Transcripts For CNBC Squawk Box 20170731

Shanghai up. Early trading in europe, modest advances across the board. Cac is up. If you look at crude oil, last week was big for oil up 4 for the week, in spitting distance of 50. Up to 49. 78 a barrel. Corporate news the big one, Charter Communications announced it is not interested, i repeat, not interested in buying wireless carrier sprint follows news friday that sprint was interested in merging with charter to create a media outlet controlled we understand why a deal is attractive for softbank. Could kill any chance of deal between the companies. The wall street journal saying the ceo could make a formal offer anyway take a look at shares of sprint. Put context around whats going on sprint up close to 6 . Charter up marginally as well. Surprising sprint is where it is sprint had been talking back and forth to t mobile. Thats been the natural partner. T mobile effectively spurned sprint and sprint has gone on this sort of merger talk spree with anybody who will listen surprising to see it up more than 5 , even though charter says good for them. That part is surprising whats going on, youve been hearing chatter about sprint Warren Buffetts name was raised as somebody, any name they could put out there, all in part i would contend to bring t mobile back to the table. Well see whether in fact something happens here a busy week for earnings as joe mentioned, Economic Data coming up on the agenda. Today we get chicago pmi, pending home sales tomorrow, personal income, ism manufacturing index, july auto sales. Wednesday look for the adp employment report. Thursday, ism Services Index and factory orders, topped off by the july jobs report friday morning. On the earnings front, about 120 Companies Reporting in the s p 500 this week, big names, pfizer, apple, aig, tesla. Viacom in political news, day one for the new white house chief of staff, john kelly. Good morning. The new chief of staff has a full plate after a weekend characterized characterized by threats President Trump and shinzo abe talk about a grave and growing threat from north korea following a missile test with longer capabilities, this time with the potential to reach new york or chicago. The u. S. Responding with show of force, fly over of the Korean Peninsula that took place over the weekend. Pacific air force commander in a statement saying diplomacy remains the lead, however, we have a responsibility to our allies and our nation to showcase our unwavering commitment while planning for the worst case scenario. Domestically, the president threatening congress and insurers in a series of tweets after failed votes in the senate, calling republicans quitters and saying the white house will not pay benefits for lawmakers or subsidies for insurers that the president called bailouts. The white house is expected to make decision on those reimbursements this week secretary price when asked about them was noncommittal. That the court made a decision that those payments were made illegally. Thats working its way through the court system, and it will. But again, what the president wants us to appreciate and wants everybody across this land to appreciate is that the system is being propped up in a way that makes it so it is not working for people the white house hammers health care, tuesday Small Business event at the white house could serve as a venue t start selling tax reform as you mention, the cabinet will see a fresh face President Trumps new chief of staff, general john kelly will begin that role today. An attempt to regain footing and reset the agenda Going Forward back to you. Lot of people are talking about the role of chief of staff, what to expect and what to expect with this president who does have his own way of doing things. Well, the chief of staff is generally exactly as it sounds, the chief of staff, but there are some questions about the effectiveness of Reince Priebus and the respect that other officials internally have for him because very few people ended up reporting to Reince Priebus. Secretary kelly, call him secretary kelly, he is the outgoing Homeland Security secretary, but general kelly is said to be asking for everybody to report up to him and is trying to consolidate some of the Power Centers within the white house, but well see how it plays out in reality versus in theory. Already working just called him general kelly. Like i dont know. I think i would probably ask him if i was going to do something, general, sir anyway, interesting to watch how do we know, it is like monday whats going to happen this week have you thought about that . If you think about last week and what happened. News cycle and all the things. On the cusp of another week. Many republican strategists called last week the worst week of the administration. Not for us. For who . Not for people watching in the news business. But in terms of terrible for the country. To have sandra, dont get dramatic anyway, kayla, thank you i wasnt trying to start anything look at the the wall street journal headlines trump deepens gop divide fuels frustration in his party why are you not thinking this is a terrible week . Relatively horrific week for everybody. New york times has elites on both sides dont like trump elites on the republican side, bill crystal, all the elites, i didnt know you would be in an off mood today the situation concerns me greatly. John kelly is an up tick. Getting new blood to get a more orderly reporting. Being head of Homeland Security made me feel a little safe north korea is a huge situation. You have in geopolitical news Vladimir Putin saying russia is expelling 755 americans from diplomatic staff in the country, could impose measures in the future this comes as the president is ready to sign sanctions against russia passed by congress. State department calls the decision to cut hundreds from diplomatic staff regrettable, uncalled for act. Maybe worse if we were in venezuela. I might be more concerned. Following a developing story out of venezuela protests turned violent in the wake of that election. President maduro pressed ahead with a vote to create a constitutional super body to rewrite their charter, despite threat of further u. S. Sanctions and months of opposition protests opponents say it gives him the power to rewrite the countrys constitution there are so many questions about what happened with the vote that outsiders say probably half the yes votes were legitimate yes, leading to all sorts of things they say the vast majority of venezuelans would not be in favor. Hsbc Second Quarter profit rose 57 the bank says it continues to see benefits from a turnaround plan that it launched for 2015 announcing 2 billion stock buy back heineken reporting better than expected results for the first half of the year strong Profit Growth in europe, thanks to a late easter holiday, early start to warm summer weather. And sanofi, french drug maker reports strong sales growth in Consumer Health and vaccine divisions. I would think the failure of Health Care Puts you in a great mood the democrats are taking self east, celebrating. It was a great week for health care how about the markets . Lets take a look at the markets this morning again as we see positive numbers almost every morning. It is jobs week. Were going to look at the broader markets now. But a series of new highs again, 20 since the election head of investment strategy, how are the earnings werent earnings pretty good last week . Really good isnt that something . We have 6 top line growth, double digit Earnings Growth doesnt seem to matter whats going on in washington it is like the second year in arow of seeing double digit Earnings Growth. We emerged out of earnings recession about a year ago and indeed, this type of Earnings Growth is more than enough to support current valuations level thats not something that everyone thinks right now. Well, people are nervous, theres been a bit of a narrow lead to the Market Technology up over 20 for the year but Earnings Growth is across the board. And of course it is important to look not just in the u. S. But outside the u. S. Revenue growth has been good, too, better than recent years. Thats right. I think thats the more important number earnings can be quite cyclical top line growth is more longer term signal to what earnings will be Going Forward in the future. Tells you the economy is doing well now we had blockbuster Consumer Confidence 121 on Consumer Confidence consumers are pretty happy as well. Weak dollar means revenue can only get better. Thats right. The weakness of the dollar is not enough to derail outside the u. S. Then theres opportunity in developed markets in dick as priced at a 50 discount to the u. S. Much of that performance came from weakness of the dollar. In local currency terms, still have relatively attractive valuation. So the market in terms of north korea, i guess its the black swan that everything would be effected if something really awful happened even casually not helping that much does the market know anything or the market is wait and see if youre thinking about black swans or Something Like north korea, the only thing thats going to work in that scenario are super Long Duration bonds. Zero coupon bonds will make money if theres derailment of the geopolitical situation but thats such a black swan, it is a risk not worth taking is it a zero percent chance he would try to launch a Nuclear War Head or lets say it is a onehundredth chance, i can see the market go down 50 if that happens. Yeah. The market either doesnt believe thats a real possibility or burying our head in the sand. I dont think you can price it in. I should say two things might work in that scenario. Zero coupon bonds nothing is going to work. Cash might not even be good. Depends on volatility going to pay off the puts i dont know, it is something i dont think we can fathom. Maybe thats why the market doesnt consider the possibility at this point. You would have to do exotic options. It is not that nobody calculates, it is such a by narrow situation, if it happens all over the world, only happens once cash wont help. We could be preppers. I heard from a Hedge Fund Way theres a way to hedge against buying south korean companies, sounds complicated for most of us you can always factor out the worst case scenario. In worse case scenario, you would have shorted samsung years ago, right smart thing to do, but would have been a terrible thing to do, a dumb thing to do ultimately if youve seen what happened to samsung. We have nine and a half of ten indicators looking bullish to take the risk of north korea becoming much more volatile than it is is a tough thing not just north korea, the relationship with china is fraying, potential for trade sanctions to come as a result, our relationship with russia is fraying, heard people the worst we have seen since the cold war. Does that matter i think that volatility is likely to tick up a bit, even in the absence of black swans coming to fruition the notion we can have the vix below ten for a protracted period of time is unlikely even modest upparticultick in vy is likely to ensue in the next it year. Thank you see you in the near future when we come back, snaps first lock up expiration is today. They can sell shares the First Time Since the ipo, could be a sell signal for a stock under pressure mark ma haney will join us next to talk about it are you ok . What happened . Dad kinda walked into my swing. Huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac who knew that phones would starentertaining us,ng . Getting us back on track and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save when you choose by the gig or unlimited. Call or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network, designed to save you money. Looking for a come back. The ousted uner ceo says he is Steve Jobsing it, hopes to return to lead the company again. Always felt this may be the case i think. I just dont see how people write him off easily, he is not a ceo brought in to run the place, he is a major owner, biggest shareholder. I dont think he gets brushed off so quickly. Kalanick resigned from his position in june, referencing apple founder who was fired and later returned after meg whitman declined to be considered for the ceo job, the search is down to all male ceos, one is a person of color also a piece in New York Times that said that the second they heard meg was out, a board member they showed the reporter the Text Messages and it was a board member . Board member seemed to show the reporter what the Text Messages from the Board Members were back when they they all learned about it from meg whitman tweeting about it. Not because she apparently called she was the horse they were betting on early investors and employees and insiders at snap, Parent Company snap chat can sell shares the First Time Since the ipo. It is expected to put pressure on that stock. Plunge below debut price now down to 1349 you remember the original ipo price was 17. Joining us to talk about it, mark mahaney is this a buy on the dip situation or is there more room to go down, sir . Well, this lock up, you always have selling pressure going into it. My guess is this helped find a floor on stock you have earnings coming up, big indicator what happens with the stock. We like the shares, estimates havent changed much, still like it, have a 31 price target and are sticking with it is that a turnaround, the stock will turnaround after we hear the Earnings Report is that the trigger . Whats going on here there are two catalysts on the stock. First is just like with twitter, users matter most. It is daily average users. They need reacceleration we think theyll get that end of this year, beginning of next year in part as they fix the android integration problems theyve had. And they continue to roll out new features thats point one required for the stock to move. Second, they rolled out Self Service Advertising solution, need that to stabilize ad Revenue Growth one of those two factors is the catalyst behind the stock. Lot of people worry about the competition, namely facebook you look at the numbers they have, does that give you more hope or less for snap . Its the single biggest risk group since we initiated on the company. It is going to be because facebook and instagram have enough innovation, come up with their own innovative features that it undermines growth, we like ongoing productivity and innovation, snap maps was one of the more interesting features in the space for awhile they have to continue to do that if they do, this team