welcome to "squawk box." i'm melissa lee along with joe kernen and mike santoli. take a look at how the day will kick off we are looking at a higher open across the board dow up strongly by 72, s&p up by 8, nasdaq looking to add 20. this is a holiday shortened session and this is probably light volume at this hour. let's also take a look at the ten year treasure beery. la we went from 2.13 last week to 2.27.beery we went from 2.13 last week to 2.27.eery. we went from 2.13 last week to 2.27.ry. we went from 2.13 last week to 2.27.ry. we went from 2.13 last week to 2.27.y we went from 2.13 last week to 2.27.aey we went from 2.13 last week to 2.27.rey we went from 2.13 last week to 2.27.y we went from 2.13 last week to 2.27.y we went from 2.13 last week to 2.27.ey. we went from 2.13 last week to 2.27.ry. we went from 2.13 last week to 2.27 overnight in asia, some good numbers in the tech centered economies. nikkei up by a tenth of a

percent. european a equities, big story was the big rise in the euro last week. and green across the board and there the euro i know you watch it closely. >> i had in my plans and forecast for 2017 that the dollar was going to get stronger forever and hurt exports and everything else and i need to recalibrate. >> dollar down by 5.6% >> lead story in the "journal. and taking a check on crude oil -- >> that must mean that crude is at about 100, right? no, wait >> you would think it is soenl easonally strong su period also. >> i left at about 2.15 and it's back >> exactly a staggering move in the ten year last week >> so something happened

>> every central bank said get ready. so you have 15 basis points on on the ten year. >> i don't believe the bermuda central banker said that >> is that the 13th branch of the fed? >> right my biggest concern is i can't believe the ocean can be so clear and so aqua and the beaches so incredible. yeah so i'm trying to deal this morning. some of these things are important i think, but not everything that i'm reading is that important after a week of really seeing what is important, family and surf and everything else here are some of the big stories -- these better be big okay this is. because this is important for tesla.model 3 sedan, good looking car, and you need a car that doesn't cost 150 grand with

government help. it has passed all regulatory requirements for production. should begin rolling off the line on friday and in a tweet, elon musk says 100 vehicles should be delivered next month and then delivery will increase to 20,000 per month in december. that will be amazing is that going to happen, santoli? >> that is only six months away. it's not one of those well in three years, we'll be at half a million. >> but production rises exponentially. >> so i think that they will are on track >> yeah, if everything goesle smoo smoothly dropbox -- i get things telling me to go there >> yeah, big files sure you know about the cloud >> a little bit.

i bought more cloud stuff for my iphone to back things up that is my experience. >> same sort of -- >> some people don't feel comfortable with technology, i feel very comfortable. i'm back up. >> did you go to the cloud store? >> back up in a lot of ways in faskt. you' fact you'll see, santoli. you're 46. reuters says grop box oig offering could come rater this year, this could be the biggest company to go public since snap. it was valued at about $10 billion after a private fundraising round in 2014. and four former barclays executives are in court in london facing charges to 2008 emergency fund raising in qatar. barclays is also a defendant first time criminal charges have been brought against a bank and its leadership in connection to any action taken dwururing the financial crisis we'll have a live report from the courthouse in a bit.

and hong kong and china launching a highly anticipated bond trading program the setup gives foreign investors access to china's $9 trillion bond market through trading houses sounds like a big deal >> president trump speaking by phone today with the leaders of china and japan. china state media is reporting that zink zink pixi jinping hasd to negative factors that have come up. u.s. sanctions against the chinese bank over its dealing with new york and the presence of a u.s. destroyer near a disputed islands and shinzo abe pledged more cooperation over north korea and lot of buzz about president trump's twitter feed eamon javers joining us from washington aren't you and everyone down there jonesing forrussia

isn't this a diversion >> i asked kellyanne conway last week about list tweeting habits and she said the media would be talking about russia anyway, so we would rather have them talk about the joe and mika >> there you go. >> to him, they are taking a negative story of russia out of headlines and replacing it with a negative story about the president mebeating up on the media which is more popular with his base so might be a method to the madness. >> i got back, i looked at the "wall street journal," i don't see any tweet stuff here when worldwide wrestling. i even looked at the "new york times" and i see something about about michael kohn, but i don't see anything about the tweets.

is it important? >> it is important, yeah >> the tweets are? >> yeah, i think so. i mean this is what the president wants to talk about at least a good percentage of the time >> doesn't take long for 140 characters he probably has time for other things after a tweet >> you probably do >> i read people saying that he's spindi spe he's spindiending the entire wek tweeting but people are spending their entire week hyperventilating about the tweets he probably moved on right after he tweeted >> yeah, i don't know what he did. here is the tweet joe is talking about for everybody who isn't following it this is the tweet about cnn that the president put out on sunday. it's a video of himself wrestling with a figure whose face has been replaced by the logo of cnn.

it looks like an old world wrestling federation video that somebody has edited and put cnn on the face there and the president is beating that person up some people critics of the president said it looked like an incitement to violence against journalists and particularly cnn journalists. other people said no, this is the equivalent of a presidential prank call cnn put out a statement though i think we have a section of that statement, it said it is a sad day when the president of the united states encourages violence against reporters clearly sarah huckabee sanders lied when she said the president had never done so. that is something that sarah huckabee sanders did say last week instead of preparing for his overseas trip, his first meeting with vladimir putin, dealing with north korea and working on this health care bill, he is instead involved in juvenile behavior far below the dignity of his office. we will keep doing our jobs. he should start doing his. for their part, administration officials defended the president

said there is simply nothing wrong with this including thomas bo bossert homeland security. maybe we don't have it he essentially said nobody would view this as a threat. he said that he doesn't view it as a threat and people shouldn't read it that way though we live in inflamed times and a lot of people read that as an attack on journalists and a call for physical attack on journalists. but his defenders said no, this is simply a thing where the president is voicing his criticism and concern about the xwleed so we'll continue to debate it >> people will defend julius caesar dressed as trump and defend johnny depp and republicans get mad and say how you can you be doing that and then the democrats will say how can he be -- both sides are -- if both sides want to ramp either do ratchet town the hydown the hyp

say how can you do this, this is horrible, and then the other side and say what we did was not -- >> i think if you're a conservative, how would you have reacted if barack obama had tweeted out a video like that about fox news if your reaction to donald trump doing it is the same as your reaction to barack obama having done consistent >> any of the things that -- a play in the park with barack obama being knifed wouldn't go over, neither would holding a severed head of barack obama or -- >> the severed head thing was egregious. not funny. >> johnny depp saying an actor hasn't assassinated a president in a quhil maybe it's time. i'll gee -- >> old he is relates tore rick is the type of rhetoric that is tinged with violence and what you worry about is that it tips over to actual violence. there are ring wiwingnuts on boh

sides. >> acosta said i thought wwe was fake and that just played in to -- yeah, that was fake with the original thing with vince mcmahon was fake i saw it without it replaced on his head and it was juvenile. >> did you watch it at the time? are you a big wwe fan, joe >> yeah, i was until someone told me -- i think you told me it wasn't real and so that really disappointed me but no, i saw the original and with vince are mcmahon and it was ridiculous the first time around so sticking a cnn head on it brian stelter, god bless him -- >> media critic at cnn >> i made an being a withqua ma once and he was so clueless about irony or sarcasm i had made hundred entourage references in a past, so i made

a reference about aqua man and he wasn't swift enough to realize that it was sarcasm. so i feel bad for him. he's really affected by this and i hope gets over it because -- >> that's why i say the president's defenders talk about this as sort of the equivalent of a presidential prank call no harm done he's just with kind of pants them and that is it and moving on but the question is why is the president doing this, right? why is he --' he spent his weekend, if you look at his twitter feed, there are tweets about policy and the white house tells reporters again and again that they don't think reporters are focusing on policy enough. but then the president is putting out these public statements which are focused on cable news anchors, the divisions between them, why with was this one fired, why was this one hired. the president maybe secretly wants to be a media executive in his next career, right he is really, really focused on cable television and how it perceives him. >> anyone who voted for him

probably at least is not that affected by all this and some even like it and the people that are just you like running around with their heads cut off, they probably didn't vote for him in the first place. i will say one thing, i have a frustration with the media and its coverage of republicans for -- i remember it all the way back to when i was just getting out of college and ronald reagan became president and i remember it through reagan and all the way through george w. bush and i remember -- >> a long standing conservative complaint. >> even back further than that, back toed a tod ed a ded a toedy stevenson. and they wouldn't release dad lay stevenson's transcripts of his grades just so they could continue to hold imup as an intellectual al gore was an intellectual but w. was about an and i had yot, john care akaerry was intakelle.

so to finally get some comeuppance is satisfying to some people, to his base >> yaurk i think it is but the challenge when you're the president is you need to reach the middle you need to broaden your base. he has, what, 32 for% to 36% of country solidly in his camp. of those probably 20% will cheer just about anything he does. but if you want to pass legislation in the middle, if you want to get moderate republican female senators from maine for example, you need to broond that base, you need to reach i don't understand your core supporters in order to generation legislative momentum. and these tweets don't do that these tweets rally the base and alienate a lot of other people >> he's not going to let

mainstream media call the shots and dictate the narrative. they have had it that way -- w or reagan would just sort of smile and let it happen. i was with w at one point and i was talking with about the "new york times" and i was trying to a and he goes i don't read it, joe, i don't care, i don't brred it >> he is also not dictating the narrative by doing this. he is perpetuating a media fight narrative. >> but you're not talking about russia >> he's not talking about health care he's not talking about tax reform which is one of his big agenda items his health care bill is dying in the senate he needs voters to push it over the top. this is a president who very much needs an enemy, needs a political foil and why he was so successful on the campaign trail is because his base loved the idea of him fighting against hillary clinton, he was fighting against barack obama, he had enemies to

punch in the face rhetorically now he doesn't the total victorythat republicans had in the last election means that he is sort of king of the hill and there is no enemy in sight. the president very much wants an enemy and he's decided to make the media that enemy and the media is sort of a punching bag for him and he needs that fighting energy to fire him up every day. >> all right thanks, we'll do the markets eventually coming up -- i know i say eventually coming up, the minions ruling once again, huge office at the box office as despicable me 3 takes the top crown. we'll talk about the big business of hollywood next

