a. welcome to "squawk box." i'm melissa lee along with joe kernen our guest host for the hour is the one and only guy >> thrilled to be here >> fast money trader we get do the ssymphony. you can promo your show. but i ask you guys that work together every day, don't gang up on me >> of course we will >> joe, we love you. >> this is your home, joe. we bow to you. if you didn't want me here, i wouldn't be here i know how it works. >> we're having more of these trader types we had tearanova yesterday. he's always fun. >> and in these market, you have to know how to trade these

ranges >> i agree and it occurred to me again why the market went up yesterday, we just don't know how to enjoy good things, good times. i mean, it really looks like we have maybe pro-growth policies, interest rates that will probably still stay low. inflation that probably won't be a problem. everybody is worrying about profit margins hitting peak because wage gains will start hurting profit margins it's bad for income inequality, but in the meantime profit margins stasy sustained. everyone is saying it's overvalued, but are we missing the point that there is like a perfect storm? >> yeah, and yesterday you were talking about profit margins and once wages go up, profit margins by definition have to come down. but i think -- and i'm guilty of this all the time. we make this more difficult than it has to be

to your point, maybe it is this simple now and i think the intelligence i can't, they try to figure out ways where ty the market will go lower.i can't, they try to figure out ways why the market will go lower. >> and let's check on equity futures. this of course after a record close on the dow jones industrial average we are looking at another higher open with the s&p looking at about 4.5 points, dow up 31, nasdaq up 29 points at this hour overnight in asia, it was positive import export data that helped lift the indices. hang seng up, nikkei basically flat european equities, we are seeing green arrows across the board with the biggest gains in spain

right now. ten year yield, we see that here again this morning ten year yield at 2.331%. the two year note 1.347% and it is just about a one month low. >> mark grant a dooum dacouple g gee said we go lower before it heads back up. all the gary cohn stuff yesterday was interesting. because depending on who you are, he's like a rorschach mark grant said that i think gary cohn will reverse the errant yellen policies to people who think that she has been behind the curve, that means that he would raise rates. but mark grant was talking about that these recent increases given the economic factor have been counterproductive, with the rest of the world still easy, that it was a misthat that yellen was raising so it was weird to watch some people think that gary cohn will be great because he would

raise rates. oh, he would be great because he would reverse the rides. so weird >> if you think donald trump was a wild card as president, gary cohn as a fed chair is even a wilder card. >> because he's not an economist? >> he's not a twrrained economit but he grew up in a trading environment. he was lole on the commodities exchange for years so a completely different skillset than the fed requires. >> but as somebody who always thought that the exit for easy money would be easy and fruit with challenges, maybe gary cohn is the perfect person. >> who is better suited to get out of it. >> and maybe he would bring a trader mentality that you would love maybe fed funds could change intra day, go up, go down, just are depending on -- we went up a quarter, we're going back with

down >> get gary on the show, we'll have a conversation. >> one other point about the market 1999, we were at 10,000. i know we went to 666 on the lows, but just forget about that, hard do, but go from 10,000 to 21,000 in 18 years, and do the compound rate of return, what is that, 4% it's not that -- this is not necessarily way out over -- >> not gang busters. you're are right and to your original point, yet this is again we say it all the time most hated rally in the history of man kind. and i'm not sure why are >> and the iea is raises its forecast fdemand for global oil. you can see we're back to 45 or so temperature several members did pass much more oil than allowed by their

supply deal. separately, new custom also data from china showed rising oil demand in that country which imported 8.5 million per day, a 14% increase from last year, makes china the biggest crude imt po importer passion the united states and we've talked about this, janet yellen heads back to capitol hill today yesterday she struck a dovish tone >> most of my colleagues or at least the median anticipated that one further increase in the federal funds rate would likely be appropriate this year but as i say, we constantly watch the economy and evolution of inflation in the labor market and will make decisions on the basis of our evaluation of that

information. >> today real hear from charles evans and fed governor lael brainard and look for weekly jobless claims, prior price index and federal budget and delta air lines reports before the opening bell. went home yesterday and sometimes i turn the tv on as background and i said yellen is on, i'll watch a little what time did yop >> i tried to watch and even in i said you know what, i'll read the summaries. i'll wait until its over and then read the salient points because i couldn't do it and i switched and it was a different hearing. it was chris wray on that hearing. so i watched that for a while. >> and you thought you would read the summaries the next day,

right? >> that one i didn't watch that long either because it was not about chris wray out -- it gave them a chance opine and filibuster about russia >> and that surprised you why are? >> no, it didn't surprise me that's what they do. but it was one big russia -- you wonder why cnn only covers that. that's all they do in -- anyway. and speaking of which, here we go >> we'll talk about trump here today's top political story is president trump arriving in france he will meet with macron later this morning and i meamon javers joining us h more >> the president has landed in france he's staying at the ambassador's residence. he's expected to discuss syria and terrorism with president macron of france we're also expecting that he will give a news conference later today and he will also visited too many of floriof flnn

they are expecting some protesters against mr. trump, so we will watch to see whether he gets similar reaction that he got last week in hamburg when he is in pairs are. but all that teed up for today meanwhile yesterday the president gave an interview to reuters where he laid out his defense of his son donald trump junir. who scheduled the controversial meeting with the russian officials who suggested that they might be bringing some information on behalf of the russian government that was harmful to hillary clinton here's what the president said about that meeting that his son took he said i think many people would have held that meeting he also said on his meeting with vladimir putin last week in hamburg, i said did you do it, referring to election reference, and he said no, i did not. absolutely not and i then asked him a second time in a totally different way. and he said absolutely not so the president saying that he pressed vladimir putin twice on the issue of election interference in 2016 and putin

simply denying it. so expect that news conference will be dominated by russia this afternoon depending on who the president calls on remember, those are two and two, so only two questions from the u.s. side depending on the reporters he calls organizatin, expect a question about russia >> did we city that that was a meeting with russian officials >> fair pint point. a russian lawyer whose go-between said she was conveying information from the russian government >> because i think that is probably true, about i don't think we know whether that is true but now it looks like -- it was very interesting, you saw a guy that we have had on a bunch of times, the hedge fund guy that it all came from

and that they are sanctioned so much that -- and this woman suosedly -- just seems like more than coincidence at that was so high on her list of things do. and it looks like some people were directly tying to what president putin really wants like a lobbyist for putin on that issue you not on the election, on that issue you. >> right and lob be biists make entire careers off of issues like that. so you can see where that could be alucrative niche for somebody with a russian background and a line to the putin regime >> but the right is saying that she got in for some -- no good reason why she didn't need a rea to get here, that the obama justice department let heard in for some odd reason. >> i have not seen that. >> lead story on drudge. you have to check it out you're stuck on the huffington "post" -- you can move over to drudge occasionally. >> i didn't read the huffington "post" either. i woesk up aboutwoesk up about a

minute and a half before this. i work on all day. >> i know you do i wouldn't know how to act >> i will tell you that i talked to a former u.s. intelligence official who is very experienced in counterintelligence who said that his view of that meeting was that it was a probe by russian intelligence they send forward people to see what the reaction would be and he said he thinks the russians were probably surprised that don jr. took the meeting after that probe but once they got that receptiveness, then they could have moved on to other steps so on this former intelligence official says he thinks there is more to it, they would have kept going after getting that response there don jr. >> and now we're going back to 2014 or '15, i think we've gone back to before trump had announced and they were eavesdropping on some russian types talking about some people that knew trump. ooirts g it's gotten to that point glp

ye >> yeah, they hop toremonitor af people >> and they unmasked every person that could ever run for president i think glp so were they all just where fans of "the apprentice" or was there something more sinister going on you can only imagine the man hours listening to all those tapes in russian >> well, they can listen to those or watch janet yellen. kind of the same -- no anyway, thanks >> you bet >> works all day >> he does >> by the way, so does melissa lee. >> well, she's not here every morning. >> she's here a lot. >> i knew this was going to happen you two together, you'll be just -- >> oh, come on, joe. some news just in from uber. it is combining its ride sharing business in russia and neighboring countries in to a joint venture. uber isn't publicly traded, but

yandex is. it's a producer of search mapping and navigation software. it is nine as the google of russia and you see they are up 10%. let's talk markets following a record close for the dow join position us is karen cavanau cavanaugh, bruce kasnan, chief economist at jpmorgan. that is a big job. >> yeah, a lot going on in the globe be global economy >> are there different divisions with other chief economists? >> we have regional heads. >> i'm the chief economist for the bank and investment bank there is an asset management business which is separate >> he's the big swinging person -- >> i know what he is but it's early >> these fast money guys, still in the boom boom room. i'm talking about urt babout yog

guy there. and in the past i kind of thought you were too negative on things and i think it's thinking born about out because this is a real strange economy that we're in it seems pretty good gleeb alob but then there are areas where are it is hard to get above 2% gdp. >> well, our view has been over the last year that the global economy is doing quite well. but it's not thinking driven centrally by the united states so it's not a u.s. centric story, but a very positive upbeat story on growth and recovery in pricing power. and i think as we were saying before, corporates are doing quite well in that environment i don't see anything that is breaking that. and i think the world as we go through the next six to 12 months will continue to deliver a good outcome >> how can it not be rip roaring with the nominal plimt numbers that we're seeing now? it's threatening to get down

to -- theoretically could get down near 4% >> i don't know if you want to say there is anything wrong with the u.s. u.s. economy in the sense that we're generate be jobs in the first quarter, about 1.5, we'll go about 3%, about 2.25 in the first half and about 2% whole year. >> so trump wants 3% and you've been no, we're not doing that. >> we don't have are fiscal stimulus built in and we haven't had it since the election. we don't think congress has enough coherency to deliver are clear skrooutcomes deregulation is moving very slowly second of all not moving in the same direction in terms of its growth impact. so five years from now, i think the deregulation could become an important story. >> karen, that would seem to indicate the market has moved up

to reasons unknown >> the reason they moved up is because companies can make money in this low growth environment it's not the best environment, but companies have shown time and time again they can get it done and they will continue to get it done and they did it in the first quarter with earnings growth of almost 14% they will to it again in the second quarter and so that is why the market is moving up. the market and the economy aren't always the same thing and it would be great to have a backdrop of a 3% or 4% growth economy, but we just don't see that and until we see the fiscal changes and deregulation, until we see tax cut, we won't see that but it sdntsd mean that the market can't continue to go up >> what about all the confidence numbers that you see with small business and consumers it was all meant to happen because of profits or have they actually started acting --

>> wheels have are started to turn and we've seen it in the confidence numbers and then we'll start to see more, but we really go nedo need the tax cutd regulations to change. but the confidence is there. so the wheels are starting in motion and that just will be a bigger boost for the market. >> i think if the chief economist of jpmorgan was more bullish, i think that would be part of the animal spirit. you're holding things back single handedly. >> i wish i had that much you spoker, but we call it like we see it i think the other thing we want to keep this n. mind -- >> would it kill you to get on board, would it kill you to be more -- >> the other thing to keep in mind, when you think about a 3%, 4% u.s. economy, you're thinking when to 10, 15 years ago when demographics were moving and also a key core view we have is that productivity growth is not jen can rating the samd kind of gain

so 2% economy in terms of what it delivers in job growth and more broadly in temps of the labor market is like what a 3% economy was 10, 15 years ago >> people do think that some of these things could juice that productivity, that that is work fbl. and maybe even you bring people out that aren't in the participation rate, bring them back, in a that can help with - >> i'm more skeptical on that point. but the confidence readings, what we've seen in the first half of the year is an economy glow growing 2.25, but 10% investment growth what is holding it back is government and even stori invens and those are not things you worry too much about so on the u.s. economy i think is doing okay. i don't think 2% is a bad number especially given what would happen if we have a 3% economy and potential is 1.5 it keeps the fed moving slowly that is a reason the market is doing well but the big story on the world

right now is what a happening in europe, recovery that we're seeing we have global backdrop which is very good for u.s. corporate earnings it's good in terms of the overall global backdrop we live in >> do you agree with all that? >> i agree with that and that's why i think investors need to go and spread their net wide. >> but you're not pulling your horns in >> absolutely not. the bias is to the up side so all this talk about yellen and raising rates, i think that rates will drift hire, but ighe' not worried about it >> there are plenty of bears and skeptics that hate bullish talk. and i was kidding. you keep your opinion. but they watch and say that there was all this bubble -- i was just kidding if you want to stay dower like you've been for a while, that is

your prerogative karen here who is very optimistic >> fair and balanced >> did you know that is available? >> that's why i just said it >> oh, really, are you going to claim it >> i should. >> we've lived it. >> the no spin zone. >> yeah, don't even -- >> you went down the path. >> yeah, but do you know all the names? >> that is your old buddy. >> anyway, let's move on >> i didn't name the show. >> he has nothing do with it coming up -- coming up -- opec's output surged in june. but prices stabilized overnight on strong command numbers from dhoo china. we will talk crude realities the future isn't silver suits and houses on mars,

