Transcripts For CNBC Squawk On The Street 20170807

European markets you asked we answered. Theyre a mixed bag with the ftse up ever so slightly this morning. The ten year note yield did move around on friday and we do have it now at 227. Right around the same levels it cant get through it. Too much future selling and boy did that group collapse. It did. Lets talk more about that and other things including our road map which is going to start with stocks seeking new records. The dow is on track for its 10th straight at aly gain and plus, paging inspector gadget. Apple nearing the release of a new watch version which can make calls directly. Right. There you go soft bank ceo providing speculation about a sprinttmobile deal continued speculation about a charter deal well try to wrap all of that up and add some insight and new stuff. Well see. The s p 500 one point away from the record closing high. The nasdaq is in the middle of a two week losing streak. Amazing. It is. March of 2,000 is what people keep saying. The difference is cash positions, multiples, shrinking multiples in nasdaq. Expanding multiples and the big dow names and each week theres one thats new and the week after another large cap name, 3m. It keeps going rotation within the caps at the same time shrinking multiples. Its very hard and then came back to the Capital Equipment companies. Were seeing a rotation out of everything other than apple and arguably facebook. Alphabet which my Charitable Trust owns was not liked no it was not as well received as many others. It was unstabilizing where as whats going up when amazon stable oozed down . Walmart not predicting it but talking about how difficult it is right now how its been a loser and we know that and quoting fang something you created at least. You have to do your thing. But thats been the way to go for a long time now and these pull backs have been just that very brief very brief pull backs and growth in the underlying earnings, top lying revenue and the stock price continues. Right i think its hard to value a facebook if youre looking at it i speak to a lot of people about stock when im on these weekends no one can justify the value of facebook except for you and me because were looking at gap earnings gap. Now people dont ever seem to understand gap its a really good piece about paypal but book is gap but you have to compare it. Its hard even comparisons across the board to companies. So many adjusted ones in so many ways. Stock compensation. You mention twitter because that was always a big knock against the company when it was for sale almost a year ago at this point heres what it would look like if we gave these people crash. And make a judgment. But the people that are really rigorous of which facebook i think is the most rigorous at all want to show you how profitable they are. Microsoft does it too. Microsoft does it too, yes. By the way, that microsoft quarter was fabulous but the very reserved forecast kept that stock under a cloud. Youre still largely positive. Very positive. Why because david one thing that has come out from thernings period is the adoption of the cloud as the fastest trend in the world of all the trends i follow second by the way is aerospace aerospace. Undervalued by the market and were going to talk about that because the Aerospace Companies have greater growth in almost every part of technology except for the crowd Cloud Adoption is extraordinary. Its going faster and faster and every time i think someone says Amazon Web Services is going to lose, look at their growth. Soefsh wins its one of those situations where everybody wins. Sales force wins . Well, sales force is alive. Oracle wins. Oracle, i think oracle will understand. We talk cloud were really talking that. Got Resource Planning they dont even need to compete in the cloud they have good cloud presence but Amazon Web Services is run agoway with it i question how strong googles is we dont he know its growing well. However diane green that runs the business and the claims that they will be as big as five years a number of times it seems hard to imagine. Amazon web services is so powerful its really the place to be. After the sell off. Youre including boeing in that. Boeing is so much more richly valued than united tech. Im afraid i dont have much to offer although bankers have been hired on both sides so theres an indication that there is something going on here i think it was bloomberg on friday that reported interest from utx although no talks in that initial report. The rumor had been around earlier last week but the question was they just finished the bea deal and utx could have had a shot because people werent happy with that deal. No, they werent. They could have had a shot with rockwell back then and didnt go for it i dont have any insight other than it does appear that again at least the advisers that typically get hired in these things doesnt mean that anything is going to happen have been hired. I think they should pay 140 bow as good a big power grab because it was at 15 times earnings on friday united technology, 18, boeing 23 boeing needs to be reckoned with you cant go into boeing and say we have some great ones, you have to say we own it. And you have to deal with us in more than just the way you would deal with the other partners there was a Great American that put together and got rid of a lot of great stuff for time warner and when he was ready to rant fox tries to get it right now theyre finally where they have to be. This ceo, if this company is taken from him, its good. Really . Yeah. Hopefully well have more actual reporting on it for you. Versus what give people Building Blocks you still manage to use your voice you were on vacation. No, because i spoke to the eagles i had my video here. This is me speaking to the eagles but i guess we should take it after the commercial break. Were going to show that after. I can see it here but nobody else can its very exciting. We have a report this morning saying the company is going to release a version of the apple watch later this year that will make calls on cell lurks rarks networks need to be connected to an iphone to have that capability hes been wearing this for years now. I didnt plug it in last night. Whats going on with your hands . I dropped something in between the seat of the car. All of my skin was gone. I got up at 2 30 i didnt give it time. I didnt give it any time. I have not been particularly positive on the watch. And then basically you never saw it again you have it. Its a black hole on your wrist but when and if it can make calls do you think thats a game changer . Of course. Of course because i can just very quickly give you a call. Absolutely. Get smart. This is a lot for me if i never take it off when i do my all nighters its not like i wake up and its charged because i dont wake up. What am i supposed to do how do you do it with my schedule with a two hour, one hour sleep night thats the big draw back that i dont believe is healthy. Even for you even for you. You told me i was getting younger. Yeah if you dont sleep at all, that doesnt work im a three day sleep, 4th day no sleep. I get much more out of life. I sleep all day for three days hopefully well get to charter, soft bank, tmobile as well two separate Conference Calls. Heres another look at futures as we get closer to the opening bell this morning. We have a lot more squawk on the street coming after this you are loved at the lexus golden opportunity tesales event before it ends. Choose from the is turbo, es 350 or nx turbo for 299 a month for 36 months if you lease now. Experience amazing at your lexus dealer. For years, centurylink has been promising fast internet to small businesses. But for many businesses, its out of reach. Why promise something you cant deliver . Comcast business is different. We deliver superfast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. We do business where you do business. Tesla announcing plans to raise 1. 