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at pantheon. how are you feeling about the second half of the year given the steep rise in rates we saw in the past week we saw the ten year bund yield go up 20 basis points and in the united states a rise in the ten year treasure beery yield of about 15 basis points in just five days. >> it was a crazy week.y yield 5 basis points in just five days >> it was a crazy week i think the biggest hurdle is relationships seem out of whack. what i mean is you are seeing bonds and equities moving more in lock step than we're used to ever in the past we had long period would bonds went up, equities went up, and then they would both selloff 2.3%, we're still in a relatively low range we didn't have really any up side reaction in yields when the fed raised rates here a couple weeks ago. so i think a lot of the second half will depend as we head into

he weres lasting next week and what the ceos layout as the picture going forward. we had a great earnings season in the first quarter and with that, we also had ceos talking about a lot of growth. talking about growth in asia, growth in europe as well as in the u.s. we just haven't had that picture painted in a long time so as much political swirl et cetera as there is around the market, at the end of the day, it will come down to is the earnings picture good and can we continue to sustain these throughout the rest of the year. >> and yi an, on top of the hawkish or reiterated haushish instances of basically four of the five largest central banks around the world last week, we have a jobs report coming up, people will be looking very closely at how quick, how adamant, how continuous a tightening here in the united states would be. what is your view on what you are looking for this week on the economic front >> i think the federal report

will be strong and that is important because we've had three numbers that aren't so great. i reccthink 200 plus numb. we have three payroll reports in nine weeks when the market expects the fed to do nothing.e. we have three payroll reports in nine weeks when the market expects the fed to do nothing.r. we have three payroll reports in nine weeks when the market expects the fed to do nothing. i think we will see a sequence of good numbers which will then give the fed impetus to move in september. and if that happens and some of the fear that we've seen transmitting through the bond markets will intensify and my concern then for the stock market is even if the earnings mnumbers are good, we will still face a valuation risk >> but is it actually the labor market that will be the swing factor here for september? you hear a lot of focus now on inflation targets not being met either in the u.s. or in europe, yet you have the hawkish rhetoric is three good job reports enough >> i think provided we don't get

three inflationary reports like the last three, it probably will be enough. yellen has been clear that she views them as transitory so provided that doesn't continue and i don't think it will, then just steady inflation numbers and maybe unemployment heading down to 4.2, 4.1 way lower than the fed thinks is sustainable, i think that will be enough to move them and the markets will think what about december and march next year, as well and that is where the fear comes in for me. >> so as we enter the second half, are you concerned that perhaps equity investors haven't factored in the dwrupside risk o bond yields? steady move higher this bonds and here we are this morning at 2.3% >> well, i think one of the things that you also saw though

was people start to rotate a little out of technology and tech has had a little bit of a stumble the last couple weeks. my real fear is more for the nasdaq itself than the s&p 500 and if technology fails in the s&p 500, you have more financial stocks to take its place nasdaq, there really isn't any secretary door sector to turn to that is showing strength consistently. so i would be a bit more nervous in terms of the indices versus one another. to be honest, i think a little bit of a selloff even down 5%, whatever, would be very healthy for this market. but as we continue to see time after time, every selloff it's paid to come in and be a buyer reminds of me of fsootball. if a play work, you continue to run it so it has been successful in

order to do so, so i'm not quite as nervous in the shorter term for it and i said i think a little bits of of a selloff woue healthy over all >> all right, jj, ian, thank you. and now to media the minions did it again december icspicable me 3 takingr one spot at the box office the latest in the franchise opened to $75.4 million. editorial direct aor at box offe media joining us you create a new franchise and extend it and then hope that it in-its to build viewer ship, which is teis seems do. >> and it's worked for universal this time around the despicable me franchise has

turn very well for them. it we expected to be high 80s, but it's a bit of a weird weekend for holiday following on a tuesday. so i think that we will see a big monday and create a sort of five day weekend scenario by the time we get to wednesday morning. >> yeah, almost impossible to go apples to apples with any of these because there is always some mitigating factors. so you would say that this was about on par with expect taatios and very successful? >> yeah, about on par, maybe a little bit lower these are global franchises after all. and this series does well overof seas we could see it hit high 800, $900 million range globally. so a big win for universal

>> long term is the introduce a new, you know, a new part of the franchise on a holiday weekend, is that continuing to be as successful as it was five years ago or is the entire industry starting to change i look at the way tv is viewed now. will it always be this way, the release will come, everybody will go on a holiday weekend, or are you starting to see that start to deteriorate a little, that model >> well, holiday weekends are still prime real estate at the box office here in the u.s what we are seeing is that there is not a defend inside i is on the summer that there used to be it's definitely a year-round business you see big movies come to theaters all year. we had a very strong first quarter. and we'll see a very strong fourth quarter disney is coming out starting in

ne september with pixar and marvel with anticipated releases. so you are seeing the nondependence i is, the outlook that this is a year round business and not everything has to be crammed into these three summer months. >> how is overseas for despicable me? >> it's doing fairly well. it started to open about two weeks ago. it expanded this last weekend nearing nearly $200 million at this point probably won't reach the heights ofminions, but should be a strong performer >> hasn't hoped internationally everywhere >> it's a slower rollout there is a huge market coming up in china are we expect to do big business. >> all right

beg daniel loria, thanks for being with us. it is a weird weekend. a lot of people got the four day thing going, so not around >> lucky them. >> what happened to us, dan? we're not worthy or something? i mean i'm questioning, you know, myself worth >> i don't know that weert ones to ask coming up, the top stories and also a look at innovations in private innovation. for your heart...

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good morning and welcome back to "squawk box." equity futures sharply higher at this hour. 70 on the dow, are 77 now. up 8 on the s&p. the yield on the ten year sold off a little last week yield went higher. 2.31 today which is sort of still in that range that you can see. we are range bound for the last six months or so

we'll see what finally happens where we ever see the 3% >> stocks to watch today, sates says its model 3 will start rolling off the line on friday and will neck fr knock 20,000 in december caterpillar facing more questions. federal investigators believe the company failed to submit numerous export filings with the government there are questions about whether this was part of an effort by cat to avoid paying taxes. airbus is unveiling a leaker corporate structure and confirming a reorganization of commercial sales.leanker corpord confirming a reorganization of commercial sales.leane corporate structure and confirming a reorganization of commercial sales bae systems fining a $4.8 billion deal .british government will buy three new high tech warships total announcing a deal to invest $1 billion in an iranian gas field, the first by a

western country in iran in years. and danone is selling stonyfield and our next guest says the state of private aviation is in a wait and see mode as investors a wait tax reform on under president trump, but one company flying high, sky high, textron aviation up eefr 15% wheels up has partnered to provide private jets for its membership business. joining us is founder and ceo wheels up. wheels up saw 95% growth in active member be ships last year, has projected revenue of $300 million for 2017. and i've noticed branding is really key i love watching these senior guys especially with the majors, and it was the u.s. open

and i'm watching and kenny pair a perry, i played with him and stepped in his line once and i was done the rest of the round but there is the wheels up the biggest logo on his shirt. and i look in the bass kelts wh basket and it says wheels up everybody with wheels up is -- tom brady, i see serena. blanding is big for you. how do you do branding is impor. ricky fowler, russell wilson over the last 3 1/2 years, this is our 4th birthday there announcing the business on this show, i think in the last 3 1/2, 4 years we built a billion dollar brand now we are to build a build i don't know dollbillion dollar business behind it you are the company that you

keep and two things that are important is trust and that trust is backed then by safety so on when you have folks that have the money, tom, are kenny perry to fly whoever they want, and they choose us and everybody who you have just mentioned is a member, they pay for hours, we do get to bonus them a little bit. kenny did a great job. sorry you stepped in his line. >> sometimes if you're on the other side of the hole, if you walk by you're not thinking about it because if they putt through it, you're supposed to think about will of-i mean, you have to think about a lot. >> he probably made the putt anyway >> he did. and that backswing of his is -- so $300 million. at the end of '17? >> run rate of $300 million. >> and we put $600 million to work here. and the team has done an unbelievable job we have a new cfo in mary

gallagher. she's done a great job >> so you have some step you will announce here, too, for -- you've had some blue chip investors and that always helps with a company like yours in the early stages in the past we talk about -- >> tweef hwe have a new investoa kkr. and so nobody bigger in new york city for sure. >> and what are they funding >> they have joined our get stack. we've raised over $400 million in debt to get the airplanes from textron kkr just striked in $90 million and that is our next 17 aircraft which takes care of tranche number two which will be at 17 king airs by the time that is done >> so people know from marquee jet, that was you, which was -- that was a different -- >> different model >> what did you do at marquee?

>> we're trying to be more netflix today. think amazon prime think cost company co think cost company cstco so a million and a half can join wheels up and they have the wealth to do it. marquee, maybe a couple hundred thousand >> and the way that you can do that is shorter flights, you don't need a citation or -- >> 80% of private flights are less than two hours in length. so we have the ultimate king air 350 i which is the flying suv, that takes care of that flight at a destructive price point, $4295 per hour and we were selling eight 150e s seats at marquee $8,000 an hour. >> you could get three amilies >> easy. >> and going on a two hour flight, so almost getting down to first class >> yeah, less than ten but the sales group has done

unbelieleeelievable job will be. we're almost doubling our membership numbers running 25%, 30% ahead of plan right now. and the mar get is telling us that we actually made the right decision partners with textron and doing that king air. >> so the slow and easy 2% gdp growth could last a long time is much better for you than 4% that goes to a recessioning i mean recession, what could -- could you get derailed in a recession? >> i would say counterintuitive. i think people that own a share or whole airplane, we're the last stop before laguardia, before l.a.x so i think that you would have a lot of trade down into wheels up again in that -- >> so not necessarily -- >> no, i actually think that the exposure in a downturn, that comes in our favor >> treks tron gaextron gave your deal. >> we have an exclusive with textron's beachcraft unit on on the king air 350 i

so in the car business including elon, 30 people that make an suv. there is only one asset in our class in the world that is the king air 350 i four years as go we spent $1.4 billion to make an order with textron which at that point was just beefrp craft and we for the an exclusive on the airplane for north america and western europe and so wire in great position with the membership model, but with an asset that is unmooch unmatchable. >> last time that you were on, you saw a trump bump what have you seen since then? >> i think that for our asset sort of light model as it relates to the member, we've seen unbelievable grooet i thi growth pip i think people want to see the tax reform come this becausic businesses and cfos around the world are looking for what is the deal and when the deal gets set down, i think that

you will see a lot more asset purchases whole aircraft at the oem level. so i think there is a lot of wait and see but i think as far as a membership model you think about amazon prime, costco, that is really who we are going after which is a wide base that doesn't have to make a big commitment which i think is perfect for today's setup. >> so how much is kkr and what do you get >> kkr is doing roughly $90 million of forward debt. it gets up 17 airplanes. so gives us real visibility into what our next year, year and a half look like and then of course with textron, we're working with them, we take in citation xl, xls and we've talked on the show before about the citation 10. fastest and highest. and i think by year end, we'll see those tens hit the ramp. >> that's when andrew will be interested so you don't have any citation tens now >> we're targeting december. >> so i'll let him know that you'll be ready to go fast and

high that will be within a year or so >> within a year and you could take his billions money. you could take his billions money and just slide it. >> i'm not in this league obviously. but -- actually i might be some day. >> one day >> all right thank you. good to -- actually, i probably need to -- >> full disclosure and i have to thank the gamma group that runs the airplane and gamma pilots have been unbelievable >> all right kenny, thank you appreciate it. i'm working on andrew. >> you're just one deal away >> $17,000 to join >> 17,500. >> i fly economy everywhere i go i don't care how far it is all right. coming up, life in the fast

lane elon mufrk sask says the first should roll off the production line this week details next (baby crying) (slow jazz music) ♪ fly me to the moon ♪ and let me play (bell ring)

welcome back to "squawk box. among the top stocks to watch is tesla. phil la pebeau joining us with detail on the model 3. >> end of july, july 28th, a friday night, that is when we will see the first deliveries about 30 customers who have ordered a model 3 will receive them then. and late last night, elon musk as he promised he would, he finally gave us some details about the model 3 rollout. it passed its final tests with regulators two weeks ahead of schedule first models will be produced later this week. likely on friday and then production will ramp up musk sending out a tweet last night saying looks like we can reach 20,000 model 3 cars per month in december. remember, they had said that they were going to hit 500 per week by the end of this year, so 20,000 this december means that they will hit that goal. by the way, when you take a look at annual deliveries, i've had a few people who have asked me

what do they do for the seconding quarter, have they announced it no, they have not announced it yet. we would expect it any day now that we will hear what their 2 q deliveries were. they are expected to come in roughly 24,500 vehicles. as you take a look at shares, keep in mind this begins a very critical second half march for these guys if you will of key milestones that they will need to hit we have are obviously the model 3, the question of whether or not they announce a plant in china, the solar shingles, installations of the first ones. so again very very busy second half of the year starts this week with the first model 3 coming off the assembly line >> you know, the model 1 and model x both had production glitches in terms of delayi ini production there because he is releasing this news and the big milestone for

production of the three end of july, does this take off the table any potential delays do you think? >> i think they are pretty confident that they will be able to on hit these targets that they have put out there. look, if he is delayed a week or two, i don't think that people will totally freak out, but keep in mind, the ramp up in production for the model three is far aggressive than what we saw with the model on s and the model x. so if there are delays, you will see some type of a pull back i would imagine with the stocks. but it's not unheard of when you have a new vehicle not just tesla, a lot of automakers have this, where you have it delayed a couple weeks sometimes a month or two, and usually doesn't happen, but it can happen. >> all right phil, thank you. phil lebeau in chicago for us. coming up, july 4th means big business for the fireworks industry pl we'll talk to a