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celebrity entering the political arena could be kid rock he hinted on social media that he intends to run for u.s. senate in 2018 he's 46, amichigan native. he promised a major announcement is coming soon he's been on the show. love the guy anyway, i said do i call you mr. rock >> senator rock. >> >> it would be senator rock, but we may have supposedly a president the rock and then senator rock >> hard for you. >> i saw some of my buddies that used to be at cnbc that lean a little bit left for saying oh, really, kid rock well, i guess he will run for senate now that the supreme court spot is filled and the fbi

looks like it's filled maybe he can run for senate. i go oh, yeah, he doesn't have the al franken how can kid rock -- he was not on "saturday night live." how about schwarzenegger jesse? >> we could go on and on but we won't opec oil output rose in june despite the group extending a deal to limit production joining us now from nasdaq corporate solutions, great to have you here. >> so what do you see in terms of the price of oil? some people are saying that we will break 40, other people saying above 50. >> i think that we continue to stay range bound you made the poechint about lib and nigeria.

their output is up so that coupled with the uptick in u.s. production has caused the market to have a negative confirmation bias. so welook for anything that is positive gets overlooked by the market and we focus in on these negative data points and the financial positioning is such that the shorts are elevated and a lot of the length has been taken out. so short term, we're having the risks to the up side, but we stay in that range bound market for the next few months. >> s&p at an all time high energy basically slide ways. exxonmobil down 18% since january. are the equities trying to tell you something? >> it's interesting because it kind of feels like deja vu of last year where energy underperformed for most of the year with and then in q4 rallied tremendously and we became the best performer in the year. so an interesting dynamic. we also have the decoupling of

the credit market. and that is important because 20% to 25% of u.s. production growth, u.s. is linked to that high yield market, so that would be a very important corrective element if the credit market were to tighten in terms of reining in the growth. >> do we have a sense of break even price for a barrel of oil here in the united states? yesterday i was having a conversation with jeff occur ary and he was saying that there is so much private equity money pouring in.curry and he was saying that there is so much private equity money pouring in the money keeps going this because there is so much money being poured into the private equity that it keeps getting deployed no matter what the irr is >> that is a great point and so the numbers are all over the man. some are sub 20. and what is interesting we always think of saudi as being the lowest cost producer, but saudi actually needs a lot higher price than most u.s. shale producers need

but where the rig counts have been going up are in the rigs that are backed by the private equity money so it really shows thedy pergs some of the high yield companies is where you have seen stabilization. >> and in terms of a lift in price, how much in your view if at all does it have to do with the ipo? >> there is a thesis that aramco needs a higher oil price to get their ipo done that will probably be towards the middle of 2018 in terms of when you might start to see that get priced in, but i think aramco has a lot of other levers in their tool box to juice their valuation in terms of tax policy, what they put in their ipo. we've seen from this new crown prince that he has been very aggressive in terms of actions against the qataris and yemen and other situations so i think he is very much about market share rather than price because anything that benefits his nemesis, mainly iran, isn't good for him and he's taken that aggressive approach.

and i don't think that the market is really realizing that. >> all right thank you. stocks to watch today include teva pharmaceuticals getting a upon on reports that the company will poach astrazeneca's ceo. shares of astrazeneca moving lower. mallinckrodt moving higher after special status for its muscular dystrophy drug and amicus trading lower after they announced a secondary offering of public stock fda advisory panel recommending approval of novartis new leukemia treatment. the process i can treatment is last resort early tests have shown promising results. novartis says the entire process takes 22 days and can cost up to half a million dollars last night's vote is a recommendation full vote is expected by the end of september about it would be the first ever approval of a

gene altering treatment by the fda. looking at -- do you remember gopher? >> from the love boat. >> he became a congressman from his home state of iowa but there are ten. oh, ben jones from dukes of hazard remember him he was coote represer. >> steve lar gent, played in the nfl. >> sunonny bono. >> yeah, ski accident. clint, jesse the body. clint eastwood was mayor of caramel. so on this is not senator kid ro rock -- fred thompson. >> joe kernen from new jersey. >> i'm not from -- >> it's all the same >> mayor kernen, senator kernen?

congressman? >> i have trouble sitting through any meetings that is my problem >> you could be president then >> because of your attention span or other issues >> attention span be and bladder. coming up, for that senatsenatoo release an updated health bill and lanhee chen will be joining us as we led to break, here is a look at yesterday's winners and losers she's nationally recognized

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good morning let's take a check on equity futures. we are looking at the dow extending its record close from yesterday looking to add about with 27 at the open. s&p looking up about 4 and nasdaq looking higher by 26 points target just coming out with upbeat earnings news for second quarter saying its comp sales will be positive and earnings above the high end of the previous range of 95 to on 115 ceo saying traffic is improving and that the retailer is doing well in the face of a

competitive environment. you see the spike in shares up 5% dismal year overall. >> and if you look at target, it was on the way back. it was trading over 54 1/2 and what happened? amazon announced whole foods, stock goes down 10%. these are excellent numbers if you look and despite the fact it's up 5%, i think you can build on this gain i think target valuization wise is a stock you might want to own. >> and well get the retail earning. walmart shares are up by 0.7% but it is worth watching to see if the good news sort of bleeds over >> permeates. >> good word >> reagan. >> what does that have to do with anything?

>> oh, yeah, of course, ultimate example of an actor turned politician >> i thought you were talking about target i thought maybe he shopped there. >> work with us here guy, come on i know it's early. time for bonz socho. we're going to talk about health care and possible tweaks include keeping some obamacare taxes, fighting the opioid crisis and stabilizing state insurance markets. joining us now, hoover institution research fellow. it's good to see you i wonder what you would do if you were in this administration. what do we need to really get just one more gear into this domestic economy that seems to be lacking right now what is the most important thing? >> well, it seems that not repealing this net investment income tax is a significant issue. now, i understand the politics of it.

i understand the optics of it. i know why senate republicans are hesitant to move ahead with that repeal, but if you are looking at all of the factors that drive economic growth, being certainly this is one of those factors that you have to pay careful attention to more broadly, i think obamacare has been a drag on economic growth so the question then becomes how do you repeal and replace it in a reasonable way the framework is fundamentally the same as the one the house republicans have been work with. i think it's fine, i think the question now becomes can they get the politics right to getting across the finish line and that is really what all the changes and modifications are about. >> yeah, i hear exactly what you're saying about that tax because it seems like a lot of moderate republicans are guys that are up for re-election and they are worried about the criticism from chuck schumer or

that they are hearing from town hall meetings and they think that tax would add to it but i don't think they understand no matter what they do, you will hear about someone losing coverage and you will hear the stories from democrats. your heart strings will be pulled on from people that are affected by whatever we do and that would happen whenever you try to pull back on an entitlement, but they think that this tax thing is -- they are most scared of that because dems say you are giving tax cuts to the rich and taking away services from the poor with medicaid but in a perfect world, if they were really true to what they wanted to do, they would get rid of the taxes >> yeah, the tax piece and medica reform piece is also really important here. i think a lot of conservatives -- >> how so potically? >> well, it's tough politically because what you are looking at is the cbo estimate showed a

reduction in spending relation difference to obamacare of about $700 billion on medicaid over the next ten years and that that is posted up against$500 billion or so of tax relief. so you have this weird tug of war. but the medicaid reform piece is also crucial from a fiscal sustainability point of view this program is not going to be able to continue unabated the way it is so you wonder if rep did just said damn the torpedos, get rid of the taxes, reining in medicaid, you wonder what would happen in 2018 and then you wonder if the moderates and conservatives of do nothing, you wonder about 2018 not a good situation >> it's definitely not a good situation if they can't get something done underlying the reason why this is such you an important issue for republicans to tackle is the 2018 election cycle. and if republicans cannot

deliver on something they have been saying that they will do for the last seven years, it creates significant electoral issues i think so they will have to do something here i think mitch mcconnell puts it up for a vote next week regardless of whether the votes are there or not because this is such a critical policy issue if they can't get this done, tax reform is no easier. infrastructure apparently is no easier so they have to move on this >> i've seen it argued that the town hall meetings and that some of the rhetoric from the left isn't really necessarily as widespread and that if they did do something 2018 is not necessarily lost so from that point of view, you'd say not doing something is probably even worse for republicans than if they do put through snag is criticized a lot by certain elements. but obamacare people that have if are not enamored of it.

what are the polls. >> polls for a long time were negative but we're seeing obamacare in a little bit of a renaissance now because anytime you try to turn away as you said earlier, we've been under in obamacare regime if you will for the last seven years. anytime you try to take something that has been in effect for seven years and put it in a different direction, it's very challenging. i don't think we've ever seen in american history by the way something like what the republicans are trying to do so obamacare may be more popular now, but it hats tit has the sa problems it did last year, hire premiums, less competition and the need for fooreform is still very desperate >> all right thank you. coming up, new data on jobs and linked oin workforce report. president trump is in france meeting with president macron. we'll talk to p.j. kro jp.j.cro. ♪

[car tires screech] [bell rings]

time for today's executive eventual and launch of another

german grocery chain on u.s. soil courtney reagan joining us >> reporter: good morning. that's right, so in about an hour or so from now, this store will open for the first time it is the 14th of 100 planned u.s. leital grocery stores so far shoppers have been impressed. but competitors are watching and in some cases fighting back. kroerg h kroger has filed a lawsuit alleges that the private label called prefer selection infringes on kroger's private selection and is confusing to customers who may falsely associate the private label with the u.s. competitor. lidl of says it is proud of its pree preferred range. last quarter, kroger set about 29% of its sales came from private labels collectively.

but all other grocers should be paying attention because lidl brings significant competition in at momosphere and selectioni and price. this pineapple is 89 cents today. the stores are about a tenth the size of a regular grocery store and in some cases it may feel like there is no thrillfrills, t also has premium feel to it especially when it comes to the organic produce, meat and bakery areas. when it comes to pricing, lidl has promised that they would be about 50% lower than the competition, but a pricing study found that their prices were about 14.6% below kroger, 10 respe10% below walmart and on par with aldi this is just the beginning, but certainly a name that competitors are watching particularly those that are familiar with its presence

overseas >> sooits interestiit's interee timing comes when target is raising its estimates for second quarter and they are willing to give up on price in order to compete. lidl is lowering the bar in terms of price >> absolutely. the grocery wars are really just heating up when we think about amazon's purchase of whole foods and there are so muare so many questioning surrounding that aldi is already stepping up its game adding about 400 stores this year. those prices are quite low about on par with lidl so i think everyone will have to up their game. if target really does want to compete at least in this area of grocery. >> so six aisles i'll bet you every store you know the aisles have the same thing and that speaks to me. because if i go somewhere else,

i'm totally lost >> that is true. and in a way it's sort of trending back towards simplification in retail where for so long it was we need to offer consumers every product of every type and every kind shape and size and now folks are saying do you really need 16 kinds of kevin ketchup. >> i was in dairy and now i need a seg wway to get back to -- thy are too big. >> and that is for folks that actually still want to use their own shopping >> a lot of people use that fresh direct or -- >> i do a combination. i go to the grocery store myself >> you don't send your people? >> thanks, court coming up, ceo of lloyds talks about the cyber threat to global business.