has a pretty good track record shares should work wroyoure expecting stock too up, what do you think the true down side is i dont think we are far from it let me throw out numbers the stock is trading ten times sales. High multiple, but twitter is growing five to six time sales and its revenues are declining facebook also trades close to ten time sales with 50 growth i think theres a lot of valuation support for the stock here glad you brought up twitter bar ons had a story on twitter over the weekend could be on way to hat size, because of comparisons you compare twitter to facebook, facebook is growing, twitter is struggling how do you see twitter now we continue to have a sell on twitter. The market is assuming that Revenue Growth there, they can recover to Revenue Growth. Regain that momentum and not only that, has to be decent growth, talking 10 to 20 at least implied with that kind of price to sales multiple, thats a hard thing for this company to pull off. Advertisers, surveys, both come back to us looking for those things to turn if we dont, theyll turn their term stock remains under pressure that stock continues to fall, 14 is the price target with twitter. What do you think happens to that company, need to get bought. I think thats a reasonable outcome, but thats many years out. I think thats a scenario that three, four, five years out before acquisition occurs, and if it did, would probably occur with a yahoo multiple, five, six, seven times cash flow, not sales, and thats a much lower price than today. Appreciate it very much hear youre on a cell phone this morning. And it is working. What service is that, given we were talking about sprint . Verizon all is good. Very good mark, appreciate it. See you soon thanks. Sprint hired that guy they cant do any better than that hes everywhere. Again, it is like can you imagine being that guy wherefore the last ten years, hasnt had to do anything first it was verizon, now it is sprint seriously. I mean, thats this guys job cant find anything else coming up, big changes and new challenges for the white house north korea is testing a long range missile that could hit major u. S. Cities. U. S. Responded flying bombers over the Korean Peninsula and testing Missile Defense system expert analysis next 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. San fee. Good morning u. S. Equity futures, last time we looked in the black up 43 on the dow nasdaq looking to rebound after volatility, interesting trading toward the end of last week. S p 500 up a little over three quick look at treasuries which were back below. 229 with ten year. Oil has been strong, up close to 50. All the things playing into the overall scenario what are they drilling can you hear it . Jackhammering above our heads. Why were talking louder, turning up the volume to hear everybody. It is not outside, it is inside. Above our head. Can we talk to somebody about this it is annoying. What are they doing come on. What are they working on this is a Live Television show on. Why do they start at 6 00 a. M the only union in new york city that is starting at 6 00 a. M. Probably because of traffic get into the city earlier, get out of the city earlier, we get it in geopolitical news, President Trump spoke with shinzo abe this morning about the need for more action on north korea. Over the weekend north korea tested an intercontinental Ballistic Missile, the second in a month. United states and allies responding by flying supersonic bombers and fighter jets over the Korean Peninsula yesterday in a show of force the u. S. Ambassador to the u. N. Nikki haley tweeting late yesterday that shes done talking about north korea, adding china must act. Her comments echo sharp words from President Trump over the weekend, the president tweeting i am very disappointed in china. Our foolish past leaders allowed them to make hundreds of billions of dollars a year in trade yet they do nothing for us with north korea, just talk. We will no longer allow this to continue china could easily solve this problem. For more, lets bring in former Defense Intelligence officer and department of National Intelligence official now with the Rand Corporation and patrick crow nan, from the Security Program for new american security. Mark, start with you how dire is the situation now, in terms of Security Threat . I think the situation is very significant and its becoming more perilous with each of these tests. What were seeing from the North Koreans is an effort to solidify their regime in the face of what they see is threats from the outside world. One of the problems this presents is that the North Koreans over time have a lot more ability to provoke u. S. And its allies and others in the region into providing them with sorts of things theyre looking for over time, that is stability for the regime, whether from funding or from other things theyre trying to get the u. S. And allies to stop doing, such as military exercises to bolster our defense. The latest missile, some say could reach as far as new york heard denver, chicago, los angeles all in reach where do you think we stand in terms of what they would be able to do at this point . I still think it is too early to tell. A lot of data is coming back now, analysis being conducted on what happened with tests, theres dispute about the capability of the missile systems. The program highlighted by chief of staff of the army over the past week is beyond what we had expected it to be at this point. Some of of the Intelligence Community estimates on when this capability would be online have been revised forward looks like possibly within the next year and a half there could be a working intercontinental Ballistic Missile. The degree to which that missile will have an effect, again, as you know, depends on the range but even if it is able to range targets in alaska and hawaii, that presents significant challenges for the u. S. In terms of protecting our population, and also from a military standpoint, being able to protect our most important military assets. So regardless of the range, i think this is a significant problem and North Koreans have shown determination and ability to move forward withthis program on many levels. Patrick, we will get to you in a moment. Mark before we do, just about every military expert in recent months says theres no alternative, south korea is our ally, within striking distance and anything we did would have massive detrimental impact on south korea. What do you think . Yes i would agree with those sentiments, even before this capability comes online, the North Koreans have a significant number of tools at their disposal to bring significant destruction to the south Korean People so many of the discussions about decapitation, surgical strikes carry significant risk, not only risk of retaliation from North Koreans but question of what happens if those strikes are in fact successful. You leave north korea with a situation that may be much more chaotic than currently exists and potential for loose nuclear weapons, loose wmds in north korea, that presents a whole host of new security challenges that will be very difficult for the United States to deal with patrick, lets talk about what that does leave us with, thats the option of trying to get china to put additional pressure on north korea. Obviously theyre the lifeline, doing most of the trading with that country, and President Trump laid it out cleanly. Our trade with china is at risk if they dont do anything. Where does that stand . The overall u. S. China relationship matters more to both beijing and washington than it does dealing with north Koreas Nuclear problem. Thats the reality we have Nuclear Deterrents with north korea. Even though it is on the cusp of crossing a threshold, being able to reach the continental United States with an intercontinental Ballistic Missile, the United States has to cajole and pressure beijing to try to clamp down on banks and other entities doing trading in business with north korea. China has resisted a lot of this pressure and theyre not happy with Congress Passing sanctions bill now pressuring the white house and the United States to sanction chinese entities doing trade with north korea so china in the short term is going to react negatively to new u. S. Sanctions thats my prediction this is going to lead to downward spiral in the short term in u. S. , china trade and relations, but will maybe come out in the coming months with a new deal with china. Both on trade and on maybe agreed diplomatic approach to north korea. At the moment, things are going to get worse before they get better. Things are only going to get worse before they get better, but you think at the end of this months from now, we will be in a situation where china is putting a additional pressure on north korea . China will put increased measure on north korea to get back to the bargaining table, theyll put gradual pressure on the United States to get back to the bargaining table you sound like were moving toward the chinese plan, more talk, more diplomacy which President Trump says were not going to do any more the reality is were stuck in unsatisfactory middle policy between doing nothing which is unacceptable, trying to eliminate the problem which is not acceptable at any cost people can bear, so we can only contain north Koreas Nuclear weapons, manage down this problem over time, ultimately that leads to some kind of diplomatic framework it may not work, but it is going to be tried. Mark, would you agree with that assessment, eventually we will end up with a north korea with Nuclear Powers . Yes i think all indicators point in that direction, and i think patrick highlighted the point. On this program, Missile Program in north korea as well as Nuclear Program is not recent. This has been going on since the 1990s, developing these technologies and view these as central to their Regime Security i think as we look at getting china involved we have to be very clear about what it is were asking them to do. Chinas ability to convince and persuade north korea to give up this capability i think is limited. The relationship between china and north korea diplomatically has been frayed and been fraying for some time. I think the best means that might be available, but i think unlikely theyre going to work, is to get china to really take on some very tough sanctions against north korea. But the chinese over time have shown significant unwillingness to do that the other key player here is russia over the weekend the russians retaliated against the United States sanction bill, getting u. N. Security Council Action by continuing to pursue that would have been extremely difficult if not impossible barring those two being able to step up and put some pressure on north korea themselves. I can understand the president s frustration, the answer is there are no solutions, youre stuck letting someone who is probably not a stable actor, same character we are dealing with detente works with people that are rational and sane. Talking about other leaders you dont think are those things, thinking theyre going to be Nuclear Armed powers at that point, i understand the massive frustration. What would you do, mark, in this situation . I think what the United States needs to do is really think our Security Posture in east asia and we need to start coming open to some of the questions that north Korea Nuclear Weapons Program and Ballistic Missile capabilities bring to the table a few of them manifest themselves over the past weekend. Part of us argues maybe the United States needs a more aggressive or much more forward leaning security presence in the region from what we have which is significant the second piece is looking at south korea. South korea asked to renegotiate, relook at the missile range restrictions put on the offensive strike capabilities in addition, questions about bringing in more advance Missile Defenses and also there have been arguments in japan that the japanese need to look at having some sort of retaliatory offensive strike capability. The big issue here is that we need to think seriously about how to deal and live in an environment where north korea has these capabilities how do we think about deterrents, how do we approach our allies, more importantly how does this come up with china as we look at china, a lot of things on the table now could be on the table in the near future, things they dont want to see happen. Thank you both for your time. Thank you coming up when we return, tomorrow, key day for future it could create 6 billion in new market value out of thin air. We will explain what that means. Later, pharmaceutical industry ceo joins us, and tax policy in focus. Talk with Grover Norquist at 8 30 a. M. Eastern time stay tuned youre watching squawk box here on cnbc whats going on here . Um. Im babysitting. Thatll be 50 bucks. You said 30. Yeah, well it was 30 before my fees, like the pizzaordering fee and the dogsitting fee. And the rummage through your closet fee. Are those my heels . Yeah yeah, were the same size. In shoes. With tmobile taxes and fees are already included, so you get four lines of unlimited for just 40 bucks each. For a limited time save 300 dollars on the amazing iphone 7. And the wolf huffed like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Welcome back to squawk box. Time for the executive edge. Bit coin about to get an upgrade of sorts set fo take place tomorrow depending how it plays out, we could end up with a split in bitcoin. Hi, andrew. Tomorrow, august 1st, bitcoin goes through a Major Software upgrade that if successful could create two different bitcoins and bitcoin cash the goal is to increase network capacity, make transactions more evident, not all investors are supportive, leading to confusion and concern around the faith of the currency some told customers they wont support bit coin cash. Smaller ones will, but the level of spufrt in bit coin cash is unclear as most demand seems to be confined to asia. Disagreement over tomorrows upgrade resulted in high volatility in the price. Reached around 3,000 in early june, below 500 early july since then trading around 2700 the new bitcoin is trading in futures market around 300 so much cheaper than todays bitcoin. Which should you invest in most established funds say if you have long term conviction in bitcoin resiliency, depressed prices from uncertainty should represent an attractive buying opportunity. I am watching it closely still have some left from one week on bitcoin challenge. See how it trades and if we see a shift to new bitcoin cash. I still have that it is worth about 20 now. Exactly what we said would be the problem, right these things could get forked effectively. And more to come, too that was my question. How much more is to come experts say another in the fall this is what happens when a currency is in infancy these type of Software Upgrades are needed to evolve and become accustomed to demand. Why when they do upgrades, does it have to effectively open the spigot think about it like Microsoft Windows upgrade, when a new one is available, some transition, some stay on the old one thats why this type of new bitcoin is needed. Only difference is theres a monetary value attached. Appreciate it great to see you thanks. Dunkirk taking top spot at the Weekend Box Office Warner Brothers world war ii film down only 44 from the first weekend earning 28. 