live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" on cnbc. we're li we're live from the nasdaq market site in times square. u.s. futures are higher. dow futures are down by 5.5, this after the markets did close lower yesterday. it was a decline of about 50 points for the dow. it did break a seven-day winning streak for both the s&p 500 and the nasdaq. despite that, some of the technology stocks were stronger. that did put a floor on the losses. if you look at what happened overnight in asia, nikkei down slightly, as was the hang seng. shanghai higher by a quarter percentage point. this morning in early trading in

europe, you will see that at least at this hour dax is higher. up by 0.10%. ftse is up by 0.20%. crude oil has been below $50 for quite awhile now. most of last week. this morning crude is down another 81 cents to 48.81. couple pieces of news to tell you about. the pound falling today hitting a six-week low against the dollar after a projection by polling company yougov showing theresa may's majority falling short ahead of the election. conservatives could lose as many as 20 seats. they currently hold a 17 seat majority. breaking overnight, a suicide car bomb in afghanistan's capital has killed at least 80 people and injured more than 300. the explosion rocked a highly secure area in kabul where many foreign embassies and government offices are located. happened at the peak of morning

rush hour traffic. windows were shatderred in restaurants and buildings. no group has claimed responsibility. both the taliban and isis staged large-scale attacks in kabul in the past. the u.s. military conducted a successful u.s. military test yesterday launching a ground base rocket from a california air bass. the test which cost 2$244 millin involved a simulated attack by an international ballistic missile. the exercise is in response to the haven't launrecent launches north korea. only 4 out of 9 such tests have been successful. >> what would happen if it missed? >> it misses sometimes, but they have -- i watched a piece on it last night. they have 38 of them in silos. they were -- the guys are ready every day. for the real thing. they're there 24 hours a day

ready for the real thing, which is scary. we may not be th when they asked one of the guys, how many would you send up if one was coming, he goes we don't discuss protocol on what we would do. but i will tell you it would be more than one. you know, this worked very well. compared to -- they made the point compared to 2013 or 2014, technology is leaps and bounds better than it was. so it was good that they hit yesterday. >> reagan thinking you could protect everything -- >> the left has been laughing at the idea of doing it for 30 years, disparaging, talking about costs and you can't do it. >> from a technology perspective -- >> hard to keep the program on track. my fault for setting you off. i was thinking about that this morning coming in, how much we've seen advances in technology just in your cell

phone in the last five years what they can probably do with these things is probably much more precise and amazing. >> you would hope you have "star wars," your defense could be your best offense and you need to hit it. >> no near misses. >> you can't be like 90%. commerce secretary wilbur ross telling cnbc that he's open to resuming talks on a mega trade deal with europe. the comments come after president trump directed a series of angry tweets towards germany over trade. talks around the proposed transatlantic trade and investment partnership, ttip, not ttp, were put on hold after trump's election last year. vietnam's prime minister set to meet with president trump at the white house today. yesterday the vietnamese leader announced he would sign deals for u.s. goods and services worth 15 billion to $17 billion,

mainly for technology and services. ge power ceo says general electric will sign deals worth about $6 billion with vietnam. president trump has been handing out his cell phone number to world leaders and urging them to call him directly. the associated press says trump has given his number to at least three leaders justin trudeau, the mexican president and the french president, emanuel macron. the unusual invitation is something you would expect to happen with a business leader. this is said to be a breach of bip mdiplomatic proep caltocol. >> for more on that, we get over to eamon javers. >> that's a fascinating one, the president reaching out to these foreign leaders, it will be up to the secret service and technology arms of the u.s.

government to make sure that phone is secure. today we are learning more about the investigation into the russia matter, both in the senate and the house. a couple developments to bring you up to speed on here including michael flynn who says he will turn over business documents, we were told. he was subpoenaed for personal documents, he said no using his fifth amendment rights, then the senate went back to him and said you can't hold back the business records on the fifth ament. therefore it looks like the senate intelligence committee will get those records. michael cohen, the president's personal lawyer telling cnbc i have nothing to hide and i'm more than happy and willing to testify. he said he was asked to testify. he will do that ultimately. the house intelligence committee requested information from boris epstheyn who was a campaign aide

for president trump and briefly served a role in the white house before departing. all of those people will be giving various amounts of information and testimony to the senate and house intelligence committees. meanwhile it's business as usual at the white house. they're lking for a replacement of the outgoing communications director. today the president is going to be meeting with the prime minister of vietnam where they're expected to sign deals worth between 15 billion and $17 billion. a lot on the plate at the white house later this afternoon. >> okay. thank you. >> you bet. back to the broader markets and the economy ahead of friday's jobs report. joining us now is michael tyler who is chief investment officer for eastern bank wealth management. and jim o'sullivan from high frequency economics. let's talk about the markets and the whole idea of sell in may go away. it hasn't worked in a while.

it's been five years peter shatk has told me. >> there is also an adage about summer rallies. the reality is that markets are chasing earnings. as long as earnings look strong, there's no reason to be overly concerned about the markets. i look at what are the cash flows what are companies looking at? in that respected, if we get continuing fed policy to be pretty much as expected, and they've been transparent about that, if we get continuing stable earnings growth, then i think the markets will be okay. will we get a quick down draft because sof soof some political? possibly. but you stay in that. the markets will be fine. the one concern i have is that i think the stock markets are pricing in some form of tax reform this year, that may of

may not happen. other than that stocks are okay. >> if the question is all based around earnings, that ties back to the economy, too. how do you see the u.s. economy father i faring? the economy is chugging along. the labor market continues to look solid. we have the lowest jobless claims since 1973. at this point i don't see a subtle change in the economy, which has been slow for recovery. >> as a result fed officials are starting to talk up the idea of more rate increases. yesterday the dallas fed president said he expects to see two additional rate hikes this year and to start tightening the balance sheet at the same time. will that put a crimp on the economy? >> ultimately the goal is to slow down employment growth, right now we're getting 180,000 a month on unemployment.

already down below the estimate for full employment, so ultimately the goal is to slow down employment growth, not necessarily gdp growth. it takes time. right now policies are highly accommoda accommodative. they won't go rapidly. >> everywhere i look, i see the concerns about the idea that the stock market gains, 30% of the stock market gains are coming from these five top technology stocks. the old f.a.n.g. that is now afama or something -- the top five technology names. do you think this rally broadens out? do they lead the way or are they holding things artificially high? >> they are leading the way. in point of fact, every year a small number of stocks lead the market. that's the way the market works. there's another group lagging this year, as it happens, the companies you mentioned, apple, amazon, facebook, et cetera, they have strong revenue growth

and strong earnings growth. none of them are that expensive based on earnings now. >> none of the technology ones are that expensive or the other ones behind them? >> no. of the technology leadership, the companies contributing the most to the market -- apple at a market multiple, alphabet or facebook, they have genuine earnings and decent earnings multiples relative to growth. none of them are outrageously priced which we saw in the dotcom bubble, which i'm sure people are remembering and thinking is this another example of 2001 again? the earnings are there this time. is this the group that will continue to lead? do you see another group that will step in? maybe if the fed starts raising rates, financials will step in? >> films are looking good now because the fed might raise rates. the more interesting question for the fed is what they do with the balance sheet. i think we'll see some tightening on the back end of this year as they let that

balance sheet roll off. that gives them more room to raise rates in the short-term. if any of that is going to happen, it has to be in concert with europe allowing ets ra ini structure to raise. >> we heard from draghi yesterday that it doesn't sound like it's something he sees happening immediately. >> i think the tone of his language is beginning to shift a bit. we have certainly seen european banks rally tremendously. that's something that could benefit the u.s. companies as well. so i wouldn't want to pin it down and say it has to be from europe or the technology leadership. financials are doing well. discretionary stocks are looking good. less happy with staples companies, which have done very well but are fairly expensive. >> jim, in terms of what we're expecting this friday from the jobs report, what would you see as a likely number, what's

strong? >> you look at claims, there's no sign of slowing. monthly numbers are volatile. if you think back a year ago, the may report was weak. up 30,000. for technical reasons, there's downside risks. i have a 140, below the recent trend. but even if we get a weak number, again as we did for may last year, i think you look at jobless claims, the message is there's been no significant slowing here. >> gentlemen, thank you very much for joining us. >> thank you. there's no way -- we've already had a conversation about this, president trump's late night tweets making headlines again. a few minutes after midnight trump tweeted an unusual sentence which has gone viral. if it goes viral, we don't need to decide whether it's news or not. if it trends, then it becomes news. and actually he just tweeted about this and said who doesn't know what i meant by that? who doesn't know that i meant coverage? >> he just tweeted that? >> he said who can't figure out

what the meaning -- the true meaning of covfefe is? enjoy. i was thinking about last night, i said i think like kelly evans, i'm getting rid of twitter. >> you're done with it? >> i said that to my wife. but you see certain things -- i can't. i sort of can't, that's where you see things first. >> there's been news events i found out about on twitter. >> exactly. because the third grade instincts of what to do trend and therefore it becomes news. on the previous show this talked about this tweet for, like, 15 minutes. it's so frivolous, irrelevant and meaningless. i've tried to -- on iphones, i look and go what the hell is that? >> my guess is that he sent it out, went to sleep and woke up. >> if you want to make the story that he shouldn't tweet as much, he is the president, now he

responds to the social media ridiculous coverage -- >> it's a weird echo chamber. i people from the left argue it shouldn't be covered because it takes your eye off the real story. >> we abdicated our responsibility on what is pertinent, relevant, important and can say anything trending by definition. anything trending is not relevant. >> some of his tweets are news worthy. >> some of them are. like third graders would talk about. oh. you know what? it's like a beavis and butthead. i know you have to a andrew. you have to push back. you're getting e-mails or something. covfefe, it's like beavis and you about thehead. what's covfefe. >> one thing this show has not often bid is the most mature. >> we do with ppi and stuff like that it's partly our fault. i was not even going to talk about this. who cares about a typo --

>> except we just spent three minutes talking about it. >> i know. just like "worldwide exchange." forget hotel gyms, hilton is betting you will pay extra for gym equipment in your hotel room. dia diana olick will have that coming up next. the power of innovative thinking. the power of 100 of the world's top companies. the power of an etf. the power of qqq. the thinking we put in, clients get out. power your client's portfolio at powershares.com/qqq. before investing, consider the fund's investment objectives, risks, charges and expenses.