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we're counting down to the big reveal of cnbc's stop state for business. >> north carolina repealed its controversial bathroom bill, so businesses that boycotted the state have begun to return. >> texas is still adding jobs at among the fastest rates in the nation minnesota's best category, education. georgia finishes near the top for workforce and infrastructure. >> and the winner is, washington state. >> thanks for this honor it really is an honor. >> washington, america's top state for business, 2017 mounting cyber and geopolitical concerns are slowly shifting the global insuranc industry landscape joining us now, inga beall

thanks for joining us. >> thank you. >> the deadline is approaching for the eu and uk to reach a free trade deal. a lot of businesses are thinking about how do we access the eu in the future what are you doing >> being an insurance market we are in the risk business so we've been planning this for a long time, even before the vote last year. we thought we've got to have some contingency plans and as soon as we knew the outcome, we put in place our contingency plan looking at the various countries lloyds could set up in to continue to offer insurance for the eu customers we've chosen brussels and that was after many months of discussions with various regulators we will have that up and running, our plan is, by the middle of next year so we can actually test it before the uk actually exits the eu. we need the licensing to be able to continue. it's about 5% of lloyd's global

revenues, so quite a considerable and important market for us. >> we were talking in the break about your cyber insurance industry or business, i should say, and, you know, it's stunning because i feel like only recently have companies and just the general public really been made aware of the threat of cyber hacks and attacks and so on, and yet you've been offering this for 20 years? >> yeah, yeah. >> so what are you seeing these days in terms of business acceptance, of spending the money on cyber for a long time they didn't want to spend on because it wasn't something they could point to shareholders and say, look, we spent this money and it was worth it because nothing happened. >> and of course what really happened was it started here in the u.s. and that's because of regulation, coming in, kicking in and saying, come on, firms, you've got to start getting your act together we want to know what breaches you've had, particularly because we want to protect the customers. that saw a massive rise in the

demand for cyber insurance in the u.s. lloyd's probably writes 30% global market share of this. the u.s. used to provide 90% of that but now we've got regulation coming in in places like australia, we've got it coming in in europe next year and that's going to drive businesses to actually start thinking about buying more because they're going to have to report breaches, and particularly in europe they're going to be introducing fines. and it's all about protecting the customers' data. so we've seen a dramatic increase what we're still trying to do, though, is understand how to add it up, how to had atadd the exp up because this is a risk that knows for geographic boundaries. it cuts across the whole world we're very much used to dealing with physical risks, earthquake risks, hurricanes, we've been modeling it for decades. this is a brand new risk we're trying to get our arms around.

we're trying to understand what the impact is and particularly how it impacts businesses. >> i would think even if you had one incident happen to a corporation that you don't even know if that is the end of that incident, so, for instance, a worm could get in and mutate in some way and cause more damage so from your perspective, it seems like there could be a lot of risks potentially in this new age of cyber attacks. >> some of these have been within firms' infrastructures for a long, long time, could even be years. we also know that a lot of it is about not maliciously necessarily, but employees, right, just accidentally doing something that lets something come into the system so a lot of the time we spend with our clients who buy cyber insurance is helping them build more resilience into their businesses one of those aspects is how can they make sure their employees, all of their people know what they should and shouldn't do because it's so easy just to make that one click and there it is, it's in there. >> how much do you thinkyou're going to -- in terms of

business, is this your fastest growing line of insurance? >> for sure, absolutely. we've got premiums now about $800 million, so it's quite sizeable and there are some other risks, though, because with this unrest in the world, the geopolitical uncertainty, people are buying much more insurance to protect their trade credits. when they're trading with businesses in other countries. we've also seen a rise in demand for terrorism insurance, particularly for those countries and markets where there's no national pool or government involvement, so we are seeing a rise in demand for other types of insurance when you look at what's happening in the whole world. >> fascinating, inga, thank you for joining us >> guy. >> joe where did you grow up? what's your hometown, quick? it's not a trick question. >> just answer >> quick. >> if you don't know -- >> cincinnati, ohio. >> you do know. >> the mayor of cincinnati, iojeoh, rry springer.

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stocks rally as fed chair yellen signals that rate hikes will be gradual. your trading day setup is straight ahead. health care front and center mitcconnell gets ready to reveal new details at a mid-morning meeting. plus a new linkedin workforce report find out if hiring has been hot, hot, hot this summer as the second hour of "squawk box" begins right now live from the beating heart of business, new york city, this is "squawk box."

>> good morning and welcome back to "squawk box" here on cnbc we're live at the nasdaq markets in times square. i'm melissa lee along with joe kern an and wilfred frost. it does look like we'll have a positive open. the dow extending its record-high close. looking at 22 points at the open the nasdaq on the longest winning streak since may, looking at about 22, s&p up 3.5 this morning shares of target are higher. the company says second quarter earnings will come in at the higher end of its prior guidance and comp store sales will be positive customers are responding positively to changes that target has implemented those shares are up by about 4.3% another premarket winner yandex. it will be combining its ride-sharing services with those of uber in russia and surrounding countries. it also specializes in mapping,

search and navigation technology those shares popping 15%. investors will look at two key economic reports weekly initial jobless claims as well as june producer price index. claims are expected to be down slight slee while the ppi is expected to be unchanged for the month. delta airlines releasing quarterly results and this must be important because, wow, he's here, phil lebeau. phil lebeau. phil lebeau. >> that's for sure. >> we are all benefiting from this. >> i'm good. let me give you the numbers from delta. a slight miss for the 2q earnings coming in at $1.64 relative to the earnings estimate of $1.67 a share. revenue in line with expectations at $10.8 billion. the qq margins, and we already had some guidance from them to expect it to be 18.5%. came in at 18.4% that compares to 17.4% last year couple of key metrics to keep in mind passenger revenue per available

seat now, that's the big metric in the industry, up 2.5% that's at the higher end of their previous guidance. but the cost her available seat mile will get some attention when you normalize it for the new pilot contract up 5.5%, so that's a hefty increase. the guidance for the third quarter, we'll get more details on the conference call at 10:00. margins between 18 and 20% this is what they have been talking about for some time, increasing those margins passenger revenue up 2.5 to 4.5% for the third quarter and capacity up 2.5% with the biggest growth in the domestic market again, we'll get more details about that capacity growth coming up on the call at 10:00. >> phil, how did american beat yesterday and delta not do so, what was the difference? >> american, you didn't have a beat yesterday, you have the guidance raised by american. american's earnings don't come out for a couple more weeks so their guidance was increased remember, delta raised its guidance in terms of those internal metrics about a week

ago, so what you're seeing with all of the airlines is an increase when it comes to passenger revenue per available seat mile and they're moving those margins higher and the expectation is that we should see that increase in the third quarter as well. >> great stuff. >> phil, thank you. >> you bet. janet yellen heads back to capitol hill today she will testify before the senate banking committee at 10:00 a.m. eastern time. she appeared before a house panel yesterday striking a dovish tone about rate hikes. >> most of my colleagues, or at least the median anticipated that one further increase in the federal funds rate would likely be appropriate this year, but as i say, we constantly watch the economy, the evolution of inflation in the labor market, and we'll make decisions on the basis of our evaluation of that information. >> huge. >> also on the agenda today, we'll hear from chicago fed president charles evans and lael

brainard. shares of tether pharmaceuticals -- they will poach astra zeneca's ceo snap has a price target of $22 a share. competition appears to be stable and they may be looking to lock up shares. snap bouncing back 3% but below the ipo price which was $17. the markets will get another dose of fed chair yellen as we mentioned. let's bring in the chief investment strategist, david bianca and lou bryan also joins us can she get any more dovish than she was yesterday? >> well, you framed that well. certainly the chair has acknowledged lower than expected inflation, talking about the neutral fed funds rate being less than 2% we think the fed will hike in december and probably two or

three times next year. what the fed is doing is acknowledging the concerns of disinflation and that's helping to keep longer term yields from falling the way they were doing a couple of months ago maybe they're managing the yield curve. >> lou, is this sort of a green light to investors out there in terms of higher equity prices, higher bond prices, lower dollar is the path of least resistance for most of the equity for the asset classes higher except for the dollar >> it was yesterday, that's for sure and i think it was because of somewhat of a slightly more downbeat assessment of the economy than we might have thought because of her view of inflation rather than scoffing it off saying we're really paying attention to it also the idea as david brought up the neutral rate. the last measure i have of the neutral 8 is 0.05. when you've got the pec core at 1.4, the neutral rate waiting for adjustments is right now at 1.45 so the fed wants to be

accommodative but if they raise the rate one more time then they're no longer accommodative, they're straddling neutral i think that made the market back away even more from the possibility of a december rate hike, which they had not completely bought into prior to yesterday. >> david, is it astonishing to you at all that the markets are so skeptical about december and yet economists are so convinced about december >> well, we are still convinced there will be a december hike. we think we're getting close to neutral. we said neutral is probably close to 2% when that was a controversial statement but we still believe the short end of the cousin will go up and we're still sticking with big banks in the united states. but one of the things we're also talking about, if the fed is getting close to neutral and the ecb is still negative, maybe it's time to really start looking at european banks and adding allocations to europe, not just european industrials but moving more aggressively into european banks as well.

>> lou, on that point, what about the u.s. dollar, particularly against the likes of the euro given, of course, that we've got a slightly more hawkish tone expected from mario draghi and a more dovish tone from janet yellen. is the dollar headed south from here >> we're right up at the higher edge of the range for the last couple of years. if you were to get over 115 and sustain that for a while you could have a run on the dollar versus the euro and that could be because of this shift in sentiment from the central banks. but the ec -- the shift in sent mea -- sentiment, the ecb is not going anywhere as far as this policy goes. they may taper back at a pace faster than the market assumed, but at the end of the day the fed is leaning towards raising rates. they still think they're going up in december, whether the market believes that or not. the fed is leaning towards

hiring rates and the ecb is still involved in their stimulus and very accommodative program. >> we saw the most strength in yesterday's market in reaction to fed chair yellen is in technology sort of the old thesis, kick back in, rates will remain low, where are you going for growth, you're going to technology do you still buy that? >> all year long we've been recommending growth stocks we haven't been believers in reacceleration we still like tech, we like big banks, but we're increasingly adding to europe the european economy has been encouraging, it's been strong. the euro has shown some strength here, but we don't think the euro gets too much stronger that would weigh on the european market and we think the ecb will wait for the fed to put through some hikes before doing anything significant. >> given what we learned from janet yellen yesterday, what's the key question outstanding in your mind that you'd like to hear answered?

