me >> longest daylight time of the year >> oh. the same -- okay >> and the longest read of the year >> same length >> "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box. more daylight. good morning was it light when you went to bed last night >> yeah. >> yes exactly, right it's light the sun was still out. okay it is the longest day of the year -- >> 24 hours. >> we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and melissa lee joe and i have been debating this the last 15 years >> so you're not saying 26, 27 years. >> more daylight ever. >> longest day >> longest day

let's look at u.s. equity futures. yesterday the markets were weaker this morning things are mixed. dow futures up by close to 12 points s&p down by 2 points nasdaq down by about 15. in asia, the nikkei was down almost a percentage point. same thing for the hang seng the shanghai was up by a percentage point the cac is down by 1% now. ftse is down by a third of a percent. the dax is off by 0.6% the ten-year note, the yield yesterday settled at 2.15% this morning the yield is below that 2.146% breaking overnight, saudi arabia's king ousting his nephew, the ksitting crown prine and putting his son, mohammed bin salman

the former crown prince was in charge of saudi arabia's services footage showed an amicable change in succession the saudi all shares is up sharply today on the news. a check of crude prices, this is seen as a potential wildcard when it comes to crude with the change in power. we're seeing it holding on to modest losses here this after a big loss in yesterday's session. >> this happened fast. because the president was just over there in saudi arabia western sensibilities, pro sort of coming into the 21st century. economics. that's why the stock market is up they talked about he had gotten a lot of power for being 31

years old. he is like deputy crown prince or assistant or -- crown prince understudy there was conjecture would he be elevated to this post. when was trump over there? a month ago. >> yeah. >> it's already happened he rolled out the red carpet for trump when he came had a close relationship very interesting that it happened that quickly. >> the rise in saudi shares has something to do with msci saying saudi shares could be included in msci indices at a future date >> the other big story is someone getting ousted at least stepping down travis kalanick, the uber ceo, and arjun kharpal joins us from london i thought it was going to be a leave. is it definitely not a list? he's never coming back never say never?

>> joe, what we understand is that there was big infighting in the board. the board members forced him to resign but travis is still a major shareholder in uber, he sits on the board, so he's not completely gone, just resigning from the ceo position. that leave mispositis many posi at uber. they are searching for a replacement. no one has been put forward to the fore we had departures from uber, from twitter a pool of talent in silicon valley to choose from. so this leader needs to be as innovative and aggressive as travis kalanick was, but at the same time operationally tight. uber is expanding into new markets, new product area, and rumor brs a s about a potentialo we need someone to lead the company forward.

>> all right we'll talk about this for three solid hours. he would will beat the bushes until we find as much as we can. they basically what was happening at that company in today's world could -- this is really the only outcome probably that could have happened at this poin point. >> can i ask a -- we'll move on. can i ask a question who would be stupider, a person who didn't know there were only 24 hours in a day or someone who believed i didn't know there were only 24 hours in a day. >> someone got you with that already? >> someone said laughing my fao, joe squawk doesn't know every day has 24 hours who is really stupider someone who doesn't understand

sarcasm or the person who doesn't knows there 24 hours in a day. >> it's close. >> is it it is close. i can't tell who would have to be more absolutely stupid. any way. i don't want to focus on one tweet. i went to grad school for god's sake >> do you know aqua man? >> yeah. this is worse than when i was kidding about aqua man staggering i learned that -- when you're maybe three years old n s old, n how many hours there are in a day. grad school at m.i.t., i knew by then >> my son knows. he's five. >> your son probably knows there's 24 hours does every minute have 60 seconds? >> only some only odd numbered. >> thank god we're not on the metric system. are there 24 hours in the metric system never mind >> walgreens and theranos reached a deal to settle their

legal dispute. a tentative agreement calls for the lab testing company to pay the drugstore operator less than $30 million. at one time walgreens hosted 40 theranos blood testing centers the deal has not yet been finalized a ed according to the "journal." republicans claiming victory in two special congressional elections yesterday. john harwood joins us from atlanta. he has more on that. good morning >> good morning. big sigh of relief from the white house. they won both of these races, too close for comfort in south carolina for mick mulvaney's seat he's the budget director now but a win. and in georgia, karen handel, the republican did better than had been expected by the polls preelection. she won and she ended up after a campaign in which she did not talk much about donald trump, thanking him in her victory

speech last night. >> special thanks to the president of the united states of america >> no surprise president trump was on twitter last night saying he had blanked the democrats in the special elections, which is crew they are all republican seats, to replace people he picked in his cabinet. this provides a boost at the president's attempt to get his agenda through it calms republicans jitters as the senate is preparing to take up the healthcare bill and they hope to get on to tax reform positive evening for the trump white house. >> this was watched so closely you point out what the president said about all the money spent on this. what does this mean to the

democrats? i know it wasn't necessarily the democratic leadership looking at this race as one they should be pouring a lot of money into, but a lot of money came pouring in from democrats around the country. >> democrats really wanted to win this race. they threw everything they had into it. they thought this was theirsho to embarrass president trump, show that the so-called resistance was going to slow him down jon ossoff had tremendous funding. republicans linked ossoff to nancy pelosi, not a popular figure in georgia. if you look at big picture, how democrats over the course of these specials ran reasonably close in the republican seats, they're looking at a pretty good 2018 midterm election. one where they could make gains. but they have not proven they have the ability to punch through and flip the house

if they're going to do that, they have to win seats like they did last night heavy college educated district. the kind that is the least friendly within the republican universe to donald trump they were not able to do it. they have a lot of work ahead. for now republicans, i think the most immediate effect of this is to calm the party and allow them to move forward with a little bit more spring in their step over the next couple of months as they try to deal with these big issues >> john, thank you very much coming up, china winning a big market victory after a four-year battle it could mean billions of dollars flowing into the china stock market those details next and a full market rundown is straight ahead. your muscles look good, but we should be seeing more range of motion. i'm fine. okay, well let's see you get up from the couch.

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while painting your toes. on demand laughs, during long bubble baths. tv on every screen is awesome. the all-new xfinity stream app. all your tv at home. the most on demand, your entire dvr, top networks, and live sports on the go. included with xfinity tv. xfinity the future of awesome. welcome back to "squawk box. the queen of england will open a new parliamentary session today. her speech begins at 6:25 a.m. eastern time back here in the united states we get the latest read on housing with may existing home sales out at 10:00 a.m. eastern. on the earnings front, carmax and winnebago before the bell

and oracle after the close president trump is taking his technology week initiative on the road. he's headed to cedar rapids, iowa where he will talk about technology's role in farming and agriculture. he will hold a rally there later in the evening china's stocks taking a major step towards global acceptan acceptance with msci adding china shares to the emerging market index china has been campaigning for the decision for four years, msci previously excluded the shares because of restricted access to china's equity markets. we'll talk more about china stocks with mark mobius at 8:15 a.m. eastern time. back to the broader markets now. joining us is michael tyler, chief investment officer from eastern bank wealth management

and tom manning. guys, great to have you with us. >> good morning. >> michael, starting off with you. you look at the markets what is the outlier in terms of performance is oil oil hitting fresh bear market territory just yesterday i'm wondering if you think the markets can maintain record levels even as this asset class, oil, is in a bear market >> i think they are -- oil has always been the most diverse sector compared to the rest of the market the least correlated, if you will, compared to other sectors. it's not surprising that oil is going one way, the rest of the stock market is going another way. when you look at oil, how far down will it go? i don't think we'll see much below $40. i think we'll be in a trading range. right now the u.s. shale producers are the marginal producers and they're much more flexible than the saudis or opec has been that's a good thing. the rest of the market is

producing good earnings growth and can keep going until you find a point where the fed kills it with too aggressive action or the prices get too expensive so far neither of those have happened >> all the good points, of course thomas, in addition to oil, you look at what is going on with the yield curve, you wonder if the other asset classes are sending a warning signal for stocks the spread between 5 and 10-year yields are the smallest since 2007 we may be looking at inversion if the fed keeps acting and acting hawkishly what are your thoughts that the signals other asset classes are sending in the face of record high levels. >> it does appear that the stock market or the bond market has it wrong now. with stock market yields at 215, and the stock market moving higher, there's diversion going on here. and it's hard to tell which one is right at the time with short-term rates going up

and long-term rates not moving higher, we continue to have this debate internally about where the next move is i think at this point we believe the stock market is more right than the bond market usually we don't think that way. the bond market has a good pulse on where things are going. the economy is strong enough, we think, for rates to rise later on this year but in the short-term, i think the market wants proof of that >> in terms of what you're doing now, michael, you have taken profits in technology stocks what kinds of stocks the f.a.n.g. high flyer stocks >> some of those have been so fast, gone up so fast. particularly the ones that are small portions of the benchmark. >> are they overvalued >> i don't think they're overvalued they've had a friend douse run b tremendous run. stable stocks have been beaten up

we are still overweight total stock market >> tom, you're in f.a.n.g. and long f.a.n.g you're not concerned they moved too far too fast >> we're long f.a.n.g. to the extent that it's a fairly big segment of the market in terms of the weightings. so we're not necessarily overweight those areas relative to the market. growth has seriously outperformed value this year it would be foolish to move out of those areas at this point given the momentum behind them like michael, we do agree there's better value in other segments of the market we are rotating. we are seeing rotation in the market we want to stay ahead of that. >> rotation into what ma banks, one of the best performing sectors this month? >> you saw the warning shot across the bow in technology so we've been lighting up a bit in the technology space. with energy declining, it's ban

tough sebeen a tough sector to be in. healthcare, there's some great value in certain healthcare providers at this point in time. >> michael, you also found some values and bargains in energy. what areas are you looking at? any concern that some of the dividend payers in the energy sector could come under pressure as oil prices go closer to 40? >> i don't think that dividends now are under pressure the remarkable thing in the oil sector has been the degree to which the cost of extraction has dropped significantly over the past several years that's changed who sets the marginal price what you can also see is that companies will be much more adept at plugging holes, restricting supply as needed to keep the price within a trading range. that's different from even two, three years ago when prices fell from 114 to 126. >> when you look at the energy

sector, what sorts of companies are you finding values in? are you in the ones that are more levered to a move higher in the price of oil like some shale operators? >> i think there's a lot of risk there. we're mostly in the integrated companies, large integrated companies. you have some cushioning from the downstream but i think that you -- there's room in all of those areas, but primarily we're sticking with the integrateds. >> michael, where are you finding value in terms of other sectors out there? you say there is no clear catalyst for the markets to move higher at this point >> i don't think there is. i think that right now you have to wait for the earnings to come through. we had 14 prgs ea% earnings gron the first quarter aided bay doubling of oil prices year on year now oil prices are dipping the weaker dollar relative to a few months ago is helping.

i don't think you'll see double digit earnings growth again for the next few quarters that puts a bit of a head wind into the market but i think the earnings can do decently. >> tom, you're expecting a pause in the markets then resumption of the move higher later this year >> that's right. there's no clear catalyst to move the markets higher. they could drift a bit liar the resumption of healthcare reform and tax reform could be a catalyst yes. we think that the market up 10% now year to date is generating largely the full year's market return with maybe a bit ahead of it. >> tom, michael, thanks for your time appreciate it. >> you bet >> mattel's ken doll getting a makeover the company is releasing 15 new ken dolls featuring three body types. seven skin tones, eight hair colors, and nine hairstyles. barbie's senior vice president

saying by continuing to expand our product line we're redefining what a barbie or ken doll looks like to this generation i love that. the next gen ken coming a year after they gave barbie her own makeover do theyhave the najarian bald with the man bun that's a good look >> when did you cut the man bun off was that before the longest day of the year or the 25th hour of the last solstice >> you notice i never turned my head i never cut it off >> it's there. >> business up front party in the back. >> no, no, no. don't show don't show >> is there a totally dr. evil is there abald ken >> they should >> that's why i don't think it's

fair we're not going to overcome the anti-baldite stigma. there could be the liesman, you still have the crown -- >> john fort could do it >> he's young and hip. >> that's what i mean. until they do that -- >> i have not looked through the full collection of dolls >> like kids, some day they may be bald, they can't feel good about themselves shouldn't be bald shaming. bald shaming is -- no one should do that. >> agreed. >> when we come back, house speaker paul ryan pushing for tax reform by the end of the year we'll ask chris coons if the timeline is realistic and what he wants to see in a potential tax bill as we head to break, look at yesterday's s&p 500 winners and losers think again.

