♪ >> live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with broin s brian sullivan and andrew ross sorkin brian, thanks for being here today. >> sure. >> a look at the u.s. equity futures. yesterday was a bit of a mess for the markets. this morning a rebound with green arrows the dow futures indicated up by 60 points. s&p indicated up by 8, and even the nasdaq, which saw the biggest declines, they're indicated up by 15 points. we'll keep an eye on all of this yesterday the dow was down by 00 0.8% the nasdaq down by 0.4%. overnight in asia, the nikkei ended the day down by 1%

hang seng index was weaker down 0.8%. the shanghai was flat. european equities this morning, if you want to look and see what's happening in early trade, green arrows across the board. the ftse is flat the cac is up by a half percent. the dax is up by 0.2%. crude oil prices which were up once again yesterday, we've seen at least six sessions in a row of gains, up to 45.28. >> here are the big stories. good morning tesla ceo elon musk tweeting again. when asked about speculation on the release date for the model 3, musk tweeted news on sunday the model 3 is tesla's highly anticipated so-called affordable model. starts at $35,000. musk says the production version of the model 3 will be unveiled in july, but still no official release date tlaes has taken in more than 400,000 preorders for the car.

james bullard is retreating further from his formerly hawkish stance on rates. he said weak data undermined the fed's plan and the central bank should take a more reactionary approach, if and when it sees solid signs of growth. he said some of president trump's policies have to provide growth but they need to get through congress first he said the fed can afford to wait and see what comes out of the political process. there's a trio of economic reports to wrap up the week, month and quarter. may personal income and spending at 9:45 a.m., june chicago pmi a precursor to the ism manufacturing data at 10:00, the final report on june consumer sentiment. >> look at shares of dow component nike because they're surging in premarket trading today. the company reporting quarterly earnings of 60 cents per share

about 10 cents above wall street estimates. revenue also beat. the company confirming after holding out for decades it will begin selling its products on amazon we'll talk to a nike analyst about that another beg announig announcemee retail world shares of micron also popping in the premarket after the chipmaker topped wall street forecasts. cost reduction plans helped the company. shares closing at an all tsh time high. they have been on a tear, up 129% >> can i jump in for one second? got a headline here. has to do with warren buffett. just breaking. berkshire hathaway will exercise warren's options to own bank of america. bar remember buffett will buy

700 million shares. >> that's how many of the warns he held. he was saying at within point he would exercise them if the price was at a certain amount. bank of america just doubled the dividend for the common share. he's probably getting a better deal on the dividend, i would guess. >> and he becomes the largest shareholder in bank of america >> he's been breaking out the warrants in the annual report for several years. just talking about how -- why this is such an important stake for berkshire hathaway, i bet it's because bnk ank of america doubled ets d ed its dividend >> he owns a 6%, converting that to 700 common shares would you view this as a sign of confidence >> are you ready for this?

as of wednesday's closing price, he has a paper profit of 11$11. billion. >> wow on that transaction. >> he's not bad at investing >> no. i heard he's pretty good at that >> think about this, you wake up, it's friday morning, 6:04 in the morning. warren buffett buying 700 million shares you wake up boy 25 shares of ibm. 700 millionairemillionaireshare. he changed his equity structure, but 700 million shares >> the warrants were $7.14 each. bank of america shares are trading at 24.32 that tells you why he has that profit number coming through this was the expectation they expired in 2021, but it just hiked its annual dividend to 48 cents a share. 60% increase >> i assume, i may be wrong, but

i assume, you probably know this, i assume he got these preferred shares shortly after or during the financial crisis >> that's exactly when all this happened >> we talk about having powder, keeping powder dry, having cash. when you have the capital when others are forced to sell, they need a buyer, that's what warren buffett does better than anybody. waits for pain, comes in, they needed buffett, goldman, mank of ameri bank of america and making nearly $12 pi billion. >> he said if the stock should rise before 44 cents before 2021 we would consider making a cashless exchange. that's what he has done. >> we will keep an eye on bank of america this morning. looking at this conversion

almost like a forced conversion for him. shares of blue apron we're watching as well on its first trading day as a public company, the stock closing at $10, in line with the issue prize. reached a high of $11 during yesterday's session. lots of questions about the business model and the competition around blue apron. keeping an eye on shares of microsoft. the business journal reporting that the company will announce a major reorganization within the next week. the report says the changes will better align the company with its cloud business and cloud business has been growing rapidly. faster than amazon web services, not saying on a dollar figure. for the last quarter amazon said aws revenue was up to 3.3.6 6 billion. microsoft said revenue was up by 93%. those are the two big ones along

with google cloud, which is somewhere behind those two >> president trump is going to be meeting with south korea's new president for a second day today. the two men and their wives had dinner at the white house last night. eamon javers has more on that. we understand the president will be meeting with mr. putin next week >> that's right. so today it's president moon of south korea who is in town he arrived yesterday there will be a series of meetings today this one day after the treasury department imposed sanctions on a chinese bank and several chinese individuals along with a trading company in retaliation for their allegedly doing business with the north koreans. that's the big agenda item for the president and the president of south korea today last night at a dinner at the white house the president made some remarks welcoming his guest. >> we'll have tremendous discussions tonight. i know you've been discussing with our people some of the

complexities of north korea and trade and other things and we'll bes by cu bes be discussing them all as we progress it could be late into the evening. we respect you and the people of skdz i would like to congratulate you on your election victory it was a great victory did you a fantastic job. a lot of people didn't expect that i did expect it. >> so the schedule for the rest of the day, at 10:35, an expanded bilateral meeting, and at 11:15 a joint statement from the rose garden. once again the president not taking questions at this event typically the leaders would take two and two, two questions from the bo r. domest domestic pressm

the foreign press. >> and the putin news, should he or she not be having this meeting? >> gary cohn and h.r. mcmaster were asked yesterday several times whether the president would press putin about russian interference in the 2016 u.s. election they said simply that the agenda for that meeting has not been determined so they're not prepared to say whether the president will address this intervention in the u.s. election, which the u.s. intelligence community concluded did occur. that's one they have to answer at some point. what does the president say to putin about that issue the president doesn't want to bring it up because he doesn't like the idea that anything could taint his election they'll have to come up with something to say about it. that will ab prickly situation for this president >> topic number one on twit e

the fallout from the tweets yesterday about mika brzezinski and how that may or may not relate to the healthcare bill. in terms of the support he will or won't have. >> we have the tweet up on the screen now this is the one that got a lot of attention saying mika brzezinski was bleeding badly from a facelift at mar-a-lago when she came down to visit trump. trump venting pure emotion here at these cable news anchors. that got the attention of the political establishment in washington and people around the word, particularly moderate republicans, some of whom the president will need to pass that healthcare bill. the president has a hiealthcare bill stalling, he has relations with syria and russia, the situation with north korea and the visit with the president of south korea today, despite all

that he's focused on these kablt news anchors and venting this emotional stuff at them. we saw some reaction including ben sass who put up a tweet saying please just stop, it's not normal and beneath the dignity of your office republican senator lindsay fwram s graham saying your tweet was beneath the office and represents what is wrong with american politics, not the greatness of america so there's nothing for his own ego or self-satisfaction he's not advancing the ball on any of the fronts that he says are important to him that has people wondering what he's doing >> a meant first, you notice in the tweets from congressman sasse and lindsay gravmtey grah

did not tag the president. so maybe he would not even see it though he probably sees it on tv >> he watches a lot of cable news he'll see it >> when you talk to people is there any sense -- there's a sub thought, if you will, that this is part of a strategy. keep people off balance, a master plan to divert and deflect. if you wanted to defle ed ted tt attention from a struggling healthcare bill, you put out something positive to show the administration is moving forward with its agenda on another front. this is like a negative feedback loop today you have a "washington post" op-ed from joe scarborough and mika brzezinski and they say he is not well

you set up that feedback loop you are not doing anything positive for your presidency you're doing something in the moment that feels good at that second for you, the president of the united states, but you're not doing something that advances the agenda, that sets a positive feedback loop that you can build on and make progress on it's baffling the president would do this. doesn't have the self control to vent privately if he's frustrated maybe throw a pillow across the room vent to reince priebus, there's lots of things presidents can do but they typically use the self control not to let that stuff out in public. >> also in that "washington post" op-ed they said that a top white house staff member warned that the national inquirer was planning on writing an article on us unless --

>> the national inquirer has been pro trump but this line in that op-ed is new reporting that i have not seen before. >> exactly basically saying a white house staffer threatened them. >> right that's something new i have not seen before. we haven't seen before we'll need more reporting on what that was all about and who in the white house made that threat is that appropriate behavior is another question this is a fascinating soap opera. i accept that. i accept that the language is coarse, terrible for the country. what i don't know, what i'm trying to figure out is whether it actually matters in terms of what is going to happen or not happen in washington in reality. >> if you're a president you need friends on the hill bottle line. you need people in your camp supporting you, willing to push. there are moderate republican senators, he needs them on

healthcare like lieaseleasisa mirkowski. >> but does she leave him over a tweet? >> maybe not, but even those critical of trump before, the hard core base of trump supporters, they did not come out yesterday and blast him over this in fact, they sort of aligned themselves with sarah huckabee handers who said the american people knew what they were getting when they elected donald trump. he's a fighter, he punches people in the nose if he perceives they punched him they like that so a core group does support this president and did not waiver at all yesterday after this tweet to your point, yeah, the political dynamics are still there in place for this

president. but, again, it's cumulative. you go back and look at the comey tapes bluff. we have never seen a president bluff like that and then be forced to admit there was nothing behind it later. when presidents do that t erodes their credibkrecrediblkrecredibt time all of that erodes his ability to be effective over time. he's only six months into the job. >> fair enough, eamon javers, always great to see you. >> you bet a check now on your broader markets and your money joining us is chris retsler and sigmund jaime. welcome. i'm not going to ask you to wade into the murky world of politics, chris. but as a fund manager, whose job

it is to find value in stocks, when you watch politics do you think is this going to hurt the stock market wl >> you are certainly bringing in data, always processing it, trying to figure out what impact is, the attention span of people out there is not long. we'll get to next week, the fourth of july rn, a lot of thi will pass us we'll focus on earnings season trs there's industry conferences out there that will give us data micron last night. a lot of information we can process. that's what i would be focused on >> is there any part of the -- whatever you want to call it, the trump agenda, gop agenda, that you think is, "a," built into the gains we had in the equity market. and "b" therefore may be at risk if we don't get tax reform,

healthcare and everything else done >> i think deregulation and tax policy have been built into the mark market we always thought the timing on getting those through would be further out. with there will be something it may not be as big we may not need it as big. that's okay. you have to look at companies, see what they're doing in their own world and how they can grow their businesses >> it could be people get worried about technology stocks. >> you stole it from me. that's much more relevant tan what trump did yesterday the volatility can bleed into the rest of the market the question of how to deal with that, if you hid in slvalue stocks, you lagged 500 basis points in the first half of the year so perhaps combination of growth is the place to go

>> healthcare has been a winner. healthcare at 15% as an s&p 500 group this year. tex nol technology selling off a bit do you believe healthcare -- we focus on the f.a.n.g. stocks, i can't stand the acronym, we focus on it. >> i think healthcare is a reasonable bet >> can you get more specific in healthcare >> biotech sold off this week. the old school health care companies have an opportunity to reform even if there is no reform in the broader system think about financials but in the mid and small caps there's lots of headline issues you can win when the trstress tests come through >> that's your world >> it is we find value in the small cap if you're in small mid cap tech

you're positioned well if the money comes out of the f.a.n.g. names. we like a lot of nextgen storage, intel launches, new shifts this year >> krit, sim eshchris and simeoe when we come back, shares of nike soaring after the company beat earnings, and also announced it will be selling directly to amazon for the first time

