Transcripts For CNBC Squawk Box 20170815

Barrel, 47. 53 home depot is just out with Earnings Results are good 2. 25 a share see how the stock reacts 3 cents above revenue. Comparablestore sales, an important metric to watch, up 6. 3 the consensus was for under 5, 4. 9 so thats a significant outperformance home depot raised sales and Earnings Guidance for the fullyear. As you can see, its been a grade p great performer. If we went back any period, two, five, ten years. Very close today well see if it will trade at a new high its last earnings report, it jumped about 11 on the stronger than expected earnings, and has been flat after amazon and sears announced that deal to sell ken mother applian kenmore appliances on amazon. North koreas leader has delayed a decision on firing missiles towards guam. The country state media said kim jongun will wait to see what the United States does next. The leader made his first public appearance in about two weeks inspecting military assets and reviewing plans to fire missil s s near guam. Benchmark capital is blocking the selling of shares it also wants to eliminate three board seats. This after reports that the board was approached by three investment proposals benchmark controls 20 of the voting shares. They published an open letter to uber employees explaining the lawsuit against kalanick in the letter they warn that kalanick appears to have undermined the search for a new ceo adding that it fears hes plotting his return to power at the Ride Hailing Company turning to the wall street agenda, july retail sales and import prices are out at 8 30 a. M. 10 00 a. M. , june business inventories, and the National Association of Home Builders home depot, coach, tjx before the bell after the close, we will hear from urban outfitters. President trump will sign an executive order designed to speed up the federal review of the Environmental Impact of infrastructure projects. The white house says the goal is to pare down the process on whether the project can proceed to one decision. He will take part in a discussion on infrastructure this afternoon hes proposedleveraging 200 billion of spending into 1 trillion are we safe if were in terms of traffic, if we say west of 5th . You have to stay on either side for a good buffer zone. Was he here last night . When did he arrive is he here i dont know. Last night. He was here last night . Where was he having dinner i think he went right to trump tower. All of the blockades were up all the way around trump tower ladies and gentlemen, eamon javers i didnt mean to Start Talking like that. He was here last night they have a huge security perimet perimeter. It was nothing like during the transition, when he was president elect. Its not white house north, its grander this is not the northern white house of bedminster, this is the northern white house of manhattan. Eamon is here because the president is in town, he also is here to talk to us about latebreaking news that took lace la place last night the ceo joining his counterpart of merck leaving the president s council. Welcome, eamon thanks officially for welcoming me here. Fun to be on set with you guys last night the president got in town we saw a lot of protests greeting the president as he got into town. This is not his political hometown the president also firing off a tweet last night, an additional tweet on merck after ken frazier, the ceo, left his Manufacturing Advisory Council to protest the way the president handled the racist violence in charlottesville, virginia over the weekend. The president saying merck pharma is a leader in higher and higher drug prices at the same time taking jobs out of the u. S. Bring jobs back and lower prices so the president taking a hostile stance towards merck after that decision. Two other ceos departing that Council Related to the political situation. The ceo of under armour saying im appreciative of the opportunity to have served but decided to step down from the council. I love our country and our company. And i will continue to focus my efforts on inspiring every person that they can do anything through the power of sport which includes university, diversity and inclusion. And the ceo of intel saying i resigned because i wanted to make progress. Many in washington want to attack those who disagree with them we should honor not attack those who stood for equality and other american values. I hope this will change. I remain willing to zeserve when it does. The ceos of other companies saying they will stay on that council. Some are saying they will stay on some are saying they have to depart you can imagine the level of scrutiny this decision is receiving in a lot of board rooms. We were talking about it earlier on worldwide exchange, the idea on whether this is a personal decision or commercial decision or a combination of both in the instance of kevin plank, his particular company, i made the argument that potentially theres a commercial element to it. If you remember what he said about steph curry and the response from curry earlier. How much is that weighing on it. Is the decision of intel, is that a fundamentally personal decision i dont think you can separate those things. Theyre all intertwined, all the ceos are wrestling with their personal conscious, political views what it means for a corporate leader to represent an enormous company all of that is wrapped up into it when you look at ken fraziers decision, one thing that he passes up is the opportunity he had in july when he was at the white house, they did a big event talking about new pharmaceutical technology. It was a big platform for the company. The president called him one of americas great business geniuses thats the kind of thing that you are get when you are in good stead with this white house. You can borrow the bully pulpit. Now he wont have that so now hes getting angry tweets on twitter its always a commercial decision, to some extent which you point out in your piece. Its a commercial decision to stay on also and to your point, some of these guys, they dont want their company singled out by the president , and theyre afraid of the wrath of the president i made the argument needling you a little that i would be afraid of being called out by you in the high moral ground New York Times and being proselytized for not being morally correct. I would be afraid of what the president said i might be more afraid of being called out by the paper of record for not being morally let me say this whatever the commercial decision is i can tell you that there were lots of tweets and social media in relation to what i was writing about yesterday, which is raising the question on who ceos you were sort of saying they need to leave. While there were lots of people who supported that position, there were others who, you know, wrote in and thought i was the anti christ personified. I saw some of those i retweeted them thank you they got a lot of likes ten of those likes were mine for every person who may look at what kevin plank did and said i will run out and buy an under armour shirt, there are other people who will protest and boycott on the other side. We talked about the situation in the fall, statements that were misconstrued comments not that critical of the president , and there was a boycott. Heres the question thats part of the commercial thought. Is there middle ground in American Life anymore . Companies always occupied the middle ground. The country is so divided right now. That middle ground is slipping away people are being forced to make decisions one way or another maybe the middle ground is the likes of someone like tim cook, condemning what happened over the weekend, but staying on the councilment. Jeff immelt also condemning the violence but saying he will stay on the council. Thats a position, too, but it feels like a vanishing position where companies that wanted to occupy the middle ground and president ial candidates who wanted to campaign for the middle ground, middle ground is smaller. A lot smaller than it used to be i dont know how many you have left. Climate pushing elon musk over the edge and bob iger. The next thing, lets pick these three. Youre there for manufacturing its nice to make a statement, protest, be known, are we finally going to just one by one theyll leave for whatever reason that is specific to their own business or interests . I think yes i think were going into an era in america sfrnlgt that t is that the way it should be . Its not the way it has been in recent decades, but were entering a recent phase where a lot of people will not use the word president before saying trump. Im wondering if it was a different overall if the office of the presidency, if it was a different person, whether it would be as easy to quickly i think the president s personality and tactics play a role in this before it would have been look, the president of the United States asked me to serve and do this. He tonight care right some of our president s have had some interesting qualities and things that were not perhaps, you know, that admirable. People would still serve at the request of the president i talked to people at the white house, on the north lawn driveway, i said what wiare you doing snhere he said the president asked me to come, and im a Good American this president is operating a base First Political strategy. Typically people have campaigned for the presidency and go for that political center, thats where the votes have been. In a more polarized america, the votes are on the wings, thats where the energy is. This president is playing to his base thats polarizing and forces people to make decisions the antibase, a day doesnt go by where i dont see someone saying the president is a fraud or an impostor yesterday he wasnt deserved to be a human you have people cheering for impeachment right now. Yes the legitimacy of the president has never been has such a level if you tried it the last eight years, you can imagine what would happen people did try it over the last eight years, thats what the Birther Movement was about the argument youre making about both ends, no middle most commercial entities are all about the middle what we thought about the middle pepsi, cocacola, mcdonalds, whether youre a democrat whether youre a democrat, altright or progressive the question is progressively, do these companies sit around and say, okay i dont know. There are so many progressives on this end, maybe we dont need to worry about them. Because we think theyre a tiny group. Or the altright commercially is a loud base on twitter or online, but maybe not how do you think that decision will be made i think you will see an era where companies will hire political pollsters, look at the numbers, politics look at where the votes r Companies Look at where the customers and dollars are, and theyll have to make decisions. This country is pulling itself apart right now in a way we have not seen its disorienting for people in the boardrooms they dont like making these decisions. If you look at the way the statements have been written, theyve been scrubbed with a toothbrush hundreds of people have had a hand in these statements the president doesnt scrub anything with anybody. For merck, he doesnt mention President Trump whatsoever in the initial statement. Doesnt mention the president or say why hes resigning. Doesnt say what hes protesting against at all in the statement. Yet his resignation in itself is a protest. Because hes trying to avoid the tweet. Didnt work eamon javers, thanks for being with us in person. You bet the market has got to be down on all this. Its up ggot to be down, what joining us is sam so val and steve zidal. Sam, after yesterday, its almost as if last week never happened thats right. Whats interesting is that it seems to be following in the footsteps of history we actually saw about a 14day peak to trough decline on this north korea missile crisis which is actually twice as long as the average peak to trough in terms of calendar days looking at military and terrorist actions going back to pearl harbor so the market makes the assessment is there going to morph into a u. S. Or global recession, if not, we buy right back in. Youre out there and waiting to buy a dip, youre waiting for the prognosticator s, prediction of a 5 pullback to come true, you dont get that chance. It doesnt stick around long what is the message to investors . You just buy you just buy. At record highs at full evaluations . Its based on the underlying fundamentals here we are at end of the Second Quarter, earnings season, it looks like s p 500 earnings will be up around 20 on a year over year basis that follows a string over the last five, six quarters where earnings have been accelerating thats not just contained to the u. S. Were seeing it around the world. Emerging markets, you had yesterday china and Industrial Production and retail sales up double digits. Hong kong and singapore showing accelerating growth. So the message is the underlying fundamentals are strong. We think that bodes well for corporate profits for the next quarter or two we think equity also k tquities higher for financials, we have not seen the bounce back the recovery of last weeks losses last week financials lost 2. 