>> actually i think they're very transparent in their thinking and acknowledging that there is tons of uncertainty as to what inflation is going to be we're debating things like the phillips curve and it's a lot flatter than history, maybe it's completely flat. taylor rules don't seem to apply to this cycle. they don't have the answer that i'm looking for, we're all debating this together what's the normal interest rate. >> lou, longer term, in terms of the changing makeup of the fed, what's your take on how that's changing we've got randy quarrls appointment. are you hopeful for a change in leadership or would you like it to remain the same >> i don't think yellen has done a bad job. i think as far as the makeup of the board, that's always interesting and adds to the debate, but the fed is the chairman's committee, so it depends who they put in as the chairman and the rest of it is interesting, but not vital >> gary cohn is nominated and

becomes fed chair, does the market go up and by how much do you think? how much is that worth to a market to have a trader heading the fed? >> yeah, i think that thmarket will go up because of his background i don't know if it's just a one-day thing or not and i don't know exactly if it's justified it's simply that gary cohn worked at goldman, so that must be good for us as david said, there's a lot of interesting dynamics going on here, and the fed could be sort of in a trick box by the end of the year, because if the inflation rate does continue to trend lower from here, as it has the last few months, and the fed does go up with rates, i think that that's very friendly to the long end and you might have a very narrow spread between the 10-year and the fed funds when the new chairman comes in and that is sort of a tricky situation. >> coming back to european banks, is that a short-term trade based on valuations changed sentiment or have they sorted things out? >> it's a long-term trade.

we are tactically cautious for the summer, for things that are -- for more policy concerns in the united states and the whole world feels that if the u.s. dips a little bit, but for the next few years, next three or four years, i think europe delivers returns, price returns twice that of the u.s. equity market led by european financials. >> david and lou, thanks. >> thank you some news in the drug market an fda advisory panel unanimously recommending approval of novartis' new leukemia treatment it genetically alters a patient's cells to fight cancer. early tests have shown promising results in very sick patients. the entire process takes 22 days and can cost up to a half million dollars. last night's vote, though, as you know, just a recommendation. a full fda vote is expected by the end of september it would be the first ever approval of a gene-altering treatment by the fda still to come, senate

majority leader mitch mcconnell set to unveil a new health care bill at a mid-morning meeting. a preview of what we can expect coming up. at 7:30 eastern, the latest workforce report from linkedin find out how hiring is going over the summer months. later, street reaction to delta's earnings and a look at the sector "squawk box" back in a couple minutes. the power of innovative thinking. the power of 100 of the world's top companies. the power of an etf. the power of qqq. the thinking we put in,

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welcome back senate majority leader mitch mcconnell is expected to share

with republican senators the details of the new version of its health care bill at a mid-morning meeting. kayla tausche has more on what we can expect. good morning. >> good morning. the details of the bill will be shared and leadership will take the temperature of republican senators who have been divided over how to amend this bill since its first release nearly a month ago. some expected changes include preserving the investment income and payroll taxes from the affordable care act, adding more money to fight opioid addiction and a new stabilization fund and creating a high deductible plan option vice president mike pence was in kentucky stumping for the bill and will likely need to cast a tie-breaking vote. no more than two republicans can vote no for the bill to pass aides have suggested two guaranteed nos to be susan collins of maine and senator rand paul of kentucky. yesterday after seeing an outline of the new bill, paul called it an insurance bailout superfund and said he'd still vote no. >> when we looked at the bill a week ago and i said -- or two

weeks ago and i said i couldn't support the bill as it was they have now taken the bill and made it worse. they have taken any pretense that this is a repeal bill and they have made it a bill that basically is a spending bill >> many other republicans, especially those from states that expanded medicaid, are choosing to wait until the 11th hour to say how they'll vote one other determining factor may be whether an amendment allowing insurers to offer nonexchange plans makes it in. as recently as yesterday an aide for one of the bill's authors, senator mike lee of utah, didn't know whether it would be in there. house aides have said they'll put off their recess if the senate produces a bill for them to take up, but we'll have to wait and see how that goes and how, joe, the reception of this bill is and whether it's any different from the first time around. >> right we'll talk more about it now, kayla, stay tuned. joining us, former new york lieutenant governor betsy mccoy and former vice president of biden's economic advisor and a cnbc contributor, jared bernstein.

there he is, jared how are you doing? >> i'm good, thank you. >> right off the bat, i want to ask you a philosophical question, jared. >> sure. >> is it what we should intend to do in terms of medicaid taking on such a big role in the health care of so many americans, is that a viable way to approach health care? because a lot of aca, a lot of obamacare, a lot of the additions are into that program and it really has exploded in the past seven years from what was a small -- relatively small program. it's now providing a lot of health care. some states one out of four people are on medicaid >> yeah, i think -- >> should we allow it to just grow or is it something we should try to do to not have it be the health care of so -- as the answer should we just go to single payer in your view, jared? why mess around with medicaid? >> i think single payer has some

attractive characteristics and it's very common in european countries that spend half to two-thirds of what we do and manage to cover everyone with better results that said, that's a way heavier political lift than anything we're talking about. i like the way you teed up the question the important point, though, is something you touched on which is medicaid is just a vitally important program in the lives of literally 70 million americans. so the kinds of changes that we're talking about, i'm happy to get fiphilosophical, but at h end of the day this is a political decision that's going to make health care for those many millions of people far less affordable if you go with either the senate or the house plan and i include the tweaked senate plan half of all births are now covered by medicaid. two-thirds of people in nursing homes are covered by medicaid. now, if you want to dial that back, you have to figure out another way to support those folks with equally affordable care and eventually what you're going to do is reinvent medicaid so it's actually a much more successful program than it often

gets credit for. >> the single payer, just the description of how you described that in other countries, you talked about coverage and with better outcomes. you have coverage, but a lot of places you don't have any access, jared. and the reason that medicaid is so cheap is because they don't pay doctors and you're running out of doctors that are even going to -- i could make it cheap too if i paid 60% or 70% of what medicare pays. >> i disagree with you because i focused on outcome its for a particular reason. you can't have positive outcomes without access. >> you know that there's a lot of different reasons why -- you can do single payer with 9 million people try it with 300 million people, some need it well, it's just -- i don't know. we have different -- betsy mccoy is here. >> let's talk to betsy let's see what she has to say. >> she's loaded for bear with this medicaid stuff. >> first, i'd like to address the misconceptions, the demagogue reout there. we hear again every day on the

news that millions of people who are currently on medicaid are going to lose it that is not true because both the house bill and the senate bill grandfather in those who are currently on medicaid. they will not lose it. so that's number one but number two, we do have to rein in the rapidity of the growth of medicaid right now 74 million americans are on medicaid. that's 20 million more than on medicare, the universal program for the elderly. medicaid is crowding out aid to schools, roads, other things that we need it's the single largest item in many state budgets, so there has to be a way to control the growth of this program, which as you pointed out, joe, was supposed to be a safety net program. but urngd tnder the obamacare r turned into a rapidly growing program with the intent of turning it into single payer >> it was almost a trojan horse. you know, i don't mind if you just tell us you were doing

that, jared, it would have been a little better than -- >> well, i don't think that was a secret and in fact the medicaid expansion -- >> wait a minute gruber said there are a lot of secrets in there. >> the medicaid expansion was a well understood part of the program. in fact the supreme court tried to dial it back. >> it's not like republicans could have stopped it. >> i'd like to point out why it's so important to pass this repeal bill. number one -- >> betsy, let's talk about the numbers for a second. >> just a me, jared. there are 12 million americans who are currently paying penalties because they have chosen not to buy these plans. they're unaffordable and they offer benefits that these people don't want number two, there are hundreds of thousands of people who have been demoted from full-time work to part-time work because of the employer mandate and many, many employers across the country who are being discouraged from hiring because of the obamacare employer mandate. both of those things, the individual mandate penalties and the employer mandate will be

repealed in addition, hundreds of billions of dollars in taxes will be repealed and we need that in order to clear the runway for tax reform. what this nation is waiting for is tax reform. >> all right, let me argue with you about some of your number, some of which are correct. >> we can't get there until we pass this repeal bill. i don't know why he's talking over me. he has plenty of time to talk. >> on medicaid, it is a factual error to say that millions of people won't lose coverage. >> you are wrong the cbo -- >> the cbo -- >> the cbo looked at the numbers and they're projecting how many people -- >> 10 to 15 million would lose medicaid. >> that's what they did. >> 10 to 14 million people according to cbo. >> how many people will be enrolled in the future. >> so we're now into the alternative news segment of the discussion >> jared, you're saying -- >> people who are currently on medicaid will not lose it. it is in the bill.

>> you're saying 10 to 14 people that are on? >> not on now. they're not going to lose it they're guaranteed it's grandfathered in. >> according to the congressional budget office, because of the reforms proposed, the medicaid cuts proposed in both the house and senate bill. >> they're not cuts. >> 10 to 14 million fewer people would be covered by medicaid in 2026. >> but those are not currently on medication. they're slowing the growth in future enrollment. that's not the same as losing coverage. >> so the other factoid that betsy has wrong is this business about part-time work in fact there's been a sharp decline in involuntary part-time work there's been some increase in voluntary part-timers. that's something we want i don't think betsy is saying people who want to work part-time shouldn't be able to >> i can give you a list. >> that number has come down sharply. >> i can give you a list published in investors business daily of hundreds of employers across the country, not just companies but municipalities, junior colleges, senior

colleges, county governments that have reduced full-time employment and demoted people to part-time status to avoid the employer mandate it is a job-killing part of obamacare. >> that's not what the bureau of labor statistics numbers show and that's what you want to go on here. >> no. >> look, this is not that complicated. >> look, the employer mandate -- >> joe, help me here. >> okay. >> moderate. >> it adds too much to the cost -- >> i don't want to talk over you, i just don't want to let you filibuster. >> okay, go ahead. you've got like a minute. >> thank you look, the cbo scored this and they found that over 20 million people would lose coverage over the next ten years. >> wrong lose is the wrong word. >> hold on seven million would choose not to buy private plans. >> that's not a controversial claim and it's a lie -- >> it is a controversial claim because you've used the wrong word they're not losing coverage. >> this is what they do on fox news this is not what we do on cnbc

on cnbc we actually try to have discussions. >> it's a lie. you just told a lie. they're not losing coverage. >> all right this is just not the way to have this discussion. >> read the cbo report. >> jared, you're saying the word lose when it's a fact fewer peep will be added down the road. you know you're doing it. >> 20 million fewer people are not have coverage. >> it's a loaded point to say they're losing it, that you're yanking it, that's different than saying fewer people will be on it. >> no, it's not. it's saying if you didn't repeal the bill -- if you didn't repeal the bill, over 20 million will not have coverage. >> they're playing music, but to me these two voices at the same time is music for cable. jared -- >> he's distorting it. >> i'd love to come back and have a rational conversation about this with someone who's -- a much more fact-based discussion. >> we don't need any insults if you had the facts on your side you wouldn't be insulting

me. >> we've got to go thank you both and maybe we will do it again because it was something anyway. coming up, summer hiring season has been hot, hot, hot, this according to linkedin the latest data up after the break. first look at u.s. equity futures. we are looking at a higher open. s&p up by 2, nasdaq up by 20 stay tuned, you're watching "squawk box.

