Transcripts For CNBC Squawk Box 20170728 : comparemela.com

About 0. 6 hang seng down almost as much. The shanghai turned in a positive day up by 0. 1 and in europe, in the early trading, at least at this hour, you will see that the markets are weaker as well the cac is the big loser down about 1. 4 . You can see declines of over 0. 7 for the dax, similar decline for the ftse alltime low on the fix yesterd vix yesterday. We kept saying complacency we cant go down suddenly the nasdaq is up. Midday reversal. Everybody told us yesterday that for some reason the vix wasnt the indicator it used to be for volatility or for complacency. If its an alltime low, dont you think people are not worried about anything doesnt that usually set things up for a rise in volatility. My god these things can move around vix up 6 yesterday. We want to get to washington we have breaking news overnight. That could add a bit to the vix. Senate republicans failing to repeal obamacare in a dramatic latenight vote on capitol hill. Kayla tausche has more reporter it was a latenight sprint the bill text was printed at 10 00 p. M. The cbo score around midnight and the vote around 1 30 a. M. With three senators voting against the socalled skinny repeal of obamacare leading to a 4951 failure. There were gasps in the gallery when the deciding vote was cast by arizona senator john mccain so, yes, this is a disappointment a disappointment indeed. Our friends over in the house, we thank them as well. I regret our efforts were simply not enough this time mccain had chastised the process but voted to move forward. That sound bite was from Mitch Mcconnell. But mccain had said that House Speaker paul ryan, who you just heard mcconnell say that he was thankful for his house colleagues involvement, but people said that paul ryan didnt give sufficient assurance that the bill as it stood would not become law ryans statement earlier in the evening said senators have made clear this is an effort to keep the process alive not to make law if moving forward requires a conference committee, thats something the house is willing to do. Earlier in the evening a handful of senators held a press conference saying they would potentially vote for the bill only on the assurance that it would go to conference and get heavily debated, not that it would become law they viewed ryans statement as saying he was willing to do that but not committed to do that you heard Mitch Mcconnell speaking on the floor at about 1 45 a. M he was talking about that was his only regret. His only regret was the vote count. Now this leaves republicans without a clear path forward on healthcare and the president tweeting to that effect late in the evening just a couple hours ago saying three republicans and 48 democrats let the American People down. As i said from the beginning, let obamacare implode, then deal watch. Well see how the white house, if they decide to stabilize the Insurance Markets in the meantime in the absence of any movement on legislation. People describe it as a soap opera inside the white house the comments the mooch made to the new yorker yesterday what is going on what does it mean to who stays and who goes that will have a lot to do with policy well, for anyone who didnt see this interview last night, im not sure there are people left who did not manage to read this Anthony Scaramucci, the newly installed White House Communications director called up a new yorker reporter after the reporter tweeted some details about a dinner that was happening at the white house he demanded to know who was leaking it a colorful conversation ensued at which he disparaged nearly half of his new white house colleagues including steve bannon and Reince Priebus, the chief of staff who has been the focus of this. Because the conventional wisdom has been that this feud of scaramucci and priebus, if there is a winner, it could be scaramucci, because he is closer to the president he said if you want to leak something, priebus will resign shortly. This is a Communications Director that on one hand is leading a leak brigade, trying to fire staffs who are, he believes, behind leaks to journalists. Meanwhile hes on the phone call with a journalist who he believes to be con iffi believes to be con iffdential ao leaking things about the white house. The plot thickens. Clearly a lot of people are scratching their head over how this happened and what it means for him. Ultimately its the president s call there was mccain, ron johnson and who else did not wanted assurances from paul ryan himself that they would go to conference there were three or four Lindsey Graham of south carolina, who also used some colorful language. He did. In describing it he said he wouldnt vote for a pig and a poke their bill was a fraud but he voted for it he voted for it because he believed it would go to conference thats the beautiful thing. When you think about it, seriously, you wonder why people around the country dont understand washington. Those guys needed an assurance that if we pass this bill, that in the future it definitely wont get passed well pass it, as long as you can tell us you wont pass it. Its almost like they would say we will pass obama repeal, as long as he wont sign it. The fact they had seven months to come up with a plan that would garner enough support to pass, and they didnt do that so then in this 11th hour, theyre just trying to find something, something that would get enough votes to move the process forward to keep the process alive regardless of whether it was a good bill what are we on on jason movies were like 11 or 12. Is this dead or not . Jason comes back, like in a s is this dead or not . Are they moving on tax reform or will it come back next week . What do you think . Theyre committed to tax reform thats what the Administration Says at this point were wondering if the Statement Released yesterday by the big six principles, so the top leaders in the house and the senate and the white house, treasury, National Economic council and the like, they put out a statement yesterday hailing the conversations this were happening on tax reform and the commitment to have this be in committee by the fall theyre trying to move the goalpost on timeline they also dropped any discussion of the border adjustment tax well talk about that youll have fun asking kevin brady about that people were wondering was that the agreement that we were supposed to get on tax reform before recess . That the white house promised. Or is there still something forthcoming because there were not really new details in the statement, just the fact that theyre committed to doing this. Okay. Thanks well talk border adjustment with david walker. Republican chs said they were trying to give up border adjustment tax the proposal would have hiked prices on imported goods to the United States. Gop lawmakers reiterated their goal on starting work on a joint tax plan through committees by this fall. For more lets bring in david walker you have been around washington. But you havent actually been one of these illustrious decisionmakers do you think that tax reform is possible given what we have seen with trying to do this will democrats work in a bipartisan fashion on tax reform first, washington is a train wreck right now. Yeah. I think healthcare is off until after the 2018 elections you do. Needs to be. Were having the wrong debate on healthcare i can come back to that, but, yes, we need tax reform. Theres bipartisan support for tax reform for Business Tax Reform it needs to be pro growth, simpler, fairer, more competitive. I think realistically you have to decide whether or not the democrats will play on this. Part of that depends upon the scope. I believe they ought to try a couple Infrastructure Investment with tax reform as a means to have a pro growth, pro jobs policy, to try to get more democrats to play. Realistically you wont see anything at the earliest before 18. Theyll have do it through budget reconciliation. And were talking deja vu all over again i was in washington during reagan he was my first president ial appointment. Broadened the base, lower the rates, go to territorial rather than global, and youre talking about just corp frat, broaden the base no. No for individuals, too both when you say broaden the base, i think individual reform, not corporate. Both. On the corporate, you know, in 2012 i mentioned last time i was on with you, i did this National Fiscal responsibility bus tour, tested a range of reforms including tax reforms with the American People, which is what matters. Some things we talked about on the corporate side, lets go to territorial rather than global lets bring the top tax rate down to 25 . Lets do something with regard to capital expenditures, accelerated either immediate expenses and more aggressive depreciation rules lets have a tax credit for basic research, not applied research lets have a dividend deduction that would encourage corporations to either invest for growth or distribute earnings for growth. To create a more level Playing Field. You also have to keep in mind a lot of businesses in the country are not taxed as ccorporations. Theyre taxed at the individual level. Which is why its hard to do corporate without the individual right so on the individual what we talked about is going down to 3 rates, 90 of the people would be able to do tax return on one pete piece of paper we could have rates of 10, 20, 28 that we would end up having deductions for things like one Home Mortgage up to the maximum conforming loan, which varies by region of the country, charitable contributions and retirement and certain other forms of savings so you get to keep things that people like in it, charitable, 401 k s, but to joes point, how do you make this happen . Let me phrase it this way so nobody will want to give trump a win on the democratic side you know that. And whether thats right or wrong, mcconnell and pane didnt want to give obama a win youre saying infrastructure might get the democrats to cut taxes. If youre going to blow out the deficit cutting tacks, blow it out further by spending money on infrastructure, do you think the democrats will sign on you wont get all the republicans under this plan. They will probably say, we want this thing paid for, we dont believe in dynamic scoring. You are looking at 26 , 27 on the corporate side at which point, you lose more republicans. The Third Largest caucus in the Congress Today is something called the Problem Solvers Caucus im one of the national cofounders of no labels, which supports that caucus roughly equally divided between republicans and democrats. How many people in the caucus about 70 i think. Its not an oxymoron, sear youts seriously . Its not an oxymoron. This is the only one bipartisan of any meaningful size they have publicly come out and said they would like to see tax reform coupled with infrastructure reform. You are correct thats spending money coming and going youre spending money. Then we have to come back and say first keep in mind on infrastructure most money will come from the private sector okay. Even the president has already said that. Hes talking about investing 0 200 billion over ten years, having 8 800 billion come from the private sector theres plenty of opportunity to do Infrastructure Investment we have plenty of patient capital, Pension Funds and other types of investment vehicles that could make this attractive. One thing we have to think about is how do we want to keep score . Do we want it to be revenue neutral . Deficit neutral . We have the debt ceiling limit coming up, one of the most ridiculous things on the planet. We need to change our metrics debt to gdp. We need to get rid of the debt ceiling limit, the focus on the deficit. We need to focus on debt to gdp. Very to get spending on the table. Spending it out of control its not just a federal issue, its a state issue i think this is great to talk about, but its all theoretical. Its divorced from the reality of the situation politics. Needless to say that with all due respect to everything you just said, it may be spectacular, but this will never happen because of political dysfunctionality is that your point at the moment the problem is you have four parties in washington you have two parties, at least two parties in the republican the gop, and at least two parties in the democrats you have a sort of very progressive left, a semi middle. Back to the 70 people caucus. Probably not including the leadership of either party, right . No. It does not. Neither of them, it would be willing to sign on to this can you bill enough of a consensus in the middle or can you sway the leadership at this point to get on board with some of that . The truth is we have way too many wingnuts in washington. We have too many far right in the Republican Party too many far left in the Democratic Party theres nobody in charge of congress theres somebody in charge of factions, called republicans and democrats, but nobody in charge of the body as a whole the president has an opportunity to lead. The president has to be more effective. And he needs to follow Ronald Reagan what reagan did, he went directly to the people with regard to the facts, the truth, the tough choices. Heres a goal. Heres principles of values. He rallied the people to put pressure on congress then he negotiated on a bipartisan basis behind the scenes to get something done i dont know that we can get anything done or not im not optimistic im saying if you want to get something done, its not going to be early than 18 it will be on budget reconciliation, majority vote. And you have to get something to entice the democrats to play the best bet is infrastructure theres a Washington Post amazon Washington Post piece. And it is that republicans are starting to openly rebel against President Trump. Theyre feeling comfortability doing that as we move along here, its going to be democrats are going to hope that gets to the point that even republicans wont cooperate. I dont think tax reform will be as simple as you think 2018 is coming, they will not want to give him a win nobody said simple. A lot of these people feel safe in their districts. The far right and the far left, a lot of those in the Republican Party democrats are hoping it gets bigger in the Republican Party and people feel free, like murkowski. Did you see Susan Collins yesterday say its despicable they would threaten murkowski with federal money in alaska if she doesnt come up with something. Thats been done the last 50 years. Can i say, President Trump ran, though, on a platform of being a great negotiator i remember having conversations with him years ago, when president obama was in office, president obama would say the republicans are on stbstinaobstd trump would say im a brilliant negotiator the job of the president is to bring people together to take the most obstinate person on the other side and bring them with you. Thats the on, thats what he sold the public on thats not happening now full stop. You think he can negotiate with the democrats frankly i dont thats what i mean. Theres no one that can you are setting up this strongman argument pardon me one second. Two things reagan is the model. The president is the only person who is elected by all the people the president has the bully pulpit the president has to go directly to the people. Trump has not done that. He wont go to the democrats because the democrats dont pardon me one second. One reason that we have polarization, we have too many wing nuts is because most of the districts are safe we need political reform we need political reform to have a republic thats truly responsive to the public david, thank you. Coming up, shares of star bux a bucks and amazon weighing down the nasdaq well be back in a moment. Welcome back to squawk box. On todays economic agenda look for the first report on Second Quarter gdp. Thats coming out at 8 30 a. M. Eastern time then the final report on july Consumer Sentiment that hits at 10 00 a. M. Eastern. Minneapolis fed president , Neel Kashkari is speaking later this afternoon. As for earnings, we have a triple play of dow components hitting today. Records from merck, exxonmobil and chevron. Well bring you the numbers and reaction from wall street as soon as they hit lets talk about whats going on in seattle. That city taking center taj on t stage on the earnings front. Starbucks reporting profrlt prof 55 bucks a share revenue just missed at 5 5. 