7 the biggest weekly decline since march. We are up 1 or so plus. What is going on are we concerned that financials have not snapped back and theres something wrong with the picture for this group no, its more sector specific than it is macro specific. I think what it implies is that even though earnings are doing well for the financials, they were the other than energy, it was tech and then financials in terms of the strongest Second Quarter growth, the real problem is that were seeing a ratcheting down of rate increase expectati expectations its usually a steepening of the yield curve that benefits the financials, especially as Interest Rates are rising. It will be less profitable for the financials to make these loans if theyre not making the profits on the loans you know, the low rates is the second leg to this story the first argument being profits are good, theyre accelerating the second being, you know, low rates. People will argue, macro folks will argue that low rates are bad for a lot of reasons but as a stock investor, as you see companies with accelerating growth and low rates, it is like nirvana. It may not be the best for financials, but for tech, materials for energy. You want to buy the beaten down Energy Stocks . Energy prices are down about 1 10 year to date Earnings Growth is terrific. Its shaping up to be a good opportunity. You dont agree the reason i think that earnings are doing so well for energy, theyre at such a low base to begin with we did a study looking at oil prices related to earnings for the energy sector, theres a 93 correlation between oil price direction. So if were finding a lot of swing producers are saying im not able to make money on this, i want to reduce my capex expend expenditures, we will support less and then a down trend andrew, whats the tie . The tie says muhlenberg okay. Step and repeat you are working for muhlenberg now board of trustees of the college. We just had rodmuhlenberg on money manager. I thought you got another new job. Another new job its not my mother who is hiring me thank you coming up, home depot just posting an earnings beat well dig through the report with brian neagle right after the break. Squawk box will be right back. Finally. Hey ron theyre finally taking down that schwab billboard. Oh, not so fast, carl. Oh no. Schwab, again . Index investing for that low . Thats three times less than fidelity. And four times less than vanguard. Whats next, no minimums . No minimums. Schwab has lowered the cost of investing again. Introducing the lowest cost index funds in the industry with no minimums. I bet theyre calling about the schwab news. Schwab. A modern approach to wealth management. Home depot out with quarterly results, beating the top and bottom line and raising guidance for the full year joining us is brian neagle, Senior Analyst covering hard lines and broad lines. Is the samestore sales number and the outperformance, is that telling the story . The bottom line, you can do things with a lot of times revenue, margins but samestore sales, its hard to its hard to have that not be real. Not ab pbe a positive. Thats fair home depot in the United States did a 6. 6 comp. In this retail environment, given what were hearing from other retailers, thats amazing. Just like we were talking in the break, whats incredible with home depot is the quarter in and quarter out they put up these numbers, despite choppiness in the overall business to answer your question, it starts with sales. If you look as we dissect home depots results, they have a clean p l. Sales flows through. So the average ticket rose 3. 6 customer transactions were up 2. 8 what do you think is spurring is it just the seasonally strong period for home depot . What is getting the customers not only in the door but spending more . I think this quarter we probably for the first time in a while benefited from weather well see what they say in the conference call. Its been an elongated spring. Beyond that, this is one of the few areas where the consumer is spending i think that goes back to home prices have been steadily increasing it gives that homeowner and Consumer Confidence in the home. The hoother factor, we talk abo this a lot with ecommerce home depot is much more protected from the threat of ecommerce what do they sell again and again to the same customers . For me, i would have to watch a lot of diy network or something, theres a place where you can learn how to do things go do it i cant imagine, people put in bathrooms. They refurbish a sink. I cant do that. Does it help to watch the tv to do that . Is it possible for me to be a big im looking at andrew, too. Im to the capable. I think you guys are. You just have not done no, were Bed Bath Beyond guys were Bed Bath Beyond guys we pick out duvets together. Yeah. Vaporizers. What is the question to brian on this . My question is if you dont have a contractor what do you do . This is key is that where its going . Mostly people who are contractors. I dont want to feel bad about myself not being handy handy is sexy to people. I want to be sexy, im not we dont know the specific numbers here i think theres a bigger chunk of home depot sales that are to professionals. A lot of those professionals are doing what you are talking about, the Bathroom Remodeling i buy light bulbs there i need help with that from one of their friendly associates help with light bulbs i look at other stuff, i wouldnt foe how know how to get of the store have you ever watched this old house. How about the two brothers . The Property Brothers . Modern day bob vilas i think those shows are a piece of this category thats my question. What percentage of the customers are diy . Theres about 70 of their business 70 is diy screwing in a light bulb is not part of that so youre saying what percentage of customers are coming and actually remodeling their bathrooms themselves bingo as a guess, i would say thats relatively small. I think that portion of the business is skewed more and more towards the smaller contractor heres a more serious question quickly what we saw home depot take a hit why is that not serious youre talking about your level of sexiness, joe i think thats not serious he just got a twitter hit that said i am sexy. Sears announced they would sell kenmore appliances on amazon have we seen the full effect of that yet in the stock there was concern theres concern at home depot, concern at lowes. Ill answer that question this way, have we seen the full effect its fair to say no. We dont know what that impact could be. We dont know my view, i wrote about this and looked at this, kenmore was once a powderful branu powerful brann losing to home depot i think its sears trying to find some value in a legacy brand. I dont think its much of a threat at all to home depot, but to answer your question, we probably dont know for sure i have probably ten different types of Lighting Fixtures in my house. Umhum. Not due to me but the person that the contractor. Person that the contractor is taking instructions from there are ten different types of different light bulbs. Thats tricky yes so when you bring the old light bulb, they cant match that old light bulb i feel handy. Beyond that, we have issues. Have you responded to your twitter follower i will like it. Thank you for saying it wasnt a frivolous question the core issue we got to she listens to us on radio, right . Yeah. I have a face and body for radio. Brian, thanks. Thanks. Brian didnt laugh after my questions. He laughed inside, im sure not convinced i think it was important stocks to watch today, pandora getting a boost in the premarket after the Music Streaming Company appointed sling tv founder roger lifynch its new ceo. A federal judge has ruled costco owes tiffany 19 19. 4 million over the illegal sale of counterfeit diamond tiffany Engagement Rings the moving comes after costco argued tiffany had become a generic term. And herb la lialife taking t after china may crack down on pyramid seller sglos trade talks begin this week to renegotiate nafta. We will talk to Javier Palomarez next and then a look at yesterdays winners and losers 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. Going somewhere . Whoooo. Heres some advice. 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You pointed at andrew . What . I didnt say anything i did not say anything i did not do anything. You made eyes no eyes no eyes happening. No eyes ever happening i dont know pa whnoknow what happened well talk trade, talk nafta. Talks for renegotiation of nafta kick off tomorrow. For more we bring in Javier Palomarez. Good morning to you. What do you expect to come out of this . You know what i expect, what i hope for is a continued understanding of the criticality of Foreign Trade and therefore nafta for american Small Businesses i think the average american doesnt recognize that 95 of the Global Market exists outside of the United States and that when you look at all the corporations or companies that engage in Foreign Trade in this country, 98 of them are considered medium to smallsized companies. Im hopeful. I believe there will be a continued focus on the krill l criticality of Foreign Trade what are you specifically lobbying for when youre in the halls of washington over the past couple weeks and months, what are you telling them. Were really communicating to the administration that we need to level the Playing Field we dont believe, we never have, that nafta should be torn up and thrown out that makes no sense whatsoever we are very focused on the notion that canada and mexico are our number one and number three trade partners respectively we should treat them accordingly. These are important relationships to the continued wellbeing of the American Economy and the American People. Talk to us about minimum wage minimum wage here and elsewhere and what you think should be done there you know, labor is one of those things we look at as we consider the renegotiation with nafta. You know, in our country we have specific regulations that govern how and where and when we can employ people, how much we need to pay them at a minimum, the minimum age, number of hours we want that Playing Field to be leveled amongst ourselves and trade partners do you think thats possible i think anything is possible. We are in a place now where we need to push for things that do need to be recalibrated in terms of nafta in terms of the conversations you have had with members of the administration, do you think on that issue, the wage issue, theyre on board with you . I wouldnt say theyre on board with me. I would say that theyre willing to listen. Theyre willing to have the conversation wages are important. Possibly the number one issue for the average american and certainly for Small Business owners its an issue that will continue to have dialogue with the Administration Im hopeful theyll see it our way. Theres no guarantee, but im encouraged by the fact they continue to have the dialogue with us. Do you see any fault lines within the administration itself over the renegotiation of nafta . Absolutely. Im hopeful that the team that this administration put together, that the cabinet members like mnuchin, even tillerson and ag secretary purdue, these are tried and true business makers, they understand the criticality of business and how a bias towards doing Good Business is important for the continued wellbeing of our country. And im hopeful these voices eventually will win out. Youre separating these voices from which other voices those that dont believe the way we do. At the end of the day whofrn who would those people be those are the people we see embroiled in other issues that are not good for the American People, certainly not good for business we need to focus on the important things that are driving this economy we need to refocus effort and stay laser focused on the issues that matter most to the American People good jobs, an economy thats healthy and creating opportunity, not only for american Small Business but for the American People. Before we let you go, just walk us through the permutations if nafta were to be ripped up, what happens if nafta was to be ripped up, it would be disastrous im talking to you right now from dallas, texas look at the relationship between texas and mexico, just that relr relationship at lone 30 of all exports that leave this state go to mexico. That accounts for trade and goods that go to that willing partner off of the border if nafta was to be ripped up, 6 million american jobs would be 6 million american jobs would be at risk some say up to 14 million american jobs depend on nafta. We need to be careful. Words matter in a situation like this number one and number three trade partners, we need to treat them accordingly we need to proceed with caution and respect. Appreciate your time and perspective. Thank you. Thank you very much you bet coming up, streaming service soundcloud securing an emergency round of funding to keep the company afloat the new ceo will join us and david abney is teaming up with rival fedex calling for tax reform, Infrastructure Investment and better trade deals. And well talk about the progress on tax reform with congressman kevin brady. Stayun ted youre watching squawk box on cnbc well, when you have copd, it can be hard to breathe. 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The tsa says it set a new record in july screening more than 70 million passengers and crew. The july record of 72 million topped the previous record set in june by about 2 million screenings according to the agencys data, 99. 9 of those screened in july and june waited 30 minutes or less in standard lines and 99. 6 of precheck passengers waited less than five minutes. Whale watching, more specifically at what weve been told about hedge funds theyve been tearing back in healthcare and banks in the Second Quarter, david tepper eliminated mylan, teva and pfizer starboard and third point sold shares in baxter banks were unloved by hedge funs soros sold out of Goldman Sachs as did Moore Capital which eliminated Morgan Stanley and slashed stake in b of a. Third point dissolving stake in jpmorgan and duquesne getting rid of bank of america then there was snap. Jana, third point, appalossa and Moore Capital sold out of snap in the quarter those shares are sharply higher after an increase in yesterdays session. This morning getting love from canter fitzgerald. Coming up a big exclusive interview, soundcloud securing a lastminute funding round to stay in bbusiness. The companys new ceo will join us mequawk box returns in a mont stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. When youre clocking out. Sensing your every move and automatically adjusting to help you stay effortlessly comfortable. There. I can also help with this. 