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good morning, welcome back to "squawk box" here on cnbc we're live at the nasdaq in times square the chicago sun-times newspaper has been sold to a group of investors that includes a former chicago city council member. tronk had also been seeking to buy the sun times. the justice department opened an antitrust investigation into that possibility but closed that probe after this deal was announced. the state of illinois has dodged an unwanted distinction the triple minus credit rating is the lowest rating still considered investment grade. illinois could have become the first state ever to be downgraded to junk which s&p said they might do if they didn't reach a budget deal. opec compliance with production cuts fell to its lowest in six months during june compliance dropped to 78% from 95% in may among the biggest offenders, algeria, ecuador, iraq and venezuela. federal reserve chair janet

yellen will appear before the senate banking committee today that's after giving the markets a nice boost yesterday on signals about the pace of rate hikes and steve liesman joins us i started watching when i went home and said, you know what, i'm going to talk to liesman and you're going to have to summarize it for me. but i don't want you to skew it. >> you have a good skew antenna. >> that sounds strange, but go ahead. >> it's so great to come in every morning at 7:30 and do my report here. >> go ahead. >> the big news from fed chair janet yellen's testimony yesterday, the idea that the fed's end point that this cycle could be closer than some in the market may believe that is there isn't really very far for the fed to go from here. >> because the neutral rate is currently quite low by historical standards, the

federal funds rate would not have to rise all that much further to get to a neutral policy stance. >> okay. now take a look at the fed's forecast for how far they think they have to go. they have 2.8 by 2019, but 3% is the long run rate. maybe yellen is saying, you know what, we may get to 2 and coast there for a little while the market kind of has that dialed in already but it's different from what the fed has been saying in its own forecast. here's a quick summary of everything yellen said that matters, i think balance sheet will happen relatively soon. could be a july event, more likely september event the next rate hike, it's likely this year but it's going to be inflation dependent and the inflation dependency of that was kind of added. it was a little more circumspect that the next rate hike would come by december the terminal rate, lower than you think as we just discussed jpmorgan saying -- you had bruce cashman on there appears to be an emerging view at the fed that the precondition for balance sheet

normalization relates to economic growth whereas the precondition for another rate hike is better inflation data. so right now the rate hike running just 41% it's traded well above 50% we'll see if yellen feels the need to bring back any of the dovish comments she made, but i suspect she's just fine with what she said yesterday and how the market took her words. >> the neutral point, as you said at the top, the most important thing. does that mean that the peak of the fed funds rate in this cycle, however good the economy is, could be just a couple of -- couple of quarter point rises from here? >> yeah, maybe three i think two is a number to start to think about we've been talking about three the whole time so here's the problem. one, the neutral rate is a moving target. right now it's thought to be at or near zero as the economy keeps going and growth increases and inflation comes up, the neutral rate is going to rise somewhat, but nobody really knows. >> that's what i think >> what do you think >> i think that nobody really knows. >> well, that's for sure. >> but we don't know that

inflation stays quiet forever. and i don't think she knows whether this is absolutely a different terminal rate than we got in previous cycles i don't think she knows. i liked hearing it but i don't think she knows. >> they talk a lot about this r star, which is the neutral rate. i did a report not too long ago, the fault is in r star. >> no. >> you don't remember? >> no. >> melissa is shaking her head. >> well, she went to harvard. >> steve, we didn't get any changes to long-term inflation targets which there was some talk of beforehand. >> no, but they're a little more uncertain about the inflation and inflation dynamics she still says factors depressing deflation are temporary factors. they're going to roll off. the decline in telecom prices but there was a little more up certainty about that 50-50 is probably a pretty good shot for this year but by september or maybe this month they'll announce that balance sheet roll-off. >> steve, thank you very much. >> it was my pleasure.

>> our pleasure. >> i really enjoyed it. >> so did i. >> he said i had a skewed antenna. >> you can't get over that, can you? >> no. >> how did you interpret that? >> i kid melissa about harvard harvard was a glimmer in someone's eyes when his school was like 800 years old or something, right >> john harvard went to cambridge. >> you went to all of them, didn't you cambridge, oxford? >> just oxford. >> just oxford >> it was fun. best years of my life. >> that's sad. really these aren't the best years of your life. >> until he met you, joe. >> until our first joust. >> and you're not married yet. you haven't had children actually you're not married yet. these should be the best years. >> november 2015 our first joust, joseph. linkedin out with its monthly workforce report

hiring this summer is red hot, up 12% year over year. may and june were the strongest months for hiring since the summer of 2015 with the biggest increases in oil, energy, manufacturing an transportation. let's bring in daniel roth, linkedin editor in chief to bring in the highlights. surprisingly strong is it the main takeaway. >> this is the strongest we've seen since 2015 and it's happening in industries that are doing incredibly well. so manufacturing, oil and gas, auto, engineering, aerospace, you're seeing places that are about using your hands, about building things, those are the places that are doing well financial services is doing well a lot of this looks like it is industries that were under the previous administration thinking we are not going to start hiring, we're not going to do things under trump they're starting to open up the doors and bring people in. it's unclear whether that's exactly what's going on but there is a feeling among employers that they can hire, they're building toward the future, there's less regulation, now is the time to bring people

in. >> you're saying may and june is the strongest summer since 2015, but if those are true trump-related effect, has it been that strong since he took office >> we saw it in january and it's happening everymonth since then. >> particularly the oil and energy sector that you said was one of the best performers, that's up to what date and does that factor in the recent oil price decline or you think this is strength in the industry regardless >> that's a great point. we've seen strength in that industry almost every month, but a lot of it probably has to do with the rise in oil prices. when you see oil prices going up, there is -- the oil companies need to hire and this is all energy solar installers, big hiring solar installers, there is a desire to get people in who can do these energy-related jobs. >> what about the retail sector. lots of people with amazon's purchase of whole foods. are we seeing already or do you expect it to come as that acquisition rolls out lots of retail jobs disappearing as automation takes hold? >> this is fascinating we started looking into the

question of this whole retail apocalypse this has been covered really well, everyone is calling it, there's huge closings, so we wanted to know whether the data backed it up what we're seeing is it's not happening. there is hiring going on, there's strong hiring, there is demand for people who have retail experience. but it's happening in certain pockets. so san francisco, washington, new york, denver, places that are doing well, cities that are doing well need retail workers and you still have a situation where 90% of all retail purchases are happening in stores. >> but a city like san francisco, the issue at this point is the cost of living is so high, how are you going to have that cashier living in the bay area. >> it's not just cashiers, health care workers. if you look at the skills gap in places like san francisco, seattle, portland, austin, really hot cities, there is a massive demand for skills in places that don't pay well but where people who are doing well actually need people to fill those jobs, so health care, education, retail, food and

beverage employers can't find people to fill those jobs because it's so expensive. >> what happens historically do wages go higher >> wages go higher people leave so you can watch the flow of professionals around the country leaving san francisco. now, san francisco used to be a net gain in hiring every month, one of the top hottest places to attract workers. you're seeing it starting to drop seattle, portland, austin, denver, charlotte, those are the cities that are now attracting workers, a little bit cheaper. >> that's on a regional basis. where are the skills shortages on a sectorial basis >> health care is probably the biggest one. there is demand across the country for health care workers who can do health care administration who know how to run the big systems, to be able to run entire health care operations. and you see it in tech, there's a lot of software demand that's largely because everyone has become a tech company. no matter what you're in, you need people who have certain tech skills. >> those types of jobs,

traditionally they're filled through immigration or through training here, and does that make a big swing factor on terms of companies -- >> we've been looking whether the h1b slowdown, whether the government clamping down on h1bs has had an impact on hiring. we haven't seen it in our numbers but are continuing to look for it. immigration definitely plays a role in filling these jobs right now the jobs, though, they're being filled by everyone there is just such demand that people -- employers need workers no matter where they're coming from. >> dan, thank you very much. dan roth of linkedin. i have to say whenever there's the visa debate, i'm glad no one ever mentions the 01b. that's the one i'm on. whenever they talk about clamp down, it's always h1. >> if h1 is the high tech, what is 01? >> h1, those are the people we really wanting. >> maybe the 01s are expendable. >> i think it's crucial that

they keep them as long as it's anyone -- >> there's a reason why it's 01. >> you're not really cut out for h1. >> i don't care. as long as 01 sticks. >> why don't you take the plunge and just do it >> you mean become a u.s. citizen? >> it takes time i think it's eight years. >> have you started the application process? >> i have eight years. >> to even apply. >> have you looked >> listen, i'm 18 months in. i think we'll see. but, no, i'm pretty sure it's eight years to start getting a green card. >> let's talk about it in a few years. i'm not sure -- let's talk about it >> if the 01s -- >> well, let's see let's talk about it. coming up, stocks on the move ahead of the open on wall street futures at this hour pointing to a higher open. the dow looking higher by 4 points, nasdaq by 17 take a look at the yield on the 10-year note and it was janet yellen that sent yields lower

across the board yesterday 2.323% is where the 10-year is at we'll look at the price of oil after yesterday's gains on wti, we're looking at a down picture, down 0.8 on brent as well as wti. "squawk box" will be right back. . ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that. (upbeat dance music) (bell ringing)

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we're back i'm getting some details on this 01b thing. the 01 visa is for individuals -- or for an individual who possesses extraordinary ability in the sciences, arts, education, business or athletics. then it ends with or in the tv industry it does. it does. or in the tv industry. you've got to be really talented in something useful or if you're in tv, you get one too. >> well, that's lucky that was added at the end or else i wouldn't be here, that's for

sure. >> i was reading wow, this describes you exactly. extraordinary ability, 6'5" -- >> i don't think you get one for height alone, sadly. >> looks to die for, hair. everything everything you're flawless, you've got no flaws. let's take a look at some stocks to watch this morning. >> he's blushing >> you know what, because he believes me. >> no, that's not when you blush. you blush when it's embarrassing. >> because it's so true. seagate technology was downgraded and barclays cut the price target they said they have already cut much of the cost out of its operation, as much as it can, and several other factors are shifting market sentiment in favor of rival, western digital. vantiv was upgraded

they expect vantiv to benefit significantly from a transaction. a drug maker is rising in premarket trading. they granted orphan drug status for a muscular dystrophy drug. you need a little protection to make up for all the r & d that you spend on something where you'll never have a huge patient population target is out with upbeat earnings news and issued upgraded guidance saying comparable sales will be positive and earnings above the high end of its previous guidance previous guidance calling for earnings per share of 95 to $1.15 per share. the current cup census estimate is $1.06 per share the retailer is doing well in the face of a competitive environment. shares of walmart and kohl's are

up 1% premarket as well. coming up, the military are relying more and more on drones to help capture the bad guys up next, meet a former special ops army intelligence officer who was responsible for hunting the top two isis leaders using drones. oscar health signing a deal with humana. they are looking to pa yond individual health care. they will join us, we'll be right back your insurance company

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executives gathered at the white house recently meeting with president trump on the state of their industry. for more on the drone business let's bring in brett velakovic, a former u.s. army special ops intelligence officer i don't want to screw up your name, brett, and now founder and ceo of drone service company, expert drones. he is author of "drone warrior." brett, it's controversial, thanks for joining us. but what we've accomplished using drones, as president obama

and the president was criticized for it, but incredibly probably beneficial to society that it was used in those circumstances. would you not agree with that at this point, get that out of the way? >> absolutely. we've been fighting wars for centuries and never before have we had this ability to know so much about our enemy this isn't just a little gray helmet in a trench 100 yards away now we have drone technology just like businesses use data to drive their decision-making processes, we use data and intelligence information from drones to help us hunt the enemy and help us basically save lives. so every single war going forward will be utilizing the benefits of drone technology from here on out because of how beneficial it is to the war fighter. but the future of drones is not warfare, it's -- that will always be important, but really the future of drones is the private sector and enabling businesses and employees to do their jobs more efficiently.