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like technology that can update itself. an advanced fiber-network infrustructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most. welcome back nike topping wall street's fourth quarter expectations. the company is teaming up with amazon to sell a limited product assortment on the e-commerce platform this comes as a way for nike to combat counterfeit sales of i product on amazon.

joining us is senior analyst from barronberg. you had a buy rating on this your price target was $70. are you impressed by the beat the company came in with >> for sure. the fourth quarter we were not concerned with that. what we were concerned with was the forward guidance we were concerned about what the newt hur futures would be they decoupled from revenues, so the guidance is pretty much what was expected >> this is huge in terms of your call let's talk about what's happening here when you look across the industry, under armour has been under pressure because only stores have closed their doors why is nike immune from those issues >> our call was based on footwear we think foot wire is a more resilient category than apparel.

apart has a lot of competition, fast fashion so there's a significant deflation in that category footwear has been able to hold price. nike reported low single digit asp increase on the heels of mid sickle digits over the last 5, 7 years. that's our call. >> the stock is flying this morning in the premarket do you attribute it to more of the results or that they'llen se they'll be selling through amazon or a bit of both? >> amazon is the search engine, you have be there. >> it's the meat not the gravy moving the stock >> it's the guidance >> what kind of margin could they get on amazon >> well -- >> honestly, yesterday i looked on amazon, not knowing they would do this. i looked on amazon first, because i wanted them delivered

quickly. >> you wanted the free shipping. >> i didn't find the pair i wanted, and i bought from nike.c nike.com, and it was cheaper than on amazon i was shocked. because i can almost find things cheaper on amazon. so to andrew's question, what is the numbers going on there >> it's just a test right now, we'll see if it's successful >> can i throw a little bit of water on the quarter lower tax rate, lower share count. >> sure. >> are those things sustainable quarter after quarter? they did play into the results >> they did gid to a luide to aa rate going forward >> what about this strategic realignment that the company has. is that meaningful and does it

matter we think they refocus for growth people throu threw this out. but realigning for growth. >> what does that mean digital grew 30% last year, so they're investing pore in that platform. >> in terms of apparel, is this something that will slow them down >> apparel is a focus, they're introducing some innovation for the nba apparel. >> how do you compare nike v versus some competitors? >> we prefer nike because of the low percents taj of apparel. >> what about our friends at under armour >> that's a tough one. we're hold rated >> what did you think of the -- >> the dick's quarter got us

concerned, and another quarter of slowdown for under armour, the key won't take that well >> is the key reorganizing >> they will be having smaller launches with less color ways, they are changing their stance there a bit. >> thanks for coming in. when we come back, senate republican also use the holiday recess to try to gain healthcare support. lanhee chen will join us and tell us what changes we could see. as we go to the break, here's a look at yesterday's s&p 500 winners and losers for your heart...

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♪ welcome back you're watching sq"squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box. let's look at the u.s. equity futures. they've been higher after significantly difficultday for the markets yesterday. particularly the nasdaq. technology shares untd preder pressure this morning futures are up by close to 18 points dow futures up by 80 points. the s&p looks like it would open up by 10 points. also watching shares of bank of america. after the bank's dif den

increasi increase, berkshire saying it will convert 700 million shares to common shares you can see 24.54 is where bank of america trades now. berkshire bought those shares back in august of 2011 warren buffett told share holders he would be converting these shares once the dividend got above a set price. congress heading into recess today. when they come back, the healthcare debate will continue. joining us now is lanhee chen. what do you think will happen here, in terms of circling the wagons over this break, what do you think could happen or not? the hope was to get agreement on

some of the trickier issues before they left town. now that they left town it is more difficult to get everybody together the debate resolves around the medicare program, the money for opioid issues. those issues are the big sticking points here as we move through the fourth of july recess and into action on the bill after congress comes back >> on the medicaid piece of it, the biggest piece of it, i think, what do you think the chances are that there's consensus? >> the challenge there is you have conservatives and moderates in a different place i think it will be very difficult. at the end of the day, conservatives can be convinced that in the long-run there are significant constraints on medicaid spending enough that such maybe in the short run you

can give a little more money to create a gentle guide slope. that's the pathway to agreement if there is one. >> cosome con sayversationtaxes and different tax rates? >> there we could see republicans hold off on repealing the net income reinvestment tax, the tax in obamacare that was placed on those making over $250,000 many viewers are probably familiar with this tax republicans are considering maybe do we not repeal this temporarily, take some of that money and put it into medicaid >> i can see some moderates going along with that. if you're on the other end and you wanted to block this to begin with, that will make it tougher. >> that dependsment some in the more populist wing of the

republican party are probably okay with this ron onson frjohnson, a guy thus opposed to the bill. he could say i can go with that if we did get more traction on medicaid or regulatory reform. this seems like this could be an avenue for agreement >> try to handicap the situation. you're in the swamp as we speak. you understand it well what do you think the chances are? >> i think there's a better than 50% chance i think it's just over 50% i think republicans will be so mote kaivated by the poll kicitf this for them not to do something is a problem. i do think that's the sale that mitch mcconnell will try to make here over this recess and as they come back after the fourth of july. >> then assuming you're right, what is the timing looking like? the next conversation, if there is a next conversation, is all about taxes.

the hard deadline is the august recess the end of july is the hard deadline for this debate my sense is they want to clear the decks by the middle of july. they'll get back july 10th tri they'll try to do debate that webbing, maybe the week of the 17th or the 24th, certainly nobody in the senate wants this to go past the august recess >> if you don't repeal the tax piece of this, how does that impact the next tax conversation >> republicans are hoping if there's able to repeal those taxes in obama care, they can set a lower revenue baseline, the standard they have to reach in terms of how much money they raise through tax reform is less than if they didn't repeal the taxes. that will ender into the conversation tax reform is no less complicated than obama care repeal and replace we're in for a whole lot of debate and nashing of teeth over

the next several months. >> thank you for your perspecti perspective. nice to see you. we have some special guests today in honor of today's premiere of universal's dismickibdismic despicable me 3" we have some minions visiting with us >> that's becky's boy. look at him go >> he's a minute qulions freak he's been dying for the minions movie to come out. you don't understand, we have fart guns at home. everything ready to go >> what? >> yes, you heard that right. >> i thought i heard fart gun. >> that's what she said right here on the air. >> you have not seen it? >> of course >> you didn't know they had the actual gun >> i didn't know there was such a thing. i have an urge to purchase numerous ones.

>> here are the minions. "despicable me 3" big weekend. >> right >> for the movie huge deal. there you have it. >> break out the fart gun, america. >> will they come up to talk to us in their minion language? >> i think so, which is why we need kyle here as a translator >> those are the real minions, not the times square -- >> no, no these are real minions, official licensed minions. >> yes we asked them to come in we have a sneak peek of the movie. >> we have it here. >> we do >> let's slow it >> this does not mean we're going back to being villains >> oh. we should tell you, "despicable

me 3" is in theaters today minions box office take, this was for the first movie, 1.1$1.9 billion with a "b. so, there's a lot riding on this my kid also want to watch it. >> that's like 1.159 million per eye. coming up, our guest host at the top of the hour, red dit co-founder alexis ohanian. and andrew's e-mail will be hacked with a phishing attack. >> what? have they phished me already >> you will be okay. >> how do you know >> because i looked at the

segment notes prior to the show. >> that usually helps. that usually helps >> shake shack is expanding across the united states and internationally, but the stock e derperformed the rally thceo will join us on set. you're watching "squawk box" on cnbc the power of a low volatility investing approach. the power of smart beta. power your client's portfolio with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus

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president trump just tweeting about the healthcare battle he writes if republican senators are unable to pass what they're working on now, they should immediately repeal and then replace at a later date. so there you have it perhaps trying to press the issue or move on a quick check on u.s. equity futures at this hour dow looks like it will open up big, maybe up 77 points higher nasdaq opening up 22 points higher the s&p 500 opening up close to 9.5 points higher. >> every time it looks like we'll get a multi day pullback in the market like yesterday, we see the market come back >> which probably tells you there's money on the sidelines waiting for a dip. >> all coming into the broad market etfs, according to the

"wall street journal" which keep buying pretty much everything. time for your friday executive edge it's almost independence day here's some good news, your fourth of july cookout costs will cost less this year the average cost of a traditional summer cookout for ten people is $55.70 that's a touch cheaper than last year the sample menu includes hot dogs, cheeseburgers, pork spare ribs, potato salad, baked beans, lemonade, even chocolate milk. it does not include any adult beverages. >> that tends to drive up the price tag by quite a bit entrepreneurs got a chance to showcase products to walmart -- >> adult beverages

does that include pedialyte? >> that's better than gatorade >> showing your age. >> back at walmart, hundreds of inventors auditioned their wares in arkansas. selected companies were chosen to meet one-on-one with buyers who were looking for made in america products it's part of walmart'suy 22$225n made products. coming up, a look at suits via instagram. greearws tn rohere we have a bhave morning coming p

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welcome back to "squawk box. you share your photos and keep up with friends on instagram, would you buy your next suit from a social media platform mu ssh musika frere built his entire

brand with that in mind. he builds custom suits for big clients thanks to the big following on instagram we want to bring in the co-founder of the company. chris, because i already screwed up one name, i don't want to screw up up one name -- >> is a frequent client of the brand but not more important to you, but maybe i don't know. he plays on the hbo comedy silicon valley which we all love >> i'm a little star struck, because you guys -- >> you like the rotten characters >> i do, i do. and you, too, because you dress all these guys and this is fantastic. >> okay, so i want to talk about -- first of all, where did this idea come from and specifically in terms of launching this company >> it came from instagram. we started on instagram. partner and i when instagram got started we had fashion blogs >> right >> and this is even before direct message he sent me a message that said i love your style, i see them everywhere, i said i love your

style, too he should key should meet up and he flew down to miami about a month later and we started the business plan in the miami library. >> how did this happen >> this was another happenstance thing. i was in los angeles at barney's shopping for a tux for the emmys and bumped in his business partner and i think i was wearing a suit he was like hey, nice suit, who makes it i think it was ralph lauren or something. and he said, i can make a better one for you. i said really. he said are you ever in new york come by the shop i'll make you a suit you know, see how you like it. and the relationship has been going ever since that was years ago and i think i might have twelve suits by you guys. >> and we did a couple shows -- >> so i did a tv show on amazon for sony called good girls revolt, a period show about the 1960s and the women's movement in the '60s and i played the editor of "newsweek" magazine. and they built all the costumes. great period costumes. >> we redesigned the whole '60s kind of vibe it was cool. >> can i ask the price point on

the suit >> entry level for us is around $2100, $2200 for a bestspoke suit, though >> that's what's really special about it they're competing with tom ford, suits that are $4,000, $5,000, and you're getting the same kind of quality and craftmanship for literally half price >> although the price can go up to $10,000, right? >> it could, yeah. >> if you get that gold plated suit >> i have the gold threads here. >> what's in the $10,000 suit? just so we know. >> finest cashmere in the world. who sold a suit for $10,000? english cashmere >> and so, would you spend any money on marketing or is it all instagram >> we haven't yet. it's all been organic. all of our clients have been organic, either through search and media, bumping into people or meeting people like chris >> the proof is in the -- >> here's the -- >> i've met people before they're like that will sell themselv themselves and ultimately it doesn't really measure up when you actually get the material but the thing is, the suits really did sell themselves >> you can't fool clients --

>> yeah, the truth, you're looking for three things the fit, you're looking for the quality, and you're looking for the price point. and i just haven't been able to find better. i feel like i'm wearing my pajamas right now. i'm imagining you're all in your p.j.s, as well >> we're imagining everybody's naked, that's how we get through this thing >> okay. >> aleks, you have a very loyal clientele. how are you going to keep up as demand starts to grow and swell? >> we have a specific way of measuring and we're very particular about that. that's why we get the fit that we do. but we're super, super -- like the way we train our associates the measure is something we really focus on. >> what do you do? what's the measuring thing >> if i told you >> imagine it, and -- >> actually getting them naked to make sure it's that accurate. >> one of the things about that measuring process that's actually pretty great if you were to buy a suit for say $500. and take it to a tailor, odds

are just to get it fitted, odds are you'd probably have to go for a second or third fitting because it doesn't turn out right the first time and that's the one thing that's actually pretty great about these guys. they take their time with the measurements and then you give them four weeks to deliver the suit. and it comes out of the box, you can wear it that night >> right >> it's -- >> not only that you have to spent $300, to get the $500 suit to look good >> how do you stand on instagram? because everybody wants to be an instagram or social media star now. it's so easy to get a cool-looking photograph. >> of course >> post it, make a product but turning that into real business are two different things >> it's a live resume. so you are what people see you can't fake it. people say how did you and your business partner get followers it's content people see the quality they see the people that wear the stuff and continue to support the brand, not only wear it once but twice and three times. >> instagram, are you guys on snap >> we have snap -- i use it more as a personal thing.

