Transcripts For CNBC Squawk Box 20170725

Pretty much across the board. Theyre doing particularly well, we should say, in spain, and finally, if you are buying wti crude by the barrel this morning, the price tag is going to cost you 46. 84 its 600 million for the right shoe, and 600 million for the left shoe. Have you ever bought these things how much do those cost, and my wife says 400 i say thats not bad per shoe i was going to say, that is a mass i sale at 400. This 1. 2 billion is really drars 600 million for one shoe and 600 million for the right one they are pretty cool. I mean, i dont theyre beautiful shoes. I dont want to think about them as a do you know about rent the runway no. Can you rent shoes . Thats a good idea. These things are so expensive, right, and then we have two german shepherds, which doesnt help, obviously. Are the dogs being walked in the no, you leave your shoes around i thought that 1. 2. Its a great name. It is. Very high. It can help michael kors. A lot of respect in my house. I have them in my bag you do . Are they jimmy choos . They have to be jimmy choos i dont own a pair. You . Not yet never say never exactly they dont make anything for us, do they . I dont think so. Maybe they do depends what you like they may all right. Japans soft bank has approached uber about taking a multibillion dollar steak in the company. According to the wall street journal the report say the talks were film, and any deal would likely need to wait for uber to hire a new ceo the uber report comes less than a day after soft bank teamed up to invest 2 billion into sing more Ride Sharing Company grab shares of softbank higher about. 75 on todays wall street agenda, the earnings reports are starting to come fast and furious. 3m, ka the pillary, eli lily, General Motors, mcdonalds, United Technologies are all out before the opening bell today. After the close, well hear from amgen, texas instruments, chipolte and u. S. Steel. Theres a pair of economic reports this morning the s p kay shiler home price index and july Consumer Confidence plus, the fed, of course, begins a twoday policy meeting the decision is due tomorrow at 2 00 eastern time. Theres earnings per share from continuing 7. Adjusted earnings per share is 1. 38. That is 9 cents above the estimate of 1. 29. Dupont Second Quarter sales 7. 4 billion. Thats above the 7. 292 billion that was expected. Still expecting a close. The merger with dow chemical by august the stock is basically not doing much on this news. I think this means something. Well see whether kayla thinks it means something john mccain returning to work today just in time for a Key Health Care vote kayla joins us now with more Huffington Post is shaking in its boots this morning saying that the indication mccain is coming back means that this might not be dead and mcconnell might have the votes the conventional wisdom, joe, would be that he wouldnt in the state that he is in right now after his diagnosis last week wouldnt be coming all the way back from arizona for a vote that would fail. It is worth noting that the statement his office gave yesterday, it gets more real estate to the defense and sanctions votes that he will be participating in as well it is true that his presence back in washington could end up being a galvanizing force for health care where several republicans are still at this stage noncommitmental. Senate leadership saying those concerns can be dealt with after the vote passes to proceed it means voting to proceed that will occur tomorrow so far senator Susan Collins is the only republican who is an outright no, but there are a half dozen more who are undecided saying they dont know what theyre voting for. While the finished product is unclear, the starting point will be the house bill from back in may. Then the senate will have 20 hours to debate and make their changes. A statement out yesterday from the Trump Administration saying its strongly encourages all senators to support it. This, an official word after the president used his bully pulpit to do so we as a party must fulfill that solemn promise to the voters of this country to repeal and replace. What theyve been saying for the last seven years but so far Senate Republicans have not done their job in ending the obama care nightmare. So far we still have a 12 45 lunch on the calendar for all Senate Republicans that happens nearly every day in the middle of the week when theyre in session President Trump four minutes ago, kayla thats on top of my twitter feed, and heres what he said. Eye cranian efforts to sabotage the Trump Campaign quietly working to boost clinton where is the investigation, a. G. There we go again with throwing down some shade on our buddy Jeff Sessions. It is curious that he chooses to do this in a public way, joe. I would imagine that he knows how to reach the attorney general directly if he had concerns about something that he believed are they talking . Apparently he went to the white house yesterday. He was at the west wing yesterday. Sarah sanders confirmed that general sessions was at the white house. He did not meet with the president. They are looking at their office and seeing whether it would make a sense to make a change not him then after they pulled back after juliani said its not him. By the way, he said its not him, and if he were Jeff Sessions, he would he said that. That doesnt mean it wont then ted cruz. Ted cruz floatation is interesting to me because he has won a lot of supporters throughout this health care process in the senate. He has tried to put some formative ideas on the table to try and reach a compromise, and people are saying, maybe this is a new ted cruz maybe this is ted cruz 2. 0 or 3. 0, and this signals that he wants, again, to run potentially to challenge trump in 2020 this could be a move to try and sideline any future ambitions that senator cruz has, but at this point all of this is just speculation. You know, just thinking about it the unmasking there are so many things that theoretically if you had your own guy in, and i think thats maybe thats what trump is frustrated about at this point too. You know, where is sessions on this he recused himself from russia it doesnt mean he cant look at those things certainly he feels that the fact that he tapped sessions for this job means that he believes he would receive some loyalty in return or some prioritization as of what the president feels should be at the top of the list for the department of justice to be investigating on the flip side, critics have said that sessions in his press Conference Last Week instead of saying that he is committed to the job, he should have come out and given a fullthroated defense to the work of the department of justice and the independence of the department and the work that it does saying that it is free from politicization and partisanship. Some others on the other side say because he didnt do that, he is bowing more to the president than others would like it is a unique situation, to say the least. Certainly the president feels that he has been slighted, as weve seen evidence again by this mornings tweet im down to where i follow three people, and i have three people following me, because i have blocked everybody else wrrng. Limiting the utility of twitter. Whats the point i dont know if there is a point. Okay. Show me what is the point to being on twitter close twitter, and dont use it for the next three hours. You know how much that tickles my fancy that those two heroes of the new age are they should really are they arguing . Thats great a little bit of argument dpood kayla, thank you. Its not about hair right . Shares of google parental fa bet under some pressure this morning. The tech giants results beat wall street expectations, but investors disappointed by key metric what the Firm Earnings in revenue per ad clicks. The company also saw its net profit decline by nearly 30 or as a result of that fine of nearly 3 billion from e. U. Regulators every bit of that re new comes at a lower margin than desk top search. Theres really no Better Business model than desk top search was youre not convinced that theres going to be a moment at which theyre going to figure out how to capture that same margin on a mobile device . Well, i think there are opportunities. If you look at the google pixel device they launched last year, that is an opened and operated piece of hardware where you were logged in google user, and they dont pay any traffic acquisition costs to the likes of apple and samsung i think you have Hardware Initiative that is are tied into better ad targeting as well as better Unit Economics. You have to scale that over the next couple of years i think sustained 20 3erz top line growth, 85 billion to scale, in terms of an advertising business, is something a lot of companies would envy i think at the end of the day the advertising ecosystem continues to surprise you in its strength, albeit at lower incremental margins. I thought you were going to tell me. What . Thats why i need to keep it. Can i just why what time is 6 14 . Why are we primetime for the president it is again, i mean, if you are following the sessions trump relationship, these are i needed to see it this is a modern day no, i mean this is a modern day reality show. Its very important the nasdaq is off the record close because of google. It matters to investors. Theres a Second Screen reality show going on right now out of washington this morning okay. Keep to twitter theres another reality show going on in europe, by the way, when it comes to alphabet and google, which is to say the e. U. How look at that fine and potentially future fines are we out of the woods . Zblie think we have two vepgs every investigations that are still ongoing. They try to explore why someone has a certain amount of market dominan dominance. It posted the last fine and decision we said that google would likely keep all options open. They said that on the Earnings Call last night to both appeal as well as to express some remedies to the e. C. Well have to see what that might change in terms of User Behavior or advertiser behavior. Thats a question mark, though, on the European Business lets be clear, right . 1 00 i think Going Forward regulation is Something Likely most of the large cap Internet Companies could face more of Going Forward than not when you look at their scale and their size however, whether it really changes the user economics or the Unit Economics and the business model, i still think its a low probability event at the end of the day do you buy google here . It seems like youre staying focused on the Revenue Growth overall as opposed to the individual metrics the forest through the trees instead of the treateds wheres we raised our price target overnight from 1,050 its very rare to see this combination of reasonable Free Cash Flow multiple on sustained 20 top line growth, especially when measured against a relatively low growth global gdp environment wrrks. Lets make it slightly more kplikd if you could buy google or alphabet in this case or buy facebook, what do you do we have a slight preference for alphabet over facebook because we think the computing utility elements of alphabet are very underestimated by investors. Facebook at its core is a Media Consumption property right alphabets mobile computing ecosystem is something you use every day. Okay. Final question were going to show it in just a little bit, but theres been a bit of a throwdown between elan musk and Mark Zuckerberg over a. I. My question is actually who is more advanced on the a. I. Front, Artificial Intelligence, between facebook and google . Alphabet is much further ahead on Artificial Intelligence and Machine Learning we believe on those topics alphabet is actually the Industry Leader by a wide margin today. The ceo of irobot wants to use rumba to sell information to Companies Like google and amazon he has his own views about a. I. Too wrrks mr. Roomba. Well tell you why after the break. Wheres jack . Hes on holiday. What do you need . I need the temperature for pipe five. Ask the new guy. The new guy . Jack trained him. Jacks guidance would be to maintain the temperature at negative 160 degrees celsius. That doesnt sound like jack. Actually, jack would say, hey mate, just cool it to minus 160 and were set. Good on ya. Oh yeah. Thats jack. Good on ya. We, the people, are tired of being surprised with extra monthly fees. We want hd. And every box and dvr. All included. Because we dont like surprises. Yeah. Like changing up the celebrity at the end to someone more handsome. And talented. Really. And british. Switch from cable to directv. Get an all included package for 25 a month. And for a limited time, get a 100 reward card. Call 1800directv. Yogigspeed internet. Me . You know whats not awesome . When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids. And these guys. Him. Ah. Oh hello that lady. These houses yes, yes and yes. And dont forget about them. Uh huh. Sure. Still yes you can get it too. Welcome to the party. Introducing gigspeed internet from xfinity. Finally, gig for your neighborhood too. Welcome back the company that makes roombas wants you to use the robotic vacuums to map your home and then sell the data to tech giants like google, apple, and amazon irobot ceo says that the data could help make the smart home smarter. The data could be used to improve dosound system acoustic to schedule air flow from air conditioners by room, and to adjust smart lighting by the position of windows. How does it know where windows are if its bumping boo walls . Is that worth 400 something . A. I when are you going to get to talk about your story with musk . 