If you check out crude oil, which is probably the biggest market story weve been watching for a week or so crude Oil Yesterday was up slightly to 42. 74. This morning up to 42. 84 youre still talking about wti below 43 a barrel. Americas 34 largest banks did well in the stress test. The results show even during a large recession large banks would be well capitalized and could support homes and businesses when times are tough. The second part of the stress test will be released next wednesday. There are talks about whether things might have loosened up a bit with the fed. Doug parker says he is not happy with Qatar Airlines plan to buy a 10 stake in the company. Parker telling phil lebeau he found out about it yesterday parker telling cnbcs phil lebeau he found yesterdays offer confusing, adding why an airline were aggressively fighting would want to take a stake makes no sense he wonders if the motivations were misguided and ill conceived. They have been fighting over policy in washington on whether Qatar Airlines can be here and whether theyre dumping their product. Hes been very outspoken. Phil talked to us about this yesterday, but how he thinks they have an unfair advantage. He was asked if this was a situation to try to silence him. If youre in a tooth and nail fight with your competitor and you might lose, might as well buy their stock. Is this arent you hedging your bets that if they succeed, if your efforts fail, at least youll ride i would go long you. You would go long me . You want to buy a piece of him . I would buy a piece of you thank you if my efforts fail to undercut you and hurt i would like to be part of your success. Which is all over the place. Would you sell him a piece . I feel maybe this is ill conceived and misguided. And you have no choice. I can own up to 10 of you, you have no choice im still a private company you dont want to release a lot of stuff about you thats probably a good idea. We have different share classes. Im like Travis Kalanick this story we always come together on. On rainy saturdays what do we do together . Go to Bed Bath Beyond. Hold hands. Not the entire time shares of Bed Bath Beyond we look at duvets together. We do. I thought the humidifier and the mist shares of Bed Bath Beyond down sharply after posting weaker than expected results. The retailers samestore sales tumbling 2 . The company citing softness in physical stores. The one bright spot softness at physical stores, thats where its supposed to be fun to hang out on a saturday. The bright spot is digital sa sales, but that was offset by higher shipping costs and coupon expenses down 23 its not the the business its in, which is a great business its the digital thing again it is the digital you start to look at amazonproof businesses when it gets to retail, theres fewer and fewer. I used to think mattresses, beds i just bought a bed from amazon. You bought it from amazon you didnt buy it from casper . I thought about it, but now amazon is selling you a guy who will set it up for you you can buy the servicing thing on it. Casp casper, thats not an option thats all you use, harrys shaving kit, you use anything no. Tommy john underwear . Any guest that we have you use i only like to have guests on where i tried the product. Did you get a deal on the mattress we dont have a casper mattress do you a pillow top we do just a thin pillow top some of them you really sink down the difference with amazon on this is theyre servicing things did you live through the waterbed era i did im aware of it. Who thought that was a good idea cold, hard and you could get in, and its all who thought that was something that we never had one. But i had a friend whose parts had one. My aunt and uncle had one we loved it its not that its not that one never popped either that happened, too can you imagine . We have a serious well switch gears the likelihood that isis leader Abu Bakar Al Bagdadi has been killed is close to 100 . Who said that . A russian senator. The senators name is victor ozarof, head of the Defense Committee in the upper house of parliament it was like may. So were still trying to figure out whether this actually did happen we heard maybe hes dead hard to confirm these things if you believe this guy, he says close to 100 . And this is official President Trump is officially nominating new york jets owner Woody Johnson to be ambassador to the uk. Nice gig johnson is a longtime republican donor has owned the Football Team since 2000 also chairman and ceo of private Asset Management firm, the johnson group. Johnson Johnson Family the president also nominating former l. A. Dodgers owner Jamie Mccourt to be ambassador to belgium. You got to give parties a stipend like 20 per bottle of wine to serve at the parties. Thats why you need wealthy donors you floedneed a lot of money. A number of ambassadors are asked to refurbish a lot of the whats the word the u. S. Ambassador the homes the embassy homes. You can argue both sides of this you would like normal people to be ambassadors instead of people who can grease the campaign and get rewarded this way. But it is nice to have the private sector where the government doesnt have to pay for it i could argue from either side i would say congrats to woody and susan, his wife. Shes a big jets booster a key position. It was joe kennedy who had that position right i dont know what it means for his attendance at the jets games. Probably will go down significantly. Lets talk about the Senate Republicans working to build support for the healthcare proposal they face opposition by democrats and by several high profile members of their own party. At last count there were at least four republicans saying they were not quite ready with this version of it Kayla Tausche has more on there. She joins us now good morning reporter good morning. The sell is going to be a tall ordertor Senate Leadership after a lackluster reception yesterday on capitol hill when the bill was released no senators offering outright support when it came out despite key changes to the house legislation. For fainstance offering tax credits based on income instead of age and ending medicaid expansion. Those were efforts to win over moderate republicans the president says he not only supports it but it looking forward to making it special remember, obamacare is dead. The plan also got an endorsement from the chamber of commerce most other medical Industry Groups coming out against it six physician groups in addition to that asco, the American Hospital association as well as aarp which again called the legislation an age tax that would strip 17 million seniors and children from medicaid theres a group of four conservative senators who said they oppose it and want to change the current bill mostly because it doesnt cut costs or lower premiums enough. Senator Lindsey Graham said every senator wants something. There are 52 of us. All of us have leverage. The question for us, will we deliver or not i dont know what they want changed in the bill. This is an opening offer, not the final deal so time will tell. But they only have six days time last night at the congressional picnic senator graham told nbc news that the chance of getting to 50 votes is just 50 50. Thats a better likelihood than some would be considering for every deal they cut they will tick off another constituency you have people, not just the conservatives who stepped out and lindsay gravm sey graham whn he wants things, but also someone like senator heller, whose state has been leaning more and more democratic, what will he do in the situation . Hes assumed to be a no currently. I heard aides to leadership saying hes someone they want to allow to vote no because its becoming a more popular position in his state and they dont want toize th izlose that seat and then theres senator rand paul who opposes anything but an entire repeal of obamacare some hope that he comes around, and at that point thats public posturing he put out there and will support the bill once it comes to the floor, but they dont know others like ted cruz want premiums lowered senator collins of maine would see her popularity spike if she voted against this in that state. She wants to make sure tens of millions of americans dont lose coverage so the cbo score we get next week will hold clues to this the more changes you make as youre getting that cbo score, the more scores you will need on the back of that when he says 50 50, that seems like an optimistic view when you consider it the back drop is if you dont pass something you will have political pressure the journal has a long lead editorial. I know these are, you know, this is the ebenezer skroocrooges ofe Editorial Board who dont want to take coverage away from everyone, they point out a final no, if it happens, a final no from the senate is really a vote to live with obamacare if it fails, next step is single payer. All these guys know that the journal piece kind of daring republicans, after going on four elections and repealing obamacare, if they dont do this rand paul says this is obamacare, just a revised verg moderates saying its way too draconian. These guys on both sides have to accept not a perfect bill, but something that allows them to keep the promise of not making obama care the status koe. At least starts to rein in the entitlement spending on healthcare which will be out of control. Thats why one option still talked about is even if you feel like you dont have the public support coalescing around this bill, dont count out the Majority Leader Mitch Mcconnell who still might bring this to the floor, he might see this as a dare to republicans before they go back home to their district i think its better than 50 50 these guys every one of them has they love their day in the sun if you could get some slight thing in your favor, then you what do they have to give then it makes it harder on the other side it does thats the hard part. Thats what you have. If youre going to placate those four, then you really its going to be a struggle. Remember those things people used to have on their desk, the pendulum sweeping, every time you appease one side, you knock the other side off very 80s those little pendulum things. Wall street little metal balls would hit each other yeah. All right. Back to the Broader Market joining sus is steven parker. Head of thematic solutions if you want to have a theme involved, where you can explain it to people, like cocktail par parties, i own some tesla, do you have a theme no, why . Can i go somewhere and actually have a theme for my investments . They come to you thats right. Jeff saud, i dont know why youre here. Do you have any themes just money making ideas, right no, i have themes im a thematic investor. You are as well maybe its thematic friday i havent talked to you in a while mr. Chief Investment Officer at Raymond James are you bullish . Yes, i have been. I continue to be bullish i would add one thing to your conversation about mitch mcconnell, hes very good at playing defense, not good at playing offense. So what conclusion do we draw from that statement . I think that the bill has not the votes to get through so what happens you said it earlier, if they dont pass it bill t looks like obamacare implodes, you get a single payer you are still bullish yes im still bullish. Healthcare stocks were up yesterday because they think the bill will pass i lived in d. C. , im well connected on capitol hill. As of last night i dont think they have the votes to pass it yet i think the markets have transitioned to an earnings driven market. Earnings will come in better than people think. Who did you mention that wants her own state to get her bolster her numbers Susan Collins in maine. Thats the problem with the system here. We a even the republicans dent want to lose a single seat when you have a 52seat majority heller is up this year if he loses it they guys will lose all their seats if they dont govern all right, why should i listen to you on this because i lived inside the d. C. Beltway for years, i ran Capital Markets there. Thats your problem but jeff, real quick correct what you just said about the politics of the moment does that factor in at all to thinking about the market and your algorithm . You always talk about the algorithm. The models. The models are bullish all the models the longterm model turned bullish in october of 08 and has not flipped negative since then. In your model is there input that relates to whats happening in d. C. . No. Absolutely no. Just wanted to be clear a lot of counter forces swirling, oil weak, tenyear not in a hurry to get to 3 . What is the market doing what is it telling us . I think jeff mentioned it, were focused on an earnings driven market. Everyone is focused on markets at alltime highs, thats because earn pg ings are strong just here in the u. S. But globally while we may not be seeing the economy ripping, what were seeing for the First Time Since the crisis is a synchronized global recovery. Not just the u. S. Leading us higher, European Data was strong this morning Consumer Confidence in europe, the highest level in 16 years. Thats translating into Earnings Growth and that is pushing markets higher we track the baskets of companies that are most exposed to things like deregulation or tax reform in the months after the election those stocks outperform the Broader Market by 10 , 20 theyve given back all that outperformance over the last couple of months the Market Expectations around policy has come down significantly. I dont think we need that for markets to continue to grind higher it would be a bonus i think its more of an upside potential than necessity. If the risk is not if something doesnt happen, it doesnt necessarily mean theres an air pocket under the market you may see a bit of a selloff, i dont think it will be something substantial if i was andrew, if i had all these other billions, all this stuff, would you be buying f. A. N. G. Just buy them . Because they go up every day they had a brief little pullback talk to him. Tell me, what am i supposed to do, knowing that joe thinks i have a time horizon of a hundred years. Because im invincible at this point. He thinks hes immortal he does. The Technology Story really is dependent on your investment horizon. These have become popular trades give us a hundred years these companies, a lot of these Tech Companies have incredible growth prospects. Valuations are not crazy like they were in 2000. Theres a continued story where growth will not reach the levels we saw historically. People are looking for companies that can deliver growth regardless of the economy. Thats a longterm tory. Guys, thanks. Andrew your rival who is my rival david faber, m a type rival good friend he was interviewing jack ma yes in detroit the singularity s is upon us. Is possible but hes worried they may not care much about us the machines he also thinks well have a fourday work week fourday work week. Singularity is a possibility sigh bo cyborgs. We have to suck up to the machines when we return, new data on the economy and the trade. We have a new read on the biggest risks to businesses. Details after the break. Most etfs only track a benchmark. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Welcome back to squawk box. The latest results of the cfo survey are officially in Jackie Deangelis has the details. Good morning good morning. Almost officially putting the first half of the year to bed, so it was a great time to conduct the cnbc global cfo Council Quarterly survey to see where cfos stand on various positions and how their viewpoints changed we asked them what keeps them up at night what the biggest external risk factors are. Consumer demand followed by cyberattacks and then u. S. Trade policy speaking of trade policy theres some concern that trumps rhetoric towards germany would lead to a trade war with that country or possibly the entire eu just under 60 of respondents said theyre some what concerned about both with respect to the global economy, the eurozone, which they said for the last three quarters was stable is now improving while the u. S. Continued at improving status for the Fourth Quarter in a row. We also asked about the stock market, would the dow see 22,000 before it falls back below 20,000 60 said we will go up before we come down. An optimistic but cautious tone at the same time okay. What do we think about that cautiously optimistic what do you do with that . What do you do with that its like the most 20 years, thats the most common two words from a sell side, not a cfo, but how do you go wrong with that . Im constructive on the economy. What does that mean . Thats even more out on a limb than cautiously optimistic. Cautiously optimistic means any time something could happen, but maybe not. Then it goes higher. Thats interesting because on the trump questions we asked them their tone changed a bit. Many of them were saying they dont think well see implementation of policy before the end of 2017. So that was a little bit of a shift. We asked them to describe President Trump in a word, i share some of those words with you. They werent that kind arrogant, thauthoritarian, narcissistic, reckless any nice words . There are no words. Thats the nicest. The nicest, there are no words. They do it anonymously. Yes they all haveoptions on their stocks, companies, like kaching every night honey, were doing well. Then they throw the slam word at trump. Thats fine. We asked them a lot more questions on a lot of topics, technology, innovation, how theyre feel being businesses now. You know what id like to have them in if you can get them on record with those words, we can talk to them about it lets see how quickly that happens. Fair enough thank you coming up, digital flash crash. Well tell you why crypt o currency where is your bitcoin . No, my 5 is 24 dlurs i think gifts over 25, you have to give back really . Even if it appreciates i cant figure out who gave it to me someone sent me 5 originally. Now its worth something did you see this . Yes fascinating. 319 to 10 cents in about a second well talk about that. The squawk newsmaker of the morning, tom price saying why hes sporting the healthcare proposal from the senators heres a look at yesterdays winners and losers baby crying fly me to the moon elegant music and let me play bell rings at crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. Ready or not, here i come. Ek. anyone can dream. Making it a reality is the hard part. Northrop grumman command and control systems always let you see the complete picture. And were looking for a few dreamers to join us. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning. Andrew just dropped a bombshell. Stepping out. You were in new jersey . I was in new jersey did you have nose plugs you hate you think i love new jersey now he loves it. Should we disclose where i was two weeks ago . At my house in the great state. Its nice out there, short hills. Lovely. Where was this one . Thats a good question. Just one of those states, called new jersey. Do they have individual towns . Im not sure why would you want to know any way . You never want to go back. Futures turned negative in the past half hour the bigge efgest dow mover caterpillar after Deutsche Bank cut its rating on the stake. Thats responsible for part of the reversal in the dow. We do have some other stocks to watch today shares of sonic are also under pressure after the fast food chain reported a revenue miss for the latest quarter samestore sales coming in weaker than expected the company is trimming its guidance for the current quarter. Toshiba expects to report a bigger than expected loss for the past year and will delay reporting those results as it undergoes an audit the Company Revised its outlook for the year saying it expects higher sales and lower net income. That stock off by 4. 4 and synnex beating on the top and bottom line. The company says operating income jumped more than 50 in the latest quarter on higher revenues. Right now the stock is flat. There was a crypto currency flash crash on thursday afternoon. It is up about 4,000 year to date, etherum, but crashed to 10 cents from 19 on one second the flash crash is blamed on a multimillion dollar sell order it triggered about 800 stoploss orders those automatic executions deepened the flash crash the currency quickly rebounded bitcoin has also been hitting records. It so joining us for more on all of this stuff, william mugiar, am i pronouncing that right yes he is the author of the blockchain. First, for those of us who dont know, the difference between bit coyne and ethereum explain that both of them are block chains one could think of ethereum as a new block chain. Ethereum has been optimized for software developers, bitcoin was more developed towards big a crypto currency. Ethereum is loved by the programmers and developers out there. So when you look at the price go from 319 to 10 cents t really raises questions about whether these things are actually real currencies whether they can be stable what do you think about that theres currency speculation. You cannot deny that this is a new field. Over time the speculation will subside an things wid things wi stable what happened yesterday, i wouldnt say a crash, its more of a flash or blip, a technical error on the exchange that was powering these transactions. When you look at ethereum it has four things going for it that are strong ultimately its about building a whole ecosystem. And ethereum has a strong ecosystem of developers. About 35,000 developers worldwide. Number two more than 500 startups developing new ideas, new business ed models and new companies built on ethereum specifically and you have a lot of large enterprises, fortune 500 Companies Like jpmorgan, bny melon, microsoft, bp, all using ethereum in different projects and finally its become a source of crypto capital itself it can help others create new currencies and this is capital basically that is almost replacing Venture Capital. These are the four things that are strong for ethereum. If you could own ethereum or bitcoin at this point, what do you do i would do both right now both. Yes, because bitcoin is not going away what happened in the last year is that the gap narrowed between ethereum and bitcoin whats the chance that a whats the chance a third or fourth or fifth cryptor currency emerges and effectively makes bitcoin or ethereum obsolete thats the larger question here, right . I dont think i dont think its going to happen this is a new field so were going to see several new players that will become the next google, the next amazon, the next facebook, the next linkedin look at the web revolution, it has given us 5 to 10 large companies. Not one replaced the other necessarily. So the field is new. Right now the top two joints are bitcoin and ethereum a year ago bitcoin was 90 of the whole crypto market. Thats not a good thing to have one leader today ethereum is about 30 of that market. But william, maybe its just im struggling to wrap my head around it because im so steeped in using u. S. Currency or going to europe and using the euro before the euro using every Different National currency. When you think about what the world looks like five, ten years from now in an electronic way or even in a brickandmortar way in terms of how people are paying, you think youll walk into a store or go on to amazon or how ever well be buying Different Things and well use all sorts of different currencies yes this will be one of the cases. Crypto currency will not replace what we currently have its going to be a new way its going to be a new alternative way of paying and buying and selling not just at the retail stores, what is happening now, is that there are Software Applications that will have cryptorcrypto cu in your smart phone. Your smart phone will not just be a wallet holding currency when you use the next generation of facebook and others, they will contain some crypto currency value that will be tradable so there will be more fluidity and lick kquidity currencies the currently have what will it take to turn these currencies into stable currencies that people feel comfortable accepting on a daytoday basis rather than just on investment yes, theres technology being worked on specifically called stable coins, which will help to stabilize that over time its going to be stabilized right now theres lots of speculation that its driving these markets high up because in the grand scheme of things the whole market for crypto currencies is only about 112 billion as of today. It was close to 12 built onlail year thats still a small number. I wouldnt be surprised if it moves towards the half trillion dollar mark by the end of this year then it will go from there real quick, news can use for the audience if you wanted to actually get in on this and be able to pick off the currency at 10 cents yesterday afternoon, where and how do you physically do it . Just realistically cant do it on etrades. How do you do it you have to become a user of these new exchanges of the likes of coinbase, gdax, cracken, bit tracks, these are all new exchanges which are the likes of the nasdaq and the brokers that we have our stocks in today. So theres a whole new world right now that is trading crypto currency its different from the current world we know today. All appreciate your time. Come in studio next time fascinating field. Thank you trumps tweeteding. Mmhmm. I helped pass and sign 38 legislative bills, mostly with no democratic support, gotten rid of massive amounts of regulations. Then nice. Sometimes you see sad. This is a nice written emotocon. You go to new jersey, you start itching. Its beautiful there. Where is that for me . Not just davos sometimes square . Sometim times square times square. Im going there today im driving down long island going out to the hamptons . Down. Seat of federal youre going to washington . Right. Of course. I know why i will im teasing i will show a couple pictures for why i have to go down there. Ill be down there for a couple of days, in fact wow all weekend most of the weekend to pick someone up down there. Its very its a very good cause for that i will its like me its worst than jersey, me going down to the beltway. The thing is on the weekends in d. C. , its nice everybody has left everybody leaves town right aurl the people y all the people you want to leave. When we come back, American Airlines Ceo Doug Parker is not happy about Qatar Airways planning to take a 10 stake in his country. Reaction at 7 30 a. M. Eastern time well, time flies today marks the oneyear anniversary of the brexit vote that sparked a reorganization of european been a year been a year shook up british leadership wilfred frost still depressed. He took a closer look at how it happened and whats next for the uk reporter a year ago today the most historic vote and surprising result in europe for decades. Uk voters backed an exit from the European Union the british pound collapsed falling more than 10 as the results emerged. Instantly trillions of dollars wiped off Global Stock Markets the result led to Prime Minister David Camerons departure. He was replaced by theresa may who felt that brexit means Brexit Brexit means Brexit Brexit means brexit reporter but with just a small majority it wasnt until march that theresa may finally invoked article 50 of the lisbon treaty thereby triggering the twoyear exit process may then took an enormous gamble calling an election to try to increase her majority, with it strengthen her authority for brexit talks but the opposite happened after a disastrous campaign. A very, very poor result for the conservatives. They have missed the majority. The pound has fallen reporter despite the blow, brexit is still expected to happen here is chancellor Philip Hammond speaking earlier this week were leaving the eu, because were leaving the eu well leave the single market. Reporter formal negotiations began on monday and the uk has a Monumental Task to reach a beneficial deal in the 20 months they have left the british pound remains 15 below its prebrexit oneyear average the ftse recovered largely the ftse 18 higher today the key oneyear takeaway is that brexit has not sparked a wider collapse of the eu as highlighted by recent Election Results in holland and france. Guys youre doing well, wilf theres seven stages it starts with denial. I think you went through anger finally ends in sort of an acceptance that it happened. But i think youre there finally. As our resident globalist, elitist, everything. It was a shocker when it happened youre handling it i guess it helps when the stock market is up joe, i have remained throughout in the state of glorious unaffected impartiality okay. All right. Thats your story. That is David Milliband was here earlier this week saying wilfred was the right wing off camera he was saying that. Wilf gets pigeonholed is that true . Neither perspective is it true he thinks youre a raving rightwinger . I think he was being facetious. Tongue and cheek. Exactly he was a labour man with some you look the part ill tell you that you look yeah you could be conservative. You could be in the conservative party. You would be a hell of a Prime Minister i dont know if thats the cards. Certainly not i like to sit on the sideline. Thats for now. Thats for now youre 30. And forever all right wilfred frost, thank you cheers, guys. Coming up, when we return, retail analysts have long counted cars in parking lots to get a read on the consumer but orbital insight uses satellite data to gather that. The Company Shares its numbers on t gceherory business with us after the break. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Will you be ready when the moment turns romantic . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis. And get medical help right away. Become a villain again. Mmm. [ minion babble ] [ minions cheering ] [ minions sighing ] [ minions cheering ] [ minions booing ] okay minions, were going back to villainy. [ minions shouting ] so bad so good that im so bad. [ honking ] so, youre villains now . [ nervous laughter ] i mean, hello sweetie. Despicable me 3. Rated pg. Welcome back, everybody. Amazons bid to buy whole foods has kicked off a discussion about the evolution of the grocery business right now that business is still all about driving to the store, parking, and Walking Around with a shopping cart. But one company is seeing that change from a very high vantage point. Not from 20,000 feet, but more like 2 million joining us right now is kevin obrien. He is chief business officers at orbital insight. And, kevin, i think about how we used to talk to analysts who would do channel checks and stand in stores and see how many people were there and gauge broader traffic trends by that why dont you describe what it is you do . Sure. First thanks for having us what orbital insights does is we have a basic mission of looking at whats happening on the earth and to the earth so specifically with retail we work with a series of satellite partners are, digital groeb and some others and plant labs and aegis out of rome and ask them to basically deliver us all of their historic satellite content, and dont give it to us, but put it out onto amazons cloud and we begin to run a series of a. I. Prophesies in running things like deep learning and Computer Vision and data science its a lot of the a. I. Stuff that youre hearing but its very economically focused. And we look at about 250,000 parking lots across north america and we do things simple as counting cars but when you do that over time you can get a very nice, long, historic perspective of kind of the Economic Health of people visiting certain locations and when you put that in with other fundamental analysis you can get a very clear view of how certain retailers and brands are actually performing visavis their competitors. And then we deliver that through apis and web services to corporate customers. We have a sense just from watching the news and what retailers have been telling us for the last year or so, that things have kind of fallen off a cliff. That people arent shopping as often, theyre not going out to these stores is that something that kind of matches up with the data youve seen yes broadly youre seeing that in certain sectors. Specifically in retail and consumer if you look at whole foods, we detect a decline around mid 15, 2015 there was a decline at that time period and really accelerated since then and its really a sector divergence here. Its not necessarily just whole foods. Kroger, super value and some others so you are seeing a decline in those areas. And yeah, you have more and more folks that are looking for different types of options to purchase their services. Its kind of a its really a natural extension of new ways to shop for things, and new ways to purchase them. Whether its retail clothing or eventually Food Products like amazons going after any of those gresry chains that seem like they are resistant to this sort of new trend . Anybody whos hanging in there with their profit . Costco and walmart. Weve seen kind of continual steady line increase in traffic to those particular brands when you think about the size, and the breadth of offerings that they have, theyre very strong in their category targets declined a bit. We thought they would be up with the big three but theyve also declined with the rest of the sector albeit at a slower rate. Its really the walmarts and the costcos that manage to fare quite well so far. Kevin, really interesting stuff. We appreciate your time and hope to talk to you again soon. All right. Its quite a delay coming up Airline Stocks are rising after, going to go back and forth, ive been saying qatar. After Qatar Airways announced plans to take a 10 stake in American Airlines. Ppabt rk it doug paersn hay ouit the shareholder, 10 shareholder. Why not . Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. 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Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Markets now, stocks pointing to a mixed open an wall street front and center, live in washington with more reaction to the gop plan to repeal and replace obamacare. And doug parker speaks out on qatar airs proposal to take a 10 stake in his company we have his comments and a Industry Outlook straight ahead. The second hour of squawk box begins right now live from the beating heart of business, new york city, this is squawk box. Good morning, welcome back to squawk box right here on cnbc live at the Nasdaq Marketsite in times square, im Andrew Ross Sorkin along with becky quick and joe kernen futures at this hour, well show you whats going on. We are red in the dow. Dow looks like it would open off about 32 points. S p 500 unch or slightly up. A little bit of green there. Nasdaq also off this morning, close to 2 points. Expected to be the busiest volume day of the year on wall street today is the day of the annual rebalancing of the russell indexes. The various stocks being moved in and out about 8. 5 trillion, thats with a t, are linked to those indexes. Oil prices faring steady this morning but that wont be enough to keep crude prices from falling for a fifth consecutive week Energy Stocks are on pace for their worst week in a year wti trading at 42. 82. All 34 banks now facing the doddfrank stress test they faurd well in the latest results. They were all determined to have sufficient capital, which is good news, to keep operating under what the fed calls adverse financial conditions a second round of results comes up next week it will determine if the banks will be allowed to return as much capital to shareholders as they would like. A lot of analyst investors looking to see what the fed has to say about that fact weve got a couple of stocks that were keeping an eye on this morning shares of sonic, under pressure after the fast food chain reported a revenue miss for its latest quarter they have those two guys, right . You know those guys with the commercial, yeah who fight back and forth and talk about this new drink. You remember it, joe, thats effective advertising. Its annoying theyre so annoying, both of them and did they send us stuff or was that shake shack sent us burgers, right we tried those has doneic in the past they have in the past. Its been awhile they said sonic has not they did at one point when we were in new jersey still as a result, sales were weaker than expected i mean, we probably couldnt have changed that outcome. But you never know what the counter factual is if we had tried a couple of sonics on the air. Company is trimming its trimming its guidance for the current quarter. And Googles Waymo hiring an extesla engineer to lead its selfdriving car unit. The new hire will oversee the development of cameras, radar and Computer Vision. At googles Autonomous Car company. I mean ended up less than 45. Cheaper. Cheeseburgers less than 45 but its still good if you kept it on your desk over a year or two like ive kept my bitcoin would go up in value or down if you kept it on your desk for a year my point is, you know, you cant look at it like an asset all right so we could if they were to if they were just to send over some burgers it would be okay. I think that would be acceptable i dont know unbecoming. Unbecoming. Okay. Never mind. Dont send it over here. Im not all right i dont really like to politics President Trump has officially nominated new york jets owner Woody Johnson to be his ambassador to the uk johnson is a longtime republican donor and has owned the Football Team since 2000. Hes also chairman and ceo of private Asset Management firm johnson group. The president also nominated former l. A. Dodgers coowner Jamie Mccourt to be ambassador to belgium we talked in the last hour about how some zoners, and yes, helps. That helps. Maybe refurbish some of these embassies and embassy homes. Yeah. If i get offered it would have to be a pretty where would you want . A pretty crappy country for me why is that because im not going to be able to throw the type of Party Necessary to youre getting you might get apple two buck chuck. Yeah two buck chuck 20, 20, wine, serving, Senate Republicans reviewing their Health Care Bill the major difference between the house and senate versions, medicaid cuts. Kayla tausche joins us now with more if you plan im coming to d. C. Today i dont have time to hang out, though, kayla, in case i dont want to disappoint you, but i am coming down, im sorry. Well, im also sorry to let you know that im actually going to new york today. Maybe that was ships in the night. Your nonexistent assistant called me and let me know so i land that. Exactly joe when youre talking about medicaid cuts that is one of the biggest changes and its also among one of the biggest sources of frustration in the new discussion draft that was released yesterday both bills put medicaid on the budget tied to inflation instead of being open ended but the senate bill ends the expansion by spending by 2021. And by 2024 shifts about 40 of the cost to the states thats one of the reasons that groups like the hospital and Health System association of pennsylvania oppose it in a statement that group saying quote we remain concerned about the senate plan to phase out enhanced medicaid funding which has helped more than 770,000 pennsylvanians gain coverage theres a similar story in ohio. One reason why senator rob portman, who goes on squawk box quite often, has been a staunch advocate of a softer approach despite the views of more conservative members. The cbo score will be a line in the sand, and should estimate cuts in the program, and a change in coverage loss to help some of these moderate senators figure out exactly where they stand. The bill is a modification of the house plan, which in one sense makes scoring the bill easier but it doesnt make popularity harder to come by. A new nbc news wall street journal poll that was out yesterday shows just a third of republicans see the house plan as a good idea and by comparison, joe, a Kaiser Family Foundation Poll out said that overall, regardless of party affiliation, the Affordable Care act at this moment in time is actually more popular than the House Health Care plan. Right not surprising people love entitlements especially if you get them right . Anyway, thank you, kayla and you know, im disappointed but who knew well see each other again soon, im sure of it didnt give you advance warning that, you know, to roll out the well leave the red carpet down for when i do come thanks for more on whats going on in washington, d. C. , is it more important how its going to play out in the market, this morning were joined by karen cavanaugh, management Senior Market strategist and also david joy is here, Senior Market strategist at amer prize. Finance. What do you think this mean and do you think it is going to go through . Who knows if its going to go through. It may not but, the only thing is that it creates more uncertainty for the markets. But at the end of the day and do we think uncertainty is a good thing or a bad thing not really. But i think the markets kind of used to uncertainty at this point. And markets moving forward based on the underlying fundamentals market is driven by fundamentals not by whats going on in washington the health care is not the big kahuna the markets looking for tax cuts theyre looking for less regulations. And you dont think theyre connected . It will come. If we can get over this hump were definitely in a better position to see tax cuts and thats really going to make the market take ff youre still buying by the fiscal at this point still buying by the what meaning of course i am. Right now we havent had any kind of progrowth reform, and were still doing were still moving ahead markets been going two steps forward, one step back ill take that any day of the week david is washington at this point just option value . I think to some extent. Is there a downside piece to this or no not in terms of the legislative calendar assuming that the Health Care Bill does get resolved whether it passes or not i dont think theres actually you just said as soon as it gets resolved. Resolved in what way that they go to a vote at the end of next week, and theyre allowed to move on to tax reform i degree thats the more important issue for the markets. Not whether health care passes or not but its obviously important to know what health care is going to cost in terms of what you can get done on the tax reform side. In and of itself intrinsically health care itself is not as important to the market. I completely appreciate that point. At some level you have to try to handicap whats going to happen on the health care front to then be able to appreciate what is even possible on the tax front, which then you can doyour math on to figure out where you think the market may or may not want to be. Exactly and personally my suspicion is this gets done i think it gets done they only need to maybe move it a little bit to, you know, get those extra two votes from the four senators that have said four holdouts, right . How far do you think you have to pull it that way and then does it become uncomfortable for everybody else yes you begin to lose the moderates if you go too far. So its a very tricky thing. But i like the fact that the leadership has said were going to vote on this so it puts the burden to get something done pretty quickly where do you have like the s p by the end of the year right now at 2360 but what frankly over the next week or so were going to be looking at maybe changing that with an inclination that will raise raising it. Maybe another 5 or so, somewhere between 2500 and 2550 is what were thinking is that fully balanced in terms of how you think this is all going to play out or do you say to yourself, the bank stocks are going to be the winner how do you think about this . We think about it in terms of washington, at least, as sort of a secondary issue. The fundamentals we think are pretty good. Thats whats driving to the extent that you will raise guidance yes it will not be dependent on what we think happens in washington and the overweights we have, we start with technology. We think that thats the thats still the driving . Health care, modest overweight, and whats the part of the business at this point you just dont want to be in at all is retail too dangerous to play . Or is there an argument to be made that maybe its in how do you think about that . Well, thats sort of a company by company kind of issue it seems to me the consumer is in very good shape. I think youre going to see good spending its a question of where that spending gets done i would degree with that. Everybody was disappointed with retail sales oh, down 0. 