nt we'll show you what he said about relations with france, steel imports and donald trump jr.'s e-mails. no word on whether he had steak with ketchup friday, july 14th, it's "squawk box" right now good morning yes, is that for bastille day or is that -- >> i know it's early, but yes r, when you said i know this song, i figured you understood why >> okay. just putting that all together welcome to "squawk box." we're live from the nasdaq

market site in times square i'm kelly evans along with joe kernen and melissa lee we have the dow looking at a tiny gain, same for the nasdaq the dow closed at a record high yesterday. overnight in asia, let's scan the landscape. i think the kospi was at a record high yesterday as well. some green kind of following on from our semi strong day yesterday. gains of about a tenth of 1% as for europe which is still trading of course, you can see some differentiation ftse 100 and dax lower ftse down more than a quarter of 1% and finally a look at crude which has been holding levels of 45 and 46. it's up about and a halfhalf a t

in washington, senate republicans are battling for votes within their own party after he releasing their latest health care bill two gop senators will not vote for the bill, that means mitch mcconnell has to convince every one of the 50 remaining republicans to vote yes or the legislation fails. the new bill keeps some of obamacare's taxes on the wealthy and includes $45 billion to fight the opioid epidemic and another $70 billion to stabilize the insurance markets and help lower income americans pay for coverage the bill also sets up a new fund for exchange based high risk plans. meantime president trump is in france this morning as we've heard. let's get to eamon javers who has the latest on the trip >> reporter: good morning. the president is there for bastille day the actual parade is still going on right now in paris. they are having an elaborate reception for the president. you can see the military bands there playing, all of the full

pomp and circumstance here laid out for the president of the united states on his visit with emmanuel macron in france. yesterday the two leaders had a news conference and talked about a whole range of issues, including the idea of what happened involving russia. here's what the president said yesterday in terms of don trump jr.'s meeting with a russian attorney who was proffering allegedly information that would help the trump campaign. the president portrayed that as business as usual. >> i've had many people call up, oh, gee, we have information on this factor or this person or frankly hillary. that is very standard this politics politics is not the nicest business in the world, but it's very standard where they have information and you take the information. >> reporter: on air force one on the flight over, the president talked with reporters for about an hour's time

initially that was all off the record, but then the white house decided to put out some about excerpts of what the president said including the moment that the president described his face-to-face meeting last week in germany with vladimir putin in which the president pressed putin twice he said on the issue of russian meddling in the u.s. election in 250016. he said that putin said absolutely not twice, that is that putin denied that he had interfered in the u.s. election twice. and then the president said what do you do, being end up end up t fight? then i brought up syria. so the president saying that he sort of pressed putin as far as he was comfortable pressing him and then moved on to the topic of syria in that meeting last week they also talked about steel tariffs as a possible way to go here talked about trade he talked about north korea and once again he suggested that the russian meddling in 2016 of wasn't necessarily a guaranteed

fact he said it could have been china, could have been north korea, they are also very good at hacking so a lot of subjects swirling around this president's trip to france, but you see some of the parade route going on there in paris right now. >> i don't think it would be a fist fight i think it would be judo >> judo, right putin is very good at judo if you believe the press machine. >> i don't think it would be fi fistacuffs i've seen him on a horse that was -- i love those shots. >> president trump went too a military academy, so maybe he can handle himself pretty well he must have picked up a thing or two there >> i couldn't help but think when i sea he'say he's a good-b being i'm talking about my german shepherd, right >> he's a 39-year-old man.

>> this is an interesting factoid. >> as a father, i don't think they ever outgrow being your boy, but when i see splik tha something like that, ceasehe's o boy, being it's like i'm talking to my dog. >> donald trump you jr. and emmanuel macron are the same age. they are both 39 so i don't think the president would call macron a good boy, but when you're a father, you get certain privileges >> you had to love the bromance yesterday. >> these are two politicians you wouldn't necessarily see as fast friends and suddenly they appear to be fast friends >> if i was like an on thpportut and i thought about what the united states can do for you if you are on friendly terms and if i were to assume it was four years and then even think, you know -- he's not over here watching the mainstream media's

take on trump and his chances, et cetera. and if it was going to be eight years, i think i might just as a -- i wouldn't care i think i might have the same sort of reaction to a lot of that wouldn't you just to cover your bases >> absolutely. it makes strategic sense for france they want to be close to the united states militarily, in terms of trade and culturally. all of those things matter a lot to france particularly with the isis threat that is gois going that they need some input from u.s. intelligence on, u.s. military around the world. all of those reasons make it important for france to be joined at the hip with the united states as they have been for a decades. so u.s. domestic politics, you can imagine if you're a french leader, you look at u.s. domestic politics and that i is that but i've got to make sure that we keep this relationship so many so many lsolid. but there could be a down side in france to seeming too buddy

bh buddy-buddy. >> bocobama was very popular in europe i don't know if that is a badge of honor this obamacare thing, just in rand paul and susan collins, you've gota got the whole -- th sums it up the moderates that no matter what they get, they won't like it and then you got someone be who is so far out that wants to just clean repeal and just pull the rug out from everyone. so the whole thing there and it just gedepends on everybody inside that is a metaphor right there >> the president said yesterday, you pull over a couple on this wing by adding some things and then you lose some on the other side health care is a difficult issue and it's not getting easier. >> and i have another going that is a male, but he's 12 and he's

small and i immediately thought of the german shepherd and i feel guilty now. they are both the boys. >> you can't play favorite with children or dogs >> that's right. anyway, thanks to people who are like -- we didn't care >> i care. >> i didn't say if you're goint them, i want pictures. breaking overnight, this is hard to understand hawaii controls everything a federal judge says no to the travel ban or at least parts of it a hawaii judge has eased some restrictions on the travel ban remember the grandfather, grandmother thing. the ruling says the u.s. government cannot deny entry of grandparents and certain other people living legally in america. justice department declined to comment on the ruling. they have said in the past that the travel ban is grounded in

immigration law. an at&t is reportedly planning to shake up its management ranks after it completes its deem tal for timen warner randall stevenson will become executive dhchairman he will oversee two guys that we have had on and known for a fairly long time stenke is very tall, and he'll be media and then donovan who i've had conversations in the past about trying to understand the way these little squigles that are out that you can't see go into your phone and show you a movie. >> it's really amazing >> if you told someone 100 years

ago gee that little squigles will come on to this little thing, they would say it's impossible because our senses don't allow us to pick up any of that spectrum. but it is amazing to try too understand >> so amazing people are still concerned it might cause cancer or something >> but all possibilities about existential possibilities. >> like beam me up kind of thing? >> going back to the at&t restructure, does it remind you of a certain company that we might work for >> that's what they said, being a be kin kin to comcast >> distribution and then the media. >> most interesting thing about the potential reorg is that direct tv move to the telecom side of the business and it had been on media so they are flipping that in order to allay concerns about

with competition we'll see if it works. >> do you want to gee bao back >> i remember somebody was going to try too like spectrum information that was going do into a device. and it's impossible. and now my kids are like my wi-fi is down, this is -- how is is this possible >> how can we live like this >> exactly the stuff that comes -- my maps that comes from a satellite so i know where -- >> where are to go >> you went to harvard, so you understand how all this works. >> clearly >> i'm still really, really -- to me it's like magic. >> because across the river -- >> well, in 1939 they didn't teach us a -- that was a joke. laugh. >> i know. >> you weren't born, that is obvious. >> last month at&t said it was confident that regulators would

approve the acquisition by the end of the year, but yesterday are seven consumer groups urged jeff sessions to block the deal on grounds that it will lead for higher prices. i see great cases made for on lower prices maybe a they have a they have a case for higher bryces now back to the broader markets. >> innovation happens as soon as it develops. >> they think employees of the competing companies -- >> because the u.s. standard is does it hurt or help the consumer and the european standard is there competition or

does it block it >> it's the 24th record close of the year not every day, but a lot of days and the nasdaq is on pace for its best week since last -- let's bring in david joy with us onset, siemian hyman for some reason, i always think simi-i-m-i-a-n s-i-m-i-a-n. prime mate type thing. there because the movie is coming out tonight >> is that skull island? >> into, wwar of the "planet of apes." >> guylike me is more interested in war of the planet of the apps do people watch -- >> people watch to learn how do apple applications >> it's like an app talent show kind of. >> that is weird anyway, he's head offen investment strategy at pro shares advisers.