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welcome back you're watching "squawk box" live from the nasdaq market site in times square? good morning welcome back we've been watching the u.s. equity futures after the markets end slightly lower yesterday, things are mixed this morning dow futures up by 12 s&p up by a point. nasdaq up by 1 poin3 points

fedex posting better than expected earnings and revenue. among the reason, higher rate s. adobe systems offering upbeat guidance on the cloud based suite. mike santoli suggesting another "a" should be added to f.a.n.g shares of la-z-boy rallying after they increased their stock buyback authorization. house speaker paul ryan giving a major speech on tax reform and he told brian sullivan he expects to get this done before the end of this year >> we all agreed on the timeline gary, steve mnuchin, the house and senate tax writers, we believe this fall is the time to get it done, get it done before the end of the calendarier this has to get done america's tax system is one of the worst in the industrial world. it's a huge anti-competitive force in our economy it's the abcs, the basics of tax

reform we agree on almost all of that we're narrowing our differences, getting on the same page and then delivers tax reform in the fall >> joining us now with tax reform and other issues on the hill, senator chris coons. senator, we want to talk about patents, and strengthening that. you can look at the history of the world and it wasn't up until you could own something, intellectual property, gdp, per capita gdp, that's when it went up inventors used to be paid by inge cans and queens this is a bipartisan thing that you are doing with a couple other senators we all understand that it brought a tear to my eye reading your efforts on that before we get to that, let's talk about this other stuff. you saw what congressman ryan said about tax reform. then there's the obamacare

repeal and mcconnell is he walking around with a briefcase where it's chained to his -- all the stuff is in there, nobody has seen it? it takes three keys to open. do you know anything of what's in this bill does anybody >> i have no idea what's in the republican leadership written obamacare repeal and replace bill in the senate neither do many republicans and all democrats. this is no way to produce a bill of this significance folks may well forget this, but the process that led to the affordable care act included dozens of hearings, many days of public mark ups of that bill in front of the finance committee and the health and education committee before it reached the floor. i understand folks say that was then, this is now. the reality is that there will be very little time after the big reveal of what's in this bill before we're asked to vote on it. >> that's what they want that's the idea. >> i wish my constituents could

know what's in it. i think that's what they want. president trump denounced the house bill as being mean and my hunch is part of why all the contents of this bill are concealed from the general public and from some republican senators is over concerns that once folks understand how it will impact people, there will be a lot of pressure against it. >> senator, is there a chance if you saw the bill you might vote for it >> there's a chance if i saw the bill there would be things in it that i would support if it is anything like the house bill, it's unlikely that i would support the entire bill. i met with a number of republican colleagues, both recently and in the last congress to say i recognize the failings of the affordability care act a lot of small business owners complained rates have gone up too much and they have not been able to afford the healthcare available. i offered bills to reform some aspects of the affordable care

act. i cannot support the american healthcare act if the senate bill looks like that, they would have to rely solely on republican votes to pass that. >> the patent issue, what are the shortfalls in patent law right now that need to be fixed by this new initiative >> i'm glad you recognized patents are an american creation they were in our constitution and are a critical protected property right that allows inventors to take advantage of the value of their inventions. in recent years there have been supreme court decisions and actions in the patent trademark and appeals board that weakened the value of those patents detailed technical things about how you can challenge a patent repeatedly after it's been granted to weakens your ability to go to the capital markets and get capital because it's less reliable we would address some of those

concerns and bring us back to being the number one patent system in america. the u.s. chamber of commerce last year said we dropped to the tenth best patent system in the world. we had previously always been first. >> a lot of lawyers probably don't like listening to what you're saying now. that is who is on the other side of this, right the fees involved with patent disputes, patent challenges, patent litigation, you will put half the lawyers out of business if you make it more difficult to keep doing this. not saying that's a bad thing. wouldn't that happen my goal is to strengthen pate s patents, so innovators, transfer offices, all of those will benefit from having stronger patents it may or may not mean less litigation, but it's more likely the small guy who has invented something really big or disruptive in the garage will be able to take it to market and

continue the innovation that's been so important to our success and our competitiveness as a global economy >> in this sort of aspirational shark tank world, senator, i'm sure that's music to entrepreneurs ears does this also help the big guy? a lot of patent holders in the u.s. are challenged by products overseas does it make it easier for them to take them to court? >> it is neutral as whether you are a big company or small company, it strengthens patents. if i'm a dow or dupont, i have a stronger patent when i'm protecting it against infringement whether by a startup or foreign economy as we all know fsh, if you're g to succeed in a shark tank world you need access to capital having a strong and defensible patent makes it more likely to attract start up capital if you have a break through

invention, it will get attacked and infringed. defending it in court is the time honored way where we incentivized people. i think stronger patents are good for everybody, whether large or small who has a disruptive invention they want to take to market. >> you worked with a couple republicans to put this together >> senator tom cotton is my initial cosponsor. several hours are looking hard at this. this was endorsed in the last congress by strong business groups we hope to have conservative and lynn bra liberal senators on board. >> just couple of time there's you were talking about the private sector and an idea and

entrepreneurship and getting away from some constraints you almost sounded like a republican, senator. it was really strange for me it was surreal actually. do you know there are times where making a lot of sense? is that somewhat new -- you're laughing >> this is not at all new to me. that would be music to my grandparents ears were i to continue in the long tradition of being republicans i was the first democrat in the history of my family >> black sheep >> i grew up in a family of inventors and i have a strong healthy respect of the risks of entrepreneurship and how hard it is to navigate, getting capital, taking products to market and scale up it wouldn't be such a bad thing to have more republicans sounding like democrats and more democrats sounding like

republicans. >> i am raising some kids -- let me raise thead this to you. democrats would be much better as a party if they got together with republicans on healthcare, tax cuts, security, obstruction doesn't work maybe he's watching. maybe he heard you and thought here's a guy who gets it >> president if you're watching, i have a series of bipartisan bills that i introduced with republicans on healthcare, tax reform, manufacturering that i would love the opportunity to sit down and talk about. there are republicans and democrats who try to work together in the senate i have gotten bills introduced and passed into law in the last congress the only way that happens is by having republicans and democrats work together. whether it's in the obscure but important area of intellectual property and patents or the more pressing area of healthcare and tax reform, i think we all do better when we sit down and work together, trying to pass bills

written by only one party and in secret i don't think that's the right path the best path is to come together and listen to each other. thanks for a chance to talk about that >> hope to see you again soon, senator. just to clear the record not everybody day is 24 hours. earlier i -- because it's the longest day of the year. but it is only 24 hours, senator. >> leap year >> no, not that. to keep coordinated universal time of the earth since th rotation sometimes is irregular and to keep it more closely synced to means solar time there are times where you add a second to a day >> that's also what leap year is about. >> there's been 27 adjustments, day nas as that are longer than hours since 1972 this guy says don't tell becky or you will never hear the end of it. >> tell him thank you. >> you got it. who is it?

>> just some guy some -- >> bill? >> bill. >> thank you bill. >> big bill. he's a nice guy. >> coming up, uber ceo travis kalanick stepping down overnight. we'll bring you the latest at the top of the hour. at 8:00 a.m., kevin mccarthy will talk about the gop's plan. at 8:po, marco rubio will join us. stay tuned, you're watching "squawk box" on cnbc [vo] when it comes to investing, looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.

breaking news overnight. saudi arabia's king ousting his nephew, the sitting crown prince and pitting his son, mohammed bin salman next in line for the throne the new crown prince is 31 he maintains his position as defense minister and will oversee a vast economic portfolio. he was named deputy prime minister the form every crown prince was in charge of saudi arabia's security services. he's been relieved of all positions. saudi television showed footage suggesting an amicable change in succession with the former crown prince pledging allegiance to his younger cousin

it may not be a coincidence all of this happened as crude oil prices slipped back into bear market territory saudis have been leading the cartel to make sure thain reiey reining in production. the prince has been in charge of a lot of things including vision 2030, the saudi plan for economic renewal and diversification to get them off the need for crude oil prices to support their economy. maybe not a huge coincidence this timing is coming now. it's fast. he's very young. 31 wti down another 12 cents today. 43.39. lead story in the "wall street journal" today is about how oil prices returned to the bear market despite the best efforts of saudi arabia and opec. uber's ceo travis kalanick resigning after share holders staged a revote. bill gurley of benchmark capital tweeting there won't be many pages in the travis kalanick,

very few entrepreneurs had a lasting impact on the world. gurley was reportedly one of the major investors that demanded that kalanick resign joining us is a partner from lead edge capital, the firm invested in uber at a $40 billion valuation. brian, thank you for joining us. >> sure. >> was this the only path forward for uber in your view? >> no. look, the board has an obligation to serve all stakeholders to serve as checks and balances to make sure the company is run properly you have a board here incredibly experienced who made the determination that the right thing to do to move forwardis have new leadership. that's fine. there's no problem with that i think in our mind we just have to trust them as shareholders to identify is this the right thing to do. i don't knows there a one correct answer and time will tell but in our opinion it is just a

matter of the board serving the interest of all stakeholders including the share holders and those minority interested shareholders, and properly doing what they think is right >> ub hear taer has taken a serf hits this is just the latest in a string of developments for the company. what is your intake on how that impacted valuation did the pane tacompany take a h valuation because of the series of pr fiascos that it suffered what does the valuation do now that uber's ceo is out and there could be a fresh start for the company? >> sure. i think that in regard to valuation, there has not been a primary round at the company for a while. probably 18 months there's not really specifically lots of share transfers at the company because they keep a tight grip on transfers.

so the idea of talking about valuation is more of an empirical theoreticaled can rather than a practical one right now. that being said, i think certainly if it was a public company, let's say it was a public company already, certainly, you know there might have been a hit taken to the share price given there's a negative sentiment when there's real negative sentiment about a company you could have a dip we look at things as investors at our firm over a long time period our belief with uber in particular is this is a company where there's a lot made of some of the pr related things a lot made around the management but at the end of the day most of the users on uber, they want to get from point "a" to "b. my mother who lives in florida, who is 65, she doesn't necessarily care who the ceo is of uber. >> but does she care about a culture of sexual harassment at the company?

do corporations care about a culture of sexual harassment when they say use uber as a designated ridesharing service >> absolutely that's something that is very important and we take that -- we do not take that lightly. we take that incredibly seriously. my point is i'm not positive that every single one of those people that is taking it, the majority of people, the first and foremost concern are the politics of the company. that being said, of course they care about sexual harassment and these things but they also care about getting a comfortable ride and using a great service. the holder report came out with specific things that the company should do. they're following those things you know, they're doing what they could do to instill a great culture and soften up the image a bit. i think those are all wonderful things certainly no investor and no rider will necessarily condone that but you also have to decouple it to some extent

