live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. it is friday, we are live from the nasdaq market site in times square i'm becky quick along with joe kernen and andrew ross sorkin. look at the u.s. equity future the. yesterday the dow ended ever so slightly lower, as did the s&p and nasdaq slightly higher this morning things are relatively flat. forever now everything has a glean arrow in front of it s&p up by 2 points, dow up by 1, and the nasdaq up by 8 points. the nikkei was by 0.11 points. this morning we have been looking at higher prices for european markets right now the dax is down by a half percentage point. the cac and ftse down by 0.4%.

if you check out crude oil, which is probably the biggest market story we've been watching for a week or so crude oil yesterday was up slightly to 42.74. this morning up to 42.84 you're still talking about wti below $43 a barrel. america's 34 largest banks did well in the stress test. the results show even during a large recession large banks would be well capitalized and could support homes and businesses when times are tough. the second part of the stress test will be released next wednesday. there are talks about whether things might have loosened up a bit with the fed. doug parker says he is not happy with qatar airlines' plan to buy a 10% stake in the company. parker telling phil lebeau he found out about it yesterday

parker telling cnbc's phil lebeau he found yesterday's offer confusing, adding why an airline we're aggressively fighting would want to take a stake makes no sense he wonders if the motivations were misguided and ill conceived. they have been fighting over policy in washington on whether qatar airlines can be here and whether they're dumping their product. >> he's been very outspoken. phil talked to us about this yesterday, but how he thinks they have an unfair advantage. he was asked if this was a situation to try to silence him. >> if you're in a tooth and nail fight with your competitor and you might lose, might as well buy their stock. >> is this -- >> aren't you hedging your bets that if they succeed, if your efforts fail, at least you'll ride -- i would go long you.

>> you would go long me? >> you want to buy a piece of him? i would buy a piece of you >> thank you >> if my efforts fail to undercut you and hurt -- i would like to be part of your success. which is all over the place. >> would you sell him a piece? >> i feel maybe -- this is ill conceived and misguided. >> and you have no choice. i can own up to 10% of you, you have no choice >> i'm still a private company >> you don't want to release a lot of stuff about you that's probably a good idea. >> we have different share classes. i'm like travis kalanick this story we always come together on. on rainy saturdays -- >> what do we do together? go to bed bath & beyond. >> hold hands. >> not the entire time >> shares of bed bath & beyond -- >> we look at duvets together. we do. >> i thought the humidifier and the mist -- shares of bed bath & beyond down sharply after

posting weaker than expected results. the retailer's same-store sales tumbling 2%. the company citing softness in physical stores. the one bright spot -- softness at physical stores, that's where it's supposed to be fun to hang out on a saturday. the bright spot is digital sa sales, but that was offset by higher shipping costs and coupon expenses down 23% >> it's not the -- the business it's in, which is a great business it's the digital thing again >> it is the digital >> you start to look at amazon-proof businesses when it gets to retail, there's fewer and fewer. i used to think mattresses, beds i just bought a bed from amazon. >> you bought it from amazon you didn't buy it from casper? >> i thought about it, but now

amazon is selling you a guy who will set it up for you you can buy the servicing thing on it. casp casper, that's not an option >> that's all you use, harry's shaving kit, you use anything -- >> no. >> tommy john underwear? any guest that we have you use >> i only like to have guests on where i tried the product. >> did you get a deal on the mattress >> we don't have a casper mattress >> do you a pillow top >> we do just a thin pillow top some of them you really sink down >> the difference with amazon on this is they're servicing things >> did you live through the waterbed era >> i did i'm aware of it. >> who thought that was a good idea >> cold, hard -- >> and -- you could get in, and it's all -- who thought that was something that -- >> we never had one.

but i had a friend whose parts had one. >> my aunt and uncle had one >> we loved it >> it's not that -- it's not that one never popped either that happened, too can you imagine? we have a serious -- we'll switch gears the likelihood that isis leader abu bakar al bagdadi has been killed is close to 100%. who said that? a russian senator. the senator's name is victor ozarof, head of the defense committee in the upper house of parliament it was like may. so we're still trying to figure out whether this actually did happen we heard maybe he's dead hard to confirm these things if you believe this guy, he says close to 100%. and this is official president trump is officially

nominating new york jets owner woody johnson to be ambassador to the uk. nice gig johnson is a long-time republican donor has owned the football team since 2000 also chairman and ceo of private asset management firm, the johnson group. johnson & johnson family the president also nominating former l.a. dodgers owner jamie mccourt to be ambassador to belgium. you got to give parties a stipend like $20 per bottle of wine to serve at the parties. >> that's why you need wealthy donors -- >> you floedneed a lot of money. >> a number of ambassadors are asked to refurbish a lot of

the -- what's the word -- >> the u.s. ambassador -- >> the homes the embassy homes. you can argue both sides of this you would like normal people to be ambassadors instead of people who can grease the campaign and get rewarded this way. but it is nice to have the private sector where the government doesn't have to pay for it i could argue from either side i would say congrats to woody and susan, his wife. she's a big jets booster >> a key position. it was joe kennedy who had that position >> right i don't know what it means for his attendance at the jets games. >> probably will go down significantly. let's talk about the senate republicans working to build support for the healthcare proposal they face opposition by democrats and by several high

profile members of their own party. at last count there were at least four republicans saying they were not quite ready with this version of it kayla tausche has more on there. she joins us now good morning >> reporter: good morning. the sell is going to be a tall ordertor senate leadership after a lackluster reception yesterday on capitol hill when the bill was released no senators offering outright support when it came out despite key changes to the house legislation. for fainstance offering tax credits based on income instead of age and ending medicaid expansion. those were efforts to win over moderate republicans the president says he not only supports it but it looking forward to making it special remember, obamacare is dead. the plan also got an endorsement from the chamber of commerce

most other medical industry groups coming out against it six physician groups in addition to that asco, the american hospital association as well as aarp which again called the legislation an age tax that would strip 17 million seniors and children from medicaid there's a group of four conservative senators who said they oppose it and want to change the current bill mostly because it doesn't cut costs or lower premiums enough. senator lindsey graham said every senator wants something. >> there are 52 of us. all of us have leverage. the question for us, will we deliver or not i don't know what they want changed in the bill. this is an opening offer, not the final deal so time will tell. >> but they only have six days time last night at the congressional picnic senator graham told nbc news that the chance of getting to 50 votes is just 50/50. >> that's a better likelihood than some would be considering for every deal they cut they will tick off another constituency you have people, not just the conservatives who stepped out and lindsay gravm sey graham whn

he wants things, but also someone like senator heller, whose state has been leaning more and more democratic, what will he do in the situation? >> he's assumed to be a no currently. i heard aides to leadership saying he's someone they want to allow to vote no because it's becoming a more popular position in his state and they don't want toize th izlose that seat and then there's senator rand paul who opposes anything but an entire repeal of obamacare some hope that he comes around, and at that point that's public posturing he put out there and will support the bill once it comes to the floor, but they don't know others like ted cruz want premiums lowered senator collins of maine would see her popularity spike if she voted against this in that state. she wants to make sure tens of millions of americans don't lose coverage so the cbo score we get next

week will hold clues to this the more changes you make as you're getting that cbo score, the more scores you will need on the back of that >> when he says 50/50, that seems like an optimistic view when you consider it the back drop is if you don't pass something you will have political pressure >> the "journal" has a long lead editorial. i know these are, you know, this is the ebenezer skroocrooges ofe editorial board who don't want to take coverage away from everyone, they point out a final no, if it happens, a final no from the senate is really a vote to live with obamacare if it fails, next step is single payer. all these guys know that the journal piece kind of daring republicans, after going on four elections and repealing obamacare, if they don't do this --

>> rand paul says this is obamacare, just a revised verg >> moderates saying it's way too draconian. these guys on both sides have to accept not a perfect bill, but something that allows them to keep the promise of not making obama care the status koe. at least starts to rein in the entitlement spending on healthcare which will be out of control. >> that's why one option still talked about is even if you feel like you don't have the public support coalescing around this bill, don't count out the majority leader mitch mcconnell who still might bring this to the floor, he might see this as a dare to republicans before they go back home to their district >> i think it's better than 50/50 these guys -- every one of them has -- they love their day in the sun >> if you could get some slight thing in your favor, then you -- >> what do they have to give

then it makes it harder on the other side >> it does >> that's the hard part. >> that's what you have. >> if you're going to placate those four, then you really -- it's going to be a struggle. >> remember those things people used to have on their desk, the pendulum sweeping, every time you appease one side, you knock the other side off >> very '80s those little pendulum things. wall street -- little metal balls would hit each other >> yeah. all right. back to the broader market joining sus is steven parker. head of thematic solutions if you want to have a theme involved, where you can explain it to people, like cocktail par parties, i own some tesla, do you have a theme no, why? can i go somewhere and actually have a theme for my investments? they come to you

>> that's right. jeff saud, i don't know why you're here. do you have any themes just money making ideas, right >> no, i have themes i'm a thematic investor. >> you are as well maybe it's thematic friday i haven't talked to you in a while mr. chief investment officer at raymond james are you bullish? >> yes, i have been. i continue to be bullish i would add one thing to your conversation about mitch mcconnell, he's very good at playing defense, not good at playing offense. >> so what conclusion do we draw from that statement? >> i think that the bill has not the votes to get through >> so what happens >> you said it earlier, if they don't pass it bill t looks like obamacare implodes, you get a single payer >> you are still bullish

>> yes i'm still bullish. healthcare stocks were up yesterday because they think the bill will pass i lived in d.c., i'm well connected on capitol hill. as of last night i don't think they have the votes to pass it yet i think the markets have transitioned to an earnings driven market. earnings will come in better than people think. >> who did you mention that wants her own state to get her -- bolster her numbers >> susan collins in maine. >> that's the problem with the system here. we a >> even the republicans dent want to lose a single seat when you have a 52-seat majority -- heller is up this year if he loses it-- >> they guys will lose all their seats if they don't govern all right, why should i listen to you on this >> because i lived inside the

d.c. beltway for years, i ran capital markets there. >> that's your problem >> but jeff, real quick -- >> correct >> what you just said about the politics of the moment does that factor in at all to thinking about the market and your algorithm? you always talk about the algorithm. >> the models. the models are bullish all the models -- the long-term model turned bullish in october of '08 and has not flipped negative since then. >> in your model is there input that relates to what's happening in d.c.? >> no. absolutely no. >> just wanted to be clear >> a lot of counter forces swirling, oil weak, ten-year not in a hurry to get to 3%. what is the market doing what is it telling us? >> i think jeff mentioned it, we're focused on an earnings driven market. everyone is focused on markets at all-time highs, that's

because earn pg ings are strong just here in the u.s. but globally while we may not be seeing the economy ripping, what we're seeing for the first time since the crisis is a synchronized global recovery. not just the u.s. leading us higher, european data was strong this morning consumer confidence in europe, the highest level in 16 years. that's translating into earnings growth and that is pushing markets higher we track the baskets of companies that are most exposed to things like deregulation or tax reform in the months after the election those stocks outperform the broader market by 10%, 20% they've given back all that outperformance over the last couple of months the market expectations around policy has come down significantly. i don't think we need that for markets to continue to grind higher >> it would be a bonus >> i think it's more of an upside potential than necessity. >> if the risk is not -- if something doesn't happen, it doesn't necessarily mean there's

an air pocket under the market >> you may see a bit of a selloff, i don't think it will be something substantial >> if i was andrew, if i had all these other billions, all this stuff, would you be buying f.a.n.g. just buy them? because they go up every day they had a brief little pullback talk to him. >> tell me, what am i supposed to do, knowing that joe thinks i have a time horizon of a hundred years. because i'm invincible at this point. >> he thinks he's immortal he does. >> the technology story really is dependent on your investment horizon. these have become popular trades >> give us a hundred years >> these companies, a lot of these tech companies have incredible growth prospects. valuations are not crazy like they were in 2000. there's a continued story where growth will not reach the levels we saw historically.

people are looking for companies that can deliver growth regardless of the economy. that's a long-term tory. >> guys, thanks. andrew your rival -- >> who is my rival >> david faber, m&a type rival >> good friend >> he was interviewing jack ma >> yes in detroit >> the singularity s-- >> is upon us. >> is possible but he's worried they may not care much about us the machines >> he also thinks we'll have a four-day work week >> four-day work week. singularity is a possibility sigh bo cyborgs. we have to suck up to the machines >> when we return, new data on the economy and the trade. we have a new read on the biggest risks to businesses. details after the break.