1 million according to com score it grossed 108 million domestically since release the new release, the emoji movie, did that need to be made, coming in second 25. 7 million started with strong sales friday, met with harsh reviews, decrease in sales over the weekend. Saying it got the poopy version. Write some plot. Yes, pretty much. Universal girls trip third place second week in a row, the comedy bringing in 20. 1 million. When we come back, u. S. Olympian christian son is preparing for a volleyball rematch. Talking sports, sponsorships and more. Right now as we head to break, quick check of the european markets now things in the green, but barely. The cac is literally flat. 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. You myour joints. Thing for your heart. 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. I can see scripps, the combination according to discovery will accelerate growth across linear platforms around the world. Create a Global Leader in real Life Entertainment 20 of the viewership in the United States. Adjusted earnings per share in the first year, after the close. Expected to close by 2018. Comments saying this is exciting new chapter for discovery. Scripps one of the best run Media Companies in the world with terrific assets, strong brands popular talent our business is about great story telling, authentic characters, passionate super fans coming together, scripps will be stronger, flexible, more dedynamic Media Company. It can be fully optimize, monetize theed meantime, were going to come back to that speaking more about that transaction. Adidas announcing it will be the official sponsor the Volleyball Team in town for a rematch against brazil airing. Theres a crazy rivalry with brazil what is that about it gets two story programs in the history of volleyball. Consistently been at the top brazil has a great culture of volleyball in their country, in the United States. Traditionally been very good also we have two of the top teams in the world a long time. Youre wearing adidas gear f the sponsorship . Because also you can be sponsored by a different company, as well, right . Yes so how does that work yeah, so i think the adidas is overarching usa volleyball so were required to wear aditdous at all times when were on the job for usa volleyball aside from shoes when were performing, because of the performance tools essentially. So adidas has been great for us. Do you think theres ever going to be a professional Volleyball League in the u. S. . You know, i hope so our new branded ceo jamie davis has talked about trying to figure that out and trying to get that going so really hoping for it right now theres not. Is there a model . Is there a country where theres where its a really, really big deal . Yes right now i play in italy. Italy has great, very strong professional Volleyball League so theres some very strong leagues in italy, russia and poland the main three a lot of players go overseas to play in. When do you play over there from september to around may. What is holding it back in the United States . What does it really need to boost it to the next level i think just exposure and popularity so i think adidas partnering with adidas is going to be very helpful for us to get this big brand behind us that are supporting it, and really exposing volleyball to the american population. How did you get into volleyball like youre a tall guy yeah. You ever play basketball . I did basketball is actually my first sport. Okay. And then, growing up i grew up in hawaii so volleyball is kind of a decently and played on the beach or were you playing both. I kind of grew up playing on the beach to start, and then transferred indoor and realized it was a lot of opportunity in college. Last question, how do you compare Beach Volleyball versus indoor volleyball . Its totally different game a couple different rules same concept smaller court. Obviously two players versus six players. Right but, much, much endurance oriented playing in the sand youre not jumping as high and moving as fast but youre very mental, very endurance oriented thanks for coming in this morning. Appreciate it all right, coming up much more on the news that just crossed, Discovery Communications is buying Scripps Network. 90 a share in cash and stock. Well talk more about that and later Ken Duberstein will join us on the white house shake shakeup w psint reagans chief of staff for a little while. 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. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Another shakeup at the white house. New chief of staff john kelly takes office, as conflict with russia and north korea escalates. Earnings and the economy front and center as wall street gets ready to kick off a new week your earnings score card is straight ahead plus we are keeping an eye on oil this morning after the Trump Administration considers sanctions against opec member venezuela ahead of next weeks big meeting. What it could mean for oil prices coming up as the second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Good morning, welcome back to squawk box right here on cnbc were live at the nasdaq marketsite in times square im Andrew Ross Sorkin along with becky quick and joe kernen. Take a quick look at the futures this morning things are looking up. Dow looks like it would open up about 44 points higher nasdaq up about 12 and the s p 500 looking to open up about 3. 5 points higher a couple big headlines making news this morning. The price of crude Oil Continues to rise. It topped 50 per barrel for the very first time in two months earlier this morning that comes as u. S. Crude supplies tighten amid the threat of sanctions against opec member venezuela. And Charter Communications saying it officially is not interested in acquiring sprint it made that declaration in a weekend statement but may soon be more closely tied to the wireless carrier reports say sprints majority owner softbank considering a bid for charter, which currently has a market cap of more than 100 billion. National association of realtors will be out with june home sales at 10 00 a. M. Eastern time that measure of home sale contracts, but not yet closed. Expected to be up 1 following a decline. Some breaking news just in the last few minutes Discovery Communications is buying Scripps Networks interactive for 14. 6 billion in cash and stock the deal is official its worth 90 a share compared to the friday close for scripps of 86. 91. However, scripps had been trading around 67 a share when word first surfaced that it was exploring the sale discovery is trading at this point, should be interesting to see where that goes. A big, widespread between them right now but well see what happens. They expect it to close in early 2018 yes now to politics developing story out of russia Vladimir Putin says that russia will expel 755 americans from its diplomatic staff from the country and could impose additional measures in the future this comes as the president s getting ready to sign new sanctions against russia that were passed by congress. The state department calls russias decisions to cut hundreds of its diplomatic staff a quote, regrettable, not called for act. I wonder how many they have left about half the staff. President trump, meanwhile, spoke with japanese Prime Minister shinzo abe this morning about the need for more action on north korea over the weekend, as you know by now, north korea tested an intercontinental Ballistic Missile that went quite a bit higher than the first one that was also launched earlier this month. The u. S. And its allies have responded by flying supersonic bombers and fighter jets over the Korean Peninsula yesterday in a show of force and u. S. Ambassador to the u. N. Nikki haley tweeting late yesterday that she is, in her words, done talking about north korea. Adding that china must act her comments echo sharp words from President Trump over the weekend. The president tweeting, im very disappointed in china. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do nothing for us with north korea, just talk. We will no longer allow this to continue china could easily solve this problem. Again, the backdrop another shangup at the white house general john kelly taking over as President Trumps chief of staff. Joining us right now is an it it mcbroide. Former assistant to george w. Bush and chief ofstaff to firs Lady Laura Bush and anita, thank you for joining us this morning. Sure. Good morning lets talk about this whats the traditional role of a chief of staff what should this person be doing . Well, imposing order, of course, on the white house and making sure that the staff knows they are staff and have to report to the chief, and then ultimately, to the president it requires a white house requires discipline. And a chief of staff has a very complex role managing the congressional relationship managing the cabinet managing the white house staff managing the president s time. His agenda you know, andy card used to say, one of the nine chiefs of staff that i worked under in three white houses, you know, used to say someone may want to see the president or need to see the president. If you want to see the president you likely want. If you need to, you will but the chief of staff needs to know what youre going to be talking about. Why is that why do you need such order imposed . Well, there are so many competing things going on in a day. And a white house always needs to be prepared for crises. And youve already talked about two crises this morning, with north korea. The aggression there and then, also, this action by the russias, in expelling our diplomats and closing facilities those are things you wake up every single day at the white house, and you have to be ready to deal with the crisis. So you dont need chaos amongst your staff, and your inner workings, and certainly dont need any of the tension between staff to be playing out in such a toxic public way because ultimately, that doesnt help the president that means the staff is a distraction, and thats not a good recipe for success. For all the big things that you want to accomplish general kelly is somebody who is used to an orderly line of reporting. Used to doing things sort of in a military type of style right do you think he will be successful imposing that at the white house . Well, he certainly has led two very complex organizations, both the military organization, and a civilian one, by being a cabinet secretary. And i think thats an important thing to note, too he understands what that cabinet relationship is to the white house. So i think that that certainly seems to be the strength of personality that the president responds to. And that and that the staff will respect but i think the big thing is to, will the president allow him to do his job the way he needs to do it, will he allow him to manage all the free wheeling access that comes in and out of the oval office. And that includes the family thats going to be hard to manage, so well just have to wait and see i sure hope so i think of a couple Different Things its hard to imagine a daughter not being able to talk to her father sure, ofcourse. Or a soninlaw kind of being able to walk in. Sure. And we just had new Staff Members like Anthony Scaramucci who was told he reports directly to the president will that line of direct communication end there . Is this going to go through general kelly . Well, im sure general kelly has had a conversation with the president , and with the senior staff, about that. I mean, there have been reports over the weekend hes been calling senior staff over the weekend, talking to them im sure, you know, trying to set a in order and discipline, but also the relationships, where they feel comfortable that they, you know, should go to him, and let him know what they may be talking to the president about. And i think, you know, of course every president needs to have family around them, friends, and people that are bringing information to them. Right from the outside. You know, youre not you cant hold wall them off from everything but, the chief of staff needs to know everything thats going in and out of that oval office. In terms of everything thats going on in terms of policy decisions. Absolutely. Everything in terms of policy. Decisions. Because it has an impact and the chief of staff would have the broadest view of what the overall strategy is. And can work with the senior members of the team to make sure every t is crossed and every i is dotted before theres any public pronouncements on anything general kelly is somebody who speaks truth to power. Thats right. The secretary of homeland since found out about the no travel the travel ban right was unhappy that he didnt know about it and went in and told the president that directly so for him to still be seen as somebody that the president wants coming in, i guess thats a very good sign well i think that shows that the president respects that. Respects that he has the confidence to do that. And is not afraid to speak that truth to power of all the situations that weve talked about with russia, with china, with north korea, what do you see as being the primary issue and maybe the one thats going to take the most of your attention from the white house . Well, both of those, hard to separate both of those i mean, a threat of aggression against the United States by a very unstable north korea, i think of course thats very worrisome. And then this relationship with russia has dominated, you know, so much of this president s time, from his campaign, and through now governing. So both of those are very serious. I dont think you can prioritize one over the other all right anita, want to thank you for your time today. Thank you very