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. Welcome back to squawk box. Big news in the music business soundcloud announcing a 170 million funding round after rumors that the auto Tuning Service was struggling to stay afloat the company also bringing in a new ceo to turn the company around Terry Trainor joins us now for his first interview since being name chief executive officer were thrilled to have him on the program this morning tell us about this deal and what it means and where youre taking this company andrew, great to be with you. Thanks so much for making time its always a pleasure to join you all. Look, soundcloud is just an extremely interesting platform i was very excited to be part of the deal and work with the investors and founders to bring this together. Its truly one of a kind where its the largest creatordriven audio platform on the web where any creator and millions a month use soundcloud to upload their audio and share it, distribute it easily across the web, across any device to reach a massive audience and with the opportunity, you know, its very exciting in terms of us Building Tools for those creators, continuing to develop our Subscriber Base there, as well as a totally differentiated listener experience built upon the content of those artists kerry, you have rain group and also thomasek investing in this what is the business model, though because you look at soundcloud and say to yourself, this is the next vimeo or even youtube if you can make the model work. But its not spoet fie no, thats exactly right. The core of the model is an extremely differentiated big, which is selling those tool sets to audio creators. So theres soundcloud pro, and soundcloud pro unlimited, where audio creators pay for access to the platform for enhanced features to upload and share and measure their work so in that respect, to your point, yes, theres a lot of similarities to vimeo and those creator driven opportunities are somewhat counterup tuive because everybody immediately goes to the consumer side. But that core business is growing nicely, very profitable, fantastic margins, and it often creates a unique consumer opportunity because of all that contact soundcloud has 150plus million tracks and so were also building a great subscription listener experience, and we have a free listening with advertising experience, as well. Kerry, as you know, so many in the music industry, and in the podcasting world, love your love the product the question is, why, frankly, investors and economically it has not been loved and to some degree i would add, you know, why isnt an apple or a spotify or an amazon show up at the table to try to pick this company off if it has the value that so many in the business itself think it does yeah, well, look, we absolutely believe in that value within the business as i just articulated flowing from that creator driven model you know, i think that there are a number of companies who are interested in soundcloud ive actually gotten a lot of messages of support from others in the streaming industry who recognize how incredibly unique this platform and this ecosystem is and frankly, i think it was a lot of what we brought to the table, myself, and rain and thomasek in working with cofounders to say look we believe that theres a great next chapter here for soundcloud to remain independent and continue to execute on that vision, and myself, bringing, you know, very relevant experience, we think, from vimeo to say, look, we can help soundcloud really develop that business on an independent path, rather than focus on an acquisition or a sale. Right got to ask, is chance the rapper involved in this transaction in any way or another you seem to be tweeting about this of course, hes a grammy winning unsigned rapper but got his start on soundcloud. Yeah. Yeah look, chance is involved in that key way, and that support artists passion platform is just incredibly genuine and incredibly unique. Chance did not participate financially in the deal. However, his support is important to us, and you know, its a mutual exchange, where hes a fantastic example of just a unique power, and audience that soundcloud can provide. And you know, we value our relationship with chance very deeply, and the amount of support that weve gotten from artists from all corners of the music industry, you know, expressing support, and passion and asking how can i help, how can i support, you know, again, just incredible. That direct connection with the Artist Community is really coming to set soundcloud apart have you ever thought of creating a model that includes the artists in it . Well, we do have a program called on soundcloud where the artists have direct revenue share agreement with us. And so, you know, thats absolutely a program that were going to look to expand further. All right Terry Trainor we appreciate your time we wish you lots of luck with it all right coming up, u. P. S. Ceo teaming up with a rival, fedex, in a new oped. Calling for, among other things, tax reform, Infrastructure Investment and better trade deals. He will join us in just a few minutes. Later were going to talk about the progress on tax reform if there has been any. With congressman kevin brady chairman of the influential uswa a mnsomttee who knew that phones would start doing everything . Entertaining us, 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. Two high profile ceos leave President Trumps Manufacturing Council. The reasons and the implications straight ahead backing off, north korea tones down its rhetoric, sending global stocks higher were going to have the latest from the region and what it means for your money and boeing stock has been flying high as the company ramps up production. But is there turbulence ahead . A closer look at the companys bulging back orders is coming up as the second hour of squawk box takes off 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 joe kernen and melissa lee, who is hanging out with us, in for becky. Quick look at the futures. We are in the green, the dow looking to open higher, 53 points, nasdaq up close to 18 points higher and the s p 500 looking to open by 5. 5 points higher some of the big head lines of the morning. Under armour ceo, intel chief resigning from President Trumps Manufacturing Council. Theyve joined merck ceo ken frazier who announced his departure yesterday morning. All three an apparent reaction to the president s failure to quickly condemn White Supremacists by name for the violence in charlottesville in virginia this past weekend dow component home depot rising in premarket trading. The Company Earned 2. 25 per share, three cents above estimates. Revenue and samestore sales also above forecasts home depot, and then earnings out from coach, earnings of 50 Cents Per Share coming in one cent above estimates revenue also below forecasts but samestore sales increased 4 , or slightly better than consensus. Developing news out of north korea this morning leader kim jongun has delayed a decision on firing missiles toward guam. The countrys state media said he will wait to see what the United States does next. The leader made his first public appearance in about two weeks, inspecting military assets and reviewing plans to fire missiles near the u. S. Territory of guam. I hate to characterize this as blinking, but because, you know, god knows you could hear it, but mattis yesterday, you saw the comments, right . He said if there were to ever be anything even aimed at us, and fired, that would be that would be reason for a response, and then within 24 hours, you see maybe we wont do guam but at the same time, saw this yesterday, dunkirk, the top u. S. Military office involved in this says hes aiming to further develop a working relationship with his counterpart in china in order to lessen the risk of miscalculation on the korean peninsula. Thats what could get scary. Radio stations broadcasting on guam of a nuclear you know, you worry about, you know, about a miscalculation but this gentleman said, the chairman of the joint chiefs of staff, he arrived in beijing this morning as he continues his travels in asia. The general says that he wants to underscore the United States ironclad commitment to its alliance with seoul and tokyo, because on this day the effective military to military ties with china are also important. Beijing is north koreas biggest economic partner he is visiting south korea, and china, in a week trump said he was unable to unleash the fire and fury if north korea continued to threaten the United States President Trump will sign an executive order today to speed up federal review of the Environmental Impact of infrastructure projects. The white house says the goal is to pare down the permit process over whether projects can proceed to one decision. The president s spending a few days at trump tower in new york city hes also been taking part in discussions on infrastructure this afternoon hes proposed leveraging 200 billion of Government Spending toward 1 trillion of projects that include privatizing the nations air Traffic Control system a couple of stocks on the move pandora getting a boost in the premarket after the streaming Company Appointed sling tv founder roger lynch as its new ceo. Lynch is replacing interim ceo who will continue as cfo herbalife stock is cracking down on china they announced theyre launching a three Month Campaign against recruitment by pyramid sillers that stock is up slightly this morning, this after a decline in yesterdays session. Turning now to todays wall street agenda. July retail sales and import prices are out at 8 30 a. M. Eastern time then at 10 00 a. M. , june business inventories and the monthly survey from the National Association of Home Builders lets get you caught up on the markets at this hour joining us right now is brian leff its, Senior Investment strategist at oppenheimer funds, our guest host scott furman. Good morning to both of you. Good morning. You look at the earnings picture that were living in right now against the backdrop of whats going on in north korea and everything else, and you think what about the markets . So what i think is that the markets are responding appropriately to a synchronized improvement in Economic Activity around the world now, i would like to say it was coordinated. It wasnt coordinated. Its the result of emerging markets having a weak 2015 europe having a weak couple of years, and the big major blocks in the economy are improving as a result, companies are beating on sales we havent seen sales beats like this in a very long time, and corporate earnings look generally good not across all companies but generally look good. So when people are focusing on the geopolitical risk, the political risk, these things are always going to be out there we can look throughout history these things always exist. We always think we live in the most Uncertain Times the reality is the markets are reflecting and improving economic backdrops what investors should be worried about is a policy mistake somewhere in the world the geopolitical will always be with us. And when you think about where the s p 500 is right now for example, where do you think it lands at the end of the year . I think were going to continue to move higher. I think when youre in an environment where the world is improving, and policymakers are doing no harm. All right we had a correction, 2015 into 2016 as central bankers were tightening rates, at least raise rates, capital flows out of the emerging markets. Today inflation is very benign Global Growth is improving i think the markets will continue to press higher i know youre longerterm than that. I would i think brian has well articulated the argument for a continuation of todays equity valuation, as you go forward, which is were in a slightly better than neutral posture if you look almost everywhere from a pure financial perspective. You have the benefit, then, of the mass of very low Interest Rates. And thats whats really driving you from slightly better than neutral performance across the board. Some sectors doing better than that but, you know, perhaps not a lot better than that so, you know, weve grown accustomed to this 2 to 3 growth range as opposed to trying to break out of that. And the math works really well for the equity markets when you layer in the very low base rate that we have and i think as long as that continues, and it looks like that will continue, for at least the next 12 to 18 months the hard thing to know is the formula of what happens if we hit a recessionary bump of some sort how much lower can the rates go . The fed is arguing they need to take rates up. They can take them down. I dont think weve been through a period like that thats the part that i dont think we but if you look at what ends a cycle, the usual trappings of a recession, you would want to see significant credit growth, which we dont have. You would want to have animal spirits. You know, Business Investment. We dont have that the total volume of m a deals is actually going down. We have a relatively steep yield curve. So the usual end of a cycle elements arent there. I think whats particularly interesting for investors is what actually performs what is the composition of returns and what parts of the world perform well you remember in the aftermath of the election it was going to be protectionism, all u. S. , you could only own u. S. Assets, value stocks, because we were going to get bigger growth and now its europe, growth stocks, emerging markets scott, we havent been two to three. Weve been 1. 5 to 2. 5 so two to three would be a that would be that would be good. That might be more likely than a recession what were looking at right now, i think what the market has been reacting to is weve now broken through that two for the last couple of you did that a couple but one quarter athe a time. Right, right. Again, better than neutral if you call lets call two a neutral number at this point okay. Slightly better than that i think youre seeing again some industries performing better and there are stories around other growth trends, obviously in the economy and were also in a period where there are lots of uncertainties. So everyone looks at the unemployment statistics and wonder where is the inflation that would normally go with a a metric that we all focus on, which may not be the right metric anymore, that now takes you down below 4 or so unemployment but we dont have inflation. We dont have inflation almost anywhere right japanese have been trying they cant do it so we are we have to acknowledge were in areas of uncertainty that longerterm need to help figure out. And then productivity growth has been a real interesting variable i mean, thats always been a good driver of sustainable value, sustainable growth. And thats been a little mixed the world is never going to be certain, and the interesting thick about 2 gdp growth and youre right, joe, we can set our watch to 1. 5 , 2 gdp growth, the reality is thats not a lot of economic volatility and thats kept market volatility quite low i cant believe that you said geopolitically its no worse now than it normally is. The markets acting that way Warren Buffett said during the 2008 financial crisis in the 20th century the United States, there are two world wars, a dozen or so recessions, great depression, financial, flu epidemic, the assassination of a president , the resignation of a president and the dow claiming from to 1 1,000. So weve been here before. I agree its just that one thing you left out was a, you know, its one side launch, the other side launches well, it would be a big difference we had that in the 80s as well, right . Not nuclear we had a cold war and we had a mutual we didnt have a guy like kim jongun who had six you know, as many as 16 Nuclear Weapons. We probably did have concerns about Nuclear Weapons in cuba in the 60s right in hindsight but it just seems like right now, i dont know if i say geopolitical were just right in the average amount of geopolitical risk. Seems like it might be a little bit. It might be slightly elevated but weve been here before the world can only end once weve got that going for us thats true. The only thing he fears is nuclear war around armies. Brian, thank you. Scotts going to be sticking around appreciate it. Coming up, business rivals, agreeing on policies the ceos of u. P. S. And fedex penning an oped in the wall street journal yesterday. We will be joined by the ceo of u. P. S. , right after the break. Well talk about taxes and investing and infrastructure in a first on cnbc interview right after the break. 