and for anybody to be in this business right now, david, you sort of have to have one foot ready to pretend that, yeah, i'm in here, but i'm wondering about how far things can run and that has sort of been what you've been saying in recent appearances on the show. yet we keep hitting new highs. do you think we've seen the lions share of gains for a this year or not? >> i said say yes. but i still think the market will go higher >> that makes no sense yes, would he se rk, we've seens share but the market will go higher you can say you're right into matter what about. >> i think the market will be up another 3%, 4% in the second half so the lion's share of the returns have already are been achieved >> so we won't match the returns in the first half.

but we'll do pretty well for the rest of the year >> i think so. i think the fed is really behind the curve. in terms of inflation, they are hamstrung and i think the markets are recognizing that and it means lower interest rates for a longer that is a pretty environment for corporate earnings growth. >> do you agree with that? >>s earnings are here. we had over 6 of% top line growth last quarter can and so far only 5% of the companies in. we're also heading for good solid earnings growth. but i do think you have to look outside the u.s. these days. the discounts in europe and the uk are about 50% on a price to book basis emerging markets are supported by a weakening dollar and at least sort of stable commodity prices so time to mike sure you're diversified outside the u.s. >> i think i have some emerging crap

>> if you're in a target dated fund,s they stick you in all these international bonds. you toont just hadon't just hav, but a lot of people don't realize. >> talking about domestic equities, what do we -- >> with respect to the u.s., of course part of the concern is that it's been a tech led market nasdaq up twice the s&p. soi think there is unease there. and the thank think challenge it to the value side, that was expensive insurance. s&p value in-be geks only up half the s&p in the first half so if you are looking for maybe cheaper production insurance quality growth companies that underperform just a little bit when the market runs, but offer a lot more down side is probably a good place to go >> there are two ways of looking at the market. it's doubled in 18 years which

means that it hasn't gone anywhere really, 4% a year, or on from 666 at the financial dry sis lows on the s&p, almost like quadruple. which is the real thing to look at?lows on the s&p, almost like quadruple. which is the real thing to look at?sis lows on the s&p, almost k quadruple. which is the real thing to look at?crisis lows on the s&p, almo like quadruple which is the real thing to look at is the day of reckoning coming >> i don't think this economy is close to a recession we still have a lot of excess capacity and as a result, i think earnings can continue to grow. but i think over the long run you raised a very good point these concerns since 2009 are not what we're going to expect on an annual basis going forward. i think you have to laook at it over a longer term spectrum. in addition to that, however, we already have an extremely will he interest rate regime. that is probably not going to be replicated again

sos will, lower. >> by simple math, somewhere in the 6% to 8% range. so equities aren't particularly expensive, but don't expect great returns. >> so you will be okay if the apr a ape is take over >> i've been preparing for years. >> that was a shocker, wasn't it one of the biggest shockers in moved have i h movie high schostory. >> damn you all to hell, yeah. >> yeah, he was good all right. david, siemian, thank you both sincerely. coming up, much moreeve's vn

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welcome back president trump is wrapping a two day visit to france today attending a bastille day parade with president macron right now actually for an assessment of the trip, let's bring in james rubin sir, thank you for joining us. >> happy to be with you. >> what do you think the implications of this visit are >> well, i think it is a big deal in terms of u.s. role in europe and that is because under the british leader right now, who is so business sid hey heren worried about getting out of the european union and because president trump and the german leader are obviously not going to be joined at the hip, the

fact that the united states and france will find new reasons to work together, to lead in the western world is an encouraging sign for all of us and there is a reason for that france has changed in the last ten years. you may remember back during the george bush days, the common word on the street was to on criticize france for not being with us. >> yeah, i remember freedom fries. >> they are prepared to act internationally and they don't have all of the baggage that the british have and germany never wants to act international internationally. so there is a natural reason for the two to get along >> to what september are thexte really prepared to act will they be leading an international coalition in too places struggling with terrorism for example? granted they have been more proactive of literally, but they also problems back at home

>> this new french president is really something different we haven't seen a french are leader gather for example this much political power certainly in my lifetime maybe charles degall france has allege shown an act to act internationally even when things aren't going well at hole so whether afghanistan, whether syria unhad we acted under president obama, french are regularly sending troops president trump will have someone -- it used to be britain that was with us as the numberle one friend and ally in europe, but because britain is busy with brexit, because the iraq war basically destroyed their confidence, it's very encouraging for the united states to have a strong military power. there are only two in europe, france and britain, and britain is out of the game so i think it's good news for the united states to have a

strong leader president in france has a lot of power, but look, they will be competitors, too, as you saw in their first heatle being and we' meeting so we'll see hugh tow te friendship goes. >> every relationship is a quid pro quo. so if we're asking france for cooperation on a military basis, what are they asking from us >> i don't think yet the french other than having lost their first debate which was on the climate change agreement, i think president macron may imagine with a slow cultivation of president trump he can explain from a businessman's perspective the market advantages of accepting the climate change truth and adjusting our economies to new markets. perhaps he thinks with a clee relationship he can slowly but surely persuade president trump who said things that make people think he might want too be pto

persuaded. who kneows. but it's still good to sit together part of what is great about being the president of france and for a president trump, it's not having a fight with a fellow european who he has generally picked fights with >> and i'm sure if you're british right now, you're wincing. there were a few analysts writing about this, they said was theresa may even there i don't remember it. i don't remember anything happening with that. she is severely diminished in terms of power you're saying britain is struggling with brexit and other issues is that just a temporary sidelining of the uk from that sort of representing that or is this more of a lasting change do you think? >> well, i'll an american living in locndon and i certainly enjoyed it when britain was the leading friend of the united states and it certainly was during the period after 9/11 and through the iraq war

but as much as brexit is a problem, the iraq car war is a problem. britain changed after the iraq wau war. there was so much damage done to their confidence there are still reports about whether blair misled the country and that has damaged britain's confidence internationally and so the choice in military terms is britain or france they are the only two countries with a big military. turkey does as well, but they are sort of bogged down in that part of the world. should i guess what i'm saying it's into tnot just brexit but t is a big issue i'm amazed hoichl of tw many ofe is taken up by brexit. 99% of their preliminapolitical into figuring out how to leave the european union they even have a funny phrase called nonbrexit issue, that is how big brexit is here you put that together with their loss of confidence on the military side and that is why can britain has been so silent

and absent on the big issues >> you're right, it is a big change of the times. thank you for joining us appreciate it. >> probably worth it though when it's all said and done coming up, disney unveiling a new model of its star wars land theme park about attraction. we'll find out what analysts want to learn about disney's theme parks and movie plans next hey dad, come meet the new guy. 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. at where instead of payinging wa befor middlemen,em.

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i like this song bastille song. worked for us, so -- oh, this is different, but still bastille. what is this, bad blood? this is a better bad blood than stupid -- >> i agree >> covers are good >> what was the cover that they did of that other -- we'll play that one later >> i haven't even said good morning yet. n now i'm saying it the 6:30 part of the show. good morning futures are flat so you have to do the math and now we're up two, three on the dow jones. still down on the s&p which is just a hair away from a new high and then the nasdaq up two

today's executive edge, we have a closer look at the events that could move the markets june retail sales and cpi are both out at 8:30 eastern followed by industrial production, consumer sentiment and business inventories and ron kaplan speaks in mexico. jpmorgan will be reporting in the next few minutes and then right around 8:00 a.m. right whentrying to put an american in the finals been eight or nine years >> yeah, so now you have to root for him. there was a funny moment where someone said to murray in the press conference -- >> yeah, and he got accolades from everyone for stand being up saying yeah -- >> are first time an american has been in the quarters since -- >> yeah, and his mother was so

happy. she said that is my boy. and then around 8:00 a.m., we'll get reports from citigroup and wells fargo. it is the most wonderful time of the year when wolf gets to talk for like ten minutes about the intricacies of bank earnings net interest margin, return on equity, book value in relation to its peers i mean, we all -- >> you look forward to that in a few minutes time >> i'll have to put it on a loop for the rest of the day. >> happiest good piest ex-popo s qui kicking off today. are you expecting anything out that will move the took? >> i'm not sure that anything will move the stock. disney has been doing great with theme parks and i do expect a lot of discussion about what they are doing