>> i mean i -- looking at the uses that you've identified with your business, some of them i even feel like after talking about what drones have done for us in warfare, i feel like it's almost -- i feel kind of strange talking about some of the mundane uses for it, but it's very interesting did you see delivering alcoholic drinks and actually shaking the alcoholic drinks to people that have ordered them, brett see why i'm having trouble switching from warfare to something like that? but is it really possible? there it is. >> we've done it look, the truth is military drones -- drone technology is evolving beyond its military origin to becoming powerful business tools there really isn't an industry right now -- i tell leaders of industry all the time, that if you're not thinking of ways that drone technology can help make your company more efficient, you're already behind because the amazons and facebooks of the world, they get it one of the examples you're talking about is we had a

client, pepsi, come to us and they said, hey, how can we give drones a voice within the beverage industry. so we said, hey, why don't we build a drone cocktail bar where we modify drones, have them shake drinks, mix drinks, deliver them to people's tables. while it's not necessarily any faster than a bartender shaking a drink, it's entertaining, and so people are using them for marketing. we have industries like the construction industry, agriculture, insurance companies. we are in the midst right now of a drone revolution and people and business owners, they need to get with it because we're going to see a lot more use cases of this going forward. >> brett, i read in your notes that with your business, you now make a lot more money servicing drones, ie repairing them when there are crashes than the outright sales oerriginally. how far away are we from having serious human injuries or accidents from drones that could set the industry back a long way and prevent it from seeing

amazon using it to make widespread deliveries. >> that's a good point the truth is a lot of these manufacturers right now are working on sense and avoid technology and basically obstacle avoidance we're seeing some of the newest drones on the market being able to maneuver around buildings and starting to get to this point where they could be crash-proof, which is obviously bad for business because right now people are buying drones and crashing them and there's a big industry for people than how to repair these things. when you think about just in 2014 there were 450,000 drones that were sold in the u.s. and just last year we were close to 2.5 million. this year we're talking about over 3 million so just think about the amount of drones that are going to be in the airspace. you know, so now there's this whole ecosystem in silicon valley where people are making apps specifically geared towards how could we help the construction industry, how could we help real estate developers, agriculture, farmers, and there's all these industries now that can benefit from it and

really it's about making it safer, increasing their endurance, making sure they're not invading people's privacy, because that's obviously a big concern, but in the end it really is about how we can kind of use drones to create this positive impact on humanity and change the world. >> just coming back to the use in warfare, you said we'll never go to war again without having huge amounts more information on our opponents, our enemies than they do, but also i read that china actually makes more drones than the u.s. does so who's got the best technology and how confident are you that the u.s. will always be ahead of others if a war does come up >> quite frankly, that's the thing that makes me nervous because i see both sides of that i've seen the sensitive government top secret-type technology and then i see the stuff trickling into the private sector right now we have hands down air superiority when it comes to military drone tech, like hands down we're the best at that. but a lot of that stuff has been restricted to this kind of government side of things and hunting terrorists and

counterterrorism now, the problem is, and we are looking at this data just last night for consumer drones and the chinese actually own close to 80% of the consumer drone market, which is insane, and we've really missed this gap and i worry that we have to be careful and make sure that we're focusing on that as well. >> brett, love that, very interesting, thanks. thanks for being with us this morning. "squawk box" back in a couple minutes your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall.

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one that keeps you connected to what matters most. earnings season takes off. delta under pressure after reporting results. reaction from the street is straight ahead. yellen round two stocks look to extend gains as the fed chair returns to the hill for her second appearance before congress. plus president trump back in europe the commander in chief arrives in france for a meeting with the country's president. we'll tell you what's on the agenda as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york. this is "squawk box. >> good morning. welcome back to "squawk box" here on cnbc live from the nasdaq

when morgan brennan is on, you combine good morning with -- >> you combine it. >> you can combine it. >> you love -- >> i love europe, i do. >> especially france. >> i think it would be a better place if everything -- you know, just a few -- if you could start a business, a brewery in greece, maybe we wouldn't be constantly worrying if they're going belly up. >> youwouldn't buy greek beer, though, would you? >> what are you saying >> buy their olive oil and other things like that. >> okay. >> you love the sports in europe as well, don't you soccer >> you know what i think they need to do. >> you do like tennis. >> we're starting to adopt a lot of things. football goes over there and you like it. real football. >> you mean american football. >> along with wilfred frost, melissa lee, andrew and becky are off today. the nasdaq is still pretty

strong on a relative basis s&p is up 1.5. a little over a point. dow jones up just under 6 and the nasdaq up 16 treasury yields were moderating yesterday. today 2.32 on the 10-year. oil prices have been in a range with 45 as the midpoint. we're right about there today, 45.07. among today's top stories, uber is combining its services in russia with yandex. yandex is a producer of search, mapping and navigation software in addition to providing ride-sharing serves. you can see it's up 22% today. janet yellen heads back to capitol hill today she will testify before the senate banking committee in just a few hours. yellen appeared yesterday before the house panel striking a dovish tone about future rate

hikes. amazon is reportedly planning to release another echo later this year. the end gadget blog says the new echo will have a smaller smart speaker and have round edges and also have a new cloth-like exterior similar to that of google home and apple's upcoming home pod. delta out in earnings. the airline reported an adjusted quarterly profit of $1.64 a share. that was three cents below estimates. revenue was essentially in line. revenue per available seat mile was higher by 2.5% joining us on the squawk news line, joe denardi. are there winners and losers in this quarter with the major carriers, joe? why the three-cent shortfall and others have been above expectations, right? >> yeah, i think results in the quarter were largely in line they missed our estimate by a couple of cents just because we were slight sleely ahead of the

guidance the outlook for the third quarter is a little better on the revenue side and a little worse on the cost side so i think that may be why the stock is indicating down a little bit. >> what issues are specific to delta at this point? we know about united and still dealing with some legacy issues and merger type issues what is delta trying to -- what are managers there trying to do? >> yeah, i think what differentiates delta over united and american is the margin premium they have over those two carriers and i think what's important to delta bulls at this point is proving to the market that they can maintain that margin advantage. i think the bulls on united and american like the idea that they can catch up on margins and the earnings power associated with that, so i think delta needs to prove their margin advantage is sustainable longer term. >> is there -- are we right at where we're going to stay in terms of the number of seats that we see occupied on the carriers they finally -- warren buffett finally went back in, or at

least his company did. that would have never happened if these guys continued to do the things that have hurt them in the past. so they really know how to manage their businesses now in terms of keeping planes full >> yeah, i think that's certainly a part of it, but i think what a lot of people miss is that what's truly different about this industry is where they make their money. and 10 or 15 years ago, you didn't have bag fees, you didn't have change fees, and the amount of money that these airlines make from selling miles to credit card companies is just tremendously underappreciated. and that's what makes these businesses better and more sustainable longer term. that's why ultimately they'll get much hire multiples than they get right now delta trades at nine times earnings right now if they can prove to the market that it's better business over a full cycle, that multiple will go up. >> joe, i think that is a very underestimated by investors in terms of -- basically when chase, for instance, has a card that offers points, chase is paying the airlines, correct do you think investors are

appreciating that story? we see every day all these credit cards out there offering all sorts of airline points, these joint sort of credit cards, whether it be a united mileage plus or a delta card are investors factoring that in? >> absolutely not. and i think that's really the truly underappreciated part of this story when you spend on your co-brand credit card, you earn miles, the bank needs to buy those miles from the airline and they're paying the airline much more per mile than it costs the airline when those miles get redeemed because the airline is delivering to them a very profitable and sticky customer and that business has exploded in value over the past several years. because of consolidation, airlines have been able to negotiate much more favorable terms from the credit card terms and it's resulted in a massive shift on who makes money on these cards from the issuers to the airlines it's not appreciated because of the disclosures that airlines provide around that business are

inadequate. >> joe, where are we delta in the battle against the middle eastern airlines some interesting news yesterday out of american and their battle with the middle eastern carriers yesterday. >> yeah, i think -- i think delta, united, american, are all on the same page in terms of wanting to exert as much political influence as they can, you know, in their hopes of leveling the playing field it remains to be seen how effective they're going to be because really on the other side of that, you have boeing to some extent and the country's largest exporter they don't want to see any constraints put on those airlines' ability to grow. so we're not particularly hopeful that anything of substance gets done. but we'll see. >> that's amazing. you're right, joe, people don't think about that but i've seen all these offers andrew is very smart about which credit cards you get these unbelievable deals. but everything we spend goes so

we get one pass miles like united >> roughly 50% to 60% of delta's earnings or american airlines earnings comes from selling miles to credit card companies. >> 50% of earnings >> yes >> not of revenue. >> of earnings but that's still -- that's a staggering number. >> i don't even get that mad at my wife when she spends money because i'm getting the miles. i mean it's not perfect, it's not a great trade. >> you give me a credit card, i'll get you miles too it's easy. >> i don't know, that might not go over well with penelope, i'm not sure thank you, joe, i appreciate it. i learned some things there. >> thank you other talks to watch, check out shares of target they are up in premarket the company says second quarter earnings will come in at the higher end of its guidance and comparable store sales will be positive customers are responding positively to changes target has implemented. those shares up 5.5%

other retailers, walmart as well as kohl's, dollar tree, macy's, they're all higher today. snap was upgraded from a buy to a hold. the analyst acknowledges the recent sell-off but says near-term risks to revenue may be overstated. shares of teva pharmaceuticals getting a pop on reports they will poach rival astra zeneca's ceo. astrazeneca's shares are down lower on that news. president trump arriving in france joining french president emmanuel macron for a news conference later today joining us is p.j. crowley, former assistant secretary of state in the obama administration and author of "red line, american foreign policy in a time of fractured politics and failing states. good morning to you. >> good morning. >> thanks for joining us i guess the first question is, is how popular or unpopular is president trump in france at the moment >> he's very deeply unpopular in

france and this presents an interesting conundrum for president macron on the one hand the politics would suggest that he should push and prod president trump on climate and other issues when they're together in public later in the day on the other hand, he has the opportunity to become kind of the trump whisperer in europe. under george w. bush you had a great relationship with tony blair. with barack obama, it was angela merkel so who's going to step up and kind of be the connective tissue for the trump administration from europe. macron has that opportunity. >> but that would be a remarkable turn-around, if that was the conclusion of today' meeting compared to those meetings, the handshake, infamous handshake at the nato conference around about a month or so ago. >> well, it is but it is a surprise that macron made the invitation, you know, to president trump to come and it's been a surprise that trump accepted on the one hand, you know, from donald trump's standpoint this

is an opportunity to be presidential this is what presidents do, you know, confer with foreign leaders on key subjects. the key subjects today being vladimir putin, counterterrorism cooperation and syria. and obviously presidents also revel in the opportunity to commemorate important historical events so this is a plus for trump. what's unusual, obviously, is the context of this trip this is president trump's first public appearance since the g20. it's the first public appearance since the revelations of the e-mails from donald trump jr so he'll be pushed in this press conference today on that and on whether he accepts vladimir putin's rejection that russia interfered in the 2016 campaign. >> talk a bit more about the position in france, not just macron's position, but towards russia because it was often not focused on key topic at the

french elections where you had marine le pen and others pro russia it was really only macron that was anti-putin so can trump find some ground there with the rest of france, even if it's not with mr. macron >> obviously and trump himself kind of weighed in in the election he seemed to favor le pen. but this is an important relationship france is one of the most capable of america's allies. it does spend significantly on its defense so that passes that kind of trump bar. it would be a very highly unusual relationship, but the fact that both -- that the invitation was made, the invitation was accepted, there's an opportunity here. and i think for president macron, he's had his own meeting with president putin since he's come to office they have a chance to compare on that and i think one of the questions here will be to what extent does

trump move on this putin question you know, he did say yesterday in an entinterview with reuters that he did push putin for 20, 25 minutes, but does he accept putin's denial or is he going to say that he needs to see more from putin actually that would be something that i think macron would respond to as well because, obviously, france itself had its own contest with russian interference late in the campaign obviously resisted that. >> p.j., thank you very much for joining us this morning, much appreciated. and that trump/macron conference scheduled for about lunchtime today eastern time. oscar says it wants to humanize the industry. one of the first steps, a partnership with hugh mania. plus media veteran ben silverman helped green lit shows. later, why anything you say

can't necessarily be used against you in a job interview, at least if the eu gets its way. stay tuned, you're watching "squawk box" on cnbc ♪ you're gonna have dizziness, nausea, and sweaty eyelids. ♪ ♪ and in certain cases chronic flatulence. ♪ no ♪ sooooo gassy girl. so gassy. if you're boyz ii men, you make anything sound good. it's what you do. if you want to save 15% percent or more on car insurance, you switch to geico. it's what you do. next! ♪ next!