3 . But if you take a look at year over year theyre actually up almost 4 . And double digit in some of the home oriented kind of stores or the nonstore retailers. So, there is definitely good news for the consumer. The consumers continuing to spend. A lot of people take a look at that monthtomonth data and its noise but verall, theres definitely some is there a market that you wouldnt touch because right now as i say its just buy everything. It feels like that no, but i think its good to be diversified so i definitely think that some of the things that have not done as well would be good places to be in. In financials. And even some of the retailers that you that have been beaten down maybe too much, theres always some opportunity, pendulum always swings too far and how do you think about looking outside of the United States i just came back from europe where i have to say the optimism theres more optimism there than there is here weve lowered our u. S. Weighting to neutral relative to our global bench mark and weve increased europe eurozone right to an overweight. Weve also increased japan to an overweight absolutely. If you take a look at manufacturing, especially in the eurozone, the high cmi since 2006 were seeing a definite turnaround, so theres definitely opportunities, so investors should be all over the place. But, i mean, in the United States not just with large caps, not with bank, all just with banks but look at the mid caps, the small caps, which havent been doing as well, theres definitely opportunities there as well. Okay. I tried to get you guys to disagree you like that. But didnt really work out this morning. Thank you, guys, appreciate it when we return, indian Prime Minister Narendra Mody will be traveling to washington today to meet with President Donald Trump for the very first time. And then American Airlines Ceo Doug Parker speaking out on Qatar Airlines proposal to buy a 10 stake in his company what this move could mean for the industry and whether or not it will actually go through. And Later Department of health and Human Services secretary tom price will be joining us to talk about health care, this bill from the senate and where things stand. Stay right here. You are watching squawk box on cnbc the power of the Nasdaq Market. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Co large boat honking ation. Read it carefully. Im living that yacht life 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 watch this indian Prime Minister Narendra Modi will be traveling to washington this weekend to pleat with President Trump sema mody joins us right now with more. Most experts are expecting a bromance to emerge modi and trump are considered strong, nationalist, proBusiness Leaders to use social media to communicate to the masses during Trumps Campaign he praised modi and said he loved india at a rally in new jersey for Indian Americans on monday the two leaders are expected to discuss defense and terrorism at the white house, as well as new ways the two countries can share intelligence to weaken isis and al qaeda. India continues to be a big buyer of u. S. Arms, and could look to ink more deals during modis visit now north korea could also come up, india is north koreas Third Largest trading partner. Theyve been limiting trade. Trump may try to get modi to halt all trade with pyongyang to halt the companys nuclear program. Leaders are not eye to eye on all topics the Paris Climate Summit modi supports and h1b visas has been criticized by the Trump Administration for stealing u. S. Jobs modi will make the case that indian firms are investing in the u. S. Economy and about 75 of the top 500 u. S. Companies use indian i. T. Services ahead of modis meeting with President Trump, the indian leader will engage with american executives on sunday morning attendees will include cook, microsofts nadella,googles pitch chai, and im hearing india is not only an important market for corporations here in the u. S. But for wall street, as well there could be some kind of head butting i know its supposed to be a bromance and all things getting along but the idea that trump wants jobs here, not outsourced. True. And that could be a point of contention and thats why i think immigration and h1bs will be a point of contention as you point out between the two leaders. Again, modi will try to make the case that the foreign talent that is coming in from indias helping u. S. Technology firms innovate and grow, if you look at apple, accenture, google, theyre all beneficiaries of this h1b visa these guys make a lot of trips in now its interesting to see Business Leaders there on almost a weekly basis. Its a great point. The last time Prime Minister modi was here in may of 2016 and at that time he was making the case of why india is just such a appealing destination for big american firms seema, thank you. Thank you coming up, a number of high profile mega deals in the news lately we will talk whole foods, amazon, at t, and time warner, and much, much more. Ahead of mergers and acquisitions at jones day in just a bit coming up, though, why i am headed to d. C. Today for the weekend. Its all for a good cause. I love this. Hi, im alan greenspan. How are you . I love that guy hes like we have to update that so next time you say hi, im janet yellen that guy was so great hes like, no youre not he wasnt a plant no, he wasnt no, youre not youre on idiot. Basically hi, im alan greenspan. How are you . Dirty look. Briefcase i had the the overcoat. Check out the futures this morning. Do people remember the briefcase indicator . I dont know. Im worried about the next generation squawk box will be right back time now for todays aflac trivia question are you ok . What happened . Dad kinda walked into my swing. Huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac now the answer to todays aflac trivia question yeah that will be the time capsule. I mean, who in their right mind would even mine is not on the set but its here. Oh, my goshs i still have it anyway. The guys are trying to kick us off theres only four people left in the company. Thats what i heard im headed down you already starting to scratch headed down to washington this weekend why . Because all week its been the young womens Political Leadership program which was put on by running start. You should check it out. Runningstartonline. Org or runningstart. This week the 10,000th young woman has gone down there for this kind of a conference to talk about leadership and politics. And becoming leaders and Nonpartisan Movement of young women leaders, gaining the skills to feel confident and ready to lead. By participating in these really awesome i mean they met here, my daughter blake is down here look at who shes rubbing elbows with down there. She was with will hurd, congressman will hurd that was a couple of days ago Kellyanne Conway and she didnt she said hi, im blake kernen but didnt mention theres several of her good friends they make friends really quickly and its just, the whole thing has been such a phenomenal experience were going to go down and give our support i like the i look like a politician head line hashtag i look like a politician the face of our representation and they do. And its been around for awhile but you can become a member or contribute and i feel bad plugging theres will hurd and theres all the wheres waldo in the back row you can see blake up there sort of in there. Oh, i see her yeah its this is like, i feel like you sort of. You would be all over this i am. Which train you taking im driving and im riding shotgun . Im driving maybe not. Maybe scott. Can i sit in the back yeah. And i got two back seats so its not a trunk situation. Not the third row did you think i its come to that id put you in the trunk. Really . I thought we remember when we talked about a motor bike with a side car people suggested that yeah. Will you go youd be cute in a side car will you contribute will you contribute you know you dont drive a stick, do you . Depends even on a motorcycle. That ive never done. I can do that for you well be good with that. Were going to talk more about this crazy situation with American Airlines and qatar. American airlines Ceo Doug Parker making those comments about the offer from Qatar Airlines to take a 10 stake in the company. His comments and what it could mean for others in the Airline Sector were going to talk about it when squawk around after this break. Quick look at u. S. Equity futures, dow is up about 32 points nasdaq after as well about three points but the s p 500 is mainlyp. When you booked this trip, you didnt know we had over 26,000 local activities listed on our app. Or that you could book them right from your phone. A few weeks ago, you still didnt know if you were gonna go. Now the only thing you dont know, is why it took you so long to come here. Expedia. Everything in one place, so you can travel the world better. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Good morning, everybody, welcome back to squawk box here on cnbc we are live from the Nasdaq Marketsite in times square among the stories that are front and center this morning, just one economic report on todays calendar the governments out with its new home sales for may that hits at 10 00 a. M. Eastern time economists are looking for 3. 7 increase and a partial reverse of aprils 11. 4 drop. Sears is planning to shut down 20 more u. S. Stores according to published reports. That would be in addition to more than 200 closures that the retailer has already announced and shares of caterpillar are down in the premarket trading this morning Deutsche Bank cutting its rating on the heavy equipment maker to hold from buy. The banks forecast for caterpillars earnings are already well above the streets consensus. But it now feels that optimism about a rebound at the companys key markets is already reflected in the stocks price as a result that stock was down by 1. 2 when we started this morning. We were in positive territory. Albeit very modest advances. But this morning you can see that the dow has been pulled down in part by whats happened here American Airlines Ceo Doug Parker making comments about the qatar air offer. Im going back and forth, phil phil spoke to him and joins us now with more. And you you had the early call on exactly you talked exactly about what to expect from doug parker, and he delivered, phil. Yeah. He never disappoints if youre looking for some candid commentary youre going to get it from doug parker i had a chance to talk to him yesterday afternoon after a day in which they sent many messages from American Airlines saying, were not interested in qatar investing in us. And so when i had a chance to talk with doug parker, i asked him point blank what was your reaction the first time that he was approached by qatar ceo was two weeks ago in cancun at a industry event he said i found it confusing i was a little bewildered why an airline we are aggressively fighting would want to take a stake, makes no sense. When it comes to this stake that qatar is proposing, a couple of things to keep in mind while it intends to buy up to 10 of the outstanding shares from american, americans bylaws basically say that its board of directors need to approve any purchases of stock that go beyond 4. 75 so theoretically, if the board shoots it down, they cant buy more than 4. 75 of american stock. On the issue of whether or not this is a move by qatar to get a little closer with american so that parker might, pull back a little bit in his criticism of the subsidies that Gulf Airlines are receiving from their countries, he says, if that is their motivation, it is misguided and ill conceived. All this is doing is strengthening our resolve to defend our airline, which we will continue doing vigorously take a look at shares of american guys, the way this will play out is that once they send a letter of intent to the american board of directors, then the board of directors will have, i believe a 30day review period where they can say, okay, this is our reasons why, according to the doj, that we are not going to approve or will approve, if they decide to go that route, which seems unlikely, not approve a purchase of shares beyond 4. 75 . And by the way, hunter pay with Wolf Research one of the lead Industry Analysts on wall street, he says if this gets shot down by the american board it would make no sense for qatar to even by 4. 75 and theyre likely to walk away from this idea entirely. You know, phil, we love parker for speaking his mind obviously thats something kind of a rarity when it comes to ceos yep but i wonder how shareholders feel because when that news first came out the stock spiked up to 50. And since then, since parker came out with his comments has come back down a little bit. Becky i usually believe that most veefrs are very savvy and smart. I believe there was a lot of misunderstanding initially and im talking about in the very first couple of minutes after this came out. Right because i saw people putting out on the internet oh, are these two going to get together . Will american now have a greater presence in the middle east . Thats not what this is about entirely and thats why you saw the market come back and say wait a second this doesnt really make sense. This is just somebody trying to buy a stake in the company. Exactly and as far as parkers concerned nobodys buying his silence. Correct i dont understand what whether qatar what they were trying to do, or whether they did they miscalculate on what doug parkers response was going to be . Because as you said, if they arent allowed to go to 4. 75, and they just say okay lets chuck the whole thing, then what was it all about, phil what was it all about . Theyre in talks right now, joe. Think about it from qatars perspective, qatar is in a box right now. It is being isolated, the country is, from some of the other middle Eastern Countries we know about that story weve been talking about that for some time. And the airline is paying the price. Theyre it cannot fly directly over United Arab Emirates and some of the other countries that are isolating qatar. And so youre looking at an airline that is worried about at the potential that perhaps the doj, or the transportation environment, when theyre looking at the open skies agreement and whether that gets enfirsted, is there some kind of a carveout where they get separated from etihad and emirates what do you do if youre qatar what do you do if youre the ceo . Do you try to get a little closer to one of the american u. S. Airlines and perhaps lessen the possibility of some type of an open skies enforcement . On the routes that theyre trying to add to the u. S. . I mean, theyre really in a tough spot right now i guess in a Perfect World of capitalism, it would be people are free to do whatever they want in terms of buying and selling securities but i guess that doesnt really work that way. This has got this is political overtones coming out the out the nose on this one. Right and remember, joe, one other thick to point out here, no Foreign Company can buy more than 24. 