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tv   Squawk Box  CNBC  July 25, 2014 6:00am-9:01am EDT

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address in order to avoid paying taxes, then you really are not doing right by the country and by the merp people. >> it is friday, july 25th, 2014, and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. after a busy week of earnings news, it is a relatively quiet morning on the corporate calendar. but there is one key economic report of note here. we have june durable goods. economist res looking for the headline number to increase by 0.5%. check out the futures. you'll see right now they look like they're indicated to open dow. dow futures down by 40 points below fair value, s&p down about 4 points. it has been a strong week for the markets, but we'll see what happens as we get closer to the opening bell.
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we have a number of stocks to watch this morning. all names that reported after the opening bell. amazon posted a quarterly loss nearly double wall street's consensus. the results were hurt as the company continues a rapid pace of investment. amazon's cfo says the company is spending more than $100 million on original video content in the third quarter. we're going to be talking to an amazon analyst coming.up -- let's say that again. amazon analyst coming up in the next half hour. visa posted better-than-expected earnings and revenue. that's mostly because of growth and cross border transactions than been slowing amid a stronger dollar. and starbucks earnings amid the street. stronger than expected and take a look, that stock still down by about 2.5%. andrew, we'll send it over to you and the big question is, did you get picked for jury duty yesterday? >> i did not get picked for jury duty yesterday. i have one more day to go. supposedly you do two days max
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if you don't get picked. i'm hoping it's a summer friday and they could let us out by lunchtime. i do not know. but we have a number of amazing squawk viewers who are panelists with me. so i got to have many conversations, many of them are watching us this morning and hopefully -- >> i thought these were the people that were actually being led around in the orange suits. so they were the possible jurors, not the actual perpetrators of all the -- right? >> we might have some viewers who are -- >> definitely. >> we'll take them where we can get them. >> we will, we will. do they have cable in racar's. >> american greed. there they all watch themselves on american greed. >> they do, they do. let me tell you about a couple other stocks to watch this morning. pandora shares are coming under a bit of pressure.
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the company's quarter shares came under pressure after the forecast falls short. down 9%. baidu now gets 30% of its revenue from mobile services, up from about 20% previously. then, the news of the morning, mr. kernen had referenced earlier, this is media tech news. britain's bskyb paying $8.3 billion in cash to buy rupert murdoch's pay tv assets in germany and italy. murdoch's 21st century fox is also the top shareholders in bskyb. as a result, it's going to have a cash infusion which may allow it to take the proceeds from that partial exit from europe and take it and put it you know where. into his bid for time warner. it's happening over the next -- i heard that. >> usually you say when you put
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it you know where, you know where to stick it. >> and what country is bskyb in? >> bskyb is in britain. and this is in germany. here's was going to happen. -- >> speaking of white collar criminals, rupert murdoch, why didn't out put that in there? >> i didn't think of that, joe. you know where your mind is. over the next few weeks, we're getting earnings report from time warner. you're getting earnings reports from news corp., but it's really 21st century fox. depending on where those news reports check out, you'll see the month of august to be a jockeying effort in terms of where shareholders are going to land on all this. i imagine time warner privately has been working on a plan to show the public probably for early september, depending on sort of where things stand with shareholders and how much pressure there is is to show what they can do independently. so i think this whole sort of game, it is a game, is going to begin in earnest.
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>> so you're suggesting both companies are going to try to make those numbers look as strong as possible? >> everyone is going to try to look as strong as possible in the next two weeks. then we'll have a an august behind the scenes jockeying with shareholders to decide who is winning. and then time warner may or may not come out with a public presentation about how well they can do independently. and then after all that, that's when and if you may see a new bid by mr. murdoch in using some of this cash. and then the question becomes how high he can go. i imagine there's two bids in this. i imagine you raise and 96, 98, and then as they say, some bankers look to say on wall street, with one final bid, you get over like 102 or something and hope that puts it over the top. >> andrew, in toerchls what time warner did earlier this week with changing some of the bylaws, where you can't call a meeting earlier, what does that
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do in terms of -- >> it makes it much more complicated and difficult to actually announce a meaningful proxy test or for the shareholders to win out in terms of being able to throw over the board. 100% true. having said that, i'm of the view that that does not necessarily stop rupert murdoch from coming forward with a new bid and that unto itself can continue to put pressure on the company. we will see. >> let's check on the markets this morning. take a quick look at the futures. after a data kind of felt summery yesterday in terms of -- you know, there's a lot of results coming out. so it would be a time where people that have positions would be moving around. you can see it in individual issues, but the overall markets are feeling a little bit -- not dollar based quite yet. what is it, july something? >> 25th today, right? >> yeah. the dog days are in august, usually, aren't they? >> yeah. i think you've the still got a few weeks. >> people do spread out.
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>> well, you're leaving. >> i'm leaving. >> is that today? >> today is your last day, right? >> i didn't even realize vacation -- >> you didn't realize vacation was after friday? >> no. i've been worried about andrew. he gets manhattan affective disorder when he doesn't get his dose of jersey sunshine. >> poor andrew. >> and how nice the people are out here and, you know, you didn't -- >> i know you miss it. >> did you visit it temporarily at all yesterday or you were jersey free yesterday and today? >> i was jersey free yesterday. i may -- the urge, it could pull me over the bridge later today because i haven't -- i'd be at least 24 hours out of the space. >> that's like a four-day weekend for you. >> you should just drive part way across the george washington bridge and then if anyone is following you, pull a u-turn. remember how they do that? you should do that just to get a quick little dose. >> i should. >> a lot of people do call it a
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dose when they come -- >> if you get halfway across the bridge, is that technically jersey? >> technically jersey. >> in the lincoln tunnel, there's the line. >> that's true. we could probably do it in the tunnel, but it's probably more complicated to do the big swerve. >> well, i don't think you can do it on the gw bridge any more. >> joe, i may stop by to see your place in the afternoon just to give a hug before you take this vacation. >> you know, that would be fine. stop by this afternoon. we're leaving at 11:00. so come on by. we're really not leaving at 11:00. you can stop by. let's look at the oil markets today. 102. 11. up 4 cents. 2.5% on the ten-year. take a quick look at the dollar. 1.34. that's almost time, sorkin, almost time.
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1.34. >> what are you waiting for? >> 1.30. i'm not paying $22 for a croissant. i can't. >> you'd rather pay $18. >> yeah. and a little smidgenon of coffee. they call that coffee. what is that? and there is gold which is now below $1,300. unfortunately, the geopolitical -- did you see russia? >> yes. >> is this for real? >> that's what i was wondering. the story in the "wall street journal" today is that russia is firing on ukraine. >> it's not separatists. >> no. they're firing from russia's borders, they're saying. >> at ukrainian troops? >> that's right. that this is now happening -- >> when does it become a ukraine/russia war? >> this is the first step of us accusing them. >> yeah, right. let's talk about the other news out there, the gaza death toll has now passed 800. u.s. secretary of state john kerry is pressing mediators. martin fletcher joins us this
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morning from tel aviv. martin, what can you tell us at this point? >> becky, this seems to be building up into make or break days. john kerry, the secretary of state, is leaving cairo earlier in the afternoon to return to washington. now, he's leaving behind a cease-fire proposal, which has been leaked. not sure exactly what the details are, but from israeli leaks, it appears to be that he's proposing a one-week cease-fire beginning sunday during which the -- the various sides will deal with the key issues remaining, most on israel will i's side that they want to continue dealing with the tunnels and destroy those tunnel networks from the political sides. they want the siege in gaza lifted. but it's not clear what will happen now. the israeli cabinet has delayed a meeting by a couple of hours this afternoon. it appears they're waiting for the first response to that cease-fire proposal from hamas.
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if he agrees to the proposal, if hamas agrees, it appears that israel will also agree and then we'll hopefully have a week of silence during which they can work out all the remaining issues. so that's the stage where we are now in the cease-fire proposals looking good. but the fighting is intensifying. but there's a shifting in the focus today to the west bank. last night, there were demonstrations in the west bank, a calamity of the crossing from -- close to jerusalem. between 10,000 and 20,000 palestinians at nighttime marched across the borders. they were met with israelis who stopped them. there were gunfire, rubber bullets, tear gas, a real melee. today we're waiting to see wal happen after friday prayers, which is the main prayer of the week. hamas has called for an -- on the west bank calling on west bank palestinians to rally to
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begin another uprising in israel to coincide with their fight in gaza. so israel, of course, is very concerned about that happening. so we're looking at two things today in particular. the potential of a cease-fire agreement and potential of the opposite, the fighting spreading to the west bank. becky. >> that sounds like a fairley -- a lot of material trying to adjust. if you're sitting in the situation where hamas is calling on the west bank to start an uprising like this, how serious can we take this idea of a cease-fire? >> well, it's a matter of what comes first. the cease-fire, if there was one, would presumably water down the cause on the west bank farther. where you have an uprising, it is peace and quiet in gaza. but it does seem to be an either/or choice at the moment. if there's a cease-fire, looking good on both sides. if there's not a cease-fire, looking bad on both sides. now to the interview that we're all talking about this
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morning, steve liesman sitting down with president obama late yesterday, all the way out on the west coast. among the topics, discuss taxes. >> what i'm saying is that companies flock to the united states in part because they benefit from the best university system in the world, the best infrastructure, although i'd like to see it be a little better on production. infrastructure. there are a whole range of benefits that help to create value, create profits. for you to continue to benefit from that entire architecture that helps you thrive, but move your technical address simply to avoid paying taxes is neither fair nor is it something that's going to be good for the country over the long-term. and this is basically taking advantage of tax provisions that are technically legal, but i think most people would say if you're doing business here, if
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you're basically still an american company, then you're simply changing your mailing address in order to avoid paying taxes, then you're really not doing right by the country and by the american people. >> you said a bunch of times that getting the wealthy to pay a little bit more, and we've succeeded in raising that top tax rate to 39% or rolling back, is there a limit there? is there a limit to how much you believe the government should take from an individual in terms of a top tax rate? >> you know, i don't have a particular number in mind. but if you look at our history, we are still well below what, you know, the marginal tax rates were under dwight eisenhower or all the way up through ronald reagan. tax rates are still lower for most folks. and what that means is that we
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probably can make some more headway than closing loopholes that folks take advantage of as opposed to necessarily raising marginal rates. >> joining us now on the right -- or in the right -- no, it says on the right, republican political strategist joe watkins of former white house aide. i don't have any opinion either way. a former white house aide under president george h.w. bush. and on the left, someone that really is -- i don't know. we agree on so much more than we disagree on, zimmy, jimmy williams. both are cnbc contributors. jimmy is i think a little bit confused about where he stands on these things. i don't expect much of an argument here. gentlemen, did you see -- what? did you read the whole transcript, jimmy and joe? >> oh, yes. >> i did, i did. >> all right. >> i think the president -- >> well, let me just say that
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i'm tired of dividing and preparing for 20 -- for november. i saw a couple of things that we could agree on and that is we both want the president, democrats, republicans want the united states to be the best place in business. we want business to come here because it's the place they want to be. they don't even want to leave because it's the most competitive place to operate in the private sector and then from which all good things come, jobs, tax revenues, building infrastructure. can't we agree on that, jimmy? no? >> absolutely. but i don't think anyone is talking about american businesses leaving. it's simply how much of their profits they store offshore. >> but there are people that build facilities elsewhere, either they're delivering -- >> that's right. but they're all delaware-based corporations. so let's not act like they're
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leaving the country. they're not. >> okay. some of them actually are either doing business over there for a reason because it's not -- i mean, jimmy, you do not think that our corporate rate is too high as it is? >> i do, i do. and michael steele, who is speaker boehner's spokesman said yesterday in "the washington post" that under president obama, the u.s. has the highest public tax rate in the developed world. it's the same rate that it was in bush and clinton. i'm not sure why it's president obama's tax rate. i'm of the school of thought that it's too high. >> the world has moved -- >> i the world agrees. i understand the lap occur. >> why you then don't start -- you know, it's not -- >> no, no, it's not uncompetitive in the last ten years. gentlemen, the president of the united states set a corporate tax bill to the congress four years ago to take it down 28% and what did they do? nothing. they did nothing with it. the president of the united states is on the record for the corporate rate being 28%. i happen to be of the school of
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thought that corporate america shouldn't be of one rate. on the individual side, you pay five rates why can't corporate america pay five rates. make it 10, 20, 30, i don't care what it is. >> jimmy, what the president is trying to do is -- he's trying to punish companies. if you're a company and you see an increasing amount of your revenue coming from overseas sources, it makes sense for you to try and maximize profits for your shareholders. it makes sense for you allowing the foreign entity to buy your operations and reincorporate so you don't get hit twice. we have the highest effective corporate tax rate in the world. even our three largest -- >> that's not true. >> it is true. >> no, it's not. it's -- >> we lowered ours in the developed world. but at the same time, we ought to be able to compete. and our folks are looking for way toes compete to -- >> joe, why is there no agreement that, joe, it sounds like jimmy and joe both want
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lower rates. why don't we have lower rates? jimmy, you just said there was a proposal put forth. why has that not been accepted? >> well, of course, i'm hoping that this fall when we are able to elect effectively a republican senate as well as a returning of republican house, we might have a chance in the next session to get something done. >> but isn't here -- there's a problem with that. chairman camp of the ways and means committee put out a tax bill. hits entire party pooh poohed it. thets no, we're not sure sure what chairman camp put out. why? it's a remarkably progressive tax bill. so if the house can't pass their own bill, don't blame -- >> if the president can't even get harry reid to do trade initiatives -- >> but neither side is doing what the leaders of the -- >> the entire city of washington, d.c. is completely dysfunctional. my point is, the president put
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it at 28%. the republican house has done nothing and the democratic senate has done nothing. >> so in the terms of the timing -- other than -- >> oh, really? >> how much time has he spent on -- >> minimum wage versus others things. >> that's right. the president has not led on corporate tax reform. that's exactly right. by the way, howard schultz will be on your show today at 9:30. the amazon number troubles me. microsoft laying off 16,000 people troubles. pe 52 straight months of job growth. i'm pretty sure that corporate america is doing pretty good right now, guys. >> is the gdp seem like it's doing pretty good, too, jimmy? >> no, i'd like for -- >> participation. how about a labor force participation, jimmy? >> and you're exact lit rye. >> -- lowering unemployment number -- >> you might be in the stock market feeling flush and a time of people attribute that to the fed and it's hurting income inequality and everything else.
