good morning. welcome to what could be a very unusual edition of "squawk box" this morning. millions of people waking up to a massive, massive computer outage, including us. security firm crowdstrike and flights grounded and call centers affected and live tv broadcasts were knocked offline. we are going to be a little bit without some graphics and charts that you normally see and we'll bring you updates as we get them this morning.

in the meantime, former president trump speaking at the republican national convention and outlining his vision for the second term. and pressure mounting on president biden to step aside. reports say he has gbegun to accept he will not win in november. we will discuss it all. it is friday, july 19th, 2024 and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin. joe is out today. boy, if you are just waking up, this is something to pay

attention to. this is having impacts around the world and all major industries where you see problems with this. we'll go into detail in a moment. it started overnight in australia and rolled around the globe. we have seen impacts from a lot of places in the markets. you see red arrows and what is happening in the dow which is down 85 points. nasdaq off 38. the s&p 500 down by 4. treasury maurrkets, you will se the treasury yields, actually, 4.47 is where you see the two-year yield. 4.20 is the ten-year. all of this waiting to see what happens with the big story on the global i.t. outage. andrew, we can't talk about the markets without talking about this first. >> let's talk about what is going on this morning if you don't have access to the computer or email.

microsoft and cybersecurity firm crowdstrike suffering major outages overnight. it is leaving financial firms and airlinesunable to access the systems. microsoft said it started before 10:00 p.m. eastern time last night. the company determined the cause and restored service. many users still reporting issues. we've got some ourselves. nbc confirmed a crowdstrike update is causing the disruption. blaming the issue and it is in the process of rolling it back quickly. the question is how quickly. >> this shows the weaknesses and the points where you have a problem. we see this with other attacks that have happened and things taken duo you down. it is not a cyber attack. it is a problem with crowdstrike and the release it rolled out. when everything's in the

cloud -- everything gets shutdown. you mentioned hospitals before and retailers shutdown by this and communications companies and media and airlines and major banks. if you think you are business as usual and off at the airport. >> we people get to the office this morning, but some at the office having the problems that we may be having. phil lebeau this morning is in cardiff, wales. i want to get over to him this morning. good morning. >> reporter: andrew, we have been watching this the last su several hours as it played out. i have a bit of good news. american airlines 20 minutes ago lifted the ground stop for main line flights for american airlines. domestic and transatlantic and around the world as well as sky west regional flights operating for american airlines. both have lifted the ground

stop. those flights should start taking off as scheduled. ground stop still remains in effect for a number of other airlines. delta and united. i reached out and talked to united several times this morning. they are working on the issue. no indication when it will be resolved. the faa put out a statement within the last 15 minutes saying it is working with a number of airlines requested a ground stop because of the i.t. issues they are experiencing. over here in europe, ryanair is telling people show up to the airport three hours early. who knows how long it will take to get through ticketing and to get to the plane and for the plane to take off. if you look at the flights over berlin, it is basically empty. the ripple effect is seen with global travel. if there is some good news this morning, a little bit of good news, it's american, the first that was under a ground stop, has lifted its ground stop. guys, back to you. >> phil, thank you for that.

we will check in on all sorts of industries to try to understand how they are affected. thank you. >> we will continue to keep you updated on the global computer outage. in the meantime, former president trump speaking at the republican national convention. eamon javers joins us reight no from milwaukee. >> reporter: good morning, becky. just five days after the assassin's bullet came inches from taking his life, donald trump accepted the nomination for the president of the united states from the party. delivered the third longest speech at 93 minutes. the former president said he wants to be president of the united states for the entire country. here's what he said. >> i'm here tonight to layout a vision for the whole nation, to every citizen, when you are young or old or man or woman or democrat or republican or independent, black or white,

asian or hispanic. i extend to you a hand of loyalty and of friendship. together we will lead america to new heights of greatness like the world has never seen before. >> reporter: on the economy, the former president had two major themes. one was on inflation and the other on immigration. the former president said he will solve both of those problems. on inflation, he suggested the key way to approach that was by increasing energy output in the united states. here's what he said. >> republicans have a plan to bring down prices and bring them down very, very rapidly by slashing energy costs. we will, in turn, reduce the costs of transportation, manufacturing and all household goods. >> reporter: now that sets up a presidential campaign going into november between donald trump, who has now accepted his party's nomination and joe biden, who has not yet accepted his party's

nomination. their convention not scheduled on the democratic side until august. real questions now about who donald trump will be campaigning against given the struggles of the biden campaign that we have seen. there will be questions coming out of this week in terms of uniting the republican party. did they do what they needed to do to capitalize on the moment and extend their polling lead and really move into a dominant position in this campaign, guys? i think you saw the republican national convention attendees really excited and they will try to take that energy back to the fall. guys, back to you. >> eamon, that is the question of who will donald trump will be running against at this point. it looked like it was silenced for a couple of days, but it reached a crescendo yesterday. >> reporter: yeah, you see these

leaks on the democratic side. they leaked congressional leaders had a meeting with president biden, but they didn't say what the content was. you saw the congressional leaders had a meeting and also some insight into the content. we saw jamie's full-page letter to president biden urging him to do the right thing. those kinds of leaks are being done strategically. it seems like the democratic leadership wanted biden out of the race and do it on his own and have a moment of grace to rally around and applaud him for the presidency and move on to the next chapter. biden dug in his heels and did not want to do that. that's why you see this flurry of leaks that's been increasing in tempo and severity throughout the week as democrats get more and more concerned watching the unity here in wisconsin at the republican national convention and the power of former president trump's images

surviving that assassination attempt. all of that is terrifying with the return of donald trump. what do you do? you have to force joe biden out of the campaign and figure out what you are going to do next. there's no real great slolution on the democratic side. >> who is that at this point? you don't know who is pulling the strings behind all this. >> reporter: we do, actually. you see the hand of nancy pelosi here. you see chuck schumer, the democratic leader in the senate and hakeem jeffries. there are questions about what kind of role barack obama has been playing and the op-ed by george clooney. the sense of democrats that obama could have stopped that op-ed and didn't. these democratic leaders are sending strong signals that it

is time to go for joe biden. >> eamon, do we have any sense of what the vice president thinks about all this? it is one of the missing pieces of the reporting is, if you will, does she want to run for president? does she believe she could be the candidate? i ask because we all speculate about what's supposed to happen next, but i wonder what her position is. >> reporter: it is a really great question, andrew. i have not seen any direct reporting on kamala harris's state of mind amid all that. my experience in 30 years of covering politics, that every vice president wants to be president of the united states. i assume that's the case here. you have to look at it and is this the race she wants to run at the time she wants to run it? she is the heir apparent to the biden legacy such as it is. she would be the first among many candidates who might take a run at this. andrew, you have been pointing

out all week, if you are gretchen whitmer with the window open and as difficult as it is and strong as trump looks, do you hold off until 2028? in that case, kamala harris is the only candidate to run because she is the only one in position to do it in three months time. >> all right. eamon, thank you very much. eamon javers from milwaukee. let's get back to the global computer outage. if you are just waking up this morning, there's been a massive out outage related to microsoft and crowdstrike, this is a global security firm. this is a problem that rolled out from an upgrade that crowdstrike actually put out. we are still continuing to watch this. it has been impacting things across the globe. major banks and airlines and media and retailers and communications outlets. all of these people trying to

get things up and running. we will go to arjun kharpal with the update on what has been happening. hi, arjun. >> good morning, becky. it started late thursday night with microsoft reporting issues with the azure cloud service and applications as well. in the early hours of friday morning, it said most of those had been resolved. there was a separate issue relating to crowdstrike which released an update globally which appears to have had issues. as it rolled out, it caused a number of i.t. issues across the globe. the company now rolling back that update to try to fix these over the last half an hour or so. we had a statement from the ceo george kurtz. the company is actively working with customers affected by the defect found on the single content update for windows hosts. this is windows specifically. mac and linux hosts are not impacted. this is not a cybersecurity incident. the issue has been identified,

isolated and a fix has been dep deployed. that is the latest from the company. the question is how long this will take to rollback and get systems back online. in january, we saw something similar from microsoft when they tried to rollout an azure update that went wrong. they had to roll that back and that took a number of hours for businesses to come back online. there are a number eof experts suggesting this could take more than that potentially for some businesses to get back on their feet. one of the impacts which has been notable is many people using windows-based laptops with the blue screen of death. the blue error screen popping up with the error. that is the latest. a lot of businesses talking to crowdstrike and microsoft trying to figure this out and get their organizations back up and running. >> arjun, i'm looking at the blue screen of death myself with the frowny face on it. we'll see how long things take to get back up and running. there are obviously industries

far more important when you look at the airlines or even banking. in fact, we want to go polto lee picker with the impact on the industry. >> reporter: becky, it appears this point in time it hasn't affected major banking operations. things like trying to take money out of the bank or putting money into the bank. that is based on conversations with people who are running down the operations. it is having an impact at jpmorgan, for example, some people had log-in problems this morning. these are internal employees. that's kind of true also with other firms across the street, but all businesses there are operational. the firm declining to comment for now. there was also a bloomberg report this morning that the bank told clients it was unable to process certain trades. i haven't been able to confirm

that. there was a disruption with a german bank according to the regulator. we don't know the disruption. at barclays, all barclays services are operating normally at this time other than the digital investing platforms. customers were unable to manage accounts in the app, online banking or over the phone. this story is still unfolding. it appears in terms of broader operations, things not operating as normal, but the things that matter to our viewers, you know, seems to be unaffected based on what we know at this time. >> leslie, thank you. andrew, we're dealing with some of these things here, too. >> we are. >> it is unnerving. it is a reminder of how fragile some of these systems have become and how quickly you can take it down.

>> worth noting for folks waking up or on their computer, if you have a windows computer, that's where the problem is. we should know if you are on a mac, no problem, folks. if you are on linux, no problem. if you are on a mac and have to access microsoft or azure or anything on an azure platform right now is not winning. if you use icloud or google product, you are in better luck. a lot of times people don't know they are using the azure cloud. >> behind the scenes. >> right. when we come back, more on the global story of the outage throughout the rprogram. up next, we will talk about the aerospace and larry culp will be here live. "squawk box" returns in just a moment. i can't believe you corporate types are still at it.

just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

♪ “billathi askara” by björn jason lindh ♪ [metal creaking] [camera zooming] ♪ [window slamming] woman: [gasps] [dog barking] ♪ woman: [screams] ♪ [explosion] [explosion] ♪ [lock clicks shut]

the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title. welcome back to "squawk box." i want to bring in phil lebeau with a special guest this morning which made a lot of news. phil. >> reporter: thank you, andrew. larry culp. ceo of ge aaerospace. the i.t. outage that hit so many

organizations. >> phil, we had a lot of impact this morning. you see behind us, the team is fully engaged in the work of the day. we think we're working our way through it. >> reporter: with regard to the plant, there is news you are making this morning. a $1 billion invest. n investment in this facility, but other facilities. >> let me formally welcome you to wales. we have 1,300 colleagues here to prepare work on the cm-56 and wide body engines. we talk about how 70% of our business and services is the team that does work here that manifests itself in the 70% figure. they are using flight deck to drive progress here. this is the future home of the

work on the engine for boeing's 777 engine. >> reporter: that $1 billion is something you need. let's be honest. you have a wave of customers who are saying we know we're going to need our engined serviced in the future. you just don't have enough capacity. not just you, but the industry overall. you have to add capacity. >> right. phil, we will spend $5 billion in the next five years across the global footprint to lay in the capacity. the capacity we need with the a aero body space and the wide body space and, frankly, the military. we are seeing an uptick in the engine platforms. we need the footprint and capacity to support those engines for decades to come. >> reporter: let me ask you about flight deck. the key to flight deck is smarter and leaner

manufacturing. how different is this plant here than when it was when you took over as ceo? >> i came here for the first time as we were coming out of covid. when i was here most recently, i barely recognize the wales facility. this team has done a phenomenal job implementing flight deck and putting the principles to work and enhance quality and safety and driving better efficiency and better use of all of the folks we have here to improve our delivery turn around times for customers. >> reporter: you spend a lot of time at supplier plants working with them say how can we help you be better, right? >> exactly. our challenge today is not demand. it really is supply. as we shared on our first report earnings recall, over three quarters of our challenges today are rooted in the supply base. we are not getting enough material in to do our work. we are taking flight deck to the

supply base. we talked about 15 sites with suppliers that intare critical. in the second quarter, we saw ten of those sites more than double their output to us. we see flight deck helping us with our suppliers going in and identifying and breaking those constraints. >> reporter: quickly, we have the farm bureau air show this weekend. the record or thders. you see the backlog orders. where do you see the industry over the next year as it works through these backlog and supply chain challenges? >> we have the airlines flying at record levels and the air framers are looking to ramp production. we have a supply challenge, not a demand issue in any way, shape or form. we will work out of the current situation, but it will take a while because we're pursuing a moving target. that's a good thing.

