a great the obvious answer is incomplete the second response i would have, are we grading on the curve or some sort of absolute standard youre applying lets go absolute i imagine thats where theyre going. You know, 100 days in, its too hard to say. Im not just punting it is. Things are not going well now. He said they passed a bunch of big legislation, that wasnt true hes making progress in the deregulation front what percentage of ceos are crony capitalists . If i gave you the list of republicans in that room you would be shocked immelt is supposedly a republican immelt wasnt there not anymore you have to grade him you cant grade him on one area. You have to break it out he gets an a on his quality of his cabinet. A on philosophically trying to move forward reducing government interference with small business, d minus on selfdiscipline and message. Governors, thank you both for your time. Well say goodbye as governors since we introduced you as senators when we come back, bob iger talking to cnbc on the First Anniversary of the shanghai theme park his mmts saicoentrght ahead. Youre watching squawk. Well be back in a moment. Anyone can dream. Making it a reality is the hard part. Northrop grumman command and control systems always let you see the complete picture. And were looking for a few dreamers to join us. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Disney celebrating the oneyear anniversary of the opening of the shanghai park eunice yoon got a chance to talk to bob iger. She joins us with more good day, eunice hi, joe in about an hour and 20 minutes time disney is going to have a fireworks display at the castle behind me. This will cap off what has been a good day for disney. Ceo bob iger is in town. He as well as other executives were greeting some of the first visitors to the park some of the most loyal customers in china to disney i spoke to him about some of those visitor numbers for the year this is what he had to say well, im pleased to say that as we hit here on the oneyear anniversary, we now exceeded 11 million in guests. We had mentioned 10 million by the 11th month we now exceeded 11 million we made no projections about whats ahead except to say that this is something thats been embraced by the people of china truly in that about 50 of those visiting are actually from outside the shanghai region. Thats a lot higher than we expected now, the point of the park is not only to bring foot traffic to the theme park business but also to build awareness of the disney brand overall so i asked that to bob iger, he said that theres definitely more brand awareness, though that hasnt yet translated into numbers. At the same time he is still betting big on the Chinese Consumer he said he already has plans to add a new attraction here, its called toy story land. It will be completed in 2018 and that shanghai has plenty of land for further expansion over to you, joe real quickly, what time is it its evening there, right . What did you ask . I wonder where you are in the park if you took that shot in orlando, it would be crammed with people right now. Your time of day if it were here no, this is crammed im by the castle but it is crammed with people. The thing is that the people are on the other side of the camera watching me. Thats why you dont see as many people behind. This area has been blocked off by a rope. Got it. Understood it is very crowded here yeah. That would be yeah. That would be funny if it wasnt a rope yeah, things are going great here yeah all right. Eunice, for more on disney were joined by barton crocket, Senior Analyst at fbr Capital Markets did you have a number that would have either been disappointing or impressive for that 11 million . Is this about right . Yeah. We had about 10 million after the last update. The numbers have come in very close to what we thought after we went out to the park opening last year. We were arguing that this was on pace to be the most profitable disney park globally we were above the street at that time everything played out close to what we thought. So thats a great story for disney i think the theme parks are the main driver of Earnings Growth for disney shanghai is propelling a good chunk of that now. Not a lot of you wouldnt say thats a big Market Penetration so far, would you . Correct me if im wrong, they got a few people left that have not visited that live in china yeah. I think the market is pretty good people can go twice yeah. You can still get the 11 million. So you got 2 billion left to go or i dont know yeah. How about Everything Else the cnbc woes, its not a small part of the business, but its the one that everyone talks about all the time to talk about whether disney is a buy or not a buy. Right have they stabilized things there yet or not look, i think that spespn is grind. The ad trends on tv networks gently are a bit challenged now. Theres some pressure, advertisers rotating to internet some big categories, auto flattening out i think the number of subscribers to espn is a constant source of worry for people, a constant source of debate the reality is they have pricing leverage theres southward pressure there. The problem with disney stock, which we have at market perform with 116 price target is that it has tv networks right now its hard to invest in tv networks, just given whats happening with the consumer and where theyre going. I think the theme parks are great. I think the movie business has been heroic. Though its going to be hard to grow from the peaks they ascended but the main kind of drag on disney is the concern around tv networks i think running in excess of whats happening, which is kind of a grind well, i mean, they certainly have, i would say, a Bright Future given that they keep getting new franchises theyre very good at wringing every darollar out of every way and trying to monetize these things, they create new ones they buy what they dont own it seems the future is bright. I dont know if you would hang it all on a sports network, but it seems to be what people key off of now its bizarre, right . Yeah. The movies are great i would argue that the share they have of Domestic Box Office is at an all time high and history says that it will be hard to sustain that. Are, you know, sequel driven you know, it is hard to sustain interest in sequels. You know, i think that, the dependence on movies that have been so successful, how do you get any better than that okay, barton, thank you well check back with you later. When we return actor Leonardo Dicaprio giving up gifts that he received as part of a malaysian Money Laundering probe the details are next as we head to a break take a look at whats happening in the european markets theyre up across the board. Much as the futures here the ftse is up by more than 0. 6 of a percentage point, the cac is up twothirds of a percent. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Youre searching for something. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if there was a single site where you could find the right hotel for you at the best price . There is. Because tripadvisor now compares prices from over 200 booking sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Welcome back to squawk box. Actor Leonardo Dicaprio has turned over an oscar that was won by Marlon Brando as part of an investigation into a malaysian Money Laundering probe. Dicaprio said he would turn over any gifts or donations from people connected to the one mvb wealth fund Production Company red granite has been accused of using funds diverted from that wealth fund and brandos oscar was given to dicaprio by red granite to thank him on his work by wolves of wall street the doj has also moved to seize works that it said was purchased with laundered money and then gifted to dicaprio lets get a quick final thought from our guest host for the hour, joe terranova, the senior managing director, also cnbc contributor and joe, just after what we heard from the fed this week does that change your thoughts athe all on the market . No, it did not. And as i said previously i think the fact that we were able to really digest normalization of rates once again, i think thats positive i think looking forward, the important thing for the investor is next week the cdash results and i really think financial return back in focus once again. There are some financials that are better positioned than last year citi should look very strong after these results come out bank of america, which personally im long, thats been a strong play yeartodate i think that continues for morgan stanley, as well. Some of the select regionals that have kind of struggled here in the last couple of months ccar could be a catalyst for them to return to the depreciation thank you so much for being with us. Thank you always enjoy talking to you have a great weekend thank you coming up real estate is in focus. New data on Housing Starts later this morning but first, a read on the markets, and the fallout from this weeks fed rate hike. Squawk box will be right back. Brian, i just need to know if the customer app will be live monday. Can we at least analyze customer traffic . Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. I did active duty 11 years. My in july of 98. And two in the reserves. Our 18 year old was in an accident. When i call usaa it was that voice asking me, is your daughter ok . Thats where i felt relief. It actually helped to know that somebody else cared and wanted make sure that i was okay. That was really great. Were the rivera family, and we will be with usaa for life. Usaa. We know what it means to serve. Call today to talk about your insurance needs. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . The future isnt silver suits anits right now. S, think about it. We can push buttons and make cars appear out of thin air. Find love anywhere. Hes cute. And buy things from, well, everywhere. How . Because our phones have evolved. So isnt it time our networks did too . Introducing americas largest, most reliable 4g lte combined with the most wifi hotspots. Its a new kind of network. Xfinity mobile. Wall street looks to open lower on this quadruple witching friday can tech break out of its slump . Were going to talk markets and your money in just a few minutes. The Cleveland Clinic entering the Health Insurance market with the help of oscar health how the company is looking at ways to change the way we buy health care. Plus the president travels to miami to make remarks on u. S. Cuba policy. Why he is rolling back some obama era changes the second hour of squawk box begins right now live from the beating heart of business, new york city this is squawk box. Good morning welcome back to squawk box right here on cnbc were live at the Nasdaq Marketsite in times square im Andrew Ross Sorkin along with becky quick and joe kernen. Take a look at the futures this morning. We are in the green. The dow looks like it would open up about 38 points higher. S p 500 up about well call it 6. 5 points right now and the nasdaq about 14. 5 points a couple of headlines, the Russian Military says it may have killed isis leader abu bakr al baghdadi. His death has now not been confirmed, though, but russia does say the late may strike hit a meeting of Islamic State commanders in syria, and that he was present at that meeting. So we will find out more perhaps more information separately the Justice Department has cleared the planned merger of dow and dupont the clearance comes without any requirements for further divestments. Both Companies Say the deal should be completed sometime in august and were going to get a fresh read on the housing economy at 8 30 eastern time. The government will be out with may Housing Starts economists are expecting a 3. 