summer is flying by. back to school commercials already. that's rough. "squawk box" begins right now. good morning. welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen who is just getting into the picture there for a second. michelle caruso cabrera is joining us. becky is enjoying some time off today. earnings season hitting feefer pitch today. we're going to hear from a lot of people starting with dupont, then we have verizon, travelers, coca-cola, other earnings include lockheed martin, kim ler by clark, hardly david son and comcast. we're going to hear from apple, microsoft and electronic arts after the bell. that's what's going on in earnings central.

we are going be talking about it literally almost every 15 minutes over the next thee hours. keep your eyes on attention on inflation. and the june consumer price index, economists say headline cpi likely rose 0.3%. also worth watching, existing home sales for june coming out at 10:00 a.m. eastern time and sales expected to rise by 2.2% there. a dip from jumps that we had seen the previous month. joseph kernen, i see you staring at a screen. what do you see? >> dupont. it's a couple of cents shy. $11.17 was the estimate.it's posting $1.15, but the revenue number is above, which will be interesting if they miss on -- no, it's operating earnings of $1.17. so right in line. operating earnings, $1.17. so in line with expectations. and the revenue number is slightly above.

we were looking for 9.7852. and i think we got above that. maybe that -- is that second quarter sales? 9.71. so maybe it's in line with expectations. the dividend has been -- no, revenue is 10.11. so sales, they obviously have something other than sales. revenue slightly above. and then we've got different reasons. we should point out the company did raise its dividend from 47 cents a quarter from 45 cents. it was yielding 2.7 cents. so two cents on 45, that's not even -- that's sanl digit increase, but i guess the shareholders will take it. >> it's the third time in like two years. >> dupont, the second half adjusted earnings, $1.25 to $1.35. and the estimate is 60 plus 66, so what is that? that's $1.36.

so maybe at the low end of what we're looking for. fiscal year, 4 to 410 and 403. >> keth nelson at bay? we just saw him at delivering alp alpha. >> the company is saying they were impacted by the agricultural sector, that earnings were declined 105 million, down 111% on lower corn seed volume, lower north american herbacide. >> i don't like -- if you put an "h" there, i'd say it. otherwise, don't put it there. do you call him herb greenberg? >> no. >> higher seed inventory write-downs, as well.

they also saw a decline in electronics and communications operating. >> i think that's probably a real quote we're seeing there. so that is -- after all was said and done, that's what it looks like. >> that's where we landed. >> exactly. i don't think a whole lot of people are -- >> landing there. >> trading in dupont, but a few people, obviously, right now. that's number one. did you know that 6,000 -- of what percent of the dow is that? >> you know what? just like you weren't watching me when -- >> i wasn't watching punish i don't know. >> and you can't figure it out? >> no, i'm fought going to do math at this hour. six, four, 21. >> it's a fifth. >> it is a fifth. >> that's 30. >> what percentage is that? >> it's a fifth. 20%. >> i said that out there. you didn't have to listen to me to know it's 20%. >> oh, i know.

sorry. >> apple is reportedly planning on launching the latest version of its iphone with a significantly larger screen. "the wall street journal" says the company is asking supplierses to make between 70 and -- the company is asking suppliers to make between $80 million and $80 units of tweess with a 4.5 inch and 3.5 inch display by the end of the yoer. >> i'm excited for that. >> i am, too. the keyboard is killing me. >> thank you. it's going to change everything. i just want to put it out there. >> it matters. >> it matters so much. you do not understand. >> what are you watching on your iphone? >> i want to put the prediction out there. this is going to change the value of apple. it's going to put them back in a whole new place. this is going to be mind blowing. it's that big. it's that important. >> we can't trust you on what

you -- >> i don't like beats. >> you don't like the beats. >> no. >> what's the wrob? >> excuse me? >> they're great. texas instruments reporting better than expected revenues. >> that was funny. >> go ahead. >> i like -- it's -- texas instruments is telling investors to expect higher third quarter revenue. >> what? >> on a white shirt. >> you have to be very careful. you can put on your lobster salad. >> the old man looks good in -- >> among the drivers for texas instruments, improved demand for chips using cars, industrial equipment and communications here. customers appear the be holding lean inventory of chippes and that should help maintain demand. chipotle results beating the streets. the burrito chain raised prices

and still attracted more diners. same-story sales boost 12%. shares rising on the news. 10% gains for chipotle to tell you about earnings or not, but we're seal. >> look at the stock price. >> you're talking about the one-year? >> yeah. it's below 100. it's now $649. but it should be the growth industry of the -- you like screens on your -- you know, on your electronics. for me, it's mexican food. >> it's great. >> the worst mexican food is great. look at that. 2010. >> burritos are my favorite thing in the whole wide world. >> actually, that's right. you're the one that likes mexican food. there's another food scandal sweeping china.

mcdonald's and kfc apologized to chinese customers have a report that a food supplier had given the chains -- now we're getting word that the scandal is spreading fast, dragging in starbucks, burger king -- >> they tell that -- not a lot. chicken? >> yeah. >> or maybe some of those weird breakfast sandwiches. but it's dragged in burger king, papa john's and others, the dhans pulling products with meat from the supplier and mcdonald's saying some tainted meats was used in burgers in japan because -- >> in japan? >> mcnuggets are already for -- i eat them once in a while, my son eats them, but they're questionable. >> are they really chicken? >> they're chicken, but have you looked at a chicken? >> yeah, i have.

>>fy bassomitic. the whole chicken goes into a blender. >> and that's what comes out? >> no, but my fear piques. >> the one thing to say about china, the issue is -- we went from such a pleasant thing, and that is mexican food, to not only chicken mcnuggets, but past their due date. >> on meat that was used in china. >> on top of everything else. >> i'm not surprised to see this spread like wildfire to other companies. because the media there is not necessarily stuff that you can believe, right? usually it's controlled or

deeply influenced by the government. you can see this news spread like wildfire on the internet even if it's not true or even if it's not that big of a deal. >> i'm spoiled with how substantial all of our food supply chain is in this country. anywhere, i can remember being in portugal. you go into the normal butcher shop or meat section of the small sort of whatever you call them and it's still -- the smell is a little stronger. things that are hanging that look like -- >> and the chinese government has made a very big decision that te finally going to do to agricultural what they did to manufacturing for the last 30 years. it's mostly mom and pop farming in china, which means the supply contain can be sold. ooifgd private equity people

telling me 80% of everything you you eat in china, it's dirty. >> pigs in a river, 30,000 -- >> they have supply chain issues. they have to deal with it. >> you're going to get -- i think we've been discussing geopolitical news, have we not? this is probably more weighty and a little bit more -- >> potentially more weighty. we're going to talk about geopolitical news right now. european minutesters are meeting to discuss further sangs against russia. hadley gamble is standing by with more. hadley. >> andrew, the buzz here, two words. arms embargo. as we were coming into this meeting, there was a bigger question about how effective the eu can be of 28 member states, 28 separate agendas and no appetite for further economic sanctions. those sanctions have hit germany particularly hard, but there seems to be growing concern about western companies supplying russia with weapons because we don't know where

they're going to go and are they going to enup in the hand of separatists. so the buzz here is all about the weapons, who has them and what do we here. >> i have t-of 4/yesterday on the streets of donesk. they come in increasing numbers across the border in spite of our commitments and in spite of our demands. >> now, one country that is notably silent on this is france. the french foreign minister earlier arriving here in brussels, taking no questions in english, only talking about the situation in the middle east and the situation in gaza. and the reason wind that could be the fact that the french have a $1.6 billion deal with russia for two warships.

president hollande says he's going to go ahead with at least one delivery in the fall. there could a again of moo the space will get involved. we'll just to have would it and see if the frefrt come. >> heather, we've had a huge issue there. >> so frustrating, you're right. in this day and age you would think -- >> and whenever you try to -- you want to have a conversation, but you really can't have a conversation. >> sometimes it happens with cell phones, have you noticed? yes. and you see it come. here is one person talking and you can see it coming. >> when we work overseas, we try to always figure out what is the

fastest fath, always. okay. netflix surpassing 50 million subscribers. quarterly earnings falling a penny short. anthony, i shouldn't, but i muft ply the net number by four and look at what the market capital of the stock is and i always go, that's unbelievable, right? i don't know what it is this time, and they're not going to make what they made this quarter. but it's still incredibly rich in terms of valuations and it's going very quickly. some people, it's not just about being able to access content. they actually have some -- they make their own content now. so there's a lot of exciting things about it. is it worth what it's selling for? >> i think netflix is a little bit like amazon in the sense that the domestic business is much more mature, it's proven to be more profitable as the

contribution margin approaches 30% in the u.s. and then internationally, their inve investing, so they're initial losses, they talked about launching in france and germany. i think what i'm trying to do is value the domestic business, value some of the analyst businesses. but it is true whether it becomes more difficult to value net yix. it's difficult to look at it as the company invests. >> you can't use normal metrics on it. then i was reading, making comments about the big merger, the media landscape. he goes, you know, the comcast time warner cable just -- that's just -- we can't really deal with that because it affects netflix directly because it's overloading all the pipes and they expect it to be free for them to overload everything and not have to pay anything.

they also pander to the left that thinks net neutrality is like some god given right. it was from the old testament or something that you're entitled to, which you're not, because if we build the pipes, it's like a normal free market. but then, so the fox 21st century fox, that acquisition, time warner, that's fine because they're both big already. so he's a content guy. so he's against the distribution merger, but it's fine with the content. it's so transparently obvious that he's talking his own book. >> well, on the net neutrality issue they are heads in the sense that they believe very strong in that neutrality and their policy is they would like to see that merger blocked. >> they know what to do that. supposedly. but it seems like they -- they know they're not -- >> they can't sanity phi that kind of a deal. and there are some small incremental costs that have to do with that.

but i understand what you're saying in terms of the policy. in terms of warner fox, they said these are powerful companies already. basically, it did not continue a combination of those two. really, you have to give them credit for negotiating directly with the producers. that's his hedge there. so there's this issue of a netflix being hedged whether or not the outcome is comcast and -- >> time warner gouges netflix when they're trying to sell them content because there's one less player. >> you do recognize, joe, and as you know, i'm not against this transaction, but i do realize -- >> which one? >> the comcast/time warner deal. i want comcast in my own home so i'm selfish. you do know there is no free market in the context of the -- >> there's no free market anywhere, right?

>> it's legitimately not a market sale. if i'm going to spend billions upgrading the pipes, i'm not going to just eat that. if you're going to take 60% of what i've built so there's no delay on downloading your stuff, you're going to pay for it. >> joe, you have -- >> there is no market. >> we have netflix, which is the prime content. >> what's that? >> you have netflix, which is supplying the contents. so in the media world, in the content is king type world, you charge the distributor, right? the content i have is the pricing power. >> it should be fine. >> in this world, why isn't netflix the content owner here that should be charging the guys? >> they are. and god bless them if they can. they should. i don't see how at $8, they're sort of -- you know you're

right. it is like $8.99 a month or whatever it is. so they're doing that to build their subscriber base globally. but in the meantime, it should cost more than that. the last time he tried to raise prices, it was a debacle a couple of years ago. >> i have two questions for you. the context of netflix and the context of price and value for hbo, there have been reports that inside fox 21st century fox, their valuing that company around $20 billion. this company, netflix, clearly valued at much more than that. does that make sense to you? is hbo too little or is netflix too much? i think it's probably a little bit of netflix being fully valued. i think the opportunity is they can go direct and that gets a lot more exciting. >> is that a code for overvalued? is fully valued a code for -- can you speak english? >> netflix trade is double the

multiple. >> have you noticed netflix is now selling their original programming, not just on netflix, but what appears to be on other networks. >> so if i'm a fios subscriber and i do not have netflix, i can pay to watch this? >> a content provider can set things on fire. >> that's kind of -- you know, that's a benefit of owning the contents. there are other ways they can monetize those rights. so it's sort of like their hedge in terms of dealing with the studios. this is another hedge in terms of dealing with the cable issue is they own that content.

