If it closes up higher again today that will be eight days in a row of gains thats the first time the nasdaq would have done that since february of 2015 got a whole lot of earnings coming out that will very likely influence where we trade today look at the dollar dropping to a tenmonth low against a basket of currencies the euro rising above 1. 15 for the First Time Since maze of 2016 look overnight in asia the nikkei down by 0. 6 . Markets in china were higher with the hang seng up 0. 2 the shanghai up by 0. 3 . In europe, in the early trade, you will see dax is weaker down by a half percentage point. The cac is down by a third of a percentage point markets flat in london with the ftse sitting just fractionally higher lets get you through the big corporate story of the morning netflix shares soaring to new highs. The company added 5. 2 million new streaming customers in the Second Quarter thats 2 million more than wall street predicted most new subscribers came from foreign markets. This is what investors had been looking for. As of the end of june, netflix recorded more members abroad than in the United States. The Company Issued upbeat guidance for the Third Quarter well talk more about netflix with an analyst in came minutes. Up close to 11 . Almost double the subscribers. Like 60 more. Is it the analysts just cant add or or is it just too hard to figure out whats going on the user time, the time people spent on it dropped, but that doesnt matter when you get more and more people signing on they need a new hit they have done well with the two. Havent binged either one of those, house of cards or orange is the new black. That will get long in the tooth. Afrnlgts l a lot of new growth you have amazon, hulu once they have your credit card, its hard for you to to decide youre really turning it off. We can put a man on the moon. Why cant we have a password only usable once they have to fix that. So you dont have 15 people i think it is an issue, but theres a reason why people will eventually get it that. You have so many devices youre using now its complicated. Got to be a way to do it. The problem becomes if you tick off a user who is paying for it and is legit nimately usn it on a different device, thats sure way to get people to drop your subscription. Ill make it more complicated. Please dont. A parent gives their kid a password they dont happen to use netflix, but the kid does. For some reason they decide that they want to use it but they want then they decide im going to drop it. Then the kid will never pick it up got to be a way its not so simple. Earnings alert for you United Health reporting quarterly profits of 2. 46 per share beating estimates by 8 cents. Revenue in line with wall street forecasts. Also raising the fullyear outlook to 9. 90 per share from the prior range, 9. 20 to 9. 35. The current consensus estimate, 9. 80 United Health sees strong growth from new businesses and sees exceptional customer retention. A lot in this story number one, the headline is United Healthcare is a dow component. Okay. Which explains a lot. Why the dow is up. The stupid healthcare thing is dead but who cares whether you have the taxes youre saving from healthcare repeal when youre not getting rid of the taxes so tax reform no longer needed the sequential obama care repeal first and then tax reform because theyre keeping they whimped out and they were keeping the taxes. For a long time yeah. The Investment Income was never going away right now i think one of the reasons the market is taking this in stride, look what happened in the house that was like war and peace. Watching that happen was war and peace. Theres bandages all over the thing. It gets through and it goes to the pa tritricians in the senate could they ever really do it its almost like democrats and republicans, the gulf is so wide between a Susan Collins and a rand paul. Within the whole Political Party. I dont know. At this point, dont you think they try to not tax reform, but a tax cut across the line . Thats what theyll focus on. Then i started thinking with just the repeal part of it. You look at the websites, obamacare stays the law of the land so it stays. Now supposedly because they didnt do this si, single payer next do you think in this country right now, years from now democrats retake the houses of congress, they retake the presidency, i think getting all the way to single payer is just as hard. I dont see that happening either i see more jamie dimon shihtzu in washington in gridlock. Were not going to single payer. We wont stop anything and the stock market continues to go up explain that because its the waterboarding. Its the Corporate America not being water boarded anymore. Just take away i think this is earnings plus the fed. But why are earnings doing well business is back sort of a little bit more unindumb kcouun from the stroke of a pen House Republicans are unveiling their Budget Proposal for 2018 it does have reconciliation for the tax reform did you see that, ylan this budget dedicates more money to defense but it also includes some big cuts to mandatory spending programs. Here are the numbers 621 billion for defense. More than the white house had in its budget but still may not be enough to satisfy the hawks. Discretionary spending at 511 billion. And cuts to social safety net by 203 billion. This budget would Institute New work requirements on programs like food stamps for democrats, those are all basically nonstarters. Remember republicans do need democrats to pass a budget through the senate and they need a budget to pass tax reform. Tle here are the details on tax reform, lower rates, deficit neutral, so tax cuts can be paid with new revenue or spending reductions and a territorial system its unclear how the opposition to the healthcare bill that emerged last night will affect this budget. We do know they were counting on it passing in order to make the budget balanced. Back over to you okay. Ylan, thank you. A lot more to get to the other big political story, Senate Republicans failing to win support for their healthcare reform bill. Now President Trump and Majority Leader Mitch Mcconnell are calling for a vote to repeal obamacare without an immediate replacement. John harwood has the details on that good morning. This is something that ted cruz warned about when he was trying to prevent obamacare from bein implemented in the first place in 2013. He said if we let the exchanges and the subsidies get put into place, its going to become almost impossible to repeal obamacare. Thats because people tend to like benefits given to them. You had 20 Million People through medicaid and the Obamacare Exchanges who have gained coverage under this law the rate of people without insurance has declined precipitously. To come in and do something that takes that away through a bill that changes medicaid, through a bill that reduces subsidies, is just very difficult to do. S what happwhats happened thate promises republicans made that this would be easy and they would do it quickly, in the end republicans were not willing to stand up and say im the one who killed the repeal and replacement of obamacare were not true they were willing to do that mike lee and jerry moran were last night to join rand paul and Susan Collins. That suggests that Mitch Mcconnell may attempt to have a vote on a straight repeal of e obamacare, but its not clear senator also tas will take thatd that means in reality that republicans, like ylan mentioned r poised to move towards tax reform and they need to pass a budget first to get that done that wont be easy either. I was thinking if you wanted to get some payback, if you were mcconnell, you would do the clean the repeal. Because people would be on record and they might have problems in the next election. If you think about it i think Mitch Mcconnell would rather keep his job as Senate Majority leader. The spinelessness goes across the entire spectrum of leadership i thought thats what mcconnell was planning to do if he did i was thinking that would be a good thing to do that way you would know who knows how many there would be. Maybe 8 to 10 like they said but then you would know them why does he want to put the red letter why does he want to out his colleagues when they can maybe he thinks it would actually pass. No. No. Its not going to pass but what what i think Mitch Mcconnell is trying to do, one of the tensions within this process is Mitch Mcconnell has known for some time this would be extremely difficult to get done the part of the logic of pushing a quick vote before the july 4th recess, which didnt materialize in the end was whether it passed or failed you could have a conclusion to it its been dubbed the show them a body strategy. That is to say show the Republican Base that we tried to do this, we had a vote and it didnt work, rather than having the thing end with a complete whimper that vote may be the voete a motion to proceed to this repeal bill in the senate you have to have a vote to take up something. If they had that vote and it doesnt get taken up which is the likely outcome that means mcconnell will be able to say i tried, procedural vote didnt work time to move on. I just thought of this yesterday. You can see your hair looks great. Im quickly mine looks good i just got it cut yesterday. Thank you i get it cut at this fancy place. I dont pay for it at the lowes. You point pay for it . Who is there checking out bob corker at the desk i walked in i saw senator corker john, i asked him what i asked barrasso yesterday what is so great about being a senator that really all they care about is making sure they can stay a senator is it the power . Is it people seeing them and going, hello, senator, youre a god . Is it the corner table at the washington doing interviews with people like us. Theres something great about staying in office. They say the three most popt things, staying in office, staying in office, staying in office thats all they care about i asked him, you know how is he. Differential, geez, joe, i dont flow what it is. Trying to make thats a good corker. Not bad but, you know, i wonder if this was all off the record i asked him what is so great that you dont do not him, i think he was on board. You dont do what you promised your constituents you would do because youre worried about your own survival. Constituents change their mind heres the thing. As a former bush aide said last night in an interview on another network, the Republican Party oversimplified thisfor seven years. They magnified the problems with obamacare. They minimized the problems with replacing it they suggested as donald trump did over and over and over again, this will be easy this will be quick ill do a better cover more people at a fraction of the cost. Thats more from your prism that theyre over that they were like its prop kand ga, t propaganda. Its Jonathan Gruber boobytrapping this thing. You give somebody an entitlement you can never take it back thats not a boobytrap yes, it is, its like a hurt locker how do i make this thing not explode if i remove this thing by removing it, everything blows up that was the key. How do you make it not explode thats not a boobytrap. They cant. How do we get to single payer . Is it possible in your view, you have your pulse on the left, do you think its possible to get to single payer legislatively in the next ten years no. I dont either so were stuck in this morass, with what weve got . You could call it a morass, or as Mitch Mcconnell said places with no Insurance Companies no more. They have zero or one. Medicaid will turn into the biggest entitlement we ever thought about having if we let it go. Thats why mcconnell has said if the Senate Bill Fails, we will sit down with democrats and work on some sort of fix for the marketplaces i think if you do that, it is possibility to remedy some problems that not all of them but some problems you talked about. Did mcconnell mean that or using that as a threat both. I had a conversation with the republican member of congress a week ago who said i dont expect the senate bill to pass, but im and i voted for the house bill right down the line once that Senate Bill Fails i will start working with democrats because ive got thousands of people in my district who are concerned about not having Insurance Options thats the pressure that can make something happen. There are ways to fix some of this its not like this was the only plan in the entire world how you are going to fix medicate for all it used to be a fairly specific answer to a fairly specific thing. Medicaid can almost become single payer if you can cover everyone under medicaid. The plan was not going to fix it, it would cut off federal spending for it. Its like a black hole. If it goes to where its going, and you cover everybody, its hard to have education, fire, police, roads. Look at all of the plans that the house put forward, all of the plans that the senate put forward, all put the most pressure on the people who need it most, the least pressure on the people who need it least you could have tried to address this in a more equitable way thats the narrative that youre thats the narrative youre getting rid of the obamacare taxes which were only seven years old. If you get rid of that, rich and wealthy ones, if you try to reform medicaid,at the lower end, yes, you can point to things you have to decide what your goal in life is. If the goal is to lower taxes, thats a different story than if the goal in life is to fix the healthcare system. But thats as if the taxes were always there and now youre cutting them they werent they were put in for this unpopular program. It didnt get popular until six months ago. But im suggesting to you that they they left the taxes so that your people couldnt argue that narrative. Thats why they left 3. 9 in. It was a problem optically. In a Perfect World you could say part of obama care you passed with reconciliation and no republican votes was raising these taxes. If you get rid of it, taxes go away but there should be ways to try to bend the cost curve thats what obamacare never addressed. It did address it not well. We saw lower healthcare insurance inflation costs largely because of the recession. It is not clear exactly why the cost curve has bent. But it has bent. To say it hasnt is not right. Correlation is not causation. John no understood seven years ago there are multiple contributors seven years ago the cadillac tax, which the republicans delayed in this bill because it was politically unpopular. The democrats didnt like it either because it was unpopular with unions. But it passed you told me long ago when this was wallowing at 40 approval, obamacare, you said people dont know what is good for them, they need this i did the American Public doesnt know this is what they need. Now reform of certain entitlements is what we need youre not on that side of thing. This is not a medicine you think people need to have. Trump is against it all right you know what, john . Netflix. Netflix is something you should have bought yesterday. The rest of this is just fluff netflix up 17 after it reported 5. 