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We mentioned earlier, earnings Beat Estimates by a penny a share. But its the revenue that usually gets a stock and here it is revenue, again, revenue and earnings forecast fall below street consensus and we are seeing the pressure there. Remember there werehigh expectations in this quarter analyst estimates had been rising going into the quarter. So slight misses are hurting the stock, which was up 20 for the past twelve months two business rivals uniting this week on a message to the government and laying out what they need to be competitive on the world stage. The message coming in the form of an oped that the ceos penned the two companies competing, u. P. S. And fedex joining us now is ceo of one of those, with a first on cnbc interview, david abney, the chairman and ceo of u. P. S. How did this come together, david . Who called who you guys probably talk once in awhile, i guess. To fix prices and stuff like no, just kidding how did this actually come together well, you know, first and foremost, were always going to compete. Theres no doubt about that. But, there are just certain basic policies that we have a chance, we believe, in government in washington today to make some Real Progress and we just felt like a message together would be more effective than if each individual company goes alone so it came as a passing idea, then we thought about it some more, and then we started writing the letter, and then it took a life of its own and yesterday we wrote it together, and nothing bad happened in the world. So i guess it was okay to do that the process for congress or government being able to proceed and answer your wishes, do you give it a high degree of probability, david or are you looking at it, and maybe thats why you felt you had to pen the oped to try and make it more likely because, we just seem to be stuck in a morass to some extent well you know, we think theres an opportunity and not going to be able to put odds on it, but we saw an opportunity. We see that congress and administration has been open to tax reform of course, the harder part is getting people to degree on just how we implement it. But were just saying we need a lower rate were okay to take loopholes out. We need a territorial tax provision, and wed like to see some kind of permanent structure. We really believe it generates jobs, stimulates economy, so that was one of our main points. Its really focusing on Tax Reform Tax reform, obviously, and infrastructure and im certain that some of the fear prior to the election on some of the protectionist rhetoric actually both sides, you had some of that with tpp, et cetera, i guess you and fred both think that those would be harmful, and thats important, as well, that we dont go down that path. Is that in the editorial absolutely. Trade, we think, is such an opportunity for the u. S. You know, 95 of the worlds consumers live outside the u. S so we really believe that we need to focus on exports, and every time the u. S. Has added a trade agreement, weve seen our exports from our customers increase 20 , so we believe that its a job generator we think that what the president and administration is doing with nafta, that we need to modernize nafta, and were encouraged, and we hope that they get that accomplished just to try and get some overall info on how business is right now, david, how would you characterize the economy at this point . We were just talking to scott, is it a 1 to 2 gdp world right now . Is it a 2 to 3 if this were to happen do you think we could get firmly ensconced above 2. 5 you know, that was the whole purpose of our letter, is we dont think the u. S. Really needs to live with a 2 or so increase we believe that some of these policy changes, and of course infrastructure is another one, that we could raise the gdp by a percent or more. It just takes good policy, and good execution, and thats what the letter was all about right but, taking a snapshot, a point in time right now, where we are in the United States, would you say . And i guess you guys love amazon, dont you . You and fred well, we love all of our customers, thats for sure like loving all your children, right . But you know, right now the economys doing okay its probably increasing slightly it is consumer driven. Theres no doubt about that. And we would like to see from the industrial manufacturing side a little bit more of an increase in u. S. Exports were seeing a little bit of an increase but we would like to see that grow much faster david, you mentioned the increase in business thanks to amazon youre also seeing headwinds because of retail store closures, and specifically businesstobusiness shipments you indicated on your conference call, i believe, that you thought that after the Fourth Quarter the comps would get a lot easier that implies that store closures, weve seen the worst of it this year. Can you give us what you do see for store closures and how much will that be for business for the remainder of the year . You know, Fourth Quarter we did see a little bit of pressure from store closings. But we did increase our b2b business, just not nearly to the perspective that we did with b2c. So yeah, theres some pressures there, but theres also some tailwinds. A lot of these large brick and mortar retailers are using omni type approaches, for reaching their customers, using their stores as warehouses and were seeing that drive volume b2b, too. So you know, were slightly encouraged, and were going to continue to work with b2b and b2c customers. I guess you hear about conditions of bridges and roads, and everything youve got to constantly using the infrastructure, do you get the feeling that there are, if we dont do this now, that not only will business be affected, but are there safety concerns right now with the condition across the United States, do you think, is this essential that we do this . You know, this is a real issue that we talk about it used to be the u. S. Led in infrastructure now, what you see in china, and even india, is something that the u. S. Has got to make some improvements on. Got to remember, we have about 100,000 drivers, and if we have a five minute congestion delay on each of those drivers every day, thats 105 Million Dollars a year so were working very hard on this we have said all along we believe in a user pay, user feces tell so were willing to pay more to develop these bridges and roads but we want to see that money dedicated to Infrastructure Improvements but its a real area of concern. Andrew you want to ask david if he were on the Manufacturing Council. You love the story fair question you want to take him there. David, what do you make of ken frazier and folks from intel as well as under armour stepping down from that council well, when you start with ken frazier, we consider him part of the u. P. S. Family. Because, his father worked for us for 30something years, and retired in great standing. Got a lot of respect for ken i think ken had to make the decision that he thought was best for him i think other ceos that have done the same thing had to make that decision. Each of us has to look at it, and then do what we think we can live with, and what we think is right. Okay. There are so far three we appreciate your time today, mr. Abney. Thank you. And well have kevin brady on a bit later if you want to tune in well see where we are on tax reform at this point thank you. All right thank you. Okay. Coming up, walking dead producer suing amc over massive profits. And north Koreas Kim Jongun is throwing the ball back into President Trumps court. How should he respond . We find out in just a couple of punutes when we speak to former dety assistant secretary of state. Squawk box returns in just a moment i love you, couch. You give us comfort. And we give you bare feet, backsweat, and gordos. Everything. I love you, but sometimes you stink. Soft surfaces trap odors. Febreze fabric refresher cleans them away for good. Because the things you love the most can stink. And plug in febreze to keep your whole room fresh for up to 45 days. Breathe happy with febreze. Welcome back to squawk box. Joes favorite show, walking dead, visitors of amcs monster hit now suing the network, claiming that amc is holding back a significant amount of money it usually would have been given to Top Producers damages have now reportedly reached 1 billion the issue at hand is that amc, not just the network, but also the studio behind this program and, instead of actually moving cast from one place to the other, license fee, if you will, rather than real money, they put it at 1. 45 million per episode. The creators are saying it actually in truth was closer to 30 million an episode given the type of ratings and advertising dollars associated with this program. And kirkman made a move yesterday, right didnt he go to he was mad about something happening initially and what makes it complicated is that people were working on the program are currently suing them so, this is now not just affecting the math but potentially the makeup people have to do more than your makeup artists in the morning. You have a tougher pretty tough. Its a long time. Coming up, why north korea is backing off its threat to launch missiles towards guam. Well look at what the next move will be. Take a look at u. S. Equity futures. We have a question about your brokerage fees. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh and i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. She cant become a guitar legend just by playing air guitar. The babys room wont build itself. And her paw wont heal on its own. Were all working forward to something. Synchrony financial can help your customers make it happen sooner. So she can plug into her dreams. And theyll have a new addition for their new addition. Whatever youre working forward to, even if its chasing squirrels, Synchrony Financial can help you get there. Good morning welcome back to squawk box right here on cnbc were live at the Nasdaq Marketsite in times square among the stories front and center at this hour, we are just about an hour away from what will likely be the most closely watched economic report of the day, retail sales expected to come in with an increase of 0. 4 that would more than reverse also President Trump will sign an executive order today hes in new york establishing a process for advancing his infrastructure agenda. Hes also going to give a statement on that topic this afternoon. Watching shares of nutritional productsmaker herbalife and newskin this morning regulators have announced a crackdown on the multilevel marketing companies. Neither company was specifically named in that announcement the government move follows the death of a Chinese College student who had been a victim of a multilevel marketing scheme and herbalife. What does bill ackman have to say about all this i dont know. Ouch i guess. North koreas leader kim jongun was briefed on the military plan to launch missiles into waters near guam yesterday. Although prepared for the enveloping fire at guam the north said it would watch what the foolish yankees do before taking ar making decisions china has slapped sanctions on the country. Joining us now former creosote president evans revere hes been Albright Stonebridge Group Senior Adviser evans, great to have you with us nice to be here what do you think actually happened in the decision to sort of just wait and see i think north korea has shifted back to a more normal mode in terms of dealing with the United States of pugt a threat out there, backing away from the threat, and then indicating to the United States that it will determine whether and to what degree it actually is going to carry out the threat the North Koreans, i think, were very careful about never actually saying that they were going to hit guam, or actually launch those missiles. The implied threat but once again, i think secretary mattis comments yesterday indicating that the United States an act of war would take that missile out, that sends a pretty powerful message to the North Koreans but at the same time, if people are inclined to say that we dodged a bullet here, i would suggest that the bullet was never intended to be fired in the first place by either side so this is fully bluster on both sides well its bluster but its bluster that made an important point from the north korean perspective, they have now arrived as a Nuclear Weapons state. That was part of the message they are now prepared to deal with the United States as one Nuclear Power to another this is their perspective. And they are prepared to reengage with the United States now from the position of strength, from their perspective. Does this open the doors to negotiations of season ort or talks between the two countries . I think the door to negotiation has always been open thats been pretty clear does it make it more likely i think it sends a message to the United States that the next time north korea and the United States sit down, from north koreas perspective, north korea will be able to tell the United States, we are a Nuclear Weapons state, and we will deal with you as an equal. Whether theres a bit of hot air to that or not is another question but this is the north korea now. At least youre making it sound as if this is a regime that, at the very i hate to say at the end of the day, i dont want to say at the end of the day youre using it properly. But ultimately ultimately. Thank you but ultimately, there will be a rational counterpart for the United States to deal with so there is some we shouldnt just think of this guy as just off the wall, some destructive hes not off the wall hes not irrational. He is dangerous. He has Nuclear Weapons nay are prepared to threaten the use of them. But they are not so foolish as to actually use those weapons or prepare to use those thats what i always