>> so snap's not part of this? >> for snapchat it disappears. for instagram they can go back, hey this is the one i want >> what about facebook >> not so much that's like a family thing >> is there anything else, pinterest? >> pinterest no i never really understand pinterest. >> twitter >> no you can't see the photo. >> this is like a live lookbook. >> instagram is perfect for us it's visual and guys are visual. >> but you're not spending advertising money? >> not at all. not one penny. >> are you thinking about that >> if we get more money -- >> we've got a pretty rich guy did you meet alexis in the green room the co-founder of reddit, i think you were probably standing right next to him and didn't know it. go bother him. >> quickly before you go you have to tell us where you get your inspiration -- for the character you play >> i'll give all credit where credit is due because the writers of silicon valley have crafted this perfect character but they have drawn from

reality, and i know that there are a lot of rumors who they're based on for me, i've been in the hollywood sphere for the last 20 years so i'm really just mirroring a lot of the behavior that i've seen behind the scenes >> behind the scenes you get it from there. we see from the people we interview we have our own guesses. >> i've got to get this -- please, according to imdb you are working on a yet untitled three stooges sequel is that accurate >> apparently it's in the works. >> no, you would know! >> listen, we did the original movie. we had a ball making it. and i know that all of us are engaged in doing another one >> you want to comment on t.j. miller all the things you said >> i think t.j. is a brilliant comic. >> very politic right there. >> thank you >> thank you, guys >> really appreciate it. >> when we come back our guest host for the next hour is reddid it co-founder alexis oni 'rgoing to be talking cyberattacks, investment opportunities and more

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it all adds up to our most reliable network ever. one that keeps you connected to what matters most. new this morning, warren buffett's berkshire hathaway converting 700 million preferred shares to common shares. stock getting a pop. details of other corporate stories minutes away as markets look to rebound from yesterday's sell-off the front page of the internet, the ceo of reddit, alexis ohanian will join us talking technology, investing, cybersecurity, and much more plus andrew gets hacked. the ceo of phish me will be here to show you how to protect your i.d. on the web. the second hour of "squawk box" begins right now live from the beating heart of business, new york city, this is "squawk box."

>> it's real this hacking thing is going to be real. you're going to have to watch it because i can't even believe what's going on online right now. i will show you in a minute. good tease we'll explain in a minute. good morning, everybody, welcome to "squawk box" right here on cnbc, live from the nasdaq marketsite in times square i'm andrew ross sorkin, becky quick is with us ryan sullivan is hanging out joe kernen's got the day off he's back next week. take a quick look at futures because they look like they're going to open up and they look like they might even rip dow looks like it would open up higher about 77 points higher. nasdaq up about 21 points and the s&p 500 close to ten points higher berkshire hathaway officially exercising 700 million shares of bank of america common stock it's going to be using 5 billion in preferred shares as consideration for that purchase. for its agreement when it bought those shares in august of 2011 it's going to pay just about

$7.14 per share for that common stock. just on the common stock price we should tell you it's an instant profit of about 240% we think it's close to about $12 billion in total in terms of the paper profit that he's made thus far. you mentioned earlier. he's not only now going to be the largest shareholder in bank of america but largest shareholder in -- >> wells fargo warren buffett is the single largest shareholder in two of the biggest, or maybe the two biggest retail banks in the united states. >> right so, anyway, fascinating. all quite fascinating. it is the final day of june. it's a busy one for economics. personal income and spending, for may, comes out at 8:30 eastern time then the chicago purchasing manager's index out at 9:45 eastern. and in 15 minutes after that, university of michigan's consumer sentiment index and activity -- rather i should say, activity investor in gage capital is taking aim at organic maker products maker hain

celestial. you've got a lot of hain celestial in your house, becky >> we all do >> it's unveiled a 9.9% stake in hain, and nominee seven candidates for the eight member board. earlier this month hain issued results in an accounting probe which it said found no indication of any wrongdoing and only minor changes to its prior results. hain has gone through the wringer once before with another activist in the name of carl icahn. a few stocks on the move this morning, nike reporting better than expected he of 60 cents a share. you're going to want to take a look because revenues rose 5% from a year ago to more than 8.5 billion dollars. the world's largest sports wear maker was helped by an increase in demand in key markets around the world. here's the other big piece of news the company confirming a new partnership with amazon. here's what nike's ceo mark parker had to say about the deal on nike's earnings call. >> in the u.s., we're executing

a new pilot with amazon, with a limited nike product assortment. as we do with all of our partners, we're looking for ways to improve the nike consumer experience on amazon, by elevating the way the brand is presented, and increasing the quality of product storytelling. we're in the early stages of really look forward to evaluating the results of the pilot. >> okay. and take a look at shares of nike up 6% in extended hours trading after that announcement was made we'll see where that opens this morning. we're also watching shares of blue apron on its first day of trading as a public company. that stock closed at $10 in line with the issue price shares reached an intraday high of about $11 during yesterday's session but still questions. lots of questions around that company and the competition in that space morgan stanley ceo james gorman addressing yesterday's sell-off, and the bank stocks in an exclusive interview on cnbc

he said thursday's big slide is no reason to panic >> if we have a healthy correction here that wouldn't be all bad, in fact, watching cnbc today a number of commentators talked about we do provide correction and you've seen what's going on in the so-called fang stocks and they're off again today and there's a rotation these are healthy adjustments to a market markets shouldn't be moving in a straight line. so no, am i concerned about this no am i surprised not at all >> pretty short-lived correction markets indicated higher this morning. gorman also talked about the bank's stress test saying that the banks are extremely well capitalized. he said everyone should declare a little victory here. more on yesterday's move and what to expect in the second half of 2017 coming in just a moment meantime, james bullard is retreating further from his farmerly hawkish stance on interest rates speaking in london bullard said that weak data has undermined the fed's plan and the central bank should take a more reactionary approach quote, if

and when it sees solid signs of growth he said some of the president's policies can provide growth but, of course, they have to get through congress first he said the fed can afford to wait and see what comes out of the political process at next fit raid decision. call happens on july 26th. andrew >> okay. and the tech sector dragging the broader market lower in yesterday's session. also the final day of the quarter and investors reposition their portfolios which could explain yesterday's move dom chu is here on the set hanging out with us. we don't get to see you in person >> i've seen becky twice this week this will be three times i'm excited to be part of the "squawk" set in this time of the summer i guess a lot of people are on vacation -- >> oh, my gosh >> we're going to be invited back lots more, done >> you're beautiful, but you're also sbel jept >> flattery will get you everywhere >> talk about the markets, guys. it was huge yesterday only because we were together

yesterday afternoon talking about what was going on in the marketplace. we had a chance to talk to a number of traders about the outlook. as we talk about the end of this particular quarter and the first half of the year, there are a number of things to watch for, specifically out of washington, d.c., a lot of traders echoing this one sentiment, there's one theme that everybody wants to see out of washington. this year, take a listen to what they said. >> tax reform. if we can get tax reform, real he legitimate tax reform through, that's real positive, if we can't that's a real negative >> i think the most important thing in the markets will be how the tax packages go through congress >> tax reform, without question. >> all right so the tax reform side of things obviously resonating a lot one sector that everyone's watching for sure, you mention technology this is the one sector people say will take the tone and set it for the rest of the year, guys >> would you agree, dom, that there's a huge -- >> -- last year as well as the financials >> financials will be the sector to watch >> if you can get the financials working back in, particularly if

there's a hit to deregulation, i think then the whole market will pull together, and we can see new highs. >> all right so, tax reform, financials, and you guys mentioned technology. i'll just put that chart up there yesterday that we've seen. because the 50-day moving average that shorter, medium-term trend line that a lot of people are watching, it is showing signs of weakness in technology, which is one of the reasons why a lot of people feel as though this could be one of those signs that we're due for that little bit of a pullback that james gorman spoke about overall guys >> two things. is that a musika frere suit? you look very dapper >> thank you very much >> would you agree the biggest question is how much of the gop agenda, trump agenda is already into the market. i've heard zero, i've heard 20%. so in other words if it doesn't get passed and it is 20% you could expect a correction. if it's zero and we get it, then the market goes up more. >> so i've heard that same

spectrum of thought from a lot of the traders that we speak to on wall street and the idea here is, the expectations are there it's not zero. there are -- there is a sign of positivity, and a sense of it in the marketplace. if things don't work out, it could be that catalyst for a bigger downside move and that tells you that people are pricing in some expectation of tax reform >> all right, dom, thank you have a great weekend joining us right now to talk more about all of this is david bianco chief investment strategist for deutsche asset management, and andres garcia amaya who is founder and ceo of zoe financial. gentlemen, thank you both for being here this morning. david, let's jump off on that point. what do you think the expectations are for tax reform and what happens if it doesn't come to passage? >> we've done math on this and i'm expecting the s&p to generate 130, 131 dollars of earnings this year but i think the s&p is trading on a kind of pro forma expectation of 135 dollars of earnings with the benefit of a tax cut so i think $4 to $5 per share of

earnings is priced in on the expectation of a tax cut if we got a 25% -- >> what about 4% >> yeah, exactly >> so if we -- if we don't get anything then maybe the market sells off 4% >> pretty much but i don't think the market's going to believe that the republicans are going to give up on a corporate tax cut they'll just keep trying even in 2018 >> what if it happens next year? >> i don't see a negative catalyst but in order to get a positive catalyst we need to get more visibility with tax cuts done. and if we had a 25% corporate tax rate and then i think the policy should be just that simple 25%, leave most of the rest -- >> that is a lot higher than the 15% that people have been talking about. >> i would love it to just get that done. >> 25% even if it's a smaller cut, you think that that's something that would actually push the market higher >> actually give the s&p 5 to 10 dollar per share earnings benefit. >> andres, you agree with that >> i think if you look at what the bond market did when this came about, the yield curve did

start to seep in there was reflation trade happening. there's other things i look at yes, earnings might be kind of a one-off push or benefit, but ultimately, if the bond market is telling you this is a long-term play that's going to help the u.s. economy gdp potential growth, then i think that would be more than just a one-off play it could be something much larger too soon to tell you yes or no but the bond market, which i like to look at more closely than the equity markets, it's telling you that they are paying attention. and they seem to be believing that there is something there. >> do you think there's a potential for a downside effect? if there is a tax reform passed. like david thinks there could be a sell-off, do you actually, maybe not -- >> yeah, look, when valuation is above average, there are concerns of momentum switching in the other direction because of a catalyst such as that i think more three, five years out, and i think if it doesn't happen, hey we're already in that environment so i don't think it's going to

change anything. >> how about we play sentence completion, david. the s&p 500 is up 20% over twelve months, the biggest risk to the stock market is >> the republican party not cooperating and getting things done they need to recognize that they need to do it incrementally and they're not going to change the world overnight and i the polit important? >> the market's not entirely dedependent on the politics but the policies need to be right. >> can you finish that same sentence the biggest risk to the market is >> i think the biggest risk continues to be us heading to a recession. the risk of a recession, you eventually -- >> well it's 100%, right we'll deal with a recession at some point >> in the next three years what's the risk of a recession >> i think the fed basically going back to surprising us one way or another >> surprising us by moving rates higher >> yeah, that's one. >> and screwing up