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welcome back to "squawk box. tomorrow millions of americans will look skyward for the fourth of july fireworks.

but behind the oohs and aahs are some serious technology experti expertise. joining us is phil grucci from america's first family of fireworks. >> thank you very much for having me. >> you are the fifth generation of the grucci fireworks family stretching back to the 19th century, the business. i wonder, so you're in boston. you're going to be doing the big show boston harbor how many big shows do you have obviously this has got to be the intense season for you >> yes, i'm here in boston, but we have 80 other scenes, 80 other locations around the country, as far west as honolulu, hawaii, pearl harbor, and as far down south as miami, florida. so we're spread out quite throughout the entire country. >> and, you know, we talked about the technology involved there. is this a kind of -- the chemistry of pyrotechnic that's

what it's always been. where does the technology come in as you develop these new shows year after year. >> well the technology has been mostly in the chemistry side also in the electronic and engineering side particularly with the advent of computer and the digital age we've experienced everything from my grandfather lighting the fireworkses with a smoldering burlap sack to electronics pushing a button, to the whole show being fired with a computer and now we're actually building computer chips into certain fireworks that we have to control the height, and to create these magnificent scenes inside >> yeah, it seems to me the kind of intricate choreography of it, right, and matching it up with musical score and things like that has to be, i guess, where the complexity comes in these days >> well it's the choreography for sure but it's also, if you see some of the images on the screen, we're covering vast bases. so we're on a 2700 foot building in dubai, which is the world's

tallest building, there's 20,000 devices all circuited together so it does that to music but more importantly we have control of when that fires because the computer system tell us when to do that. >> and we talked about, you know, mentioned the money involved here. i mean has that escalated a lot over the years what does one of these big city shows cost these days? >> you can, from a municipal program, you could range anywhere between $50,000 to $100,000 and some of the larger productions into the millions. one of our largest productions was a little over $10 million for 6 1/2 minutes in duration. but it's all -- it's all relative to the expenses, and it's relative to the amount of labor and manpower and everything else that goes into the performance. one of our shows we served 15,000 lunches to the team because the team was so big and they were on location. >> you know, phil, we think of fireworks we think of the fourth of july here in the united states but obviously your business is

international. where are the areas of growth? and what sorts of shows do you do around the world? >> right in the past, fireworks were pretty much a peak season during the fourth of july primarily also during the summer now we have two peaks. a peak in the fourth of july, and then the peak for new year's eve, actually a bigger peak for us here. and we span the globe. everybody celebrates december 31st for new year's eve. so we see those two, and that's pretty much doubled our business in the last ten years. >> and where is the growth coming from? other countries or regions of the world spending the most on fireworks? >> i'm sorry, yes, that's right. the growth is primarily coming for us from asia and from the middle east. dubai, qatar abu dhabi. now the emirates we're working with performing a large production so we're seeing that in the middle east, and they enjoy the fireworks, they enjoy their celebrations, they're seeing a lot of grand openings

happening, so we see the growth for us in those areas. >> and no more -- no more lighting them with a burning burlap sack. >> no more lighting with a burlap but we're still manufacturing and may point out that we are manufacturing a lot more parts domestically now. we have two factories in virginia and in new york that we're finding a need to bring that manufacturing back into the united states. and on a show like boston, for example, we're about 15% of that now is being manufactured in new york state >> interesting so made in america show up in boston >> yes >> thank you very much, phil thanks again >> thank you coming up, this morning's top stories and a roundup of the global markets on the shortest trading day of the second half of the year. futures right now, looking to open higher across the board the dow jones futures up now about 81 at the open take a look at the 10-year note. that was the big story last week and this morning, it is showing a little high her 2.314%

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good morning shortest trading day of the second half of 2017 and so far sparks are flying. stocks pointing to a higher open on wall street president trump on the world stage, a call with china and a looming face-to-face meeting with putin we'll talk about what's at stake. plus business by the barrel and we're not talking about oil. we'll talk to the co-founder of one of new york's biggest breweries about what's on tap for america's birthday raise a glass, it's monday, july 3rd. and the second hour of "squawk box" begins right now. ♪

live from the beating heart of business, new york city, this is "squawk box." good morning and welcome back to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square i'm joe kernen along with melissa lee and mike santoli becky and andrew are off today let's get a check on the futures. up nearly 90 on the dow. getting a little bit better as the morning has progressed the s&p is indicated up 8.3, and the nasdaq up about 16 oil prices are a little bit above 45 this morning. 46 or so on wti. 46.12. and the ten year is above 2.30 after yields spiked a little bit. you know, it's all relative. at 2.3%. but that is higher than the past six kweex or so.

among the other stories we're following today the first tesla model 3 will roll off the production line this friday, and the first delivery to customers will take place on july 28th that's according to weekend tweets from tesla ceo elon musk who says the $35,000 car has received regulatory approval for production two weeks earlier than expected. dropbox reportedly has its sights set on an initial public offering later this year reuters reports that the data storage and sharing services are seeking to hire underwriters for an ipo they'll start interviewing investment bankers in a couple of weeks and the nation's automakers will report their june u.s. sales figures throughout the morning today. ford, general motors, and fiat chrysler are all expected to report lower sales than they did in the june third in 2016. toyota, though, is expected to post a small increase. stocks to watch this morning. glaxosmithkline signed a $43 million deal with privately held

compa baron says bristol-myers squibb is undervalued because of setbacks because of the immune oncology drug. the paper says investors appear to be ignoring the lucrative market >> and casino operators in macau such as wynn resorts could see a boost today after gaining revenue rose 25% in june compared to a year ago that marked the 11th straight monthly increase >> all right now to politics this is pretty interesting i think this is mike allen's scoop from axios steve bannon, steve ban be reportedly pushing a tax -- hard for me -- a tax hike, a tax hike on the wealthiest americans to pay for some steep work -- tax cuts on the middle and the working class. and this is classic bannon, populist, axios is reporting the president's adviser has told colleagues that he wants the top

income tax bracket to, in his words, have a four, a four handle in front of it the current top tax bracket is 39.6. for americans who earn more than $418,000 annually. bannon is -- >> presumably also to fund a steep corporate tax cut. >> maybe -- >> in i think that is part of the deal >> that's all in the article from axios mnuchin and cohn are both, they don't want to do anything small. because cohn is gone it's not going to happen, he's out of there interested in transformative -- yeah >> all right well, four former barclays executives are in court in london today facing charges connected to 2008 emergency fund-raising in qatar. barclays is also a defendant in the case this is the first time criminal charges have been brought against a bank and its

leadership team in connection to actions taken during the financial crisis >> while it's a shortened holiday trading week but there's plenty of economic data. the markets will close at 1:00 p.m. eastern today, and on wednesday we get factory orders and minutes from last month's fed meeting. we'll also get the paychex small business report. on thursday, june adp report, the ism services index and all topped off on friday with the big june jobs report president trump just tweeting, and i actually saw this, he says that he will, in his words, will be speaking with germany and france this morning, and i expect that this will be followed up with some background on what -- he has a pinned tweet that goes back eleven hours. so i got a little bit confused this just happened less than two minutes ago. so, and i'm going to make sure we bring you any additionals it is jobs week. joining us now for the countdown to the payrolls release former

acting u.s. labor secretary seth harris, and annie mcclose ski. she served as an economic adviser to governor jeb bush and rick pecky's 2016 presidential campaign, former policy director at aei, and used to be we'd look for numbers based on -- based on a work force that we thought had some room left to go now everything, seth, that we talk about is whether businesses is actually find the type of individual they need and that's, you know, may not be a slowing job market, might just be hard to find the right people is that where we are we pass that inflection point? >> you know, i don't think so just yet, joe. i -- i'm pretty bearish on job growth and still think there's a lot of slack in the economy. lots of part-time workers out there who want to work full-time. still some people at the outer fringes of the labor market who want to come in. you know, to me the big number's always wages real wages, but, you know, if you take the wage increases the

work verse been seeing and deduct inflation, it's about 0.6% over the last year. that's not the sign of a market where employers are bidding up the services of labor. so, i'm a lot more bearish on the labor market than a lot of folks are. and i think that we're seeing a slowing in job growth. so i want to see wage pressure i don't expect we're going to see it soon. >> so that -- if you can't find highly trained people for the jobs you need, therefore you don't pay more, that couldn't explain it, seth, that it's just tough to find people that are trand in what you need them to do, engineer, whatever it is that -- where the good jobs are? >> well, employers bid for them, right? they compete for them. and they drive up wages. >> and that's not happening? >> we're not seeing that throughout the economy there are some spot shortages. welders are in demand right now in the economy but in most parts of the economy, even in skilled jobs we're just not seeing the kind of dramatic, real wage growth sustained real wage growth we need to see. >> so i'll get back to you on

what, you know, everybody's got a different take on the participation rate it's like a rorschach. i don't know abby, do you agree with what seth is positing here? >> yeah, i do. i largely agree with seth. you know the big number from last month's job report is that the unemployment rate was the lowest in 16 years and it's very possible unemployment rate heads down even lower in this jobs report but the two big factors to keep an eye on are wage growth, like seth mentioned, and workforce because it's really difficult to say we have a healthy labor market if workers aren't getting a raise and if more and more americans are deciding to leave the workforce. that's not necessarily related to skills, it's also related to the benefits to work and tax and benefits program this calls for smart policy intervention from washington to change incentives around work not only for high income earners but also for low skilled workers to be able to get a boost when they enter the labor market. >> abby, quite a bit of

controversy about what you can actually -- if you -- accrue all -- add up all the benefits you can have, whether it's the snap program, whether it's a disability, whether it's obamacare, if you don't work, what does that add up to as a disincentive i've heard $40,000, $50,000. but i heard a lot of people say there's no way you can have benefits that are that high as a disincentive what is it actually? >> yes, we often talk about the marginal tax rate for highest income earners but for low income households the marginal tax rate, the effective marginal tax rate can reach 100% so every dollar earned is a dollar in lost benefits and this is because of exactly what you said it's benefits programs and food stamps and medicaid, obamacare, and others, all lay on top of each other which creates a massive disincentive to work and has essentially captured a significant number of workers in this kind of welfare model and with little rational incentive to enter the workforce that can be countered

specifically with a wage subsidy for low wage workers it's an expansion of the eicc which i think aside from broader tax reform would be one of the single biggest things that the trump administration could do to boost workforce presentation rates and wages. >> seth, you know, i've heard that it's baby boomers, blah, blah, blah, with the participation rate but then isn't there a big number in the sweet spot for employment i don't know whether you call it 40 to 50 or whatever, don't they make up a pretty big part of the participation rate people that are out of the workforce? >> yeah. you're exactly right so we're seeing -- we're seeing, you know, obviously the decline in labor force because of the retirees at the older end of the spectrum, and the decline because of people going through additional schooling, college and graduate schooling at the lower edge of the spectrum but the workers between mid 20s and mid 50s that number is drop toog and i think that's what's most concerning to economists to say how can we get those people in the prime of their working

lives back into the labor market >> seth you were going to speak up to this issue, as well? >> no, i degree with abby that we're seeing a really troubling decline in the participation of people between the ages of 25 and 54 there's a particular problem with respect to women. we have seen labor force participation of women rising fairly significantly over the course of a couple of decades, and now that also has begun to trail off. a big part of that is because the united states is unique among western liberal democracies in not providing supports to the principle caregivers and families. and that's usually women still in our society, to go in to the labor market and stay in the labor market we don't provide support for child care we don't provide paid family and medical leave. we're unique in the western world in failing to support our families in that way and so we're seeing a trail-off of labor force participation among these pram age workers about half is, you know, folks in the baby boom who are

retiring now by the way, retiring with not enough money but, they are also the labor force participation rate also is a problem among those prime age workers. that's a really troubling sign but we saw wages go up and supports for families go up, that number would shift. >> okay. seth, abby, thank you. for dog joining us today we'll see you both again i don't know what that -- i don't know why the stock market keeps hitting new highs. gdp, job growth. i mean -- >> low and slow. >> it's like goldilocks. >> for awhile now. high liquidity, credit markets are great. >> i wonder if there's a disconnect when you hear it's not a lack of qualified workers it is actually a slowing job market anyway, still ahead, may be a shortened trading week but it will be busy for the markets we're going to talk strategy right after the break. plus a feud between two music titans hits the music streaming business but the rappers beef might be

good news for apple music and spotify users. we'll tell you why next. and later in "squawk," booze news it's the golden age for beer lovers but craft brewers, we've been reporting on this before, may be feeling squeezed. the cofounder of bronx brewry tells us how he's handling competition and what's on tap for july fourth at 7:50 eastern. you're watching "squawk box" on cnbc you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if