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welcome back to "squawk box. the latest results of the cfo survey are officially in jackie deangelis has the details. good morning >> good morning. almost officially putting the first half of the year to bed, so it was a great time to conduct the cnbc global cfo

council quarterly survey to see where cfos stand on various positions and how their viewpoints changed we asked them what keeps them up at night what the biggest external risk factors are. consumer demand followed by cyberattacks and then u.s. trade policy speaking of trade policy there's some concern that trump's rhetoric towards germany would lead to a trade war with that country or possibly the entire eu just under 60% of respondents said they're some what concerned about both with respect to the global economy, the eurozone, which they said for the last three quarters was stable is now improving while the u.s. continued at improving status for the fourth quarter in a row. we also asked about the stock market, would the dow see 22,000 before it falls back below 20,000 60% said we will go up before we come down. an optimistic but cautious tone at the same time

>> okay. >> what do we think about that >> cautiously optimistic >> what do you do with that? what do you do with that >> it's like the most -- 20 years, that's the most common two words -- from a sell side, not a cfo, but how do you go wrong with that? >> i'm constructive on the economy. what does that mean? >> that's even more out on a limb than cautiously optimistic. cautiously optimistic means any time something could happen, but maybe not. then it goes higher. >> that's interesting because on the trump questions we asked them their tone changed a bit. many of them were saying they don't think we'll see implementation of policy before the end of 2017. so that was a little bit of a shift. we asked them to describe president trump in a word, i share some of those words with you. they weren't that kind arrogant, thauthoritarian,

narcissistic, reckless >> any nice words? >> there are no words. that's the nicest. >> the nicest, there are no words. >> they do it anonymously. >> yes >> they all haveoptions on their stocks, companies, like ka-ching every night honey, we're doing well. then they throw the slam word at trump. that's fine. >> we asked them a lot more questions on a lot of topics, technology, innovation, how they're feel being businesses now. >> you know what i'd like to have them in -- if you can get them on record with those words, we can talk to them about it let's see how quickly that happens. >> fair enough >> thank you coming up, digital flash crash. we'll tell you why crypt o currency -- where is your bitcoin? >> no, my $5 is 24 dlurs i think gifts over $25, you have to give back >> really? even if it appreciates >> i can't figure out who gave

it to me someone sent me $5 originally. now it's worth something >> did you see this? >> yes fascinating. >> $319 to 10 cents in about a second we'll talk about that. the squawk newsmaker of the morning, tom price saying why he's sporting the healthcare proposal from the senators here's a look at yesterday's winners and losers

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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. ♪ >> good morning. andrew just dropped a bombshell. >> stepping out. >> you were in new jersey? >> i was in new jersey >> did you have nose plugs you hate -- you think -- >> i love new jersey >> now he loves it. >> should we disclose where i was two weeks ago? >> at my house >> in the great state. >> it's nice out there, short hills. >> lovely. >> where was this one? >> that's a good question. >> just one of those states, called new jersey. do they have individual towns? i'm not sure why would you want to know any way? you never want to go back. futures turned negative in the

past half hour the bigge efgest dow mover caterpillar after deutsche bank cut its rating on the stake. that's responsible for part of the reversal in the dow. >> we do have some other stocks to watch today shares of sonic are also under pressure after the fast food chain reported a revenue miss for the latest quarter same-store sales coming in weaker than expected the company is trimming its guidance for the current quarter. toshiba expects to report a bigger than expected loss for the past year and will delay reporting those results as it undergoes an audit the company revised its outlook for the year saying it expects higher sales and lower net income. that stock off by 4.4% and synnex beating on the top and bottom line. the company says operating income jumped more than 50% in the latest quarter on higher revenues.

right now the stock is flat. there was a crypto currency flash crash on thursday afternoon. it is up about 4,000% year to date, etherum, but crashed to 10 cents from $19 on one second the flash crash is blamed on a multimillion dollar sell order it triggered about 800 stop-loss orders those automatic executions deepened the flash crash the currency quickly rebounded bitcoin has also been hitting records. it so joining us for more on all of this stuff, william mugiar, am i pronouncing that right >> yes

he is the author of the "blockchain. first, for those of us who don't know, the difference between bit coyne and ethereum explain that >> both of them are block chains one could think of ethereum as a new block chain. ethereum has been optimized for software developers, bitcoin was more developed towards big a crypto currency. ethereum is loved by the programmers and developers out there. >> so when you look at the price go from $319 to 10 cents t really raises questions about whether these things are actually real currencies

whether they can be stable what do you think about that >> there's currency speculation. you cannot deny that this is a new field. over time the speculation will subside an things wid things wi stable what happened yesterday, i wouldn't say a crash, it's more of a flash or blip, a technical error on the exchange that was powering these transactions. when you look at ethereum it has four things going for it that are strong ultimately it's about building a whole ecosystem. and ethereum has a strong ecosystem of developers. about 35,000 developers worldwide. number two more than 500 startups developing new ideas, new business ed models and new companies built on ethereum specifically

and you have a lot of large enterprises, fortune 500 companies like jpmorgan, bny melon, microsoft, bp, all using ethereum in different projects and finally it's become a source of crypto capital itself it can help others create new currencies and this is capital basically that is almost replacing venture capital. these are the four things that are strong for ethereum. >> if you could own ethereum or bitcoin at this point, what do you do >> i would do both right now >> both. >> yes, because bitcoin is not going away what happened in the last year is that the gap narrowed between ethereum and bitcoin >> what's the chance that a -- what's the chance a third or fourth or fifth cryptor currency

emerges and effectively makes bitcoin or ethereum obsolete that's the larger question here, right? >> i don't think -- i don't think it's going to happen this is a new field so we're going to see several new players that will become the next google, the next amazon, the next facebook, the next linkedin look at the web revolution, it has given us 5 to 10 large companies. not one replaced the other necessarily. so the field is new. right now the top two joints are bitcoin and ethereum a year ago bitcoin was 90% of the whole crypto market. that's not a good thing to have one leader today ethereum is about 30% of that market. >> but william, maybe it's just -- i'm struggling to wrap my head around it because i'm so steeped in using u.s. currency

or going to europe and using the euro before the euro using every different national currency. when you think about what the world looks like five, ten years from now in an electronic way or even in a brick-and-mortar way in terms of how people are paying, you think you'll walk into a store or go on to amazon or how ever we'll be buying different things and we'll use all sorts of different currencies >> yes this will be one of the cases. crypto currency will not replace what we currently have it's going to be a new way it's going to be a new alternative way of paying and buying and selling not just at the retail stores, what is happening now, is that there are software applications that will have cryptorcrypto cu in your smart phone. your smart phone will not just

be a wallet holding currency when you use the next generation of facebook and others, they will contain some crypto currency value that will be tradable so there will be more fluidity and lick kquidity currencies the currently have -- >> what will it take to turn these currencies into stable currencies that people feel comfortable accepting on a day-to-day basis rather than just on investment >> yes, there's technology being worked on specifically called stable coins, which will help to stabilize that over time it's going to be stabilized right now there's lots of speculation that it's driving these markets high up because in the grand scheme of things the whole market for crypto currencies is only about $112 billion as of today. it was close to 12 built onlail year that's still a small number.

i wouldn't be surprised if it moves towards the half trillion dollar mark by the end of this year then it will go from there >> real quick, news can use for the audience if you wanted to actually get in on this and be able to pick off the currency at 10 cents yesterday afternoon, where and how do you physically do it? just realistically can't do it on e-trades. how do you do it >> you have to become a user of these new exchanges of the likes of coinbase, gdax, cracken, bit tracks, these are all new exchanges which are the likes of the nasdaq and the brokers that we have our stocks in today. so there's a whole new world right now that is trading crypto currency it's different from the current world we know today. >> all appreciate your time. come in studio next time fascinating field. >> thank you >> trump's tweeteding. >> mm-hmm.

>> i helped pass and sign 38 legislative bills, mostly with no democratic support, gotten rid of massive amounts of regulations. then nice. sometimes you see sad. this is a nice >> written emotocon. you go to new jersey, you start itching. >> it's beautiful there. >> where is that for me? not just davos -- >> sometimes square? >> sometim times square >> times square. >> i'm going there today i'm driving down -- >> long island going out to the hamptons? >> down. >> seat of federal -- >> you're going to washington? right. of course. i know why >> i will -- i'm teasing i will show a couple pictures for why i have to go down there. i'll be down there for a couple

of days, in fact >> wow >> all weekend >> most of the weekend to pick someone up down there. it's very -- it's a very good cause for -- that i will -- it's like me -- it's worst than jersey, me going down to the beltway. >> the thing is on the weekends in d.c., it's nice everybody has left >> everybody leaves town >> right aurl the people y all the people you want to leave. when we come back, american airlines ceo doug parker is not happy about qatar airways planning to take a 10% stake in his country. reaction at 7:30 a.m. eastern time

well, time flies today marks the one-year anniversary of the brexit vote that sparked a reorganization of european -- >> been a year >> been a year >> shook up british leadership wilfred frost still depressed. he took a closer look at how it happened and what's next for the uk >> reporter: a year ago today the most historic vote and surprising result in europe for decades.

>> uk voters backed an exit from the european union >> the british pound collapsed falling more than 10% as the results emerged. instantly trillions of dollars wiped off global stock markets the result led to prime minister david cameron's departure. he was replaced by theresa may who felt that -- >> brexit means brexit >> brexit means brexit >> brexit means brexit >> reporter: but with just a small majority it wasn't until march that theresa may finally invoked article 50 of the lisbon treaty thereby triggering the two-year exit process may then took an enormous gamble calling an election to try to increase her majority, with it strengthen her authority for brexit talks but the opposite happened after a disastrous campaign. >> a very, very poor result for the conservatives. they have missed the majority. the pound has fallen >> reporter: despite the blow, brexit is still expected to happen here is chancellor philip hammond speaking earlier this week

>> we're leaving the eu, because we're leaving the eu we'll leave the single market. >> reporter: formal negotiations began on monday and the uk has a monumental task to reach a beneficial deal in the 20 months they have left the british pound remains 15% below its pre-brexit one-year average the ftse recovered largely the ftse 18% higher today the key one-year takeaway is that brexit has not sparked a wider collapse of the eu as highlighted by recent election results in holland and france. guys >> you're doing well, wilf there's seven stages it starts with denial. i think you went through anger finally ends in sort of an acceptance that it happened.

but i think you're there finally. as our resident globalist, elitist, everything. it was a shocker when it happened you're handling it -- i guess it helps when the stock market is up >> joe, i have remained throughout in the state of glorious unaffected impartiality >> okay. all right. that's your story. >> that is >> david milliband was here earlier this week saying wilfred was the right wing >> off camera he was saying that. >> wilf gets pigeonholed >> is that true? >> neither perspective >> is it true he thinks you're a raving right-winger? >> i think he was being facetious. >> tongue and cheek. >> exactly he was a labour man with some -- >> you look the part i'll tell you that you look -- yeah you could be conservative. you could be in the conservative party. you would be a hell of a prime minister i don't know if that's the

cards. >> certainly not i like to sit on the sideline. >> that's for now. that's for now you're 30. >> and forever >> all right wilfred frost, thank you >> cheers, guys. coming up, when we return, retail analysts have long counted cars in parking lots to get a read on the consumer but orbital insight uses satellite data to gather that. the company shares its numbers on t gceherory business with us after the break. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.