2 million you cant have a point 2 point 2 subscriber unity of the year is back the mercedesbenz summer event. Get to your dealer today for incredible onceaseason offers, and start firing up those grilles. Lease the e300 for 569 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. When this guy got a flat tire in the middle of the night. Hold on dad. Liberty did what . Yeah, Liberty Mutual 24hour roadside assistance helped him to fix his flat so he could get home safely. My dad says our insurance doesnt have that. Dont worry i know what a lug wrench is, dad. Is this a lug wrench . Maybe . You can leave worry behind when liberty stands with you™. Liberty stands with you™. Liberty mutual insurance. Welcome back joining us for a check on the broader markets is jack lacheney and on set with us is eddie perkin gentlemen, thank you for being here mark, lets ask you first what do you think is happening . Weve been asking why the markets continued to climb higher even while we see the trump agenda caught up in washington whats happening i think the fundamentals are overriding the politics. We have Economic Activity that remains sturdy we have corporate profits that are rising at a double digit pace so the combination of the two and obviously the teamup principle remains alive and well there is no alternative for risk space capital and bodes well for stocks the advance continues over the course of the second half. If we get fiscal programs that are stimulative in nature, that will write further advances in equity prices. The rest of the picture looks bright for the time being. The big star lately has been technology you have a warning you think Big Technology may be the nextpariah what do you mean i think antitrust is something to keep an eye on and cybersecurity is something to keep an eye on i think there are bigger markets to invest in i would look for those stocks and sectors hitting 52week lows like telecoms, industrial stocks i think well get back to the trump trade. The market was strong in the first half of theyear but not so much trump policies, those were laggards in the market, i think its time to rotate back into the stocks that worked immediately after the election what do you mean by antitrust for technology you saw the news on google from the European Union. Amazon post whole foods deal is getting flack. Is amazon going to do is already doing major damage to retailers, when are mom and pops going to start to go to politicians and ask for some help mark what sectors do you like are you a fan of technology . Do you like other areas . I like technology, id like to buy it on a pullback, but im afraid to buy it up here there are other sector ns that look good. I like industrials citi group is starting to recover. That will invite investors back into small caps over large caps. Credit over treasuries, and sectors like financials, i mentioned industrials and even energy looks interesting mark, eddie, thanks for being here good to be with you. Netflix, the online streaming giant reporting stronger than expected revenue profit missed bay penny. None of that matters, its all about subscriber growth and strong guidance for the Third Quarter. The stock, look at that, up about 10 . Market cap is 70 billion it will be pushing not quite 80 77. 77 or so. Joining us is Anthony D Anthony de clemente. Lets start out by talking about the possibility of subscriber growth in this country would you call it saturated . Most of this is international of the 5. 2 million . Is the lions Share International . I would say were getting close to saturation. Roughly 52 million subscribers i would argue the Revenue Growth is stronger than the subscriber potential with Pricing Power they got that but the saturation level for international, is this just scratching thesurface . Good question are we halfway there yet . How much more is left . Im trying to get to an havent wham market cap. I think the rough or broadway to think about it, if you think about penetration of broadband subscribers globally, outside the u. S. In many countries the penetration for netflix is less than 10 broadly its in the teens. If you compare that to penetration in the u. S. , where you have 52 million subs out of broadly 115 million tv households okay. So a ways to go. We have a ways to go. Instead of talking price target what do you think the eventual market cap of netflix could actually be . Do you think it could be 2 200 billion . Our price target is published at 195 thats not even 100 billion the way to think about it let me ask you a question. Yes i know youre a fan of comcast. I hope they stay in business. I hope the checks clear. That they generate what is the greatest number of subscribers for global Subscription Business Model . I dont know. Thats why youre here over 100 million subs we have not seen a company like it in terms of scale and in terms of it being the Largest Global distributor of media. That scale will have Network Effects in terms of the data they have about viewers, in terms of negotiating power they have with suppliers, the movie and tv studios themselves. As time goes by, theres room for yun siupside in the profita of that scale. Took on 1 1. 1 billion in debt up to 5 billion in debt does that both eveer you at all . Im not saying it should, but when it doesnt bhoother me because they have proven out the Business Model in the americas why is there a difference and discrepancy between profitability and Free Cash Flow generation thats timing of when you spend and invest in the originals. Put cash commitments up front for original series. The benefits of that up front capital accrues over time. Is there ever a time when you dont have to spend that much money to come up with more and more new hits . Theyre going up against Amazon Amazon will have the pipes its going to be all about content. How do they always get great content . I would say overtime, over multiple years, as they continue to Grow Market Share within internet tv, the scale and the information about viewership that they have allows them to getbetter at what they pick and to you might say right now its theres theyre rolling us out. Okay. The basic comment is theres room for both. Amazon and april prime instant is not precluding netflix from growing. What youre suggesting, are they overpaying for content now . The word overpaying suggests theyre not doing the right thing. Theyre rationally investing large amounts of capital now to invest for many years of future growth im telling you, i know how to go on to amazon and watch something now. If i know that, they have a competitor, right . I think coming up, gop leadership failing to win enough votes to pass a healthcare reform bill. Trump saying republicans should repeal obamacare and dems will n. In i we will talk to joel benenson. Well be back in just a moment c. Power your clients portfolio at powershares. Com qqq. 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. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. The turtles every day. Were happy together, is that why . Were all back together is your news, can i share that youre going to make people think im pregnant again would you stop thats not the news happy birthday happy birthday. Thats all. Thank you, gentlemen. It could be your birthday and you could be pregnant. Im not now we know as far as you know. U. S. Equity futures at this hour up 21 points im not pregnant either. What about you are you not that i know about not that you know about good up 20 on the dow nasdaq up thats relative on a relative basis stronger than the other the s p is up because nothing that matters anywhere seems like it can hold back the market. The dollar is weaker today on the news from last night sometimes that helps equities. Crude above 46 i dont know well see what happens there lets go, andrew here we go you blew my big surprise on my own pregnancy your own okay. I didnt know. You didnt know unintentional gop defections late yesterday means the Senate Healthcare bill is effectively dead. President trump tweeting last night. He says republicans should just repeal failing obamacare now and work on a new Healthcare Plan that will start from a clean slate. Dems will join in he says. Joining us now to talk about it is joel benison, he served as Hillary Clintons president ial campaign chief strategist. Good morning good morning. What do you think can happen . You have a track record now going back into the last administration and this one of the two sides not being able to work together. Its being complicated at the moment by fissures emerging on the republican side. Like the house budget came out today, you already have 20 members of the tuesday caucus objecting to that. Sooner or later the folks running things in washington with republican control of everything have to recognize the way you get things done is by winning the middle not by playing to the base. We have not had that for a while. That means you have to work with the moderates in your own party, you have to work with people in the other party. If the leadership and the republican said cant make that happen with their hands on the rudder of everything, were in for a rough period and the kind of stagnation, political that jamie dimon talked about the other day can i ask a quick question. Do you think voters who look at this situation on either side are shifting alliances or allegiances, if you will, because of it . Im not sure they are at all look at the polling numbers, youre seeing that after donald trump won, he had independence in a good place. Right now with his Approval Ratings going down, the most problematic numbers are the majority of independents fleeing. If you look at a historical point. The last president who lost the popular vote and won the electoral vote in 2001, his approval overall at this point in his presidency was 52 35. Trumps today is a mirror image of that and largely because of the failure with independents. This is a tricky situation these guys have been saying for years they were going to repeal and replace. Thats what they were elected to do and promised to do. We know Public Opinion has changed and is looking at this differently. How are these elected officials to keep up with that and if democrats were in charge now, do you think there would be fissure theres . If they were in charge of both houses the democrats have a wide var variety of opinions like the republicans do. They wouldnt have started out trying to repeal something the republicans in their repeal movement drummed up numbers for approval of obamacare. The threat of taking this away from people who gain some benefits is far worse than the uncertainty of what would come with the repeal that and replacement that theyre talking about. What kind of fixes do you think need to be made to make it work to the extent there are markets where its not you have to start out with the fundamental design of the system was predicated that states would expand medicate 20 states didnt 19 states didnt when you talk about markets not working, part of the problem is one of the integral pieces here was to have it work the same way in all 50 states now, whether governors anticipated horrors that didnt come to pass in the other 30 states, youre seeing the reality that half the people on medicaid are children. A High Percentage over the age of 65. These are voting families concerned about losing healthcare for people who are vulnerable in their own families that was a big miss calculation. Another part was thinking more Healthy People would sign up because of the penalties there. If you dont have people signing up for this you cant address the idea that the premiums are high because most of the people on the plan use it theres a question about whether the penalties were high enough maybe at the beginning of obamacare you should have made the mandate and the penalty more stringent. Mitt romney had done that in massachusetts where it worked better you have to have real penalties with teeth in it for Healthy People who dont sign up james carvele over the weekend said the Democratic Party has nobody running the party. Do you think thats right . If not, who is running the party . Running a Political Party when youre out of power is a difficult task it is by committee you know, when you run things by committee, it can often be more like a camel and a horse comes out in the byproduct somebody has to meernlg haveneme eventually throw out a name. I think its premature. Thats part of the problem what democrats are doing now is playing opposition ball in washington and theres some dbenefit to tha depending on how far the republicans wanted to go if i were the republicans and the president , i would try to get the leaders together into the oval office, sit down, have a meeting with them all around that table, get the photo op and not let them out of there for a couple hours president obama did it intermittently, not relg gularl, but you have to do that to break logjams from time to time. When we return, we will have our guest host, ben lerer. Then Goldman Sachs is expected to release Quarterly Results well bring you numbers and reaction from wall street. And well talk to david zaslav stay tuned, you are watching squawk box. Welcome back look at shares of Johnson Johnson. The dow component out with earnings coming in with earnings on an adjust the basis of 1. 83 a share. Better than the street was expecting. Revenue was slightly light 18 18. 8 billion versus 18. 9 billion expected the fullyear guidance also says they expect to earn 7. 12 to 7. 22 a share. The street was at 7. 10 they are saying they still expect to hit numbers through the rest of the year again, the street is taking in stride right now that stock is up by 2. 30 dollars a gain of 1. 74 and that will help the dow jones well keep an eye on that. This is one of three dow components reporting this morning. United health already out. That was better than expected. Still have Goldman Sachs coming up in just a bit bank of america were expecting soon, too. Time for the executive edge investor s have a new way to play china bike sharing startups are raising a ton of money from high profile venture capitalists. Josh lipton joins us on the set with the hottest start up trend in china. Heres a number, 1 1. 3 billion. Thats how much money two chinese bike sharing companies, mo bike and ofo raised in new funding. Heres the concept fans download an app which lets you locate and unloekck a bike nearby mo bike charges 15 cents for 30 minutes. Unlike traditional bike sharing programs, they dont have to park at fixed designated racks like citi bike with these you drop them off wherever the trip ends mobikes ceo davis wang talked about the surging growth his company is enjoying. We are transporting more people than taxis in china in some cities we are transporting more people than subway which means mobike is becoming one of the major transportation platforms in most of the cities we operate now, it was noted that monthly active users in this market were growing at 100 month over month still mobike and ofo support a combined 50 million rides each day. They operate in more than 100 cities they have 100 million registered users. They control fleets of 6 million bikes each mo domingu osho bike closed a f of 600 million and ofo raised 7 700 million fro investors. Big names piling into both i checked in with both companies. Theyre interested in tapping into the u. S. Market but they could face competition not just from established bike sharing players like motivate, which operates those citi bikes in nyc, but also vc backed startups like linebike which raised 12 million from investors. Linebike will launch in seattle this week. A lot of competition why isnt it scooters i dont want to pedal. Have you done this in new york city you have ever done it . I have not. You have a driver, but thats not so if mobike and ofo merge, would it be mofo i havent checked on that you knew a joke would come there. Thats good. Possible combination. Good name ofo ofomo. If it went the other way josh, thank you. You didnt think of that snfrnlt i didn. You know morris and foster already are mofo i knew i heard morris and foster before bank of america is out stock is not doing much at this point. Lets look up 3 cents marginally. Yeah. Provision for credit losses, Net Interest Income. All kinds of things that wilfred he likes to do this yes we should leave it to him he enjoys it 5. 3 billion is what the company made he will be looking through the pre press release. Which i started to. Refr knevenue better than exd versus 21. 