they have already put out a model of the star wars land. i don't know that that is investable, but certainly looks nice we'll look for a more information about new attractions, maybe we'll hear when when toy story land is coming in orlando. maybe we'll hear about the popular tron ride in shanghai maybe coming to the u.s. maybe we'll hear more about what is happening with some of the production on their movies han solo has been a source of consternati consternation, but certainly it speaks to disney's strong point which is movies, theme parks, h per dhmerchandise, not espn sfw. and also reported declines in their children's channel. how do you assess what is actually going on here for their tv and cable business? >> i think what is happening is that disney is a tv network and networks are suffering from

secular change which is that more interest is going to internet video and people find tv network bundle a little less valuable and that is a trend that will continue for as along as the eye can see so i think that for disney, what will be really important for the stock over the longer term is can they come up with some type of over the top strategy to navigate the change. will they go direct with their big consumer brants, lids and what will happen with their direct over the top effort with espn if they get traction there, i think it will gee a long way to allying the fears about disney tied too a sinking ship. >> they made smart recent acquisitions could they do the same in tv? >> i don't expect them to be buying things in tv. i think their acquisitions have been a big content >> so what is the end in sight

is thissing if this is going through a secular change, what is their way out? >> they did buy into bandtech and i think that is the way up, to make that not just the small thing, be but something that is big enough to matter and that has to be pretty big given how huge espn is part of the bundle fee structure >> all right, thanks a lot have a good weekend. coming up, earnings season does kick off. jpmorgan is set to report first and then wells and citi follow later. we'll bring you the numbers and reaction on wall street. plus health care jobs and taxes in focus arkansas governor hutchinson joining us live from rhode island where ghovernors are ga gathering for a conference

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. mike pence and justin trudeau speaking at the national governors association conference later this morning an joining us now asa hutchinson governor, good to see you. we'll just talk about what happens at this, but i guess since i've got you here, the health care deal came out. mcconnell came out it's all about medicaid and a lot of it has to do with all the states that at the time i don't know how you were supposed to say no federal government is dangling this in front of you, we'll pay for everything but as it turns out now, kind of looks like a foustian deal that we're now dealing with based partly on the governors that accepted it. do you acknowledge that?

>> well, my predecessor accepted the medicaid expansion in arkansas based upon a federal commitment that they would pay for 90% xft bathe expanded medi. as you indicate, the late eitstr version of the senate bill reduces to the traditional match which is much of less and it's a cost shift to the states we're anxious to see the cbo numbers that come out monday on this i expect from those cbo numbers that you will continue to see a significant increase in the number of uninsured swrult as a result of that reduced funding there are some good things about the senate new version of the bill it is a more fair distribution of federal money they have responded to my requests for more flexibility in terms of including the expanded medicaid in a block grant option for the states these are significant

improvements it's clearly a work in progress. so we're still hopeful that they will be able to come to an agreement and something that works. >> do you wish your predecessor had not accepted the medicaid -- i mean, the people that get help from it, and the -- it didn't hurt the state so it was a tough deal to turn down do you wish he had >> well, i wouldn't say that i wish that the federal government would keep its bargain. that is the frustrating part and this was a really bipartisan decision you had a democrat governor and a republican legislature, so it was a decision made in the best interests of the state of arkansas and i continue that medicaid expansion because it has benefited over 300,000 and kept the premiums at a reasonable rate never low enough, but not as bad

as it's been in the other states so a lot of good things out of this but we have to look at the future thousannow. and we'll create cost savings. i agree with the federal government that we need to do this and we are controlling the numbers of medicaid expansion by asking for a a waiver to reduce those numbers. so we are making significant reform, but just don't undercut us by becausing te withdrawing partnership. >> a piece in the journal oig that moderates got almost everything they wanted and they are still not sold is there anything that some of these republican moderates, anything that you could put in here short of, i don't know, keeping obamacare and strengthening it that would allow them to vote yes on this do you think this passes in its current form >> i think they are actually getting closer but the big worry again is that there is not any change in the reduction over time of the

federal match rate for the medicaid program which shifts a huge cost to the states now, we can take some cost shift because if you give us flexibility, we can manage it better we can create savings. but this is too great of a cost shift and again, the cbo numbers will make a big difference on honest when th monday when they come out. and you ask whether they can get to a passage this is the proposed bill, but there are amendments that will be offered i know senator lindsey graham has some amendments that he is proposing. so we have to remember that we haven't seen the final product and they are working and i'm grateful that they are listening to some of the governors i want them to continue to >> just listening to you, it's the same with all these things the federal government doesn't want to have to be the bad guy in terms of reforming or cutting entitlements and god forbid the states actually have to reform

entitlements nobody wants to reform entitlements and that was the genius of the original obamacare. you give someone an entitlement and you can never take it back politically and that's why we're stuck in the soup. >> that's an important point because i agree that this should not be a permanent entitlement program. it should be assistance as people move up the economic ladder, it should be a safety net but not a permanent entitlement. so in arkansas, we've asked for a waiver which i'm hopeful that will be granted that allows us to have a work requirement and that eliminates that permanent entitled concept and encourages them too move off of the medicaid and another big change in the bill is that it increases the support for the individual marketplace so it increases the incentive to move off head indicatmedicaid and gi someplace to gee go so great improvements.

give the states flex ability to move away from it. >> do you think that this if explained properly could end up being something that doesn't hurt republicans in 2018 because right now, if they don't -- it looks like a lose/lose. if they don't do anything, it will hurt them and if they do do this, you will hear about that people will lose insurance coverage what they mean is fewer people in the future would be choosing to do -- there wouldn't be a mandate and fewer people would be added to the medicaid rolls down the road, but they will use that as saying -- they will conflate it with people having health insurance taken away because no one holds them to the veracity of what they are saying but it will be tough politically. you're seeing it already watch chuck schumer every day. >> it will be a tough political environment in 2018 and partly because ooirit's simply fear of

unknown. there will not be any sush citydy changes next year, but it is the concern about the until nine that allows the opposition to raise the scare tactic. so, sure, it's a difficult political environment. i think everybody understands that and that is why they are really going slow and trying to get it right. we have to have a long education process for the voters so we diminish that fear >> as time goes on, you got to appreciate the way obamacare was implemented. however they did it, i think they thooufr exaknew exactly whr doing. >> people allege like giways li. >> and almost impossible to repeal i think they are chuckling about it thousand. how many times did the republicans say oh, yeah, weights weight until we get in there and then, oh, we're sorry. anyway, thank you, governor. appreciate it.

still waiting for results from jpmorgan up next, millennials are living with their parents for longer. our next guest says that is not a bad thing. really >> depends on whose perspective. >> you're a millennial?er side,h >> you can't have kids if you live with your parents and then you can't glowheo t pkcan't gro. >> you can have kisd and thds a parents take care of them. it's so... quiet. is it, too quiet? it's awful. yeah. feel at home, pretty much wherever you are.

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♪ welcome back one in three americans between 18 and 34 are still living at home but millennials staying under their parents' roof could be a good thing for them and the economy so says a senior really at the r. street institute who wrote an op-ed titled kids living with their parent longer, it's a good thing. hello, sir, and why do you say so >> hi, thanks for having me. well, i think it's important to recognize that the millennials

aren't pioneering a new low in the way that they're living but rather getting back to a tried and true american tradition of intergenerational living this is a pattern that was very common throughout the country for decades. until about world war ii and then we got a very anomalous situation where we built a very weird housing stock. but people living with their family and drawing on mutual support is, in fact, a very old and time-honored tradition >> jonathan, how old are you >> i am about to turn 30 >> do you live at home >> i do not. but i did. >> until how recently? >> oh, just for a few months when i was home from college >> okay. so why aren't you living at home right now? >> well, i have a job here in d.c. and that's what took me here but there are a number of people that i know who get a lot out of being able to help their parents, help their grandparents, who live with them or people from bigger families who can come home and help their parents take care of the little