>> yeah. there we go. so screwing up, and the other one is oil so i think those are usually you look at tax recessions, things that shock us into a recession, it's not all age >> we're going into the ninth year of expansion, i think the chances of fall nothing a recession are less than normal, which is 15%, one out of seven less than normal but i think what's interesting is back to the stimulus question, how is the bond market looking at that? particularly with the bond market expecting acceleration and reflation. and instead right now, we're looking at the possibility of just stuck at sub-2% gdp growth and disinflation rather than reflation. i think that we've got going on is a bond market, and the currency markets are going in to a period of greater volatility and i think that's going to bring more volatility just for the summer to the equity markets. >> since it's friday, my best idea of the moment is? >> my best idea he is moment is health care and financials we just got a big boost in financials on c-car and there are -- >> and you still think it's a good idea?

>> on financials, absolutely longer-term. there will be some currency and market volatility but financials have good upside and so does health care. >> andres? >> i look internationally at the emerging markets i think the dollar trade is over that's one of the biggest trades we've seen the last five, six years. you're going to get a lot of returns just in currency >> gentlemen, thank you both and have a great weekend >> thank you >> when we return, our guest host is reddit's co-founder alexis ohanian he's going to be joining us for the remainder of the hour. we'll talk technology, innovation, ransomware, the silicon valley culture all sorts of things. and then later the ceo of phish me will try and hack andrew. he'll show us the dos and don'ts -- >> it's really scary >> sounds like he's already in over here. >> i think he's in >> also the co-founder and ceo of health care start-up better will be here we'll be discussing the president's plan to repeal and replace obamacare and how her company is looking to try to help patients stay in the loop when it comes to insurance bills. finally check it out the minions are getting ready for the big screen once again.

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release date set tesla has already taken in more than 40,000 preorders for the car. shares are up 69% this year, but let's see, let's do the math, july 2nd is sunday, right? so that would be july. >> we want to get to our guest host this morning. alexis ohanian is here, the co-founder of reddit the self-described front page of the internet he has like 100 investments in the tech sector. including one i want to ask you about just right off the top >> sure. >> instaycart. >> yes >> i don't know if you use instacart but big business with whole foods. >> mm-hmm. >> historically. what's going to happen there, given the amazon deal? also, blue apron >> yes just went public >> no, but don't they do some distribution for blue apron? >> i don't believe >> no? i thought there was a little bit of connection. >> their bread and butter is to do on-demand grocery delivery. and whole foods is one of their partners but basically, if anything

underscores the need for every other grocer to catch up really, really quickly and whole foods still represents i think less than 2% or 3% of all the revenue in groceries >> what's the silicon value view of the amazon/whole foods transaction? game changing or not >> i think it's just one more step of amazon working towards basically vertically integrating around everything we want to buy. >> do you think that's a great thing? do you think that's a scary thing? what's the take? what's the alexis ohanian take on this? >> i think right now we're looking at the big five tech companies and all trying to understand, like, these tradeoffs, all make us alot happier. because our lives are a lot better i think we generally as consumers like the idea of -- >> technology also, maybe i'm just, i guess, technology does stress us out. i mean a little bit. >> mm-hmm. there is another side to it. i think the part that's important for me is that there's always that competition. >> right >> because that's the healthiest part -- >> the big five is too big, alexis >> i don't in but i think it's something we're going to have to

figure out in the next five or ten years. because, we need that vibrancy and i think instacart is like in a great position they're like the switzerland to work with the other 98% of the grocery stars in america >> my understanding on instacart is they signed a deal several months ago with whole foods for five years how is that going to get changed or not, i mean would amazon buy them out of that deal. what do you think is going to happen here? >> that's a good question for the ceo of instacart but i think my bet is on the fact that this has been a wake-up call to every other grocer that they need to be able to offer this kind of technology and service. >> your answer to this was, yes, with whole foods and with a lot of other grocers so your take was immediately, it's not our only business, right >> yes >> 10% of the business >> 10% of the business >> i -- i actually don't know. i've been in the country that whole foods represents less than% of all grocery steals. >> in terms of the companies you've invested in, are they mostly on aws in terms of the final platform >> a lot a lot.

and i think that has been one of those things that a lot of companies basically five years ago sort of took for granted in tech because amazon was a first mover with a really great cloud product, and people have now come to realize if amazon servers go down, right the internet kind of skips a beat so many companies are contingent on that. google's got a cloud option. there are a few others that are coming up, but a lot of our internet a lot of the websites we all know and love rely on amazon infrastructure >> let me bring up another point that was mentioned yesterday, he said amazon has this ability to go in and disrupt every other industry in large part because of aws because they have this profit center that then gives them the money, and the cover to go ahead and make these pushes and get into these industries. does that make you uncomfortable? yay or them? or how do you think about that when you're investing? >> i think it is not for us, a big factor because at the earliest stands is of investing, you know, our

bet is, can these companies do something that is unique enough that one day will generate, you know, outsize returns. we know amazon is an acquirer of a lot of companies so that is actually -- >> it's good >> in a wayist a part of the plan because it's a way to get liquid especially as more and more companies are hesitant, really, to go out into public markets. and i think you know, also as a consumer, there is a ton of value that comes from the fact that i can sort of minelessly say i know exactly where i want to get something, and amazon can get it to me but then i think at the same time, the reason the internet has been such a great place for entrepreneurship is that, if you had a better idea, if you had a better mousetrap >> you invest in all companies or new companies that inherently are small because they're new. you want them to become big. >> mm-hmm. >> do you feel like these big guys, not just amazon, could be oracle, could be sales force, whatever, google, alphabet, whatever it's called these days. and they're going to hold your

company down >> well, they'll either -- >> either buy you or crush you >> the incumbent -- >> is there a middle ground? >> the incumbents, strong founders, strong companies rarely get crushed by larger businesses the acquisition plan definitely happens. and that can be a good thing for investors. for sure i think the big challenge is going to be going forward. how do we make sure that as a consumer, if i wanted to sort of pack up all my toys and go to another service, that i could do that quickly and easily. >> right >> as a consumer i can very easily swap out a tv if i want to take all of the sort of knowledge that amazon has built about me the consumer and move it to another retailer, it's actually not true -- it's software so actually should be allowed here but until we consumers can have that leverage, i think we're going to see more of the same. >> let me ask you about another big news item, and i'm curious how it may change investing or not in the valley. which is to say this whole situation with uber, travis

kalanick, perhaps more importantly structurally, the way uber and so many other tech companies are set up, where the founder, or the top two or three folks have these dual class shares effectively control the company as meaningfully as they do given the situation at uber, you think that's going to change meaning when founders come to you next time and say i want your money, but by the way i want to give you no rights >> mm-hmm. >> do you think that they look at this uber situation and say maybe i now have a little bit more of an argument to say, actually, we're not doing it that way >> so it definitely affects later stage investors more than us that said when it works well 44 zuckerberg said it's a great thing. investors are happy with that. it definitely is going to be -- it's going to be a moment for more reflection within tech about the amount that we invest with literally and figuratively in our founders. and it's something that i think

can be more than just a cautionary tale. but a real wake-up call. >> do you think the whole situation is a lesson to the valley >> i really do i really think so. >> you went through that with your investments, there were guys in an insurance company >> well, yes so they were definitely in the news for some hr issues. no doubt >> better now? >> i think they're a much better company now. i think also the founder and ceo of parker conrad has learned a lot, and also was i think to a certain extent unfairly maligned but, more importantly, i think these microscopes we hold founders under are important because, it's a chance for us as investors to get the best out of people and we want that we want to set a high standard and i know parker's going to come back with a new company and really impress everybody >> okay you're going to stick around >> yeah. >> and we're going to do some phishing later >> in just a moment. in fact when we come back we are

going to put andrew to the test. he's going to be possibly hacked can he tell the difference between ransomware or a virus and a real e-mail? we'll talk internet security and cybersecurity with the ceo of phish me right after the break right now, though, as we head to a break take a look at the u.s. equity futures

welcome back you're watching "squawk box. live from the nasdaq marketsite in times square. good morning, everyone welcome back to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square among the stories that are front and center, the u.s. has agreed to sell taiwan just over $1.4 billion in arms. the package includes missiles and related components, as well as some technical support.

it's a controversial move that is seen as likely to anger china, even as the united states is seeking chinese help in reining in north korea that controversy notwithstanding, agriculture secretary sonny perdue is in china today to mark the return of u.s. beef to the chinese market for the first time in 14 years. beef sales have been soaring within china in the last few years. it's gone up something like $250 million to billions of dollars in that time span. u.s. beef had been banned back in 2003 because of the scare over mad cow disease and mobile carrier sprint is being sued by creditors of bankrupt radio shack the lawsuit accuses sprint of dooming the electronics retailer's comeback by using confidential information to open competing mobile stores. this stems from a 2015 deal between the two. sprint says that the lawsuit is disappointing and that it intends to defend itself vigorously it is known as phishing and we're not talking about fishing,

with a p-h hackers send you what seems like an inokayous e-mail, you click on it, and suddenly your computer is infected and all of our personal data is at risk trained employ east try to identify these hacks, joining me is the ceo and co-founder of phish me good morning to you. >> good morning. >> so you have -- you've set me up >> we tried to >> you have set me up. i don't know, can we get a camera we're going to talk about this before we do this, and we will show what you've done, because i -- you scared me i mean this is serious phishing. you train companies and all of us to try to avoid clicking on things that actually expose the networks that's your business >> that's correct. take it a step further to try to get you to report those things in a timely manner so think of yourself saz a cyber informant for cnbc >> but we are to a large degree missing the link in all -- when people talk about how to protect the system, if you will. >> mm-hmm.