4 increase President Trump will announce a revised cuba policy today. The change is an attempt to stop the flow of u. S. Cash to the countrys military and Security Services at the same time, the president wants to maintain the diplomatic relations that there are currently and allow u. S. Airlines and cruise ships to continue to service the island trump had previously said he supported restoring diplomatic relations. But wished the u. S. Had negotiated a better deal which obviously is an attempt at working around the edges for the deal that president obama structured as hes done as with other things. We have an update on congressman steve scalise. He is still in Critical Condition after undergoing more surgery yesterday. He is expected to need multiple operations to stop bleeding and repair internal organs scalise was shot in the hip at the congressional baseball practice on wednesday. The expectation is that he will be in the hospital for an extended period of time. And well keep you updated did improve, though did improve a little still pretty scary, pretty dire. You know you just dread looking down and seeing were assuming that hes going to make it, you know, and theres still a lot of concern, still, you know, and so far so good when you like we talked about yesterday, bouncing around in there and theres arteries and veins and you can imagine what a surgeon has to do. He lost a lot of blood. Lost a lot of blood youre putting back together individual arteries and veins and theres damage to organs its just horrific but, better news, anyway, this morning. A few stocks on the move this morning. Nike taking a hit on a downgrade from jpmorgan. This comes after the sneakermaker announced yesterday theyre going to cut about 1400 jobs and slash the number of sneaker styles that it offers. And keep an eye on the shares of snap today just a suggestion if youd like to perhaps, perhaps watch snap today. I think, the stock sinking to its ipo price of 17 a share drop highlighting investor fierce over the companys competition as they go up against facebook and that keeps up, and apparently, im told by people here that instagram is back. Instagram is back in a very big way. All of the features, theyre open about completely copied it. And by the way, they might have even done a better job aping the features, meaning theres other parts of it that snap doesnt even do and given the relationship that facebook has with advertisers, which is much more meaningful than snap, theyve been able to integrate that, too. All right with snap do you have to follow someone to be or yes, you do so its the same as instagram with followers snap is better as a sort of onetoone medium where you snap the other person where as instagram is more of a broadcast look, our kids love snap. The younger kids are staying there. 345ib theyre not moving some of the older people who were already on facebook and instagram. But when a company says we may never be profitable, is that in some type of disclosure of risk has to be in perspective i dont know. Where you list its a very strange thing well, you talk markets, were going to do a little homework over here. Will you do that . Lets get to the markets. Executive Vice President and chief Investment Officer at beamo private bank and his mic man was there. I dont know whether he has oh, no hes on and peter costa president of empire there. Empire he said by the way im interrupting they said it from the very beginning in the prospectus that we may never be profitable wow so thats not really new news but i think its sort of come back as new news for those who didnt want they wanted to avert their eyes to that when they all right so, jack, i dont know where to start with you. I dont know how youre feeling now. I guess i start with since the election, i know before the election, you were in an believe it or not there was an article that you were quoted in on november i think right before the election, investors seeing no letup to the market bloodbath if trump wins the presidency yeah, i remember. You remember that i also remember the weekend before saying that the cubs and trump have the same chance of succeeding exactly and i think you were looking at ten straight sessions where the dow would drop 10 then that turn around. Then i saw again in january you thought the market was 5 to 10 overvalued so were up another what 8 or 9 are we 20 or 25 overvalued right now in your view from a fundamentals basis, yes. Let me explain how you get there. If you look at the total return of the s p, over the last six years or so, the total return is simply the amalgamation of earnings and dividends you take Earnings Growth, and Dividend Growth, and link them all together and then you take earnings and Dividend Growth to the next four quarters, and push it out. And what we find is that, yeah, indeed, the s p is about 22 , 23 higher than what the amalgamation of earnings and dividends would suggest. Now, its possible that market is discounting two years, or more than a year but, if earnings come through exactly how analysts expect, which is about a 13 to 14 Earnings Growth from this point over the next four quarters, yeah, it is about 20 to 30 22 overvalued that said we have a lot of liquidity. Right thats coming into the market although the Inflection Point is, theoretically, starting to drain some of that, or at least its not you know, its not on the dial is not all the way up to where it used to be but theres still a lot of squashing around right . Right and so from that perspective, thats what, you know, that can fuel a lot of a lot of growth so peter, lets say you accept everything jack just said i agree with him, by the way. 100 so what do we do . Is that a time when people should at least raise cash then . Ive been saying it for the last two months already. I might have been a little early on it. But i do think that people should be trying to at least rejigger their portfolios, try to be what does that mean, rejigger well well get into cash. You have a lot of you know, if you look at your portfolio, and nine out of the ten stocks that are in your portfolio, for example, are at alltime highs, where are they going how much further do you think youre going to get out of the stock . I dont know. Maybe 5 . You know, i mean if you miss it for 5 but theres a 10 or 15 move on the downside, why wouldnt you take profits and all right when i started at Merrill Lynch the dow was 800. And at 5,000 people said how much higher it can go. At 10,000, at 15,000 i dont know how much higher even stocks that i remember amgen went from like 1 to 2,000. It was always at an alltime high how do you i know one thing you dont buy are stocks that are at alltime los because they just keep hitting new alltime lows you look at why people were buying stocks after the trump election it was the, you know, the looking forward and saying that theres going to be this tax cut down to 15 for corporate earnings and i dont know if thats going to happen. And also, i didnt think that was going to happen this year, either i think that you look at one of the main reasons people jump in to the market in full force the way they did is because the expectations that there was going to be a trillion dollars worth of Infrastructure Spending over the next ten years. All right. You know, thats youre going to see that anyway it doesnt matter if trump is president or whatever. It was needed to be it needed to be done its going to be done. But the tax this tax cut is this is a very contentious issue with washington. Theyre going to have a hard time let me ask you this if ron baron says that the market is going to double, did he say by what year 2030. But thats 13 years all right so you think you need to time 5 and 10 . You know what im just looking at it as a shortterm investment. Im not looking longterm. Longterm i agree with him i do think the market will be i dont know about being in value in 13 years. Thats only six percent a year isnt it . Its did 6. 5 a year. 13 years is a long time to double but to peters point i wanted to disagree i think that investors are actually increasingly skeptical that these policies are going to come through you know, if, for example, if they thought that the personal income tax rate would decline, why are Municipal Bonds outperforming taxable bonds this year if we thought that we were going to lower the Corporate Tax rate, why are the mega caps where they pay virtually no taxes outperforming the small and mid Cap Companies that would have a huge benefit and why is mexico up 20 this year if we thought that trump would rip up nafta, build a wall, and slap tariffs on our neighbors to the south so i think that whats happened is from between the election and say december january, we had this enormous surge in protrump policy strategy. In fact, to a point where investors had assumed 100 that that was going to come true and look at 10year treasury, same thing. Went from 1. 8 to 2. 65 or whatever now its come back to 2. 2. I think at least just looking at treasuries that at least half to maybe three quarters of that anticipated policy shift has been pulled back except, jack, theres still we have people every day that argue that it had nothing to do with either trumps policies, or animal spirits, that it was corporate earnings that were already in a strong upward swing and with momentum that it almost as if the market was already going to do that regardless of who got elected. So i dont know if we need thats true but why is it why have treasuries gone from 2. 65 back to 2. 2 then . I have no i dont understand oil i guess is supply. If you were in the yield curve, looking at all those things youd be saying. Although everythings global now and germanys under a point who knows whether its the same the same world as it used to be. And were seeing better growth abroad. So what ive done, you know, we underweighted u. S. And were, you know, continue to try to find incremental value. Theyre still expensive relative to history but, theyre certainly 15 to 20 cheaper than the u. S and, they have better fundamentals theyre growing faster you know, thats the way to go let me just one thing, it is bmo volunteer week the thank you sands of bmo employees are spending a day at hundreds of charities between canada and the u. S i wanted to bring that to everyones attention excellent and so do you think were below where we are now i do think by the end of the year we will lower or higher well be higher i do think so. I just think that theres going to be a period of volatility starting youre starting to see it in the tech stocks. Does it carry over to the you know, everyones talking about this you know, theres recalibration. People getting out of techs and going into the financials. Going into, you know, you think theyd start going back into health care at some point but i think theres going to be a lot of turnover this summer. The summer is going to be very i think were going to see a lot more volatility. Youre in the New York Stock Exchange for just normal people to get out now and be in again by the end of the years shortterm. Longterm im as bullish as everybody else in the whole world. All right but shortterm ill a little you used to be a professor of finance that Boston University and youre back to that outfit now. What time is your next class you got im the an sent minded profess professor. Im in the wrong city. Im in chicago, i need to be in boston whats the charity work youre doing today in chicago youre doing it . Pardon me yeah, so here