much for having me. As we talk about all of this, oil hitting a twomonth high u. S. Government is considering imposing sanctions on venezuelas vital oil sector Jackie Deangelis is here and she has more on that story good morning, becky well, this weekends events and the threat of u. S. Sanctions on venezuela could come as early as today, not only present a serious impediment for venezuelas economy, but also create a side risk for crude prices which did pass the 50 mark venezuelas economy runs on oil. Crude is this regimes lifeline. Production is estimated a little more than 2 Million Barrels a day. Take that off the table, and the Global Market could see that black swan type of event that makes crude prices rise. Makes traders nervous. According to the eias latest numbers u. S. Imports of venezuelas crude were a little bit more than 25 Million Barrels in april do the math. Thats a little less than a Million Barrels a day or a little less than half of what the country is producing venezuela also sits on more oil reserves than the saudis roughly 300 Million Barrels. So the deterioration of the countrys situation is a global consequence here in more than just one way right now, crude shipments to the u. S. Are not expected to be impacted its considered one of the harshest options thats not to say that it cant come down the line venezuela is geopolitical flashpoint traditionally we look at the middle east as the most Important International supplier of oil but of course, this countrys contributions to the market and its reliance on oil revenue cant be discounted at this time and guys, i was going to talk about rising gas prices today, because of the rise in crude prices if we cross that 50 mark, remember, prices always rise a lot faster at the pump for consumers than they fall so this poses a little bit of a threat were talking about pretty historically low levels at the pump right now anyway. Absolutely. Definitely you know, a couple of months ago i came and we had the conversation that consumers were getting, an early christmas in july but certainly the last month here in august, we could see another 10 or 15 cent spike. Jackie, thank you very much sure thing. Okay coming up when we return, another busy week of earnings ahead about 120 companies in the s p 500 set to report results. The big names, including pfizer, apple, aig, tesla and many more. Your earnings score card just minutes away and later were going to talk drug pricing with the ceo of pharmaceutical research and manufactur manufacturers stay tuned to cnbc hi. 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. Thats why at comcast were continuing to make4 7. Our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Markets always good to talk about, especially when they keep hitting new highs. Looks like more today. After another record close for the dow on friday, we have the jobs report this friday. Joining us now senior equity strategy at ubs Wealth Management steven desang tis managing editor at jefferies. David, i dont think he agrees with you, necessarily, stephen you expect stocks to grind higher equity markets well supported by solid Earnings Growth. Equity valuations higher than average but supported by the macro environment. So you sumd it up for me yeah im just reading what he doesnt think so were going to talk to him in a second yeah. I mean i think this is a Good Environment for stocks youve got Earnings Growth that has clearly rebounded. Earnings looks like this quarter are going to be up about 10 Pretty Healthy sliern. I think that persists for the balance of the year. And likely into 2018 tax reform could be upside to that, as well. With Interest Rates and inflation pretty low, thats a pretty thats an environment where the fed doesnt have to be aggressively raising Interest Rates. Thats a pretty Good Environment for stocks and certainly relative to bonds, stocks look pretty attractive. And how long have you been sitting in this . Weve been fairly constructive for awhile. Since the lexz . Since before the election since before the election thats the same question ill ask you, steven. So you think valuations are stretched, and its going to be tough. How long you been sitting did you decide that before you came in today you had been bullish no. How long have you thought that because its 20 since the election youve been negative the whole 20 . No, weve been more cautious just in general. Especially on those smaller cap stocks since when . Since really when before the election i thought, you know, weve had a pretty big bump in the Fourth Quarter from a performance standpoint, without really anything transpiring we do have double din it Earnings Growth. And so i think the equity market, high single digits, probably makes sense kind of tracks along with for here i think just in total were already above highs i do know that. Weve got to look at the Earnings Growth, its going to be still somewhere around 8 or 9 thats fine. I think when you look at 18 times for the overall market, when you get down to, you know, small mid cap names trading at over 20 times earnings, i think you need a little bit more juice there, than the one thing with volatility being so low, you keep seeing these headlines coming out of washington, that at some point are going to start to theyre going to start to matter and we do have some mandatory stuff that needs to get done in september. That if these guys cant shoot straight, theyre going to create theyre going to create a pocket of worry here. Does jefferies or do you have an s p target for the end of 2017 so essentially its actually out of hong kong, he raised it to 2500. Not a lot of upside. I think it was 2450. So not a lot of upside from here i think were thinking more of a rotation inside does the global strategist so you cant track him down if hes totally wrong or something . You could find him you could always find somebody nowadays in this world and he does i think this thing is much more of a rotation where the Earnings Growth that were getting for Large Cap Companies are coming from abroad youve got a weaker dollar youve got better growth outside the u. S. I think we feel better with the multinational story as opposed to being more domestically oriented okay. And as you get to the small midcap names, more domestically i just want to echo something that hes saying were also a little bit were overweight large cap versus small cap. And i think part of it is that u. S. Multinationals are benefiting from the weaker dollar you do have a better growth environment, or at least acceleration in growth overseas. Then the other thing were later in this Economic Cycle and small caps typically do best earlier in the cycle so i just think that our positioning reflects some of that that we are later in the cycle, still healthy, but large caps look a bit more drastic here all right were going to leave it there. Come in every morning. I dont know last week it looked a little dicey there. One of those days. With the nasdaq looked it was up 50 or 60, and then the next minute i looked and it was down 100. Were starting to see some all right yeah. Starting to see some a little volatility its just us looking for volatility and is it wait a second, moves we used to be more accustomed to, were not accustomed to . You got to admit, in a supposed single digit stock market world for years were up 20 . I mean, its gone far past what most people thought. And continues so well see whether that hard to buy here i guess. Coming up, earnings are driving the markets higher as weve seen over the past several weeks. Were going to run through the earnings score card in just a few minutes. Up next, did the emoji movie have what it takes to topple dunkirk at the box office . Not a lot of dialogue in dunkirk. Havent seen it yet, have you . No. Find out after the break and talk box office results. Squawk box will be right back. Shes nationally recognized for her compassion and care. He spent decades fighting to give families a second chance. But to help others, they first had to protect themselves. I have afib. Even for a nurse, its complicated. And it puts me at higher risk of stroke. That would be devastating. I had to learn all i could to help protect myself. Once i got the facts, my doctor and i chose xarelto®. Xarelto®. To help keep me protected. Oncedaily xarelto®, a latestgeneration blood thinner. Significantly lowers the risk of stroke in people with afib not caused by a heart valve problem. It has similar effectiveness to warfarin. Xarelto® works differently. 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And before starting xarelto®about any conditions, such as kidney, liver, or bleeding problems. Its important to learn all you can. To help protect yourself from a stroke. Talk to your doctor about xarelto®. Theres more to know™. Welcome back to squawk box everybody. Dunkirk taking the top spot at the Weekend Box Office again this week. The Warner Brothers world war ii film was down only 44 from its first weekend. It earned 28. 1 million. The film has crossed 102. 8 million just domestically since its release. Sonys new release the emoji moving coming in second place. The animated film garnering 25. 7 million. And while it started out with strong sales on friday, it was met with pretty harsh reviews and a decrease in sales as the weekend went on. When we come back, the earnings parade continues this week the names that you need to watch straight ahead right now, though, as we head to a break, take a look at the u. S. Equity futures looks like the dow is set to open up about 47 points higher nasdaq up by 17. S p up by 4. 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. Thats why at comcast were continuing to make4 7. Our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. 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 at this hour a marriage of two well known Cable Network operators announced this morning. You heard it here first. Discovery communications buying Scripps Networks for 14. 6 billion in cash and stock. The two Companies Expect that deal to close by early next year also, first 30 buyers of the tesla model 3 now have their vehicles in hand the company handed them over late friday. The challenge now for tesla, according to ceo elon musk is ramping up Production Capacity fast enough to fulfill orders in a timely manner. Said the company would go through at least six months of production hell is what hes calling it also a tax on sugary drinks going into effect in chicago on wednesday. Comes after a judge threw out a lawsuit against the measure brought by retailers the tax is one penny per ounce in an Appeals Court has ordered the faa to take another look at airplane seat size a Passenger Advocacy Group challenged the faa in court asking after the agency refused to impose rules regarding the seat size. The faa said its a matter of comfort, not safety. But, friday, a federal Appeals Court in washington, d. C. Said that the faa used outdated or irrelevant tests when it came to that conclusion. The Advocacy Group says small seats and rows that are too close together can slow down emergency evacuation the threejudge panel says the agency needs to come up with a better response to the safety concerns it just seems like common sense. Cramming more people in an entire space its obviously going to be tougher to get out and ive been on a lot of planes recently, carrying an infant down the aisle, its really hard when you go sideways you bump into everybody on both sides of the way down im a small person i dont know how, as people have gotten bigger and bigger we have shrunk the Airline Seats do you remember a few years ago, jane wells did the story on its a small world out at disney land they had to put in bigger seats because our butts have gotten so much bigger. Did she play that song . Yeah, it gets stuck in your head forever as were making those seats bigger and bigger we are shrinking airlines i mean speak for yourself my answer is not bigger. I dont have a problem people in general have gotten bigger yet over that time in the United States has gotten bigger. In some spaces its 31 not everybody not everybody sideways have gone from 18 1 2 to 16 1 2 inches. He looks good youve got a big ass . Youve got me pinned down here you dont youre bigger than ever americans in general if you look at americans, bigger all the way around you said their ass is bigger. I didnt say that i said bigger butts. Im not sure. I think physical fitness is coming back a little bit if you look at the general size for americans 50 years ago or now 50 years ago. Or 20 kwleers ago i think theres a health kick 20 years ago look at the number of americans who are rated obese now versus 20 years ago. And thats when youre looking at i just got off a strict diet. Most unfortunately most of the country is not you, joe. Right i can i can tell them what to do stop eating. If you dont put it in your mouth it cant stick to your rear thats right. After the busiest week of earnings season, were kicking off one more big week with the likes of apple, underarm our, pfizer joining us with a breakdown of where we are thus far, with the results and what to expect, Investment Advisory services and chairman and advisory investors. Looking very sharp thanks for noticing i work hard for this you do. So where are we . 4 . Thats where it is as of friday. Pretty good. Analysts thought 6 . Surprise is already 3. 