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are you feeling flush, jimmy inspect do you think you can go out and poll people and say things are going great in this country right now? >> no, no. i don't feel that. i think many in the country obviously wrong direction, right direction on the economic front. most people would say it's not going that way. but what i can tell you is we're not shedding 800,000 jobs a month as we were -- >> guys, how do we get corporate tax reform? if both sides say they're for it, what has to happen? >> i hate to say this and this is going to sound pessimistic at 6:21 in the morning. until barack obama is gone, you're never going to find a republican chamber or either house of congress passing anything. >> that's something i can agree with you on. >> until barack obama is gone, there's not a whole lot of things that are going to happen. >> jimmy, is that a personal anamus? why is it one individual? >> because the idea behind barack obama's legacy is from -- from the day he was inaugurated until now is to do anything to
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destroy that. i'm not the only person who thinks that. >> i hope that's not true. i hope -- joe, my good friends, i think you're a sensible person. are you telling me on inaugural day in 2009 the republicans sat in the u.s. capital and planned barack obama's demise for the 2012 elections and beyond? >> tell me, jimmy, when does the party out of power from the white house not plotted to get back into the white house? >> after bill clinton was -- >> to try to win the white house back? >> you can't -- >> after bill clinton was impeached, he worked with the congress to get stuff down because they finally got their blood. they're never going to let barack obama get away and if you think they do you're -- >> i remember a lot of people in this country being hopeful and a lot more open to things before the way health care was handled and, really, not sanl republican vote and all the special deals and the nebraska purchase. you know, lost the seat in
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massachusetts and then had to go rec sill ate -- you look at those first two years the way that was done, i don't know how you can blame anyone for not wanting to work with the other side after that. >> well, i mean, that was four years ago. i was be bitter at my ex boirnd, but he's still my ex-boyfriend, i could care less. we can be bitter about barack obama and -- >> i can tell you, that has -- and that's what ushered in a lot of the resistance in the house in 2010. and -- >> then you know what? we should just wait until barack obama is gone and hillary clinton is president and -- >> jimmy, republicans didn't have any great love for lyndon johnson, but lyndon johnson still got civil rights down, he got voting rights done, he got housing done. bill clinton did not have a lot of republicans, but he still managed to get a budget surplus. he still managed to do something about welfare reform. tease what leadership is all about. it's getting above the noise and --
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>> that's your talking point -- president barack obama is not a leader. tell osama bin laden that. >> i'm not saying that. i'm saying this could be his legacy to be able to bring republicans and democrats together to get a tax reform. >> they're never going to give him a win. if you think they're going to give him a win, then please, i've got land in florida -- i mean, come on, guys. you all know they're not going to do that. they're not. >> all right. we're done again. i started out with such promise, i thought, and it's just -- >> i heard becky just sigh. it's friday, becky. >> it went so long. >> the thing that's so crazy is the three of you, i know, agree on so many points. jimmy, i read your stuff last night. i know you could all sit down and find a plan you could all agree with. >> the difference between us and them and the congress is they
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take -- we don't. that's why we can say what we say. >> weren't you a republican once, jimmy? >> i was and then i saw the light, the bright light. >> in his heart of hearts. >> the opposite way. >> come back to the right side, jimmy. >> their brain takes over from their heart. anyway, gentlemen, thank you. have a great weekend, everybody. >> who needs this? i'm going to have have a -- a little umbrella drink in it. >> pretty drink? >> yeah. >> enjoy yourself. >> i'm going to get hammered. we were just talking about hammered again after this. man, what a month, what a six months that we've had. >> yeah. >> on policy and all this stuff. although the markets, you know, i guess they should be -- >> ignoring it. >> that shows you that the market does not dictate necessarily that everything is flush and -- >> what do you mean? actually, the markets -- >> you should feel awful happy
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about the markets and yet we don't. that just shows you, it's not the ultimate indicator. >> arbiter of how things are going, yeah. especially with what's been happening geopolitically. >> andrew is happy, though. what, have you got a lot of comcast or something? that almost hit a new high yesterday. >> i've got a drink down here with an umbrella. i'm happy. sitting here on the floor of the stock exchange. >> goldman sachs beating wall street to develop its own chat tool. we have that story in today's executive edge. "squawk box" returns in just a moment. >> announcer: stay tuned to vote. which home is the best bang for your buck? place your vote for the winning home. go to cnbc.com/vote right now. and get ready to start voting. at humana, we believe if healthcare changes, if frustration and paperwork decrease... the gap begins to close.
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the fc reported that goldman sachs bankers want their own chat room. they are developing a chat tool called babble to replace the instant messaging service. tension between the bank and bloomberg seemed pretty tense last year when news broke reporters used private term -- to track bankers, guys. >> that's the first thing i thought of was how is bloomberg going to get all his scoop? don't they have a show called inside info or something?
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what is the name of that show? >> surveillance. >> yeah. where they show the ins and outs -- >> is that what it is? >> no. not close. >> i figured you would want to use it all the time. >> babble seems very funny. i was thinking immediately that these fat cat bankers at goldman, that's a good name for it. babble. what do they talk about, boom boom room type stuff? where they're taking their clients? what do they talk about, andrew? >> it's like an instant messaging service. people use it all day. it's the stickiest piece to some degree of the bloom berg terminal. >> is it snap chat or does it last forever? >> it lasts forever. >> well, i would never say anything there. >> is this something that you would be -- it would not not just goldman, it would be goldman and others? >> goldman and others, right. so goldman has been developing this for about a year or two now, but now they have it in
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place and perhaps now want to try to develop it use it with other -- >> it would only work if anybody had it. but it's the same thing as nbc trying to say we're going to create our own nielsen box. you have to be an independent entity for other companies to trust -- >> aren't chat rooms where people go to argue with -- i see people argue with one person all day long. no one ever wins and i have no -- i have no time or -- i will not go on any of those things. and i say the same thing. if you wrestle with pigs, you're going to get dirty. there's no reason to wrestle with haters. >> most of it is private chatting, joe. >> instant messaging? >> a lot of it is literally instant messaging. if lee cooperman wanted to message eddie lampert, you go on the system and message a name and it goes. >> but, again, it seems to me like it would be better if it
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was an independent -- just because bloomberg was that independent thing before. they lost that independence with the scandal that came through. are you going to trust a competing bank to not be using or looking through any of that information? >> one point of defense about the terminals. in regard to the allegations. it wasn't that reporters were somehow having access to the chat rooms. that's been a concern, whether they could potentially. but that wasn't what that particular issue was about. so unclear. what they could see, by the way, was whether people have logged on the system. >> in the past, you told me about private chat rooms, you were talking about something totally different, andrew. and i don't know that -- you want to do that -- if you're into that, that's fine. what whatever your cup of tea is. but, you see, i've never been in a private chat room. >> because you taught me about that incognito thing, i don't know what to say.
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>> yeah, the turning on the privacy. have you ever done that? >> no. >> me, neither. coming up -- i've heard about it. amazon shares are being punished this morning. as we head to break, a look at yesterday's winners and losers. ♪ ♪ ♪ with diabetes, it's tough to keep life balanced. i don't always have time to eat like i should. and the more i focus on everything else, the less time i have to take care of me. that's why i like glucerna shakes. they have slowly digestible carbs to help minimize blood sugar spikes. glucerna products help me keep everythibalanced. (crash) ugh! i'm good. well, almost everything. [male announcer] glucerna. delicious shakes and bars...
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amazon post ago much bigger quarterly loss for extended trading. now to break down the results, ron josie at jmp securities. a lot of people concerned about this stock because the profit didn't come in where they thought the revenue continues to go up, about 23%. so it's sort of a tale of two cities. >> yeah, andrew. it wasn't too bad. i think the concern and the reason the stock jumps down so much in the aftermarket is aws giving pricing, growth on a revenue basis slowed down pretty dramatically. but almost more importantly, their guidance for the quarter includes a lot of increased costs. i think the question is whether we're about to embark on a new investment or whether this is a one-time blip where all these costs sort of came together. that's the question. >> ron, you talk about aws being
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the cloud piece of their business. we don't talk about it enough. it's now driving so much of their business. as you said, that business up 38% from the same quarter last year. but revenues are growing 60%. this is under the other category. they don't break out exactly what that is. is that what you're referring to? >> yeah. in one q, that other revenue grew 60%. but you can assume that's about a growth rate. so from 60% to 38%, that's a little concerning. that's a pretty big detail. the good news is that while amazon did decrease prices dramatically beginning in april so it's self-inflicted, that's driving the decline in revenue. usage is up 90% year over year. so the core product seems to be working. it's a pricing issue for them. >> when you talk about investment spend and now the concern is how much are they investing and frankly i imagine how disciplined are they going to be? what are you worried more about? >> i think a matter of both, really. i mean, the thing that was
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surprising, everyone was expecting at least some sort of profitable from an operating income perspective in q2. certainly losing money at the mid point. so the question is on what? so they're spending an additional $100 million on content, new centers are coming out here. aws head count expansion overseas. there's just a lot of things going on. >> so what is in there that you say is a mistake long-term? do us i don't want them in the content business? do us i don't want them in the telephone business? i'm not saying those are the right ones or the wrong ones, but what is it about what they're doing beyond just the total number that has you anxious? >> that's a great question. it's awfully early in regards to e-commerce and penetration. it's hard to say what they shouldn't be doing. as an example, i think from their content, i think five of their original content shows are in production, focus pilots are booel being filmed at this point. it's early. we don't know what they do with
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conte content, but where does in actually go? next quarter or two quarters down, are you spending on ten original content shows? unclear and unclear how that benefits the overall business, given that this is relatively a -- the content is included in video which gets into prime which helps overall spending for sure, but it's awfully early there. hard to tell, andrew. >> ron, what is your target price on this company? >> so we don't have a target price on it, per se. but, you know, our advice is, you know, we wouldn't be sellers here. we just think we would be allocating capital via facebook or a google at this point. >> so that's interesting. if you had a dollar of capital right now, you would not put it in amazon? >> we like facebook. >> facebook over google, just to be clear. >> for sure, yeah. >> ron, thank you for joining us this morning. >> thank you. >> appreciate it very much. all right. we will have more of steve liesman's exclusive interview with president obama. find out what the president had to say about janet yellen. "squawk box" will be right back. sdwla stay tuned to vote.