>> i literally just saw this. there's an argument made about what's called reverse net neutrality. one day, netflix or google is going to say to comcast, actually, you know what? unless you pay us directly, in addition to what we're going to charge the customer, your customers can't have us. >> we'll be running so much sports by then and -- >> or google is going to say -- >> what has google got? >> youtube. >> i don't want to watch youtube. >> how about h you will you? >> how about that? >> we're not going to gouge ourselves. >> no, no, what happens when -- >> directv -- >> let the markets work. it says, you know what, actually? i know you have this content, but you're going to have to pay us in addition to what the

conseamer is looking at. >> can someone come in and build -- you say it's not a free market. can someone come in and build -- well, that's a problem. >> it's not just challenging economically. >> do you want to get into that business, you're free to do that. in this country, you're free. other than that, you don't want to pay it, don't pay it. anthony, we've called everything here. everything is fine. i still haven't seen any of those netflix offerings, though. >> can you do that? there's a picture of her in there, too. are her eyes on that? >> who are you talking about? >> the picture on -- there's a picture of her in -- >> like all the -- >> right.

>> no use with the eyes, it's crazy. >> crazy eyes. >> before we go -- >> do you know what i'm talking about? >> i know who you're talking about. the malaysian prime minister just announced they have control of the black boxes from flight mh-17. they appear to be in good condition. >> near not looking at a -- >> oh, the train has appeared -- i think it's arrived in eastern ukraine, yes. thanks. coming up, when we come back, we're going to continue a little bit of this debate around the media. time warner's board moving to prevent its shareholders from calling a special meeting. that company trying to prevent any quick move to approve a potential takeover by rupert murdoch. we have that story when we return.

welcome back to "squawk box." time warner playing defense. the media giant announcing a big change in its bylaws that move shareholders ability to call a special meeting. joining us now with more insight is jeffrey jacob. he is a former attorney with the federal trade commission and with federal governance angle. we have jeff sonnenfeld, senior associate deal at yale school of management office, cnbc contributor. let me start with you, jeff.

from a corporate governance perspective, is what they just did okay with you? >> yes. i think it's really a great idea. it slows down some of the frenzy on of this deal. basically, there's a provision that they had in there -- in their bylaws, these are bylaws, of course, which require annual re-election of shareholders. everybody is up for re-election. they don't have any poison pill or that kind of stuff. so you can turn this over next june if need be. what this does is prevent any kind of preemptive panic misinformation that you can confuse people. there's a lot of confusion out there, i think, actually among analysts when they talk about a 75% overlap of shareholders. it's important at this given time to realize the pace of those people with the 75% overlap is four to five times ownership of fox and not time warner. so basically, it's 90% and a minority owner is trying to -- the terms for the majority of the ownership. you've got succession issues on

anti-trust funds. >> i want to get to the other side. jeffrey? >> yeah? >> you put this in the category of best practices? >> well, what happens frequently with hostile takeovers is there are blocking actions by the board. what it as gives them is the ability to try to negotiate a higher price from fox. that's what they probably will intend to do. so from an anti-trust perspective, this happens frequently and it really doesn't affect the authorities all that much in terms of their overview from that perspective. >> no, i hear you there. what i'm trying to understand is here is a situation where clearly the company has now blocked arguably the rights of certain shareholders. not certain, all shareholders in this instance. do you put that in the category of best practices? >> well, the question is are they acting in a fiduciary duty towards the shareholders and are they trying to argue at a higher

price? if it ends up in a court of law, that would be their argument. so as far as best practices are concerned, it's a discretionary action. >> and they've got a good supporting argument there, too, andrew. take a look at the 25% compound ets vote. the price should be way higher than that. they can argue this is very much -- it tripled the stock price in this company under 3% in the last five years. >> when you think about this deal, does this make it more likely or less likely that a deal ultimately gets done? >> well, really, the deal will be looked at separately. it doesn't get done, the anti-trust authorities will look at whether there's direct competition, they'll look at direct competitors. for example, cnn will likely have to be divest.. they will look at the film studios. those are the different acts. >> i'm looking at the specific issue the shareholder votes. does this indicate that the board of time warner says, you know what? we are ready to negotiate? or is this effectively talk to the hand and we are never going

to negotiate? >> i think they're open to negotiation. i think it's a publicly listed company. i think if they have the right price and right terms, the company which has paired itself back to a core business is the most profitable media enterprise out there. it's just there are a lot of questions. >> do you care about the dual claes chas share issue? you are accepting a dual class share or nonvoting share. having said that, i know you were disputing the overlap issue, but there is a lot of overlap, arguably at least a large portion of the time warner shareholders. they've made their bed with fox. they're already okay with that. >> an 83-year-old guy has run the cup for 63 years, to try to deal with potential sesson, giving one son one piece of the business, one poor performing

son. the other poor performing son, james, another piece of the business. >> you are not a fan of the murdoch family, it sounds like. >> well, they've not distinguished themselves as leaders. this news corp., this liberation of sorts, and 21st century fox, james has soiled him with the phone hacking scandal with all the rest in the uk. management oversight is awful. even fox's shareholders -- >> given that you have just dismissed the entire murdoch family as, you know, unacceptable -- >> and that's most of the board of directors. >> is there a price at which you would then accept stock in a company that's going to be run by these people that you've just suggested are effectively misfits? >> it's not just the price. that's a great question. the price maybe should be $200

rather than people talking about $100. but on top of that, what's the quality of it? they're basically coming up with a minimal cash portion by leveraging the assets. time warner could do that now by taking a lot of debt they don't need. >> jeffrey, one question before we go. despite the fact i've put mis t misfits in your mouth, and i'm not sure that that is what you think, they have outperformed time warner bay wide margin over the past decade. >> well, they've been all over the place. this newspaper business, which has been in the red, has been a strong performing unit? right now, i think you can take a look at the soaring success of hbo, time warner's last quarter, they're up 9%, 10% -- >> but shareholders apply a higher multiple to the murdoch family's business than they do to time warner, therefore, are giving a higher value to the

management of -- i shouldn't say news corp., i should say fox, than time warner, correct? >> no. i think it's a temporary restructuring out there. you look at the time warner board, look at the quality of the board of 21st century fox, they don't even compare. they're a bunch of cronies and family members. here you have on the -- the fox, on the board of time warner, you have jim barksdale who did the netscape aol deal. you have steven b on olenbach, did the abc deal. he ran hilton and sold that to blackstone. they pulled off a lot of the pharmaceutical industry from schering-plough to mercks, respectively. these are not filled with nostalgic players. this is not the old aol time

warner disaster. >> we have to leave the conversation there. we appreciate it. but we've got to -- >> or -- >> there are two jeffries. there's a jeffrey -- we'll call them jeffrey and jeff to make it easier. >> thanks. >> we're going to thank them both. >> then he could have answered some questions. it's sad his last name prevented him from -- that's part of the whole discussion. sorry, you're out. i can't say your name. anyway, thank you for participating in the conversation. i'm not sure what the right answer is any more. verizon reported 91 cents a share and that was a penny ahead of expectations. there are all these records. what is a good number of 0.49%? i don't know what analysts were looking for. the stock initially is trading down just a little bit on this. what are these other -- which one of these are important? new fires -- >> did you know that? >> new fires, customers up 100,000. is that good? internet customers up 139,000.

>> in the revenues for fios, 14.4% year over year compared to other areas in the business where wireless is up only 5.9. >> and the revenue number is above, 31.8 billion versus 31.15 billion. but ebitda margin expansion, it backs what its targets were for that. continues to target at 16.5 billion to $17 billion. i guess that's in ebitda. and cites, as you said, strong wireless, fios revenue and continued margin expansion. but just a one cent deal of -- >> i think. the adjusted number is 91. >> can i point out one oddity? they actually saw an increase in landline revenue for the first time in seven years. quarter over quarter. >> we have no landline. >> i know. that's why i'm shocked. >> i still want one, but kids don't want them any more.

>> wait until the next blackout happens. you'll wait until you had an old fashioned landline. >> landlines will be okay. >> as long as you have a phone that's not powered on battery, too. >> so that's two -- that's -- let's see. that's one -- we're getting six. so that's 33 % of the 20%. of the dow that we've got soever today. >> so coming up, double the data, double the guess. earnings reports economics week is a lot for the markets to digest. we're turn to go robin and brad. morning. >> welcome. ♪

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trading week, markets finishing well off session lows. with volatility back in the market, how should investors be positioned? here to join us is lisa chalot. brad freedlander is co-founder of angel capital and has a morning star five star rating. lady and gentlemen, good to have you here. the evidence in the markets for the last six months, ul until we get alternatings reports today, suggest that geopolitical events do not matter. what matters is what the federal reserve is doing. and do either one of you disagree? >> i think you're in the bond market you're not seeing that. the bond market is reflecting a little of those ghee your political tensions. >> when it comes to sovereigns? >> yes. >> i want to talk about high yield, though. i see two things happening in the market that maybe are a risk of what we might see when the

fed really starts to have to react to maybe perhaps improved economic data. small caps, underperforming in a very big way. and high yields looks like it's really start to go roll over. do these worry you? >> they do. look, i think that those two things, historically, have been the canaries in the coal mine and we are concerned. i think the one thing that you need to remember here, though, that you didn't note is the strength of earnings. i mean, we have had one of the best periods of positive earnings revisions coming into this earnings season that we've been in three years. our beat ratios are really pretty good. everyone said, you know, how can the market be at these levels? the s&p is up about 6%, 7%, and thus far in earnings season, we're seeing some of these companies put up 9%, 10% year on year earnings growth. i always made folks remember what drives the market is earnings. >> so what i see happening in small caps and what's happening in high yield, not a precursor

to the overall market rolling over, necessarily. >> i think they could be canaries in the coal mine. i'm watching it opinion but i'm not concerned yet. >> and what you've seen in alternatings season thus far has been very constructive? >> i look at earnings, as well. i'm more of a bond manager. i spend my time there. earnings have looked good, revenues, that gives me confidence over the long haul, notwithstanding a short sell-off here and a short run. >> in bonds you're talking about? >> notwithstanding that, in the short run, when you look at earnings, you would think over time equities can keep up with earnings growing towards double digits. >> as a bond manager, are you shaking in your boots? i'm thinking at this moment, where we're not just seeing this unprecedented action by the federal reserve and it's beginning to unwind, and we have watched the bond market rally for decades now. >> yes. are we at a moment? are you worried at all? >> we've seen that moment now for a few months and we've seen

a tug of war with the ten-year treasury would be a perfect place to look. ten-year treasury still under 250, still reflecting some of the weakness that we saw over the winter, the winter doldrums. but now really stuck on some of those geopolitical tensions that exist. i think ta tug the of war will begin to shift in the other direction, to your point, and into the second half of the year, you will begin to see rates rise and that's something that the fed will be watching, as well, as they're looking, much more focused on payrolls, on jobs, on inflation. we had cpi figures this morning. those -- that's the fed's mandate and we'll begin to see these reverse some of this through the end of qe and eventually you'll begin to see some of the rhetoric that's been so deafish begin to switch over so you're talking about an improving economy. does that mean high yield is now an opportunity? those bonds can perform as the economy gets better, know? >> sure. high yields can hold up to a

certain extent, but i think from an investor, putting my investor hat on, you're now flirting with precrisis type of valuation. there are other places to be within the bond market that i think make much more sense. i tend to focus on the structured credit markets. these are the areas that are still, to a certain extent, reflecting a stigma associated with the housing crisis. >> so you get better yields. >> exactly. and as rates rise, this space is largely floating rates. so you'll benefit as an inve investing from rising income and over time valuation. >> what are you telling investors at this point? >> we want to be global, we want to be highly diversified and we want to cherry pick. this is the time for active stock picking. we want to be in some of those large cap companies. we think we're going to see a pick up. so energy, industrials, technology, those would be key places where we'll be cherry picking. >> we call them smokestack

stocks. there you go. lady and gentlemen. >> but there's only one gentleman. >> gentleman, yeah. amid a food scare, mcdonald's is set to post quarterly results when "squawk box" comes right back.

welcome back. at 8:30 eastern time, you get to huge consumer price index. the headlines cpi likely rose 0.3%. then at 10:00 eastern time, we're going to get existing home sales. sales expected to rise by 0.2%. in washington, the senate committee on veteran affairs are holding a hearing with bob mcdonald. that is today's squawk planner.

coming up when we come back with a flood of quarterly reports just getting started. we heard from dupont and veri n verizon. we're going to get mcdonald and a lot more. uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer.