welcome back to "squawk box. american airlines is ending a shared agreement with qatar and ethiad airlines. that's where they share the same flight, each marketing under its own brand and flight number. american said the decision is due to what it called illegal subsidies that these carriers receive from their governments qatar says it will buy up to 10% of american despite that decision. health care industry giant hu humana is partnering with oscar health joining us now is oscar health ceo and the cfo. gentlemen, great to have you with us. this is oscar for business specifically so you're going after the business market with humana humana is providing the network of doctors, and what do you bring to the table

>> what we spent the last five years building is a different kind of insurance company. the health care system is frighteningly complex and overly costly we said we want to start an insurance company where the insurer helps you simplify that experience, connects it up more, connects the dots for you in navigating this complex health care system. what we do uniquely well, i think, and what other partners see in us like humana is we are able to engage individuals and members around the health care much earlier on and in a much more deep kind of way. we have a very personalized service for people, watching over your shoulder as to what's happening with you as you navigate the health care system. with the click of a button, you can summon a doctor and about 70% of all oscar members get treated over the phone that's a beautiful combination with what they experienced for businesses in the national area. >> people enrolled with oscar, they have a much greater percentage use of telemedicine

for instance, that's what you're talking about. in terms of the business perspective, though, does it cost businesses less because they're managing the health care costs earlier on in the process? >> the big thing it does do is attack costs, which i think is probably missing from the debate and what we think we're in a unique position to do with great technology and great member experience is that we can work with partners like cleveland clinic and humana in order to get integration to drive better outcomes and lower costs. >> does it preclude you -- does this deal preclude you from working with other hmos on other deals? >> we have a big landscape where week do partnerships we look forward to doing more of these things for a very long time. >> you've had to pull out of markets because of aca, it got too costly to operate in certain markets. when you take a look at what's going on on capitol hill, we're expecting the latest version of the republican plan today, what

are you looking for in terms of the impacts on your business and how you do business. >> a couple of thoughts on this. i just still don't think that people will be crazy enough and suicidal enough to throw 25 million people off their health insurance. >> so you don't believe in repeal, that they will repeal? >> i believe that there will -- at the end of the day and without calling the play-by-play be a plan that continues to cover tens of millions of people who have found coverage since the days of the aca. i'm very optimistic about that i do think that what none of the bills that i've seen so far address really is the fact that the u.s. health care system is too costly by a mile we spend about twice as much per gdp as any other rich country in the world. a bypass surgery costs $78 in the u.s. and $34,000 in switzerland, for example and i want to see some things in that bill that start addressing that problem there isn't enough competition in the value chain of health care i do think if you consumerize this market more --

>> more transparency. >> more transparency, xactly, more choice for consumers, you can attack some of the underlying issues. if you, for example, were to give employees the choice of buying a plan, you could free up to $150 billion per year in more income to americans choosing to buy different kinds of plans. >> wow in thamerms of oscar, you're a startup essentially and looking to expand. when you take a look at what is being proposed, what could hurt you the most, what could help you the most >> regardless of where the debate ends, we think we're well positioned because people are going to need health insurance and we think with our technology platform, focus on consumers, we think we're going to be in a position to grow a very big business over a very long period of time. as long as we're stable, i think we'll be fine. i think that as we focus on investing innovation, it's with partners like humana and partners like the cleveland clinic that make us super optimistic.

>> that's a very diplomatic answer at the same time, with this debate going on and the uncertainty with health care, are you at all pulling in your reins? are there any markets you're saying, you know what, maybe we won't enter that market because things are a little uncertain right now. there's got to be something. >> so we are about doubling our footprint for next year so we are optimistic about even the individual market. in nashville, we're rolling out oscar for business with humana and we plan on going into the individual market. we think it's a market that you can make work. if you look at the texas marketplace, a market where you didn't have medicaid expansion, the average risk from 2015 to '16 came down. the population insured was healthier than the year before but there are some markets where that stability hasn't really necessarily occurred and more work needs to be done to stabilize the markets. i do think if you go ten years out, u.s. health insurance, u.s. health care will look much more like we and others envision it there will be deep integrations in the way we have built them with the cleveland clinic between insurance companies and

between hospital systems there would be more risk sharing, more individualization, more choice, more convenience with televisits and so on. that's what we're positioned well for i want to say let us do the work, because once we are in the markets, we will get that growth, about 35% of members to oscar come because friends and family tell them about oscar the first companies in new york that bought oscar for business bought them because they used to be oscar member and now run a business so as long as we can do our work, i think it will push the system forward. >> got it. thank you, mario and brian. >> who's oscar oscar is josh's great grandfather. but why go back generations to get a name -- why josh's great grandfather? >> he immigrated through ellis island and the immigration official couldn't spell his actual name, gave him the name oscar.

josh, later on was in the e.r. and was confused about how this all works. he said this is almost like ellis island back in the days. >> mario saying mario carts, mario. so mario health, people would say no, no, no oscar health is pretty good. >> thank you. >> all right, thank you. we'll see you again, i'm sure. this is three guys at harvard business school. these guys are going to be -- this is going to work, you know what i mean? these guys are on to something i do, i think so. >> we want to sell insurance to you as well. >> really? >> next time we come. >> we can talk i like insurance i'm from ohio. facebook stalking potential employees. they do this and they may no longer be able to do this over in wilf's neck woods. although brexit, i guess you aren't eu. >> we still are at the moment. >> just cling to that. anyway, look at this, regulators say that employers must have a legal basis for even looking at

social media profiles. any data collected must be relevant to the job in question. now, the guidelines published by the eu data protection agency, they're not binding, but they're considered highly influential and they're expected to guide how authorities interpret next year's tougher eu data protection laws. >> it's not a terrible idea, though. >> what? you don't think that -- if you're interviewing somebody for a job, you wouldn't want to check out their social media to see if they're racist or violence. >> there's too much access to private information in general. >> well, don't put it out there. >> that's a fair point as well. >> it's not private anymore. >> if you think anything is private, i don't know if you need to change some of your -- he seems worried maybe you just need to change -- >> maybe we should check out his social media. >> that's fine i've got a very clean social media account. >> maybe you need to change some of your social media habits. >> he's worried about his 01

visa. there's two big reports about to hit the tape. plus janet yellen back on the hill today we've got that going for us. just a few hours until the fed chair testifies before the senate we'll talk to an economist stay tuned, "squawk box" will be right back hey dad, come meet the new guy. the new guy? what new guy? i hired some help. he really knows his wine. this is the new guy? hello, my name is watson. you know wine, huh? i know that you should check vineyard block 12. block 12? my analysis of satellite imagery shows it would benefit from decreased irrigation. i was wondering about that. easy boy. nice doggy. what do you think? not bad.

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♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square mostly cloudy t among the stories front and center the latest automaker to face accusations of possible illegal emissions, daimler they have summoned daimler to address allegations that it sold cars with excess emissions in both europe and the u.s. that's pretty interesting, daimler, huh and president trump is in france with a busy schedule already under way. he'll meet with french president -- will you do it for me, wilf emmanuel. >> it's not a tough one. >> the way you do it, you roll your r, you show off. >> i don't think i do. >> you do. >> i only did it because you forced me to. >> it's easy for you to go back

and forth so we know you speak french you can fake it. all right, we've got to get to the data later he'll hold a joint news conference. and verizon has issued an apology to customers after using information from customers that was exposed. i think we do have a hard number to hit here. so let's hit it. rick >> all right let's start out with jobless claims, shall we last week 248 moved up to 250, now it's down three, 247,000 continuing claims. they have been below 2 million for a little while 1.945. the meat of the matter june, ppi up one-tenth, a little hotter than the unchanged we expected strip out everything we need to eat and drive, food and energy, it's still up 0.1. up 0.2 on trade month over month and that's core rate as well final demand year over year, lots of stuff here, right?

2%, 1.9. and on the trade year over year 2.0. if we look at all of those inflationary year over year numbers, they're all a little bit cooler, but then of course this is ppi. response of the market, 233 tens up up 11 dow futures before, up 13. dollar index still under the gun a little bit of course look to overseas weird things happen. yesterday there was a very small document, they changed the document so yields are popping a little bit, flirting with 60 basis points we want to keep that in mind they're hovering at the highest yields since october why is that important? because the spread between us and bund seems to be narrowing a bit. we want to watch the leadership, watch the correlations and of course we want to pay attention to janet yellen today on the senate floor it certainly seems as though when you look at her face to

face, she might be coming towards more balance sheet or tightening, but i really think she's kind of walking backwards a little bit, maybe a little michael jackson move there i do think she is walking it back a bit in the ending bob brannon wrote a piece. maybe the yield curve is something like japan something to pay attention to with balance sheet reduction than necessarily raising rates, kind of the message from yesterday. joe, it's all yours. >> okay, rick, thank you steve liesman is here again. you were whining last time you were on about coming on in the morning like you have some hard -- like it's difficult. did i -- i didn't give you any grief today. what were you -- you get to be on "squawk box" almost every day. what were you complaining about? >> no, it's the introduction, joe. >> like this one >> no, no, no. when i have like a prepared hit and incredible wisdom in the prompter that i feel is essential -- >> that you've worked on. >> that i've done work on. >> okay. >> and then it's a bit like lucy

sticking out the leg and charlie brown tripping over and with the football and the whole thing. >> you don't have that now, though. >> no, but we've just done it almost as if i did i was going to say something about -- >> are you going to do constants? >> do you want to say anything about what rick said. >> you had a 006 pop in food, it looked a little bit up the chain of pipeline pressure, finished goods up 0.2 and intermediate down 0.2 the thing i wanted to say is we were looking for possibly a pop because you have the layoffs in the auto industry and that can sometimes mess with the seasonals. you didn't get it. still speaks to me of a strong jobs market. >> okay. i'm just going to ask constance one question really and then you can -- because you watched the whole thing yesterday so you can from there on you can do it, all right.

constance, chief economist at kpmg my question, constance, i referenced it earlier with steve, it's nice when janet yellen says we may have a lower terminal rate than previous cycles, but my point was does anyone really know whether inflation stays like this forever? can you say for a fact that things are different right now and the fed, when it's finished, will be lower than it was in previous peaks or do we not know >> i think there's a really good set of evidence that says it will be lower. >> geographically? >> there's potential gdp, which is the sum of the growth rate of the working age population plus the working age productivity productivity is about 0.8. the thing about inflation that i think is really important, is it good disinflation or bad disinflation we're having disinflation. prices are increasing but at a slightly slower rate when you look at things like the atlanta fed's sticky price index, which looks at the prices of things that don't move around a lot.