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which home is the best bang for your buck? place your vote for the winning home. go to cnbc.com/vote right now. c
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can. welcome back to "squawk box." we've been talking about steve liesman's exclusive interview with president obama. >> i try to avoid commenting on the day-to-day trends in the stock market. i think that is true is that the
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federal reserve has properly focused on the need for us to bring unemployment down. the costs of unemployment particularly long-term unemployment as well as unemployment for young people just getting started in their careers. that's something that has devastating effects on the economy for generations or for decades to come. so i think janet yellen has said this is a focus of ours right now. inflation remains relatively low. >> yeah. i don't know. andrew, i don't know whether i -- the president's opinion on bubble or not -- >> i think he was smart to stay out of it after yellen kind of stepped in it a week or two ago. i think he was smart to stay out of it. >> i said yellen, the more i think about it, she said that for a reason. she's on record. >> but the president commenting on stocks makes no sense. >> no. >> it was a tough question to be asked and he answered as well as
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he could, i imagine. >> i was once again -- you know, i had to say, but i once again was hearing through the whole thing, you didn't build that. that just kept coming back to me and back to me again. we do have a great infrastructure. and we do have great universities. but every single thing the government has ever done has been paid for by the private sector generating revenues rather than tax. the president's salary, everybody's salary, every government employee, every government program, everything the government has done, a vibrant private sector generates the prosperity in the capital and the wealth that has been taxed and goes towards paying for all those things. >> joe, i don't understand how you -- >> how do you separate -- the chicken and egg things is wrong. if the government didn't come first and then the corporation ves to pan their -- >> and enable the government -- the government did come first, actually, in this case. in this case, we came over from england, we came here, we created a government because we wanted policies that allowed
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capitalism, all the things that you love so much to flourish in this country. >> andrew, it started with the xhe commerce itself in the colonies, it started with people making candles and being able to go back and forth. it was probably 2% of what the gdp was back then went to this framework of a government that did allow for law and private property and things like that, but it's never been the government that has made this country great. it's been the people. and the government should be -- the government should be doing all it can for the people and for the capital generators and for the private sector. the government is unpatriotic for the government not to make it -- >> you know what is unpatriotic to stay in this country? you would like them to move at this point. >> not what i'm saying. i'm saying the government should be in a position to do all they can to make companies want to stay here. >> you want to build this country as attractive as humanly possible. >> it shouldn't be finger pointing, it shouldn't be you're
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doing this, you're doing that. the government didn't give them these things. private sector generate today revenue that allowed the university, that allowed the build out of the infrastructure, that allowed the function and all. >> we're not going to solve the chicken and egg question. >> no, i know. but all i heard is you didn't build that again. the government is either there to help the private sector or the private sector is there to -- >> joe, who created the internet? honest to god. i'm not talking about al gore. >> where do you get -- it's basic science that we support with the government, we use it with money in the private sector. but it's money from the private sector that supports the scientific grants. the government doesn't create any money. >> announcer: stay tuned to vote, which home is the best bang for your buck? place your vote for the winning home. go to cnbc.com/vote right now. and get ready to start voting. vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination
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cnbc's popular million dollar home competition is back. this time, six homes are battling it out to see which one is best in terms of the bang for your buck. and this time we are looking at reclaimed homes. each property was originally built for another purpose. something like a church, maybe a warehouse originally. here's how it works. we have two $1 million homes facing off. and for the first time ever we are going to have you, the viewers, decide who the winner is. you can go and look right now. you can vote by going to cnbc.com/vote.
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check it out. you'll see the two right there. this is only going to be open for about 90 seconds. take a look at it. the winner is going to move on to the next round. the loser is eliminated. the reporters don't say where they are. we'll figure out where we get a look for this round. we have morgan brennan in the mill manx and meg tirrell in the reclaimed warehouse. >> this former flour mill sits on 3.75 acres. built in 1835 it's listed on the national historic register and recently bithsen functioning as a bed and breakfast. inside this 6,000 square foot home many pieces of the original machinery remain. like these authentic grain funnels now lights inside this enormous commercial grade kitchen. this property has three bedrooms, one full bathroom and two half baths, with wide open floor plans. across four levels. and this detached guest cottage used to be the hog house.
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in the early 19th century this waterfall powered the mill. today it adds to the peacefulness of this farm country property. this historic stone mill for a million dollars. this condo is in a converted warehouse that used to store goods for companies like coca-cola and wrigley. but it's transformed in a city whose motto is keep it weird. while you get no land you're surrounded by city attractions like a world famous bookstore and a simply delicious doughnut shop. the kitchen flows into a 2200 square foot living space that used to be three separate condos all filled with the character of a 100-year-old building. plus the owners' added touch of reclaimed windows, doors and even wallpapers. there's three bedrooms and 2 1/2 baths. the master bedroom is specially created to capture the morning sunlight and the owners also designed custom shutters out of local reclaimed wood. this bathroom is a zen retreat where you can kick back in a japanese soaking tub plus have your own outdoor space with this private rooftop garden.
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and if you still need to get away you're an hour from the coast and the mountains. all of this for just $1.25 million. >> all right. check it out. we are watching the votes come in right now cnbc.com/vote. you only get to vote for another 30 or 45 seconds. joining us right now to talk more about it is real estate supper broker dolly len. i think the big question has to be where these two properties are. >> generally location, location, location. mill mansion, which is a lovely home, an interesting home, is in montgomery county, st. john'sville, new york. >> okay. >> so it was so difficult to gather statistics for anything sold in that area. that i guess i don't know how buyers are going to find a house. you know. i would say that is a problem for the sale of the house. it's on the market awhile. it's had pricing from $2.5 million down to where it is now. and it still remains unsold.
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>> okay. >> and i think that's a lot to do with where it is. >> nice though. >> outdoors. the other place reclaimed warehouse looked like it was reclaimed by squatters and like they broke into a warehouse down in kendall -- >> but it's cool. >> it looks like -- >> it's young, it's cool, it's in a great location. it's walking distance to anywhere you want to be. >> where is it? >> it's in oregon where there's no state sales tax. think about that. no state sales tax. >> you have to live in a warehouse. >> no, you don't have to. there's lots of other choices. portland is one of the coolest -- >> to live in this warehouse -- >> looks like squatters broke in a window and like put in a put down a futon. >> i challenge you to come with me and look at it. >> i'm going to the mill. >> joe, you have it with our viewers right now the mill is winning. >> the water the outdoors. >> 56% to 44%. we will proclaim the mill the winner for this time around. >> i felt like i was in -- >> dolly' heartbroken. >> i felt like i was in a 19th century novel. >> i love the portland place. >> love it.
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yeah, very urban. >> i like the breeze, animals and things. coming up did >> proximity. >> coming up nax crusader glover nor crist reacts to president obama's comments on inversion. i don't know where he'll come down. e financial noise financial noise
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a cnbc exclusive. president obama speaks out on the economy. jobs. and taxes. >> is there a limit to how much you believe the government should take from an individual? >> we probably can make some more headway in closing the loopholes that folks take advantage of. >> today, washington and wall street react.
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tax crusader grover norquist, senator rob portman and citigroup vice chairman and performer omb director peter orszag. the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin. joe kernen and becky quick, they are back at headquarters this morning. our guest host all morning, charles kantor, managing director at neuberger burrman, a founder of the cantor group. look at the futures see how the markets are setting themselves up for this morning. we have some red arrows right now. dow looks like it would open off about 47 points. nasdaq open off about 17 points and the s&p 500 off close to 5 points. if you take a look at the ten year you can see what's going on in the number right now, 2.505. let's get you through some of the morning head lines. amazon posted a quarterly loss that was nearly double wall
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street consensus. the results as the company continues a rapid pace of investment in new businesses. also, visa posting better than expected earnings and revenues, but that company is cutting its revenue forecast for the year. that's mostly because growth in cross-border transactions is slowing amid a stronger dollar. joe? >> yes. >> over to you, sir >> yes, andrew. andrew. thank you, president obama stirring the tax debate last night in an exclusive interview with steve liesman, among the biggest topics, inversions. >> i think most people would say, if you're doing business here, if you're basically still an american company, but you're simply changing your mailing address in order to avoid paying taxes, then you're really not doing right by the country, and by the american people. >> you've said a bunch of times that getting the wealthy to pay a little bit more, and you've succeeded in raising that top tax rate to 39% or rolling back the tax cuts, is there a limit there? is there a limit to how much you
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believe the government should take from an individual in terms of the top tax rate? >> you know, i don't have a particular number in mind. but if you look at our history, we are still well below what, you know, the marginal tax rates were under dwight eisenhower, or all the way up through ronald reagan. tax rates are still lower, on average, for most folks, and what that means is that we probably can make some more headway in closing the loopholes that folks take advantage of, as opposed to necessarily raising marginal rates. >> for more reaction to the president's position on corporate taxes, we are joined by grover norquist, who is the founder of americans for tax reform. grover we can guess what you think about some of this, but let's just start with the corporate inversions themselves.
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what do you think of the idea of companies going ahead to take advantage of this loophole some people will call it in the tax system? >> well, it's interesting that the president's from illinois, durban, senator durbin who is taking the lead complaining about inversions, is from illinois. american companies in illinois have, for the last 20 years, have been moving to the other 49 states. okay? because illinois has high taxes, and high regulations, and they're moving to states with lower taxes. about 2 million americans, not just companies, but americans have moved from high-income tax states to low, or no-income tax states in the united states. what happens with inversions is the united states has a 35% marginal tax rate. nobody makes a decision based on average tax rates. 35% marginal tax rate on the last dollar that you earn. other companies in europe, european countries, have an average of 25.
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which means half of them are lower than 25. canada's at about 17.5. a company that buys an american firm, if that american firm deals with international trade, what the president wants to do is tax business overseas, run by american companies, at higher rates than other companies would do so. then he's surprised when this is very damaging to those companies and the same company bought by a british or european firm is worth more the day its ownership transfers, and that's not something you can stop. because people can buy companies. >> right. >> the president's fault that he has done nothing, nothing, nothing, nothing in five years to reduce corporate rates, which he said he was going to do. >> right. >> and he hasn't. >> his point is that he sent a bill to congress, suggesting a 28% corporate tax rate. what do you say back? he says i've sent it to congress and they're sitting on it, they're not doing anything with it. >> well, he might call harry reid, he runs the democratic
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senate. the president of the united states had a supermajority in the house for two years, a supermajority in the senate for two years, and when he did, for 700 days, he woke up, did nothing, went to bed, and for 700 days he woke up, did nothing, and went to bed, and now he wants to tell us now that he's lost control of the house, that he really has an interest in this. he didn't do it when he had to do it all by himself, and if you ask both the president, his own statements, and harry reid's, they'll only do corporate tax reform if it's a trillion dollar tax increase. he's not -- he wants to use those high rates to punish american workers and companies. >> would you go along with a revenue neutral policy so that if we bring it down to 28% there are going to be some companies that are paying more than they were before, some that will be paying less. would you go along with a revenue neutral policy? >> look, and the republicans in the house under dave camp ways and means have put to the both corporate and individual tax reform in that direction. it is revenue neutral.
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actually, raises revenue straight from growth. but static model, it's revenue neutral. >> right. >> so yes, the republican house, ways and means committee, has put to the a package from the senate, that reid could pass something tomorrow if he wanted to. but the president and harry reid are holding corporate tax reform hostage to a 1 to 1.4 trillion tax increase they want and the president whines this is damaging american companies to the point where they're more -- they're worth more if a european buys them. he caused this problem. >> dave camp, his proposals, even though he's a republican, that doesn't have massive republican support that goes along with it. >> okay. the president could get into this conversation by getting the democratic senate to pass anything. when there was an effort by bachus, chairman bachus on the senate finance committee to come up with an idea, wasn't my cup of tea, but it was something, harry reid says not until you find me a trillion dollars in higher taxes.
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okay. that's what this is about. the president wants higher taxes. you saw last night when he was asked, do you think rates could go up, he said well, we've got some room. we could go back to eisenhower's rates, he didn't tell the viewers -- >> he didn't say we could, he just pointed out that we are below what the rates were during eisenhower. >> let's just remind viewers what he didn't mention. 90%, that was the rate under eisenhower. >> but people paid 5% -- people paid 5% with the loophole. he didn't mention that either, grover. what did he mean up to -- did he say up to ronald reagan ow there are -- what was he saying about ronald reagan? >> since ronald reagan brought the rates from 70% top rate individual from 70 to 28% corporate down to -- >> 28. >> we're not at 39.5. you got to add that 3.8% tax for obamacare. so we're at about 44%, guys. and at present rates and he's talking about up to 90 might be acceptable.