6 30. K on. I love that story hold the phone. K on. Hold the phone. People dont even say that anymore. Hold the phone no. Why would i hold the phone hold the phone at 6 30 were going to tell you about it a lot of things are becoming in the past. Where im currently living hold the line right, joe . Hold the line i know a lot of the old i dont like moving forward very much. Maybe you can tell no comment. Nasdaq set to come off its recordclosing high, and the fed begins its twoday policy meeting now. Lets talk to eric, multiasset chief Investment Officer 365 billion in assets under management chris russ, fund manager of needham small cap. Gentlemen, good morning to you both eric, ill start off with you. In terms of the nasdaq and the run that weve seen, obviously, record high yesterday. We have google posing a bit of a problem today. Are you concerned at all about the strength of the fang stocks as we enter the very heavy earnings week . Weve got facebook and amazon also on tap to report. Im concerned about the overall level of complace ecencn markets right now. Yesterday was the eighth straight day with vix closing below ten. Thats a rrd it looks like today will be the ninth. Weve had 270 days without a 5 correction in the s p 500. There is just a remarkable level of complacency right now as we go into kind of a challenging seasonal time in markets, though, at the asset class multiasset level, were not trying to take big directional bets on equities versus fixed income right now. That said, there are actually a lot of interesting opportunities to take advantage of divergences between markets where you can take advantage of valuation. Whatsoever divergences . In the United States we would rather be a Smaller Company stock. Thats something that chris is going to agree with than large cap stocks 18 times forward earnings. Not terribly overvalued, but you have to question where is earnings where are going to be the major drivers and large caps Going Forward, whereas in europe, parts of the emerging markets, you can get access to better marginal improvement in Economic Growth at better valuations. Chris, within small caps, whatsoever sectors are you looking at technological ini dont he vegas continues. You are just talking about the roomba what is the components that go into that, to collect that, the sensors, the storage . Whats behind all that irrespective of whats going on in d. C. Or what they approve or dont approve and when that occurs, technology continues to move forward were going to get a new iphone this fall at some point. You have component constraints whatsoever companies are you looking at some in ermz it of suppliers to the iphone that are in the small cap universe . He with like semicap equipment still, which is a part of the whole supply chain. Anything with a higher beta is going were not seeing a big market break, but we are seeing a rise in volatility Going Forward, and this environment in our global allocation or multiasset income funds, we would rather be capturing income now to be able to reinvest at higher Interest Rates. Were going to see peak qe rates that will be rising, we think, and at better valuations when you do see some volatility in emerging markets, were playing emerging market depth where you can take advantage of the dynamic, capture a higher yield, 5 , 6 . Are you investing in individual wonbonds or through the how are you allocated in you are on strategies were able to lessen the individual bonds we like high currency sovereigns we like some currency sovereigns we like shorter duration are you worried that the rush to the exits in eerj manying market bonds is going to be fierce because people have been reaching for that yield . Whats the average yield at least 5 its north of 5 . The hard currency markets, which are almost average Investment Grade about 5 local currency, you can get more youre always going to be subject to the potential for volatility if you do get market breaks. The Balance Sheets of emerging markets, the improvement in growth is the better situation than the last time we saw kind of a taper tantrum in emerging markets got hurt overall, chris, last word in terms of the markets what are you foreseeing . Are you seeing any sort of rise in volatility ahead . Its certainly been a concern that its been down there for this many days, but weve been building up some cash positions to take advantage during the earnings season here,which were really excited about, uz bah were going to hear hopefully some good things if we dont hear good things, with he can put money to work in longterm good stories chris, and aaron, thank you appreciate it. Coming up, tensions rising between elan musk and oh, no. This between north korea and china in this case andrew doesnt really you want to get right to that Business Network okay. All right but if the world ends, its not going to matter a lot. Binary. Binary decision. China is beefing up Border Security in anticipation of a potential crisis this is whats happening in north korea. Former state Department Officials will join us next as we head to break a look at yesterdays s p 500. Winners and losers she cant become a guitar legend just by playing air guitar. 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. Snierchlt welcome back youre watching squawk box live from the Nasdaq Market site in times square. The dow and s p are up, but we mentioned earlier, the nasdaq is down large part off of alphabets earnings niez you are looking right now. The nasdaq off the dow would be up 67 points. 65 points, and the s p 500 up close to five points weve mentioned it a handful of times, but were going to bring it to you right now. Zuckerberg says the following. I think people or nay sayers are trying to drum up the dooms day scenarios i dont understand it. Its really negative in some ways i actually think its pretty irresponsible. I have to watch him on Facebook Live he was literally in his backyard barbecuing with pros i wi priscilla. They were doing briskit. They couldnt get it hot enough. In between in between they were chatting about a. I. He was chatting with the people in a very modern kind of way. Anyway, this morning about two hours ago when most people were still sleeping, at least on the east coast, that is, musk responded on twitter tweeting the following. He said, i have talked to mark about this his understanding of the subject is limited. Fire another twitter user said the tech titans should write a blog post on the topic to which musk responded movie, on the subject coming soon. Take that for a little bit of a tease. Elan already talked terminator or something. Is that the movie he is talking about . If Mark Zuckerberg cant figure out how to work his grill, maybe he doesnt understand Artificial Intelligence the musk narrative, he said we better learn how to merge our bodies with machines these things are kind of i know elan is so smart, and he is such a big why do you think its so far out there . You think within ten years he has a company neurolink which is specifically geared to interface with computers actual fears about when as humans we need to start worrying about machines i think weve got some time to figure out ways maybe of dealing with that. I mean, i know he loves to talk futuristically and, you know, we can all be living on mars and everything, but im with zuckerberg on this chill. Let me ask you this, though, five years ago i dont think thats not im not up at night thinking about how a. I. Is going to, you know, hurt me or kill me or turn off the lights you just said you dont like to move forward. I just think, you know be real i think zucker berg is absolutely right autoif you get tut computers mammograms and all these other things, all of a sudden you can open up the world and theres all possibilities. He is looking at it on the bright side. As well he should. I think its interesting that elan looks to recognizes, by the way, recognizes there are down sides to this. At google, alphabet, weve been talking about that with earnings they have deep minds, which is one of the probably most advanced a. I. Units in the world. They bought it out of london they have an ethics board, and they spend a lot of time talking about the ethical implications of what theyre building i dont think its too far afield to suggest there are some issues with this, but i also understand why zuck wants to be optimistic technology always advances more quickly than the ethical expression that follows it why not start that its not a novel there is a whole jagenre of science fictn books that have been written for the past 50 years about machines i was kidding about terminator. There are guys that won hugo awards writing what elan musk is saying okay its not, you know, profound or a novel idea to talk about whether its anything nearterm, i this i about things like this. I dont know maybe you guys you may see some type of the very beginning of an issue with where theres a problem, but i wouldnt even doubt whether were going to be happy when were dealing with machines, but youre going to download that great brain of yours on to hardware, and the hardware, and you are going to be able to soar. Were going to be able to talk to each other. Every morning. Forever forever because its so good, and the chemistry is so great that we may never i have thought that that would be everybody has their own that was our chemistry, though, that might i dont know zplie just would worry more about this than the terminator scenario in geopolitical news according that i new wall street journal report china is beefing up defenses on its 800 mile border with north korea preparing for what could be a potential crisis, including a possible u. S. Military strike joining us now former assistant deputy secretary of state joel ruben. Shouldnt be surprising at all you think about, you know, saber rattling or just prayigmatism. There may be something that the United States might feel compelled to do, and this is just planning for it or even the possibility of it. Seems prudent. Andrew, joe, melissa, its great to be with you this morning, and we have a chaotic situation in our policy towards north korea and then what north korea is doing and to try to use the market language on this. The chaos is creating uncertainty, and the result is you see china, for example, pricing in its response. It is adopting a policy of reactions to this chaos skplk a wall is a Contingency Planning effort its not the only effort, im sure, that theyre engaging in, but certainly it doesnt demonstrate a lot of confidence in our ability to resolve this right now. Are you you said theres a chaos in our current policy towards north korea. I mean, how far are you going . Are you going back ten years, 20 years . How far back are we going with that this is multidecades the Obama Administration there was a deal with north korea in 1994 on its nuclear program, and that is really sort of the key pivot point in understanding how we got to where we are today it was known as the agreed framework. It brought some clarity to what north korea was doing. They dig cheap on the flip side in our side in 2002 in the bush administration, we terminated that program, to use the phrase, from the previous discussion, and that meant that we were left with no real policies. For essentially the last is a years weve been floating and weve been watching north korea expand its programs. They have now created Intercontinental Ballistic Missiles capable of reaching up to alaska. Some estimates are stating and developing their nuclear program, and we dont have a real policy on how to address this this is a bipartisan failure, quite frankly. In the type of precautions or planning that china is involved with, it could be refugees, right . Im wondering if there are theyre building a wall over there, and actually they already had a pretty good wall, as we know, but im wondering if thats Border Security thats part of it theyre probably worried about if there was some type of radiation from whatever happens in the next two, three nothing is off the table, i guess. Theres all kinds of planning that theyre thinking about it planning for contingenciecontin. Yeah. There are some basic physical facts associated with north korea. That is what is consistently impeding progress in addition to, of course, the leadership of north korea, which is in and of itself extraordinarily complicated and messy. The physical facts are there north koreas border with south korea, just underneath the border is about 40 miles south at 24 million person, city north korea has tremendous amounts of artillery thats been chinas core concern about military conflict in addition to the potential for Nuclear Exchange to which we feel that china is now sort of acknowledging that they have no power to help in this situation, so theyre just taking care of their own interests in whats happening now . I mean, should we feel like theyre saying theyre saying, look, this is you know, were giving up. We cant do anything with these guys i think its a dualitq. I think, first and foremost, United States were supposed to lead, and were supposed to be leading on diplomacy, and theres been an ongoing process known as the sixparty talks for a number of years. That really hasnt gotten the job done clearly that was awe great opportunity to do it china is looking at this, and, well, theyre hearing saber rattling from the u. S. Or demand, the u. S. s policy has been to ask china to resolve it for all of us, and china doesnt have that leverage alone at this stage china maybe frankly reading the tea leaves and saying, well, if theyre expecting us to resolve it, thats not going to work we cant just do this on our own. China does need to do more i dont want to give them a pass on this, but understand they have limits as well. Investors are always trying to figure out what to do about all of this news how to handicap it whether they can somehow figure out a way to price it in invariably, most investors say this is a binary theres a binary outcome here. Therefore, you cant do anything about it i know youre not what would you do about it . What i would do is that as an investor, first and foremost, i would be paying attention to the sanctions activity today as it turns out, house of representatives is going to pass a saekzs bill with a large bipartisan vote. Shes going to be sanctioned related to iran and russia, and also north korea theyve added that into the package. One can expect that sanctions will continue on the north korean file. Sanctions are a tool to get to a solution, and right now we dont currently have a clear stlat eejic diplomatic approach to get there. One should essentially expect that sanctions approach to be leading our efforts, and that means it could impact extra territorial players such as china and others who are engaged with north korea and people have to be on the lookout for those kinds of impacts well, thank you appreciate it. Thanks for listening to our earlier conversation if you want to do some reading, it is not this isnt mandatory. Im not signing it to to you you know how people sort of do Extracurricular Activities verner is a famous scientist won the hugo award actually has i dont know whether he wrote it before our friend, but his essay is called the coming technological sing later. A lot of his fiction is about where we are in the future the precedent you set, how much will you pay me per page to read this . He has paid you per page to read this thing . Years ago he really wanted me to read Arthur Brooks. He thought if i read that book, it would open up my mind to another way of thinking. Ill pay you to read how much did you pay . 1 a page 1 a page there were 30 pages index not part of the book i charged he wanted me to pay for the index pages too. If you read them. He didnt read them i dont think he read any of them does it look like he read anything about Arthur Brooks does it look like he has read anything i happily cashed the check. You did yeah. I want you to read the road to surf the net 1 a page maybe he will do it. Coming up, a veteran Media Executive will be our guest host at the top of the hour former Frontier Communications ceo maggie widerodder joins us on set eli lily brings us earnings. David rick will join us at 7 is a a. M. Eastern time first on cnbc then well get gms Quarterly Report in the next hour. Well get the first word from cfo Chuck Stevens. Stay tuned youre watching squawk box on cnbc eli lily out with the drugmaker earned 1. 11 a share. Also beat forecasts. Lily did raise its outlook to 4. 20 a share. The consensus was at 4. 12 its at the lower end of the guidance we will talk to eli lily ceo david rick, 7 15 a. M. Eastern time first on cnbc. We do want to get a check on the futures here especially as the nasdaq just yesterday coming off of a record close. We paid our losses here at the nasdaq as we have gone through the premarket session. Looks like now the nasdaq could lose about 3. 