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ask your doctor about cialis. and get medical help right away. become a villain again.. mmm. [ minion babble ] [ minions cheering ] [ minions sighing ] [ minions cheering ] [ minions booing ] okay minions, we're going back to villainy. [ minions shouting ] ♪ so bad ♪ so good that i'm so bad... ♪ [ honking ]

so, you're villains now? [ nervous laughter ] i mean, hello sweetie. despicable me 3. rated pg. welcome back, everybody. amazon's bid to buy whole foods has kicked off a discussion about the evolution of the grocery business right now that business is still all about driving to the store, parking, and walking around with a shopping cart. but one company is seeing that change from a very high vantage point. not from 20,000 feet, but more like 2 million joining us right now is kevin o'brien. he is chief business officers at orbital insight. and, kevin, i think about how we used to talk to analysts who would do channel checks and stand in stores and see how many people were there and gauge broader traffic trends by that why don't you describe what it is you do? >> sure. first thanks for having us what orbital insights does is we have a basic mission of looking

at what's happening on the earth and to the earth so specifically with retail we work with a series of satellite partners are, digital groeb and some others and plant labs and aegis out of rome and ask them to basically deliver us all of their historic satellite content, and don't give it to us, but put it out onto amazon's cloud and we begin to run a series of a.i. prophesies in running things like deep learning and computer vision and data science it's a lot of the a.i. stuff that you're hearing but it's very economically focused. and we look at about 250,000 parking lots across north america and we do things simple as counting cars but when you do that over time you can get a very nice, long, historic perspective of kind of the economic health of people visiting certain locations and when you put that in with other fundamental analysis you can get a very clear view of how certain retailers and brands are actually performing vis-a-vis their competitors. and then we deliver that through apis and web services to corporate customers. >> we have a sense just from

watching the news and what retailers have been telling us for the last year or so, that things have kind of fallen off a cliff. that people aren't shopping as often, they're not going out to these stores is that something that kind of matches up with the data you've seen >> yes broadly you're seeing that in certain sectors. specifically in retail and consumer if you look at whole foods, we detect a decline around mid 15, 2015 there was a decline at that time period and really accelerated since then and it's really a sector divergence here. it's not necessarily just whole foods. kroger, super value and some others so you are seeing a decline in those areas. and yeah, you have more and more folks that are looking for different types of options to purchase their services. it's kind of a -- it's really a natural extension of new ways to shop for things, and new ways to purchase them. whether it's retail clothing or eventually food products like amazon's going after >> any of those gresry chains that seem like they are resistant to this sort of new trend? anybody who's hanging in there

with their profit? >> costco and walmart. we've seen kind of continual steady line increase in traffic to those particular brands when you think about the size, and the breadth of offerings that they have, they're very strong in their category target's declined a bit. we thought they would be up with the big three but they've also declined with the rest of the sector albeit at a slower rate. it's really the walmarts and the costcos that manage to fare quite well so far. >> kevin, really interesting stuff. we appreciate your time and hope to talk to you again soon. all right. it's quite a delay coming up airline stocks are rising after, going to go back and forth, i've been saying qatar. after qatar airways announced plans to take a 10% stake in american airlines. ppabt rk i't doug paersn hay ouit the shareholder, 10% shareholder. why not? looking from a fresh perspective can make all the difference.

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markets now, stocks pointing to a mixed open an wall street front and center, live in washington with more reaction to the gop plan to repeal and replace obamacare. and doug parker speaks out on qatar air's proposal to take a 10% stake in his company we have his comments and a industry outlook straight ahead. 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, welcome back to "squawk box" right here on cnbc live at the nasdaq marketsite in times square, i'm andrew ross sorkin along with

becky quick and joe kernen futures at this hour, we'll show you what's going on. we are red in the dow. dow looks like it would open off about 32 points. s&p 500 unch or slightly up. a little bit of green there. nasdaq also off this morning, close to 2 points. expected to be the busiest volume day of the year on wall street today is the day of the annual rebalancing of the russell indexes. the various stocks being moved in and out about $8.5 trillion, that's with a "t," are linked to those indexes. oil prices faring steady this morning but that won't be enough to keep crude prices from falling for a fifth consecutive week energy stocks are on pace for their worst week in a year wti trading at $42.82. all 34 banks now facing the dodd-frank stress test they faurd well in the latest results. they were all determined to have sufficient capital, which is good news, to keep operating under what the fed calls adverse financial conditions a second round of results comes

up next week it will determine if the banks will be allowed to return as much capital to shareholders as they would like. a lot of analyst investors looking to see what the fed has to say about that fact >> we've got a couple of stocks that we're keeping an eye on this morning shares of sonic, under pressure after the fast food chain reported a revenue miss for its latest quarter they have those two guys, right? you know those guys -- >> with the commercial, yeah who fight back and forth and talk about this new drink. you remember it, joe, that's effective advertising. >> it's annoying they're so annoying, both of them and did they send us stuff or was that shake shack sent us burgers, right we tried those has doneic -- >> in the past they have in the past. it's been awhile they said -- >> sonic has not >> they did at one point when we were in new jersey still >> as a result, sales were weaker than expected i mean, we probably couldn't have changed that outcome.

but you never know what the counter factual is if we had tried a couple of sonics on the air. company is trimming its -- trimming its guidance for the current quarter. and google's waymo hiring an ex-tesla engineer to lead its self-driving car unit. the new hire will oversee the development of cameras, radar and computer vision. at google's autonomous car company. i mean ended up less than $45. cheaper. >> cheeseburger's less than $45 but it's still good if you kept it on your desk over a year or two like i've kept my bitcoin would go up in value or down >> if you kept it on your desk for a year >> my point is, you know, you can't look at it like an asset >> all right so we could if they were to -- if they were just to send over some burgers >> it would be okay. >> i think that would be acceptable i don't know >> unbecoming. >> unbecoming. >> okay. >> never mind. don't send it over here. >> i'm not --

>> all right >> i don't really like -- to politics president trump has officially nominated new york jets owner woody johnson to be his ambassador to the uk johnson is a longtime republican donor and has owned the football team since 2000. he's also chairman and ceo of private asset management firm johnson group. the president also nominated former l.a. dodgers co-owner jamie mccourt to be ambassador to belgium we talked in the last hour about how some zoners, and -- >> yes, helps. >> that helps. >> maybe refurbish some of these embassies and embassy homes. >> yeah. if i get offered it would have to be a pretty -- >> where would you want? >> a pretty crappy country for me -- >> why is that >> because i'm not going to be able to throw the type of party necessary to -- you're getting -- you might get apple -- >> two buck chuck. >> yeah two buck chuck 20, 20, wine, serving, senate

republicans reviewing their health care bill the major difference between the house and senate versions, medicaid cuts. kayla tausche joins us now with more if you plan -- i'm coming to d.c. today i don't have time to hang out, though, kayla, in case -- i don't want to disappoint you, but i am coming down, i'm sorry. >> well, i'm also sorry to let you know that i'm actually going to new york today. maybe that was -- >> ships in the night. >> your nonexistent assistant called me and let me know so i land that. >> exactly >> joe when you're talking about medicaid cuts that is one of the biggest changes and it's also among one of the biggest sources of frustration in the new discussion draft that was released yesterday both bills put medicaid on the budget tied to inflation instead of being open ended but the senate bill ends the expansion by spending by 2021. and by 2024 shifts about 40% of the cost to the states that's one of the reasons that groups like the hospital and health system association of

pennsylvania oppose it in a statement that group saying quote we remain concerned about the senate plan to phase out enhanced medicaid funding which has helped more than 770,000 pennsylvanians gain coverage there's a similar story in ohio. one reason why senator rob portman, who goes on "squawk box" quite often, has been a staunch advocate of a softer approach despite the views of more conservative members. the cbo score will be a line in the sand, and should estimate cuts in the program, and a change in coverage loss to help some of these moderate senators figure out exactly where they stand. the bill is a modification of the house plan, which in one sense makes scoring the bill easier but it doesn't make popularity harder to come by. a new nbc news/"wall street journal" poll that was out yesterday shows just a third of republicans see the house plan as a good idea and by comparison, joe, a kaiser family foundation poll out said that overall, regardless of party affiliation, the affordable care act at this moment in time is actually more popular than the house health

care plan. >> right not surprising people love entitlements especially if you get them right? anyway, thank you, kayla and you know, i'm disappointed but who knew >> we'll see each other again soon, i'm sure of it >> didn't give you advance warning that, you know, to roll out the -- well leave the red carpet down for when i do come thanks for more on what's going on in washington, d.c., is it more important how it's going to play out in the market, this morning we're joined by karen cavanaugh, management senior market strategist and also david joy is here, senior market strategist at amer prize. finance. what do you think this mean and do you think it is going to go through? >> who knows if it's going to go through. it may not but, the only thing is that it creates more uncertainty for the markets. but at the end of the day -- >> and do we think uncertainty is a good thing or a bad thing >> not really. but i think the market's kind of used to uncertainty at this

point. and markets moving forward based on the underlying fundamentals market is driven by fundamentals not by what's going on in washington the health care is not the big kahuna the market's looking for tax cuts they're looking for less regulations. >> and you don't think they're connected? >> it will come. if we can get over this hump we're definitely in a better position to see tax cuts and that's really going to make the market take ff >> you're still buying by the fiscal at this point -- >> still buying by the what -- >> meaning -- >> of course i am. right now we haven't had any kind of pro-growth reform, and we're still doing -- we're still moving ahead market's been going two steps forward, one step back i'll take that any day of the week >> david is washington at this point just option value? >> i think to some extent. >> is there a downside piece to this or no >> not in terms of the legislative calendar assuming that the health care bill does get resolved whether it passes or not i don't think there's actually -- >> you just said as soon as it gets resolved. resolved in what way >> that they go to a vote at the

end of next week, and they're allowed to move on to tax reform i degree that's the more important issue for the markets. not whether health care passes or not but it's obviously important to know what health care is going to cost in terms of what you can get done on the tax reform side. in and of itself intrinsically health care itself is not as important to the market. >> i completely appreciate that point. at some level you have to try to handicap what's going to happen on the health care front to then be able to appreciate what is even possible on the tax front, which then you can doyour math on to figure out where you think the market may or may not want to be. >> exactly and personally my suspicion is this gets done i think it gets done they only need to maybe move it a little bit to, you know, get those extra two votes from the four senators that have said -- >> four holdouts, right? how far do you think you have to pull it that way and then does it become uncomfortable for everybody else >> yes you begin to lose the moderates if you go too far. so it's a very tricky thing.