thought, to be crazy and do some of the stuff that he enjoys doing, obviously, you do need to be alive to do. And god knows what his predeelections are but i heard about his father once again look at where we are right now. The United States made some threats. The North Koreans made some threats. But neither side took any concrete actions to actually materialize those threats. Mutual issue of destruction is it still works there is a school of thought, and i sometimes askrub to it, that believe that the North Koreans dont necessarily believe in mutual thats what im worried about. How could they not believe in it who wouldnt be destroyed . Ive had a number of conversations with north korean officials that have convinced me that if we simply rely on containment and deterrence, the way that we did with the soviet union back in the day, the way that we do with russia and china today, the north korean message to me in some of these conversations is, we are not necessarily going to play that game now, once again, that may be bluff. It may be bluster. It may be posturing. But it really worries me going forward. Now, back to being not rational you know, again, i get that the question comes up, weve tried lots of Different Things since the mid 90s in terms of negotiation, providing significant billions of dollars of Financial Support in order for him and his father to disable their nuclear i was part of many of those talks. Right and yet none of that has worked. Yeah. If you look at the chinese, its so interesting that the chinese have never embraced him. That the official chinese newspaper refers to him as fatty kim. And the question i guess i have is, is the policy of the administration playing a bigger game in terms of making sure china knows its not business as usual from the u. S. Perspective, and therefore the first time the chinese are actually taking concrete actions, is that one of the things thats going on here . Or how do you see that part of it i dont think the chinese are where wed like them to be in terms of their determination to put the sort of pressure thats necessary on north korea the chinese are in a better position than they used to be. Theyre willing to cooperate to some extent in implementing sanctions. But theyre Still Holding their fire and leaving plenty of room for maneuver here. A lot of the United States posturing. A lot of the United States rhetoric has been designed to send a pretty strong message to beijing that were serious about this i think that message has gotten through. Fundamentally and my chinese counterparts tell me this, their policy toward the north has not changed. They dont like a Nuclear Armed north korea. They would prefer a denuclearized north korea but the thing that really terrifies the chinese is the prospect of the collapse of the regime, chaos on the korean peninsula. Thats their bottom line the Trump Administration has signed an order effectively to give the uspr latitude to open investigations into intellectual property handovers that are in china. The chinese perception is that theyre politicizing trade that theyre tying it to the north korea situation. Is the real issue here we have damaged our trade assuming this threat has gone away, the damage to the trade relations still stands, potentially. I think its really important to keep these issues on separate tracks, and not create that perception that somehow were politicizing trade issues. There are probably some very good reasons to take a long, hard look at chinese trade practices, especially in the area of intellectual property. But lets keep it away from north korea. Lets keep these issues away from taiwan, South China Sea these things should be kept on separate tracks, as difficult as that may be. Evans, thank you. Evans revere great being here. Coming up, more on the markets from guest host Scott Sperling of thl partners and then later, shares of boeing have been flying high thanks to strong results and ramped up production phil lebeau goes inside the numbers at boeing and tells us what could be ahead for the company. Check out the futures this morning. Strong again across the board. Up 50 now on the dow, 20 on the nasdaq, just under 6 on the s p. Squawk boxilbeig bk. Wl rhtac whoooo. Looking for a hotel that fits. Your budget . Tripadvisor now searches over. 200 sites to find you the. Hotel you want at the lowest price. Grazi, gino find a price that fits. Tripadvisor. Were watching shares of Dicks Sporting Goods under tremendous pressure in premarket trade. The stock is down 16. 5 . This after Quarterly Earnings missed estimates by 4 cents a share. 96 cents a share is the number compstore sales were up less than expected. Companys fullyear outlook is well below street forecasts. A lot of analysts were signaling that the Liquidation Sale of hundreds of Gander Mountain stores would impact dicks in the quarter. Theyre very cautious especially after a disappointing print from big five as well as kabilas earlier in the quarter dicks down almost 17 lets get back to our guest host Scott Sperling, we talked about during the break, so ill ask you now, the big issue of the day has been what some of these ceos have been doing in reaction to Donald Trumps response, or nonresponse, or however you want to describe it, to the violence that took place over the weekend. Weve now seen merck ceo, under armour ceo, and also intel ceo, leave that board if you were an investor on a Portfolio Company and had a ceo on one of these councils, what would you tell them . I think first and foremost they have to do what they believe is the right thing for themselves, and for the company. They all have their own view on that this is a very tough environment to be political. I think the polarization that weve all talked about has reached extreme levels and trying to pull people back to the center is an effort that many of us are really focused on and trying to participate in because there are more things that we have in common that really separates us, but approaches are very different. So, you know, the fact that they serve on this council was a statement, the fact that theyre pulling off is a bigger statement in light of but if you got invited on this council, would you have said no . No im not saying that they should have. I think it was a rational thing for them to be on this council i think as americans, whoever is president we want to succeed we want to push them forward and theres a real opportunity to make some changes in how this country this countrys Government Works to, i think, leap out of the 1 to 2 growth rate that joe was talking about earlier, and maybe as much as the three plus percent growth rate that we heard described as an objective from one of our leading ceos in this country, a little bit earlier this morning. So, i do think that their participation in the Manufacturing Council was a very rational thing to do i would hope that that organization is able to help move things forward. I wonder if it has not been as effective as it could be in terms of its utilization, and therefore what part of their statement is basically, you know, i go to a couple meetings, but i dont feel like im helping move things forward anyway, so its not that big a deal to me thats the complaint of the aflcio which said it is weighing his participation on the Manufacturing Council specifically but when you think through having a seat at the table and changing the conversation, versus resigning to express your opinion, how do you weigh those choices . I personally always prefer the seat at the table, even if i am a dissonant voice at the table. Ken frazier is an incredibly smart, successful individual who i think has set very high standards for the industry, and for Business Leadership overall. I have Great Respect for his decision here. Kevin plank, similarly, has been a leader in, you know, his segment of the business world. So, i cant i cant criticize them at all, even though that may not have been the choice i would make you said you prefer to have a seat at the table, even if it even if youre on the disgrowd e disagreeing end of the table yes the question i have, is there ever a moment at which you say the utility of being at the table isnt there . Again, thats what i what i wonder is whether or not this forum has been seen as an effective table. Right to have a seat at whatever the phrase might be there. You know, whether theyre also basically saying im not getting much out of this anyway, and therefore right thats not but then the flip side is you have employees and then you have customers, right and you might have employees and customers who are looking at the president on different levels. Sure. Some are making political comments some are making other types of comments about his behavior, or what he stands for you, as a individual or your company may have a certain set of values which you may think you share with the president maybe dont think you share with the president. And these are sort of where it gets complicated look, do i wish the president had made the comment that he made yesterday on saturday yes. I mean, i i cant i dont know exactly his mindset, whether or not he was trying to criticize every type of violence, not inclusive of what went on there, but other things that have been really inappropriate that have been going on, and maybe thats what he was thinking. You know, clearly the abhorrent nature of these particular groups should be called out specifically thats what i would have done. But im, you know, i cant i cant ascribe ill will to the president at this point. I think your happy talk would say that everybody wants the president to succeed im not saying that everyone does and not everyone everyone should but right up the Senate Majority Leader People didnt want barack obama to succeed either there were certain sectors that obviously didnt want him to succeed. Do you think, right now, that certain components of Mainstream Media want donald trump to succeed as president absolutely not. Absolutely not. I can tell you success is measured on how quickly he can be out of there im giving you what i believe we should do as americans. Im not giving you whats occurring in this country. Back to this issue i dont disagree with you. But i think theres a larger question of what success is. Meaning i think that most people want the country to succeed. Yes and then the question is, how you define success, so do people want President Trump to succeed . Yes if it means americas succeeding but theres some people who look at the approach that hes taking, versus potentially other peoples approach to success, and say that isnt success so and sort of the same thing with president obama. 100 . Raising taxes on the wealthy, obamacare 100 . The same thing there would have been and many people so thats just this is but this is a fair debate right. You can say that the approach that president obama took, Mitch Mcconnell didnt want him to succeed in getting his policies through. Exactly and his view its fair to say that i may not want, because i believe they will be bad for the country, President Trumps policies to succeed. But all the more reason to engage in the debate and try to come up with something in the center that can move the country. I dont think that theres any that there are republicans out there or democrats out there who dont share the hope that we can grow faster, that we can help people who are currently in impoverished situations get the skill set, and the ability to succeed in this country. Scott, i will its all a matter theres people that if he was president while the country was growing faster, and succeeding, theyd no, youre right. Theyd rather have it not happen and maybe wait four years till when it can happen. One of the negatives of the populism that we have on both the left and the right is that it is breeding a level of more extreme view that is very no doubt. One thing, i know we coming up later go for it coming up, should investors be worried about boeings backlog . Thats interesting question. A closer look at the stocks run, and if there are clear skies ahead for the plane manufacturer how about we play leaving on a jet plane instead of steve miller just for once just play something different. In the next hour, news through the lens of social media how Companies Like twitter, facebook, youtube, and snap are changing the way the public views the world. Group nine media ceo ben larimer back today here to discuss. Squawk box will rhtac beig bk. Im living that yacht life, life, life top speed fifty knots life on the caribbean seas its a champagne and models potpourri on my yacht made of cuban mahogany, gany, gany, gany, gany watch this dont get mad bell mnemonic get e trade and get invested 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. 