5 million in debt thats going to help scale up its model 3 production and sure up its Balance Sheet. Elon musk said the auto maker was considering a Debt Offering but not considering offering more shares to raise money that would be known as an Equity Offering it is lowering the price of its model x suv by 3,000. This will be 79,500. It notes improved profit margins. Thats going to help with the Debt Offerings this is a company that lives and dies in the Capital Markets. The ability to sustain itself given its not making money is a key. But people believe and will keep doing that. As long as they give him money the stock will go higher. As long as he keeps the dream alive and the Capital Markets cooperate. They have chosen to debt markets recently more often than the equity markets. He singled this in that bizarre Conference Call last week i want to back up on that. It was right after the journalist saw the model 3 and the journalist fell in love with it so as long as the car is great the money will keep coming if the car were not as great as another car it might matter but the other guys have not produced we say many times elon musk is unbelievable theres nobody like him. Maybe besos is better than him in certain ways aid love to see him go head to head. Mayweather and mcgregor. I was thinking more like the rumble in the jungle. Id like to see them both put on their space suits they can put those on and go at it. Were smarter than we are a lot of people keep talking about what is going to happen to whole foods. When amazon takes control thats a real possibility whole foods, they were going to go growth and then decided to not grow as much because the profit mar jins but i dont see that. It completes the acquisition and thats the amazon way. What do we do just sit back and wait and everybody assumes. Reporting. Real reporting on which i did a whole documentary and got nothing from the company come on. Look at costco. They reported again a better than expected Monthly Sales number nobody cares because its food and everyone just says food is a battleground and either walmart or amazon is going to win but they both could win. Thats interesting. What do you do . What about the providers of things that go on the shows . You were here friday. I dont want to be i dont want to be there walmart is doing private label. Theyre the only guy walmart is doing private label i think walmart is telling you to get off the Amazon Web Services too. They are. Theyre playing hard ball but walmart is not going to let these companies go over that that was a key its not about frenchs mustard. Its about franks hot sauce. Its the number one hot sauce and millennials love it. Why do millennials love hot sauce . I dont know. Why. It doesnt have any calories. Its the Fastest Growing aisle they may have paid a half billion more than anybody else if not more. True but they have a plan a man, a plan, a canal panama. Panama, got it. Up next well see what he has in the store. Take another look at futures this morning were headed for a higher open d me ls rere squawk on street ani anotmo straight ahead. 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. 6. 5 minutes. Not even 6 minutes before we get to an opening bell there are things that you say on air that make people money and you throw them away like kernels. I pick them up and develop them into popcorn nxpi you said and they may not be, and im talking about qualcomm may not be able to get this. Elliott owns a big position in xp this is now over the 110 price. Well over. We kept talking about all the 110 calls. Do you know that index funds tend not to tender with f the stock price is above the offer they have to pay more. Morgan stanley raises price target what do they say . Share holders of the other upper hand. Based on conversation with large holders that expected just this and maintained. Air argue is its based on what they get its the key for qualcomm. I asked the ceo about it he is more or less deferred on it as he should. What is he supposed to say you have to wait. We have to wait, jim. You never know he face peemd down my Charitable Trust im telling people dont tender. Go with elliott. Electrical bot owes the way around these things. Its a Dutch Company too we have the opening bell in a few minutes. Were going to go for a lot of stocks you should be watching including comments from softbank because they continue to talk deal somehow for someone a deal. 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. Chances are, the last time yoyou got robbed. An, i know i got a loan 20 years ago, and i got robbed. Thats why i started lendingtree the only place you can compare up to 5 real offers side by side, for free. Its like shopping for hotels online, but our average customer can save twenty thousand dollars. At lendingtree, you know youre getting the best deal. So take the power back and come to lendingtree. Com, because at lendingtree when banks compete, you win. Opening bell is going to ring didnt get your take on the employment number from friday. Of course. Look, that sweet spot right now, optionalty. Thats all i ever want the fed have optionalty to do what they want yellen is so smart i trust her. I trust her. Theyre loud enough that i cant hear you right now there it is. Theres the opening number day two here at the big board making all the noise provided with water for the oil and gas industry and itsthe way to avoid environmental problems but its a comply katd issue. Our president is not really focused on the possibility. No. Over at the nasdaq was brighthouse financial. Provider of Life Insurance and annuity products that did complete its separation from metlife. Metlife is 60 40. I love the International Stocks start to open across the board. Not much to tell you about a little bit of a bid in technology after a few bad days. Yeah. You always have to watch it. There is a move, an understanding of both opt car length could be in little problems i dont think so its a switch from 40 to 100 for cloud. And this auto business is just on anything it touches anything but its gaining. Lets take a little time to talk oil. Really . Yeah, really. Whats your take i feel as though you try to be more positive. Heres what happens pioneer that is the company that did a series of Equity Offerings stock collapsed. It collapsed and eoc that had a fantastic quarter, stock got hammered its always good to stop for a