6 billion. Joining us is a. B. Mendez from frost investment advisers. Lets take amazon. How much you are upset about the profit miss or do you look at the revenue piece of this . Good morning. Thank you for having me. You know, weve been involved with amazon as investors for over seven years for better or worse we basically learned to focus less on the quarter to quarter ups and downs of profit and more the Strategic Vision of the company. Those trends are intact as well as top line growth moreover were confident in the Strategic Vision of the company. What do you think the company could be worth you look at the stock right now, 1,015 i think breaking that 1,000 mark has psychological significance looking at the price to cash flows, its around the median multiple. Not out of line. Its less expensive than the fiveyear averages this quarter notwithstanding, on a rolling 12month basis theyre converting more earnings into Free Cash Flow in 16, they did 10 billion in Mitch Mcconnell<\/a>. But mccain had said that House Speaker<\/a> paul ryan, who you just heard mcconnell say that he was thankful for his house colleagues involvement, but people said that paul ryan didnt give sufficient assurance that the bill as it stood would not become law ryans statement earlier in the evening said senators have made clear this is an effort to keep the process alive not to make law if moving forward requires a conference committee, thats something the house is willing to do. Earlier in the evening a handful of senators held a press conference saying they would potentially vote for the bill only on the assurance that it would go to conference and get heavily debated, not that it would become law they viewed ryans statement as saying he was willing to do that but not committed to do that you heard Mitch Mcconnell<\/a> speaking on the floor at about 1 45 a. M he was talking about that was his only regret. His only regret was the vote count. Now this leaves republicans without a clear path forward on healthcare and the president tweeting to that effect late in the evening just a couple hours ago saying three republicans and 48 democrats let the American People<\/a> down. As i said from the beginning, let obamacare implode, then deal watch. Well see how the white house, if they decide to stabilize the Insurance Markets<\/a> in the meantime in the absence of any movement on legislation. People describe it as a soap opera inside the white house the comments the mooch made to the new yorker yesterday what is going on what does it mean to who stays and who goes that will have a lot to do with policy well, for anyone who didnt see this interview last night, im not sure there are people left who did not manage to read this Anthony Scaramucci<\/a>, the newly installed White House Communications<\/a> director called up a new yorker reporter after the reporter tweeted some details about a dinner that was happening at the white house he demanded to know who was leaking it a colorful conversation ensued at which he disparaged nearly half of his new white house colleagues including steve bannon and Reince Priebus<\/a>, the chief of staff who has been the focus of this. Because the conventional wisdom has been that this feud of scaramucci and priebus, if there is a winner, it could be scaramucci, because he is closer to the president he said if you want to leak something, priebus will resign shortly. This is a Communications Director<\/a> that on one hand is leading a leak brigade, trying to fire staffs who are, he believes, behind leaks to journalists. Meanwhile hes on the phone call with a journalist who he believes to be con iffi believes to be con iffdential ao leaking things about the white house. The plot thickens. Clearly a lot of people are scratching their head over how this happened and what it means for him. Ultimately its the president s call there was mccain, ron johnson and who else did not wanted assurances from paul ryan himself that they would go to conference there were three or four Lindsey Graham<\/a> of south carolina, who also used some colorful language. He did. In describing it he said he wouldnt vote for a pig and a poke their bill was a fraud but he voted for it he voted for it because he believed it would go to conference thats the beautiful thing. When you think about it, seriously, you wonder why people around the country dont understand washington. Those guys needed an assurance that if we pass this bill, that in the future it definitely wont get passed well pass it, as long as you can tell us you wont pass it. Its almost like they would say we will pass obama repeal, as long as he wont sign it. The fact they had seven months to come up with a plan that would garner enough support to pass, and they didnt do that so then in this 11th hour, theyre just trying to find something, something that would get enough votes to move the process forward to keep the process alive regardless of whether it was a good bill what are we on on jason movies were like 11 or 12. Is this dead or not . Jason comes back, like in a s is this dead or not . Are they moving on tax reform or will it come back next week . What do you think . Theyre committed to tax reform thats what the Administration Says<\/a> at this point were wondering if the Statement Released<\/a> yesterday by the big six principles, so the top leaders in the house and the senate and the white house, treasury, National Economic<\/a> council and the like, they put out a statement yesterday hailing the conversations this were happening on tax reform and the commitment to have this be in committee by the fall theyre trying to move the goalpost on timeline they also dropped any discussion of the border adjustment tax well talk about that youll have fun asking kevin brady about that people were wondering was that the agreement that we were supposed to get on tax reform before recess . That the white house promised. Or is there still something forthcoming because there were not really new details in the statement, just the fact that theyre committed to doing this. Okay. Thanks well talk border adjustment with david walker. Republican chs said they were trying to give up border adjustment tax the proposal would have hiked prices on imported goods to the United States<\/a>. Gop lawmakers reiterated their goal on starting work on a joint tax plan through committees by this fall. For more lets bring in david walker you have been around washington. But you havent actually been one of these illustrious decisionmakers do you think that tax reform is possible given what we have seen with trying to do this will democrats work in a bipartisan fashion on tax reform first, washington is a train wreck right now. Yeah. I think healthcare is off until after the 2018 elections you do. Needs to be. Were having the wrong debate on healthcare i can come back to that, but, yes, we need tax reform. Theres bipartisan support for tax reform for Business Tax Reform<\/a> it needs to be pro growth, simpler, fairer, more competitive. I think realistically you have to decide whether or not the democrats will play on this. Part of that depends upon the scope. I believe they ought to try a couple Infrastructure Investment<\/a> with tax reform as a means to have a pro growth, pro jobs policy, to try to get more democrats to play. Realistically you wont see anything at the earliest before 18. Theyll have do it through budget reconciliation. And were talking deja vu all over again i was in washington during reagan he was my first president ial appointment. Broadened the base, lower the rates, go to territorial rather than global, and youre talking about just corp frat, broaden the base no. No for individuals, too both when you say broaden the base, i think individual reform, not corporate. Both. On the corporate, you know, in 2012 i mentioned last time i was on with you, i did this National Fiscal<\/a> responsibility bus tour, tested a range of reforms including tax reforms with the American People<\/a>, which is what matters. Some things we talked about on the corporate side, lets go to territorial rather than global lets bring the top tax rate down to 25 . Lets do something with regard to capital expenditures, accelerated either immediate expenses and more aggressive depreciation rules lets have a tax credit for basic research, not applied research lets have a dividend deduction that would encourage corporations to either invest for growth or distribute earnings for growth. To create a more level Playing Field<\/a>. You also have to keep in mind a lot of businesses in the country are not taxed as ccorporations. Theyre taxed at the individual level. Which is why its hard to do corporate without the individual right so on the individual what we talked about is going down to 3 rates, 90 of the people would be able to do tax return on one pete piece of paper we could have rates of 10, 20, 28 that we would end up having deductions for things like one Home Mortgage<\/a> up to the maximum conforming loan, which varies by region of the country, charitable contributions and retirement and certain other forms of savings so you get to keep things that people like in it, charitable, 401 k s, but to joes point, how do you make this happen . Let me phrase it this way so nobody will want to give trump a win on the democratic side you know that. And whether thats right or wrong, mcconnell and pane didnt want to give obama a win youre saying infrastructure might get the democrats to cut taxes. If youre going to blow out the deficit cutting tacks, blow it out further by spending money on infrastructure, do you think the democrats will sign on you wont get all the republicans under this plan. They will probably say, we want this thing paid for, we dont believe in dynamic scoring. You are looking at 26 , 27 on the corporate side at which point, you lose more republicans. The Third Largest<\/a> caucus in the Congress Today<\/a> is something called the Problem Solvers Caucus<\/a> im one of the national cofounders of no labels, which supports that caucus roughly equally divided between republicans and democrats. How many people in the caucus about 70 i think. Its not an oxymoron, sear youts seriously . Its not an oxymoron. This is the only one bipartisan of any meaningful size they have publicly come out and said they would like to see tax reform coupled with infrastructure reform. You are correct thats spending money coming and going youre spending money. Then we have to come back and say first keep in mind on infrastructure most money will come from the private sector okay. Even the president has already said that. Hes talking about investing 0 200 billion over ten years, having 8 800 billion come from the private sector theres plenty of opportunity to do Infrastructure Investment<\/a> we have plenty of patient capital, Pension Funds<\/a> and other types of investment vehicles that could make this attractive. One thing we have to think about is how do we want to keep score . Do we want it to be revenue neutral . Deficit neutral . We have the debt ceiling limit coming up, one of the most ridiculous things on the planet. We need to change our metrics debt to gdp. We need to get rid of the debt ceiling limit, the focus on the deficit. We need to focus on debt to gdp. Very to get spending on the table. Spending it out of control its not just a federal issue, its a state issue i think this is great to talk about, but its all theoretical. Its divorced from the reality of the situation politics. Needless to say that with all due respect to everything you just said, it may be spectacular, but this will never happen because of political dysfunctionality is that your point at the moment the problem is you have four parties in washington you have two parties, at least two parties in the republican the gop, and at least two parties in the democrats you have a sort of very progressive left, a semi middle. Back to the 70 people caucus. Probably not including the leadership of either party, right . No. It does not. Neither of them, it would be willing to sign on to this can you bill enough of a consensus in the middle or can you sway the leadership at this point to get on board with some of that . The truth is we have way too many wingnuts in washington. We have too many far right in the Republican Party<\/a> too many far left in the Democratic Party<\/a> theres nobody in charge of congress theres somebody in charge of factions, called republicans and democrats, but nobody in charge of the body as a whole the president has an opportunity to lead. The president has to be more effective. And he needs to follow Ronald Reagan<\/a> what reagan did, he went directly to the people with regard to the facts, the truth, the tough choices. Heres a goal. Heres principles of values. He rallied the people to put pressure on congress then he negotiated on a bipartisan basis behind the scenes to get something done i dont know that we can get anything done or not im not optimistic im saying if you want to get something done, its not going to be early than 18 it will be on budget reconciliation, majority vote. And you have to get something to entice the democrats to play the best bet is infrastructure theres a Washington Post<\/a> amazon Washington Post<\/a> piece. And it is that republicans are starting to openly rebel against President Trump<\/a>. Theyre feeling comfortability doing that as we move along here, its going to be democrats are going to hope that gets to the point that even republicans wont cooperate. I dont think tax reform will be as simple as you think 2018 is coming, they will not want to give him a win nobody said simple. A lot of these people feel safe in their districts. The far right and the far left, a lot of those in the Republican Party<\/a> democrats are hoping it gets bigger in the Republican Party<\/a> and people feel free, like murkowski. Did you see Susan Collins<\/a> yesterday say its despicable they would threaten murkowski with federal money in alaska if she doesnt come up with something. Thats been done the last 50 years. Can i say, President Trump<\/a> ran, though, on a platform of being a great negotiator i remember having conversations with him years ago, when president obama was in office, president obama would say the republicans are on stbstinaobstd trump would say im a brilliant negotiator the job of the president is to bring people together to take the most obstinate person on the other side and bring them with you. Thats the on, thats what he sold the public on thats not happening now full stop. You think he can negotiate with the democrats frankly i dont thats what i mean. Theres no one that can you are setting up this strongman argument pardon me one second. Two things reagan is the model. The president is the only person who is elected by all the people the president has the bully pulpit the president has to go directly to the people. Trump has not done that. He wont go to the democrats because the democrats dont pardon me one second. One reason that we have polarization, we have too many wing nuts is because most of the districts are safe we need political reform we need political reform to have a republic thats truly responsive to the public david, thank you. Coming up, shares of star bux a bucks and amazon weighing down the nasdaq well be back in a moment. Welcome back to squawk box. On todays economic agenda look for the first report on Second Quarter<\/a> gdp. Thats coming out at 8 30 a. M. Eastern time then the final report on july Consumer Sentiment<\/a> that hits at 10 00 a. M. Eastern. Minneapolis fed president , Neel Kashkari<\/a> is speaking later this afternoon. As for earnings, we have a triple play of dow components hitting today. Records from merck, exxonmobil and chevron. Well bring you the numbers and reaction from wall street as soon as they hit lets talk about whats going on in seattle. That city taking center taj on t stage on the earnings front. Starbucks reporting profrlt prof 55 bucks a share revenue just missed at 5 5. 6 billion. Joining us is a. B. Mendez from frost investment advisers. Lets take amazon. How much you are upset about the profit miss or do you look at the revenue piece of this . Good morning. Thank you for having me. You know, weve been involved with amazon as investors for over seven years for better or worse we basically learned to focus less on the quarter to quarter ups and downs of profit and more the Strategic Vision<\/a> of the company. Those trends are intact as well as top line growth moreover were confident in the Strategic Vision<\/a> of the company. What do you think the company could be worth you look at the stock right now, 1,015 i think breaking that 1,000 mark has psychological significance looking at the price to cash flows, its around the median multiple. Not out of line. Its less expensive than the fiveyear averages this quarter notwithstanding, on a rolling 12month basis theyre converting more earnings into Free Cash Flow<\/a> in 16, they did 10 billion in Free Cash Flow<\/a>, thats from 2 billion three years earlier. How transformational do you think the whole foods transaction will be . Its very big the two highlevel strategic things im watching, one, how can they continue to Grow Consumer<\/a> share of wallet and increase recurring transactions. Grocery is a big part of that. Subscribe and save is another part of that once you subscribe to five or more different items, the recurring savings go from 5 to 15 . Rhyme g im getting 20 off on my recurring diaper order before the discount on a per diaper unit basibasis, they wer cheeper than my Corner Grocery<\/a> store. Thats huge for customers within the prime ecosystem. Secretary ondaril secondarily, think being ways to add efficiency and longterm progress, one is investing in the Logistics Network<\/a> and the artificial intelligence. Lets switch gears and talk about starbucks. We could talk about the earnings, the thing i found most fascinating yesterday was the 100 buyout of their partner in china, and what that means to own the entire business there. Yeah. Its fascinating when you think about the Chinese Market<\/a> its a large opportunity they plan to double the store count over the next three years. Even just the tevana brand, an interesting Side Business<\/a> in the u. S. , i would think that tea business in china might have significant potential. They see something thats worth sort of deepening that investment to take 100 ownership. Having said that, investors did not applaud or applaud enough stock down almost 6 yeah. Again, starbucks is a lblongtem holding. Longterm growth those margins cannot to grind higher gradually prior to this quarter it was 17. 7 . If you look at it on a trailing full quarter basis, very Healthy Trends<\/a> in tax. We look at opportunistically at the dips at this point a. B. , thank you for your time you bet starbucks ceo kevin jonson will hang out with the gang on squawk on the street at 9 00 a. M. This morning. When we return, major earning reports due before the opening bell. And meg whitman shutting down reports that shell be the next uber ceo. You wont believe who is on the short list well talk about that. First as we head to break a look at yesterdays winners and losers whats going on here . Um. Im babysitting. Thatll be 50 bucks. You said 30. Yeah, well it was 30 before my fees, like the pizzaordering fee and the dogsitting fee. And the rummage through your closet fee. Who is she, verizon . Are those my heels . Yeah yeah, were the same size. In shoes. With tmobile taxes and fees are already included, so you get four lines of unlimited for just 40 bucks each. The price we say is the price you pay. Welcome back youre watching squawk box live from the Nasdaq Market<\/a> site in times square. Good morning u. S. Equity futures at this hour, interesting day yesterday after the dow set another new high things got scary in the nasdaq down 100 points after being up 40, 50 points. Huge swings in volatility yesterday in technology. Today the s p down 10. The nasdaq is the future again were watching, down over 60 dow jones called down about 43 points this morning. Breaking news, pakistans top court disqualified Prime Minister<\/a> nawaz sharif from office and he has resigned at issue is a damming corruption probe into his Family Wealth<\/a> sharif had about a year left on his third term as Prime Minister<\/a> the governing party must choose an interim Prime Minister<\/a> to replace sharif until the next election thats scheduled forever m mid. Mattel reporting wider than expected loss. Sales of the key power brand, barbie falling 5 . Shares of boston beer are soaring. The company beating wall street expectations on the top and bottom lines expedia reporting a mixed quarter, earnings missed but revenues topped forecasts. The ceo of expedia will be on today at 10 20 a. M. Eastern time. Barclays reportsed a net loss of 1 1. 