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those 90% rates kick in at pretty high rates but they were damaging enough that when we got rid of them we had the '60s. the growth in the 1960s. >> grover, what happens if you don't get a deal in the next two years and over the next two years, if i could speculate rate knew that you lose 30 of the russell 1,000, or even s&p 500, in the united states, that go abroad and they are gone and that toothpaste is out of the tube and they are gone for good. >> well, this is what people have been telling the president, corporate america's been telling this white house this for five years now. we could have done something to allow repatriation, as president bush did. and about 400 billion came back pap. people believe that 800 billion to a trillion would come back if we did that again this time the president has put the kibosh on that every time. this is a crisis of his manufacturing and we need to fix it. >> do you think there's anything unpatriotic or un-american about
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leaving? and let's just define what leaving is. it's actually staying, and getting a different effectively a different postal address and paying taxes differently as if you were somewhere else. >> in a free market, if your a publicly owned company, somebody's allowed to buy you if they offer more money. that somebody could be british or belgian, because the company will be worth more owned by overseas rather than here. because of the way we tax overseas earnings. not how we tax anything earned and produced in the united states. that we can hit with a 35% corporate rate if it makes the president happy. but it's because we do that for overseas earnings, as well. that's what we in north korea do differently than other normal countries. and it's not a good idea. it's damaging. it's stupid. it should have stopped a long time ago. >> an drew, wasn't it -- and grover, it was reductionist logic that we heard last night, where the only people were talking about are big companies,
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that moved to ireland, where they have ten employees, and they pay zero -- that's the reductionist -- who's going to say that that's okay? everybody is going to say, okay, that's something that we don't want to happen. >> but that's what's happening. >> andrew you heard what's happening. companies are for sale. they're worth more to foreign buyers. >> they're worth more -- >> they just go on the stock market and buy them. >> if you want to reduce it to the minimalist -- >> they aren't foreign buyers. they are not foreign buyers. the transactions that are taking place are traditionally use doing these reverse mergers. >> we're losing them both ways and also losing manufacturing and jobs for the same reason. >> i think this is a natural response that corporate america wants the cash they've already earned and they've already paid taxes on. it would be like saying to you, joe, you have $100 in your bank account when you want it you're only going to get $65. but you already paid taxes on it. that doesn't seem to make sense. and corporate america is responding now, because we threw
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the business cycle, and they're looking for ways to improve their businesses, and taxes -- tax is a business cost. and it impacts off the tax returns in very, very meaningful ways. you're having this debate now because the businesses that want to do the tax inversions are looking for ways to increase shareholder value, and on the margin probably feel the least best about the growth prospects. >> this is not just companies. americans living overseas are hit with this worldwide taxation policy of the united states that the rest of the world does not have, because it doesn't make a lot of sense, and it's not a good idea. and we're forcing people to either come back to the united states, not work abroad, or some people, thousands of people in the last year, have given up their citizenship because it's so expensive to continue to pay american taxes if you're living in canada for the last 20 years. >> and it's counterproductive and we end up losing money because of it losing tax dollars
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because of it. and then you try to just, you know, you try to legislate against the symptom of the underlying cause, and nothing is -- >> blaming the victim. >> right. >> i think it's a reflection of globalization. labor and capital move to places that can earn the best risk adjusted reward for their effort. wherever that may be. and that's what corporate america is doing, and that's what humans -- >> you know what you don't consider? patriotism and fairness. and that's where you're wrong. >> grover i have to say, i agree with you on many points. but i wouldn't call corporate america a victim at this point. >> well, when we're paying a -- well -- >> they're not paying. for large corporations it's not the effective tax rate. >> effective tax rates don't matter. you can drown walking across a river with an average depth of two feet. what matters is the marginal tax rate you pay on the next dollar you earn. that's what makes decisions one way or the other. >> yes, but -- >> the marginal tax rate
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matters. >> but if you look at the gao, the studies that the gao has done in 2010 and 2011, a look at the actual rates that major corporations paid, they are well below the 25%. >> in 2010 and 2011 it was all the write-offs from the financial crisis. >> from 2008. >> and it's the blended rate because they've already moved so many operations offshore that you're averaging the 35 with the 10 that they're getting in the foreign -- >> -- corporate tax reform needs to happen. but to say that you're blaming the victim. >> in other countries that have 20% also have lower actual -- >> because there are a lot of companies that pay less. >> over there, as well. >> it's not just the rates, guys, it's the fact that other guys don't impose their second level of taxation -- >> that is fair. that is absolutely fair. >> grover -- >> that's what we're talking about. >> how do you feel about the fact that other countries have price controls on drugs. our drug companies are deciding to go over there but they're not all of a sudden going to start
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charging us the same price for the drugs here. there are so many different tradeoffs i think we're picking the apples and the oranges that we like. >> yes, exactly. we should stop doing stupid things, and we should allow the europeans to continue to do stupid things. we should make a distinction between destructive stupid things, let the europeans do those and good ideas. i'd like to give them our tort law. >> so you're for price controls? >> no, no. that's under the stupid things. >> so andrew you're for price controls? >> no i'm not for price controls. >> then make up your mind. you just said that's how they do it. it's bad. we don't want to do it, too. >> you move to the netherlands -- you pretend to move to the netherlands and there are price controls over there that the individual -- >> they're wrong. >> -- individual tax rate by the way is over 50%, so the distinction if you want to move to the netherlands go move to the netherlands and enjoy it but it's just a different experience and we need to acknowledge what we get from being an american country and an american company from what is going on over
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there. >> but i just -- >> perfect point you shouldn't -- >> patriotic paying half as much in taxes we really could. >> i agree with grover's point. you can't compete globally if you're set up in an unfair system. >> and we all want -- i think everybody around the table wants a lower rate. so let's do it. >> what we want is for this country to be the place where everyone wants to do business. and it's not. >> completely agree. >> i think it is. i think it is despite on -- >> then why are people leaving? >> on the margin it's becoming less competitive. >> but to say that this is not where they want to be. >> we could do better. >> sure. but where would businesses rather go, france? >> apparently they're going other places and being bought because they're cheaper in other places. it should be cheaper here to do business. we should be more competitive globally, and we'd have more jobs based on it. >> i don't take the same dour approach that businesses don't want to do business here in america. >> the whole discussion is about why they're leaving.
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>> you're right, america sucks. >> that's not what i'm saying. i'm saying the whole discussion is about trying to keep them here. >> we do want to be the place they want to do business. i think they want to do business here despite a terrible tax policy. >> do we want to stop americans from moving from high tax states to low tax states -- >> totally different. >> are they unpatriotic? >> i find that to be one of the most unfair arguments in this whole thing in part because they're not moving -- they're moving from state to state but they're actually moving the whole company. this is pretend. they're moving -- they're postal address. totally different argument plus they're leaving the whole country. >> just one man's view. >> move to where they're not as ill-treated. and the same thing with capital. >> that's the -- >> yeah the -- just moving the address. that's the -- that's the -- that's the very foreign -- and in that -- you should you know in the big overall corporate tax reform you should address that. because -- our conversation on tax reform thanks grover just getting started this morning. still ahead senator rob portman on the fight in congress and then at the top of the next
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hour, a former obama omb director peter orszag. s! 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. in a we believe outshining the competition tomorrow requires 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.
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because the future belongs to those who challenge the present.
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still to come this morning, geopolitical concerns in iraq and gaza. also some disappointing results out of amazon last night. those are the stories that are likely to drive today's trading session.
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you can take a look right now. the dow futures down about 38 points below fair value. s&p futures off by 4.5. "squawk box" will be right back. as long as i've lived in iowa, there's always been wind. (strauss' blue danube playing)
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if energy could come from anything?. or if power could go anywhere? or if light could seek out the dark? what would happen if that happens? anything. yyyup. with xfinity internet soyour family can use all their devices at once. works anywhere in the house. even in the garage. max what's going on? we're doing a tech startup. we're going public! [cheering] the fastest in-home wifi for your entire family. only from xfinity. welcome back to "squawk box." we're talking markets. joining us allison deans chief
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investment officer of crt global and our guest host charles kantor. we're about halfway through -- more than halfway through earnings season and wanted to get your gauge of where you think we are. fairly priced, overpriced, underpriced, allison? >> you know, i felt like the market's fairly valued. i had forward earnings estimate about $123, and it's 16 times earnings. the thing that's making me hesitate a little, though, is more than two-thirds of the companies are coming in with earnings better than expected. growth better than expected. and top line results better than expected. so i am thinking $123 might be a little too low. but at 16 times earnings i'm not sure it would go up more than $1 or two so it still doesn't look like a very inexpensive market to make. >> how surprised are you that it doesn't feel like anybody seems to really care about what's happening geopolitically. i mean we've had sort of momentary impacts but not in any meaningful way. >> i'm very surprised. when i look at what's going on with russia right now and ukraine i feel that that could
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have a global economic impact. it's one of the reasons why, while we're frustrated with europe i understand why they're hesitant. which is there could be very big economic implications, and that could have a ripple effect on corporate profit growth. so, to me, with the market and these valuations i'm surprised the market's not a little concerned about that. >> does that mean more downside risk right now? >> i think it could be a risk of a pullback because if some news comes out that could have some economic impact with the market valuations you could see people -- >> charles where you at? >> i think i'd be probably closer to cheaper than expensive. i think the argument around the multiple folks forget that over the last 30 years operating margin in the s&p has expanded. you now have higher highs and higher lows in terms of operating margins. that means corporate america has done a fantastic job in running their businesses i think they've used lead manufacturing, capital allocation strategies, innovation, globalization to
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build much better businesses, and in the world of investing, if you have a better business with higher highs and higher lows in terms of operating cash flow and margin that has to be worth more. so i stand on the side of cheaper versus more expensive. in terms of the market not caring about geopolitical risk i would suggest to you, i think the question depends which market, we tend to look at credit spreads as an indicator of riskiness and risk tolerance. option adjustment spreads in the high yield market have expanded over 50 basis points over the last month so the credit market's a little nervous. equity markets haven't yet got nervous and that's mostly i think a reflection of the fact that you entered the earnings season expecting 3% growth and you ended up with 6% growth. >> although it's interesting, having followed financials early in my career i find the bond market typically predicts what's going to happen in the equity market so i think it's another reason to be a little bit cautious going into the next few months. >> okay. we are going to leave the conversation there. allison charles, thank you very, very much.
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when we come back, we're going to talk to senator rob portman, because he's going to be speaking out on the tax debate. president obama, talking about that yesterday, inversions and much, much more. "squawk box" returns in just a moment. i don't always have time to eat like i should. and the more i focus on everything else, the less time i have to take care of me. that's why i like glucerna shakes. they have slowly digestible carbs to help minimize blood sugar spikes. glucerna products help me keep everythibalanced. (crash) ugh! i'm good. well, almost everything. [male announcer] glucerna. delicious shakes and bars...
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welcome back to "squawk box" everyone. amazon shares trading sharply lower after the e-commerce giant posted a bigger than expected loss. the results were hit as the company spent big on business investments. stock was hit big, too. you can see right now it's down about 10%. in europe bank lending in ireland sees its steepest fall since late 2011. the data from the ecb highlighting one of the impediments to growth in the eurozone. in asia, mcdonald's is suspending sales of its chicken nuggets and other items in hong kong. that decision comes after the fast food giant acknowledged that it had imported products from the company at the center of a food safety scare in china. you hear this, joe? mcdonald's is saying forget it because some of that meat was like a year old. >> a year? was it frozen? >> i was hoping it was frozen. i didn't see the details on that. but this is smart. at this point they say forget
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it. they're going to be doing their outsourcing no longer from any chinese companies, from thailand to make sure they're getting quality products. >> my nuggets, i eat them. >> i had some this week. they're good. >> it's okay. it's questionable enough. >> i know. i know. >> what it is. and if it's really old, then, even the -- i mean you know, you saw the parts is parts. remember that commercial? >> i know. >> god knows what it is. at least it shouldn't be a year old. you're taking a chance eating it in the first place. >> definitely better off -- >> right. i don't think -- >> it was the chinese company that they were sourcing some of this stuff from feeding to many different companies. >> any of it breasts? >> i don't know. i doubt it. >> why not -- >> i did -- >> why not make that product? >> what? >> why not make that product if you've done -- >> white breast only? >> white breast nuggets. >> you can. they exist. >> they don't make it? >> i don't think at the fast food restaurants. i've bought them for the kids.