minute and explain. Its the lowest cost all in but there was a sense that if it produced too much would send the price of oil down. So there was kind of too much oil goes down. If they dont produce enough they dont make enough money whats happened is wall street will no longer fund these companies so they cant spend beyond their cash flow now eog is a conservative company but it doesnt matter. People just feel like its packed i dont agree. The problem not enough pipe. Initially everyone said hey listen its from 1940s theres pipe, pipe, pipe theres been so much oil found and natural gas that its overwhelmed the infrastructure and in the meantime oil cant get above 50 because as soon as it gets to 49 or 50 all the companies have to sell in the futures market to be able to fund their drilling. So the price of oil on the futures market, 50 no appreciation its going to be mediocre for years. Its the eogs and pioneers of the world. Costs have come down considerably over the last three years. Theyre 20 bucks. Pioneer is the one. Why isnt that a good thing it should be but the Drilling Service companies are starting to raise their rates they are . Yes its going to squeeze margins. A couple of counts in north dakota thats it. Right talked a lot about that only in part of oklahoma so its a half full, half empty and i think that the half empty crowd is in charge now plus theres this overhang of antifossil fuel no matter what even though 80 of the world these stocks are becoming coal and at a back coe like when it comes to the holders and there was a hedge fund that closed i struggle to find upside right now. The longer term picture interesting as well. Now that is the really longterm which is electric car and or the automated car. So the Autonomous Vehicle sleets of which could be roaming our streets within who knows, depends who you talk to, but theyll be very efficient. And theyre going to run all the time nobody is then going to be buying a car and having to have it filled up in the garage. The demand for oil, the demand for oil is going to plummet. Now theyre going to be buying all the oil. So tesla has done the convertible buying say they do it again and again theres more pressure on the fossil fuel stocks because people will be saying thats a longterm short and its right in our faces. Theyre not going to have their focuses on electric as of volvo so thats right. What is going to happen david is the group is trapped and you need to have a major event because opec is no longer a factor opec cant get it together so i got into the saudi deal and theyre caught. One said theyre buying them and another said theyre buying charter. Who knows if theyre buying anybody. This is the on going saga involving masason. One of the truly unique individuals in the world of business now that started softbank and the vision fund that we talked about that started to make investments at 100 billion thats separate from softbank. Softbank bought armed holdings they own 80 of sprint they turned that all around. Made a killing there of course alibaba is still the greatest single investment made by anybody he bought it at nothing. 50 billion worth of stocks. Soft bank reports earnings. He is asked questions. What does that mean its unclear as i reported not last week but week before when it comes to charter soft bank is in the process of trying to come up with a fairly complex structure under which it would make a proposal for charter even though it is said it will never go hostile and charter indicated no real interest. How much equity could soft bank contribute much debt capacity would they have to put together a deal at a premium for sprint and charter that would be interesting for charter shareholders very much unclear but is there a possibility of raising other outside capital . Does he have other investors that might want to contribute to this new company that would then buy in sprint and buy all of charter . They engaged off and on and tmobile doesnt see sprint as being worked with the markets right now and part of the reason is when you look at the cash at sprint, its only about half it gets a little tough its treating it like a 9 multiple and he says listen sprint is doing great even if we leave it alone but we only want to consider trying to do things that will help it. Hes probably not looking to do anything that doesnt at least value it at current market. Okay. So well see if we can get past that impasse, whether all of these things he is doing will bring tmobile back in a reasonable manner. I dont know but the equity is some what overvald when they look at sprint. Because of how much is just that horrendous Balance Sheet. And it needs Balance Sheet repair and any deal they did would have to involve outside capital coming in to sure up that Balance Sheet as well is it possible that hell get another large investor to give him equity that will help solidify it as unlikely as it would seem that they have interest . To be continued. He did not offer details this morning. We would tell you if he did. Why does one reporting outfit say its charter and another says its tmobile theyre not talking to charter well, i shouldnt say that massa says bring this to your board. Im going to make an offer and he hangs up on him or is courteous to him but makes it clear hes not interested its been on and off again so you never know because hes now so involved in other things he would go over to the soft bank side and become the key number two and take over and so well see. Can i ask you just part of this whole universe why did viacom collapse so badly. We heard that the ceo was good and this was the collapse people were talking about this weekend. During the course of the day on friday there was a sense that it was down 13 at would be point. Im not sure where it flows. People thought it was a bit overdone theres concern for a number of reasons. One is slowing domestic advertising. And then you had viacom say were going to be down 2 . There were hopes there wouldnt be but ratings have been better. Theres also a fear that somehow theyre going to get dropped by charter. Because they dont have must have networks. And then disney coming up this week. Yeah, thoughts. Its a company have were good programming as a bundle. Where younger people dont know what youre talking about when you say bundle my skinny bundle is netflix and amazon and its so generational what does he want to do. With its 20 stake in espn which we dont talk about often. Would you spin it off would you try to get a deal . Youtube needs that program. Do you do direct to consumer as he has indicated will be the case but can it really move the needle i think this disney Conference Call is going to be so important. Why if the espn number goes down again its going to, youre going to question why you said he was bullish and feeling better about it. In the meantime theyre 40 cents away from an all time high this thing is back it wants to be in fang so badly. The dow up for the tenth straight day and this comes off of a very strong day for markets in europe and asia in fact, asian stocks are trading at a ten year high following that strong jobs report is this the end of a weaker dollar . Probably not but