flight deck will give us the tools and principles to make sure we're at our best inside the four walls in wales. >> reporter: larry culp, ceo of ge aerospace. guys, back to you. >> phil, thank you very much. when we come back, we have much more on the global computer outage that is affecting everything from airlines and hospitals and 911 services. crowdstrike is the company behind what is happening around the globe. this is not a cybersecurity attack. we will talk about what happened. this was a routine update and we will talk about what happened upigt cinobal impacisomg rht after this.

while i am a paid actor, and this is not a real company, there is no way to fake how upwork can help your business. upwork is half the cost of our old recruiter and they have top-tier talent and everything from pr to project management because this is how we work now.

welcome back to "squawk box." i want to update you now on the global computer outage affecting airlines to hospitals. if you are just waking up this morning and you have something that works with crowdstrike and microsoft azure, you are affected. let's get to steve kovach with more. >> reporter: andrew, this is an issue with crowdstrike. let's get this out of the way. george kurtz saying this is not a hack or cyber attack. crowdstrike pushed out an update that caused the outage and they are rolling it back and a fix has been deployed. quote, crowdstrike is actively working with customers impacted by a defect found in a single content update for windows

hosts. mac mac and linux hosts are not affected. a fix has been deployed. unquote. it caused windows pcs managed by the crowdstrike security products to reboot and show the so-called blue screen of death. it has been taken down and a slew of companies like our's and airlines and united to major banks. unityou microsoft forced windows devices to get stuck in a rebooting loop. now we are waiting for updates from crowdstrike and microsoft about when everything will be back online. importantly after that, we got to find out what went wrong here, andrew. >> in terms of payments, i don't know how this works, but for those businesses that are

affected, do companies like crowdstrike or microsoft payout? are there insurance programs for this thing? >> reporter: i'm not sure about insurance, but contracts talk about when an out sage is happening. i guarantee it will be worked out since it is impacting so many companies. so many airlines went down by this and you can imagine how much in sales was lost. that will be shaken out. throws typically written in the contracts, andrew. >> in terms of getting back online today. >> reporter: we haven't heard specifically from microsoft with the technical support page and no update on the timing. all we know so far is crowdstrike saying they pushed out the update and they found the fix and it's rolling out now. that's all we know so far. as of timing when things come

back online, that's still to be determined. we'll have more updates as we get them, andrew. >> and becky raised this at the top of the program. we are so interconnected and the cloud creates this interse economics. is there a different way to do it? >> reporter: i was thinking that today. why do all of these companies use one company to take a lesson from and diversify the systems you use. that will have to be shaken out. i'm also reminded this incident is likely not a hack, but reminded of what we learned from at&t just a couple of days ago about that massive hack they had and that exposure. that seemed to be related to snowflake. so many companies are containing so much data and just one little break into a system or one little accident can take down a cascading effect on the internet

like we see this morning. what the fix for that? who knows? perhaps not putting all your cyber eggs in one basket. >> i can't get into my computer on this. redundancy is not something where i've got two different cloud service computers running just for this. it seems like it is a pretty complex issue unless i'm missing something. >> reporter: exactly. so many businesses are reliant on microsoft for these things. when microsoft has a problem or one of their partners or vendors have a problems t cascades and impacts everyone. i'm looking at a blue screen of death right now on the computer next to me. >> same. >> reporter: we're having our own issues with graphics on air. this is serious. this shows you how interconnected we are and how one little issue can just totally take things down.

>> although, what is more concerning, the reason we talked about the airlines is because that is a visibility situation where people are showing up at airports and told to show up three hours before their flights and long lines out all over the place. i know some of the issues are coming back up and running. to be faced with these issues in the morning starting at 5:00 a.m. when things get busy on the east coast with the airports and think of the lines and how it shuts things down. that is just the visual ramifications and visual picture of what is happening in all types of industries. you can see it physically when you see lines of people in the airports. we don't see the people turned away from business and don't get to do things. the massive lost productivity as a result of that is something to contemplate. >> exactly. when so many people are trying to log into their corporate pcs today and see the blue screen of death like here at nbc, that is an issue. that's loss of productivity

here. when one company or two companies or a small number of companies have such a dominant position and market share, this is what happens. it takes it all down. >> at least it's a friday in the summer. take the day off. >> reporter: most people are off anyway, today. >> lina khan may use this as an example. steve kovach, thank you. i'm sure we'll talk to you later. when we come back, more on the global computer outage we'll follow throughout the morning. an update on american airlines. it will continue to experience disruption throughout the day. there will be lots of ripple impacts from all of this. we have reaction from netflix earnings. we'll talk to an analyst after ght w,etixha rino nfl sres down 1%.

>> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. okay, team! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

welcome back, everybody.

shares of netflix are actually trading a little bit lower this morning. down by less than 1%. the streaming giant reported person expected profit and revenue and ad-supported memberships. joining us roight now is jessic of b of a. jessica, the numbers looked f fant fantastic. the guidance for the current quarter and ad sales that cost an issue. what did you see? >> that was it to a "t." the number were great. the sub numbers and net ads were bullish. they came in well over 8 net adds.fantastic.

they beat on revenue. revenue was up 17%. 20% adjusted for currency. margins improved. remember, this was a big issue a year ago. everybody was worried they wouldn't grow margins. the reported numbers were fantastic driven by content and by the lower priced advertising tier. if you want to nit-pick, why is the stock not reacting better is the outlook for subs is positive, but certainly will be down hesequential ly. the second thing is advertising. it is a new business for them and it will take time to ramp up. >> i'm sorry. go ahead. >> and it is a tepid advertising market.

>> i looked at it and when i first started hearing the numbers, i was shocked to see the stock down. some of the things they did by blowing expectations out of the water and you thought this company, not that they never had mistakes or things they've done, but over the long arc of time and through their existence, they either have been incredibly lucky or super smart about everything they've done in terms of not making people pay for additional passwords until the market really found it would sustain it. people weren't willing to give it up. it just seems like over the long arc, they have done great things. you can see where the stock is over the last ten years. over the last year, it has come back sharply to where it was in 2021. what is your feeling with netflix and all of the other streaming products? you say most of the time netflix

is the winner and you look for the second and third runner up. >> netflix has done a phenomenal job year to date. this is the first thing we turn on. there's an incredible amount of choice. the growth is obvious and maybe a little lumpy. the drivers won't be advertising which will ramp in 2025 and 2026. again, it's a new business, live, which is something they are growing in and sports, and approaching it differently. you can still see the building blocks. their sub base is 270 million globally. so far ahead of everybody else. still a very difficultecent rum. advertising when it kicks in, will be a high incremental

margin for them. it is not going to be a straight line up. they are clearly executing and nobody can argue with the content. the engagement is very high. >> then it is a valuation call at this point. would you tell somebody to buy in here? >> our price target is $740. we have very decent upside. it is very extensive to traditional media. there is no legacy business for netflix to lose and everybody else is transitioning and challenged. >> so, what do you think about all of the traditional media stocks that you cover at this point? >> look, we have buys on several of them. we had published a note earlier this week on warner bros. discovery walking through what we feel are the strategic options and how they can drive upside for their business. we do like disney as well. look, the industry has to change

and the transitions can be painful. they're in the middle of that at the employment. moment. >> jessica, i'll ask you, are you dealing with that or dealing with the blue screen of death? >> my computer works, but we have problems getting notes out the door. >> jessica, thank you. great talking to you. see you soon. coming up, wie will talk to pollster frank luntz about the speech last night from former president trump at the rnc last night. a statement out from the white house. a security council is now aware of the global outage incident and looking at the issues and impacts. we'll have more on that after this.

tony, >> announcer: the open championship leaderboard is sponsored by state street global advisors. welcome to the mdy mid-cap cup, presented by state street global advisors. today's challenge is to play 9 holes without the middle of your bag. how does that sound? that sounds terrible. ♪♪ ♪♪ ♪♪ ♪♪ (aaron) i own a lot of businesses... so i wear a lot of hats. my restaurants, my tattoo shop... and i also have a non-profit. but no matter what business i'm in... my network and my tech need to keep up. thank you, verizon business. (kevin) now our businesses get fast and reliable internet from the same network that powers our phones. (woman) all with the security features we need. (aaron) because my businesses are my life. (kevin) man, the fish tacos are blowing up! (aaron) so whatever's next we're cooking with fire. let's make it happen! (vo) switch to the partner businesses rely on.

the all new godaddy airo helps you get your business online in minutes with the power of ai... ...with a perfect name, a great logo, and a beautiful website. just start with a domain, a few clicks, and you're in business. make now the future at godaddy.com/airo while i am a paid actor, and this is not a real company, there is no way to fake how upwork can help your business. upwork is half the cost of our old recruiter and they have top-tier talent and everything from pr to project management because this is how we work now.

the discord and division in our society must be healed. we must heal it quickly. as americans, we are bound together by a single fate and shared destiny. we rise together or we fall apart. i am running to be president for all of america, not half of america, because there is no victory in winning for half of america. >> that was former president trump speaking to the rnc last night describing the assassination attempt on his

life over the weekend and jo outlining his vision for a second term. scree sc joining us right now is pollster frank luntz. get into it with your reaction? >> this is fantastic. he's low key, he's not mentioning the president. he's addressing the issues they want to hear about. he spoke about his own situation on saturday and the moment that he got outside the barriers when the speech was over i got exactly the offense reaction from people. i believe that simon -- paul simon and art garfunkel got it right. it really is a tale of two speeches. >> what do you mean by that? >> the people who don't like donald trump thought he went on way, way, way too long. the people who like donald trump

thought that he was subdued, respectful, and humble. i sent out a tweet using that word humility because it's rare, if never, people have used that word to describe him and i got back so much pressure, so much blowback, i'm a pollster and my job is to measure public opinion. and i have not seen a speech in a long time where half of the people i spoke to thought it was trump at his best and half of them thought that it was disorganized, meandering, and basically trump out of control. so -- >> it's a rorschach test, right? it's a rorschach test, frank. >> yeah, and the problem is, this is a convention speech. it's supposed to be a little bit longer. he should have started earlier. he could have -- >> it was 93 minutes. >> right. >> he didn't have to do that and he could have appealed to people even more, but the fact is trump

is leading now and he's leading in the swing states and the last week has been very good for his campaign, even if it's been bad for his health, and the last month trump has found his sea legs and joe biden has come apart. so we end up the end of the convention with the republicans in the lead. >> clearly, do you look at this speech as a needle mover? i think going back to this rorschach test you're talking about, obviously people in the room and people at home who i think, there were a lot of people very impressed by what the president was saying and by a lot of things coming out of the convention, and yet i know there are people on the other side of this. >> no, i was actually dreading this interview because i thought there was going to be conflict with your co-host. no, this has not moved the needle. i want to be clear about that. i do not expect donald trump to get a bounce from this speech. what i do expect is that the intensity of his supporters will

absolutely turn them into voters in november, and that's important and conversely on the democratic side whoever is the nominee, whatever the chaos comes out over the next month, there is no intensity at all. so, whatever numbers you see you can expect trump to do 1 to 2% better because of the turnout ratio among republicans will be that much higher among democrats, but andrew, there is not a swing voter left. we've all made up our minds. the question is do we get out and vote. >> let me ask you about that then. there is a big question as to what president biden's going to do, whether he will step aside. if he is going to step aside, if he at thes aside this weekend and then what happens next. walk me through the other names that are out there, and if there's anybody that you think on the democratic could give the president and the republicans a run for their money. >> and i absolutely can identify three people who could do it,

cory booker, the senator from new jersey, former mayor of newark, brought a city on its knees back up to its feet, an amazing speaker, brings crowds, gets standing ovations wherever he goes, wes moore, the governor of maryland who has already handled a nationwide crisis, the bridge, the striking of the bridge and understands what it is to get dong and mitch landrieu, former mayor of new orleans when the city was going through the hell that it went through, all three would give trump a tremendous run for their upon because all three of them are great politicians, great -- have a great retail message and republicans should be careful -- go ahead. >> let's throw out a couple other names. let's say it's kamala harris and let's say you were to pair her with a mccraven, somebody like that. how does that stack up?