8 its done okay with the other banks that have reported coming up, an update on the health of the fast Food Industry and the chairman of ceo of sonic restaurants is on remote it will be like remote hes not in studio. So there wont be anything here. To eat . Im not eating anything any ways heres a quick check of whats happening in european markets rit w. Ghno rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Summer brings a renewed focus to fast food with road trips and stops along the highway for a snack. This summer socalled Quick Service restaurants also have a stake in some Important National discussions, including those about franchising, also americas infrastructure chairman, president and ceo of drivein restaurant chain sonic, good morning its very good to see you this morning, cliff, thanks good morning, joe thanks for the opportunity to be with you and if you had to characterize business currently, versus the recent past, how is it right now for sonic well, i would say its a little sluggish. We have a number of good initiatives under way from a product standpoint next month well roll out a dunked chicken sandwich. Thats a delightful product with a bourbon Barbecue Sauce but we also have some Food Technology initiatives under way. This year weve rolled out a new app which now includes our mobile pay, and mobile order so were making a lot of investments in the future. The consumer is a little bit sluggish these days. Matter of fact, next year in 2018 suggesting were going to see not just flat traffic, im not talking about sonic, im talking about the industry, flat traffic but probably slightly negative traffic so when you include unit count growth thats occurring in the industry, all of the business only gets more challenging for all. When you decide that youre going to try to grow, is it going to be through youve got 3500 already, right . Correct so innovative menu changes . Is it adding to the number of sonics that you already have how do you do it is it advertising . Those two guys still feed them a lot good, good. Im glad you see them. I see them. It works. Im glad well its a breakthrough, you remember it, and a lot of others people do, too. Youre right. But really all the ways that you mentioned well be focusing on growth, it includes new stores, but it also includes new products this has been a part of our legacy continuing new product news has been historically will be prospectively new stores, new products, work to grow, advertising medium, so evolving over time, of course not just television, but other mediums in the 21st century, more digital and social media efforts, so this will be a growing part of our strategy for promotional standpoint ongoing so, in almost any way you can think about growing new stores, marketing, samestore sales, new product, product we will continue to push out with our brand. Our average store does about 1. 25 million in sales but we have stores in the systems doing 3 million and 4 million so the throughput capacity at the average store is still considerable a lot of opportunities for growth for our brand you cannot ignore millennials, can you is that is that the group that is the sweet spot that you need to bring in to Quick Service restaurants, are they the most important theyre certainly becoming that just because of the size of the population their buying power theyve got options, and they use the options much more than their parents have historically. But all of it, yes, all of us are pursuing millennials theyre much more likely to use fast casual or Quick Service restaurants. And as importantly, some of the new technologies, i mentioned a moment ago i roll out of our new app and the mobile pay and mobile order coming at the end of the year. But, millennials are much greater users of this technology, no surprise. And consequently, appealing to them from a product and promotion standpoint, but a technology standpoint, appealing to them with technology and making kind of weeding into their lifestyle becomes all the more critical for sonic and its competitors. I must be i must identify with millennials a little bit because these snackable items, thats popular with them, huh, like lil doggies and lil chickees i just see the word snack and i know that i would like that. I dont even need to know what they are we approach our business from multiple day part standpoint, not just lunch and dinner. Most of our competition gets the lions share of the business lunch and dinner we get our breakfast, lunch, afternoon dinner, and evening and we focus different products on those five different day parts so thats why you see more snackab ablabl ablable type itee right millennials are attracted to those multiday part, smaller meals but more meals throughout the day. If youre in studio weve got to try these snacks. Be off the diet by whats the little doggie . That little hot dog . A little hot dog, yeah. Its a snack size sandwich, you might say. And these appeal as an addon at a meal time or they can also appeal as a snack in the afternoon. Someone stops in for a cold drink, and preaching to the choir. Preaching to the choir, cliff. Im there. Good. Good you dont need to show you. Andrew, yellow mustard or brown mustard . For me, brown if im doing it but im not a condiment person never been well, made to order so well do it any way you want all right, cliff, thank you we got to run. Coming up were going to talk about the wall street reaction to the bank of america earnings weve got a lot more Johnson Johnson and later Discovery Communications ceo is going to joins rsonnb ufit cc. Breaking overnight, Senate Republicans pull the plug on their Health Care Bill we are live in washington with the latest earnings kick into high gear bank of america and Johnson Johnson reporting just a short time ago we have the numbers and the street reactions straight ahead. Plus guest host and group nine ceo ben lerer is here 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 right now. We do have some dow components that have been moving things around this morning. Dow looks like it would open up higher about 16 points higher, s p 500 up about 2 points and nasdaq close to 16 points higher lets get you through some of the big headlines making news at this hour. United healthcare, one of three dow components reporting Quarterly Earnings this morning, and scoring a topline beat the Health Insurer Beat Estimates by eight cents with profit of 2. 46 per share. It also raised its full year forecast and then there is netflix. It did not Beat Estimates on the bottom line but thats not holding back the stock this morning by any means shares surging on much higher than expected numbers of subscribers. As for the bottom line netflix earned 15 cents per share, one cent short of consensus forecasts and tesla, it added two new independent directors, James Murdoch joining that board, ceo of 21st century fox and Johnson Publishing ceo Linda Johnson have been added to the board as well. The automaker facing criticism in the past for a lack of independent directors. Senate republicans failing to win support for their Health Care Reform bill now President Trump, and Majority Leader Mitch Mcconnell are calling for a vote to repeal obamacare without an immediate replacement. John harwood joins us right now. He has more on this story. John becky, this is Mitch Mcconnells exit strategy. He is not expecting this repeal bill with a replacement later to pass that was a strategy that republicans considered and rejected earlier this year but it would allow the republicans to move on to tax reform, which they need to pass the budget, House Budget Committee has got its blueprint out this morning if they can pass that budget, if the senate can pass thirst, if they can pass the same one, then they will have the reconciliation vehicle they will need to move on to tax reform. But what weve seen with health care is that on big, complex legislation, this party has had trouble getting to consensus, and President Trump hasnt helped too much, because hes first of all hes not popular. Second of all, hes not invested in the details of the legislation. So, theres a tough road ahead for republicans, and obamacare, or the exchanges, that are continuing to operate, are left with some of the difficulties that weve seen over the last few months and the question is, how and how quickly do republicans work with democrats perhaps to resolve those issues i dont know. I understand what youre saying, its probably true about the president on this issue, but, you think houdini could have wrangled these republicans into something . And you no, im not blaming him no, no. Im just saying he didnt help if he had been more involved and more detail oriented you think the outcome would have been different no. Okay. Thats what i mean and when i say trumponomics, its like mcconnellnomics before id call it id ball it obamanomics this is a completely separate track this is a tough issue just like we found out. And especially when you when the entitlements out there and youve got people depending on it, people in need depending on it, its going to be very tough to even reform its tough to reform any entitlement to make it easier to do everything you want to do joe, youre exactly right and consider what President Trump said during the Campaign Last year. That we can do it easy, we can do it quickly, everybodys going to be covered, ill take care of that as the head of the government, going to be much cheaper. All of those things were not really connected to reality, and so he also pledged not to touch medicaid what weve seen is that republicans, who wanted President Trump in office because they thought he would sign the bill, said okay, you stand to the side, were going to write our bill, the bill had deep cuts in medicaid, and one of the problems is, of course, that affects many trump voters, and many constituents of these republican senators and when it got down to the details they looked at it, they heard their constituents complaining, they heard the attacks from democrats, they know 2018 midterms are coming up, and they said, oh, no thank you did he say that about medicaid i knew he wouldnt touch medicare, but medicaid yes, he said more than once not just medicare in fact in early part of the 2016 campaign he disputed the idea that Mike Huckabee was the protector of medicaid. He said i was saying dont touch medicaid before Mike Huckabee said it. And of course, now weve seen that the republicans tried to go down that track, but its very, very tough, given the millions of people who added Health Insurance under that expansion yep that is true all right, john harwood thank you. Two key Earnings Reports are out this morning more than two, but these are big dow components Johnson Johnson beat mimts by three cents and bank of america scored a three cents beat with earnings of 46 cents a share andrew yep the head line was, netflix was higher in spite of missing its earnings per share right they earn like 1 a year and trades like at 200. So its like, if you had three extra cents in there, you wouldnt be trading at 200 times earnings, youd be trading at 199. 999 times so earnings, as you point out their precash flow is negative earnings are like they dont even need to release that. Really right . I mean its totally anyway. Look amazon meg tirrell joins us to talk Johnson Johnson and also the first, first oh, boy, this is a bonus for us bonus for viewers, bonus for everybody. Wilfred frost has more on bank of america earnings. As promised you went through and looked at the most minute details of this. I have, indeed. A bigger bonus to come when meg comes on but let me go through some of the geeky numbers i love first of all as you already said in terms of eps, 46 cents a share. Revenue 22. 8 billion versus expectation of 21. 8. The core part of the business, the consumer and Business Bank about 45 of their earnings. 8. 5 billion versus expectations of 8. 4 billion so pretty solid number that meant net income within that part of the business 2 billion. Does show that they continue to keep costs under control there operating leverage, slowly coming through still for bank of america in terms of the rate hike cycle what does this all mean in terms of Net Interest Income across the whole business up 9 at 11 billion. So you say that pretty solid, better real little than the jpmorgan number which was up 8. 5 net but they dont have the guidance Going Forward for Net Interest Income that jpmorgan had so in terms of that core part of the business solid like citi on friday, slightly better than jpmorgan it was a bit disappointing. Sales and trading, which matters a little business less for bank of america, but we keep the Goldman Sachs data down 9 they guided during the course of the down 10 to 12 so this is a little better than expected. City for comparison was down 7, jpmorgan down 14 so theyre in the middle of that down 9. Breakdown, 15, come down 14 equities plus 3 so all in all youd say this is a pretty solid continuation of strong numbers for bank of america. But its not blowout beat, and in light of the yields tipping a little bit they are down in premarket. Theyre down half a percent. Theyre now down 0. 9 . Other banks are a little bit negative bank of america more so given this, id say solid set of numbers, clearly not overwhelming lets move on and get meg tirrell with more on j j numbers. J j is up this morning on a beat on earnings per share in the Second Quarter revenue, however, coming in a little bit light that beat for the Second Quarter was by about three cents which probably driving the stock higher this morning of course is that the company increased its fullyear 2017 guidance eps now it projects 7. 12 to 7. 22 a share versus previous estimate of 7. 10 they did also rates lower of their 2017 revenue guidance slightly, as well. If you walk through j j three big segments theyve got consumer, pharma and medical advices. Consumer is the brands we know Johnson Johnson for. They said their Baby Products were a little bit light in the Second Quarter about 3. 5 billion in the quarter. However that was offset by positive results for overthecounter products for antismoking internationally and also their neutrogena brand doing pretty well. In terms of pharma, 8. 6 billion in the quarter down slightly in terms of sales, however they did just close that big acquisition in the Second Quarter, did get approval for a new psoriasis drug so analysts are expecting that growth in pharma to accelerate and finally medical devices doing pretty well, 4. 9 bringing in sales of 6. 7 billion. That call is going to be at 8. 