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you can make anybody happy. speed is made with the ibm cloud. the ibm cloud is the cloud for business. welcome back to "squawk box." this morning calling in on the "squawk" newsline with a preview is peter saley.

walk us through what we should be looking for and what to expect. >> thanks for having me on. i would tell you the focus will be on june same-store sales globally, and definitely in the u.s. i think the expectations are for a slightly positive global u.s. calm in the month of june, about 0.3%. i think if it comes in, you know, stronger than that, that's good news. although, i think sentiment is fairly negative, also i think focusing on what the commentary is around july same-store sales, if those are stronger than 1.5% or 2%, i think, you know, the stock could rally on that news. otherwise i think it's kind of slow and steady for mcdonald's, you know, it's a big shift. >> do you the of mcdonald's as a singular name or do you think it represents something larger? >> you know i think mcdonald's

is a great global brand, in our opinion, you know, it's just great global brand with still some growth and certain pockets around the world. but again, you got to really focus on different countries and different -- it's a different brand in every country. and it's really tough to, you know, really move the needle around the globe in our opinion. >> how much should we be worried about this scandal or problem in china with the food that's also impacting yum? >> well, for mcdonald's, it's not -- china's not as big a part of their revenue as some other parts of the world, or it is for yum. so it shouldn't be as big a deal. but there will be a focus for the read across for yum. investors will be focusing on the china business for mcdonald's to find out what the read across is for yum brands. >> if you could buy one restaurant chain right now, what would it be? >> if i could buy one restaurant chain what would it be? i'd buy starbucks right now. i think they are operating on a

very high level, mid single digit comps and getting growth from all -- from different products and from different parts of the world. you don't have to put all your eggs in one basket with starbucks in terms of their revenue growth. >> right. and where would mcdonald's fall on a list like that for you? >> mcdonald's would be a little bit lower on the list. they just don't have a lot of growth. they're fairly saturated. more than 30,000 restaurants around the globe, so not a lot of growth left. more of a cash flow story in our view with the dividend and the share buyback. >> real quick, where would you put chipotle in all this? >> chipotle is going to have a great day. it's going to open up probably around 10%, fairly neutral on that although the fundamentals are fantastic. i think the multiples, then valuations up is pretty up there. >> okay. peter thank you for joining us this morning. >> thank you. >> appreciate you helping us. >> coming up, quarterly results from coke, comcast, travelers, united technology, and we'll hear the actual number from

mcdonald's among many others. we'll have that and we'll give you some instant analysis on all these numbers. plus we're going to welcome today's guest host, aei, american enterprise institute president arthur brooks. he will tell us about the road to freedom. the battle is still being waged, too. >> unfortunately -- >> join us on set when "squawk box" comes back. we'll talk.

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so why wouldn't i choose the fastest wifi? i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business. strike up the band, the earnings parade is here. quarterly results from six dow components. du pont, coca-cola, mcdonald's,

travelers, united technology, and verizon. the numbers, what they tell us about the health of the global economy, and instant market reaction. the second hour of "squawk box" begins right now. good morning. welcome back to "squawk box" i'm joe kernen along with andrew ross sorkin, michelle caruso-cabrera. there's travelers. it looks at this point like it's a little shy of expectations, but i can just tell you that travelers always has different items. it's very complex business, property casualty, but that is the number that they're giving $1.93. i've seen it be way above, below and then totally changed based on what the company says. there was 82 cents for example of catastrophic losses in the quarter, the revenue number is well above expectations. 6.15 was the revenue number and

the company did 6.79. and as you can see the stock is not reacting very much to the number at this point. there were some other things that sound positive, that the company is talking about. so, like for example, net written premium. the book value of the stock is $75.32, and on an adjusted basis talking about $1.93. all of those are below expectations. but a return on equity was 10.7% and return on operating return on equity is 11.4%. so we'll see whether that stock actually ends up selling off, whether, a lot of times the company will call us and tell us take this out, put this in, whatever. >> united technologies, too. eps of $1.84 which is better than expected. top line and bottom line increase the lower end of 2014 eps guidance, now expect eps of $6.75 to $6.85 per share.

sales of $17.2 billion. it's 3% of organic growth and i haven't been able to get commentary from the company here. >> let's go. we do have the parent company network. >> you want to do it? >> comcast is reporting right as we're talking right now, and it was 76 cents a share ex items which is above the statement of 72 cents a share. as we always -- this is like there's so many bells and whistles. >> transactions -- >> with the time warner cable bit. >> but that didn't do -- yeah, if you adjusted it was 75 cents. so it was either, you either keep it in and there was a gain in there, as well. but four cents above, total consolidated revenue, and and drew and i have been talking about this when we saw the 6.8 billion -- 16.8 billion dollars is up 3.5% and was actually 16.84, 16.85. the estimate was 16.96. that's 100 million dollars based

on 16.5 so that's about 0.6%. but it would take the growth rate which is 3.5% it would have been 4% if you included 100 million dollars i don't think that's what they necessarily what it keys off of. i think it keys off of what is happening at nbc more than anything, and for nbc universal, there was a 20% jump in operating cash flow. 20% jump which includes nbc which for the first time in awhile finished the season in first place among adults 18 to 49. i don't know why i don't -- >> for all of that. >> i don't matter worth a whit. i guess i don't have any money to spend. 18 to 49. it was the only network that had ratings growth versus a year ago and the theme park continues to be pretty impressive in how it's done. i think a lot became a much more bright spot than come cast thought about when it acquired the company.

remember blackstone had sold something, remember, and it was valued -- >> yeah -- >> they sold it at one valuat n valuation, and suddenly it looked like it was worth five, six, seven times what the going right was at that point. let me see, there's some other methods when we talk about this. cable revenue up 5.4% to $11 billion. video had its best second quarter in six years with customer net losses improving by 11%. see i think, you know, i can't tell you what's going to happen today, andrew, but i -- we're up 73 cents. i don't think that that half a percent on revenue which you felt was going to -- i don't think that is. >> it's a video -- >> see the stock up? >> yeah. >> will you grant me that or not. >> absolutely. i thought the stock would go up. >> off revenue. >> i think the revenue issue is going to be -- >> with all the growth that it's had recently because it continued. >> the other question i was going to look at you said video customer net loss declined

144,000. if i remember correctly over the past couple of quarters prior to this, we had actually gained video subscribers. so what i'm trying to understand -- >> year over year they're showing that it narrows the number. >> right. >> so you're narrowing the number that was lost in a we're-ago period. right? so sequentially that might not be the case. in the year-ago period it narrowed from how much lost. joining us for the next two hours to talk about the geopolitical and economic landscape is arthur brooks, president of aei, and normally we talk, i mention the road to freedom which is a great -- >> thank you. >> hate andrew, read a dollar a page. >> was it worth it? >> they tried to charge me for the free market. there were 40 pages -- >> how many pages in the index, in the back? >> i wanted full-on -- >> the citations? >> like 30 pages. >> i had to pay for that. he didn't read it. he didn't read the index. >> i think you should have paid me more. >> you didn't read the index. >> that's going to cost --

>> the battle which i wonder how much of the battle -- because when was the battle written? >> 2010. >> battle was written in 2010 and you probably have how many different numbers that basically showed that the country still was central right. >> whenever you look at -- >> but it's four years later, i would have thought for awhile that first mood left when we embraced hope and change. now we're back to where your book -- >> we're even better. >> we never moved. >> center right all along? >> yes. >> people in new york would not tell you this is a center right country. >> this is new york. if you go to america you can find -- >> i read every year that, and certain publications to base anything on what people in iowa think is a huge negative and something that doesn't represent the country. certainly doesn't represent new york city. >> that's actually wrong. it doesn't represent new york city. but basic what people say in new

york and los angeles that's a mistake. sort of the cultural milieu that we live in is represented by this place. but if you want to see what people who actually have lives where they go to soccer practices and choir rehearsals. >> those are the people that i say still have the american dream. i say in st. louis and kansas city and people going to work every day that are raising children and they got iphones, they go on vacation in cancun, and if you work you can still earn your success. >> yeah, yeah. the hope thing that we got was nothing more than a campaign slogan. that was like i hope i win the lottery. i hope the government does something nice for me. >> actually had a better chance of winning the lottery at that point. >> two questions, one you just suggested you think the country's the center right. >> right. >> some of the research i've seen, pew and others at least when you look sort of under 49 years old. >> yeah. >> there is an argument being made that the country is becoming more left. i don't know if it's true or not.

do you think that's right or wrong? >> what they based that on is asking kids, asking college kids, and people in their 20s, you know, what's better capitalism or socialism? well, they don't know what socialism -- for us, socialism is gulags, the soviet union. the only socialists that people were 25 -- might ever have seen, guys that look like me. they're calling -- >> and i also they that liberal when we say liberal we're talking about the size of government. when kids say it today they're talking about gay marriage, and they're talking about -- >> social issues. >> social issues. they don't even correlate being -- and that's why many people would say i'm liberal socially but that doesn't mean you want a huge government. >> yeah, right. >> in every aspect of your life. >> let me ask you a second question which is you just suggested that the dream or the hope is still very much alive. >> yeah. >> you don't think that the middle to some degree is being hollowed out? that -- you don't believe that there's a greater challenge today, if you were in the middle, than there was 30, 40

years ago? >> it's not just that the middle is being hauled out it's that the whole bottom is left behind by obama nomics. this whole generation is a pluto contractic -- >> we can blame anyone we want. >> this is the phenomenon of our age. we're going to have numbers coming in about gdp from 4 to 3 or 3 to 2, whatever the truth is we have 5% or 6% economic growth in the top 20% and we got zero in the bottom half. >> but two minutes ago -- two minutes ago you just said that hope and the dream was still very much alive. and everyone's going to picnics on the weekends. >> because they still have a life. the truth of the matter is, just because you have zero percent economic growth doesn't mean you stay in and feel depressed. but it is the fact that economic mobility is being hollowed out. it's not just you've got no middle. it's not that the top is -- >> the bottom is stuck at the bottom. >> the bottom is stuck at the

bottom. >> but joe i think -- you tell me i always thought the argument you were making was that the middle was not hollowed out, everyone's at football games -- >> i'm saying that the middle -- that every group of -- every socioeconomic group since 1980 has done better. probably 40% the lowest group is up 40%. the top group is up 200%. also when you look at the bottom group, make people move from the bottom to the next quintile, and that's never measured when you say there's been zero growth. a lot of people have moved up into subsequent -- >> only 8% of the bottom 1/5 ever make it to the top one-fifth. >> make it to the top. i'm talking about moving up so that you can't say that there's no growth. because people move from the fifth to the third or the fifth to the second -- >> there was an article two or three months ago. -- >> is that your measure of success? that somebody goes from the very bottom to the very top? >> no, no.