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one that keeps you connected to what matters most. welcome back. some stocks to watch today. mallinckrodt is exploring a sale of its jgeneric drug unit. that stock is up over 2%. toshiba says it could still be some time before the auditing of its results for the 2016 financial year is completed. the embattled conglomerate will hold its shareholder meeting on june 28th. that stock is down another 3% this morning. >> united airlines is under fire once again. the faa threatening to fine the airliner almost $500,000 for flying a plane it says was not in airworthy condition. the faa claims united flew a

eventually serviced boeing dreamliner 23 times on international routes before performing required inspections. in the end they replaced a fuel gauge. i wanted to look at those dates and see when i was flying. scott pele reportedly out as cbs anchor. he will return full-time to "60 minutes." pelley took over the evening news job six years ago. he has consistently ranked in third place behind abc and nbc news evening program. >> those seats don't come open often, sorkin. they don't come open often. >> are you trying out for the role? >> i--you kn -- you know you wa

wear your jacket and be newsman. rarefied air. big job. you have to have a certain political bent to be sitting in that chair. you know, that's okay. just saying, it's rare. you don't want to wait until you're 70 or 80, like me. hilton unveiling a new line of rooms complete with a gym. let's see how it works. doesn't look like a gym there, diana. >> look, if it's 6:20 in the morning and you're watching squx sd "squawk box," you're probably in bed thinking should i work out or roll over and go to sleep? what if the gym was next to the bed. hilton is betting on you will pay a premium, $45 extra a night for the five feet to fitness room. >> one of the most fascinating elements of this entire space is the sheer volume of different

activities and options that are here. >> it's a tiny space. >> exactly. >> it's not just a bike and a yoga mat but an apparatus of active amenities like sandbags, balls, trx. >> let's go. >> and a screen with on-demand instructional videos and routines for every piece of equipment. >> great thing is that it takes the guesswork out of it. >> so would you pay more for this instead of going down to the regular gym? >> no. absolutely not. >> why not? >> because i can get it all right here. why would i pay more to have it five minutes away? >> for budget crunchers, maybe not. >> but for others -- >> i would. i do a series of stretches before i walk out of the room. for me that would be convenient. convenience is what it's all about. there's everything in this room. even the little meditation chair. they put a floor in that keeps everything quiet so when you're

jumping up and down, you're not bothering people below you. then this steel contraption that holds the waiteeights, the sand. hilton says the rooms cost about 10,000 a year, but they will see that made back in one year if people keep using these rooms. there was a partnership where they put the pelliton in your room, that's the bike where you can do the workouts, the live classes. i've been looking on b mshgbnb summer rentals, and some are putting the fitness equipment right on the front page. joe, would go to sleep? would you work out? >> i can walk across the hall to the -- i don't need to be alone. it's nice when a hotel has

fitness equipment. >> you can work out whatever you want. you don't have to go downstairs with other people. you don't have to wait for the treadmill. >> that's a bad visual. that would be my luck, i would get on the bike after someone else has been on it. >> no, they said they train the cleaning staff especially. >> diana, you can never open windows in a hotel room. they almost always seal those shut. >> funny you can say that. they have a special filtration system for the air. >> this was my question. i don't want it to smell like a gym. >> they say it doesn't smell. the room is very fresh smelling. it doesn't have that hotel room smell because of the special air filters in the five feet to fitness rooms. >> there's all kinds of stuff that goes on in hotel rooms. none of them are suitable for you. >> you need to take a blue light for you. >> make sure you clean the

remote control. >> we know people who bring sheets with them. >> really? >> yeah. >> i don't do that. >> i bring my yoga mat. every time i go to a hotel room, i will bring a yoga mat. the grossest part of doing yoga is that you're on the carpet. i would like a floor like this, where i can put my yoeg ba mat out. they even give you the ball chair for the desk. >> i don't think this is -- this is not a new trend, i don't think. how much more do they charge you for this? >> they're testing it out in tyson's corner, virginia. >> not for one night. >> they already tested the yoga and the bike in the room. people like it. if you're there for five nights, that's 250 bucks almost. >> yeah. >> i've had a pellitan for three, four months, i finally did it -- >> once. >> you got the shoes? >> you don't need the shoes. >> i got the shoes, the bike.

i got a shout-out this past weekend on my birthday. >> the shoes are scary. there's an emergency stop because it's going -- >> going so fast? >> yeah. if you don't hit the emergency stop, ah! >> grace. graceful. >> exactly. >> thank you. >> they would love you to buy those shoes. four people in our family, $200 a pair. >> and the kids are changing sizes. >> get the pass ketbaskets. when we return, two giant technology sectors are teaming up. and a look at yesterday's s&p 500 winners and losers. this is my headquarters. this is where i trade and manage my portfolio. since i added futures,

i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. i count on my dell small for tech advice. with one phone call, i get products that suit my needs and i get back to business.

♪ ♪

welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning. u.s. equity futures at this hour are really kind of flat again. not a lot of volatility. yesterday big banner day, because we were down after seven up days. it was 50 points, which was more than what we've seen in terms of action. the vix continues to trade at near historic lows with very little volatility in the markets. today you're looking at the dow indicated down about 4 1/2. the nasdaq is up. so the markets are mixed. the s&p is up fractionally.

>> the supreme court issuing a new ruling yesterday tightening rules on where injury lawsuits may be filed. that decision is considered a win for corporations. it says that state courts cannot hear injury claims against companies that are not based in the state. if the alleged injuries did not occur there. the ruling will prevent plaintiffs from shopping courts in states that are friendlier to lawsuits. the swr apple's highly anticipated carpool karaoke finally has a release date. the original series will debut august 8th on apple music. new episodes will be released on tuesdays and only available to apple music subscribers. technology competitors are teaming up to fight cyberskrum. ibm and cisco announcing plans to work together to combat

cybercriminals. joining us is mark zandelhoff. what is this exactly? >> i'm excited about this. i've been in security for a long time. this is the first time two of the largest players in cybersecurity are teaming up to reduce complexity for people. hackers are recently collaborating new techniques. we saw that with wannacry. this is ibm and cisco teaming up to try to get ahead of the hackers. >> cisco and ibm historically have been competitors, maybe you don't think of yourselves that way, but what is the view? you come together and be stronger and play against google, amazon, and microsoft? is that what this is really about? >> it's all about cisco and ibm coming together against the hacker. in cybersecurity we have complimentary portfolios. we have both risen to be two of the largest players in the

space. $2 billion portfolio at ibm, grown to 8,000 people. cisco is about the same size. we compliment each other to help defend against hackers. i think it's more about the hackers. these guys are relnt leentless. we saw that with wannacry. >> what is the product? >> we have many capabilities. cisco is defending at the network layer. ibm is analytics and watson with cyber. so now we're integrating them. so we're not trying to sell something new. we're saying when you have one plus one, we want to make sure they work together and that ibm and cisco are sharing threat intelligence. that's how you get ahead of the hacker's business model. >> it's weird there's not a broader sharing agreement among all companies. you have to negotiate this on a bilateral basis? >> there's been a lot of different agreements in the space. what's different about this one, a lot of times it's a large

company, a small company, a set of small companies, these are two of the largest companies in the space coming together. we saw this with wannacry, we got on the phone with our peers at sis koshgs stacisco, started we knew, what they knew. you can help customers and update technology by doing these things one-on-one with meaningful sharing. >> one what does this say about the competition between ibm for example or cisco and some of the cloud providers? recognizing you are a cloud provider as well. >> i think from my perspective, we are helping to secure workloads whether in traditional data centers, hybrid data centers or moving into public or private cloud. we would do that. >> if my information is on aws, amazon service, you will help me? >> absolutely.

>> it's agnostic to the platform. >> in security you have to support every operating system, every data base type, cloud type so make sure as customers move in a certain direction you can help them. >> what is a quantifiable example of something that you learned working with cisco as owe he pose opposed to doing it alone? >> during wannacry, we have trapping out there capturing billions of data points to understand what is happening. we capture a lot of spam e-mail with attachments. ransomeware attached to these things. so you can share that and say, hey, we have not seen any of the wannacry attached to e-mail. so we're ruling out ways that may have infiltrated companies. that allow ed cisco to see wher

they started. it helps customers real time. you have to be fast. i was working friday, saturday, sunday when that thing happened to help customers. >> who else is doing it right? who is doing it wrong? >> i think what customers need is an integrated set of capabilities. this is why ibm security has done well over the last few years. customers are trying to deploy 60, 70 tools from 30, 40 vendors. it's an unmanageable dog's breakfast that they're trying to fight against the hackers with. we're trying to do it together, that's where we're helping and integrating with cisco's capabilities. >> mark, thank you. when we return, amazon flirting with $1 thoish$1,000 a. it crossed that yesterday. we'll look at the company's business and the race to a trillion dollar market cap. and richard lefrak will be

our guest host at 7:00 eastern. we will talk about the real estate trends he's been seeing. and michael nathanson will join us at 8:00 a.m. in a rare television interview. stay tuned, you're watching "squawk box" on cnbc. new idea, but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data- so, multiply that by her followers, speaking engagements, work experience... credit history. that more accurately assess a business' chances of success. this is a good investment. she's a good investment. get ready, because we're helping leading companies lead with digital.

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welcome back to "squawk box." time for the executive edge. amazon cracking the $1,000 per share mark early in the trading week and beating alphabet to the psychological milestone. next up the race to become the first trillion dollar market cap company. joining us is michael graham, senior equity analyst at canacord. i will go along with that. even though it's -- it's -- i mean, berkshire cracked the $1,000 mark 40 years ago or something. if you don't split your stock, that's what happens. okay. so what is interesting is the trillion dollar market cap. amazon would have to more than

double whereas apple would have to go up 25%. you and -- but some people think amazon still gets there first, even though it has to double. >> i think it's tough to call right now which one will get there first. if you look at the three companies that most people think have the best chance, the three you mentioned, amazon, google, apple. i think amazon has the chance of maintaining the best growth rate, it has the longest way to go. it has to double. google also has a good chance. those are probably the two with the biggest chance. >> that speaks volumes about what you think about apple. that only has to go 25%, you think the others have a better chance. >> i don't cover apple, but i do think that the growth from these other stocks is probably going to be faster over the next few

year years. >> you have a list of things amazon has going for it. it's incredible. some of it is in the stock, on a valuation basis it doesn't deserve to be here. >> the biggest thing is e-commerce is only 8% of retail. you have to think amazon will be the biggest player in that category. continue to take share. if e-commerce can keep growing as a percentage of retail, that's probably the biggest tailwind amazon has. another thing that people often overlook is that aws was started from nothing inside of amazon. investors have to ask what is the next huge business that amazon might incubate internally. most people think it's probably global shipping service to compete with fedex and u.p.s. they're already doing that to solve their own problems. >> a global shipping service that they would allow others to use, too? >> that's how aws started. how can you use computing power

for the peak seasons, in the off season they resold that capacity to other companies. this shipping capability is the same thing. in the holidays, fedex and u.p.s. run out of capacity, amazon has to make their own. i think they'll sell that to other businesses. >> wasn't amazon struggling with the planes recently? >> they were struggling with the pilots, they had piloting protesting at the shareholder meeting. i'm sure they'll have growing pains as they scale that business up. >> is that a business that you can amazon, if you will? >> i think so. it's scale based. takes capital. takes a long-term view. amazon has permission to do this from shareholders. >> you think they can do it more efficiently than u.p.s. or fe x fedex? >> i think they are already u.p.s. and fedex's largest customer that business has 15% operating margins.

there's an ability for amazon to come in and undercut. >> so you figure brick-and-mortar is a growth opportunity, too? that seems back to the future. >> i think it's still experimental. we just opened -- amazon just opened a book store in columbus circle, number 7 out of 13 planned for the u.s. still small numbers. a big hook for those stores is to try to tie into the e-commerce business. they're basing the merchandise they feature in those stores on online shopping trends. i think it's still experimental. if they can show they can make a good return on things like book stores and grocery, they'll pursue it more fully. >> international expansion, how much could that help? >> that's a huge deal. india is the biggest place where they're spending money now. india is a sizable drain on the international e-commerce margin. but also responsible for a lot of growth that amazon is

experiencing. big part of the international growth is the prime business. we estimate 80 international prime members, 40 in the u.s., 40 internationally. the international part of that has grown faster. >> will there be a -- can they get over the hump in india eventually? however how long will it take? is it possible to do it? is it possible -- that would be a great place to do it. >> a lot of people. >> that's right. >> amazon thinks so. no they're not always universally making this decision to go in china. they started to build in that country for a while and then decided it won't work as well as they wanted to. they pulled back. in india they tested t slowly ramped up and then said this will work. we'll go full scale into india.

that's the primary investment -- >> china went to their own amazon. in subsaharan africa, when there are fast food places down there, you think it's going to work, but where do you get the chickens? does it work the same way? it's totally different in a country that might not have the advanced infrastructure, but india has pretty advanced infrastructure. >> is there an amazon of india they have to overtake? >> are other competitors there. it's not as clean a field as the u.s. was when they started. it goes back to this ability to take risk and commit capital over a long period of time. i would argue amazon has that ability more than any other company in the world. >> how many you said we when you were talking about amazon? are you like a plant from amazon? >> i misspoke. >> you did? >> yeah. >> i do that sometimes. not about companies, about comcast sometimes, republicans.

it's bad to say that. people have no idea. any way, thank you. >> thanks. >> if you've ever dreamed of owning your own town, here's your big chance. welcome to aladdin, wyoming. population there, 15 people. the entire town is basically up for sale, including most of the commercial property, including the aladdin store that dates back to the 1800s, a cafe, motel, gas station and a post office. it's a popular place for bikers headed to the sturgis motorcycle rally in south dakota. the previous listing price was 1$1.5 million. you know, apparently there were no buyers at 1.5. so the owners decided an auction might get some attention. the town auction is planned for this friday. >> got to wonder if there is a base limit. >> i don't know what the minimum is. apparently there was a town near

d by that was sold for $900,000. you get to rename the town. we could call it the becky quick george w. bush. or just -- >> "squawk box." >> we could just have kernen, wyoming. you could control it your own way. you could -- >> 15 people. >> no local taxes, right? no taxes. >> no taxes. >> all of the things you want. you could set up for those 15 people. >> during that read, i realized maybe that scott pelley job may not be -- >> not be for you? >> that might not work out. >> sturgis. >> sturgis. you know where the motorcycle guys go? >> yeah. >> coming up, sales of swiss watches have been slumping. robert frank will unveil a watch that cost $500,000, and it's already sold out.