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 im leaving on a jet plane dont know when ill be back again how nice. How nice while investors have jumped on the boeing bandwagon, and embraced the dow components growing cash flow and margins, the company is in the midst of a critical surge in production phil you were thinking steve miller i know that because thats all we ever play that was my suggestion, because i go back far enough to remember leaving on a jet plane anyway, phil joins us now. Why would backlogs be bad, phil . Well, you dont want to have too big of a backlog that eventually your customers say what i got to wait eight, nine years for a plane . Let me see if i can go somewhere else or look somewhere else for a plane and maybe cancel an order while im waiting. We are here in the factory bob pollock our forephotographe going to go in this is where they join the wing to the fuselage. This is step one of a week long process. This will be a completed plane within one week. When you look at monthly production for the boeing 737, this month they moved up to a new production rate of 47 per month. Now the majority that are being built right now are the next generation 737s. They are transitioning over to the 737 mac. Theyre doing about 7 a month. Over time theyre going to increase that production this is a critical period here 42 per month was how many they built earlier this year. Theyre now at 47 per month. They will ramp up to 52 per month by 2018. And then in 2019 theyll go up to 57 per month. As we think about the rates, 57 in 2019, theres upward pressure on that rate, past 2019 so the only way that we can actually conceive about getting to those rates is assuring that the automation augments the workforce that has to do this job. Automation being the key. And you heard him talking about the importance of that automation guys, take a look at the shares of boeing. Perhaps the best dow component in the last year were going to be here all day long talking about the importance of this surge in production it is critical to what boeing is doing in terms of its cash flow, operating margins, et cetera, and well be live here throughout the day guys, back to you. Phil, were going to bump out now with benny and the jets. But not because of the jets but because youre wearing elton john glasses i love the safety goggles phil, thank you. Top ceos leaving the president s Manufacturing Council. The latest on the fallout from the violence over the weekend in charlottesville, virginia, is straight ahead plus tax reform with congressman kevin brady, chairman of the influential house ways and Means Committee. Well be right back. Whoooo. Finding the best hotel price is now a safe bet. Because tripadvisor searches. Over 200 booking sites so you save up to 30 on the. Hotelock it in. Tripadvisor. Ceo exodus intels chief the latest to quit President Trumps Manufacturing Council. Following the leaders of merck and under armour tax code overhaul. House ways and means chair kevin brady set to give a major speech on reform. The gops top tax man joins us with a preview plus ubers battle with a top investor kicks into high gear why benchmark is playing hardball with the ride share giant 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 Andrew Ross Sorkin and melissa lee. Becky is off today our guest host Scott Sperling copresident of thl partners. Lets take a quick check on the markets, which are friendly again today. Up 44 on the dow jones up 5 now on the s p. And the nasdaq indicated up over 20 among todays top stories, north koreas leader has the latest decision on firing missiles toward guam the countrys state media said kim jongun will wait to see what the United States does next kim jongun made his first public appearance in about two weeks inspecting military assets rereviewing plans to fire missiles near the u. S. Territory of guam. In Corporate News a federal judge has ruled costco owes tiffany 19. 4 million over the illegal sale of counterfeit diamond tiffany Engagement Rings. The ruling comes off costco argued that tiffany had become a generic term excusing its use on a standalone basis. And we are less than 30 minutes away from two big economic reports july retail sales and import prices both due out at 8 30 eastern time and at 10 00, june business inventories and the monthly survey from the National Association of Home Builders okay. The days earnings, a lot of stuff coming out this morning. Home depot reported better than expected results revenue and samestore sales also coming in above forecast. The dow component also raised its fullyear outlook. You can see right now though that that stock is trading marginally down in the premarket. Thats because joe and i have been spending most of our time at bed, bath and beyond. Exactly because youre not handy. Because were not handy and therefore not as sexy as you could possibly be. Handy is sexy according to you. According to your no, no, no. Handy is sexy, ben, is it not . Im not handy, so no. Lets check out shares of coach. That could be sexy coach is a sexy company, i think. Ive been trading a little this is less sexy too many man purses the hand bag and accessoriesmaker reported quarterly results, earnings 50 Cents Per Share came in one cent above estimates. Revenue was below forecast samestore sales increased only 4 , slightly better than consensus. Dicks reporting adjusted quarterly profit of 96 Cents Per Share. Four cents below estimates revenue and samestore sales came in below consensus. The Sporting Goods retailer citing weakness in hunting and licensed apparel among other factors, and look at that stock down 15, almost 16 , getting crushed in the premarket according to the fact that theres a 13 shortage so theyre probably really pressing this morning on the back of the disappointing results. And now to a story that weve been following the ceos of intel, under armour and merck resigning from President Trumps Manufacturing Council. Eamon javers joins us once again now. Youre out of washington youre out of the beltway. Youre up here its rare they let me out every now and then, you know, i get a free pass to come up here and see you guys do you still is there still an echo chamber up here or mainly something that happens just down there in that press room i think its a different echo chamber. It is its a theres also echoes definitely. The president s here in this echo chamber today he arrived last night. He tweeted that it was good to be home although he considered the usa his home and said the white house is a special place he was met by protesters here in midtown manhattan last night as he arrived at trump tower. We also saw this unfolding series of events through the day yesterday as a number of ceos decided that they were going to step off of his manufacturing ceo council, as well as other ceos deciding to stay on here are the statements from the two that broke late yesterday. The ceo of under armour saying im appreciative of the opportunity to have served but have decided to step down from the council. I love our country and our company and will continue to focus my efforts on inspiring every person that they can do anything through the power of sport, which promotes unity, diversity, and inclusion the ceo of intel also putting out a statement about his resignation saying i resigned because i want to make progress. While many in washington seem more concerned with attacking anyone who disagrees with them, we should honor, not attack, those who have stood up for equality, and other cherished american values. I hope this will change and i remain willing to serve when it does so guys were seeing this series of decisions being made by ceos and i think you have to watch this throughout the day today. There are a number of ceos we havent heard from on the Manufacturing Council. There could be more announcements to come. Some saying theyre staying on some getting off the politics we were talking about in the 6 00 a. M. Hour, pulling the country apart and Companies Going with it. Are you surprised that for those of us who press reload on the president s twitter account every second these days, have not seen the same type of response from the president this morning about two others leaving that we did ken frazier . We saw that within the hour yesterday after ken frazier made his announcement that he was stepping off the president going right after him, right after merck his company, accusing them of high drug prices, saying that ken frazier will now have time to lower the drug prices that was an astonishing political decision by the president of the United States to attack an africanamerican ceo who was resigning on a point of conscience in the moment. I would guess that the president got some advice behind the scenes to cool it on that. And we have not but he did it again he doubled down late in the afternoon. He did it again last night. He only got the advice last night . We havent seen the under armour attack yet, or the intel attack yet were watching for that this morning. The president is presumably awake and hes been tweeting this morning already well wait and see its an astonishing decision, though, to do that to go after ken frazier the way that the president did yesterday politically it tells you that the president is a counterpuncher hes going to punch back and it doesnt matter to him who it is hes punching or really why or what the underlying issue is hes just going to attack when hes attacked. Well wait and see whether he does that with these two other companies. Thank you, eamon. Its great to see you in person. Well see a lot more of you throughout the day the Tech Community taking some steps to block content from neonazi organizations google and godaddy both pulled the plug on the domain registration for a site called daily stormer which had been promoting the deadly rallies in charlottesville, virginia. Joining us right now is ceo of group nine media, a Digital Media company, and we welcome him to this conversation which has gotten complicated over the past hour or two. Because, its gotten into politics and all sorts of issues where do you stand on all this had you been invited to be part of one of these councils, what would you have done . You live in a little bit of a different, youre a different generation and also a different industry yeah. Well i have not been invited so i havent had to make that decision but, i dont feel like i would be comfortable going and participating. I totally stand behind the decision of these guys jumping off the various handles. I just you know my politics i dont share a lot with the president. Whats your sense of the responsibility that the Tech Community has or doesnt have, especially those creating quote unquote platforms for some kind of hateful speech and i will even say, on many sides yep okay youll say on many sides. Look, you know, yesterday facebook and twitter both came out and said that they werent going to change their policies, although facebook did go and start pulling down some of the really hateful stuff thats happening. Twitter, i think, sort of famously and after a long time has had this, i think, frankly too liberal policy the trolls on facebook im sorry on twitter, play a massive role there its really hard to get away from them. I think some of the other platforms have done a better job clamping down. That being said, you can look at like facebook and theres a very strong argument to be made that its a bit of an echo chamber. So you see only the opinions of people like you. And so where do you think the line is where do you think the line is on what kind of speech should look, i think that what happened in charlottesville is utterly unacceptable and like the line is that that is utterly unacceptable and theres no place for it and thats not free speech, thats just hateful and so, i dont think that theres a place for that i do think in general all these platforms need to do a better job sort of sharing opinions that are not necessarily of only their friends but particularly in this like hyperpoliticized environment we need to do a better job showing like seeing what other people are thinking right okay but we want our viewers, and ive got tweets and other emails from them saying, what about what about those who have talked about killing where does the line get drawn . Look, were in a crazy world right now where sort of media is democratized forever you had a finite number of tv channels or a finite number of magazines that sort of, you know, that was the media, and now anyone is a publisher. And so, its a really hard thing to regulate. Part of the power of these platforms is the voice that they give everybody at the same time there is there needs to be some delineation between premium publishers, and content that is sort of rooted in fact, and peoples opinions. And i think that theres work that the platforms are trying to do to sort of showcase that. I want to talk about the tv stuff in a minute. But one other piece about it i want to try to understand is, internally, within the facebooks of the world, within the twitters of the world, within the goolgs of the world, how do you think they really feel about this on a visceral, emotional level . I recognize that theres a regulatory element to all of this a big one in europe, especially, where theyre thinking about that but where do you think they think their own responsibility lies one way or the other . This is a huge debate i think theres probably theres a very strong Business Case to be made for this being good for them. Conflict drives sharing, it drives conversation. Its part of what makes the platform so dynamic. At the same time, i think most of the employees of these companies are young, probably sort of, you know, progressive from a political perspective folks. And so i think that theres a conflict at these places weve seen, you know, the programmer at google who wrote the letter about sort of women in the workplace, that has been received obviously incredibly poorly by sort of the entire i think that theres a conflict at these places because its good for business but its socially problematic we want to talk about Facebook Watch this is facebooks effort to really get in to the content space in a meaningful way. Yep whats it going to look like in the immediate term . And look even 24 months out, where do you think they are relative to netflix . Are they in the same conversation ive been on a few times and weve spoken about this. I think facebook and youtube and twitter and instagram and snapchat are all ultimately trying to build the next generation of what lv looks like i dont know exactly what that is aside from the fact that they are clearly leaning into more premium programming, more episodic programming theyre creating a platform where publishers can actually build ip and the reason for that is that theres still more than 70 billion in u. S. Television advertising that these platforms want, and so theyre trying to create an environment where theyre able to serve some sort of ad format likea free roll o a midroll thats going to be able to take money out of the market and youre launching 24 new channels were launching 24 new shows on day one, probably many more than 24 new shows over the next several months at group nine what do those shows look like so theyre going to look like theres going to be a range. And i think thats part of the reason were launching so many is this is about testing the limit. And so are people going to consume do people want to consume in a binge format . So do you want to publish a bunch of episodes simultaneously do you want to publish once a week half hour hour five minutes our shows generally are going to be somewhere between 5 and 15 minutes. Its going to be dependent on the programming, and what the like looks like. I can see us testing much shorter, much longer the idea is you dont know what the platform is going to look like you dont know what behaviors are going to be. Theyre playing us out. Economics of this for the content creator the economics in the shortterm are theyre helping underwrite the cost of some of the content. In the longterm were going to build big, successful franchises that were going to be able to monetize through advertising and then bring to other platforms. Ben, love having you on the program. Thanks for having me. Coming up house ways and means chair kevin brady set to give a major speech about tax reform lloiusig he e gops tax chief wi jn rhteron squawk box. This is not a cloud. This is a car