6 billion for the first half of the year the bank was het by the fait by sterling a charge from the misselling of payment protection Insurance Scandal<\/a> and a loss from the sale of its Africa Business<\/a> ubs reporting a 14 rise in Second Quarter<\/a> profit. The banks ceo says he is still cautious and the company is suffering from low volatility. Ubs stock down 3. 6 . Bmp paribas reporting a better than expected Second Quarter<\/a> profit the bank was helped by strong results from its corporate and Investment Banking<\/a> division. Credit suisse reporting a 78 rise in Second Quarter<\/a> profits. That was above forecast. The bank benefitted from a strong enemploy inflow of new mo the Wealth Management<\/a> business. Lets take a look at the markets after a record close for the dow and trouble for the nasdaq joining sus is alicson dean, an chris cordero. Thank you both for being here today. Lets talk about what weve seen this morning we talked about lots of issues from around the globe. Pakistan, north korea, you have things happening in venezuela. You have the healthcare bill looking like its going down in flames no sign of any renewal for that. On the other side of things, earnings keep coming in strong and you have a central bank that doesnt look like it will be raising rates at much of a pace, much of a fast pace. How do you add that up and figure out why were still seeing the dow at new record lefts . Chris . Because of earnings earnings are coming in strong. Big thing about earnings, weve seen it out of a couple announcements today, revenue keeps beating. Thats a huge thing. We keep growing revenue. Its up to the corporations to manage the profit side as we see the revenue increase, thats because the economy is just kicking along its both in the u. S. And we see that abroad. Were finally seeing global economies pick up in line with the u. S. That just translates into good news for business. Alison, what do you think i agree the market is pricey, you have healthy Global Growth<\/a>. Corporates are strong and revenue trends are improving this outweighs some political strife going on in various countries around the world as well as this healthcare debacle. My concern there is that it weighs on significant upside for the market because they were so unable to get through with healthcare, how good will they be at tax reform, Infrastructure Spending<\/a> and things along those lines . Can they government learn to come together and come up with cohesive policy . Forget about whats happening in washington. Forget about whats happening in other governments. If youre an investor you try to figure out what to do with your money. You would tell people what continue to own equities. U. S. Equities are not very cheap now. At a minimum u. S. Equities should perform in line with profit growth. Theres growth overseas. If youre an equity investor, have a global portfolio, not just an equity portfolio are you looking at europe what other places overseas europe and japan, both very attractive emerging markets, dip your toe in there as well merging markets can get rocked by these political stories were following . Theyve been down and out lately my view is you have some interesting valuations out there. Some of these things could hurt them but enough is going on in the stronger emerging markets, its worth dipping your toe there not taking huge exposure but some exposure. Chris, today and yesterday it was Technology Stocks<\/a> people were concerned about do you have concerns in technology overpriced stocks like amazon, yes. But stocks like intel, which i like, a terrific value, who would think you could buy intel at 14 times earnings with a 3 dividend yield thats a tremendous value. What intel is doing, theyre building the chips for the servers that are powering the cloud. I think thats a great business. Intel came out with earnings last night, raised its guidance. You like intel because theyre continuing to automobile beat e . Continue to beat expectations and the price hasnt gotten away from them. Thats an understatement. 35 for 12 years have you owned it the whole time not for the full 12 years, but in an literally its been trading at 35 for 10 years, 12 years. You didnt like amazon, but i like intel amazon they went from 100,000, intel at 35. Youre sticking with amazon . Amazon hasnt figured out how to make money. I trip over a box every night going home but they havent helped me figure out how to trip over numbers in stock. Alison, what do you think if you like growth, they are a growth industry. They should continue to do well. So you think the concerns are misplaced or shortlived shortlived concerns. You will have spotty results here and there, but we have a strong Growth Market<\/a> what would it take for you to think theres other Asset Classes<\/a> you would be interested in if equities got much stronger, we saw a slow down in growth that would turn me off. If we see higher yields on bonds. Right now were at the beginning of series of rate increases which will put pressure on bonds. Energy prices, i keep thinking weve seen the bottom, then it stays soft looking at the commodities market t doesnt feel as if Global Growth<\/a> is robust enough if growth were to pick up, having exposure to commodities would make sense chris, you look at equities what other things would you potentially consider as an asset look you can look at real estate its relatively pricey right now, but if we start seeing that pick up more that could ab potential place to be. And in terms of what the central bank says, the latest comments from yellen, everybody looked at them as particularly dovish, saying we wont be looking at high rates any time soon that message f there weshgmessaa different central banker, would that change the message on its own . If the next fed chief is not yellen once again, does that change your perspective on because everything youre talking about is a relative argument equities look like a great plates relative place relative you see bonds. Its the best option out there. If yellen is not the next Federal Reserve<\/a> chief, does that give you pause it depends on the Federal Reserve<\/a> chief. If its someone who is hawkish, you may like equities more if it is someone who doesnt feel we need to do anything with rates chris, what about you its hard to push for increasing rates with inflation so low if rates start rising, thats going to pinch equities more and make bonds more attractive thank you for your time today. Thank you coming up, a dow component triple play. Results from merck, exxon and chevron are out. Merck in the next couple minutes. Later, how minority whip steny hoyer will talk about healthcare, taxes and other things stay tuned, youre watching squawk box on cnbc welcome back right now its time for the executive edge wells fargo says that it is going to be compensating around 570,000 car loan customers forced into buying Auto Insurance<\/a> that they didnt need. New yoNew York Times<\/a> says the unnecessary insurance pushed some 274,000 customers into delinquency and resulted in nearly 25,000 wrongful vehicle repossessions. The bank estimates the total compensation cost is around 80 million. In a statement wells fargo says starting next month it will proactively reach out to impacted customers with letters and refund checks. Hewlettpackard enterprises Ceo Meg Whitman<\/a> refuting comments that she will be the next uber ceo. In tweets, wlitman said normally i do not comment on rumors, but the speculation about uber has become a distraction im fully commit toted to hp an remain committed as the companys ceo. We have a lot of work to do at hp i will not going be anywhere ubers ceo will not be meg whit mra whitman. Active december cushion discuse reportedly actively held without going ge Ceo Jeff Immelt<\/a> you can say thats categorically false that lease going there. I can say categorically if i was a betting man if you were a betting man based on conversations ive had with people close to uber, that he would not necessarily get this job okay. Why why jerk him around for it then . If he theyre doing a thorough search, you need to look at a lot of candidates. I think its good for him i think it would be great for him. Good that hes in the mix because maybe hes theres a big job, an important job, headline job. A great job hes not finished. His Business Career<\/a> is not finished right. If you can get there before the ipo, there might be value. This is a question discussed there. If you become the ceo of this company now, you will get ostensibly pre ipo shares. Is it based on the 60 billion number bingo theres the 70 billion valuation, thats what most investors are thats what the last technical round was the last round. The secondary market you can pick this stuff up for under 5 billion. So it becomes interesting it would be crazy for them to go after what they would be considering big talent and not offer them what is fair market value. Yes except for the fact that if the last people in are at the 70 billion they need this to work for them. You want to keepeverybody aligned. It becomes interesting in terms of how do you it. The value destruction the last six months of that company, maybe you have some below, some built in advantages to make sure you are keeping everybody at the table. We were having this conversation before i think whoever they bring in will be somebody who has to work with Travis Kalanick<\/a> the idea that youre not going to be working with limb, he ohis a massive stake in the company you have to be ability to wole t him. I dont know how much hell be involved and how much power he has he is the largest shareholder. He is the largest shareholder. But doesnt have control but hes not majority owner. If they were all aligned, they were all on the same table i realize theyre not all aligned. The idea he will not have some say in how the company is wrorus wrong. Merck is reporting. The gaap number is 71 cents, the adjust the number is 1. 01, versus expectation of 87 cents if thats the clean number to use, thats well above the revenue number is above, 9. 9 billion versus 9. 74. Then it gets interesting let me see if i can find a nongaap forecast. The gaap forecast for the fiscal year is 1. 60 to 1. 72. The street said 3. 85 thats like that other number i gave you nongaap between 3. 76 and 3. 88 3. 76, 3. 88 and 3. 85 is where the street is. Sales, 312 million zetia, vitoran, and the biggest drug, genuvia, 3. 1 billion then they got into the Animal Health<\/a> business. Almost a billion in sales with Animal Health<\/a>. Not Much Movement<\/a> at this point in that stock. Coming up, millions of americans suffer from excess ef sweating its only 3 unless you use squawk box guests, then its 12 , 15 you know who you are its different when youre on camera you know who you are. Thats because you make them sweat, yo self were supposed to do that the upper lip sweat gets me uncomfortable. Help is in sight there is a treatment being submitted to the fda by the end of the year. Some people get botox in their pits seems like a bad idea it does. As we head to break a quick check of whats happening in the european markets its hot outside. 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<\/a> 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 box. Millions of americans suffer from extreme perspiration. But Biopharma Company<\/a> determine ire ra is telling patients dont sweat it thats cute. Joining us now tom wiggans, ceo of dermira the ceo is on track to submit an application for its arm pit treatment to the fda by the end of the year. At this point its a big market, tom. Youve got, i dont know, antiperspirants which may or may not work and you do get people who get botox injected for this reason but theres not just one injection. Youve got to do a few right and that you know, you got to be ready to do that, i think, if you want to do it so theres a pretty big market for this well, its estimated that as many as 15 Million People<\/a> in america have this condition. So all of us sweat right . When you its the hypersweating. Right its the hypersweating when you work out you sweat. If you walked more than a block in new york this morning it seems like you sweat but you need to to cool down the condition of hyperhydrodisis for those people who sweat too much they sweat all the time and that has some profound quality of life impacts okay. I believe the mechanism is fascinating to me. Ive i had some experience in neurotransmitters. So youre blocking the neurotransmitter from from going across and hitting sweat glands, to stimulate them, right . Correct correct. I hope you know that from going to the neuromuscular junction so i would hope you only affect the sweat glands with this. Do you have a way of just blocking it for sweat glands well, dermira was founded to bring innovation to dermatology. We think this is a good example of it. Weve taken a standard category of products that block ecytocholine but weve formulated them topically so not only is it more tolerable but its easier to use it really is something that does it take ecytocholine apart or does it block it it blocks but only it has local activity wherever you apply it. So, thats the benefit from a tollerability standpoint but were also interested in what is easy, convenient, for the patient. And its easier to use i mean id be worried i couldnt move my arm after i did that no, no, no. Its not a pair litic. It blocks the receptor blocks the receptor okay the stock, i guess, responds to competition. There are currently, youre also working in the yearly, i dont think yearly the stock is it reflects some worries that youve got from established companies that already are in a lot of these markets, right . Youve got botox, but you also have a psoriasis treatment, too. But you have competition, right . Well, of course we have competition. Right thats okay with us because we think the products that we have are bringing enough innovation to the market to differentiate them certainly the hyperhydro sis products, our psoriasis product, we just filed a sub element for that this week we think that has advantages and we have an acne product which is a huge, underserved market in medical dermatology. So we have that product as well with a new mechanism of action weve got a balanced portfolio, a latestage portfolio and all of these things we think provide potentially competitive advantages whats the difference whats new about your acne product . How does it work well, we often say acne is the poster child for lack of innovation in dermatology. And the company was founded really to bring innovation to dermatology. There hasnt been meaningful innovation, with the exception of a few areas, like psoriasis, where theres been terrific innovation, but there hasnt been a lot of innovation in dermatologist for decades. So acne has been treated, if your kids have acne, theres a pretty good chance theyre being treated with the same thing that you were treated with when you were a teenager. Usually the pill, right well accutane is for very serious cystic acne and its very effective but a numb beof the compounds like antibiotics and other things have been around for a long time. Our product has a unique mechanism of action. It blocks the production of the oil on your face that really starts the acne cycle. So its kind of been the long sought new mechanism of action its in Clinical Trials<\/a> right now. Advanced Clinical Trials<\/a>, and were hopeful it will continue to get good results and can bring it to patients it sounds like could be similar, i guess its not, but seb ashs dplands make the oil, right . Yes youre not blocking it with a topical ecytocholine no. This is a different way to block the glands well its a molecule that blocks an enzyme thats necessary to produce these oils. Okay. And you dont need these oils . Theres usually a reason you have those, right . Well a little oil is good for your face. A lot of oil you know hyper i see becky kind of nodding maybe a lot of oil is not good and certainly, if you have a lot of oil and it blocks your pores, you know, thats the start of the acne cycle we you know, andrew but we wear makeup and i still get a zit occasionally and i welcome that at my age im happy youre i go, look, look at this. Yeah so i dont want any of that. Well, okay. Thats i can assure you there are a lot of teenagers and adults who do want it. Who need it they need it. No, i know. There are people who need it. For you, you dont need it no, i dont i welcome one. The product for you, too the sweat thing. Yeah, i dont im fine there. Im good its i think its fine one of them, though, today but its early anyway, thank you, tom were going to check back later. Okay. Coming up, when we return, well talk well, well all be sweating the babys room wont build itself. And her paw wont heal on its own. Were all working forward to something. Synchrony financial can help your customers make it happen sooner. So she can plug into her dreams. And theyll have a new addition for their new addition. Whatever youre working forward to, even if its chasing squirrels, Synchrony Financial<\/a> can help you get there. Even if its chasing squirrels, theextreme risk of burstd a pipes and water damage. Y. Soon, Insurance Companies<\/a> wont pay for damages. That is, not if they can help prevent damages from happening in the first place. At cognizant, were turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. Get ready, because were helping leading companies see it and see it throughwith digital. Good morning, everybody. We are on Washington Watch Senate Republicans<\/a> failed to repeal obamacare and a dramatic vote late night on capitol hill. We are live in d. C. With the fallout. U. S. Futures are reacting to the news plus Technology Stocks<\/a> getting ready for another day of selling after amazon disappoints weve got the full Market Reaction<\/a> straight ahead. And Virtual Reality<\/a> helping potential homeowners build and design their homes the future of home buying through augmented reality. The second hour of squawk box begins right now live from the beating heart of business, new york city, this is squawk box. Good morning welcome back to squawk box right here on cnbc were talking about compulsive hand washing this morning. Live at the Nasdaq Market<\/a>site in times square im Andrew Ross Sorkin<\/a>, along with becky quick, whos back in town, and joe kernen take a quick look at the futures. I hate to tell you but we are in the red this morning probably one of the first mornings in quite awhile dow looks like it would open off about 28. 