but i like the fact that the leadership has said we're going to vote on this so it puts the burden to get something done pretty quickly >> where do you have like the s&p by the end of the year >> right now at 2360 but what frankly over the next week or so we're going to be looking at maybe changing that with an inclination that will raise -- >> raising it. >> maybe another 5% or so, somewhere between 2500 and 2550 is what we're thinking >> is that fully balanced in terms of how you think this is all going to play out or do you say to yourself, the bank stocks are going to be the winner how do you think about this? >> we think about it in terms of washington, at least, as sort of a secondary issue. the fundamentals we think are pretty good. >> that's what's driving -- to the extent that you will raise guidance >> yes it will not be dependent on what we think happens in washington and the overweights we have, we start with technology. we think that that's the -- >> that's still the driving? health care, modest overweight, and -- >> what's the part of the business at this point you just don't want to be in at all is retail too dangerous to play?

or is there an argument to be made that maybe it's in -- how do you think about that? >> well, that's sort of a company by company kind of issue it seems to me the consumer is in very good shape. i think you're going to see good spending it's a question of where that spending gets done >> i would degree with that. everybody was disappointed with retail sales oh, down 0.3%. but if you take a look at year over year they're actually up almost 4%. and double digit in some of the home oriented kind of stores or the nonstore retailers. so, there is definitely good news for the consumer. the consumer's continuing to spend. a lot of people take a look at that month-to-month data and it's noise but verall, there's definitely some -- >> is there a market that you wouldn't touch because right now as i say it's just buy everything. it feels like that >> no, but i think it's good to be diversified so i definitely think that some of the things that have not done as well would be good places to

be in. in financials. and even some of the retailers that you -- that have been beaten down maybe too much, there's always some opportunity, pendulum always swings too far >> and how do you think about looking outside of the united states i just came back from europe where i have to say the optimism -- there's more optimism there than there is here >> we've lowered our u.s. weighting to neutral relative to our global bench mark and we've increased europe -- eurozone >> right >> to an overweight. we've also increased japan to an overweight >> absolutely. if you take a look at manufacturing, especially in the eurozone, the high cmi since 2006 we're seeing a definite turnaround, so there's definitely opportunities, so investors should be all over the place. but, i mean, in the united states not just with large caps, not with bank, all just with banks but look at the mid caps, the small caps, which haven't been doing as well, there's definitely opportunities there as well. >> okay. i tried to get you guys to disagree you like that. but didn't really work out this morning. thank you, guys, appreciate it when we return, indian prime

minister narendra mody will be traveling to washington today to meet with president donald trump for the very first time. and then american airlines ceo doug parker speaking out on qatar airlines' proposal to buy a 10% stake in his company what this move could mean for the industry and whether or not it will actually go through. and later department of health and human services secretary tom price will be joining us to talk about health care, this bill from the senate and where things stand. stay right here. you are watching "squawk box" on cnbc the power 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

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indian prime minister narendra modi will be traveling to washington this weekend to pleat with president trump sema mody joins us right now with more. >> most experts are expecting a bromance to emerge modi and trump are considered strong, nationalist, pro-business leaders to use social media to communicate to the masses during trump's campaign he praised modi and said he loved india at a rally in new jersey for indian americans on monday the two leaders are expected to discuss defense and terrorism at the white house, as well as new ways the two countries can share intelligence to weaken isis and al qaeda. india continues to be a big buyer of u.s. arms, and could look to ink more deals during modi's visit

now north korea could also come up, india is north korea's third largest trading partner. they've been limiting trade. trump may try to get modi to halt all trade with pyongyang to halt the company's nuclear program. leaders are not eye to eye on all topics the paris climate summit modi supports and h-1b visas has been criticized by the trump administration for stealing u.s. jobs modi will make the case that indian firms are investing in the u.s. economy and about 75% of the top 500 u.s. companies use indian i.t. services ahead of modi's meeting with president trump, the indian leader will engage with american executives on sunday morning attendees will include cook, microsoft's nadella,google's pitch chai, and i'm hearing india is not only an important

market for corporations here in the u.s. but for wall street, as well >> there could be some kind of head butting i know it's supposed to be a bromance and all things getting along but the idea that trump wants jobs here, not outsourced. >> true. >> and that could be a point of contention >> and that's why i think immigration and h-1bs will be a point of contention as you point out between the two leaders. again, modi will try to make the case that the foreign talent that is coming in from india's helping u.s. technology firms innovate and grow, if you look at apple, accenture, google, they're all beneficiaries of this h-1b visa >> these guys make a lot of trips in now it's interesting to see business leaders there on almost a weekly basis. >> it's a great point. the last time prime minister modi was here in may of 2016 and at that time he was making the case of why india is just such a appealing destination for big american firms >> seema, thank you. >> thank you >> coming up, a number of high profile mega deals in the news

lately we will talk whole foods, amazon, at&t, and time warner, and much, much more. ahead of mergers and acquisitions at jones day in just a bit coming up, though, why i am headed to d.c. today for the weekend. it's all for a good cause. i love this. >> hi, i'm alan greenspan. how are you? >> i love that guy he's like -- we have to update that so next time you say hi, i'm janet yellen >> that guy was so great he's like, no you're not >> he wasn't a plant -- >> no, he wasn't no, you're not you're on idiot. basically -- >> hi, i'm alan greenspan. how are you? >> dirty look. >> briefcase i had the -- the overcoat. check out the futures this morning. >> do people remember the briefcase indicator? >> i don't know. >> i'm worried about the next generation >> "squawk box" will be right

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now the answer to today's aflac trivia question -- yeah that will be the time capsule. i mean, who in their right mind would even -- >> mine is not on the set but it's here. >> oh, my goshs -- >> i still have it >> anyway. >> the guys are trying to kick us off there's only four people left in the company. >> that's what i heard >> i'm headed down >> you already starting to scratch -- >> headed down to washington this weekend why? because all week it's been the young women's political leadership program which was put on by running start. you should check it out. runningstartonline.org or@runningstart. this week the 10,000th young woman has gone down there for this kind of a conference to talk

about leadership and politics. and becoming leaders and nonpartisan movement of young women leaders, gaining the skills to feel confident and ready to lead. by participating in these really awesome -- i mean they met here, my daughter blake is down here look at who she's rubbing elbows with down there. she was with will hurd, congressman will hurd that was a couple of days ago kellyanne conway and she didn't -- she said hi, i'm blake kernen but didn't mention -- there's several of her good friends they make friends really quickly and it's just, the whole thing has been such a phenomenal experience we're going to go down and give our support >> i like the i look like a politician head line >> hashtag i look like a politician >> the face of our representation and they do. >> and it's been around for awhile but you can become a member or contribute and i feel bad plugging there's will hurd and there's all the -- where's waldo in the back row you can see blake up there sort

of in there. >> oh, i see her yeah >> it's -- >> this is like, i feel like you sort of. you would be all over this >> i am. which train you taking >> i'm driving >> and i'm riding shotgun? >> i'm driving -- maybe not. maybe scott. >> can i sit in the back >> yeah. and i got two back seats so it's not a trunk situation. >> not the third row >> did you think i -- it's come to that i'd put you in the trunk. >> really? i thought we -- remember when we talked about a motor bike with a side car >> people suggested that >> yeah. >> will you go -- >> you'd be cute in a side car >> will you contribute -- will you contribute -- you know >> you don't drive a stick, do you? >> depends >> even on a motorcycle. >> that i've never done. >> i can do that for you we'll be good with that. >> we're going to talk more about this crazy situation with american airlines and qatar.

american airlines ceo doug parker making those comments about the offer from qatar airlines to take a 10% stake in the company. his comments and what it could mean for others in the airline sector we're going to talk about it when "squawk" around after this break. quick look at u.s. equity futures, dow is up about 32 points nasdaq after as well about three points but the s&p 500 is mainlyp. when you booked this trip, you didn't know we had over 26,000 local activities listed on our app. or that you could book them right from your phone. a few weeks ago, you still didn't know if you were gonna go. now the only thing you don't know, is why it took you so long to come here. expedia. everything in one place, so you can travel the world better.

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good morning, everybody, welcome back to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square among the stories that are front and center this morning, just one economic report on today's calendar the government's out with its new home sales for may that hits at 10:00 a.m. eastern time economists are looking for 3.7% increase and a partial reverse of april's 11.4% drop. sears is planning to shut down 20 more u.s. stores according to published reports. that would be in addition to more than 200 closures that the retailer has already announced and shares of caterpillar are down in the premarket

trading this morning deutsche bank cutting its rating on the heavy equipment maker to hold from buy. the bank's forecast for caterpillar's earnings are already well above the street's consensus. but it now feels that optimism about a rebound at the company's key markets is already reflected in the stock's price as a result that stock was down by 1.2% when we started this morning. we were in positive territory. albeit very modest advances. but this morning you can see that the dow has been pulled down in part by what's happened here american airlines ceo doug parker making comments about the qatar air offer. i'm going back and forth, phil phil spoke to him and joins us now with more. and you -- you had the early call on exactly -- you talked exactly about what to expect from doug parker, and he delivered, phil. >> yeah. he never disappoints if you're looking for some candid commentary you're going to get it from doug parker i had a chance to talk to him yesterday afternoon after a day in which they sent many messages from american airlines saying, we're not interested in qatar

investing in us. and so when i had a chance to talk with doug parker, i asked him point blank what was your reaction the first time that he was approached by qatar ceo was two weeks ago in cancun at a industry event he said i found it confusing i was a little bewildered why an airline we are aggressively fighting would want to take a stake, makes no sense. when it comes to this stake that qatar is proposing, a couple of things to keep in mind while it intends to buy up to 10% of the outstanding shares from american, american's bylaws basically say that its board of directors need to approve any purchases of stock that go beyond 4.75% so theoretically, if the board shoots it down, they can't buy more than 4.75% of american stock. on the issue of whether or not this is a move by qatar to get a little closer with american so that parker might, pull back a little bit in his criticism of the subsidies that gulf airlines are receiving from their countries, he says, if that is their motivation, it is

misguided and ill conceived. all this is doing is strengthening our resolve to defend our airline, which we will continue doing vigorously take a look at shares of american guys, the way this will play out is that once they send a letter of intent to the american board of directors, then the board of directors will have, i believe a 30-day review period where they can say, okay, this is our reasons why, according to the doj, that we are not going to approve or will approve, if they decide to go that route, which seems unlikely, not approve a purchase of shares beyond 4.75%. and by the way, hunter pay with wolf research one of the lead industry analysts on wall street, he says if this gets shot down by the american board it would make no sense for qatar to even by 4.75% and they're likely to walk away from this idea entirely. >> you know, phil, we love parker for speaking his mind obviously that's something kind of a rarity when it comes to

ceos >> yep >> but i wonder how shareholders feel because when that news first came out the stock spiked up to $50. and since then, since parker came out with his comments has come back down a little bit. >> becky i usually believe that most veefrs are very savvy and smart. i believe there was a lot of misunderstanding initially and i'm talking about in the very first couple of minutes after this came out. >> right >> because i saw people putting out on the internet oh, are these two going to get together? will american now have a greater presence in the middle east? that's not what this is about entirely and that's why you saw the market come back and say wait a second this doesn't really make sense. >> this is just somebody trying to buy a stake in the company. >> exactly >> and as far as parker's concerned nobody's buying his silence. >> correct >> i don't understand what -- whether qatar -- what they were trying to do, or whether they -- did they miscalculate on what doug parker's response was going to be? because as you said, if they aren't allowed to go to 4.75,