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>> yeah, i mean -- you mean mrs. paul's or something. >> there's an organic like apple farm -- applegate farms. that's the one. >> yeah. we use the same one. >> we do, too. our next guest places big bets on the market and was featured in michael lewis's the big short for his massive trade on the chance of the housing market in 2006. so what's his next great trade and where is he seeing opportunity now? joining us is paul trichle, partner and head of global event trading at the $4 billion hedge fund whitebox advisers. still with us is our guest host charles kantor from neuberger berman. thanks for having us. >> thank you for having me. >> you're going to tell us all your secret trading opportuniti opportunities? >> at whitebox advisers we like to focus on trades that bring asymmetry between risk and reward. that's what led us to the mortgage trade in the first lace. >> that's a lot harder to find today, though. >> it is -- well, it is. except for we believe that there is an opportunity that creates that type of risk/reward environment now. especially if you look at,
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there's a significant, we think, mispricing between where our european sovereign yields are, the u.s. yields on fixed income instruments, and where currency volume exists. european -- sorry, european yields have collapsed significantly. >> right. >> which may be appropriate. it might be that, you know, that the ecb has said that it's going to back all of the poor sovereign countries no matter how dire things get, we're skeptical of that. we also believe that there's a potential there could be recovery in europe. either case, in either case, if you have a huge downturn, or a huge upturn, the fixed income yields are mispriced. they're far too low. in the u.s., you have significantly higher yields for the most part than the core of europe. again we're farther along in the recovery. and it's probably justified that they're there, as well. but if you combine those two factors, in a world where european central banks are continually printing money, that can't work equally for everyone.
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and currency volatility is at an all-time record low. so if you combine those three trades, we feel you can trade positive carry very positively. >> you're not talking about buying u.s. treasuries, though? >> well, not exactly u.s. treasuries. other fixed income instruments in the u.s., that are very similar to treasury-like exposure that we think the credit's solid but you get more spread. >> what kind of things? >> there's certain municipal bonds that we still think are very attractive. there are r and bs securities that are attractive and corporate issues that we think. so it's a combination of those types of securities, and then having an underlying european short and a long currency volatility position. >> and you think about the investment what do you worry about on the downside? where could you be wrong potentially? >> we could be wrong in a lot of ways potentially. i think it's not like we're a huge macro -- we make macro calls. what we feel protected against is even if we're wrong, the amount of money we'll lose is not very much.
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we're very protected on the downside. the fact is it could make us wrong would just be a that everything is priced like it is, and currencies even though we feel the euro is very overvalued, and the ecb would prefer to have it lower, that the currencies can trade very technically. >> it's been surprising that the euro has hung in -- >> could stay technically strong. >> is the debt principally a bet on increased vol or are you hoping for more volatility or something structural about the relative value of the euro versus the dollar? >> it's a combination of both. we are hoping for more vol fillty. but it's one of the rare situations where we can put on a trade where we benefit from increased volatility, yet, we can structure it so it's positive carry so we have staying power in the trade. oftentimes when you trade short trades, like with the mortgage short it was critical component of that was being able to time it. otherwise you expect if you bleed carry you get tired of the trade, you're expected return becomes very, very poor if you don't time a short trade
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correctly so you either have to be able to time it or carry it. >> how problematic would it be if the u.s. ten year was yielding, let's say 2.4%, 2.3% towards the end of this year? the yield has been stubbornly low and has surprised a lot of people by not rising. >> for this trade that wouldn't be problematic at all because most of the credits that we'll be picking we think will have more fixed income exposure than they will will have credit exposure a the ten year like rallying will probably help this trade. where we're protected is because of the difference in carry we get we can short more than we're long. so we're able to be afforded to put on more short paper so generally if global interest rates rise we're plow texted and will benefit -- >> how much capital are you putting toward versus leverage to make the risk adjusted returns you anticipate making if you're right? >> on this trade, we don't feel you need to use very much leverage. we would be levered on the long
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side at just one dollar long per asset invested, and then that will afford you to be able to on the short side be levered around 2.5 to 1 on the short and then equal dollars on currency through options. so it's not a very highly leveraged trade. >> total leverage? >> 3.5 to one on sovereign like instruments. it's a low levered trade. and again the reason for this is, again, there are risks. and there's mark to market risk. the mortgage trade through cbs you could trade it up with explicit options so you could absolutely quantify your downside from a mark to market perspective. when this is a long option trade but it's more implicitly long so when you create an implicitly long option trade, you are subject to some extreme market to market moves so you want to reduce the amount of leverage you use in those trades. >> paul, thank you so much for coming in. it's always a pleasure talking to you. >> all right, great, thank you. >> andrew? >> great conversation. coming up next, senator rob portman on tax inversions. "squawk box" returns in just a moment. every ford dealership,
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fine barbecue, good times and zero heart burn. and that's why i take prilosec otc each morning for my frequent heart burn because it gives me zero heart burn. prilosec otc the number one dr. recomended frequent heart burn medicine for nine straight years. you can beat zero herat burn prilosec otc one pill each morning 24hrs, zero heart burn president obama making a case for a bill that would prevent companies from moving headquarters overseas to avoid paying u.s. corporate taxes. >> we've reached out repeatedly
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to both democrats and republicans and our argument is simple, if we lower corporate tax rates, and close loopholes, there's going to be more certainty in terms of what corporations pay. so there's a whole bunch of good reasons why we should do it. i'll be honest with you, steve, the reason it's not getting done right now is that congress, you may have noticed, is not just real productive. and they have trouble getting stuff done right now, even when they say they want to do something. >> senator rob portman is a member of the finance committee. he joins us now with his reaction to the president's position on tax inversions. senator, how are you? it's good to see you. >> i'm doing good. how are you? >> what are the chances that -- what are the chances that congress or the house would pass a bill that would just close this loophole? is it possible that that would happen? >> well, you can't really close the loophole because people are going to find, you know, other ways to become foreign corporations, and would be
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terrible tax policy, joe. we've got to reform the tax code. we've got to get at the underlying problem. >> there are people that think that they can do it the other way. >> we tried that a few years ago and it didn't work. and it doesn't work because if you make it even more disadvantageous to be an american company, what's going to happen? you're going to see more companies become foreign companies, maybe not through inversions which i think is reallied tip of the iceberg. we'll look at it. there are all sorts of companies being acquired by foreign companies today, try to buy an american beer right now. you know. i mean they're bought by foreign companies, because the bottom line, aftertax profit is better for these foreign companies so they can afford to pay a premium. that's what's going to happen and will accelerate if we make it harder to be a u.s. company. we've got to get at the underlying problem. i heard the president's speech yesterday. he called these companies economic deserters. and you know the problem is washington. in a way these companies are economic refugees. in other words, i don't think
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they want to leave the united states, i think what they're saying is i can't keep my fiduciary responsibility to my shareholders and be an american company anymore which is incredibly sad, because the american tax system is so noncompetitive. the rate's too high and international system doesn't allow us to compete effectively so we've got to look at washington not call these companies names. >> sorkin, i'm looking at, you know, i don't ever expect to see this in "the new york times." and senator portman, i'll just reference this, the f.t. basically agrees with you, andrew, that a company like apple has benefited from u.s. innovation, the rule of law, other advantages of the american system to become globally dominant but they didn't reach the top via philanthropy and expecting them to change their act is quixotic. but, the f.t. goes on to conclude that this won't fly, just closing that loophole won't fly. >> i don't disagree with you. >> and the president probably, his advisers, they say, have argued you can't waste capital
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on a big tax reform because it won't happen. but this won't happen, either. if you're going to try to do something, why not try for the grand bargain that actually solves the problem? >> i don't disagree with you. i -- look i think everybody -- >> the f.t. actually comes to that conclusion. that because all you'll do is have more lawyers finding more ways of getting around this loophole. >> i could make the argument. i could make the argument that president obama is trying to drive a wedge in washington right now so that we actually do get some form of corporate tax reform given the fact that not only republicans but many democrats, and by the way, everybody really does want to get to some form of reform. but then we sit around and say we can't get there. >> you don't think this is senator portman to me it looks like, it looks like there's an eye on november and it's an easy position to take that the draft dodging corporations are the bad guys. >> exactly. >> and congress won't raise the minimum wage and they won't close this loophole. what am i to do? elect more democrats in november? >> look, i hope the president's
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interview yesterday with steve was accurate, and that he is going to send a detailed tax proposal for it. he wasn't yet. back in 2012 they sent a 25-page white paper from treasury. that's great. they have not. engaged with us on corporate tax reform. i hope they will. as you know, because i've talked about this on this show for the last three years, this is not just an important problem. it is an urgent problem. and the people who are suffering are american workers. because when you have these high tax rates, based on all the economic analysis, including a congressional budget office report, 70% of the harm goes to workers in terms of lower pay, lower benefits, and the ability to have a job. so, you know, this is an issue that ought to be something the president leads on. it sounds like last night that he wants to start leading on it based on his interview with you guys. that's great. but it's not going to be solved by just doing these political one-offs where we make it even harder to be an american company. you mentioned apple. you know, they drapged apple up here to the hill, the democrats,
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to give them a hard time about using creative tax planning. okay? and said, you know, basically what the president said yesterday, they didn't use economic disorder they used the word economic patriotism means you shouldn't go overseas. listen, what we did, in that period, is we came forward and said this is what samsung pays after all these creative tax planning by apple samsung pays less, and so if you're apple, what are you to do? you know. and every other country in the world that is part of the oecd, all the developed countries, have all reformed their tax code since 1984 when we last touched it. >> so senator -- >> and we're just sitting at the side lines. and there's an opportunity here. >> getting to the nitty-gritty. we all want this country to be the most attractive place to do business. what does that mean -- >> slightly. >> has to be for i. >> it's got to be at least 25%. it would be better to be lower because 25% is slightly above the average when you include the state taxes because we're really at 39 now but it's got to be at least to 25, and we've got to
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have a tax system internationally that there's a territorial type tax system. >> i've had it scored by the committee on taxation up here to be revenue neutral. i've shared those details, i'm happy to share it with others. frankly the democrats i talked to about it are interested up to a point but they're looking for some cover and some support from the white house. so i think there's an opportunity here, let's look at this, as the opportunity to take advantage of a bad situation, these inversions, and actually do something to help the country move forward. by the way, it also responds to the question that a lot of people have about why do some corporations in america not pay taxes, so hardly any taxes. if you did this reform, everybody would be paying taxes. >> all right. >> because you'd have fewer preferences, exemptions, credits, deductions, and you know, so it's good for the country to reform this code but it's also good for the american worker, who right now is getting the short end of the stick. >> right. senator, do you think you could
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carry ohio in 2016? no, seriously. do you think you could? >> well i'm up for re-election so i hope so. >> i don't mean that. i mean -- >> how about portman, becky? i mean, i'll put becky on the spot. >> no -- >> on social irus you're where i'm glad where you are, because i think, you know, that it's not divisive, and you speak -- you're kind of boring maybe, but it could -- we could spruce you up a little bit. but you know what? i think -- >> boring in a good way. >> but i think the social issues might not allow you to appease the base. >> but you would be -- >> joe -- >> i'm with joe. >> where are you? we're back to you know we got two families that can run this country? those are the only people that can run? i moon i don't get it. >> here's where i am. the country's in trouble. we're in trouble because we are slipping behind. because we're not doing what we need to do on tax reform as we talk about but it's much bigger than that. it's about regulations, it's about what we do in terms of
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international trade, where we are sitting on the sidelines and american worker's getting hurt. it's about what we're doing in terms of health care costs dramatically increasing at a time when you already have a middle class squeezed out there with wages going down. so look i think the country is in trouble. the debt and deficit is a real issue. i did a little -- and got a lot of grief from the right and the left saying why are you talking about the debt and deficit? i'm talking about it because it's at record levels and it enables us as americans, over the next 30 years, to add another 70 trillion dollars to the debt. so these are big issues. and if we don't address them, you know, i think the country's not going to be able to get back on its feet and we're not going to be able to pass along to our kids and grandkids a better country. that's what i'm focused on. i'm doing it in the senate now and i hope to continue -- >> don't change the subject. what were you omb -- you've done like ten things in washington, right? you got all this experience too, right? >> i can't keep a job. >> will you think about it? not vp. just think about it. you know, it -- great state of
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ohio. a lot of presidents come from ohio. you know that, right? >> you just got this ohio bias, joe. by the way, our cincinnati reds are having a tough time. if you could throw out the first pitch. >> i just checked. they get to 1 1/2 games back from milwaukee before the all-star break. i go to one of the games against the yankees, they get swept by the yankees, they've lost six straights. they're six back again and it's like why do i try? why do i -- >> no, there's still room for comeback. a lot of injuries. got the nats >> town this weekend. >> you jinxed them. >> yeah. >> you made a lot of sense. the president yesterday said he was four square -- what does four square behind mean? he's four square behind doing this tax reform. >> let's take him at his word and get busy on it. i think the american people are looking for leadership right now and this is one area where they're seeing these companies go overseas they don't like it. i don't like it. you don't like it. let's do something about it that actually gets to the core of the
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problem which is we've got a noncompetitive tax code. >> what drives me nuts is the -- is just the, you know, picking fights, pointing at fingers, and elections coming up and these guys are this and divide -- it's all the same crap. i don't know if you're going to see anything get introduced. looks like more posturing and we have five years of it. but senator, appreciate it. >> thanks, joe. see you, andrew. >> take care, guys. >> when we come back we do have stomp stocks to watch today and at the top of the hour, more of steve liesman's interview with president obama. also, reaction from citigroup's vice chair of corporate and investment banking peter orszag. "squawk box" will be right back.