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welcome back to "squawk box. futures right now, the dow is up about 90 a quick check this morning up 83 now. 83, the s&p indicated up 8 and the nasdaq indicated up 16 today marks the first trading day of the second half of the year. here's where the major averages stand so far in 2017 the dow is up 8% year-to-date. s&p 500 also up just about the same amount. nasdaq obviously the clear outperformer up by 14% in the first half as for seconder winners, tech is the best performer, rising more than 16% this year that's followed by health care, up 15% and consumer discretionary up 10%. that, by the way, is helped a lot by amazon, netflix and a lot of the online retailers, as well the losing sectors, falling nearly 14%, telecom off about 13% year-to-date and real estate is up but only a little over

4.5% >> let's now get a check on currencies and the oil market. joining us head of emerging markets at brown brothers harriman guys, good to see you. wynn i'll start off with you as we enter the second half of the year it's an interesting setup. we've got eem up about 13%, at the same time we've got dollar weakness, and we've got hawkish central bank activity around the world. so what's your outlook here? >> well, so much has changed over the last six months remember we start off in january, reflation trade was very strong, fiscal stimulus, higher u.s. interest rates since then we've had a tailoff in u.s. economic outlook we've had what the fed sees as a transforeq1 slowdown that's transitory carried over into q2. that kept u.s. rates down, kept the dollar flat. i think we're trying to figure out where is the u.s. economy going. what's the fed doing we're remain overall optimistic

but we do think the fed will continue tightening. we kind of downplaying what the other hawkish central bank of course recognizing that we need stimulus but that's a long way between adding stimulus and actually taking away stimulus. and i think the market's sort of overreact to this point. but we're still overall positive on the dollar. >> so you think the dollar will go higher no matter what rates do >> yes, well i think that the fed is on track to hike in december >> okay. >> they'll probably start shrinking balance sheet in september. these are all, you know the bank of england, ecb, bank of canada, talking about less stimulus but the fed actually removing stimulus the only major central bank that's doing so. that should underpin the dollar against the majors markets is more problematic. i think a lot of the multiyear rally, finding global liquidity, fed is starting to take it away already. the other central banks are starting to, as well perhaps in 2018. i think that's a very anythingive for emerging

markets. that's something to think about for a couple quarters. >> jacques, what's your outlook for oil specifically you know the dollar and the weakness in the dollar certainly hasn't helped. so even if the dollar's positive, as win said in the back half of the year, i don't know if that's going to do anything either. >> well, given the holiday tomorrow, i think it's important to focus on one of the key themes of the fourth of july, and that's consumption i'm not talking about joey chestnut eating 70 hot dogs. i'm talking about you and i driving our cars and using gasoline the world uses an extra 2 million barrels her day of oil in the second half of the year than the first half of the year, so what that means is this is opec's big chance. as long as they can keep oil supplies relatively constant, this higher demand is going to drive down inventories and that's been the key roadblock for oil prices >> isn't that the big question, though i mean in terms of opec kind of taking that opportunity to try and show some discipline there meanwhile, you know, it doesn't seem as if north american production has been dissuaded that much as crude has come down to the bottom end of this recent

range? >> yeah, that's a great point. and i think what you need to look at is that opec has done a good job by itself, but there's been other factors and the other factors have been weak demand in the first half of the year rising u.s. supply rising supply in libya and nigeria. but again, you get this extra bonus in the second half of the year where you get this big shootup of demand. and it's just seasonal it happens every year. so that's why as long as they can keep it relatively flat on supply you should see inventories go down and that's positive for oil prices. >> jacques do you think we've seen the lows for 2017 that's what it sounds like you're saying. >> yes i do think you're going to see an uptick over the course of the back half of the year but then you have to remember the same problem is going to occur again in the first half of 2018, is that demand goes down and then more supply will hit the market as the u.s. supply picks up so this is a limited window for opec to take out inventories down >> and, just to follow what

you're saying before about the fact that you don't necessarily think that the non-u.s. central banks are really going to get to that tightening position any time soon, are we in a decent spot, though, considering that at the beginning of the year the big concern was divergence between what the fed was going to do on the one hand in the tightening mode and all these other banks pulling in the other direction, that was maybe going to make the dollar too strong and hamstripg the fed and what it wants to do now, are the banks kind of giving cover to what the fed wants to do? >> yes, absolutely i think the european central bankers may find problematic -- 10% to 15% >> they seemed to last week when they tried to walk back some of these comments >> that's right. >> the day after didn't really work >> the market doesn't really believe the fed right now. so right now the odds are something like 30%, 40% of a rate hike by year end. that's very strong where we are in the economic cycle. so at some point, hopefully the u.s. economic numbers will turn. friday's jobs report is very

important. maybe we'll see some wage growth and market will start to believe in the fed but until we see that, it's very, very choppy. i think it will be difficult for the dollar to get much traction, to get more dlarty on the u.s. and the fed. >> which emerging markets specifically, win, will see the greatest downside with the higher dollar? >> i'm very nervous about the turkish lira, south african rand these are companies that have a big commodity boom that are pretty much over now we have political risk as well they've been riding high on this wage liquidity, i think when that comes back, gets out, they're the ones that are suffering the most >> is that same wave what u.s. high yield credit is benefiting from, too? i mean it seems as if that's the one thing telling you not to worry too much about stress in the system >> that's the one thing that i go back, like this whole qe it's really distorted the credit spectrum emerging markets all

the spread products really just been yields have been pushed down and going out and reach for yields again, it's an inflection point walking out of this zero or near zero rates in developed world, i think it's really quite vulnerable >> win, thank you. jacques, our thanks to you, as well >> jacques, you know the name of the guy that eats the hot dogs are you like a big fan i mean he has like season tickets and stuff? do you go to that? the hot dog eating thing competition thing, do you? >> you have to watch it on tv with your kids it's -- >> it's famous, joe, you don't watch it >> i didn't know the guy's name. >> kobayashi >> this -- >> i just wonder what happens like over the next 24 hours. that's the thing that gets me about the whole -- and that -- >> you mean after the hot dogs are consumed >> yes >> right, right, right >> yes that's the thing that doesn't work for me. that we're back to that again. i don't know i think it's insane. can you imagine doing that >> it doesn't feel like it would

be the thrill of victory afterwards >> might be well put >> all right thank you. president trump i told you he was going to tweet again he did tweet again and his words here it is spoke yesterday with the king of saudi arabia about peace in middle east. interesting things are happening. we'll keep you updated watching the twitter feed. kanye west, meanwhile, reportedly completing with jay-z's streaming platform, known as title tmz says that the kanye quote -- that kanye, in his words, complained the company owes him money. more than $3 million also suggested he never received his promised bonus after his life of pablo album resulted in 1.5 million new subscribers for the streaming service and according to reports the rapper is done with exclusive streaming deals. west will plan to make new music available on all media platforms so it can reach the most people. and game of thrones, final season, may feature the series

longest episodes ever. the hbo drama will conclude after its eighth season in 2018. i'm a couple seasons behind. i got lost in the plot only six episodes are expected for that season, but each episode could be the length of a feature film the episodes is currently about an hour long >> well spacex calling off a satellite launch from the nasa kennedy space center in florida just ten seconds before liftoff. there was a technical issue with the falcon 9 rocket. the next opportunity for launch is tonight and separately the company's reused dragon supply ship will re-enter the earth's atmosphere this morning traveling back to the international space station. spacecraft has been gone for a month and will return more than 4,000 pounds of cargo and research material for nasa >> stocks to watch this morning, danone agreeing to sell stonyfield for $875 million. the sale is part of an agreement reached with the doj in connection with danone's recent acquisition of whitewave

vivendi acquiring majority stake in havas for about $3 billion. the company says it plans to follow up with a tender offer for the remaining shares >> bet you it's longer than 24 hours. >> what? oh, you mean the aftermath -- i would think you would feel it for days >> yeah. feel it. dealing with this and everything else i mean, you need to train for that >> you do. did you read -- there's an article in the "journal" about the guys training for it >> it seems not like a good thing to -- >> so the profile of the guy who is -- in this year's hot dog eating contest, he trains, he goes to the gym five or six days a week, which is great, and then he goes to buffets a couple times a week to train. like all you can eat line. >> stretch his stomach >> yeah, exactly serious business >> again, young people probably better at that sport >> probably.

>> slow down anyway >> coming up, busy week for president trump. he'll take off for the g20 summit in germany. among the world leaders the president will meet with vladimir putin former deputy assistant secretary of defense forward russia evelyn farkas joins us next first the check on the futures we're looking to start the second half of the year on a high note. dow looking to add about 87 at the open stay tuned you're watching "squawk box" on cnbc

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now that's a rare sight. that's a times square subway stop where there are multiple lines coming in. nobody there just no one there. all right. we're here >> we're here. >> good morning, welcome back to "squawk box" here on cnbc. we're live at the nasdaq marketsite in times square among the stories front and center investors are showing increased enthusiasm for municipal debt according to new peterson thompson reuters nearly $88 billion in new public bonds have been snapped up so far this year that's up 8% from a year ago financial information providing bank rate is being acqui acquired the buyer is a digital marketing company called red ventures.

it will pay $14 a share in cash for bank rate. that's a total of about $1.4 billion. you see the shares popping about 2% on that news. despicable me 3 topped the weekend box office universal's latest renn try in that franchise drew $75.4 million in north american ticket sales. universal is owned by comcast the parent of nbc universal and cnbc president trump speaking by phone with the leaders of china and japan. china state media is reporting chinese president xi jinping has pointed to some negative factors that have cropped up in u.s. china relations since he first met trump three months ago beijing has expressed displeasure with u.s. arm sales to taiwan. u.s. sanctions have been dealing with north korea and the presence of a u.s. destroyer near disputed islands in the south china sea. president trump tweeting that he will be speaking with germany and france this morning. he will also be meeting with world leaders at the g20 summit this week. joining us now former deputy

assistant secretary of defense for russia, ukraine, eurasia, evelyn farkas. madam secretary, it's good to see you. >> thank you, thank you. >> i was talking about, you know, after the most recent developments in north korea, just talking about that i don't even want to -- i don't even want to leave new york because i'm afraid i'll get kidnapped and taken to north korea -- >> don't go to north korea i've been. in 2008. >> you've been >> yes but i would only go if you're part of an official delegation that's been accepted by their government >> i'm not going anywhere -- that's what i said i'm afraid to go to south korea because i'll get kidnapped and taken -- it's so frightening when you were there, you must have had some trepidation, i would think? i mean because all bets are off when you walk into that place, aren't they? >> interestingly at the time that i went it was 2008 and it was the bush administration in office and official from the department of defense, i'm not joking, tried to talk me out of going. and reminded me of when -- of how the north koreans, at the time it was kim jong-il who was the president, had taken a sushi