kids and the other siblings >> jonathan, i don't know whether you got your own bank account yet. hopefully you've done that, but jpmorgan, $1.82. >> wow >> you know, $1.82 >> that's over the high end. >> yeah it is. $1.58 close to a new all-time high where the stock is trading. i think it's been as high as -- i don't know whether it's -- >> 94.51 >> it's been as high as that revenue is also above -- so $1.82 versus estimates of $1.58. and the revenue 25.5 billion >> wow >> looking for 24.96 that's a net number of $7 billion -- >> we need to look at the revenue on a managed basis, which is the apples to apples comparison with the consensus revenue number >> that's 26.4 >> so on the revenue side, we've seen, by the way, jpmorgan's share price in the premarket double its gains on the release of this earnings, and see what

kind of impact this has, obviously, on the rest of the group. but trading, that's going to be a key line that we're going to be looking through for the press release. remember marianne lake the cfo recently at a conference said the trading revenues would be declining about 15% in the second quarter a lot of analysts have been ratcheting the revenue estimates down based on the trading revenue line we'll see if that comes to fruiti fruition >> the same markets revenue was down, amid lower volatility and declining activity but there's no number yet. expecting -- >> the decline was guided to down 15% >> 15, so they're saying -- >> so anything better than that could be upside for this and of course this is going to be, you know, a lot of ripple effects for the rest of the group. citi is going to be reporting in about an hour's time and goldman on the trading revenue, remember last quarter that was a huge miss on goldman. and so, we'll be looking for anything -- >> and by the way for that first quarter jpmorgan was up 17% i think. >> exactly so there's a huge disparity -- goldman was certainly the outlier of the group when it came to that miss.

>> and jpmorgan shares up more than 1%. but think about how much they've dipped into this now they're doing what a $19.5 billion buyback over the next year after the stress test results were out they were rumored or reported to have been involved in looking at worldpay that uk payments acquisition. >> right >> so there's been a sea change just in the last couple of weeks since those results maybe looking back again for this bank for the first time since the financial crisis these are a lot of -- a lot of important junctions. >> yeah, in the release jpmorgan's ceo said the consumer remains healthy. >> mm-hmm. >> so get more color on that and what that means in terms of loans and of course commercial and industrial loans that has been a key area of banking that has been on the decline for this year. >> they're living at home. so -- >> the millennial consumers. >> yeah. >> is jonathan gone? >> i don't know. but i think he has a point, by the way. >> that it's a good thing? >> yes >> they're in their basement on, you know -- >> for a certain amount of time -- >> using the parents' wi-fi. >> but, joe, you graduated

saddled with student debt, you might have a different perspective on these things. >> no one's paying their student debt >> i paid my student debt. >> well yours was worth it >> jonathan, by the way, if you're still here the thing that i liked about it, i was just going to say i think the child care costs, look if you're a millennial you're going into one of the most expensive, there's a lot to be said for having your own mom and dad. i'm not saying they have to do the work all over again but that's a big advantage, don't you think? >> oh, yes, absolutely being able to share a variety of tasks around the house does help and it's important to note that just because you're living at home doesn't mean that you're absolutely dependent you can charge a little bit of rent you can be adult but, you can also be able to have a, you know, good approach -- >> i lived near my grandfather for a year that was the best year of my life thank you so much for joining us this morning good to talk to you. >> thank you still ahead much more on jpmorgan's earnings beat which is sending the stock higher premarket.

former microsoft ceo steve ballmer jos nt.inusex we've got new survey data on how americans feel about transparent government data. (baby crying) (slow jazz music) ♪ fly me to the moon ♪ and let me play (bell ring)

wall street waits for earnings three big banks rolling out results. we've heard from jpmorgan. up next, citigroup getting a group on government data former microsoft ceo and owner of the l.a. clippers steve ballmer joins us for a special interview. we'll talk about his latest venture called usa facts, plus get his thoughts on the president's economic policies and what they could mean for business any of them ever become law. and governors meeting to discuss the nation's trade and jobs policies. governor chris sununu of new hampshire will be our special guest 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, welcome back to "squawk box" here on cnbc we're live at the nasdaq marketsite in times square i'm melissa lee along with joe kernen and kelly evans let's take a look at how futures are shaping up at this hour. we look to be adding across the board here keep in mind the nasdaq, this would be the longest winning streak since at least may. looking at about one point at the open, the dow looking higher by 14 and the s&p 500 looking higher by just a fraction and of course jpmorgan going to have an impact on the moves today. >> looks like the bank just reported some strong earnings. the beat on the top and bottom line wilfred frost joins us now with more on these numbers. wilf >> kelly, yeah, the beats very much coming more on the bottom line than top. revenue a bit of a beat $26.4

billion versus expectation of 25 but the eps, the leading part was $1.82 expected to be $1.58 here's the key line, they say it was primarily driven by the net impact of rising rates and loan growth partially offset by declines in markets. a growth in the net interest income because it's better net interest margin because of rising rates is the key reason for the beat but as we said there, slight disappointment in markets. so trading overruled, down 14% this was forecast, of course, about six weeks ago by all of the banks that trading would be down, and jpmorgan basically within the range of what was expected, fixed income very much leading those declines, down some 19% equities only down 1%. that's worth focusing on briefly, because that will bode well for morgan stanley. within capital markets, morgan stanley has 52% of its revenue from equities.

jpmorgan 26% of the investment banks coming from equities morgan stanley should bode well because of the high exposure to the part of capital markets. on the loan growth, which was decent 8% year-on-year for jpmorgan 2% quarter on quarter. that's a relative bright spot for them looking at what jamie dimon has said, we're also pleased to announce increases to our capital return plans, of course, the seacar results were fantastic for the industry and on the earnings car, want to hear what all of the ceos have to say about that because it puts any quarter's returns in perspective. a sea change of what they're able to do with their capital following c-cash a couple of weeks ago. >> despite as high as 1.3% or so, and now it's given back some of the gains what are some of the key holes in the information obviously you get a release and a lot of color on the conference call what are some of the key things standing out to you where we're lacking detail >> well, bit more time to go through the numbers. i think loan growth is up decent

amount we need to have a bit more look at the provisions if there's any concerns there as i said, definitely comments on the capital return plans, and what -- if that's a one-year thing or a real change moving forward. definitely those declines in capital markets, is something of note that that's going to continue, because we need that that had been forecast it's a big decline particularly the fixed income but it had been forecast but clearly over the last two or three quarters trading has been something that's benefited the whole sector is this a one quarter thing, or is it something that's going to last a lot longer? >> all right, wilf, thanks for checking in. jpmorgan shares now down premarket. some other stories making headlines this morning following an upbeat day for retail stocks thursday, the government's latest read on retail sales this morning. economists are looking for an intess of 1 fns% in june following a drop of 0.3% in may. fiat chrysler is issuing two separate recalls involving 1.3 million vehicles worldwide they involve potential fire risks and inadvertent air bag

deployment the company is aware of two potentially related accidents but no injuries. and arconic is facing a deadly lawsuit over the grab fell towers last month shareholders are accuse the producer of defrauding the shareholders over the use of flammable panels, arconic declined to comment on the suit. former microsoft ceo steve ballmer is now a big numbers guy. always was but in a different way. his latest project usa fact is an exhaustive database as government information as part of his aim to make the u.s. government more transparent. usa facts has launched its first poll on americans' desire for trusted facts and unbiased information and steve ballmer joins us now you launched on tax day, right perfect. >> we did. we did people want to know where their money goes >> and crashed, too, didn't it so many people wanted to look at it >> we had a little problem as i was sitting in this chair. that's exactly right but we're up -- >> the power of "squawk box. so you are addressing these

governors at the summer meeting tomorrow in d.c., right, saturday morning are you doing that >> yes >> are you nervous >> am i nervous, no. not particularly >> you got your speech ready >> i do. >> you practiced it? >> i actually did practice i'm not a prk 'tisser but i practiced this one >> i have to ask you, are you going to like run back and forth like a raving lunatic like you used to do at the microsoft meetings >> you have to adopt your style, joe, to your audience. sales people need to be excited. governors, maybe a little different. >> please do that to these guys. please maybe we can get something going, somewhere so, you know, i was just looking at some of the stuff and i want to -- this is an allegory for what we're talking with. in the large annual report you released in april, what a government is supposed to do is secure the blessings of liberty, education, entitlements, programs for civil rights, economic mobility, environment, and agricultural programs and we