30 on their new launch of their psoriasis drug psoriasis, you remember that from the ad . Maybe you dont. I dont remember that which made we think, have you seen ads for what is that stuff you get from herpous virus that goes on they show a guy without his shirt on, and his entire i thought that was from the chicken pox, shingles. What is that . Shingles. From chicken pox. What are you talking about . Theyre advertising now, they will show a guy that looks like which is a pretty effective way to get you to take the shot to prevent shingles. They will show a guy and hell be like this and then its like oh, my god where is this ad playing . Nightly news . Yeah. Its not your demo not my demo not my demo. You dont want shingles thats all im going to say. I havent had no. Our next guest has not seen this ad. Youve never seen this ad hes in a different demo. Looking at a computer screen. Sounds really cool. Our next guest is ben lerer ceo of group 9 media so much to talk to him about let me start with netflix, im just curious more about the economics of netflix than anything else. As an investor, how you look at that, we were talking about how the negative Free Cash Flow and sort of where they are in the world, and sort of how things are valued these days. Well i actually think the most interesting thing about netflix, like the subtext was that they now have more subscribers internationally than in the u. S and i think its it gets forgotten how incredibly scalable these platforms are so theyre cloud based they dont need this infrastructure to go totally global this is still the early innings for a platform like netflix. There is so much opportunity without having to go and put these giant pieces of infrastructure into place. Netflix is only going to keep growing. So the numbers today, are more important. You talk about social networks, where are you on snapchat these days . I am snap yes. Snap . Im still very long on snapchat i think that, our strategy is to build on all the platforms where people are snapchat has a definitively different and frankly much younger audience than instagram, which is obviously theres has Snapchat Instagram we continue to invest a bunch in snapchat and they continue to grow and our audience is growing the platform i think its probably beaten up a little bit in the press but theyre still growing. When you say invest, what do you mean from our perspective that means investing in content so were making content. Were making shows were making were hiring teams and creating programming on those platforms on a relative basis in terms of creating programming and other content, are you investing more in doing that on snap these days you investing more on doing it on facebook, instagram and what about twitter . Snap is sort of a closed platform so the only investment you can make is an investment that they give you permission to make. We cant just create shows endlessly. They have to actually buy the shows or sort of give us the shelf space for the shows. We have a Good Relationship with them and so theyre doing that but, that investment is sort of throttled by them. Is there a way, though, that it makes sense for you and you get a lot out of it but its not necessarily a great place for investors . Or do you just think it takes time before they can figure out well i think for investors, i think the amount of attention that so that makes a lot of sense. I get why you would want content there. We want to go where people are and i would imagine that advertisers want to go where people are, also and a lot of people are on snap. And so, the amount of usage versus the amount of advertising revenue is still not in line right what about twitter . Twitter, i think similarly, we continue to lean in i mean, again, we want to be everywhere theyve made a really big push into live content. You know, later this year theyre launching this network with bloomberg, sort of a h 24 7 live network on twitter. I think that will be interesting to watch theyre definitely in sort of fourth place behind facebook, snapchat, instagram and youtube in the war to big out what their distribution and scale look like theyre moving really hard into video but they have a lot of work to do i have a private company for you. Pinterest. Pinterest is 12 billion valuation the thing with pinterest from my perspective, im sort of all all in in the deep end of video and they really have not figured out video yet and theyve been very slow to come to it. And so ive sort of been a little slower to lean on there i think that as they figure out video or if they figure out video it will become more interesting. It definitely has a really good hold on sort of a slightly older female market. So thats the answer. If youre not moving into video, if youre not embracing these two things, you cant stay stagnant in this arena i dont think so. I think that advertising money, if you still look at where the dollars sit, theres 70 billion in television, that digital wants, and thats going to end up translating into video advertising. So, thats the big opportunity okay, going in a different direction with you amazon whole foods implications i think thats exciting i think amazon whole foods actually is a good example of transformative . Are we making too big a deal out of it . I think were probably making too big a deal of it in i think yesterday blue apron stock went down 12 because amazon filed a patent for something that could conceivably look like you own it wasnt conceivably that patent tag line that came along with this is well do the prep, you be the chef. Oh, i know. But theres a lot of infrastructure, and a Huge Customer list that blue apron has built and a big business and i think probably were a little overreactive to this you also on plated. Stake in plated which is competitor of blue apron. Yeah. And you dont think ultimately an amazon whole foods can eat your proverbial lunch in this case . Think about how big a category food is in general and how many traditional players there are in that business who want to go direct to consumer who need to have that infrastructure but im a prime customer and i can click and say bring me dinner and here are the ingredients. And can they get it to me day one . But, this is as an investor, were invested in a private company. I dont think the goal for these companies is necessarily always to go public theres a big group of strategics who, youre not just going to cede to amazon everyone in the food space okay, fine, amazon went down, forget it were not playing. Youre saying your gamble is plated or blue apron gets picked off by a walmart in a sort of jet style kind of thing where they say we need to be in this business and we dont have the infrastructure to do it . Absolutely. Thats a gamble well its not, i mean the gamble is that theyre going to build a good product and theyre going to grow and theyve done that i think in the context of plated there are plenty of biers around the table, big, you know, the albertsons of the world who are trying to get into this space, who want a directtoconsumer business, who can either spend the next five years going at it themselves or can buy a company like plated. And from their perspective, from investor perspective you mentioned big in the areas where plated is big, too no, im just i make them or krogers or any sort of big Supermarket Chain that that theyre going to have to they have to compete. Youre not just going to say, okay, we lose amazon wins and lets just go home what do you make of where walmart is with jet. Com . I actually had a drink with mark lori two weeks ago which was really interesting to hear and at jet they are it sounds like theyre taking jet sort of more upmarket. And theyre going to focus on like the deal that they did, theyre going to get exclusive access to Higher Quality product and to sort of brands that they think are destination brands i think its an interesting strategy and mark is being very smart in looking at brands that are sort of maybe dont have all the heat and all the excitement but that have really good cuss mer bases that have good supply chain and good product and thinking about a strategy for how they can go and ultimately buy so like the i think its hay market they bought, that business is growing massively. Plugged into the infrastructure that they have at walmart. Okay. Were going to throw a little break in here. Would you put money in uber at 50 billion valuation down from 70 . I do see the i dont know how to do that kind of investing. And i take lyft. You take lyft yeah. Were going to have a locker conversation about that. Im curious about why that is. And also when we come back street reaction to earnings from Johnson Johnson and bank of america this morning and then well talk media trends with discovery Ceo David Zaslav plus harleydavidson earnings out just moments ago sales of the iconic motorcycle maker stalling a bit as the Company Faces pressure from competitors. The stock falling on the report. We will speak to an analyst about the results. Stay tuned you are watching squawk box on cnbc Johnson Johnson out with Quarterly Results this morning the Company Reported better than expected results joining us on the squawk news line is jeffrey meachum, barclays Biotech Research analyst. Geoffrey, if there was a highlight from Johnson Johnson either a better than expected or a bit of a shortfall, what would you point to after going through all the details . You know, i would say overall i think the stock is up just because as meg said earlier, the guidance raised was more than the beat you look across the product lines, pharma was a little bit light, consumer and med tech were basically in line so i think thats pretty much it its the guidance raised on the bottom line. Good cost containment. So, is that how managing j j at this point will bear fruit on the cost side of things . Thats thats not very exciting yeah, its not very exciting. But i would say investors are looking on deals to see how much that would drive pharma growth and then Going Forward, you know, they do have a new product cycle coming with respect to, you know, the drug just aproved for psoriasis and darzalac is doing quite well i guess if you wanted excitement you should go back five years or so when all the problems with qualitative issues at plants, and fines, and globally, it seemed like the you know the history of j j, that was under bill weld at that point i guess. Thats all been fixed under gorsky you know, theres been a number of theyve had posted a number of analyst events, gone into a lot of detail, Dominic Caruso the cfo has talked a lot about this with respect to the consumer business, and the correction of some of the manufacturing plants, some of the facilities but in reality it was only a few facilities but obviously got a lot of negative press i wouldnt say its behind them. But it feels like its later innings, though. As far as actelion when will we know whether that was a good price . Whats the first therapeutic or one we will say wow, that was a great addition to the stable for j j . You know, i think were in the pharma business, well probably have to wait i would say until first half of next year maybe even the end of next year. I think the biggest threat here is truly the generic threat. Theres not a lot of competition in pulmonary hypertension. Weve covered the space for quite some time from our biotech experience right but we havent really seen it, i mean obviously its early days for the integration but i think investors are really looking to see what the competition looks like and what the generic impact looks like. Yeah. You always got to think about that and then, notwithstanding what finally happens with drug pricing and Everything Else, and the pressure out of washington i guess thats going to alleviate it a little bit at this point anyway, appreciate your time, jeff, thanks yep, thank you. Okay, good. Also bank of americas Quarterly Results out this morning beating the street on both the bottom and the top lines. Joining us right now on the squawk news line is jeffrey hart Equity Research principle at Sandler Oneal and jeff, these are beats on both counts but the stock is trading down a little bit. What happened . Well the head line number is what looks to be pretty solid beat but there are, as usual, these guys a few moving parts. If you back out kind of the net gains on the sale of the uk credit card business, add some securities gains, and if you take out some reserve releases it gets me from the 46 number to a 43 number which is in line with consensus so the numbers are kind of in line with consensus. I wouldnt think this is going to stay as kind of negative for too long, though, because i mean, look, core trading was a little better than we were expecting. Investment banking was a little better than we expected. Net Interest Income was a little light but i think thats more on the trading side than kind of the core lending side. So we didnt point out the Net Interest Income miss that we got from jpmorgan earlier this week. So i think these look like pretty good results my first run through them so you would be buying the stock here yeah, i mean, im not seeing anything in here that would suggest the stock, you know, a specific selloff. Things were worried about was would trading be worse than we thought, was Net Interest Income and kind of the outlook going to be worse than we thought and Interest Income wasnt and we dont get much on the outlook from the press release from what we can see right here it looks like a solid number to me not necessarily a big beat but a solid number jeff, just in terms of what you expect to hear from some of the other banks that are reporting, more of the same . I think so. What were seeing is kind of a slowing in loan growth with Net Interest Margin or kind of an Interest Rate side and at this point providing an offset credit quality, Credit Trends still seem to look pretty good, and Capital Markets are what they are i mean, you know, last week was probably going to be the best trading results but b of as fall between city and jpmorgan well see where they end up. Those are the three focal points people will be looking at for banks. Net Interest Income with loan growth, credit cost and how good the Capital Markets or bad on the Capital Markets. Jrt, jeff, thank you. Thanks, bye okay, Discovery Communications ceo david zas love is going to join us to discuss the move to streaming and harleydavidson reported a short time ago shares down nearly 11 this year thanks to slumping sales can the company get investors revved up about the stock . Were going to find out when squawk box returns if you could book a flight, then add a hotel, or car, or activity in one place and save, where would you go . Expedia. Good morning, everybody. Welcome back to squawk box here on cnbc we are live from the nasdaq marketsite in times square lets talk about the stories that are front and center this morning. Two economic reports are on todays calendar in just about an hour well be getting june figures on import and export prices. Then coming up at 10 00 a. M. Eastern time the National Association of Home Builders is out with its monthly sentiment index. We are watching shares of motorcycle maker harleydavidson this morning earnings for hog coming in at 1. 48 a share. It did Beat Estimates by ten cents but revenue fell short of forecast and harley lowered the full year shipment and profit margin guidance. Also one widely watched Earnings Report today comes from dow component ibm its scheduled to report after the bell the company has seen revenue fall for 20 consecutive quarters but if consensus estimates hold up ibm would break that streak it is summertime. That means shark week is almost upon us, and Discovery Communications has just landed snapchat to develop a new series based on the upcoming week of programming. And joining us on set to talk content, media consolidation, is david zaslav, ceo of Discovery Communications and weve got to get the media, weve got ben here, and its interesting, but weve got to first weve got to talk sharks this is not for you. This is for becky here yay well pass this right past joey man cannot swim as fast humans cannot swim as fast as sharks but that is not stopping you here is the wall street journal today, phelps versus sharks who you got . His point is that sharks goin to have to have an off day to lose right . Because they can swim at 20, 25 miles an hour. Even with a mermaid, he probably cant get more on eight or nine miles an hours well see how long is the distance . Well who is the shark . Do we know have you identified the snark . Yes, we did we found a huge great white, we took phelps and we sent him right over to south africa he actually went in to the shark cage with him. We have some great and there was a little interlude between the two of them. Oh, my goodness whats interesting is that he is so competitive, phelps he really wanted to win he spent two days in that water with that fin figuring out how does he accelerate whats the fastest speed and on sunday night well see whos faster its a great idea and this youre doing this the right time this year it was too early last year, shark week, wasnt it . It was a little bit early last year. So we wanted it in the dead of summer i cant take look at this on andrew and the glasses ben is wearing them cool. You wear them cool. This is you look like elton john for gods sakes. Thats why we invested in bens business, to make us cool. Hes got it going. He does have it going all right so you dont even do it over the hair you do it right just in the front like resting on the forehead so i want to brag about bens business please do that. A little bit. So, were in the business of storytelling and, but more traditional. Half hour, one hour shows. And were the leader in nonfiction were leader in sports in europe were the leader in kids in latin america. But when it came to short form, when it came to the relationships at facebook and the relationships at snapchat, ben had built a behemoth we put a couple of the companies together, and in this past month he did over 5. 