chef and a south korean actress hostage. and i just looked at him and said, i'm neither one of those, i think i'm okay >> maybe >> yeah. >> but anyway, a lot has happened since 2008. but i don't know if we're in any different position other than they now seem to have capabilities that are actually frightening. i guess people disagree. is the latest that they could hit -- they could hit the mainland at this point they have the capability to hit -- to have the missile linked to a nuclear device at this point >> well, they're not there yet so, in terms of whether they can hit the mainland, it looks like they're making strides whether they can miniaturize nuclear weapons, and put it on that missile and hit the united states, they're not there yet. but, the experts estimate it can happen within president trump's term, so this four-year term which is regrettable, of course. so i think what needs to be done is we need to go back to 1994, really when we had the agreed framework

which was basically freezing north korea's nuclear program. the north koreans will not like this so to get there, i think president trump is doing the right thing in terms of getting the chinese on board with a harsher sanctions regime and trying to put pressure on north korea. the only way they'll go to the negotiating table is if we put pressure on them >> just -- what always comes into my mind is that if you've got a leader that doesn't care what economic sanctions do his people, i don't know how you influence him. how do you hurt him? what does he -- >> well, yes, exactly. you need to hurt the elites around him and we do that in the russia context you need to make sure that -- i mean, there is a point where he would get worried if his people were starving again, for example, i would hope. certainly the fuel that china provides i mean over 90% of north korea's fuel is provided by china. and most of all their other trade is with china. so the chinese have a lot of leverage, and i think certainly the north korean leader does

have a threshold, you know, he can't freeze and starve his people, certainly not indefinitely, and certainly there's the elites in pyongyang, he can't -- >> the relationship they have with the united states, or the relationship with north korea? i mean if push came to shove, who would they side with, do you think? >> well, that's a hard question. i mean, i don't think they side with either the united states or north korea. but frankly speaking, their objectives are different from ours china wants north korea to continue to be a buffer state between it and south korea, where we have, as you know, almost 30,000 u.s. troops. they don't want a nuclear south korea, either. so that's where maybe we would get them to apply pressure because they don't want to encourage the south to develop their own nuclear deterrent. but china really wants north korea to continue to exist, they don't want to collapse in a huge mess because that would result

in a refugee flow to china and likely chinese deployment of troops to their border, if not over the border, which would be a problem. so they're more interested in stability than we are in the sense that our number one objective is removing the nuclear threat from north korea. we don't want instability either, but our number one objective is not maintaining stability, which is china's. china will turn a blind eye for the moment to the nuclear program. >> and, i guess that's moot whether they can hit us, because we have allies that we don't want to throw under the bus either, and they're right there. >> correct, correct. >> so there's no answer. >> they can hit japan, south korea. they can hit them with conventional weapons that's the other reason why i think the president's rhetoric, i'm not sure whether it's helpful, and it may -- i don't want to diminish the threat posed by the nuclear weapons, but the conventional threat is already real it'salready every day the sout koreans and i mentioned our troops there, and also now in

japan, are under direct threat from north korean conventional attacks. so i think, you know, we need to kind of pause the rhetoric, but keep up the pressure economically >> should we compared to north korea should we worry about russia, and sanctions, and you know, i know they hacked our election or tried to influence -- >> yes so i -- >> if i only had so much time, i don't know >> i don't like making comparisons. i don't like ranking but if i'm forced to, and you did ask the question, i'm put russia first >> really? >> yes, because russia interfered in our elections. i mean russia launched a major information operation against our elections. they did it through fake news and propaganda, through getting into 38 states' voter registration data into their computers. we don't know what they did. in one case they think it was michigan they started to manipulate the data. we don't believe it had any outcome, you know, on the actual voter tally. but it doesn't matter because

they also, as you know -- as the most publicized thing was the hack of the information from the dnc and from the clinton campaign which was then released through wikileaks. so their operation against us, that's really an assault on our democracy. and, you know, i know director comey is always saying they're going to come back they never left. and they have all that information. they have that ability to get in to our system, and i worry very much about the russians, because they see us as an adversary, and they are doing things to us directly in our homeland in a way that thankfully the north koreans are not. >> right they do it everywhere, i guess, too. >> yes >> usually at a different -- it's not as bad. i agree with that. but we, you know, we have interests in foreign elections, too. we just don't -- >> well we don't manipulate directly we may provide support to democrats who are alternatives to opposition. but i think that's different that's saying okay let's give the people a choice. that's not saying let's go in there and try to tip the scale hard-core for one candidate.

>> can you solve syria in twelve seconds? probably not >> i would say that that's a really important topic and probably the best opportunity for the united states and russia to cooperate there are two areas where we need to have conversations with the russians right now one is on our overall strategic relationship so the nuclear balance as well as the conventional balance in order to basically provide a lessening of this risk of miscalculation. so you talk nuclear, conventional arms control, and then we need to talk about syria. and i think there it's not a vital u.s. interest the exact outcome of syria we want stability there. that's really important to us. but, how assad goes, that's all negotiable and that's what we need to negotiate with the russians. >> okay. madam secretary, thank you >> thank you very much >> we'll see you later, thanks >> take care coming up, tech may be keeping wall street on edge the past few weeks but the sector is a top performer rising more than 16% year-to-date

we'll talk to mark mahaney about his top tech picks after the break.

welcome back to "squawk box. president trump just tweeting again. he's been very active this morning. he tweets that we'll be speaking with italy this morning. according to his tweets so far this morning he will also be talking to germany and france. meantime let's get a check on the markets, how we're setting up for the first day of the third quarter. first day of the second half of the year the dow looking at 89 points at the open s&p looking higher by 8.5%, nasdaq up 18 points. as for the price of oil, last week's big news is that rig counts went down by two hole rigs wti at $46.18 a barrel brent crude at $48.86. the 10-year yield we're watching very closely it started one week ago at about 2.13%. we're now at 2.313% on the 10-year yield. >> the first half is in the books, the tech sector up nearly 17% so far this year

joining us now to talk about the group mark mahaney lead analyst at rbc capital markets >> good morning. >> i have a feeling you may look at this and say yeah, tech stocks has wobbled, faang has backed off a little bit. it may be that the fundamentals of these companies haven't really changed but will the fundamentals 16% better now than they were six months ago i guess my point is is it just kind of moving along with flows or are there good corporate stories to talk about? >> i think there are generally good corporate stoshries but of course not across all of tech i really focus on a small number of names, those faang names and a few other names in that computer internet sector that i think have had extraordinarily consistent growth generating a lot of cash and valuations even though the facebooks and googles of the world have had these dramatic surges in stock prices they're still only trading at around 22, 23 times earnings and if you adjust for cash

levels those are as low as 18 to 20 times earnings and for assets like that we think valuation is still reasonable there aren't the big upside stories in terms of none of these are really materially off their highs. materially low in terms of price points so they're not aggressivebuys in this group with the possible exception of facebook. >> yeah, it's interesting. i mean you certainly look at these valuations, and we're talking about very profitable businesses, and you know, lots of cash generation and all the rest of it but the question has always been at any moment in time what the market is willing to pay for that growth that they're going to see and i look back, i think google, since its ipo has compounded its stock at about 26% annually. which of course is amazing it's probably one of the best large cap stocks of its generation but it did that in the first several months of this year. so i guess the bigger question, tactically, is do you think that these stocks back off any more before they get another look >> you know, it's hard to know you mention google, the one new fundamental wrinkle that we have to focus on here is government regulation and you know, google's right in

the middle of all this now they've got a fine from the eu they've got 90 days now and the clock is ticking in order to come up with ways to appease the regulators in europe and by the way, it's pretty clear from the european commission's statements that we're going to see likelihood is a probability, distinct possibility we're going to see more fines and more restrictions in other parts of google so there's a fundamental overhang on google that doesn't exist for any of the other stocks maybe it will one day. we don't think it will near term that's really the fundamental wrinkle to work through. on amazon there's another story which is the closing of the whole foods deal and the execution risk associated with that so for us, the cleanest story, you know, near-term, next three to six months really is facebook >> back to regulatory i did want to ask you about facebook, mark, because there was a report in bloomberg saying that germany's federal cartel office is investigating facebook, and to see whether or not it basically bullied users into signing off on the fine print which enabled facebook to better argue it their ads which is arguably good for their business

how much of an overhang is this? does it seem like when you piece together apple, with its fine, you piece together, alphabet with its fine and now this investigation possibly into facebook, does big cap tech have a target on their back >> well, melissa, you make a good point look, there's also government risk now with facebook and they've got 2 billion users, that means they've got users in just about every market in the world, really, except for china. and so there's a lot of governments that could look at regulating it so it's a problem with these really large massive platforms. there's always two risks increasingly government, and there's competitive risk we're not talking about the losers in the group. we've seen companies that haven't executed well like the yahoos and the ebays lose market cap overtime and ceded it to these kind of names. so this risk is going to be rising it's a very hard thing to handicap we think it's manageable for facebook today it's clearly a bigger investment risk for google today. >> and when it comes to facebook, mark, i mean we just

sort of, in that mode of, well, look, the platform is what it is it's gaining market share in digital ads. of course along with google it's dominating any of the growth in advertising as a whole or are we going to get to a point with facebook where investors start to ask, what's the next thing what's the next catalyst how am i going to basically see my way clear to keep paying up for this stock for years to come >> yeah, so let me swing at that pitch. look, with facebook you've got a stock that trades at 20 times earnings ex-cash but what you have is 30% to 40% earnings growth. so it's the most growth adjusted valuation, it's the most attractive stock on the growth adjusted valuation basis you've got very good momentum based on a lot of the advertiser surveys that we do in its core facebook business. you've got this instagram asset that's probably a quarter or third of monetization of facebook and you've still got this option play with facebook it's got 2 billion user assets, facebook messenger and whatsapp that have zero monetization

related with them. we think they'll figure those out over time. that's not in numbers or the stock. that's why we think there's at least 20% up on facebook shares in six to nine nopts >> are all those bullish points on facebook implicitly bearish notes for the likes of snap, for the like of twitter? or are those assets kind of so much smaller that maybe they at some point have strat onlyic value? >> make you're asking the right question again there's two make irrisks here, government and competition. there's no question that twitter and snapchat, although these are tiny relative to the ad revenue that google and facebook generates, there's no question of being negative impacted by what facebook does so both of them have to race on innovation, can they come up with newer and newer product features to entice more users. twitter hasn't shown the ability to do that over the last three to four years. doesn't mean it can't do it in the future but it's pretty clear that they can't. the one company that has been able to do a great job of product innovation so far is snapchat even take a look at snapchat maps i thought that was the best

feature innovations we've seen across consumer tech in awhile if they continue to do that kind of thing and they need to do it they'll escape kind of the death star that google and facebook but that's the big risk on snapchat >> all right mark, thanks very much for your time this morning. >> thanks, mike. >> and coming up it's 5:00 somewhere. "squawk" is counting down to the food, fireworks, and froth we're going to talk to co-founder of the bronx brewery about business and what's on tap for the july fourth holiday. we will be right back. yo a used car,

welcome back to "squawk box. americans will spend a total of $7.1 billion on cookouts and picnics to celebrate the country's birthday about $73 per person that's according to the national retail federation. it's up some 6.8 billion in 2016 and about 65% of people will participate in a barbecue of some sort. 27% plan to purchase patriotic merchandise. well credit report website wallet hub says july fourth spending clocked in at more than $1 billion last year and much of that will funnel to the massive breweries. it's a big holiday for the craft beer scene as well joining us is damian brown head brewer at the bronx brewery right here in new york city. thanks so much for joining us. >> good morning. >> i feel like when i walk into the grocery store or a liquor store, there are hundreds of beers. so how do you get your beer to

stand out? >> yeah, it's a good question. definitely thousands of beers available at this point. 5500 breweries in the u.s. each of them making dozens of beers, so it's tough to stand out. for us i think we focus on having a unique point of difference we focus on pale' ales. we've got the name bronx in our name so we try to draw a lot of inspiration from the straightforward, no-nonsense mind-set of that borough >> do you mostly sell within the new york city area >> yes, we distribute to the tristate about 70% of our sales are in new york so very much a new york city brand. we've also started sending a bit of beer to sweden. >> sweden? oh, that's interesting in terms of the seasons for beer >> yep >> is july fourth like the super bowl >> yes, it's the super bowl in the industry summer is by far the busiest

selling period july fourth is i great weekend for us it's interesting, new york is such generally a heavy on premise market so people spend a ton of time in bars and restaurants drinking but on holiday weekends during the summer, like fourth of july, it's flipped a bit everyone goes out of the city, they're drinking on the beach, at the pool, barbecues, not at bars and restaurants so for us it's important to get our beer in the right distribution points in the off premise, make sure the beer is on the shelf, on the floor, ahead of the weekend the thing about craft brewing in general, in the brands, is that you have a lot of seemingly newness is a big deal, right >> yep >> haven't tried this before i mean is that challenging to get loyalty? because it seems like everyone's looking for the next -- >> yeah, i mean they certainly are. for us it's important to not try to shape those trends, right so we've doubled down on pale ales for us, big platform for being approachable and balanced. and as much as people love to

explore and try new beers they also need some go-tos that they fall back to i think that's where we try to -- >> are they your competition do you pull for other craft beer guys >> i mean at this point, 5500 breweries in the u.s., i think we're all competing very furiously. it's a great industry to be in people are very friendly but no, we're competing. >> you are so it's not -- you guys aren't ganging up on like miller lite or something >> no we're competing with them just as much as we are with the others >> especially -- >> they've got 15, 20 years on us but, yep, craft brewery. >> this is so cold -- >> don't you want to crack it open >> i do. >> this is a summer pale ale that we brew, a good beer to take for the weekend also brought some of our boom boom white ipa which we released for the fourth of july >> boom boom >> boom boom and big juicy --