>> the biggest issue is, is us >> correct yeah, it's 90% of the hacks you hear about these days start with an e-mail like the one you're seeing >> okay. so -- >> this is -- >> just eliminate the human, everything would be better >> they created this gmail screen here. can you see this can you get that so this is g mail here and this has the kind of things that would be in my inbox -- >> so now okay here i see an e-mail from kate kate by the way, our producer over here, we don't know who it is because it doesn't have a last name on it. kate has shared a document with you. for you to view this, hold on, but it says hey my computer is having issues this morning, could you please reviews this, thanks, kate so this -- i'm supposed to know that it's a trap, right? >> don't do it the force field is still up. >> so how am i supposed to know that's a trap. >> well, a few things.

for starters people often don't change their e-mail as anything beyond a communication protocol. it's a vector if we start there. is that usual for her to be communicating with you >> no. >> that's a starting point we don't expect you to be a technical ninja of sorts >> so this one seems easy. i'm not going to click on this one. it gets harder up here, jerry baker, from "the wall street journal. >> uh-huh. >> old friend. okay so he's got an e-mail he sent me. >> right >> is this the real jerry baker or is this the real "wall street journal" or is this fake should i click on any of these links or not how would i know >> i'd say give yourself five seconds before you click on the link do a few things -- >> so right where it says interactive -- that seems real to me. but if i click here where it says me, you've made up a fake e-mail address, it's not my e-mail address mail by wsj e-mail.com is that real >> that's not. that's something we've spoofed this is a fake e-mail from jerry

baker. >> uh-huh. >> so not -- so if i were to click on this, this says the trump administration began enforcing its temporary ban now i'm about to infect myself >> yourself and the network here >> and the entire cnbc network okay hold on so mta, i got an mta transfer thing. same thing this look like it's telling me i should click on that but you're saying this is fake and i would not know that. >> all fake. >> i know that but i'm saying -- yes i know that. but even dealbook. do you know what dealbook? of course i would subscribe to dealbook because there's a guy i know who is right there. so this is not even the real thing. you've just faked dealbook okay so this -- >> for the non-idiots -- >> this is the real deal right >> it looks like the real dealbook but it's not the real dealbook >> are there two clues we can spot for the nontechty out there. to andrew's point, the mail.wsg.

if there's something in front of the company, like, mail.citibank.com look for that sort of odd thing? and also i've notice in phishing attacks, to me, look at what they call the top level domain >> correct >> as opposed to@citibank.com, it's citibank.co or some other country. >> i would take a step back for nontechti nontechties. to give you an example we get targeted by phishing abeing tos all day long at phish me >> are they poking you >> yeah, of course i get an e-mail which looks like it's from my co-founder who says, we've had this issue, and i start off reading, and says dear -- right. that's the clue. my co-founder never calls me dear >> oh. hope you are well. no >> but it sounds like if somebody wants to attack you -- so a lot of things you sent me were sort of things you could send en masse to people. >> correct

>> but now people are doing very sophisticated like to you personally >> right >> who never is trying to get you, you'd have to think of all the different things that relate to tu specifically >> they're looking at your social media, social networking profiles, understanding who you're connected to. what's going to appeal to andrew of course it's business news, breaking alerts. >> right >> what's the emotional trigger. hey if they sent you, there's a free gift card you probably won't act on it. but if it's a business related breaking news, you would >> okay, separate question, if i open -- this isn't g mail on this network, because we're on the network. if i have an iphone or an android phone. >> correct >> and i were to click in on the gmail link, have i exposed everything, same thing >> you know, ironically, you're a little safer on those devices. >> okay. because what happens >> speaking about later the security of the underlying systems is a lot better than the work stations that we all work on >> right >> they're a better sand box as we call them >> if i make a mistake and click

on my phone, have i endangered -- >> you're not connected to the network of your corporation, you haven't endangered your corporate network. >> but have i endangered all of my other e-mail in gmail >> you potentially could but it's a lot harder. some of the attacks that have succeeded on phones these are nation state hackers that have spent millions of dollars to acquire these -- >> can you phish through a text message? >> you can but it's -- >> it's embedded -- >> it's a lot harder today's sms phishing is much more of a let me try to oh, you need to wire money, send it to the finance department -- >> but can someone take over your phone >> they can. but it's very expensive and much harder than taking over your laptop or your computer. >> okay. >> -- consumers to do, because they're getting -- they're very sophisticated, right we have very smart engineers in tech who also get duped by these phishing e-mails

>> correct >> so what's the hope for a consumer >> i think unfortunately it's a pretty bleak story out there technology is failing in cybersecurity. look i used to be a hacker in an ethical way 15 years ago -- >> a white hat >> yeah, a white hat and when i heard about the latest ransomware that was going around, it was the same techniques i used 15 years ago that's how bad it is we haven't really evolved and everyone's talking about artificial intelligence and machine learning and we haven't covered the basics >> what about when you get a facebook friend request? those can be fake, right >> they can be, facebook, linkedin endorsements. so the story is, they try to abuse you emotionally. it's an emotional trigger. what's going to appeal to the person, is it a sense of authority, fear, is it reward giving in nature curiosity? that's what they're really -- >> is there any service that's -- >> how do you protect us from ourselves? >> is there any good -- any service that's doing a good job of alerting people that these are not real >> it's actually unfortunately the opposite

most services now are hoping that you are going to alert the technology so it's sort of the human assisted intelligence is what's helping beat the hackers. >> is it important to have, i don't know how you have it, i have multiple el mails i have a gmail address that i use to buy online. i use that for nothing else. >> right >> like that's where all the stuff comes. >> yeah. >> all billions of e-mails and then i've got my work e-mail -- >> that's a great idea i do that, too and honestly, if there is an attachment coming in an e-mail that i'm not quite sure -- >> it always comes to my fake e-mail, if you will. they all do. >> yeah. i actually forward it in to google and i open it in the google cloud and why give it out to compromise something that's not my system. off you go to the google cloud >> explain what you mean how do you do that >> when you have a gmail account you can say open the doc in google docs, and so on >> right >> that's not technically opening microsoft word on your system, or adobe on your system. it's in the google cloud >> you think google does a

better job than microsoft? >> i don't think any one of them does a better or worse job everyone is sort of in the same arms race. >> well, thank you for -- how long did that take to do i'm just curious, what you did to me >> 15 minutes to seven you those seven e-mails. >> wow okay that's scary >> thank you >> thank you >> we appreciate it >> hopefully scaring us straight a little bit >> by the way, two factor you athentz indication for everybody, right >> mandatory >> mandatory, please >> it is mandatory it raises the bar. but unfortunately there's been attacks that have been able to bypass two factor you athentification as well. so you've got to have -- >> do you write a letter -- >> is there anything you do that is extra special that we probably don't know about to protect ourselves? >> i barely react to e-mail anymore. >> if i have any doubt i don't click on it. >> if it's -- >> like caller i.d. -- >> but e-mail is dead, maybe hopefully thank god. >> thank you, sir.

>> all right coming up a disruptor in the health care space that is helping patients not only figure out their bill but get their money back by the insurance companies that don't want to pay them back. the ceo will join us after the break. check out the futures. yesterday's slide, today's glide. dow indicated up 75 points the nasdaq to bounce back, as well we'll be right back. time now for today's aflac trivia question -- are you ok? what happened? dad kinda walked into my swing. huh? don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that. buth my fathe! without that cash from - aflac! - we might have to choose between hawaii or your face. hawaii! what? haha...hawaii! you might have less coverage than you think. visit aflac.com and keep your lifestyle healthy.

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oh, that makes me sick 1 55 million >> what does >> that's how many hot dogs we consume on the fourth of july. >> it's going to be great. you're all invited, america. in wisconsin it's only bratwurst. as health care corners the debate in d.c. one new start-up, better, has entered the scene to make the process simpler by

working to get patients paid back by their health insurance you go to a doctor or hospital, they do not accept your insurance. maybe you're off network well, simply take a photo of the bill with their app, then the better team kworks with your insurance to get you your money back joining us now with more on better and the changing health care landscape is rachael norman, better co-founder and ceo. better one of the initialized capital and our co-host alexis ohanian investments. rachael, welcome >> good morning. >> we've all been there. something happens or maybe you're traveling or whatever you get bad information, you go to a doctor, all of a sudden you get a bill you think is covered but it's not because you find out you're out of network. take the picture on thebetter app, i send it to you guys, what do you do, and how much and how likely am i to get payback >> yeah, so what we do when we get those bills is we actually check them for, you'd be surprised 90% of medical bills have coding errors so we actually correct that.

so when we're submitting it to insurance we're making sure they get all the information they need to process it now how much you get back is really going to depend on a lot of the details of your policy and how it's covered for example you have a ppo there's a really good chance that we're going to be able to recover quite a bit of that money. >> wow repeat that again. because i think that's extremely important. that it's not just out of network, it's that 90% of bills have some kind of coding error, which means, you either are overbilled or didn't deserve the bill in the first place? >> well -- >> give us an example of what would happen a basic example. >> a code iing error, so those really complicated a really common example is you take that trip to the emergency room and that gets sent to your insurance. but the way it was coded, it might look to your insurance like an office visit, and then all of a sudden it's no longer covered as an emergency. >> so how do you guys get paid >> so what we do is when that

bill is processed by insurance money goes back to the patient we take a 10% cut of the money they're getting back but in really common cases where it's just going to someone's deductible or it's not covered under their policy it's totally free to use. >> and i -- you know, we were particularly enamored, and the reason we were investing is because i don't think we even realized the extent of the problem. because once you get one of these claims in the mail you're getting a pretty daunting piece of paper and i mean i feel like i'm a pretty smart guy it's inscrutable how do you all manage to do this, though, in a way that's scalable? >> yeah, so, that's really bringing in a lot of software. if you look at the medical billing space globally, it is still to this day tremendously human powered. so we're leveraging technology to find and correct those coding errors and get them through the system and correct all the issues that can come up there. >> rachael, is it getting easier

is it getting better because over the last eight years or so there's been a lot of consolidation in the doctor space, particularly, it seems like small offices are kind of being forced because of all the paperwork they've had to deal with under obamacare to consolidate and find ways that they can look for technical solutions in some of those things does that make your job easier >> so, those types of things help but really what we find is there are an awful lot of doctors, therapists, psychiatrists, all types of health care providers that as the system gets continually more complex, they're opting out of insurance altogether and so what happens when they do that is that is qualifications and that's where we come in. >> and it sounds like you all also were issuing some sort of challenge to john oliver >> yeah. so we're doing something that we are really excited about we're taking 100% of our initial revenue, so every time that claim is paid, we get our 10%, 100% of that is going to

purchase and forgive medical debt and we're buying back $16 million worth of medical debt for folks across the u.s. that are struggling with that and that actually gives us an opportunity to make a little bit of tv history this morning so when john oliver did his debt forgiveness campaign that was less than ours he beat oprah and had the largest tv giveaway in history and now i'm on tv and we're going to beat him. >> all right well i guess you're trying to do it better, rachael norman i know it's spectacularly early out there on the west coast. thank you for getting up good luck with the john oliver challenge. appreciate your work >> awesome thanks so much >> i want them to beat john. the poor man showed a picture of me one time supposedly naked on a bike -- >> you were naked? >> no it was a photo shopped thing. i made up this story on the air and i was drinking a beer and there was a dead squirrel -- >> he has a picture of you naked on a bike -- >> no, no, no, it was photo shopped.

the guy was much better looking than i was my wife was like why can't you look like that >> you should be happy with that >> anyway, when we come back, we wrap up the hour with our guest host alexis ohanian. reddit also check it out, the minions are here today my son kyle. universal's "despicable me 3" hits theaters today. make sure you head to the nearest theater near you this weekend and enjoy the show that's what we're planning on doing. here's a preview -- ♪ ♪ at johnson's we care about safety as much as you do.