5 points. S p looking at a buy about five here, and, of course, we have a lot of earnings ahead still, joe. We do weve got four more tweets that we havent mentioned that i know andrew loves these. At one point the president said the problem with the acting head of the fbi and the person in charge of the hillary investigation, andrew mccabe, about 700,000 from him for his wife or his wife i dont know then big day for health care. After seven years of talking well see whether or not republicans are willing to step up to the plate. Obama care is torturing the American People. The democrats have fooled the people long enough repeal or repeal and replace i have a pen in hand then, finally, so great that john mccain is coming back to vote brave. American hero. Thank you, john. Now you are uptodate time now for the executive edge. Two popular food chains reporting. Mcdonnells stock up more than 25 this year. Chipolte just hit a fouryear low. Joining us now at the tale of two stocks, cnbcs susan theyre so different it helps if youre not worried about, you know, not feeling well e. Coli all the good stuff thats thats the first thing i would make sure of probably you know then you can argue about the health and whether, you know, people look at that movie they did about being the pounder the one before that the guy goes in and eats mcdonalds with the morgan sper lock anyway. Fast food nation. Tale of two restaurants and interesting fortunes between the two mcdonalds set to report earnings in just under an hours time should be growing around 3 in the Second Quarter the rollout of digital ordering, delivery and value promotions, including 1 beverages are helping drive orders and then you throw in over 20 billion in cash returns, refranchising, 95 of stores and menu innovations like fresh beef quarter pounders coming your way, and thats why mcdonalds shares are up from 40 since november last year going in the opposite direction another restaurant chain set to report today after the close, chipotle hitting a fouryear low this week. Another round of bad press following the norovirus at a virginia location and reports of rats in a dallas store, once again shaking investor and customer Consumer Confidence sales have fallen off at least 10 in the past week and investors have been rushing in to either downgrade the stock, or reduce the charter price. Second Quarter Results still going to be positive, after the bell today in comparison to the 24 drop in sales last year. So its an easy compare. Its not going to be hard for chipotle to come out ahead but its the guidance forward for the Third Quarter. Which still looks a little bit lofty given the events of the past week, and that im sure will move the stock later on today. Guys thank you all right have you updated andrew, your view oh, no mcdonalds youre a nonbeliever there again. What do you mean i was a nonbeliever . In the anticipation of what he was going to do the stock shouldnt be up based on anything thats actually happineng. Remember you do at the time when this bell rings. It starts a chain reaction. Thats heard throughout the connected Business World. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. As the senate prepares for a possible vote on repealing some or maybe all of the obamacare provisions, several of the policy implications remain unclear including how the federal government will handle cost sharing reduction subsidies. For a look at the impact of the debate on the Health Care Stocks ana gupta, managing director what are you telling cliepts in terms of what could happen here . In terms of the bill itself i think the vote today is likely to be successful you know the debate . Its like burn the ship, though it would force the senators to coalesce at some point around a replace bill but the timing of that is a little uncertain and september, middle of september is the deadline for the Insurance Companies to decide if they participate in the 2018 exchanges and so, if you do not have funding for these csrs by the middle of september, i think its very likely we see some more exits even though state Insurance Commissioners are really pushing hard for the bill to pass, and are likely to give them some rate increases, not all states have committed to that you want to be in a space but you dont want to be too subject to the whims on capitol hill what are the quote unquote defensive stocks in your universe the defensive ones are those that exited exchanges, United Health is defensive, humana is defensive, aetna is defensive, as well. Theres more upside, really, because its all about favorable tax policy estimates do not include repeal. And the companies have priced their premiums outside of exchanges to assume that repeal is not happening, have not factored in the tax. The stocks that are most exposed are Molina Health and to a lesser extent in terms of the market swings daytoday and the stock swings daytoday do you find theyve been accurate in sort of predicting what is happening on capitol hill or what may happen i think theyve gotten better you know, we started out in march with the house that was much more volatility, and now you see modest declines for those, i think, where investors are trading up in to the potential of a favorable outcome. But i dont see them doing anything too irrational at this point. All right ana, thank you thank you so much coming up, a veteran of Media Industry weighing in on mergers, cord cutting and a lot more. Former frontshare communications ceo maggie wilde rotter is going e be here shs in the squawk green room right now. The earnings parade continuing dupont, United Technologies, eli lilly, 3m, gm, caterpillar and mcdonalds all reporting this morning. The numbers and reaction on wall street is straight ahead battling americas Opioid Epidemic the former chairman and ceo of pfizer joins us to discuss his latest venture and the biebs says im sorry to fans, canceling his final tour dates due to some unforeseen circumstances details straight ahead as the second hour of squawk box begins right now live from the beating heart of business, new york city, this is squawk box. Noise canceling head phones this morning 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 joe kernen and melissa lee. Beckys got the day off. Take a look at the futures at this hour. We have some green arrows on the dow and s p. We have some red arrows on the nasdaq well explain why in just a moment dow looks like it would open up about 77 points higher the s p 500 up about 5. 5 points. The nasdaq looking to open down about 4 points in large part as a function of alphabets earnings which well mention in just a moment but tell you whats making headlines. Earnings season accelerating with no less than five dow components out this morning. Dupont was up first. Reporting profit of 1. 38 per share, nine cents above estimates on strong sales in its agriculture business dupont still expecting, though, that pending merger with dow chemical to finally be completed next month also on the docket this morning, got to watch out well bring you the numbers as they come, United Technologies, 3m, and mcdonalds united tech just crossed it earned 1. 85 per share and the Second Quarter beating forecasts by seven cents revenue also Beat Estimates and raised the lower end of the full year earnings outlook. And then at the bottom of the hour were going to be hearing from General Motors. Well see how the bottom line was with auto sales. Softbank has reportedly approached uber about taking a multibillion dollar stake in the company. The Japanese Company has invested in three Ride Sharing Companies in asia. The wall street journal reports talks are preliminary and any deal would likely need to wait for uber to hire a new ceo. The uberreport comes less than a day after softbank teamed up to invest 2 billion in the singapore Ride Sharing Company grab taxi. Shares of softbank moved higher by 0. 8 . Michael kors is buying luxury shoemaker jimmy choo for 1. 2 kors will pay roughly 3 per share in cash a 36 premium to jimmy choo price the Company Announced that it was for sale and this next piece plays into just you see the dow is up about 80 points now. Now europe is up europe is all up 1 . So i think thats pretty much is across the board but is there any dupont earnings are all good when does are you attributing this to no, no, no. Session . No im just wondering whether, if it becomes if they were to go forward with this Health Care Health care which gets them points on the board. It also frees up some possibility of tax money i just wonder whether that ever actually but the failures havent really hit the market too badly either. People say that its great people say that its icing on the cake i dont know i dont know earnings are good, and europes up, so thats you know, 70 points 80 points. Its not that much but just wondering because mccains coming back mccains coming back in fact he is expected john mccain to be back on capitol hill today he recently underwent surgery and was diagnosed with an aggressive brain tumor his return will be just in time for a critical vote on Health Care Legislation could give republicans a crucial vote in support of a motion to move forward with debate on the issue. Its still unclear what they will ultimately be voting on whether it will be the most recent version of the bill, an updated version, simple repeal, maybe a combination. The party is still working to obtain enough votes. If they i mean if they didnt flip the moderate senators on the repeal only, and i dont think youre going to flip, man it would be the other one where they had to flip mike lee and moran from kansas, the two guys that added to to rand paul and the lady from north Maine Collins yes right yeah so, thats maybe i dont know looks like it will top but they dont care what it is its a vessel, ive been reading whatever passes today is a vessel for all the amendments to come during the debate and some introduced by democrats even and then, house planning to pass a bill today to toughen sanctions on russia for its alleged meddling in the 2016 president ial election. That vote follows a bipartisan agreement reached over the weekend between house and the Senate Negotiators that comes amid growing scrutiny by congress and special prosecutor looking into possible links to russian officials in the Trump Campaign. The bill has already passed the senate, but, seems like it might complicate things. But the administration and the white house says theyre going along with it. You mention trump tweets. I hate to disappoint you and leave any of them out, andrew. Theres a new one. Oh. The Second Screen reality show continues. Jared kushner did very well yesterday in proving he did not collude with the russians. But like the democrats, you want kushner under oath because you think hes like right, basically . No, i dont think hes lying necessarily. But you want him under oath i wouldnt understand why he wouldnt any of these people al franken said that i was watching and they were like, it was like you know what they watched squawk, they heard me talking and then they go on the air and they say but did you see he said barron trump was next up. That was the best part of the tweet. Next up 11yearold barron trump to see if hes read any russian comic books or anything. Really collusion i think in todays world. Alphabet shares are trading lower right now. The company reporting a steep drop in Second Quarter profits due to a massive antitrust fine from eu regulators the google parent reporting a 10 drop in the key cost per click metric whats going to be a trillion personnel now, now people are saying amazon is the trillion first. Its going to be amazon, google or apple facebook has purchased a startup called source three to help it crack down on users who share pirated videos and other content without permission terms of the agreement havent been disclosed lets get a check on the markets as attention turns to the fed meeting starting today joining us now is tom lee, managing partner, and tom manning, president and ceo of fl Platinum Investment Management Company and our guest host for the rest of the morning is Maggie Wilderotter the ceo of Frontier Communications. Welcome to you all two toms on the set. Uhoh so ones going to be mr. Manning, one mr. Lee i will start with you mr. Manning. You think were just going to be range bound for the rest of the summer earnings are not going to do enough to help us go higher . Theres some great earnings out this morning it looks like, the head line numbers. Google disappointed last night, weighing on the nasdaq it is the summer, its quite time of year weve already had a nice move early on here in q3 and i think its time for a pause. Just because largely were in summer, it has been that type of a situation over the years, and i think it will continue this year i think activity will pick up in the Fourth Quarter tom, where do you stand on the overall markets, is the nasdaq pretty much at a record high well, i think earnings are definitely confirming Business Conditions are decent, right theyre not like amazing, theyre not really accelerating. And i think it means you want to focus on companies that are still secularly growing. So i think in some ways, as much as, you know, people sort of talk about f. A. N. G. , i think f. A. N. G. Is still a good place to be, just because there is real underlying growth there i think rest of earnings havent been that spectacular. Maggie, whats your take on where we are right now in terms of Business Conditions and how the markets are doing. The markets are telling us that things are gangbusters really. Yeah, i think theres a lot of confidence in business. I think theres also a lot of Consumer Confidence. And that combination has made it very strong for businesses to perform. I think youre going to continue to see in 17 as weve seen theres been very good profitability in companies theyre very focused on growth innovation and people have their heads down so i do think that well continue to see good numbers throughout 17 in specific sectors. I dont think its across the board. But i think overall, the companies are doing well and the markets responding to that. Do you like technology, too do you think thats a place i mean im just trying to get a sense of whether people still say the consensus trades are still the way to go in this sort of market environment. Because technology certainly has been been often called a crowded trade. I think as long as the trend continues and doesnt show any signs of a beating look at the economic environment it seems conducive to continued slow growth in companies that can produce topline growth as well as bottomline growth should continue to perform well here and multiples should expand visavis the rest of the market so for now we continue to remain positive on the technology sector, and other areas that are providing growth in the market such as not as many to toms point, certainly a lot of land mines as you look through some of the traditional sectors that tend to grow in good economic environments like consumer discretionary, and particularly retail. Technology, and certain segments of the health care industry, biotech actually performed quite well over the last 30 to 45 days you like the ultimate contrarian type environment . Yes, in fact, i think its great telecom and energy . I think thats why its great you have someone who ran frontier i think in some ways its a catalyst for telecomin the nex 12 to 18 months. What people forget is the last, well, you know, last eight years weve had a business unfriendly attitude towards the Telecom Sector kind of unfair, cutting into regulations. I think title 2 is really going to settle a big trade balance problem with the telecoms. I think it sets the stage for some consolidation to take place. And the groups trading at 5 p e discount to utilities. Telecoms could be a huge area. When you look at the sort of chess board of potential consolidation, how do you see it play out once and if this at t, you know, goes through you know, i actually agree with tom that there is a big opportunity for consolidation. I look at telecoms and i agree i think its been an environment where the companies have an unlevel playing field, and with a light touch regulation from the ftc, which is really what, you know, the chairman and the commissioners are doing right now, they can roll back the bad situation of this unbalance of trade. And with that youve got companies that have very large infrastructure costs, and they have high content costs, and they have lots of competition. So i and theres a big changing innovation environment for telecom as well. So i think having more scale in those markets is really going to be important for the winners but, tom, in terms of your thesis on telecom its main consolidation. Which is a very hard thing to invest in. Sure. The prospect of consolidation. Yeah, melissa, its interesting the telecoms should have good industry structure, but its fairly