>> if i would drink that -- i mean the first six for me go down really smooth and then less so i mean i want to get started >> it's like the hot dog eating contest? >> yes >> the following 24 -- >> not going to do it. >> i'll make sure to leave some for you. >> i will definitely have some tomorrow although, again, you know, sometimes i drink -- i've moved on, i like liquor since i don't feel as fat like you know what i mean >> the bloat factor. >> i think a lot of people are moving from beer to wine and spirits. beer overall is flat you guys are probably aware of that craft is continuing to grow. but the rate of growth is slowing. >> all right >> so. >> thanks for having you on damian >> thanks for the beers. still ahead on "squawk box" today's top stories plus the second half appears. can you expect fireworks from cts?housing market, tech and oil seor a roundup straight ahead you're watching "squawk box" on cnbc don't you mean dad kind of ruined our hawaii fund?

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crown. final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square i'm joe kernen had to laugh watching mike leave the set over there standing up just like a -- just like an organ grinder. like we all do now you used to be baron's, you used to be so cerebral -- >> thank you >> you don't think you can be cerebral -- >> i begd you for years, for years, come on you had to see print dying on the line -- >> i had to make sure the model wasn't going to make a comeback. >> i'm glad you finally -- you know you don't have a face for radio. you're perfect for this, mike.

>> you're right you did try to get me over here for a long time >> 25 years. >> i will confirm that >> was it 20 years ago >> 20 years ago? >> honest to god >> when i first started showing up on "squawk box. anyway, i'm with mike sant olie and melissa lee is here. becky and andrew are off today trying to get andrew out just leave that other gig -- >> anyway the futures right now are indicated up about 90, 85 points right now on the dow. s&p up 8.5, nasdaq up 20, treasury yield we talked about, was it 2.13 last monday? i knew it was down, and so -- >> tremendous move >> 2.13 to 2.31. >> making headlines this morning hong kong and china launch a highly anticipated bond trading program today. the setup gives foreign investors access to china's $9 trillion bond market through hong kong trading houses

president trump speaking by phone today with the leaders of china and japan. china state media is reporting chinese president xi jinping pointed to some negative factors in u.s./china relations since he first met trump three months ago. president trump also tweeting this morning that he'll be speaking with italy, germany and france laterer today, these conversations coming ahead of the g20 summit later this week and steve bannon is reportedly pushing a tax hike on the healthiest americans to play for steep middle and working class tax cuts access is reporting the president's advisers told colleagues he wants a tough income tax bracket to have a 4 in front of it the current top bracket is 39.6% for americans who earn more than $418,000 annually. today's top stock to watch is tesla phil lebeau joins us with news on the model 3 >> mike, good morning. the model 3 is coming this month. when, the end of the month the 28th is when first deliveries will begin. late last night we got a few detailed tweeted to us from elon musk

essentially the passing of the final tests over the last couple of weeks, earlier than expected. two weeks earlier than expected. production will start this friday, and then elon musk tweeting out handover party for the first 30 customer model 3s on the 28th. production gross exponentially so august should be 100 cars, september above 1500 and then by the end of december, he says that the monthly production rates will be 20,000 vehicles. remember that he said that their target was 5,000 vehicles per week at the production rate by the end of december. so roughly in line with what they have forecasted already as you take a look at shares of tesla versus the s&p 500 this year no comparison at all. tesla really has been the stock to watch in terms of what it's done over the last well really all of this year, guys it will be interesting to see this month, as we see the first model 3s being delivered we start to hear some commentary about the vehicles we'll probably get a better sense of how many orders are

truly out there for this vehicle. what happens with shares of tesla, more than a few people are saying don't be surprised if it pulse back a little bit we'll see if that happens. >> very good, phil thank you. and pretty good looking. i mean, really you think -- not you although you're fine but, the -- i mean not my cup of tea necessarily. but the model 3 is a good looking -- he's got that down, doesn't he in terms of i mean we know how much -- i still when i see a model -- what is it a model "s"? you can see them coming a mile away they're very distinctive and very pleasant looking. he's on to this -- i don't like those other ones i think the suvs are hideous >> yes >> you don't like the model "x"? >> i don't like it >> the doors are cool. >> they look like the rear ends are inflated or something. but this is pretty good looking. i guess the question is really, phil, 20,000 in six months really is that possible >> well, that's the production rate that's the production rate they're not saying that they'll have 20,000 coming out in

december they're saying the rate of production will be 20,000 for -- >> what's your opinion -- >> yeah, they do it? >> i would not be surprised. i have no reason to believe that they won't be able to hit that production rate. >> okay. and for 35 grand >> well that's the base price. don't fool yourself into thinking that it's only $35,000. that is the base price most believe that once you get it outfitted the way you want, with the features that you want, with the content that you want, you're looking at a vehicle that might high 40s, maybe 50, $54,000. something like that. it all depends on what you want with your vehicle. so, i mean, tesla is like any other automaker. they will tell you a price, well that's the base price. that does not mean that you're going to see every model selling for $35,000. >> and just how much of that is going to be somehow subsidized any of it? how much of it by states?

>> well it depends on where you live look certain states like california, still have generous tax incentives for electric vehicles, if they're bought there. interestingly, there are many states that have pulled back on those incentives in fact we're going to hear from our colleague out of washington a little bit later on today that this has happened over the last six months, increasingly a number of states that had these incentives for electric vehicles, they've pulled them back in the last six months so, it depends on where you live, and yes you can still get, for now, the federal tax credit of $7500 >> okay, phil. you know, if you were really optimistic, you look at ron barron you throw it all together, you put the solar stuff on your roof, you charge your car, the batteries get better, i mean it's a very compelling story even the solar panels are kind of cool looking. >> absolutely. >> it's a pretty compelling story, i got to admit. >> and that's the all-in one package that elon musk has

envisioned for all of tesla that you would go to a tesla store, you see the vehicle and you say well, you know, look, as long as i'm going to be charging it why don't i get the power wall unit at home, and eventually i'm going to need a new roof, why don't i get solar shingles so that's the idea that he has here that sustainability. that's what they're going for. >> but if they continue hitting these milestones, phil, and then you throw in the wild card of potentially announcing the crossover vehicle sometime in the fall or a pickup truck, you have a map sort of to new highs in the stock and then you wonder, because all these things require lots of money, you know, then you wonder when they're going to do another capital raise. >> right and remember, they're going to have to expand production at some point three months it's going to be busting at the seams it already is. that's why we will likely see aplant announced in china. and that makes a lot of sense. you're talking about the world's largest auto market. china is much more aggressive than any other country in terms of pushing for electric vehicle adoption so it makes sense for tesla to open a plant over there. >> all right, phil

thanks >> yep >> talk to you later the nation's automakers are going to report their june u.s. figures throughout the morning today with ford, general motors, chrysler, all expected to report lower sales than they did a year ago in june 2016 but toyota is expected, just so you know, to quote a small increase >> also on quality, manufacturing and pmi, ism manufacturing and construction spending roll out. on wednesday we get factory orders and the minutes from last month's fed meeting. we'll also get the paychex small business report. on thursday the june adp report and the ism services index and finally on friday the big release of the week, the june jobs report. well let's get back to the broader market on this shortened trading day. joining us is john veil chief global strategist and president of stri kumar global strategies. good to see you. so we heard last week parade of central bankers. coming out and saying we mean

it, we're going to be removing stimulus obviously the fed has been on that track we heard from the uk from mario draghi of the ecb so it seems as if the market's at least, you know, caught our attention. we have yields going up globally so should we take the central bankers at their words is it finally the time that we're going to see the yield levels >> mike, what the central bankers are doing is to make sure that the secular deferral in the market doesn't get out of hand both on the equity market and the bond market. you saw it in the janet yellen statement of june 14th she's no longer just saying inflation will go back to 2% growth it's going to pick up she's concerned about the somewhat rich valuations, to use her words, that she sees in the market this is a new cue. so that is what we are trying to combat, but i think that it's still a yellen put in the market, there is still a draghi put in europe, because his own home country of italy is not out of the woods yet, even though

some of the numbers today are looking very good. needs to be very careful with the banking situation, and they cannot let the improvement that they have had pass by. so my expectation is, yes, the fed may increase one more time the signal for investors to watch is what happens to the two to 10-year spread in the united states and it was 135 basis points just before president with the trump flation euphoria i think it's going to go down again. all of that suggests that the economy is slowing, that there's no inflation, and the fed has no room to increase significantly or to pare back the balance sheet. >> john, do you actually think the central bank is targeting financial conditions here? they feel as if maybe the equity and credit markets are too overconfident, and that's what they're up to? are they responding to the fact that, you know, economies are doing okay >> i think they are responding a bit to the speculation but i think in terms of draghi's

case it really is a shift in the regime there, where he is getting more optimistic. and i think part of the reason why is because being the former head of the bank of italy, he was very worried about these banks that were failing in many ways in italy. and now that those have been solved along with bank popular in spain he's got a lot of things to be concerned about >> interesting because the conversation with all the central bank speak last week turn toward wait are they going to start to overlook their own inflation targets. are they going to try to explain away the fact that nobody's hit this 2% number on a sustained basis? i think that maybe the markets are saying we have to prepare for that kind of resolute sensibility among central banks. >> yes, i think so at least on a transitional stage. they're not going to be as worried about it they're not going to wait until it hits 2% until they start hiking rates or favoring qe in the case of the ecb. but yes, certainly with a rising

core inflation in europe, as well, as we saw 1.1 that gives them some confidence, as well. >> could you think the yields could invert >> the yield curve is going to invert, melissa, if you have two or more rate hikes so you're going to go from maybe one more rate hike i think you're going towards 60. the last time we had a significant inversion, tr the two to ten year spread was minus 15 basis points was in november/december of 2006 and you had the great rescission begin exactly a year later and that is a prospect the fed is going to deep doing it. at the moment i'm only calling for an economic slowdown not the recession yet. but because it depends on what the fed does >> now we haven't seen the lows for the 10-year yield -- >> we have not seen the lows i see the 10-year going below 2% again. i said the same thing when it hit 263 after the trump election that it was not going to keep saying that, and i think we can't stay at 231 either, today.