>> that's not -- >> 8% is a pretty good number. >> no from the bottom one-fifth to the top one-fifth. >> that would be tremendous! >> from the bottom quintle to the middle quintile. you want to look from poverty to the middle class. since the '80s that's fallen by a third. that's actually mobility from poverty to the middle class has fallen by a third. >> you're saying it's not as good as it used to be. just making a point. >> full stop 2009 till now. >> we all talk about the -- >> from the top to the bottom. >> we talk about the romney 47%. there are disincentives in this country right now to going out going out and pounding doors to find a job if you're making -- if you can make -- what can you make right now on disability with food stamps, with -- >> this is the welfare argument. >> it depends on what state you live in so you could make between $25,000, or $35,000 a year. >> you get a job you got to pay

for gas, you got to pay for clothes, you've got to get up. >> leave the house. >> there's a lot of -- >> you know what? americans actually, the data are overwhelming. it is true that a lot of people are taking -- but it doesn't mean they want to. >> no. >> i literally, it's a sad thing, anybody who says i would prefer to have my kids see me get a welfare check than a pay check. and the fact that we don't have serious gdp policies that reach all the way to the bought up. the mystified look on the policymakers faces when we say it's only 2% growth while equity markets are cranking. the reason is because all of the growth is concentrated in the top 10% of the income distribution. 81% of the stock market growth has gone to the top 10% of the income distribution. >> that's because of president obama policies. >> because of policies that are simply not pro-growth all the way to the bottom. we're biassing the whole economy against the bottom kwientile at this point. remember john edwards? he blew himself up and he was ridiculous and wrong on everything except when he said we were two americas. he was just early.

he doesn't see obama-nomics. >> are the mistakes bipartisan? >> of course. i mean the falling mobility started happening in the 1980s. the problem is it's accelerated since 2009 because of the inadequate responses -- >> but the responses is to raise what percentage say are paid the minimum wage, and aren't working as college kids or second job? it's like 1%. that's president obama's answer to all of this -- >> you have the minimum wage increases, andrew in favor of minimum wage increases? >> i'm not -- i'm not one way or the other on that. >> you're not in favor -- >> here's why you shouldn't be in favor of the minimum wage increases, okay? is it not that some people won't get ahead. you know who's going to get ahead? my teenage kids an asymmetric impact. we have 30% african-american teenage unemployment in this country. it's going to be over 40% with the minimum wage increase. it hurts the people you're supposed to help the most. that's why we need the eitc

expansion -- >> earned income tax credit. >> you need a program that makes work pay. >> i'm much more supportive of the earned income tax credit. >> you got to be. you got to be. >> than i am the minimum wage. >> the government can do a lot to make work pay. particularly for single men with noncustodial care of their kids. that's a really big deal. and if we don't do that, i mean, what good are we? if we can basically try to force the companies to try to pay more and hurt the people we're helping. it's pretty bad. >> okay. >> we are going to be with mr. brooks for the next two hours -- >> published in "the new york times." >> did you see the piece? >> i did of course i did on sunday. >> trying to reach some of the people that -- >> i love publishing in "the new york times." it's a new audience. >> it is. >> and it's a great paper. >> we're going to continue our conversation with arthur in the meantime when we come back verizon posting quarterly results earlier this morning. shares coming under a bit of pressure at this point. we're going to get to the street's take in just a moment. >> get music. >> call me maybe. >> totally there.

and wage -- >> okay exactly. >> we're waiting to hear from fellow dow components coca-cola. we're going to get coke's ceo muhtar kent live at 8:00 eastern time to talk about his earnings, the consumer and much, much more. "squawk box" returns in just a moment. ] the mercedes-benz summer event is here. now get the unmistakable thrill... and the incredible rush... of the mercedes-benz you've always wanted. ♪ [ tires screech ] but you better get here fast... [ daughter ] yay, daddy's here! here you go, honey. thank you. [ male announcer ] ...because a good thing like this... phew! [ male announcer ] ...won't last forever. see your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. but hurry, offers end july 31st. share your summer moments in your mercedes-benz with us. but hurry, offers end july 31st. ♪ "first day of my life" by bright eyes ♪ you're not just looking for a house.

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welcome back to "squawk box." let's show you what's going on with the futures right now. all the earnings reports we've had this morning the dow jones industrial average would open higher by roughly 36 points. the s&p by 3.5 and the nasdaq higher by nearly 12. making head lines, cit group is buying the parent company of privately owned one west bank for $3.4 billion in cash and stocks. those are two old names from the financial crisis getting to the. and harley-davidson shares under pressure. the company posting better than expected quarterly earnings, but it is lowering the full year guidance for motorcycle shipments. andrew? >> talk about verizon for a second because it beat the street. the company adding 139,000 net fios internet customers in the quarter and 100,000 fios tv users. joining us on "squawk" news line is michael mccormick, equity analyst at jefferies. walk us through the head lines as you see them. >> i think there's a few things to be focused on. three key beats that should dispel some of the competitive

fears. number one, arpa growth or what the average customer pays per month was up more than expected. churn a little bit lower and wire line margins beat. so those are the three things people will be keying on today. the caveat is wireless margins came under just a bit of pressure so that's probably around promotional activity for tablets and a bit of an elevated marketing spend. >> how do you think about what's going to happen towards the end of the year? there's a lot of reports out today around apple and their bigger screen. how is that going to impact verizon as you see it? >> it's something we've been focused on is the back half of the year and whether or not we're going to see increased upgrade activity. clearly any time apple comes out with a new device you tend to get very high upgrade activity. this one will be the same. and they've been moving into proven financing plans something that verizon's been hesitant to embrace. >> when you think about the margins on wireless is there a way to explain what's happened here when you look through it? >> yeah, you know, we've had conversations, made public announcements regarding the marketing activity into the

quarter. clearly there's been a much more competitive landscape in u.s. wireless driven primarily by t mobile's activities. verizon i think is reacting to that. there could be some low end activity that took place to maintain the subscriber but tablet is the key driver. >> what's your target on the stock now? >> our target on verizon right now is $55. >> what is your -- i looked at that immediately i can remember i always you know i like to talk about churn because it's something that used to matter. what when it was really promotional and people were churning all over the place how high did it get? >> so verizon's had industry low churn for a long period of time. we've had carriers go up to on the post side nearly 2% -- >> that's people that in any given quarter switch or something? >> so yeah, that's customers churning up to competitive carrier typically -- >> point nine they've had a good -- and 0.9 is really good? >> yes, 0.94 on the post base

side. we were looking for 0.97. that's a really good result. the key pigging it apart is looking at the churn at the low end so they reported 2.3 million 4g lte adds but total adds were 1.4 so that would indicate that you're losing that low end subscriber potentially to other competitors at lower pricing. >> it was expensive to roll out i remember how much money they spent for fios. so success now they making money everything's good? >> yeah, so it sounds like margins within the fios unit are above the overall wire line margin profile for the company so that's a good thing. clearly operating at a much better scale now. they reported today 35% penetration. and i think you're seeing a lot more success in the urban market. they're going after the multidwelling units or apartment buildings or having great success particularly in broad band only subscribers. >> so it's not video really. you have to look at fios and really take into account and that's what i don't know maybe it's a great service for is it a great service for internet i don't -- >> it's fast. >> yeah --

>> i don't love the videos. but i don't know how to work it as well and it was you know i got some flak yesterday for that gee. it's a miracle you like exfin ty because it's more than fios. nobody in my family can figure out -- >> user interface. >> user interface. i want it back to xfinity. i'll get it back. >> the churn number i assume is just from personal experience depends on the reliability of the networks the most? >> you're talking about on the wireless side? >> exactly, yeah. >> clearly there's a view that verizon wireless has got the best network in the country and that can be perception or reality. i think at&t and verizon are sort of largely viewed as substitute products but the churn has been a result of better network quality, clearly. >> mike, before you go. you just talked about them being substitute products, at&t and verizon. with this directv deal do you see pressure on ver susan in terms are of the content that at&t may be able to deliver as a function of that transaction. >> i think over time clearly having scale within video

subscribers is going to be a benefit when it comes to content negotiations. >> are you handicapping that verizon's going to have to go out and do something on the other side to match what at&t is doing? i mean if we were to sort of project out 18, 24 months competitively in the merger landscape? >> i think you have to look at those foot prints a little differently. verizon don't want to go out and buy something like dish network for example. but verizon fios covers about 75% of verizon's foot print. at&t universal is a relatively small overlap. so for at&t this gives them instant scale. and frees up capacity for broadband as well. >> very, very quickly. land line revenue actually went up for the first time in seven years? what's the explanation for that? >> well, oddly enough, consumer which has been an area of weakness for a long period of time within telecom has become a good grower. to joe's fient fios has been successful, 5.3% growth in consumer and a little bit better

loss rate on enterprise customers. >> michael, thank you. >> i haven't picked up my home phone in a very long time. >> people are getting more land lines? >> we don't really have a land line -- it's over cable. it's something -- >> better than the bubble. major tech players including microsoft and intel are creating at levels not sin since early 2000. the tech stocks that are worth having. e financial noise financial noise

financial noise financial noise

coming up, the earnings parade is just getting started this morning. still to come we're going to get quarterly ruts from mcdonald's and coca-cola. then at the top of the hour, coke ceo muhtar kent will join us for a "squawk box" exclusive. stay tuned. we'll be right back. dealership, you'll find the works! it's a complete checkup of the services your vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer.

welcome back to "squawk box." du pont's earnings matching estimates, revenues coming in a bit better than expected. the company raising its quarterly dividend by two cents to 47 cents a share. higher by nearly 3%. verizon beating the street. the company adding 130,000 -- 39,000 net fios internet customers in the quarter and 100,000 fios tv users. in the premarket it appears to be lower by a little more than 1%. comcast earnings topping estimates. the ceo saying he's seeing

strong content across the table. that stock higher by 2 3rs. european ministers meeting to discuss further sanctions against russia following the flight of mh17 over ukraine. cnbc's hadley gamble is following developments. hadley? >> hey, michelle, that's right. so the big words, the buzz words here in brussels, arms embargo. coming into this meeting everyone had thought what can the eu really do? you have 28 member states. you have 28 separate agendas. there's not much of an appetite for more economic sanctions. sanctions have hit germany really hard as we now know. the italian finance minister weighing in saying more economic sanctions would be a big mistake. but really the conversation has turned to growing concerns about western weapons sales to russia. where are these weapons going? who's got them? the separatists in eastern ukraine? and really what is the eu going to do in response? >> look, everybody wants to see

a balance set of measures as we go forward. but the world has changed since the european council last week. the events of last thursday have changed public expectations on us, and we have to send a clear signal from our meeting today that we recognize that and that we are going to go further as a consequence. >> now that was philip hammond the uk's new foreign secretary. he's been thrown into the deep end of the pool coming in as he has with the situation in the middle east blowing up, as well as what we're seeing in eastern ukraine. but one country that's remained silent on this issue is france. and that could be because at the moment, they have a $1.6 billion deal for two warships, one of them is supposed to be delivered in the fall of this year. francois hollande indicated that warship is going to be delivered. facebookious, the foreign policy from france was refusing to take questions in english today and was only speaking on the situation in gaza. we'll have to wait and see if

the eu can get france on board for some kind of arms embargo. >> thank you hadley. >> okay we should also talk about some big tech earnings because we're going to be getting some of those. apple, microsoft all coming after the bell. major tech players trading at levels not seen since early 2000. dominic chu joins us to see which tech stocks are worth more than at the height of the dotcom boom. >> here's how it goes. 500 stocks in the s&p. 51 of which are in the tech sector. now those 51 stocks make up nearly a fifth of the entire market value of the index. the current list of stocks includes household names like intel, qualcomm, ebay. how many can say they're worth more than they were during the great dotcom bubble? that list goes down to less than half. all right? so among those stocks that have really eclipsed their bubble peaks there's a blue chip. in fact it's big blue itself. ibm. sure it's been a relative underperformer so far as of late but longer-term investors can still say, look, that they're up 70% since the end of february back in 2000. all right.