5 billion views on facebook and so were one of the largest providers, were actually number one provider of short form news on facebook. And thats bens team. We own almost 40 of the company. And we also he also has more channels on snapchat than anybody. I think this is really interesting. Because hes a disruptor so we have a choice. We can hold onto our existing business or try and do some of these new forms of content or we can figure out how to disrupt ourselves. And so thats really what our company is about now so, ben is disrupting us you know, he build this business thats the leader with animals on the web 2. 5 billion views. So thats disrupting animal planet, but we own both of them. How is it changing what you do at discovery . What are you not investing in . What are you doing differently as a result . Well its changing our culture. Were learning about short form content. Were learning about one minute videos with no audio were learning about short story telling. And ben is learning from our company about long form story telling. So i think its a great combination. But is this a story, though, of trading analog dollars or digital dimes or pennies or whatever it is in terms of the economics of all this . This comes back to what we were talking about earlier, if you look at the amount of attention in mobile, and in mobile video right now and if you look at the amount of advertising, it is miles away from where it needs to be. Right and obviously we still believe in the value of television but there are younger audiences who are going to have a different relationship with it and as time goes on a lot of the not Great Television is going to do you ever think the economics of the Digital Business that youre in will be as good as the business that hes in . I dont think that that will happen, actually i think the business the traditional tv business where you make money from the affiliates, and you make money from advertising at the scale that you did, is an amazing, amazing, amazing business that may not exist but andrew i think its the wrong question if you look at media in general, media is all Media Companies on the content side are down between 30 and 40 . Right and theyre down because theres this question of, its a terminal value question, when you come out of the tunnel, whos going to have the ip thats going to survive . The 7 billion mobile phones out there . Whos going to get on those screens . Whats going to be the emerging company thats going to be relevant on all of those plorms . And if you look at a company like netflix, you know, our multiple, we have one of the highest multiples in media, were a little less than nine. We used to be 13. 5 netflix multiple is 1 hupd the question is not how much money. The question is can we be relevant on all platforms, and if we are, then the well be rewarded by shareholders right and the Capital Markets in a meaningful way because theyre waiting to see whos going to be one of the winners and ben is, i think, really helping us now in being a leader on facebook, leader on snapchat. And will help us be one of the winners. So, 25 years ago you were like trying to figure out how to get i was hanging out with that was like you were really good at that but it seems kind of easy. So then you then you go to in retrospect then you go to discovery and take it international and you figure out content thats going to work in russia. I mean you figure out all this stuff, and i look back on that and i think maybe that was kind of easy lifting compared to what youre looking at right now. This is are you do you need guys like ben to tell you how to do this now because were just old, and were not in a position to disrupt ourselves anymore . It seems very daunting, the Media Business isnt it hard . Its hard but its interesting and its theres never been more opportunity the difference is that we created channels before, and we distributed those channels around the world we had an extraordinarily efficient model. Right and we viewed the shows that we did as shows for channels we now own all of our content as ip and the big bet that we have is, and were different than most Media Companies in this way, is were way long on ip so we own weve invested six or seven billion dollars over the next five years in sports in europe were the leader in sports but we own that on all platforms. So if youre the if youre at espn and youre watching an nfl game, and you see verizon, a verizon ad saying sign up for verizon and watch this game that money goes to the nfl. We our strategy is we have, in order to deal with this issue, is we have bought, whether its discovery, whether its oprah and own, whether its euro sport and all the sports in europe, kids, we own that ip, and were the ones that want to sell it to the mobile players, to sell it, all the devices, and i think things are going our way. Because we have our existing business thats still growing. We have 12, 14 channels in every country, we have really strong ip, we have good growth. Its not in the mid teens anymore so its more in the single digit growth. Mid single digit growth but its not going away so quickly, and we make because we make money on all that ip, you know, you talked about Netflix Netflix spends 6 billion to 8 billion a year on content. Right we paid for all of our content. So when we go directtoconsumer in europe with sport, were already making money on all that ip so when we take the french open or Tour De France or football or the olympics, to consumers, if we could build a big directtoconsumer business, were going to get a huge multiple on that you ever see a day where snap or facebook or twitter or any of these guys end up paying you the way a cable operator would well, look, facebook right now, ben and i are in meaningful discussions with them, because were one of the leaders in video on that platform, were working really hard, and were in the first chute of figuring out how to monetize those 5 billion you should talk about that so thats a yes well, eventually, we would like to be wed like our old model which is we get paid no matter what and we make advertising. We dont love this model which is we make very little advertising, we dont get paid but were trending in the right direction. Yeah, well to answer your question, i think there is i believe a genuine desire on the part of a platform to build truly sustainable and real longterm Business Models for people content creators on those platforms. I think having the kind of scale and the kind of brands on those platforms that we do today is going to put us in a good position to be one of the first to build real businesses on those platforms. But like you guys are alluding to, its still in the early innings figuring it out. But the reality is theres a bunch of platforms that are competing for premium content in this new world, and the content is valuable, and with facebook and with snapchat, and with you tube, and with folks like amazon and netflix coming into market theres never been a better time to be a premium content creator. And thats what were doing. Thats what theyre doing. I think the intersection of the worlds is i think well set up. To your point, we were together last week at sun valley whether its youtube, facebook, snapchat, they were all there saying we need exclusive content. We need your video what could we do how could we experiment . Four or five years ago, those content plays, those platform plays felt that they didnt need content so were definitely moving in the right direction. Right do you think those guys end up trying to compete with you as well meaning do you think theyre going to end up getting into the content game on the production side well, theres nothing look were in business with amazon now. Yeah. Where were doing some sports stuff together in europe were doing some traditional distributing for us a little bit here in the u. S. In a meaningful way in the uk. And its a little bit scary. Facebook and youtube and amazon are very Big Companies that have an opportunity for us to be real helpers and supporters, and Energy Generators right they also they also could be, if they decide to move in our direction, they could be great competitors. So, at least for now, theyre energizing the marketplace and making content more valuable im glad its you and ben i mean im listening, and i understand but you did say a couple of things that strike me, and that is, you guys havent figured out monetizing any of this yet youre hoping some day that it pace off but youve got to be there but we are monetizing it i know, but not like not like the great cable model that if you went back to the early 80s in cable you sure its going to work eventually and become absolutely. If not im going to maybe i can have a job working well that might happen. Thats the who knows no, no, no. This is were the amount of engagement, the amount of attention, the amount of audience that were generating, its inconceivable that there is not massive value thats placed against this by advertisers. And its about figuring out the productization and some changes that need to happen in the advertising ecosystem. But, inevitably, the amount of time thats being spent with these brands, and just the trust that these brands have and engagement these brands have with consumers its massively valuable and the money has to get there. I think you should still keep doing Michael Phelps type stuff with sharks and keep your channel. The channel is still doing i would stick with all that euro sport in terms of the consolidation taking place in the media landscape, obviously were looking at time warner and at t do you see a time where an at t, after they get a time warner they need to compete with verizon and so theyre looking for they become they start looking for exclusive content themselves, and then you become a provider to one or the other do you see a moment when that happens . So, weve seen this already in europe. And this is why we feel that there may be kind of a renaissance of growth. If you think our existing model where were quite profitable right with our traditional channels we own all of our content. Just in the last few years, the mobile players across europe are starting to become its a quad play this is where the big opportunity is and i think years undersold he is moment. For three years youll go to europe, and every the person will have their mobile, their broadband, their cable, and their hard phone from one provider and heres the problem when you stop someone and you say whos your provider in many cases theyre going to say, i dont know because its a pipe. Its just a pipe what each of those distributors wants now, whether its deutsche tell come or vodafone, and its going to happen here too the reason that randall did his deal they need to dekhod advertise the pipe and the only way to decommoditize that pipe is with great ip so the when is when Deutsche Telekom or vodafone needs Something Special they can come to us and say what do you have we can say we have the olympics, we have discovery, we have oprah and i think you know, we have all these sports in europe that is our bet. And thats why were long ip and you know in the long run, content i think is going to continue to win. And hopefully well have the right ip you know, not for nothing, there was a great white the size of a Station Wagon off the coast of North Carolina a couple of days ago so when is shark week again . Its on sunday night. How can you not make that appointment it is a point it is okay it is becky has the shark theres the shark do you know were cousins not by blood actually . We related. Wife pam and his wife pillar there you go its distant but theres a connection we are very connected are you jealous, joe . I am a little bit were connected by years and experience and the love. Okay. More than that. You know but its not blood its not blood thank you ben will be with us for the rest of the show and im being censored when we go to break im going to say it by whom . Becky move on Goldman Sachs just reporting 2. 95 versus estimate of 3. 39 revenue came in better than expected as well but the stock down we will have more on those numbers the stock is actually off its weakest point. Down at like 2. 26 when this first came out im not sure why its bounced back up. We will break down those numbers in a moment coming up the latest on the story of the morning the Senate Health care plan to repeal and replace the Nations Health care law is dead two more senators have come out against that bill. Last night the latest straight ahead. Check out the futures as we go to break 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. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Welcome back, everybody. Again we are here with ben lerer this morning he is the Group Nine Media ceo and managing partner at lerer ventures thats the most active seed stage tech investors in new york city and ben, lets talk about some of your other investments. Weve talked about plated. Yep what are the investments when you look you think, okay, these are really big deals this is maybe some of the best that we have out there one of my favorite companies, or one of the companies im closest with is a Company Called casper the Mattress Company . Who recently did a deal with target, so target made a large investment we had them on to talk about it great, great. Actually, i knew that. And what i think is particularly interesting about that deal is a trend that were seeing across ecommerce in general, which is over the last few years we got very excited about directtoConsumer Brands and invested in a bunch of them across a ton of different sectors and what weve started to see is, this sort of recognition that the traditional businesses actually have, like that foot print that they have, is really valuable and powerful, as well, so youre starting to see the old and new come together similar to what were talking about in media where youre seeing the old media and new media come together and casper is a really good example of sort of doing that well you know, some of the other Companies Just so people understand, youve invested in Companies Like oscar, which is the health care company. Warby parker which is the eyeglasses company two questions for you. First of all, what have you learned from your dad . In how you go about looking at investing and what do you think he may have learned from you well, i think what ive learned from him is, that none of this is as confusing as it seems. Hes very good at sort of cutting right through a lot of noise down to a core issue of and particularly in sort of early stage investing, really using your gut to make decisions around believing in a teams ability to execute and to pivot. And sort of something that he talks about is this idea of investing in the obvious so if something seems like its obviously going to work you dont have to necessarily question yourself and say what am i missing sometimes theres just obvious opportunities and you should lean in to those give us an example of something you