>> brian, thanks for phoning in. brian neider lead edge capital. >> the earth is going like that. so you have to add a second. as it is going around the sun -- >> the moon? >> no, no. the earth goes around the sun. >> yeah. >> you know how long it takes to go all the way around? >> 365 days? >> how much longer a quarter. >> which is why every four years -- >> bingo i said bingo like sorkin i guess i miss him i don't think -- the seconds are -- 27 seconds since 1972 all this -- you know who else i feel like? mr. science, bill nye. >> that's you. >> the junk science guy. >> that's me when we come back, american brands looking to tap into the chinese market the ceo of gerber baby products

on working with alibaba to sell to cli these chinese consumers before we head to break a quick check of the european markets. and bit of pressure. the cac is the worst of the bunch. downy b0.9% "squawk box" will be right back. ray's always been different. last year, he said he was going to dig a hole to china. at&t is working with farmers to improve irrigation techniques. remote moisture sensors use a reliable network to tell them when and where to water. so that farmers like ray can compete in big ways. china. oh ... he got there. that's the power of and.

welcome back about 4 million babies are born in the united states each year that's a lot but it is nowhere near the roughly 18 million that are born in china or at least were in 2016 companies are paying attention to this market, especially companies that make products every child needs like baby food joining us right now from detroit where we'll take part in alibaba's gateway 17 event is bill partika the president and ceo of baby food giant gerber. thanks for being here today. >> thank you for having me, becky. it's a pleasure to be here with you and the entire "squawk box" team >> you're already the number one brand in china, is that correct? >> that is correct >> so what would you like to see from alibaba, what are your plans? what are you thinking about, this market? >> well, as we built our business in china, it's interesting, it didn't start on our own doing. it started with local traders who started to purchase american

products, and trade those in the chinese market a few years ago, we partnered with platforms like alibaba, and started to take control of the business itself. and it's been a tremendous success. >> we know that in the united states, moms are looking at more organic issues and i realize you have a gerber organics line. what are you doing in terms of market share in the united states are you losing out to brands like an ella's or an earth bound >> >> in the united states, actually in all markets, this new millennial generation, as we look forward to a generation to feed they're having a fundamental change on the marketplace. even big manufacturers like ourselves, we cannot sit back on our laurels. i can tell you in the u.s. we still maintain a very strong number one position in the marketplace. and we have the solutions that the consumer is looking for in organic. we actually have the largest nongmo portfolio in the category we're looking forward to being on trend >> what's stunning about the

chinese market is that it's got 20 million babies, so five times the size of the u.s. market. why do you need to go through alibaba? i mean alibaba has come under fire for having counterfeits on its website. and i'm wondering if, perhaps, you could have gone it alone, so to speak, in selling directly to the chinese consumer, who would then know that it is directly from gerber? >> so we have looked at a number of routes to market in china, melissa. i think you make a good point. actually i was in a presentation yesterday with jack ma and the reason we chose alibaba as one of our primary strategic partners is their focus on being transparent with the consumer. those are the same values that the gerber business shares so we feel very confident in the platform i can tell you, at least two things with china. amazing dynamism in the country, and one of the most important decisions you make is who you choose to partner with and our alibaba partnership has paid off many dividends than we expected to pay off into the

future >> bill, want to thank you very much for joining us today. we appreciate your time. >> thank you for your time >> and by the way, folks, make sure you catch "squawk on the street" later this morning, david faber has an exclusive interview with alibaba's executive chairman jack ma >> news breaking overnight that uber founder, co-founder travis kalanick has stepped down as ceo we'll talk about what's next for uber, and then later we're going to talk taxes with house majority leader kevin mccarthy "squawk box" will be right back.

>> breaking overnight. uber ceo travis kalanick is out after shareholders stage a revolt we're live with the man who broke that story straight ahead. plus a royal shake-up.

saudi arabia names a new crown prince, in a surprise power shift global markets are taking notice a closer look at oil is coming up and fedex delivering for investors. we break down the numbers as the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york city, this is "squawk box." good morning, everyone welcome back to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square i'm becky quick along with joe kernen and melissa lee things have been a little bit mixed. dow futures are up by about 30 points now the s&p futures have turned positive dropped by just over 1.5 points. nasdaq still negligent dive down by about 4 points below fair value. we're also watching oil at this hour oil has slipped into bare market territory as u.s. producers

continue to pump out all kinds of production. the shale has been a huge issue that opec hasn't been able to deal with. so even as opec has been reining in and cutting production, u.s. production has increased and that is what has led oil to 43.51 right now for wti. >> we'll be getting inventory numbers later this morning that could also move oil breaking news out of the middle east, saudi arabia's king salman has appointed his 31-year-old son muhammad bin salman has crown prince in a series of royal decrees issues, the first in line from the throne was stripped from his title of crown prince and from his coast as country's powerful interior minister overseeing security the newly announced crown prince mohammed bin salman who serves with the defense minister in an overseas vast economic portfolio had previously been second in line to the throne uber ceo travis kalanick

resigning after shareholders stage a revolt board member and early uber investor bill gurley at d.c. firm benchmark capital tweeting this morning there will be many pages in the history books devoted to travis kalanick very few entrepreneurs have had such a lasting impact on the world. clearly, however, it was reported that one of the major investors who was demanding kalanick resign, things heated up and moved pretty rapidly. it's been an incredibly difficult year for uber. it started with the blog posting by a former engineer, a woman who laid out her cause for why she had left uber. she wasn't suing them. wasn't doing anything. laid out her problems with the entire sexual harassment she said she faced there that kicked off a round of investigations, and soul searching at the company all of that capping last week with kalanick saying that he would take a three-month leave of absence today we hear that he is stepping down. now there were some drama between board members over this. arianna huffington was convinced that kalanick could be

recuperated. could be find of fixed so that he could come back and continue to lead the company. because he's definitely the person who got the company to where it is. his hard charging ways but this problem is one that persists in silicon valley and we'll see if this has impact on other companies. >> some of the findings of the holder report were absolutely staggering sort of a revelation of a bro-y kind of culture. a culture of drinking at company events, patterns of sexual harassment and when you have five major shareholders essentially banding together to send this letter out, all according to "the new york times," to demand or to ask kalanick to step down, they control 40% of the voting power of uber shares so you got to listen to these guys >> but the narrative changed fairly quickly because the narrative up to this point had been that kalanick and his co-founder as long as they stuck together on this would be able to stave off any insurrection, they were the ones who controlled the majority of votes. that's where things changed pretty rapidly just this idea that it was a

coalition by the investors who came and asked for this. >> yeah. >> the founders are, you know, the rest of -- it's mixed. jobs, comes back, i mean, remember when the pepsi guys, $9 billion stock -- >> mm-hmm. >> some other guy. gil emelia was at apple for awhile most valuable company in the world now. then facebook i guess -- >> brought in sheryl sandberg as the adult in the room. a lot of these companies bring in the adult at some point >> right but that hard-charging rebel, you know -- >> it's why the company got to where it is today. >> i know. and it's too bad that this stuff happens. >> you bring up a good point, would you ever say never return? would he be able to come back in once the company kind of weathers through this. >> i liked him when he was on. even though he couldn't slip a lot of baggage >> again it's his hard-charging way that got the company to where it is today. on the cnbc newsline to talk more about this is ed lee of

recode and ed, this is the conversation that people are going to be talking about all day. what happens to uber without travis kalanick? >> well, right now, i mean, they're going to continue operating as they have they already had sort of in place a leadership team. he was taking a leave of absence so they've already sort of kind of geared up for this. i think the bigger picture though is what it does to the valuation, to the whole idea of the company. a lot of the earlier investors still think of uber as travis kalanick's company anyway. so for some of those early guys, i think they're still kind of coming to grips without travis kalanick company anymore that's the big question mark >> what's happened to competitors like lyft in the meantime as all of these confusing stories have been swivelling, as uber's been kind of focused on its own internal issues they've been picking up market share, right >> that's a good question. but i've actually been surprised that lyft hasn't taken better advantage of uber's troubles right now uber still leads, you know, in terms of riders, and

drivers, there's this sort of network effect that uber still takes advantage of and lyft really hasn't cracked into it any more than they had before. so, they're still a distant number two in a lot of markets and i don't really see that changing even after this happens. unless, you know, people start leaving ubner droefs, which i don't think is happening >> although they fired 20 different people, and many of them were key people, so they kind of cleaned house themselves >> yeah. so, you know, it's just sort of coming all around. i think right now, the leadership, you go by the question, you know, i think ariana huffington right now seems to be sort of a key driving force behind a lot of these changes, and behind a lot of, you know, what might happen next she's on the board and i think, you know, she's going to be the one to look at in terms of, you know, who they look to try to get to kind of fill that big gap, as well as the other, you know, the executive ranks. >> how do you figure out what this mean for the valuation? we have to wait and see another

round of funding >> i think that the next big step is to go public you know, shares have been creating on secondary market but it's something trading as low as sort of valuations at $50 billion instead of $7 billion on the secondary market not quite the same liquid situation. so it is going to trade lower but that's much lower than you would expect that's still a question mark in terms of whether new investors are coming in anyway i think they have to really gear up for public offering to kind of smooth it all out, make the early investors hold >> who can be the next ceo, ed somebody inside the company or outside the company? i know he just resigned. but we all want to know. >> so do i there's some names going out but i can't quite -- we can't report out ourselves, who the people are -- >> within the company or outside the company? >> they're looking outside the company. if it's an internal person, the

closest so far would be camp, the current chairman and cofounder along with travis when the company was formed so he is one contender, as the insider. but, from what we've been hearing from sources they really want to look outside they've been looking for coo candidate, sort of second. so there is a chance that the people they look at could step into the ceo role. we don't know who those people are yet. >> quickly does this have any effect on the other silicon valley companies is there an effect -- >> no it's a great question, becky. it does send a chill in the sense that it degrees, other companies tend to operate in this kind of male dominated, you know, win at all cost type of way. it sends a message that you can't operate like this. this is not good not good for your company. it's the culture you really have to sort of change how you think about leadership, and you know, developing a company

>> ed, thanks for the time >> sure. >> some other headlines at this hour we'll get a fresh read on the housing market at 10:00 a.m. eastern time the national association of realtors is out with existing home sales for may and economists are expecting a half a percent drop walgreens and embattled lab testing company theranos have reached a tentative settlement to their legal dispute walgreens had been attempting to recover the entire amount they put into the partnership the deal calls for theranos to pay less than $30 million. and fedex reporting $4.25 a share, well above estimates of $3.88. revenue also beating forecasts and fedex gave an upbeat full-year forecast more on fedex later this hour. >> house speaker paul ryan delivering a major speech on tax reform he then spoke to our brian sullivan about whether the border adjustment tax is alive or dead. >> it's not dead it's just we acknowledge, along with the administration, that in its present form, full phased in

immediate 100% day one we can't do that. we don't want the currency to have to appreciate 25% overnight. we think that that would be very destructive. >> you've got a -- >> all over america. we don't want to do things that severely disrupt companies let alone u.s. holdings of foreign -- foreign holdings of u.s. companies third world debt there's a lot of issues we have to deal with >> joining us now freedom caucus co-founder congressman jim jordan congressman thanks for being with us today. >> yep >> is it possible to phase it in and pass muster with you and -- >> no. >> no way? >> i don't -- >> well i don't think so look this is a whole new tax placed on the american economy that's not what we want to do. it's a tax that's going to hurt consumers, going to drive up the cost of every single good that americans purchase so i think this thing should be dead i think it is frankly dead in the house and the senate. but for the fact there's one guy who is pretty important, he likes it, and of course that's the speaker of the house i just respectfully disagree and

feel like we shouldn't -- you shouldn't put a whole new tax on the american economy and we shouldn't operate in this revenue neutral tax policy world. because that's just a fancy way of saying the tax burden is going to stay the same, we're going to shift around who pace what and in that scenario what always happens in this town is the connected class get a good deal and the middle class families get a bad deal. i don't think we should function that way just lower the rates, design a good tax system that's conducive to growth and move from there. >> so, are you still think it's going to be tax reform or is it going to be tax cuts at this point because it's just to -- >> well, it will be both but what i'm saying is i don't think it needs to be revenue neutral. since when about republicans say that letting people keep more of their money somehow is a cost to the government this is not what republicans -- at least not what conservatives believe. so let's design a tax code that lets families keep more of their money, lower the corporate rate, do the things that we need to do to spur economic growth and that are conducive to producing economic growth, let's do that, and then let's cut spending.