that was interesting. of course, a lot's happened since those days. the company's much more of a services company. the world's biggest, any kind of a hardware one. so ibm a real change. then there's san disk. maker of removable cameras, and flash memories that go into mobile devices. those shares are up 180% since the area of about march 2,000. heights of the internet bubble. and they're up just 33% this year alone. san disk a nice run there. then there's apple. a stock that's really been in a massive turnaround here. it's up a whopping 2400 plus percent since the dotcom era. apple reports after the bell today. and i just want to highlight one more stock. it also reports today, microsoft. which is just we'll call it a stone's throw away from reclaiming its bubble peak. just about 8% away from there. maybe just one good earnings report, maybe two, and this thing's right back to where it was, back where it was during

the height of the dotcom bubble. back over to you. >> we talked about it here. the wintel juggernaut. windows, and intel was where it's at, in the pc world. now we've been conditioned to think pc is on the way out. and here are the wintel juggernaut is a juggernaut again. can you tell me why? why did both stocks finally broke out at the same time, after six, seven, eight years of underperformance. why? >> well here's the interesting story about that. a lot of investors say that they like the fact that these companies, who've been -- you know, they haven't had the hypergrowth that apple's had during that time. what they have had is a mature business that keeps on spinning off cash to shareholders, keeps on buying back stock in some cases, so with large cap technology names, oftentimes it's about investors returning back to companies that reward investors not just by growth but by steady income check and remember all those baby boomers out there, they don't want bonds that just pay 2.5% for ten years. maybe they want a stock and maybe --

>> we love netflix, and its earnings and revenue. microsoft, you know, they don't sell anything anymore. only $24 billion a quarter worth of something. so i mean, you know -- >> it's like chump change, right? >> $24 billion starts adding up after awhile. but yeah, there's still something that they're -- some market they're satisfying. dom, thank you. check out the futures right now. we'll see with all these dow components we've even -- we're doing a little bit better. we are. yesterday was a pretty good stand. we were down over 100. looked like geopolitical environment. people were going to say wow, i'm just too uncertain. but comparative losses yesterday, small caps got hit again and today were higher so far with big numbers coming up. much more "squawk box" when we return. >> up next, blackrock's emerging market's guru on the state of latin america. and at the top of the hour, supersize earnings from mcdonald's. >> that's scary. >> and you can't have mcdonald's without drinking a nice, cold

coke. ceo muhtar kent joins us to discuss business. "squawk box" is coming right back. in a world that's changing faster than ever, we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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coca-cola earnings and that's the knee jerk reaction down a little bit to start with. the adjusted earnings per share number was okay, a penny ahead of expectations at 64 cents. that was a penny ahead. the second quarter revenue number was below the 12.83 was the estimate, and it was 12.57 worldwide unit case was up 3% op obviously, we need to still look at how important the american market is. north america, case volume, zero percent growth. latin america zero percent growth although international overall was up 3%. asia pacific -- eurasia and africa up 5%. but and bottling investment units case volume was down, 1% now if it was comp currency, if you made that, if you took that out the net revenue was up 3%. which would have been better, i guess, so currency exchanges did hurt 2014 operating results. and the company continues to

expect a three-point headwind on operating income during the second half because of currency. and we've now got that stock down 40 cents or so. and we always have this discussion, too. should you have salty snacks that make you want to drink more? or should you not have salty snacks to make you want to drink more? >> should you be coke or should you be pepsi? >> -- you should be coke. >> warren buffett thinks pepsi's fine but nelson peltz says that's because he's undermined -- >> i like -- i mean i love -- >> you think there's a synergy there? peanut butter and jelly? >> i love -- yeah like smucker. smucker buying. i think anything that ends in toes i like. >> mementos? >> cheetos, doritos, tostitos. >> why do you have to like them connected to the drink part? >> because it makes me want to

have a -- a -- remember -- >> that's the problem. >> the carbonation. >> makes want to have a coke. >> i like coke better than pepsi. >> but you have your tostitos with the coke. which undermines the issue. >> no it doesn't. at least i'm buying something from pepsi. >> but you -- >> oh, okay. i guess -- >> or you could be buying it from a separated -- >> i'm also getting the salsa from pepsi, the tostitos salsa. hot. >> right. >> so why -- now you're making the argument that that's -- >> because those are better than any -- >> that's got to be a latin brand. >> with the hairs coming out of it? man -- >> that's like you know. >> when people say that that's what you got to substitute for the carb snacks it's like i've tried. >> who's saying that the pork rind -- >> lowe carb. >> frying a piece of -- >> think of a diet where you can eat fried pork rinds. >> cheddar cheese and pork rinds. >> wash it down with warm tap

water. this is like punitive. >> all right. anyway -- >> we're going to talk -- >> we're going to talk to muhtar kent. >> i know. >> because turning our attention south of the border our next guest says -- now we're talking about investing in latin america, now much more about the results of political elections, rather than short-term market fundamentals. will landrieus from blackrock. you recently returned from brazil and our guest host arthur brooks is with us, who is fluent in spanish, if you didn't know. will, last week brazilian stocks were the best performers in the world bus dilma rousseff, the president, her poll ratings get worse and worse. looks like she's in a tie now with, and the bar is low in brazil, a guy who appears to be pro-markets or pro business. did i give a correct assessment? >> absolutely. since march when her poll numbers started to come down the equity market has been going up over 30% since then. sure emerging markets became

more en vogue in that period but brazil has been outperforming. if you look at the gdp numbers, inflation numbers -- >> there's no good economic data. >> -- in the short-term except that it's almost like abd, anybody but dilma. if dilma loses the market could move up in the short-term. >> for people who aren't familiar let's remind people what she does. i mean, she thinks she runs petrobras, she thinks she runs valet, they're frequently talking about those two names. very interventionist in an old kind of latin aamerica a la 1970s? >> oil prices have been under control. she tried to bring interest rates down, or actually the spreads down in the banking system, forcefully by using the state banks to do that. so had some troubles in '02 and '03. several sectors, none of it has worked -- >> i'm shocked. >> it's one of those things that maybe government does not know best.

think of some of the discussions you were having earlier. >> so, you think that if she loses, you think they're going to turn around and markets continue to go up in brazil. you think that's a bellwether for the rest of latin america? it's been very depressing to see what happens -- >> ecuador, argentina. >> fill in the blanks. a lot of the problems that we're tully seeing with law and order in central america today, immigration, migration, northward is a direct cause and effect on the fact that we've got these political dynamics going on. what's going to happen? is this the bellwether of latin america going insane? >> already had the role model to a certain extent in mexico. two years ago doing several reports you see the migration but it's not from mexico. they're actually going back because there are a lot of new opportunities. >> it's a total. >> absolutely. >> brazil is the biggest economy, it's got 60% of the equity market and falling. used to be 70% of the equity market. there's been a lot of value destruction because of the failed policies from the last four years. so i think if we can show the

world, show latin america again that pro-market policies do work, and benefit all the population, like we saw during the lula years where brazil being one of the two countries where income distribution improved during a ten-year period. >> very little time left. are we at an india moment for brazil? when we see pro-business, the stock market rallied like crazy, is there still time to buy brazil here? >> absolutely. they're still trading less than ten times ex last year's earnings. you're probably going through an adjustment, and from 2016 on you have much better growth. >> the risk being if she wins against -- >> we could go back to the levels. >> thank you very much for joining us. >> coming up next, why the next big economic and political debate could be about inflation. steve liesman our guest host arthur brooks going to sound off on that when we return. tomorrow on "squawk box," the earnings parade kicks into high gear. dow chemicals ceo, pepsi's cfo

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cpi data will be out in just a bit and the inflation data is going to be kicking into high gear. steve liesman is going to be here to tell us why is it

possible it could be a nasty surprise. >> i think part of the thing is there's been an absence of data, and so markets are going to cue in on this data. if it's toward the high side, there have been some debates on inflation, is there inflation or not. the fed's balance sheet run away inflation. it hasn't been debated much is this. what happens when and if we really get there? wall street looking for 0.3 rise in consumer price index. that would be the third month in a ray at or above that level. the highest three month run since october 2012. the year over year inflation rate about 2% below the fed's target. especially since the fed uses a different numbers that runs below the cpi. one side on the fed thinks the $4 trillion balance sheet is a tinder box that could blaze if any inflation sparks get even a little bit close. that viewpoint argues for preemptive and earlier moves by the fed than the market expects right now. another side argues that we run substantially below the inflation target for several years now. wages are lackluster, they've

not kept pace with the productivity or inflation under this argument, for wage growth, add inflation to run before the fed will need to clamp down. so there are economic issues here, also important political and cultural ones. what's the tolerance of the body politic for inflation and what is the blowback on the fed if they clamp down just as the middle class starts to make gains in their wages? that's the real inflation debate. for that we turn to our expert at the table. so the '70s created a massive anti-inflation sentiment among the public. >> right. >> have the -- what do we call the double offs change that at all? >> yeah. the truth is that most people who are in their 20s and 30s and 40s have never really experienced any sort of inflation, so there's no cultural bias necessarily against it. on the contrary, anybody who is paying attention knows when you have a deflationary threat it's even worse for the economy because it's horrible for the labor markets. if you have anything approaching deflation you get more layoffs and that's the kind of environment we tended to be in. the troourt is that the fundamentals suggest based on everything we've learned over the past 75 years that sooner or

later we're going to pay the piper. but you don't know how much run room is left. it's exactly the way that you set it out. what actually is going to happen, two things really have to happen. number one, velocity -- velocity is -- >> let's talk about velocity. i give a dollar to andrew, he's going to give it to michelle, she's going to pocket half of it, give some of it to joe and joe's going to give it to you. >> i'm going to pocket it. >> whatever happens that's velocity and there's not a lot of it right now. >> it's very low. it's almost historically low. when velocity is extremely low you can print money all day long and it doesn't pass around the economy, doesn't spark inflation, doesn't drive the price level up. when you print money, when you're the reserve currency of the word, because everybody else's currency sucks worse, which is effectively what we're talking about, no matter how irresponsible you are, you can keep printing money and foreigners will keep -- you're basically finding gold in your hills. you can see seniorage in economics so it doesn't come

back those things sooner or later have to change. >> and what about this? so we have macaulay on last week, huge win long-term win. >> victory. victory lap for janet yellen and the fed. broke the back of inflation, it's gone forever. therefore, all the worries about qe have been misplaced. and we can paul krugman we can bury it, close the book on it. what if it's not commodity inflation? what if all of the stuff is -- what if the stock market really is asset efficient? what if the bond market is asset inflation? what is the housing market is not -- what if all of these things, what if a lot of the decisions that companies are making on the risk curve have been misplaced because of where it is. what if the entire world, and what we see as justified is really asset inflation -- >> are you suggesting it's possible we're on another bubble? >> that's what i'm saying. >> and if we dent -- >> it has nothing to do with commodity inflation or wage

inflation it has totally to do with what we're seeing in savers being penalized and people not being able to get enough income in retirement. what if it's all about that we've moved money to where it shouldn't be in an artificial way? >> so, let me just give you a little background here. >> then i want to ask arthur, is that possible? >> yes. that is possible. look it's not unprecedented. we've got -- >> how do we declare victory? we might be heading right into -- >> you can't. look you can't declare victory. i mean there are too many fundamentals that are upside down. there's a lot of stuff we need to do. in the meantime, prudent economic policy, fiscal and monetary policy is something that we have to -- look. you could destabilize the american economy. we might be destabilizing the american economy as we speak right now. and we could be two years away from something that's almost as bad as -- >> and then when we look at growth rates, look at these counterfactuals saying that the fed helped by what would have been much worse, when we add in the terrible break two years from now, just like when you add in '09 to what happened prior to that, suddenly the 2002 to 2010 growth rate doesn't look that good anymore. who knows what 2010, 2020 looks

like after all this. >> it's been debated for many decades the extent to which asset prices should be folded into the measures of aggregate price levels. and it's been decided by a lot of guys who have thought about it a lot that for example, housing prices don't belong -- >> how do we have any idea what stock prices are worth? how would we even do that? >> joe i push back on you. i've been talking to a bunch of guys about, which let's say we accept the notion that the fed is boosting the stock market. what's the mechanism? if arthur's concept is right that there's no velocity -- >> just move it -- >> you can't get anything -- >> because you don't get any return anywhere else. >> so it's a decision. so, but is there a lot of extra leverage in this system? is margining extra high right now? there's this notion that companies are borrowing to buy stocks but we don't really see debt versus say asset levels or debt versus revenue levels being all that high for companies. their balance sheets are in excellent shape. so, there's two --