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call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. swiss watch sales may be down, but one company is bucking the trend. robert frank joins us now with a very special guest and some very special toys here this morning >> yes, our very special guest, balthazar, swiss watch exports

falling for the third year in a row down 6% in april after a 10% drop last year. but nbnf is selling out of its six figure watches. the company's marketing chief is here to unveil a $500,000 creation. sorry, guys, it's already sold out. thanks for joining us. >> thank you. >> thanks for bringing all these timepieces. so, swiss watch sales just going through maybe it's a structural thing, maybe it's because of asia, you guys have become this massive cult among billionaires. i mean, especially in silicon valley. what are you doing that's different? >> i think we're doing exactly what people don't expect. and you know, everyone's a marketing expert. everyone knows the tricks. we tend to avoid those tricks. and just turn out exceptional different products. >> you don't do a lot of advertising, marketing, you spend a lot of money on r&d. tell us about this watch that you're unveiling today, the alien nation. >> the hm6 alien nation.

a couple years ago we launched the first hm 6. it was a crazy machine to start with but we decided to take it a few steps further. so we basically put a sapphire crystal case around it, sapphire crystal is a wonderful material, but it's very difficult to work with. the machine to polish -- >> yeah. >> that's the first step. the second step was actually adding a lot of lume as we say, glow in the dark material inside the case so this watch will light up. >> this is like an homage to the ufo sort of craze. there are these aliens that are almost old school aliens. there are six of them. they took months to carve out of white gold. who's going to wear this? i mean, i had trouble seeing what time it was on that watch. >> you're right. i mean for all our watches time is kind of secondary. they do give time, of course. but it's about creating a little mechanical sculpture. back to the aliens. why aliens? we all dreamed about aliens when we were kids and that's what inspired us. whether it's a robot, whether it's a spaceship like this.

it's always these universal dreams we had as kids. >> does this sell particularly well with guys in silicon valley? >> it does. >> kind of right up their alley. >> it's surprising because a lot of people in silicon valley are digital entrepreneurs. you think that maybe a mechanical watch, kind of old school, wouldn't interest them? >> it's like an aliens, and -- >> you're right. that combination works. >> now i want to show these robots, because you guys don't make watches, you make machines, you make these crazy creatures, you do insects. you do robots. this is balthazar. he actually, you know, he spins around, has got a dark side. there's balthazar's dark side. this cost what? >> $55,000. >> and this watch that i'm wearing. >> in the 80s. >> so what's the cheapest watch that somebody can get from mb&f? >> the starting point is around $50,000. yes. >> and just to be clear, you guys made 270 something watches, rolex is making hundreds of thousands.

so, are you going to ever get to the thousands? or are you going to say we're always going to be a small boutique, one-off, four-offs, whatever it's going to be. >> we're going to remain a niche boutique. >> smart watches, you don't see that as a threat? >> it's a different tool. a lot of our billionaire customers or whatever do have smart watches. >> do they wear both? >> have you seen people now wear two? >> they either wear both at the same time or typically different times of the day. they might put -- >> i've seen same wrist. you wear your ez sneakers. >> your watch and your robot. you got your time. >> yes. >> charris, thanks for joining us. >> thank you. >> coming up, real estate mogul richard lefrak will be our guest. he'll be here for an hour. think again. this is the new new york. we are building new airports all across the state. new roads and bridges.

new mass transit. new business friendly environment. new lower taxes. and new university partnerships to grow the businesses of tomorrow today. learn more at esd.ny.gov i count on my dell small for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ ♪

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rebuilding america. trump adviser and billionaire developer richard lefrak is here to talk jobs and getting public/private partnerships off the ground. earnings and economic data front and center. the fed's latest read on the economy will take center stage this afternoon. we will get you ready for the last trading session of the month. and trading floors offices in washington will all be buzzing today as the country's top spellers are set to compete in the 90th annual scripps national spelling bee. why this year's competition is making history. the second hour of "squawk box" begins right now. live from the beating heart of business, new york city. this is "squawk box." >> i like dave matthews. good morning welcome back to

"squawk box" here on cnbc. we're live at the nasdaq marketsite in times square i'm andrew ross sorkin along with becky quick and joe kernen. take a quick look at the futures this morning, see how things are setting themselves up for the day. dow looks like it will open up close to 20 points higher, s&p up 2.5 points, the nasdaq a little over 10 points higher. we'll flip that board around show you what's going on in europe right now. again, green arrows pretty much across the board with the dax and ftse 100. yeah i think gotten a little bit better. the pound falling today. we mentioned earlier, hitting a six-week low against the dollar after a projection by poland company ugov showing theresa may's conservative party falling short of a majority in next week's uk election. conservatives could lose as many as 20 seats. they currently hold a 17-seat majority. we also have some other headlines. the federal reserve set to release its beige book today. the region by region assessment of the u.s. economy is going to be released at 2:00 p.m. eastern time. also whirlpool will ask u.s. officials to impose trade

barriers on washing machine imports. executives say the request will be submitted today. whirlpool fighting what it calls unfair trade practices by rivals that are based in south korea. and cbs expected to announce the departure of scott pelley as evening news anchor. that's according to multiple reports. pelley would return full-time to "60 minutes." pelley has been anchoring the evening news on cbs since june 2011 when he succeeded katie couric. some breaking news overnight. a suicide car bomb in afghanistan's capital has killed at least 80 people and injured more than 300 people. the explosion rocked a highly secure area in kabul where many foreign embassies and government offices are located. it happened at the peak of the morning rush hour traffic. windows were shattered in shops, restaurants and other buildings up to a half a mile away from the site of the blast. no group has claimed responsibility. but both the taliban and isis have staged large-scale attacks in kabul in the past. the taliban at this point has said that it was not responsible for this car bomb. >> in a highly secure area.

>> what was thought to be a highly secure area. >> yeah, exactly. i know. awful. and day before, 31. explosions, bombs in iraq. >> right. >> we don't -- we desensitize to iraq and afghanistan. anywhere else, you would -- incredible. anyway, the u.s. military conducted a successful missile defense test yesterday launching a ground based rocket from an air force base in california. the test, which cost $244 million involved a simulated attack by an intercontinental ballistic missile. the exercise is in response to recent launches by north korea. it doesn't confirm the u.s. is able to defend itself against potential strikes by north korea, though. it's a good sign, obviously. but since 2004, only four out of the nine such tests have been successful. but, point out the technology has been getting better and better and better. and, when we measured it from yesterday, or in recently, one for one. not four for nine.

so keep our fingers crossed. and in some political news, commerce secretary wilbur ross telling cnbc he's open to resuming talks on a mega trade deal with europe. these comments come after president trump directed a series of possibly angry tweets towards germany over trade. talks around the proposed transatlantic trading investment partnership or ttip were put on hold after trump's election last year. speaking of trade vietnam's prime minister is set to meet with president trump at the white house today. yesterday the vietnamese leader announced he would sign deals for u.s. goods and services worth $15 billion to $17 billion mainly for technology products and services. ge's power -- ge power's ceo says general electric will sign deals worth about $6 billion with vietnam. prime minister has reportedly been handing out his cell phone number to world leaders and urging them to call him directly. the associated press says that the president has given his number to at least three other world leaders. canadian prime minister justin trudeau, mexican president

enrique pena nieto and french president emmanuel macron. this is an unusual invitation. it's one that's pretty normal between businessmen who hand out phone numbers like this and then think that's a good way to build up relationships. but in this case, it's said to be a little bit of a breach of diplomatic protocol. it is raising some concerns about security, because a cell phone is more vulnerable to eavesdropping. joining us this morning, he is one of the most powerful real estate developers in manhattan. he's a close friend and adviser to president trump. and joining us right now is our guest host for the hour, lefrak organization's chairman and ceo, richard lefrak. richard, it's great to see you this morning. >> good morning, everybody. >> good morning. how are you feeling? >> i'm great. thank you. >> you know, we've been talking to you about your role as an adviser to the president. informal head of the group of people he's been listening to about infrastructure. and i know things have been early on and going in some of this, but this is an area that we're hoping we see bipartisan support when it comes to this. traditionally democrats and republicans can both line up

around infrastructure. where do things stand right now? what kind of an update can you give us? >> well, i think the budget is a very good place to start. or the proposed budget is a very good place to start to get some idea of what the thinking is down in washington. the placeholder is about $200 billion which the federal government is setting aside for investment in infrastructure. and the hope is that that would be matched with another $800 billion, either from the states, or from the private sector. >> and that's how you get -- >> that's how you get to the trillion dollar number. and of course, that's not going to be spent all in one year, or else budgeted for one year. but i think that's the point and place of beginning. and, you know, i know that the president and his staff and administration is very anxious to get this subject on the table, and get rolling. because it's jobs for americans.

and it's always needed. >> in terms of the funding, the $200 billion in the budget, and then other ways of funding infrastructure, we've heard more and more talk about the gas tax. the president himself floating this idea that it's something the administration is considering. where do you come down on the idea of the gas tax for funding infrastructure? >> well, i'm not running for congress so i'm in favor of it. the -- it's -- you know, it's a -- >> in terms of raising the gas tax? >> well you wouldn't really -- it's -- you wouldn't be raising it, you'd be leveling it to where it would have been had they adjusted it for inflation in 1993. so, in real terms the gas tax is actually far less than it was in 1993 when they imposed it. and if they did adjust it for inflation, or adjust it for the fact that your car is getting much more mileage than it used to, it actually would produce tens of billions of dollars of annual revenue that could be reinvested back into

infrastructure in the country. of course, there's an argument that it's regressive. because, you know, it hurts little people, small people of lower incomes much more hard than wealthy. but, you know, they're actually paying on adjusted basis less than they paid in 1993. but that's just one source of revenue. it's not the only source of revenue. and we can't forget the fact that the states actually provide something like 80% of the money that goes into infrastructure. so the federal government contribution by and large is small, but, the federal government interference in the activity of implementing infrastructure s&l quite large. >> in terms of permitting -- >> yes, when you take money from the federal government you get into the morass of the permitting and all the problems that they create in terms of requirements, and mandates. >> as a business person who

likes to bet to some degree and a lot of business people are trying to bet on what's going to happen inside the government, what is the path to some of these planning that you have been working on? which is to say given the questions about health care, given the questions about tax reform, when and how does infrastructure get -- work itself into all of this? >> listen, i'm not part of the political process. so you know, i'm not at all involved in how and when they're going to trot this out. but my guess is, if i had a guess, it's relatively quickly, okay? because they are doing work on it now. the budget is a reflection of that. and it's something that both the democrats and the republicans can agree that it's a good thing. what they can't agree on how to pay for it. how to allocate it. but they can agree it's a good thing. >> the stuff you're talking about in terms of cutting the permitting time, we've heard labor unions who have been in favor of these things, because