think was obvious . I think casper is perfect casper was obvious in that the way that people buy mattresses was broken you go to sleepese and get on some weird mattress that wasnt obvious to me when i heard about casper originally i thought to myself even in the mattress world is broken, the idea that this mattress is going to get sent to me, im not going to be able to try it im going to try it out at home not the place but they take it back in yeah, but its not obvious. Thats why youre a tv personality and im an investor. Thank you thank you. This segment is over and you know, its nice to know you. All right actually, the reason i asked you about that is because we do have bens dad who is going to be joining us in just a little bit. Ken lerer will be here as well ben, stay with us. Thank you soming up when we return, ben will be gone and stocks to watch at the top of the hour, more on the gop Health Care Plan failing again that bill now looks to be dead were going to get the latest for what it means to insurers in just a bit maybe talk about oscar, too. Youre a tv personality and then its a special father son interview, ken lerer will be here, managing director of Lerer Hippeau is going to talk media without his son we recently had a heart attack. But we are not victims. We are survivors. We are survivors. We are survivors. And now we take brilinta. For people whove been hospitalized for a heart attack. We take brilinta with a baby aspirin. No more than one hundred milligrams. As it affects how well brilinta works. Brilinta helps keep platelets from sticking together and forming a clot. In a Clinical Study brilinta worked better than plavix®. Brilinta reduced the chance of another heart attack. Or dying from one. Dont stop taking brilinta without talking to your doctor,. Since stopping it too soon increases your risk of clots in your stent,. Heart attack, stroke, and even death. Brilinta may cause bruising or bleeding more easily,. Or serious, sometimes fatal bleeding. Dont take brilinta if you have bleeding, like stomach ulcers,. A history of bleeding in the brain, or severe liver problems. Slow heart rhythm has been reported. Tell your doctor about bleeding,. New or unexpected shortness of breath, any planned surgery, and all medicines you take. If you recently had a heart attack, ask your doctor about brilinta. My heart is worth brilinta. If you cant afford your medication, astrazeneca. May be able to help. Still to come this morning a rundown of this mornings big Earnings Reports including bank of america, Goldman Sachs and harleydavidson. Check out the futures. We have some dow components that have reported better than exp t expected numbers and yet the futures still sinking a bit this morning. Dow is now up only by about 3 points s p futures up fractionally. The nasdaq up by 8. 5 stick around squawk box will be right back. The babys room wont build itself. And her paw wont heal on its own. Were all working forward to something. Synchrony financial can help your customers make it happen sooner. So she can plug into her dreams. And theyll have a new addition for their new addition. Whatever youre working forward to, even if its chasing squirrels, Synchrony Financial can help you get there. Even if its chasing squirrels, 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. Earnings alert a parade of Quarterly Results this morning, including numbers from three dow components. We have the Market Reaction straight ahead streaming higher netflix shared sores on alltime High Subscriber growth crushes estimates. Plus the farm of the future. Well introduce you to a startup hoping to disrupt the way we bring food to the table the final hour of squawk box begins right now live from the most powerful city in the world, new york, this is squawk box. Welcome back 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 the futures right now are up just five. Weve had how many dow components john we had a lot United Health care, Goldman Sachs and Johnson Johnson. Goldman sachs has been the weak link they beat earnings on both the top and bottom line for some reason the stock is trading down a little bit morning treasury yields quickly were going to talk banks and obviously that pertains to treasury yields in just a second 2. 29 on the 10year. Making headlines, gop leaders in the senate have pulled their Health Care Reform bill after two more republicans came out against the legislation. Majority leader Mitch Mcconnell says the senate will soon vote on a clean repeal of obamacare phasing it out over two years, with no immediate replacement. See what happens in earnings news dow component United Health reporting better than expected quarterly profits and offering upbeat guidance the insurer says its seen strong growth from new businesses and what it calls exceptional customer retention that was up more earlier kind of flat right now the futures were up more with that and fellow dow component j j beat the street on the bottom line and raising the full year earnings outlook stronger demand for newer product. Weve also heard from two banks this morning bank of america and Goldman Sachs. Wilfred frost joins us with the highlights on this and again, wilf, Goldman Sachs beating expectations but i guess there are some news on trading revenues that maybe is throwing people off this morning . Absolutely right, becky so the head line numbers for Goldman Sachs, 3. 95 eps forecast for 3. 39 when you look at where that beat comes from in one sense fairly impressive because its pretty consistent small beats across each line of the business. Now, even includes a small beat on Institutional Client Services otherwise known as sales and trading. That was 3 billion, versus expectation of 2. 9 billion. But that overall performance, the equity performance very strong, flattering what was another shocking set of numbers in fic, fixed income currencies and commodities. Down 40 year on year. Now last quarter the stock reacted negatively because of a bad performance in this business they hit 1. 7 billion last quarter. Analysts have already forecast the possibility not just of a yearonyear decline like everyone else but the possibility of a quarteronquarter decline that was already priced in and could go lower than 1. 7. Theyve hit 1. 16 billion for fixed income currencies and commoditie commodities. Why is this so worrying . Goldman sachs traditionally have stood out from the rest of the pack in two key areas over the last two decades, ficc and Investment Banking and this ficc two quarters in a row of very poor performance just very quickly overall trading taking into account equities and fixed income, theyre down 18 yearonyear. Citi was down 7, bank of america down 9, jpmorgan down 15 . The ficc is so bad that they still stand out as the worst yearonyear in terms of overall trading. Overall the other skters all did beat investment management, small beat Investment Banking small beat. The story of the other small beat was investment in lending as i said, a small beat for that but that continues to show a trend of very strong growth 1. 58 billion in terms of revenue of that segment up 42 yearonyear they really are trying to transition the business away from their traditional strengths having to do a bit more lending and stuff and basically that transition hasnt been complete yet and its showing up in that poor ficc performance. Fixed income commodities and currencys. Okay, thank you for that. Joining us right now to help us break down those numbers and what to make of it all chairman of whaling Global Advisers whats your takeaway more of the same, andrew. Loans are up, good right the ficc is no surprise the fixed income because we peaked last year. We kind of bull market on fixed income for years and then the rest of it, remember these banks are fully valued to see it on the trading loft when they kind have of have small beats on earnings and revenue is not a surprise. Bank of america have a single digit equity return right now. They want to go up to where wells is which is 1. 5 they have to get their equity returns up in low teens its the same story with Goldman Sachs. Thats where it belongs these stocks have been goog side wyes since february. Among the big guys is there one you like better than the rest of the top four yeah. The best of all of them is u. S. Bank. Its over two times book and its because of the financial performance. Wells is 1. 6 is that you know these are commodities. You get a dividend you take a nap. Thats really what this is about. Very little alpha in these stocks right now you can see the operations you can see the marnens on Interest Rates you can see the lending growth which is all they have doddfrank took the principle activities away from the banks how much of it is the volatility in the market very much its been flat you look at goldman who traditionally had made money on volatility quarter after quarter and theyve been struggling and its not a surprise. And bank of america, meanwhile, theyre doing pretty well on the Investment Banking side. You know, slowly but surely theyre getting that bank back to where its supposed to be, which is the least jamie dimons quote unquote rant last week was that about whats going on in washington in terms of the economy . Was that about the banks all of it the banks are supposed to get a nice bump after trump and the republicans did what theyre supposed to do and theyve wasted half a year weve got nothing done even the small banks, which is a lamp you would have thought they would have passed that by now. You heard those comments. You thought to yourself, this is great. Go jamie did you think it was counterproductive . What was your im waiting for the president ial bit i mean, jamie dimon is a competent, reasonable human being. I wish we had somebody like that in our National Political life you think hes really going to run i think hes not the last time somebody from wall street tried to run for president , i think it was jpmorgans lawyer. It was like a century ago. It didnt work youre a former fed guy what do you think of the idea of gary cohn going from being a banker talking about being a banker into washington the rule of thumb is, to be fed chairman you have to go through the white house. You know, my dad was counsil yair for Alan Greenspan so thats how it works. If you see cohn go to the fed to me thats an escape path for him and that means that goldman has given up on the Trump Administration but would that be good for the fed . I think the fed needs to have more noneconomists in its leadership im one of those who believes that theres nothing wrong with having bankers, people from industry, on the fed board we have been dominated by academic economists and theyve gotten it wrong. Low Interest Rates, quantitative easing are deflationary. So of course we havent hit our inflation targets. But nobody at the fed understands that they sit there wringing their hands about selling their mortgage securities. Were down 30 on volume in the Fannie Freddie market this year. You could sell it all andrew and nothing would happen in fact im tell calling for the 10year to go back to two, okay . So rates arent going up and its because the leadership of the fed doesnt understand that the playbook has changed. Markets change the demographics of our country have changed so the behavior has changed. But they dont get that. Dont you think the politics of the moment is that President Trump doesnt want this to go up either no, of course he doesnt. He wants growth. All politicians want growth. But the question is, how do you get it i think we have to realize that the old consumption based model, the neo keynesian model of 100 years ago really has pretty much run its course. We have to invest. We have to do other things to get growth you know, i was out with Paul Mcculley last week out in wyoming hearing his spiel about how we need more deficit spending no thats probably going to hurt we have to come up with a different playbook christopher whalen, thank you. Thank you great to see you. That demo change plays into this baby boomers babyboomers love harleys and theyre getting older theyre not riding as many wait until you see this. Shares of harleydavidson are really down sharply this morning. The motorcycle makers earnings beat the street but its shipment guidance is weak, and joining us now robin farley, analyst at ubs. Is that too simplistic to talk about, would you say, robin, that baby boomer demographics are getting a little bit older they went from they delivered 262, 221 last year, 262,000 and they had said flat to down full year this year and now theyre saying 241 to 246. Thats not flat to down. Thats actually down right . Oh, yes, this is a much worse quarter than anyone expected they shipped within what they guided what matters was what they sold to people. That was down 9 mrs in the u. S this is the big spring selling season this is the quarter that matters most and they had a new engine which only happens every couple years with motorcycles that should have driven some core riders to replace their bikes, and the fact that sales came in down 9 this quarter, you know, the issue here is worse than just what it means for 2017 longerterm problems clearly flagging people point out that, i mean, there had never how long is the indian brand been back with polaris because some people buy those instead or maybe they just go for a honda or Something Like that but is competition worse than it was five, ten years ago for big bikes like this . Competition is worse. Youve had a couple years with the indian brand relaunch and thats like a clear shot at harley with that sort of American Vintage brand butharley is losing more sales than indian is getting, right . So theres an issue beyond just indian taking sales from harley. And it goes back to what you said, which is that baby boomer at a certain point theyre not buying bikes at the same rate that they used to. So longterm, do you see any other demographic groups returning to you never say never, i guess and they are harleys a great brand name i mean once all the baby boomers are dead, does the company just shut down . Or what happens . Well you know, it is a fantastic brand. But harleys been trying for years to go after younger riders you can go back ten years and look at them introducing different bikes, trying different performance brands that never took off, were never successful, more recently theyve introduced the street models which are sort of less expensive lighter weight bikes but clearly, not enough to be adding here to the overall picture. And the fact that they introduce a new engine last year and couldnt even get positive retail sales on that, because thats really going back to the well of your core customer, and if theyre not buying a new engine, then the outlook beyond 2017 robin, is there any chance ever of like a tesla type motorcycle i mean, you know, maybe millennials wont buy anything with an internal Combustion Engine im not sure. Im not sure if harleys sales declines are really tied to an objection to using fossil fuels. Harleys talked about could be in ten years, though it could be down and i dont want a selfdriving motorcycle, either no, of course the trends in cars, right . Harley is working on an electric engine but im not sure that thats, first of all, going to be something that it would offset the kinds of declines were seeing here. Well i dont know whats your rating we have a neutral rating. But i think its fair to say that the retail Sales Results in this quarter are worse than even what we expected and we did not have a particularly positive view going into the quarter. All right and they do sell i mean they sell the side car bike thats what were going to andrew, right, the side car . The side car or am i the side car . Its always me because im older in the side car do you wear the goggles anyway, robin, i dont know it doesnt sound