after all, that's what we're supposed to be, as a -- as conservatives, and as a republican party >> if it comes that it gets scored that it's going to add to the deficit, because the cbo never takes into account -- they're always wrong on dynamic scoring. they have no idea that pro-growth -- i guess they just can't do it. you know, then they, you know, they say they're not -- they would say it was a partisan agency if they didn't try and do it that way. they're not going to include dynamic scoring. so as a freedom caucus guy you're -- you will be able to withstand the blowing out the deficit criticism? with -- with not paying for this >> well, a couple things we should cut some spending. we may have to give some of the tax cuts in a temporary basis. which the way the scoring works over a ten year basis, not you know, but frankly in ten years the tax code is probably going to change anyway if we just do it in temporary terms. so we may have to do those

things again, come back to the fundamentals let families keep more of their money. don't put a new tax on the american economy structure your tax code in a way that's conducive, and better growth than we've had. the 1.2, 1.3% we've averaged in the obama years we certainly have to do better than that to grow our economy and deal with the huge debt we have. so let's focus on that and then let's cut some spending that's what we told the voters we were all about when we elected us let's focus on that. >> how is congressman scalise? have you heard in the last couple of days he tweeted, i think. >> yeah. which is great to see. steve came in just a year after i did. we've known each other now for nine years here in the congress. super guy and we're wishing the best for him i hear what you hear in the news and we've been asked not to visit with steve, let him recover the best he can. so it's good news what we're hearing. >> will be great when he walks back in on the floor not a dry eye. i mean, that's going to be -- so, just shifting gears a little biggest election in the history

of the republic happened yesterday down in georgia. i don't know whether you caught it but, it was big until the democrats lost and then it was just as expected, because the republicans have always won there. you notice that? >> yeah. how could the republicans win? i thought the democrats had this one. no, i mean, look, we're four for four, right? kansas, montana, south carolina, and of course the georgia race, which was the most expensive in history. i think that's good news i think it says let's get focused on what we told the voters we're going to do they still want us to do that. so let's do what we said but all good news and frankly, the one in south carolina last night, ravel norman who won that race, is going to join the freedom caucus so that's even double good news for us. we're very pleased with the results. >> it's funny because leading up to like the presidential election, there was a narrative that -- that i was surrounded with, and then it was a totally different outcome when the people actually voted. and then again there's this narrative leading up to this georgia election that i read in all -- all the big papers that are back here that, you know,

that trump is very unpopular and this is -- once ossoff wins you're going to start see the other republicans head for the doors because 2018 is going to be clear you're going to lose the house. and then the voters vote, and it's always like 180 degrees from what i've been reading. what do we do with that? how do we -- can we get better at covering these things or is it just the nature of the beast? >> yeah, it's the nature of the beast. >> it is >> the media, the left is the left again that doesn't change our job and our task so let's get focused on what the voters sent us to do they sent a message last night that they want us to keep doing that again, great news. and obviously, if the democrat won this it would be wall-to-wall coverage this morning, everyone would be going crazy. but of course now the republican won, oh, it's old news, she was supposed to win anyway >> you can't win georgia no democrat's ever won georgia >> no one's ever won but $30 million they tried to and didn't accomplish it. >> all right, congressman. i don't know i will tell you one thing, 2018 will be a problem if you guys

don't do something on these two things so maybe that's going to -- that's going to spur -- and it's not going to be bipartisan you think that there ever comes a day where you can get rid of the filibuster and that other -- that patrician house >> let's hope so i mean i'm in the house so i don't decide that but let's hope so or at least go back to where it's a true filibuster where you actually have to get up and talk for hours on hours if you want to hold something up and actually have real debate. i think the american people would appreciate that much of a change, at least let's hope so. let's hope they change that. >> which part of ohio are you -- >> central, north central. god's country. >> no, no, that's a little south of there down near portman country is down -- >> yeah. >> down -- >> just down cincinnati is where the senator's from i'm north of dayton. >> you know it might be important, your efforts are important there, as well because i think southwestern ohio is safe but northeastern, you got to work on that anyway, congressman, thanks. preern it. >> you bet good to be with you. >> when we come back, we talk

markets, and your portfolio. let's take a look at the futures this morning yeah, dow futures and s&p futures up slightly. nasdaq down slightly stick around you are watching "squawk box" right here on cnbc hey you've gotta see this. c'mon.

no. alright, see you down there. mmm, fine. okay, what do we got? okay, watch this. do the thing we talked about. what do we say? it's going to be great. watch. remember what we were just saying? go irish! see that? yes! i'm gonna just go back to doing what i was doing. find your awesome with the xfinity x1 voice remote. let's get to the markets joining us now is ian, chief

investment strategist and associate managing partner gentlemen, thanks for being here ian i'm going to start off with you, what do you make of the markets right now? the dow went to record level after yesterday's session. oil is down. flattening -- >> the truth is that the equity market is the only thing that hasn't got the message that global growth is actually slowing. if you look at the commodity markets, if you look a range of reflation trade they're actually coming off breakage, they're coming off bond yields are coming down the equity market is going to be the last thing that hits this and we're saying watch out you've got a 5%, 10% correction coming your way >> a 5 to 10% correction in what sort of time frame >> second half of the year we're talking about global growth slowing driven by that chinese tightening that you've got. we've got tightening in the united states. and if the ecb starts tapering as well then you've got a full house. it's pretty hard to make headway against that particularly when analysts are so excited about the earnings. >> so is this the first time you said, today is the today you're saying 5% to 10% correction?

or you've been saying that for all year >> i've been saying that it's been in other markets. we've been very bullish since -- >> until when? >> about the start of the year you know -- >> because if it goes up -- if you did this -- >> last year -- >> 5% -- >> three months we've only made 2.5% in the u.s. market. >> kay so that's what i'm saying. if you get your correction it will still be above where you started calling for one anyway so it was not a great call >> it's been difficult so far. >> for you for you. not for everybody. >> absolutely. >> okay. >> but look at what's happened inside the market, joe because it's been a growth rotation it's been the value rotation you would expect it in a market -- >> remember the guy earlier said i'm paying attention to the equity market, not the bond market the bond market is going to catch up with the equity market. you're saying the equity market's going to catch up with -- >> and i think the thing that we're focused on is that rather than looking at politics, look at what's happening in china china has actually been a much stronger driver of global equities in the last probably

five to ten years and that's been the things that we're worried about. that tightening actually pretty difficult so it can make headway. the good news is if we did get some reform then that might make a difference >> sounds like you're not as concerned. you're invested in some of the regional banks >> we are. what i'm looking for is underappreciated assets right now. and apparently in a market that's fairly valued you look at the regional banks, large banks. you look at where it is, their balance sheets are strong. you're going to have some dividend growth coming especially when you get capital return but you also look at other sectors like housing repair and model. that's where the growth is the consumer is having a lot more money in their pockets because there's deflation around them if oil prices are going down now you've got amazon, whole foods, consumer staple prices are going to go down housing is strong. look at stocks like lowe's, i think you're going to do well over there that's going to do some growth and then cyclicals look at underappreciated cyclicals. there's a whole part of the

market like airlines trading at single digit nmultiples. >> are there ripple effects in the decline in the price of oil that we're not thinking about? before it had been accredited, and granted $43 a barrel oil is very different from $33 a barrel oil, energy companies, the balance sheets are much stronger these days but european financials are still -- they still have a lot of oil debt on their balance sheet. >> absolutely. >> and we saw what happened -- >> we saw it a year ago. and i don't disagree with you. i think what we have to be careful about is if oil goes below 40% you get selling from sovereign funds. do you get other unintended consequences but what i also think is we know this is going to happen. so when the markets last year when it happened nobody really know what was going on i think a lot of this is built in if it goes down to your point, it's supply driven and i think there's an opportunity there to pick up really high quality stocks >> so the 14% decline in energy equities that we've seen this year, does that discount what you say we know is going to happen already in other words are there buying opportunities in energy equities >> no. i don't think -- stay away from energy but if it does go to the broader

market like it is last year, and it pulse out some really good quality companies, because you have a liquidity driven sell-off, then i think you go into the market and you buy these companies that today i think are fairly valued and you probably don't want to touch them until you get that pullback which we all know comes and that's when you go into those. >> sarat, ian, thanks so much. >> thank you very much >> when we come back this morning the resignation of travis kalanick as uber's ceo. what the shake-up means for the ride hailing company plus former fed chairman richard fisher will join us to talk about interest rates and the economy. and later kevin mccarthy is our special guest. "squawk box" will be right back. time now for today's aflac trivia question -- are you ok? what happened? dad kinda walked into my swing. huh? don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair.

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one week ago, the fed raised rates for the second time this year, and yesterday the markets got another batch of fed speak

from vice chair stanley fisher chicago fed president evans, and let's find out what could be coming next from janet yellen and company. joining us is richard fisher, the former head of the dallas federal reserve. he's a senior adviser at barclays and a cnbc contributor. richard, thanks so much for being here >> thanks for having me. >> so you weren't surprised by the rate hike i take it. >> no. nor was i surprised by finally having an announcement on paring back on the balance sheet. >> this is something you've been beating the drum for for a very long time. >> that's correct. >> you think that by paring back on the balance sheet that means that the fed is going to stop raising rates at least for a little while >> not necessarily but i do think it's an important step the last words i said to chair yellen when i left is your skwlob is to begin the process of slimming down the balance sheet and make it gradual. make sure we don't disrupt the markets. but we have to have money in our po pockets for when we eventually have a -- >> you're talking about a $4 trillion balance sheet