5. Nasdaq down about 53 points. Well talk about amazon weighing that down as well, s p 500 off about 8 points making headlines this morning, were going to get you a first look at the morning on the nations economy and how it did in the Second Quarter<\/a>. Economists think the gdp will come in at 2. 7 annual growth rate, well above the 1. 4 rate registered during the first quarter. That number coming out at 8 30 also dow component merck out with its quarterly earnings. They earned 1. 01 for the share Second Quarter<\/a> 14 cents above estimates. Drugmakers revenue was also above forecast and two more dow components out with their numbers later this morning. Exxonmobil, set to report in about an hour. And chevron, will be issuing its Quarterly Report<\/a> in about 90 minutes. Joe . You know, the simplist psycho analysis of swann that washes their hands all the time yes people have had faucets that they feel very guilty about. And its actual the hand washing is its very freudian. It is but if you have this thought where oh, my god i feel horrible and then you wash your hands so im not sure, you say its because of germs or are there thoughts youve had that im with andrew explain to the audience whats happening here. We had a segment about sweat and i was saying i have the opposite problem which is that i shake a lot of hands, especially in this job because oftentimes the guests are over here and i say hello and hopefully im trying to be polite then you feel dirty and im washing my hands because i dont want to get sick its very hard to do this job in the morning and do it sick its like playing injured. I try to avoid that. By the way i have no problem doing this whatsoever im not even thinking about it im just exexplaining that my hands are so dry and dried out to the point why do you keep washing them . Im saying, maybe in this case maybe im wrong i just think you a lot of times there are things for that, too antidepressants help you know your president , our president hes shaking a lot of hands now. Shaking a lot of hands. But he is someone i know but i dont understand how about how who howie mandel, used to only give people the fist bump. Right because he didnt want to ive always agreed with President Trump<\/a> on that. Ive got so many germs i cant even think about worrying about germs. It builds up your immune system is that true it continues to build your immune system the Senate Rejecting<\/a> a slimmed down Obamacare Repeal<\/a> last night nobody people probably know this by now, kayla, but we do want to hear your analysis of what happened. She joins us with more not everyone was up all night following this, joe. Some people are just waking up and they want to know what the news is. The vote was 4951, three republicans voting against the senates skinny repeal of obamacare. Two of them voted against proceeding earlier in the week but john mccain, who triumphantly returned from his cancer diagnosis earlier, effectively ended that effort, shocking the floor no. Gasps and applause there, as he cast that vote late last night. Among the issues for various members, a cbo score that showed 16 million fewer people insured while premiums, a key focus for conservatives would have risen 20 . Most importantly, the possibility that this eightpage latenight fix would actually become law the president tweeting blame against the no vote saying they quote let the American People<\/a> down then calling for obamacare to implode. But there are real questions now about how much Political Capital<\/a> he has with lawmakers and with his own party, after hosting luncheons, making official speeches, and threatening to pull row sources from states elsewhere. Alaska senator Lisa Murkowski<\/a> whos on the receiving end of some of those threats still voted no i know that theres probably disappointment, because it was the three votes that senator mccain and senator collins and i cast that did not allow this this bill to move forward. And that is difficult. But, i believe each of us stood for the reasons that we felt were right so she didnt feel the threats worked she still wanted to do the right thing. So now theres no clear path forward on health care six months into the administration lawmakers are eyeing a month on recess and the west wing is at war. There are also hard and fast deadlines looming on the debt ceiling and the budget so it remaps to be seen whether this exercise was the exception, guys, or the rule. Kayla, i guess we wait to hear from who next is this the white house that signals the next move . Is it mcconnell . Is it the house . Where where do you think this all lies at this point the speculation overnight, becky, was that maybe the democrats at this point will put a plan forward because they were rejoicing at the fact that this bill did not move forward. So if, in fact, they are so excited about this not moving forward, then is there a potential replacement, or another plan, or a stabilization plan that the democrats now will put forward . The white house at some point needs to decide whether its going to continue making billions of dollars in payments to the insurers, which thats sort of an issue thats been hanging in limbo principles met on monday to try to work this out, a go forward policy and they couldnt reach a decision because they were waiting the outcome on this legislation. So will they make those payments thats a big question. Kayla, who introduced the single payer amendment and then, all the democrats, they voted they didnt vote yes or no, they voted present. Yes, they voted present why they didnt vote yes, why . I thought thats what elizabeth warren, Bernie Sanders<\/a>, why didnt they vote yes senator Bernie Sanders<\/a> said he felt like it was a political move that they were being trolled just to get on the record voting either for or against single payer, that then could be used as a massive against them in the future so they felt like that was not a productive exercise for just one that was being done for political reasons. But needless to say that did not go anywhere. Present yeah conviction conviction weve seen a lot of that in from both sides in d. C anyway thanks, kayla. All right. Folks, in the meantime weve been watching earnings amazon reporting a beat on revenue but a huge miss when it comes to the earnings themselves that drove the stock price down about 3 in afterhours trading ernst per share came in at 40 cents. That missed the streets estimates of 1. 42 a share but we did see revenue that was better than expected for more on the numbers eric sheridan, ubss managing director joins us to talk about this eric, how big of a surprise was it to see a miss like that revenue came in better than expected how shocked were you it wasnt that shocking at the end of the day this is a Management Team<\/a> thats playing the long game. They beat the guidance for revenue in q2. They very rarely do that theyve only come in at the high end of their guide they guided about 4 above the street for q3. Talked about a lot of things resulting in reaccelerated Revenue Growth<\/a> in the u. S. Consumer environment right now there are not a lot of things reaxccelerating Revenue Growth<\/a> and they are slowly investing against any number of opportunities to gain incremental market share for the long term. You know, amazon, this has been the playbook from day one jeff bezos laid this out in every letter that hes ever written, the people have always said okay, is there a point where investors run out of patience, whats your answer on that i dont think were at that point. I think right now, when you look at some of the key categories theyre going to go after, food, consumer packaged goods, private label, india, finally seeing prime adoption in western europe, i think investors are going to give them patience while the stock is pulling back 3 today, it is up 40 yeartodate and i think in a low global gdp environment, buying something at this scale thats still growing well north of 20 , theres not a lot of those opportunities out there. Because amazon has invested in the past, thats why theyve gotten in arenas where they have been massively successful. Things like the cloud and being first and having a very long runway the company said last night the chief Financial Officer<\/a> said theyre looking to continue to invest in businesses that do four things. Customers love them, they can grow to be large, they have Strong Financial<\/a> returns and theyre durable and can last for decades. Are they disciplined when it comes to looking at the businesses theyre investing in . I think its actually one of the most disciplined Management Team<\/a>s on wall street they take gross profit dollars and reinvest them back in the business in a way to drive what we call the prime flywheel you become a prime subscriber, youre in their ecosystem and the velocity at which you shop and consume continues to rise. Most prime subscribers spend two to three x what nonprime subscribers spend. So in that ecosystem it is key to continuing to drive that revenue. We were talking about this off camera today, they only just like no other company. Apple owns me in one way, but amazon owns me in a much bigger way. I look there first would you tell people would buy the stock . I would looking out over the next couple of years i think this is one of the few opportunities to buy a Global Growth<\/a> leader thats actually reaccelerating on the top line and the historical track record of them investing back in their business is one that has historically paid off for shareholders the stock is up 40 this year we had another stock picker who was here this morning who says he thinks these shares are overpriced what do you say to that . When you look at the various segments theyre playing for, youre looking at still early days in terms of penetration a lot of people dont realize ecommerce is still only about 13 to 14 of global retail. Cloud computing is a mid single digit percent penetration of global i. T. Services these are very long runways that we think are going to sustain growth for the long term, as well as necessarily just looking at this years numbers i didnt realize it was only 13 . What are they in the United States<\/a> now its about 15 . Okay. Eric, thanks for coming in today. Appreciate it. Thanks. Okay lets get to the Broader Market<\/a>s. Joinings is the chief market ap list at the Lindsey Group<\/a> and a cnbc contributor also randy is here, Vice President<\/a> Portfolio Manager<\/a> of barrons funds can we have a vix conversation not to get too nerdy about all this but we were talking about this in the 6 00 hour, what were supposed to think of the vix right now . I mean, i honestly dont know in the shortterm what to make of it. It can stay low for awhile but it tells you when you reach an extreme like this that people arent that worried about but did something change . Is there something fundamentally different going on in the world . Central banks when they start to get very active over the past five or six years we saw the steady decline in the vix. That culminated in the last couple of weeks. Usually its a setup for change. But, who knows when. Right where are you on equities right now . Yeah, i mean, were we look micro than we work macro. So were finding incredible Growth Opportunities<\/a> in the economy. Now im a small cap manager, but im tailing big opportunities like amazon, for example right so in the data center we look at companies that can make equipment that are going to help grow the data center we own a Company Called<\/a> maycom, which makes optical connectors, multibillion dollar opportunities, and so these companies are growing top lines very quickly what inning are we in at this point . Well, of the broader economy . Broader economy, Broader Market<\/a> im not even going to do real economy, just market its hard to tell when you look at valuations on my individual stocks in my portfolio i still see tremendous upside were a little mid and longterm focused on the nearterm, you could have some valuation discrepancies. But what im trying to find is companies that are growing cash flow so when i look a year or two years out or even four years out its tremendous as theyre randy, i saw you nodding through some of the conversation that we were having with eric about amazon is amazon one of the stocks that you like well, we dont own it its a little too big for us our weighted average market cap is about 1 billion 7 so slightly smaller than amazon. Its a tremendous company i follow very closely because it has impact on Many Companies<\/a> peter, youre our resident fed expert this morning. You cant fight the fed. Maybe thats what this is all about. Because nobody else is here well, the 64,000 question for the market is how does it respond to quantitative tightening, which will likely begin in september the market got very excited when qe was on, qe 1, 2 and 3 and i think well have to see how it responds on the reversal. Bill park of this bull market has been multiple expansion. Since 2013 the end of this year earnings are up about 10 . So three years in a row earnings were flat. Right but the markets up like 35 because of the multiple expansion. So what happens to multiples when the fed starts shrinking their Balance Sheet<\/a> i think is a key question you asked the right question. What do you think the right answer is . Well its not going to be symmetrical, but if qe ignited a lot of spirits, then qt may do the reverse. Not symmetrically but if you combine that with the ecb tapering i think that could change peoples risk appetite. Do you think about that i look at a broader gdp im not trying to analyze the correlation of rates to Market Growth<\/a> but i do think about gdp growth. And whats interesting is, the 2008 recession was one of the worst recessions weve had in incredibly long time growth has been really anemic in gdp since then and so weve had, you know, kind of low like 1, 1. 5 gdp growth all of a sudden i think the number this morning was 2. 7 so we are seeing somewhat of a reacceleration we have the tumult in washington is not helping anything. But incredibly markets are looking through it and i think the reason is, we have low inflation weve got Economic Growth<\/a> thats actually improving and so the cyclicality is not extreme. And you know, markets may get ahead of themselves a little bit. But if the earnings keep coming in and we see cash flows continue to grow i think were going to be okay okay, randy, peter, thank you. When we come back this morning, the ceo of striker will join us to talk about Quarterly Results<\/a>, and possibility of repealing attacks on medical device makers. Was that an airplane reference House Republicans<\/a> taking the border adjustment tax off the table. We will talk nafta, government funding, and more with the u. S. Hispanic chamber of commerce and 8 00 a. M. , steny hoyer is our special guest. Tedoureatching squawk box right here on cnbc. Liberty mutual stood with me when i was too busy with the kids to get a repair estimate. I just snapped a photo and got an estimate in 24 hours. My Insurance Company<\/a> definitely doesnt have that. You can leave worry behind when liberty stands with you\u2122 Liberty Mutual<\/a> insurance. So it only made sense to create a network that keeps up. Introducing xfinity mobile. It combines americas largest, most reliable 4g lte with the most wifi hotspots nationwide. Saving you money wherever you check your phone. Yeah, even there. See how much you can save when you choose by the gig or unlimited. Call, or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network designed to save you money. Stryker out with earnings. The medical Device Company<\/a> beating on the top and bottom lines. Sales in its neurotechnology business saw the biggest boost in the quarter joining us, ceo of stryker you know, talked about what moves your stock, what helps or hurts the results of your company over the years as its been a lot of Different Things<\/a> in a recession people dont have a lot of this surgery, necessarily, that some see as elective or they put it off where are you in terms of the sweet spot right now are people getting Knee Replacement<\/a>s people getting hip replacements . Absolutely. For us its always about innovation is it always we grow regardless of the health care against your competitors . You need to have a better hip replacement . Absolutely. Weve grown for the last 17 quarters north of 5 very consistent high growth. Taking market share against our competition. Knee replacement we have robotic assisted knee surgery which is taking the market by storm really makes precise placement of the implant, less soft tissue damage were the only ones with that on the market so our knee growth has outpaced the market for about three years now. Were really excited about that for the future you talked about neurotechnology, taking clots out of the brain with a stent. These are Game Changing<\/a> technologies that really provide long life for patients also right now if they have a stroke you can be impaired