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let's take a look at some stocks to watch this morning. chinese internet search giant bidu blowing past wall street targets helped by a jump in mobile revenue. pandora shares coming under pressure. the company current quarter forecast was below where wall street was estimating. pandora says it plans to put a lot of money back into its business. visa posted better than expected earnings and revenue. the company is cutting its revenue forecast for the year because growth in cross-border transactions is slowing amid a stronger dollar. is that a dow component. >> mm-hmm. >> i had to look up. >> mm-hmm. it was like uh-huh and huh-uh together. >> mm-hmm. >> starbucks beat the street
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with its earnings. same-store sales growth in its americas region was stronger than expected. starbucks boss, howard schultz will join the "squawk on the street" team at nine eastern, looks like 9:45. andrew? >> we do have a big hour still to come before we head to that break though check out the futures. see how things are setting themselves up i believe right over there. >> hang on a second. andrew are you leaving for jury duty? >> i am not. we have peter orszag also coming up in the 8:00 hour. i will be right here with you. >> okay. >> when we return. and we will return with some of those red arrows as well. because it looks like the market's going to open down about 30 points. mplt >> coming up, the president's message to american business. >> if you're doing business here but you're simply changing your mailing address in order to avoid paying taxes, then you're really not doing right by the country -- >> we'll have more of steve liesman's groundbreaking interview in just a couple of minutes. right here on "squawk box." we never thought we'd be farming wind out here.
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it's not just building jobs here, it's helping our community. siemens location here has just received a major order of wind turbines. it puts a huge smile on my face. cause i'm like, 'this is what we do.' the fact that iowa is leading the way in wind energy, i'm so proud, like, it's just amazing. if energy could come from anything?. or if power could go anywhere? or if light could seek out the dark? what would happen if that happens? anything.
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♪ during the cadillac summer's best event, lease this 2014 ats for around $299 a month and make this the summer of style. ♪ washington takes on tax inversions. >> there are policies we can put in place that can help that. some of it has to do with globalization. some of it has to do with technology. some of it has to do with what some have called a shift to a
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more winner take all economy. >> the president sets out his plan to keep business growing in america. his view on the economy, jobs, and the geopolitical turmoil gripping markets around the globe. peter orszag joins us with his reaction to cnbc's interview with the president. and the ceo of homeaway on the vacation rental landscape. >> a whole week you'll be here. ha, ha, ha. okay. oh, wow. just something. >> this, plus your morning head lines. as the final hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick, and and drew ross sorkin, man of the hour is here. did you read the f.t.? >> i just came in on the plane.
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>> just read that. >> obama's dilemma over tax inversions. you want to do the rest of the show and i'll read this -- >> we didn't know we were going to talk to you. >> i'm not a speed reader. >> plod through it. plod through it? prod through it? thoughts on the market charles kantor of neuberger berman. check -- >> i think it's plod through. plod your way along. >> plodding your way. >> okay. >> plot is like -- >> we're down about 30 points. not a whole lot happening in the equity markets. at this point. but, that could all change. although it is -- >> it is. and by the way, if you look at some of the individual stocks you do have some big movers. amazon is the stock to watch today. the online retailer posting a quarterly loss that was nearly double what wall street was expecting. results were hurt as the company continues a rapid pace of investment in new businesses. amazon's cfo says that the company is spending more than $100 million on original video content in the third quarter. it was the real reason that the
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stock took a hit. you can see right now, it's down about 10%. it's a decline of $35 to $322.92. britain's bskyb is paying $8.3 billion in cash to buy rupert murdoch's pay tv assets in germany and italy. murdoch's 21st century fox is also the top shareholder in bskyb. fox is expected to use the proceeds from its partial exit from europe to help its bid for time warner. you can see that stock is up by about 50 cents. in geopolitical news, secretary of state john kerry is pressing for a gaza cease-fire. the civilian death toll soaring to more than 800. there is worry that the israeli/palestinian bloodshed could spread to the west bank and jerusalem in the occupied west bank roughly 10,000 demonstrators marched in solidarity with gaza overnight. >> steve -- oh, president barack obama may be stirring up the midterm election debate by going after what he calls a corporate tax loophole. cnbc steve liesman joins us now -- the entire company's
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going to join us now with more of his -- >> just call of cnbc. >> all of cnbc is going to join us now -- no. i guess you are cnbc. now my point here -- we like watching and we're proud of you for getting it. and you say he did not cop to actually asking for me to be audited personally. that was not -- he never mentioned me and didn't say i asked for -- >> he just said that they happened to be in a rotation of doing people with initials j.k. in jersey. >> and that that -- >> he said it was random. >> because i asked. all the discs have been destroyed on why i'm getting -- they don't understand agent fees. my point here, steve, is the f.t. comes at this -- >> i did this story. >> but it comes at frite the left saying that these companies are -- i'm not going to say dirt bags but they're basically, even apple has benefited from everything it's gotten in this country but don't expect them to be thrillen tlopic. it's quixotic to think they're going to be good corporate
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citizens. then it says this is not going to pass just closing loophole. >> right. >> so if he's going to fry to spend some capital why not do the grand bargain -- >> that's my story, joe. that's what i have in the prompter right here. >> that's why i think -- oh, i got to do it again? did i do it again? >> i did just go and tell you -- >> how did you spill the coffee all over? >> it was -- >> how did -- your entire -- the entire -- >> how did -- >> he came directly from the plane coming back from california. >> so you were rushing or something? >> just back there in the makeup area. >> did you just pour it on yourself? >> joe, you're the guy who when you have a bad back comes up and slaps you on the back and asks you how you're doing. >> exactly. >> that's who you are. >> you know that about yourself and you're comfortable. joe my question this morning for investors is whether this tax inversion thing could be, and i say could be, the thing, the catalyst, that sparks the long-awaited broader tax reform. president obama made a forthright pledge, made it to me.
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made it to cnbc, that his administration, now in its sixth year, stands ready now to push it. >> we're eager to make it happen. invariably it takes some time to work through a big tax reform piece of legislation. when ronald reagan last did it back in '86-87 it was about a year and a half long process. now is the time for us to get started. i think that people should expect that this administration will be foresquare behind it. >> what does that mean? i asked what that meant. >> four square means all the way. all the way behind it. the question of political muscle but the president insists tax reform will be simpler and fairer which in his mind is not just lowering the rate but also eliminating what he calls unproductive loopholes. he's backed the 28% rate. republicans wanted 25. but here's the question is whether either side in this congressional election year prepared to take on what i'm calling the loophole lovin' lobbies who stand behind all these tax breaks. now on the issue of inversions,
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which is what the f.t. deals with, by the way joe had no idea i was doing this question. i asked the president if the company wasn't just doing their job by maximizing profits. here's what the president had to say. >> it is true that there are a lot of things that may be legal that probably aren't the right thing to do by the country. people are paid to maximize profits, but people are also paid to be good corporate citizens. they're also paid to make sure that they're thinking about, in addition to shareholder value, how do you grow a company over the long-term, and this kind of strategy, i think, undermines people's confidence in how companies are thinking about their responsibilities to the country as a whole. >> so most of the political analysts of which i admit to not being one say no chance on tax inversion. no chance on broader tax reform. almost ever during the obama administration. but something needs to be done about these companies moving overseas. it remains possible in my mind
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that this is the issue that propels broader reform and brings both parties to the table. >> you know we had -- >> naive, maybe. >> well, you know, we had grover norquist, not cleveland, grover norquist on this morning, and he -- >> he's from ohio. >> he is. >> president from ohio. >> yeah. >> his point is that the plan that the president's put forward, and that the democrats on the side want a trillion dollars in additional taxes -- >> right because they want to use for infrastructure and for other things. >> is there a way to do this, a revenue neutral bring it down to 28%? >> look, i -- the last -- i have enough trouble understanding economics as joe says almost every day. and politics is the last thing but a trillion is an opening bid. could it be a half a trillion, could it be a quarter of a trillion -- >> could it be revenue neutral? >> i don't -- >> fixing the tax code and helping out the small businesses that can't take advantage of these loopholes? >> in the old world you could couple tax reform with maybe a half of the rise in the minimum
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wage the president wants? you know, somewhere in there. >> but why doesn't this issue stand on its own? if both sides are in favor of it, why can't this issue stand on its own? >> we've got to get harwood on the phone. he's doing national public radio this week. this is something that as joe noser ra wrote in the times earlier this week the democrats agree is something that would create jobs in this country. the republicans say it and it remains absolutely insaeb to me that what you're talking about, becky, can't happen. that there's not some -- i'm not ready to give blame either side. >> whether -- >> whether the republicans have just been so nasty to him or whether he really just doesn't have the stomach for doing what's necessary, i -- do you see him rolling up his sleeves and governing and getting down and dirty with all of congress and trying to get this done? i don't see that. it's beneath him to do that. >> here's what he said joe. he said to me, and he said this before, that the problem in congress is not the republicans. he says it's a faction within
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the republican party. >> he doesn't say that it's harry reid? harry reid won't pass any of his trade deals. >> that's true, too. >> the democrats at this point will not do anything to lower the head line rate. the republicans have the -- are with the companies that want some of the tax -- >> what i don't understand is why he never engaged with dave camp. camp had a bunch of things -- >> see the -- >> in his proposal that obama add wanted -- >> and the republicans hate it. >> if i wanted to get down and dirty in a political conversation with the president instead of a broader economic one i'd have asked him. >> you say you're naive. i want to be like you. i want to be naive about having a chance -- >> you have -- >> what scares me is my cynical nature because i saw that jobs plan that he kept putting forward in front of all the people, all the speeches that he gave, that was pure posturing to paint republicans -- and this will be again, too for november. this will be the republicans want to help these tax dodgers get out of the country. they don't want to raise the minimum wage.
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i don't -- i don't think -- >> we've got to go. but i disagree a little bit with you, joe. the president wants these things to happen. he's not -- >> he could have done it in his first two years and -- >> he could have -- >> many times -- >> still in his presidency. >> i know. many times i thought you're cutting off your nose to spite your face. you will be getting more job creation if you were nicer to the private sector and helping the private sector help your president. it never worked. >> i agree. i think there's plenty of room for compromise. >> steve loved the interview. >> when we return former omb director peter orszag will join the conversation. check out the "squawk box" market indicator. bopp. in india we have 400 million people
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welcome back to "squawk box" everyone. we've been watching the futures this morning. it does look like we see some red arrows. those dow futures look like they'd open down by about 39 points below fair value. s&p futures would open down by just over four points. also, abbvie's second quarter earnings beating the street by six cents a share. revenue also topping consensus. among the drivers you had surging global sales of its humira treatment for rheumatoid arthritis. abbvie agreed to pay $50 billion to acquire ireland's shire.
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>> okay. let's continue our conversation now about the president's interview last night with steve liesman. joining us is peter orszag, citigroup's vice chairman of corporate and investment banking. also, of course, the former director of the office of management and budget under president obama. steve liesman, of course, also with us. peter i don't know if you got the chance to hear the earlier conversations we've been having. >> i did. >> joe has made the argument repeatedly that whatever is happening here, there is really no way, unfortunately, or fortunately, for president obama's proposal around inversions to actually get through and we need to ultimately work on a much larger package, which also may not happen either. is that how you handicap it? >> yeah, i think that's probably right. i think the probability 6 a rifle shot fix here the way the administration has proposed is pretty small. i'd also note, by the way, the administration came to this kind of slowly. if you look at their proposal, it was scored, the revenue
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impact over five years, was evaluated under $4 billion. so i think that reflects a lack of appreciation for how much of this activity was projected to be happening. you can't say that $4 billion over five years is the most important problem facing the united states. >> so is the president being disingenuous when i makes the comments that he did yesterday to steve? >> no, no. i think the administration kind of missed the fact that this trend was developing. and so they were a little bit kind of slow off the mark. >> you have made a proposal, or at least a suggested proposal, around how you think we should do a territorial tax system, which really isn't that territorial at all, which i actually have to tell you, i'm a fan of. maybe you can explain to the viewers and maybe some folks in washington what you're talking about. >> sure. and by the way, everyone -- the reason that broad scale corporate tax reform is so hard is everyone says i'm in favor of broad scale corporate tax reform and then they mean completely different things by it.