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yogig-speed internet.me? you know what's not awesome? when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids. and these guys. him. ah. oh hello-

that lady. these houses! yes, yes and yes. and don't forget about them. uh huh. sure. still yes! you can get it too. welcome to the party. introducing gig-speed internet from xfinity. finally, gig for your neighborhood too. welcome back, everybody. let's get some final thoughts from ourguest host, reddit's co-founder alexis ohanian. one thing that's big news for you is you are expecting >> yes yeah, very excited >> when are you due? >> baby's due in september >> you look great. >> thank you obviously my fiancee is -- >> she looks great, too. >> cover of vanity fair. >> she does. >> she's very good at a lot of things, and well on her way to being an awesome mom, too. >> i know you guys have a policy for maternity or paternity leave. are you taking time off, too >> yes, yeah you know, at reddit it's really

important for us to support men and women when they are welcoming a new member to the family we've got a pretty generous policy i'll be taking off for six weeks myself >> that's great. >> and trying to do my best, the best job possible as a new dad, first-time dad and it's something that i think our culture team have prioritized from -- i won't be able to take advantage of this, but there's dedicated office space, actually the nicest rooms in the office for new moms to do everything from nursing to just having some times to themselves. we want to create a place where we can attract the best and brightest people and the only way to do that is to be supportive of parents. >> so you're setting a tone yourself by taking some of this time >> yes >> making sure that everything's there. how tough is it to recruit women in silicon valley? especially given some of the things that have happened recently >> it is our opportunity because like you said, i think for so many of us in tech we have to do as good of a job as

possible in making sure that we've got the best and brightest and most diverse workforces that we can and, something like, you know, we just had our vp of sales just -- he's a man, he took time off, spent time with his family, and we want that to happen because we want to break that stereotype that is, you know, the men work and the women take care of kids we want to give that opportunity to everyone. >> do you advise your wife to be on her social media strategy because i have to say i liked your response to john mcenroe this week. >> i -- you know, every now and then she'll ask me, for my opinion on something but she is her own -- her own social media strategist. and to her credit -- >> for those who don't know the back story john mcenroe kind of through water onto some conversation saying if she was ranked on the mep's list she wouldn't be in the top 700 of men's players -- >> holy -- >> and she had a very classy response, which was basically, i

don't talk about you, why don't you keep me out of it. >> yeah. she is -- >> have you ever played -- >> i've actually never -- >> because you're a good athlete. >> you've never picked up a racket >> i've never picked up a racket in my life i was a pretty mediocre athlete in high school but never picked up a racket no >> alexis -- >> how about ping pong >> no. >> silicon -- >> i don't mess with ping pong m pust -- >> is she a ping pong player >> she's pretty good, yeah >> alexis, thanks so much. as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?

tech stages a comeback on the final trading day of the quarter. an analyst lays out his top picks in the sector straight ahead. burgers and business >> i would like to buy a hamburger. >> i would like to buy a hamburger. >> the ceo of shake shack tells us how the chain plans to shake up fast food >> and the minions are book. ♪ a rundown of the blockbuster that could heat up the holiday box office 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. >> love the minions. we'll talk more about that in a little bit good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq marketsite in times square i'm andrew ross sorkin along with becky quick, ryan sullivan's hanging out with us today. joe's got the day off. he'll be back next week. take a look at u.s. equity futures right now because they look like they may be ready to rip. the dow looks like it would open up about 76 points higher, s&p 500 open up 9 points higher and the nasdaq looking to open about 15 points higher new this morning, berkshire hathaway is exercising warrants to buy $700 million of bank of america common stock it's going to be using its 5 billion in preferred shares as consideration for that purchase. first agreement when it bought the preferred shares back in august of 2011, it's going to be paying just above $7.14 a share for the common stock based on the common stock price that's an instant profit of about 240% the stock is now trading of course at 24.53.

also making headlines, activist investor engaged capital is taking aim an organics product maker hain celestial it's unveiled a 9.9% stake in hain and is nominating seven hasn'ts for hain's eight-member board. earlier this month, hain issued the results of an accounting probe which it said found no indication of any wrongdoing and only minor changes to its prior results. it's a busy friday for economic data. personal income and spending in just about 30 minutes' time. at 9:45 eastern we get june chicago pmi and then the final report of june consumer sentiment. andrew >> okay. some stocks to watch to tell you about. check out shares of tesla getting a boost this morning ceo elon musk tweeting about the model 3. that's tesla's highly anticipated affordable model musk responding, asking about the release date and he writes, quote news sunday. stand by if you're a tesla watcher and get on twitter maybe he'll be tweeting about

this shares of nike higher in premarket this morning the athletic apparel maker beating on the top and bottom line the company confirming that after holding out for decades it's now going to be selling some of its products directly on amazon and the puget sound business journal reporting that microsoft plans to announce a major reorganization it could happen sometime next week the report says the changes will better align the company with its cloud business now to politics. president trump tweeting about the health care battle he writes, if republican senators are unable to pass what they are working on right now, they should immediately repeal and then replace at a later date let's get to eamon javers with more on this eamon? >> hi, becky this is a new idea here from the president who had previously suggested that what he wanted to do was repeal and replace obamacare at the same time so there would be no gap, really, between the two sets of laws that would cover health care in this country today, though, he's floating this idea of repealing first, and then replacing obamacare that's an idea that might have

some traction among some republicans on capitol hill who are eager to deliver on a campaign promise on repealing and replacing obamacare. at least the repeal piece could be done this year. i just spoke with kellyanne conway, the adviser to the president, here on the white house driveway a few moments ago. i asked her, though, if the repeal obamacare and don't get around to replacing it, does that leave a gap in which the president's not living up to his promise to keep some of the obamacare provisions that are popular, including the ability to keep children on their parents' health care until they're 26, and also the ban on pre-existing conditions block for health insurance she said the specifics of this haven't been worked out yet but there are some republicans on capitol hill who are supportive of this. i also asked kellyanne conway about the president's tweets yesterday, which have been getting so much attention about cable news posts, and personal attacks on those hosts who say things that he disagree with i asked her if that helps or hurts the president in terms of getting his legislation passed up on capitol hill

she responded with a sort of swipe at the media she said you guys wouldn't have covered the president's agenda anyway, so that doesn't matter so that's the response here from the white house. they think that the president is in strong -- on strong ground here in terms of tweeting at cable news hosts she says ultimately the media is not on their side yoen way and ultimately they think it doesn't affect the legislative picture there. >> eamon, thank you very much. have a great weekend >> you bet, you too. >> all right now let's talk technology tesla to netflix, gene munster has a view of it all gene joins us now. let's start off if we can with tesla. because tesla up 70% year-to-date elon musk tweeting last night basically wait for news in july on the model 3 how important is a july release date or at least a significant update to tesla stock? >> it's not that important obviously it's been part of a move the reason why investors are long tesla is there's a fundamental shift going on

now when people go and look at cars moving around i want them to think about horses. because, they're going to change dramatically this is not about the model 3. one other piece to this is the model 3 is going to be particularly cheap if you look at total cost of ownership i'll set that aside. but model 3 is important, but what's more important is this bigger shift every tesla that's shipping today is going to be fully autonomous, and what tesla was saying two years, hard to believe that i can talk about how that's possible but this is going to be a huge shift in terms of how we get around and tesla's a pioneer in this >> okay. so not that important but i assume it would have to be this year maybe not july, maybe -- >> definitely has to be. >> but this year is key. >> yes, this year. it's likely going to be october before you're going to see the volume shipments for the first orders you'll see employees get them in july >> let's talk overall tech because here's what's

interesting, the obsession with a couple of different stocks, they have an akron im, it starts with an "f" you know what i'm talking about. but facebook is the best performing of the fang stocks. it is the 25th best performer in the nasdaq 100 this year in other words for all the attention, they've done okay but plenty of other tech stocks are done is the attention on this small group of four or five stocks bad for the overall market are we bypassing some really good investments >> i think we are. i think at the end of the day, they're best positioned for kind of this paradigm shift that's coming up. part of it we just talked about. if you look at the total market cap that's been generated by the faang this year it's almost $500 billion in initial market cap. it's understandable we talk about it but i think there are opportunities that are missed. i think one opportunity that's outside of tech to be negative on over the next five years is this whole -- these auto parts retail suppliers this would be like owe riley, auto zone, advance, i'm on

o'riley awards rewards person, i love the stores. but these are suppliers to an old way of doing things. there's many moving parts. dozens of moving parts on a traditional car. electric cars have almost no parts. and so when i think about the broader market and think about opportunities, to be negative on these auto suppliers i think is a big opportunity for an investor who can play that over the next five years. >> gene, let me ask you about another story we've just seen a few graft on this morning talking about microsoft preparing shift, some sort of a restructuring based about what's happening in the cloud there a sense there's some announcement that may come next week what do you think about that what can you talk broad by about cloud, who's winning and how these things are shaping up? >> so, amazon's winning, google is gaining, microsoft azure is doing -- is one of the key three players. i think if you look at the total amount of activity by companies, small and large, that's done in the cloud it's still relatively

small. call it 20%. and so this is the right time for microsoft to restructure, because if you think about the 10, 20 year theme, it's important to be strategically positioned today because there's still a lot of adjustable markets so i would applaud microsoft for doing that >> what do you hope to have them -- what can they do about restructuring? push it, promote it, make it a much bigger part of the business >> i don't have a good sense of what they could do i think one of the key advantages that, for example, aws has is these models. they come the with about 2,000 modules which is basically free code the developers can drop in. i think azure's been lacking on that that's something they could maybe put a greater focuses on those skills that their cloud services that can do that can help them gain market share. >> gene munster, have a great fourth of july weekend >> thank you >> we'll see you soon, i'm sure. >> thank you, brian. >> meantime the white house wrapping up energy week among the big themes america's road to

becoming a net energy exporter jackie deangelis is here with more we're still a ways away? >> we are. but it's closer than you think this is such a key takeaway. it seemed to fly under the radar. a declaration that the u.s. is on the brink of becoming a net energy exporter. the trump administration says the u.s. will export more than it imports as soon as 2020 that's less than three years ago and six years less than the eia's most recent forecast now president trump kicked off his term with some swift moves in the energy space. less regulation, more room for build-out, faster approval those watching the daily fluctuations in oil prices might say it's depressed prices a little bit but longer-term analysts say it's a really sound strategy for two reasons number one, domestic consumption may not be growing that quickly. but international consumption definitely is. there's no way that demand has peaked, especially with commodity prices so low. so there's definitely a market to serve globally. number two, what better way to

tap countries that pose a threat and check them with revenue loss consider natural gas we're going to be a net exporter as soon as next year russia, qatar and the biggest competitors not exactly at the top of our ally list think about the global players in oil it's more than just prices and profit, some argue it's an issue of national security >> on this point i keep going back and forth because you can say that qatar may not be at the top of our list of friends at the moment but it does happen to be the largest military base that we have in the middle east. we are reaching out to saudi arabia, trying to have president trump show up there and make some friends, some allies with how we fight terrorism there it seems like this could be a double-edged sword if we're cutting off the saudis or anybody else and making it much more difficult for those regimes. i go back and forth -- >> yeah. >> i understand the need when russia threatens ukraine, if we want to be able to step in and help them out with these issues but it does seem that we are undercutting some of our

potential allies >> it's definitely an issue and sort of taking a bet and sort of placing all of the chips on one side i think some strategic alliances this morning, definitely after president trump's trip to the middle east, you know, he is more aligned with the saudis that's when we got the -- >> the saudis are probably the government we were undermining the most -- >> the most. >> with low oil prices >> so they're the next target. that seems like what's happening here is a little bit of a chipping away of what, you know, the strength that's coming out of the middle east i think that's important, as you said, it could longer-term, be a problem. because they're not going to go away they're not going to accept lower oil prices, and they're, you know, communities are crumbling. >> i do go back and forth on this point i understand why you would need this, particularly with lng. i get that point we did have senator heidi heitkamp here a democrat from north dakota and her point is, look, the senators in iowa tell me that we shouldn't be allowed to export our oil, but i don't tell them that they have to leave their crops lying follow

in the field, that they can't export their corn. >> that's the issue, right you mentioned the fact that we'll get to 10 million barrels a day potentially by next year that's the estimate in terms of production if we do, we need a place to go with that oil. we need a market to sell -- >> her point is it's an artificially low market particularly with the lng. i can see both sides of this argument >> yeah, it's tricky hard to say who's exactly right at this point. what i will say about president trump is, there is a method to his madness. he has a strategy. whether it's going to work long-term -- >> did you see the article i think it was in the journal, that basically after ten years of fighting over the dakota pipe lin it's getting done, but now nobody wants the oil >> right >> because we're oversupplied with oil >> interesting how these things have a way of changing >> supply and demand rears its ugly head. they said the cure for high prices is high prices. jackie, thank you. when we come back the clock is ticking for the state of illinois just one sign of the pain the

multistate lotteries have been suspended. we have a live report from chicago next plus we are just days away from the g20 summit. we're going to be talking about what's at stake with former undersecretary of state richard stenging and later you've got mail. forget about a traditional delivery truck, though how about golf carts we're going to tell you which shipping giant is going down atoute stay tuned you are watching "squawk box" right here on cnbc the power of 100 of the world's top companies. the power of an etf. the power of qqq. the thinking we put in, clients get out. power your client's portfolio at powershares.com/qqq. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc.