9 of a u. S. Airline so, there was never any chance here that this was a play by qatar to take over american. No, no. That cant happen but it just, they miscalculate, its not going to happen they may end up going back with there i dont know, would that be a defeat if they just chucked, you know, if they say just lets say i dont think its a huge defeat because i have to be honest with you joe, i found no one, no one at all in the entire industry, or within American Airlines, or with their competitors, who think that this makes sense. Theres nobody who will have then it looks silly joining us now with more seth kaplan managing partner at airlines weekly. Can you shed some light on this, seth because were confused you know, i think one of the comments that doug parker made, when he said look, if theyre trying to influence us, you know, theyve got another think coming i mean they sort of achieved that with investments like this in other places, most prominently International Airlines group thats the Parent Company of British Airways. You know, years back, willie walsh who is now the head of the Parent Company, while he was at British Airways complained rather loudly about the arabian golf carriers, air france, klm, his main competitors and iag is more sanguine about the arabian golf competitions, there are strategic reasons aside from the ownership stake about why they may not care as much, and sort of more atlantic focused than their competitors. The reality is qatar owns 20 of the airline. I guess, you know, theres just sort of taking a step back they own a piece of iag which is a one Globe Alliance partner like american they own a piece of the Largest Airline in latin america, so you could say well okay this is just what theyve gone around doing but i think the question of influence at least in an aero political sense is not perhaps also as phil mentioned in the geopolitical sense with everything now going on it is certainly at least a fair question if not probably a primary motivation hmm almost seems like maybe they just threw it out there just to see the response, too. You said i didnt know that anyway so theyve got some stakes elsewhere, so its like business as usual yeah, and look, you know, again kind of devils advocate airlines do go around buying strategic stakes you know, american itself, spent a couple hundred Million Dollars a few months ago buying a piece of china southern. Thats not just a Financial Investment american there is buying some influence in china but when they seth when they did that they did that with china southerns permission oh, bsolutely and there are a million differences. Im just saying, were saying what could they want you know, theyre not the First Airline ever to try to perhaps look for influence by buying a stake in another airline but yeah, no, here its, you know, with Everything Else going on, although it seems like it was likely conceived before the blockade, you know, obviously now theres a whole lot more likely going on, and you know, it one thing thats clear is that its more than a Financial Investment american obviously is very viable air rhine qatar, though, one of the leeft Profitable Airlines in the world so from that standpoint, too you know, if this is just about airlines, with good Balance Sheets looking for ways to Place Capital were not talking about an airline thats in that situation here were talking about an airline that alongside its gulf competitors is struggling mightily right now and so that sort of goes back to the accusation by doug parker, and his competitors sultan united that, you know, these are not joe you mentioned in a Perfect World of capitalism, you know, people should be able to go buy stakes in whatever. Well, american, which they have said basically look, this isnt capitalism were happy to compete against airlines we just cant compete against countries. Right and so, you know. Right so you have questions for seth no, seth and i weve talked in the past about this and about the persian gulf carriers. Look he brings up a great point here in terms of this being one of the least Profitable Airlines in the world and that is at the heart of the complaint not only from american, but united and delta they keep saying why are these guys adding routes to the u. S. , having them subsidized thats not fair competition. Right if this was a truly an open market, and you were not making not turning a profit, would you be adding routes at the rate that theyre adding routes probably not you would probably say, hey, lets get our books in order before we do any kind of an expansion. And thats at one of the primary complaints that doug parker and the other executives have. Right seth, before you go, is there any chance that as a function of whats happening here in this conversation that even were having right now, that qatar will change its stance and approach to doing business so that it can placate some of those concerns so that it could actually get an investment in american and you know once is there a window here in terms of negotiating all of this yeah. I you know yeah, theyve done some things that i think are kind of unnecessarily provocative. And look, you know, the other side of this, those airlines, and the consumer advocates say hey, you know what, american adult to and united are just whining about this high quality, low cost service they dont want to compete against it. But you know, they have even as compared to emirates and etihad, their competitors, qatar has sort of shown this increased bravado lately they said were not going to pare our expansion plans were going to order more airplanes eventually that sort of thing and so if anything that just sort of i dont want to say confirms, but you know, it just kind of plays in to the accusations that here is an airline that doesnt respond to market forces, whereas their competitors at least, although you know, maybe not making the kinds of capacity cuts you would see from a u. S. Airline, facing what theyre facing, at least they have been dialling down the expansion. Qatar hasnt been doing that and so yeah, im not sure that even strategically this necessarily, in the longterm, gets them to where they want to be in terms of looking more, you know, less like a political project, and more like an airline. Andrew, thats not akbar al bakers style the ceo and seth knows this you talk with him, hes a firecracker and hes not afraid to be provocative and to say, well, may not be what you think, but this is the way were operating. Fair enough guys, thank you. When we come back, a look at the m a sland scape and at the top of the hour health and Human Services secretary tom price joins us to talk about the senate Health Care Bill. In the meantime take a look at the futures. Theyve been a little bit weaker as weve gone through the coarse of the morning dow futures down by about 32 points below fair value. Nasdaq down by 4 s p still hanging in there up by less than one point. This morning vertical deals like at t and time warner and now amazon whole foods have not historically been blocked. But theyre definitely generating a lot of Political Tension in todays environment heres what at t Ceo Randall Stephenson told squawk box just yesterday right now, were in negotiations, and the negotiations are theres nothing surprising but, joe, its early and so early in the process, but were optimistic that if its viewed under the rules of anticompetitive behavior, this thing ought to pass. It is vertical its a vertical merger the competitive environment at telecom and will media will look exactly the same the day after this transaction closes as it did the day. We want to bring in the head of m a at jonesing good morning to you. Good morning. First does this deal about through . Eventually i think so and amazon, whole foods you know, what is amazonwhole foods is it a tech deal . A retail deal . A grocery deal i dont know theres no question it gets some attention. In washington. Whenever you do something that involves directtoconsumer activity, necessarily politics get involved but you know, the rule of law is the rule of law. And vertical deals, you know, you can make arguments about them, but its a decades old argument even in the waning days of the Obama Administration not too much pushback. Theres an interesting argument being made about amazon these days which is to say as it gets into all of these other deals that perhaps were supposed to think about their antitrust policy or policy broadly by transactions differently because they become a platform what they call a Platform Company if you will. Youve seen the argument that is person wrote in the yale journal just recently about all this the ability to subsidize different parts of the business using the profits of other parts of the business. The Real Advantage is they dont have to make a profit. But they do now they do make a profit but you know, the grocery business is a tough business right theres just no question about it when you think about when whole foods came on the scene awhile ago, it had the highest margins in the industry, because it was different well, then everybody else adjusts to it. I dont i think, obviously weve got to think forward but lets not get carried away my gamble is both of these transactions get through what does this say about m a writ large, despite these two headlines were talking about right now, m a activity is now at 2013 levels what does that say about the economy and confidence or whats going on in washington or what well, theres you know, as usual, its a complex equation many of the factors that drove the incredible level of activity in the last two years, low gdp growth, incredibly accommodating Capital Markets, debt markets are just absolutely fabulous right now. Better than ever all that sort of thing and companies having more cash than they know what to do with it so what are they doing theyre buying back stock. Putting up dividend, pressure on all that sort of thing so the underlying characteristics by the way, stock buybacks are also down. Yeah, well, part of that is, you know, look at larry finks annual letter last time. Oh, its a little bit yesterdays news invest in your business. Do those kinds of things but, you know, they theres a huge uncertainty in terms of capex generally im surprised the durable goods numbers have been as good as they are because of tax policy. How much of this is because ceos are waiting to see what happens so they can decide yeah, you can look at whole foods domestic, vertical transaction, all u. S. From practically all u. S. But, if youre a company that is affected, would be affected by the border adjustment tax, what happens . Sounds like the border adjustment tax is dead on arrival thats what everybody is saying or theres a lot of pretty smart people, and im not predicting whats going to happen in washington, balls id rather go to vegas than do that, but a lot of people say, we would have a little one so it could grow bigger the robots are calling the shots at blackrock now anyway, arent they . Theyre not well,theres something to that but i thought you were going to think this whole foods thing was like beets i didnt think youd like this this deal oh, i think its going to be transformative you do . Ten years out transformative. Whole foods is a very Small Business right now, people worried about antitrust today i think theres no meaningful concern. I think longterm this is going to be huge for amazon. And they want to do first of all, jeff bezos doesnt do anything he doesnt think is going to change the world. This is part of sort of his march to but its still the last mile for the grocery business and there are areas where they have whole foods are also put in places where people tend to have amazon from an antitrust perspective still very small slice of the business safeway is bigger than whole foods just in like the whole world. Got a rocket ship going to mars, now hes buying Grocery Stores but as an amazon prime customer tv shows now its delivering give the customer what they want bob, heres within the context that i said, if m a activity is at 2013 levels is this amazon whole foods deal a unicorn or a precursor to a wave of more transactions well, there is a tendency for a transformative deal to make everybody else think what am i doing . And i better do something quickly. But the reaction last was it last friday i think it was announced, all the other grocery chains were, you know, tanked, a krogers numbers had been down getting carried away i read a whole bunch of stuff that this means that the blue apron ipo is going to be blown out. Come on. You may be right but its not tomorrow although they did say that i think it was yale, harvard, somebody said one of those business papers that everybodys threeyear plan got thrown out the window everybody has to come up with a new plan and part of those new plans means looking at other less strategic things to do rather than just before you go, take us just unside the Corporate Board room right now. Because i think you spend a lot of time inthose rooms. Are there transactions that people are talking about that theyre holding off on have there been deals that have got in close that have been falling apart . Whats the pipeline look like right this minute . Well, actually for us the pipeline is very good. We sort of bill on an hourly rate basis whether a deal gets announced or not. Theres been a lot of people working a lot of things. Pipeline is great. It doesnt feel any different for us than it did a year ago. But you talk to an investment banker and their knuckles are dragging on the ground because there are not enough headlines that come out. I think you know, m a guys are always optimistic. I recognize that so what do you do i think the second half is going to be good i really do. The fundamental factors are still there. You know, whats the 10year at, 2014, 2015 now youve got to do something with that money bob, we appreciate your time this morning and your perspective. Be like us buying qvc or something. Still dont knock it. You never know whats going to happen i dont think hed im disappointed why i thought it would be like beaks. You would totally despondent about the apple beats deal because you didnt think it was cool enough for apple to be buying this. Beats i thought was harder to justify. And i still think is hard to enough do you think selling kale at selling kale at we love kale. First of all whole foods is a big margin business. Amazon doesnt care. Were going to continue this conversation in a commercial break. When we come back, stocks to e tuwah. Thfures have been a little bit weaker for the dow and nasdaq stopping dance music starting then stopping prone jar shatterst livthe competition. Pe . Olay regenerist hydrates skin better than creams costing over 100, 200, and even 400. Fact check this ad in good housekeeping. Olay. Ageless. Welcome back, everybody, lets take a look at stocks to watch this morning blackberry earned two cents a share compared to a forecast of a breakeven performance revenue did fall below street estimates. But blackberry left the overall profit forecast unchanged. Revenue was below estimates as compstore sales fell by 1. 