its all over the city you know, all the way from northern suburbs down to south side a lot of, you know, rehab and so forth. My job today is just get the word out okay. Im not unfortunately going to be able to get away from my desk were ruining your whole effort with that stupid ticker weve got. If you stand up. What does the shirt okay. All right okay, good that ticker that ticker for me is very good. Because it just works a lot better for my what i all right we should wish everybody a happy fathers day especially peter. Especially peter. We have the very needed costa with us every day, cameron costa who is our Production Assistant extraordinaire there she is in the green room we love his daughter she doesnt usually get me up this early cameron is up so early every day. Trust me, our family understands that thats a feat in itself. And we love her and happy fathers day thank you when we come back today, jet blue is testing buy mibiometricr boarding and the president preparing an executive order on drug pricing. Were going to take a look at the sector and some names that could make some money. Youre watching squawk box on cnbc you know whats awesome . Gigspeed internet. You know whats not awesome . When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids. And these guys. Him. Ah. Oh hello that lady. These houses yes, yes and yes. And dont forget about them. Uh huh. Sure. Still yes you can get it too. Welcome to the party. Introducing gigspeed internet from xfinity. Finally, gig for your neighborhood too. Welcome back to squawk box. Did you forget your boarding pass hate for long lines to check your bags . No problem, all you need is your face this week jet blue testing out some biometric boarding passes at boston logan and in minneapolis. Phil lebeau joins us now with more phil andrew this is the beginning of biometrics improving how we get through the airport. Making it move much quicker for us we were in boston yesterday and we saw the gings of jetblue bringing in basically facial recognition boarding passes. And it matches up your face with your passport photo through the customs and border patrol. It takes about three or four seconds. Boom, you walk right on as opposed to showing your boarding pass to a grate agent most of the people we talked to yesterday on this flight to aruba, they liked it it was pretty cool. Worked really fast i dont know, that was really interesting. I didnt know it was going to be that easy. Pretty quick and easy takes a little longer than just running and scanning it. I think this is the wave of the future facial recognition has been around for a long time and its a great way to pecs edite the lines and also keep us safe. Shes right it is the way of the future because were going to start seeing it with other airlines. In fact delta in minneapolis next week will start using facial recognition for people who want to automatically drop off their bag when theyre checking in for a flight and it works much the same way once they have your passport, they scan it, then they match up your face with your passport, and boom, youre on your way the idea being much like selfserve kiosks in the future, you will not have to interact as much with gate personnel, or airline personnel. As a traveler here, technology, you can check in on the app on the way to the airport and youre using biometrics from security to bag drop to the alarms to board the plane. This is going to create a truly revolutionary travel experience for our customers. As you take a look at shares of delta and jetblue remember this is just the beginning of what well see in the industry, guys because increasingly the airlines realize you want to get through this process as quickly as possible. And hopefully not have to interact as often with gate personnel or at the ticket counter, and remember, when we started with selfserve kiosks, everybody like whoo, what are you going to do when you check in nobody to talk to. Now its standard. Most people do the selfserve kiosks they dont have to go to the ticket counter this is what were going to see more of in the future from the Airlines Just carry an 8x10 glossy of you, phil im just going to walk on as you. How does this work well, it matches up with your passport in the case of jetblue, they have the passport in the system. Theyre accessing the data of customs and border patrol. So if i went up there and said im Andrew Ross Sorkin put me on this flight it wouldnt match up it would immediately say no, no, no, no, no, no, no that face is not the same face on the passport. Thats how they know that people who are boarding the flight are the people who are supposed to be boarding. No more smiling on passport photos my family just had to update thirst no more smiling. I think it probably for facial recognition. Three to four seconds isnt there anything faster than three to five three to four seconds . I mean im in a rush three to four seconds . Joe, thats about how long it takes when you go up to a gate agent and they say okay heres a boarding pass, heres your passport, yeah, here you go. And that may improve over time it will probably improve over time they got to get that down it would it was pretty quick watching everybody getting on that flight yesterday homer is looking at the microwave and its got like eight seconds to go, and he says doh isnt there anything faster than a microwave you want the food. Three to four seconds too Long Technology will bring that down coming up coming up were going to get a look at the Biotech Sector plus, Oscar Health Oscar health teaming up with the Cleveland Clinic to offer Health Insurance plan to consumers. Well Talk Health Care reform and more in just a few minutes time now for todays aflac trivia question. Are you ok . What happened . Dad kinda walked into my swing. Huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac no splashing wait, so you got rid of verizon, just like that . Uh huh. I switched to tmobile, kept my phone everything on it oh, they even paid it off wow yeah, its nice that every bad decision doesnt have to be permanent now you can ditch verizon but keep your phone. Well even pay it off when you switch to tmobile. Now the answer to todays aflac trivia question well i didnt realize that did you know that nixon signed i did not yeah checkers fitting tribute to the late adam west last night. The city of los angeles lit the bat signal in his honor. Hundreds of fans gathered to watch. As the iconic bat emblem was projected onto the city hall tower. Adam west played batman in the classic 1960s series he died last friday at the age of 88. And you know batmans gone through a lot of changes that was a pure comic book sort of a tongue in cheek series. There were cliffhangers every commercial break and the kapow, kabam. When we come back the s p 500, biotech is just off the 52 week high is there still more upside p oc ttnext its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Good morning, everybody. Welcome back to squawk box here on cnbc we are live from the Nasdaq Marketsite in times square among the stories that are front and center this morning, shares of Booz Allen Hamilton are under pressure this morning. The Justice Department is investigating how the Consulting Firm charges the government for services and accounts for its costs. The firm says its cooperating with that investigation. The stock down by 16 this morning. Toys r us says that it lost 163 million during its First Quarter with sales down by 4. 1 . The company says its been hit particularly hard when it comes to sales of Baby Products like strollers, cribs, and diapers. And more drinkers around the world are opting for the hard stuff. According to figures from the industry tracker iwsr, global beer and wine sales fell last year sales of hard alcohol products gand ground. Here in the United States, beer sales were up 2. 6 compared to an overall alcohol sales increase of just 0. 1 . Time now for sector nomics first up biotech President Trump reportedly preparing an executive order aimed at lowering drug costs drug stocks dipped lower on the news and meg tirrell is here with more hi, meg. Guys, reports that drug pricing, theres a meeting going on today at the white house. Well be looking for news from that very closely. If youre looking at biotech for the year it actually is outperforming the Broader Market a little bit up about 10. 7 yeartodate. 4. 7 after the s p 500 what im hearing about sentiment has been kind of mixed some people are very optimistic about where things are whereas others describe the Investment Sentiment in biotech as boring right now in terms of concerns whats weighing on the sector, drug pricing concerns chief on everybodys mind there is that meeting of Trump Administration officials today to discuss the potential executive order which sounds pretty bad but based on conversations that we had yesterday at the Piper Jaffray conference in minneapolis, investors are optimistic that maybe the executive order that comes out wont be as onerous as some people are talking about also weighing on the stage is a lack of m and a, waiting on tax reform so get some clairery on that in terms of whats driving biotech, new product launches particularly from regeneron that has a new drug that is making people pretty happy. Also friendly fda. The new commissioner talked to Scott Gottlieb who is a frequent guest on squawk box or had been before he was in the office, and were hoping well come on soon, he is considered pretty industry friendly and so people are really looking to him to see what he can do. We know that he is joining that white house meeting on a potential order on drug prices today. Even though the fda doesnt take on drug prices specifically hes going to be in the room. Thats probably making people feel a little better about that, too. Okay. You want to stick around can you stick around sure. Okay. Joining us now for more on this, plus his stock picks, tony butler, analyst at Guggenheim Securities whats your top pick right now and how does it work with what she just said . Its a great question in fact its merck mercks been our top pick for a few months, and its not because theyre the lack of new drug per se its really because there are new indications for existing drug you had most recently, andrew, you remember that kens focus was either a recent cancer meeting, and in fact their drug is showing an expansion in the overall number of tumors in which it may play a role most recent being approval in may for lung cancer. First line lung cancer utilizing catruda in combination with chemotherapy and its our belief that the overall expansion for that opportunity last year sales were 1. 4 billion 3. 6 billion this year, could almost double by 2020 and that drives earnings per share which we would expect to be 3. 86 this year, probably up to 4. 