and they just say okay let's chuck the whole thing, then what was it all about, phil what was it all about? >> they're in talks right now, joe. think about it from qatar's perspective, qatar is in a box right now. it is being isolated, the country is, from some of the other middle eastern countries we know about that story we've been talking about that for some time. and the airline is paying the price. they're -- it cannot fly directly over united arab emirates and some of the other countries that are isolating qatar. and so you're looking at an airline that is worried about at the potential that perhaps the doj, or the transportation environment, when they're looking at the open skies agreement and whether that gets enfirsted, is there some kind of a carveout where they get separated from etihad and emirates what do you do if you're qatar what do you do if you're the ceo? do you try to get a little closer to one of the american u.s. airlines and perhaps lessen

the possibility of some type of an open skies enforcement? on the routes that they're trying to add to the u.s.? i mean, they're really in a tough spot right now >> i guess in a perfect world of capitalism, it would be people are free to do whatever they want in terms of buying and selling securities but i guess that doesn't really work that way. this has got -- this is political overtones coming out the -- out the nose on this one. >> right and remember, joe, one other thick to point out here, no foreign company can buy more than 24.9% of a u.s. airline so, there was never any chance here that this was a play by qatar to take over american. >> no, no. >> that can't happen >> but it just, they miscalculate, it's not going to happen they may end up going back with there -- i don't know, would that be a defeat if they just chucked, you know, if they say just -- let's say -- >> i don't think it's a huge defeat because i have to be honest with you joe, i found no one, no one at all in the entire industry, or within american

airlines, or with their competitors, who think that this makes sense. there's nobody who will have -- >> then it looks silly joining us now with more seth kaplan managing partner at airlines weekly. can you shed some light on this, seth because we're confused >> you know, i think one of the comments that doug parker made, when he said look, if they're trying to influence us, you know, they've got another think coming i mean they sort of achieved that with investments like this in other places, most prominently international airlines group that's the parent company of british airways. you know, years back, willie walsh who is now the head of the parent company, while he was at british airways complained rather loudly about the arabian golf carriers, air france, klm, his main competitors and iag is more sanguine about the arabian golf competitions, there are strategic reasons aside from the ownership stake about why they

may not care as much, and sort of more atlantic focused than their competitors. the reality is qatar owns 20% of the airline. i guess, you know, there's just sort of taking a step back they own a piece of iag which is a one globe alliance partner like american they own a piece of the largest airline in latin america, so you could say well okay this is just what they've gone around doing but i think the question of influence at least in an aero political sense is not perhaps also as phil mentioned in the geopolitical sense with everything now going on it is certainly at least a fair question if not probably a primary motivation >> hmm almost seems like maybe they just threw it out there just to see the response, too. you said -- i didn't know that anyway so they've got some stakes elsewhere, so it's like business as usual >> yeah, and look, you know, again kind of devil's advocate airlines do go around buying strategic stakes you know, american itself, spent a couple hundred million dollars

a few months ago buying a piece of china southern. that's not just a financial investment american there is buying some influence in china >> but when they -- >> seth when they did that they did that with china southern's permission >> oh, bsolutely and there are a million differences. i'm just saying, we're saying what could they want you know, they're not the first airline ever to try to perhaps look for influence by buying a stake in another airline but yeah, no, here it's, you know, with everything else going on, although it seems like it was likely conceived before the blockade, you know, obviously now there's a whole lot more likely going on, and you know, it -- one thing that's clear is that it's more than a financial investment american obviously is very viable air rhine qatar, though, one of the leeft profitable airlines in the world so from that standpoint, too you know, if this is just about airlines, with good balance sheets looking for ways to place capital we're not talking about

an airline that's in that situation here we're talking about an airline that alongside its gulf competitors is struggling mightily right now and so that sort of goes back to the accusation by doug parker, and his competitors sultan united that, you know, these are not -- joe you mentioned in a perfect world of capitalism, you know, people should be able to go buy stakes in whatever. well, american, which they have said basically look, this isn't capitalism we're happy to compete against airlines we just can't compete against countries. >> right >> and so, you know. >> right so you have questions for seth >> no, seth and i we've talked in the past about this and about the persian gulf carriers. look he brings up a great point here in terms of this being one of the least profitable airlines in the world and that is at the heart of the complaint not only from american, but united and delta they keep saying why are these guys adding routes to the u.s., having them subsidized that's not fair competition. >> right >> if this was a truly an open market, and you were not

making -- not turning a profit, would you be adding routes at the rate that they're adding routes probably not you would probably say, hey, let's get our books in order before we do any kind of an expansion. and that's at one of the primary complaints that doug parker and the other executives have. >> right seth, before you go, is there any chance that as a function of what's happening here in this conversation that even we're having right now, that qatar will change its stance and approach to doing business so that it can placate some of those concerns so that it could actually get an investment in american >> and you know once -- >> is there a window here in terms of negotiating all of this >> yeah. i -- >> you know -- >> yeah, they've done some things that i think are kind of unnecessarily provocative. and look, you know, the other side of this, those airlines, and the consumer advocates say hey, you know what, american adult to and united are just whining about this high quality, low cost service they don't want to compete against it. but you know, they have -- even

as compared to emirates and etihad, their competitors, qatar has sort of shown this increased bravado lately they said we're not going to pare our expansion plans we're going to order more airplanes eventually that sort of thing and so if anything that just sort of i don't want to say confirms, but you know, it just kind of plays in to the accusations that here is an airline that doesn't respond to market forces, whereas their competitors at least, although you know, maybe not making the kinds of capacity cuts you would see from a u.s. airline, facing what they're facing, at least they have been dialling down the expansion. qatar hasn't been doing that and so yeah, i'm not sure that even strategically this necessarily, in the long-term, gets them to where they want to be in terms of looking more, you know, less like a political project, and more like an airline. >> andrew, that's not akbar al baker's style the ceo and seth knows this you talk with him, he's a firecracker and he's not afraid to be provocative and to say,

well, may not be what you think, but this is the way we're operating. >> fair enough guys, thank you. when we come back, a look at the m&a sland scape and at the top of the hour health and human services secretary tom price joins us to talk about the senate health care bill. in the meantime take a look at the futures. they've been a little bit weaker as we've gone through the coarse of the morning dow futures down by about 32 points below fair value. nasdaq down by 4 s&p still hanging in there up by less than one point.

this morning vertical deals like at&t and time warner and now amazon whole foods have not historically been blocked. but they're definitely generating a lot of political tension in today's environment here's what at&t ceo randall stephenson told "squawk box" just yesterday >> right now, we're in negotiations, and the negotiations are -- there's nothing surprising but, joe, it's early and so early in the process, but we're optimistic that if it's viewed under the rules of anti-competitive behavior, this thing ought to pass. it is vertical it's a vertical merger

the competitive environment at telecom and will media will look exactly the same the day after this transaction closes as it did the day. >> we want to bring in the head of m&a at jonesing good morning to you. >> good morning. >> first does this deal about through? >> eventually i think so >> and amazon, whole foods >> you know, what is amazon-whole foods is it a tech deal? a retail deal? a grocery deal i don't know there's no question it gets some attention. in washington. whenever you do something that involves direct-to-consumer activity, necessarily politics get involved but you know, the rule of law is the rule of law. and vertical deals, you know, you can make arguments about them, but it's a decades old argument even in the waning days of the obama administration not too much pushback. >> there's an interesting argument being made about amazon these days which is to say as it gets into all of these other deals that perhaps we're

supposed to think about their antitrust policy or policy broadly by transactions differently because they become a platform what they call a platform company if you will. you've seen the argument that is person wrote in the yale journal just recently about all this the ability to subsidize different parts of the business using the profits of other parts of the business. >> the real advantage is they don't have to make a profit. >> but they do now >> they do make a profit >> but you know, the grocery business is a tough business >> right >> there's just no question about it >> when you think about when whole foods came on the scene awhile ago, it had the highest margins in the industry, because it was different well, then everybody else adjusts to it. i don't -- i think, obviously we've got to think forward but let's not get carried away >> my gamble is both of these transactions get through what does this say about m&a writ large, despite these two headlines we're talking about right now, m&a activity is now

at 2013 levels what does that say about the economy and confidence or what's going on in washington or what >> well, there's -- you know, as usual, it's a complex equation many of the factors that drove the incredible level of activity in the last two years, low gdp growth, incredibly accommodating capital markets, debt markets are just absolutely fabulous right now. better than ever all that sort of thing and companies having more cash than they know what to do with it so what are they doing they're buying back stock. putting up dividend, pressure on all that sort of thing so the underlying characteristics -- >> by the way, stock buybacks are also down. >> yeah, well, part of that is, you know, look at larry fink's annual letter last time. oh, it's a little bit yesterday's news invest in your business. do those kinds of things but, you know, they -- there's a huge uncertainty in terms of cap-ex generally i'm surprised the durable goods

numbers have been as good as they are because of tax policy. >> how much of this is because ceos are waiting to see what happens so they can decide -- >> yeah, you can look at whole foods domestic, vertical transaction, all u.s. from practically all u.s. but, if you're a company that is affected, would be affected by the border adjustment tax, what happens? >> sounds like the border adjustment tax is dead on arrival -- >> that's what everybody is saying or there's a lot of pretty smart people, and i'm not predicting what's going to happen in washington, balls i'd rather go to vegas than do that, but a lot of people say, we would have a little one so it could grow bigger >> the robots are calling the shots at blackrock now anyway, aren't they? they're not -- >> well,there's something to that -- >> but i thought you were going to think this whole foods thing was like beets i didn't think you'd like this >> this deal oh, i think it's going to be transformative >> you do? >> ten years out transformative. >> whole foods is a very small business right now, people worried about antitrust today i

think there's no meaningful concern. i think long-term this is going to be huge for amazon. >> and they want to do -- >> first of all, jeff bezos doesn't do anything he doesn't think is going to change the world. this is part of sort of his march to -- >> but it's still -- >> the last mile for the grocery business -- >> and there are areas where they have whole foods are also put in places where people tend to have amazon -- >> from an antitrust perspective still very small slice of the business safeway is bigger than whole foods just in like the whole world. >> got a rocket ship going to mars, now he's buying grocery stores >> but as an amazon prime customer -- >> -- tv shows now it's delivering -- >> give the customer what they want >> bob, here's -- >> within the context that i said, if m&a activity is at 2013 levels is this amazon/whole foods deal a unicorn or a precursor to a wave of more transactions >> well, there is a tendency for a transformative deal to make everybody else think what am i

doing? and i better do something quickly. but the reaction last -- was it last friday i think it was announced, all the other grocery chains were, you know, tanked, a kroger's numbers had been down getting carried away i read a whole bunch of stuff that this means that the blue apron ipo is going to be blown out. come on. you may be right but it's not tomorrow >> although they did say that i think it was yale, harvard, somebody said one of those business papers that everybody's three-year plan got thrown out the window everybody has to come up with a new plan >> and part of those new plans means looking at other less strategic things to do rather than just -- >> before you go, take us just unside the corporate board room right now. because i think you spend a lot of time inthose rooms. are there transactions that people are talking about that they're holding off on have there been deals that have got in close that have been falling apart? what's the pipeline look like right this minute? >> well, actually for us the pipeline is very good. we sort of bill on an hourly

rate basis whether a deal gets announced or not. there's been a lot of people working a lot of things. pipeline is great. it doesn't feel any different for us than it did a year ago. but you talk to an investment banker and their knuckles are dragging on the ground because there are not enough headlines that come out. i think you know, m&a guys are always optimistic. i recognize that >> so what do you do >> i think the second half is going to be good i really do. the fundamental factors are still there. you know, what's the 10-year at, 2014, 2015 now you've got to do something with that money >> bob, we appreciate your time this morning and your perspective. >> be like us buying qvc or something. >> still don't knock it. you never know what's going to happen >> i don't think he'd -- i'm disappointed >> why >> i thought it would be like beaks. you would totally despondent about the apple beats deal because you didn't think it was cool enough for apple to be buying this. >> beats i thought was harder to justify. and i still think is hard to enough >> do you think --