1 percent but the Athletic Apparel and footwear retailer does say comp sales should increase in the low Single Digits for the fuel year. And nettronic is raising its payout to 46 cents a share andrew coming up, health and Human Services secretary tom price is going to join us a lot to talk about with him and then later, who are the people in your neighborhood a former cnbc disruptor thats shaking up social media. The cofounder and ceo of next door talking about Tech Innovation and the companys expaion nsin germany squawk returns in just a moment heres to breaking more glass ceilings. In golf and everywhere else. The kpmg womens pga championship. Health care showdown. The senate takes the wraps off its obamacare replacement bill our special guest this hour health and Human Services secretary tom price. Tech on a tear the nasdaq coming off its third positive session in the last four were going to talk to an investor about the next big opportunity in the space, straight ahead plus, an app that would make Mister Rogers proud. Its a Beautiful Day in this neighborhood a Beautiful Day for a neighbor would you be mine could you be mine nextdoor wants to be the eyes and ears of your community the ceo says the startup could be the next facebook hell be here to explain as the final hour of squawk box begins right now live from the most powerful city in the world, new york, this is squawk box. Good morning, welcome back to squawk box here on cnbc live from the Nasdaq Marketsite in times square. Im joe kernen along with becky quick and Andrew Ross Sorkin the futures have been down caterpillar is weak after a downgrade down 27 now on the dow. S p is up a little over a point. And the nasdaq is down, 3, almost 4 quick look at 2 15 on the 10year. Oil prices down below 45 andrews, whole foods margins, what are they . Theyre not good, are they yeah, but on a relative basis 2 . But on a relative basis to other supermarket chains i know 2 look, from from 3. 5 to 3. 2 to 20. 5 now think about what amazon can possibly do king of the small margins i guess. Not just small margins, but about being able to being able to deliver the customer everything they want think about it and by the way, amazon gets the majority of my dollars that i spend at home right now. I do fresh direct. Why because i dont have time to go to the Grocery Store. When youve got two people working outside of the house its an hour, hour and a half of my day plus the kids toys, plus whatever youre order being on amazon all the time. Im ready to go to the Grocery Store from 10 00 a. M. On many times im there two or three times. I dont need no stinken fresh direct i ordered fresh direct this morning before the show even started. Never got it. From my phone in the makeup room im not going into the future just forget it we give up and i dont know if joe knows about it do you know about a Company Called instay card thats whos going to be instacard allows you to get deliveries from whole foods. Oh. They just signed several months ago a fiveyear deal to do that. Very interesting what happens to that deal. It may actually be very good for them also lets get you caught up on this mornings big headlines. All 34 banks facing doddfrank stress tests fared well in the latest results they were determined to have sufficient capital according to the fed, next week and this is the most important part, a second round of results will determine if banks will be allowed to return as much capital to the shareholders, as they would like. And investors will be looking for that info in the middle of next week. Also Googles Waymo. Thats, of course, its Autonomous Car unit, has hired an extesla engineer to head its selfkriefing car business the new hire will lead development of cameras, radar and Computer Vision for the tech giants Autonomous Car effort. And tesla may be considering watching, ready for this we talked about apple music, spotify. Launching its own music streaming music. Recode reporting that the carmaker has spoken to major music labels about acquiring the rights to songs and albums i do not get this one. The service would come bundled in all tesla vehicles. The report also says tesla interested in offering multiple tiers of Service Starting with a pan door lalike web radio service. Talk about a low margin business and beats head phones along with that. I dont understand any of these synergies here why does tesla need a streaming service . This one i will say i dont get. Whole foods i got. I even got beats to some extent. This one is tougher to appreciate all right i dont know stocks to watch. Check out the shares of caterpillar. Just referenced, it was Deutsche Bank Deutsche Bank and analysts there cut the rating on the heavy equipmentmaker to hold from buy. Deutsche banks forecast for cats earnings were already well above the street consensus but now the analyst says optimism about a rebound in the companys key markets is already reflected in the stock price and blackberry, blackberry, out with earnings. A Communication Software and services company, beat on the bottom line. But revenues fell below estimates. Company left its full year forecast intact and notes that it was profitable for a Third Straight quarter the stock, however, taking a hit in premarket trading just this is like well be taught in Business Schools and in the future, how i cant remember what the market cap was at the top but its a 4 billion lets see, bbry, im just wondering what its worth now . Because it was multigazillion dollars. Almost 6 billion. Remember wasnt it at one point . Yeah. When they owned the entire market right you know, past performance doesnt say anything about future a lot of the times. Blackberry Ceo John Chen has done a heck of a job, but hell be on squawk alley at 11 00 a. M. Eastern time. The senate unveiling the obamacare replacement bill among the key changes to the houses legislation, medicaid cuts or at least a slowdown of the expansion. Nbc news reports that four republican senators will not vote for the bill, at least in its current form, although they said theyre open to negotiation. Joining us right now is the health and Human Services secretary, tom price mr. Secretary, thank you for being here today good morning. Wonderful to be with you okay. So from my understanding of the bill, it seems like there are a few major provisions that the bill would end the mandate to require individuals to buy insurance. It would end some of the obamacare taxes. It would reverse the expansion of medicaid thats pushed out there. And for the first time it would be limiting states the states funding, federal funding for medicaid are there other things that you want to poent out about it yeah, i think the important thing to look at is what this will do is actually stabilize the Health Care Market right now weve got an individual and Small Group Market in health care that is literally collapsing before our very eyes. Where youve got issuers pulling out of the market. You saw anthem saying theyre going to pullout of wisconsin and indiana next year if things dont change youve got prices going up, premiums going up, deductibles making it so individuals have insurance cards but no care. And so what this will do is stabilize the market weve talked to issuers about this and many of them have told us, that they are interested in getting back in to the markets and thats important for your listeners. But what it will actually do is make it so that patients and families and doctors are going to be the ones in charge of health care and not washington, d. C. So its a remarkable improvement over where we are right now. And thats the important thing for people to appreciate secretary price, i hear your concern that there have been all these insurers who have stepped out of the marketplace, that there are a lot of counties that are going to have no coverage offered under the current law thats right. As it stands. But part of the problem was that, look, it was really difficult for the Insurance Companies to make any money on this people were getting in, buying Health Care Insurance when they got sick theres the issue with no preexisting conditions being something that was brought against them from insurance perspective. But when you get rid of the mandate, which you know, has been a huge complaint for people, that means that you are going to continue to have people who are sick buying insurance, not necessarily have the Healthy People buying it, and i dont understand how this is going to make it more attractive to all those Insurance Companies, why they would buy in under this plan makes it more attractive because theyre able to sell something that people actually want right now we have 6. 5 Million People in this country who have paid 3 billion in penalties so that they dont have to purchase what washington is forcing them toll buy its an astounding model that was selected by the Previous Administration and its not working again, in that individual and Small Group Market so the reason that issuers, Insurance Companies would get back into the market is because they can fashion a Health Coverage plan that actually works for the people that need to buy it. Because the obamacare plans covered too many Different Things yeah, because it was a one size fits all. Its a topdown model. Its washington knows best, you buy this, or you pay a penalty you pay a tax. That doesnt work. Thats not the way the system ought to work. The way the system ought to work is to make it so that every single american has access to the kind of coverage that they want for themselves and for their families and that that access is available in a commercial space. Thats what thats the way you reconstitute the individual and Small Group Market lets talk about the politics at play here weve already heard there are four senators who are holdouts on this, mike lee, ted cruz, rand paul and ron johnson who have all said that theyre, at this point, cant vote yes for this then you have someone like Susan Collins who has not said shes going to vote no but has raised huge concerns about what this would mean for rural hospitals in her state if you cap medicaid payments coming from the federal government thats going to be difficult for a place like maine. How do you get to the votes you need you can only lose two senators at this point and make this pass but youve got to work through all those issues and this is a process. And you all know this. When you look at a snapshot in this process sometimes it looks pretty. Sometimes it doesnt look so pretty were reaching out to every single senator and making certain they have Comfort Level with the piece of ledgislation. Knowing it will improve. Its called the better care legislation. Thats what were interested in making certain happen. Its important that you mention medicaid because medicaid is a program right now for those in the lower income area, and the fact of the matter is that medicaid has onethird of the physicians in this nation who cant or wont see medicaid patients. Not because theyve forgotten how to take care of them, because the system isnt working. We want a medicaid system that actually works and we believe that the construct of the senate has brought forward is one that will do that mr. Secretary, the american opt association, the federation of American Hospitals, americas essential hospitals, the American Academy of pediatrics, the American Association of medical colleges, you know where im going with this all have condemned this bill. Let me just read something to you and have you react this coming from the american essential hospital saying todays senate bill makes few material improvements to the house legislation and might be worse overall for the hospitals that protect millions of americans and their communities are essential hospitals. This bill might even accelerate decisions by some to reduce services or close their doors. Well, two points. Someone that the Current System is making it so that they have to reduce services and close doors. You read it in Small Community papers all across this land. Hospitals are remarkably challenged the second point is that what the premise of that point is, is that the bill is all thats being done the fact of the matter is that the bill is a significant portion, yes but its not all thats being done right here at the department of health and Human Services were working with hospitals were working with physicians. Were working with other providers to make certain that were decreasing the regulatory burden, that were decreasing the difficulty that they have in caring for the patients across this land. And when you look at it, in its entirety, this is such a better move from where we currently are if this is mr. Secretary, if this is such a better move why arent we seeing more support of this for the same groups one of the things is that it will continue. The individual and Small Group Market is collapsing and medicaid is a system thats not able to care for the patients in that system right now. The second is that change is difficult. The unknown is difficult what i will tell you is that the fact of the matter, the president is absolutely committed to making certain that every single american has access to the kind of coverage that they want for themselves and for their family, not that the Government Forces them toll buy. I mean theres winners and losers in obamacare. Sure there are. Obviously. And the and the hospitals are like at the top of the list for the winners. So i mean its not surprising at all. Let me ask you this, though, mr. Secretary, there were some senators, probably from states that arent that solid in terms of red versus blue, that wanted to avoid the whole taxation issue. Because theyre ready to either roll over the minute someone says youre redistributing wealth from the poor back to the rich how are you going to how are you going to counter that argument, because that case whenever you cut taxes, obviously since a lot of taxes are paid by people in higher income brackets, whenever you cut it youre going to hear that youre redistributing it from the poor to the rich and youre not going to be able to say its going to help Small Business and help the economy. That probably wont do it. How are you going to convince people that this isnt heartless and a redistribution from poor to rich . Remember all those taxes that were put in place by obamacare, interests of dollars in taxes, were taxes to pay for a system that doesnt work. Doesnt work for families, doesnt work for patients, doesnt work for docs, employees or employers, doesnt work for states from a financing standpoint when you remove all those taxes which is what the bill is attempting to do and put in place a more efficient system, a more effective system, a system thats more responsive to the people actually using it, the docs and patients across this land, thats a system that the American People will embrace those taxes the 0. 