it will lead to faster job turnaround. >> right. >> there are some issues that seem like it's a complete no brainer. and it doesn't require any funding. >> no. it's really reform of government processes, which can be done internally. this current system really grew out of, you know, it's kind of morphed into a horror over the last 30 years. so, you know, one thing that's being bandied about or tossed about as an idea is that it would go to more of a one stop shopping kind of a thought where one agency would take the lead in getting the permitting. and it would force the other agencies into some form of a simultaneous review of the applications, as opposed to what they do now, which is when one guy -- one agency finishes, the other agency starts and that's really management reform in washington, and i think they're sincerely interested in that. by the way, that was something

that was started a little bit during obama's time. >> did you -- do you have the cell phone number? >> the cell phone number? >> you have president trump's cell phone number that he's reportedly given out to a couple of -- gave to macron, gave to -- >> actually, when i want to speak to him i don't call him on the phone. >> you can get through to him, though. how often do you speak to him? would you say? >> every several weeks. >> every several weeks. you saw him recently. here's where i was going with this, in the past, you've had presidents deal with side issues, whatever you want -- it's not a side issue to certain people, but you had iran/contra, you had whitewater, and they're able to move forward and do their agenda. so he has a special counsel now, with the russia investigation. but i'm thinking these leaks that seem to come at 5:00 in the afternoon, and it really does sort of put a speed bump on any legislation that seems to be going because it takes all the

air out of the room when it happens. when you've talked to him, does he have the feeling that these leaks are holdovers? or are there people close to him that are part of his inner circle that are -- >> i've never actually -- >> never discussed that? i would be furious if it was people -- >> i would be furious if it was people that i appointed, too. >> but there are holdovers everywhere. >> i'd be furious if it was holdovers. >> but if you could stop those and let mueller do his job and find out, like the way it's been done before, where you get to a conclusion, and it's done in an orderly fashion, instead of these leaks that you don't even know whether they're true. you don't know whether -- >> during iran/contra, during whitewater -- i'm only laughing because during both of those periods there were leaks every single day. >> i know, i know. but things got done. my point is it's hard to get things done when the entire world stops when you hear one of these -- >> let me just say something about the president. the man has incredible energy. okay?

he can multitask if he has to, believe me. he can keep six balls in the air at the same time. so i don't -- whatever is going on in the political sense, including this -- >> i don't think it's him, i think it's mcconnell, and the house, and these guys are always worried about the next election and they seem to get bogged down. are they working right now on tax reform? are they working right now on -- mccain just opines on -- >> i can only deal with the subject matter of the infrastructure. and i know they are working on this subject matter. quite diligently. because i think they all realize that it's something -- >> maybe they'll surprise us and we'll say hey, all of a sudden they've got a tax reform. >> maybe they will. maybe they will. but my feeling is that with respect to the infrastructure, it's going to come into focus, relatively quickly, and they're going to try to do something relatively quickly with it. and it's needed.

>> can i ask you just a management question about the president's demand. "the wall street journal" this morning, they wrote a piece about dubke but they said that he wasn't the problem. and his replacement won't be the solution. it's impossible to run a communications job, or a policy job if the top man, this is the president, prefers chaotic, make it up as you go, management. is this make it up as you go management? >> i think that's a little -- a bit of an overstatement on the part of "the wall street journal." listen, there are very competent people that are in the administration that are working diligently every day. you know, president trump has his, you know, his style. i mean, i said when many, well over a year ago, that he enjoys a little bit of chaos. i mean, that's his little bit of his management style. that doesn't mean he's not going to be successful doing what he's doing. and frankly, if it wasn't for that he wouldn't be president. so, i don't think people should

be upset about the fact that he's a little nonconventional. >> 8 years old during iran/contra. did you go back and take a lesson on leaks happening during iran/cont iran/contra? >> i'm not a complete dope. there were leaks like crazy during that whole period. >> you went back and studied up on that? >> i had an opportunity to visit the president about a month ago and he ran a very tight, thoughtful, meeting. with everybody in the room. he was very focused. so the fact that they think it's kind of a three ring circus there is a little bit of a hyperbole. it really isn't. >> narrative? and you're going to keep hearing it. anyway, richard, stick around. >> okay. coming up when we return, the s&p and nasdaq snapping a seven-day winning streak yesterday. we'll talk markets after the break. and later, infrastructure and jobs high on the agenda in washington. and for americans. we're going to speak to the ceo of the national association of manufacturers jay timmons and the ceo of emerson elect david farr in just a bit.

you're watching "squawk box" right here on cnbc.

get a check on the futures at this hour. turned around. and we're actually positive last time we looked.

got david joy, amer price financial chief market strategist. dow is indicated up 22.5, nasdaq up 13, s&p just over 3. david we had i think seven up days in a row on the s&p. a brief respite yesterday. i used to see on some of these websites that the market is getting very, you know, long in the tooth. this morning on market whatever it is, market watch, this market, no end in sight to the bull market. so now i'm nervous when market watch writes that. where are you right now? >> well, i think there were two sort of underlined supports for this market. i think in order to sort of keep us at the level where we find ourselves today we need to see economic growth in the second quarter and probably into the third. somewhere around 3%. i think that's what the market is priced for. we don't get that. i think this market is expensive. the second narrative is that if we can hold at these levels with some decent economic growth, for long enough to get to the point

where the administration follows through on infrastructure spending, or tax reform, then the market can go higher. in the absence of those two things this market is overpriced and we will end the year, i think, below where we are today. but for right now, the market is giving both of those narratives a benefit of the doubt. >> so, the -- without some actual government action you don't think the market itself could -- or you don't think the economy itself and corporate earnings could improve on its own enough to justify it? do you really -- we really need something done? because a lot of people think we're in a global synchronous global recovery here which could get us better gdp growth here without the government doing -- or at least we have deregulation and animal spirits working for us. >> yeah, no, i agree. the global economy is accelerating. it's better than last year. but, i mean, if you look at where the s&p is valued right now, it's at 21 times trailing earnings, 18 times forward

earnings. in my view that reflects the expectation that the global economy is a little bit better and that we'll probably end the year with somewhere around 10% earnings growth in the u.s. so i think that's already priced in. and as i say, i think in order to go higher, we need new news. and the new news has to come from washington. it doesn't necessarily have to happen quickly. it can happen after the summer recess. but i think we need to see progress and some tangible evidence of progress. >> watered down would work still if it was just corporate? if it was only -- the tax cuts only corporate, not big-time tax reform, and only 25%, say, that's enough to move the needle? or does it have to be something really significant? >> no, i think that's enough to move the needle. if -- i don't think the market is really concerned about individual tax reform too much. i think it's the focus is primarily on corporate tax reform. if all we get is a 25% tax rate

on the corporate side a lot will depend on what else happens with repatriation and what else might be eliminated along with that 25% so that you get an understanding of what the real tax rate is. if all of that looks okay to the market, i think that's enough. at the same time the market doesn't necessarily want to see the budget deficit balloon out. we have too much debt in this country as it is. so somewhere in the middle is a sweet spot that i think the market would be okay with, and if that 25%, plus some things around the margin, i think that's enough to take us higher. >> all right, david, thanks. david joy, amerprise financial. >> the nation's capital buzzing as the national spelling bee comes to town. but this year history is being made. details after the break. also programming note, cnbc's big coverage of code conference, reed hastings, make sure you stick around for that and a lot more. "squawk box" returns in just a moment.

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the country's top spellers are set to compete in the 90th annual description national spelling bee in washington. roughly 11 million students tried out for the title of top speller. but only the best of the best are competing over the next few days. this year's competition has already made history. get this, 6-year-old edith fuller qualified for this year's competition. that makes her two years younger than the second youngest contestant before her. the winner gets $40,000 in cash, and a $2500 savings bond. the finals will take place tomorrow. we around here like to watch this. pretty nonstop. when we come back, how worried is the fed about uncertainty in washington? steve liesman has been doing some digging and he will join wus a report in just a little bit. and later several bills to reduce drug prices are moving through congress. we will speak to the chief medical officer of express scripts and the ceo of radius health about possible solutions

to a growing problem. right now though as we head to a break take a look at the u.s. equity futures. we have moved a little bit higher. dow futures up by 22 points. s&p up by almost 3. the nasdaq up by almost 13 rk were constantly thinking. always on the lookout for patterns and connections to make everything work better. i call it the internet of everything, but it's really the internet of everyday life. ♪ the partnership between dell technologies and sap helps make the promise of the internet of things a reality for our customers. we know how powerful live data can be. we use sap at dell to run everything from finance to procurement to travel expenses. and that's the same kind of live insight we can now start offering to all of our customers. and as we get better information, better insights, it can improve virtually every aspect of society and the economy.

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good morning, everyone. welcome back to "squawk box" here on cnbc. we are live from the nasdaq marketsite in times square. among the stories that are front and center this morning, mortgage applications fell by 3.4% last week. according to new figures from the mortgage bankers association. both new purchase applications and refinancing activity fell. the average 30-year mortgage rate was unchanged during the week remaining at 4.17%. we are watching shares of luxury goodsmaker michael kors this morning. the company beat profits but revenue was short of the forecast and comp store sales fell more than expected. kors gave a weaker than expected forecast and that stock is down by 8% continuing this trend of retailers that miss and get punished in a big way.

four big pension funds are opposing the election of six directors at drug miker mylan. they're upset over what they consider to be excessive executive pay. the new york city and new york state pension funds are involved in the effort, along with calsters which is the cal teachers pension fund and pggm which is a dutch pension fund. rebuilding american infrastructure and putting merngs into high quality jobs both bipartisan talking points. ideas on how to get these things done very widely across the political spectrum. joining us is david farr chairman and ceo of emerson electric and the chairman of the board at the national association of manufacturers and jay timmons, president and ceo of the national association of manufacturers. our guest host has been richard lefrak of lefrak organization. thank you all for being here. let me start with you. >> okay. >> and it's a question i asked richard. when you talk about -- when people talk about the path to tax reform, or the path to infrastructure, what is the path as you see it, given the

commotion and the headlines that we talk about daily? >> yeah. i think from a business perspective, i think the path is one that we must make. and we're going to have to figure out how to make some compromises around the various issues we need to get done. we do need to get the tax reform done from a standpoint of the competitiveness. at the same time, infrastructure is very, very important relative to the needs that we've fallen apart as a country from the infrastructure. from our perspective i think there's going to have to be some tradeoffs and going after some more revenue. broaden that revenue base, and try to get a competitive tax rate and put the money back into the future. i think for the first time we've been living off our parents' infrastructure investment and we need to get on and do the same thing for the next generation. >> jay, do you see a path? and the reason i ask -- >> absolutely. >> you read "the wall street journal" just yesterday they suggest maybe there is no path. we're not getting there on these issues. >> we've seen these battles over the years. you see these peaks and valleys in congress. yes we're going to get something done. no we're not.

i have great confidence that there is a -- that there is a will. not only from the administration, but also in congress to get it done. and the president's outline i think is fantastic for reducing the cost of doing business in the united states. 15% corporate rate. making sure pass-through entities aren't left behind. a territorial system. repatriation. that is a recipe for success. and that's what congress is going to have to decide. do they want to create investment opportunities and jobs in the united states? or do they want to let this opportunity go by? i don't think in the end they're going to want to let this opportunity -- >> what's that time line look like in your mind then? >> well, what would we have liked is manufacturers we'd have liked to have seen -- >> yesterday, right? >> we want to see it done yesterday. but i think that that we have certainly this year to really focus and get this done, but as dave said, there are a lot of other priorities, too. regulatory reform is key for manufacturers. and infrastructure investment is, as well. >> those are three -- >> you mean republicans in congress? >> yeah, well republicans and

democrats, clearly they're going to have to play together. >> what you just described is going to have zero on democrat -- 15%? pass-throughs. repatriation. that will have zero support. >> well, let's see. look i've talked to several democrats that want to see a more competitive tax system. are we going to end at 15%? well, that's certainly where i'm going to start. i'm not going to predict where we're going to end on this. i think the most important thing is that we all focus on what makes america more competitive. >> you'd need an obamacare probably repeal which you're not going to get any help from democrats. yesterday the president was talking about getting rid of the filibuster in the senate, but he got absolutely nowhere with mcconnell and the senate's not going to do that i don't think. >> i think the senate is going to make their own rules and stay focused. but when you look at a company like emerson or you look at any of our 14,000 members and you figure out what it takes to be competitive in the united states, you know that tax reform is absolutely a key ingredient.