and cost the Health Care System<\/a> a huge amount of money there is value in this technology it reduces other costs for the Health Care System<\/a> whats your biggest limit in trying to get doctors trained on these new technologies Something Like<\/a> robotic surgery training is a change of behavior you have to change your implant. You have to learn how to stand differently in the operating room and also reimbursement sometimes is a challenge reimbursement and then it brings the whole Health Care Issue<\/a> into focus you deal with the centers for medicaid and medicare on this. Right but you also had the medical device tax that was one of the things that went down in defeat last night was getting rid of the medical device tax permanently it has been suspended the last two years. Last year and this year. Were looking forward to full repeal of the device tax regardless of how this Health Care System<\/a> ends up evolving obviously with the defeat last night that was on the table, to be part of the repeal. We look forward to that. The knee surgery that how invasive is it now is it minimally invasive, or its not even possible to do that when youre doing a hip or knee, is it . Well, there are different approaches like i mentioned robotically assisted surgery is less invasive than traditional surgery. Slightly. Buttist still a fairly invasive procedure but it does return you back to work or back to activity, theyre really amazing procedures im sure you know people who have had Knee Replacement<\/a>. Think about one of our sponsors, he was able to go back on the tour and win on the champions tour after getting Knee Replacement<\/a>. One of the efforts from people who have been interested in potentially getting is thinking how long does this last and what is it seven to ten years . Much longer than that how long . Total Knee Replacement<\/a> can last up to 30 years. Wow thats extended in the last dramaticalcalifornidramatica2 years. Ask you Something Else<\/a> that the the clot removing, its a stent a stent so, that doesnt help with aneurysms, right no. Theres two types of stroke. You have something for aneurysms . Coils you have titanium coils you implant into the an youveism. You go up through the leg yes thats for hemorrhagic stroke. For es schemeic stroke, thats a clot its a blockage in the vessels of the brain that can predispose someone to having a stroke eventually. And the danger is the blood doesnt flow to that part of the brain those brain cells die, they cant regenerate. So its very, very serious so, baby boomers. I mean, youre pretty well set up Everybody Needs<\/a> were in a great space with the health care given demographics whats the average age for a hip replapsment . Average age is about 60, 65 mostly covered by medicare thats why not were not so worried about how health care resolves the system because most people are already covered what about knee replace innocent a little bit younger. And you can do a partial Knee Replacement<\/a> and you keep your acl intact you dont bring any props in. The last you know you have to have a saw that cuts through oh, dont morning. Morning show yeah, but every time i come here you ask me about bringing promise and i say the two most exciting products we have is the robotic assistant. Its a big robot and the stent is microscopic what about the youve got a saw . Power tool that looks like a power tool next time ill bring that by the way, heres the stent. You have one microscopic. How does this look . Its a Battery Powered<\/a> saw. Looks like a hardware tool to some degree. What are you sawing through youre cutting through bone to put in the new to put in the new implants. Basically we just take the part that has osteoarthritis but it doesnt cut the flesh, right . No, just cuts through the bone thats the way technologically, its its meant to be minimally invasive, and just work on put it right on your thats what were going to do youre going to test it. Test it on you it doesnt cut flesh i know but it it doesnt cut flesh. Is it loud . Rrrr does it smell can you can you is it like a like it just like leather face chain saw no, no. No . These are very, very small batteries. Its very agile. No problem kevin, of all the things that you look out there and you see everything from health care, to whats happening with reimbursements, what happens with what is your biggest concern . Obviously the company has a lot of things going for it but whats the one thing that youre really trying to manage . For us its just focusing on driving innovation if we provide value in the Health Care System<\/a> we have a product that takes smoke out of the operating room, when you cut through the skin it actually pulls the smoke into the canister so the Health Care Professionals<\/a> that are around the surgery are not exposed to secondhand smoke, these kinds of value added technologies will always be ainful innovation. Innovation is number one. Weve been a Growth Company<\/a> for 37 years since weve gone public how much we spend about 6. 5 of our sales in r d which is for med tech a healthy level of r d spend. We also use your cash to buy companies so we bought 40 companies over the last four years. Thats a form of external r d as well its always about innovation. The material of choice for knee and hip is the same thing so theres titanium components, and cobalt hrome those are the two types of me l metal. And for hips you also have ceram ceramics you look at everything . Yes these rt top these are the top of the line no ones going to have a knee problem with Something Better<\/a> than that . Were not concerned about that the implants are fantastic what has to improve is the actual placement of the implants the balancing of the knee. Thats why we went after the robot. We bought a Company Called<\/a> maco about four years ago to help make the procedure more standardized hip patients are very happy but about 25 of knee patients are not satisfied. Whos your biggest competitor Johnson Johnson<\/a> zimmer is a kcompetitor depew is that division Johnson Johnson<\/a> bought them what happens in terms of coba cobalt i saw a report this morning about how cobalt is going to be a very rare material harder and harder to come by as all of the cars, electronic vehicles are using them in batteries. Yeah, so far we havent had any issues in terms of the price of cobalt chrome and theyre are also other tears you can use as well okay, great you know were going to land on an asteroid, and all this stuff theres an asteroid thats supposedly worth 17 trillion with the cobalt no, with everything with everything. Send ben affleck up. Just like the movie just like the movie to thrill drdrill through th asteroid when we come back, well hear from the ceo of the u. S. Hispanic chamber of commerce good morning, everybody. Welcome back to squawk box here on cnbc we are live from the Nasdaq Market<\/a>site in times square among the stories that are front and center this morning, Energy Giants<\/a> and dow components, exxonmobil and chevron are both out with quarterly numbers in the next hour. Exxon is expected to report experience of 84 cents a share on revenue of nearly 63 billion. Chevron is projected to report profit of 87 cents a share on revenue of just over 32 billion. Also federal regulators are expanding an investigation into fords aexplorer suv. Theyre looking to reports of exhaust odors leaking into vehicle compartments after getting more than 2700 complaints the affected models are from the 2011 through 2017 model years. And wells fargos going to be reimbursing about 80 to 500,000 customers. They were wrongly charged for car loan insurance the bank says it takes full responsibility for failing to manage the Loan Insurance Program<\/a> properly American Airlines<\/a> is reporting phil lebeau multifaceted dude, really. You do it all, phil. You have the numbers for us. And joe in this case we do have the Second Quarter<\/a> numbers from American Airlines<\/a> this is a beat on the top and the bottom line. American earning 1. 92 a share in the Second Quarter<\/a>. That is five cents better than analyst expectations revenue coming in at 11. 105 billion dollars. Slightly move estimates. One of the highlights from the Second Quarter<\/a>, a big push higher when it comes to total revenue for available seat miles up 5. 7 , compare that with an increase of 3. 1 in the first quarter. By the way, that 5. 7 increase in revenue for available seat mile which is really the metric in the industry, thats the best of the Big Four Airlines<\/a> in the Second Quarter<\/a> and the company reporting a margin of 13. 5 in the Second Quarter<\/a>. Guys, later today on the halftime report, you do not want to miss this interview an exclusive sitdown with doug parker chairman and ceo of American Airlines<\/a> were going to talk not only about the Second Quarter<\/a> results, the outlook for the remainder of the year, and yeah im sure there will be a question or two regarding Qatar Airways<\/a> and what has been a very interesting last couple of months in terms of that airline trying to take a stake within American Airlines<\/a>. A beat on the top and bottom lines for american in the Second Quarter<\/a>. Back to you. Great thank you for that, phil with nafta talks between the u. S. , canada and mexico set to begin next month want to bring in javier palomarez, the u. S. Hispanic chamber of commerce president and ceo. Good morning to you. You say, as a democrat, that you disagree with the president on many issues but that there is a way to negotiate nafta in a better way what do you mean by that absolutely. You know, if you look at nafta today, look any piece of legislation thats nearly 25 years old does need to be recalibrated, and adjusted but to allow the entire agreement makes absolutely no sense. Were very happy to see right now, at least, that the objectives that have come down from the administration in terms of nafta and the renegotiation include the protection of programs that will allow american Small Businesses<\/a> to continue to compete on a more level Playing Field<\/a>. More specifically, when you look at labor, by way of example, you know, were the most were the largest economy in the world. But, when it comes to labor, we are very stringent and rightly so on things like minimum wages, the minimum age of a worker. The number of hours that a worker can work before he begins to pay overtime. And even the conditions in the workplace in terms of health, and safety other countries dont necessarily follow as stringent a set of rules therefore creating an unfair advantage for those other countries. Were happy to see that instead of throwing out nafta, were going to try to renegotiate those elements that make a lot of sense so that we can create that level Playing Field<\/a> you know you look at the environment. Again, were the most industrialized nation in the world. But weve got restrictions in terms of carbon emissions, and toxic waste and things of that nature again, some of our neighbors dont necessarily follow those same restrictions where do you think the level where do you think the wall falls within all of this and how this is going to impact any negotiation . Well, listen, weve never been a proponent of a wall were not a proponent of a wall now. And we never will be its better to have increased personnel along the border its better to have technology and surveillance mechanisms that keep the border safe were all about deporting those who dont belong here because they are criminals, or a hazard to the American People<\/a> do you think youve had success with that argument we have we have. We have, and im very happy to see that, you know, theres a slowing down of the rhetoric were looking more carefully at whats the best and most effective way to protect our borders. Right it impacts a variety of things as long as its on the table, doesnt it create a cloud or an overhang in terms of these conversations, or no well, of course it does therein lies the opportunity for our association that represents now 4. 2 million hispanic owned firms in this country that collectively contribute over 668 billion to the american economy. Listen, its important that we have a voice, and we have a place at the table i have to admit, that in the case of this particular administration, they have been very willing to deal with us very willing to talk to us on wednesday of this week i spoke for an hour and a half with secretary of agriculture sonny perdue i brought in ten american farmers, four from california, two from texas, and four from florida. We had a great, very candid discussion about where this economy needs to be in terms of agriculture. Yesterday alone, i spoke with ivanka and other members of the administration about where we need to go in terms of wage disparity, and women, you know, in the workplace i have to admit that theyve been very willing to work with us and they have been listening to our input on agriculture, youre against the border adjustment tax. But i would have thought that that would help things when it comes to the agriculture actually, it does not there are some crops by way of example that simply cannot be grown in the United States<\/a> because of the weather there are some parts of the u. S. That, you know, during certain parts of the year, are under two feet of snow, and you cant harvest a crop there so you have many farmers that have agreements that grow crops south of the border, and bring those crops up to keep the American People<\/a> fed and happy during the winter months to levy a tax on those imports would be foolhardy and ultimately, its the American People<\/a> who would be paying more for that food that comes and those grains that come from south of the border. Okay. We want to thank you for your time this morning, sir thanks for having me. Appreciate it. You bet all right. Coming up, youre not going to believe it probably the most compelling block of tv programming in the world. This is billion Virtual Reality<\/a> and using it to design your kitchen, brandnew Pilot Program<\/a> that Toll Brothers<\/a> is rolling out. Were going to show you about this immersive Virtual Reality<\/a> technology when we come back time now for todays aflac trivia question. A used car, what should i watch . Show me sports. Its so fluffy look at that fluffy unicorn hes so fluffy im gonna die your voice is awesome. The x1 voice remote. Xfinity. The future of awesome. Im the one clocking in. When youre clocking out. Sensing your every move and automatically adjusting to help you stay effortlessly comfortable. There. I can even warm these to help you fall asleep faster. Does your bed do that . Oh. I dont actually talk. Though im smart enough to. Im the new sleep number 360 smart bed. Lets meet at a sleep number store. Whuuuuuat . Rtgage offer from the bank today. You never just get one offer. Go to lendingtree. Com and shop multiple loan offers for free free . Yeah. Could save thousands. You should probably buy me dinner. No. Go to lendingtree. Com for a new home loan or refinance. Receive up to five free offers and choose the loan thats right for you. Our average customer could lower their monthly bills by over three hundred dollars. Go to lendingtree. Com right now. 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<\/a> 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 welcome back, everybody. Our next guests have a new partnership that shows how Virtual Reality<\/a> is changing luxury home design lets bring in toll architecture president jeb gibson good morning. Jeb, why dont you walk us through what it is this partnership is doing and how you think youre helping customers so, before we talk about what this is, its really the why why did we do this so how do we delight customers who are already delighted . And because theres a line between so we have beautiful model homes. And we have incredible Design Studios<\/a> where customers can make many, many choices about what theyre buying and even if we build a model of every home, in some cases we do. And in each community we model, you know, many homes so i see what it is im picking before a clunk down a lot of money, probably more money than ive ever spent in my life but the model home represents one style. So if thats not your style, we wanted to find a way to help our customers visualize the other possibilities. Their choice so, the partnership that we started was about sort of this twoprong way of visualizing the first is about the space and the physical choices you can make about can i make my kitchen bigger white cabinets, i want dark granite to come in i want something along these lines. Right i get it for those of us who dont do this for a living its hard to visualize things when youre looking at little swatches or small pieces of things we wanted to be able in realtime allow our customers to make their choices and, using the v. R. Technology that mark and his firm helped us develop they can immerse themselves in the model and make their choices in realtime, and come away with the confidence in fact were looking at some of the people doing this right now. I guess when you put this on what you see is, okay, swap in a wood floor swap out Something Else<\/a> and actually live in the space, feel like youre standing in it yeah, what we found is that you sort of make your choices on the ipad so people dont eally want to spend, you know, the entire time in the headset making all their choices. Its an unfamiliar technology. They dont know how to navigate it we use the ipad as a paint palette where youre making your choices and you go into the headset and you can make some sort of alternatives you can go from, change the floor, let me change the wall color, let me change the backsplash so its a iterative kind of back and forth experience jed, what do you hear back from the customers who are using this you have this in three states right now . In two about to go plus the design studio, which is where those pictures were taken. And you can see from their faces i mean its just absolute delight. And the feeling that theyve been there one of our customers said that she felt like she was already in her kitchen. Right let me ask you a question, which is, in the new apple phone, supposed to come out in the