all degree with that but we've got to walk the line between providing as much as we can without skrug all the future generations by doing so much that there's nothing left for any of them, and that's where we are right now. >> that is part of securing the blessing of liberty to our posterity. >> how do we do this do you have some ideas how we can do this? you can't always give everybody everything they want like europe. you can't be an entitlement state cradle to grave. but these are tough times we're in right now to explain that >> the way i frame it, and it's a little mathy but let me say drns >> people will understand. >> our government is trying to maximize outcome for its citizens, but with a constraint. there's a constraint you can decide the constraint is for the budget to break even as a business guy that kind of makes sense to me. but that's what we're about. and making the tough tradeoff between people, between programs, you know, that's kind of what the democratic process is all about >> i looked at -- just as an

aside. i looked at microsoft stock. either you set that company up for the greatest future in the world, which is what i do believe, steve, i actually do, or, they were so damn glad when you left look at that stock the reason i bring it up is that you're starting to like trump yet? >> i am politically neutral -- >> how -- >> but i am, hold on, i do believe that we all should be grounded in the same fact set. and one of the things that is troubling to me, and it's not troubling me about the president, or anybody else, particularly is we can't -- and that's what gear really trying to do at usa fact. i do believe in our poll shows that people believe that if we're all grounded in the same facts, it is very helpful in terms of decision making by politicians, and the ability to find common ground among citizen. >> i was talking about as a former ceo some of the

pro-growth policies that this administration is trying to get passed are those -- what do you attribute the 17% gain in the stock market to? >> frankly i have no idea. i really have no idea. when microsoft stock was very low, i had no idea now that microsoft stock is high i have no idea >> the worst case scenario didn't come to pass, did it, steve? we're not down -- the market didn't crash >> no, of course, it did not >> it was supposed to. >> forget the of course. it did not but explaining why -- >> okay. >> and i believe, look, are we in a market bubble or not? i don't know i'm silent on it but where multiples are, et cetera, you could be a little worried. i killed myself in the late '90s when i said i thought the stock market was overdone and we got a hiccup down the next day, and i kind of alienated myself from every money manager friend i have i'm going to be silent about whether i think we're in a

bubble >> since 1999 the market is a little more than doubled so, you know how to do -- you're a genius you know how to do the rule of 72 what's 18 years, 72 divided by 18 >> should be almost about 3 times and what's the market up 2.5 -- >> yeah, so you're talking about 3% or 4% a year. this is if you go back to the depths of the financial crisis, you know, that's a much bigger gain but you go back to '99 this is not necessarily what -- something you wouldn't expect for stocks over the long-term to return >> no. but you have to look at what's happening with gdp growth. gdp growth for periods of this, for parts of this period have also been more modest. >> right >> and the question is really what can we expect what will productivity growth look like? i'm not a guy who says oh, productivity growth is going to go to zero but i do think it is episodic as we get invention computer was an invention whose real impact whether in phones or

pcs or anything else really pumped it in the 2000s and we're still innovating from that invasion when will we see the new ratchet up again no prediction but you can look at kind of what's happening and then you can lay historical events on it and that's an important factual thing. >> how long you going to be here i wish you could stay longer -- >> i think an hour >> okay. but are you going to be here half hour. you're not going to be here for rick mulvaney. our budget secretary he wrote something called mag anomics. make america great economics half the people in the world say population growth and productivity, that the lack of population growth and the toughness in the increase in productivity means we can't grow faster than 2% there's a lot of other people who say for population growth you bring people back in the workforce and for the productivity growth you get corporations to start investing in plant equipment instead of buying back their stock, and finagling with, you know, not

making long-term investments and productivity comes back and 3% to 3.5% is possible. >> okay. usa facts.org, you will find the following. if you take a look at what's happened with capital investment, by u.s. businesses, and i'll include r&d because that's an important part of investment no matter what tax policy we've seen, it more or less increases linearly over time it does not spike up it does not spike down i won't draw a conclusion. but the question is can that really be simulated. >> is r and d the same as building plants and long-term deployment of assets >> no i said both. you can look at the r&d increases, and the capital equipment. >> nothing affects it? >> you go lack at it but i would say a line charts how it progresses. if you take a look at the number of people working, per working -- number of jobs per working age population, pretty steady growth.

a bump up. a bump down. there's the economic upturn, downturn of 2007, 2008 and now, again, a steady up. but if you put a -- if you had excel, my favorite spreadsheet >> i don't even know what that is >> great microsoft product but if you used excel and said hey give me a curve bit. the curve bit is going to look like the line. it may not reflect as much government policy as some people would speculate. >> i'll tell you that -- and people, you know, alan greenspan went from, i don't know where he is now he's a hero and then people, you know, blame him for certain things but, like a rorschach -- >> no -- i'm not going to say whether he's a hero or -- but interest rates have gone down. >> yeah, but he's done -- >> and cap-ex has not gone up. >> he's done work where he has shown that the more capital of a society that is earmarked for the public, for government

spending, that that takes away from what is spent in the private sector on capital -- >> on usafacts.org, you can put the government -- you can take a look at what hospitals to government cap-ex and private cap-ex ten you can take a look at that. and rather than blah, blah, blah, i'm not meaning you -- >> yeah you are. >> but blah, blah, blah, i would love to, for you sometime, just assemble the picture that shows what's going on with interest rates, capital expense, government, nongovernment, r&d, and what -- >> steve, when you're spending money, in a part of society that usually has no accountability, and doesn't have anyone, you know, watching the ps and qs and whatever, where a cynic would say 90 cents falls through the cracks, by definition if you have a profit incentive that makes you watch your ps and qs much more closely it's going to be a better use of capital why is that not -- why isn't that just obvious to you >> it might be a right thing to

do again i don't speculate. let me highlight a couple things if you look at where government cap-ex goes, it goes primarily into about four areas. it goes through the military, into military equipment. you can speculate on whether you think that's valuable or not it goes into roads and bridges and the like a lot of people would say hey we continue to improve and expand that but reasonable people can disagree it goes into schools most people would probably maybe even to a fault would say hey everything we do with schools is a very good thing. so then ask the question, where is the part of the capital expense project -- >> because you're talking about the capital expense budget >> that's the one joe just said. again i'm not going to cross around you could also talk about what goes on on revenue but joe talked about cap next going to government specifically and i'm not going to argue for more or more less. that's not really my point >> right >> my point is we should be grounded in the same fact as

pardon of the debate that's really the only thing i'm trying to -- i'm a partisan -- >> i don't know if i'd say i give a blank check to education. the way that it's been done up to this point. what we spend, and the results that we get. >> and that may be, you know, a reasonable opinion i just hope that people debate it, people can take a look i mean if you take a look at class sizes -- >> all these facts, you know, all these facts -- >> spreadsheet -- >> yeah, exactly that's what i'm about. i'm not going to try to tell you "a" is better than "b. >> but the facts allow people to draw different conclusions from the facts and we're just back to where we started >> but we're so much better off having people -- i mean, look, if the real difference in spend is, you know, 2%, we shouldn't have a religious argument we should just find common ground and if the facts really say we're 50, 100, 200% apart, okay people are going to have to make their own speculation. why take the molehills and make

those into mountains let's stick to the real mountains so we can have the democratic process -- >> you might because if you look in today's political milieu or whatever you -- i don't want to speak french >> you did a pretty good job i do speak some french >> if you look at what the far left considers to be facts, and what the far right or even middle right, and middle left what they consider to be facts, maybe it's good that you're doing this, because they have totally different facts. alternate facts on both sides of the aisle. >> you take a look at our survey and what people will say is they do believe, in the poll, representative across the country, democrats, republicans, everybody, says we will make better decisions, our politicians will be more trusted, people do believe today this was probably the most stunning one, question, do people generally agree on the facts even if they have different beliefs. no 52% of people say no they say basically, look at the -- let me give you just one other.

people need to use the same data to have an informed debate about the future of the country. 88% of them say that and yet most people would say they don't have a common fact base, they prefer facts to anecdotes, and they think most of the information that they get on government spending, et cetera, is biased. none of that is a good -- is a good situation for people coming to common ground >> all right we're going to have much more with steve ballmer right after this break meantime, we do want to squeeze in this break and still ahead we're going to be getting more on jpmorgan's results. the stock is slightly negative in the premarket in just about 40 minutes or so we're going to get citi as well as wells fargo stay tuned you're watching "squawk box" here on cnbc.