>> although individuals are bad. >> i keep talking about this idea -- that's right. this idea -- >> in -- >> leverage. >> this notion -- >> things can be overvalued or highly valued. and not be a bubble. a bubble is a specific thing when it busts, it's messy -- >> but we never knew about it -- >> the greatest economist of all time -- >> that's happening -- >> that's how bubbles work. >> but how fearful should you be? >> i don't know. >> that you're going to cross the street -- >> i'll tell you, when someone tells me that the fed has won and they should take a victory lap i'll get really fearful. >> mcdonald's serves up earnings. plus an exclusive interview with the ceo of coca-cola, muhtar kent is our special guest. right here on "squawk box." you used to sleep like a champ.

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i haven't seen that but the comp stores these numbers comp sales you can definitely you don't need to factor anything out. global it was flat it was supposed to be up i think 0.8%. u.s. was down 1.5%. and i think it was supposed to be down less than a full percentage point. so both global, and u.s., are below -- >> you're down 1% when it comes to comps. >> well, what was the estimate? >> i don't know. >> that's what we need to know. the revenue is 7.18 billion was below 7.286 billion which what was expected. so at this point there's a reason that the stock now i've got 95 -- yeah, see, there that's what i -- >> a couple of dollars. >> the highs 103.78. and this is not new information we're getting from mcdonald's. it's been challenging for the past, i'd say three, four quarters in terms of comp sales.

trying to get it to grow. you can only introduce how many times can you bring back -- >> right. and they acknowledge the statements coming from the ceo, they -- >> acknowledge it being bad but they're committed to creating the best experience and that during the quarter we've evolved our strategic plan on our framework to enhance our focus on the customers for insight's planning and actions to re-ignite momentum over the next 18 months. fortifying the foundational elements of our business by concentrating -- >> europe has been doing a little better. that was down 1%. asia pacific mideast and africa, up 1.41%. i always love when it comes up in europe because there's a big mcdonald's in the louvre and when i see french people in the louvre, huge lines waiting at mcdonald's. >> we've won. >> it's just that they can't really look askance with us and say, you really you're

disgusting ugly americans because the lines are bigger in the mcdonald's at the louvre than anywhere in the world in that bastion of civility and culture. and yet they love -- they love the mcdonald's there. >> what's not to love? >> it's a delicious product. >> i agree. the mcrib scares me. >> why? >> because i think they have like a vat of stuff and i think they pour it into a mold which makes it look like a rib. i do. i think it's stomach and it's all -- right andrew? >> there are no bones. >> there's the man who's got it right now. >> you don't want a bone in the sandwich. >> that's why i never understand it. >> but i think it might be -- >> there's some parts of it that aren't so awesome. and it's molded in to look like it's goes into like a jell-o mold. >> how can they -- >> ronald -- >> his outfit is a little different. he looks sort of like that. and you know, even like clowns or you think they're creepy. >> we have to have the new ronald come on. >> the future what they're

saying -- the way they talk about the future you know, meet expectations, et cetera. >> i mean please don't get me wrong because my son and i mean -- anything in moderation. but a couple of those decimal points are for me. not for me. >> the family. >> i sneak the fries. i never order my own. but there's some in the bag. left over. >> you eat them? >> i help out. >> no calories if the fries belong to somebody else. they're your kid's fries. >> we did the happy meals. i helped -- the kids love the toy in the box. >> coffee is great. >> i'm not that guy -- >> egg mcmuffin? >> yeah. >> it's great. >> anything in moderation, we go to mcdonald's. we do a couple times a week. >> and just one of six dow components reporting quarterly results this morning. du pont's earnings match consensus. the chemicalmaker warns current quarter earnings will fall below

estimates. rising the quarterly dividend to 47 cents a share. verizon beating the street. results got a boost from strong wireless subscriber additions. verizon this morning, also call it flat. lower by 24 cents. united technologies earnings and revenues topping estimates, the top line the bottom line number was a big beat. raising the lower end of its full year view. the stock is higher by nearly 1% in the premarket. and travelers earnings falling short of consensus. revenues in line. the company says results were impacted by higher catastrophe losses, a decline of more than 1% of travelers in the premarket. joe? >> coke's quarterly earnings beat the street by a penny. joining us exclusively is muhtar kent chairman and ceo of coca-cola. great to have you on muhtar once again. we love when you join us to try to work through these. you know, you're running i think coke once again out of all the brands didn't it win again globally as the most admired brand i don't know in the entire

planet? but that doesn't mean it's easy to run this company and give everyone the kind of growth in case volume that they need to keep bidding the stock up. and to me it looks like, with the currency surprise you again, some of the numbers are not as good as they would have been because of currency? >> well, good morning first. thank you for having me here. >> i think currency, we have had currency head winds, significant currency head winds over the last three years. we see them getting less strong. the currency headwinds. but, again, in the last quarter, we did see significant currency headwinds. but we do see year-on-year variance not as big as it used to be in the prior years. so the important thing here is that we're focused on all our five priorities. the most important being sparkling beverages across the globe, led by brand coca-cola, and this past quarter we've seen

some fruit of our labor where coke grew all around the world. brand coke grew in north america very importantly for the first time in a long time. and sparkling beverages were up 2%. >> in north america, it was flat. right? >> total volume was flat. brand coca-cola was up 1%. >> so the brand coca-cola was up. >> but the estimate was still i think 1.3%. and if you do 1.3% on the amount of case volume that coke sells that's a significant number. could you know why we're at -- was the estimate wrong? or was there -- can you point to pockets of weakness in north america? >> actually, we were pleased with north america results, first because by coca-cola group, secondly, because our pricing was very strong in this -- in the second quarter that just passed in north

america. our sparkling beverages was up 3%, three points. i think when you take the totality of where we are in north america, i think we're making steady progress. that's, i would say, the best way to describe north america and across the globe, on the heels of our world cup program, and also on the heels of everything else that we were doing with share of coke in more than 70 countries we see, again, a good sparkling beverage brand growth for our entire world. and sequential improvement importantly in europe, sequential improvement in many markets in asia, so we see some pretty good -- pretty good results that we're happy with. >> can you just explain bottling to me? it was down, 1% bottling case volume. and it was supposed to be up 5%. how can that miss by that much?

>> just repeat the question? >> bottling. bottling, case volume was supposed to be up 5%, and if i'm looking at this right, bottling case volume was down 1%. >> i think that is to do with structural because we sold boughtlers and when you compare it year-on-year that's what the number is. >> okay, all right, good. you're going to -- we've got to go to the wintergreen stuff? >> i think just asking muhtar while we have him, muhtar as you know, david winters has said a number of things about the company, including compensation. take a listen to what he had to say and i'm hoping you can respond to it. >> we have not sold any shares of coke. and you know, we love coke. but we think that there's some real fundamental issues here, not only about this bad plan but the governance and how the clarity and how this has been run. we think that coca-cola needs to do a lot to restore its

credibility with investors. >> so muhtar, you've heard what david winters has to say. what do you have to say back? >> well, i've said it before, let me just very quickly repeat it, our equity plan is a good plan. it was approved unanimously by our board. it was approved very strongly by our shareholders, and it's a very flexible plan, and i think if you take the entirety of the plan, we believe it's a very good plan. can we tweak it? of course we can. we believe that overall it's a good plan approved unanimously by our board, and by our shareholders in a very strong manner. as far as some of the other allegations, look we respect every single one of our 2 million shareholders. and they're very important to us. not every one has to agree with everything we're doing. the important thing here is that overall the company is moving in the right direction.

we believe that we have a great, great category that we operate in, the nonalcoholic, ready-to-drink beverage category growing in the world. we're seeking to improve our marketing, increase our marketing, improve our communications with our brands. and we're seeing some good results coming out with sparkling volume growth of 2% in the world. 19th consecutive quarter. >> muhtar what kind of conversations are you having -- >> value shared growth and we feel that we are on the right track to bring back momentum into our business in a volatile world. >> real quick what kind of conversations have you had with warren buffett who abstained on voting in favor of the plan and i know has said publicly that he was not a fan of it? >> i won't give you -- i'm not going to dwell on details of conversations with our largest shareholder, but we do often have conversations with all our shareholders, including warren.

and i think the important thing here is that, you know, we will do what is necessary to ensure that our governance is best in class, the way we operate is best in class. and what we return to shareholders is best in class. since middle of 2008 we've returned over 100 billion dollars to our shareholders. can we -- we're always striving to improve on that. >> muhtar, the soda volume was down in the first quarter. you turned that around, first time in 15 years down and you grew it 2% in the second quarter. that's what you were talking about. that's probably one of the highlights in your view of what we saw in the quarter. >> this is a continuous effort. we have five -- we have outlined five priorities, starting with growing coca-cola, and sparkling beverages. ensuring that we play in the still beverage -- profitable

still beverages portfolio. improving and increasing our communication vis-a-vis brands, best improving the execution with our bottling partners around the world. and investing in the future leaders. and we are resolutely focused on those five priorities, and this quarter, again, just showing a small glimpse of early results. >> you're just off a 52-week high. so down a little bit today. but, we'll keep an eye. appreciate it muhtar kent. >> thank you. >> appreciate it very much. >> my diet coke drinking every morning clearly helping those -- at least this -- definitely the coke brand, it's the diet coke brand. >> i think it's a soda. >> are you drinking coke zero? that was the most successful launch in years and years. >> i'm a diet coke guy. >> coke zero and -- >> one is nutrasweet and one is plen today. the one is plen today is coke zero and it's designed because men in theory don't like to

drink coke -- >> what are you saying about my diet coke? >> i'm not saying anything. >> i drink coke zero because -- >> if i had my choice it would be -- >> i would drink a six pack of that every day. so you say stocks are fully valued when they're over valued i'm fully -- my weight is at a fully -- so i can't possibly drink regular coke. >> do you know what made me crazy about all these people who were so anti-coke was they got mad at teller swiss for endorsing diet coke. >> i am not -- >> it's diet! >> i'm with her i like diet coke. >> but the obesity people who are -- >> talking about the additives. >> the new research says that diet coke might actually stimulate insulin in much the same way. there's some research on that that suggests that you might gain weight from diet coke. i'm not sure. >> la la la la. >> andrew? >> okay. coming up next the senate finance committee is going to be holding a hearing today on corporate tax reform. we're going to speak to a harvard business school professor who is ready to