concentrated but they have this cost problem because of the Net Neutrality. Right . They have they have content. But the other is a fourth player market is still too competitive. Like canada has three players and i think its natural to move to three the credit markets are pretty confident in telecom stocks. They trade tighter than most sectors but the equities have been horrible. So, you know, weve got an opportunity. And i think youre going to see consolidation not just with the basic players, whether thats the wireless players, or the wire line players, but youre going to see the consolidation with content, as well because the network is not as important as it used to be as it becomes more commoditized over time, and whats different is what runs on that network and i think all these players see that so i think there will also be innovation in addition to the consolidation. Are you invested at all in this sort of thesis . Either telecom or telecom as the pipe for content well, you know, i think the entire sectors becoming much more interesting if you look at where valuations were last year, it was an expensive group for much of the year with the decline in prices, you know, point of valuation plus catalyst can make a very interests investment thesis. We have not added to our positions in those areas yet but they are becoming a lot more interesting to us. Does that mean, maggie, that in terms of the pricing for things like mobile plans, they will continue to go lower . I mean its sort of like a years because it almost seems like the companies are treating it as a loss leader for other scenes in the future its a little bit of back to the future weve had these buckets in the past where its all you can eat to get consumers to use the product and businesses the one thing that everybody focuses on is really more the consumer products. But ill tell you, in most of the telecoms, business, you know the commercial side is a huge part of the revenue stream so actually innovating, and especially providing Safe Environments for companies is also going to be really important as to who wins and who loses, especially in the cyber world that we live in. So you will see more competition for pricing. Which is another reason why i say the regulators are backing off. Is because it is very competitive out there. And you dont see just everybody raising prices and everybody else following okay. Our thanks to the two toms tom manning and tom lee. Maggie is going to stick with us for the rest of the show weve got a lot to talk with her. Got to talk names. Thats just a tease. Shes here for awhile. Now to some very serious news here Justin Bieber has canceled the remaining 15 shows of his world tour due to unforeseen circumstances. Bieber has been on the road in support of his well received comeback album purpose since march 2016 playing 1 54 concerts we know all this. We know all this what . What do we know . He had exactly 154 to go, and we know that purpose as well is going actually didnt you know you have no idea what im talking about. Did you know he was well received no, i didnt know ive been listening to it on spotify. No pop rising. You ever hit on the pop rising you can actually find out whats going to be hot next week. This week. Are you honestly are you honestly a belieber . I am a belieber you are why not you know who mont claire, his spiritual adviser is out there so he hangs out in mont claire spiritual adviser yeah, i think thats somewhat maybe he could do a concert out there. Maybe hell do a local one and just show up oh, theres more to this news explain what happened . Why did he thats a big tease. Were going to come back to it well come back to that elon musk elon musk, now we got bieber. And we got crazy story and eli lilly Ceo David Ricks is going to talk Quarterly Results and the state of big pharma i dont know whether hes a belieber and former pfizer ceo jeff kindler will be our guest. Well Talk Health Care reform, the president ial remarks yesterday afternoon about drugs and gmc cfo Chuck Stevens will join us. Stay tuned youre watching squawk box on cnbc because, when you really, really want to be there, but you cant. At cognizant, were helping todays leading Media Companies create more immersive ways to experience entertainment with new Digital Systems and technologies. Get ready, because were helping leading companies see it and see it throughwith digital. Yeah, and i can watch thee bgame with directv now. . Oh, sorry, most broadcast and sports channels arent included. And you can only stream on two devices at once. This is fun, were having fun. Yeah, we are. No, youre not jimmy. Dont let directv now limit your entertainment. Xfinity gives you more to stream to more screens. Eli lilly out with earnings. The drugmaker beat on the top and bottom line. Also raised its full year outlook. Joining us david ricks, ceo of eli lilly. Thanks for joining us. Thanks for having me on you are at the end of trying to replace some of those, i guess John Lickliter spent a lot of his latter stages of his career dealing with some patent expirations. Now theres some new drugs coming online, and i think a couple of them sales actually beat expectations, which helped results this quarter can you go into which ones did that, and what the revenue numbers were thats right. Strong quarter for us, really driven by the new product story. Which started under johns tenure we see that tinge. Products like trulicity and taltz drove that new products were a little over 1 billion in the quarter, 18 of the company now products launched since 2014. So, its really new product growth story that led to 8 topline growth held expenses flat grew growth margins. And 34 reported growth on the bottom line. So youre all over the place. What is that for psoriasis thats right. Moderate to severe plaque psoriasis. Part of a new class of breakthrough medicines for patients with these conditions were about 40 and complete clearance of their skin, something that wasnt possible just a couple years ago. Not treating the symptoms, treating the underlying cause . Or thats right. Yeah theres io 17, an antibody that attacks that protein, sequesters it, and that relieves the plaque this is having a profound effect for patients youve got psoriasis, trulicity was diabetes it competes with a novartis drug thats at a run rate now of almost 2 billion a year yeah, thats right. And trending upward. This is part of this glucagontype pep side class its a once a week therapy in a very convenient auto injector. Everything else is a daily therapy. And these medicines really work to help people lose weight and reduce blood glucose which are important problems with type 2 diabetes youre adding through acquisitions, and not maybe companies but of drugs for oncology, too. I didnt i mean, eli lilly is, youre all over the place. And also, there was a little bit of a setback for an r. A. Drug, a Rheumatoid Arthritis drug with one of your partners will that hurt future results . Yeah, well, so, just to take these one by one we had two licensing deals in the quarter. One Just Announced yesterday one late in june for diabetes. Another product like trulicity an injectable for diabetes and yesterday with nector in aisle 2 which can add to our autoimmune franchise, an exciting new mechanism to arrest autoimmune diseases like lupus and krones, we did have some mix results on a Rheumatoid Arthritis compound which is launched in europe we got approval in japan, but the fda told us they werent going to approve the package and weve announced today to expect about an 18 month delay as we work with the fda, perhaps do some additional clinical work to get that drug to patients. But were committed to do that and theres a lot of other uses for various im sorry we dont have a lot of time left i want to talk about the better deal the democrats have been rolling out as far as, did you like the drug pricing stuff or not . Thats specifically what i wanted to ask him to that point. This is what chuck a better deal Chuck Schumer had to say just yesterday, were going to fight for rules to stop Prescription Drug price gouging, and demand that Drug Companies justify price increases to the public. Dave yeah, i just looked at that last night im not real deep on it. But, this is actually a case where i think some of the problems that theyre outlining we actually agree with patient outofpocket costs for Prescription Medications have grown dramatically but not for the reasons that are outlined in their paper. Which theyre talking about list price increases. Mostly this is driven by insurance design changes high coinsurance, high deductible plans in fact patient outofpocket costs for medications have grown 50 due to those changes in the last three years and we advocate for policies that would pass through the substantial rebates we already provide the insurance system, and Government Programs like medicare if all we did was that, lilly announced in march, our average rebate is 50 in the United States sounds like you think that the biggest problem is not on your end of it, but through the supply chain maybe the pbms if you looked at patient out of pocket cost that is by far the biggest driver is insurance design now they also highlight these bad actors, the valeants of the world, which you guys report on and thats a problem, too, but we think Scott Gottlieb the new fda commissioner has it right, which is to really increase competition in what are those arbitrage opportunities in the generic market that have gotten a lot of headlines if i may just sort of switch gears a little bit and talk about alzheimers just a bit so many people have loved ones afflicted with alzheimers you had a major setback in december in terms of a trial which was a disappointment you were going to apply for fda approval but at the time you said it doesnt mean that Alzheimers Research at lilly is over what can you tell us about that particular pipeline, some of the other trials involved with that same compound, and if that could actually be upside for investors who pretty much took that out of your market cap in terms of potential pipeline yeah, thats right. Well our Research Continues in alzheimers. Including where we have a presymptomatic trial going. Our main focus is on our base inhibitor which is in phase three in combination with astrazeneca treating mild alzheimers, so the early stage ofdiagnosed disease and two other very promising projects coming forward, antibodies to treat alzheimers, attackingth plaque so our were in a situation where we think were learning every day, unfortunately failure is part of the business. Thats the risk we take. But each time we fail we advance our knowledge. We remain committed to Alzheimers Research although we are taking on board, and reflective of the mistakes we made, and learning about how the biology actually functions of course this is a huge health problem, and the First Company to come out with the medication that could slow down this disease, obviously thats an enormous opportunity, and for patients, who are desperately waiting for something. So we have six medications in the clinic, for alzheimers today and our commitment continues in that space. All right, thanks is lickliter gone completely he is gone. June 1st he passed the gavel on the chair of the board hes still in town very active we stay in touch and i know he misses doing this on earnings weeks are you do you have any jesuit educated people around left over to man the ship here i well, im a product of the indiana Land Grant University so purdue lickliter always thought he had a good thing there with that the jesuit anya im jesuit educated maggie, there we go i got two High Schoolers and a jesuit program did you do . Hes a slow learner hes getting there future generation youre overcoming that deficiency all right, thank you thank you for having me on. Youre welcome. When we return weve got caterpillar, 3m and General Motors all set to report earnings the numbers, Market Reaction straight ahead then, gms cfo Chuck Stevens is going to join us first on cnbc to talk about the quarter and the state of the Auto Industry which has been in the news recently mes. Awk box returns in just mont 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. Good morning, welcome back to squawk box here on cnbc were live at the Nasdaq Marketsite in times square among the stories front and center this morning were watching shares of barnes noble. After the investor Asset Management issuing a letter about the board this morning saying it had acquired a meaningful stake and the current value of the stock is unconscionably low said the company should begin to explore Strategic Alternatives including a sale citigroup will be holding a meeting for analysts and investors. The first time citi has held such a meeting since the financial crisis the bank said the restructuring is complete and now that the fed has include its capital plan its time to talk about the path to growth. And the latest reading in home prices in about 90 minutes time. The caseshiller report for may is expected to show a 5. 9 yearonyear increase. That would be a slightly faster pace than the 5. 7 rise registered in april. Gm earnings just crossing the wires as we speak. Andrew, this was a strong beat by General Motors in terms of earnings per share beating the street by 20 cents gm earning 1. 89 in the Second Quarter. The consensus was for 1. 69. Revenue, however is lighter than expected coming in at 37 billion. The street was expecting 40 billion. But remember, theyre no longer considering operations in europe those are discontinuing operations, so as a result youre going to see a little bit of a difference there when it comes to revenue the margin overall for the quarter, better than expected at 10 even in north america, they earned 3. 5 billion, due in part to strong sales in the crossover Utility Vehicle market where their sales were up 18 in the Second Quarter margin for north america 12. 2 also earned a half billion dollars in Gm International basically china, as we were looking at there, and finally no change in either the guidance to production, remember they gave us that Production Guidance back in june, as well as to their earnings per share speaking of the financia performance and where gm is at relative to the industry, and where people are looking for them to go, were going to be talking with Chuck Stevens, first on cnbc, coming up in 20 minutes, the cfo of General Motors were not only going to talk about these numbers and the second best quarter gm has ever posted financially, but were also going to talk about whether or not this is a company thats going to start ending production of certain sedans. Here in north america. Because that market, guys, is very slow right now and it doesnt look to be improving any time soon. Thats coming up in about 15 minutes. Back to you. All right, phil lebeau, thanks we also have 3m just reported moments ago. 2. 58 a share. The estimate was 2. 54 so thats four cents ahead and the number i have for sales is 7. 8 billion the estimate 7. 857 i dont know whether thats just slightly below, if its exactly 7. 8. They do break down the sales, consumer sales 1. 14 billion, health care, 1. 44. Industrial 2. 77. Outlook at this point. Actually in the press release itself, it looks like theres an outlook which at this point down about 5 8 of a percentage point. Caterpillar looks like its a big beat here. More importantly, though, focusing on the outlook of 2017, raising its outlook for 2017 given the Strong Performance in the First Quarter excuse me Second Quarter and the first half of the year now expect profit 3. 50 the mid point of sales and revenue outlook range or adjusted per share of about 5. Previous outlook had been adjusted profit per share about 3. 75 so raising by 1. 