9 tax on payroll tax wont be rolled off until 2023 is that the more likely scenario versus the house bill which would roll them off this year . When you get to the specific taxes then you get to what it takes to pay for the bill as its constructed and what the score is going to be your folks watching your show know that thats the language that comes out of the Congressional Budget Office. So thats a balancing act, and just making certain that the numbers work but the important point, again, is that as you decrease taxes you increase the accessibility, and the affordability and the choices that the American People have in terms of health care with this piece of legislation mr. Secretary, the attitude of the country has probably changed seven years ago, maybe, people didnt think it was a birth right that everyone just necessarily have health care that has changed, though, and i think you know, there are probably a majority of voters would say, you dont want anyone to lose coverage and the card thats going to be played is the medicaid card. Even though it was designed for poor, you know, mothers and disabled children, its now being used for healthy men that are not even in the poverty level. So, but, if you rein it in youre takingaway Health Coverage and thats going to be the hardest thing to its going to be the hardest thing to sell, you know, to youre going to hear it from the media, and from the democrats and from one of the senators who calls it mean and meaner yeah. A couple points one is that youve got 28 million americans right now who dont have Health Coverage thats a system thats not working for those 28 million its important to appreciate that in addition, the Congressional Budget Office said that there would be 23 million new individuals who would have coverage in fact thats about 10 million right now. And so, again, the system currently isnt working. In terms of the medicaid individuals, what we want is a the opportunity for those individuals to have coverage, one, that they want. And that may be the medicaid system it may be in a system in that individual and Small Group Market that is actually repaired and improved so that the kind of coverage theyre able to get in that system, with the subsidies that are present in the piece of legislation are more responsive to that individual as opposed to a medicaid system that oftentimes doesnt work for patients if you if the senate blows this, and congress, in general, blows this, is it single payer are we headed hurtling towards single payer i sure hope not because thats doubling down on a system that hasnt worked, and wont work, because thats a topdown model thats washington dictating to the American People what kind of health care they will receive. I dont think the American People want that i know they dont want it when i go out there across this land and talk to them about what needs to be done this is kind of messy in the middle of it but i believe well get through this and get to a point where we move in a much better system that puts patients and families and doctors in charge of health care secretary price, thank you for your time this morning thanks so much. Take care still ahead a tech roundup from the ceos of ubers big exit to President Trumps executive summit at the white house. Were going to talk to teresa gouw about who was named one of the smartest tech investors by ford rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Welcome back to squawk this morning we want to talk some tech from ubers kalanick presigning to trumps meeting with tech ceos and amazons bid for whole foods. A lot going on in the news joining us is theresia gouw. Shes also named to forbes midas list the worlds smartest tech investors, five times. So, shall we start with mr. Kalanick which is to say, what does this all mean in the larger scheme of whats happening thanks for having me. I hope the biggest lesson we can learn from everything thats going on with travis, and with uber, is that its not just about one person, or even one company. I hope we think about it as a potential turning point to think about now important it is to have a positive culture not only because we all want to work in a place with a positive culture but because eventually it becomes selflimiting and may limit the ability of your company to continue to grow and be successful. Two quick uber questions. One is youve probably seen online there is a Campaign Going on inside uber, by employees who were loyal to him, to have him come back. Any chance that happens . I dont think so. And if you look at the numbers, and you look at what it is you literally only have to click on something, you dont have to sign your name its a small percentage of the overall employees. In terms of his role in the future hes still on the board. Yes i dont think that will change my understanding is the way the Voting Rights go for the founders in that company, as in many other companies, i think that that is a seat that he controls so hes not really out, right . From a daytoday operating basis. There are i dont know how many Board Members now. But if he were to decide with his two other cofounders effectively that they wanted to, either go back to work or do whatever they really wanted, kick all the other Board Members off, technically they could. I dont know the details. I guess one of the questions from a larger standpoint is does this change this idea in the valley about dual class shares, special shares, that allow one or two individuals to control things it may, because it used to be incredibly unusual and then you go back and it was google. And theyve obviously been very, very successful and the same thing at facebook. And now i think that its gone from a real minority to seems like 20 , 30 , 40 of companies according to some study that have these types of, you know, founders, dual class shares or super Voting Rights. I think people, the pendulum will start to swing back without playing a blame game how complicit do you think the Venture Capital community has been to the extent you believe theres been bad behavior at other Tech Companies in terms of turning a blind eye. I think we all have to be mindful of not putting not thinking that the idea of profit and positive culture are at odds with each other. So thats my whole starting point. So i think some of us, those of us whove been complicit in putting profit above all else and saying well you know, growth sofls all problems, i think that this is an abject lesson that thats not necessarily the case, and that we need to think about them as not being at odds with each other, but at the right point in time being quite important to one another you know, it was striking to me that he was when he was forced to resign he was interviewing ceo candidates. I think this is the first time theyve had a search for coo the companys been around for eight years. If you look at when Companies Like google, or facebook, brought in outside Senior Executives it was much, much earlier. I mean i remember being there talking to sheryl two years after our investment, not eight years. Okay quickly change topics, amazon whole foods, you long or short that transaction transformative or crazy . So im long both personally, and then as an investor. I think its a bold move i think there will be a lot of interesting twists and turns along the way. But if you think about a industry so what it does for amazon, the ability to have, i mean im already an amazon shopper, probably to the extreme you are, too yes this will mean that the percentage of households that can be interacting with amazon every day and the physical foot print and how they can remake the distribution chain in food retail i think its pretty stunning and last question would you be vulnerable towards walmart given this transaction doesnt matter i think that it definitely is accelerating the arms race with them i know mark and doug personally so i think theyre doing some Pretty Amazing things. And they are also being very aggressive it will be an interesting race okay. Theresia thank you has it definitely come when you order on amazon, does it definitely yeah, its almost pretty much definitely comes. I mean, i see stuff come to my house you dont mean in two days i myself have not ordered things like that but i do see people in my family order things on amazon does it come quickly yesterday i got something in 45 minutes got the little amazon box youve seen them before hes seen them. Hes catching up. Hes catching up. When we come back were going to tell you about a hot new toy in china thats been causing d s bngong parents in schools anitei banned on ecommerce sites that story is right after the break. Coming up, President Trump tweeting there are no tapes of his conversation with former fbi chief james comey. rgog alk to a man who was in the running to replace comey, former governor Frank Keating. Always on the lookout for patterns and connections to make everything work better. I call it the internet of everything, but its really the internet of everyday life. The partnership between Dell Technologies and sap helps make the promise of the internet of things a reality for our customers. We know how powerful live data can be. We use sap at dell to run everything from finance to procurement to travel expenses. And thats the same kind of live insight we can now start offering to all of our customers. And as we get better information, better insights, it can improve virtually every aspect of society and the economy. Thats the opportunity of our generation. The next industrial revolution. Thats why Dell Technologies runs live with sap. Thithis is the new new york. E . Think again. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov good morning, welcome back to squawk box right here on cnbc were live at the Nasdaq Marketsite in times square at this hour, Consulting Firm center has unloaded 1. 6 billion dollars in pension obligations shares of American International group and mass mutual are the buyers of that, tinge a recent trend. 13. 7 billion in pension obligations were transferred last year, the second highest total ever also crude prices steady this morning, but still on track for a fifth straight week of losses. Thats a result in Energy Stocks having their worst week in over a year and crude prices on track for the biggest drop in the first half of the year in about two decades. Wti crude right now at 42. 85 and today is the day the annual rebalancing of the russell index. This is important because investors are going to be watching to see which stocks are included and excluded, especially from the russell 1,000 and russell 2,000. Now, the day of rebalancing usually the heaviest volume day of the year on all of wall street so take a look around 4 00 p. M. To see where the buying lands. All these active managers know exactly what theyre doing so really has nothing to do with index funds. The hef yegs volume of the year. Its a tradeup. Make sure they get straight in line with the index. The new musthave toy for school kids in china is a nightmare for concerned poirnts and School Officials powerful mini cross bows that shoot tooth picks and needles. Looks like a craze. Theyre being banned in some schools and on chinas two most ecommerce sites theyre powerful enough to puncture soda cans, apples and cardboard depending on the projectile thats used they sell for about 1 apiece and we dont want them here in the United States, either. They go right in your you could put someones eye out. Thats what my mother always said no kidding. In fargo, the latest season of fargo theres a lot of we already know about the walking dead yeah. And the latest season of fargo theres a couple of scenes with a cross bow very i mean, feel it when it hits people like in the leg or something. President trump tweeting yesterday that he did not have tapes of his conversation, he himself did not have tapes, of former fbi director james comey. Special Counsel Robert Mueller still pushing forward with his probe. You see that fox was back on top for the week, whatever, over msnbc because the russian thing like calmed down a little. So actually, you wonder why, anyway meddling in the 2016 election. Joining us now a man that was considered to replace comey as fbi director former oklahoma governor Frank Keating he also previously served as the third ranking official in the Justice Department under president reagan governor, its good to see you how close do you think you came to getting what chris wray was finally chosen for i think that was a solid choice ive got to say, andrew, its kind of fun to be in the church, even though youre not at the altar. But it was a pretty intense roundtrouble the attorney general who i served with is u. S. Attorney in oklahoma, jeff sessions, and of course the president at the head of the table choosing to take that as a compliment its not andrew but it was a compliment, governor when he does ask a question it will probably be very clear that its him that he finally asked. Let me ask you, do you think mueller and comey are like bbfs, arent they . Is this going to be okay, is this going to be fair, knowing what special counsel and prosecutors have done in the past where could this end up . This could end up anywhere, couldnt it . Thats true you really dont know. I have never been friendly to special counsels, independent counsels, special prosecutors, whatever you want to call them the average length of these investigations is three years. In the case of whitewater and they talked to me about being the whitewater counsel when he was running for governor of oklahoma, and Jamie Gorlick who was the attorney general said well that wont work but the reality is that thing started in 94 and ended in 2002 so these never end and i think its bad policy, its bad justice its unamerican to have one prosecutor with a staff and one victim i dont care how prominent or how ordinary the victim is that ought to be the responsibility of the congress or grand jury. But independent counsel, special counsel, special prosecutors i think are unamerican and a big mistake. You think that at this point is no collusion is found, and everybodys waiting, its been awhile, but maybe there still is something, maybe there isnt lets say there isnt. Just for argument sake i dont want to disappoint half of our audience, want it to be collusion so badly, but lets say theres not, is that still okay to go for obstruction, even if there was no crime you were covering up in the first place see, joe, thats the problem. I guarantee if you were my only defendant and i had a staff of investigators, id find some crime, it may end up jaywalking. But look at the whitewater case they went after the president for a real estate deal and ended up with a stained dress. I know. Okay. I understand that. But the reality is, its just not fair to the subject of an investigation to have all of the resources of the u. S. Government on them, theyre going to get it eventually and force something and thats what really worries me here. Do you think that the that muller would go and look at loretta lynch. You