5 and i would say that youve got a good chance, 90 plus percent of exceeding double digits. So very strong let me ask, does that mean the big analysts have just been fundamentally wrong . Is that whats really going on weve been surprised at the magnitude of surprise. Usually 2 to 3 , you know, its always its never one thing its a confluence of things. Its conservative guidance by companies. And its analysts, you know, kind of, you know, basically making sure that they dont get in front of, you know, the numbers. So i think its a combination of the two. And, to some degree i think everybodys surprised at how well this economy can do with the macro environment being what it is. Those numbers and those estimates, those are the immediate estimates going into these Earnings Reports what do they look like a month or two out because i feel like there is the opportunity, sometimes, for these analysts to sandbag the earnings in advance . Or at least their estimates. They take them down so that everybody can then talk about the pop later. You see that. Yes, you do you see that all the time and the companys guiding do it they do they guide lower you know, you its semantics. Markets respond better when you outperform your number right are these gap numbers these are actually, this number that im providing you, these growth numbers, are actually what we do is these are the final numbers that basically are reported, mixed in with the ones that still havent reported are they gap . Or do they most of them are gap. Some are adjusted. Theres not one ubiquitous standard most of them are gap but there used to be all sorts of different accounting standards. And that gets in to the minutia of being a consensus estimate. People always talk about the multiple is always so much higher if you actually use gap instead of the, you know well, and the multiple is always higher when you look at it on a trailing 12 months but thats why people like to look at things on a forward 12 months, right . And expectations there double digits, you know, it doesnt matter what the analysts said, double din its is double digits thats pretty good yeah, and i think the interesting story here, and this is not news to anybody, i think we talked about it a few weeks ago is that financials and technology are driving this. I mean, technology is creaming i mean theyre absolutely creaming it. Youre at 19 for the quarter or the same quarter last year financials 11 right really strong numbers consumer, you know, the consumer is a little bit, you know, its negative but thats a function of retail. Its not really a pox on the consumer does it make sense to you that the multiples on some of the Consumer Staples whether its p g or clorox or whatever are now running higher than some of the tech guys you say are killing it does that do you look at that and think what well, i dont i think theres idiosyncratic issues around a lot of this stuff particularly individual company multiples. What i find remarkable is that in general, in general, value is trading at a bigger discount on a multiple basis than growth yet has a much higher expectation for growth over the next twelve months seems kind of paradoxical doesnt it you expect a higher multiple for companies that are going to drive earnings, right . Yet value, expectations are higher than growth and yet theyre trading at a much lower multiple we hear that its because of the Global Markets are doing well, and synchronized recovery. Europes doing better. Were hearing how much of what youre talking about is domestic i mean, cant provide multinationals obviously benefit when europe is better and a weaker dollar. But is it is it double digit here in this country . Is the do the domestic economy Strong Enough to generate double digit earnings gains for all our companies . Its able i think its interesting when you see technology when people make a Technology Investment theyre enhancing productivity downstream. A lot of the gains in Earnings Growth are through greater efficiencies so the labor, the global labor environment and technology conspire to basically create Profit Growth through cost cutting efficiencies, and things like that. Up, too, though . Yeah. And you have enough Revenue Growth at the top line consistent with the 2 to 3 growth economy it is remarkable this is a little bit unusual to see this kind of Earnings Growth at a such slow growth economy, 2 . Im just wondering, maybe its not i mean, so domestic Revenue Growth is what if you dont take into account a weak dollar and multinationals, what are you thinking . Its hard to say. I mean its hard to say how much of the s p 500 actually get their profits come from overseas whats exactly . Its really tough to say. I would still say that basically, at s p, the view is that youre still 60 to 70 predicated on u. S. Operations to drive your Profit Growth thats kind of the number. Very anecdotal its just a function of how Companies Report and again, it gets back to what small caps you can count on a lot of that in that is domestic. Because they typically dont have the ability to have distribution for two reasons one brand, and three just logistics. Right trying to figure out how things are going here i dont know you know, we hear that the employment number doesnt include a lot. And parttime and all that we did 2. 6 on gdp im wondering whether, you know, were all watching to see what we can do. What the potential really is whether were stuck at two, or whether with deregulation and animal spirits, even 2. 5 or 2. 75, or even 3 which is what were shooting for Steve Liesman pointed out that were running above where we should be just because of the population and demographics. Im getting to feel better about gdp. And he says its working youre working with liesman and im being successful and i said when i finish with him im going to start with andrew this is a much tougher nut to crack. Right . Practice. If i can get liesman even to 2. 5, where he says thats possible, you know, in communist countries its very difficult. I would say 2. 5 if i could get you to believe its possible then ill work on 3 after that because its coming i think. I hope youre right as america gets greater and greater. I can only hope youre right. Even if youre wrong about it i would prefer to be wrong about it i genuinely would prefer to be wrong. I would love to see 3 growth. Love i would love how about this not only would i love to see 3 growth i would love to eat my own words. I would love to tell you that President Trump is responsible for it you have never eaten your words. I would be in six years youve never even you havent even a letter as many times as youve been if we can get to 3 or 4 growth i would be ecstatic i would think the president. I would thank washington i would thank mike here. July 31st july 31st save the tape. 7 38 okay. Ill basically eat crow. How about that real crow real crow you go get the grow. If we get to 3. But not for a quarter you got to get there annualized. I know. And i will eat the crow and enjoy it what kind of grow fried raw everything fried tastes good. Taking the feathers off would you eat like crow feet i dont know, well see mike, thank you. Youre welcome. This is going to be good. This is going to be highly rated when this happens. Folks, we do have one other corporate story to bring you today. Cable operator Charter Communications says that it is not interested in buying wireless carrier sprint. This comes after news on friday that sprint was interested in merging with charter to create a major media outlet controlled by Softbank Charter out with a Statement Last night saying we understand why a deal is attractive for softbank but charter has no interest in acquiring sprint charters statement could kill any chance of a deal between the two companies. But the wall street journal reports that softbank ceo Masayoshi Son could be making a formal offer anyway. Check out shares of sprint you guys see the stock, oh, its up but not by nearly as much as it was. Only about eight cents now thats 1 . Earlier today it was up by about 5. 5 coming up were going to talk drug pricing with the ceo of pharmaceutical research and manufacturing in america better known as phrma, and they dont like theyre very cheap with their vowels and the guys name is ubl. Its weird its like vowel are expensive. His name is what ubl . And ubl . And 3679 hrma can i buy a couple vowels . Much more on the shift in power at the White House Former reagan chief of staff Ken Duberstein will join us. You always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. 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 welcome back to squawk box. Developing story out of venezuela. Protests have turned violent in the wake of the nations election the president there pressing ahead with the vote to create a constitutional superbody to rewrite venezuelas charter, despite the threat of further u. S. Sanctions and months of opposition protest opponents say that the election gives the government the power to rewrite the countrys constitution the pharmaceutical research and manufacturers of america better known as phrma recently launched a campaign to discuss drug costs joining is president and ceo stephen ubl. The fine line, i think were all aware, though, we had Scott Gottlieb on, we understand the promise of a pill. The promise of pharmaceuticals, as opposed to hospital stays, for example, so we understand if you can get something that really works, its the best deal in town. But then again, you do see, you know, some attempts by the industry to maintain prices that seem to be high. So, we dont want to hurt innovation but we would like it to be more affordable. You know, the Price Inflation for health care is so great. A lot of it is pharmaceuticals, right . How do you walk that line . Youre absolutely right were living in the golden era of medicine. I mean things that you would have referred to as Science Fiction a few years ago, harnessing the bodys immune system to fight cancer or taking cells out of the human body, reengineering them, putting them back in the body to fight cancer its incredible stuff. But, if you look at express scripts a leading pharmaceutical manufacturer, drug spending went up 3. 5 . And prices went up 2. 5 . But whats not moderating is what patients pay out of pocket. So increasingly, even though pbns and plans are negotiating incredible discounts and rebates theyre not making their way to patients at the point of sale. So 50 of the time, in the commercial market, for example, patients are paying the full list price of the medicine so if you or i go to the hospital or the doctor were paying a negotiated rate its only when you show up at a pharmacy that youre paying the full list price for medicine so we think the administration, others, should take steps to ensure that patients are benefiting from the truths of those marketplace negotiations why isnt it and when, you know, weve got some friends that are in the pharmaceutical industry, they speak about pbns and express scripts like these guys are the devil a lot of times. Doctors, do, too, theres no transparency and you have no idea if we know thats, or at least one group of people says thats where the issue is, why dont we try to handle that . Why dont we try to do something about it are they immune . No. I think policymakers are beginning to focus on in inefficiencies in the supply chain. Our members retain about 60 of the list price of the medicine that means 40 is being absorbed by other actors in the system. Whether thats plans, pbns, pharmacies, whole salers, industry leaders, as again a practical matters on the one hand pbms control 80 of prescriptions in the country they use that leverage to help control costs and drive a hard bargain. The problem is the fruits of those negotiations over the last few years, they negotiated over 100 billion dollars in negotiated discounts theyre not making their way to patients so, we degree that affordablety is a challenge for many patients do you think that the pharmacy benefits managers are middle men that are ineffective . If we negotiated discounts arent making their way to customers, whats the point . I think the models right for disrupti disruption we think the pricing model in our Industry Needs to evolve away from this rebate and discount model towards models that really reimburse the product based on the outcome achieved by the patient. And increasingly our members want to put their money where their mouth is theyre sitting down and saying for diabetes patient, lets look at the metrics that really matter in improving care for people with diabetes whether its a1c or keeping people out of the hospital, and you shupt have just one drug, one price. They should be reimbursed differentially based on the outcome achieved by the patient. On a scale of one to ten the pharmaceutical business in terms of Market Forces being generated on it, how much of it is free market its a fiercely competitive market i mean you look at the hepatitisc examples my point is youve got patent protection what is it eleven, twelve years . Youve got orphan drug status. Youve got the government involved with all types of regulations. You have the epipen, whatever that was they wouldnt let the generics come in for whatever reason and you see medicaid these arent free markets free markets have a way of letting competitors come in, and keep everybody honest. And you have to mind it doesnt seem like its a free market so therefore prices arent held down like they would be i think there are policy changes that would enhance competition. Much of the negative press attention focused on our industry over the last year has been focused on socalled bad actors people like martin shkreli, valeant, even mylan. These are old drugs essentially without effective market competition. They dont have patents. Theyre off patent medicines i think the fda commissioner is beginning to take some steps to improve hes been here and talked about that do you support the steps that hes taking . Absolutely. Because the whole industry gets a black eye. And actually those companies are very little in common with our members. You know, i was just with one of our largest companies, they spent 7 billion in r d last year and launched one drug these companies are taking substantial risk, and making sustained investments in r d over a long period of time those other companies didnt bend anything for taking advantage of regulatory arbitrage. Thats interesting that the industry is behind some of these efforts the fda commissioner Scott Gottlieb is trying to put in place at this point absolutely. I mean i think the commissioner is focused on reducing Development Times. If it takes ten years and 2. 5 billion to bring a drug to market were always going to have to wrestle with costs so reducing Development Times and encouraging competition, i mentioned the hepatitisc example. We now have three companies in that space its a cure for that wretched disease but prices have come down by 60 . You know, the patents, theyre all under patent, theyre just different modes of action going after the same disease so it is a fiercely competitive marketplace but there are changes we can make to make it more competitive i dont know how you a lot of times youll have a company that has like five drugs, they know theyre coming off patent theyre going to go the revenues are going to go down like 80 so theyre in this box. You know, and everybodys judged quarter by quarter, by wall street so you know that i remember eli lilly had these patent experts, and so sometimes theres we need extended release version. Or right but it seems like, i mean i understand the rationale and the front end of why you do it but it seems like theres some unintended consequences that arent great you have to be careful. Incremental positive changes in a product can be clinically meaningful and were always standing on the shoulders of somebody else. Which link in the chain are you going to pull out . Obviously we need to make sure lawyers that are involved with either patent attacks or, you know, defending patents the whole the broader point is, we were the only item in health care that the price has actually come down right because of patents. 