this weeks market cues will be very important. We have treasury auctions starting tomorrow followed by chinese trade data most economists expecting chinas surplus to increase with the u. S. Plus fridays u. S. Consumer crisis following weaker inflation. I also want to draw your attention to the big energy names and the double digit losses we saw last year. Pier in national, range resources, opec leaders are gathering to discuss the current supply cut agreement traders also watching venezuela and whether economic sanctions will be announced so oil very much a big talker. Quick look at bitcoin that continues to break records well above 3,000 following the highly anticipated Software Upgrade now at 3400. Lastly, marriott teaming up with alibaba to get better access to the Chinese Tourists according to analysts chinas Online Travel market sales expected to increase 20 this year compared to a year ago looks like were going sideways if you go to a two day it looks like were holding the gains thats the point back to the end of 2015, do you know where bonds close where there trading now. Lets start the chart the very end of 2015 when the bonds settle at 227. The reason i point this out is not only that were unchanged on a 2 year basis but to comp it to the bund if you look at the bund chart yields were over 60 and now under 50 but considering the cra crazy ride the last couple of years were linked at the hip and we continue to be although if theres a light to be shown it would be that the treasure rates are high and most down moves are due to the bunds we want to Pay Attention to the 118 levels of p ifrivot and it only the euro strength against the dollar its also against the yen and against the pound as you see on the one year chart where its at the strongest level since october of 2016. David, jim, back to you. Thank you, rick lets get a closer look now at oil prices. Good morning. Oil is pausing under 49 barrel at the moment. An unofficial opec, nonopec gathering this time, speculation that theres conversations regarding stepping back from the negotiated deal if certain members are unable to comply longer material. But its chatter at this point the break of 50 barrel was significant but not enough momentum to be able to hold as you can see. Were approaching the close of the period and thats going to be anticipated soon as well. Crude had a more than 10 run in the last month along so to go higher from here traders are saying you need a good reason. Back to you. Okay. Thank you. Jackie coming up well get a closer look at what is at stake for the trump agenda especially when it comes to tax reform and tomorrow on squawk alley be sure to watch an exclusive interview with Jp Morgan Chases Ceo Jamie Dimon. Thats tomorrow at 11 30 happy birthday. 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. Upod. I got everyone practicing it underpromise and overdeliver never say were going to be a dream team were going to win the whole game no leave it on the field though. I left my voice in the field i have nothing left. Coach peterson, the whole gang, the philadelphia eagles, at a team, the best franchise in the world and thank you the eagles for letting me be there let alone address them what a great team. All right well have stock trading with you mr. Eagles and make sure you upod it. Also today on fast money Halftime Report there he is. Lee cooperman live with scott and the crew hell be talking a little bit of adp. He was a board member there for quite sometime squawk on the street is going to be right back. E military, but at home. She thinks shes the boss. She only had me by one grade. We bought our first home together in 2010. His family had used another insurance product but i was like well ive had usaa for a while, why dont we call and check the rates . It was an instant savings and i shouldve changed a long time ago. Theres no point in looking elsewhere really. Were the tenneys and were usaa members for life. Usaa. Get your insurance quote today. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. For years, centurylink has been promising fast internet to small businesses. But for many businesses, its out of reach. Why promise something you cant deliver . Comcast business is different. We deliver superfast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. We do business where you do business. Beef worked for them. It was worth every penny for them. Great point. We have to talk a little bit about the lineup that they have but also about teva. Brent coming on, all right. I have been critical about the earnings and happy birthday to sarah happy birthday to wilfred frost. Happy birthday to bill griffith. Happy birthday to brian steel, all part of our family. Yes. Thats amazing. People were really busy 9 months ago that means youre smart. 9 months. Is that the dead of winter stop thinking like that. Im sorry when we return its a big week for immediate yaemedia earnings its a history there keep it right here hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade i thyou never got the brakes looked at . L. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. At ally, we offer low rates on home loans. But if thats not enough, we offer our price match guarantee too. And if thats not enough. We should move. Our home team will help you every step of the way. Still not enough . Its smaller than id like. Well help you finance your dream home. Its perfect. Oh, was this built on an ancient Burial Ground . Okay. Then well have her cleanse you house of evil spirits. Well do anything, spiritual chatter seriously anything to help you get your dream home. Ally. Do it right. Lets take a look at where we are. Starting the week strong the dow in record territory. Can we make it nine Straight Record closes in a row well see if the dow closes positive s p 500 stays positive materials and technology are strong today energy is lagging and wti crude is sitting below 50 barrel as these producers meet to talk about cuts technology is having a good day. David with the nasdaq up a quarter of a percent right now. A bit different than in recent trading sessions. The dow hitting another record high we have you covered for your trading day ahead. Big immediate yaernings this week what investors should be watching as cbs, disney, 24th century fox get set to report this week. Plus getting convicted of fraud. The details and the possible sentence straight ahead. But first lets get straight to the markets joining us now is chief Market Strategist at Russell Investments and the director of global macro at fidelity investments. You have been sounding the caution alarm on this market saying its vulnerable to a pull back and here we are again on a monday morning in record territory. Correct its an opportunity to be disciplined so we dont have a recession call on the u. S. Economy for example. We dont necessarily have a negative view on the u. S. Markets but we do think that this is a Good Opportunity to rebalance globally at these valuation levels they are supported by the fundamentals so fundamental is good but these valuations we think this is a good time for a u. S. Dollar based investor to diverse fireworks globally and look in areas where evaluations