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this morning the senate finance committee will be tackling the hot topic of corporate tax reform. our next guest will be testifying during the hearing. professor of harvard business school joins us now. he's a faculty member with the school's u.s. competitiveness project. he's also on the advisory board of the international tax policy forum. good morning, professor. good to have you here. >> good morning. good to be here. >> what's the most important thing that should happen to corporate taxes in this country to make us more competitive? what are you going to tell congress? >> i think several things should be done. the first is our rate has got to be brought in line with where the rest of the world is. we're really an outlier. and the second in conjunction with that is we have to move away from this worldwide tax regime that we have. those are the underlying drivers of these inversion transactions, and those are the underlying drivers of why firms are undertaking transactions that are probably not efficient. so we really need to think about those two changes. and then in combination with that we need to raise revenue which i think can come from taxing some of the non-c corps

as well as attentionly aligning book and tax profit. >> i can't imagine that a viewer of this program doesn't know what a worldwide tax regime. but let's just explain it. meaning the u.s. government taxes profitability overseas, as well as what's happening here in the united states, which is unlike the rest of the world. correct? >> that's right. so our citizens are subject to worldwide regime. your income is taxed wherever it's earned, potentially in germany or ireland or wherever. and in the u.s. it's taxed. we do give a referral and tax credits but we have ended up with a byzantine system which creates lots of distortions. distortions with cash, to the merger market. it's a variety of things. >> professor we keep hearing from people that it takes like six, seven, eight years to do corporate tax reform so all these inversions are happening now, and i do see there's a clarion call now someone even in "the wall street journal" today from usc, don't know how that compares to harvard business school -- >> it's a great school.

>> it is a great school. >> my wife is from there. >> but he argues that there's not going to be any corporate tax base left to reform if everyone is able to move so we've got to immediately pass something punitive right now that just disallows corporations to do it. which will give congress and the president another pass on actually doing tax reform. if they're not going to do it for six or seven years, what's the answer? >> well, first off, i'm not sure they're not going to do it for another six or seven years. i think these inversions are the lightning rod that gets us to the light place. in fact there's a lot of consensus about what we should be doing. i think the worst thing that could happen is if we try to do something punitive on these specific transactions. because we're in the land of unintended consequences here. so if you actually penalize something, for example, you say well if you want to do an inversion you have to actually do it with a larger foreign partner. that's not going to serve our interests. that just means the transactions are going to be structured -- >> worrying about a race to zero. i keep hearing that. i wouldn't mind a race to zero because everybody would be even

worldwide and then we'd just try to create jobs and tax the people that get jobs, and maybe tax shareholders or whatever. when we're all doing better it would be better. but if we go to 25, why wouldn't people still go to ireland? >> i think that's right. i think the rate if we really are serious about lowering the rate i think we need to get lower than 25. we're going to find ourselves antiquated as soon as we do the reform, be on the high end of things. >> what is the answer -- >> so i think the answer is a significantly lower rate, 15 or 18 would get us to a place where we're actually comfortable. the question is where does the revenue come from to do that? >> you go to cambridge -- you don't even go across the bridge, do you? what if they recognize you? you're on the boston side of harvard. but even -- >> no, no -- >> would you even stick your head out over there, over in cambridge? >> i do. >> 15% to 18%? >> i do. and proudly so. i think the thing to realize is actually a lot of consensus. we know we need corporate tax reform. we know we need to reform the rate. and we know worldwide regimes are antiquated. i think we're getting closer to consensus on this than you think. >> some of the work we've done

at aei suggests revenue maximization level is 26%. that the revenue neutral level is 17%. but the optimal level is zero where we actually take the dividends and capital gains and we tax them among shareholders at regular rates. what's your view? i mean in an ideal world where do we go? >> clearly the corporate tax is not a great tax. it's an entity level tax, a second layer of taxation. having said that we probably need it because otherwise without it you could have individuals shielding their income in corporate form. so we need a rate. it's probably somewhere north of 10 to 15. >> why do we need a rate, why not zero? >> he's saying people who run the corporation, individuals will start to pretend to be corporations so they don't pay. >> i got it. okay. >> so we do need a rate. in theory i think arthur's right, corporate tax is not a great tax but there are these backstop features which allow it to be good. the question is where does the revenue come from? there we have to be creative. one of the trends people don't fully acknowledge is now we have

more business income in non-c form than in c-form and that is a potential revenue source to fund really significant reform on the krcht-corp side. >> good idea. i'll buy you a ticket on a shuttle to go down there. nothing you said has been -- i don't see how anyone can disagree with what you're saying. >> well, i think the one last piece which you might disagree about is i think we need to think about the way corporations are reporting profit. so we're in a world where corporations are reporting profits to capital markets in one way and to the government in another way. and that's got to end. and that can be a revenue source, as well. a lot of corporations, we -- >> we agree with that. that makes perfect sense. >> what about this idea is if you reduce corporate taxes enough there's so much job growth you make up for the revenue because individuals are paying more in income taxes. >> that's feasible. we don't know i lot about what the rates are that would provide that. but we do know if you're interested in raising american wages which is presumably the most important thing on our horizon today getting corporations to invest in the u.s. is the best path to --

>> you're already in washington. i just don't have to pay anything to get you down there. >> he's not at aei though. >> it sounds like he could be. >> he could be. >> i do aei, i do brookings, i do them all. >> he does brookings. >> professor, thank you. we appreciate it. thanks. >> thanks so much. >> thank you. okay coming up we're going to talk about some of the other head lines making news, including lots of earnings. tomorrow on "squawk box," the earnings parade kicks into high gear. dow chemicals ceo andrew liverest, pepsi cfo hugh johnson and delta airlines ceo richard anderson. plus slicing up apple servings ahead of the first trade on wall street. it's all on "squawk box" starting at 6:00 a.m. eastern. financial noise

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welcome back to "squawk box." here's some earnings results from this morning. here's what's happening. dupont's earnings matching consensus. revenue better than expected. the chemicalsmaker warning that current quarter earnings will fall short of estimates citing weak agricultural sales. verizon beating the street. and mcdonald's reported quarterly profit four cents below estimates. global same-store sales were flat during the quarter with analysts having expected an increase of 0.8%. when we come back markets are going to be watching cpi data

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welcome back to "squawk box." we are just seconds away from the june consumer price index. rick santelli is standing by at the cme in chicago. rick i heard the beep. what's the number? >> up 0.3 on head line. up 0.1 when you strip out everything we buy, like food and energy. let's look at year over year up 2.1 on head line and up 1.9 on ex food and energy. so let's take the head line up 2.1. up 2.1 on the head line matches what we had actually last month, but those readings are the highest readings and let's put it this way, we haven't had more than that since october of 2012. so we'll continue to monitor that. let's look at core. currently 1.9. we were expecting 2.0. that is better news. 2.0 equated to the september

2012 and you have to go back to july of 2012 to find a higher one. so we can all see that we are nudging up to some of the higher levels on inflation. if you look at the index, we only wish that our stock portfolios looked like the xi and ppi index because pretty much it just keeps going up, and we argue about the white noise range of change month oaf month for the most part every month. we still have more data coming out like existing home sales and other housing data points that will be key especially as we continue to try to handicap how we can have any underperformance in housing when we have an overperformance on loan interest rates. >> thank you so much, rick santelli. looks like we got a little bit of gain in the futures on all of the averages there and the ten-year yield below 2.5 krrs. >> i think we dodged a bullet. when it comes to inflation all the risk is to the upside. there's not going to be an adjustment to fed policy, but there could be an adjustment to

the fed policy from inflation that overshoots. i think there were some guys out there, quite a few that were looking for 0.4 on the top line looking for 0.2 on the core. we got the 0.3 and the 0.1. 2.1% year over year on the head line number is above the fed's metric. which is the pce indicator. >> yep. >> which runs i don't know, 0.5 to 0.4. >> alan greenspan's favorite? >> there were certain indication more substitution which by the way we got a little bit from chipotle, right? beat was higher so people bought more chicken. >> that's important to explain. >> so if people -- if one price goes up people prefer another lower price one. then the aggregate inflation level would be somewhat lower. not everybody buying the more expensive beef product. the cpe moved more of that. certain little less of other indicators in there.

the outlook is fuel prices should be coming down. some of the commodity prices have come down. so we might be in a zone here where the fed can kind of coast through. that would be the best possible hope i think. >> that would be an explanation of why the future's added 20, 30 points. >> i think you want to go into every cpi number a little bit nervous now because i think that as i said earlier, some members of the fed, and it's not all the way to the hawkish right side more towards the center see this $4 trillion balance sheet. same news for the president who i think is a centrist in this regard echoed stanley druckenmiller when he said the following, the economy is closer to normal, policy is far, far, far from normal. and so his concept is we have a lot to catch up, and that we may be running quote/unquote behind the curve. >> he's been on a lot and he has said stuff like that over the years. he's been a little more hawkish but he's still sitting there when they're deciding all this stuff. >> remember he made a big turn

to the dovish side when he decided we needed to peg it to unemployment and some other metrics. he's come back incrementally joe, he said one thing then he finally said in his last speech we're -- >> that's a little cya for the whole group. >> that's what i'm saying. and michelle pointed out, you go into this number -- >> now they can say at least one guy on the fed was saying this. so we weren't totally -- >> i'm not sure he's just one guy. and i'm going to go -- >> i guarantee you fisher -- >> possibly so that's where we focus on williams -- >> two fishers. >> cue up the star wars -- >> i was going to say, and the e.t. >> you know one has the "c" pronounced fischer and the other without the "c" is pronounced fisher. >> exactly. so you're asking people that are prognostication again and again what's in your crystal ball? you're basically getting the aggregate data from all the experts, macro economists, journalists, about what's going to happen in inflation.

>> i think that they can -- they're going to get up to the 2%, 2.25% inflation rate, and then i think they're going to have to change policy. i think 2.5%, 2.5% is probably the high end of where they get to. i think there's a lot of global forces at work and you guys at aei have done a lot of good work on this. it's not just american capacity. right? capacity in china, in thailand and vietnam plays a role in the price level here in the united states. >> sure. >> so it's not just here, and honestly we haven't really been through this before. it's labor capacity over there. it's factory capacity over there. what's happening in china right now is going to have a huge impact on inflation. i don't think we're on the precipice of runaway inflation. i believe in the overall concept which has been part of monetary policy the fed can pick an inflation rate. it can get to where it wants to be on inflation and it's going to have to have its hammer, its foot down on the pedal for quite awhile. >> i think slow is probably the best course. >> thanks, steve.

>> thank you thank you. >> coming up next he was once wall street' top cop now he's ranking top analysts. it's a new thing. it's not an easy job but these two men think they have the perfect formula. former new york governor eliot spitzer is here, and the ceo of tip ranks are going to join us right after the break. take a look at futures see how things are setting themselves up for the day. green arrows across the board. ♪ ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. but hurry, offers end july 31st. share your summer moments in your mercedes-benz with us.