90 of prescriptions are generic medicine as you point out after the patent expires the price goes down 80 or 90 . Hospital care that doesnt happen in hospitals. Physician care can you imagine if you had bypass surgery at 100,000, and after five to seven years, it became 80 off were the only item in health care where the price has come down okay. All right. Never mind youre right stephen, thank you great to be with you. How do you pronounce it ubl people have been telling you to buy a vowel for years. Vowels in phrma are they going up in price or something . Great to be with you. Talk to bannon. Got a bunch of them. Twelve years. Hell get that when we come back, weve got some stocks to watch this morning. In the meantime take a look at the futures. Weve been in the green all morning long dow futures indicated up by about 56 points. S p up by 4. 5 and the nasdaq up by 15. Stick around, squawk box will be right back. These days families want to be connected 24 7. Thats why at comcast were continuing to make our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Welcome back to squawk box. Major League Baseball welcomed the latest member to a very exclusive club yesterday Texas Rangers third baseman Adrian Beltre cemented his place in history by collecting his 3,000th career hit he ripped a double down the left field line beltre is just the 31st player ever to get to 3,000 hits. And the first from the Dominican Republic he also joined two hall of famers, george brett and wade boggs as the only Third Basemen in the 3,000 hit club. I was talking about this with dom earlier. Pete rose. 4250 or something. I mean, its such an unbelievable record. Of course he had more games, more but congratulations. Thats pretty good 3,000 hits lets take a look at some stocks to watch this morning. Dow component boeing, riding a sixth session winning streak its risen almost 15 over that time and its added 212 points to the Dow Jones Industrial average. Just by itself, over that period, the dow itself is up 218 points over those six days and coach was downgraded to hold from buy at jefferies. Which says that the positives that went into that buy rating have now all played out, and are reflected in the stocks price that includes the power of its brand name and acquisition of kate spade gopro was upgraded from equal weight to underweight at morgan stanley. Current alcohol eggs are already reflected in the stock price and Software Improvements may help drive future sales coming up, former chief of staff under president reagan Ken Duberstein is our guest. His thoughts on the shakeup at the white house. And then tax reform now front and center after the repeal of obamacare fell short americans for tax reform founder Grover Norquist is going to join us next. Squawk box returns in a moment you always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. A tax code overhaul. President trump set to make his pitch for tax reform this week as new chief of staff general john kelly takes office. Discovery is the new owner of the food network and hgtv the Media Company buys Scripps Network in a deal total valued at 14. 6 billion plus why one startup wants you to put down the hammer now name that wood. Oh and use a phone to renovate your home. Well talk to the ceo 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, and welcome back to squawk box here on cnbc live from the nasdaq marketsite in times square im joe kernen along with becky quick and Andrew Ross Sorkin the futures right now, been up for most of the morning. Well take a quick look at the dow, the nasdaq, and the s p actually up a little bit more than they were almost 60 points now on the dow. Could be another record. Up 4. 5 on the s p. Nasdaq indicated up 7. Oil prices have been at the high end of the recent range now almost 50. Down a little bit today but 49. 68 on wti crude among todays top stories, a media deal to tell you about this morning the Discovery Communications is buying Scripps Networks interactive for 14. 6 billion in cash and stock the deal was worth 90 a share compared to the friday close for scripps of 86. 91. Word had already gotten out about that deal at that point. The stock has picked up. But this is a premium about 35 to 37 over what that stock had been trading at before also, cable operator Charter Communications is saying thanks but no thanks to wireless carrier sprint this comes after news on friday that sprint was interested in merging with charter to try to create a mega media outlet that would be controlled by sprint parent softbank. Charter out with a statement saying we understand why a deal is attractive for softbank, but charter has no interest in acquiring sprint according to the wall street journal, softbanksceo could make a formal offer anyway shares of sprint had been up by 3. 5 earlier this morning. Now its up by just under 1 and on todays economic agenda, chicago pmi at 9 45 a. M. Eastern time 15 minutes later, we get june pending home sales a couple stocks to watch this morning. Facebook getting downgraded. The firm sticking with its 140 price target the analyst citing the tech giants remarkable run this year and unaccounted risks to growth. Theyre looking at that stock now at 172. 25 shares of snap could be on the move today the lockup period following the companys ipo in march expires today. That allows early investors and some employees to sell their stocks snap trading below the ipo price of 17 a share right now also astrazeneca says the fda has granted Breakthrough Status for its drug for nonmetastatic lung cancer. Shares now at 30. 52, up almost 1 and its monday and its general john kellys first day as President Trumps new chief of staff joining us now Ken Duberstein. He was president reagans chief of staff in 1987 to 1988 ken, good to see you thanks for joining us. Good seeing you you lose some weight, my man . Yeah. You look phenomenal ive been doing great see i told you. People arent getting fatter theyre getting thinner. I am, too. So ive been thinking about what the role of chief of staff, and theres got to be at least five different roles that may be of lesser or greater significance, or importance, depending on, i would think, the president so lets go back and what was the most important thing that president reagan needed from his chief of staff a hierarchy of duties . Or working with congress to get things done . What was what did he need he needed all those things. And then some. You know, the role of chief of staff in essence is to be the reality therapist for the president. To tell him what he doesnt want to hear but what he needs to know so you know, that is important regardless of who the president is but you also have to help him organize the white house staff so that you can win on capitol hill to be an effective president means winning on capitol hill. If you translate it to today, john kelly reorganize the white house, tame the staff, so to speak, so that they can push on tax reform, and infrastructure, and getting a debt ceiling increased, and take the drama out of everyday life in the white house, and drama as it always is, but take that extra edge off and get things done quietly, effectively, and on target and also tell the president sometimes what he doesnt want to hear. But what he needs to know. People thought about sorry to interrupt people thought Reince Priebus knew so many people in congress, and knew so many republicans that that was going to be a strong point, legislatively. Now, general kelly doesnt, you know, doesnt have that same relationship, i dont think, with as many of the people they need to get on board in congress but maybe in terms of people things in order and a chain of command he seems to be stronger there. Could that make it could a stronger chain of command make it easier to work with congress, do you think . I guess you dont want leaps you dont want people, you know, you dont want ten different people making decisions about what the president s doing either, i guess. Absolutely. You need a chain of command in the white house. You need to organize in a way. People are always going into the oval office. The chief of staff needs to know what that person is saying, and when hes coming in or shes coming in. Not only before, but more importantly afterwards, and what did the president say. But youve got to organize the white house staff, in a way, that you can maximize getting things done. What john kelly brings is stature, is age, is some wisdom, the military bearing but most importantly, hes been in government before not just at dhs, but at the pentagon, even on capitol hill that makes a big difference. Reinces background was all political in the sense of the campaigning. And the rnc. John kelly has a background in government itself. Ken, but theres one missing link in think which you didnt mention, which is trust, and the loyalty of the president i think this president may be somewhat different in that youre right, experience counts and matters in a major way, but it seems to me, at least, from the outside, that when you look at the people that the president has trusted the most, the people that have been in his inner circle the most over the years, those are the people who actually talk openly to. Its very difficult for him to open up to people that have not been part of that circle yeah, but what the president has to do is empower john kelly. It is interesting that he is going to participate in the swearingin ceremony this morning at 9 30. Hes got to make it clear that he is the white house chief of staff, and things flow through john kelly if he empowers him that way, then it seems to me that many of the problems will certainly disappear, if not be diminished. Im just wondering what the prospects are. Because if you look at supposedly, as hearsay, but you hear about secretary of state rex tillerson, that hes tried to do certain things, bring his own people in, and had some pushback from the president. And you know, when youve got a president who was a ceo or whatever, dealing with another ceo, its like we know how coceos were that doesnt work at all do you think a general, though, the president would be President Trump will be able to subvert himself, essentially, to some of the things that general kelly tells him to do or asks him to do . Or there will be head butting there, as well i mean, these are two strong wills, you would think yes the entire john kelly, make sure that his presidency is effective. To get people on the same page to have some accountability. Thats the key to whats going forwa forward. If President Trump were to undermine it, then theres a problem. But it seems to me thats why the stature, and the bearing of a fourstar general certainly can make a difference. But john kelly also has to realize that when theyre playing hail to the chief, its not for john kelly, its for the president of the United States hey, ken, whats the toughest issue you had to deal with in the white house . How did you get control of it when you were trying to set up your chief of staff position well, remember, we were coming out of the iran contra episode and the scandal. And so, making sure that we focused on positive agenda and not get taken down by all of the events of the day. Theyre related to iran contra but you always have to be pushing that positive agenda thats why i said, in john kelly, help enforce discipline, inside the white house, organize on tax reform. The president needs some victories on capitol hill. Thats what the American People expect thats what people in the white house expect thats what congress expects but the president has to push things over the line it takes leadership. Ronald reagan was willing to do that when i came back to the white house, president reagan was at 38 in the polls i wasnt simply a lame duck, people were saying he was a virtual dead duck. And by the time he ended two years later, he was at 68 job approval, we had had our successful meetings with gorbachev. We had enacted all 13 appropriation bills. Wed gotten the Supreme Court nominee through. Wed gotten a canada free trade done we had welfare reform done not bad for a lame duck or dead duck president youve got to focus on accomplishments. Thats why theyre there so the the prospects, in your view, just your gut feeling about whether this two years from now will we be talking about chief of staff general john kelly i think in two years you will be talking about chief of staff john kelly but the question is, did he get tax reform done on behalf of the president , with the president s leadership can he get a debt ceiling smoothly done, appropriation bills done, infrastructure, and something on health care thats john kellys responsibility as the chief of staff to the president all right Ken Duberstein, thanks thanks for your time this morning. Appreciate it. Thanks a lot. See you later byebye when we come back, what do Companies Like sprint, alibaba and potentially uber have in common one man, softbank chief. Well take a look inside his empire next. Plus is tax reform on the horizon . Americans for tax reform ceo Grover Norquist tweeting, watch for a bill by september 28th he will join us at 8 30 a. M. Eastern time and later forget tinder. A home startup is calling itself the renovation matchmaker well talk to the ceo. Stay tuned you are watching squawk box right here on cnbc welcome back to squawk box. Softbank ceos masasons 100 billion vision fund may have major implications for investing. Deirdre bosa is here today to give us a look inside the empire good morning, guys. Thanks for having me on today. We talk about masasons ambitions. Its far from charter or the u. S. Cable market hes after hes building what he refers to as his 300 year vision and hes not content with his current empire which already reaches across the world he has sprint, of course, a big chunk of alibaba, arm holdings and his finger in many, many other companies that we talk about on a regular basis now the nearly 100 billion vision fund is his vehicle to extend that reach further. It is completely unprecedented in size and ambition and it could have major implications for the vc world. It could have major implications for the Tech Industry at