>> maybe republicans, what's the saying, that americans try everything else before they finally do the right thing? maybe republicans -- >> winston churchill. >> maybe republicans, like with obamacare, remember they tried everything, and then they finally did it. maybe they'll finally realize they're going to lose 2018 if they don't -- >> if they don't do something. >> how does emerson, for example, in terms of running a business and thinking through the future, and what is going to happen or not, how do you handicap it? how do you bet on it? >> as i told the congress, i was testifying in the house ways and means committee i told them we're betting that congress will get something done. we'll figure out how to get something done. this is too important for this country. >> that's twelve months out? >> no i think sometime in the next 12 to 18 months. from business standpoint we're investing now to make, you know, for the future. and i firmly believe this -- >> based on the assumption that this does happen. >> something will happen that would be positive for the u.s. economy. from a growth standpoint i firmly believe that we have the ability as a country to accelerate growth. if we make the investments. we've been held back for too

long. >> right. >> and we have the ability, and i also think foreigners, foreign companies will come into this country. this is a large market. the largest market out there. so i firmly believe that i'm betting right now as a ceo i'm making investments in ohio, investments in wisconsin, missouri and texas right now, probably over $200 million just betting that we will make this happen. and you have to do it. >> you know, as far as the infrastructure goes, i would say if it takes 12 to 18 months we haven't succeeded. i think we should get something on the table in the fall. i really do. i don't think it's that complicated. >> 18 months is 2019. >> yeah. i don't see the infrastructure -- >> after the election. >> i think with respect to the infrastructure, i mean, they're all for it. republicans like it, democrats like it. it's just a question of working out the details. >> and i think you have to make tradeoffs. >> the politics get so thick that they don't give a damn about the country down in congress and they are just busy fighting each other, then nothing will happen. but if they have any interest in doing something for their country, the infrastructure is really easiest thing to accomplish.

>> how many conversations have you been engaged in with the conversation is about attaching infrastructure to the tax plan, for example? >> not as many. it's not really -- >> it's a separate issue? >> it would be the other way. it would be the infrastructure would lift the tax plan instead of pay for the tax plan and infrastructure, the cost of it. because the way the infrastructure plan is now, the way it's set up now, the cost is really not that tremendous because they're relying a lot more on private industry, and changing and regulatory activities and other things to do it. and by the way, as far as the states go i'm going to say an apostrophe now, there's $25 billion of annual revenue in internet sales tax that's not being paid right now. and that's a ton of money for the states to fix up. >> right. >> locally. >> the reason why i think it's going to take longer, they're going to be intertwined. there are going to be tradeoffs going back and forth. clearly we'd like to have it done by the end of this year, early '18 but i think dlz going to be some tradeoffs back and

forth. >> the investments you were making in anticipation of this tax reform, if the tax reform doesn't come, does it make those investments not workable? >> no. they'll make them workable. i'll get less return and it will take longer to get the pay back. we make investments, we build new facilities, it will take us two to three years basically to really fit it out and to move forward. >> right. >> i firmly believe something will happen in the next 12 to 18 months, hopefully closer to 12 but it's going to be tradeoffs back and forth. i don't think they can separate going to back to what joe said i think they're intertwined. i think there's so much wrangling going back and forth between the democrats and republicans the president needs to get engaged and push it. but i think they're too intertwined. >> i was going to ask you separately on infrastructure about blackstone which just announced they were getting $20 billion from saudi arabia. raising $40 billion infrastructure. >> right. >> my understanding is that the second part of the fund, it's a matching situation. right? they need to actually get the $20 billion needs to get matched by somebody else, or at least a

series -- >> you looking at me? >> series of others. no i'm curious whether you think there's $20 billion out there in the very immediate term right now that's ready to get working to match? >> i don't think there's $20 billion. i think there's $500 billion. >> i think there's more. >> as long as there's revenue to support some of these investments, the thirst for yields around the globe is awesome. every pension fund, every sovereign wealth fund, i mean they're all looking for yield now. so, there's no shortage of capital to invest in this. what there's a shortage of is revenue to support the capital. and that's the great tension that has to be figured out between the states and the federal government. >> i think i was on a trip to saudi with the president. there was a lot of positive feelings right now. the money's there. we're just looking for ways to, you know, free up the regulations. as he was saying earlier, sometimes we have to go through four or five regulation steps. if they could just simplify and get down to one and control the whole process, things will speed up. the money's around the world. this is the safest market in the

world to invest. so i firmly believe the money will come in if we create the rate tax policies, right regulation policies, and have the desire to reinvest in infrastructure for the next generation. if the time has come we must do it for the next generation. >> how much pushback do you think is going to happen on the tax issue, internet? >> big. i think it's a big pushback on it. >> and what do you think is going to happen? >> i'm not, you know, swami, i don't know. i would say, you know, i discussed it with the president. i discussed the gas tax with the president. i discussed some of these things with the staff. but, you know, i don't make policy. we just make suggestions. >> yeah. >> border adjustment is dead, right? >> i would say border adjustment is dead. i think there's going to be some tradeoffs. they're going to have to figure out how to raise some revenue and we're going to have to figure out how to do that and charge taxing other places. but if you get the rate down to 15% and you really level the playing field you come up with a territorial tax rate. the standpoint today, my main competitors are german, and i

pay a much higher tax rate. we're paying tax rates today, we do pay taxes, 32%. last year i paid $1.8 billion of taxes. versus my competitors, overseas, they don't pay that same tax rate so i'm getting double taxed. >> your biggest competitor? >> tax rate would be more in the 12%, 15% range. and when that territorial rate when they bring it back to say germany it's like 4% or 5%. and so it's a lot lower. so we bring money. we have a hard time bringing money around the world because it's being taxed. so i think from that standpoint if you could level that playing field, and have a more appropriate tax rate for around the world you'll find the money will flow. investments will come back. as i told him in kopg, i said you know, we did the one year thing. yeah, it's one year. we as business leaders can't make investments for one year. we're making three, five and 10-year horizons. >> we've heard anecdotally that some business leaders are waiting hoping that there's a better tax treatment. >> we are. i told my board last board meeting i've already set aside

the actual p&l costs of doing this but we're waiting. what's going to happen now the treasury is going to get less revenues because what's happening corporations are holding back. i'm waiting on $2 billion repatriation right now and i will not bring it back until i get clarity on is there a path to, as joe said, is there a path out? and i think there's a path out. it's going to take time. >> are you happy the fed's going up? are you unhappy? >> i think we've had too free of money for too long. the federal reserve needs to raise -- >> richard is a real estate guy. he loves zero. >> it creates bad investments. >> it's delicious. >> for me i think -- >> too low, too long. >> you think so? and, everybody they say that but guys that borrow money -- >> well, sure. obviously you want to borrow it at the lowest cost possible. we don't want to see a return to the restriction of credit that we saw in the last decade. but i think there's probably room to -- >> look at japan. japan's had zero money for how many years? >> by the way, if you're going

to borrow money to do your infrastructure, what are you waiting for? my god, this is the best time in the world to borrow that money and invest it in the country. >> the impediments, a lot of these impediments were removed that add to your costs. the labor difference between here and everywhere else is that narrow to where you can do it here? people say it's just not possible. >> but you think about this, joe, you've got -- you've got the highest corporate tax rate in the world. you've got 297,696 regulations. that's an actual number that impact manufactures directly. that equates to $35,000 per employee per year in compliance costs. you get rid of those costs we can compete with any country when it comes to labor. >> really? they pay $5 an hour. >> but from the standpoint of how much you automate it, productivity, overall cost. it's not labor. when i look at an investment facility, i go through ten items. while you're going to have a different type of job you're going to have a higher skill job. that's where the ceos are getting engaged aggressively on

educating the workforce for the next generation. i'm building a new facility that makes garbage disposals in wisconsin. i need higher technical skills. we're going to have to upgrade the workers. >> emerson makes garbage disposals? >> we make 'n syncerators. >> are really -- >> don't put your hand up. >> see how long you can go near your sink if there's food stuck in there -- >> very good -- >> is it close to the labor employment story. which is five ten years from now look out at your company you think you have more or less employees? >> i think we'll have more. the issue is, our workforce is aging. just like me. we're going through a period right now where the workforce is getting older, we're going to have to replace them but we're going to have a different type of skill set. i'll have less people standing on a line assembling, more people doing, you know, value engineering within the facility making sure the machines are working properly we'll still have labor i bet you a workforce population will be higher, and at the same time we can compete

on a global basis. >> and on that note, 3.5 million jobs by 2025 in manufacturing will be created. 2 million of those, if nothing else changes, 2 million of those will go unfilled because we don't have the folks with the right skills. >> that's a huge problem. >> that's a huge problem and that's why we're, as dave said, that's exactly -- >> we have -- >> we have the same problem in the construction industry. because we're going to be losing a tremendous amount of skilled labor in the construction. >> yeah. >> and one reason this infrastructure idea is such a clever and good idea now is because it's the kind of thing that you can train people through apprenticeships. you don't have to send them to code college to learn how to lay bricks. and so, you know, i think it's another great idea that meshes very nicely with investing money in infrastructure. >> one of the big institutions we invest in in st. louis is technical school. we put millions of dollars in we take the kids out of high school right out of ferguson, emerson is located in ferguson and educating 200 kids, young children, to become more technical in skills.

and they'll go to the school, pay for -- finish their high school, get the technical skills, go out in the workforce, stay in the community and make a lot more money than working at mcdonald's and burger king. >> you said your beggest competitors are german paying closer to 12% or 15% tax rate. if we get a tax reform with businesses paying 25% will that make you competitive? >> won't make we competitive but we can compete better than today. right now my effective tax rate is 37%. >> you'll take it? >> i'll take it. from my standpoint if you're going to do major reform which we haven't done for 30 years becky we want to do it big. don't nickel and dime us. you've got to do it. >> becky, 23% is the international average. we're going to be less than average. that makes absolutely no sense. >> let's -- >> the average getting more than average -- >> what's that? >> meaning more than average 25%. >> right. >> i'd love to be the

insinkerator. top of the line. this is important. this is top of the line. >> we make a good product. >> the insinkerator. with sound seal technology. how much does one of those go for? >> $150. >> richard is sticking around. "squawk" returns in just a moment. so you miss the big city? i don't miss much... definitely not the traffic. excuse me, doctor... the genomic data came in. thank you. you can do that kind of analysis? yeah, watson. i can quickly analyze millions of clinical and scientific reports to help you tailor treatment options for the patient's genomic profile. you can do that? even way out here? yes. even way out here.