>> selling kale at -- selling kale at -- >> we love kale. >> first of all whole foods is a big margin business. amazon doesn't care. >> we're going to continue this conversation in a commercial break. when we come back, stocks to e tuwah. thfures have been a little bit weaker for the dow and nasdaq stopping) (dance music starting then stopping) prone jar shatterst livthe competition.pe? olay regenerist hydrates skin better than creams costing over $100, $200, and even $400. fact check this ad in good housekeeping. olay. ageless.

welcome back, everybody, let's take a look at stocks to watch this morning blackberry earned two cents a share compared to a forecast of

a break-even performance revenue did fall below street estimates. but blackberry left the overall profit forecast unchanged. revenue was below estimates as comp-store sales fell by 1.1 percent but the athletic apparel and footwear retailer does say comp sales should increase in the low single digits for the fuel year. and nettronic is raising its payout to 46 cents a share andrew >> coming up, health and human services secretary tom price is going to join us a lot to talk about with him and then later, who are the people in your neighborhood a former cnbc disruptor that's shaking up social media. the co-founder and ceo of next door talking about tech innovation and the company's expaion nsin germany "squawk" returns in just a moment ♪ ♪

here's to breaking more glass ceilings. in golf and everywhere else. ♪ the kpmg women's pga championship.

health care showdown. the senate takes the wraps off its obamacare replacement bill our special guest this hour health and human services secretary tom price. tech on a tear the nasdaq coming off its third positive session in the last four we're going to talk to an investor about the next big opportunity in the space, straight ahead plus, an app that would make mister rogers proud.

♪ it's a beautiful day in this neighborhood a beautiful day for a neighbor ♪ ♪ would you be mine could you be mine ♪ >> nextdoor wants to be the eyes and ears of your community the ceo says the start-up could be the next facebook he'll be here to explain as the final hour of "squawk box" begins right now live from the most powerful city in the world, new york, this is "squawk box. good morning, welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square. i'm joe kernen along with becky quick and andrew ross sorkin the futures have been down caterpillar is weak after a downgrade down 27 now on the dow. s&p is up a little over a point. and the nasdaq is down, 3, almost 4 quick look at 2:15 on the 10-year. oil prices down below 45 andrews, whole foods margins,

what are they? they're not good, are they >> yeah, but on a relative basis -- >> 2%? >> but on a relative basis to other supermarket chains >> i know 2% >> look, from -- >> from 3.5 to 3.2 to 20.5 now >> think about what amazon can possibly do -- >> king of the small margins i guess. >> not just small margins, but about being able to being able to deliver the customer everything they want >> think about it -- >> and by the way, amazon gets the majority of my dollars that i spend at home right now. i do fresh direct. >> why >> because i don't have time to go to the grocery store. when you've got two people working outside of the house it's an hour, hour and a half of my day -- >> plus the kids toys, plus whatever you're order being on amazon all the time. >> i'm ready to go to the grocery store from 10:00 a.m. on many times i'm there two or three times. i don't need no stinken fresh direct >> i ordered fresh direct this morning before the show even started. >> never got it. >> from my phone in the makeup

room >> i'm not going into the future just forget it >> we give up -- >> and i don't know if joe knows about it do you know about a company called instay card that's who's going to be -- instacard allows you to get deliveries from whole foods. >> oh. >> they just signed several months ago a five-year deal to do that. very interesting what happens to that deal. it may actually be very good for them also let's get you caught up on this morning's big headlines. all 34 banks facing dodd-frank stress tests fared well in the latest results they were determined to have sufficient capital according to the fed, next week and this is the most important part, a second round of results will determine if banks will be allowed to return as much capital to the shareholders, as they would like. and investors will be looking for that info in the middle of next week. also google's waymo. that's, of course, its autonomous car unit, has hired an ex-tesla engineer to head its

self-kriefing car business the new hire will lead development of cameras, radar and computer vision for the tech giant's autonomous car effort. and tesla may be considering watching, ready for this we talked about apple music, spotify. launching its own music streaming music. recode reporting that the carmaker has spoken to major music labels about acquiring the rights to songs and albums i do not get this one. the service would come bundled in all tesla vehicles. the report also says tesla interested in offering multiple tiers of service starting with a pan door la-like web radio service. talk about a low margin business >> and beats head phones along with that. i don't understand any of these synergies here why does tesla need a streaming service? >> this one i will say i don't get. whole foods i got. i even got beats to some extent. this one is tougher to appreciate >> all right i don't know stocks to watch. check out the shares of caterpillar. just referenced, it was deutsche

bank deutsche bank and analysts there cut the rating on the heavy equipmentmaker to hold from buy. deutsche bank's forecast for cat's earnings were already well above the street consensus but now the analyst says optimism about a rebound in the company's key markets is already reflected in the stock price and blackberry, blackberry, out with earnings. a communication software and services company, beat on the bottom line. but revenues fell below estimates. company left its full year forecast intact and notes that it was profitable for a third straight quarter the stock, however, taking a hit in premarket trading just -- this is like we'll be taught in business schools and in the future, how -- i can't remember what the market cap was at the top but it's a $4 billion -- $let's see, bbry, i'm just wondering what it's worth now? because it was multigazillion dollars. almost $6 billion. remember wasn't it at one point? >> yeah. when they owned the entire

market >> right you know, past performance doesn't say anything about future a lot of the times. blackberry ceo john chen has done a heck of a job, but he'll be on "squawk alley" at 11:00 a.m. eastern time. the senate unveiling the obamacare replacement bill among the key changes to the house's legislation, medicaid cuts or at least a slowdown of the expansion. nbc news reports that four republican senators will not vote for the bill, at least in its current form, although they said they're open to negotiation. joining us right now is the health and human services secretary, tom price mr. secretary, thank you for being here today >> good morning. wonderful to be with you >> okay. so from my understanding of the bill, it seems like there are a few major provisions that the bill would end the mandate to require individuals to buy insurance. it would end some of the obamacare taxes. it would reverse the expansion of medicaid that's pushed out there. and for the first time it would be limiting states -- the state's funding, federal funding for medicaid are there other things that you

want to poent out about it >> yeah, i think the important thing to look at is what this will do is actually stabilize the health care market right now we've got an individual and small group market in health care that is literally collapsing before our very eyes. where you've got issuers pulling out of the market. you saw anthem saying they're going to pullout of wisconsin and indiana next year if things don't change you've got prices going up, premiums going up, deductibles making it so individuals have insurance cards but no care. and so what this will do is stabilize the market we've talked to issuers about this and many of them have told us, that they are interested in getting back in to the markets and that's important for your listeners. but what it will actually do is make it so that patients and families and doctors are going to be the ones in charge of health care and not washington, d.c. so it's a remarkable improvement over where we are right now. and that's the important thing for people to appreciate >> secretary price, i hear your concern that there have been all these insurers who have stepped out of the marketplace, that there are a lot of counties that

are going to have no coverage offered under the current law -- >> that's right. >> as it stands. but part of the problem was that, look, it was really difficult for the insurance companies to make any money on this people were getting in, buying health care insurance when they got sick there's the issue with no pre-existing conditions being something that was brought against them from insurance perspective. but when you get rid of the mandate, which you know, has been a huge complaint for people, that means that you are going to continue to have people who are sick buying insurance, not necessarily have the healthy people buying it, and i don't understand how this is going to make it more attractive to all those insurance companies, why they would buy in under this plan >> makes it more attractive because they're able to sell something that people actually want right now we have 6.5 million people in this country who have paid $3 billion in penalties so that they don't have to purchase what washington is forcing them toll buy it's an astounding model that was selected by the previous administration and it's not working again, in that individual and small group market so the reason that issuers,

insurance companies would get back into the market is because they can fashion a health coverage plan that actually works for the people that need to buy it. >> because the obamacare plans covered too many different things >> yeah, because it was a one size fits all. it's a top-down model. it's washington knows best, you buy this, or you pay a penalty you pay a tax. that doesn't work. that's not the way the system ought to work. the way the system ought to work is to make it so that every single american has access to the kind of coverage that they want for themselves and for their families and that that access is available in a commercial space. that's what -- that's the way you reconstitute the individual and small group market >> let's talk about the politics at play here we've already heard there are four senators who are holdouts on this, mike lee, ted cruz, rand paul and ron johnson who have all said that they're, at this point, can't vote yes for this then you have someone like susan collins who has not said she's going to vote no but has raised huge concerns about what this

would mean for rural hospitals in her state if you cap medicaid payments coming from the federal government that's going to be difficult for a place like maine. how do you get to the votes you need you can only lose two senators at this point and make this pass >> but you've got to work through all those issues and this is a process. and you all know this. when you look at a snapshot in this process sometimes it looks pretty. sometimes it doesn't look so pretty we're reaching out to every single senator and making certain they have comfort level with the piece of ledgislation. knowing it will improve. it's called the better care legislation. that's what we're interested in making certain happen. it's important that you mention medicaid because medicaid is a program right now for those in the lower income area, and the fact of the matter is that medicaid has one-third of the physicians in this nation who can't or won't see medicaid patients. not because they've forgotten how to take care of them, because the system isn't working. we want a medicaid system that actually works and we believe that the construct of the senate has brought forward is one that will do that

>> mr. secretary, the american opt association, the federation of american hospitals, america's essential hospitals, the american academy of pediatrics, the american association of medical colleges, you know where i'm going with this all have condemned this bill. let me just read something to you and have you react this coming from the american essential hospital saying today's senate bill makes few material improvements to the house legislation and might be worse overall for the hospitals that protect millions of americans and their communities are essential hospitals. this bill might even accelerate decisions by some to reduce services or close their doors. >> well, two points. someone that the current system is making it so that they have to reduce services and close doors. you read it in small community papers all across this land. hospitals are remarkably challenged the second point is that what the premise of that point is, is that the bill is all that's being done the fact of the matter is that the bill is a significant portion, yes but it's not all that's being done right here at the department of health and human services we're working with hospitals we're working with physicians.