>> if you do the numbers once they're fully going to the caps, it's, you know, $600 billion total per annum. not very much. it's 30 billion a month for the treasuries and 20 for the mortgage backed securities so240 plus 360 and it's a very slow process but i think what's important is the sign, the direction, and i'm glad they got it started >> the fed was convinced that this was responsible for helping boost the economy on the way up. what's the impact on the way down >> well i think the markets are very, very liquid right now. very accommodative there's a lot to let others pick up here's the key figure. 35% of what the treasury has in their portfolio are what fed has in their portfolio all u.s. treasuries. longer than five years maturity. six year duration for the portfolio. so, and they've basically purchased 50% of the net issuance in the last eight years. now, here's the key figure to me

even though the debt of the united states federal government has doubled in the last eight years under the obama administration, that cost of carry has gone from 1.7% of gdp to 1.3% of gdp as rates come up, that cost is going to increase and it has to be done gradually but it has to be done. the fed needs to have the wherewithal, should we go into a downturn, and remember we're going on ninth year of expansion. we've only had one expansion that's done more than ten years in our history >> let's break down a couple of the things you just said that cost of carrying the federal debt has gone up -- >> gone down gone down as a percent of gdp. >> but not in the last 18 months in the last 18 months increased as the fed has increased 100 basis points you're talking about real numbers that add up very quickly. >> that's right. >> will there be a point where the fed blinks and says wait a second, we need to slow this down a little? >> no. i don't think so they can't slow it any slower than it actually is. and i -- here's the -- for once

we have the potential for a tax reform, and fiscal policy, in the last 15 years, only eight of those 15 years we've had a budget by the federal government and those budgets have been kick the can down the road budget so if they can get a budget together and actually get it done, have real fiscal policy, use something on the tax front, now the fed doesn't discount this but if that happens, then we have a change we have no help whatsoever from the fiscal authorities it was all monetary policy, monetary policy. >> that was the only game in town >> now it's not the only game in town >> it sounds like you're changing a little bit just some of your rationale for wanting to raise rates and being behind the curve. i think it used to be maybe they were going to be asset bubbles, and you know, oil was up, it's 90 -- you know, there were things to worry about not regular inflation but maybe asset inflation and setting up the next bubble. now sounds like you're saying they need to get back to more normalized numbers so if there is a recession, there's something to do. but you know, last time zero

didn't help the economy that much maybe that's not the answer next time there's a recession you just automatically cut rates. maybe they just stay low here and we, you know, whatever happens, happens we sort of the economy has to stand on its own without thinking these guys are always going to save it. >> joe, you and i are son the same wave length on that front i do think things are very richly priced here almost every trading asset i can think of is trading at very expensive -- >> lately the people saying don't -- mark grant oh, my god we're going to derail this what's the terminal pricing for the 10-year do you think or not 10-year but for fed funds? what's the terminal level where it would be much lower, the end -- the last one would be much lower than it was ten years ago. >> if we're running 2% inflation i add a percent so i say three would be -- >> which is lower historically >> low it's a four plus. but you know joe, the fed's job is not to bail out financial markets. the fed's job is to conduct monetary policy. so that we have maximum employment under the conditions of the economy, and the least

possible inflation that's really what it comes down to and avoid deflation senio serious deflation. i think the problem is the markets have become dependent on this morphine that we've been feeding into the system. or you could call it whatever drug you want. just settle the mood but we all know that becomes an addiction after awhile >> to bring the shakes on you've got to get back to normal? >> remember what my great chairman of my federal reserve bank, herb kel he will her you can't go from wild turkey to cold turkey overnight. but this has been a long, drawn out process. i'm just glad they got it started. and, maybe they'll pick up the pace -- >> at this point you're watching the yield curve. >> yes >> the spread between 5% and 10%, the smallest -- >> 83 basis points >> exactly >> does that tell us something >> not necessarily just tells us that we're a very attractive place to be we have positive yields. the 10-year is, again these are very accommodative markets, and

the market can pick up new debt issuance by the treasury at very cheap rates. the fed doesn't have to do this anymore. that's what it tells me. >> richard, thank you so much. it's good to see you >> thanks for having me. and it's even good to see joe. >> we're golf buddies. you should take up something else after -- after three days -- i mean bowling, pool it's just not going to -- i mean, i'm no good either, but wow. >> we could play together because neither of us are very good 4 under -- >> 4 under, my pro was 7 over and i finished 8 under i added -- i improved four by 15 strokes. >> the problem with -- >> you're the worst pewter on the planet >> worst driver. >> you're the worst -- >> the problem was that we outdid our -- >> the audience -- >> outperformed the pros that we played with. i'm proud of you, joe. >> i'm proud of you richard. i can't believe we replaced you with a fischer it's just weird. yellen leaves do we need another

yellen to go >> he doesn't spell his name correctly. >> he's got that "c. >> his speech was quite important. he keeps saying basically the sub text is rates are too low. we need to do more he also is not a great believer in the inflation index he talks about the cpi. i think you have to really dissect, because the intellectual leader is at the table in addition to the chair, they're living in this direction, stan fischer in my view is very supportive and has been from the very beginning when he joined the fed good man >> thank you >> thank you today's top corporate story uber ceo travis kalanick stepping down amid a shareholder revolt here's the co-founder of the ride sharing app talking to employees at a five year anniversary event in june 2015 >> i realize that i can come off as somewhat fierce advocate for uber people have said that. i also realize that some have used a different "a" word to describe me. well, i'll be the first to admit that i'm not perfect

and neither is this company. like everyone else, we make mistakes but at uber we are passionate about learning from them >> joining us on the "squawk" news line mike isaac of "the new york times." he broke the story of kalanick's departure overnight. mike, thanks so much for calling in we really do appreciate it it was a fascinating story to read give us a sense of how quickly this turn of events happened, and whether or not there was urgency on the part of the five shareholders who revolted. >> hey, yeah, thanks for having me it was super fast moving story hence coming out at, you know, 10:00, 11:00 at night on the west coast essentially, you know, as we sort of tracked this, travis kalanick has taken a lot of heat over the past few months for the culture that has sort of come up at uber underneath him whether that's for, you know, some of the sexual harassment allegations that have come out there, or just the sort of

general sense of brashness, and aggressiveness going on there. and you know, after sort of a prolonged set of scandals that kept occurring, the, you know, five of the largest shareholders that uber has said essentially enough is enough and our founder is not deciding to step aside or find a new ceo so we have to actually sort of step in and give him an ultimatum here and that's what it came to and he fought, he did fight with them somewhat. i mean i have another story coming out probably later today, if not tomorrow, on sort of how the whole thing went down but he definitely did sort of push back until finally decided to step aside. >> travis, is this a situation where -- i'm sorry, mike, is this a situation where travis is stepping down for good or is this a situation where you could see him coming back eventually, like a steve jobs did with apple >> as long as we're -- yeah, so that's a good question there's a lot of speculation as to how he might still play a

hand in this company to be fair, he's been there since the very beginning, almost very beginning, you know, almost like eight or nine years he has -- control over his company. he has, you know, power on the board. and he has a lot of allies that work through to sort of operate even when he wasn't really fully there. even in his leave of absence that he was taking right now, he was still sort of people i talked to said he's still operating inside of the company. so i'm very curious to see if he can really, fully, be gone at this point >> well, he's on the board -- >> yeah, well that's the thing he's still got a board seat. he's still going to be there he still has -- he has not sold a single share but so like, you know, this doesn't mean the end of travis i just wonder like, you know, how gone he's going to be. >> but, mike, was there any sort of urgency to this move?

i mean, is the company trying to ready a fund-raising round for instance where you might see the hit on valuation, were there more than five shareholders who were really upset with travis staying on you know, with just an indefinite leave of absence? was there a catalyst -- >> yeah. you know, i think -- i think there's some concern -- i mean, look, the investors are looking down the road at like is the public market going to be open to a ceo that is as controversial as this? you know, or looking to take this company public in the next twelve to 18 months, probably the next 12 months you know, can this be the guy that can do it and i think enough shareholders, you know, both far beyond just these five firms that i name last night have realized the writing on the wall there, and started making moves and i imagine there would have been more than just the ones we saw. >> sure. mike thanks so much for phoning

in great story. we'll be looking for the update either today or tomorrow >> thank you >> coming up a look at the nation's gas glut ahead of today's inventory data plus a royal shake-up in saudi arabia what the move could anor global oil markets you're watching "squawk box" on cnbc this is where i trade andrs. 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. 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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welcome back, everybody. bills in gasoline over the last few weeks have rattled the market sending oil under $44 a barrel today today another report is very likely to be a market mover as well jackie deangelis is here she joins with more on what she should be watching >> good morning to you, becky. well we're just two weeks away from the fourth of july holiday. the peak of the summer driving season and crude yesterday fell under $43 a barrel very significant but it makes perfect sense west coast, temperatures close to 120 degrees in some places, east coast, rain, rain, rain, not today. but it's been like that. neither of these scenarios make you want to pile in the car and go anywhere. and gasoline demand is suffering as a result. so today we're going to get some inventory numbers that are probably going to confirm the trend. last night a small build from the api. this is a few weeks of the lows now.

if crude oil drops into the 30s, as many say it will now, in july, it sets a bad tone for the future typically we see more pronounced drops in prices in the fall. and we talked about opec holding something back a card maybe to play possibly later. well with the u.s. now forecasting 10 million barrels a day next year and canada 3 million barrels a day in the next two years it's difficult to see a scenario where opec is going to want to give up more share, nor can some of the countries afford to. also, the concern isn't just about the price of the raw commodity right now, but also about stock. the sle down 14% year to date and these energy names could drag the dow and the s&p down, as well, guys. >> well, we're going to talk more about it. thank you, jackie. as i say, let's talk more about the global oil glut. let's join us energy and utilities direct for nasdaq corporate solutions. you're not even here you work at the nasdaq, and you're on a remote i mean, i saw that and i'm like, what but then it's for a good reason. you're like -- you're doing what i want to do

are you like touring the permanentean basin and looking at the rigs and stuff like that? >> yes, i have the good privilege of touring around in operations in the permean yesterday. i'm not in new york. but the astounding thing about what's going on is the level of efficiencies and operations continuing to increase so every dollar that is spent, every rig that is deployed is just more and more productive. so more of these producers are now actually breaking even in the permean below $30 a barrel so it's extremely significant. >> absolutely. and that's -- i hate when people say absolutely but that really was what we've been trying to communicate, and that is that as the cost of production comes down, we can no longer say all right the range is 50 to 60. and then it was 45 to 55 has the cost come down i don't know what the range is it's all based on production and supply, right? so do you think there's a new

range for wti of 35 to 45 now or is it 40 to 50 or what is it >> i think the market goes lower from here before we go higher. i think that with the market is trying to do is to test opec's resolve, and say just how serious are you about draining global inventories and also to really assess just how price sensitive shale is, and what is the level that will actually curtail production in the u.s. but we see that number has gone lower and lower and i think that even at $40, production can flatten. it would really take going below $40 to see a curtailment in production growth from the u.s >> and then the saudis aren't irrelevant, are they but are we the new swing producer are we driving this bus at this point? or what can they do? >> yeah. so, saudi arabia and opec can really maybe establish a floor on prices but they certainly are no longer effective in managing prices upward. and so the critical question now

is can u.s. shale grow at a level that meets or exceeds global demand growth and increasingly, we're seeing that the answer to that question is yes and that's certainly undermines opec's ability to manage the market in either direction >> all right we'll see you next time. i just walked out there, and there were some little quiches out there. they're not really are, but i tack one is that okay >> totally fine. next time i'll join you. >> because -- >> said like -- >> our producer took a coca-cola -- >> we do have good food. >> all right if they ask me i'm going to say i just spoke to her. she said it was fine we'll see you next time you're around here we'll see you back in studio. >> love it thanks, joe. >> coming up, shipping wars are heating up between fedex and u.p.s. while it's only june the companies are gearing up for the holiday season a look at the company's latest quarterly results and outlook are next futures right now, we have been growing -- oh, there we are

negative territory for the s&p as well as nasdaq, dow up 15 at the open ♪ 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.