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welcome back, everybody. while the official fed position is neutral on the trump administration's policies, fed officials are pushing back in their recent communications. steve liesman joins us with more. an apolitical fed? >> not exactly. fed officials in speeches and interviews have been dropping comment, both positive and negative on the policy changes being debated in washington. minutes from the last fed meeting even showed them urging president trump and congress politely to pose new rules or get off the pot. here's what it looks like in fed speak. clarification of policy changes would remove one source of uncertainty for the economic outlook. here's dallas fed president robert kaplan from our "squawk box"ible ter view yesterday. >> the reality is some of the policies being discussed will

help gdp, regulatory review. if it's thoughtfully done. potentially infrastructure spending if it's thoughtfully done could help. but some of them could hurt gdp growth. >> fed officials have made positive comments about plans for tax reform, especially corporate tax reform. but they're reluctant to go too far because they don't know how it will be paid for or structured. they like infrastructure spending and to a point they like deregulation. they don't like potential changes to trade and immigration policies warning that the u.s. needs more immigration to hit higher growth because it needs the workers, along with concerns over going too far in deregulating the financial system. >> we have corporate tax reform, which makes sense. but we also raise trade barriers that might hurt some industries here in the u.s. what's the net effect of that? the devil's in the details, right? >> fed officials have had a consistent message, fiscal policy changes should be focused on boosting productivity growth for the long haul guys and that's the one message we should

hear that's pretty consistent. and they like a lot of what they're hearing. it's the trade and immigration stuff that's stamped out as being an area of concern to them. and joe, it's math. right? >> no i understand. i understand. and people talk about the -- just not compute with some of trump's, you know, the 3% or 4% is going to be tough because you need population growth. what about when does trump put some of his people on? when will statistic start? >> i'm waiting, joe. we kind of check every day. we have this -- there's a name that's been out there for the vice chairman for supervision has not been named. two vacancies already. this is not a crazy time. right now, we in june yet? today's june. >> the 30th -- >> to start hearing about who the next fed chair would be. there's a lot of talk about the absence of talk about criticism of fed chair janet yellen. and a crazy, maybe 10% chance

that maybe he continues her term, question as to whether or not she would want to continue. that's one idea that's out there. there's also, andrew ross sorkin's favorite idea. do i want to take it? >> i'm sure -- >> you can have it. >> i've said it before i'll say it again, i'm also mentioned today by mike allen, financial -- >> interested in -- >> gary cohn not interested according to this article -- it's -- >> not interested in being the chief of staff. but is interested in being the fed chair. >> not a crazy idea but -- >> he was -- >> he ought to get going and i don't -- >> ought to get going doing what? >> getting some of these appointments made. i guess there's an idea you could wait until the fed chair is appointed and that person brings his or her people in. but there are certainly vacancies. we definitely have an absence of this vice chair of supervision right now. the president needs that person in order to affect the financial

deregulation. >> ax yoes saying that the president decided to pull out f of -- >> also saying that -- >> today this morning. you think it's june? it's not june. it's may. >> no june for the fed. >> no, he thought today was -- >> well -- >> i -- >> steve thank you very much. folks we'll be right back. the power of a low volatility investing approach. the power of smart beta. power your client's portfolio with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus

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>> thank you for having me. >> lots of luck with infrastructure. >> thank you. >> it is truly a bipartisan issue. >> yeah. one that maybe -- >> -- wish the country good luck with it. not me. >> okay. we'll wish you luck. >> and the administration. >> thank you. >> thank you for having me. great to see you. >> coming up when we return, is now the time to buy social media stocks? that's the question. one of the top analysts in the sector is going to tell us right after the break. ♪ we're drowning in information. where, in all of this,

is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.

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she's the ultimate evil. [ dramatic music ] the mummy. rated pg-13. it's the last trading day of may. tech stocks on pace for their sixth positive month in a row as heavy hitters take the stage at the industry's most prestigious event. a live report from the code conference straight ahead. the media battleground. one of the street's top analysts tells us which companies will survive the cord cutting thread in a rare tv interview. >> plus drug price overhaul. we'll talk to two pharma executives about the cost of care as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." good morning welcome back to

"squawk box" here on cnbc live from nasdaq marketsite in times square i'm joe kernen along with andrew ross sorkin and becky quick. futures up. up 16 or so on the nasdaq. we had a rare down day yesterday in the averages after seven straight up days in the s&p. at least so far today back on track trading higher. >> among today's top stories let's get you started with what we're saying about vietnam. the country says it will sign deals for up to $17 billion for u.s. goods and services. the country's prime minister will meet with president trump at the white house today. ge power's ceo says that general electric is worth about $6 billion with vietnam. a shake-up at uber. a head engineer of the company's self-driving car unit has been fired. anthony levandowski is at the center of a dispute between uber and waymo. uber says that he refused to comply with a judge's request to turn over documents that he had been accused of stealing from

waymo. and new figures are out from the mortgage bankers association. mortgage applications fell by 3.4% last week. both new purchase applications and refinancing activity was down. the average 30-year mortgage rate was unchanged during the week. it remained at 4.17%. check out the shares of michael kors the luxury goodsmaker beat estimates by three cents with quarterly profit of 73 cents a share. but comp-store sales fell more than expected and the company gave a weaker than expected forecast. we'll talk to an analyst about that quarter in the next half hour. another stock to watch, disney, it continues to lose subscribers at a faster than average pace. the sports channel lost 3.8% of subscribers this month according to "the new york post" which cites estimates from nielsen. the third higher of the 2.9%. joining us, one of the top media analysts, michael nathan, a senior research analyst and we're thrilled to have him. we don't get to see you that

often so thank you for joining us. >> thank you for having me. >> let's walk through this espn disney news to try to understand what you think is really happening here. >> okay. so there's a lot of noise out there. nielsen's job is to try to -- pay tv but it's an estimate. and there's all these new virtual tvs like sling and directv now not being counted. so we're very cautious on looking at nielsen's numbers as a true indicator of pay tv. right now we're find of in a gray zone. we're all guessing about the size of espn's decline. and also against the broader pay tv declines. >> and do you think the pay different declines are real? >> yeah. basically what's happening is there is a -- there is a conversion going from big tv basic subs to smaller subs and there's just a mix shift going on. a mix shift is going to be bad for a lot of companies. disney's not a lot of those

companies. going to be bad for amc network and discovery and viacom and description networks because not all of these can be bundles. but that cord cutting is real. >> let's talk about the losers for a second. what happens to them? meaning, do they merge? do they get picked up by some of the bigger guys? what's the plan? >> viacom's talking about perhaps a bundle of the smaller networks come right up there with a cheaper bundle called 20 bucks for 40, 50 channels of nonsports, nonnews networks. so you're going to have possibly a new, you know it a new entrant at a lower price point that's going to disrupt maybe the bigger bundle. so you just have a lot of different -- >> what happens to the consumer? do you end up saving any money as a consumer? or do you end up paying more to get all the stuff you used to have in one bundle? >> that's a great question. we see two things. one is you'll save money on your television portion but cable says to you look the broadband bill in your house is going up. so in some ways comcast and charter will make it up on the broadband side.

>> because nobody can live without the internet. >> right. so if you want to pay to get sling or sony view, you're going to pay for broadband, right? so what we see happening is for our entire life we only had one choice. the big bundle. right? that big bundle is been good for everybody. but going forward you have more and more choices. consumer spending on video will be going down. consumer spending on broadband will be going up. >> are consumers going to long for the good old days when they think they're getting all these better deals coming through? >> you know, it's interesting. i don't think so. because i think there are too many channels on television. i think that we've had very little choice as consumer. the industry has pretty much built something that really has gotten too big. and i think we all long for the good old gas. i think we'll be happy with less channels, less pricing, more options to go on demand. this is a good thing. but it's not going to treat all companies the same. you're going to have winners and losers and that's kind of our big point in the media. >> let's talk about social media because there's the second screen, which is to say while everybody is watching us,

they're often now on some form of social media. >> yeah. >> twitter. let's go through twitter snapchat and walk through them. >> okay. >> what's going to happen to twitter? >> twitter, we have a sell on twitter. we have a sell on snapchat. twitter is going to keep disappointing. because, while it can drive daus, or engagement, it's not a good platform for modernization. >> adaus are? >> daily active users. if the president tweets yesterday about germany not being a good partner. people will go and look at that. but if you're bmw or mercedes-benz do you want to advertise in a tweet stream about your great car when he's railing about, you know, germany not being a good corporate -- a good global system. so i think they're going to have a hard time monetizing their traffic. over time twitter will probably be bought, but -- >> by? >> by it's going to be a much lower value by probably a media company at a value that's half the price where it is today. >> half the price. okay? >> to me when you look at

twitter's valuation it's insane. their revenue is declining. the revenues are falling faster than newspapers and radio companies yet traded 20 times ebitda number which is off the charts. i kind of think like in internet land there's always hope trades. oh, they'll turn it around, be an m&a opportunity. over time you see what happens to yahoo! and aol grinds lower and eventually someone is going to buy it in the traditional business. one of these companies here. >> okay. now, snapchat, we've got an entire work on snapchat. we have a sell on snapchat also. we had focus groups from high school, junior high school dpom in and ask them about their snap usage. kids in junior high school spend two hours a day on snapchat. >> that would seem promising. >> but guess what? those high school kids are not buying cars, they're not buying homes. you know, their advertising opportunity for reaching junior high school kids, not that large. so i look at this going look they have driven engagement to

the max. they have a core, loyal audience. that loyal audience is probably near saturation. and is not my advisable. that demo is served by -- >> and part of the argument is then that they will stay with the platform as they get a little older and have more spending money. you don't believe that? >> you know, it's very possible but we have a long way to go until they get older. until junior high school kids are out of college and buying their first house. >> let me throw out two other traditional names to you. >> yep. >> cbs, 21st century fox, and i'm going to throw into the mix that verizon ceo has publicly said come, we may want to buy you. >> right. >> merge with you. do something. >> first cbs and fox are family controlled companies. i don't think they're going to be selling any time soon to verizon. right? just i don't think that's something that they -- that's not going to be their exit strategy. we have a buy on fox. and we think fox is really -- we're very positive about their ownership of global sports global news and we feel the risk

reward is great. cbs would be more cautious. worry a bit about the advertising environment. we like to see second quarter third quarter results kind of strengthen the ad market before we got more opportunist for that. >> on fox by the way, given the commotion at fox news, matter, doesn't matter? >> fox news makes most money from subscription revenues, right? so that's -- those are five and seven year contracts. i don't think in the near term there's any risk that those contracts will disappear. right? long-term we have to watch it and see if there's an erosion of the audience base. >> and final question just long-term? do you see the company, at&t, time warner, i don't know if you think that deal goes through but if it does are you of the assumption that all of these cable players or distribution players have to attach themselves to the content? >> so our house view is that the time warner at&t deal goes through. it sounds good that you need to see more combination of distribution of content. but when you look at the

landscape of things they can buy, it's disney, it's fox, it's cbs. i don't see anyone making a move on the distribution side to buy those three companies. so it sounds great, and some of that's sexy but it's really unlikely that you know, verizon's going to buy disney, come cast, cbs or fox at this point. >> you were wrong though i need more channels. >> you need more channels? >> i need more. i've got 900 channels, i can't find anything. i end up on cops, a rerun. or like gunsmoke. >> law & order. >> i need more. do not make -- is there anything on? there's nothing on. 900 chants, i can't find anything. >> -- more on demand. >> bad for -- >> ♪ bad boys >> you wind up on netflix. >> you go on demand. >> but sometimes i don't because i don't feel like it. i don't feel like making the move to on demand. and i end up literally on the rifleman. love chuck conners. >> i think that netflix is going

to change the interface one day so that people like you who just like to flip they're going to make the interface more flipable. i think the problem with netflix and all of these on demand players right now is it really requires a conscious choice. >> you have to decide to binge. >> if you're going to binge. sometimes i don't feel like bingeing. there's nothing wrong. >> we do our job is just look at facts, right? the facts show you that that hunting and pecking behavior that you described is in the -- you look -- >> we're aging out. >> you look at ratings -- >> everything i do is in decl e decline. >> exactly. >> michael. someone laughed. someone laughed. >> thank you. >> sad. >> coming up, still ahead, found something out of the 900. the world of -- the world business told through the lens of classic literature and film. one of the top hack experts wants to repair wall street's represent use and he'll be here to explain plus how one pharma

company is taking on one of eli lilly's block buster drugs athe a lower cost. we'll talk to the ceo and later marc andreessen has a message for the labor market. don't fear the robots. don't fear the robots. relax. we'll tell you what he said at the code conference. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management. i count on my dell small for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ ♪