it just you know, nothing real positive here for harley fans but we appreciate your time, thanks thank you her name is robin batman and robin . Thats the way i was viewing it you want to drive . You told me you dont you know, down one, five up, you know how to ride a motorcycle with a clutch . No. What youve got to be in the side carr the clutch . Why do i need doesnt it have an automatic for me . Thats a bad question thats why youre in the side car. Thats why youre in the side car. Doesnt exist, thats not a thing thats real. Really . Youre in the side car . I have a motorcycle license i do ive never ridden a motorcycle other than when i got my license. Why did you get it it was a bad decision how about a moped it was nice to have it in case i needed to get away at some point if youre out if you werent in new york city, like in boulder, if youre in boulder, nice to have a bike around here, a little congested. What about like a vespa vespa for bermuda yeah, but is that automatic crazy drivers vespa is automatic. Theres no clutch. Vespa is cool, right . Sort of . Cool enough . Ive lost a lot of bredibility. I would stop. I would stop talk about politician back to washington, and todays top political story, gop leaders pulling the senate Health Care Bill Kayla Tausche joins us right now with the details, and a look at what is next kayla, good morning. Good morning, becky theyre still trying to figure out whats next. If that Health Care Bill was on life support before its officially dead now as two more republican senators say they cant support it that makes matters more difficult for negotiating any compromise senator jerry moran of kansas and senator mike lee of utah said they opposed the bill for very Different Reasons in a statement moran calling it a bod policy saying we should not put our stamp of approval on it we must start now fresh with an open legislative process to develop Innovative Solution that provide greater personal choice, protections for preexisting conditions, increased access, and lower overall costs for kansans. Lee says it doesnt go far enough in lowering premiums for middle class families. So you can see that these two senators are on very different sides of this afrg umt the white house has previously said it was more focused on getting the bill passed than doing so on a specific time line the president last night tweeting that republicans should just repeal failing obamacare, work on a new Health Care Plan that will start from a clean slate. He says democrats will join in, and perhaps replace it within two years. But the spectrum of republican positions makes that a very difficult sell then this morning the president tweeting again that they should just let obamacare fail and then come together and do a great Health Care Plan that is an issue, because Insurance Companies will want to make sure that these exchanges are stabilized in the meantime, and thats something that even majority leader mcconnell has said hes committed to taking up and discussing so well see exactly where this debate goes, but its unclear whether now the senate and the white house are aligned on which direction they think that should be andrew okay. Kayla tausche, great to see you. Ive actually been havent seen her but ive been on. She has great instagram account. Coming up, our guest its weird like youre looking through somebody elses reality. Our guest host ben lerer is joined by an investor he knows pretty well, his father. The dynamic duo talk all things tech right here on cnbc. For your heart. Your joints. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Welcome back to squawk box everybody. Many of new yorks most promising startups are backed by the dynamic father and son lerer duo. We are son set today with both of them. Ken lerer is managing partner of elevener hippo ventures. Hes chairman of buzzfeed along with a lot of other titles thank you very much for being here thank you so weve been talking with them through the morning, been hearing his thoughts on what makes sense to invest in, why, what your strategy is. Lets hear it from you when you start looking around, you have over 300 companies that you guys have funded, what is the basic investing guideline that you use as principle . Well, so you have to like and trust the person youre investing with because youre in business with them, and if you dont trust them, and doesnt make sense even if its a great idea. Timing is incredibly important if its too early youll lose all your money if its too late, its too expensive to get into. So timing is critical. At least for me, i think you need to invest in something you understand if you dont understand it, there are other investments, take a pass. Those are three good things. Lets talk about timing have you learned lessons in terms of being too early or too late both. We started a Company Called now this, which is a very successful company. Now, in fact, part of group nine and we started it too early. Discovery its group nine with the doddo and journalist and seeker anyway we started too early we saw that video was going to be tomorrow, but it was too tomorrows away so it took us two years to get it going, and luckily we raised enough money to keep it going. And now it corrected but that was too early. What was too late i dont know what was too late were generally going to be too early, sort of just based on the principle of the fund, and the way that were thinking about investing in technology and emerging markets so were usually too early if theres a mistake to be made if theres a mistake to be made thats been the theme. We invested in a Ride Sharing Company that was too late. Thats fair it was after uber and lyft . Which one was that . It was after everything lets talk about one of your successful exits moat is a company that you all invested in. I dont know what you did but you sold it for 800 million well, we didnt sell it, but it was sold. But benjamin can talk about mote better than i can. It is an Ad Tech Company helping with dim tal measurement for advertisers as theyre spending money on engagement around the advertising that theyre doing. But what i think is particularly interesting about mote is actually that some founded a new York Technology company just sold to oracle for 850 million two to three years ago all the news would be new york producing a billion dollar debt startup, blue apron is another example, i just think its interesting how far new york has come if you actually just think about like this market as a tech market in terms of competing with Silicon Valley yeah. Look we dont have our facebook or our google yet but the idea that there are companies that are 850 Million Dollar sales coming out of new york in the tech space and no one talks about it being a new york company, or that people want to go and sort of poohpooh the blue apron deal. Three years ago everyone would just be celebrating that new york had a multibillion dollar tech ipo its not news anymore its not news anymore i think it speaks to the evolution of new york and actually thats the thesis for our fund has always been new york centric, and so, i think its been really interesting to watch over the last seven years as weve been investing just this market. How does it change the mix of companies . Historically youve always been involved in digital Media Companies in large part. When my background is media, and i think most people think our fund is mostly media, in it fact, its not okay. Although the high visibility companies, the Consumer Brands and Media Companies, theres a lot of ecommerce, a lot of tech, but were known for media investments. Has it shifted in terms of whats going on in new york, the kinds of companies it started with media, obviously. It started with media, and its so i think 75 or 80 of our investments are in new york. But the company that we invested out west is because the out west investors say you need a new york partner because of media because of publishing. Because of advertising and that makes a whole lot of sense. So, its still media centric, but theres a lot more going on in that. Go ahead. I was going to ask a media question, which is, is google and facebook trend or foe of your digital Media Companies given that the newspaper industry is now going after them, effectively trying to form a consortium, to suggest that google and facebook have too much nower yeah i think theyre both friend and friend and will continue to be friend and friend and i think youll see the advertising model change significantly over the next couple of years, and theyll even be friendlier and friendlier and i expect that they will buy content companies so the newspaper industry theyre not wrong good luck. How do you see the advertising relationship changing i think they i think facebook, google, snapchat, realize that in order for them to grow, and be friends, theyre going to need to be more open, theyre going to need to share theyre going to need to go into a tv more tv relationship i dont think its going to be like an affiliate cable deal i dont think well get to that. But i think youll see the doors swinging wide open very quickly. In terms of looking ahead if you guys are usually early on a trend, whats one of the trends that you see coming down the road well, youre going to see a lot of m a activity and a lot of consolidation the next couple of years within media and digital why because its time because digital need because the traditional model, the traditional video model now is being disrupted like the traditional print model was disrupted ten years ago. Thats never going back. Todays consumer is cutting cords. How they consume media is changing significantly it sounds stupid and obvious but digital is the future. And if youre david zaslav or if youre steve burke or if youre the head of any media company, you have to figure out what your Digital Strategy is. Interestingly, the ceos who are thinking about that are 55 years old, or 57 years old, but the guys and women who are 65 or 70 are saying well the next person can figure out that. I dont worry about that but the younger ceos, they have to figure out that transition. And they are the ones who are going to be around the next decade or two or longer yeah. Is the holy grail of advertising only giving ads to people that are interested in what youre selling . Customizing the advertising to the person from the personal history you get from all the Digital Information . That seems like if you want to expand who you sell to, you dont want to just sell to people that you know are right . I would say thats not the holy grail but thats part of it yeah i mean i think its art and science. Theres going to be much more personalization in advertising but theres still great story a rhtg and great work ken, thank you so much for joining us and thank you for letting ben be with us. June import prices hitting the wire export prices, too import prices down 0. 2 but that was expected last month down 0. 3. Shade 0. 2 its only down 0. 1 if you look at expect role yum which is a good way to go, its up 0. 1 that alone gives you some includes we look at export prices down 0. 2. Now thats one youd like to see do a little better were expecting unchanged. Last month also shaved 0. 2 from minus 0. 7 to minus 0. 5 year over year you ask on import prices was up 1. 5. Much more than expected. But that follows a slightly upward revised up 2. 3. That gives you the context and in terms of export price year over year they were up 0. 6 half, less than half of the 1. 5 on our last look were under 230. 227 is where we settled in 2015 keep an eye on that. The big story today, either the dollar index or the euro kind of the same thing dollar index down a half a cent and the Euro Currency 1. 15. 5 as it marches on andrew back to you. Thank you for that, rick. Good to see you. We also have some washington stories to tell you about this morning. Senate gop leaders have pulled their Health Care Reform bill after two republicans came out against the latest legislation Majority Leader Mitch Mcconnell says the senate will soon vote just to repeal obamacare phasing it out over two years with no immediate replacement. Nbc news reporting senator mike lee will vote yes on the motion to proceed we had announced the senator jerry moran would vote no on the motion to proceed on the current version of that bill which effectively killed that version last night republicans will still need 50 votes to even move on to the bill and get to the vote to repeal that bill also the House Budget Committee unveiling a spending proposal today that calls for 621 billion in defense spending in the next fiscal year including money for a border wall thats on the list, the proposal also outlining a significant reshaping of social welfare programs such as medicare and food stamps the Committee Says the plan will result in a 9 billion surplus after a decade and also getting some new details on how the white house is plans to renegotiate nafta. The president s top trade representative says reducing trade deficits with canada and mexico is a top priority formal negotiations to rewrite nafta are said to begin in about a month. The ways and means trade subcommittee will hold a hearing today to talk about the modernization of nafta joining us now congressman david riker, chairman of the ways and means trade subcommittee, and congressman its good to see you. Get to trade in just a second. But i reference the house, and its saga, with Obamacare Repeal is like trying to read war and peace and i dont even know what we just saw now in the senate. Any comments on this and where it goes from here . I guess i would describe the situation much like you already have i feel like weve been on a roller coaster ride here so im going to patiently wait and see the final bill that comes out of the senate before i make any decisions on how i vote. You have optimism that we go, or that you gentlemen now move straight to tax reform, and that that might have a better outcome . Or what is a casual observer to think of the way congress is working these days well, you know, tax reform and health care together, well separately, are massive undertakings as youve seen. But together even more massive and complicated. So, my hope is after being on the ways and Means Committee almost nine years and working on tax reform, almost the entirety of that time, that we can move something forward here before the end of the year. And thats been our plan from the beginning of this year it is kind of interesting that you guys see this, just getting this from were hearing that mike lee is now a yes on the motion to proceed yep latest thing. The clean repeal . The clean repeal. So that i dont know what that means, congressman. Thats what i wonder. I wonder if they could actually its just, you know, for war and peace this was like the epilogue i mean i dont even know how to describe it. Anyway, so you got something easy to do all you got to do is renegotiate nafta. Correct and just figure out the right way to do that how do we do that . Well, you know, i think the administration has some lofty goals in their effort here to renegotiate. But i think its the right thing to do. Its been over 20 years since nafta was negotiated, and as we all know, look back to 994, we can see the changes in technology, and we didnt have iphones, we didnt have ecommerce, so there are things that we need to look to to improve. So today were going to hear from some witnesses that cover the gamut of our economy, from agriculture to small business, to financial services, and hear from them how the nafta trade agreements been a positive in the years passed and helped our economy grow and how we can work to change things to make it even better not everything is a zero sum game is it possible to make this better for us, and where mexico goes you know there are a lot of things here that could be better for us, as