>> john, i mean, where does the, at least potential, for some kind of policy help filter in to all this i mean we're sort of -- we've kind of had the markets tell us, okay, we're back in that 2% growth zone, high liquidity, you know, tech stocks are led the way, we're okay with this but it's not about a cyclical acceleration >> we have to remember that we're in a normalizing phase now. we're not really in a tightening phase. >> but on the fiscal side, do you think that that -- >> on the fiscal side, well, i don't think that there's going to be much coming out of washington to be honest. if there is something it's going to be mostly symbolic as far as i'm concerned. i felt that way for many, many months >> so then the trajectory for the u.s. in terms of growth? >> people are talking about potential growth being a little bit around 2%. i think we can probably hit that this year. but other than one quarter's

worth is probably not going to be happening in the next couple years. where do you see slowdown coming in the u.s.? seems second quarter tracking in the high 2s right now in germs of gdp growth and maybe something like that in the third quarter. >> mike, the second quarter in the last four years has always been a bounce back from a very poor first quarter that is what you see the time at which the fed goes really wrong with its forecast, whether it's for seasonal reasons or other reasons is the second half of the year. and i think the third and fourth quarters are what you want to watch out for for a real slowdown so much so that when you look at the year as a whole, i can't see us going about 2% at all so the 3% goal and i agree with john here is just a distant dream. that's one and again the core inflation rate has been remaining very low and month-to-month inflation rates have been negative for the fed. when you have the situation,

when you put it both together, the bond yield that's not showing an increase. it doesn't forecast it >> all right of course third quarter last year i think was 3.5% for one quarter. but that was the snapback after brexit all right, thank you very much all right four minutes ago, president tweeted. at some point fake news will be forced to discuss our great job numbers, our strong economy -- the strong economy, success with isis, the border, and so much more and we were just discussing the economy and the jobs numbers and everything else. hopefully, since we've done that we're not fake news. right? >> hopefully we aren't. >> no, we're not >> we're definitely not. >> no! not this show. coming up -- or any show on cnbc or nbc, or anybody that -- >> all of us -- >> anybody i can get in trouble with the nasdaq jumping about 14% so far this year. the dow and s&p both up around

8% best sectors year to date, tech, health care and consumer discretionary. worst, energy, telecom and real estate stay tuned you're watching "squawk box" on real news snx.

welcome back to "squawk box. take a look at where the futures are trading right now. it's been a positive story most of the morning you see there the dow on pace to open at more than 80 point gain. we have a holiday shortened session today. stocks will close at 1:00 p.m.

making headlines, a mixed quarter for international speedway the operator of the daytona, l talladega and other well known racing tracks missed on the bottom line. company said marketing efforts are helping to reverse the pressure on attendance the latest revenue and we begin the second half today we're drilling down on the best and worst performing sectors. let's start with energy. a loser so far this year we're drilling down. >> that's right. good morning to you, joe crude surprised everyone in the first half of the year, logging a near 15% decline that's after having touched bear market territory the second half sees decline it could be the third down year out of the last four so where do we go from here? cnbc's exclusive oil survey polled analysts, traders and hedge funds to get their take. survey respondents largely agree there could be more price pressure ahead for crude almost half said there's more downside about 40% said they're not comfortable calling the low for the bottom

how low can we go? the largest group said the high 30s is likely but that crude prices could still end the year closing between 40 and 49. that suggests a little bit of a bumpy ride when asked about our friends at opec muddying the waters and possibly jawboning the market, the car tell will flex its muscle to try for short-term swing. but that opec has lost control of this market meantime almost everybody says that supply is still the most important factor in closing prices and 80% said that will continue going forward. with respect to demand about half said trending higher and stronger, but not strong enough to absorb that excess product. finally 60% said president trump's pro-energy policies were not having a direct impact on crude prices at this time. overall, a little bit of a bearish view on crude. >> jackie, thank you jackie deangelis from the worst to the first, a look now at technology josh >> well, michelle, the tech sector of the s&p 500 is the best performer so far this year.

up 16%, apple, facebook, alphabet and amazon have all enjoyed strong double digit gains. but not everyone is a fan for the second half, cfra's sam stonewall says the tech sector's valuation as well as expected earnings growth in 2017 are now basically in line with the overall market as for tech events in the second half, none will likely be bigger than when apple's tim cook takes the stage and unveils the newest iphone investors are bet being it's going to be a hit with that stock already up nearly 25% this year some analysts say that move already does reflect a lot of good news, that's why mizuho recently downgraded apple to neutral. also sure to make headlines in the second half, uber where the search is on for a new ceo after travis kalanick abruptly resigned following months of bad press, including allegations of sexual harassment within the company. now uber has to hire new leadership, fend off competition from rivals like lyft and deal

with that ongoing legal fight with waymo, the self-driving unit of alphabet guys, back to you. >> josh, thank you very much now to the housing market. which rounded out the first half of this year with weaker sales and higher prices. what can we expect in the second half dana owen joins us now from washington >> hi, mike. the tight supply of homes for sale that plagued the 2017 spring market is only getting worse and that will mean weaker sales going forward. even the realtors last week said that sales this year have already peaked existing home sales did come in higher than a year ago but sales came down more than expected in this easily busy spring market the one thing that could help slightly is just the fact that seasonal demand falls back in the second half, which could help fill the supply a little bit. but with all those side lines in spring i'm not sure that that usual shift will actually happen home prices continue to soar but if you're looking for some hope the annual gains are shrinking slightly and that's for existing homes. but newly built homes saw a

record high median sales price last month and builders are seeing even tougher land and labor situations, which will keep prices high. to mortgage rates. we keep saying rates will go up, and they haven't but the 30-year fixed loosely follows the yield on the 10-year treasury, which has been unpredictable to say the least but here's one thing we do know. the fed continues to shrink its purchases of mortgage bonds. so over time, that means less liquidity in mortgage bond market which has to push rates up eventually. back to you guys >> all right diana olick, thank you. some stocks to watch this morning, glaxosmithkline signed a $43 million deal with privately held a.i. company. the two companies plan to use the partnership to speed up the drug delivery process. and barron's says bristol-myers squibb is undervalued because of the company's immunooncology drug they say investors appear to be ignoring the market that the drug has already been approved and casino markets in macau

could see a boost today after beating revenue in the chinese administrative region rose more than 24% in june compared to a year ago that marked the 1th straight monthly increase financial information provider bank rate is being acquired. the provider is digital marketing company called red ventures it will spend $14 in share for bank rate or a total of $1.4 billion >> and in hollywood news despicable me 3 topped the weekend box office universal's latest entry in that franchise drew 75.4 million dollars in north american ticket sales. universal is owned by comcast, the parent of nbc universal and cnbc shares of comcast year to date up 7.6% it had been up more. you can see just in the last three weeks or so there's a little bit of consolidation of up near 42 back to as well around 30.

i don't follow -- >> ha, yeah. >> 93. >> coming up, we're going to get a key read on the trump economy this week. the jobs report is due out friday we're going to talk to two economists after the break plus way out of this world what the white house is setting its sights on the galaxy and the private sector we're going to tell you what to expect in the space race in the second half. that's going to be up next hey, i've got the trend analysis. hey. hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn. ...better than a manual, and my hygienist says it does. but...

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good morning and welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square among the stories that are front and center this morning, new car transaction prices are up by just 1.5% compared to a year ago. that is according to kelly blue book which says the average price for june was 34,442, up $511 from a year earlier by comparison, new car prices were up by more than 3% in june of 2016. analysts say that the post peak environment for auto sales is putting pressure on prices and elsewhere investors are

showing increased enthusiasm for municipal debt nearly $88 billion in new public bonds have been snapped up so far this year and that's up 8% a year ago and a reminder that the stock market will close early today at 1:00 p.m. eastern time it's one of only two early closes this year the other occurs on the friday after thanksgiving there's no christmas eve early close this year, since december 24th falls on a sunday wow that's weird christmas on a different day every year see that's different than the fourth of july yeah, i know i'm conjuring up some more mail. >> oh, that's right. that's right the longest day -- >> that's right. last week -- she said it was the longest day, and i go wow, so longer than 24 hours so my stand, which i'm sure there are many in the twitter sphere immediately said that i wasn't aware and in fact not

every day is exactly 24 hours. there's a fraction of a second in there, which is why every once in awhile -- >> you put those out there that way when you really get caught in something you say, i knew that. >> exactly see, method -- you're learning >> i told you. you're learning. >> a long way to go. >> all right the june nonfarm pay rolls is on joining us is anthony chan chief economist at chase, and chief international economist for deutsche bank. guys, good to have you what are you expecting for the jobs report and will that move the needle in terms of your expectations for a fed hike? >> we think the head line number of 210,000 and we think the unemployment rate will stay constant. but the surprise will be that wages will be inching up to 2.6 year over year it's not dramatic change from the 2.5 we had last month. but we do think that the economy is still doing well and i think to your question that this will tell the market that the economy is still moving along very nicely

>> anthony your expectation is very different >> that's right. i'm looking for the numbers to get a little bit softer over the next couple of months below 150,000. and the reason for that is that it's getting very challenging to find workers some work that i've done shows that when you look at that jobs survey, remember that at one point during the global financial crisis you had 6.6 people unemployed for every job opening. today it's down to 1.17. and when that happens historically you tend to see that nonfarm payrolls grow a little bit slower. i think we're going to see a number below 150,000 i do agree that the tight labor markets are going to lead to higher wages something in the neighborhood of 0.3% month over month. which translates into 2.6% year over year. and that unemployment rate, i think this month, is going to stabilize at around 4.3% >> you see the same jobs data. i'm just curious why the dramatic difference in expectations for the payrolls number >> the key issue when you have full employment, that's a huge skigs about what happens when the economy is that full employment can you find more workers? and if you can't find more

workers, then what happens i think the answer is very simple, if you can't find more workers you have to pay workers more and that's from a fed perspective very critical. if you have to pay more that means higher wage inflation and the fed has to be more on alert. in other words it may not be that we have a huge acceleration in job growth but those jobs that are created are paid more because workers now can be job hopping which is exactly what the jobs data shows the 6 million job openings at the moment, the fed is still on track, and the fed is still vicinity indicated that this labor market is still strong there's not the signs of a slowdown that it would seem to suggest. >> do you feel like the risk is to the upside with rates even the markets are only expecting one more hike this year and later this year that perhaps the fed could act more swiftly >> absolutely. remember the fed expectation is that we'll have one more hike this year and three more next year, and the market is way, way below the forward curves are way below that so i think that the market will be surprised in the coming months that the data is not deteriorating and particularly not on the inflation front