91 and those are new estimates out from a note that we have out this morning so merck would be our top pick, in part because of the expansion of opportunity for catruda and lung cancer. How concerned are you about the recent reports that merck halted two trials in multiple my lem ma because of an imbalance of debt . Its a great question, meg. Thank you, in fact, just as a reminder, theyre 500 ongoing trials that merck has with catruda today bridging from solid tombers like lung cancer over to blood tumors like multiple myloma so the key is was there an opportunity and my guess is its a concern but it wasnt in our models. Its not in wall street models, not in investor models so it is a concern and then the question really boils down to was it the right dose . Could we actually lower the overall dose to include the outcome in multiple myeloma. Stay tuned for that answer what company wouldnt you touch . Well its a great question, too. But i think, and if you base it on what megs saying about the sentiment, new drug opportunities tend to be where investors are circling now thats really driving revenue. She alluded to dupixant from regeneron and you have benchly whos been the ceo at regeneron for a number cofounder and this is for Atopic Dermatitis itching. It affects 300,000 individuals in the United States the scripts have been jumping off the page and it was just approved in march. So what we think is that thats an opportunity set but you know what . Its really a drug and a drug cabin cabinet. Its not only a drug for Atopic Dermatitis the argument is it may have utility in asthma and a number of other allergies because of the exact focus thats been founded by regeneron of how the drug works if you could stop that signaling down that pathway maybe you can reduce and the argument might be, there was some estimates that are in excess of 10 billion for this opportunity a drug in a drug cabinet so its just a consideration i think thats where investors are going to want to point what about the other big guise . What about pfizer . Pfizer is a little bit treading water doesnt have a number of new products that are large enough to drive the overall revenue and earnings per share so theres an argument that says, is pfizer going to rejigger its operations . Theres been some thought that it might separate some of its businesses theres been some thoughts it might acquire additional businesses it may be a combination of those which can drive the overall revenue opportunity. You think pfizer perceives big m a . I was talking to an investor who thinks bristol was the target after they get data on lung cancer it could be that they do. And there has been that prevailing thought it may not only be bristolmyers, there could be other opportunities that they may seek you may go back to astrazeneca is there clarity on tax reform i think you do. Its not only clarity on fax reform but that encompasses the notion of repatriation of dollars abroad into the u. S. Markets. So the ability to actually help pay for those particular acquisiti acquisitions i think that may be whats stymieing some acquisition opportunities. Irrespe irrespective of the thoughts that we have around pfizer okay. Were going to leave the conversation there tony and meg, thank you. Thank you appreciate it in the next hour were going to continue with sectornomics and big bets on the housing sector when we come back, the Cleveland Clinic entering the Health Insurance market with the help of startup oscar health. Were going to speak to oscar healths ceo and the companys chief policy officer right after this break President Trump set to announce his new policies on cuba today he is expected to roll back some of what president obama did during his administration. Details to come. Squawk boxilbeig bk. Wl rhtac most etfs only track a benchmark. Flexshares etfs are built around the Way Investors think. 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Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Welcome back to squawk box, everyone weve been watching the futures and after ending slightly lower yesterday you can see the markets are up once again this morning. Dow futures indicated up by almost 40 points s p futures up by just over 6. The nasdaq up by 14. One of the countrys bestknown hospitals the Cleveland Clinic is partnering with Health Care Startup oscar on a cobranded Health Insurance product thats available to individuals. Mario glosser is the ceo of oscar health and joel klein is the chief policy and strategy officer. Gentlemen, thank you both for being here today thanks for having us. Mario the last time we talked to you we learned what oscar does learned how its a little bit different of an insurance product. Why dont you tell us what this is this is the first time that the Cleveland Clinic has put its name on an insurance offering. This is going to be available to people who live in ohio . Thats right. Five counties in ohio. Around the cleveland area. Its a very unique Health Insurance product that will launch if you think about what health care looks like to most people today, its a fractual experience, you forget about things that tell you when you are in the e. R. On the way out by going very deep, technologically speaking with a provider system that is excellent as cleveland is, were creating a much more seamless for Peoples Health care we just heard in the last couple of weeks that anthem, one of the big insurers in ohio, was pulling out because it hasnt figured out how to become profitable, particularly with all of these changes that are coming down the pike so why is this a market that you guys are stepping in to . What can you do differently . We think that when the dust settles on the political side there will be a stable individual market. And, what we love about the individual markets currently is that people can vote with their feet for the first time in health care and Health Insurance. They can tell us, by signing up or not signing up, whether they like the product were giving them, which is rarely the case in Health Insurance nowadays were building a Consumer Product that they love to engage with and love to use for their health care. With all these changes in washington does it matter if obamacare is taken apart if the new Health Care Law is put in does it matter one way or the other to your profitability . It matters in the shortterm for sure but i would say this there is about 20 to 30 Million People who find themselves without Health Insurance, and if the right change dont come down the pipeline, and so were very comfortable that the right changes will come and the market will be stable go ahead. Product. People think about Health Insurance when you talk about other insurers, theyre creating something thats a very different experience taking a group like Cleveland Clinic, putting it together with oscar is going to create a very Different HealthCare Experience as mario talked about. The clinic is one of the most forward thinking organizations in terms of population health, quality health, moving away from the old, tired fee for Service Model which is costing us way too much money when you think about it, the really Important News here is why is Cleveland Clinic going into the Insurance Business . Thats a powerful, powerful is it something that only works when you have Something Like the Cleveland Clinic . In terms of not only what youre planning on providing to the customer, but also on the profit numbers, by streamlining and paying for outcomes . I think it helps with what really matters is marios vision of where health care ought to go and the Cleveland Clinics vision are so tightly aligned that we can create Something Different visionary and forward thinking so, but, is this joint venture a model either for others or for you, which is to say, is it possible in the future you could do a partnership with mayo . Do a partnership with mount sinai . Do a partnership with nyu . Or is that you use the Cleveland Clinic and become scale it nationally to the extend that if the laws ever change, policy changes, so that you could do Something Like that . This is how i think, and how we think health care ought to look like you shouldnt have these somewhat artificial distinctions when the Insurance Company, the provider assistance, that harm the member more than they help the member we really think that if you create these, and put the Insurance Company at risk for delivering better outcomes, thats going to lead to very different experience in Health Care System, and much better model going forward. Its a really important point about, theyre taking 50 50 joint venture in terms of risk so they get part of the upside they share in any losses it says so much about the way theyre thinking about the evolution of health care and yes, i expect to see other great provider systems, thinking about where this is going, how do that with others you can partner in other parts of the country and do similar things my other question is going to be and i note toby is not here or somebody from the Cleveland Clinic, but are you advantaged as a consumer to participate in this if i have both the insurance piece, and their services, relative to if i am going to either walk in off the street at cleveland now, or come in with my own insurance how that works thats the core part of the vision right now, a provider system doesnt know whats going on with you until you walk in to that doctor or practice, into that hospital. Thats almost too late in the process already. You ought the provider would like to know who you are as a member, at the time when you sign up for that product, and thats exactly how this will work i mean it sounds like it is definitely the sort of system for the future, that we need to be looking towards, and working towards. However, getting there in the short term profitablety does matter and you raised. So can you afford to have this not be profitable for the next two years . What happens so, i think largely our profitability has been driven by the individual market as a whole which decree airs stabilization. Were very confident with the way we set this up that were look nothing a much more stable future joe, what can you tell us about where you think things are headed in washington what kind of outcome we will get . We know that donald trump has asked for a version of the bill thats less mean in the senate than what we saw went through the house. I think from day one i thought what mario is basically saying is right. There are over 20 Million People on and off exchange right now in the individual market. Whatever else happens in washington, nobody wants to run for reelection with that many people impaired. So i expect to see stabilization. The reason its taking as much time as it is, is because i think increasingly, people are realizing you got to do whats right for the public here. I got to ask why youre here. Especially given the policy component of this. Jared kushners brother josh was one of the founders of financiers of oscar. Does it make your job in washington easier or harder . How does it work it really has no impact you know im spending a lot of time with people on the hill talking about whats going on. This is about Major National policy i know in the Media Business ive got to ask i get it. People want to know no, no, i get it and i understand it. But this is really about Health Care Policy over 20 million americans. And just one point thats really important in terms of what were doing here, every member of oscar, if youre a member of oscar insurance, you have a concierge team, four people including a nurse who are personal to you. They know becky. They know andrew Cleveland Clinic works in care teams. Its no longer the doctor, its the individual those care teams connect in to our concierge teams is what makes this so seamless so much knowledge we share so much better for the individual customer. No question i guess the question becomes how many of those types of hospitals do we have across the nation and how do you expand to places that dont have a Cleveland Clinic in their backyard from the beginning of oscar week, try to build a Better Health and insurance Health Care Experience in all the relationships we are in now with all the hospitals we have, montefiore in new york, we have built these kind of people relationships. And you see this really working extremely well we know in the moment you get the hospital exactly what the instructions