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>> well, we think that things are moving in the right direction for the global economy, for the u.s. economy, and in particular for e-commerce fedex obviously a global bellwether so great revenue numbers for the quarter and we expect record holiday shipping again this year after a record last year. and we think the company's going to be able to leverage that into better pricing and strong buying >> u.p.s. just said this week that it's going to be raising the surcharges that it puts on packages for shipments around the holidays fedex has said it's considering some of these things what do you expect to see them do >> yeah, notable but what u.p.s. is doing, what fedex said is that both companies are looking to get better recompense for the holiday volumes that are leading to a lot of extra expenses for the company. u.p.s. and fedex have raised infrastructure spending in order to combat the level of volumes they're seeing and looking to get money for that and it's a good sign that pricing is going to move in the right direction that both companies are talking about the same type of thing >> amazon has been seen as a potential challenger, even though it's a huge customer, also a potential challenger in

terms of what it might do for its own shipments. the fedex founder and ceo fred smith has said you know, they're not a transportation company, we are. he doesn't seem concerned about it are you >> no, we're not concerned about it we think the level of spending involved in building a global transportation network like fedex and u.p.s. has is something amazon is not going to be interested in doing there's not enough money in it for them we think there's room for volume for amazon if they do a little bit of the last mile of transportation, we think there's room for that for both u.p.s., fedex and amazon but the volume growth we're expecting is extraordinary over the next few years >> if you're not worried about amazon, what are you worried about? what are the risks to your valuation? >> certainly, if the global economy starts to falter, if the u.s. economy starts to falter, and if e-commerce doesn't grow the way we're expecting we won't see the volumes we're expecting. these companies also are doing major infrastructure push-outs there's a lot of integration risk in that and fedex recently but tnt

they're one year in still integrating that acquisition, making a big, huge presence in europe >> you've got a strong buy on fedex. what's your view on u.p.s. >> we have a strong buy on u.p.s. as well fedex the upside is a little bit higher for us but we think both companies are going to benefit from strong e-commerce growth over the next several years. >> jim, thank you so much for joining us >> thank you >> when we come back, the resignation of travis kalanick as uber cho. what the shake-up means for the ride hailing company and later in the program, house majority leader kevin eshyilbeurpealci gut. of the nasdaq market. 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. call 800-983-0903 for the prospectus containing this information. read it carefully.

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new this morning, a big corporate shake-up ceo travis kalanick of uber resigns after the company's board revolts. >> the tax reform time line. >> we've all agreed on the time line, gary, steve mnuchin, the house, the senate tax writers. we believe this fall is the time to hit the floor, get it done before the end of the calendar year >> coming up the two key players, house majority leader kevin mccarthy and then senator marco rubio. >> plus a page from jack ma's playbook >> i just continue to wonder what that world will look like over the next 30 years >> because the knowledge is not enough >> the highlights from that cnbc exclusive interview 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 and welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square happy first day of summer. people are meeting at stonehenge once the sun comes up -- >> they're hanging out here doing yoga right behind us waiting for the sun. wait they're actually doing it right now. >> yeah? >> they're up on their mats. >> oh, yeah, looks like -- >> laying in times square. >> yoga. big security at stonehenge this year and big security here, obviously. yeah, there they are, doing on the yoga mats. yoga mats. i've, you know, guess i'm not going home at 9:00 >> try to get through? >> no, i'm going to head down there and show them my -- >> you wore the proper colors.

that's the same color as all their yoga mats. >> never done yoga >> not even wii yoga on the wii >> no. >> that one is pretty good >> done wii golf i'm better at wii golf than real golf take a look at the futures with dow positive last time we looked up 15. what happened there. fair value -- because fair value is going down so much. but, up 15 points. the s&p is down less than a point, the nasdaq indicated down about nine points. it's better. it's improved. it's a busy news day basically just have that in the master -- >> yes >> if you ever hear anyone on tv say it's a really unbusy news day, they're probably -- they would never say that >> that's supposed to give our secrets away >> listen up people, it's a really interesting news day. >> it's a really busy -- >> way to sell it. >> one of the top stories we're watching, saudi arabia's king

ousting his nephew the sitting crown prince putting his son mohammed bin salman next in line for the throne the new crown prince is just 31 years old. he will maintain his position as defense minister and will continue to oversee a vast economic portfolio he was also name as the prime minister and oil prices at this hour are, if you look at the "wall street journal," back in bear market territory. >> lead story. >> lead story in "the wall street journal." $43.59 on wti crude. >> big corporate shake-up at uber this time at the very top ceo travis kalanick is out let's get to deirdre who has been following this story. >> guys, kalanick is out entirely at least as ceo of uber reportedly under pressure from some of the start-ups' largest shareholders of course this comes just a week after he announced an indefinite leave of absence and a week after the holder report with many, many recommendations uber's board in a statement says, quote, this is a bold

decision and a sign of his devotion and love for uber by stepping away, he is giving the company room to fully embrace this new chapter guys, of course, this comes after months of crises that led not just to kalanick's departure, ultimately, but the departure of many high level executives, including emil michael right there. "the new york times" reporting that over the last day five of uber's major investors demanded that kalanick resign immediately, including board member bill gurley of d.c. firm benchmark who is one of kalanick's earliest supporters question now is, of course, who will lead uber 2.0 when kalanick went on a leave of absence last week he left a management committee in his place of more than ten people to lead daily operations but the company has been searching, as you guys know, for a coo, a cfo, a cmo, a general counsel and now a heightened search for a ceo to replace kalanick himself, guys but don't expect that he's going to walk away from the company entirely, because he still is on

the board, of course and he still controls a majority of uber's voting shares. >> presumably, deirdre, the search for all the other c-level posts that you mentioned will be held up until a ceo is named you wouldn't want to take a coo position not knowing who you would report to. >> absolutely. i mean, the most important search so far has centered around that coo position that he was supposed to balance some of the control that travis kalanick had. in addition to finding that person, maybe the search just goes to the ceo, so some of the responsibilities that person would have to take on. but they're facing -- they're facing exits at many of those high positions so they have a lot to fill and you know, it begs the question, too, who is going to lead strategy? if you have more than ten people leading the company right now, who makes those decisions? >> deirdre, because this entire revolt was led by the funders, by the guys who are funding so

many other places in silicon valley, does this mean that you should expect to see a change in culture that seeps through the valley >> you know, we asked this question, we've been asking this question over the last month, really, since these crises have been rolling out and what we hear is, yes, while it may not change the way that they invest in start-ups it's certainly going to change their disclosures that they look at. they're going to look for more corporate governance and internal controls because it's amazing that a company the size of uber with 14,000 people didn't have a lot of these controls in place. that's what the holder report and the internal report found out. so i think it does increase scrutiny what i'm hearing is that it may not -- it may not affect the way that money is raised in terms of the amount, but certainly what investors are looking at it's too big of a liability to not have these controls in place. >> all right, deirdre, thank you. deirdre joining us from detroit. now to politics. house speaker paul ryan giving major speech on taxes. here's what he told cnbc's brian sullivan about the time line for

tax reform >> we've all agreed on the time line, gary, steve mnuchin, the house, the senate tax writers, we believe that this fall is the time to hit the floor, get it done, and get it done before the end of the calendar year this has to get done america's tax system is one of the worst in the industrialized world. it is a huge anti-competitive force in our economy and we know we need to get tax reform done there are the abcs, just the basics of tax reform we agree on almost all of that so we're narrowing our differences between the house, the senate white house, getting on the same page, and then we're going to be delivering tax reform in the fall >> joining us right now is house majority leader kevin mccarthy he's going to be speaking at the national association of manufacturers conference on new business optimism later today but we get to speak with him first. and leader, thank you for being with us today. >> thanks for having me on today. appreciate it. >> we have been trying to figure out what tax reform, what this package is going to look like and i realize you all are doing the same thing right now but do you think in the end it's going to look more like a series of tax cuts, or more like a tax

reform that really broadly changes how we look at taxes in the united states? >> well, as far as i have to deal with when health care gets done if health care moves the end of next month, then you have the repeal of a trillion dollars worth of taxes there so you're actually starting with a corporate rate down at 25 to start out with and you can broaden the amount of tax reform you can get done so we're working through that right now. we'll go in to tax next and we'll do as much as possible because growth will actually solve the majority of our problems that we're headed into in the next decade >> gary cohn laid out a time line yesterday where he said to expect a package that's pretty fully flushed out within the first few weeks of september does that sound like the same time line you're working on? >> very much so. we're learning from walking through the health care, work that we did, that get everybody together early on, be able to roll that out right afterwe're done with health care and for everyone to be able to see it. and have it work faster than we have in the past

i think that you'll find more people together in this. i think america has a desire to be competitive we waited too long for tax reform i think on both sides of the aisle we talked about this so i'm looking forward to actually bringing new growth back to america. >> we spoke with congressman jim jordan earlier, a republican, and in the freedom caucus. he said that he doesn't like the border adjustment tax, he doesn't think it's something that's going to get passed, that it's basically one guy who really likes it but that one guy is really important in the house and that's paul ryan what do you think about the border adjustment tax? is it dead >> well, i think from the standpoint of the report, if we're making policy in the world of politics and that's a challenge, we can change that. but it won't stop changing tax reform overall that's something we're working through right now. >> leader, what do you think about the idea of local and state taxes being able to be deductible, on your federal income tax it's been a huge issue between, you know, southern states and northern states, particularly northeastern states, where it

really makes a big difference for those heavily taxed states what do you think happens with that situation >> well, if we're going to look and start with the premise that this tax code is going to be fair and simple, you got to look at it as an entirety because if you're just taking what some people would say a benefit to california to continue to raise taxes on new york, you're having other states and other americans pay for that then you're not going to get as much tax reform as you desire, the rates are not going to be low enough so if you look at the entirety, i think that is an unfairness for the rest of the states as you move forward >> probably fair but there are probably a lot of unfair issues in the tax code, do you have the votes to push that through because there are republicans in those states like new york, connecticut, and california, too. >> there are but if you're going to just look at one specific element when you judge whether you're going to vote for a tax bill i think that's the wrong approach. you've got to look at the entire tax bill if you're going to make us more competitive around the world, is it going to lower the rate overall? you want to look at the overall process of where you're going forward. and i think yes there will be

enough votes >> what are the big issues with health care? i realize that's in the senate right now. they've talked about a very different package than what the house passed if the senate comes up with the most likely bill to pass, which would probably be something that continues to extend medicare for a number of states for a longer period of time, is that something that you will be able to reconcile once you get to conference >> well, one thing i do, let the senate do the work we've done our work. and i think at the end of the day we will come together with the final package that actually repeals the obamacare, but you've got to think of this. if you want to keep what's currently out there, then you have to look at those 94 counties in iowa out of 99 that have no health care. you've got to go to the americans in tennessee, the 16 counties, that have no health care or you've got to talk about all the individuals across america that have their premiums double. when you talk about those 18 co-ops out of 23 that have collapsed. and when you really look at the

data, more people took the penalty and the waiver, 19 million, than signed up for obamacare. so you can't continue down the current path of where we are because of that, i know we'll come to an agreement together to solve this problem, to actually lower premium, give people greater choice, and select where their health care goes >> i think you would agree that there's a lot of work to be done for all of congress this particular year. are you committed, if need be, to work through the august recess as speaker ryan has indicated he would be willing to do >> look, the first thing i would say is my father always told me if you plan for failure, that you've got to do something else, you're going to end up with that i'm trying to get everything done by july if we come to that date and we're not there yet, yes we'll gladly look at that. but let's not start pushing things back. one thing i know about government is you push the deadline back, then that's the only time you'll start to work we've got a deadline now, let's do our work now, and we'll discuss that later >> looking at your district.