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welcome back to "squawk box. illinois' budget deadline is looming and a lot is at stake if they do not reach a deal leslie pepper joins us in chicago this morning >> illinois has about 17 hours to come up with some sort of a bald budget or it risks becoming

the first state in u.s. history to be downgraded to junk status. the state has operated for two years without any sort of budget, and the patience of the ratingagencies is wearing thin they're concerned about illinois' $7 billion budget deficit, it's $15 billion backlog of unpaid bills, and $250 billion worth of pension liabilities. unfunded pension liabilities much of that can be placed on springfield where the republican governor and the democratic legislature have not been able to compromise on a budget. we spoke with chicago mayor rahm emanuel yesterday who had some choice words about the political brinksmanship. i think the governor under hess tenure unpaid bills have gone from $3 billion to $15 billion. and it's a failed state under his leadership >> so what happens if illinois' credit rating is downgraded? well, it will become much more

expensive for illinois to borrow in the future, digging it into an even deeper fiscal mess guys >> okay. leslie picker, thank you good to see you. are you -- are you standing outside the trump hotel? by any chance? >> i am, indeed. >> i told you. >> i am, indeed. >> there's nothing wrong with that it's a nice running path it's the marine towers, spectacular city >> and the chicago river >> it's the best big city -- i'll be picking up my family there in about three hours, leslie, next door, i'll see you there. it's sad -- >> awesome >> for the best big cities in america, and it's going through this which means the schools, the copps, and everybody else, or any issuing debt has got to pay 8%, 9% on their debt it's downward debt spiral. >> exactly well you want to hear a crazy statistic there? because chicago public schools hasn't received the funding it needs, it took out a massive loan from jpmorgan, which is paying $70,000 in interest per day on that loan that's according to the chicago

tribune. >> what is that a -- >> think how many teachers you could hire with that >> time not sure what the interest rate is on that >> there are -- >> -- the chicago tribune study. >> some of the school debt is yielding 9% or 9-plus percent. >> i was loaning money, i'd want that too, right? >> you said this in your report i apologize, we were sort of conversing for a second about chicago, which is, no state in the modern era has ever been junk >> right >> they're already the lowest. this would be the worst of the worst. >> that's correct. >> and cook county where chicago is, had the highest net outmigration of any county in the united states last year according to the census department so they've got fewer people paying taxes they want to raise taxes, and of course, the -- it's an awful sad situation. >> illinois as a whole had the largest number of people affecting last year of any u.s. state. so the population decline is a big problem here >> all right, leslie, thank you very much. we'll be seeing more of her

throughout the day in the meantime, president trump's going to be meeting with south korea's new president for a second day of talks today in washington trump is expected to press president moon on trade disputes over cars as the issue of north korea's nuclear threat also looms. he'll be holding a news conference later today at the white house. treasury secretary steven mnuchin announcing u.s. sanctions on a chinese bank for laundering money in north korea. >> north korea's provocative, destabling and inhumane behavior will not be tolerated. we are committed to targeting north korea's external enablers and maximizing economic pressure on the regime until it ceases its nuclear and ballistic missile programs >> joining us now is richard stengel. he is former undersecretary of state in the obama administration and former managing editor of "time" magazine he's now an msnbc analyst. thanks for being here. >> great to be here.

>> and consultant to snap. which is a business network -- >> that is correct >> right over there. >> which is -- >> -- to california -- >> no, no, "the new york times," the old "new york times" building is now snap's headquarters in new york >> right you worked there >> i used to i mean i still work there, but i'm not in that building anymore. >> it is symbolic. >> i mean the new media -- >> new media -- >> although "the new york times" is doing fine. >> let's talk about that but before we do why don't we start with the issues. this is a little bit of a tricky relationship and each of these presidents needs their own issues to -- they're not going to see eye to eye on a lot of things right now >> yes and it's a three-way relationship, obviously, with china. and, it's an existential issue to south korea right i mean i think the thing we sometimes forget is there's not a single person in south korea who's not affected by this whose family is not divided. and president moon wants to take a more compromising approach

with the north korea and the chinese, i think that's a good thing. and, in fact, you know, we shed help him with that i think trump has expressed some interest obviously in meeting kim jong-un. maybe they can actually all talk together >> potentially, that's the situation that could be talked through. but for the u.s. it's a very different situation. this is a new threat to us to have the potential for a nuclear warhead to sometime in the not too distant future reach our shore. that's the difference between our positioning and thirst >> i mean i'm a little bit skeptical on their ability to put a nuclear warhead or an icbm i mean that's very sophisticated technology they've done a lot of testing and shooting, but i mean, that seems to be prettyfar in the future >> i'm shocked at how much progress they've made in the last five to eight years >> but again they're also good at marketing their progress, and i just -- having a denuclearized north korea is everybody's object the thing we sometimes forget for the chinese, what they don't want is what we want which is a

unified, democratic korea. >> exactly right >> that's what they're afraid of >> is that ever going to happen? >> listen, there is some actually sports diplomacy through sports could work. i mean there is some talk that -- >> not with dennis rodman. >> did you ever talk to dennis >> i have talked to him. >> you have? during this -- >> no, no, no. i mean a long time ago >> i mean south korea has sort of approached north korea about maybe hosting certain events in the upcoming winter olympics >> yes >> that might be viewed as a slightly positive policy >> i would agree with that and the ping pong diplomacy, of course >> -- to pyongyang -- >> would other countries send their olympians there, having just seen what happened to otto warmbier >> yes, that's very tricky that's very tricky >> it's a crazy situation. >> we have that. we have an upcoming g20 meeting. >> yes >> so what's front and center for that >> you know i saw mrs. merkel who a lot of people are arguing

is the leader of the free world. took a shot at president trump yesterday by basically saying, you know, countries focusing on themselves, and not being global, is a bad thing and i think part of what she wants to do is shape the landscape of the g20 this is an organization that we created that's about globalization, and she's kind of singling out president trump as a pariah, like you created this organization and now you're not supporting its goals >> although the trump administration can go back and point to the idea that we have the agriculture secretary in china today, for the re-admittance of u.s. beef for the first time in 14 years they're looking at it as bilateral agreement. so they're -- >> yeah, and the thing is, look, one of the problems i think with our foreign policy thus far is this idea that somehow it's easier to do bilateral relationships than have these multilateral relationships getting out of tpp which i think is a disastrous thing. trying to negotiate 22 individual bilateral agreements,

so the g20 is in favor of the big bilateral agreements >> andrew you want to talk about snap >> you didn't tell me about that >> can we talk about it? >> sure. >> what do you think is going on >> i think snap is this incredibly innovative company. it's led by a guy who is going to be a titan among all the titans, and i think the future is very -- >> but here's the question the question is, it is a great one-to-one communication platform hugely so. >> mm-hmm. >> the real question is whether it is a one to many platform in terms of its ability not just to attract the media companies that are using the discover element of it, but effectively advertising. >> right >> isn't that the big question -- >> and it can be both. but remember the jie gantism of facebook is not something that is the snap philosophy the snap philosophy is about intimate connections between people you care about and the depth of those connections >> but zero value economically to that, richard >> well if i send a snap to andrew, there's no value --

there's no -- >> monetize the one-to-one >> -- of their video >> so it's monetizing the one-to-one but getting people in that one-to-one gets them onto discover, gets them using journalism stories i actually think the content on snap is fantastic. and what i see tki auturalngbo o kids using it. i see them looking at stories from the economist or cnn. looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock. ♪ at johnson's we care about safety as much as you do.

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welcome back to "squawk box. rick santelli here live on the floor of the cme group breaking news may read on income and spending up 0.4 on income up 0.1 on spending they're down close to expectations, income actually running a little better. we did lose a tenth from 0.4 to 0.3 last month let's look at some of the internals, month over month down 0.1. deflator yield for year up 1.4 both those a little on the light side

personal consumption expenditure core month over month up 0.1 year over year up 1.4. so, you can see that these numbers are close to expectations cooler on the price issues preopening equities are higher europe was a little bit higher long weekend end of the quarter, maybe anything can happen. keep an eye on 2.27 and 2.30 with 10-year note yields andrew back to you have a great independence day. >> thank you, rick have a great independence day. are you doing anything fun you want to tell us about? >> you know, i'm going to think about the country. i'm going to think about the country. i'd like to see less fireworks in d.c. and more fireworks out of my back window. >> i like that i like that. rick, thank you for that have a great weekend long weekend maybe even through to next week. in the meantime we're continuing our what's working series today. instead of stock picking we're taking a closer look at what worked in the economy in the first half of the year and what to expect in the second half joining us is stewart hoffman senior economic adviser for pnc

financialal services group i'm going to go to you first, what do you think's worked, if you will, for the first half >> well, i think that the global environment has just worked. and by that i mean you've had a synchronized upturn in activity around year end for the first time in many years, all of the major poles of growth have been working and at the same time inflation pressures are softer so the general risk environment has worked so it's been positive. positive risk. >> so the bad news is, we have to admit, i think part of this was a surprise for a lot of people >> yes >> if i had asked you this in the fall i'm not sure you would have thought this is what was going to happen. >> we would have told you a story that energy prices would boost head line inflation, that will end at q1 and underneath that core will take off. >> i tee up the segment because you were also not going to tell us what works but what worked in the second half. >> sure. >> i was asking you about what you were thinking about six

months ago before all of this. so what do you think is going to happen >> i would say that the environment for us is still one of cautious optimism in the sense that the risk back drop, the fact that inflation is weaker than expected means monetary policy is likely to normalize at a slower pace but we would still be constructive on equities we had a very good result from the are ccar yesterday we think we'll get a lot of capital coming back from large cap banks for dividends as well as equity share repurchases so i think the equity market in the u.s. looks good. equity's globally still look good and it's a positive carrying environment so currencies, and some of those. >> stewart, what do you think? >> well, i think what worked in the first half was the consumer. the american consumers talking about some of the global positive surprises in europe, china, but, right here at home as a record number of us get ready to travel for the holiday season, yet consumer spending

was a bit weaker in the first quarter. but the data that rick has talked about, 0.1 rise but with inflation down 0.1 that's a decent increase in consumer spending on a year over year basis consumer spending in the first quarter was still up 3% in real terms, and probably going to be there this quarter, as well. so what i think worked in the first half is the american consumer housing, maybe a little more on the investment side. continues to carry the economy, you know, maybe 2% to 2.25% real gdp if we're not going to get any tax cuts and health care is still an issue but the american consumer, i think the debt to the american consumer has been greatly exaggerated. and count on all of us to help carry the economy forward, and that's good for a number of the retailers. >> right >> and i mean good for the economy overall. michael mentioned, yeah, inflation's been lower and i totally agree. we don't have the feed raising the rates into september

we think the rates for december, but if we saw in the days today, yes the inflation numbers move away from the 2% fed target. but chair yellen and others have made it clear they're looking through that >> gentlemen, thank you. appreciate it. happy fourth, everybody. >> to you, as well >> thank you >> the fourth of july is almost here and as a result we're going to get a head start on the festivities this morning we're talking hot dogs, burgers and business with shake shack ceo right after the break. and the minions this morning stay tuned you a wchg reatin "squawk box" right here on cnbc. so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business