>> here's -- it's going to cause -- her numbers are better today than they were six months ago and right now joe would be yelling at me so she has improved. but they're going to ask, what has she done as vice president? in fact, i can see the trump commercial already. can you name anything that the vice president has achieved in the four years that she served and just have a blank ad for the next 60 second. >> she was in charge of one thing and that was the border. >> and exactly, and when we look at immigration, by this time next month, immigration is going to be the number one issue in this country. it's going to overtake affordability, and on both issues she's very weak. the question is will she debate trump? is she prepared? and i -- you know, it throws everything up in the air. i don't like to speculate. all i can say is you take away the nomination from her, and you cause the democrats to fall into utter chaos.

there will be a war within the democratic party. but if you give the nomination to her, there are so many donors who don't want her as the nominee because of the last four years that i would not want to be a democratic strategist right now because you're damned if you do and damned if you don't. >> frank luntz, always appreciate your perspective on all of these things. we will see how things play out and i'm sure we'll talk to you a lot more in the coming days and weeks. appreciate it. >> thank you. when we come back, as we head to a break we've got an update on the global computer outage that's affecting a range of businesses around the world today. the new york stock exchange and the nasdaq have each put out separate statements saying that their markets are fully operational and that they expect a normal open today. we'll have much more at the top of the hour, though, about other industries that are being impacted. "squawk box" will be right back.

[music “this little light of mine”] in the world's poorest places, children with cleft conditions live in darkness and shame. they're shunned, outcast, living in pain. you can reach out and change the life of a suffering child right now. a surgery that take as little as forty five minutes and your act of love can change a child's life forever. please call, scan or go online to give a new smile. thousands of children are waiting. sure, i'm a paid actor, and this is not a real company, but there is no way to fake how upwork can help your business. search talent all over the world

with over 10,000 skills you may not have in house. more than 30% of the fortune 500 use upwork because this is how we work now.

weathertech products are designed and manufactured in america using only american raw materials. most competitors make things seven thousand miles away... and then wonder why they don't fit. with weathertech in your vehicle you may hear angels singing as you marvel, how do they do it? simple. american technology and american workers deliver quality... not imported junk for a few bucks less. get the world's best floorliners and support america. find your fit at wt.com (♪♪)

it is 7:00 a.m. on the east coast. you're watching "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick. joe is off but we have a major news story this morning affecting so many parts of the world. a major i.t. outage caused by microsoft's cloud computing services linked to crowdstrike and folks waking up to the blue screen of death in many places. airlines cutting flights back, work stoppages, financial services firms across the board, this is a real issue. some of this now coming back online but a lot of folks as i mentioned trying to make sense of what's happening as you go to your computer screen happening on windows systems. if you have a mac or linex, not

the case. stove ko-- steve kovach has the latest. >> ceo george kirtz saying on x this is not a hack or some sort of cyberattack. what he did say is crowdstrike pushed out an update early this morning that caused the outage. they've been rolling it back and saying a fix has been deployed. just minutes ago microsoft technical support page was updated saying some customers are able to restart and getting back to their system. that crowdstrike statement from the ceo saying, quote, crowdstrike is actively working with customers impacted by a defect found in a single content update for windows hosts. mac and linux hosts are not impacted. this is not a security incident or cyberattack. the issue has been identified, isolated and deployed. unclear whether things will

totally recover. some things came back online but it caused windows pc managed by crowdstrike security to reboot and show that so-called blue screen of death. it's been taking down operations at a slew of companies from tv networks like ours to airlines like delta and united, major banks and so many more. microsoft acknowledged the outage on its technical support website but put the blame on crowdstrike and said it forced those windows devices to get stuck in a reboot loop. meantime, shares of crowdstrike rival sentinel 1 are popping in premarket trading this morning. we're still waiting for more updates from both crowdstrike and microsoft about when everything is expected to be back online and working properly and more importantly after that just what went wrong and why the fix was deployed in the first place, andrew. >> okay, steve, thank you for that. your screen? >> blue. >> i'm still blue, as well.

>> it says you can restart it. it's still not working but we'll keep trying it. you know, it's okay. it's a friday. >> we should say apologies to the audience if some of our charts aren't working as quickly as they can. we have a couple issues affecting us. >> it has been an interesting morning but have news hitting and want to bring that to you. travelers just out with its quarterly results coming in with earnings of $2.51 a share, a big beat from the street's expectations. et street was looking for $1.98. now, revenue when looking at net writ and premium basis grew 8% to a record $11.12 billion shy of expectations. i think about $60 million shy. but really this is a pretty interesting beat. if you were looking at the weather over the last quarter, there was a record level of severe convective storms across the united states. you might have expected that that would have a big impact in terms of the profitability of what you're seeing from

travelers. not the case. travelers is saying the results were driven by a lot of different thing, first of all, favorable net prior year, reserve development meaning they set aside a lot of money thinking they'd have to pay it out. they had higher investment income too that came from fixed investments, their fixed income portfolio. obviously higher yields leading to higher income there but had higher numbers coming out of their equity portfolio too and that was because of higher p/e returns on some of these things too. last year also a pretty big year. second quarter, primarily when you're going to see huge cat stock weather issues for most of these major insurers unless there is a big hurricane in the third quarter, the second quarter is usually the biggest numbers. they did have just under $1.5 billion in catastrophic losses, but, again, they were able to make up for it. they had net writ and premiums being up 8%. it's up by about $1.40.

>> back to the outage, airlines around the world being impacted with some stoppages and the like and want to get to phil lebeau with the latest there. good morning. >> we're hearing part of england and saw the impact in europe in terms of flights put on hold and some of the airports, it looks like there's no flights at although we think there are some. berlin is a good example ryanair was telling passengers show up three hours early because you won't be able to check in online. you have to check in at the airport and with the u.s. airlines it was about two or 3 in the morning when we heard from united, american and delta all requesting a ground stop with the faa. about an hour ago, i want to stay, american lifted its groundstop, so it's once again operating, as is its regional airline operator, its partner, skywest but for delta the ground

stop remains in effect and for united, united says some flights are starting, but it's vague in terms of how many and how widespread united saying that it expects flight disruptions throughout the day so we're a ways from this being worked out. no doubt seeing the long lines and pictures from newark airport and seeing it from other airports in the united states. a lot of people frustrated that they are showing up today expecting to take a flight somewhere. they can't even check in. they can't get anywhere close to boarding a plane because the flights are not going right now. guys, i'll send it back to you. >> all right, phil, thank you very much. continue to follow this throughout the morning. in the meantime, we have more earnings coming in. american express reported results with a gap number of $4.15. but if you are looking at the adjusted number it was $3.49. that's to account for the sale of certify, a company they sold, that gave them about a 66-cent

gain and if you strip it out you get to 3.49 on the adjusted basis compared to the street at 3.23 so that is a pretty significant beat still by about 26 cents. if you look at the revenue line, that came in a little light of expectations, $16.33 billion. that did miss expectations, but amex is raising earnings guidance for the full year saying that they are seeing a lot of things happening. they have new card acquisitions came in of 3.3 million, card fee revenue was up double digits and that's the 24th consecutive quarter that's been happening. this is a company on a tear for awhile. year to date the stockis up by about 30%. you can see this morning it's pulling back by 1.7% but some of the things the company is saying it's going to do is take what they have earned, some of the additional revenue that they've seen coming in and they are going to drop that down for additional spending on marketing. they're going to increase it by about 15% this year and that is

a big number because last year they spent $5.2 billion and saying they are going to spend $6 billion because it's been a phenomenal flywheel. you talk about amex all the time and what you've dean with the card. i've talked to them about what they're doing with marketing spend. where are you spending that? digital is where are -- it's going. some of it goes to the big platforms but they have member on member, like, they will reach out to you if you are a member who spends a lot of money, pretty affluent one and they will ask you to help them find other friends who might want to be members too. >> like an affinity group. >> if you're a wealthy person spending a lot odds are you have other friends that want to do the same and they will reward you with mile, remember -- >> they have not reached out to me for this. >> you're not spending enough but say this is kind of where they're planning on doing that.

a big increase you'll see in marketing. we'll see whathas. that is off by 1.7%. >> okay, coming up, the nasdaq and nyse expect markets to open normally despite the global computer outage affecting everything to hospitals and airlines. much more on that story throughout the morning. [crowd chanting] they ignored your potential, and mocked your ambition. but it's not the critic who counts. with every swing and block, your game plan never changed. ♪♪ some still call it luck. let them. because you know what it's always been. inevitable. ♪♪ ♪♪

team usa is back! let's see that enhanced 4k from xfinity. wow. everything you'd want is right here when you say... “olympics” so, what if your favorite athlete is... "grant hollowa”" nice. or you can't get enough... “swimming” definitely adding that to favorites. now let's check... “medal coun”" and when is gymnastics on? “olympic schedule” it's that easy.

find it, see it, count on it with the best seat in the house. get the fastest connection to paris with xfinity. welcome back to "squawk box." global markets being impacted by a major i.t. outage. i want to get to dom chu looking at some of the banks and brokerages that may have been affected. what's going on?