you know, a little time. i'm -- >> history >> i can't believe you get elected out there in california. but now i look where you are, and now i understand it. so in your district trump won 58 -- there was a district in -- that's unbelievable. there was a district in california where trump won 58% >> my district is a great district >> well, yeah. you're heading a single payer out there. i mean, you may secede you may -- you need to build a big dome like in the simpson's movie for co2 or something california's lost their mind, haven't they >> huh you watch the democrats have taken over california and the state house -- >> how is that going >> not well. they gave you the highest tax, state tax. they just raised the gasoline tax 12 cents they raised the license tax. the last time we had a governor that took this approach we recalled him i think you're going to find that there's a recall movement for a state senator in there you know, absolute power corrupt, absolutely, and that's

what i see happening in california >> i was just thinking about that election yesterday, which, again -- >> that was a big election >> no it wasn't. now i've been told by everyone that it was the result, everybody knew was going to happen and it was way too optimistic to think that democrats could ever take georgia and they never really thought seriously that they could so it's not really much of a win for republicans. you got the wrong narrative now. turn on the tv >> listen, the most money ever spent -- >> right >> the ideal direct that the democrats have laid out of how they're going to retake the majority here, and they lost you got to think about it. they have spent more than $30 million. they used a progressive movement of where they're going, which is the bernie sanders, the nancy pelosi philosophy, and it failed remember a difference when you saw majority happening before? we had massachusetts, where unfortunately ted kennedy had passed away, no republicans had won in congress there on the

federal level and scott brown won. overwhelmingly that was a real indication of what the democrats were doing was wrong. they thought they had the same thing here we've gone through four special elections, and every time the democrats come back after they leave and talk about how much they improved by the money they put in, and how they're getting so much closer this was the ideal campaign, and also the ideal candidate, and the ideal seat of what they said they needed to win a majority and they failed. >> i didn't mean to stir things up there >> not at all. >> i should have not kellyanne conway said she's laughing her ossoff. laughing her ossoff. pretty good line >> i'll let that stay right there. >> and we ask about scalise earlier. he tweeted, so -- >> he's doing better he's doing much better >> fantastic prayers are working. anyway, thank you. >> all right take care. >> we still have a big hour ahead on "squawk box." we've got about 45 minutes of that hour.

anyway, i think it's at least on today -- >> an hour >> oh, it's an hour? >> 45 minutes will be an hour now it turns out up next china gets a green light to be included in a key index. mark moabous bius is here on se. he joins us. look closely. hidden in every swing, every chip, and every putt, is data that can make the difference between winning and losing. the microsoft cloud helps the pga tour turn countless points of data into insights that transform their business and will enhance the game for players and fans. the microsoft cloud turns information into insight.

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it's a new kind of network. xfinity mobile. welcome back to "squawk box. market index provider msci will add mainland chinese stocks to his emerging market index. joining us now, mark mobius, executive chairman of the templeton emerging markets group joins us here on set welcome, mark, good morning to you. >> thank you >> as we think about the impact, is it going to be automatically a rise for chinese stocks? >> it already has been you've seen the chinese markets do pretty well but let's remember this is going to be gradual. you know, it's going to be a period of years. >> and it's contingent >> right it's contingent on a number of things the thing i worry about is getting it too big in other words now we're talking 26% of the msci index, you know, it could go up to 40%, which i think would be not good for emerging markets, investors, as we've got to have more diversification. this is something we have to

watch carefully. >> so are you reallocating or changing how your portfolio is weighted in anticipation of these changes? whether it be increasing your exposure to china or decreasing your exposure to taiwan and south korea which should see their weightings drop as a result of the addition of china? >> right now, lodgest weight is china but we're out of the weight relative to the index after that it's korea, taiwan, then you have countries like south africa, brazil and so forth. but china is still the largest and india is coming up fast. so that's why i say, maybe the full weighting, if you were to go to 20% may not be very good but at the end of the day you want to be in india, want to be the other places, which is why active investing is going to be very important going forward >> you know, the path of investing is done so well -- >> yeah. >> at this point what changes the situation why, and when do you think that investors will actually say, okay, wait a minute, maybe that's a different --

>> because the danger is that, you know, if everybody moving, representing at least half or etfs plus indexing funds maybe half of what we're talking about, and when they move in one direction, the turnaround, is down, it could be a panic. and you could have real underperformance so i think you're going to have to look for any investor, you have to look at both active and passive, you can't have only one. >> what do you think about not only the u.s. federal reserve's moves, but moves from other banks and what that could mean for the emerging market? >> you know, it's interesting. we went back ten years to look at the fed rate against the emerging markets index there's no correlation sometimes, the rate goes up and the market goes up sometimes it does what you expect it to do. rate goes up and the market goes down >> the last ten years -- >> over the last ten years >> okay. >> so i think too much emphasis has been put on the fed rate, on the interest rate. what we've got to look at is inflation, and we've got to look on the dollar.

because the dollar has been getting weaker against emerging market currencies which has helped emerging markets' performance this year. >> the last ten years we've been largely in an easy monetary environment which interest rates are extremely low. so in a period where we have not only the fed rate raising rates but also normalization of the balance sheet which is effectively tightening are you concerned that that could have an impact, even though the last ten years have shown you very little correlation >> i think what's happened last ten years all the money came to the u.s. and ignored emerging markets people were underweight up to january of last year and i think the change, the higher rate, assuming that inflation raises goes up higher than the interest rate, it would be good for emerging markets it will not be negative. >> you had a questioned half of investing in terms of the allocation, you point out, what are some of the biggest discrepancies between what the eem has versus what you have in your portfolio

where do you see the opportunity that perhaps benchmark investors are not getting exposed to >> well, to give you an example as i mentioned we're a little bit underweight in china, even though that's the biggest allocation then we're big in korea, which is not a huge weighting. taiwan is very big for us south africa, which would not have a big weighting in some of these indices. and brazil so -- and of course india, we're also big in india. so we're going to be seeing much more diversification, rather than focusing just on china. and the reason for that is because individual stocks in these markets are doing very well particularly in the technology area >> well, let's talk about korea in particular. south korea. they've got this noisy neighbor on their north, the saber rattling may not be new but it certainly feels different in just how defiant that leader has become >> yes >> the president of south korea saying, look, it may be an existential threat to the united

states, something they worry about down the road, but this is life or death for us today why do you like these stocks anyway >> the reason is that, you know, at the end of the day, if war breaks out, it's the end for everybody. we're in a very bad situation. >> not just for the south koreans. >> not just korea. i think most of us investors say okay, that's a given let's get on with your investing. if south korean stocks look good then we'll invest. and remember a lot of these stocks are global. you know, if you're investing in a samsung or an lg, korea could be wiped off the map god forbid but they're doing business around the world -- >> would be hard to see samsung stock not being affected by this >> exactly they would be affected but what i'm saying is you have such diversification in the way they operate nowadays. at the end of the day, i think we've got to take that as a given risk that is a global risk something that we -- >> listen to what you -- what your forecasting for what's

going to happen. with north korea do you -- what is the final resolution of this do you think, since there's no -- there's no good alternative or choices whatsoever at this point is it just continue to be all right now, just what would you call it, containment or something? >> let's face it what we tried up to now has not worked all the sanctions -- >> if you could do anything, don't you risk a huge loss of life over in that area of the world as a minimum >> i think what you've got to do is start a friendly dialogue you know, been avoiding that with the sanctions but i think say look, it's a given -- >> have you been >> no, i haven't been to -- >> i'm afraid to go to south korea because i think i could get kidnapped and brought to north korea. so i'm afraid -- i am. i'm so afraid of -- who goes -- tourists they take 5,000 american tourists a year -- >> they're looking at those

decisions in the wake of what's happened this week and the tour group that took that student is not going to be -- >> i believe china's tour operator >> but they won't be taking americans from that tour operator again >> i know the egyptian who runs one of the companies in north korea and he did very, very well t g tru >>hanks.

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good morning, welcome back to "squawk box" here on cnbc we're live at the nasdaq marketsite in times square among the stories front and center, shares of auto retailer carmax rising in premarket trade. the company reported quarterly profit of $1.13 a share. that beat the consensus forecast of i believe 98 cents a share. revenue was also above estimates as comp-store sales of used vehicles rose 8.2% from a year earlier. those shares urging 7.5% there's about a 15% short interest on this stock also in the fast lane this morning shares of winnebago. it beat on the top and bottom lines as it continues to benefit from expanse of its towable product offerings. mortgage applications rose 6% last week. new purchase applications fell but an increase in refinancing activity more than made up for the drop the average 30-year mortgage rate was unchanged at 4.13%.

joe? >> couple of stocks to watch this morning wall greens and theranos have reportedly reached a tentative deal to settle their legal dispute. that's according to "the wall street journal." the proposed deal would see the blood testing company pay the drug store operator less than $30 million but it has not been finalized. walgreens had tried to recover the $140 million it initially put in to that partnership and china's e-commerce giant alibaba is pitching its message in detroit today david faber is there he spoke to the company's executive chairman jack ma you still there, faber you're in michigan, in detroit, yeah >> i am still here in detroit. that is true, joe. interesting town, actually they say it's turning around >> hear from dan all the time about -- >> yeah. i know you guys have him on all the time >> that's good >> he was here yesterday talking about all the square footage that they're adding in terms of buildings, and waiting lists for

tenants, both for business and for residential. but yeah we talked to jack ma yesterday, as well about a lot of things. as you know, joe, i mean mr. ma sort of likes to talk about the future in very broad terms he is the visionary for alibaba. of course its founder back from 1999 from 18 years ago. but he's always been setting sort of the broad vision stepped down as ceo almost five years ago at this point but still talks about what he sees coming and how alibaba can benefit from it. one of the things and the reason that we're here is because they brought 3,000 small businesses and medium sized businesses from the states, and particularly from the heartland here, to understand the alibaba platform and how you can sell and use it to sell to the growing masses of consumers in china, as it becomes more of a consumer economy. but in our conversation which went all over the place as it typically does, tended to talk to him about broader issues such

as employment in the future, what we can expect, things that you like, too, joe we didn't quite get to the singularity and whether we're really going to merge with machines but we did talk about artificial intelligence and whether, in fact, it is going to overtake human beings. here's what he had to say. >> it's about wisdom, it's about experience i don't think that machine -- the artificial intelligence is going to replace the wisdom. >> i just continue to wonder what that world will look like over the next 30 years -- >> it's going to be painful. because the knowledge is not enough the wisdom is not enough so the jobs will be taken away, some people who catch up will be rich, will be more successful. some people will be more painful. the government, you know, if the world is going to be data the people will have more data >> so there you have it. wisdom is going to be the key thing that differentiates us from the machines, joe i don't know if you agree with

that >> whew. i'm pulling for the machines in a perverse way >> what? >> the whole point of the singularity, when machines have a billion times the knowledge of all human existence, of everything we figured out in the past 100,000 years, when machines have a billion times that you can't at that point predict what they'll be able to do which could include downloading, david faber's brain onto like -- david we could be like -- like in the movies, flying around with pails and stuff -- >> you're hoping these machines will be kind and benevolent dictators. >> yeah. they may not like us i'm hoping we get that skward away that's one of the, like you know in science fiction one of the core edicts is that they can never cause harm to a human. they always seem to get around that somehow i'm optimistic i'm counting on it, faber. i'm living it 2045 and at that point i'm going to get downloaded because, you know, i'm also praying as a backup.

you know >> i got it. listen you're the first person to introduce the whole idea of singularity to me. i'm listening to you, listen to ma, too, and hope for the best maybe people can download from our greatest tips from the '90s. >> you know i've already reserved andrew's avatar i've got his shape and his image and everything for where i'm going to reside. but anyway, you maybe, you know, maybe cramer's is open you can get that one or something. anyway, david, thank you or maybe not congressional -- let's get to senator rubio here congressional republicans turning to tax reform as part of their legislative agenda including potential family friendly reforms to the tax system senator marco rubio joins us now from washington. senator i'm gratified and sort of excited that we've been talking really about obamacare repeal, with mcconand tax reform with leader ryan, and i haven't heard russia mentioned in like a couple of days anyway. and it was -- it's a welcome change are things really happening now?