are not as challenging. Like what europe. We think they make more sense. Do you agree with that . They have a stronger currency. Thats not exactly friendly for exporters. Thats one of the factors weighing on european stocks lately which do you prefer . A agree that nonu. S. Equities offer better risk return potential you than the u. S. Market they have caught up already quite a bit since the february 2016 bottom. Its up 50 . The s p is up 32 which is pretty good as well of course. But germany is trading at 13 times earnings the u. S. Is trading at 18 times better forward earnings. The numbers are very clear in terms of valuation discrepancies yet theres talk that Value Investing in the u. S. Has not necessarily been fruitful if were looking at the basic measures of value that we have come to know is there anything going on in the markets . Whether its the sectors that are working or the types of stocks that are thriving this environment that might keep those valuation differences across the world in place . Yeah thats a very good point but the gaps are still quite high earnings are higher across the board. It is firing on all cylinders and really since about a year and a half ago investors have never gotten as much return for little volatility as they would now. I would agree in that we have to remember that a 10 correction can happen for any time for any reason and the odds of that happening are about 1 in 3 so we can get too spoiled by the amount of return we have gotten per unit of risk over the past five or six quarters. You dont even have to look to u. S. Versus europe for the discrepancy. You see it within the u. S. Market Big Multinational Companies for instance versus the smaller cap companies. The russell 2,000 index underperforming lately which one is a better value to you and what does that tell you . The fact that were seeing this gap widening out. That goes back to something earlier about the currency differential between the euro and the u. S. Dollar thats going to be critical and lessly inquirity is going to be something that people want to understand really clear. It would be good relatively. You think the fed is done for the year. Inflation is too low. Its getting a little soft. Wages a little soft. The Economic Cycle a little soft no alarm bells but theres not really the fed to be overly aggressive raising rates because i think theyre going to let the bond market do a lot of the heavier lifting. Finally, since were talk about the risk a month from now, maybe you want to put in the stock that congress doesnt have that much time to address the debt ceiling and the prospect of a Government Shutdown as we look forward here. The odds of a fed hike in december are about 40 it remains to be seen obviously Balance Sheet attrition will come first and so far that seems to be on track for a very measured base if anything we need to be looking more at the ecb and how quickly they are going to continue to taper their Balance Sheet and when and how theyre going to eventually start to sli shrink that. That may be a bigger factor Going Forward now since they have been the driving force on the front. North korea is responding to new un sanctions the official News Agency Says the sanctions infringe on its sovereignty and theyre vowing to take righteous action on saturday the Un Security Council unanimously adopted a resolution that ams ims to slash the export revenue by a third. It would ban exports of core, iron, iron ore and seafood Rex Tillerson spoke about north korea earlier this morning at a conference in the philippines. Well, the best signal that north korea could give us that theyre ready to talk would be to stop the missile launches we have not had a extended period of time where they have not taken some kind of action by launching Ballistic Missiles that would be the first and strongest signal they could send to us is stop the missile launches. He told russias foreign minister that the u. S. Will respond by september 1st to moscows move to expel u. S. Diplomats. Not a lot of financial reaction i was just looking at it maybe a little bit weaker because theres some risk there i guess but it takes a lot to spook investors right now and everybody says north korea is a big risk factor that theyre watching but it hasnt got to that level yet. I dont know what takes it to that level other than anything you dont even want to come close to thinking about. And the way it relates to our relationship with china and the president continues to put pressure on him at least through his tweeting but how that relationship as it relates to trade is probably the most important. Absolutely. Meanwhile, lets send it over to morgan for a quick market flash. Check out shares of bright house financial. Those are falling 4. 5 right now. First day of tragd ding on the nasdaq metlife which is about half a percent higher today its up actually 1 now. This day is a Long Time Coming after the top u. S. Life insurer announced plans in early 2016 to spin off the Slower Growth more Interest Rate sensitive business which had accounted for about a quarter of methieflifes assets. A bigger than expected charge thanks to the spin off and that the dividend would be smaller than anticipated Analysts Expect volatile trading near term. At least metlife investors are sharing because they dont take a dividend theyre down 4. 5 . Back to you. Morgan, thank you when we come back it is a big week for Media Companies earnings well break down what investors should be watching for ahead of those reports starting with disney i believe to recall plus a Government Shutdown is on the horizon as the battle over the budget continues well discuss the impact on pushing through a tax plan when sqwk on uathe street comes right back dont go away. These issues could weigh on the media giants over the next couple of days first up cbs reports after the bell followed by disney tomorrow afternoon and then 21st century fox on wednesday late last week viacom shares plummeted after the company warned both its domestic advertising revenue and affiliate fees will decline by low single digit percentages this quarter one factor likely to impact the larger media giants this week, broadcast tv saw a 12 overall raidings decline in the quarter but on the upside in a contrast and directtv now and comcast reported better than expected results in part driven by higher distribution and licensing fees at Nbc Universal analysts say this could be a rough earnings season for media stocks we see relatively week fundamentals but ahead of earnings tonight cbs is well positioned going into the back half of the year and it should get a boost from a strong up front season as well as the return of the nfl and the launch of star trek on its all access direct to consumer app looking for more details on all of that. Back to you. Thank you for more on this weeks immediate yaemedia earnings, so far what we have gotten has been at least some what of a concern on the domestic advertising front theres mixed signals is that something that youll be watching closely right the trend is really frustrating because these guys had good pricing tail winds at a very healthy level. And that was one of the frustrating