we're working with other providers to make certain that we're decreasing the regulatory burden, that we're decreasing the difficulty that they have in caring for the patients across this land. and when you look at it, in its entirety, this is such a better move from where we currently are -- >> if this is -- mr. secretary, if this is such a better move why aren't we seeing more support of this for the same groups >> one of the things is that it will continue. the individual and small group market is collapsing and medicaid is a system that's not able to care for the patients in that system right now. the second is that change is difficult. the unknown is difficult what i will tell you is that the fact of the matter, the president is absolutely committed to making certain that every single american has access to the kind of coverage that they want for themselves and for their family, not that the government forces them toll buy. >> i mean there's winners and losers in obamacare. >> sure there are. obviously. >> and the -- >> and the hospitals are like at the top of the list for the

winners. so i mean it's not surprising at all. let me ask you this, though, mr. secretary, there were some senators, probably from states that aren't that solid in terms of red versus blue, that wanted to avoid the whole taxation issue. because they're ready to either roll over the minute someone says you're redistributing wealth from the poor back to the rich how are you going to -- how are you going to counter that argument, because that case -- whenever you cut taxes, obviously since a lot of taxes are paid by people in higher income brackets, whenever you cut it you're going to hear that you're redistributing it from the poor to the rich and you're not going to be able to say it's going to help small business and help the economy. that probably won't do it. how are you going to convince people that this isn't heartless and a redistribution from poor to rich? >> remember all those taxes that were put in place by obamacare,

interests of dollars in taxes, were taxes to pay for a system that doesn't work. doesn't work for families, doesn't work for patients, doesn't work for docs, employees or employers, doesn't work for states from a financing standpoint when you remove all those taxes which is what the bill is attempting to do and put in place a more efficient system, a more effective system, a system that's more responsive to the people actually using it, the docs and patients across this land, that's a system that the american people will embrace >> those taxes the 0.9% tax on payroll tax won't be rolled off until 2023 is that the more likely scenario versus the house bill which would roll them off this year? >> when you get to the specific taxes then you get to what it takes to pay for the bill as it's constructed and what the score is going to be your folks watching your show know that that's the language that comes out of the congressional budget office. so that's a balancing act, and just making certain that the numbers work but the important point, again, is that as you decrease taxes

you increase the accessibility, and the affordability and the choices that the american people have in terms of health care with this piece of legislation >> mr. secretary, the attitude of the country has probably changed seven years ago, maybe, people didn't think it was a birth right that everyone just necessarily have health care that has changed, though, and i think you know, there are probably a majority of voters would say, you don't want anyone to lose coverage and the card that's going to be played is the medicaid card. even though it was designed for poor, you know, mothers and disabled children, it's now being used for healthy men that are not even in the poverty level. so, but, if you rein it in you're takingaway health coverage and that's going to be the hardest thing to -- it's going to be the hardest thing to sell, you know, to -- you're going to hear it from the media, and from the democrats >> and from one of the senators who calls it mean and meaner

>> yeah. >> a couple points one is that you've got 28 million americans right now who don't have health coverage that's a system that's not working for those 28 million it's important to appreciate that in addition, the congressional budget office said that there would be 23 million new individuals who would have coverage in fact that's about 10 million right now. and so, again, the system currently isn't working. in terms of the medicaid individuals, what we want is a -- the opportunity for those individuals to have coverage, one, that they want. and that may be the medicaid system it may be in a system in that individual and small group market that is actually repaired and improved so that the kind of coverage they're able to get in that system, with the subsidies that are present in the piece of legislation are more responsive to that individual as opposed to a medicaid system that oftentimes doesn't work for patients >> if you -- if the senate blows this, and congress, in general, blows this, is it single payer are we headed hurtling towards single payer >> i sure hope not because that's doubling down on a system that hasn't worked, and

won't work, because that's a top-down model that's washington dictating to the american people what kind of health care they will receive. i don't think the american people want that i know they don't want it when i go out there across this land and talk to them about what needs to be done this is kind of messy in the middle of it but i believe we'll get through this and get to a point where we move in a much better system that puts patients and families and doctors in charge of health care >> secretary price, thank you for your time this morning >> thanks so much. >> take care >> still ahead a tech roundup from the ceos of uber's big exit to president trump's executive summit at the white house. we're going to talk to teresa gouw about who was named one of the smartest tech investors by ford

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welcome back to "squawk" this morning we want to talk some tech from uber's kalanick presigning to trump's meeting with tech ceos and amazon's bid for whole foods. a lot going on in the news joining us is theresia gouw. she's also named to forbes'

midas list the world's smartest tech investors, five times. so, shall we start with mr. kalanick which is to say, what does this all mean in the larger scheme of what's happening >> thanks for having me. i hope the biggest lesson we can learn from everything that's going on with travis, and with uber, is that it's not just about one person, or even one company. i hope we think about it as a potential turning point to think about now important it is to have a positive culture not only because we all want to work in a place with a positive culture but because eventually it becomes self-limiting and may limit the ability of your company to continue to grow and be successful. >> two quick uber questions. one is you've probably seen online there is a campaign going on inside uber, by employees who were loyal to him, to have him come back. any chance that happens? >> i don't think so. and if you look at the numbers, and you look at what it is you

literally only have to click on something, you don't have to sign your name it's a small percentage of the overall employees. >> in terms of his role in the future he's still on the board. >> yes i don't think that will change my understanding is the way the voting rights go for the founders in that company, as in many other companies, i think that that is a seat that he controls >> so he's not really out, right? >> from a day-to-day operating basis. there are i don't know how many board members now. >> but if he were to decide with his two other cofounders effectively that they wanted to, either go back to work or do whatever they really wanted, kick all the other board members off, technically they could. >> i don't know the details. >> i guess one of the questions from a larger standpoint is does this change this idea in the valley about dual class shares, special shares, that allow one or two individuals to control things >> it may, because it used to be incredibly unusual and then you go back and it was google.

and they've obviously been very, very successful and the same thing at facebook. and now i think that it's gone from a real minority to seems like 20%, 30%, 40% of companies according to some study that have these types of, you know, founders, dual class shares or super voting rights. i think people, the pendulum will start to swing back -- >> without playing a blame game how complicit do you think the venture capital community has been to the extent you believe there's been bad behavior at other tech companies in terms of turning a blind eye. >> i think we all have to be mindful of not putting -- not thinking that the idea of profit and positive culture are at odds with each other. so that's my whole starting point. so i think some of us, those of us who've been complicit in putting profit above all else and saying well you know, growth sofls all problems, i think that this is an abject lesson that

that's not necessarily the case, and that we need to think about them as not being at odds with each other, but at the right point in time being quite important to one another you know, it was striking to me that he was -- when he was forced to resign he was interviewing ceo candidates. i think this is the first time they've had a search for coo the company's been around for eight years. if you look at when companies like google, or facebook, brought in outside senior executives it was much, much earlier. i mean i remember being there talking to sheryl two years after our investment, not eight years. >> okay quickly change topics, amazon whole foods, you long or short that transaction transformative or crazy? >> so i'm long both personally, and then as an investor. i think it's a bold move i think there will be a lot of interesting twists and turns along the way. but if you think about a industry -- so what it does for

amazon, the ability to have, i mean i'm already an amazon shopper, probably to the extreme you are, too >> yes >> this will mean that the percentage of households that can be interacting with amazon every day and the physical foot print and how they can remake the distribution chain in food retail i think it's pretty stunning >> and last question would you be vulnerable towards walmart given this transaction doesn't matter >> i think that it definitely is accelerating the arms race with them i know mark and doug personally so i think they're doing some pretty amazing things. and they are also being very aggressive it will be an interesting race >> okay. theresia thank you >> has it definitely come when you order on amazon, does it definitely -- >> yeah, it's almost -- >> pretty much definitely comes. >> i mean, i see stuff come to my house -- >> you don't mean in two days -- >> i myself have not ordered things like that but i do see people in my family order things on amazon does it come quickly

>> yesterday i got something in 45 minutes >> got the little amazon box >> you've seen them before >> he's seen them. >> he's catching up. >> he's catching up. >> when we come back we're going to tell you about a hot new toy in china that's been causing d 's bngong parents in schools anitei banned on e-commerce sites that story is right after the break.

coming up, president trump tweeting there are no tapes of

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good morning, welcome back to "squawk box" right here on cnbc we're live at the nasdaq marketsite in times square at this hour, consulting firm center has unloaded 1.6 billion dollars in pension obligations shares of american international group and mass mutual are the buyers of that, tinge a recent trend. 13.7 billion in pension obligations were transferred last year, the second highest total ever also crude prices steady this morning, but still on track for a fifth straight week of losses. that's a result in energy stocks having their worst week in over a year and crude prices on track for the biggest drop in the first half of the year in about two decades. wti crude right now at 42.85 and today is the day the annual rebalancing of the russell index. this is important because investors are going to be watching to see which stocks are included and excluded, especially from the russell 1,000 and russell 2,000. now, the day of rebalancing usually the heaviest volume day

of the year on all of wall street so take a look around 4:00 p.m. to see where the buying lands. all these active managers know exactly what they're doing so really has nothing to do with index funds. the hef yegs volume of the year. >> it's a tradeup. make sure they get straight in line with the index. the new must-have toy for school kids in china is a nightmare for concerned poirnts and school officials powerful mini cross bows that shoot tooth picks and needles. >> looks like a craze. >> they're being banned in some schools and on china's two most e-commerce sites they're powerful enough to puncture soda cans, apples and cardboard depending on the projectile that's used they sell for about $1 apiece and we don't want them here in the united states, either. >> they go right in your -- you could put someone's eye out. that's what my mother always said >> no kidding. >> in fargo, the latest season of fargo there's a lot of -- we already know about the walking dead >> yeah. >> and the latest season of fargo there's a couple of scenes

with a cross bow very -- i mean, feel it when it hits people like in the leg or something. president trump tweeting yesterday that he did not have tapes of his conversation, he himself did not have tapes, of former fbi director james comey. special counsel robert mueller still pushing forward with his probe. you see that fox was back on top for the week, whatever, over msnbc because the russian thing like calmed down a little. so actually, you wonder why, anyway meddling in the 2016 election. joining us now a man that was considered to replace comey as fbi director former oklahoma governor frank keating he also previously served as the third ranking official in the justice department under president reagan governor, it's good to see you how close do you think you came to getting what chris wray was finally chosen for >> i think that was a solid choice i've got to say, andrew, it's kind of fun to be in the church,

even though you're not at the altar. but it was a pretty intense roundtrouble the attorney general who i served with is u.s. attorney in oklahoma, jeff sessions, and of course the president at the head of the table >> choosing to take that as a compliment it's not andrew -- >> but it was a compliment, governor >> when he does ask a question it will probably be very clear that it's him that he finally asked. let me ask you, do you think mueller and comey are like bbfs, aren't they? is this going to be okay, is this going to be fair, knowing what special counsel and prosecutors have done in the past where could this end up? this could end up anywhere, couldn't it? >> that's true you really don't know. i have never been friendly to special counsels, independent counsels, special prosecutors, whatever you want to call them the average length of these investigations is three years.

in the case of whitewater and they talked to me about being the whitewater counsel when he was running for governor of oklahoma, and jamie gorlick who was the attorney general said well that won't work but the reality is that thing started in '94 and ended in 2002 so these never end and i think it's bad policy, it's bad justice it's un-american to have one prosecutor with a staff and one victim i don't care how prominent or how ordinary the victim is that ought to be the responsibility of the congress or grand jury. but independent counsel, special counsel, special prosecutors i think are un-american and a big mistake. >> you think that at this point is no collusion is found, and everybody's waiting, it's been awhile, but maybe there still is something, maybe there isn't let's say there isn't. just for argument sake i don't want to disappoint half of our audience, want it to be collusion so badly, but let's say there's not, is that still

okay to go for obstruction, even if there was no crime you were covering up in the first place see, joe, that's the problem. i guarantee if you were my only defendant and i had a staff of investigators, i'd find some crime, it may end up jaywalking. but look at the whitewater case they went after the president for a real estate deal and ended up with a stained dress. >> i know. >> okay. i understand that. but the reality is, it's just not fair to the subject of an investigation to have all of the resources of the u.s. government on them, they're going to get it eventually and force something and that's what really worries me here. >> do you think that the -- that muller would go and look at loretta lynch. you think that all is under the same unmasking and all this other stuff. you know, yesterday was kind of interesting. we heard about the server that was never turned over, because jay johnson said we didn't want to look like we were, you know,

aiding either investigation. and then trey gowdy said maybe there's something else on that sver that was the real reason it was in the best interest never to really look at it will mueller get into all this stuff? >> well, i mean, theoretically it's never ends. but practically, in a counsel such as the mueller appointment, the attorney general can say enough, i'm going to turn down your recommendation for prosecution. he can do that but how far it goes before he does that is anybody's guess. i mean there are many different varieties, and shapes and sizes of special counsels. independent counsels special prosecutors. >> governor, what -- >> -- is not american. >> governor in the context of the investigation about this administration, given that the judge and jury is effectively our congress, what do you think it would take in terms of a surprise i don't know if it would be a surprise but something that you would hear that would be so disturbing that we'd actually be talking about impeachment?