welcome back to "squawk box. let's get back to our special guest this morning, usafacts former, microsoft founder steve ballmer. i want to pick up where we left off -- >> on the -- >> it's not that important in terms of the data, and the steady line over time when it comes to cap-ex by businesses,

and r&d spent, it almost makes you want to draw the conclusion that it doesn't matter what policies are in place, as we are debating very vigorously health care because we perceive that as sort of the gateway to tax reform it almost makes no difference. >> well, accountants of course will do their own analysis i'm a business person. i just look at the history that is what's available to me to look at and, i was not heartened by that i didn't expect to see so little correlation between the things that are controllable by government, and the outputs to the economy. i just did not expect to see it. in a sense you could think about it this way, is all the money that's being borrowed with low interest rates, is it earning into cap-ex or not you take a look at the numbers, and again, i won't talk to causality but it doesn't seem to be >> can you go over to europe,

and go back and do all the just the facts numbers on europe for me, and explain to me why our gdp for 40 years grew 40% or 50% faster than their gdp? if none of this stuff matters. if cradle-to-grave entitlements, and percentage of gdp, you know, much higher on government spending, if it has nothing to do with growing wealth and prosperity, why are they -- why did they lag so much for four years? >> i didn't argue that something in the aggregate of policy here doesn't have a better mpact than something in the aggregate of policy in europe. that's not my point. all i talked about were some numbers and how they vary over time >> i want you to go down to venezuela and -- >> look i started looking at what it would mean to do switchbacks.com. >> cuba. go there and try to do it. >> but believe me, as hard as it

was to get government date to understand it, assemble it, make it simple to understand in the u.s., whoo, i'm not starting any place out of the u.s. any time soon we got to ground on our own issues and our own problems. >> i just want to talk about basketball does that make me a bad person >> no. we were going to we were going to do that did you watch the espys? >> i'm wondering about lonzo ball he's going to be your home -- he is the l.a. guy. you've got the clippers. okay he's going to the lakers you've got the logo. but he's been doing well in these games lately >> he's had some good games. he's a rookie in summer league and you can't tell much. i mean, obviously he's a great player and i have a lot of confidence in our team. and in the battle for l.a. go clips >> so you see it as there's only one l.a. team. you think the clippers are going to be it >> the heritage is all on the lakers' side and yet we've owned them the last several years >> what about j.j. reddick

>> great human being played in philadelphia j.j. actually last night here in new york >> he's got the podcast going. >> no, he's a great -- he's a talented guy he's been a wonderful clipper for the last four years. and, you know, i wish him well we had a very nice dinner last night. >> you -- >> no. >> i bet if you stood up on top of a very large platform or jumped on a very springy trampoline you'd get there >> -- than i could jump. >> are you kidding me? >> what were you going to ask about the espys? >> did you see -- >> no. >> opening monologue did you watch? >> i didn't. i didn't >> i mean i was like -- i had to change -- i was so uncomfortable. but he also eviscerated the knicks, what peyton said about the knicks porzing porzingis, whatever his name is, he couldn't believe the disarray in the new york knicks and he's from latvia. if that tells you anything, that anyway it was -- >> porzingis is a heck of a

player i'll tell you that. >> can i switch gears and talk to you about twitter you've been an early investor in twitter, and shares have been doing quite well this year, actually up about 18.5% or so. what's your perception on how the company is doing today, versus about a year ago, and do you think snap makes twitter look that much better? >> good question i'm the latter i won't chent. >> why not >> bought i don't really know. >> you're not an investor in snap at all? >> no, i'm an investor in microsoft index funds, twitter, and then a few private things that fit -- >> what's going on with twitter. why is it -- >> twitter is a very good asset. i continue to say twitter is a very good asset. so improving the product some, and improving and making the monetization better, and the company's been on top of both those things, and the market understands that, and it is now getting reflected somewhat in the stock price. they still have their work cut out for them and their path could be way up relatively sort of gently up

or something else. and you know, it's worth worrying about -- >> no matter what twitter does, it's going to be the same thing, it doesn't matter. twitter is just going to -- i've given up on everything after talking to you -- >> oh, no, joe >> that's wrong. >> nothing matters >> that's wrong. let me say what matters. innovation in this economy matters. >> you're right about that and microsoft is a model of that, obviously. thank you, though. >> thank you >> it's great having you please come back very lively and fun. coming up, a new hampshire governor chris sununu will talk trade policy, jobs and other topics front and center, we'll be right back. 's advocate but... i kind of feel like it's a game changer. i wouldn't go that far. are you there? he's probably on mute. yeah... gary won't like it. why? because he's gary. (phone ringing) what? keep going! yeah... (laughs) (voice on phone) it's not millennial enough. there are a lot of ways to say no. thank you so much. thank you! so we're doing it. yes! start saying yes to your company's best ideas.

let us help with money and know-how, so you can get business done. american express open.

good morning and welcome back to "squawk box" here on cnbc we're live in the nasdaq marketsite in times square and among the stories front and center this morning, we're about an hour away from the government's latest reading on inflation. this is going to be a key one. the june consumer price index is expected to show a tiny rise, a tenth of a percent that's from a decline of a tenth of a percent for form ma the year on year number will be report, fed chair janet yellen and other fed officials have been emphasizing the importance of pushing inflation back up towards its 2% target. and that's why it will be in so much focus today meanwhile, roku is aiming to go public before year end the maker of streaming media devices has reportedly hired underwriters and there could be a confidential ipo filing within a few weeks. roku is said to be seeking a valuation of about a billion dollars. and honda will unveil the latest

version of its popular accord model at a detroit event today it's seeing a host of newly updated models rival toyota is about to unveil a new version of the camry later this month nissan and hyundai have updated midsize models in the work is that really news? i guess these are like the best-selling cars on the planet. >> ever, yeah. >> jpmorgan beat the streets estimates on top and bhot up line joining us is gerard cassidy head of u.s. banking strategy and large cap banking analyst at rbc capital markets. great to have you with us. >> thank you >> looks like a pretty strong quarter. the roe, return on equity was the highest in the last quarter trading. that was what marianne lake had forecast about six weeks ago what do you make of the stock's reaction premarket >> i think what you're seeing, first of all, i think that as you mentioned the strength and the profitability, the roe reaching double digits, again another real positive for the profitability for this company,

but they did guide down in their future net interest revenue number, so that number was reduced by about $500 million for the full year. and so that certainly is affecting the way the stock is going to be trading today. >> why woo they guide down on that net interest revenue. >> i think their loan both has lowed a bit. jpmorgan has put up remarkably strong loan growth and it slowed down this quarter. the net interest margin which is very critical for all the banks came in lower than expected due to higher funding costs. so i think that's the reason that they're guiding down on the revenue. manager's revenue for the year >> i believe that your estimate going in was that the average big bank would have 6.2% increase in net interest income for this quarter how does jpmorgan size up and how does what jpmorgan is saying translate to some of the other banks? >> i think another bank this morning report, pnc financial

had very strong numbers. the regional banks as long as you're going to hold back on yourexpenses on the funding cause you're okay. with jpmorgan it's obviously universal bank they had growth year over year of, in the net interest income area, that was strong, but wasn't strong enough >> looking at the credit loss, if the provision was down $1.2 billion that drawdown was in energy but there was a net build, because of consumer, mostly driven by cars. can he extrapolate that? especially after the comments jamie dimon had in the release that the consumer remains healthy? >> yes, i think what we're seeing in cars is that credit losses have been unusually low for a number of quarters for the industry and as you might recall, the improvement in credit was quite strong in credit cards, and now it's starting to normalize and therefore we should expect the consumer credit losses will start to normalize, and they need to build them up. but as you pointed out, there

was stronger credit in commercial which offset that buildup in the consumer side of the house. >> and last quick question, gerard, what is the one outstanding question you still have about jpm's quarter >> i think what we really want to zero in on is the loan growth and the funding costs. are the funding costs going to continue to rise at a rate that maybe is faster than expected, which would affect the net interest margin. and then again, where's the loan growth going to come from for the rest of the year >> gerard, thanks for your time. appreciate it. >> you're welcome. >> gerard cassidy of jpmorgan shares down 28% right now. governors from around the u.s. meeting to discuss the challenges facing their states and the administration's policies, klug our next guest from the granite state let's bring in governor chris sununu a republican of new hampshire. i know so many sununus i know all of you. >> never too many sununus, joe >> there can't be too many it's particularly, i think, timely that we had governor