for you are, can put that in place for your consortium and that goes back to andrews question, is this something that can be rolled out nationwide absolutely. I think every forward thinking hospital and provider system, ceo in the country right now is thinking about how can i start taking more risk for the outcomes i produce and how can i actually be more profitable if i even see people out of my hospital and some you need such a 50 50 relationship to really make that happen so we think this will transform the Health Care System overall and were hoping many others will follow thats what i think the big story is theres a lot of hospital ceos and boards today saying what does Cleveland Clinic know that we dont know . Why are they getting in the Insurance Business why did they partner with oscar . I think thats really the big story here and do you expect other Big Insurance Companies to follow suit meaning would you be surprised if we saw aetna i cant speak for other Insurance Companies. Im making this up. What i think you will see is other big hospital and Health Care Systems move in this direction. Right i guess the reason im asking the question is given that your started with sort of legacy issues that some of the larger insurers have, can they follow suit and do similar things to you or is there a or are you advantaged in a way that theyre not . I do think were advantaged for two reasons. It is in our dna from the very beginning that we are member centric, member focused. If youre largely a b2b business the way most Insurance Companies came from. The second part is that our technology is much more uptodate and its easier to we dont have to sit on 15 different playing systems. I will say i hope everybody will start to do this because we just love competition we love for members to be able to vote with their feet and say where they get the most value for their money. And thats what we dont have right now in the u. S. Health care system and thats why its so expensive mario, joel, want to thank you both for coming in today thank you thank you all right coming up, stocks to watch with futures at this hour are indicated a little bit higher after pretty good bounceback yesterday from what could have been a could have been worse for the bulls yesterday. Closed down practice squawk box will be right back. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Welcome back, everybody. Turning to todays agenda, there is a pair of chick reports that are racking up the trading week. Hey Housing Starts are out at 8 30 a. M. Eastern time theyre forecast to have risen by more than 3 after falling in april. Building permits are expected to remain largely unchanged then at 10 00 a. M. You can look for the first report on the june Consumer Sentiment also today, well be hearing from dallas fed president rob kapl kaplan he speaks later this afternoon take a look at a couple stocks to watch this morning dow component nike nike is a dow component . Yay nike is a dow component i didnt remember this downgraded to neutral from overweight at jpmorgan jpm says its encouraged by nikes announcement of a new organizational structure yesterday but that north american sales are likely to get worse before they get better square was downgraded to neutral from outperform at credit suisse. Firm says the mobile companys stock is more than valued more than double since the election, since november and valiant pharmaceuticals was weighted overweight at Cantor Fitzgerald which praises the new management for executing well Weight Watchers shares are moving higher after an s. E. C. Filing shows the purchase of about 7100 shares by the companys general counsel. Michael seriously i could almost do that cobble that together if i talk to all my friends anyway, were talking about a 7,000 share buy of Weight Watchers the number of netflix subscribers in the United States passed the number of Cable Television subscribers in the First Quarter for the first time that is according to a new study by the lightman Research Group those cable numbers dont include Fiber Optic Services like verizon fie os or satellite providers though its not really telling you the whole forry. In sports the ncaa has suspended louisville head coach basketball coach rick pitino for the first five Conference Games of next season the punishment stems from the ncaas investigation into allegations that a former assistant paid dancers to have sex with some of the kids they were trying to recruit what yes in addition 108 regular season games and 15 tournament wins could be vacated, including the 2013 National Championship the school will have a chance to appeal the decision. Wow the bizarre prior episodes of the you know, dont need to go back into that. But crazy stuff at a restaurant nuts. I dont know. Im watching the u. S. Open. U. S. Open is you see scott mcneelys son maverick i didnt see him yesterday. 2 under, maybe even he is there. He is competing. Yes rickie yes, but mcneelys son is good enough to compete maybe well get him on. Coming up, President Trump set to limit travel and business in cuba. Were going to hear more about the policy change and what it means for American Business when squawk returns when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. [hissing] uh i [sound of wrench] [intricate guitar riff] [engine starts] [guitar continues] a hardline on cuba. President trump expected to roll back policies on relations with the country. Were going to tell you what it means for American Business. Iger on the record the disney ceo speaks out on business in china and the trump agenda first on cnbc plus the power of a logo a tally of the big bucks behind brands at the u. S. Open. We hit the links as the final hour of squawk box begins right now. Limp from the most powerful city in the world, new york, this is squawk box. Good morning and welcome back to squawk box here on cnbc live from the Nasdaq Marketsite in times square im joe kernen along with becky quick and Andrew Ross Sorkin futures last time looked up about 40 on the dow. 32 now, up five on the s p up 11 on the nasdaq. Treasury yields, 10year, it is not far from the lowest its been in terms of yield for the year but up a little today. The yield, anyway. At 217 217. Lets get whats making headlines. Shares of snap the stock sinking to its ipo price of 17 a share. The drop highlighting investor fierce over the Snapchat Parent Company as competition from facebook heats up. Take a look, shares of snap up by 23 cents this morning to 17. 23 google is bracing for a possible fine of more than a billion euros from eu regulators the Financial Times reports that brussels is getting ready to announce the first of three antitrust decisions against the search giant the eu is expected to rule that google abused its market dominance when it built its Shopping Service in europe and President Trump just tweeting after seven months of investigations and Committee Hearings about my collusion with the russians, nobody has been able to show any proof sad. He wrotes, ek clamation point. This comes after a barrage of tweets that took place yesterday afternoon, surprising many, given that he often spends his mornings, if he is on twitter. But he hit his twitter feed pretty hard yesterday. Only two or three, werent there . I thought there were four maybe only two or three . I dont know. Maybe it was four in the day. I dont know if its a barrage. Not a barrage i dont know. Raised some questions through a lot of might save that for an actual barrage. President trump set to announce his new policies on cuba today expected to roll back some of what president obama did during his administration when it comes to travel and doing business in the country. The president will travel to Little Havana in miami to make the announcement, and thats where Michelle Caruso kcabrerai this morning not exactly a homecoming but youve got some ties to the island, michelle yeah, absolutely joe. Little havana is, of course, symbolically important because of the large concentration of cuban exiles that live in the area what are we going to hear from the president today . Senior white house officials spoke with reporters last night and gave us some broad outlines. Slightly tougher travel. Individuals will no longer be allow to selfcertify that theyre traveling to cuba on peopletopeople or cultural exchanges. Tourism is still illegal so in theory everyone who has traveled to cuba recently has been going under certain licenses that theyre doing it for religious or humanitarian or cultural reasons and you have to fill out a lot of paperwork under president obama that went down to almost nothing now, as an individual, youll have to travel with a group of peopletopeople specialized group. So theres going to be a prohibition on American Businesses doing any kind of business with the cuban military since they controlled so much of the cuban economy, that could be restrictive. However, they told us last night theres going to be exceptions for air, sea, and communications so cruise lines like carnival and norwegian and the airlines are going to be allowed to pay the equivalent of Port Authority fees to the cuban military so those things should still continue your phones should still work, though they will be very expensive, because the roaming fees will be very high the interconnection fees are high marriott was at risk because they manage a military owned hotel that they have rebranded as a four points by sheraton hour last night on the call the senior white house officials were very clear to say they did not want to disrupt business that was already under way, suggesting that marriott will be grandfathered, and that also should suggest that the few mastercards that do work here that have been issued by places like stonegate, those should still continue to function at this point airbnb should be just fine google, the very small tiny things that google has been allowed to do in cuba, those should also be allowed to continue because of the telecom exemptions, and the communication exemption. But we are expecting to hear from President Trump when hes here early this afternoon. Guys, back to you. I hear you can hear us now, michelle so in terms of walking a line for, you know, campaign promises, and what somm someone like you thinks is proper, what do you think of these of the approach the extremists on either side will be unhappy. This is very much middle of the road it will still be much, much easier to travel to cuba than it was say under george w. Bush it will only be slightly harder than it was under the last year of president obama when it comes to travel. When it comes to dealing with the cuban military, i think thats going to please a lot of the cuban exiles, because that was money going to the cuban regime by definition the cuban government is a military government and so theres going to be an increased amount of paperwork for companies that operate peopletopeople travel. Theyre going to need to find hotels that fit. This may be a boone to the airbnb operators down in cuba because those operators, the tour operators may be forced to push people to those kind of facilities, as well. Hotels, pricing has gotten extremely expensive, because of a lack of capacity in cuba the hotels owned by the government are awful and extremely expensive. One of the reasons why maybe tourism hasnt been as strong as people had originally thought. Thats weird. I mean, when you say extremely expensive, are you talking about one night is what, a person makes in a month down there almost . I mean, i cant how much is it, is it 1,000 a night for a good hotel down there . Oh. Oh, yeah for