>> these statements on the record are starting to roll in so let's frame the discussion right now showing you the markets which are relatively stable given what's going on right now with regard to banks, brokerages, airlines, s&p relatively unchanged. nasdaq down by 1. if you take a look at the stocks that are involved, of course, microsoft and crowdstrike are the epicenter stocks of this particular move and to the downside you can kind of see those things happening to the greater degree with crowdstrike down 12%. apple, we're just putting this up to show you, apple as of right now doesn't seem to be affected at all by this. linux and other operating systems aren't beingaffected. apple certainly better than microsoft and crowdstrike. with regard to the statements, you mentioned before the major exchanges in the u.s. we'll start with the two statements from both the nasdaq and the nyse first. if you take a look at the market's reaction, according to the nyse those markets are fully

operational and expect a normal opening this morning. that's acording to the big board, the new york stock exchange. going on to the nasdaq, a similar story there, as well. the nasdaq is basically saying the same thing. our european markets and u.s. premarket are operating normally and expect our u.s. markets to open normally. so no big deal there for the nyse and nasdaq. with regard to one of the banks on the record. barclays is saying that all barclays services are operating as normal at this time other than our digital investing platform, smart investor where customers are currently unable to manage their account in the app. on line banking or over the phone. that's their statement. one of the banks coming out so far and a government reaction. according to a spokesperson with the national security council in washington, d.c., we're aware of the incidents and are looking into the issue and impacts. those are the on the record statements so far, becky, we will bring you more of those statements as we know more from the big banks and brokerages on wall street but framing the discussion around the big move

lower in crowdstrike and microsoft. i'll send things to you. >> crowdstrike's biggest competitor is mcafee, privately held at this point, went private in 2022 but big questions around that. obviously cybersecurity is a huge issue, have to watch that. this was not a cyberattack. this was something that crowdstrike has since said was a problem in an update they put out so catching it on those levels but obviously cybersecurity is a huge issue. you did see crowdstrike shares down by 20% earlier and it has come back. sentinelone is another competitor we're looking at. >> just the idea it's being more ingrained into the culture of technology and even more so as we push further and further and deeper into artificial intelligence, cybersecurity becomes a huge issue at that point. more interesting for me, though, this idea that all it takes is a software update and this wasn't cybersecurity. this is cybersecurity, yes, but

we get those updates pushed to us on our phones and our tablets all the time, something can just happen without us even knowing it if we have automatic updates set and highlights how sensitive we are to technology. >> and how connected everything is. >> yes, absolutely. >> dom, thank you. >> you got it. >> let's talk more about the markets. the chip sector actually hitting a rough patch this week after some comments that were made by both of the presidential candidates in terms of relations with china and taiwan. joining us to recap the significance of this week's events on that sector is ben ritus. ben, let's talk about what we heard. it was stunning. you looked at the chips and they were really taking a hit down 4% or 5% in some cases. the comments that came out were first the biden administration basically saying that it's going to be putting some additional limits on what can be given to china in terms of some of the

chip equipment makers. then you heard also from president trump, former president trump that he'd be looking at the question of whether taiwan should be helping foot the bill for security if the united states steps in to help it on those levels. what did you think as a chips analyst coming into those two headlines? >> well, the market had been pretty lackadaisical about the china thing for a little while and almost forgot about it and it rears its head. it is the single biggest risk exist tensionally to chip stocks, so so when they come out and say these things, the market can tend to react. i think over the long term, things will work themselves out. but china and taiwan, taiwan is the epicenter of production, of odms, of folks that assemble servers and pcs as well, and when these kind of things are talked about, there can be an adverse reaction.

i do think over the long term, though, there is a movement towards chips this terms of them being the most valuable, oil of tech and it's not stopping any time soon. so i think this will sort itself out and get back to fundamentals but it was a rough week. >> i was going to say, it must be bizarre to figure out how to value them. if everything is fine these are the fundamentals we go on but this other issue is more important on everything. do you have to ignore it to some extent? >> i think a lot of people are just hoping for the best. it is so unanalyzable and everybody's nightmare that something were to happen. there's so many funds and clients and analysts just hoping that nothing ever happens, but i will say that, you know, i think donald trump over his record, you know, he views the stock market and the economy in a certain way as a score card and if he wants to keep his score

card going, he's got to make sure taiwan is stable and then systemically help move jobs to the u.s. it can't be like some kind of start/stop type of thing. that will be very disruptive. >> an interesting point. when you look at the chips sector overall nvidia has been the one that's taken off but you've also said what's happening with apple is pretty important, so how would you rate these stocks? which ones are your favorite and why? >> i cover four of the mag seven and i would say that typically, se seasonally, you know, nvidia had a great run, and there's hugely some digestion. this is at the same time last year, everybody was like, oh, what about amd and broadcom and these guys and similar things are echoing while apple, what i really love about apple, this could be the biggest cycle, you know, 100% we've ever seen being told you have to upgrade to get one of these zillion features

and i thought there was something for everyone and i think that's going to resonate. it already is. we're seeing builds go up but apple could systemically grow iphone sales through this and catalyze ai for the masses, they really can, because a lot are like ai, sounds great. we don't use it day to day except for chatgpt and these guys will give you examples how to use it for the masses. google announces stuff and people sometimes goes past people because google is a little technical but when apple does it, it can go mainstream so i like what we're seeing there. >> ben thanks a lot. ben reitzes. cfpb director rohit chopra will join us about the massive outages. the latest from milwaukee after the final day of the rnc. "squawk box" will be right back. >> aflac trivia question, elon musk purchased a car featured in which hollywood movie?

e sw wn quk x"thanerhe"sawbo returns. that's like the gap in my health insurance. gap in your health insurance? yeah, it didn't cover everything when i got hurt. good thing i had aflac. (aflac duck) hmmm the cash i got from aflac helped pay for medical expenses, groceries, rent. it really helped close that gap. (whisper) go, go, go! (group) yay! go aflac! go duck! get help with expenses health insurance doesn't cover. find an agent. get a quote at aflac.com. wish we had aflac on our team. you can! (♪♪)

okay, team! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot and now the answer to today's aflac trivia question. elon musk purchased a car featured in which hollywood movie? the answer, "the spy who loved

me," 1975. musk purchased james bond's lotus submarine car for $1 million. >> welcome back to "squawk." crowdstrike suffering a major outage overnight. you might be seeing it on your own screen with what's called the blue screen of death. hopefully it's getting updated as we speak but it's leaving many businesses unable to access their computer systems including, by the way, some of ours here at nbc. want to get some reaction right now, rohit chopra is the director of consumer financial protection bureau. we got a couple other things to talk about. this is not on our bingo card, rchlth ohit-- rohit. what is your initial reaction -- >> as of right now we do not have any reports yet from the banks and others we regulate that there is a major outage in

terms of a critical payment system or a very large bank. that being said, i think we are just getting a taste of some of the potential effects of a real reliance by the financial sector and sectors across the economy on really a handful of cloud companies and other key systems. in the past few months obviously we saw some effects of cyberattacks, ransomware attacks in the health care arena, in auto dealers, others, this is the type of situation that can really create issues across the economy. i'm pretty hopeful what we will see today is inconvenience more than chaos, but, of course, we're just getting a taste of it, so, you know, andrew, two days ago, the treasury, myself, others, we announced some actions related to resilience of the financial system and dependence on the cloud. there are just a handful of big cloud companies where so much of the economy is now resting on

it, so we're going to really need to take a hard look at this but my priority today is making sure that consumers can access money in their bank accounts, that payments can occur and so we're going to be watching it minute by minute and have been working on it all morning. >> just speak to the larger issue, though. i think a lot wake up on a morning like this and say to themselves do we need more competition? do we need different players, more players? at the same time, you say to yourself all these systems need to be so tightly integrated to work properly. and in many ways you would almost want them to be singular as well, right? sometimes it's these little bottlenecks from third party players that link in like crowdstrike and so how do you think about that? >> yeah, i think sometimes what we fail to appreciate is that certain parts of the tech stack are as critical to our infrastructure of our economy than the energy grid and transportation, so we have to start confronting some of these

really tough problems, and i do think that the creep of concentration does play a role in undermining our resilience. it is obviously important to have inner operability but if you look at how one company that may sometimes be unknown to the public can really have a domino effect. so i think as we look at concentration across the economy, especially in technology and other sectors, we're just going to need to protect the broader public and businesses across sectors from some of these types of disasters that can occur. >> rohit, while we have you here and it was our intention to talk about it, you have put together a proposal around paycheck advance fees which i know you believe are way out of line with what they should be. what are you doing in this regard, and maybe you can

explain it to the audience. >> well, you know, during the pandemic, we saw a big uptick in companies working with employers to help their employees get paid more quickly, so instead of paying them more frequently, they would work with a fintech or other company and so we took a hard look at this entire industry, and our analysis showed that some of these arrangements lead to very, very high cost lending exceeding 100% apr. a lot of those workers end up getting into a series of loans where they pay lots of money in fees, so i think we wanted to make sure that the employees and the workers are able to really clearly compare their options with credit cards and other types of loans and that we don't have a race to the bottom. but really i want to make sure that big employers don't have a

big financial incentive to continue to delay payment to their employees if they're also getting in the business of lending to their workers. >> rohit, i have a broader question, which is just how you think about your role and the timing of your role right now as it relates to this election given where the polls are and the way it appears to be trending towards former president trump, are there things you want to try to do while you're in this place today? does it change the dynamic with which you and your colleagues think about what they're doing. >> you know, not really. in the case of the regulators, we have such big items in front of us in terms of how the economy is really working, we've seen some big changes through the course of the pandemic and really as the changes in monetary policy have filtered through, the mortgage market, the credit card market, so we're

pretty laser focused on that, but, of course, we do. we are in washington and we keep an eye on everything, but we're really fixated on how to make sure that consumers in the economy are able to navigate the current situations they face and in many cases, they're facing some pretty high rates on their credit cards and mortgages and we're thinking about how to make sure we can solve problems in their lives. >> you may not be able to answer this but i'll ask it anyway. former president trump i don't think was a fan as you know of the consumer financial protection bureau, however it appears that jd vance who may be his running mate or will be his running mate in this seems to be more of a fan. what do you make of that dynamic? >> well, i always think that the work that agencies like the cfpb do, maybe in washington they food fight, but in america,

people realize that there needs to be some sort of watchdog to really look after and protect not just households but also the businesses that are playing fairly. i think we've recovered tens of billions of dollars from fraudsters, bad actors and, honestly, that sometimes feels like a washington debate rather than one that is a real issue. so, i know that the markets have benefited a lot from the work of the cfpb so we just chug along. >> rohit chopra, we appreciate you joining us especially with this news just crossing. thank you. when we come back, former president trump speaking last night at the republican convention. we have an update on his vision for a second term. that's next. "squawk box" will be right back. you look really tired. just calling it a day. but it's 4 p.m. yeah, and i've been working nonstop since 9:30 this morning, so.

9:30. you don't say? yep. you'd want a little shut-eye too if you'd been moving billions around the world. well, actually, i do. you know, stablecoins, nfts, loans. people can access me 24/7. what? but look, everyone's different. you should get your rest. you'll get after it tomorrow. tomorrow's saturday. [ethereum] monday. you'll get after it again on monday. ♪ “billathi askara” by björn jason lindh ♪ [metal creaking] [camera zooming] ♪

[window slamming] woman: [gasps] [dog barking] ♪ woman: [screams] ♪ [explosion] [explosion] ♪ [lock clicks shut]

all right, let's take a look at the technicals after this week's sell-off. joining us is chris verone at strategus partners. it's hard to say sell-off after what we've seen, the huge upward

trend. >> i think it's really difficult to say sell-off. inthough the indices are down, the breadth under the surface has been absolutely spectacular. let's talk about small caps. last thursday they were 18-1 on the upside. this tuesday, 17-1 on the upside. you just don't see days like that very often. >> what's the gain been for the russel 2000? it's been more than 12 or 14%. >> if you look at the five-day gain it's in the 99th percentile historically. when you see moves like that it has basically locked in the next 12 months, 20% to 30%. i don't think that's out of the question if you're looking a year out from here. could this market consolidate into the conventions? i think absolutely. but what i think is more important, the spread between small and large, only four or five times in history have we seen it this degree this magnitude, '87, '99, 2016, and

2020. so i think this impetus, this impulse towards small i do believe has more durability than the consensus expects. >> i'll throw 2020 out because that was an aberration with the worldwide global pandemic. what do the other three instances tell you it would lead up, you think '99, uh-oh. >> that bear market was exclusively was a large cap. and what you began to see in late '99 into 2000 were all of these sudden surges of small versus large, and, becky, i would go back to 2021, i wouldn't throw it out and i wouldn't throw it out because it actually persisted for about 15, 16 months. >> under weird massive government spending and crazy things that were happening. >> so i would wonder what does the market see to really catalyze the small caps?