protected from storms by an Insurance Company that knows the weather down to the square block. This is a diamond tracked on a blockchain protected against fraud, theft and trafficking. This is a financial Transaction Secure from hacks and threats others cant see. This is a patients medical history made secure while Still Available to their doctor at their fingertips. This is an asteroid livestreamed to millions of viewers from 220 miles above earth. This is ai trained by experts in 20 industries. Your industry. Hello. This is not the cloud you know. This is the ibm cloud. Built for your business. Designed for your data. Secure to the core. The ibm cloud is the cloud for enterprise. Yours. Wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. House ways and Means Committee chair kevin brady set to deliver a major tax reform speech from the reagan ranch, the same place where president reagan signed tax reform legislation on the same date 31 years ago. 31 years ago and chairman brady joins us this morning with a preview wed love to hear the preview, mr. Chairman can you give it to us in two minutes . I think i can first, thanks for letting me join you today some were going to the reagan ranch on an historic date, august 16th, 31 days on that very same day the house and senate conferrees reached an agreement to send president reagan his really Game Changing tax reform so were going back to that historic location on that historic date. In fact were starting that date, interviewing to advance that speech. Then were going to invite the American People to join us here. I know your network is covering i it you can follow it on facebook, on the ways and Means Committee. The points were going to make is that president reagan wouldnt recognize the tax code we have today. Since the 31 years, americas really fallen into bad, old habits on tax reform and the final point were making is that we are on track to deliver transformational, bold tax reform this year, because President Trump, the house and senate are working together to deliver on that timetable. We all saw the debacle with repeal and replace obviously, mr. Chairman, and there are many that say that republicans that were probably never big fans of the president , that theyre going to be emboldened as, you know, the Approval Ratings stay below 40 and everything else. Theyre going to be emboldened to not cooperate, perhaps. As we get closer to midterms for their own selfpreservation. Do you think the chances are you think this will happen given the current milieu in washington yes, i do and heres why one, i dont think any lawmaker believes it helps their reelection chance to miss the opportunity to fix this broken tax code and theres so many things different in tax reform than in health care. First, while america is divided about the benefits of obamacare, theres no one defending the status quo of this broken complex, ugly, tax code. Secondly, we have the white house, the house and senate, working together on the same page, unifying behind a single tax reform plan that didnt happen in health care. And finally, as were out here as lawmakers making the case in august, september, for bold tax reform, youve got groups united behind this effort, making the case to the American People, as well so to me it feels so much different than health care ive also seen some criticism, again, not necessarily from the president s supporters, but on the right, republicans say that the president hasnt used the bully pulpit sufficiently. Didnt do it enough with Obamacare Repeal and that its going to need to be done on tax reform. We had a poll yesterday that said that the majority of the country doesnt necessarily think we need tax reform they dont feel like theyre overtaxed at this point. And sometimes it matters where Public Opinion was we never got above 20 on repeal and replace. Maybe that mattered. You think the president will get out there and outline exactly what the benefits of each of these moves are at some point . Would that help . You know, i do it will help in fact you cant do this without president ial leadership. And my sense of President Trump, hes allin on tax reform. And i have to tell you this, i dont know what those polls, how theyre determined, but in the town halls and roundtables i make, americans are starved, theyre hungry, for Something Better than what we have in the tax code today look theyre tired of watching our American Companies and jobs and research move overseas theyre tired of their young people getting out of school with very little prospects for good paying jobs they know something needs to be fixed and after 31 years this tax code has tripled in size all the special interest loopholes are back full force and people know its just unfair i sense something much different in my communities, and my guess is most lawmakers do as well what about dynamic scoring . What about, you know, the rate no longer going to 15, but being for corporations, but closer to 25 whats contained in your speech today, specifics about some of these issues or just talking about the benefits if it were to get done . So were going to make so were going to make the case for why this is a moment in time in history for the American People engaged to pass tax reform just as they got behind president reagan 31 years ago. So were still working with the white house and senate on the details of this plan, but were going to push rates as low as we can. Were going to incentivize as much Business Investment now and in the future as we can. We want it permanent so families and businesses can count on this and theres no doubt we have a lot of work left to do but, im really encouraged again by just the pace, the substance of the talks were having. Youve got the Freedom Caucus obviously. Then youve got the moderates in the house. Then youve got, think about the senate you saw what happened over there. Youve got, you know, you got rand paul and Susan Collins on the two sides. How on earth do you when youve got no room for error, why do you think the outcome is going to be any different, congressman . Look, i think the issues are so dramatically different, while there are divided opinions, obviously, on the Affordable Care act, theres very few who can defend the status quo of this tax code. Their businesses are leaving their Small Businesses are struggling in every neighborhood and every community in this country. And so, i just sense a different feel and by the way, tax reform is why we all came to congress. This is why we, in the senate, this is why we ran, because what we have is not working and so were going to welcome their ideas. Theyre going to be part of this issue in a major way but i know this, we need to deliver on tax reform. Its critical both to the economy, i think its critical to the republican agenda i applaud everything that youre doing the thing that i worry about, and i think that joe may be pointing to, is if you insist on pay fors, if you insist that we have something thats permanent, were going to come up with something that will never get passed, because that means you have to make some very hard tradeoffs. So why not just go for the significant tax cuts that will last for ten years and well see what works and well make the adjustments as we find out whether or not, in fact, the dynamic scoring is accurate, and it will pay for itself well, as we saw from the bush tax cuts, which were appropriate for their time, temporary tax cuts provide temporary growth and businesses who quickly realize they cant make longterm decisions based on this were trying to transform this tax code, give businesses the incentives to bring jobs and Manufacturing Research back to the United States. That cant happen on a temporary basis. And by the way, look, tax reform should be permanent. Thats the way we get the greatest growth for the greatest number of years and making tough choices is part of tax reform. But the benefits of it are clear in simplicity, in growth, just in jumpstarting the economy the way it is. I think at the end of the day were going to want something americans can count on whether youre a family, or youre a business. Which means were going to have to Work Together as we are right now with the house, white house is, and the senate, towards delivering it this year. I hear bipartisanship were always going to do that. I saw mccains speech. Any democrats going to come along for the ride on this chairman brady, honestly well, i dont know but i hope so were having discussions with the democrats in the house of what they want to see in tax reform i know they want a strong middle class tax cut. They want this balanced within the budget so youre not doing spending cuts to do tax reform and they want to make sure that there arent tax cuts for the wealthy in there but they, too, recognize our rates, we cant compete worldwide anymore. Were losing ground every day. And they know their local businesses are struggling. So i think we do have Common Ground how that will play out at the end, i cant predict but i think its worth the discussions were having right now. Absolutely. The devil, though, always in the details, chairman, as you know, and it sounds like, as you had said in your own words, theres a lot of work to be done and yet you are confident that the house, the senate, the white house, are all behind this tax reform plan, youre confident that this will get done by the end of the year, but the details even on where to drop the Corporate Tax rate to are still not hammered out i mean, the markets are not tax reform by the end of the year at all. Because they dont believe it. Yeah, melissa fair points to all those. Look we continue to work with, because you know tax reform is a little like a rubiks cube every decision you make on one side, whether its on Business Rates or expensing, has impacts around the board and so we continue to work to make sure weve got those details right. So well be bringing out this tax reform plan later this fall. Were still on timetable to deliver this year. Again, this is look tax reform is hard its the challenge of a generation but boy right now, again, i dont think anyone can defend where were at in the tax code in America Today chairman brady, thank you, again for fielding all those questions. We appreciate it thanks for your time great conversation. Thank you, joe. Coming up next when we return breaking Economic News for you july retail sales, import prices outoit the tape. Well bring you those numbers and the reaction were seconds away from july retail sales and import and export prices. Futures are indicating a higher open Rick Santelli is at the cme in chicago. Rick the numbers, please wow litany of numbers. All right. Lets start with empire. Thats an august number. 25. 2 more than double the expectations and sequentially, powerful following 9. 8 on revised import prices, for the month of july, expected up 0. 1. We reached up 0. 1. No revision to last months down 0. 2. If you look at expetroleum it was unchanged. If you look at import prices year over year up 1. 5 following 1. 5 export prices up 0. 4 month over month up 0. 8 year over year retail sales for july, you ask, 0. 6 , double expectations of 0. 3 pretty good number and last month we gained 0. 5 from minus 0. 2 all the way up to positive 0. 3 exautos, still up 0. 5 exautos and gas, still up 0. 5 the control read up 0. 6. Thats a strong number and last months control read down 0. 1 now stands at up 0. 1 and weve seen positive revisions to exautos and gas and exautos so from where i sit, looks like the numbers are pretty good all in all including revisions, dollar index now up over a half a cent. Ten year yields popped two basis points from 2. 25 to 2. 27 and preopening dow futures up a little shy of 50 points. Melissa lee, back to you all right, thanks, Rick Santelli steve . Steve liesman. Heres what im thinking this morning, melissa im thinking when it comes to the Economic Data not everything makes sense at first uhhuh. But it makes sense eventually and what makes sense here is we couldnt understand, we had more people working, we had some rise in wages, and Consumer Spending was uniformly weak it made no sense plus you had these buoyant confidence numbers it made no sense so what happened eventually they came around. They did the 0. 5 revision in june makes more sense and this strength in july, which was expected, that you were going to have a bounceback up 0. 6 a little bit no question that that could eventually be revised. It goes along with the story that we did 2. 5, 2. 6 in the Second Quarter and whats nice about this number is it confirms the expectation that youre going to have a somewhat above trend Third Quarter as well. We were running on the cnbc wrap it up date up 2. 8 Motor Vehicles was strong as rick said. Even Department Stores, and you know things are good when Department Stores do well. Up 1 along with the nonstore retail which always do well, up 1. 