think that all is under the same unmasking and all this other stuff. You know, yesterday was kind of interesting. We heard about the server that was never turned over, because jay johnson said we didnt want to look like we were, you know, aiding either investigation. And then trey gowdy said maybe theres Something Else on that sver that was the real reason it was in the best interest never to really look at it will mueller get into all this stuff . Well, i mean, theoretically its never ends. But practically, in a counsel such as the mueller appointment, the attorney general can say enough, im going to turn down your recommendation for prosecution. He can do that but how far it goes before he does that is anybodys guess. I mean there are many different varieties, and shapes and sizes of special counsels. Independent counsels special prosecutors. Governor, what is not american. Governor in the context of the investigation about this administration, given that the judge and jury is effectively our congress, what do you think it would take in terms of a surprise i dont know if it would be a surprise but something that you would hear that would be so disturbing that wed actually be talking about impeachment . Oh, who knows i mean, the reality is, when you have relations with a country like russia, no matter how difficult those people are, no matter how thuggish their behavior frequently is, when you have relations with them, youre always going to have them searching you out, and youll search them out for guidance, advice, information, and the like but to criminalize that conduct, thats whats a mistake here to criminal conduct that is casual and in the president s case quite truthfully, heres a layman, probably not knowing the casual things he says to someone could be looked withisticle eyes by a prosecutor. This just worries me as a citizen. I have no role in any of this. Im just concerned as a citizen at the process you have bob mueller obviously is the mentor to jim comey you know, who is the protege to comey . Who reported to comey from the fbi. So all of these people are stair steps, and i just think its so important to have independent judgment, independent analysis, and thats what can be done by congress, both parties, or by a grand jury in the process that we expect as citizens. Again as i said, one product, one investigation, one defendant, its not good you were not governor you were not at the New York Times yesterday, were you . I was not okay. No, because theres a picture of comey, i guess comey was visiting some friends over there at the you saw the picture of him walking in to the new york i believe that would be friends. But im sure but you werent there so he wasnt specifically meeting with you he was not meeting with me. Just wondering on that. Somebody else thinks that maybe comey is in jeopardy because he said that he wasnt responsible for any of the previous leaks. Although he did cop to the leak to the guy at columbia the law professor, obviously, but, was that is that there was a question was he under oath, though was that under oath saying kshs yes, comey was under oath he was under oath for that. And thats why people said he would tell everything that happened we were professionals to leak information like that. Right a private citizen leaking his own notes. For a week. A private citizen leaking his own notes a private citizen but joe i thinkthat youve turned this around, away from the president and the administration thats not to suggest that everything that comey did was perfect, either, or frankly that Hillary Clinton did. But i think ultimately, and governor, i you at some level i imagine youre disturbed if there were was tampering in this election, and specifically if the president , with intent, tried to get rid of this investigation. No well it really depends on what the task is congress can investigate that. A grand jury can investigate that mueller will investigate that. And it will be years before the process is ended but i think the fact is, prosecution isnt forever. There are statutes of limitat n limitations. And as i said, one vick tim, one prosecutor and you ahuge staff youll get your man. I mean you walked into the woods with a whole armada of weapons youre going to get a deer before you walk out. All of that just worries me structurally theres just so much fizz, and purity in the air. We ought to focus on facts and facts alone. Joe friday ought to have his day. If it turns out there was no collusion between any Trump Associates and russia, then do you think, if he does find something somewhere else, is that okay . That the special counsel well depends what he finds and where he finds it so its as broad as this, whatever is there . Well, yeah, we talked i figure if theres no collusion they ought to close the investigation, its over yeah, but thats not even if the president tried to quash the investigation look theres lots of tooims in the world where the underlying supposed crime doesnt exist, but when youre being investigated, you cant try to end the invest even with watergate there was a breakin there have to be some original crime. Thats actually completely not true youre talking about the rule of law then youll be able to thats governor keatings point. Every man, show me a man, ill show you a crime that was were back to the russians. Maybe im conflicted anyway, governor, thank you. Thanks. Thanks for appearing today. Up next, the social network for neighborhoods. Nextdoor wants to help you keep up with your community and your neighbors. We will talk to the ceo about the startups sky high rit teexnsn erasioovse ghafr the break. Usaa gives me the peace of mind and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. Welcome back, everybody. As Tropical Storm cindy pummels louisiana and texas the focus is back on flood insurance. Possible regulatory changes could open the market up for private insurers lets bring in morgan brennan. And this has been something thats been very concerning part of the industry for awhile it certainly has. We could really say for the first time in five decades now, we have the private insurers poised to plunge into the deep end of the turbulent waters of flood insurance. The house lawmakers are looking to overhaul the governmentrun National Flood insurance program. This is 25 billion in debt. Its set to expire september the bill would make it easier for insurers to compete. This is a move that could, at least in theory, bring down rates and prevent more taxpayer losses so aig, chub, allianz, hci, theyve already begun underwriting policies for homeowners and businesses. Just this week hci announced expansion plans beyond florida to nine more states. And aigs lexington Insurance Unit says it has 10,000 policies and expects that to more than double in just the next year private insurers now account for an eighth of u. S. Flood Insurance Market it was virtually zero before 2012s bigger waters act the last big attempt to revamp this market. And experts expect this to grow. Its a 3. 3 billion market in terms of earned premiums about 5 million covered properties so its not huge but it is a high growth opportunity. Most interesting, its not the low Risk Properties that are necessarily the most attractive to insurers, either. Its the ones where the rates, many of which had been subsidized, have already jumped so much in the last couple of years that private insurers say that they can now compete. This is really interesting. Were short on time but i want you to come back so we can talk more about this. Because you want to open things up to competition but you want to make sure that theyre offering the right rates so you dont wind up with a bankrupt insurer. Good to hear big names yeah, it definitely is. And were going to see where this legislation goes as it moves throughs house right now but we could see some very big changes in terms of places like florida, new jersey, along the coast, whats available out there. Morgan, thank you very much popular u. S. Online Community Platform nextdoor launched in germany this week. Joining us right now with more on the growing popularity of hyperlocalized social networking is the ceo and cofounder of nextdoor and thanks for being here. Thanks so much for having me this morning first of all, for the people who dont understand what nextdoor is, why dont you explain it this is kind of a very localized community of people who work online and kind of keep track, like a Neighborhood Watch that moves online well, its using technology to keep in touch with one of the most important communities in our lives, and that is our neighborhoods. We all use social networks to connect with friends on facebook, with Business Associates on linkedin, and with people that we find interesting on twitter but until nextdoor there hasnt been an easy way to communicate with the people right outside our front doors. And thats where our product comes in you know, im already on the list a mothers club list for my hometown and i woke up this morning to about 20 messages, moms who were concerned about some guy who was roaming around the neighborhood yesterday it seems there are list serves out there who do this. How do you convince those type of people to move into your offering at this point weve been exceptionally fortunate in the u. S. Because adoption is now 75 of all neighborhoods across the country. Its been a long road but ultimately building a product that is just for your neighborhood, that is just for communicating with your neighbors, thats quite difficult. Its nuanced to try to replicate the relationships that you have in the real world in an online tool that does it effectively. And so we have a couple hundred people working on that every single day its a fundamentally difficult problem. And we feel we have the resources to solve it best i see a lot of your coverage represents some of the big towns out there. Like a san francisco, like a denver like an austin i mean am i going to be linked up with a group of everybody in that town . Or do it on a neighborhood by neighborhood basis in some of those big cities were a private social network for your neighborhood. So its not your city. Its not your zip code its not even your area. Its your neighborhood its the people you think of as your neighbors its the folks that have kids that go to your childrens schools. Its the place where you spend most of your time. And where you have your biggest asset, your home its hyperlocal. And its a way to make that local community in the real world stronger its not a virtual way to communicate with people that you never see. Its a virtual tool that makes those real world connections stronger i know that you verify and make people use their real names so that they can get into these situations how do you make money . We make money through advertising. Its similar to other social Networks Like facebook and twitter. And even linkedin. We believe theres a huge opportunity to if we think about whats happened online, ecommerce is amazing and Online Advertising is a huge force but what about doctors and dentists and architects and Real Estate Agents how do they reach people online . They dont have websites or buy ad words they advertised in the yellow pages or local newspapers or local television or radio. Theyre starting to come down and people are using Services Like next door so theres a tremendous opportunity to bring that local economy online and thats where the i was model comes in do you expect it to take place or do you want to stay private for awhile an ipo is certainly something that we think about in the future but its a step along the path we believed from the beginning that the opportunity to build the local social network is a large one not just from a business perspective but human perspective. Community is an important thing so beyond the Business Opportunity we believe theres a huge human opportunity to make the world a better place with this product. Thank you for your time my whole life i was presumed innocent and then Proven Guilty so ive had that messed up its presumed guilty and you need to be proven innocent. Well discuss that withy m friend jim cramer live at the new york stock exchange. Back in a moment, everybody. 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 deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced. Our senses awake. Our hearts racing as one. I know this is sudden, but they say. If you love something set it free. See you around, giulia lets get down to the new york stock exchange. Today i saw caterpillar threw the dow for a little bit of a set back thats been one you have followed for a long time now we have an analyst saying the good news is already in it where are you on that . Oil does take away a leg of the expansion. So its not a bad call i hate to say it because caterpillar had great orders i dont want to go against the orders longterm but you need to see oil 45 or 50 in order to be able to do bigger projects so i get it. It kind of killed the party. You have to hope that the guy is wrong but i understand you need to have a big, big expansion here. You have a duvet . I like really, heavy, i like heavy covers and duvet bed bath and beyond. They still had great things. What happened here as their website does better the stores do worst and it really kills their profitability. Its not the stuff. They need the foot traffic. Nothing wrong with what they sell or the consumer. I love it its a great store its fun to go to. Its not just bed bath and beyond they have everything. Everything. Have a great weekend. Thanks jim, you too well see you at the top of the hour and we have a mega monday coming up on squawk box. Dont miss interviews. She sort of talks like that if beure watching this season. Rort steel and former u. S. Commerce secretary all at 6 00 a. M. Eastern time well be right back. I have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . Welcome back this weekend a new cnbc documentary premieres and its one you dont want noisz it follows a group of students in china that were hand picked it premieres this sunday at 10 00 p. M. Eastern and pacific he is concerned about the rise of populism and hopes that having people from around the globe learning together in a situation like this will help ease some of the tensions. Youtube hit a new milestone topping 1. 5 billion new users a month. Theyre also watching more than an hour, if you can believe this, of videos on their phones and tablets each day and also expanding to sell more digital ads. Final check on the markets. Take a quick look. Been a week, not a real memorable week in terms of what we saw although they had a great come back. Down 6 on the dow. The s p called a little bit higher and so has the nasdaq and there you saw the yield complex. Make sure that you join us on monday, squawk on the street is next flfs. A mixed picture down ever so slightly the futures have been moving around this morning. Asia by the way was more o
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