fruits and vegetables. apple prices have gone up, maybe i'll buy a pear. so that's a flexible price a sticky price is something like rent, right. that price moves very, very slowly so if you look at the sticky price index year over year, it's been going down for the last three months if you look at another measure that's the trimmed mean cpi that the cleveland federal reserve puts out, that's also been going down and whendisingaggregatedisaggre. the central banks are looking and saying is this good disinflation, is it technology driven, is it productivity enhancing disinflation in which case we can sort of look through that but they are constrained because look at the spread they're not going to annihilate the banks by continuing to raise the fed funds. if you look at the euro/dollar futures, it's projecting a terminal rate of 2.25, which is much lower than the fed's projections. >> to me it's a novel concept to

even speak of bad disinflation i grew up in the volcker days. the stock market went up like eight times in value or something. i can't believe it can be bad. >> it was bad right after the crisis. >> deflation can be bad but how is slowly increasing prices bad? >> well, they're increasing at a progressively slower rate so you could continue to go on a trajectory to deflation. >> so it's a second derivative. >> but also as a mark or highlight of lower aggregate demand. >> exactly. >> that would be bad inflation >> disinflation. do you think there's such a thing? >> if it's telling me that consumers are taking a side light that retailers and producers are having trouble selling their stuff and prices are declining for one reason, that's one reason. but if you have improvements in technology and things are more efficient and prices going down because of that or greater

competition, that's good disinflation. >> we look at the services component of ppi and that has started to decline and that's interesting because services is the biggest part of our economy, but also the place that's most labor intensive where we've had trouble getting productivity gains. so it could be a precursor to an improvement in productivity. >> i want to do something we like to do here on "squawk box" which is consider that the market has it totally wrong. >> okay. >> let's talk about yellen yesterday. everybody took this dovish idea. there's a couple pieces i read, tom porcelli wrote one of them they only read one part of the statement. on one hand she said we may not go so far. on the other hand she said right now the neutral rate is here but i see that neutral rate going up over time. so the other part of the statement says, you know what, we're going where we thought you were going where the first part is dovish. the market only listened to half of yellen yesterday. >> yeah, because over time may not ever happen, right so, yes, the market is a

discounting mechanism, right, but we don't have visibility on that over time that she's talking about. we have visibility on what's happening in the near future, and that visibility suggests that we have very moderate price pressure we have very moderate wage pressure and it would behoove the fed to go slow slly like they said they were going to do. >> and the other thing joe said, which is smarter than he knows it is, the fed doesn't know what the neutral rate is. >> i didn't realize the insight that i was expressing. >> what i'm about to tell you is that there was a famous paper in 2002 cited by many, many people, updated in 2007 which came to the conclusion that the fed doesn't know where the neutral rate is and that's a big part, a big part of monetary policy theory right now. >> who >> orphinetes, the central

banker for cyprus. >> who took 84 pages to say what you said in 30 seconds. >> the golf course or the island >> the country >> okay. >> my point is that you took 30 seconds to say what they took 84 pages to do. constance, they have to try to forecast it -- >> you just said basically out of the mouths of babes. >> i'm trying to give you a compliment it was very smart. >> okay. >> it's insightful -- >> i didn't realize it was smart. >> it's a little back haenhanded it's a little backhanded compliment. >> i'm trying to associate his remarks with high-falootin' academics. >> we can't know what productivity is. it's really nearly impossible to forecast. >> but you have to do it is the point if you're a policy maker administrat >> constance, thank you. >> the first couple pages are really instructive and interesting about the challenges

of making policy. when we come back, first apple, now facebook reportedly getting into the content game. so which tech company will be the next to go hollywood we'll talk to ben lvma rit r e break. stay tuned, you're watching "squawk box" on cnbc you always pay

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anyway, it's day two of the annual allen and company conference in sun valley where politics is playing a particularly big role this year. julia boorstin is there. bigger than normal, huh, julia >> bigger than normal. it does seem bigger than normal. we heard quite a lot of talk about jared kushner and ivanka trump before they arrived here last night we caught them as they were walking into their lodge to check in here last night and the crowd here is politically mixed. on a panel yesterday about the economy were pro-trump investors stanley drek miller and seth carman and the ceos are similarly mixed. we did hear quite a bit of support from some ceos about president trump's policies, including from sir martin sorro. >> if president trump could

implement his agenda of infrastructure spending, of less regulation and lower tax, if he can, that's a boost to the u.s. economy at a time probably that it needs it. >> on the other end of the political spectrum, mark penkis and mark hoffman are here. they co-founded a new initiative to win the future to crowd source ideas and support for the democratic party >> i don't want to sound geeky, but what we've spent our careers doing is designing these social systems that enable millions of people to interact with each other and coalesce and drive outcomes and so we said why shouldn't we try to bring that innovation into politics. >> i'm sure we'll continue to hear much more about politics in the next couple of days. now, coming up in the next hour of "squawk on the street" we'll have an exclusive ceo, less

moonves. back to you. >> thank you i'm surprised this guy isn't out there, aztec titans unite in sun valley we're joined by one of media's top executives leading the charge joining us award-winning producer and show creator ben silverman. an old colleague, previously co-chairman of nbc entertainment where he green lit shows like "the office" and won awards for that he's now chairman and co-ceo of independent studio propagate content and is the producer of apple's music debut tv series, "planet of the apps. there's life after nbc look at you, you're tan, you look healthy, you look good. life after nbc is great, isn't it >> fantastic. >> it wouldn't be good for me. but it's good for you. >> is there something you want to tell us >> no, no, no. i can never leave. anyway, was it a chance when you

left i don't think it was for you you knew -- >> this is the third company i've built in having traveled around the world and worked on entrepreneurial activities and building businesses and trying to push the transformation that we're living through in media. i felt a little bit like, you know, i was being held back inside the corporate world because you have to protect legacy you have to look backwards if you have a giant 50-year-old institution built on a syndicated platform of local affiliates and traditional broadcast partnership, it's going to be hard to take it to the next century i think that what's been incredible for broadcast television in general is this new addition and newfound money in the way they have been able to work out subscription fees with the cable operators on their live product, on their sports product and on their big primetime entertainment product so that was almost like a hail mary pass we were working on

while i was there. but other than that, you've got to protect the back. you can't look to the future as much as you want to. >> when i think digital, for some reason i think of different distribution i don't think that the content needs to be molded to the digital age, but it did, and you've done it somehow. >> no, but that's such an interesting point because the genres aren't changing that much the genres are not changing that much you look at netflix and amazon's content, it's still dramas, comedies, kid shows, animated shows. the formats aren't even moving from 30 minutes and an hour to 37 minutes. >> why do you need to note that there would be a difference? >> but, but, alongside it bubbling up are tremendous amount of content initiatives that are totally different the way in which content is created and produced on youtube, the way that it's produced socially the way that a platform like twitch gets born out of people playing video games. you start to see there are a lot

of different opportunities that digital will enable, but what's interesting in this kind of initial transformation period, it's more the distribution machine is changing and new players are coming in to distribute it differently than the actual content itself. and we're not yet at this place where story tellers and code writers, i talk about this a lot, are converging, but it's starting to happen and you're seeing new forms you're seeing generational shifts. >> how big a player will apple be in its own content creation in five years time, as big as netflix? >> well, obviously i've had a great privilege to work with them and they're an extraordinary company. and i think they recognize that content is something that they have been associated with from the itunes platform and otherwise. i think anything they want to do, they will and can do you know, i'm not inside how they're making their long-term decisions in any way, but i've got to think that they will be a major player i also know just from my own

experience with them the design heritage and creative heritage that exists inside apple has many ways to be expressed. it's not just in their product offering, but also could be in their content offerings. >> it seems like everybody wants to get into the content business facebook now wants to invest in original content snap will probably go down that route. are there companies out there that say, you know what, that really doesn't make any sense or that makes tremendous sense? >> well, i thought right away, even when i was at nbc, that publishing, which is what we're talking about, this is video -- premium video publishing, was a way for you to differentiate your product if there was 100 different ways to get your e-mail and a hundred different ways to talk to your family and 100 different ways to get your news and information feeds coming through, then what was the differentiatorbetween me choosing facebook, the apple product, snap product or twitter product. video seems to be the way in which these companies are

defining themselves differently. what choices they make, whether they do live, whether they do high-end drama, whether they do things related to technology what it is that they cando and how they're bundling that around specific audiences and what the digital platforms have an what e digital platforms have an advantage in today is that they really know their audience so from the sales side, what they can deliver back to the advertiser, if they do it correctly, can be pretty profound >> could that also be helpful for you as a content developer, potentially, for these outlets can they hand you a lot of data and say, this is our audience. create something for us. >> and that's one of the things that i look at the at&t, time warner, direct tv potential merger and see, wow, they're going to have a lot of information to play with, as well, connected to creativity. i don't think data can inform, me, you know, and the playwrights i work with and the people that are literally coming out of the theater they don't want to hear about that but knowing your audience helps a lot. >> not enough time

>> yeah. >> you're in l.a. now, right >> i'm in -- that's where the -- >> okay, well, but next time you're back here grace us again, please >> love to be here >> i'm still surprised you aren't in sun valley you head there had >> you know what, i haven't done enough business with the alan and company -- if i hire them my banker, maybe -- >> all right anyway, our gain is their loss here are the futures at this hour after a decent gain yesterday, after a percent for the nasdaq the s&p and nasdaq are higher again. back in a few minutes. for your heart...

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tame now for your kensho stat of the day. after the job reports beats by a similar magnitude as it did on friday, the top-performing

sectors are tech, staples and health care. if you find the policy, do something more rigorous. mainly buying the stocks and companies that have gone down in spite of terrific quarters you'll be in a much better position when the market turns when the sellers, of course, come to their senses welcome back to "squawk box. let's get down to the new york stock exchange jim cramer joins us now. jim, sum up the news we've had from the airlines the last 24 hours. what's your top pick of the moment >> geez, what a bummer southwest was pretty good. we have some good numbers from united continental coming in with a real head of steam with american. and then give us this one. and you kind of just say, like, get with the program that said, they do have growth, they are -- they have a lot of cash do i sell the stocks only just to be able to buy one that's a little bit better if you're a hedge fund manager. because this one's fine. the group is fine.

it's fine. it's just that they've had a nice run >> jim, the retailer is having a rare positive bump this morning because of target upgrade guidance >> yeah, well, this is the empire striking back they're all going to wait -- you're going to see a lot of these, because they are not destroyed by amazon prime, they're going to try to tell you they have a pulse. target was not as bad as the analysts thought we're still dealing with a lot of companies that are going to have a down 2018 over 2017 take it in mind they're going to try to rally, just like they tried to rally with costco you could get something going provided the target's not the only one we need another retailer to come out and say the same, macy's, choll kohl's, somebody, anybody, any retailer >> so jim, we get a 5% jump in the s&p physical gary cohn's fed chair. what's the market reaction if it was joe kernan as fed chair? >> oh, a nosedive. oh, did i stay that? >> i've got to mull about that, i've got to check social media to find out more joe would be good! joe's got an upbeat attitude

about the market >> i stay at zero for eight years. why the hell do i have to think? i don't have to do anything. >> i thought that you would start giving money away to everybody. because they've got like $2 trillion why don't you start giving money away >> we can do that? what is that, a universal basic income it income ubi? >> i got confused. wilf is hard to understand earlier, he said, when will apple be ready i thought he wanted to go to applebee's aisle happy to take him to applebee's, a real good special tonight. an early bird. >> i would like to go to applebee's >> okay, applebee's, make it a date >> okay, done. i'll take a date to applebee's then, not malibu up next, monkey heads to court. the details when we come back. [car tires screech] [bell rings]

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turning systems off, looking at different wire systems all that training is crucial to keeping our community safe and our firefighters safe. together, we're building a better california. a federal appeals court in san francisco is deciding whether or not a monkey owns the rights to a selfie the animal technically took at a wildlife reserve in indonesia this is ridiculous petta sued a british nature photographer and his publishing companyfor copyright infringement they sought a court order in a way that would benefit the naruto, the monkey >> that guy is smart >> the monkey? the monkey is smart. >> did you see that expression on his face? >> i'm putting one over on the entire human race. if that ever comes true, planet of the apes, this guy might be in charge.

>> i wonder whose app did he took it on >> whose phone did he take it on does naruto have a phone >> it's been real and it's been fun. hope everyone will be with us tomorrow as for right now, "squawk on the street" is next. ♪ i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. futures pretty steady, as we await yellen on the hill, day two. we'll get a cbo budget score, a new senate health care bill, president's in paris, lots to watch. europe's mostly green. yields ticking up a bit. ppi up 2% year on year, just above expectations the fed chair sparking a strong rally on wall street, the second day of her testimony begins this hour on what is shaping up to be a busy day in washington pl