well. Could it come out that way, do you think . Or is it always going to be a loser in these things . Well, you know, the goal here always is to have a fair trade agreement and especially recognizing that we have the interests of the American People and the American Worker number one. But if you look back at the current nafta agreement thats in place, its been very beneficial i come from the state of washington so if you look at the reduction of tariffs in mexico, of 20 , on apples and pears just as an example, our exports have increased by 70 as a result of their reduction in tariffs so, there are other things that we can do, for example, taking a look at the processes now that are used at the border crossings. If we update those, and automate those i think that we can protect American Consumers from products that are not healthy. But we can also speed up the process on exports so i think theres a lot of things that we can do, where all three countries will benefit my opinion is that if all of north America Succeeds in strengthening our economy, america will succeed what do you think are the top three things that President Trump is going to ask for . Well, i think hes definitely going to look at the trade deficit, look at ways to reduce the deficit. I think we need to focus on how we can increase trade, how we can i think that the second thing that hes going to look at, for example, in canada, we have an issue with dairy were going to hear from a company from Washington State today, dairy gold, on how they have benefited in trade, but how we can change the dairy practices in canada to benefit us and then well hear again, i think, whether the other focuses for the administration will be again as i said, in looking at how we can improve the process in crossing the border with our products, both importing and exporting at the mexican border. Yep sheriff for the year, first sheriff ever elected to congress, werent you . Well, i was one of the few elected to congress. But the first elected sheriff in king county from seattle you ever feel like rounding some of your colleagues up and just hauling them off . If i were you, i would i got my eye on a couple of them, just handcuff and just get them the hell out of there you ever think about that . No, ive thought about that you know, i was a s. W. A. T. Commander and also a hostage negotiator, so both of those come in handy. All those things are happening in washington nowadays congressman, thanks for your time today go ahead congressman before you go, one important trade question its not a nafta question. But we have ben lerer, a digital guy here, and for all the conversation were having about nafta, and we talk about steel, and all of these things, we havent had any real conversation over whats going on with the big Silicon Valley companies in europe. And im thinking of google, obviously and apple. Why are we in terms of the u. S. Government and the administration not spending time on that . Well, we are spending time on that but its, you know, not one of those topics that rises to the level of daily news. But its a part of not only the nafta renegotiations, but its also been a part of the tpp discussions, it will be a part of the ttip which is the European Union agreement that weve been working on tsia is the high tech agreement that weve been working on. So it is a part of the conversation, it has to be and i watched your show a little bit earlier this morning and was interested in the Technology Discussion around how different platforms operate and how our media will change oaf the next few years. So that has to be a part of our discussion when we look at trade. Because the world is changing so much congressman, again, thanks. We appreciate it your state, by the way, number one. Number one for business this year from cnbc number one in traffic worst traffic, too, i think. All right and grunge rock. And grunge rock, yeah got that going for you. All right. And im happy with drinking my starbucks coming up, the pharma of the future were going to introduce you to a startup hoping to disrupt the way food is grown. First as we head to a break check out the price of oil this morning. Stay tuned youre watching squawk box right he cc. Eronnb e trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at td ameritrade. And its also a story mail aabout people and while we make more ecommerce deliveries to homes than anyone else in the country, we never forget. That your business is our business the United States postal service. Priority you good morning, everybody. Welcome back to squawk box here on cnbc we are live from the nasdaq marketsite in times square crude oil is trading near session highs right now. This comes after reports that saudi arabia is considering a further 1 million barrel per day cut in crude exports, as a result wti is up almost 1. 5 to 46. 68. The xle which is the Energy Select sector looks like its up 0. 4 an interesting story this morning on the power of Innovation Digital farming has begun to take root, if you will, with Companies Creating Technology Systems to build the best produce year round right now is irving fane the founder and ceo of bowery, an Agriculture Company farming for the future good morning thanks. What does this mean explain . Bowery is the modern forming company and we build large scale commercial farms right we grow completely indoors in a controlled environment vertically stacked so first of all that means we can grow 365 days of the year. Totally independent of weather and seasonality. But, we grow pesticide free, agra chemical free food. Over 100 times more productive than that same Square Footage of farmland and we save 95 of the water when we grow who are you selling to . Wholesalers retailers like whole foods in the tristate area. Other stores here in new york and some restaurants as well how many farms or should i call them facilities theyre farms were growing food so theyre very much farms how many do you have . We have one farm now and were at work on our next farm here in the tristate area as well is this something thats possible only because so many people are looking for locally sourced organic food these days . Thats something buyers are willing to pay a premium for whats great about this is the product itself is actually priced at or below the cost of similar field products really . When you say similar field organic products. So youre already getting a better product at a price thats at or cheaper than what organics are coming from the field. And because our farms are right close to the point of consumption in the cities, the time between harvest and consumption for ow bowery products is about a day whereas a traditional farm is two to three weeks. Just to get things from wherever they are back to one of the Biggest Challenges with this has always been the cost of electricity for lighting yes so how have you solved that this is actually what is exciting for us and one of the things that makes this business possible is, about six or seven years ago that the cost structure around l. E. D. Lighting completely changed so you saw the cost of l. E. D. Fixtures drop by over 85 . And at the same time the efficiency of the fixtures more than double. So for years, research labs, universities, nasa, the government, theyve been using lights to grow food and other things indoors, it just didnt make any economic sense. Just recently, that changed. So you can now build a profitable business. You look at five years, how many of these forms do you want to build how close to cities can you get . So, we can be as close to a city as we really want to be ultimately, it doesnt make sense to be right over here in times square necessarily you can be ten miles away, 20 miles away, and youre still much, much closer than most forms ultimately are our view is to see our farms in as many cities around the country and around the world as possible because ultimately the problem of how do you provide fresh food to urban environments, and how do you do it more efficiently and sustainably is one that not only exists in this country but around the world you differentiate yourself, the reason i ask is there are others that are doing what youre doing yep so we have a really large focus both on automation, Robotic Technology in the forms, as well as on the software side. So, we built what we called the bowery operating system. And it is the brains of our farm its taking in millions of points of data we have a Computer Vision system with Machine Learning algorithms that can look at plants and understand whats happening with these plants, analyze all this data in realtime how many employ east do you have relative to what a traditional farm might have . We can be much more efficient than a traditional farm because a lot of what were doing can be done through automation, can be done through the software itself and when we we also are running our farms, year round consistently so a farm may stack up really quickly around harvest time and shut back down again we have a consistent base of employees which are always there. Our farms always run hmm one of my favorite companies. One of our best portfolio companies, i think we probably invested a year and a half ago yep have you looked at others like this . Because there are weve looked at other things in the coming back from the thesis of investing in people. And operators. And when we invested it was an idea, and he had been he had this thesis but there was not a farm and to see what hes accomplished in a very short period of time is pretty astounding, and again, sort of reinforces why we make investment in some people. Whole foods, amazon, good or bad . Great thing shortterm, longterm its good in the shortterm its good in the longterm its good for us its good for grocery over all ultimately and good for the consumer as well thanks for coming in. Absolutely. Thanks for having me when we return, jim cramer will join us live from the new york stock exchange. Futures right now, down 32 on the dow. Down 3 on the s p. A little over 2 on the nasdaq. Stay tuned youre watching squawk box on cnbc hey dad, come meet the new guy. The new guy . What new guy . I hired some help. He really knows his wine. This is the new guy . Hello, my name is watson. You know wine, huh . I know that you should check vineyard block 12. Block 12 . My analysis of satellite imagery shows it would benefit from decreased irrigation. I was wondering about that. Easy boy. Nice doggy. What do you think . Not bad. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Lets get down to the new york stock exchange. Jim cramer joins us now. Its the kind of day jim waits for. If you had to talk netflix, goldman, bank america, United Health or j j, which one either sticks out or are you most fired up about . Look, netflix is, obviously, the story of a company about what to fill the internet with so it can dominate worldwide its a terrific story. But im going to take j j. You know, the stock was up three. Then it comes in and slowly, but surely goes down then you have to buy it. Thats what it has done time and time again i think thats your opportunity. I also think bank of america, a crank out a good quarter didnt understand why that was down really, really good. United health was fabulous goldman, no one expected a blowout. Netflix, very exciting jnj. Once again, alex gorsky, fabulous quarter. Wellsee where we head from here, jim. Been a lot of cross currents earlier. Right. Then youve got the political backdrop and Everything Else that seems like and we can compartmentalize it now. It doesnt seem to be youre dead right youre just dead right United Health is a great play on them doing nothing the more they do nothing the more it goes up. Right people are getting every once in a while i mention drugs because i watch huff iington po. You saw drudges most recent headline, donothing congress in 146 years is the latest headline there. Anyway, jim, i dont know. Good stuff. Our company is doing so well i celebrate them bank of america, what a great quarter. Jim, thanks see you in a couple of minutes tomorrow on squawk box, earnings season taking off again, United Airlines Ceo Oscar Munoz joins us tomorrow at 8 00 eastern. Squawk box will be right back. The futures this morning oh what is that today thank you, guys thank you very much. What . Yes. Bingo. Happy birthday. Are we going to sing no, thats enough lets move on. Our guest host today is happy birthday to you thank you that was the short version. Lets continue. I have some questions i want to ask ben leer. Thank you, gentlemen ceo and managing partner ben, we talked a lot about the companies you invest in today. You make money by the exit strategy, either through an ipo or acquisition of some sort. How do each of those exit venues look right now in terms of healthiness . Selling strategics looks healthier as my dad mengtioned, we both believe were entering a moment where consolidation is going to happen whether thats in retail, media i think that sort of the old and new worlds are coming together in a bunch of Different Industries and so i think theres going to be a bunch of activity going on there, which is exciting. From an ipo perspective, there is like the markets are open you know, companies are coming out. Generally speaking, thats not what were sort of banking on. We have, you know, a handful of Companies Like casper and buzz feed that i think are publicly on that track and building in that direction for the most part, thats further down the road and companies are focused on growth and strategics. The sector, as you mentioned, for places where theres a headlighty appetite for acquisitions, traditional media, places where theyre feeling under siege right now. Absolutely. Theres a real structural change in their business and they need to find a way to get into it. Yep i think in most of these situations their traditional businesses are not bad theyre still massively profitable, ton of Free Cash Flow as they look forward five, ten, 15 years, they can see that the Business Model is truncated in some way and theyre trying not to get caught with their pants down. Thats sort of desperation, especially for ceos. Hear me out. I know youre probably going to have an answer for that. But thats sort of desperation for a ceo who is planning to stick around for a decade or two in his industry. Maybe he needs a quick way into this, doesnt have the patience to wait for something. Every time theres a deal like that, people speculate, did they overpay . What do you say back to that i think it depends and the structure also matters a lot so, overpaying versus how much of that money is tied up in future performance, things like that. In terms of buying a stake instead of buying something outright some of the deals being done by venture capitalists and big va valuations get printed generally speaking these deals end up getting done at prices that are probably pretty fair on both sides i think rarely do we see a company in our portfolio go and sell where we think they just sort of hit the lotto and rarely do we see companies that we think are getting stolen they trade at fagenerally fair value. If the price comes down, you just buy more on the open market. Right. Is that something you think about . The again, its dependent on the situation. Sometimes it will be an acquisition that you like they have some capability or some skill that you want to bring into your core business. Sometimes its going to be a business that you actually want to continue to operate as a separate unit. Ben, thanks so much. Benjamin. Benjamin. Thank you, sir. Im exhausted happy birthday, becky. Didnt know. Feel horrible. Make sure you join us tomorrow it will be 364 days until beckys next birthday. Squawk on the street is next good Tuesday Morning welcome to squawk on the street. Im Carl Quintanilla with jim cr
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