25 for the full year on djusted thats a big raise for cat here. There you see the stock responding and interestingly, because just in the past week or so, its gotten a number of upgrades, including one yesterday i believe from beamo so theres a lot of positive sentiment going into cat, going into these earnings how much did they beat this quarter . Did you say . I dont have the i just wondered what they because theyre raising the full year i think it was as much as the beat and whether theyre actually adjusting yeah the 3m just here is the outlook. 870 to 905 so they beat by 23 cents but theyre raising by 1. 25 expect that to continue to happen in future quarters. 3m just quickly, the old estimate was 870 to 905. They raised the lower and by a time to 880 but didnt raise the high end will be interesting, can we pull up futures here so see if we have much impact here in terms of we should get cat, do the multiplier on five points on cat. Look at that. So dow joins looking triple digit gain here. Multiplier . Yeah, around seven. So 105 points here nasdaq still suffering under the weight of alphabet earnings coming in disapointing so were going to be off that record high in yesterdays close as for the dow a big impact on the dow, 105 points at the open. S p looking at about seven points at the open and were not done thats the thing were not done earnings. We want to were not done with our guest host this morning. Far from it. Former Frontier Communications ceo Maggie Wilderotter good morning you know, the thing we didnt get to talk about, you were talking about consolidation in the industry but i think you sort of existential question about this industry is the future of technology, and particularly 5g technology, this idea that the technology wirelessly can be so fast that anyone who actually owns wires could effectively be put out of business i mean that would be what the proponents of some of the technology would suggest not to say that youre not going to need the wires underground to get you to these wireless Access Points but this idea that cable, for example, which has always had a virtual monopoly into the home, that last mile can be done wirelessly true to some extent it is andrew i think if youre in the Telecom Business or the cable business with wire Line Products and services you have to look at your infrastructure will be replaced to some extent with wireless in that last mile if we can get 5g down to those right i think that thats very promising to do. But if you think about the back fault for all of that information, and we see this infinite demand of information tinge to grow on the content side right that the wire line business will continue to be very formidable i just think it will shift right but critics of 5g will tell you that if theres a drop of rain outside, or if the wind blows and theres a leaf in the way, all of a sudden the technology doesnt begin to work. But you know, we said that, too, about digital when we went from analog to digital we all sounded like we were under water for the First Six Months using digital i think as you work through these technologies to perfect them, you can get 5g to work in a very good way. Realistically, though, what do you think a time line like that looks like . And the reason this is so important is because, even if you do have the back haul, if youre a comcast or spectrum or whomever, name whomever you want, it does suggest that youre going to need a potentially a wireless strategy. Well, i think you need a wireless strategy in terms of whether you do that in partnership, from a commercial perspective, or from a direct to the Home Perspective i think those are all different options. I also think that comcast of the world, frontiers of the world, they own the customer relationships. So theres a lot of power in those relationships in terms of how they deliver products. And do you think those relationships could get upended . I think to some extent they could if these guys dont do whats right and what they should focus on. Look it, technology has been innovating in this industry for years. And i think will it continue to. Comcast has also placed their bets on content. Its not just about the infrastructure lets talk about the content piece of it. And at t obviously also making a huge and verizon, look at yahoo look at aol, look at their thats maybe a different bet. Maybe were confusing the issues, maybe not. Maybe youre confusing the issues so, do you think theres going to be a day where theres going to be a lot of the content thats going to be exclusive to the distribution providers the directv had its deal with the nfl. You could only get those games if you have directv. At t has said no, no, for hbo for example if you want game of thrones we want to make it available to all the platforms right longterm, five years from now, ten years from now, do you think theres going to be programming thats going to be exclusive to each network . And that people are going to then buy along those lines i think there will still continue to be exclusive programming. I think it will be more pit driven than daytoday but i think theres a huge shift going on to the small screen so its not just about the networks having exclusivity. I think youre going to see exclusive programs for mobile. Versus tv, versus but mobile on every provider or verizon is going to have one exclusive thing for itself, and at t will have another exclusive thing for itself i think there will be innovation on the Business Models i think youll see day and date in those environments where verizon might have an exclusive for a year or 18 months before its open to everybody else. Just like you do on an hbo, as well i mean they do certain things that are exclusive for them. And theyre a hit. Right and then they do no, no, no. But its exclusive to hbo, sure. Right. But its available on every platform right so what im wondering, whether each platform gets effectively chopped up, and you start buying, in the same way that certain people buy directv simply because they want the nfl ticket, right . That people are going to buy on to at t or buy onto verizon, buy into comcast because you can only watch whatever it is there. I think i dont think its a zero sum game. I think there will be some exclusivity. But i also think that theres going to be a shift that consumers will drive what they watch, versus just packaging from content providers, or deliverers of that content so for example, we all might change on a dynamic basis what we watch every single day. And, i think the generations, the millennial generation is used to having that flexibility of doing on demand what they want to do, when they want to do it and youll see different payment structures associated with that. So i do think that the providers of content, and the deliverers of content have to look at rechanging their Business Models to accommodate that. Maggie, youre going to be sticking around. Thank you. Youre welcome. Coming up when we return, in the midst of the Opioid Epidemic imprexion is nonaddictive approaches to treating pain run by former pfizer chairman and ceo jeff kindler joining us right after the break. Check out futures at this hour green arrows after the nasdaq has turned around despite the alphabet earnings. Dow looks like it would open up 108 points higher. S p 500 up about 8 points. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back to squawk box. Maybe getting the gmos back or something might be a good idea ones that prevent norovirus. Dow jones up 108 now after that strong report from caterpillar and other dow components mostly positive except for this 3m now down a little over 2 but you can see, caterpillar up 4. 5 europe was strong this morning heres a look at some of the Big Companies reporting this morning, as we said. Gm, 3m, caterpillar, united tech, and du pont. Joining us now we have a very special guest this morning we do. We havent seen him in awhile. Hes here. Jeff kindler, former chairman and ceo of pfizer, currently ceo of private yet imprexion taking on Pain Management in the face of the Opioid Epidemic before we even start this, you walked in here and you handed all of us what looks to me like a pepper exactly dont eat it dont dont eat it. Its very spicy. So you brought this for us. Yes for what reason our company is using a synthetic high science version of the Natural Ingredient in chili peppers, tabasco, all that kind of stuff called capsaicin capsaicins been around for thousands of years and everybody understands that it reduces pain, in a very safe way so what we did, our scientists at Johns Hopkins found a way of synthesizing capsaicin and directing it directly into parts of the body where you experience pain what we found in our midstage trials is we can produce a really robust reduction of pain in a very safe way using this synthetic version of this Natural Ingredient what was the eureka moment to even think of doing this well our chief scientific officer James Campbell was the head of the department of neurosurgery at Johns Hopkins, and hes been studying pain for years. Right and again, as i said, theres a lot of knowledge about capsaicin. The problem was, andrew, that people couldnt figure out how to use it as a drug, because it stings it hurts like when you eat it, its painful, right so we knew if we could get it injected into the nerve fibers where the pain is transmitted we could create a lot of pain relief but what we couldnt work out for many many years was how to do that without the pain from the procedure itself being so agonizing. So our scientists worked on this for a couple of years and they developed a really innovative way of delivering the treatment that reduces the pain and in our most recent end stage trials we showed the greatest degree of pain relief of any trial in the anal geezic area so this is already capsaicin is already used in otc arthritis pain topically correct in terms of what your scientist did is concentrated how did they change it in order for it to be injectable and maybe more powerful . Absolutely right. First of all, it is a higher potent version and thats how we synthesize it to make it higher potency. But more importantly, we inject it directly into the source of pain we call it molecular neurosurgery if you imagine my arm represents the nerve fibers at the end of the knee, and were developing for knee osteoarthritis in particular, among other things and these different nerve fibers send different pain signals to the brain, so touch and heat, cold, movement, et cetera. One of them is called the tripv 1 receptor thats the one, hit it with a hammer, send the message out what capsaicin does is inenvelops that nerve fiber and deactivates it and it lasts as long as six months so if youre results continue to bear out the way they have today, we have the opportunity of giving patients the chance to go see a doctor, lets say twice a year, go in for an hour, get this very safe injection, and enjoy six months of meaningful pain relief. Its not addictive in any way . Its not addictive. In fact Centrexion Therapeutics is devoted to nonsteroidal, nonopioid therapeutics a third of the world population, 100 Million People suffer from chronic pain and the treatments that we have available in many ways are not effective or even unsafe when you look at the market, and the pricing for this, i dont know if you heard one of the earlier segments with ceo of eli lilly we were talking about the democrats plan that came out yesterday, they effectively attacked pharmaceutical industry right and suggested that they want to really go hard at pricing that even factor into your thinking when youre trying to develop Something Like this . Absolutely. And let me say, a general statement about it and then apply it to this so, these proposals that were hearing, theyve been around for awhile theyve made some comments about the problems with them but i think were missing a much bigger point here about health care and a world famous cardiologist had a great article about this in the journal a week or two ago, i strongly recommend, he made the point that we dont have a system that really assesses the value of different interventions to patients. Thats whether the pharmaceuticals, hospitals, doctors, and the reason we dont is were barely skimming the surface of our understanding of the patient journey. Whats really exciting right now, the real opportunity we have, and i know i were talking earlier about elon musk and Mark Zuckerberg and im not going to get into the middle of that but we do know that Machine Learning and Artificial Intelligence can capture big data and get us to really understand the patient journey. Let me use pain as an example. People with knee pain have a number of morbidities, other conditions they can be sedentary, obese, have diabetes, have heart disease, have sleeplessness. Its the number one cause of disability we need to look at the whole patient, everything thats happening to that patient. We need to think about what is the right combination of physician interventions, pharmaceutical interventions, hospital interventions, that helps those patients jeff, dont most nerves have that receptor . How do you specifically just just encapsulate the nerve for the one thats causing the problem . Well, thats a great point. I dont want to be able to not feel anything. Feedback and pain tells me, stay off your knee, balls youre going to youre not going to have any cartilage left at all if im not feeling anything im going to go out and play squash, and im not going to have any knee left. Right its a great point and joe, heres what ill tell you. And youre more of a biologist than i am. But as i understand this, its been explained to me there are different pain fibers that send different signals. We are very selectively affecting only the pain signal, not touch the movement, et cetera now to your point there is certainly the question of if we really totally eliminate the pain is somebody going to run a marathon and do damage to the knee we dont think thats very likely first of all we dont totally eliminate the pain we have all these other sensors. And a lot of these patients are sedentary and overweight and hopefully getting them up and exercising is probably a good idea can you democratize this, can you get to the point where patients can do these injections themselves were out of time sorry we have to have i know. Gm cfo thanks very much. 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. When this guy got a flat tire even if its chasing squirrels, in the middle of the night, so he got home safe. Yeah, my dad says our insurance doesnt have that. What . you can leave worry behind when liberty stands with you™. Liberty mutual insurance. Welcome back to squawk box im phil lebeau on a day when General Motors posted better than expected earnings for the Second Quarter lets bring in Chuck Stevens, cfo for General Motors and the companys headquarters in detroit. Chuck you beat the street by 20 cents, earning 1. 9 a share. What drove the profits in the Second Quarter yeah, i would think, phil, to start out with, another very strong quarter, and obviously were very pleased 3. 7 billion of profit, 10 margins, and again, are really supported by great performance in north america 3. 5 billion of profit, 12. 