>> anthony, i wonder if the expectation that the fed is going to start to drain off its balance sheet later in the year, it seems like people think maybe september will get some news on that, maybe it starts then or a bit later, is muddying the market's interpretation of where rates go perhaps they'll say oh, sure they're going to be normalizing through the balance sheet. do you think that's where a little bit of the disconnect is between the fed on paper expectations for where rates go and where the market is surprised right now? >> i really think that that's going to take the place of some rate hikes for example, as was correctly pointed out the federal reserve saying three this year and three next year we doesn't think that it's going to be three next year we believe that it's going to be two next year. one more this year, but with the federal reserve unwinding or beginning the unwinding over its balance sheet, remember that balance sheet grew from $800 billion to $4.4 trillion and they're going to start slow, $10 billion, $6 billion for treasury, $4 billion for mortgage backs and every three months ratchet up by about $10 billion. so the process of doing that is,

in fact, going to take the place of some tightening and we should not lose sight of the fact that even though wages are rising, historically, the federal reserve doesn't panic until average earnings are rising in the neighborhood of 3% to 4%, and probably even much closer to 4% and even with this aggressive hike in average hourly earnings we're only going to be up to 2.6% and remember that if you look at personal consumption deflator which is the federal reserve target of inflation, we're now running at 1.4%, nothing near 2% so, there is not that much of a reason for the fed to be that aggressive, especially as it's unwinding its balance sheet into 2018 >> why do you think investors are so sanguine about central banks around the world being able to tighten in just the right way? i mean, it's fascinating to me in that we're here in the united states, where there is a hawkish bias to the fed right now, normalization of the balance sheet, last week seemed to be a game changer looking back, the move in rates around the world,

and the hawkish tone coming out of the major central banks around the world all this is happening at the same time. so why do we believe, why do we give them the benefit of the doubt? >> this is extremely important for investors, because as you say, why is there such a discrepancy between the fed saying things are not that bad and the market saying things are not that great i think what is really important to remember is that when central banks have had interest rates at zero and the european case had negative rates for the last five, six, seven years that has created a whole new regime of how to make money. you were rewarded for basically buying high yield. you were rewarded for basically hunting yields, and suddenly the fed is at eight, nine years telling you that game is over. investors are asking themselves, what comes next if you're no longer reward are for what's paying so well for the last seven or eight years and investors are incredibly confused should i believe the fed given all the problems they've had with credibility and they've been very optimistic and too optimistic for too long and investors are now saying wait a

minute, show me the money, show me the inflation before i start to get very excited, and if there's no inflation and inflation has been dipping down for temporary reasons then i'm not going to bet on your view at the fed that rates are actually going higher any time soon >> if they're saying the game's over has that game ever ended quietly? and uneventfully i mean you have these kind of crowded trades that seem like it would be the possibility for some stress there? >> absolutely. that's also why i think the fed and the ecb and the bonk has pushed all investors into the corner of the room and they're standing there patting each other's back and saying great job you've done very well and we all think that that's the same strategy you should pursue for the next several years but the problem is that at some point when we actually do finally see inflation, this is the number one break that will drive markets, you will see move away from nine you will see volatility come around and you will see rates go, and quite a wake-up from the hibernation we've had for the last seven or eight years. >> thanks so much. >> thank you >> the spacex dragon reused

supply ship has successfully splashed down just in the last half hour, it re-entered the earth's atmosphere, traveling back from the international space station. spacecraft has been gone for a month and returned with more than 4,000 pounds of cargo and research material for nasa spacex says this is the first reflight of a commercial spacecraft to and from the space station. separately spacex called off a satellite launch from the nasa kennedy space center in florida last night just ten seconds before liftoff there was a technical issue with the falcon 9 rocket. the next opportunity for the launch is tonight. joining us now for a look at the big business of space in the second half and beyond is morgan brennan. good morning, morgan >> good morning, guys. well the white house is finally beginning to set its sights on space. on friday president trump signed an executive order reviving the national space council, which last met in 1993 this is to coordinate america's activities beyond earth. most of the action is coming

from the private sector starting with spacex. the falcon heavy this is spacex's long awaited next jen rocket, the equivalent of three falcon 9s combined should make its maiden flight in the coming month before launching for paying customers next year. that will usher in an era of bigger, more powerful rockets from boeing, lockheed martin, orbital atk and blue origin to take humans to the moon and then to mars. one big contract to watch as the second half gets under way, who united launch alliance picks to supply the engines for its new vulcan rocket. jeff bezos blue origin is the front-runner there though some recent test setbacks could make another engine more viable both companies are moving production of knows engines to huntsville aka rocket city alabama near ula's plant start-up one web started making its new cheaper satellite to be used for broadband access the first in a series of mega satellite constellations

proposed by boeing, via sat and even spacex which says it could test its own in-house rocket also in coming months. guys >> morgan thank you. morgan brennan coming up, wall street wants a new drug we'll focus on biotech the sector's up nearly 17% so far this year. stay tuned you're watching "squawk box" on cnbc

welcome back to "squawk box. take a check on futures right now. we have seen positive

indications all morning long the dow looking to add about 83 at the open, s&p looking to be up by 10 nasdaq up by about 25 points take a check on the 10-year yield. yields across the board at session lows earlier in the session 10-year yield had hit 2.33%. now backing off below 2.3. >> we're kicking off the second half today by focusing on sector winners and losers this year meg tirrell joins us to talk about biotech. >> good morning, guys. biotech is really picking up and really accelerated in june the ibb up about 17% year-to-date yacht performing the s&p and of course that strong performance happening just in the last month or so. there are a couple of things driving this sort of better sentiment. one is drug pricing. a lot of expectations that one of them will come from the government won't be as bad as people had feared. and that's getting a little overshadowed by the whole health reform conversation in general there is some sector location going on out of tech and energy and perhaps back into health care and biotech

of course the fda commissioner dr. scott gottlieb is somebody people have been watching closely. he's trying to accelerate drugs through the fda process. and when he does talk about pricing it's through increasing competition. that's something the industry responds to very favorably and of course clinical data is something we're going to be watching closely to see if the momentum can continue in the second half and there are quite a few catalysts to be on the lookout for. we'll start with the immunotherapy rates, bristol-myers, merck, astrazeneca, there's going to be some data coming from astrazeneca in lung cancer, that will have inply indications for bristol-myers in that space and for merck working there as well. that could be any time in the second half perhaps pretty soon. in another sector of immunooncology, personalized cell therapies novartis and juneau are working we're going to see an advisory meeting, in less than two weeks, july 12th, which will tell us

how the regulator is thinking about that space that will be a close one to watch. finally just two more in the biotech space, vertex, and sage. vertex is working in cystic hieb row sis. a triple combination to expand their therapies to many patients and finally sage, which could be one of the biggest movers because it's the smallest company really volatile there will have data both in a rare form of epilepsy and in postpartum depression in the second half. this is an extremely catalyst rich six months ahead of us. people will be watching that clinical data and also whether m&a returns to biotech which is something people have been waiting for. >> thank you, biotech sector continues to outperform the broader market year to date. let's bring in barbara ryan founder of barbara ryan advisers we go way back, barbara, don't we >> we do >> wait, waiting, waiting, waiting for the promise of sequencing the entire genome compared to a year ago, should

we be really excited about either finally being able to cure a solid tumor, just cure it even if it metastasizes. eventually we should be able to do that. anything with alzheimer's? anything with these chronic diseases any real progress being made with -- >> well, i think there's tremendous progress being made >> why do we see it so much -- >> you know, it's incremental. alzheimer's has been a real graveyard, to put it mildly. but progress that we've seen in oncology is incredible >> it's -- you -- you phrase it incremental. it's different cancers it's -- you're seeing six month extension of life for small cell lung cancer, or something but it's not -- there will never be, i guess, a cure for cancer, per se >> well, i mean -- >> it's going to be ways of dealing with it. >> never say never but you know, again, these are -- these are diseases like infectious disease where you have resistance that develops, and you're always having to,

it's like whack-a-mole you're constantly having to chop away i think there are a lot of things to be encouraged about. i think as meg said we have a very industry friendly commissioner okay >> mm-hmm. >> we have a -- we're moving towards repeal of obamacare. the markets hate uncertainty so irrespective of what the reform is, just to have that resolved and everyone knows the rules of the game, and the last thing i think, you know, i remember about two years ago i told you the biggest challenge i thought this industry faced was pricing. and what i think is really encouraging, is that we're actually seeing grown-ups in the pharmaceutical industry partner with payers. and develop responsible pricing models that are going to drive accessibility for patients rather than the he said, she said >> and that could stave off the more draconian regulatory measures >> exactly it was inevitable if this industry continues to be a bad

actor. >> we need them to have flexibility with pricing the innovation that we're all craving, that we all want. >> absolutely. steve miller and bob ward ceo of radio health were on here recently talking about this very issue and i remember reading i think it was related to regeneron that steve miller said their investors would have wanted them to price higher. we wanted them to price a little bit lower. so probably that was the right price. so there's got to be a compromise that facilitates the continued investment and return that's required, but also that the system can afford and that patients can take their medications. >> since amgen or some of the other multibillion dollar biotech, has there been a big one? what's the biggest one in the last five years. >> in terms -- oncology -- >> no, by a farm cuteal that's $5 billion a year in sales something like that. developed through biotechnology research >> in the last five years, the

biggest biologic drug has probably been optivo it's immunotherapy >> is it going to be immunotherapy that we make -- that seems slow. if that's the way we're going -- when will we -- >> well again -- >> understand the molecular basis of cancer, the key thing that we need to reverse? >> oh, that's, you know, way above my pay grade to answer that question. because i think the people that are expert in the field couldn't answer that question >> i know everyone's different -- >> -- on the market, right but i do think we've seen tremendous innovation out of this industry over the last ten years. the challenge is, that they have to be priced such that they're affordable, and they don't break the back of whether it be the consumer or the payer and at some point there's not some endless pot of money so you know, the generic industry has facilitated head room for the innovative new products we've seen biosimilars be very, very challenged to get to the market it's not easy and we've had one

after the other disappointment there. so that just keeps getting put off. >> so if we -- if they blow this with obamacare repeal, is single payer next and you heard warren buffett, that's what we should do warren buffett says we should do single payer >> look that's been talked about for the last 30 years. i don't think we have the stomach for that at this time. i think the biggest disaster would be, you know, repeal and no new law because, that ultimately means that wur going to have 30 million people that are uninsured that are all going to show up at the emergency room for their care, right? and that's a runaway train so you know, the senate bill is much more moderate doesn't go after, you know, pricing. sort of an environment where everyone -- all the components of the industry can do a little bit better it's incentivizing the less sick to come in to the sick, which will facilitate, you know, there being more balance in terms of not just, you know, the very sick coming in to the system

>> when you go to apco will you tell them to hurry -- can you? >> i think they feel the urgency, joe, but i think you make a great point the incrementalism can be extremely frustrating. but they are making strides. make that a success. >> but you know, look, women with breast cancer live a long time, right? that was not the case 15 years ago. that was a death sentence, right? now we feel it's something i have to treat early and i always have to be mindful but people live long healthy live which is is amazing and what's happening in lung cancer it's important stuff. >> i know. i know i'm just getting old

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joining us now is president of jersey mikes sub shops. i have been eating it and it is telling that i didn't have a beer but i'm having a sub. melissa won't have a sub but she did have the beer. >> i had one sip of beer. >> what do you think of that interesting, huh >> we should encourage her to get a turkey sub we've got back there. >> you know what, calling something jersey, have to hand it to you. i love jersey. i love where i live. the best place i ever lived.

see it in front of whatever it is. >> it's coast-to-coast pretty much even in boston they like a jersey mike's sub. >> there's good reason what is different about jersey mike's it's fresh how do you do it >> it goes back to 1956 when the original store opened. >> great year. >> year you were born and they were fresh slicing subs made to order back then and we do the same thing today we added cheesesteaks in the late 70s so we serve an authentic east coast stiep sub with red wine vinegar, olive oil, made to order, fresh sliced all the vegetables are sliced by hand every single morning. bread is baked in store. the bread is from a new jersey bakery so we have jersey water in the bred all over the country.

>> 22% in sales. you're still growing a lot. >> that's 22% in total sales total sales. >> 1300 stores >> so a lot of room. >> so they introduced the sub sandwich to a lot of places and we respect them and there's plenty of room for everybody we're in 44 states there's a few states we're not in north dakota, south dakota, a couple of weeks ago. just opened in hawaii this past year. >> you call them subs clearly but as opposed to a hero or hoagie

>> would it help or hurt. >> minimum wage? >> we're going to have to react to it just like everybody else we'll try to be efficient. we can't cut anybody in our stores we're not going to cut any payroll hours. our approach is let's raise sales. thank you. hay lyppju 4th. >> coming up this morning stocks to watch ahead of the opening bell stay tuned you're watching cnbc. . fidelity, where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be. can we at least analyze customer can we push the offer online? legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday? yeah. with help from hpe, we can finally work the way we want to.

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squawk on the street is next thanks to you both ♪ good monday morning. welcome to squawk on the street. we kick off the 2nd half of the year stocks in a shortened session. bonds close at 2 tons of macro data euro zone pmi and oil shooting for an 8 day w