things they had better Trading Trends than others but then also at time warner they had cnn but their ad outlook was very disappointing. Its their retransmission. They have a lot of exposure and then at disney youre going to see a add number because theres fewer finals games and its soft at this point. When it comes to disney there always seems to be continued focus on espn and what maybe continued subscriber decline sort of as being the leading edge of the unbundling we talk so often about is that going to continue to be a focus . Should it be a concern for investors heading into the quarter . Its absolutely a concern the trends are clear that youre seeing a 3 or so decline in basic cable and thats an uncomfortable number and getting worse so it seems. The impact on the numbers is not huge whats happening to these stocks is the multiples are coming down in advance of the earnings estimates coming down but im not sure what changes that outside of consolidation what do you think is the key to watch for in terms of next steps in consolidation youll see more that will make it easier for consolidation among broadcast companies. Tv station ownership ruls will be loosened. Well see the conclusion of the at t time warner merger and then how they leverage over the networks if they have success that can be a catalyst for more content Merger Consideration which i think would be, put a bed underneath many names in the group. And finally of course we didnt mention fox its funny, you add foxs market cap to that of cbs, two names reporting this week. The market value of netflix which i think said it all in some ways doesnt it it does it says valuation doesnt matter netflix has gone straight up viacom has gone straight down. Its a super cheap stock and netflix is super expensive its the secular trends that matter and not evaluation. Any concerns when it comes to fox . Fox is largely driven by sentiment around the sky merger thats delayed a little bit. If you want fox youre very excited about india where theyre doing well youre a little bit concerned about the add trends here in the u. S. , exports. All right well leave it there thank you. Great, thank you. When we come back the battle over the budget and taxes. Will disagreement over spending actually cause a Government Shutdown this fall well discuss. And a quick programming note dont miss an exclusive interview with Jp Morgan Chase Ceo Jamie Dimon with wilfred frost. Ua on the street will be right back dont go away. 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Are we really talking about a risk of a Government Shutdown when republicans control all three branches of government thats an amazing statement sarah. I think we are although i put the odds at less than 50 . I do think that republicans in the house will be able to pass spending bills but youll need 60 votes in the senate and i strongly suspect would be dead in the senate. Senate democrats and remember you need democrats to get to 60 will object for example to the fact that Republican House Spending Plans go above the cap when it comes to defense spending they allocate more to defense than previous congresses have agreed to and cut a bunch of low income programs so theyre not going to get democrats on that attend of the day i suspect well get another one of these patches of continuing resolution that should keep the government open and then theres the debt ceiling. Thats the frightening one. The shutdown is not the frightening one. And republicans are going to try to do this weird thing where theyre going to try to get a debt ceiling increase while maybe needing democrats while theyre going to try to shove through a big tax bill with no democrats thats not a great dynamic. He seems to still be going in one direction. Does he want to do it in his heart . I have questions about that. In the meantime you have House Republicans that still want spending cuts. Sitting in my email is a letter saying that republicans must push for spending cuts with the debt ceiling bill. That could get very, very nasty and it should give you no confidence that this is going to go smoothly. I guess theres a little bit of a sense out there that yes you have all of these factions going in Different Directions but when it comes down to it if the core priorities of both houses of congress is to get toward something on taxes wont that bring them together to say listen we have to have the shortterm fixes thats the way the market is playing. Not a lot of nervousness at all being shown. Sarah made the point about how unresponsive markets have been to, in that case, geopolitical noise id make the same case for washington noise like you just said theres an important point which is that the tax thing and the other stuff were talking about are very much separable. So the tax plan, this reconciliation plan can do that without democrats. When it comes to the debt ceiling if you go back to future debt ceiling bills they to use democrats. John boehner needed democrats to raise the debt ceiling i do think and this is an important theme that i hope we can develop in coming weeks. Theres the economy on one side and washington noise on the other side and theyre not the same thing and the markets and the job market are moving along and discounting a lot of noise that works great until you start bumping up against the debt ceiling and Start Talking about shutdowns and start having kinds of disagreements that bleed into the real economy. Although i have to say jimmy we have been here before remember what happened even at standard and pores downgraded and we still managed to avoid a default. Its only happened once in the 1970s and it was an accident were talking about september 29th were also talking about a president that his number one talking point right now is the strength of the economy jobs market. Hed have a better Approval Rating if it didnt look like the lanister army. Most of this centers around donald trump hes unpredictable that factor splaing in some of the more scary scenarios. Did he just spoil game of thrones. He just spoiled last nights episode but that was an amazing gold star to you for that reference. He is basically saying theyre going to run into it its going to happen im not sure why he comes to that conclusion. Do you have any thoughts i think that the issue of trump in here has baring on this and increasingly members of congress, republicans are just not that concerned about where he wants to push them and hes making it worse by lashing out against republicans around health care. They are really blaming congress and they have a real incentive to get their act together but i dont think trump is going to help them much. Meantime they are on august recess now at least the house thank you for joining us to talk about these washington risks United Technologies may be weighing a bit for Rockwell Collins. Phil joins us now with more on whether or not it actually makes sense. Im all ears, phil. And david theres a lot of people that say well on paper it makes sense in terms of what the two companies could do when you put them together and then you have to look at the financials lets start with the report from reuters late friday afternoon and