>> oh, who knows i mean, the reality is, when you have relations with a country like russia, no matter how difficult those people are, no matter how thuggish their behavior frequently is, when you have relations with them, you're always going to have them searching you out, and you'll search them out for guidance, advice, information, and the like but to criminalize that conduct, that's what's a mistake here to criminal conduct that is casual and in the president's case quite truthfully, here's a layman, probably not knowing the casual things he says to someone could be looked withisticle eyes by a prosecutor. this just worries me as a citizen. i have no role in any of this. i'm just concerned as a citizen at the process you have bob mueller obviously is the mentor to jim comey you know, who is the protege to comey? who reported to comey -- from the fbi. so all of these people are stair steps, and i just think it's so

important to have independent judgment, independent analysis, and that's what can be done by congress, both parties, or by a grand jury in the process that we expect as citizens. again as i said, one product, one investigation, one defendant, it's not good >> you were not governor -- you were not at the "new york times" yesterday, were you? >> i was not >> okay. >> no, because there's a picture of comey, i guess comey was visiting some friends over there at the -- you saw the picture of him walking in to the new york -- >> i believe that would be friends. but i'm sure -- >> but you weren't there so he wasn't specifically meeting with you >> he was not meeting with me. >> just wondering on that. somebody else thinks that maybe comey is in jeopardy because he said that he wasn't responsible for any of the previous leaks. although he did cop to the leak to the guy at columbia the law professor, obviously, but, was that -- is that -- >> there was a question -- >> was he under oath, though was that under oath saying kshs

>> yes, comey was under oath >> he was under oath for that. and that's why people said he would tell everything that happened >> we were -- >> -- professionals to leak information like that. >> right >> a private citizen leaking his own notes. >> for a week. >> a private citizen leaking his own notes -- >> a private citizen -- >> but joe i thinkthat you've turned this around, away from the president and the administration that's not to suggest that everything that comey did was perfect, either, or frankly that hillary clinton did. but i think ultimately, and governor, i -- you at some level i imagine you're disturbed if there were -- was tampering in this election, and specifically if the president, with intent, tried to get rid of this investigation. no >> well it really depends on what the task is congress can investigate that. a grand jury can investigate that mueller will investigate that. and it will be years before the

process is ended but i think the fact is, prosecution isn't forever. there are statutes of limitat n limitations. and as i said, one vick tim, one prosecutor and you ahuge staff you'll get your man. i mean you walked into the woods with a whole armada of weapons you're going to get a deer before you walk out. all of that just worries me structurally there's just so much fizz, and purity in the air. we ought to focus on facts and facts alone. joe friday ought to have his day. >> if it turns out there was no collusion between any trump associates and russia, then do you think, if he does find something somewhere else, is that okay? that the special counsel >> well -- >> depends what he finds >> and where he finds it >> so it's as broad as this, whatever is there? >> well, yeah, we talked -- >> i figure if there's no collusion they ought to close the investigation, it's over >> yeah, but that's not -- >> even if the president tried to quash the investigation look there's lots of tooims in

the world where the underlying supposed crime doesn't exist, but when you're being investigated, you can't try to end the invest -- >> even with watergate there was a break-in there have to be some original crime. >> that's actually completely not true you're talking about the rule of law -- >> then you'll be able to -- that's governor keating's point. every man, show me a man, i'll show you a crime that was -- >> we're back to the russians. maybe i'm conflicted anyway, governor, thank you. >> thanks. >> thanks for appearing today. up next, the social network for neighborhoods. nextdoor wants to help you keep up with your community and your neighbors. we will talk to the ceo about the start-up's sky high rit teexnsn erasioovse ghafr the break.

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welcome back, everybody. as tropical storm cindy pummels louisiana and texas the focus is back on flood insurance. possible regulatory changes could open the market up for private insurers let's bring in morgan brennan. and this has been something that's been very concerning part of the industry for awhile >> it certainly has. we could really say for the first time in five decades now, we have the private insurers poised to plunge into the deep end of the turbulent waters of flood insurance. the house lawmakers are looking to overhaul the government-run national flood insurance program. this is $25 billion in debt. it's set to expire september the bill would make it easier for insurers to compete.

this is a move that could, at least in theory, bring down rates and prevent more taxpayer losses so aig, chub, allianz, hci, they've already begun underwriting policies for homeowners and businesses. just this week hci announced expansion plans beyond florida to nine more states. and aig's lexington insurance unit says it has 10,000 policies and expects that to more than double in just the next year private insurers now account for an eighth of u.s. flood insurance market it was virtually zero before 2012's bigger waters act the last big attempt to revamp this market. and experts expect this to grow. it's a $3.3 billion market in terms of earned premiums about 5 million covered properties so it's not huge but it is a high growth opportunity. most interesting, it's not the low risk properties that are necessarily the most attractive to insurers, either. it's the ones where the rates, many of which had been subsidized, have already jumped

so much in the last couple of years that private insurers say that they can now compete. >> this is really interesting. we're short on time but i want you to come back so we can talk more about this. because you want to open things up to competition but you want to make sure that they're offering the right rates so you don't wind up with a bankrupt insurer. good to hear big names >> yeah, it definitely is. and we're going to see where this legislation goes as it moves throughs house right now but we could see some very big changes in terms of places like florida, new jersey, along the coast, what's available out there. >> morgan, thank you very much popular u.s. online community platform nextdoor launched in germany this week. joining us right now with more on the growing popularity of hyperlocalized social networking is the ceo and cofounder of nextdoor and thanks for being here. >> thanks so much for having me this morning >> first of all, for the people who don't understand what nextdoor is, why don't you explain it this is kind of a very localized community of people who work online and kind of keep track, like a neighborhood watch that moves online

>> well, it's using technology to keep in touch with one of the most important communities in our lives, and that is our neighborhoods. we all use social networks to connect with friends on facebook, with business associates on linkedin, and with people that we find interesting on twitter but until nextdoor there hasn't been an easy way to communicate with the people right outside our front doors. and that's where our product comes in >> you know, i'm already on the list a mother's club list for my hometown and i woke up this morning to about 20 messages, moms who were concerned about some guy who was roaming around the neighborhood yesterday it seems there are list serves out there who do this. how do you convince those type of people to move into your offering >> at this point we've been exceptionally fortunate in the u.s. because adoption is now 75% of all neighborhoods across the country. it's been a long road but ultimately building a product that is just for your neighborhood, that is just for communicating with your neighbors, that's quite difficult. it's nuanced to try to replicate the relationships that you have

in the real world in an online tool that does it effectively. and so we have a couple hundred people working on that every single day it's a fundamentally difficult problem. and we feel we have the resources to solve it best >> i see a lot of your coverage represents some of the big towns out there. like a san francisco, like a denver like an austin i mean am i going to be linked up with a group of everybody in that town? or do it on a neighborhood by neighborhood basis in some of those big cities >> we're a private social network for your neighborhood. so it's not your city. it's not your zip code it's not even your area. it's your neighborhood it's the people you think of as your neighbors it's the folks that have kids that go to your children's schools. it's the place where you spend most of your time. and where you have your biggest asset, your home it's hyperlocal. and it's a way to make that local community in the real world stronger it's not a virtual way to communicate with people that you never see. it's a virtual tool that makes those real world connections stronger >> i know that you verify and

make people use their real names so that they can get into these situations how do you make money? >> we make money through advertising. it's similar to other social networks like facebook and twitter. and even linkedin. we believe there's a huge opportunity to if we think about what's happened online, e-commerce is amazing and online advertising is a huge force but what about doctors and dentists and architects and real estate agents how do they reach people online? they don't have websites or buy ad words they advertised in the yellow pages or local newspapers or local television or radio. they're starting to come down and people are using services like next door so there's a tremendous opportunity to bring that local economy online and that's where the i was model comes in do you expect it to take place or do you want to stay private

for awhile >> an ipo is certainly something that we think about in the future but it's a step along the path we believed from the beginning that the opportunity to build the local social network is a large one not just from a business perspective but human perspective. community is an important thing so beyond the business opportunity we believe there's a huge human opportunity to make the world a better place with this product. >> thank you for your time >> my whole life i was presumed innocent and then proven guilty so i've had that messed up it's presumed guilty and you need to be proven innocent. >> we'll discuss that withy m friend jim cramer live at the new york stock exchange. back in a moment, everybody.

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>> let's get down to the new york stock exchange. today i saw caterpillar threw the dow for a little bit of a set back that's been one you have followed for a long time now we have an analyst saying the good news is already in it where are you on that? >> oil does take away a leg of the expansion. so it's not a bad call

i hate to say it because caterpillar had great orders i don't want to go against the orders long-term but you need to see oil 45 or 50 in order to be able to do bigger projects so i get it. it kind of killed the party. you have to hope that the guy is wrong but i understand you need to have a big, big expansion here. >> you have a duvet? i like really, heavy, i like heavy covers and duvet bed bath and beyond. they still had great things. what happened here >> as their website does better the stores do worst and it really kills their profitability. >> it's not the stuff. >> they need the foot traffic. >> nothing wrong with what they sell or the consumer. >> i love it

it's a great store it's fun to go to. >> it's not just bed bath and beyond they have everything. >> everything. have a great weekend. >> thanks jim, you too we'll see you at the top of the hour and we have a mega monday coming up on squawk box. don't miss interviews. she sort of talks like that if beu're watching this season. rort steel and former u.s. commerce secretary all at 6:00 a.m. eastern time we'll be right back. 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.

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welcome back this weekend a new cnbc documentary premieres and it's one you don't want noisz it follows a group of students in china that were hand picked it premieres this sunday at 10:00 p.m. eastern and pacific he is concerned about the rise of populism and hopes that having people from around the globe learning together in a situation like this will help ease some of the tensions. >> youtube hit a new milestone topping 1.5 billion new users a month. they're also watching more than an hour, if you can believe this, of videos on their phones and tablets each day and also expanding to sell more digital

ads. >> final check on the markets. take a quick look. been a week, not a real memorable week in terms of what we saw although they had a great come back. down 6 on the dow. the s&p called a little bit higher and so has the nasdaq and there you saw the yield complex. make sure that you join us on monday, squawk on the street is next flfs . >> a mixed picture down ever so slightly the futures have been moving around this morning. asia by the way was more o