very good hotels but theres only one and its only recently reopened but you could spend 300 to 400 on something that is awful just awful i mean, the value for your money would be quite terrible, especially if youre going at a time of high concentration for tourists airbnb operators, if theyre getting 150 a night, 164 is what airbnb says is the average amount paid forenight, that is five times what an individual makes in a month in cuba so, airbnb, if youve got a nice place in cuba, and been able to fix it up, you are doing extremely well as a cuban individual thats crazy. Thats, you know, thats no way to run a country, you know, five times one night of airbnb is five times what you make in a month. Thats nuts. I dont know i dont think communism is that great an Economic System i dont know you know, michelle i think its terrible it causes poverty. Early death. Depression i mean, its terrible. God, when but recently venezuela and cuba. I heard how iconic, castro, and you know, health care i heard from the left, and sean penn and everything i thought it was great. I dont know why dont would i do that michelle, thank you. Its good to see you today were going to talk more about this joining us now Cuban ResearchCenter President phil peters hes a consultant for American Companies that do business in cuba dont know if you hear that whole report, phil but michelle mentioned people that want to pull back on it arent going to like it. People that want to go full force arent going to like it. Because you represent companies, im sure that any dilutionof obamas policies youre probably against . Did trump go too far well, yeah, i dont think its a good idea to reduce the commercial opportunities open to u. S. Businesses, even in a country like cuba, or vietnam or china or that matter, where you dont have a market economy, and the conditions are not what we would want i think in the case of cuba, specifically, our neighbor, with a lot of change going on, with a lot of change to come, it makes sense to have more american presence there and for that presence to have more influence and so i support the idea of having commercial opening, and i think its a mistake on President Trumps part to pull it back. I agree with michelle, he didnt eviscerate obamas commercial opening. The this this prohibition on doing business with military affiliated companies is a bit of a poison because it has a very broad impact but it does leave intact the American Companies to do business in the health sector, to do business in telecommunications, to do business with half the Tourism Sector that had not in military affiliated companies so, in that and in the travel restrictions that President Trump is reimposing, really have to see what the regulations say in 90 days or whenever they come out, because that will tell the real story you point out that the cuban military manages retail, tourism, credit card payments, and the clearance thereof. So is it possible to do what trump wants to do without affecting, you know, nonmilitary businesses well, well see i think that take one example. President obama issued regulations that permit American Companies to sell things to cuba that would be for the benefit of the cuban private sector now, no deals have taken place in that area yet but in theory, we could sell everything that the private restaurants need, and the carpenters need, and all the private construction trades, and the airbnb hosts need. And private farmers need but that would have to go through the cuban retail sector. So, if this prohibition is restricted as it sounds to be then it means it would eviscerate that whole opening which opens a broad range of u. S. Exports well have to see how the regulations read when they finally come out but it could block a lot now, if it also would allow cuba if they would so choose to move things around, and for example, have retail chains that are not managed by companies affiliated with the military. And then that would presumably be just fine under trump you think when all the castros are gone, what happens then are you banking on that . Is there any reason to think that thered be a 180 degree shift in cuba even if we did engage, and sort of, i dont know, help orchestrate the move to a more, you know, open and Democratic Society well, you know, american administrations have been waiting for 180 degree shift on cuba yeah, but castro was there. Since 1961. But hes always been there. I dont know okay. Okay fair enough. And you can bank on the fact that raul castro is going to leave Office Next Year hes going to leave the presidency maybe hell remain in charge of the communist party, or maybe hell retire back to eastern cuba where he came from. But regardless, you know, i think my best guess is that cubas on the glide path theyve got theyre opening up to the private sector the private sector now takes up about a third of their labor force. 245e9s been a pretty dramatic change in the last ten years and theyre grappling with how to make a socialist economy that actually works, not easy to do but to make it more productive, to shed hundreds of thousands of government jobs, to build up the private sector, to be able to afford the social guarantees that they want theres no theres no signs of any political ferment that would lead to a change in the system i think the real change is coming from inside, the people who are saying this is not enough we need to go farther. We need to liberate the private sector even more and and allow us to work and make money and and and do well on our own. Okay. All right, phil peters, thanks appreciate it. Thank you all right talking again to you a year for now on whats happening. Very well okay. And disneys ceo bob iger is in china this morning commemorating the oneyear anniversary of the countrys shanghai theme park. Cnbc spoke with iger about the park im pleased to say that as we sit here on the oneyear anniversary weve now exceeded 11 million in guests we had mentioned 10 million by the 11th month were now exceeding 11 million we made no projections about whats ahead except to say that this is something thats been embraced by the people of china truly and about 50 of those visiting are actually from outside the shanghai region. Thats a lot higher than we expected and he was also asked about stepping down from President Trumps Advisory Council and his thoughts on the administrations priorities i am not going to proassume in any way that i am ready to suggest to the white house what its priorities are up. Know, i know that operating the Walt Disney Company there are certainly things that, you know, wed like to see happen in our country, and in terms of our countrys place in the world clearly talked about if Corporate Taxes, and tax policy, trade is incredibly important. Strengthening america as a great exporter is very important by the way, thats what weve done here. Iger declined to grade President Trumps performance so far. We talked earlier about how other ceos have done that. And by the way, people do talk about iger potentially as a candidate who may one day run. For president i have heard it speculated. So, nonetheless, a lot still ahead on squawk box. Up next, it is joes favorite time of year, the cnbc allamerica Economic Survey is here whoa. Were going to tell you how Many Americans approve and disapprove of the trump economy. Sectornomics we talked about biotech this hour. Were foesing on house iing. Ever wonder what doing well on the green means for brands were going to head to the championship 598 40 eastern time think again. This is the new new york. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced. Our senses awake. Our hearts racing as one. I know this is sudden, but they say. If you love something set it free. See you around, giulia welcome back to squawk box, everybody. We are getting a special sneak peek of the cnbc allamerica Economic Survey. Steve liesman is here. Yeah, becky, were going to have full results on monday on the poll of americas views on the economy and Financial Issues i want to give you some results from our poll. 800 americans across the country on the political situation what weve got is by a 43 to 26 margin americans think President Trump pressured former fbi director james comey to end the russia investigation what you see is a significant 31 of the public say they do not know enough to have an opinion or unsure. When you take the 30 you could add it to either side but the pluralities believes that President Trump pressured the former fbi director. And when you look at it by Party Breakdown its very interesting. Democrats are kind of intense on the issue. 744 they think it happened. And 22 democrats dont know but look on the republican side. 14 say yes, 52 of republicans say no and 34 of republicans dont know so you dont have the a big group of republicans are in the dont know a lot of intensity on the democratic side, lesser extent on the independent side. That comes up against lukewarm attitudes towards the president from the republican side lets turn to the president s overall Approval Rating. 37 approve, 51 disapprove, 12 not sure that is a fivepoint swing from our last poll in that pproval. S today proveal rose by three points approval fell by two. And take a look here a 10 point drop in republican support. Maybe 2 , 72 . Southerners fell by ten points as well as noncollege whites, 58 to 48 apparently our pollsters say you need ten points, 80 of your folks to go to the fight with the opposition 72 is not going to cut it. Our republican pollsters said its one blip here its not a trend yet it doesnt mean his base is eroding but its a trend worth watching i want to show you one more thing trumps handling of the economy 44 had approved in our april survey now thats down, 41, 44. Better numbers on the economy. Than the Approval Rating the overall Approval Rating. And the economic numbers are going to be very interesting why poll all americans . Why poll athletes that are focusing all their attention on Getting Better at are these First Team Allamericans are they second team allamericans are you disparaging athletes . Not at all. Im saying theyre young very havent got a lot of experience. You see when we go during the super bowl and talk to them about whos ben bernanke we have those funny bits they dont know that theyre young and theyre focusing on their craft. Joe youve been doing this so long that the producers of the show left three minutes in for your joking about the poll so i have two minutes to do the report and three minutes for you to joke about this let me ask you. The university of michigan, these athletes at the university of michigan, why do they poll those guys for Consumer Sentiment . I dont know. I dont think they do. I think this poll, joe, as you know is of all americans in other words all americans so graeeat athletes squawk box is a very smart guy. He said lets give steve a minute and a half and lets give joe three minutes to joke. So its a 4 1 2 minute segment im going to chill out broaden it out to include more people not just athletes, broaden it out to scholars, people of all different age groups we have all age groups joe. You saw a deterioration in the 65 plus age group. Midwesterners like the president a little bit more. This erosion thing of the base is really interesting. Its too early to say it but it has to watch. You need 80 points to go let me ask you this seriously the way the question is phrased do you think pressured does pressure equate to obstruction of justice . We didnt ask obstruction of justice. Its a good question but the question is where people came down on this issue and what they believe