2 margins. And continued strength in china. Another half a billion dollars of equity, and so you know very, very much on plan. When we looked at the first half of the year, and as expected, a strong first half which will support our meeting our objective for the year lets talk about north america, strong results in the Second Quarter but a lot of questions are mounting regarding what you might do regarding car production, sedan production, in north america. First of all, are you considering eliminating certain models and saying you know what, we just cant make money on these models anymore, declining sales, declining demand, lets just cut them . Im not going to comment on future portfolio decisions, or discussions that are ongoing i will say this, though, phil, we are all always going to be very, very focused on aligning supply and demand and as weve seen the ship from passing to cars to crossovers weve taken action to reduce our production of Passenger Cars. More broadly were going to consistently and continually look for ways to improve our deployment of capital, and you can see it in a number of decisions that weve made over the past number of years on where we can deploy capital to earn a adequate return and continue to improve the core business so, thats the way i would think about the whole Passenger Car question alignment of supply and demand, continued discipline from a pricing perspective, and efficient deployment of capital. Chuck stevens, the cfo of General Motors joining us on a day where they beat the street by 20 cents earning 1. 89 a share. Chuck well listen to that Conference Call today. Guys a lot of questions swirling on wall street about whether or not General Motors is going to have to shift its production outright cut certain sedans here in north america, and move that production over towards crossovers and has to be, as you do, are in demand. Guys, back to you. Phil, thank you for bringing us that interview. Coming up when we return were going to talk mcdonalds earnings the numbers and restet reaction next check out some of the other companies that reported this morning. Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac im the one clocking in. When youre clocking out. Sensing your every move and automatically adjusting to help you stay effortlessly comfortable. There. I can even warm these to help you fall asleep faster. Does your bed do that . Oh. I dont actually talk. Though im smart enough to. Im the new sleep number 360 smart bed. Lets meet at a sleep number store. Yogigspeed internet. Me . You know whats not awesome . When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids. And these guys. Him. Ah. Oh hello that lady. These houses yes, yes and yes. And dont forget about them. Uh huh. Sure. Still yes you can get it too. Welcome to the party. Introducing gigspeed internet from xfinity. Finally, gig for your neighborhood too. Earnings alert dow component mcdonalds serves up Quarterly Results. Reaction from the street straight ahead a high fashion deal with a 1. 2 billion price tag michael kors buys luxury shoe brand jimmy choo plus musk versus zuck the ceo calls out facebooks chief on twitter the beef Artificial Intelligence. Details about the throwdown as the final hour of squawk box begins right now live from the most powerful city in the world, new york. 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 joe kernen and mem issa lee. Becky quick has the day off. Our guest host this morning, Maggie Wilderotter, former ceo of Frontier Communications we have a lot more to talk to her about in just a bit. First want to check out the futures right now. We are looking in the green with the exception of the nasdaq, which has oscillated a little bit in part because of those alphabet earnings. Well talk about that in just a moment dow jones looks like it would open up much higher about 135 points higher. Looking like its going to rip s p 500 looking to open about 7. 5 points higher. And we do have some news that is crossing the tape. Joseph yes, i guess mcdonalds is reporting that, lets take a quick look through the numbers of mcdonalds. Check it out mcd reported just moments ago, looks like 1. 70 1. 70 on revenue of 6. 05 billion. I dont i dont see an outlook yet for mcdonalds stock up 1. 4 is that a new high. 156. 156, the alltime high for mcdonalds this is a little slow, but that 1. 70 that were looking at may not be as important as the compstore sales, especially in the u. S. People key off of that that was 3. 9 which is solid global comp sales up 6. 6 . The 1. 70 i now see was eight cents ahead of expectations. And if you dont look at comps, just look at systemwide sales and constant currencies, it was up 8 . Also, 1. 8 billion was returned to shareholders through share with purchase, and through dividends, and the yield on the stock isnt necessarily why you buy it but its not bad. 2. 5 lets go through the quarter with bob darington, managing director and Senior Analyst at kelsey Adviser Group numbers just hit at this point, bob, and you know i guess you look at the stock and theyre pretty good. You dont need to look much past that, do you well, listen, this company is humming. I think being in conjunction with the Franchise Partners with this organization have done an incredible job, not only improving the value proposition, new product pipeline, giving reason for consumers to return more often, and especially the predatory advertising levels that this company has, has them operating well ahead of i think most peers, and certainly ahead of street expectations and our estimates. We talked about it in the past that its nice to get, i guess new mcribs or whatever they are introduce, i dont know, apples, and going urt. Thats all fine. But easterbrook said our relentless ommitment is doing what we do is great restaurants, fresh food, doing it really, really quickly in a really clean setting, and if you mind your ps and qs, this is what happens and its been amazing to watch now, this sounds like mckinsey got involved they do theyre introducing more velocity growth plan accelerators, at more restaurants. You know what that is, bob you follow the company how do they do the velocity growth plan accelerator . Joe, you make it sound pretty easy you know, listen the accelerators, as the company talks about, are things that are really driving the business. The things that theyve their research has focused on and has the greatest impact on their overall traffic trend, consumer interest, and ultimately, financial performance. Those include things like the apps that the companys been rolling out, the Delivery Program in conjunction with uber eats new Product Innovation you know, again, this company is focused on those things that are most impactful to their business, and its really making a difference in two words, they were french fries for me, thats the thats the velocity growth plan accelerator, is theyre still their fries. And, well, throw in the egg mcmuffin theyve also got fresh burgers. Theyre doing fresh hamburgers thats a big deal. Bob in terms of the changes to the business model, the move to franchise is definitely there. The interesting thing to me in the earnings really underscores that change in the Second Quarter revenue from franchise restaurants was up 6 . Second quarter by Company Operated restaurants is down 9 . Thats a huge disparity. Why such a huge disparity . Well listen, youve got to remember the company is refranchising Company Restaurants as they do that, the sales number comes down. Comes down the franchise royalties go up. They beat revenue, hour and street expectations. The combined number of Company Sales and franchise revenues is the refranchising part of the story fully baked into the stock . I dont know if its fully baked in, but i think the company is well on their way of being meeting their plan to refranchise down to roughly 95 franchise operated theyre well on target with that in fact, i think in this next quarter, we likely will see a substantial closing transactions, especially related to some of their overseas markets. 75 cents away from an alltime high. So, it may happen today. Thanks for your time and analysis this morning. You bet a few more reports driving the dow this morning on top of mcdonalds, 3m came in four cents before estimates, revenue falling slightly below forecast. The consumer productsmaker raised its full year outlook thats right now a drag 2. 2 United Technologies beat on the top and bottom line. The maker of Pratt Whitney engines and carrier air conditioners said it improved sales at three out of its four businesses that stock trading slightly off. And caterpillar the big winner on the dow, the heavy equipmentmaker earning 1. 49 a share, 23 cents above estimates revenue beat forecast as well it also raised its full year outlookignificantly. Thats up to 5 . Revenue also beating forecast. Du pont which plans to complete its merger with dow chemical next month saw results boosted by higher agricultural sales on top of all this the fed will kick off a twoday meeting today. Steve liesman is here with exclusive results from cnbcs fed survey yes, and were on the fiscal and the monetary side because both are really important. And when it comes to both of those things the market is dialling back its expectations both for monetary and fiscal policy here are some of the top line numbers. 100 see no rate hike coming at tomorrows announcement. But 72 , which is a bit above where the market is, by the way, when the fed market, do see that third rate hike coming by december, and the Balance Sheet decline in eptember. Nobodys before that a few were after that. That is two months earlier than the prior survey, i suppose if theres a possible surprise tomorrow, it would come with the announcement of the Balance Sheet decline. It is not expected in the market according to our survey. Now, looking at the outlook for rate hikes, you can see that since march its come down we were looking for 2. 3 next year now its down to 2 . 2019 also down 0. 3 to 2. 4 and the long run average, remember yellen said the fed didnt have really very far to go is now down to 2. 7 from 3 and thats gone hand in land with a decline in expectations for fiscal policy which you might expect quick thing on the Economic Impact of the Balance Sheet decline, most see it as negative but not extremely negative just a little bit for Economic Growth a little bit for stocks. And bonds would take the brunt of it according to our survey by the way 44 people involved there. Now i wanted to show you that the Balance Sheet target is 2. 5 trillion they believe. Its now 4. 5 so 2 trillion to go and theyll do so over about 4. 5 years i told you about the expectations for fiscal policy you can see how theyve dialled back here. Health care is now seen in the Second Quarter of 2018 thats three quarters later than the march survey Financial Regulation reform, Third Quarter of 2018. Two quarters later infrastructure, later, as well tax cuts just a little bit later. One quarter later. Theres still a lot of belief in that although now lets take a look at what we call our never column the growing never column those who think it will never happen, 31 say health care will never happen 25 say Financial Regulation Regulatory Reform will never happen and 21 on infrastructure. Like i said a lot of belief still in tax cuts. I think the question of how you use the survey is trying to figure out whats dialled into the market here. Is the expectations for fiscal reform, is it still out there priced in, such that theres upside if it happens and downside if it doesnt the allamerica survey . The other way to use this survey is as a joke. 44 allamerican 44 economists and can i ask you a question, a serious question sure. What do you think is going to happen request yellen and when will we know i think yellen is, from what im hearing, is not going to be reappointed. And youre when is it going to be . Whats weird is i hear this criteria looking for a strong fed chair. Im not sure strong relative to what in be a very large person . A very large person or somebody who can bench press heres the funny thing, yellen came in with all these hawkish all these dovish credentials. Shes the one whos raised Interest Rates several times shes the one whos beginning this process of reducing the Balance Sheet. And shes brought the committee how many people heres let me cohn. I think the cohn story, by others, is overstated. I do not believe look at me i do not believe the president is quite as far along as perhaps some of the reporting has suggested he is in picking his choice i understand there are still casting about, although that still casting about give me the top five . I think cohn is a top choice. I think john taylor is a top choice kevin warsh is a top choice. They think taylor is not Strong Enough and warsh is too young. So theyre not decided on it theres always Glenn Hubbard out there, seems like a good idea. A wrinkle to that on warsh . Yeah. That hes not dovish enough well, this is thats interesting. But the trouble with kevin is its a little hard to discern from his very strong and well written pieces, what he means about policy because theres a lot of head shaking in the room when kevin talks. Can i ask you about tax reform sure. Because people are still very positive in the Business World about that even if theres a 7 change it could be a big deal for the economy. Well thats the thing i mean, the democrats and republicans in the Previous Administration were 3 Percentage Points apart and couldnt make a deal a lot of people think they could get to some somewhere in the mid 20s, it would be a big success, it would be a process, you know, on the road to getting it right. Yes the question becomes whether or not this president would settle for something less than the 15 hes after, even while it appears to me that a lot of republicans say 15 is unrealistic. Along with the possibility of repatriation, which could be huge yes all of this would be an improvement. And what has made me bald is this idea that democrats and republicans agree on this and they cannot get together, put two people in a room, say youre 25, youre 28, lets settle the 26. 5 and go home for the time. Thats why its an unexpected positive, too, i think because there is consensus on both sides of the aisle that something has to be done consensus does not appear to be enough these days to reach a decision yes well depends on when it comes up im getting the gotta go in my ear from the producers. Gotta go just like what was it . The inability of democrats and republicans when they agree upon something to agree upon something. Okay. So i got to all right thank you. Coming up, when we return, its a big day for health care senator john mccain is heading back to washington, President Trump already tweeting about the critical vote senator John Barrasso is going to join us at 8 30 eastern time. Plus the twitter dis that the Tech Community is talking about. Elon musk has a few choice words for facebooks Mark Zuckerberg weve got the details. And forget relay races and water balloon fights, inside one summer camp that is all about the money. Stay tuned youre watching squawk box right here on cnbc. We asked people to just go about their day to try a new feature from match. So sara, what did you do today . I grabbed a coffee. Yes, you have to do that. And then i checked out a new art exhibit. So now, you have the match app up open up the missed connections tab for me. Okay. It shows you people youve crossed paths with in real life. Oo, i crossed paths with josh near pine street. Maybe he was at the gallery . Maybe he loves art . Imagine what else you have in common. Hes cute. Id like to find out im on the edge of my seat. Match. Better ways to make a real connection. Start for free today. Welcome back to squawk box. A little bit of deal news for you this morning michael kors is buying luxury shoemaker jimmy choo for 1. 2 billion. Courtney regan has been working the phones and joins us with more good morning. Actually just got off the phone with michael kors ceo before he speaks to investors when hes doing now about that 1. 