fall, supposed to have all sorts of Virtual Reality<\/a> and a. R. Kind of stuff yeah. Youre clearly ahead of the game now but whats your worry or do you have any worries that this is going to be commoditized meaning that in two or three years from now, whether you do it this way, or whether youre walking from an old home, and you want to put new furniture in that everybodys going to have Technology Similar<\/a> to this, and then what do you do . I think you have a couple things one is, well one i hope the technology is everywhere that would be terrific for us. But, the outside of the technology where theres tracking technology or visualization tools, theres a piece behind it thats actually the harder problem to solve, which is how do you create all this content and then how do you create all these content partnerships and make them Work Together<\/a>. So for instance, you have Toll Brothers<\/a>, but they have many, many vendor partners that are involved, whether its polar, American Woodmark<\/a> that have products in. Really what our business is, although you know, sort of the excitement and jazz of it is, you know the head set. Its really the behind the scenes almost like where you all these different parts and how exclusive is this how cleex ussive is it . Is this relationship you have we are partners with them to begin this journey right and you mentioned new technology thats where we want to go we want to continue to embrace new technology and bring this forward in any way we can. If i was another home builder, would you do business with me or not the way we work is we try to find kind of the leader in each major category, and really invest in making them successful so we wednesday out there and we tried to find a partner who we really thought was going to invest behind it, was doing to innovate and well give them as many advantages as we can for as long as we can but ultimately we have to give the business jed, whats your plan in terms of rolling this out . Will you be able to see this at every location the idea is to engage with our customers, and find out how theyre using it and what they like and dont like about it and then figure out the best way to scale this. Is this just kitchens or now or is this something you could use with a bathroom design and i ask because of somebody whos chosen poorly in the past . Sure. So right now, its just the kitchen and the spaces around the kitchen. So, its not just a small shot of the kitchen but because our plans are so open you can see the family room, and the breakfast room, et cetera. And the idea is then to probably expand that to more of the home. Maybe the bathroom maybe the whole home maybe the exterior were going to figure out that road map as time permits you mentioned you do this in industry what are your other Big Industries<\/a> so kitchens, bathrooms, furniture, outdoor we have our longestterm outdoor decking. Imagine sort of visualizing your deck on the back of your house so theres a lot of different people in the ar, vr space but wefocus specifically on that home industry to create that sort of Network Effect<\/a> in terms of the economics of your business. Right you charge him, i assume, but you also charge all of the different providers . Yeah, its very early in this what i would call kind of content network. The way i sort of think about it is if were all betting that the future is sort of 3d and vr, what is the ad unit in the future right as a virtual product and so, i mean thats kind of the big light at the end of the tunnel that were all shooting for. And its not unusual, you know, in the industry, for when we use a vendor, whether its windows, or whatever, that they are providing to us a catalog of content that we can use in our growing. Right so if this is a step forward in that where we can use that content in our visualization experience jed i know that youre an architect. Youre the key architect for Toll Brothers<\/a>. Whats the business like these days is there demand for a lot of extra bells and whistles things that you would expect in the economy or are people cutting back i think that we cater to the luxury market, and they just crave choice and its our desire to give them as much flexibility as possible. And hence this program we want whats the newest, coolest thing that people are putting in their homes . That you get asked about a lot like Keyless Entry<\/a> i dont know im making up. Theres a lot of roads you can go down there. Like theres technology. Theres wireless, wifi, theres a lot of things around the kitchen and baths. And that changes Free Standing<\/a> pubs are back tree standing tubs are back great well, gentlemen, thank you both very much for joining us this morning. We appreciate your time. Thank you thank you very much appreciate it coming up, more on the late night drama in washington. House minority whip steny hoyer joins us at the top of the hour to discuss the failure of the skinny repeal of obamacare squawk box will be right back. Still to come oh, thats an rv a look at whats driving millennials to rack up miles on the open road. And what it means for the rv industry dont you go falling in love with it now. Because were taking it with us when we leave here next month. That story is straight ahead, ghhe osawbox. Because, when you really, really want to be there, but you cant. At cognizant, were helping todays leading Media Companies<\/a> create more immersive ways to experience entertainment with new Digital Systems<\/a> and technologies. Get ready, because were helping leading companies see it and see it throughwith digital. Take a look at some stocks to watch mattel reporting wider than expected loss in its key brand barbie shares of boston beer soorg this morning. The company handily beating wall street expectations on both the top and bottom line. And expedia is reporting a mixed quarter earnings miss but revenue topped forecasts thanks to solid growth in the company home away business, ceo of expedia will be on squawk on the street today at 10 20 a. M. Eastern. Shares of adidas are rallying in europe the german Athletic Shoe<\/a> and apparel maker reporting upbeat Second Quarter<\/a> earnings and raising its guidance for the full year. Check it out that stock is up by more than 7. 5 and dow component merck reported Quarterly Results<\/a> earlier this morning merck earned 1. 01 per share for the Second Quarter<\/a> 14 cents above estimates drugmakers revenue was also above forecasts. Okay a record 9 million households now own an rv. And sales are expected to hit a new record again this year the industry can thank millennials for the growth landon is with us. Before we talk, landon, you probably saw that shes in petaluma, california did you see dan loeb rent some trailer out in montauk did you see that i did what have you heard landon, out in the hamptons near montauk, billionaires live in a trailer park no, no, no. They have it for surfing right but they go there, so there are trailers they cost a Million Dollars<\/a> or something. Yeah. And so, after you go its closer than driving to your home to go to the trailer bingo okay. Its still a trailer park. It costs a Million Dollars<\/a> . Costs a Million Dollars<\/a> 1. 4 million or something. Landon this i love rvs, landon you see any nice ones . Theres some real nice ones, joe. Weve got some towables. Anything from 5,000 upwards of 500,000 plus. Youve got it here and the industry is traditionally, of course, relied on retirees for growth but now, joe, millennials are getting behind the wheel and theyre buying towable trailers versus more expensive motor homes. And coming to camp grounds like this one to really experience the outdoor lifestyle trend. Were starting to see is the older millennials. The millennials that were born in the early 80s. Theyre coming here for the cheese festivals, wine festivals, the artisan beer craft festivals. Theyre coming here to the campground for their families and their kids for all the kids activities that we do and this shows the june towable shipments topped 20 year over year while motor homes were up a more modest 6 and rv makers like Thor Industries<\/a> are taking note theyre offering new models tailored to entry level buyers and updated with new technology. Its upgrading the electronics, its just adding the features that theyre used to so a lot of the rvs are compatible to, you know, an iphone you know, a lot of the appbased things that run your ac, your awning, your jacks when you get there. Just makes it easier to camp and martin telling me that once buyers get a taste of rving they get hooked but analysts warn that while millennials are showing interest it is too soon to see if the younger buyers can drive the industry the way we saw the baby boomers do, joe. Over to you . You need a job to buy rv . I mean, i dont theyre not giving them away, are they so, like this one you can rent like cruise america is a really popular rental brand. Weve also got the sharing economy is very good with millennials. Weve got outdoors, even pretty easy to buy an rv easy to get a loan but martin says people are even paying with cash i mean you can get one as cheap as 5,000. Thats not going to be really upgraded one but, its pretty easy to get an rv if you cant, then you rent. And were seeing a lot of younger millennial families doing that its a great way to vacation without having to get five hotel rooms if you have like four children like weve seen with a lot of families here all right, landon thank you. Tough gig. Petaluma im going to go with the all right well see you later, thanks. Okay. When we return House Minority<\/a> whip steny hoyer with some reaction to last nights Dramatic Senate<\/a> vote on repealing obamacare. Plus amazons disappointing quarter has tech under pressure this morning a look at the company, the results, and what you should be doing thwi the shares. Squawk box returns in just a moment your Insurance Company<\/a> wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company<\/a>. With Liberty Mutual<\/a> new car replacement\u2122, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 782 on home and Auto Insurance<\/a>. Call for a free quote today. Liberty stands with you\u2122. Liberty mutual insurance. Mr. Mccain the ayes are 49, the nays are 51, the agreement is not agreed to Senate Republicans<\/a> failed to appeal obamacare i regret that our efforts were simply not enough this time now tension turns to tax reform a check on big oil. Exxonmobil and chevron set to report we will bring you the numbers. Plus a deadly game thrones betting contest. Well tell you how fans are cashing in on the hbo series as the final hour of squawk box begins right now limp from the most powerful city in the world, new york, this is squawk box. When good morning. And welcome back to squawk box here on cnbc live from the Nasdaq Market<\/a>site in times square im joe kernen along with becky quick and Andrew Ross Sorkin<\/a> and actually, the dow has improved, and the nasdaq has actually improved a little but both in the red still. You can see there the s p indicated down about 7 dow jones down 25. 5. The nasdaq, the weakest this morning at least down 42 points. A few Earnings Report<\/a>s to tell you about. Merck reported 1. 01, 14 cents above expectations, revenue was also above exexhibitations the stock is now actually up over 1 . I dont think it traded earlier. And up more than 16 from a year earlier. Boosted by demand for its cancer drug extruda something was up and a beat on the top and bottom line for American Airlines<\/a> carrier also saw revenue for available seat rise 5. 7 compared to a year earlier and shares of amazon, the Online Retail<\/a>er earned 40 cents a share well below the estimate of 1. 42. Revenue came in above forecast amazon invested heavily in growth areas like video content. Kind of interesting, because if you had to describe every Earnings Report<\/a> or whatever you want to call it for amazon over the last ten years, werent most of them more like this than yes they were isnt that sort of the way it worktd it wasnt that and even the analysts we spoke with in the last hour said it was not incredibly shocked by it because they tend to plow more money back into the enterprises that they think the businesses will benefit from massive investment you think in the past, jeff bezos has been troubled by no, he doesnt care hes not even looking at and at 90 billion i bet he looks at the stock but it was 90 billion yesterday, and now, you know, so he for four hours oh, look what they brought for you. Look what they brought for you. Thank you but this is okay. Thank you. The eggs with spinach the spin after is a problem, though is there canadian bacon . Look at this diva on the set getting food brought to him. You know, im not going to eat something if its not because of the calories. Is there any canadian bacon in there, do you know joe just wants bacon. Let me show you whats been happening with exxonmobil. The company is out with its earnings, and it looks like they came in with earnings per share of 78 cents. The analyst estimate was for 84 cents. But again we never look all that closely at the estimates when it comes to this company because there are a small number of analysts who do this theres always some fear that goes with it the stock is down by 1. 3 . On the revenue side, they came in with revenue of 62. 88 billion versus the 61. 9 billion the street was expecting they do say that International Downstream<\/a> was a net of 1. 04 billion. Upstream on the International Side<\/a> was 1. 37 billion. Capital expenditures 3. 93 billion. Cash flow from operations and asset sales 7. 1 billion u. S. Downstream was 347 million net. Upstream loss 183 million so well continue to look through some of these numbers. As you can see right now the stock is down by 1. 6 . Breaking overnight, Senate Republicans<\/a> failing to repeal obamacare. We want to get to washington right now. Kayla tausche has the dramatic story. Good morning andrew, it was a latenight sprint here in washington. The bill was posted at 10 00 p. M. The cbo score came at midnight and the vote took place after 1 00 a. M. , ending in surprise defeat 4951 was the vote with three republicans voting against the senates skinny repeal of obamacare. The deal breaker, arizona senator john mccain who returned from his cancer diagnosis this week solely to vote. There were gasps when he voted no no. Mccain and other senators raising concerns the eightpage bill would become law. And not sufficiently comfortable with the statement from Speaker Paul Ryan<\/a> saying hed pursue a course where it wouldnt the president this morning said the three republicans and 48 democrats quote let the American People<\/a> down. Calling for obamacare to implode. But there are questions about how effective his salesmanship is and will be Going Forward<\/a> with senators like Lisa Murkowski<\/a> receiving a threat from the interior department over other resources for her state, saying of her colleagues quote i believe each of us stood up for the reasons that we felt were right deadlines now loom on the debt ceiling and the budget, and with the white house consumed by fractures put on full display last night, by Anthony Scaramucci<\/a>, its new Communications Director<\/a> in, lets call them offcolor remarks to a reporter from the new yorker saying hell fire the entire Communications Staff<\/a> that steve bannon, the adviser to the president , in one description that is safe for tv says bannon is trying to build a brand, quote, off the bleeping strength of the president he called the chief of staff Reince Priebus<\/a> a bleeping paranoid schizophrenic and notably, guys, the white house today is not coming to Reince Priebus<\/a> defense, perhaps leading some to speculate that maybe Anthony Scaramucci<\/a> has been outsourced the firing of priebus. Well see what the white house has to say today about the issue. Theres two issues. Theres a piece in the daily beast today suggesting that the president has approved all of this that basically, and enjoying all of this. Do you buy that . I think there is a school of thought that says that that is the case because, he has been unwilling to actually fire a lot of these people despite the fact that hes more than willing to publicly disparage them take Jeff Sessions<\/a>, the attorney general, who he has spent the last week berating saying that he was beleaguered saying he was disappointed that sessions wasnt investigating Hillary Clinton<\/a> and the various leaks that have been coming out of washington. And letting him, as the washington said, twist in the wind sessions, for his part last night said he found the president s comments hurtful but hell serve as long as the president is satisfied with him and approves him being there but priebus is a different situation altogether, andrew, because priebus and scaramucci have no love lost between them and scaramucci told the new yorker reporter youll see his resignation shortly. But what about and so does priebus and then theres bannon and i just wonder whether either of those people in a normal world you would go to your boss and say, i cant work here, youre not going to condemn this or i mean its just theres a do you believe that priebus was preventing scaramucci all along from getting Valerie Jarretts<\/a> job and always sort of when the president appointed him as Communications Director<\/a> and said you report to me, not to priebus, that was an indication of who was getting i wasnt surprised by that daily beast piece at all you think scaramucci would come out and be that outspoken about no, no, im saying, it puts both priebus and bannon in but also puts bannon in a box. I would say, andrew, about steve bannon, hes been sort of an alliance unto himself throughout this entire administration thus far. He has crocodile skin. Im not sure that he would necessarily be offended by the comments that scaramucci made whereas theyre in direct competition between priebus and scaramucci which is why that punch probably landed a little harder although, breitbart does go after scaramucci this morning. Theres some comments they were saying, it sounds like someone falsely hating and another person what he secretly may hate about himself. Bannon had some