you were saying something i thought was really smart during the break, which was how aware are people of this issue we dont know. We dont know how much people have followed it its 30 who dont know, its worth watching that. And with question to me was the president has not made his case to his base on this issue. And they do not the 5214 who believe the president on this issue, for the republicans, thats not a lot of support right there. I think you could do former heisman winner and then youve got an all the way up to i think 20 seconds left on this and that way you get, youre not all just 19 and 21yearold kids right, right. Its all americans, joe. All adults allamericans im a huge fan all parts of the country. All professions. Steve, thanks ill see you monday on the economy stuff which is really interesting well more allamerican stuff were going to do this all again. We might have new viewers. A minute and a half for information thank you, steve. Have a great weekend have a good weekend when we come back youve heard of coworking spaces but what about coliving spaces with a roommate you dont know and didnt choose. This is for working adults were going to hear from one developer trying to make this trend mainstream the power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back President Trump just tweeting the Fake News Media hates when i use what has turned out to be my very powerful social media over 100 Million People, i can go around them that comes after an earlier tweet this morning and a couple others from yesterday. When we return, we we have 800,000, dont you . Which doesnt compare to well but you dont do it nearly enough. I use it very rarely. Yeah i know. Why . You know, too much theres only so much time in the day breaking economic news, key housing taust da jminutes away were going to bring you those numbers when we come back. But theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading Companies Lead with digital. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. You didnt know we had over 26,000 local activities listed on our app. Or that you could book them right from your phone. A few weeks ago, you still didnt know if you were gonna go. Now the only thing you dont know, is why it took you so long to come here. Expedia. Everything in one place, so you can travel the world better. Welcome back to squawk box. Some breaking news we got our last data points of the week in may starts and permits. Thats Housing Starts of course and starts are down 5. 5 were expecting a number that would be up 3 to 5 we ended up with 1. 092 million seasonally adjusted annualized units. A far cry from the 1. 2 and beyond what we were looking for and last month was even more of a deterioration with respect to revision originally down a little over 2. 5 now down i think closer to 3 . 1. 17 changed to 1. 156. All right lets look at permits. What made why on the curve around the next bend down just shy of 5 . At one point, 168 million seasonally adjusted annualized units. And also a negative revision so these numbers arent very good cant blame them on rates, right . Rates for the most part have gone down. Even 25 basis point rate increase by the fed. Most mortgages are going to mean more correlated with the long end which really hasnt moved that much, actually. Dollar index, after having a couple of decent rebounds, is slipping a bit but its kind of early and the numbers are small. We want to continue, of course, to focus on the feel good indices coming up today. University of michigan sent mimt, the early june read. Becky and the gang, back to you. Thank you have a great weekend and happy fathers day thank you so much we will see you back here on monday in the meantime we are continuing our sectornomics series housing numbers just out joining us is will randow. Will weve seen an outperformance in these Home Building stocks. Do you think its warranted . Im not quite sure. I mean if you look back in the Fourth Quarter you saw multiple expansion on ill call it the trump rally. In the First Quarter youve seen about 20 multiple expansion across the builders. The real question is, is there incremental demand or do we get demand from a warmer seasonal period kind of feels like its from a seasonal warmer period given our private builder survey consistent with the numbers that just came out showed deceleration year over year. Where do you think we in the housing recovery overall its taken a lot longer than people had anticipated its really two sides of the coin one is if you measure where we are in terms of economic expansion. Were a pretty prolonged period versus history but two, most of the housing indicators we see showed that housing is actually a Pretty Healthy from a vacancy perspective. From a Household Debt perspective. I would argue the household is 3 to 4 , so demand for 5 million incremental starts weve heard there havent been the number of homes built and millennials are starting to get into the idea of needing houses too what were seeing is sales on the low end are almost below the price point and most of america is selling extremely well. So that 300,000 to 500,000 price point is selling about half a pace. Where the demand is is not only in milan yams but active adults 65 plus buyer looking to downsize everybody is looking for the smaller size big time. And theyre going south so dont get long, if you will, big manager in the northeast in terms of what the fed did this week with raising rates that pushes us, mortgage costs supposedly, although weve seen the long really under quite a bit of pressure. Does that worry you about what that means for future buyers price appreciation is kind of pretty rapid in excess of 5 . Far in excess of wages by a multiple of two times to three times. When you combine that with higher rates what youre looking at is portability. In whole year over year, 10 worse than last year you start to worry that you have to keep real Wage Inflation to cover incremental costs for Home Builders and cover that price appreciation commerce secretary wilbur ross announced the tariff on canadian lumber right here on our air. One of the points at time was this is going to mean higher prices for lumber and that will mean higher prices for Home Builders has that worked out to be the case i think its theres 60 days ill call it lag lumber prices, 15 to 20 year over year 30,000 of lumber in a new home so, builders if they cant price it out have the potential for 200 basis points for margin relative to pretax margins at 10 so thats a huge hit so what you could see in terms of a negative effect is that builders will explode on sales in order to capture that price. Of the names which is your favorite our thought is the smaller builders are going to be required by larger publics its already happening weve been calling out this trend for over three years two have already occurred. The reason we think its going to happen is because builders need to find a way to grow earnings and environmental or inflation is occurring so in an environment where sales pace is seen to Housing Trend is a little bit slow. Whats the Market Capital a little is a billion dollars kind of your marking line for who will wind up getting aquired . We tend to think that the pickup premium in total with fair market price being close to 30 bucs a share relative to low 20s today. Any of these stocks that you think are potential underperformers . We recently downgraded mdc. The reason it had a great run year to date but good but not good enough so we think that some of the higher rate of stocks that have had a nice bounce here are probably going to pull back a bit given that june is the month where we typically see a pullback in builders above 6 . Thank you very much for joining us today thank you for having me okay now to a different type of housing the social generation is changing the way we communicate travel and work and now its changing the way we live diana olick is in washington this morning diana . Well, andrew, as we just saw from Housing Starts, theyre still very weak which means that demand for rental housing is very strong. Especially rental apartments and that means its very pricey. In order to cut costs for the millennials social generation, one developer in chicago is trying an experiment taking social living to the extreme. A little bit hesitant then i started to think about it more and i thought, and i thought living alone wasnt that great reporter dan is coliving in an apartment specifically designed and built for three independent residents. Its not just a roommate thing each room has its own bathroom and the common area is fully funished with all the amenities from flat ware to flat screen and each resident has his or her own lease. The monthly rent is cheaper because of the share its the brainchild of ryan sheer of property markets group, an department developer operating in new york, miami, and chicago. How do you make your home a place you connect with somebody. So you have to attract the right demographic. Everybody is welcome but Young Professionals is the target demographic and how do you connect them . Reporter through communal spaces in the apartment, and in the building like this open roof deck boasting a real chicago el car for parties and such now the folks say that the first year in this building has been so successful that were going to expand it to other products in chicago, then move it to miami, as well as new york and i know youre asking, okay, well what if i dont like my roommate its roommate roulette what do i do they say you can move within the Apartment Building if you really cant get along. But again, they say for the folks living there, theyre not responsible for each others leases its totally independent and it is a fullyear lease so its not like some of the other offerings from like common or we live where you can only rent for say a month or a couple weeks or Something Like that this is real living on a yeartoyear basis back to you guys diana thank you up next, our very own dom chu has the best assignment this morning. You really do have great tempo you have a very soft transition. Ive played with you now and you really have all aspects of your game, the tempo is really good anyway ive played erin hills. Every single guy probably would have beat me by 60 strikes i think yesterday. 60 strokes below what i shot you are at the u. S. Open have you tried to hit out of the fescue, dom . You break your wrists. What do you have coming up no, i mean, its crazy. Im looking at the fescue right now. You can literally crawl through it you couldnt even see me through there. Its pretty rough here speaking of tempo. Joe you hit a long ball and youve got a great swing but nowhere near as good as these guys and mine will never be close to that either. Coming up after the break were going to talk about americas championship its a big deal both from the money side of things and of course for the pride of winning americas golf open. Quk x. Ith us right here on sawbo well have a lot more from erin hills to come. 