3 i think thats the gist of it. Good to see the empire state number, one of the first numbers we get well watch these Regional Bank numbers. But a good number to get an above trend number there while we have you here, question of the day, bill dudley, president of the new york fed, made a comment regarding gary cohn, who obviously has been speculated as a potential next fed chair he called him a quote, reasonable candidate were you surprised that he even commented on the topic i dont remember a time when a person on the fomc commented on the next chair, or any of the look. I think theres a story inside the fed thatslets read what he said i dont want to evaluate the various candidates for the Federal Reserve except to say that i think gar very is a reasonable candidate thats new york fed president dudley i dont think you have to have a ph. D. In economics which i have to be a chair of the fed so, i think theres they were buddies, right . Worked together for 20 years or something . He would have been over at at goldman and in the context of bill dudley running the and would be in touch with gary cohn there and. Its very unusual i think the context of this might be, how do i say this . Theres a concern. Yeah. About people being appointed to the fed who are off the reservation. Right and you winced, melissa well, i dont really know what that means. What does that mean meaning nonph. D. Or you mean crazy . No, no. Like people who support the gold reserve system oh. Like people who want like people being appointed to the fed who want to wipe out the fed. Right and i think among economists and among people who follow the fed, and perhaps even among the people at the fed theres concern about there being not just one, because one is okay, but multiple people appointed by the Trump Administration who are off the reservation. Right and i think what bill is saying here is that he doesnt see gary cohn as being off the reservation. And being an economist or not an economist is not the criteria. Real quick. Just now that general kelly has taken the job running the office there, and remember gary had been, people thought he might take that, do you think that hes now more likely to do the fed job . That cohn, because of thats way outside my area of expertise. Heres what i do know. I do know that inside the administration they have taken this very seriously. Its something on the president s mind its something hes thinking about. He understands the importance of this and i think the reason why hes likely to replace yellen is i dont think the president will miss the opportunity to put his own stamp on the fed even though i dont hear a lot of complaints about yellen, and theres not a lot about yellens policy that should necessarily run counter to what the president would want from a fed chair. I think in general you shouldnt use the ferm because of the root of the term. Off the reservation at this point, probably right . You think theres a nonpc aspect to that in this current well why dont we let twitter decide if i get a flood of twitter, that will be the barometer by which i shall judge my future remarks. If youre going to be totally pure which i strive for every day as you know. As i use ivory soap in the morning and other things it was all you could say speaking out of school yes, thanks no, no, no. It doesnt work at all well, dont use that speaking out of school is not the phrase that if you thought that was not appropriate, well, i dont what would be the equivalent of youve got to come up with use a few more words. Were moving on. Outliers . Let twitter be our barometer. Michelle, bank of America Merrill lynch chief economist, where do you want to start after the last ten minutes you can start i guess yeah, i think the retail sales data is probably pretty important. It was strong the last two months or a week there were some factors that probably helped to boost sales, one of which was amazon prime day which helped to concentrate sales in the month of july, and we did see similar effect the prior month. Its possible that theres a bit of a payback in the next few months generally i think irt slow the consumer propped up a bit and thats encouraging given the trend weve seen lately for the consumer what is the future outlook for trade Third Quarter gdp oh. So it is above most of the input for tracking estimates so probably a bit for q3 were tracking 2. 8 could push it up a bit if you smooth through the last few quarters, its an economy thats running just above 2 for the full year were averaging 2. 1 hmm and the corollary with the rates . And its all related, right . Yeah. I think the data this morning between retail sales, empire state all of it is positive. To me its less the story the question is less about whats happening on the growth side of the economy, more about whats happening on the inflation side. So the cpi report at the end of last week which saw wage numbers continue to be soft, and i think thats one of the Big Questions right now, that fed officials are doing, that markets are dealing with at what point are we going to start to see some price pressures build . All right well go i was going to mention that there are some people that think anybody from the giant squid is like putting the dealer in to the casino who said that angry twitter email. But i have seen Goldman Sachs people going in to government and do an incredible job in government and ive seen goldman is so greedy and so and the peoples putting the fox in charge of the hen house. Thats what ive seen thank you, steve. Thank you michelle coming up, the mooch and Stephen Colbert. What could possibly have gone wrong . Youve t s ts xtgotoeehine the governor has declared a Winter Weather emergency. Extreme risk of burst pipes and water damage. 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. Welcome back to squawk box. Amazon has announced a private debt offering. That offering will be used to fund either all or parts of its planned 13. 7 billion acquisition of whole foods the announcement did not specify an exact amount for the offering somewhat surprising. A little bit dont you think . Any company that needs to raise money should access the markets right at this second okay, coming up next it is backtoschool season. The khan academy using tech to asoo students get back into the clsrm. Salman khan will join us with the details right after the break. Your joints. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Families around the country are in backtoschool mode our next guest office a digital way to help kids transition from summer to the classroom. Joining us now salman khan the founder and ceo of the khan academy. Sal, great to have you with us thanks for joining us. Great to be here. I feel like we should have had this segment at the beginning of the summer. When i read the notes, i was so surprised at the amount of learning loss that happens over the summer, and how that loss can actually be compounded if you sort of sit and dont do anything yeah. I was surprised, too you know, we all intuitivelyly get, we all remember when we go to school the first couple of weeks or months might be a little bit of review a student study showed that 22 of a new school year is reviewing things from the Previous School year so summer, this idea of summer slide not only do you not learn for three months, but then you have to review the two months before that, which really hits students, and it hurts teachers ability to be able to cover as much material as they want to. What do you propose at this point . Families are listening to this, its midaugust. School is a week or two weeks away is it too late or can you actually get a jumpstart at this point, and curtail that memory loss . Yeah, never too late. As you mentioned, it was the beginning of summer. I know a good website that you could stay on for keeping up but what were trying to do, and this is really at the request of tons of teachers that weve talked to is were having this learning challenge called learn storm. Which is a way to do two things. One address the Summer Learning loss so teachers can really get to a strong start. Really on the first day we all remember at school that first week or two of school was just kind of getting your materials andgetting started what we want to do is start a lot of energy with millions of teachers around the country to really tackle a lot of those skills that students need a review from last year or they might have forgotten over the summer and then keep going really strongly. These are all things that are aligned with what they have to learn anyway and on top of that its all about building the terminology is also a growth mindset. This idea that students learn to embrace failure and keep going theres all these studies that growth mindset is correlated with really success not just in school but in life in general and theres ways you can intervene to change students mindset so its a combination of prevent or remediate the Summer Learning loss, but at the same time build a growth mindset that were trying to do with this nationwide learning challenge. That growth mindset also includes a willingness to fail are you finding the kids these days, the pressure is on them to always succeed theres always also an expectation for kids to succeed in that, it seems like every kid gets a medal, for instance, on their soccer team, et cetera there is no failing these days you know, its not just kids. I think we all feel a little uncomfortable, were all a little afraid to fail. And certain parts of our lives and so this is actually a broader message, not just for students but, the more you step out of your comfort zone, there have been Research Studies that when you get a question wrong, when you fail, but as long as you reflect on that failure, thats when you form the most neural connections. So were trying to get that message out to students, even when you learn about things like that, how your brain gets more neural connections when you get something wrong when you have a failure that is a growth mindset intervention and helps people overcome the fear of failure. We just growth mindset intervened, joe. I want to know, how do you get more so the plasticity of the neuron we know how that works now, sal does it build more axons the pulse sin apartmentic how does it work what do you mean you get more neural connections explain the plasticity well, theres a bunch of Animal Studies to when you could actually biopsy brains, but where they show the animals are in a more stimulating environment where they have to struggle with more things, those animals form more neural connections. Theyve done mris of the brain when people are getting questions wrong and seeing what the brain activity so theres this whole theres two fields of research one is kind of the Neurological Research that were talking about. And then theres this whole other research pioneered from stanford and the university of pennsylvania that showed if you tell people about the other research, how your brain is plastic, how you can grow, that it actually gets them more comfortable stepping out of their comfort zone and more comfortable. Okay. Im growing right now. Yes okay plasticity. Sal, thank you. Before we go, give him a shoutout so i can do it these guys need great funding. And theres a lot of people who give them money, but sal, make a case real quick because i think the work youre doing is important. Khan academy. Were not for profit we over 10 Million Students every month use it its all free. Its not commercial. Yes. We need any help we can. There you go. This is a company that if they were forprofit, this guy would be one of the multibillionaires youd be talking about the fact that he has decided to make this available in a not for profit way is really an incredible, incredible tribute to him, and the work hes doing is really phenomenal weve seen phenomenal sal, great to see you. Thank you for thwo yre rkoue o doing. Thank you. Well see new a little bit. When we return, jim cramer joins us from the New York Stock Exchange i remember you saying, jim, the pullback was not going to be the end, short lived and lo and behold, here we go huh . I think something has to happen to make it so its the end. We have to have roaring inflation. Its good sales. We need to see the dollar zoom up its doing fine going down we didnt see something change other than sentiment when we decide its the end because, well, we heard a Hedge Fund Manager say its the end and we check and he has been saying its the end or guru comes on, says this is the end something has to happen. It cant just be like, wow, its down it must be the end thats just not the way it works. There are these guys that can stay in the business im not sure that they manage any money anymore. Theyll short up and short it again and short it again and short it again and every time they say it, they act like its amazon. Short it again short it again q, q, q. Short it again short it again they act like its new every time but they never, you know they act like its new and its not. Like a broken clock, some day theyll be right theyre actually dishonest, a lot of them. They claim immediately the day that the stock goes down, i told you it was time to get out. When it goes up, they dont know what to do howard marks, if hes saying its overvalued im all ears if he says the stock market is overvalued youre kind of a sightseer in that term. It goes to 1,085 and 995 and say see, i told you so. And theyre geniuses lets call them out, joe we can do it. They wish someone would mention their name at this point but they dont thanks, jim. Thank you. Anthony scaramuccis latenight debut what the mooch had to say after the break. I hired some help. He really knows his wine. This is the new guy . Hello, my name is watson. You know wine, huh . I know that you should check vineyard block 12. Block 12 . My analysis of satellite imagery shows it would benefit from decreased irrigation. I was wondering about that. Easy boy. Nice doggy. What do you think . Not bad. Fixodent plus adhesives. Theres a denture adhesive that holds strong until evening. Just one application gives you superior hold even at the end of the day fixodent. Strong more like natural teeth. Thats why a cutting edgeworld. University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. The mooch, making his latenight debut last night. Former White House Communications director sitting down with Stephen Colbert to talk Reince Priebus and steve bannon. Who is leaking now . Is it steve bannon well, ive said that. Say it to these people. Ive never been explain it. I said it was obviously he got caught on tape saying he was. I have no problem saying that. Is he going to be gone in a week thats up to the president. What do you think what does the mooch think . If it was up to me, he would be gone. Wow yeah. Im trying to figure out if colbert hes not friends with the mooch, i dont think i think anthony i think he smartly decided he was going to go hes getting what he wants out of this. And colbert is getting what he wants out of it. Yeah, but you can imagine colbert is not feign no, no. He did remarkably critical monologues about the mooch pretending to be the mooch. Long before the mooch talked about oral sex in reference to these things, colbert talked about trump and putin. He has no room to hes not on high ground there. Thats for sure. Why did you bring that up at 9 00 in the morning . Lets go back to the education of kids. I mean, he might be trying to educate the kids. One of the most powerful things that makes you optimistic, and sal kahn reminds me of this, the Bell Foundation programs who come from underprivileged backgrounds who go to Summer School in order to be educated. There is still a greatness and a yearning out there that make mees very optimistic about this country. The problem is we spend almost all of our time talking about the mooch and all the things that are divisive as opposed to really thinking about how we support those things that really move us forward. And i think theres huge potential to do that. Very good great to see you. Great to see you. That was a lot of fun. Thank you. Melissa, thanks. My pleasure. Are you going to be here tomorrow no, im not beckys back im leaving for two weeks. So, see ya. Congrats. Make sure you join us tomorrow squawk on the street is next good tuesday morning