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welcome back to "squawk box" this morning we're watching shares of discount broker e-trade this morning. "the wall street journal" just reporting that the company's board will consider alternatives including a sale if financial goals aren't met the board is set to have given management until the end of 2018 to boost its core brokerage business we will keep an eye on that. brian? >> all right just a few minutes ago we got a phone call from hedge fund manager kyle vass who wants to respond to something he heard about china. he joins us on the "squawk" news line partner at hayman capital kyle, thank you very much for phoning in on short notice here. what exactly that you heard caught your ear enough that you wanted to call in? >> well there are two things, brian. number one, the things that

happened yesterday kind of signified a tectonic shift in the u.s. relationship with china. number one, was you know, we unilaterally imposed sanctions on a chinese financial institutions and a company and two people there and you know, xi is very much a control freak and he doesn't appreciate the united states acting unilaterally and that's something that treasury secretary mnuchin, and the trump administration intend to continue to try to cut off north korea's funds into the future. on the same day, we announced that 1.4 billion arms sale to taiwan taiwan was kind of the one area that xi asked us to stay away from in his meeting at mar-a-lago with the trump administration we decidedly -- we decidedly took a much stronger stance. and you know, in your last interview, there was some hope that trump was wanting to have a one-on-one meeting with kim jong-un. and i think when the uva student otto came back, and passed away,

i think any meetings with north korea are now off. and so i think when you think diplomacy and the manner in which we handle our relationships with china, i think it took a major change, a major step for the worse yesterday, and i just -- i find all of the optimism to be questionable >> because, in your view, and you obviously are well known a bit negative on chinese banks and the credit cycle and the debt load on china so your ultimate thesis if i'm hearing you right is we sort of missed two left hooks that the united states delivered to china yesterday, or at least recently with this bank sanctions and two individuals, plus the taiwan arms sale. but how would that play out then from an investing or a credit thesis >> well, just about a month and a half ago, you know, so first of all, the position that china has taken on the global stage as kind of a rising power, and someone to be reckoned with from an economic perspective is something that is a fact

however, some of the facts are built on sand, a foundation of sand, because their banking system has grown too rapidly, and they have constantly said that they're not performing loans and their banking system amounts to less than 2% of assets when the deputy chairman of the cdrc in a public interview about a month and a half ago said that the way they've kept loans, not funding loans so low is they have formed 18,000 creditors committees to -- i'm sorry 12,000 creditors committees to deal with 18.5 trillion of bad loans. that's more than all of the equity in the chinese banking system -- >> having said that though, kyle, the rhetoric has toned down dramatically from not only the election season but just after president-elect trump was saying things about china. rhetoric has toned down substantially. and today the agriculture secretary is in china to celebrate the return of beef

after 14 years of not being permitted in that market u.s. beef being exported to china. how do you kind of add that all up >> yeah, i think, you know, china's trying to make marginal changes in the balance of trade. right? between buying some more beef from the u.s., buying beef once again from the u.s., after stopping when we had the mad you could problems and also if you noticed, they're importing a lot more crude oil from the u.s they used to import about 50,000 barrels a day. i think that's up to over 300,000 barrels a day literally one month after the mar-a-lago meeting. they're doing things to try to tweak their trade relationship with the u.s but more importantly, their new found strength globally, both economically and as you see militaryly in the south china sea is all based upon their new -- they're belief in their economic strength which is also kind of newfound since 2009, and all of that is built on a rapid credit expansion that they're going to have a comeuppance, and

they've admitted that they've got 18.5 trillion rnb of bad loans which is again more than all the equity in the chinese banking system >> kyle bass, hayman capital wish you had more time we do appreciate you callingin on sort of a moment's notice have a great weekend, buddy, i'm sure we'll chat with you again >> you, too. have a happy fourth. >> speaking of burgers, it is burger season. international sensation shake shack is firing up the grills for a pretty busy summer season here joining us right now to break down the burger business is randy garutti, shake shack's ceo. and randy, you've come bearing gifts. >> hand it over. >> in particular, in particular, a burger that's available only today made by a michelin star -- >> this is so typical of what we do today we flew from a chef from tokyo. we're opening our fourth shack that's a milk shake. but only at madison square park, 500 burgers, there's going to be a crazy line we're serving -- >> what's different about it >> this one has a red miso and

sancho pepper. it's how we think of going local and designing every burger every place we go. and today it's celebrate tokyo as we open more and more business in asia >> let's talk about the international. because analysts have asked some questions about how you keep the excitement the big question about shake shack was the line, lines around the stands, and now out the doors of the restaurants how do you continue to generate that >> we're always so humble and amazed you could count on one hand the brands in the world that can cause what we're lucky enough to cause. we opened in south korea last year in seoul, had almost 1,000 people online. again, today we're opening and it will be total madness we're going to serve this burger i think combining the brands that will win in this moment, the best experience, and the best convenience that's the moment we are in, i believe. and yeah, there's a line but we're making it easier every day. you can preorder on the app now.

you can cut that line. >> your goal is to get rid of the line >> our goal is to shift the line to a community of people who can cut out the friction of what waiting online means but still enjoy that shack experience wherever and whenever they want. >> randy i know you're in a quiet period, you can't talk about specifics. we did hear this week or last week the headlines about the idea that the rainy weather in new york could cause a problem because you have so many of your stores open air -- >> sure we like sunshine in the burger business. it's july fourth it's going to be sunny we love that that's part of our results spread across the country now which we super excited about the success of l.a. and texas, and chicago, we just opened in l.a.x. terminal three yesterday. so, passing our shacks across the country is a huge thing for our results in the balance of that over time >> it's a gradual game it's going to take awhile to get to that point? >> not just small company, we're a public start-up. we have 75 company owned

restaurants in this country. it's nothing so when you compare the potential -- >> do you think you'll ever do a breakfast business >> we just launched in madison square park. we do it in our airports we love braekz and we love what it means for the community. >> what do you make? >> amazing bacon, egg, cheese and sausage patties. some killer coffee and we like it as a business but it's not our main focus. >> every -- not every. many of these restaurant chains the quick service, stop eating burger king, they're all going to this light model trying to franchise everything you're all company owned seems like you guys are going in opposite directions. why is that the model? and would you ever franchise >> it's a great point. we love to have our international business be that model. asset light. we think -- >> you -- >> we love to team up with the best partners in korea, japan, the middle east, uk, and let them own that business, and inspire our global brand in this country we love our

returns and we want to own every one of them. >> okay. >> the question because he's got a mouth full of burger >> i can't >> you're going to eat the whole thing. >> it's so good. you want to try? >> the cuts are good >> we'll cut it. >> cut it first. >> mickey d's, what do youthin is going on these days >> sorry, look, that's one of the greatest brands ever made. i think they're always going to do amazing things. i think we appeal to a different consumer my kids will not grow up eating traditional fast food. i think they're going to want and expect better quality ingredients and a different experience when they go. that's what shake shack has always been. >> that's what mcdonald's is trying to do, too. look at the artisanal burgers they're putting out. >> i think it's going to be a little bit of a different model -- >> i just want to ask -- >> no hold on. i just went to mcdonald's, and i had a grilled chicken thing with -- >> yes -- >> with -- what do you think of that >> i think what we're doing is

serving no hormone, no antibiotic chicken cooked to order that we believe our guests are willing to pay a little more than that for nutritional fast food and the whole experience of coming together at shake shack we just believe what we're doing is a more premium opportunity over the long-term >> randy, thank you for coming in thank you for bringing andrew breakfast. >> eat up. thank you. >> cheers. >> cheers. >> coming up next, social networks take on cable networks. a serial media entrepreneur who sold his company to twitter when "squawk" comes back. and we have the minions right here on set. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?

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this network sals a version of the channel without commercials. it will cost an additional $4.99 a month on top of the line-up for channels it will include new episodes of shows like better call saul at the same time the shows are live on the traditional amc channel also will video save the internet stars social media celebrities are winning big. not to mention a lot of ad

bucks. joining us is the founder of brat, a new media venture focused on top digital talent. he sold to twitter back in 2015. >> still holding the sandwich. >> most importantly he's a graduate from corr medical university. >> are you kidding >> no but we have something in common. >> would you like a burger we have food. >> tell us what you're doing >> for the last bunch of years i worked with individuals that amassed huge audiences with their sheer force of personality and their cell phones and we helped them partner with fortune 500 brands the new company is looking at the landscape of these individuals replacing media companies for young people and the first is in original production so we have a slate of series

coming out this summer featuring top internet talent and they're short form, scripted and free. >> how do you find them? >> they're hiding in plain sight. if you ask anyone under the age of 20 to rattle off 100 stars of youtube or instagram they can do it in the same breath. >> what are the economics for you in this? >> right now we're producing shows for free and building our own brand. we're trying to create a channel that resinates with these mobile first audiences. >> how do you control them >> we have seen like the biggest youtube star of all getting in trouble for comments he makes. these kind guys are wild west. how do you make sure they don't blow your brand up >> we're trying to formalize and professionalize the space. it's prevents advertisers and platforms and networks from

reaching out to these individuals because there isn't that safety and concern. by building our own brand first and featuring them in shows, these are scripted shows we're controlling the production and environment and distribution. >> on this scripted stuff though some of these guys have never done this before how does that work >> in hollywood there's the assumption we're going to buy 1,000 pilots and make 20 of them and show one. >> we're doing the opposite. we're putting out a ton of shows and the stuff that works will rise to the top and a lot of it that doesn't won't be a big deal we're trying different formats and ways to express themselves. >> great to get a platform. >> they love the camera with the real crew. >> as you see facebook and am and everybody else get into scripted itself is that an opportunity for you or do you look at them as competition? >> i think of them as one of

many outlets that can pick up this content and share it so there's more and more buyers and distributors to the space that should be exciting for people that produce tv shows. >> thanks. >> coming up we're going to head to the chairs and a few very special guests will help us g di through today's top stories. stay tuned squawk box will be right back.

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welcome back to squawk box special guest. my son kyle is here but he's here because the minions are here hi guys. minions are here to celebrate despicable me. it comes out in theaters today check out a sneak peek of the movie. >> this does not mean that we're going back to being villains >> yes, we're a little excited. >> he's very excited. >> hey, bud. is this the most exciting thing

or what? do you -- >> this is more exciting. >> do you know the minions language sort of -- you're doing it right now. do we have a microphone for him. >> what do he they say good. >> why do some have one eye and others have two eyes. >> maybe the way they're made. >> who is your favorite minion >> stewart and bob. >> what about carl >> okay. i like carl. >> sounds like you like all of them. >> he does we're a little bit fanatic about this >> all right your next package could be delivered on a golf cart ups will begin using this method of delivery in kentucky thanks

to a new state law that says drivers could use public leaders on these roads but union leaders oppose to regulation it puts the drivers at risk. we'll see what happens thanks for having me on minion andburg r day. >> thank you. >> safe travels. >> happy july 4th everybody. give me a hug. >> thank you bye, everybody