maybe it sees meaningfully -- >> if it's lower bond yields, that's one thing, that could be the case given what central banks are considering right now, but if it happens at the expense of the large caps, then you've got some big concerns too given how far those stocks have run. if it's just a relative outperformance, that's one thing. if it happens while the megacaps really drop off and that's an entirely -- >> i think that's right and the way you phrased it is perfect. we don't want this exclusively occurring at the expense of the big stocks. we want them working in unison and i suspect they will because the breadth has gotten quite good here and there is nothing kind of into this july period that would suspect -- that would -- that would imply major top for large caps. there are very few big top formations. the momentum names are extended stocks that got very overbought that i think are correcting, not topping. we can talk about semis, nvidia,

micron, they are not top formations. i think ultimately those will be viable down the road. >> you would say the signs here are all looking good at this point. >> yeah, and i'm certainly -- i'm certainly aware of the reputation for a correction into, you know, august, september, particularly election year but has to be viewed in the context of what is an ongoing bull market and getting support from the macro. dollar down, rates down add some fuel. look at the leadership, how it's evolved over the last several months. this move lower in rates has really catalyzed these bank stocks to a very meaningful degree. you've had big breakouts not just in the big ones, all these regional banks have really started to go. >> chris, thank you. >> always a pleasure. coming up when we return, dan ives just putting out a note within minutes from just now on crowdstrike in response to the global outage. he will join us on the broadcast in just a moment. do not go anywhere as we

continue to follow what is a global outage for those on microsoft and crowdstrike this morng. 'rcongig back. energy fuels, a leading american uranium producer, is ramping up production to supply expanding nuclear markets and diversifying into rare earth elements, key ingredients in many clean energy and defense technologies. energy fuels.

your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do.

indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire welcome back to "squawk box." i want to get back to the global

computer outage affecting folks across the world. it happened after crowdstrike rolled out an update last night. dan ives has put out a note on crowdstrike on how they're going to need to go into damage control mode and what comes next, dan. thank you for joining us. what does come next, and what is this going to cost the company? >> well, this is a black eye moment for crowdstrike and i'd say for the cybersecurity sector. now, the damage, look, it's going to be weeks, months, potentially years in terms of the damage. the big issue is the brand damage because crowdstrike today becomes a household name but not in a good way. i don't think this is the long-term story but other competitor, palo alto and others will try to take advantage of this and will be a big focus on the sector. >> do you think that there is a liability issue here, meaning if you're an airline, like an american airline or whoever,

where there's a ground stoppage and they're losing money as those planes are sitting on the tarmac, can they sue crowdstrike? >> if you're a lawyer for crowdstrike, i don't think you're going to be seeing the beach this summer, because this is going to be coming from probably all avenues, not just airports, transportation companies, now, look, microsoft needs to figure it out from their angle. they're more, i'd say, a victim here relative to what happened on the windows site so i think less of an issue for microsoft, but for crowdstrike, you're talking about a company that prides itself on brand. f1, globally, anyone that's seen them at airports and this is just, look, it's an epic disaster. it's something we've never seen in the cybersecurity industry so this is a big unprecedented. >> in terms of the way you -- i mean, we were talking more broadly about what happens next and the sort of larger implications of our reliance on

the crowd. if you think this changes anything about the way systems are set up, more broadly, about the third parties that are used by a microsoft, about even the idea of consolidation in these spaces? >> yeah, andrew, after this happens, i mean, changes will have to happen, because the scale of something like this, there will be changes in terms of third party limitation, update, not just for crowdstrike but across the industry, because this is unprecedented and it's not just black eye for crowdstrike, black eye for the cybersecurity -- >> when you say changes, self-regulated changes or do you think the government gets involved. >> i think it will be self-regulated but the chances that crowdstrike gets called to the beltway for some hearing is probably pretty high. >> when you say changes that happen, you mean microsoft and other companies aren't going to let third parties come in, third-party vendors and do cybersecurity for them, they will do more of this in-house?

>> i think they're going to have to change in terms of the process on the updates, and then just take a step back. google, likely, you know, probably acquires one of the biggest reported by "the wall street journal," i think this will push microsoft further to do a cybersecurity acquisition themselves and have been around sort of edges there but this is something within redman, they don't just, you know, go next week like nothing ever happened. >> but meaning that how do things happen now? was this a third-party vendor allowed to do the update. they sent it internally and it happened and no one realized there was a bug in it and figure that is happening internally which is why they would want to purchase one and if so, who do they purchase. >> on the microsoft side third-party updates are common. that's happening on a minute-to-minute basis. in terms of microsoft, you know,

we've talked about, they're going to have to look across the industry. cybersecurity has been something that, you know, normally they have third parties and will continue to have them, palo alto, z scale and others. you look at a veronis, i mean, names that are front and center in terms of potential acquisition candidate. >> dan, is your sense that this makes it more likely or less that regulators would allow a transaction between a google and wiz, for example? >> so, on that extent i would -- it would actually be more likely, because i think it shows some of the dangers, you know, in terms of what we see from some of these third-party updates. obviously it depends on the regulatory environment, but this issing that actually bodes more positive for m&a between big tech and cyberrather than the

opposite because it shows here, and this will be a moment that we'll remember in tech for decades, to make sure something like this never happens again. from the gold standard, crowdstrike, i mean, that's the ironic thing. >> dan, can i ask you a question, and maybe it's my naivete. for reasons that seem inexplicable, those things don't seem to happen, knock on wood, to apple devices. why do you think that is? >> it's the nature of the mac and apple echo system because of those updates because everything is controlled within the four walls of apple park, and that's why consumer -- they have 2.2 billion ios devices. but also remember apple very rarely plays an enterprise, so apple is less exposed on the enterprise, much more obviously on the consumer side but that's also why apple cupertino are the

mount rushmore along with others. >> we do have some video of george kurtz just on the "today" show. here's what he had to say to the "today" show. >> the system was sent an update and that update had a software bug in it and caused an issue with the microsoft operating system, and we identified this very quickly, and remediated the issue and as systems come back online as they're rebooted they're coming up and they're working and now we are working with each and every customer to make sure we can bring them back online. >> dan, i guessworking with each and every customer is going to take a while. i'm still looking at the blue screen of death. haven't gotten a call from them just yet. this is the obvious. this is what you were talking about, that they are going to have to look at ways to change that system. the idea that they were able to upgrade the system, it had a bug in its own software.

you're right, microsoft will have to get their arms around this too. >> and also, kurtz is in my opinion one of the best ceos in the world. if there's one person that can navigate this it's kurtz and crowdstrike. is an uphill battle. d.c. subway and others, there's a long road ahead here. we remain bullish on the sector, but now we need to see how this all plays out for crowdstrike over the coming weeks, months. >> yeah, kurtz was at mcafee before too. you're right. he is somebody with a very long resume and a long history of working in this industry and has a lot of respect. >> yeah, if you want one person to, unfortunately, be in this situation, it's kurtz. >> dan, we want to thank you for joining us, especially late notice and i know you've been writing your notes as quickly as you can this morning. i'm sure we'll talk to you a lot

more in the coming days as we try to make sense of where this all heads. thank you. when we come back we got a lot more on that story, plus, trump's tax plan, a look at the winners and losers if his ideas come to fruition in november. "squawk x"etnsn st ment.rur iju a levated experience, tailor-made for trader minds. ♪♪ go deeper with thinkorswim: our award-wining trading platforms ♪♪ unlock support from the schwab trade desk— our team of passionate traders who live and breathe trading. ♪♪ and sharpen your skills with an immersive online education crafted just for traders. ♪♪ all so you can trade brilliantly. ♪♪

it's hard to run a business on your own. make it easier on yourself. with shopify, you can have your inventory, payments, and customers in sync across all the places you sell. start your journey with a free trial today. (man 1) can you hear me now? can you hear me now? can you hear me now? (dj) can you hear me now? (runner) stay with me now! (teens) oooo! (woman 1) mírame ahora! (woman 2) get em now! (roger goodell) we're ready now! (woman 3) have fun! (fan) ooo, pinch me now! (woman 4) save me now! (toddler) let's go now!

(woman 5) check me now! (toddler) catch me now! (gamer 1) cmon! (gamer 2) play me now! (toddler) okay, bye now! dave's company just scored the comcast business 5-year price lock guarantee. high five! high five! -i'm in a call... it's 5 years of reliable, gig speed internet... five years of advanced security... five years of a great rate that won't change. yep, dave's feeling it. but it's only for a limited time. five years? -five years? introducing the comcast business 5-year price lock guarantee. powering 5 years of savings. powering possibilities.

welcome back to "squawk box." we're monitoring the global outage taking place this morning. we're going to talk right now about former president trump's tax plan and what it would mean to the country if it comes to fruition. our adviser is here, jason fuhrman. and d.j. santoni is an economistist. when you heard from the

president last night and more in detail, i think we have a better understanding of whathis tax plan would be from that business week article where he said he would bring the corporate rate down to 15%, what do you think it does for revenue overall, long term? >> well, in terms of overall and in the long term, we definitely see increases. you know, we have this fallacy that somehow corporations pay taxes. they don't. people pay taxes. the corporate tax rate is passed on. it's passed on to shareholders in the form of lower returns. it's passed on to customers in the form of higher prices. it's passed on to workers in the form of lower wages. and, so, by reducing the taxes that corporations pay, you not only increase economic growth, but you also decrease the tax burden on each of those three groups. >> jason, you there? >> yeah. >> to me, the question is not just what it does to revenue but what it does to overall revenue

including, by the way, individual taxes and, of course, whatever total bounty is collected is going to be enough to deal with the debt and deficits and even just our day-to-day costs? >> yeah. look, this is nonsense. the tax foundation is a conservative organization. they're enthusiastic about tax cuts. they said these corporate tax cuts would cost something like $750 billion. i don't know a single, credible republican economist who thinks these tax cuts would come close to paying for themselves. so, you know, how are they going to be paid for? they might actually be paid for. and that's the remarkable thing, by a proposal to raise tariffs on every single american consumer. so, you're sitting at home, if you bought a toy, you bought a tv, you bought a car, there's a good chance that some or all of what is in that came from abroad. you're going to be paying a higher price on all of that.

and that's what's going to be paying for these corporate tax cuts is tax increases on middle class really, really poorly designed growth reducing tax increases. >> e.j., you want to reply to that? >> oh, sure. the exact same people who are saying this now also said that trump's tariffs that he put in place in the first term were going to do the exact same thing. and that didn't happen at all. in fact, several analyses were done and they found that about 80 cents on every dollar of tariffs was not passed through to american consumers but instead was paid for by chinese producers. and, so, this idea that somehow if you increase taxes on foreign producers it's automatically going to result in a pseudo tax increase on the american middle class, the data just doesn't support that at all. >> jason? >> first term trump raised taxes on people that bought washing machines. this time he is raising taxes on people that buy anything that

has any component that's made abroad. that's $3 trillion. economists studied the incidents questions, a lot of questions on this. yes, a little portion is foreign abroad. by the way, a lot of that corporate tax cut is a corporate tax cut that benefits foreigners. i'm not quite sure why you want a corporate tax cut that gives money to foreign shareholders while telling americans they have to pay more taxes on virtually every good that they buy. >> e.j., does that make sense to you? look, as i'm hearing jason talk about it, and then there is the second question, by the way, if you get down to 15%, how much does that change the game? 21% was one thing. 15 is a whole different level. does it make the u.s. even more competitive? yes, except it really brings you in a place where -- how much more investment will you actually get as a result of it? >> look, it's a great question.

again, if we look at the record of the first trump term, we can see that we had a lot of reon shoring of korcorporations and t was ib creased activity and that increases revenue as well. we don't have a revenue problem at this point in this country when we look at the federal budget. we have a spending problem. and what we need to do is increase, not the tax rates, because that's not really going to bring in much more revenue. we need to increase growth and we need to decrease spending. that is the only way you're going to be able to address this country's long-term -- >> what we're doing is in some ways increasing revenue but maybe not. zblf >> well, certainly we need to have a conversation about decreasing spending. in the current political environment where you have essentially divided congress and you have a white house that wants nothing but to spend more,

especially on all their useless green energy projects, that's never going to happen. >> jason, final word to you, sir. >> you asked me to devise a plan for economic growth. i'd say broaden the base, lower the rates. i would not say put on lots and lots of tariffs. i would not say do tax cuts that you can't afford. i think 90% of republican economists would agree with everything i just said. it's a shame that president -- >> real quickly, you say broaden the base. how would you do it and what number would you bring it to on personal and separately the corporate rate? >> we can basically keep the tax rates now if we were aggressive at broadening the base. you could do it things with the health exclusion, mortgage deduction. but other people other than me and a previous guest would want to do something on that. on the corporate side, i don't think there is much base broadening left which is why no one proposed it.