2 billion purchase of jimmy choo that was announced overnight so, michael kors ceo john idle tells me this is just the beginning of the acquisition plan for michael kors. In fact the company is forming a luxury group and will be looking for other brands, particularly those that serve an International Luxury consumer. He also said jimmy choo was attractive because of its commitment to luxury style and the aforementioned international reach. It adds diversity to the offering plus he says its not overexposed. We all know michael kors has been accused of that by some folks. Michael kors does say that it will continue to open jimmy choo stores at a slow rate. The companys only been opening about ten a year jimmy choo will continue to be run by ceo and operate at 100 side load for michael kors dont expect to see michael kors running Retail Locations suddenly jimmy choo shoes and accessories popping up there as well he also said he doesnt expect jimmy choo to hit double digit growth at 20 or something but rather, heslooking for that continuation of steady controlled Development Just as the Management Team has kind of done so far. Joe . Okay, court, thanks President Trump just tweeting working on a major trade deal with the united kingdom. Could be very big and exciting jobs exclamation point the eu is very protectionist with the u. S stop could have been stop, could have been sad i would have liked there then we didnt show this one. Did you see it actually this is from potus, not from realdonaldtrump. He put out all of the organizations that are supporting opening debate on Obamacare Repeal and replace and that was another one of his tweets but that came from potus whats the difference . Have you figured that out . The difference between potus and realdonaldtrump i think one is more official than the other potus seems to be controlled by the Communications Office or someone along those lines. You dont think its him . No. Too reasonable . Theyre very measured those tweets measured. Nod rated modulated or more measured. Its all relative its all relative. Talking about turmoil were going to talk about a little bit of turmoil at 21st century and fox and Uber Companies both public and private contend with genter inequality but even as diversity gains attention in the corporate world our next guest says theres still a lot more to be done. Joining us coceo at executive Research Firm and chair of the Corporate Board initiative at the womens forum of new york. Good morning thank you so heres the question. Mmhmm. Everybody says they want to have a more diverse board, more diverse management, more diversity across the board mmhmm. And then, theres always the practical reality of how you actually make it happen. Which is to say, do you have quotas how you approach hiring. If theres a female and a male that are up for the job, that have the same type of background, are you supposed to pick one over the other . How do you think about this . You always pick the best person oftentimes the best person, most qualified is a woman, if you look at the right pool of candidates and in Many Companies out there that are doing it right now, and womens forum of new york is honoring those companies that have at least 25 or more women on their board, and Companies Like General Motors, you know, not necessarily female type of product, you wouldnt think. But women do have views in terms of how a car should be designed. And so you look at candidates, and you pick the best ones, and you often find women who are not necessarily in ceo position but in other positions and are highly, highly qualified just getting down to brass tacks, in terms of making the decision, you say to yourself, i have a job oepg. Mmhmm. Do you have to say to yourself, consciously, were going out and were looking for the most Diverse Group of people, candidates, that we possibly can i dont want you coming back in this room unless youre handing me a group of half a dozen people, and half of those people should be women . Yes so when i do searches, my slate of candidates are at least half of the candidates on the slate are women. And our placement rate is 85 . Women or minorities. Ceos and Board Directors have to be intentional, and focused, about putting more women on boards and they have to open up the pools of candidates to beyond the usual names. Right and beyond ceos but you have to tell your search firm or whoever how much of that is a cultural phenomenon . Meaning you have to have the right culture to get to that place. And we were talking in the beginning we mentioned uber. It seems to me that in startups, especially, early on, right, a startup is usually a founder and a couple of their friends. And so its your own cohort for the most part. So if its a guy it might be a couple of guys who get together. If its a woman it might be a couple of women who get together it is about how do you set that up properly it is about from the top. Its the ceo at the top, on the boards, its the chairman on the board at the top, as well. And the womens forum did a survey even on this whole perception, a lot of male Board Members dont think theres a problem with women getting on board. Can you talk a little bit about what you learned we did a survey and other surveys have been done like this, too, which shows that men do not see that theres any issue with equality on board and women say theres a huge inequality and then men also say that equality has already been achieved and why do they say that because 60 of boards do have one or two positions filled with women. So, they say one and done, or two and through, when it should be four and more but talk about the companies that have a lot of women on their boards, and the results. The shareholder values that theyve created. Yes, so if you look at Credit Suisse, the peterson institute, they have done surveys about the financial returns. Right and so you look at Credit Suisse and they look at 3,000 companies, and the r. O. E. Was 16 versus 12 and the net Income Growth was 14 versus 10 . Of 3,000 companies and they repeat that survey like every two or three years so, the financial and the Business Case has been made. But you still need to have in terms of the top you still need to have your ceos and board chairs and looking around and room and saying gee we all look alike. We need to do something about this and companies, like i said, General Motors, macys, boyle was a company that went public at ing four years ago it had no women on the board now they have over 40 why . Because rod martin, the ceo, was intentional. Right i was at frontier, i had five women on our board, in our top operating group, 50 were women. And the last year i was ceo we delivered an 85 csr you think that was intentional . Or do you think that it just it was not an unconscious choice but a choice just given who you are . Its totally intentional. What you want to do in the telecom space, 60 of the decisions are made by women, in the home, and new businesses in our case, for rural america, Small Business is our livelihood, and a lot of them are run by women so you want to have that right kind of a balance to deliver the right capabilities to your customers. Breakfast of corporate champions is coming up youre going to celebrate. November 14th and andrew im going to be there youre going to be a moderator for the ceo panel. I am indeed andrew, 60 of the decisions in the home are made by women. How about and almost 90 . How with us 90 85 of purchasing decisions are made by women. Thats not a joke im just talking about telecom. Thats low. You guys may not control the tv im talking about important decisions made in my home are made by my wife. Thank you, janice, we will see you in just a little bit we have to look at the u. S. As number 14 in the world. On this issue on this issue and were moving half a percent a year for 20 years. So at that rate, fearless girl down on wall street is going to be 70 years of age right imagine your daughter not going to happen. Well see you november 14th lets celebrate it. Breakfast of champions. Thank you very much coming up, why investors arent too happy with Google Parent Company alphabet after its earnings report. Well talk to an analyst plus a Crucial Senate vote on health care today President Trump tweeting after seven years of talking we will soon see whether or not republicans are willing to step up to the plate. The republican senator John Barrasso joins us next my experience with usaa has been excellent. They always refer to me as master sergeant. They really appreciate the military family, and it really shows. Weve got auto insurance, homeowners insurance. Had an accident with a vehicle, i actually called usaa before we called the police. Usaa was there handson very quick very prompt. I feel like were being handled as people that actually have a genuine need. Were the webber family and we are usaa members for life. Usaa, get your insurance quote today. What if we could bring you by having better values . At blue apron, we work directly with more than a hundred family farms. So instead of spending on costly middlemen and supermarkets, we can invest in the things that matter most making farmland healthier. Cutting down on food waste. And bringing you higher quality, fresher ingredients for less than you pay at the store. Because food is better when you start from scratch. Get 30 off at blueapron. Com cook good morning, and welcome back to squawk box here on cnbc live from the Nasdaq Marketsite in times square. Among the stories, front and center, five dow components reporting earnings this morning. Four of them, dupont, caterpillar, United Technologies and mcdonalds reported better than expected earnings 3m was the only one to miss estimates, and you can see big movers in the dow helping what was a triple digit gain. Havent looked on the last five minutes about whether it was still up over 100. But caterpillar and mcdonalds are really chewing the dow this morning. Terms of seagate are getting hit hard in premarket trading. The hard disk drivemaker reported 65 cents a share. Analysts were at 98 cents. And americans are spending a record amount of time on Home Improvements according to a Harvard University study, 316 billion dollars will go towards remodeling this year thats up from 296 billion last year analysts say thats a reflection of the strong Housing Market and growing Consumer Confidence. And lets look at the future, which were alluded to. Yep, still up almost 140 points on the dow up over 8 on the s p nasdaq down on mostly move in alphabet not helping only down two points now biogen is about 4 on its earnings lets get back to our guest host maggie wild reporter former chairman and ceo at Frontier Communications i know you stepped down, youre not executive chairman, havent been for awhile now, but the stock is down 81 over the past year and josh resnik of jericho capital in may said that frontier was one of his top short positions. I want to ask you a couple things about this just to get your response. In may, when the stock was down 30 , he said this is the longest standing short in my career, now clocking in at almost five years. Sadly that relationship is likely coming to an end soon because we think its going bankrupt it is going bankrupt well ive been out of frontier 100 for almost two years now. So im not active on the board im not involved with the company. I am a shareholder im not a happy shareholder today. Because i dont like where the stock is, either i think there are things that the Company Needs to do to really focus and turn it around. And its about sales growth, and its about managing the business appropriately to be competitive in their marketplace i will say this, theyve got great revenues, theyve got 40 operating margins. Theyve restructured their debt, so they have long, long way before any of those debts come due. But they have to get with the market the last thing ill say is that the rise in acquisition, they have purchased the best networks in california, florida, and texas. And what they have to do is show what they can do on those networks for their Customer Base and following up on that, i just want to get your comment on this, one month after celebrating the verizon deal she left her position as ceo and was promoted to executive year, less than a year after that she quietly resigned as chair, left the board completely, curiously, though she continued to serve on the boards of costco, hp and juneau which begs the question why should she leave the board of the company she probably knew the best look it, after ten years as ceo of a company we had a very proactive transition, it wasnt quiet. We had announced when i decided to step aside as ceo that i would only stay on the board for a short period of time i dont believe that exceos should hang on the side of the building i think they need to move on so the new ceo has the opportunity to do what they need to do which is exactly what i did. So it was a totally planned strategy over a five to seven year window. Wasnt something that happened overnight. The insinuation here is that you knew something that others dont, you stepped away from the company entirely, and the stock continued to go lower. But absolutely not true as i said, the last year i was there, we had very Strong Performance. Thank you for addressing that maggie youre welcome. Check out shares of alphabet. The google parent reporting steep drop in Second Quarter profits do to massive antitrust fines and eu regulators. The tech company reporting a 23 drop in the key costs. Joining us now, michael graham, Senior Analyst michael good to have you we had an analyst previously on earlier today and said the focus on the overall Revenue Growth 20 plus percent overall Revenue Growth for i think five quarters straight and yet we are focused on cost per click, traffic acquisition, margins that are down yearonyear. Whats the right take on this company here you know, i think Revenue Growth is really important, and its really the core Google Properties Revenue Growth rate which was 19. 