that pushed shares higher 4 or 5 today lets talk about why this would make sense if youre United Technologies. It makes up 20 of the revenue theyre growing that business and they would fit in nicely and also a nice defense portfolio and if youre Rockwell Collins you bought be aerospace this year it has a higher premium if youre United Technologies and remember last year when honey well was making its move for United Technologies . At that time they said we dont think this is the right fit and there were concerns about antitrust hurdles. But it would be a rich price that they would be paying. I remember that very well the only thing that i can add is the two sides do have bankers but again its unclear if utx did make a bid or what it was Rex Tillerson Holding Meetings with his counter parts measures to reign in north korea high on the agenda john kerry commended the Judicial Branch of kenyas country for their role in solving political disputes hes leading a dell kags egatiof Carter Center observers. Were privileged to be here among the International Observer groups in order to try to help kenyans have confidence that they will have the election that they deserve which is open, fair, free, transparent and accountable. Lightning causing a wildfire that scorched 3,000 acres in western nevada strong winds shifted the fire away from the structures thats the news update at this hour ill be back in an hour and get you up to date back downtown to you guys. Thank you when we come back much more on the markets. Look at how theyre doing right now. Just slightly in positive territory. The dow work on a tenth straight day of gains nasdaq out performg stinju slightly squawk on the street will be right back dont go away. That is to say job growth is in excess of 200,000 more than half the time in the past two years. The economists contention for job growth undershot all but one of the 200,000 job growth months by an average of 46,000. One prominent forecaster thinking about changing their outlook. Goldman sachs writes over the weekend we have made a sizable downward revision to our forecast for the Unemployment Rate by tend of 2018 to 3. 8 from 4. 1 previously they think this is going to continue quote with openings elevated and firm searching job growth should remain brisk heres the question whether brisk job growth and falling Unemployment Rate will spook the fed. Theres an argument to let the job market run and see if the economy can run longer at a lower inflation rate and lower Unemployment Rate doubt sparking inflation. Thank you very much we had the dow looking to post its tenth consecutive positive session following the best week since may and for more on how it fits in with the jobs picture and Economic Outlook were joined now financial conditions incredibly loose. Market loves it. Can can can it count on that continuing history implies that it can when you look back and look at the number of new highs that we had so far this year, whenever we have had an above average count of new highs that has actually increased the likelihood and magnitude of the markets performance in the remainder of the year so the indication is maybe the consensus would be long thinking we would be stumbling into a big decline shortly. So the way the market is persistent in stretching to the upside that itself is a good forward indicator but in terms of what might be out there and up ending this happy economic story i guess you could say if this is a goldilocks scenario you have to remember she was snoozing while surrounded by bears but also the reason that the market continues to work its way to the upside is regarding the economy, the same could be said about corporate earnings this is the 22nd quarter in which the actual results have exceeded the end of quarter estimates and the average rate has been about 3. 5 so now were at 10. 5 rather than the 6. 2 estimated at the beginning of the quarter. What do you think markets fully supported by whats happening fundamentally either in the u. S. , globally or are we seeingly quiddity make its way into expanding valuations more than that . Look its all of the things we mentioned but theres one thing we shouldnt forget thus far you have seen a decline in the unemployment so surprise in the number of jobs created but we havent seen the same surprise in wages. Wages have been fairly benign. As a result of that corporate profits continued to increase without much inflation being visible. As we go forward i would expect wages to start to edge up as some of the effects that have been helping wages start to subside. If that helps, i actually think there was a lot less room for corporate profits as they start to rise. We have been waiting for that for a long time. A lot is being made about august, quite month, volatile month. Usually actually a poor month in terms of market returns. Not so quite in recent years we had the chinese devaluations a few years ago. What are you telling investors about how to play the seasonals . Dont go too far out on the risk curve because seasonally were in a sleepy period and we could sleep walk and fall down the stairs so august traditionally has the second worst performance for the s p 500 since world war ii september is by far the worst. Not only on a price change basis but also its fallen 58 of the time so on a frequency batting average basis september is by far the worst. So august and september together are periods we find it most challenging. You might be able to step back and say this period of unusual calm in the markets across all Asset Classes might be viewed as an opportunity to pick your spots and say how do i want to reposition what seems overdone . What seems like it might be neglected. What would you be saying in terms of potential rebalancing so one of the things that perhaps surprised a bit is we have seen a decline in dollar so some of the larger cap stocks, well poised to at least deliver against the benefit of the we weaker dollar and health care and technology and select industrials between now and the year end. And in terms of, i know you were focussing on equities but everyone keeps pointing to Credit Credit seems to be supporting whatever fund the equity markets want to have is that going to continue or can credit be sending a wrong signal. The credit spreads are quite narrow the one thing im worried about in the market is we keep looking at the averages and if you look at the distribution of credit among the companies you are starting to see a bit of weakness among the Smaller Companies that are exposed to the credit markets on the margin we have some with a preference for equities relative to credit. All right thank you for your time this morning. Appreciate it. As we head to a quick break here take a look at shares of marriott in the green after news that the hotel chain struck a deal with alibaba. Both stocks are doing well today. The deal allows alibaba users to book hotels through the website. And when we come back, guilty of fraud. We very the details and the possibleennc stee as well as his always colorful reaction dont go away. Find out what it is at trading nation. Cnbc. Com. More squawk on the street coming up sarah, thanks for taking the time my