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A little bit of breaking news this morning for those in hollywood and especially in the Technology Community apple hiring two top hollywood tv executives away from sony, Jamie Ehrlich and Zack Van Amberg are going to join apple in the newly created jobs as coheads of video programming. Theyre going to report to senior Vice President eddie hugh move seen as accelerating a push by apple into original content creation both of those folks had left sony yesterday, guys there were headlines about them leaving, not saying where they were going or what was going to happen they have been responsible for a number of big hits at tony and really does suggest that apple may be about to want to take on netflix, and everybody else in a meaningful way so good news for content provider good news for content. Good news for content yeah. Creating more content yeah. The u. S. Open teed off this week dom chu is there dom, it was just, i know you were watching yesterday. Youre out there in the middle of it all. There were a lot of people under par. The top ten guys in the world, only one guy really showed up which was rickie fowler. The course can play really tough. Is it drier today, do you think . I guess yesterday there had been some rain and it might have played a little easier than its going to play for the next three days theyve gotten some moisture for sure today weve got dry conditions weve got some wind blowing through here as well you get a feeling like the greens and fairways are going to dry out a little bit you might see more running out today. Even Jordan Spieth said the course is tough but fair you will see some good scores if you can put up that really good swing and put up that really good number. Adam hadwin put up six straight birdies for a u. S. Open record yesterday. To your point this is a tough course this is but a big deal here is this is a Public Access course like you said, youve played it. Anybody can come here, pay a fee and play the course. Only five other u. S. Open venues have been Public Access prior to this so this is the sixth one overall. Its going to be a record in terms of length. Over 7700 yards. So for golfers out there, they know just how long its going to be were talking very long par 4s 490, 500 yard par 4s and that 18th hole which can be well in excess of 630 yards. A big deal the Economic Impact also big here the World Golf Foundation says that we could start to see around 120 million, 130 million of Economic Activity around the greater milwaukee areaif this u. S. Open is like the four or five u. S. Opens that preceded it. Of course when we talk about the overall picture for just how much corporations want to get exposure here, you see the logos that all these guys are wearing all over the place, right . Well we took a look at some of the top golfers and the folks at Apex Marketing group figured out if these top golfers can stay in contention in and around the first page of the leaderboard the entire weekend, maybe even win it, all those logos translate into advertising and those companies can get anywhere from 9 million to 12 million worth of advertising exposure if those guys can stay in contention so there is so much happening here and like you said, guys, and joe specifically, the conditions are awesome and it does speak to the democratic event that were having it at a public links venue. Its an amazing thing to watch, guys its cool you Walking Around there even though theres crowds in stands now, its a pretty unique place in terms of the feel that you get with the church off at the distance at the highest point, and its a special place for only being 15 years old or whatever it is its not just that ive been to wisconsin a number of times to play golf. Everyone always thinks of black wolf run and whistling straits thats the American Club up in koehler, wisconsin, about an hour north of here the whole state is filled with great golf courses when you think midwest you think just like flat land all over the place. There are tons of Rolling Hills in this area here and erin hills is carved out of glaciers. So weve got a lot of terrain. A lot of forest areas. Its really a great scene, i guess if you want to say that, for golf in the upper midwest. Who do you like, dom . I have no idea its too early theres no way to tell i can tell you who probably isnt going to win, those are some of the top golfers in the world that had some problems yesterday. But nothing would surprise me. Wouldnt surprise me if the players champ won. Lets see what like 3 under, isnt he that guys got ice in his veins, you know yeah, its amazing too. But remember for the u. S. Open, youve seen a lot of u. S. Open championships like i have, joe, this is a great time to watch it but nothing really happens until saturday and sunday the whole story line can change. Remember what happened with Jordan Spieth and Dustin Johnson at chambers bay. Who would have thought Dustin Johnson was going to run away with that thing up until the 18th hole. You wouldnt pick like jason day at this point . Or even i mean rory. I mean they would have to or rory theyd have to do some Amazing Things could be someone were not even thinking about, or it could be rickie i mean, he was i mean thats one of the greatest rounds youll see that was the most under par ever in a u. S. Open, wasnt it, 7 under . Yeah. I mean, its Pretty Amazing. But again, i mentioned adam hadwin a lot of people dont know him but when you can put up six straight birdies on a course and set a u. S. Open record thats a big deal i would say this overall you never know when a Danny Willett type is going to show up and some of these u. S. Open venues can produce that kind of thing. But, with erin hills, the terrain, the conditions, they can change on a dime and if this weekend tends to be a little bit more gusty like it is right now and gets a little gustier we could see the whole complex of the sports change when are you coming back . You know, im going to stay out here my first fathers day gift from my wife and daughter was for me to play golf tomorrow in wisconsin so im actually heading up to the American Club to get 36 holes in tomorrow. And i fly back home on sunday. Wow yeah, taking advantage all right. Its i know what im doing today. And tomorrow, and sunday i guess. Anyway, dom, thank you these guys 640 yards. Theyre all hitting it in two. I mean, crazy. But these guys played a completely different game. Long fairways f you dont hit the fairway its at least a stroke penny in that fescue. This is swedens Henrik Stenson yesterday hitting his second shot on the par 4 11th hole from 152 yards. Believe it or not it went directly into the cup for an eagle 2. No bounce, no roll just slam dunk it happens once in awhile. Thats pretty good aim pretty good distance control Pretty Amazing hes a look at that hes like 64 65 like he did that you may see it one more time. Aim right at it. Hurts the hole youve got to repair the hole after Something Like that happens. Huh mutual of omaha all right when we return, jim cramer is going to join us live from the New York Stock Exchange. Also a quick programming note. Today at 4 00 on closing bell it is miller time bill miller and his son are on to celebrate fathers day and talk stock picks you dont want to miss it. Shares of kroger are down once again today the stock fell 19 yesterday after the company cut its full year guidance. This morning the stock is down another 2 after being downgraded by telsey, rbc, goldman sachs, suntrust, bmo, jefferies and Pivotal Research lets get down to the New York Stock Exchange jim cramer joins us. And jim, just about the time we are getting up and getting ready to go, a lot of people arent awake yet. I notice that you once again are posting a column that you have been up and pinning and its really thoughtful and its had me thinking all morning long this morning about betting against the bond market. A debate we have been having for a long time. Yeah, you just cant do it. You see the Housing Starts this morning. You say, oh, yeah, they knew that too the bonds have been so right and throughout this rotation people have been seeing, well, whats working whats working the stocks that have worked are j j, eli lilly clorox kimberly these are quintessential slowdown stocks. Theyre reacting to the bonds. People thought the stocks were wrong. But you know what, the bonds theyre too smart. And every time i go against them i feel like a fool a few days later. Is this a situation i mean, we have been talking about this even yesterday. Is this a situation that the bond market and the stock market could be right could they be signaling Different Things and both be right because this time is different . Youre looking at global Central Banks that are putting liquidity out there or do you think that that is something that the bond market is eventually going to signal that the stock market has to come back down . Youre right. It depends within the market i mean, we had a big selloff in tech tech does well in a selloff in a slowdown when Interest Rates go down. People say oh theres no Economic Growth to buy tech but it was overheated. So they shifted back to these you know, to the quintessential drug stock situations including by the way i know i was listening today. Biotech. Biotech is doing incredibly well nobody talks about it. The innovation is great. The stock they seem like theyre expensive, but not if the bonds are right. All right, jim, thank you for making me think about that stuff this morning. Happy fathers day. Happy fathers day, jim see you at the top of the hour. By the way next week on squawk box we have a power lineup you dont want to miss. Including two cabinet members. Steven mnuchin and wilbur ross ittas nd srtmoay at 6 00 a. M. Eastern time stick around squawk box will be right back. Think again. This is the new new york. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov President Trump just tweeted. Again this now not quite a barrage yet, andrew. The third or fourth so far today, right despite the phony witchhunt going on in america, the economic and job numbers are great. Regulations are way down jobs and enthusiasm way up and did he say this . Its witching day, no he didnt say that. I dont think so. I thought i saw the tweet if he did say that, hes right is it triple witching is today is this the third friday already its only the 16th. But that would be yeah, because the first was the friday. So andrew, you can confirm it is june. It is june. That im now sure of okay. Yesterday no, it was like the 12th. It was like the 12th. I thought we were in may. Who wrote that . I will admit i have written the wrong year on checks before. There are many times i write down the date. I have to go month and year. Time is going too fast. It is always goes too fast. You just wait you wait until its 1 60th of your life instead of what are you 1 40th yeah. A little more news for you before we get going for the weekend. Alphabets eric schmidt, encouraging words for those worried about Artificial Intelligence causing mass employment we talked with him about it here on squawk. He said the future is quote you with a computer, not you replaced by a computer so if youre worried about the rise in the machines and ai and some of the fatalistic things i have said, take Eric Schmidts advice and feel more optimistic. We should tell you that shares of whole foods has been pelted, well monitor and get the news about whats happening. Whole foods halted for news pending. Could be some kale related issue or something, right . There was an article this morning talking about one of the fund the founder going after one of the funds theres a whole activist situation thats going on. Not about were out of time happy fathers day to both of you and to my dad and my husband. Bye, everybody see you back here on monday. Good friday morning. Welcome to squawk on the street, im Carl Quintanilla with jim cramer at the New York Stock Exchange david faber is off we were looking at some recuperation in equities the dollar, the curve, but then Housing Starts missed big down 5. 5. Brought futures basically back to the flat line europe is positive oil on the longest losing streak