large so far the vision fund itself has employed only a few hundred million in two startups but a bunch of softbank investments from one web to nvidia, theyre expected to be offered to the vision fund according to people close to the matter. And there are reports just in the last few weeks connecting softbank to some of the buzziest names uber, slack, just to name a few. Clearly masa is a busy man hes rubbing shoulders with the white house. Heres a list of whos invested in the vision fund, the saudis, qualcomm, apple among others he says hed like to be remembered as the crazy guy that bet on the future, and so far he has shown that hes willing to bet big, and bet often whats the distinction between what goes inside the vision fund, and what goes technically inside softbank proper, if you will . So the number of investments that we had up on the wall, he has this plan to invest 100 billion within five years. Right and he has sort of set up these guidelines, robotics, artificial intelligence, Machine Learning so theyre supposed to be companies with that angle. Thats why you see envied yeah its unclear how sofi fits into that thats one of the concerns about this fund, as well where are they going to put all of this money . The companies that come in, what is the strategy . Its very early days so we dont know that yet. I know that in the leadup to the segment you guys mentioned uber as well i was going to say the uber relationship is so, we dont really know whats happening and thats going to be a complicated one because we showed you whos involved in the vision fund, the saudis. The pif also has a big investment in uber and remember, its very complicated, because softbank is also investing a whole bunch of Ride Share Companies that are ubers rivals. Like massive monster investment in grab, hola, so you see this building final question, when you think about what theyre doing, the vc Community Seems to have very mixed views about this. Some seem to think this is great in part because theyre able to exit at sky high multiples yep, finally. Others are anxious that theyre actually going to get bid out of businesses that otherwise that they would want to get into but at prices that dont make any sense therefore its going to tar the entire ballot. I have a number here. 100 billion is the fund that is almost as much as all Vc Backed Companies received last year so this is huge fire power and you had oak tree capital, howard marks saying last week he was raising those kerngs that this has the ability to take winners and losers in the tech space because it is so big and change the way that vcs invest themselves thank you great to see you apple among the Big Companies out with earnings this week. Analysts will be looking for more clues about the iphone 8 and joining right now, the maxim group. What are you anticipating . China, china, china . For the june quarter, its what i call a lame duck quarter. And what i mean by that, it doesnt really matter what they say or do. And this is because, Everybody Knows that the june quarter, the results right you know, were at the end of the product cycle. And everybody gives them a pass for whatever results theyre going to provide because, everybodys delaying their purchase for the next iphone and then for the September Quarter guidance, this is usually when, at the end of the September Quarter of last 10 to 15 days, you have the new iphone thats released. But its always supply constraint so whatever guidance theyre providing, thats a complete reflection of the supply that theyre going to have on hand. And so, it never tells you anything about what the real demand is. What really will matter is the december quarter guidance three months from now. So is there anything youre looking at, though, in this quarter that we should be paying attention to or is it just completely nothing . Theres a lame duck quarter in my opinion, this quarter. But what will be important between now and the next three quarters, is what the supply chain is talking about in terms of what is apple telling them as far as units they need to be gearing up to be building for. Lets talk about that speculation. Its all speculation because we just dont know. Sure. But you read the reports. And theres suggestions that its that maybe they would announce it in september maybe it gets pushed out maybe theyll announce in september but it wont be available until christmastime. That theyre having a hard time getting the touch Button Technology if theyre going to build it into the screen youve read all of this. Yep i dont like to get too gossipy but how do you then take that information and put it into whatever your estimates are going to be . Okay. So at this point in time we dont know for sure if it really is going to be delayed or not. So impresume that its not going to be delayed. Lets say it is delayed. If its going to be delayed lets say its delayed till october, october 1st instead of september 15th that ships out 10 to 15 Million Units from the September Quarter to the december quarter. And thats also going to create probably some overspillage into the march quarter so thats really just simply a shifting. If you believe that iphone users that are intending to refresh are going to say iphone user, oh, man, im going to have to wait another two weeks, oh but you do consider this a super refresh . Whatever is about to happen is going to be super cycle . I absolutely do consider it as a super refresh from a refresh as far as whats going to go in there wireless charging, augmented reality. We do think augmented reality is going to be the future of computing. We think whats going to be implemented into iphone as far as augmented reality, the processor thats going to be in there is going to be a little bit weak so its not going to be a true game changer. Were talking about the foundation for that. But at the end of the day giving the form that has to change and additional functionality and the survey work that weve done in china that shows that iphone users in china remain iphone users. Theyre not going away theres huge pentup demand there. Its going to be a screamer. Full disclosure hes got his phone, people. Yes thank you President Trump just moments ago tweeting, if obamacare is hurting people, and it is, why shouldnt it hurt the Insurance Companies, and why should congress not be paying what the public pace . I dont know how this is going to work itself out this follows that take away health care from congress were not going to pay yeah. Give them obamacare theyve got a big subsidized for what they pay for their staffs for congress. Which is a way of getting around because when obamacare passed it was supposed to be that all congressional houses, all congressional offices were also following the law of the land and buying their insurance that way but they get a huge subsidy. Tom price said that President Trump can do through executive order. And the question is, if you if you defund it then do you own it . Then you are probably going to get the blame for anything that goes wrong here exactly you got to love the way you want single payer. And by the way, if its defunded then the premiums that were already seeing going up 20 and 30 are going to skyrocket from there its bobby trapped. Its like trying to defuse a bomb working hard or hardly working a new study says you could be costing your Company Big Bucks by checking your facebook or shopping online. Well see. Xtouushomu, jt w ch ne 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. And the wolf huffed like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Welcome back, everybody. The average employee spends about five hours a week using mobile devices to check personal email, shop online, or scroll through social media sites that may not sound like a lot, but Staffing Firm office team crunched the numbers and that adds up to about 15 billion a year in lost productivity per year the report also found that men more commonly check their nonwork email while women spend more time on sites like facebook or twitter. Hmm. Maybe thats a productivity problem, all the lost productivity trying to figure out where it is, its going straight into shopping online. And checking our email. When we come back, is tax reform next on the trump agenda well be talking to the founder of americans for tax reform, Grover Norquist. Thats next rit ren quk x. Ghhe o one more, right above the one on the right would even it would even it out a little bit more good morning and you must i mean as parents drive by welcome back to squawk box here on cnbc live from the nasdaq marketsite in times square, among the stories front and center, this morning crude oil prices are slightly lower this morning, after topping 50 a barrel earlier. That was the first time crude had been above 50 in two months. As u. S. Inventories declined, Traders Keeping an eye on the threat of sanctions against venezuela based on some of the developments, Political Developments in that country wells fargo is cutting 69 executive jobs in its retail unit all part of restructuring following last years sales scandal that involved the opening of more than 2 million unauthorized accounts. And the National Association of realtors, realtors, is out with its june pending home sales report at 10 00 eastern this morning. That measure of home sales contracts signed but not yet closed is expected to be up 1 for last month and another tweet just coming in from President Trump highest stock market ever, best economic numbers in years, unemployment lowest in 17 years, wages rising, border secure, s. C. , no wh chai os. S. C. . South carolina. The Supreme Court oh, Supreme Court scotus. Scotus interesting interesting no white house chaos. I like on my you know how to do that . If you hit the capital thing twice it comes out all caps. So are we going to give him credit for the stock market . This is a trap you want to because if you do you want to no theyve said they use it as their own barometer how many times have you made so if it goes down he owns it, too. No, no, no, no. My point is if were going to do this then youve got to go back to the obama years just what it is. Oh the fairness of if you want to give him the credit for the stock market this time, then you used to say every time that every time the stock market went up you said that the stock market went up despite obama. This time, you turn around and the whole thing is cockeyed. But anyway andrew, for what its worth, since 1999, the stock market, including obama, which you would say he doubled it, is up 4 a year right thats because the stock market in 2009 had lost 40 of its value. Right okay. Right so it lost 40 of its value youre going to base all im just going to tell you when you lose 40 , when you get back to the same level that it was in 1999, it doesnt necessarily okay. And you want to talk about the fed and the feds role from 2009 right, what about the feds role now fed is in a tightening mode now. And you think the feds in a true tightening mode now i think the fed went from we are still in like dovish land did you take calculus this is the Second Derivative. We went from a total you didnt go talk to any of your friends, and you know in high school. And you know that someone did get out of high school you know what the Second Derivative is . Im not going to get into some math equation with you. Second derivative says where are were no longer thats not the point. All im saying is just be consistent thats all im saying. Youre right. I think that i dont think can you show me the business, the progrowth policies. Right that resulted in the stock market doing so well under obama . Tell me what the progrowth policies and, where was if its the only administration in history not to get a single year of 3 gdp growth do you think heres a question for you do you think that any of the growth were seeing now was set up eight months ago . Or even twelve months ago . By what by which policy . Meaning, meaning you dont think that theres a natural progression absolutely i absolutely think here we are i absolutely think and to suggest weve been recovering since 2009, yeah i do think that. It might take us awhile to work this debate out in the meantime, President Trumps going to be beginning to build his case for tax reform. Of course, questions remain whether a tax bill will come by the end of this year joining us to talk about it right now is americans for tax reform president Grover Norquist and grover, its great to see you. Thanks for being here. Good to be with you so, we are looking at what happened to the health care, the Obamacare Repeal bill. Do you think tax reform is going to be easier it will be easier for a couple reasons or more sure i think well have a deal out of the white house, the senate, and the house, by september 28th the white house and the house and Senate Leadership have made it clear theyre working together to write this bill. Remember, for health care the house wrote a bill then the senate played with it and the white house was, you know, talking from the sidelines there. This time all three are working together theyre not going to come up with one pill and ping pong it back and forth its going to be sort of prenegotiated. And the pieces of it are a lot easier theyre focusing on taking business tax rates down. From 35 for corporations down to 15 or 20 the white house keeps pushing very hard for is a remember, you have to add state Corporate Income taxes so 15 is 20. And 20 is 25 so you really want to get that rate down, and then equally important, both for the economy, and politically, is the subchapter s passthrough corporations, farthernerships, taking that down to 15 or 20 that gives you the political heft for tax reform. The fortune 500 companies, silicon valley, everybody with money parked overseas. 