welcome back, everybody. one of the nation's foremost tax experts harvard business school's mihir desai is out with a new book called the wisdom of finance, discovering humanity in the world of risk and return. he joins us on set with more on this and the latest on tax reform. thanks for being here. >> it's a pleasure. >> what is basic people, all of us who sit around, what do we understand about finance? what do we not understand about finance? >> i think recently finance has gotten a really bad rep. and sometimes for good reason, sometimes for bad reasons. what the book tries to do is demystifies, so it becomes clear to people. really needs to educate people about finance. the second thing we need to do is humanize finance. finance is like some kind of very complex thing that's out there, and it's really not. it actually got really intuitive ideas that are really fantastic

ideas. what i wanted to do in the book was make it clear to people that finance ideas are easy, very accessible but also that we can humanize it. >> the bad rap came after the financial crisis, right? >> the bad rap came after the financial crisis but there's been a bad rap for millennia. there's aspects of finance that have been demonized, right, and that's lending, all kinds of things. but these underlying ideas they're fantastic. value creation, and they apply to your life in interesting ways. >> tell us a few of these things. what are some of the basic things that people don't understand about finance, and what are some of the good things that are done through finance? >> yeah, so what every chapter does is take an idea, for example, value creation and then try to explain it but not with the equations or grafs but with stories. in that chapter i use the parable of the town which is a really odd parable from the bible in the book of matthew but corresponds almost exactly to the recipe for value creation and finance. in the risk management chapter, i use jane austen's pride and prejudice financing because the

risk management problem facing young women in the 19th century was like mr. collins and mr. darcy basically the same risk management policy that we talk about. troll up in the novel basically divines options and diversification. the woman in that novel basically says i got all these scooters, i don't know who is a good guy, who is a bad guy and she says if only i could marry ten. basically diversification and she outlines an option strategy. so what i wanted to do is make finance not something complex. i wanted to make it really easy and totally accessible with stories and i wanted people in finance to think about what they do in a more humane way. >> what's been the response so far? >> oh, it's been great. it started out as a lecture i gave to graduating students. and i think i was so encouraged i made it into a book. and i think that the reason why is they don't want wisdom from upon high. right? they want their work to be meaningful. and so if you see meaning in your work, as opposed to what finance is now, which is routinely demonized, it's much more meaningful, right? you don't want to be told this is where wisdom comes from.

you want your life's work to be wisdom. what happens in finance, they divide their world. like you know their work is one thing but it's not who they are. because it's demonized. i wanted to let people bring that back together and not feel like their work is demonized. >> maybe value creation is a good place to start with that. what's the message from value creation? >> so, message from value creation first is there are chunks of finance that are value creating and there's a chunk of finance which is value extracting and we should try to figure out what that is. but the value creation story is just like the parable which is you got to beat your capital. that is the essence of the parable. so the servant who does not invest and does not make more out of his talent is a word that we now associate with ability was originally money. he's the one who doesn't actually invest the money and make it into more. gets cast out of the kingdom. so that notion of being your cost to capital which is central to value creation is kind of analogous in a way to give more than you can take. >> it's funny i was reading something today on coffee is for closers and seen as kind of a

mean and vicious sort of way of looking at the world. but anybody who is getting ready to go in the job force better recognize that if you are not creating value, you are not going to be there for very long. >> absolutely. >> it is for closers. >> i think that's why a lot of these lessons are quite humane and a lot of language for people in finance they already do this, right? so optionality. you'll hear people routinely talk of optionality. i want a career that maximizes my optionality. marriage is the death of optionality. that's a way to think about the world. what i wanted to do is show that, i did, actually, these ideas correspond to the ways you can think about the world and really fantastic ways. >> let's talk about where we stand right now with tax reform. >> sure. >> we just spoke earlier with ceo of emerson who said that, look, this is absolutely urgent that we get tax reform done, that he has told his board that they're going to be making any more investments until they see which direction taxes are heading so now we're at the point where it's actually stopping companies from putting back in and you're going to see growth decline as a result. >> yeah.

>> where do we stand? how likely are things to get done? what kind of plan should we be looking for? >> i think we had our flirtation with the destination based cash flow tax and border adjustment tax and hopefully that has passed us. it was an interesting idea in theory but really hard to implement. i think we should do something modest and not let the perfect of enemy with the good. we need something like the kavrp plan from two or three years back back at 25% i think we should really not look as perfect ending as a good we should get something done and get it done on the corporate side because that actually will get agreement on. and, we can actually get that done in a reasonable future. >> i wish you were sitting here when we had jay timmons. >> i saw. >> and ceo of emerson because the back and forth, you know, the ceo of emerson said at 25% i'm more competitive than i am at 32%, or 33%, that he's actually paying right now. but it still doesn't get to the german competitors who are the biggest competitors which are close to 12% to 15%.

>> yeah but it's a heck of a lot better than where we are. the lesson of the last six months are the grand reforms aren't going to happen. >> because? >> because of washington. you tell me. that's the nature of the beast. and so we it actually get something done on corporate tax reform narrowly defined and that actually would address what's really wrong. higher rates and territorialty. that's what we shoulden focused on as opposed to grand designs i think. >> back to the whole idea of just corporate tax reform the question becomes about people who own their own businesses. what do you do with them in that category in that situation if you're not doing the individual reform at the same time? >> so i think getting the rate down to 25 doesn't cause as many problems as obviously some of the other ideas out there. i'm a little skeptical about how deep the problem is. i'd be happy to let the corporate tax reform proceed as it is. you know in general we got to rethink tax serenity. we've kind of called them small businesses and we make that --

there's a lot of big businesses in tax reform. we should think about taxing some of that activity in a general business way but that may not be for today. let's get done what we should get done which is fixing the tax. >> again the book is called for anybody who hasn't seen it yet the wisdom of finance, and incredibly interesting. making finance kind of understandable for the masses. >> thanks so much. i appreciate it. >> we appreciate it. >> you know your husband was name after matt dylan? >> yes. i do. >> okay. you know what was matt dylan named after matt dillon. it was johnny crawford. these people are yelling at me. played mark on -- johnny horton was the singer of -- coming up, checking in for your flight with your face. checking in with your face. one big airline is getting on board -- >> yeah, face for checking in -- >> you have a face for checking in. that's a -- you want to put

someone down checking in on a plane. talk about that technology facial recognition obviously those details next as we head to break check out the shares of michael kors. we're going to dig through the quarter with retail guru jan nippen at 8:30. love cores.

welcome back to "squawk box," everyone.

jeb bush has dropped his bid to buy the miami marlins leaving former yankees great derek jeter to pursue the team on his own. bush and jeter won the auction to buy the marlins last month with a $1.3 billion offer. but reports say they couldn't secure investors, and never agreed on who would control the franchise. the partnership reportedly fell apart because jeter wanted to eventually have complete control over the business and baseball operations. the leading candidate to buy the marlins now is a group that's led by mitt romney's son tad. >> that's bizarre. >> that is bizarre. you would think you'd have to have those lined up in advance, too. >> jeb decided, too low energy to buy the baseball team. >> okay if you go into it and you're not sure who's going to have complete control that is a partnership that was never really put together. >> i was kidding. i love jeb. i was kidding. like oh, my god, take a lot of energy to run this team. i don't know. >> when we return, a health care summit right here on "squawk box."

bob ward and steve miller is going to join us on set. that's next as we head to a break. take a look at u.s. equity futures. we are in the green, dow looks like it would open up higher, s&p 500 up five points. back in a moment.

good morning welcome back to "squawk box" right here on cnbc live at the nasdaq marketsite in times square. the national association of r l realtors set to issue its april report on pending home sales. congress looking for half percent increase in the number of home sale contracts signed by not yet closed. also, jet blue unveiling a new boarding system which doesn't involve paper or even an electronic boarding pass. instead the new system uses facial recognition to identify customers. the first test of the system will launch in boston next month. which is pretty cool, given that, have you ever -- i don't know if you had this recently. i just had this recently, my phone ran out of battery. >> mm-hmm. >> so i couldn't use it as the boarding pass. >> oh, yeah. >> and i hadn't gotten a boarding pass from the thing and i got in the line and i had to go back and anyway -- yeah.

separately, cisco systems ibm teaming up to fight cyber crime. the two companies will integrate their security solutions to incorporate network share information on potential threats and jointly deal with major cybersecurity incidents. joe? >> what did we decide? going with axios? president trump has propertiedly made the decision to pull the u.s. out of the paris climate change accord. this is according to axios, and officials are working out exactly how the withdrawal will be executed. the most formal approach to withdrawal might take up to three years to take effect. but that's been -- a lot of people have been picking it up. we see it everywhere. but all of them are citing axios. mike allen? >> mike allen, yeah. he's gotten a lot of skoops that he's hit. >> exactly. >> time and time again. >> this, by the way, and i love mike and he's a friend we were e-mailing earlier by the way, the credit is due to a guy named jonathan swan who wrote the story. >> not axios. >> okay. yeah. >> as the senate begins drafting its health care proposal

republicans in states have expanded medicaid under obamacare are at odds over how much of the expansion to keep intact and for how long. kayla tausche joins us from little rock, arkansas. kayla? >> good morning, becky. medicaid expansion is an issue that is a double edged sword in deep red states like arkansas. on one hand it carries a very high cost for federal and state governments. but on the other hand the benefits to hospitals and the economy here has been noticeable. take the university of arkansas medical science where we are. doctors say that the uninsured rate here has fallen from 15% to 3%. that they've been able to hire about 1500 new employees since 2009. and last year turned their first profit in a number of years. the chancellor of this hospital says that medicaid expansion has not only brought costs down for his company, but also prices down for consumers. >> the dialogue that obamacare

will collapse of its own weight is not happening. in arkansas. and it's just a different environment. we've seen an increased number of insurers rather than a decrease. so, it's a -- it's an experience that is at variance with the national experience. >> part of that is the state's unique private sector approach, allowing the federal funds to be used by low income residents, to actually purchase plans from private insurers. that's brought about 310,000 residents in arkansas onto medicaid, and it's broadened participation and it's encouraged preventive and not emergency care. but lawmakers here are trying to preserve the program in advance of changes that would come from washington, and in doing that, they voted about three weeks ago to make the income requirements stricter. about 60,000 people will be moved to the affordable care act exchanges from the medicaid program here. they said that the issue is

affordability. that the costs are rising for the states, and that the cost burden should now be shifted to the consumer of the insurance plan. doctors wonder aloud how it will end up working, whether these people will fall off the program by attrition? whether they will, in fact, go and buy their own insurance? but one thing is clear is that arkansas' being pointed to as one potential test case for states that are looking to approach medicaid expansion uniquely but at the same time trying to preserve what program they have as congress is seeking these very steep cuts to the program. they're lobbying lawmakers, they're lobbying the two nebraska senators here to say keep what we have intact. guys? >> all right, kayla, thank you very much. kayla tausche in little rock, arkansas. >> high drug prices are raising costs for seniors. some medicare part "d" drug had annual out-of-pocket fees of $1,000 or more in 2016 and that's up 80% just since 2011

according to "the wall street journal." joining us bob ward ceo of radius health which received early fda approval for its osteoporosis drug just a couple of weeks ago. and dr. steve miller, chief medical officer at express scripts, one of the nation's biggest pharmacy benefit managers. welcome. glad to see you gentlemen today. we'll get into the details of this osteo drug. but just to start. i think we should talk about some of the legislation being proposed in congress, and maybe you can explain to us exactly where the stumbling blocks are to lower drug prices. because we always hear that drug companies blame pbns, they blame somebody else, there's all these middle men that everybody's like this. whose fault is it? and they're all pointing this way and it's really hard to determine who it is. who do you think it is, steve? >> you know, when there's competition in the marketplace, we do a great job of holding down prices. the best example is generics. so 90% of drugs dispensed in the

united states are generic. the price of generics have fallen by 60% over the last sate years. now you hear exceptions to that when you see the generics where there's only one in the marketplace and the drug price spikes. but overall generics have gotten cheaper. >> does that mean 10% of the drug are responsible for all of this increase we've seen and then some? >> 10% of the drugs which are the branded products are 7%. and the question is how do we control that? when we have competition in the marketplace and we're able to play them off against each other, and you'll see bob talk about this with his new product, you can really have responsibility in the marketplace, in the private sector works and the products are cheaper. >> with this new drug, for osteo, you had discussions with the payers, right? and you're using that as the reason why it's much cheaper, because you had these discussions. but really you have to undercut the existing drugs to get -- so that's why you're doing it. i mean just -- if people just talked to payers and payers say