choice words. How about those quotes about jared kushner, kayla they were almost the same, not exactly the same, but they were almost as off color. Yes, there have been there have been many offcolor remarks. I think you can safely say but for someone in Anthony Scaramucci<\/a>s position, where he came to the podium last week and said, i hope people like me. I like my colleagues, no correction, i love them, and were all going to get along this certainly wouldnt go much further to that effort i love the cane and abel reference. Yeah. Because they didnt both survive, did they . Dy thant both survive. Like brothers. But you know anyway, kayla, thank you appreciate it. Were like brothers but were more like were more like the najarians. Oh, there you go. Love, love. Get a little plug in. Wheres your ponytail yeah, exactly republicans said yesterday that they have given up on trying to pass a border adjustment tax that proposal would have hiked prices of imported goods to the United States<\/a>. Gop lawmakers reiterated their goal of starting work on a joint tax plan through committees by this fall. Joining us right now is House Minority<\/a> whip steny hoyer, and leader hoyer, thank you for being here today, sir. Thank you all right how should we be thinking about washington these days . Is there a chance that there is a way to get some sort of bipartisan tax reform bill passed what do you think . Well i think the answer is the American People<\/a> im sure are extraordinarily disappointed with washington, as they well ought to be. And i would hope disgusted with what youve just been talking about, and whats going on in the white house. A white house that is so focused on its internal struggles, and confrontations and conflict that its not focusing on the real problems that confront the American People<\/a>. I think thats sad and i think people ought to be disgusted by it. With respect to the tax issue, hopefully the republicans, unlike their Health Care Activities<\/a> over the last seven months, will go forward on a bipartisan basis through committee, thats the only way real tax reform is going to be adopted. Its the only way real tax reform is going to be permanent. And lend stability to the market, rather than instability. Leader hoyer im hopeful well do that if the white house was more forceful in leading, you probably wouldnt be very happy, though, i mean, if the republicans were able to just take the votes that stla in the house and the senate, and move without any democratic input, i would imagine youd be much less happier than you are right now well, im not happy at the dysfunction in washington, d. C. And i dont think the American People<\/a> are, either im happy that a Terrible Health<\/a> care bill was defeated last night on the floor of the senate that was the right thing to do senator graham from south carolina, republican, called it a disaster and a fraud the head of the conservative Republican Study Committee<\/a> in the house said it was rotten to the bone thats all accurate. And paul ryan, frankly, would not say that that bill was not going to go to the president i warned members on the floor of the house last night, and the United States<\/a> senate, that we thought there was a plan afoot to have that bill, which i dont think a single United States<\/a> senator, whether they voted for it or against it, thought it was a good bill for the country. 15 Million People<\/a> would have lost their insurance next year. And 6 million of those would have been employerbased people. They had their insurance through employers. So it was a terrible bill. They voted for it to move forward, and in my opinion, there was some plan in the house to send it directly to the president. Now the good news is it didnt have the votes in the house. Perhaps not for the right reasons but it didnt have the votes in the house either. So, you may be right if the president were more effective perhaps id be unhappier with policy. But the fact of the matter is, hes our president he ought to start acting like a president. He ought to stop tweeting and start thinking we had david walker with us this morning and he laid out his vision for what he thinks would be a plan that you could actually get bipartisan support when it comes to tax reform. He said taking Corporate Tax<\/a> reform, maybe dropping it to 25 . Keeping exemptions for things like your first Home Mortgage<\/a>, not a second home, keeping things like charitable deductions in that having some things that have the been kind much tossed around, frankly, for over a decade in washington, if you could do that, and he said then bring in Infrastructure Spending<\/a> like a plan that the president has already rolled out that would largely rely on private investment to come in and pick up the bulk of that, he thought that would be something that could potentially lure some democratic votes do you agree with that i think thats accurate i think that in talking to ritchie neil, he and brady have been talking, congressman brady being the chairman of the ways and means committee, certainly i think the president of the United States<\/a>, and president obama three years ago said in the state of the union we need to bring the Corporate Tax<\/a> rate down, because right now were not competitive with the rest of the world. We ought to do that. We ought to, i think, also make sure that we invest in infrastructure and to the extent we can make it a private Public Sector<\/a> enterprise, that i think might be able to get some bipartisan agreements. Certainly were prepared to do that to sit down and talk about getting bipartisan agreement but remember, the only comprehensive tax reform bill that weve had was in 1986, some 30 years ago, which was a bipartisan activity with Ronald Reagan<\/a>, with tip oneill, and senator bob packwood and with jim baker being a real facilitator of that happening. I dont see that context yet it ought to be created because we need comprehensive tax reform how poisonous is the situation in washington right now . We havent seen the two sides Work Together<\/a> in a very long time well, you say that, we just passed a russian sanction bill that was unanimous, yes almost unanimous well, it was almost unanimous. But, dont just slough it aside. After all what it said was, were not going to allow the president of the united tates, as a member of the Republican Party<\/a>, and republicans are in the majority in both houses, and overwhelmingly passed a thing that said no, mr. President , you cant do it without our participation. The administration was opened to that so dont just slough it off as that was unanimous it was but as you know, mr. Mccarthy and i worked on that for about a month to get it to a place where it could be passed in the form and with the support that it had. So, there has been opportunities to work on a bipartisan basis. I would hope we could do that Going Forward<\/a>. And let me say this, senator mccandle Sam Mcconnell<\/a> said if this Health Care Bill<\/a> of thirst failed the option would be to work in a bipartisan fashion with the democrats. Do you think that he meant that or do you think that was a threat at the time it may have been a threat but i hope he meant it and very frankly, i think if theyre going to go back to committee, and see what alternatives they can come up with, i think the committees will work hopefully in a bipartisan fashion, have hearings, have citizens come forward, understand the ramifications of the legislation. And democrats and republicans Work Together<\/a> to make the aca work and yes there will be compromises. But the president s threat, you talk about threats, that hes going to are allow the Affordable Care<\/a> act to implode, its not against democrats, its against the millions and millions and millions of people and families and children that will be badly hurt if he does that hopefully he will not follow through on that threat leader hoyer, thank you for your time today. Thank you still ahead, shares of amazon rgog cessure this morning. Wee intoheck in with an analyst right after this break it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In Clinical Trials<\/a>, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Welcome back to squawk box this morning take a look at exxonmobil. They just reported a short time ago profit of 78 cents per share. Falls six cents short of consensus estimates. Exxon did see profit nearly double over a year earlier youre looking at that stock right now in the premarket down about 2 amazon reporting a beat on revenue but a big miss on profits. Joining us moodys lead retail analyst Charlie Oshea<\/a> the stock is indicated to pull back its head, go back a year, go back five years, ten years. You know, i have no idea ive never known what to think of amazon. I remember barrons used to write negative pieces on amazon every week when it was down at like 30 now its at 1,000 we talked earlier about whether this quarter was unique in seeing a slim profit but big Revenue Growth<\/a> and thats like thats most of the time over the past ten years. This is sort of typical, isnt it yeah. And i dont see any reason to expect it to change in the near future this is a company thats investing heavily on multiple areas. Aws international op is running operating losses because they have investment. U. S. North american, the north American Business<\/a> is, you know, 2 margins, because of the investment and we dont have any real visibility as to where all the money is being spend we dont have any visibility as to the cadence, and how long its going to last so i put something out yesterday that said i dont know how you can evaluate this company on a quarter over quarter basis i honestly dont thankfully we have a longerterm view so we can kind of be more patient than the equity side can be but its a tough one to evaluate there are some people that think some day it will be a 2,000 stock so today its a 1,000 stock if youre longterm, do you buy it today and why do people sell it today, if theyre convinced of the long is it that different than it was yesterday . People that were bidding it up 30 or 40 and then it reverts and is going to be down 20 or 30 . The valuation thing is something that weve always struggled with and again were fixed income, not equity but when i look at valuations and i hear some of the methods put out there, some multiple of 2018 ebitda, i dont know where you get a 2018 ebitda number given whats happening with the company and the level of investment thats the most important thing. Amazon is running to grow revenue, and which begets greater market share profitability is not the issue right now. Theyre spending a lot of money on prime primeday is a huge promotion. And thats not factored in the Second Quarter<\/a> numbers well see what that does in q3 what does a 32 or 33 rise in operating cash flow, how did they do that good question isnt that a big isnt that the envy of most companies . It is and thats theres theres a reason why amazon leads every one of its releases with the cash flow statement. And not the pnl. Because going back to the beginning of time, amazon has run itself to generate cash flow with the bet that over time, that will be that will lead to greater profitability as revenues grow. And i think thats still the thesis right now the company doesnt really focus on profits when you look at some of the market share efforts that amazon is undertaking, entering on a nascent basis, some submarkets, auto parts, the food business, the whole foods deal indicates to us, anyway, that amazon on its own was not successful in the food business. Buying whole foods gets an immediate scale and allows it to leverage theres all sorts of positives that happen there. But a lot of whats happening in amazon to me is almost a you know, i dont want to sound crass but its almost a laboratory experiment. Theyre trying to see what will work and were still in, you know, Online Retail<\/a> has been a big deal for 15odd years now. Go back to brick and mortar. Yesterday when you were hearing that guy say that they destroy brands, they disrupt other companies. Did any of that in terms of regulators finally taking a look at it, did that do you believe that that was a problem . I think that longterm, theres a theres a worthy topic of discussion around what it means to society. However we still look through the prism of what it does for consumers. At the moment, at least, it is still good for consumers there is no question so that overrides Everything Else<\/a> and that seems to override Everything Else<\/a>. The question is does that ever shift . Does the conversation ever really move to what does it do for employees, and what does it do for those are real issues. I mean if youre worried about what home depot did to the local Hardware Store<\/a> but i think part of this is thats what i said part of this is progress, right . Thats what you have to say to yourself i dont know. Thats the question, is this progress i think it is to your point, its offering consumers more value, and more choice weve got to go but i have one question, jeff bezos is able to pull this off and do this and run this grand experiment, if you will, because shareholders and investors have given him permission yes in a way that they have not given just about any other company in the world such permission i would degree with that completely i was here after walmart made its announcement, in october of 2015 when the stock took a 10 hit because they were raising minimum wages and they were spending, exactly. Amazon does the same thing, and the Equity Investors<\/a> react, do a 180 with their reaction. And that makes it tough for brick and mortar retailers but thats the way amazon has always set it up hasnt changed the story, hasnt changed the tune investors in that company, if you didnt realize that, youre the fool for not knowing that going into it. I wouldnt put it exactly that way youve got to know what youre getting going in youre getting a Company Going<\/a> to grow revenue, market share. I dont think investors initially said go for it we dont need profits. I mean it happens, so many times. And then it doubled again and doubled again. Right and i would think its carte blanche. I think so. Carte blanche to fail i mean the reason that he succeeded is not simply just because hes a genius. Hes bought stuff. Hes tried stuff failure is an option but his policy has always been, if someone comes to me with an idea and i think 70 of it is right, im just going to go for it. Whereas most managers would say 70 was right, come to me with a business plan, i need to know the exact business hes saying go for it and hopefully it works hes able to do it and thats why hes in this place he hasnt been on, really shall we drag out that laugh we stopped using the laugh that bezos youknow what . Because hes the one who can laugh. But im saying is but that doesnt bother him if we use that why did we stop using . Its a great laugh i dont know. Pretty old. Thank you dont we have it coming up, were minutes away from the first read on Second Quarter<\/a> gdp. We will bring you those numbers and reaction in just a moment. Also take a quick look at u. S. Equity futures dow off about 32 points. Nasdaq off 51 points back in a moment oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products<\/a> and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual<\/a> wont raise your rates due to your first accident. Switch and you could save 782 on home and Auto Insurance<\/a>. Call for a free quote today. Liberty stands with you\u2122 Liberty Mutual<\/a> insurance. We are literally, literally, and this is not a false statement, just seconds away its the first read on the Second Quarter<\/a> gdp not the second read on the first quarter. Third read on the third quarter. Or that theres the futures ahead of this number. Our chief economist Steve Liesman<\/a> is standing by for quick analysis but Rick Santelli<\/a> will bring us the numbers from the cme drum roll please. This is a big number holy cow im just going say. In order to get to an average of 2 you need, obviously 2. 6 . That makes it equal 4 divided by 2, 2 . Guess what we have 2. 6 right on the nose. All right. But heres the problem last quarter goes down to 1. 2 so we slip a little bit below 2 on the two quarter average. Lets go through everything, shall we annualized its 2. 8. Last look, though, 1. 9 if we look at the price index, 1 , that follows 2 which is obviously exactly half the gdp price index up 0. 9 also, half of the 1. 8 last look. And since were talking about advanced Second Quarter<\/a>, which this number is, lets look at Second Quarter<\/a> employment cost index, shall we . Well, the cost index went down a bit. 0. 8 last look unrevised down now stands at 0. 5. Half of one percent. A tenth leiter than we were expecting. We still have university of michigan july preliminary coming out today. What happened after that data . 2. 31 we lost a basis point, theyre still up for the week. Dollar index dollar index is like you know, trying to drop an anvil into a mud hole it just keeps sinking farther and farther. Not too fast but it keeps sinking Pay Attention<\/a> to that because the real news there is 117. 5 on the euro versus the dollar joe and the gang back to you thank you thank you, rick. Rick santelli, for more reaction bring in Steve Liesman<\/a> yeah, this is an interesting number, joe. I like the way rick thought about it, right. Which is that we talked about this for a long time a single number is very volatile but you average the two numbers and were at the 2 number which is a pretty good balanced growth which is nice you had 3 on consumer sorry 2. 8 on Consumer Spending<\/a>. Business investment up 5. 2 with equipment up a strong 8. 2 number Housing Investment<\/a> was down after a very strong first quarter. Not unexpected and then the government was up after being down the first quarter. And i believe inventory was a slight positive. One other thing is that we revised upward 2015, we had this bench mark revisions but revised down a little bit, 2016. So 2015 was stronger than we thought. 