>> well, we're going to try to cover russia's taxes, too. that's a joke. i think on the -- >> exactly >> no, look, i think -- >> how about that intervention in georgia last night? that was definitely hacked i don't see how that result, right? do we have any evidence that they -- >> no, we probably would have won by seven had it not been for that anyway to go back to your point about tax reform it takes time to put this stuff together but the one thing that strikes us is there's all kind of expenses on families in the 21st century that didn't exist 25 or 30 years ago one real world example is children today in the 21st century can't do homework unless they have access to the internet that means every family has to have a wi-fi bill or some internet access or their children are going to struggle educationally, savings for college. there's all these sorts of costs of child care. in 37 out of 50 states it's more expensive than college -- i'm sorry child care is more expensive than going to college in 37 out of 50 states we're trying to account for

that i talked a lot about that in my presidential campaign. now we're going to try to turn it into policy >> are you privy to those senators that are huddling together about the obamacare repeal do you know -- have any idea what this is going to look like, and what the -- >> well, yeah there's a general outline and guidance that they've given. obviously we're all interested in seeing the numbers and in particular how it impacts our individual states so that's what we're going to be keeping an eye on how does it impact our states? >> how about border adjustment we've been talking about that all morning long >> yeah, there's not a lot of -- i know that's a big priority for speaker ryan there's not a lot of traction on that here in the senate. i'm not sure who is the sponsor of that in the u.s. senate but we'll see. i don't think that's going to be part of tax reform it's my view, i know it's a priority of the speaker and i respect his views on those issues but i'm not sure that will be part of the senate process. >> so i -- the media's already starting to handicap which senators might not be on board and you know, i've heard perhaps, you know, rand paul,

perhaps ted cruz, murkowski, i've heard you can only lose -- could you lose three and then have pence get the -- >> well i think you could. i mean the problem is do you want it to get that way? my view of it is we need to do it right obviously want to do it as quickly as possible because there's a lot of chaos and uncertainty in some of these markets driven by obamacare. so we want to make sure it's done correctly and you're dealing with something that's very important, primarily made cade and the individual marketplace and so we want to make sure it's done right. >> where do we stand, i hate to go back to it, but where do we stand on mueller and more hearings and who's next and -- >> well you know at this point it's a special prosecutor, a special investigator's hands, a special counsel so they're handling the criminal justice aspect if there is one to this case we're focused on how russia interfered in our election so we can be prepared for the next one. >> you have some pointed questions at the last couple of hearings and got some kudos for those. i mean, at this point as far as you know, is there a scintilla

of collusion evidence yet and does it matter -- >> i'll stand by all the comments everyone has made i try not to comment on this until our product is ready we're not finished suffice it to say i echo the comments all my other colleagues have made including on the democratic side that at this point no one has seen that but again there's a lot of work to be done moving forward. what we do know is that russia interfeared in the election. we need to outline for the american people how they did it so we're prepared for the next one. >> you know, that quid pro quo pact to get along really good with them and let them do a lot of stuff, russia that is, that's not going very well right now because relations seem worse than ever. so i don't understand. we didn't read the fine print? on that deal with the devil. >> well, you know, putin has his own views of geopolitics and part of that is destabilizing the west i think part of that was his effort here. you see that happening throughout europe as well. >> senator i keep reading that republicans are going to move on to loretta lynch and i just saw something and i don't know if there's any veracity to this any possibility of special counsel appointed to look at any

of those issues than the obama administration >> i would imagine that's within the purview of this existing special counsel. and sometimes these things go in that direction but again, i mean, that's happening in its own way it's not public. we're not part of that and we shouldn't be that should not be politicized >> okay, all right, well you know, i wasn't -- when they take a picture of someone hugging someone, it starts with -- it starts where the person has to move -- the twitter sphere cofefe was fake news that was stupid. now they have one picture where supposedly she was stiff, and here's another picture -- >> that's been fully investigated we looked at that deeply it's important that people know senators are capable of carrying out a traditional greeting, and so, i stand by our investigation. i think it's been thorough >> good. you know what? just to give you a little support there, i don't think i've ever done a hug that wasn't awkward. i -- i've not gotten -- >> i can attest to that.

>> it wasn't a hug but that's fine. we stand by the investigation. >> seinfeld went through a huge -- he went through a problem where he did not hug -- he said i don't know her i don't hug people that -- because everybody's hugging. my daughter will 4ug hug, you know, anyway it's a nice trait but we don't all have it senator and don't try to hug me. >> thank you >> thank you senator appreciate you coming on today >> thank you >> up next, more on today's big uber news. ceo travis kalanick stepping down from the ceo position and tomorrow the man who is crafting the gop tax bill, congressman kevin brady will join us live stn mes tomorrow at 8:30 a.m. eaerti stick around "squawk box" will be right back.

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let's get down to the new york stock exchange. jim cramer joins us now. hey, jim, wanted to ask you about intel. down 1.6% premarket. it's got a downgrade could amd really be a competitive to intel >> it's a great question because you see amd going up all morning, melissa it started to get people to think, wow, is this the new intel? i say wait a second, intel is doing more mobile. amd has a level of momentum has has to do with gaming and fast chips that is making it so people feel that it is going to replace intel as the charmed semi

melissa, you and i both know that amd is just not as great a company as intel but they do have the hot chips maybe that's enough for this market >> the crypto currency money chips. wow you had a fabulous interview with ginni rometty yesterday the ceo of ibm she talked about a lot of fascinating things 20% of the world's data accessible 80 is the goal that's not accessible is there anything that told you that makes you believe that this stock can resume the performance that it saw in 2016? >> well it's really interesting. because i did not get the feel that the inflection point is here now i do feel that she feels the inflection point where they go into more fast, less slow, will come when we get the mainframe which is going to be in the fall so i don't think this is the stock that is -- is worth shunning given the fact it has a 4% yield and you're waiting for the main frame cycle at the same time i asked her about buffet, hey, he's out. he sold a lot. he still has some. i was hoping that there would be more about how buffett's wrong but then again, he is still a

big shareholder so you probably don't want to say that he's wrong. >> he kept two-thirds of the stake. >> eah but go back to the crypto currency for a second. >> yeah. >> this is behind a lot of retail buying. and i'm glad you brought it up because people are so desperate to find anything that's bitcoin related they're desperate to fi any bit cohn it's a public way to play bitcoin. you have to be careful there's a lot of other moving parts for bitcoin. >> this only goes back to august of '07 it either sells for $2 or $15 and it does it over and over and over again and they're really becoming viable, i don't know, it's never been an intel. is it possible this is the time? >> well, look. the leadership there is much better than the old jerry sanders days where you felt like it was up and down, up and down. this leadership is terrific. they do it gaming, they do have a fast chip.

when i see the stock moving up over and over and over again, i'm always prone to think it's due to reversals. >> it was under $2 at the beginning of 2006, close to it. >> they refinanced. >> late 2016 -- >> that's what happened, they refinanced >> okay. but i love the fact that intel's got -- brian crusanich has yet to be heard from >> jim, thank you. see you in a few minutes. >> up next, are uber's problems silicon valley problems. tristan walker h baseen outspoken and promoting diversity in startups. we'll be right back. 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?

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uber ceo travis kalanick is out after months of controversy surrounding his company's culture. tristan walker is has a health and beauty brands. by the way, we should mention walker and company is launching a new product line for women this week. we're going to talk about that in a moment. in the meantime, let's talk the news of the day. tristan, thanks for being here. >> thanks for having me. >> you were the entrepreneur in

residence so you spent some time in the valley. you know how people were wondering. is this uber culture scene widespread through the valley? >> ook, i think a lot about ou company and what we've done successfully to not get into stuff like this, right there are a couple of tenants that have made us successful we want to ensure that the diversity of our employee base reflects the diversity of our customer base. we want to make sure the values we promulgate go all the way to our customers as well. when i think of uber the one thing i can hope and be optimistic is that they take that to heart. one thing that gets lost in conversation is what about the drivers? >> right. >> the hundreds or thousands or millions in this case drivers who rely on uber for their livelihood uber really takes that to heart i hope and finds a way to communicate with them. >> are they contractors or employees? >> i don't know and i don't think it matters, right? at the end of the day the company -- >> they're mart of the company. >> -- needs to make sure that

its soul continues to inspire folks to do their ambition. >> let's talk about the new product that you have coming out. it's form. >> right. >> this is a prestige hair collection for women. >> that's right. >> what does that mean >> walker and company we're building family brands to hak health and beauty simple bevel eliminated shaving issues. >> you did it because of your own experience. >> exactly we've worked to solve it it's been successful since when we look at the hair care space, why hasn't hair care changed for decades, right the fact that there are no brands to help people understand what to use, when to use, why to use them form was built with the 75% of all women in mind who want to take the guesswork out of hair care go to form beauty.com, take our form consultation. we'll ask you consultations for which zip code you live in. >> is that why >> because of the humidity you want to understand what stage of pregnancy you're in these are things that have

impact on how you could take care of your hair. >> how much water i drink. why does that matter >> you consume water the things you consume have impact on your physical state, your hair health, et cetera. that's the real key point of differentiation for us we wanted to develop a brand that keeps up with our consumer's lifestyle if you swim often you need to use different products differently. form is really built to not only develop custom product regimines but custom usage programs for them we're very excited about it. >> we -- it makes sense. i understand that. i get it but when it comes to raising money for these types of things, it's tougher to get money from silicon valley these days as an ecommerce company? >> absolutely. we're an omni channel brand. last year retail was 10% of our business, this year is north of 50 a lot of silly korch vicon vall investors run away one of the stats that you always

hear offline retail is 90% of all commerce that number has not changed for the greater part of a decade as long as i've been a part of silicon valley it can be profitable the thing we need to focus on is building a great, strong business with the focus on profitability and free cash flow. >> i think of the investors in silicon valley wait a second, ecommerce how are you not going to get crushed by amazon? is the goal to eventually get bought by amazon dhou compete with them head on >> no. we want to build as much legacy as procter & gamble, unilever, we want to build an inspiring brands that touches lives. we distribute our products through amazon we have a core group of customers that are die hard fangs. we treat amazon as a partner and not a competitor. >> you don't look at a dollar shave club that has die hard customers. they got bought by a major

consumer products company. is that sort of your playbook? >> no. for us, our core focus is on solving acute health and beauty problems that folks of color face that is our clear point of differentiation. we will not make shampoo for the sake of building shampoo i think it's a big reason why our partners like target, amazon, other folks in the space are -- >> your products are used by not just folks of color. >> that's right. >> what is your demographic? >> we focus on problems that folks of color over index on it's a problem 80% black men and women have and 30% of everyone else. >> hair care, breakage, porosity these are things people of color over index on but everyone has our point of indication is clear. >> you've already done shaving, now hair what's the next -- >> the next thing that's so exciting about form is it's showing we can aggressively push

the industry towards this more custom personal brand and personal care experience the same thing we're doing for hair we can do for skin, cosmetics and health. >> we are out of time. have you ever heard from proctor and gallon bell? >> we speak to every company. >> very diplomatic. >> tristan, thank you. thank you folks for joining us make sure you join us back here tomorrow it's time for "squawk on the street" right now. ♪ ♪ ♪ good wednesday morning welcome to "squawk on the street." i'm here with jim cramer at the new york stock exchange. david faber is at alibaba's gateway 17 event in detroit. his exclusive with jack ma futures improving. travis cal kalanick out at uber. roadmap this morning goes like