we don't want to pay that? that's going to work? there has to be a reason to offer it lower, doesn't it? >> it's a little more complex than that, joe. if you think of a medicare part "d" medicaid patient, medicare patient, it's their out of pocket that sometimes is a barrier to accessing the right medication. when we thought about pricing, we went and talked with physicians and payers and asked, even though there are generic drugs in osteoporosis, why are diagnosis and treatment rates falling. we wanted to pick a responsibility list price, because that affects what patients pay out of pocket. >> how does that work? >> we wanted to make sure it was affordable. >> how does that work? the list price determines what? >> the list price would be the top level price that the manufacturer sets. joe was talking about different areas of the supply chain. distribution. managed care. those are all managed within that, but for a patient, if your copay is a percentage of the

list price, when we set a lower list price, we lower the out-of-pocket for patients and that's what we control. so picking a lower list price allowed us to put value for patients. >> right you had to beat the existing drugs. what would induce a company that has a drug with no competition to lower its list price? >> it comes back to affordability. when you think of osteoporosis about two-thirds of the patients are really on fixed incomes. so if the patient out-of-pocket is beyond what individuals can afford they can't access medicine. we believe patients have to be able to access affordable medications. so for timlos when we pick the list price we picked it to make sure that the patient out of pockets would fall into the affordable range. >> then you have all kinds of government agency. you have pns and you've got the fda which gives patent approval, we don't know how long they do that far, really and then you

don't know how many generics or how long to take to okay those, and our buddy, our pharma bro, that was -- or no it was the epipen, remember? the epipen, they -- they had not okayed any competition, it was bogged down in regulatory morass, and as a result that was the only product -- >> although mylan blamed the pharmacy -- >> that's right. >> -- it's their fault. >> what was the case there? >> remember the epipen is a 100-year-old drug and a 20-year-old pen, used to be $95 for a two-pack over course of several years they raised the price to $600. so only one company controls that. that's the manufacturer. >> but that was the government didn't let anyone else get into the market, right? >> so what really works is when we can move market share we can bring prices down. you saw this in hepatitis-c. when we got competition into the market place the market was we brought the price of hepatitis-c down by over 50%.

it's actually cheaper in the united states than it is in europe. so that's when the market really is working. >> and you're acting as the big heavyweight negotiating lower prices for people who don't have the scale that the company or somebody does? >> i want to bring this back to what bob's done. bob could have brought this product out at near parity to the competitor in the marketplace. what he's chosen to do is give a tremendous discount because this is an unmet medical need and he's going to make it up by volume. >> but that's the thing. there is a profit motivation behind this. you're doing that because you're going to steal market share left and right. >> it's also a different question when you look at osteoporosis today why are patients not able to access or afford medications? two things. one is price. the second piece is for the appropriate patient, what's the paperwork burden for physicians? so, when we talk with managed care, they have to determine that for an appropriate patient, yes we'll make this drug available, and we'll reduce the paperwork burden on physicians

so they're able to prescribe, as well. so when we pick a responsible price, it allows us to talk with the payer, who are at appropriate patients? how can we assure they have access? so the health care dollar stretches to treat more patients, instead of just treating a fewer number of patients at a higher price. because the goal, in health care, is to meet that unmet medical -- >> bob, someone writing in to me, someone who knows, i think, or at least has an opinion, says that express scripts makes more money on higher price drug and there's no transparency with pbms at all. >> if that were true we wouldn't be dispensing generics. generics are our breed and butter. we want to dispense generic when it's available. >> it's 90% of market so you have to. >> that's right. but there's brands that you can pit against the generics. but when we have a drug like bob's why are we going to prefer his over another is because we care about low net cost. and so what's the cost to the

patient, as he points out. so, our job, we won't be in business if we actually dispense the highest cost drug for our plan sponsors. and remember the people you don't hear plaining about us are the companies we work for. the 6,000 -- >> but you -- >> about you are doctors. and i've heard from doctors who run medical centers -- >> no, no doubt about it because we're compelling them to use the lower cost product. >> but they were rather use the one that they think is best -- >> correct. so the people that complain about us are the pharmaceutical manufacturers, because we're pitting them against each other and extracting money from the marketplace. the pharmacists, because they actually retract money from that side of the supply chain also and unfortunately because of the hassle that we create for doctors also. we're trying to develop tools to make it much easier for doctors, so electronic prescribing of drugs, and electronic authorization -- >> they complain that they don't get the choice. if they get the choice to push back with you and say we want to go with this because it works

better on this patient and i don't want to take this patient off a drug that's working. >> that's right. there's always medical exceptions. there's grandfathering if a patient is on a drug and having a good result we tend to keep those patients on those drug. but you're right, there is this degree of hassle. as a physician i can tell you, that's not -- one of the negative sides, but it also you have to look at do docs always prescribe the most appropriate thing? >> you're right, becky, it's a balance between price, and the clinical data on safety and efficacy. so when we pick a more responsible price it changes our dialogue about what is the profile of timlos. what are the patients for timlos is appropriate. do you agree, payer, that for these patients this medication is appropriate use. so it changes the dialogue away from price to how do we make sure that people who need to access and afford drugs can do that. >> gentlemen, thank you. we're going to --

>> yeah. >> we're working on it. >> when we come back, some of the biggest names in media and business taking the stage at the code conference this week from politics to tech and jobs we'll tell you what they had to say and then later today netflix co-founder and ceo reed hastings is going to be live on "squawk on the street." "squawk box" returns in a moment. most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future,

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welcome back to "squawk box." some of the biggest names in tech and business are taking the stage at the code conference this week. among them venture capitalist marc andreessen on tech's impact on jobs in america. he said that we've got the artificial intelligence thing all wrong. he liked the obsession with robots displacing people to the fear of automobiles 100 years ago. he also said self-driving cars will save lives, and increase productivity. so he's taken the other side of some of the debate we've had over here on the issue of jobs. our own julia boorstin caught up with linkedin's reed hoffman at the code conference and she joins us in california. >> good morning to you, andrew. while reed hoffman has taken a stand against president trump, and now on the heels of leading a $30 million investment in change.org, hoffman tells me that he's taking action because

the trump administration is worse than he feared. >> by trying to elevate his own tv ratings through america first kind of ideology he's breaking our alliances and global leadership with everything from not signing tpp to what you saw in the most recent european trip, which is, you know, it's unprecedented in the post world war ii era to have the leader of germany say oh, we can't rely on america anymore. >> hoffman says he wants to invest in networks like linkedin which he founded. now some of those include convoy, which is like uber for trucking, and dixo which is a network for exercise classes and as a director of another massive network airbnb he said he's glad the market is improving. >> one of the things that i've been a little worried about is that there's been a longer trend for companies staying private longer. i think there's a good public benefit and some good public accountability for ipos not

being super deferred. from a help the society point of view. i think the opening of the ipo market is good. >> as far as what's the next big game changing technology, hoffman tells us he's bullish on artificial intelligence as well as robotics. and while he says autonomous vehicles will eliminate jobs in the near-term over the long-term he says automation will create more economic opportunities. >> julia, before we let you go i saw a head line cross about steve ballmer being interviewed about whether microsoft has ever looked at twitter. i know he's an investor in twitter he said microsoft hadn't. we had michael nathanson on this morning who was very bearish on twitter. thought it was going to be worth half of what it is today. he was also bearish on snapchat. what's the mood on both of those? >> it's interesting because i asked reid hoffman about what he thought about whether or not twitter should sell just like linkedin sold to microsoft. he says there's been a great

experience, lots of opportunities there. now as he said i won't comment on twitter specifically but he says it really makes sense for a company like linkedin or perhaps twitter can find a parent company that makes a lot of a of sense. so there was definitely a lot of talk about twitter here yesterday. balmer saying he believes in the company long term. as for snapchat, i asked hoffman about what he thinks of evan spiegel not issuing any voting shares in the snap inc. ipo, it's an expert to see how it turns out. and investors get to choose if they want to invest in the company where they don't get any voting shares and the control is held by the founders. i think there's definitely a lot of conversation about both of the companies out here. we'll hear more today. >> thank you, julia boorstin, thank you. >> he's got the dts bad, dts

bad, reid hoffman. trump derangement. >> a huge hillary backer. >> wants him to release the tax returns. >> after november 8th, oh, my god the world is upside down. anyway -- >> when we come back this morning, shares of michael kors under pressure after disappointing comp store sales and giving weaker than expected guidance. that stock is down by about 7.25%, off the worst levels of the morning. hey. pass please. i'm here to fix the elevator. nothing's wrong with the elevator. right. but you want to fix it. right. so who sent you? new guy. what new guy? watson. my analysis of sensor and maintenance data

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welcome back. michael kors out with earnings this morning. the luxury goods maker beat estimates on the bottom line, but comp store sales fell more than expected and the company gave weak guidance for the year. the shares are down more than 7.5% on the news. joining us is jan enoughen, the ceo, also a cnbc contributor. what happened with michael kors? >> well, you know, i haven't been a fan of kors for a while. i think they're on the downside of the ditch, not the upside. i don't think this report told us anything different than that. they need to step up their game on reinventing their brand.

they haven't gotten there and so this the a pretty bad top line report. they off set some with better gross margin. i still think that what they really need to do is start working on the brand, controlling the distribution. lessen the outlet space. making the stronger brand with the consumer. that's where everybody has to go with a brand that's soled which the consumer. we have seen ralph go through it and kors has not gone through it. they're a long way from being fixed. >> they're closing 100 to 125 stores. is that a step in the right direction? >> absolutely. thigh need to recreate -- they need to recreate the brand in the consumers' mind. that's a hard thing to do once you sort of lost that space. they did what everybody does. they became way dedicated to off price and they hurt the brand image. at a time that coach was doing poorly as well. that wasn't just coach. that whole space started to slow

down. so what it covered -- which is everybody buying six purses a year instead of two, makes a big difference when things start to slow and the brand is not as strong as it was. so they had two things to fight against. the overproliferation of the brand and the slowing in the space. so others have started to fix that and they have done it in various ways. what you have to do is control distribution. make sure that you've got a brand that means something to the consumer. be able to maintain the pricing instead of discounting it out everywhere. you have to do that by controlling the distribution of the department stores. in the outlet space. in your own stores and maintain the price point. while that hurts the top line. >> they have admitted they have to rebuild this whole year, very quickly, would you buy the stocks when it's down 7% on the news? >> i'm not a buyer yet. i'm a coach and a buyer of ralph lauren even though they're going through the transition phase right now. i don't think kors has this problem even closed to solved yet. i won't be a buyer until they

have. i don't think this is cheap enough yet. >> good to see you, jan. coming up next we'll check on the futures markets ahead of the opening market and see which way this market is headed. be igtd roo back. the power of a low volatility investing approach. the power of smart beta. power your client's portfolio with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. containing this information. read it carefully. at bp's cooper river plant, employees take safety personally - down to each piece of equipment, so they can protect their teammates

and the surrounding wetlands, too. because safety is never being satisfied. and always working to be better. can we at least analyze customer can we push the offer online? legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday? yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes.

final check on the markets this morning.

futures have been a little bit higher yesterday after the markets closed down, slightly yesterday. dow futures looking at the highest levels since show started. up 30 points. s&p futures up by four. the nasdaq up by 20. >> got five seconds. just enough time to say make sure you join us tomorrow. "squawk on the street" is next. ♪ good morning, welcome to "squawk on the street." i'm dave faber, with sara eisen and mike santoli. cramer on assignment and carl you ask, well, he's in -- yes, in the -- in rancho palos verdes for the codes conference. he'll talk to the silicon valley heavyweights and we'll talk to netflix ceo reed