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the republicans generally mean a territorial system. the democrats often mean something else. i think the system that makes the most sense is basically what state governments in the united states have done to tax corporations, they've been struggling with the same set of mobile capital constraints that now nations face. and it's very simple. it's called formulary apportionment. the thing that's hardest for companies to manipulate is where their sales occur. everything else you can transfer pricing, what have you, you can play games. so therefore, if "x" percent of your global sales are in the united states, "x" percent of your global profits should be taxed in the united states regardless of where you're headquartered, period. >> peter, i agree that this is a big issue and the administration's been slow on the uptake. it's well worth pointing out, though, that we all know capital can be moved. but it's only what, in the last ten years or so that capital's been able to move as easily as it has been able to move, and the big struggle here is that capital is mobile, and governance is not -- is really
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not, right? >> correct. >> that we can't -- we don't really deal with the french and the germans on how to tax corporations and this whole thing. they're really separate entities. i like your idea here but i just want to say, do we have to be as cynical as the political analysts here? is it possible, indeed, that washington gets in the kind of a crisis mode here, and maybe makes a deal when it comes to either broader tax reform or at least the inversion? >> i want to believe, i really do, but i think the odds -- look, before the election, before the november election, even if you look at the calendar the number of days that congress has to deal with something like this are very, very limited. so the odds before the election are extraordinarily low -- >> so take joe's most cynical construct of what the president is doing. that he knows it will fail. and he's doing it to embarrass the republicans. does it really embarrass the republicans? do they really care? will it matter if they end up voting down anti-tax inversion legislation? or is it not an issue for them?
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>> well, i think this could be a political issue. but look, there's -- let's just be clear here. there also is a substantive issue here that we all agree, joe agrees, even joe agrees, that reform of the corporate tax system would be beneficial. so i think someone going out and talking about the need for reform of the corporate tax system is not just -- >> wait a minute, it wouldn't even be joe agree -- i'm the one that wants the corporate -- it would be even you agree that we want -- >> okay. >> and by the way, i'll sign up for revenue neutral also. i think -- >> i would, too. >> the -- >> peter what's the number? >> but will the president? that's becky's good question. >> here's the thing. the discussions about tax reform you've got to be clear, is it only corporate tax reform? there's no way you're going to get that much revenue increase out of a corporate tax reform. the corporate tax reform piece is going to be revenue neutral. the question is, do you do broader scale tax reform, including individual tax -- >> peter, peter think about people would say it's crazy. they worry about the rurk to zero around the world. think if we did go to zero. think if the whole world went to zero on corporate taxes and then
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we taxed -- think of all the jobs. all of a sudden there's all these jobs and we've got more people to tax individually. think of all the dive debds go up and we've got more dividends to tax more capital gains. why couldn't we just do it that way? let all the corporations just unleash all of them around the world to compete equally based on innovation and everything else, and then tax it by instead of taxing it twice, tax it from the people that get the money from working for the corporations? >> so you'd be in favor of high tax on capital income at the individual level? >> if i had to. if we had to. >> the reason we have a corporate tax system is people worry that in practice, that there would be so much leakage from that individual side, especially in capital income, that it's worth having a corporate income tax. >> right. >> but the key part to your proposal is there would have to be a pretty stiff tax on capital income at the individual level, and as we know, that's not popular, either. >> peter, steve made the point earlier that when you get into the nitty-gritty of any of these conversations, you're going to get into all of the loopholes and every corporation's going to
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try to protect them. >> yeah. >> how do you stop that? >> well, that's why this is so hard. let's take a revenue neutral corporate tax reform. by definition, that means that when some corporation's effective tax rate all in including the loopholes goes down, other corporate effective tax rates have to go up. and therein lies the problem. you know, all of these breaks are protected by powerful lobbies. this is not an easy undertaking. and this is why, again, it's always apple pie to say i want to broaden the base and lower the rate but no one wants to broaden the base by getting rid of the tax exclusion or deduction that benefits them. >> okay. peter we're going to leave it -- >> corporate taxes make up less than 10%. >> don't go cynical on us. >> i'm with you. i'm smiling. >> no you're totally cynical. you know that. >> peter, thank you for joining us. steve, of course, congratulations on awesome interview yesterday. >> thank you. >> that's making a lot of waves yesterday and today. >> andrew, now are you leaving for jury duty?
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>> i think right about now it's time to go over to the new york state jury. it's criminal. we'll see if i -- >> this is now -- this is the time to commit a crime because andrew will never vote to -- i mean, if i'm going to do something i'm going to do it right now. because you just don't have the heart to actually -- he's too nice. >> have a great weekend, everybody. joe have a great vacation. i'll miss you. >> you know where to find me. i got an e-mail. >> weeping. >> let's send each other selfies. >> oh, know. >> oh, boy. >> what? >> mental image. when we come back, chipmaker rf microbeing boosted by iphones and samsung kwal axsy's success. the numbers for june will be out at 8:30 eastern time. just ahead "squawk box" will be right back. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires 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.
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welcome back, everybody, rf micro devices is forecasting second quarter results above expectations thanks for higher demand for its chips that connect iphones and samsung smartphones to networks. rf micro says it expects second quarter revenue of about $345 million versus an estimate of $328 million. earnings are expected to come out of 27 cents a share ahead of where the street was expecting. the apple supplier to expected to benefit from the ramp-up of the iphone 6 build. analysts expect rf micro to have a larger role in the latest
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iphone than in the earlier versions. the stock is nearly doubled over the last year. if you take a look at the futures right now, you will see again that there are some red arrows. dow futures down by about 32 points. not bad. off the worst levels in the morning. s&p futures down by just about four points. "squawk box" will be right back. coming up after the break, durable goods data, and market reaction. and later, the ceo of homeaway, with his view of the vacation marketplace. "squawk box" is back after a quick break. [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪
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welcome back to "squawk box" with durable goods for june out shortly. steve liesman is here and these guys talking to charles, and charles has some analysis as to why now. >> he gets it. >> fascinating theory. >> why now? i think because corporate confidence is up, and ceos want access to their cash. it's incented in health care where you have a lot of high dividend yielding securities. you've had those as a reflection to the low interest rate environment. investors want income, and the corporate cfos are sitting there saying i want my cash overseas but to bring it back, it's really expensive. it turns in effective dividend yields from 4% to 6% when you bring it back. and so, in response to
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maintaining their dividends, they're searching externally to do acquisitions. >> they're too high. >> i just want to go over the math, charles. you want to pay a $4 dividend in america. >> right. >> you need $6 of money overseas to pay that dividend. >> to pay the $4. >> but if i do the inversion, $4 costs me -- >> once you do the inversion, you can get the cash, you can relever your balance sheet potentially, and you can -- and you can have access to that cash flow on a future basis, which supports your dividend on a future basis -- >> because no ceo ever wants to reduce his dividend. >> dividends are permanent. >> so the dividend players are in a stickier wicket so to speak than the buyback players because buybacks aren't always permanent. so it's a natural reflection of where we are in the cycle and where interest rates are, and where our businesses have gone globally to build their business. i think at the beginning of -- i don't want to -- at the beginning of let's increase the dividend to attract income nevers, three, four years ago, peel didn't probably think through the math, and you can't
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take on debt forever to support your dividend. i don't think that's the primary reason for these deals. i maintain the primary reason is still strategic, but the opportunity for the ceos to get control of his own cash, that he's already paid taxes on in a foreign place, without any more cost is very attractive, especially when the tax doesn't apply to the future earnings after the inversion. >> so you're suggesting, one solution obviously would be an amnesty? an amnesty could at least reduce some of this rush to the exits, if they were to allowed to bring this cash back they wouldn't need to invert to get access to the cash. >> that's right. part of the rush to the exit i think is the investment banker's out there, all about fear and greed. the fear is you close the loophole, you don't do the amnesty, the greed is, others are doing it so you better do it. the fear back in the corporate suite is i've got to fund this dividend yield possibly and i need the cheapest access to money possible to do that, and i can't take up my leverage anymore.
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>> got to get to the numbers here. >> i don't have it yet, though, it's 15 seconds. they want to run the animation. i got to put my -- we're looking for up 0.5% after a 0.9% decline. rick is not here today, so i'm going to be doing this. and usually i twist in the wind a little bit. here we go. up 0.7% a little bit better than expected. and here's the table. i love it when the technology works. 0.7% ex transportation up 0.8%. they did revise down the may words by one tick to minus 1% so slightly worse in may. better than expected in june. let me see here, manufacturing with unfilled orders up one-sixth. i'm looking for the business investment. nondefense aircraft. up 1.4% after a minus 1.2% number. that's good. by the way it was down two months in a row and now it's finally up, one of the central
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points that people are looking for when it comes to the second half turnaround in the united states is capital investment spending. big jump by the way in defense aircraft up 15.3. that's been a bit of a tear here. capital goods, so pretty good report. i'm just looking here at the orders which are also up. and it's the shipments i'm looking for. sorry. they're also up, as well. so that figures into gdp. >> no. >> i didn't do it as excitingly as rick does it. i could have waves my arms, and the background of the -- >> the background helps. >> helps a lot. but that's the best i can do up better than expected. >> next time joe and i will jump around behind you. >> that will be good. >> sounded good from here, streef. >> for more on the numbers and the economy we're also joined by john silver chief economist of wells fargo along with our guest host charles kantor. what do you think about this, john? what do you think about the numbers? >> i think steve's got it right. these are good numbers. unfilled orders means they're still probably ahead of shipments means that you're
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taking in more orders than you're shipping out. that's good. the orders ex transportation was another good number. i think this is a good number and i agree with steve. i think capital spending in the second half of this year will be stronger than the first half and for all of 2014, better than 2013, it's a good report. >> charles just said that business confidence is up, and that's what it takes really to do business investment doesn't it, john? >> oh, yeah. the combination of good confidence, a lot of cash flow, but again, expectations of an improving economy. that combination obviously with low interest rates, which hasn't really changed all that much. it is a good environment for capital spending and that's what we're seeing, steve, and i think your sum very right on. >> chuck, nothing is more puzzling than what's happening in the real estate market. and there's no better missing link when it comes to the economy and you guys have a great beat on what's happening on residential real estate at wells fargo there. what's your explanation for these lousy numbers we've been getting?
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>> well, the contrast between existing home sales and new home sales is absolutely critical. because what is happening with existing home sales, is their prices are really discounted relative to the new home sales. and so what we've seen is existing home sales, especially once you take out distressed home sales, have really improved. but new home sales remain very, very weak, relative to, you know, history. it's sort of a flat trend over last year but relatively weak compared to history simply because their prices are out of line with existing home sales. we're still working through the legacy of 2006-2008. >> give us a gdp number for the second half. >> second half of this year? >> yeah. >> oh, i'd say 2.5% to 3%. it's a good number. should be a good number. >> but it's a lousy number when you average in the first half. >> oh, well again, from our personal point of view, 2.2% is probably the overall yearly number, so that first quarter
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really hurt us. >> -- the president the larry summers idea. we are stuck at two. >> steve stay focused on where the puck is going, not where the puck has been. >> i know. but we got to go. >> john, thank you for joining us. steve, thank you. really great stuff. >> thank you. >> charles, you're going to be with us for the rest of the show. we've got a lot more to talk about. >> up next, a surprise guest on tax inversions. you won't believe who we have on the phone with us right after the break, think shark tank and basketball. >> uh-huh. your 16-year-old daughter studied day and night for her driver's test. secretly inside, you hoped she wouldn't pass. the thought of your baby girl driving around all by herself was... you just weren't ready.