pleasure, thank you for having me. On august 3rd its ironic because moodies still has aaa rating on the u. S. S p almost exactly six years ago in 2011 in august downgraded it one notch but the paper that was put out earlier in the month talks about how higher Interest Rates rising debt, lower revenue, all of these things summarized interest costs to revenue ratio that deterioration makes moodys nervous can you explain . Yeah. The bottom line is its already begun. Debt affordability the ratio of Interest Rates, interest costs to general government revenues are rising and we expect them to continue rising that can occur in various forms. All of that is going to change the me tricks a bit. Theres an assumption that over the next five years moodys believes medium term rates will nearly double. I dont disagree with at a but that assumption hasnt been correct in the past. How much weight is put on that particular notion . Its a baseline scenario over the next ten years so if medium term rates dont rise by as much as we would expect you wouldnt see this ratio get as it wouldnt be as bad as our baseline scenario. Having said that, the bottom line is that even if measures are taken, youre still likely to see an increase in a ratio thats much higher its about four times higher than the ratio that germany has for example. Finally in our last half minute, sarah, the idea of revenue neutral when it comes to tax reform is an odd thing you dont necessarily want it neutral. You want a little bit of a kicker does moodys or any of the ratings agencies take a dynamic approach to tax changes to the down side in youre final answer. I cant speak for our competitors. What we look at is a baseline forecast for revenues over gdp and that gets incorporated into all of these other ratios that we look at but what were doing is coming up for the baseline. Wed like to have you back as we move toward potential legislative progress thank you for joining us this morning. Back to you. Thank you lets send it over now to john fort and get a look at whats coming up on squawk alley. Not exactly a Jerry Mcguire moment but internal memo is rocking google as we start the week its a position on diversity thats not exactly the company line hall dig into tt. Thats coming up on squawk alley. Martin was convicted of three counts of fraud on frichlt we have more details and the possible sentence. When will ween into how will we know are the options it was asix week long trial including five days of jury deliberation thats ended friday afternoon with a guilty verdict on three counts. The government accused him of robbing Biotech Company in order to pay back investors. He defrauded into hedge funds. Government witnesses during the trial testified that they were mislead by shkreli about the funds and performance. They tried for long periods of time to get their money back and were unable to but that ultimately shkreli repaid them and then some. The fact that investors made money complicated the case and may have implications for shkrelis sentence despite the three guilty verdicts claimed victory on friday i think ben said it all you know, were, i think, delighted in many ways with this verdict. Count seven was the government attempt to theorize that i robbed peter to pay paul and the jury has spoken that i did not defraud. Investors made three to five times their moneywithout any aid of any settle comment agreement. So i made ten times or more than that of their original investment after they did receive settlements. The jury did their job and saw the facts. Shkreli could face 20 years in prison but he would seek much less, potentially no jail time the socalled pharma bro was already back on social media friday afternoon Live Streaming from his apartment while he drank a beer, no sentencing date has yet been set the judge concluded friday by telling shkreli i wish you well and see you soon i was going to ask the fact that he was back on youtube claiming victory not showing any signs of remorse or guilt would work against him when it comes to sentencing which he still waiting for. Yeah. Theres been a lot of speculation that showing a lack of remorse could potentially factor into how the judge sentence heres. Were going to have to wait and see. We dont know yet when that sentencing date will be. But certainly folks think thats not going to at least go in his favor. All right thank you, meg the price of big coin surging over the weekend topping now 3,000 climbing as high as 3,360 the price has more than tripled in value for the year. Software upgrade last weekend that was expected to cause volatility was relatively uneventful we got that fork and that bitcoin cash spinoff clearly there sin creasing demand for this currency whether its coming from abroad, places like china you have a weak dollar which some say helps at least. This is another alternative. And others too. On some level although, you know, so what was this kind of like the y2k thing with bitcoin that didnt cause disaster this is the first time it would happen and have the split. And it was a test of demand and bitcoin passed again you have to be focused on bitcoin a couple years ago so tell me what your thoughts are with the latest price and interest that seems only to be increasing i think the latest is its hard to put a value on bitcoin i always was careful to say that you can never put a price on it because it was nearly impossible there are clearly underlying risks. Its not backed by government or a central bank but there say lot of money and interest coming from legitimate and illegitimate parts. There is also the technology that underlocks bitcoin. That could be driving it up as well when we come right back, netflix making first acquisition ever buying comic book maker miller world. Well speak to an early investor of netflix a quick programming note today on the Halftime Report at noon eastern, an exclusive with leon cooperman a long time board member of adp, it will be interesting to hear his reaction to the campaign against that company that is coming up at noon eastern. Squawk on the street will be back experience uncompromising performance at the lexus golden opportunity sales event before it ends. Choose from the is turbo, es 350 or nx turbo for 299 a month for 36 months if you lease now. Experience amazing at your lexus dealer. You are loved welcome back to squawk on the street. Check out what is happening with consumer staples, technology, the best performing groups in the s p 500 on the staple side of the equation, we got meat producer tyson foods leading the charge here in a better Third Quarter beat and strong forecast as well. Tyson benefiting from streng tht in pork and beef business. The consumer staple sector up nearly 7 already this year in 2017 certainly a sector to watch and, of course that, dividend play is certainly one of those things that we have to keep an eye on when it comes to the dividend stocks anyway that, does it for this hour of squawk on street lets send it back downtown for the start of squawk alley. Back to you. Thank you, dom. Good morning, it is 8 00 a. M. At alphabet headquarters in mountainview, california 11 00 a. M. Here on wall street and squawk alley is live