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welcome back to "squawk box." there are more than 200 million people visiting u.s. financial sites each month. how do investors know which calls are correct and which ones aren't? that's where tipranks comes in. it's a new financial start-up that ranks stock recommendations by analysts and financial bloggers, designed to help retail investors to make a better investment decision by knowing which analysts are consistent and who's worth listening to. joining us now uri gruenbaum, co-founder and ceo of tipranks. also with us eliot spitzer, an investor and member of the board of tipranks, of course former new york state governor and new york state attorney general. uri, elliott, thank you for being here. el us how you got involved with this project? >> i got an e-mail from uri and uri described in his e-mail as the financial mechanism to lend transparency and data driven decision making for investors. we all see analysts all day, you watch cnbc and people are saying buy, sell, hold. are they good? it's like going to a baseball game you have an e.r.a., you have a won-loss record. uri uses all the analytical

data. they have 19 wizards back in israel. this is an israeli tech start-up. they look at all the recommendations buy, hold sell and compare them to the actual resident and says who performs well, who hasn't. this is what the market needs. >> i can't believe nobody has done it before. it seems so logical. >> how is this different than what morningstar does here? >> basically we rank financial experts. we also, since we're using technology to do that, machine learning and big data algorithms we are able to understand like what bloggers and contributors are saying around the world. >> uri, it's also, it wouldn't be morning star would be i.i., you compare to but i.i. many times it had nothing to do with the stock performance or the recommendations. it had to do with how they interact with their clients. >> does he call you back? >> and do they do good fundamental research and it rarely correlates with stock price. >> if you go to this website and you can adjust the metrics based on how long you hold what you want to compare it to, what the

sector is, it is amazing you can see analysts, bloggers, have they performed against the market. >> have we found any analysts that are any good? >> oh, yeah. >> -- timing? >> there are thousands of analysts, and -- >> i know -- >> you have about 15% of them that we notice that can consistently outperform the markets year over year. >> 15%? >> but the interesting thing that we found is not the analysts it's the bloggers themselves, some of them are money managers, and as part of their day job. what we found is that following bloggers, you can generate much higher revenues than following the average analyst. >> how do you make money? do people have to subscribe to your site? do they pay for the date stay? or do you get advertising? >> we have a few business models. we have a website like most information services are geared towards investors and you have a monthly subscription. >> what's the subscription fee? >> so it runs between $10 for a lite version where we can evaluate any recommendation you're getting online, see what

experts are saying and do your research there. and we have a more premium one for the $50 a month where you can do your own bench marks. compare any analyst to the s&p, to the sector, you can define the time of each investment that you're going to measure. >> he should have -- >> i don't know about you -- >> the two largest israeli banks have already signed up to the service and there are going to be hedge funds, trading platforms. put that aside i just want to be clear. you remember the first case i -- not the first -- >> they were investment bankers. >> right. but this was a different issue back then it was illegality. they were intentionally misrepresenting we alleged. >> dodged the whole -- >> and everything was -- >> this is more important for investors. this is isn't whether they're doing it intentionally. this is so simply are they good or bad? intentionally or not doesn't matter to the investor. this is a market driven, data driven mechanism. and look, i'm not sure -- doesn't say buy, sell hold. my view is finding that stock you're going to invest but if you're in the market this is the site that says -- >> why do you want him on your board? >> obviously he knows a lot.

and we share the same vision of empowering the retail investor and creating that -- >> uri how do you cut through the ridiculous, like the jargon that every firm has a different way of not selling -- >> or -- >> so, there is a wide confusing terminology that brokers use. we basically -- >> you can tell how their track record is? >> so we map ratings like outperform, overweight it's all a buy for us. and underperform and underweight is going to be a sell for us. so we meld them into a buy, hold or sell. >> half the time merrill used to say that it wouldn't be a one wouldn't mean it's going to outperform it could go down, but it would go down less than the overall market. it's all in reference to the market. so they're never wrong. >> yeah, that's how they want to show. but if you're an individual investor and you're going to get an overrating for a specific stock you're going to look into it and many times you're going to be responsive for it and

we're trying to look at it from the perspective of the investor. >> the best performers, the two names we have on frequently gene munster and mark grenadedy. >> our image is on cnbc when you haved pundits and analysts you have little tip ranks and monitor beneath them giving the public -- >> oh, you're here to try to do a deal. >> right after the show let me talk to you. i want to -- >> will it cost us more than 50? >> we have to buy in bulk. >> you're the -- >> i'm ready to sign up. >> while you're here, two other quick questions. >> sure. >> context history. we're on the four-year anniversary as of monday of dodd-frank. where do you think we are? >> well, look, i will say what i think most people believe, we are better than we used to be but are we ready for the next crisis? we won't know until we get here. every crisis is different. the real question is have we learned the lesson and will we actually build a capital base? will we create institutions that are ready to withstand the next

storm? the best book i read on this was the short history of financial euphoria which was written not after the '08 crisis but in the '90s and the point he makes is we have virtually no historical memory. we forget very quickly. >> two other quick ones in the news. what do you make of the settlements that bnp just had and possible settlement bank of america citigroup. what do you make of this whole stream of things? >> money is fine. but we would probably agree, money out of shareholder pockets doesn't change behavior. can it reimburse those who've been injured, yes if it's used wisely but does it change behavior, no. structural reform is what we needed. i would have looked for greater structural reform than we got. >> would an elizabeth warren presidency be good or bad for the united states? >> i'm a huge fan of elizabeth warren. you probably disagree with me. i think she understands some of the changes -- >> is that a yes? >> i don't think she's going to run -- >> but if she did -- >> would it be good? for the nation at many levels yes. i'm not endorsing politics i'm

not getting into politics -- >> you don't think that the private sector would suffer punitively? >> no. i don't. and we could have a longer conversation about that. and -- >> would be -- >> are you -- >> retailers of attorney general schneiderman he puts out more press releases than you ever did. it's amazing. >> he makes you look reasonable. >> i mean he is -- >> get rid of your magnetic business -- >> then he doesn't -- >> we need structural reform that permits our economy to thrive. i've always said when i got these cases i want the economy to work. i believe in capitalism which means play by the rules, play it straight, invest your own money. >> one final question we're going to be hearing from bill ackman later today on herbalife, he's been mounting this campaign. mounting this campaign to suggest that the entire thing is a ponzi scheme. do you think that investors should be able to short these companies publicly go out and -- is that part of capitalism?

how do you think about that and there's money involved because there's lobbying on all sorts of -- >> short selling is part of the market, short selling is part of expressing one's belief that the market is going to go up, down or sideways. i've never invested with a short because you not only have to be right on the substance but right on the timing. might as well a bit of investment advice but of course shorting is part of the marketplace. you can't speak untruths. that's the rule. >> okay. eliot thank you, uri, thank you. tipranks we just became subscribers basically. >> you did. >> thank you. with 50 bucks? >> no, no, no, multiple subscriptions. >> much bigger deal. >> you know this -- >> you know this guy coming up? >> is it jim? >> yeah. >> what happened to his hand? >> i don't know. >> who has ep taken out? >> i don't know. coming up -- >> you weren't roommates -- >> that's right. all lawyers need practice let me tell you.

coming up, jim cramer from the new york stock exchange, and more from our guest host arthur brooks. we'll be right back. tomorrow on "squawk box," the earnings parade kicks into high gear. dow chemical's ceo andrew liverest and delta airlines ceo richard anderson. plus slicing up apple servings ahead of the first trade on wall street. it's all on "squawk box," starting at 6:00 a.m. eastern time. profit from it. when you run a business, you can't settle for slow. that's why i always choose the fastest intern.

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i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business. welcome back to "squawk box," futures rights now, are you telling me the cpi was more important than six dow components? >> because of the fed. >> let's get to the new york stock exchange. yeah, the fed. let's get to jim cramer at the new york stock exchange. which of the numbers we saw today, mcdonald's has troubles with the comp stores. coke, if soda was up 2% and down for the first time in 15 years last quarter, i think that's better. what were the highlights for you? >> mcdonald's and coca-cola versus chipolte last night. people are moving away from what they regard as being not good

for you and eating what is good for you, and i think these trends are just beginning. i think you could see a long term trend against mcdonalds and coca-cola that's reversible. the coca-cola quarter, trying to talk about noncarbonated. come on, man, you're a carbonated drink company, come on, own it. >> tough when sales decline, though, to own it. >> right. >> people don't want to pay up for this stuff. >> yeah. >> you know what? the old days of price increases constantly, the idea that soft drinks sell, i think coca-cola bleeds overseas, something jim stuart said that was disagreed on, and tech is good. i like tech, tech continues to do good stuff. look at overnight like arms holding was good, therefore good for mobile, like, sky works, so i cannot to like tech, but i think the old companies, whether it's campbells soup, coca-cola,

mcdonalds, they don't have what it takes, generationally, they don't have it. >> what's wrong with your hand? >> i had trigger finger and a tendon wrapped around a cysts, two incisions. i had the stitches out yesterday. i don't know, it's looking better. >> show it off. >> i hate it getting bumped around. >> what about the deal? i'd love to know -- a new concept, analyst that actually would be right about timing or direction in a stock. i have not seen one yet. >> look, it's good to have a systematic data base. we used to have eye-eye. >> that's if they returned your call. that's if they were nice. that's if they were nice in the conference. i have no idea. >> whether the ohio state teachers's pension fund lied to or not. anybody who holds anybody accountable, you, me, analysts, sure, welcome that, makes everybody a better investor. a real good idea. >> we have to run, but a quick

coke question. coke, pepsi, where do you go as a stock perspective? >> pepsico is going to be good. i know they want to split them up, but i think the combination -- >> i love them. >> coca-cola would buy frito-lay if they sfin it off. >> i bet. >> author brooks on competitive tax reform and article in the new york times i hope you read this weekend. john desymone, and bringing down the company." squawk box" returns after a break. your 16-year-old daughter

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welcome back, back with our guest, president of aei. we talked about the article in the "new york times" and materialism. >> yeah. >> seek -- love people, not pleasure. >> that was the title of the article, and, look, it's a paradoxical thing to write about as an economist, but truth of the matter is there's a lot of research out there that asks why people are unhappy and what they do what they are unhappy. all right, now people watching today, think about money, they are thinking about, you know, what's going. in the stock market to be sure. to the extent that you follow money, power, pleasure, fame,

when you're actually unhappy, those are the exactly the right formula for becoming an unhappier person. >> none of those things have made me happy. >> i know. >> this is the key thing. my wife, my children. >> no, you're right. >> the money, the fame, the -- >> money, power, pleasure, fame. >> the power parts don't do anything for you? >> power's good. you know, this is anybody that has not read your stuff, this is the same as when you talk about what is fulfilling, and that is earned success. doesn't matter whether it's $50,000 a year or 35 million a year, getting up, making your mark, doing all that stuff, people that win the lottery, you want to to see someone with a problem down the road. >> anything you don't own. people who inherit money, it's as bad as people who win the lottery. welfare -- if you don't earn it, it's cancerous basically. the key thing is remembering this. the tendency in modern life from the snake oil to hollywood that we get to madison avenue, it is

use people, love things. that's exactly wrong. love people, use things, and then you're on the right track. >> so many times you helped me where conservatives are not going to win back the hearts and minds of people by saying it will generate more prosperity that trickles down. they win back by saying you will have a more fulfilled and self-actualized population, people that are working. >> that are happier. >> and more well adjusted, better families, better everything. >> the political paradox of the time is this. the political left in america today, they are materialists. they believe that the measure of suffering is economic inequal y inequality. they wrap themselves in moral language. on the other hand, conservatives are moralists, a more fulfilling life for everything, but wrap themselves in materialistic language, and that's why they lose. >> you see why he's president of aei. >> i read the book, great book. >> thank you.

>> paid for it too. remarkable. >> earned success. >> pardon me, but thank you for being here. >> thank you. >> great to talk to you. >> make sure you join us tomorrow on toss it down to the yes mep on "squawk on the street" because that's next. good morning, welcome to "squawk on the street," i'm carl quintanilla with david faber and jim cramer. we have giant earnings, most beat, but high profile disappoinments, ackman, and 10-year yield under 2.5, and cpi about the same as may, up 2 .1 year over year. the russian separatists handed over the bodies and block boxes. road map