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we have a surprise guest joining us on the "squawk" news line. if you didn't guess it from joe's clues already. think the nba and shark tank, well it is mark cuban, dallas mavericks owner and shark tank co-host. thank you so much for calling in today. >> my pleasure, guys. >> i hear you have a lot on your mind especially what's been happening with these tax inversi inversions. what do you think about it? >> when we talk about tax inversions we typically talk only about a single company and what the impact is on that single company. from an investor standpoint, what's the purpose of buying any equity and that's to improve your net worth. to increase your net worth. and you want to increase your net worth so you can increase your quality of life. so from an investor's perspective, i think you have to look at it holistically. the realality is the ries risk, cost never leaves the system because one company takes some action. if we get enough companies or in
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some cases big local companies moving and inverting, well then that tax money has to be made up somewhere. who's going to make it up? it's going to be shareholders across -- a lot of shareholders. but it's going to be shareholders nonetheless. and then you've got to think about, okay, wholistically, your quality of life is impacted by what happens in this country. and if this is part of a movement where in aggregate it has a really material impact on taxes paid, then again, taxes are going to go up, the government's going to screw something up in trying to deal with it, and it really creates a bad -- >> did we lose mark? i think we lost mark. we'll get imto call back in. but i'm not sure where he's going with this, if this is an argument -- that was my next question to im, is he in favor of what the president has proposed to try and stop this? because he was almost making an argument for why taxes would go up overall if this happens. my guess is that's not the case, though. >> i thought he was potentially
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heading down the line of thinking about the after-tax return for an individual. >> right. >> relative to a corporation. >> potentially he's going -- i just don't know, but ultimately, if companies become more valuable by executing smart, strategic investment and capital allocation policies, and individuals earn their securities, more wealth is good for quality of life. >> i mean the overall -- i just say it again and again and again. there's two ways of looking at things, and the country seas split down the middle. and that is one that the private sector kind of exists to fund the government so that the government can do all these things in terms of redistributing wealth and making things more fair. and then there's the other notion that really the government is there to grease the -- the pathway for businesses to succeed which generates more jobs, which
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lowers the unemployment rate, and then more tax dollars come, more, you know, self-actualization for everyone who feels good about themselves and the whole general welfare is better with a vibrant private sector. and i think people on each side lose sight of that. i don't know how you can't -- i don't know how it's not a chicken or egg thing. the government has never created a penny of wealth. it's only been able to redistribute -- >> the problem comes when the system is abused, and as a result you wind up with corporate cronyism, as a result you have -- >> corporate cronyism is the enemy of capitalism. but pure capitalism exists purely -- >> but the reason you have increased inequality is because in some places, the system's been abused. and you wonder where the government needs to step in on that. i agree with your idea -- >> all right. you back? mark is back. >> yeah, i'm back. i don't know where i lost you in that long die tribe so you have to let me. >> start out tell us what you're arguing in favor of. are you arguing in favor of the
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government changing corporate tax overall? >> no. that's not what i'm arguing because i think that's a difficult battle that given the system right now, it's almost impossible. what i am also -- what i am saying is that shareholders should take responsibility. that we're responsible for our own portfolios. and rather than looking at each stock singularly, you should look at it wholistically, what is going to impact your total net worth, including taxes going up, because someone's got to make up those taxes that are being lost because of the inversion. and you know, how is that going to also make an impact on the country and your quality of life? >> so you're arguing against buying shares in companies that do these inversions because you think it's unpatriotic and it's going to hurt what they're doing to shareholders -- >> i don't want to go as far as saying unpatriotic, because everybody can make their own choice in business. i don't consider that unpatriotic. but i think shareholders have to take more responsibility, and not close their eyes or the funds that they're part of have to take more responsibility to
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say, look, the costs don't leave the system. just because one company gets a short-term benefit by inverting, and you still don't know if that's going to translate into a higher stock price, or a return of capital, or any type of return for the shareholder, you know, if that company is leaving, then as a shareholder, i need to say, how does this impact my total net worth. because i might lose a little bit of money on the sale of the stock. i don't know if i'm going to gain money, if i'm keeping it, but what i do know is that there's ex-tens of millions of dollars in taxes that were being paid last year that are not being paid next year, so somebody's got to pay that. >> so you're saying shareholders should vote with their feet -- >> yes. >> and leave those companies that are leaving the united states? >> right. because you should evaluate your -- evaluate the cost of them leaving as it applies to your total net worth, not just to the price or potential price of one individual stock. and then also evaluate big picture, you know, by not -- by
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not selling your stock, does that encourage other companies to do the same thing. which means even larger tax shortfalls, which means it costs us even more over the long-term, which means your net worth is going to go down. right? so if the economy suffers, fewer taxes, your net worth is going down, whether you like it or not. and a part of that -- >> i think mark in the majority of the cases the shareholders have voted, the stocks have gone up because tax is an expense. and by getting access to cash that's already being taxed and free that up from a capital allocation decision shareholder value has gone up. i don't think that's the primary reason of these deals. the primary reason is companies are thinking about they're strt eveningic future. and where the individual shareholder has got hurt, and it's out of their control, is tax inversions create taxable events for individual shareholders because you have to create a new company. so you may have been sitting on a very large unrealized gain that immediately becomes taxable. and that's tax leakage that happens to the individual, that tax goes back to the government,
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but the corporation themselves is protected. >> on an anecdotal basis for each company you're exactly right. but when they move overseas, right? that tax shortfall now happens year after year after year after year. right? and so -- and we don't know, just because they have the capital overseas, doesn't mean that they're going to allocate it correctly. there's many a company that is able to create capital to reduce taxes that doesn't benefit the shareholder. and so you have a risk there, but the bigger picture risk i think is much greater. >> mark, let me ask you. you said you're not in favor of changing the corporate tax code overall because you don't think it's possible that -- would you agree that that would be the most -- the most wanted scenario. the most logical scenario to change it? >> no, i don't. i don't. and i've had this conversation with multiple politicians. i think the cost of doing business, all the forms, all the legal costs, all the tax costs,
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not the actual tax rate that we pay, but all the things involved in dealing with those, particularly for smaller companies, and individuals, and entrepreneurs, are easier to change, and have a far greater impact on our net worth than all the ramifications, all the ruminations that the government can try to go through to fix the tax code. >> although, mark, i think the problem with the tax code right now is that you have a 35% rate. you have some companies that pay much less than that. that take advantage of some of the tax credits or other things that are out there. but it's small companies, in particular, that don't hire legions of accountants to get around some of these things that get stuck with that. i think you're putting -- using the corporate tax code the way it is today, i think is a huge impediment, and a huge problem for small businesses in particular. >> i don't see it necessarily -- look, any tax amount is an impediment for any company, right? that's just a given. if you're paying money out. >> but if you can hire legions of accountants i'm going to be paying 12%, 14%, not 35%.
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>> well, you're still going to have to hire legions of accountants because whatever the government does in terms of tax reform, they're going to complicate it, and the cost to deal with it is going to go up. they're not going to get it right. we're not going to get just a flat tax that's simple. but what we can change that everybody's going to agree on, is by simplifying the whole process. >> simplifying the whole process of how companies do business, you mean in terms of regulation? >> yes. absolutely. because individual regulations -- look, i'm going to use the worst example possible, and that's healthcare.gov, right? it was a huge disaster technologically, until they got themselves somewhat together and then we were able to see that you can take tens of millions of people, have them fill in forms online, and have them implement insurance for tens of millions of people. why can't we analogize that to one or two forms online for business, that we ask all the states to support, and reduce our costs of having to have 50 different accountants? when i sign my taxes right now,
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i have to sign 50 states, i've got to sign literally i have to take a whole day of signing stuff. right. it's just ridiculous the overhead associated with dealing with taxes, and forms -- >> i wouldn't argue that with you. i agree simplification would be wonderful. but i don't think -- i don't think it should be an either/or. i think if you can simplify some of that regulation -- >> but it is an either/or, because we already know that it's almost impossible to get realistic tax reform, because of all the special interests. no matter what you do, there's always going to be a loophole somewhere with someone protected. whereas -- on the flip said did >> in 1986 they did a pretty good job of streamlining things. >> that was over 30 years ago. in a different world. >> right it needs to be cleared up again. >> it was a different world. will, look if i thought that was possible it would be an absolute yes. but if you ask me what's the path of least resistance i think
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simplifying all the forms and all the things we do, look it's the old lemonade stand thing. kids aren't allowed to open up lemonade stands because there's too many forms to fill out. companies aren't getting started because of all the administration. entrepreneurs have to spend money. all my shark tank deals i have to spend a god awful amount of money on accountants, on legal fees, all the different forms, all the different regulations, for each state that they do business. it's crazy. those in aggregate, i think, add up to more, not just in absolute dollars, but in all the time it takes. the one thing we know about entrepreneurs, they're not using their time best when they're dealing with all this tax code, all the legal issues, all the licensing issues, all the forms that they have to deal with. that is not where they're best suited and where they're going to get the best return on the dime. so if you look at it, becky, say best return on time is where the companies get their best upside,
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i think that's what's make it in reducing complexity rather than focus on tax reform. >> i hear you. reducing complexity. streamlining some of those processes. i think that makes a lot of sense but will you at least admit that the most desirable setup would be we have tax reform even if you don't think it's possible? >> no. i think simplicity would be -- >> if you could have both, mark. >> of course, if i could have both. yeah, if i could take both, yeah, of course. i'll be greedy. but the reality is that if i had to choose between the two, a 10% corporate tax reduction, or reducing all the administrativia where i could fill out one form and go to work i'd take that any time because i could apply my time and make more money on the return of my time and my effort than i can on the 10%. >> all right. so, this is the thing that's really bothering you right now? >> yeah, because it's crazy. because the risks never leaves the system. and so, again, when we look at
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things anecdotally for individual companies, and they make -- let me take a step back. the biggest lie in business is that they say a ceo will say i'm doing this in the best interest of shareholders. that's nonsense. right?nonsense. right? shareholders have different viewpoints on a lot of different things. if you ask me -- if a ceo came to me and i owned, you know, 100 shares of their company and said, you know what, we're thinking of laying people off, and we understand the impact on the country, we understand the impact on the local economy, not going to be good, would you be willing to give us a pe of, instead of the 18 we're getting, would you be willing to take the 20 by not selling your stock? chances are i would say yes. i don't think we communicate with shareholders. >> while you're here, let me ask you about area. it got a lot of coverage after the supreme court declared it could not do what it was doing, basically stealing from broadcasters. you came up with this idea a long time ago with
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broadcast.com. how do you think about how it all played out? >> all of a sudden people started saying, you know what, i'll try to do it and then beg for forgiveness. in the interest of technology, we think we have a chance for it to be approved. because that's exactly what happened with youtube. but, you know, they tried and i don't blame chad for trying. it was a good try. but it didn't surprise me that it didn't work. and, you know, i talked to chad, told him this, we tried it way back when, when the infrastructure -- but putting up an antenna, putting up a pc and streaming it individually, you know, it is an idea that makes sense, but it is not an idea that we thought legally would pass then. and i told him i would be shocked if it passed now. >> what do you think about where technology stocks are trading at the levels if you look at the social media, some of the other companies we heard from, even
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janet yellen expressing some concern about the levels. >> there is only a few companies. you talk about social media, are you talking about just facebook and twitter, who else really? >> you can look at facebook, twitter, some of the other technology companies that have ipo'd. i won't name names. >> some have jumped. do i think it is a bubble? no. it is not 1999 all over again by a long shocht. you're not getting into an elevator and people are talking about jumps of $15 a day continuously. we're not seeing huge volume on any of these stocks. we're seeing decreased volume. it is just that, you know, there is half as many stocks to invest in today as there was 20 years ago when we are were going public. and so you got to put your money somewhere, and that's one of the reasons the market keeps on going up. if you want me to say something, okay, what catches my attention in technology, twitter has a $30 billion market cap, which is higher than netflix, and so i think netflix overall is more
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impactful and more game changing than twitter is right now. now, maybe twitter can rebound like facebook did in term of marketing. >> falling all the way to 22 billion. >> twitter is 22 billion now? >> yeah. >> i just took a look. >> so, any event, it is approximately the same as netflix, right? to me, that's crazy. because i think twitter has its challenges. it will improve its montiization like facebook did. but i think netflix is game changing and has an opportunity to really change the game of presenting content even more. and so that's kind of a surprising pair and something i'm looking at. >> mark, we love that you called in. thank you so much for taking the time and hope you'll come visit us on set next time you're in town. >> absolutely. i just got my hip replaced two days ago. it was fun to sit here and do it and sit in my hospital bed.
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anytime. >> we wish you all the best. hope to see you soon. hope you're feeling better. >> feeling great. appreciate it. >> thanks, mark. we have more "squawk box" including a chicken nugget conundrum from mcdonald's. we'll be right back. at every ford 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.
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welcome back. mcdonald's is suspending sales of chicken nuggets and other items in hong kong after it acknowledged it imported products at the center of a food safety scare. it imported certain products from that company between july of last year to june of this year, though no food items from the supplier remained in its stock. coming up on "squawk on the street," starbucks founder and ceo howard schultz. stick around. we'll be right back. what you w? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running.
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want to thank charles canter for joining us today. have a great weekend. join us on monday. right now it's "squawk on the street." good friday morning and welcome to "squawk on the street." i'm scott wapner with jim cramer live from the new york stock exchange. carl and david are off today. let's look at how the futures are setting up this morning. and there is how it looks. the dow jones industrial average looks like it is going to have a negative open of some 43 or so points, digesting earnings today, some economic data, the president's comments as well, the s&p, by the way, having its

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