6 . So just getting to the psychologically important 20 level and i actually think they can do that again next year. I do think after 2018, though, the growth starts to become a little bit harder to come by a big part of the reason that the growth has been able to reaccelerate is due to ad load they raised the ad load on mobile search quite a bit and raised the ad load on youtube quite a bit so thats helped that growth rate recover one of the things that were really focussed on in addition to revenue, though, is gross margin because their Fastest Growing Revenue Streams are the ones that have the lowest marnens, and so were actually looking so youtube, mobile apps and all are great businesses and by the way, google is a very wellrun company ive had a buy on it since 2011. Until just a few weeks ago when we decided that, you know, there were other good opportunities, so we do think gross margin is going to come down over the next several years. And you know, internet is a pretty interesting sector, its sort of, there are a lot of really attractive stocks to look at we like netflix and amazon, facebook, all of those we think have really robust growth profiles google is a great company, a Bright Future so you would buy on this pullback you have a you wouldnt buy on this pullback . I would wait a little bit i mean were not getting, you know, much of a pullback as joe said earlier just down very slightly today. I think its going to be one of these things where estimates are going to have a hard time going up youve got a historically high multiple, and so i feel like over time, you know, some of the other stocks might outperform. Michael, thank you. Michael graham, canaccord committee. President trump firing off several tweets this morning. A few about health care and one that i just saw that i dont think weve mentioned yet. We probably dont. Weve got someone thats here to do that. I can read it right now. Actually, theres two that have recently come out. Let me just read this. This will be an interesting day. For health care. The dems are obstructionist but the republicans can have a great victory for the people i think thats the most recent one. He followed that up with, will be traveling to the great state of ohio tonight. Hes right great state. Great state of ohio. Big crowd expected see you there. Earlier the president tweeted obamacare is torturing the American People, the democrats have fooled the people long enough, repeal or replace. Or, just repeal thats all. Anyway i have a pen in hand joining us now Republican Policy Committee chair senator John Barrasso senator, good to see you good morning. Thank you. Weve got the basic outline of whats happening. I dont know whether you are in a position to fill in some of the blanks, or at least provide some color mccains coming back does that mean that vote, his vote, will bring this to a debate are you confident thats whats going to happen . Youve got the vote . Im confident, im committed to it. Were going to meet today at noon the Vice President will be joining us, and then we will vote after lunch on this motion to proceed to whats actually passed the house and that will begin the legislative process. I am so delighted that john mccain is coming back. You talk about somebody with courage, and with character, and with credibility i mean that is john mccain people are going to be just so happy to see him im glad hes here engaged in the fight. Ive seen it said, senator, that whatever it is today thats voted on is just a vessel to get to the debate where there will be amendments and Everything Else but, can you give us anything . I mean, its not a clean repeal, because i assume that murkowski and cap ito and some of the other senators that wouldnt go for that, i dont think they looked like they were ready to turn so maybe makes me think you got mike lee and senator moran from kansas are they on board now, do you know, with some type of repeal and replace that you had before . Well, the first vote of course is to just get to the debate on the floor. Which is the housepassed bill and that can be amended. I was in the wyoming state legislature for a long time. This is what legislation is all about. You then offer amendments. And i am sure someone will offer the amendment to repeal the whole thing. Someone will offer an amendment to proceed to the senate bill that weve been working on, which actually lowers premiums by 30 a replacement bill that protects the most vulnerable. The people that medicaid was set up for in the first place. And to actually give people more freedom and flexibility by getting the power out of washington, and back to the states and thats what im proposing right now. You couldnt do the just moving the debate last time. Who has turned well, this is just a motion to proceed to debate the bill. Weve been saying for seven years that we need to repeal and replace this and the house version . You move to the house version. Thats what the legislation is all about. Were using the budget process as you know so you have to pick up what passed the house thats the starting point and then thats where the amendments come so we will vote on many amendments its a bipartisan process. Republicans will offer amendments democrats will offer amendments. Some to improve the bill some may want to put on amendments that would kill the bill but ultimately, you get the final amended product and then vote up or down on what that final product looks like my goal is Affordable Health care for the American People thats whats been promised. The democrats from bill clinton to Bernie Sanders will all tell you that obamacare failed in its basic promise. Prices have gone way up. Control, individual control has gone down. Choices have gone down and the cost to the taxpayers have been extraordinarily high so, senator, one of the things that everyone has talked about with the pros and cons of doing this reform is medicaid. And access to health care. Can you talk a little bit about what you think can be compromised in order to get a bill done . Well, youre absolutely right. And a lot of it has to do with the fact that some states expanded medicaid, and others did not. Im from a state that did not. But as a doctor, i will tell you, medicaid was set up primarily to affect and help people who are most vulnerable right noincome women, children, and people with disabilities well, with obamacare, it expanded medicaid, and paid bonuses for states to sign up ablebodied, workingaged individuals. My goal is to get those people on regular insurance and we have that in the republican bill. But what we found out with this medicaid expansion, is its crowded out those who are the most vulnerable, because now there are so many people on this expanded medicaid, that one out of three doctors wont take new medicaid patients, which means its harder for those who are the most vulnerable to get to see a doctor in the first place. Its also hard for the hospitals who wind up picking up the tab for the nonpay on medicaid, as well. I mean it can be up to 20 for hospitals, and they still have to give treatment. So, its theres a lot of gives and takes i know going on here is there a way to maybe ease out from those states that have actually implemented the medicaid part of obamacare to make it less painful for them to make the transition . Well thats why im happy with the senate bill because the house bill just abruptly stops the transition and doesnt really provide for a smoother transition. I support a smoother transition for those states and specifically for those people, so they can get on regular insurance. There are people that have been left out under obamacare that are included in terms of the ability to buy actual Health Insurance under the republican plan i know youre focused on this, senator, but, you can do more things than just this at once the president this morning has got some Different Things that hes interested in one is more talk about attorney general sessions, which it doesnt seem like he has the confidence of the president at this point do you have any insight into what is likely there, even one of your colleagues, senator cruz has been mentioned as a possible replacement. Do you know anything not anymore than has been reported but i will tell you i worked with Jeff Sessions for 9. 5 years in the senate. He is one of the most honest people you would ever know he is a man of very high integrity. And he is an eagle scout and i know the president was with the boy scouts yesterday. To me Jeff Sessions embodies all of the things that are great about boy scouting and eagle scouts, so Jeff Sessions has my confidence senator, would you therefore encourage the president to stop the tweeting and the commentary . The president will speak for himself. Im focused today on health care, Affordable Health care for the American People. Thats where the efforts are today, im continuing to work with my colleagues to get to the 50 votes that we need this afternoon to move to proceed to the house passed bill, and i know Vice President pence will be here if its necessary to break a tie. Good. So get there so we can do tax reform, too. Thats important to the American People well, tax reform, infrastructure yep obviously the president has been very successful eliminating so many of the burdensome regulations that were out from the past administration, and i was home in wyoming this past weekend, and i continue to hear that were hiring more people. People are getting put back to work and a lot of it has to do with eliminating these expensive, timeconsuming regulations. Senator, who came up with the new the new democrat platform was that schumer himself, the better deal . You know, the you guys worried . I dont know about 19 and 20 at this point you guys worried you know, this Resistance Movement out among these democrats and really, you know, Bernie Sanders and Elizabeth Warren have taken over driving the train for the democrat party, way to the left there for britishstyle Health Care System and they even blocked, and i will tell you this as a guy from wyoming, they blocked the national day of the american cowboy, which has always weve done it for the last twelve years but the democrats have even blocked that they are blocking everything we need to get beyond this the country needs to move ahead and im focused on jobs, paychecks, prosperity for the American People. From being from wyoming, senator, thats low, youre right. That is low. No cowboy day. Thats you anyway, appreciate it, senator barrasso thanks. Thanks for having me great politician and a Great American up next, the camp thats teaching 7yearolds about supply and demand, currencies and entrepreneurship i love this. Stay tuned youre watching squawk right here on cnbc. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. 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. 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To make sure that you identify where your utilities are if you are gonna do any kind of excavation no matter how small or large before you dig, call 811. Keep yourself safe. Welcome back to squawk box, this morning sorry. Well let you all in on the secret in just a minute. Weve got to talk about camp for a second as everybody may know, i love summer camp. I went to camp cedar, sleepaway camp summer camp most often means relay races, skinned knees, water balloon fights apparently we can add fx markets and Global Economics to all of this joining us is rich martinez, president and ceo of the Young American center for Financial Education which runs summer camps for kids all about money rich, this is like, you know, right up this is perfect. For squawk box. How did this happen . What is this well, we have a lot of different aspects to our organization one is the worlds only bank for young kids under the age of 22 so its normal for us to get kids started talking about money at a very early age. So where do these camps go on how does it work tell us. Yeah, so at our headquarters site in denver and we also do it at our lake wood sites but its a daylong or weeklong day camp where kids come to our sites. For this junior Money Matters camp for 7yearolds they got a chance to study basic money management, as you talked about, Global Economics, and then, of course, our Free Enterprise economy, and then getting them set up to start earning money and become entrepreneurs. Is this a sleepaway situation or how does it work . No. Its a day camp. So theyre with us from 8 30 to 4 30 monday through friday what are the ages so, this camp is 7 through 9. But we do camps 7 through 13 now do most of the kids say to their parents, i heard about this camp, i want to go to this camp are most of the parents Hedge Fund Managers who want their kids to become how does walk us through the thinking here whats visiting day like well i think its a lot of kids that are very interested in money. Theres also the parents that are saying, you know, i want my kids to learn from somebody other than me. Maybe theyve made kids to leam somebody other than me maybe theyve made mistakes, but having a third party in there. We also do schoolbased programs these kids have heard from older siblings, their classmates and want to come to this camp. In the early days, bill daniels started a bank for kids in denver and was very focused on teaching them about money at an early age so they could be responsible. Is this sort of the next step of education for kids yeah. Its two different sides the bank is the real piece the camps are the simulations to get them ready forthe real banks. They fit together nicely. Is there a waiting list or how popular are these camps . Yeah. So, this summer well put abo about,000 kids through summer camp on our site they fill up very, very quickly. We open up enrollment in january and we are about 80 full by march. And so it is yeah, it becomes slim pickings on those spots when it gets towards summer. Financial literacy is very important. Its low. Its low so we need to make it did you make lanyards . What good was that why couldnt i learn something about money . I havent made a lanyard think about if you had learned by the way, its gone off the charts my wife is going to be objeupseo saying this. My boys will try to buy toys from each other. Theyre trading the toys. Excellent. And track by the way, curveball for you. 6 1 2yearolds, what do you think a proper allowance is in this day and age zero yeah. No about 20 bucks a month sounds good. What . Inflation going on there. It has to be pay for performance, though. You have to do chores. Otherwise, you get no allowance. Lets teach them right early on here. My kids ask for money and i give them money. We dont do that. I do. I think were doing about 2. I need money. They need money. Now my kids are using the money to buy each others toys from each other. Thats okay thats the art of negotiation. Thatsnoerood ath gskill. I agree, joe, leave your wallet in your pocket i think that shes a very nice girl. You never got the brakes looked at . Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. 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. You are loved lets get down to the new york stock exchange. Jim cramer joins us now. Whats going to be the star of the day . Between caterpillar and mcdonalds caterpillar has a very strong story to talk about all the transportation, resources, construction every single line looks terrific mcdonalds, i cant believe how much easterbrook has blown away overseas people kept saying this has to end. You cant keep this streak up. He has accelerated the streak. Caterpillar, blowing away the numbers. Have to raise numbers very big and mcdonalds has to stay on that that stock could very easily see much more to gain than just 3 bucks today. Jim, thank you. See you in a few minute. Thank you, melissa. Great to see you. Tonight on cnbc, do not miss a new episode of the profit. To keep our community safe. Before you do any project big or small, pg e will come out and mark your gas and electric lines so you dont hit them when you dig. Call 811 before you dig, and make sure that you and your neighbors are safe. 811 is available to any business our or homeownerfe. To make sure that you identify where your utilities are if you are gonna do any kind of excavation no matter how small or large before you dig, call 811. Keep yourself safe. Our guest host this morning, peggy, you threw in a quick tax reform plug. Thats something that that is bipartisan, isnt it it is. Although im not saying you necessarily need to youre on the other side of the aisle necessarily. We have some similar viewpoints. Absolutely. Free markets are good. Free markets are very good, yes. Jobs are mostly generated in the private sector. Yes. Nice to have a government that puts some goggles on, maybe, as long as theyre wide enough what you were saying about i didnt get involved in the Net Neutrality situation but the position that it makes things totally not neutral. It makes it totally not neutral. Roll it back let the marketplace decide thats how it should be. What happened to the last fcc guy . He seemed to share that opinion for a while and then totally flip flopped and went to basically a utility model. Yeah. I think taking, you know, reform from the early 1900s and applying it to the new world is not a good solution. The new World Companies are the ones that benefit. They did actually. Not frontier, if you could invest in one telecom type company today, which one would it be . If it were not frontier im a big shareholder of at t andverizon, i hold their share as well. Theyre Great Companies and zbrat futures ahead for them as well i have to give a shout out to costco, which im on the board of great company. Doing great things. Come back because i want to talk about walmart and amazon. Exactly. Squawk on the street is coming up right now. Good Tuesday Morning welcome to squawk on the street. Im carl quint nanilla with dav faber. Strong earnings, watching the senate as mccain returns for a Health Care Vote the president tweeting and pressuring Jeff Sessions futures are up germany is s