2016 weaker. Overall, nothing here that tells me that this is anything but still a 2 economy though i will say that interesting question we can ask ourselves. This little bit of surge weve had in Business Investment<\/a> is this part of the confidence that as a company the election of the president , and somebody weve seen in a lot of the business ceo surveys this was first read on the Second Quarter<\/a> yes okay. So you did rick did the math we need 2. 6 to get to an average of 2 what do we need in the third and Fourth Quarter<\/a> to get to 3, where were headed i dont know if i can do that on the fly, joe. I think wed need 4 over the next two quarters. We need to average 4, right . Because you average 2 over the first two. I hate doing math on the fly on National Television<\/a> because it is embarrassing. But to get to three i think you need four if you average two you need two pretty big numbers. Look 2. 5. Lets not forget youve got to figure out what the baseline is. The baseline could be 1. 8. Right if you take your basic productivity, you take your basic population growth, right, so 2. 6 is above what is believed to be the speed limit. Its a good number 2. 6. And by the way, what have we been doing with this number . Weve been putting people to work 200,000 on the job bringing down the Unemployment Rate<\/a> that suggests, by the way, that we are indeed running above the speed limit. But we have a guy over here, i think, joe you know what, steve . Go for it no, thats your job its fine its friday. Bring him in he doesnt do that for you, either so magnanimous. Joining us now mark wittner, senior economist at Wells Fargo Securities<\/a> mark, good to have you back. How are you . Great good to see you, steve talk about this number, 2. 6 how excited should we be about it well its pretty good its in line with expectations expectations were 2. 7. We were at 2. 2 the composition was pretty good with Consumer Spending<\/a> up nearly 3 that was actually a little lower than the consensus the pickup in Business Investment<\/a>, though, may tell us something about the second half. You know, when you look at Small Business<\/a> confidence, it rebounded after the election its held up relatively well and weve also seen that the number of Small Businesses<\/a> that say that regulation is their biggest problem has fallen by more over the last six months than weve really ever seen. So, thats an interesting question, mark were at this point here, where the business and i will admit that i had earlier said that the Business Confidence<\/a> did not translate into Business Investment<\/a> we werent seeing it and now we appear to be seeing it this and by the way the lack of regulation or the decline in regulation seems to be also something that is helping. So can we put this for the election of the president here well, i dont know that you could ever assign anything to just one thing but, its interesting when you look at Small Business<\/a> confidence and you look at the number of people that say that the taxes are the biggest problem. It hasnt changed at all because nothings happened on taxes. Right but something has happened on regulation and certainly the attitude towards business is 180 degrees different from where it was eight years ago. And there seems to be a more positive attitude. And i think that Business Owners<\/a> are putting more money into their business and i think thats whats happening with the equipment spending and i think theres a good chance, i dont think we can get to 3 growth in the second half. But i think we can get to 2. 5. 2. 5 is a good number. Mark, there was this big tax statement yesterday involved the treasury secretary, involved the House Speaker<\/a>. And Morgan Stanleys<\/a> out with a note today saying that they their read of this note is that one, this is something thats going to go into 2018. And two, and ill read this, the implied commitment to reconciliation limits rate cut and fiscal stimulus potential. Are you marking down your expectations for fiscal stimulus this year and now next we have marked it down. I think that after the election we had 2. 2 growth in 2017, which is still very close to where we are we didnt think much would happen this year we had 2. 7 for awhile in 2018. And now were closer to 2. 4. And i think that even if we get tax cuts, its not going to mean all that much. That maybe we get a tenth or two in 2018. If we got tax reform, if we got true tax reform on the corporate said i think that would be very good for us in 2019 are 2020 and into the 2020s it has more potential for the longterm than it does for the shortterm because right now were total employment theres just not a whole lot more growth that we can squeeze out of here. Mark, thanks for joining us oh, joe, is that your youre done i just had this weird thought. We are done. But think if that does happen and you get 2. 5, and then because of deregulation and if you do get tax reform and suddenly what if things, what if we do see a better economy i mean all this Anthony Scaramucci<\/a> i said from the very beginning. All of a sudden people are going to be like oh, my god, its working i said from the very beginning the president overstated the case. 2. 5 is victory all of this stuff, look at the you got to see the people that dont get the post today, did you see survivor i mean Jeff Sessions<\/a> looks like hes got a dog collar on i mean its sick i dont want to break up the soap opera, but we just had some earnings that just oh, okay. Chevron . Chevron just very briefly chevron just out with earnings the head line number is 70 cents per share. The consensus estimate was 87 cents. But the reported number includes a number of onetime gains and one time charges and chevron does not specifically break out eps impact revenue did exceed forecasts so weve got to watch that. And, other piece of news just across the tape what was that some friends of mine are involved so ill tell you about it Lorraine Powell<\/a> jobs, steve jobs widow yes just bought the atlantic. The magazine Peter Backman<\/a> one of my good friends who used to work for me at the New York Times<\/a> and went to work for her is going to become the vice chairman of the Atlantic David<\/a> bradley is going to stay there for awhile and its an interesting deal that is such an elitist im glad you brought it to us. I just want to bring you the news that is so in your wheelhouse for something well we go after the aspen ideas festival i know you do the atlantic globalist, elitist. There you have it im thinking, you wont even know who chief of staff is by then, if its will there even be a chief of staff . Right its just weird that that could all you know its happening, right . Youre not saying its bad you know him. I do. Im not saying that you know, i have no comments on whats happening im just saying that all this, this palace intrigue is actually things work because of what vitner said, you dont even need congress for deregulation. All of it works we have to go because courtneys angry but youre right keeping your eye on the prize which is that the growth numbers, i think, trump palace intrigue. So to speak if you go to the election right. I didnt make that i know. If you go to election with 2. 5 growth, low unemployment, youre creating jobs, you have this rebound in Business Investment<\/a>, how much is scaramuccis vulgar tirade going to matter . Right people have vulgar tirades just usually not to a reporter. But if youre going to pick someone thats on the record and someone more outspoken than trump if you wanted to pick an understudy you might have picked anthony. Folks, game of thrones isnt just fodder for water cooler, its driving a market for gambling and were not going to washington right now were going to l. A where we find Julia Boorstin<\/a> who is going to tell us more good morning good morning. Game of thrones is bigger than ever as season seven debut on hbo broke records, a 50 increase in viewers from last years premiere and now a range of players are all trying to get in on all of the speculation by enabling fans to place bets. The ringer, which has a toss the thrones web show hosts a mortality pool kind of like fantasy football but about which characters will die on the show. Sports gambling operations including sports bet are in on thrones betting, as well. Online gambling and casino sites publish death pools, bets on who will sit on the throne and bovada tells us when they launched thrones betting it was to try to appeal to new gamblers but now that whole category game of thrones betting is possible, betting 25 to 50 on wagers like for a bet on whether cersei will sit on the iron throne at the end of game seven. They can bet as much as a College Basketball<\/a> match one challenge, bovada has to make sure there arent spoilers posting online where people betting from remote locations from where the show wasshot. Thats interesting. What about the spoilers that were fake spoilers and getting people to well they have to watch out for all of those but the guys at bovada we talked to said they spent time on reddit trying to make sure there are no spoilers out there, theyll change the bets. Whether theyre real or not. Julia, thank you very much. Okay. When we return, the moment a select 30 people have been waiting for. Teslas model 3 is here. Were going to talk about elon musks big day with an analyst right after the break. Offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform<\/a> aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at td ameritrade. Welcome back, everybody today tesla is making the first deliveries of its model 3. Phil lebeau has more from the big day for elon musk. Phil, good morning again good morning, becky this is the day that tesla fans and customers have been waiting for. The delivery of the first mod. 3s now we should temper expectations here. Because this is not like the opening and theres going to be a flood of model 3s delivered. The event is going to be delivery of a few model 3s, and these first ones are going to be going to tesla employees so the customer deliveries will slowly start to ramp up as we go through the third quarter, and then into the Fourth Quarter<\/a> and whats interesting here, its not just that the model 3 is priced at 35,000, as the base price and then from there, you will obviously go up in price as you add on different features over time dont forget you have the 7500 federal tax credit that can be used, at least for the time being, for those people who are purchasing this vehicle. Its what happens with teslas production that is interesting for investors. Remember, they plan to get up their manufacturing capacity up to about 20,000 vehicles by the Fourth Quarter<\/a> in december and 115,000 for the year and then its a half million vehicles they plan to build in all of 2018. Thats the target that people will be focused on so as you take a look at shares of tesla, this event, these first deliveries, happening tonight, at tesla, that will get a lot of attention then its the production rampup. But they also have earnings for the Second Quarter<\/a> coming out next week. That will get some attention but its really the production of the model 3 that gets the most attention finally, guys, a number of people ask me questions. How much demand is there for electric vehicles in the u. S. , in china, and around the world rollinburger is out with some new estimates in terms of electric vehicle sales, by a wide margin, a wide margin, china is going to be selling a lot more Pure Electric<\/a> and plugin hybrid electric vehicles than the United States<\/a> this year almost a half million there. Just to answer the question, guys, why is tesla considering building a facility in china because thats where the electric vehicle growth is going to be happening. Well have more on tesla and the model 3 deliveries throughout the day. Phil, does it have the same acceleration as, you know, is there a horse power equivalent is it as fast as does it have that kind of pickup . Well, yes, but it doesnt have the ludicrous mode so youre not going to be getting the ultrafast acceleration and i dont know what the latest on ludicrous mode what is it 2. 6 seconds. I dont know. It snaps your neck in fact. It does not have that. But, but you will have like all electric vehicles, youve got the instant torque so, boom, youre gone. Very quickly so i think that people are not buying this looking at the performance as much as the range, which is over 300 miles and the price point. 35,000 is the base price. Thats whats going to get the most it will be a game changer if they can make them okay, thank you, phil joinings is barclays senior auto analyst brian johnson. Youve been listening to this conversation what do you think the stock is really worth weve got a price target of 165. We think its actually a successful niche luxurymaker but where we see the stock right now is running well ahead of 165 wow, 165. 165 yeah, its like its not at 165, brian. How long you had that . About a year now. We think that well we give it a lot of credit for just the ability for the luxury brand really out of nothing and we think all the aspects of tesla, the human machine interface, some of the selfdriving features are way ahead of the industry so thats a positive part but whats the Tipping Point<\/a> thats going to alert the markets that its overvalued given your your stock projection were not expecting it to pull back any time soon. I think the real Tipping Point<\/a> will become when we see probably more like 2018 what the real margins on this model 3 are. And whether you can actually maybe at a 42,000 target. Actually get it to maybe 15, 20, even 25 which is what hes guiding for Gross Margins<\/a> to cover the rather substantial overhead right im confused, though if you think the stock is basically worth half of what it is today, why do you not expect there to be a pullback you know, this is a stock thats driven really by the brand of as long as the brand of elon musk is strong this stock can trade disconnected. If im a client of yours what am i supposed to do . If im listening to you its not working for me now. We try to make trading around that and we think that this is one of those events on a shortterm basis well create a lot of precedent. Could actually lead to a sell off. But not all the way down to 165 im just unclear why you havent changed where your projection is were sticking to something that we believe is based on the longterm financial prospects of the company. So you think longterm there could be a pull back. Yes. Or blood bath but you think thats at least a year off yeah, there are luxury cars by 2020 will be stuffed. China has faced some real hurdles and probably has to get its partner split the profits there so at some point the stock could face the Financial Reality<\/a> and frankly at the end of the day its still a car business. We dont think that thats tremendously profitable. Thank you for this. Fascinating. Well continue to watch. What will we prefer someone that watches it go from 165 to 335 and then changes his price. I mean thats yeah. Heres what i see. Very few analysts like that they change it and then we dont ask when did you change it. Or same thing on the way down. Thats amazing. Got to hand it to him. We are going to finout atd wh jim cramer is fired up about hes live from the New York Stock Exchange<\/a> squawk box will be right back. I need the temperature for pipe five. Ask the new guy. The new guy . Jack trained him. Jacks guidance would be to maintain the temperature at negative 160 degrees celsius. That doesnt sound like jack. Actually, jack would say, hey mate, just cool it to minus 160 and were set. Good on ya. Oh yeah. Thats jack. Good on ya. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. 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<\/a> 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. Earnings out from exxon and chevron and earnings from merk and interesting conversation with an analyst that thinks tesla is going to 165. The headlines not nearly as bad as what they say its one of the few ends of the market thats holding up tesla is just a question of shorts versus longs. The people that love tesla will come in and buy it the tone of our coverage is beginning when the market fell and also this morning before you guys on the 5 00 its over. Faang is over. This is over this is good its over since 2008 and i want our viewers to know that the world ends several times and when it ends you have to be ready for it. You said today will be low volume so we may not see the buying pick up again today but i was just thinking if this was the absolute top in amazon then i can see, i understand the 30 or 40 but does anyone believe this is over now i dont know so why does it matter if its 110 or 140 this is weird. These are traders getting out right . I mean like i was doing work on amazon but i said i should just stop my work and focus on the outside reversal because its the first time that we had one lately and its over i dont like the over all. I keep thinking the people said that its over you almost forget that they said that its over until the next sell off and then theyre right back on. Maybe hell come on say well do it i cant even talk about what he says with my kids its worse than talk about game of thrones. Well see you in a few minutes. Coming up on squawk on the street dont mitsz a first ss a cnbc interview at 9 00 a. M. Eastern time your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In Clinical Trials<\/a>, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Just a final check on the markets. The dow down 32. The nasdaq still lower than the s p. Down about 6 take a quick look of the dollar. I dont think that was the forecast for this year. Not at all. Youd think the fed would be the path of leading highest first. Taking it in yeah. Have a great weekend everybody. Well see you back on monday right now its time for squawk on the street. Futures indicate weakness at the open as amazons earnings weigh on sentiment a dramatic night in the senate as the repeal on health care fails. And pl","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia800402.us.archive.org\/26\/items\/CNBC_20170728_100000_Squawk_Box\/CNBC_20170728_100000_Squawk_Box.thumbs\/CNBC_20170728_100000_Squawk_Box_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240628T12:35:10+00:00"}