the rate we have now is completely fine. in fact, we may not be able to afford to stick with that rate. >> it is a longer debate. jason and e.j., we appreciate and say thank you for joining us this morning. >> it is 8:00 a.m. on the east coast. you are watching "squawk box" right here on cnbc. i'm becky quick along with andrew ross soshg sorkin. we are dealing with a power outage that grounded flights around the world and shut down computers. this is a glitch with crowdstrike. it did something where it upgraded a new system. it sent that system upgrade through microsoft system and that's where the problems run in. this has been something that's been affecting airlines which is just the most visible part of this. it affected ports in the northeast. it affected financial systems around the globe. things were a little dicier earlier this morning. they got back under control at this point. but we have had our own technology issues here at cnbc,

too. we're going to bring you the latest throughout this hour. we want to start right now with an update on what's been happening with this outage. let's get right over to our very own steve kovak. he's been following this this morning. steve, it looks like things are shaking through. the irony of all ironies is this was launched by a cybersecurity company that was not a cyber attack. it was just a mistake. >> right. not even a cyber attack. we're getting word it sounds like delta is starting to resume its operations. that just came in just moments ago. here's what else we know so far, becky. this is, of course, the issue with the cybersecurity firm crowdstrike. they pushed an update that caused the outage. the ce oechlt o was on the "tod earlier saying not a hack or cyber attack. here's what he said on "today." >> we know what the issue is. we're resolving it and have resolved the issue. it is recovering system that's are out there. essentially, as you talked about and the statement i put out is

the system was sent an update. and that update had a software bug in it and caused a -- an issue with the microsoft operating system. >> becky, things are improving and slowly coming back online. unclear when everything will fully recover. earlier this morning, microsoft technical support saying some customers are able to restart. and the outage basically, the way it worked, it caused windows pcs managed by crowdstrike security to reboot and show that so-called blue screen of death. it's been taking down corporations around the world and tv networks like our own, airlines like delta and united, banks, so many things, 911 services as well. microsoft also putting the blame on crowdstrike and saying that crowdstrike update forced all the windows devices to get stuck in a restart loop. meantime, shares of crowdstrike, they're sort of popping here in

premarket trading. you see crowdstrike down 11%. more -- we're still waiting for more updates from crowdstrike and microsoft about when everything will get back online. it's still unclear the relationship between these two companies and who really is to blame here and what exactly happened. so, more importantly than anything else after these issues get resolved, what went wrong and how these companies are going to stop it from happening again, guys. >> yeah, steve, this started late last night. the first places to see it were australia as identified and rolled around, not just asia but then through europe where there was even problems with starting some of the markets this morning. they started a couple minutes later than had been. we already heard from the nasdaq and the nyse that they believe their systems are up and ready to go. it shouldn't impact the start of trading here. but you hear things like five hospitals in israel that were talking about it. 911 calls, as you mentioned, on some of the things. retailers across a lot of different places. some of the banks. i think what is maybe important is you see people getting to work and trying to make things

work and it's not a situation where one major customer is out and then crowdstrike or microsoft is able to flip a switch and it all fixes. i'll just say here, i still can't get logged into my computer. >> wow. >> joe, who is not here, his computer is up and running. i don't think andrew's computers are running. andrew has a mac laptop that he is able to make this work with. you see people kind of finding work arounds. i got somebody else's computer that i'm borrowing to log into some of the systems. this is what is happening everywhere around the globe at this point. people trying to find work arounds for the system that's t -- systems that they normally use. >> these are in corporate world. this is the kind of service and company, big organizations like our own, like you said, we're experiencing problems go to to keep the integrity and cyber attacks out of their systems. thank goodness this was not a cyber attack. you know, when i first woke up this morning, becky, and i saw

the headlines. i said this could be the big one taking down everything. i was so scared. but thank goodness. at least, it looks like this is a technical glitch and not -- that just speaks to the importance of these companies and how much is at stake for them. we're talking a couple hours ago, becky, on the program the at&t at&t that was a hack earlier this week. and that was more tied to security flaw with snowflake it looks like. you know, so many of the cybersecurity companies, there is a lot on the line. much it's not just one person and not able to log into their computer. it's huge swaths of our economy that are impacted by this. >> right. we say it's friendly fire. thank goodness we're safe but we shot ourselves in the foot. >> it's the one thing that shouldn't happen is they shouldn't be doing it to themselves. they should be protecting other people from it happening and not taking down their own systems. absolutely. >> okay. steve, thank you very much. >> thanks, becky. >> meantime, we want to talk about airlines and what's going

on. he's tracking the disruptions affecting airlines and that is phil lebeau. the where are we? >> i want to show you images of what we're seeing at airports around the united states. frankly, we're seeing this at airports around the world. long lines. why? you had delta, united and american starting around 2:00, 2:30 in the morning asking the faa for a global ground stop because of the communication issues with the software outage. around 5:30, 5:45, american had their ground stop lifted. united and delta, within the last hour, have both said they have resumed some flights. though, they're expecting disruptions throughout the day. needless to say, the airlines are issuing waivers. by the way, those are not the only airlines that are impacted by this. we saw this with frontier and al aligiant and european airlines. i'm in part of wales and we

heard from the different airports in europe that they're seeing long lines in part because they don't have flights and people are saying when do i board? will i board? so, at this point, you're seeing some resumption of flights. that's the good news. but you will see cancellations and delays mount all day, guys. we already have more than 1,000 cancellations in the u.s. today. there are, i think, 845 according to flightaware all of yesterday. so that number is going to continue to climb. >> phil, thank you for that. we'll be back to you, i'm sure, very, very shortly. meantime, let's take a quick look at the futures. >> that's right. right now it looks like the futures, a lull weaker for the dow. down 50 points. we've seen improvement with the s&p 500 and nasdaq turning positive. s&p 500 up by 9 points right now. nasdaq is indicated to open 43 points here. by the way, what we're watching right now, back up just a little bit, the s&p 500 on pace for its worst week in three months.

that is saying something. the last three months have been phenomenal. our big earnings mover of the morning, american express. second quarter earnings came in on an adjusted bases, $3.49 a share. that took out a 66 cent gain for the sale of a. certify. that is the transaction gain. that compared to $3.23 a share. so, it was a significant beat on the bottom line. on the top line, revenue at $16.33 billion. that did miss expectations. the stock is off 1.57%. amex as. raising earnings guidance for the full year and affirming the full-year revenue growth guidance. that's on a big beat for this current quarter. we did speak with the cfo. he pointed out a lot of different things happening here. he said that what they have been seeing is actually some pretty strong spending. and just pointed out that they dramatically increased the scale of the company. since the end of 2021 with covid, they added about 50% more revenue. 23 million more card members.

and 30 million more merchants across the globe. the obvious question is, are you adding customer ths that are go to be good credit ris whk you st -- risk when you look at. this the delinquent rate went down. that was flat quarter-over-quarter. they see a slow growth environment right now, the credit metrics are very good. spending wise, he said when it comes to millennials, they've been increasing transactions on average about 25% in the united states. says they're spending more than gen-x when it comes to things like dining. that stock is down 1.75%. let's get more on the broader markets. h let's go to mike santoli. >> yeah. the broader level, the s&p 500 mentioned the worst week perhaps in three months. it's down, i think, only a little over 1% for the week. it's down 2-plus per cent from

the intraday high. there is a lot of churn. the nasdaq 100 down 5% off the high. this actually is now taking the s&p 500 down to just its 20-day moving average. the strongest uptrends tend to try to bounce around that 20 day. the 50 day is a few percent below. you watch the technical dynamics. it's about where the market is strong and weak. there's been a lot of opposing currents here. take a look at the equally-weighted s&p 500. everyone is focusing on the small caps. to me, the equally-waited s&p 500 is more relevant. it shows perhaps an attempt to rebalance the market away from the big magnificent 7. they made an all-time high earlier this week. it's been a general uptrend. we're trying to back test the previous high from march. finally, a couple leadership group, semis and home builders, swapping positions here. this is the two-year chart of the semiconductor etf and home

builders. it's good when they're both in uptrends. take a look at semis for a potential break down. that's what folks are paying attention to. build is moving up on lower rates, andrew. >> mike, thank you for that. when we come back, a lot more on the global i.t. outage. plus, we're coming back in just a moment. of power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis, help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley

is. pressure is mounting on president biden to drop out of the 2024 race for the white house. we have more on that now. hi, megan. >> hey, good morning, becky. it's a question among democrats of not if biden will step aside but when he would do that. calls for his resignation reached a new peak yesterday. john tester was the 24th democrat in congress asking one democratic strategist told me late in the dayout. the a strategist told me that, quote, we're done. it's over. there is no path for biden to stay in this race. it really led to a shift yesterday toward feeling like

biden's exit was an inevitability. more democrats began openly preparing for a new path forward and there is new enthusiasm when major fund-raiser told me they were inundated with calls from donors that froze support for biden but saying they want to get back involved to help whoever may be the next from wh been. wealthy donors had been withholding so much support over the past few weeks that the campaign now expects to raise only a quarter of the big donor money it had initially projected for the month of july. that's according to nbc news, and a source told me that feels on track. it's still biden's decision alone, and the campaign is holding firm up to this point that he's staying in. i will note, we'll hear later this morning from jen o'malley dillon, his campaign manager, in quite a rare interview for her. that will give us the latest indication of where things stand heading into the weekend. >> that's a stunning number. a quarter of the donor money that they expected to rake in for the month.

i guess sometimes that can speak more loudly than even the polls and is maybe the type of thing that starts to catch attention within the white house too. >> it's a question of viability. yeah. it's a question of viability at that point. will they have the money heading into the fall? i talked to a separate strategist yesterday who had this idea that biden wasn't going to step aside, but that he would be underfunded in the fall. at that point, it becomes a question of, are grassroots going to try to fill the void? will some donors who are never trump come around to the idea of resigning themselves to start funding biden again? we just don't know, but that's what catches the attention. >> thank you. meantime, on the gop side of the equation, donald trump formally accepting the republican nomination for president last night in milwaukee. joining us right now with his reaction to that speech and so much more is arkansas gop senator tom cotton. good morning to you. it was a rousing speech. it was a long speech. curious what your i shall reaction was to it and not just what clearly the feeling was in

the room but what you think the feeling was around the country. >> well, andrew, it was a great speech last night, especially when donald trump told the story of the assassination attempt on saturday that he survived. i agree that the hand of god was on his shoulder when he turned and dodged that assassin's bullet. sadly, it did kill one man who donald trump honored last night, injured others. the whole convention, though, was the best i've been to in my now, i guess, four conventions since i started in politics. our party is unified. we're energetic, and we're excited, not just about this election but about the future of the country under president trump. by contrast, you have the democrats who are trying to mount a coup against their nominee. >> you just said that you think the democrats are trying to mount a coup against the nominee. it may be an unfair question to ask somebody who's on the other side of the democratic party in this regard, but is there a -- is there somebody that you think the democrats could mount as a -- as a nominee that would be

competitive with the president? the former president, i should say. >> i think the american people are ready to end four years of democratic misrule, whether it's joe biden, kamala harris, or anyone else. they they remember that under donald trump, things were good. we had stable prices, good high-paying prices, the border was secure and america was respected around the world. over the last few years, everything has gone to hell. the democrats are not worried about joe biden's medical condition, not concerned that he's unfit for office now. they're only worried about losing their grip on power. all of these leaks coming from nancy pelosi and chuck schumer and others don't talk about joe biden's ability to serve as president now. they're only worried about whether they can win the election this fall. this is not about joe biden's medical or health condition. it's about the polls. if they put kamala harris in his place, she's going to have a plot of questions to answer about what she knew about joe biden's condition and why she was out there saying he's smart

as a whip behind closed doors and totally in command. but again, andrew, the voters are supposed to make these decisions. the democratic voters spoke loudly and clearly. joe biden was winning primaries just a few weeks before that debate happened. there's been no change from his condition when he was winning primaries and people like nancy pelosi and chuck schumer were extolling him as sharp and in command. the only thing that has changed is that they can't keep it under wraps any more. they can't maintain their conspiracy of silence since the debate, and now they're ready to throw him overboard in a coup simply to try to save their own skins. >> senator, let me ask you a different question about taxes and tariffs. we read about president trump's plan this week to lower the corporate tax rate to 15%, but also to put on a slew of tariffs, which could act as a tax, if you will, on the entire country, potentially being remarkably inflationary. what's your reaction to that?