hutchinson on earlier, and even this meeting, given the backdrop of what we're trying to do with health care, governor, and i will say that, you know, the separation between the federal government, and state governments, is like maybe the biggest issue here with the whole medicaid issue what rt we going to do how do we do this? >> well, i got to give the trump administration and congress a lot of credit. they have reached out to governors. they have asked us as the implementers of their platform legislation what we want to see, how it's going to impact our states, so that's a great first step i think that's a big departure from the previous administration i've been pretty outspoken in the last version of the senate bill it just wasn't practical for new hampshire. you know, when you're looking at 1.5 billion of costs to my state in particular over the next ten years. we don't have sales tax. we don't have income tax that's just not practical. so what we have to do is kind of keep pushing, making sure -- i'd love to see this come to the floor. i'd love to see the debate

happen obamacare must be repealed there's no doubt about it. it has to be reformed. one thing that i think a lot of people miss in this conversation is they're looking at reforming obamacare, which is critical, and basic medicaid entitlement reform kind of pre2008 type stuff. so when you put those two things together, i think they're really conflating two separate issues my argument is to take them separately look at obamacare reform look at entitlement reform both of those who have to long, substantial arguments and bring them to the floor of both the house and the senate, but when you put them both together the cost implications are huge to a state like new hampshire we'd really be in a position much worse than pre-2008 and as an advocate for new hampshire and an advocate for my constituents we have to make sure they understand the practical implications of what they're proposing. >> is that one of the reasons we're in this mess that states that signed on, thinking that it, you know, doing the right thing for the, you know, for their constituents, for the state, for everything else, but makes it

much tougher when you need to try to reform an entitlement, you know, when you've been on the -- you know, when you've been a beneficiary of all that largesse, you can't roll it back >> oh, sure. >> that's why we're where we are right now. it was brilliant strategy by the democrats. >> it is you said it, i was watching you earlier and you hit it right on the head it was very well played by the previous administration, when you hook people into these very large entitlement programs now it has had a lot of benefit. we were faced with and still face a substantial substance misuse crisis in new hampshire our economy is one of the fastest growing economies. there's huge business potential in new hampshire very high quality of life in spite of the crisis. but a lot of folks have been able to receive a lot of health care that they normally would not have been able to receive. given the substance crisis but what you do have to understand is what are the costs at the end of the day. is this affordable for states? for some states it might be a very good deal i believe it is. for states like new hampshire,

it's a challenge now there's $26 billion that they're throwing on top of it, that's interesting i laughed at some of the democrats in washington who say it's an insignificant amount of money. i think that's incredibly insensitive to taxpayers that's a huge amount of money and can impact a lot of people very, very well. how that's going to be present and distributed we have to get into the details we haven't seen details about that distribution. so that will be interesting to see whether that makes it more affordable, and enticing for some states like new hampshire >> the opioid crisis, i don't even remember in the 36 times that republicans that weren't in power repealed obamacare, that was never brought up a single time i mean, obviously it's gotten worse, it's a terrible situation. i just don't understand how that became attached at the hip to obamacare reform, and i -- is it -- it almost seems like it gives moderates a way to be more stubborn because they just don't have the political courage or

will to do -- to make the hard choices. >> yeah. you know, i don't think it was just crowbarred in there as a give back to moderates i really don't believe that. i think when they looked at what the impact of expanded medicaid in particular were, to states like mine that have been on the forefront of the opioid crisis they realized that for governors like myself, this is very significant. and that's one of the swabtsies that will be most severely impacted when you're looking at recovery programs. the high cost of the indirect health care, whether it can be a heart valve or liver or -- >> nancy reagan, just -- i mean this has been going, the scourge of drugs and addiction and recovery and all those things, that -- i mean, this is 50 years old. and it's being -- >> no -- >> front and center because it's a political football with, you know, with obamacare >> well, i guess the challenge you a little bit on that, joe. what we're seeing with opioids is so different than anything before it's not like cocaine, it's not like crystal meth, it's not like marijuana. it's a whole different level of addiction that requires a new

and modernized way to go about it whether you're -- >> you're right. >> it has its own dynamics which means it has its own cost implication. doesn't mean that the federal government needs to pony up a check every time but you've got to give states flexibility you've got to give states the ability to implement their way, and that kind of flexibility is in there we like that a lot >> you do like -- >> you didn't support the first senate version what about this? >> no, i did not >> what about this one >> i think how the $46 billion is going to be allocated has not been specified and i'd love to take a look at that. and that really could offset a lot of the cost implications that right now are not practical -- >> right you're not -- >> -- to come to the floor -- >> you're not voting on it anyway >> but we're talking about it. we're talking -- >> i understand but i'm wondering whether, and you probably are representative of someone like susan collins i look at that, you've got susan collins -- you've got susan collins -- well you've got her and then you've got rand paul. and that like you've got the whole universe covered in those two.

>> well, i'm probably right in the middle let's put me there >> you think it goes -- you think it even gets to where it can be debated >> i hope so look, some of the best stuff -- i've only been governor for six months but i've learned very quickly some of the best stuff comes out when it hits the floor, you have the debate, you talk about amendments. you talk about how to make the plan better. for people who say we shouldn't even be getting this to the floor for debate that makes no sense to me. let's get it out there so the american public can have better input. so senators and even some of the folks on the house level can have input because the house needs to have input as well. this will have to go back for a vote in the house. you've got to make sure that debate happens in a constructive, positive way, that's the only way we're going to get obamacare reformed. and that is the utmost number one goal focus on the goal of reforming obamacare, again my message is take out some of that basic entitlement reform which probably should happen, but in a separate bill. you're conflating two issues you're making it too cost breaux hibbive as a single bill and again make sure you're listening to the governors and those that are going to implement this program going forward.

>> so i guess you're close to canada or something? is that where the oot comes from, does it filter down from there? do you say eh? >> we have wicked. everything in new hampshire is wicked awesome canada is our number one trading partner in new hampshire and we maintain -- >> you've got to speak the language, i guess. >> well, i think we still speak the same language. the only time we have contention with canada is hockey season that's about it for new hampshire. >> do you think your father is a right wing nut case? or where are you on the spectrum are you like where he is or seriously, because he is -- what does he tell you? does he tell you, he's lost you? >> did you just call my father a right wing nut case? what are you doing i got to go home to thanksgiving dinner, joe. >> i didn't say it i was asking you, whether you think your father is -- >> no of course not. no >> do you think he's a little bit -- do you think he's a little bit too reactionary

i mean you don't seem like -- >> no. >> he failed with you, i think because i'm not reacting >> i think my father did an incredible job the conservatives are doing an incredible job making sure this comes up as a forefront issue and we cannot let it go. >> you're the youngest governor. you're the youngest governor >> i am. i've been told >> you are still in that maturing phase anyway, governor, thank you. say hi to all the other sununus, and good luck. >> thank you >> coming up, we are expecting earnings from citigroup shortly. new findings from the iea showing investors poured more money into the energy sector and at the top of the hour, omb director mick mulvaney will be our guest. there's a denture adhesive that holds strong until evening.

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citigroup just out with rules. look at the top and bottom line beat, but wilf the stock is down about almost a percent right now. wilfred frost here with the numbers.