15 rate it can all come right back, because that, even with the worldwide tax system, our 15 would be lower than most other countries, not higher than most other countries. And then the Small Business community, the passthroughs, theyll see a significant tax cut on their business income, not their personal income, but their business income. That will be extremely powerful, add to that theyre looking to go as far on expensing, this is where theres still a judgment call, between 15 and 20, on rates. Do you go to full business expensing . Or do you go to full business expensing for three or four years, and then back to 50 , 40 . Because you cant do everything with the reconciliation yes determine it the way you want and 1031 is probably staying as opposed to going away which is deferring Capital Gains on like kind exchanges, buildings, houses, and land. Because youre not going to pull business expensing for land. And add to that, that tax gone, amt gone, those are consensus issues and on the personal side, thats pretty well laid out. Double the personal exemption for an individual from 6 to 12, 12 to 24 for family of four. And, reduce the number of rates. Lets talk politics for just a moment yeah. Over the weekend, the president tweeting that he wants to see the senate go back as to the Obamacare Repeal once again. He thinks theyre quitters if they dont do that Mick Mulvaney saying over the weekend that he thinks the senate shouldnt be voting on anything until they vote once again on Obamacare Repeal. As somebody who is so focused on tax reform, do you want to see them moving on or do you think they should go ahead and continue to work on health care before they get to that . No. You continue to work on it for two reasons. One, the one does not interfere with the other these are on two separate tracks theres a trillion dollars of tax hikes in obamacare a trillion dollars over each decade the more of those tax hikes you can get rid of when you reform and replace obamacare, the better off you are for lower tax rates. And they do not in any way contradict each other. We can walk and chew gum at the same time. All you need to get is one senate vote, and mccains argument for not voting for Health Care Reform, after having run tbs on the subject, i dont think that stands. He needs to decide what he does want there but, i think its entirely likely they come back and get that extra vote and move forward there on some Health Care Reform grover, last time we saw you back in march, when you were talking about the carp rat tax rate, you thought in terms of making it revenue neutral you thought we could be looking at 28 rate, very similar to what obama had proposed why have you changed or have you . Well, some people would argue you can only go to 28 if you are trying to make it all of it permanent. Im not sure that you will have permanency for all of tax reform there will be pieces of it that have to be permanent efforts to make it territorial tax needs to be permanent if its going to happen death tax, amt has to be permanent, they cant be temporary. But you can make certain things temporary and get a strong progrowth policy. Like full business expensing taking the corporate rate to 15. It could bop back up again in 10 or 15 years. But i think a 15 rate, and full business expensing are the kind of progrowth reforms that like the tax credit remember every couple years theyd pass it for a few years and it was supposed to last but it never did and it was finally made permanent because it was understood by the Business Community its so important to Economic Growth the lower rate, and full business expensing fall into that category. Im much more interested in passing those two for the next four years, because i believe once you get there, that is never going away but not revenue neutral, then just for the final no, not revenue neutral within the window. Theyll probably have a tenyear window but it could be 25 if they wanted its up to congress to decide how long the window is i like 25. Its a generation. Congress should from time to time be thinking in generational terms when you make Big Decisions like this. Not the next few years but, ten years, it gives you an opportunity to have strong Economic Growth, and set forth policies that people will want to see continue. This will be a net tax cut remember, this is one of the first times theyre using dynamic scoring. And with lower rates, and more faster depreciation schedules, and 1031 protected and things like that, you will see strong Economic Growth, and that gives you at least a trillion dollars over a decade more to work with, plus theyll be eliminating the tax deductibility of state and local taxes, which puts pressure on left wing democratic mayors who every time they raise taxes on their citizens say oh, the feds will pay for part of it. That wont happen anymore. When you get a tax cut it will all be yours when they raise taxes you pay for all of it. Apparently steve bannon has a plan in the white house to bring the top rate to 44 from 39. 6 in order to try and pay for some of the middle class tax cuts would you be okay with Something Like that if it were to pay for broader tax cuts of course not because higher rates, at that market at that level dont actually get you more revenue. They slow Economic Growth. And the only reason to raise the top rate up, remember it was 90 , not too many people paid it, but it was 90 at one point during world war ii. The reason for that is to convince all middle income people, oh, its not so bad. You have high taxes, but imagine the kennedy kids theyre payingeven more. So higher tax rates are not to raise revenue. They lose revenue. Obama, remember, even admitted that on Capital Gains and higher rates. He thought it was a good idea because he liked to punish people who made more money but he realized the government got less money he didnt care it was all about the optics of playing the politics of envy, and Slower Growth was the cost of doing envy politics so no, all rates are coming down the president ran on it. And the head of ways and means has made it clear thats a complete nonstarter. I dont know where that idea came from, bannon certainly is not talking about it publicly. The only thing ive seen in the press is some republican congressman who refuses to name himself or hefself says they think they heard it. If it was a good idea, and it was going anywhere, i mean, the dead cat bounced this dead cat didnt even bounce im not sure if it was ever real i dont mind it as a very bad, very stupid, very destructive false effort to get people focused on something that is never going to happen. But, it is a good idea, every once in awhile, to remind ourselves marginal tax rates matter higher marginal tax rates hurt the economy. They dont help. Grover, its good to talk to you. And i have the feeling were going to need to talk to you a lot more this will all be wrapped up by september 28th. Okay. Well hold you to that well talk to you again long before then. The deal will be written and on the floor by then well go with that okay. Thanks, grover thank you and tesla delivered its first mass market sedan. 30 model 3 vehicles were handed over to tesla employees who were the first to order it. Phil lebeau joins us now with more on that story phil andrew, we were there in fremont, california. Had a chance to driver the model 3. This was the event that tesla shareholders, tesla fans, and tesla employees have been waiting for. There were a couple of thousands of them there outside the plant as elon musk drove on the stage in a middle 3. They delivered 30 on friday. These all went to tesla employees who had ordered the vehicles theyre the first one to get them we do have an update now on how many reservations there are. More than a half million of people have been collected by tesla. So theyre going to have to work through that backlog over the next year to year and a half elon musk talked about it friday night when he was on stage i thought, you know, that really mattered to us. We really care were going to do everything we possibly can to get you the car as soon as possible. So, were going to work day and night to do right. Thank you for doing that a couple of pieces of news. First of all, the first model is being built are the long range versions which start with a base price of 44,000 310 mile range but theres a larger battery pack in them. Also you go zero to 60 a little bit faster than the standard versions which start at 35,000, have a lower range of 220 miles when fully charged knows will start going into production oh, maybe two to three months down the road and the real challenge now, it becomes ramping up production, first going to about 20,000 for the month of december, by the end of this year, and then getting up to a half million at least thats the target for next year guys there will be a lot of questions on the tesla Earnings Call wednesday afternoon after the report q2 earnings the numbers once again theyre not going to get a whole lot of attention because the focus is going to be on model 3 production i know whenever i say that people say yeah it does matter if they post a loss and whats going to be the, you know, the numbers that people can base the stock price on i dont think the stocks moving based on the Earnings Report theyre based the stock is moving on whether or not people think that they can ramp up production as they have targeted for the model 3. So, after driving it, guys, on friday night, i can tell you this its impressive. I thought the acceleration is going to stand out, and youll hear this comparison out there can it beat the chevy volt this is not to be compared to the chevy volt this vehicle is squarely targeted at the 3 series, or and the cclass. Those are the vehicles that theyre really targeting all right, good all right, phil lebeau thank you. We cant wait to see one of those on the road. So andrew, jeff immelt yeah. Ge. Yeah. Six bucks in 09. Yep so he quadrupled ge stock price. Shouldnt he get an award for greatest ceo in history . No. Good point good counterpunch. I give you credit for that one that was very clever and smart. I agree. Seriously. I agree. Think about going back and i agree ge is widely im its the same thing finally agreeing. Your joints. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. 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Home renovation website sweetened is looking to try to bring transparency and technology to the 300 zillion dollar renovation industry by simplifying the process for renovators and contractors joining us is gene brownhill sweetens founder and ceo thanks for being here today. Thank you for having me you think of industries where customers and the contractors really dont trust each other on either side. Theres not a whole lot of love to go around how did you get into this business to begin with oh, well, i was in Architecture School for undergraduate and graduate and i tried to renovate my own house here in brooklyn and i ended up hiring the wrong general contractor so i thought my goodness, if i can hire the wrong general contractor, anybody can. So, i created sweeten. Its a twosided marketplace where we actually vet the homeowners and Small Business owners the same way that we vet the general contractors. You know, the way the problem with this industry is probably that homeowners get in thinking this is going to cost a lot less the contractors probably think were ridiculous in how we come up with these expectations how do you fix that . My guess is its hard to match two people up who walk away as a match made in heaven yes so you know it is really challenging. Because its so opaque, right . Nobody knows how much a renovation costs and so we really try to share that information whenever possible with our homeowners so the homeowners know this up front absolutely. And you know, people always think about homeowners dont trust general contractors. But the thing is, general contractors dont really trust homeowners they dont trust that a homeowner will actually hire them if they give them the real price and the real time line thats why it happens yeah. So you are taking transparency and saying were going to be realistic from the getgo absolutely. As a result do people walk away satisfied what kind of ratings do you have how many people have gone through yeah weve done thousands of renovations at this point. You know, we actually point. We have our homeowners rate them at the end of the process. They know they have to do a great job for our projects because it directly effects their deal flow. Its like your uber ride or any other systems. Theres other advisers that do this too. What should i tell her, do you have a lot of competition in the space right now . Its a huge market. 300 million most of it is Small Projects 240 billion of that market are Small Projects less than 250,000. Its a huge market and certainly theres other folks in the space but theres no one else that is actually curating the general contractors and matching them so that not only do they love our product but they keep winning with us because we distribute the winning and monitor the projects overtime so were there from the beginning all the way to the end and i dont know any other platform that does that. Thank you for your time today. We appreatcie it. Thank you. Jim cramer is going to join us from the New York Stock Exchange were back in a moment 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. Im looking at the nasdaq i think you said dont look for a big come back on friday but maybe by monday things are back on track it may happen but maybe it doesnt. It looks better today. It does we had that odd reversal on thursday and you hear certain gurus have been right and they have gotten negative i think its case by case. I was doing a lot of work on the transports this morning and they have been the losers but i went over every one of the Conference Calls but things arent as bad as they look automobiles have been bad for the rails. And im seeing okay numbers. What do you think well see on friday . Do you feel that gdp can stay at 2. 5 . Do you feel an up shift . I wish that autos would come back i do think theres parts of the country that are really strong and southeast is great california is terrific northeast trying to come back. Midwest surprisingly not as strong as i would think it is right now. Any big earnings numbers this week that will influence things do you think maybe its time for health care. Okay. Great. Well see you in a couple of minutes with squawk on the street well be right back. baby crying slow jazz music fly me to the moon and let me play bell ring whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley theextreme risk of burstd a pipes and water damage. Y. Soon, Insurance Companies wont pay for damages. That is, not if they can help prevent damages from happening in the first place. At cognizant, were turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. Get ready, because were helping leading companies see it and see it throughwith digital. Dow up nearly 20 . Right to the wire here we go. Theres no time to battle it out. Join us tomorrow. Thats why we have tomorrow. Please. Squawk on the street is next. The dow will open with a run at another record. The index inside of 22k as we watch earnings a new white house chief of staff. Small gains in europe. Oil gets above 50 for the firs