>> andrew, this is a very unusual campaign. for the first time in more than a hundred years, we have two presidents running against each other. we don't have to speculate about what they would do. we don't have to wonder if they'll keep their pledges and promises. we just have to look at the record. when donald trump was president, he had tariffs. we had tax cuts. we did not have inflation. the moment joe biden took office and started spending trillions of dollars that we don't have, we have had record high inflation. families cannot afford to pay the rent and pay the bills and feed their kids. again, it's a simple contrast between two records. things were good under donald trump. american families have been struggling under joe biden. >> the question, though, on the tariff piece, though, is, at least my understanding of it, and maybe you have a different understanding of this, those tariffs that the former president put in place when he was president were relatively targeted. we actually did a segment on this earlier today. you know, around washing machines and other types of big appliances. the kind of tariffs that i think we're talking about that the former president's talking about in a new term would be much

broader based and may very well act as a tax. that's why we're talking about sort of you lower the corporate tax on one side, but then in some ways, you're raising the tax, if you will, on the other, and it actually is broader based. no? >> well, andrew, the simple fact is we had tariffs, and now there are other sectors in which china cheats as well, in which tariffs are called for too. i would also note that joe biden, by and large, has not repealed any of those tariffs. he hasn't enforced them the same way donald trump did and the way donald trump would again. that's not what drove inflation. what drove inflation is joe biden and the democrats spending trillions of dollars we didn't have, of tlotling american energy production. president trump, like he did in his first four-year term, will reverse those policies. we'll have stable prices and a healthy, growing economy. >> let me ask you about the secret service situation, because you have made some

provocative comments about what you think should happen. at this point, what do you think should happen to -- i mean, to the head of the secret service and even more broadly in terms of the security for the former president and presidents more generally? >> well, andrew, i don't -- sure what comments you're saying are provocative. ken cheadle should resign. there was an obvious failure at the event last saturday where president trump faced an attempted assassin's bullet, and she still hasn't taken responsibility. it's one thing to have a failure on your watch when you're an executive. it's another thing to start making excuses and refuse to take responsibility. she's blamed it on local law enforcement or on a sloped roof, for goodness sakes. the men and women who jumped up on that stage to protect president trump and who are willing to take a bullet for him and who defend other people all day long, joe biden and his family, deserve much better leadership than what they've

gotten from kim cheadle, and the agency needs better leadership than it's had for some time. >> okay. senator cotton, it's nice to see you. we appreciate you joining us and look forward to talking again soon. thank you. >> thank you. all right, still to come, we're going to bring you an update on what's been happening with the global computer outage. also on netflix earnings. right now, though, as we head to a break, take a look at shares of eli lilly. that stock is up after the company's weight loss drug was approved for use by china's medical products regulator for long-term weight management. it had already been approved there for use in diabetes, but this is for weight loss itself and that is helping eli lilly shares gain about 2.1% this morning. stay tuned. you're watching "squawk box," and this is cnbc. e latest mercez has to offer. make your dreams come true. but the choice won't be easy

with exceptional offers on the e-class sedan, c-class sedan, cle cabriolet and cle coupe. hurry, these dream offers won't last forever. come in now through september 3rd. ♪ i wanna hold you forever ♪ hey little bear bear. ♪ ♪ ♪ i'm gonna love you forever ♪ ♪ ♪

c'mon, bear. ♪ ♪ ♪ you don't...you don't have to worry... ♪ ♪ be by your side... i'll be there... ♪ ♪ with my arms wrapped around... ♪ it's odd how in an instant things can transform. slipping out of balance into freefall. (the stock market is now down 23%). this is happening people. where there are so few certainties... (laughing) look around you. you deserve to know. as we navigate a future unknown. i'm glad i found stability amidst it all. gold. standing the test of time.

all right, we've got a lot of highlights from netflix's

second quarter earnings. julia boorstin joins us right now, and the numbers for the quarter were pretty good, but it's the outlook that had some concerned earlier. >> that's exactly right, becky. netflix beating on the top and bottom line and reporting far greater subscriber growth than anticipated. eight million subscriber additions versus the 4.8 million that was estimated, but the stock initially dropped on the warning that third quarter revenue would fall short of analyst expectations. despite those additional subscribers. now, underlying this warning that revenue would lag subscriber growth, the company is saying that advertising won't be a primary driver of revenue growth this year or next year. take a listen. >> we're on track to achieve our critical scale goals for all of our ads countries in 2025. clearly, we expect further growth beyond that, but that represents a great threshold to get to and then to build more scale and more attractiveness from there. that allows us to shift more of our energy now on more

effectively monetizing that rapidly growing inventory. >> the company is continuing to push subscribers to its ad-supported tier, announcing that it is phasing out its basic ad-free plan in the u.s. and canada after phasing it out in the uk and phasing it in, in the uk and france, after phasing it out in the uk and canada, they said it helped increase its ads member base by 34% sequentially in the second quarter. so, andrew, now that the impact of the crackdown on password sharing is waning, the future really does seem to be all about tapping into that ad potential. >> okay. julia boorstin, thank you for that. we're going to be talking to you, i imagine, a lot more about all of this soon. when we come back, a former atlanta fed president, dennis lockhart, is going to join us to talk interest racetes and policies. that and the latest on the global computer outage that's

affecting folks across the world. and now everyone's so productive, they're operating at a higher gear... that's the now way to network at work—with real ai—putting you in the fast lane.

welcome back to "squawk box" right here on cnbc. take a look at the futures as we are contending with a global outage in some parts of the world right now around microsoft

and crowdstrike. if you're waking up to a -- what they're calling the blue death screen, hopefully it's getting updated for a lot of folks around the world, but right now, the dow off about 107 points, the nasdaq up about 20. the s&p 500, up a little over three points. as andrew mentioned, businesses around the world are slowly recovering from that global i.t. outage. still have no computer here, at least on this screen that we're looking at. we're still trying to get things fixed up and running in different places, and the same story could be said for businesses just about everywhere. our bob pisani joins us with an update on any potential impact on the trading day, and hopefully, at this point, we're getting to the point where that's not going to be an issue, right, bob? >> no. fortunately, i have been on the phone for the last couple hours with various trading defibri desks, becky, and various individuals who run various firms and so far, it's looking pretty good. the new york stock exchange, i was just talking to a person i know who's a floor trader there. he's been there for a while this

morning. he says all nyse systems are up and running. nyse markets are fully operational, and we expect a normal open this morning. i also contacted nasdaq. they said our european markets and u.s. premarkets are operating normally. we expect our u.s. markets to open normally as well. finally, i got in touch with doug who runs virtu, and they are the largest electronic market maker in the world, perhaps second to citadel. they said, "we are good and functioning in europe. number of other brokers are not. we will be fine for the u.s. open too." becky, it looks like we're doing fairly well right now, and my experience, i've been there at the nyse 27 years, is that almost invariably, when this happens, it is some kind of software upgrade glitch that occurred. so, at the nyse, there is a lot of legacy software that exists,

and individuals and systems have to bolt on to this that are coming in from the outside with additional information, and often, small changes like a single line of code in that bo bolt-on, usually done over the weekend, can result in parts of the system going down. it's not uncommon to have a saturday and sunday upgrade and all of a sudden, monday morning, there's some kind of small issue with executing trades of some kind. the most famous one occurred about ten years ago when night trading did a software upgrade with the nyse overnight and the trading started spewing out all sorts of buy and sell orders that were erroneous. i mean, massive numbers, and caused a significant amount of disruption and was one of the factors in putting them out of business. sometimes, these can be very trivial. sometimes, very serious. but it's amazing what a single line of code, potentially, can do when everything is

interconnected. >> sure, bob, and for anybody who had been just waking up, maybe wasn't following along this morning, crowdstrike has come out, the cybersecurity company, and said it was a situation like that. this was a glitch. not a cyber hack. they did an update that went through the microsoft system and that spread around the globe it's just not easy to pull it back in. the good news is this was not nefarious. this was an accident, but you can see what even an accident can do in terms of taking down the systems around the globe, and really causing some serious snafus. i guess i shouldn't use that word, but serious troubles, let's say. bob pisani, thank you. we'll see you later. >> okay. meantime, economic growth is in focus. next week, we're going to get set to get our first look at the second quarter gdp. here to talk about what the latest data could mean for the fed and its rate path, dennis lockhart, former president of the atlanta fed. he's now a professor at georgia tech. good morning to you. we're all trying to gauge,

handicap, or otherwise, you know, read the tea leaves about what jay powell may do next and whether he, in fact, may lower interest rates come this fall, something that seemed to be off the table just a couple weeks ago that may be on the table again. what do you think? >> well, i'm listening this week, of course, to all the speakers, and they seem to be expressing openness to a rate cut in the near future. that could be september, could be november or december. but they're certainly not disabusing the markets that that could happen. so, i think september is on the table. but it will depend upon how the next two or three inflation prints actually come out. >> and how do you expect those inflation prints to come out? >> boy, i tell you, i start from the perspective that data comes

in sort of in a -- in a sawtooth manner. sometimes, one month jumps up over the other, and it's hard in a short time frame to really discern exactly what the trend is. certainly, what we've been seeing in the last quarter, the second quarter, is encouraging inflation numbers that are trending downward, but still, we're pretty elevated over the 2% target. so, you know, i'm hopeful that we see a consistent picture of small decreases in the pace of inflation. >> right. two pieces of data or information that i thought were interesting, yesterday, we had john gray, who runs blackstone, on the broadcast, and he said that he was seeing in their portfolio, which is pretty large around the world, that he believed that inflation was coming down. i don't know -- is there either a specific firm or place that

you look for in terms of that data? >> well, i try, as best i can, to do what i did when i was at the fed, and that is i try to form a synthesis from probably 10 to 15 different inflation indicators, including some of the trimmed mean and median kinds of numbers that come out of some of the reserve banks, and then pull it together and step back and ask myself, what's the trend here? >> right. >> and the trend is clearly a, let's just say, a tentative resumption of disinflation. >> what do you -- >> i don't think it's one number, andrew, and i don't think the committee members look at just simply one number. >> what did you think of jay powell's comments where he effectively suggested, look, we got to move before we get to 2%? that if we waited to get down to 2%, we've waited too long.

>> that has been -- that's been the practice in many respects simply because of the lags in monetary policy having an effect on the economy. it's the old, where the puck is going question, and he's repeated that several times. to me, that means that if we see continuing progress, if we get closer using the pce index to 2.5% or even a little below 2.5% on an annualized basis, then they'll be ready to make their first move. >> okay. dennis, thank you for your perspective this morning. we appreciate it. wish you a happy weekend. >> thank you. thank you, andrew. all right, still to come this morning, harvard's arthur brooks will join us to break down former president trump's acceptance speech from last night at the republican national convention. plus we are still monitoring the fallout from the global i.t. outage. don't miss an interview with

george kurtz, coming up on "squawk on the street" in the next hour. we'll be right back. like your workplace benefits and retirement savings. presentation looks great. thanks! thanks! voya provides tools that help you make the right investment and benefit choices so you can reach today's financial goals. that one! and look forward, to a more confident future. that is one dynamic duo. voya, well planned, well invested, well protected.

♪ ♪ ♪ ♪ voya, well planned, ♪ ♪ ♪ ♪

♪ that colonoscopy for getting screened ♪ ♪ is why i'm delaying ♪ ♪ i heard i had a choice ♪ ♪ i know the name, that's what i'm saying ♪ -cologuard®? -cologuard. cologuard! -screen for colon cancer. -at home, like you want. -you the man! -actually, he's a box. cologuard is a one-of-a-kind way to screen for colon cancer that's effective and non-invasive. it's for people 45+ at average risk, not high risk. false positive and negative results may occur. ask your provider for cologuard. ♪ i did it my way ♪

♪ the discord and division in our society must be healed. we must heal it quickly. as americans, we are bound together by a single fate and a shared destiny. we rise together, or we fall apart. i am running to be president for all of america, not half of america. there is no victory in winning for half of america. >> that was former president donald trump addressing the republican national convention in milwaukee last night. formally accepting his party's 2024 nomination.

trump called for unity, but he also hit some of the divisive themes that he returns to regularly. joining us right now to talk about it is arthur brooks, american enterprise institute's president emeritus, also a harvard professor, and what do you think about what you saw last night, arthur? we've been talking about how both parties have some issues in terms of trying to make people feel good about things. former president trump was pretty clear that he was going to be shifting towards a more unified messaging after last weekend's events. what did you think of what you saw? >> hi, becky, great to see you. the first ten minutes of the speech were pretty unifying and very encouraging, and then it kind of went back to ordinary form. and the ordinary form, by the way, was not trump form. it's normal american politics form, which is not about governing. it's about winning. the biggest problem we have in these elections is that one side wins 51%, approximately, of the vote and does what they want, and the other side wins and nullifies what the other side

does, so we're going back and forth in this political ping-pong match that's really bad for the country. the result of that is that we need people who are focused on not just winning but also governing and that's about persuading. more of the first ten minutes. that's what we need. and if president trump can change his tone for the rest of the campaign and do more of that first ten minutes, it could be -- it will be a lot better, and by the way, it will be a much easier election, i think, for the republicans. >> arthur, i think you're probably right just in overall terms, but this may not be a 51% win. at least, that's not what the polls suggest. it's certainly not what democratic donors think, which is why they have been fleeing and not donated. we had a report just a little bit ago that a big donor for the democrats, the big donor dollars, probably only came in at about 25% of what had been expected for the month. that tells you a lot about where they think things stand. >> that's right, but even if it were a complete landslide in a popular vote, president trump would win 57%. and you know, that's not the way

to unify a country. the truth of the matter is we're highly polarized, in no small part because of the way that the political structure and media has pulled us apart, profiting from that discord that we have in the country and it's time now for people in politics and media and social media and business to start say we are fundamentally a 90% country on the things that really matter. look, 93% of americans literally say they hate how divided we've become as a country. that's a big market opportunity. if elon musk saw a market for 93% that was unserved, that would be something he would be jumping into right now, and that's what, i think, former president trump has an opportunity to start doing. >> when is the last time you can think of an example where there was a more unifying message in the united states? i mean, i go back to post-9/11, but maybe you can think of some other situations. >> yeah, i can think of the time coming out of 9/11, for example, where president bush was trying to be as unifying as possible, and it was extremely successful, at least temporarily.

and again, nothing is permanent in politics. nothing works for, you know, for every single person in the country, but you really can get large majorities of americans behind you, not by watering down your policy positions. no one would ask the republicans and the democrat to be more conservative or liberal or somewhere in the middle, but rather to say, look, i know you're going to hear what i have to say, and you're not going to agree with everything i have to say, but you're not going to get to the end of my speech and think i don't love you and your family. that's the kind of rhetoric that can actually win, because that's what we actually need. look, i think all of us would vote for anybody in either party that truly wanted to unite the country, because the strength of our country is in our unity, and we're going to get weaker and weaker and weaker, election after election, if we keep going the way that we are. >> in terms of what it might look like, if you have, let's say, a red wave that takes over not just the white house but the house and potentially the senate, state houses, is that

something that builds more unity or not? or does it entirely depend on what the leader ends up saying? >> no, what that is would be a temporary wave, and again, i'm personally more on the conservative side so i welcome more conservative policies but what i want more than the policies that i favor is more -- is a longer term sense of a trajectory of policy that can last in this country so we can make progress on big issues that are facing the country, and that means me not getting everything that i want. if there's a big red wave because of political circumstances right now, as both houses and the white house, okay, two years. how much are you going to be able to do in two years that can't be nullified two years later when there's a -- when we snap back because it's not a big red wave anymore? that's what's going to happen if we continue to polarize and use this polarizing rhetoric. it's like these companies that go quarter to quarter to quarter, and they have suboptimal performance over a ten-year period. that's american politics that's going two-year cycles to

two-year cycles and we're simply not argds the things that this country needs to address. >> arthur, your message appeals to somebody like me where i would love to see a more civil discourse take place. i'm sure that's the case with a lot of americans. i know it's the case with a lot of business leaders. does it appeal to politicians, and what have you heard back from them when they hear your message? >> yeah, a lot of politicians -- well, and the interesting thing about it is when i first moved to washington, when i was the president of aei, when i first got there, i thought, they're different than we are. they're not like us. no, most members of congress, for example, they're just like us, and they'll tell you privately that's what i want. that's what i want for my community. i want more unity for my family, for the future of the country, but they get into this suboptimal political equilibrium where they feel like they can't get any support from their party unless they're being as extreme as possible. and that's what we need to actually start breaking out of. the good news is i see all sorts of green shoots at the state and local level, all kinds of politicians all over the country

that actually want to unify and are not trying to get 100%. here's this weird dynamic they have in politics in washington, which is kind of political entertainment at this point. it's like a ceo saying, when i'm negotiating with one of my subs, if i don't get 100% of this negotiation, i've completely lost. that's wrong. you don't want to get 100%. you want people to walk away from negotiating table actually happier than when they came. everybody gets something. that's the kind of politics that can actually win, and in a long-term, help us make progress. >> okay. arthur, thank you for, again, extending that message. we always appreciate it. see you later. >> thank you. great to be with you. see you later. >> okay, thanks. coming up, inside the latest results from american express. we're going to talk to a top analyst who's going to join us about that after this. and of course more on the global outage that we're seeing across the world this morning on microsoft services as a result of crowdstrike. back after this.

\s

(vo) a successful business owner sells his company and takes on a passion project with his son - restoring his father's jazz club, and in the process, revitalizes a community landmark. from selling a business to giving back to where you come from, a raymond james financial advisor gets to know you, your family and the way you bring people together. that's life well planned.

welcome back to "squawk box." the futures right now. take a look at where we are, dow off about 78 points, nasdaq up about 31 points and the s&p 500, up about 8 points.

meantime, take a look at crowdstrike getting hit hard on this global i.t. outage that's affecting folks across the world with some airlines grounding planes, other financial services being impacted, all of this getting updated in realtime and hopefully getting better as we speak, but take a look right now. crowdstrike, off about 13%. big questions about what kind of liability they might ultimately have, whether companies will ultimately sue them, how all of this is going to play out. let's also take a look at shares of microsoft. we should mention apple computers and others use those products not impacted by this, but microsoft users across the board -- i shouldn't say across the board, but those that are plugged into crowdstrike impacted. microsoft, off by about 1.3% right now. and then, airlines. some of the most in terms of businesses that are being affected as we speak, you can see american airlines, up a little bit. everybody else, down just marginally. american, we should mention, has

lifted its ground stops, and united and delta flights are also coming back online right now. >> wow. but these are still the lines that you're facing. you could be facing long lines at any point, but airports around the globe, we've been looking at long lines as they deal with delays, trying to figure out what's happening. some of the airlines had said, be there extra early. some cases, three hours ahead of time. when you woke up this morning, if it was early, you may not have been able to check in online for your flight. lot of questions, and this obviously will create some ripple impacts throughout the day. it's not just these situations. these are the most visible. we've been watching the airline lines all day, but continuing to get updates here at cnbc. union pacific saying that it was impacted to system extent too, saying that their backup protocols are enabling them to communicate with their teams and dispatches, but they have had some processing delays with customer shipments. a couple of the ports have been closed here. you've heard problems with hospitals in israel. they said five of the hospitals there had been impacted,

although it did not impact, they say, the services that they were able to offer. but again, these are the ways that we watch people doing work-arounds and trying to catch up, and it inevitably will lead to quite a few delays in lots of different areas. american express reporting mixed second quarter results this morning. for more on the numbers, we want to bring in erica, head of u.s. banks and consumer finance equity research. american express beating on the bottom line but the stock is off by about 1.5%. what happened here? what do investors see that they don't like? >> so, the net revenue, including expenses, actually missed the street by 2%, and what i think they don't like is, look, american express is the jpmorgan of cards. so, every time it reports, i think, the investors have a pretty high bar. but what you're seeing is even american express's high-end consumer is also slowing. if you look at u.s. consumer spend, it did slow to, you know,

7% from 8% last quarter, and we also saw that spending in travel and entertainment has moderated and goods and services, pretty flat. while we have been talking about a slowdown in the lower-end consumer, it's a sign that the slowdown is also spreading upward. >> yeah, i spoke with the cfo, who said that it is a slow growth environment, but he said, our credit metrics are very good. he said the spend levels, he wishes they were higher, but when you look at the credit of those affected, if there's a downturn in the economy, what do you think will happen? they have added a lot of new card members. >> so, i think it's up for debate. at the end of the day, on a relative basis, american express is going to be pristine relative to peers. that being said, i actually like the intonation in your question in that there are a lot of, you know, new card members and card holders since 2021, and you

know, gen z and millennials are now a third of the spend in american express. and so, you know, as somebody that's been covering banks for 20 years, i sort of see that as untested through a downturn, and while american express will be better relative to peers, i think you're right. if we do get a downturn in the economy, i think there's going to be question marks in terms of what comes in the heels of that growth. >> so, how do you compare them to other banks, other card companies? >> i think we saw other issuers show spend that was really, really moderating, so the lower income and middle income consumer, they have more frequent tractions, smaller basket sizes. they're trying to get the value for the dollar and we're not seeing that slowdown in value seeking from the american express card holder. and we are seeing, you know, delinquencies stabilize at other

issuers. so, overall, the u.s. consumer is still relatively healthy. i think what investors are trying to think about is that rate of change that perhaps the american consumer is actually now starting to cumulatively feel the effects of inflation. >> erika, thanks a lot for joining us this morning. >> thank you. >> let's take a final check on the markets on this friday morning. you're going to see the dow futures are still a little bit down by about 63 points, but we have seen a positive turn for the s&p 500, indicated up. and the nasdaq is indicated up just about 45 points. treasurys that we have been watching through the morning. 4.2%, actually, 4.24% is where the ten-year now stands. the two-year is at 4.5%, and oil prices have been, this morning, a little bit higher just by about two cents. the big story of the morning, obviously, what's been happening with this global computer outage. it is not a hacking situation.

this was a mistake with an upgrade system and a glitch that went through that. it started with crowdstrike but went through the microsoft system. and that's what we've been watching so closely. now it's down by less than 12%. we'll be continuing to follow this throughout the day right here on cnbc. have a great weekend, and at least it's a friday, right? >> there you go. >> right now, it's time for "squawk on the street." ♪ it is being called the largest i.t. outage in history as this operating defect at sk crowdstrike does hobble airlines, banks, mass transit and municipal services all around the world. i'm carl quintanilla with david faber, sara eisen here at post nine of the new york stock exchange. we are going to talk to crowdstrike's george kurtz in just a few moments with our own jim cramer about the outage and the timeline for fixing it. first, though, we get to meagan