>> literally just hit, melissa eps beat 1.28 the expectation was 1.21 revenue 17.9 billion, the expectation was 17.3 let's have a look at a couple of the other top things on the page return on common equity, excluding the deferred tax benefit looking at close to 10%. that's pretty good for them. they've been building from a low base and they're highlighting on the front page, returning 18.9 billion in capital they of course were the big winners of the seacar results a couple of weeks ago. i need to dig down into a bit of the other things to find out exactly why those share prices are down 1.2%. but on the top and bottom line they did beat. >> wilf, thanks a lot. of course it's important context to keep in mind the price action of both citi and jpmorgan prior to the release of the earnings going into the earnings for the past three months, jpmorgan has been up about 10%, citi up about 15%. so these stocks have really run hard up into these numbers we'll get you more details as we have them.

all right. meantime, mobile energy investments have dropped more than 10% since last year and according to a new report out from the iea this week among its other key findings investors poured more money into electricity last year than into oil and gas for the first time ever let's bring in executive director of the iea. good morning to you. so, it's funny you mention this, i was just reading somebody say that in the uk, in order to support the demand for electricity they'll need six nuclear power plants by 2030 and they can barely get this current one to turn on so, this move to electric will have a huge drain on our resources in terms of just providing electricity. and where all that's going to come from, right how is that going to affect overall fossil fuel? >> if you look at the investment budget every year, how much in our entire energy industry spends for oil, gas, coal, renewables, electricity, since 100 years for the first time, investment in electricity

meaning power plants, transmission, distribution, is now higher than oil, less gas, less coal, put together. in the past oil and gas was number one now electricity took over as number one mainly driven by the investment in renewable electricity >> in renewables is there a good thing investment is happening because that will help to bring the cost of producing electricity down or is the fact that it's happening in renewables meaning it's going to push prices up until that becomes more economical? >> there is one good news here, we see more renewables which is good for the environment and everything, but the fact that oil investments declined substantially last year is an alarming news. you look at the numbers, 2015, and 2016, two years in a row, global oil investment declined sharply. >> is that because there's such a glut of supply right now does there need to be, you know, record high level of investment

simply because now we're faced with a different -- >> last the crisis were not high enough for incentive for investors. so 15 drop, 16 drop, everybody was waiting in our report, what do we say for 2017 expectations our expectations are, unlike the hopes of the oil industry, we do not see measured rebound >> you do not see a rebound this year >> unfortunately not because the first time in the history that we see 2017 oil investment -- >> oil investment. >> but different in to that. you see two different pictures one in the tradition supplier, such as middle east, russia, africa, the investment are rich or flat. but, u.s. shale, 50% increase 2017 in terms of oil investments. >> okay, 50, 5-0 percent >> increase. in >> in u.s. shale is that from just last year? >> compared to last year, 2017,

our expectation is -- >> -- how that kars with the peak because we've also had a pullback in the last couple of years -- >> much higher than last year, and the reason here is that the important point here is that we see two oil markets. in u.s. shale oil big increase in investments whereas flat or weakening in the rest of the world. and this is something important to underline when you look at the future >> i've heard even some of the oil industry blame the capital markets or blame investors for saying stop giving capital to u.s. shale because it's causing a glut it's, you know, harming prices for everybody else and not allowing anyone to be economical is there some truth to that? or is it the case that for u.s. production, it is more attractive, and does have a better return on investment? >> dynamics changed compared to two years ago. two years ago, in order to one barrel of oil to make money in u.s. shale you needed oil price about $70. >> $70 >> and today it's about $45 so

they make money. >> so the break even has gone from 70 to 45. >> exactly and we did -- in seven years of time we have seen if u.s. shale oil production, all the shale oil production in the u.s., reach 4.5 million barrels a day which is an iraq in seven years u.s. shale oil -- to the markets something very important to underline together with shale gas, of course >> so what this has done is quite predictable. it's now sort of what's happened to natural gas industry where there is expectations prices were going to be high, a ton of investment and now prices seemed to be at now at this permanently lower plateau. for oil maybe the same type of thing is starting to happen. in the meantime, with all this cheap, plentiful energy, there is this huge push towards renewable energy how did that compare on a cost basis right now with these other alternatives >> the good news is, renewables are also getting cheaper for example, solar in last five years, the cost of

solar declined by 80%. 8-0. costs of wind declined there's a big decline. china, u.s., european countries are the leaders of clean energy. >> right but china's -- i mean if you talk about electrifying -- electricification in china, so much of that still comes from coal even in the u.s., in the midwest, a lot of that source is still coal so that's going to undermine a lot of gains that have been made towards, you know, the whole point of electricity is to try to get to the enewable electricity, right, and not coal powered electricity. >> we have to find renewables are very important last year more than 50% of new power plants were renewables other 50% coal plus gas plus nuclear plus oil put together. so lots of renewables are coming mainly as a result of getting a cheaper. >> a lot of headlines in there major shifts under way thank you so much for joining us this morning come something up one more big bank ready to report wells fargo is on tap.

we'll bring you all the numbers once they hit the wires. let's take a look at how shares of jpmorgan and citi trading both out with earnings both beating on the top and bottom lines slight differences in terms of the business lines there jpmorgan down by a percent citigroup up 0.4%. (baby crying) (slow jazz music) ♪ fly me to the moon ♪ and let me play (bell ring)

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welcome back to "squawk box" as we get some big bank earnings this morning see what impact that's having across the futures which were looking slightly higher we indicated the opening a few moments ago. again moving a little bit to the upside dow implied to open higher ten points nasdaq and s&p edging higher, too. coming up, omb director mick tethaney will join us afr e we'll be right back. hey, i've got the trend analysis. hey. hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there.

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live from the most powerful city in the world, new york, this is "squawk box. good morning welcome back to "squawk box" here on cnbc, live from the nasdaq marketsite in times square i'm joe kernen along with kelly evans, and melissa lee. becky and andrew are off today and the futures at this hour for most of the morning have been relatively quiet but up about 11 points now on the dow. up less than a half point on the s&p. up about 8 on the nasdaq i'm trying to do all this at the same time. the estimate for wells fargo was $1.01 and the company looks like $1.07 it's reporting you were, melissa, last time that first revenue number you needed to adjust it or something. >> that's only for jpmorgan. >> then 22 -- this is below then 22.17 billion for wells fargo

for revenue and the estimate was i believe 22.466 that chargeoff 655 million provision for credit loss was 555 million. that net number if you wonder what $1.07 equates to they made about $5.8 million we already had citigroup from melissa. why don't you take us back >> in addition to wells we have citi, we have jpmorgan all three banks interestingly beating on both the top and the bottom lines very different stock reactions in the immediate aftermath of the earnings release wilfred frost back at headquarters breaking the numbers down wilf >> guys, jpmorgan and citi both beat on the top and bottom line but the share price is declining, despite significant declines overall in trading in income, the performance does not impact as bad as expected for, jpmorgan for example, markets down 14% rather than down 15% as expected, and for citi the fixed income trading revenue was a little ahead of expectation.

of course, albeit still down in percentage terms so overall the noninterest income has beaten for all of these banks. the issue, and reason why we're seeing that share price decline, is net interest income but this is despite that rate hike that we've seen which meant we thought that would improve jpmorgan's net interest margin was 2.31%. that's a little lower than expected that was down to higher funding costs primarily. and loan growth for them also came in a little lower than expected 2% quarter on quarter and 8% year over year for shares have since declined, of course, because that's also jpmorgan because of lower guidance on that net interest income figure going forward to $4 billion from $4.5 billion jp also had a legal gain in there as well. citigroup, ceo was keen to highlight their impressive capital return and that helps us put some perspective for these share price declines, because those results are fantastic for the

banks. also another bit of perspective of course is recent share price performance. as you mentioned earlier, so these results overall still solid, just expectations have run out and we're looking at about a percent, we should say, on light volume of declines for these banks in the free market >> will fred, thank you. meantime china is revising the way it calculates its gdp for the first time since 2002. the measure of economic growth will include health care, tourism, and the new emerging economy industries those industries typically refer to the high tech, or quote/unquote environmentally friendly sectors and its unclear whether the new metrics will be used in the gdp numbers scheduled to be released on this upcoming monday night. and another day, another snap downgrade cowan downgrading. shares are reacting right now down by 1.75%. in washington, senate republicans are battling for

votes within their own party after releasing their latest health care bill nbc news reports that two gop senators will not vote for the bill which keep obamacare's taxes on the wealthy and also includes $45 billion to fight the opioid epidemic and another $70 billion to stabilize the insurance markets, and help lower income that americans pay for coverage. the bill also sets up a new fund for exchange -- based high risk plans. and president trump is in france this morning celebrating -- you guys familiar with that? cone heads -- why they look different. they look different than most -- wow you look different >> quite a statement about france >> that was their line that they came from -- not because -- they just were from out of town yeah, anyway he's in france celebrating bastille day he weighed in on health care on twitter, he tweeted the republican senators are working hard to get their failed obamacare replacement approved

i will be at my desk, in case they need to know, pen in hand president also tweeted after all these years of suffering through obamacare, republican senators must come through as they have promised let's get to our newsmaker o the morning and a "wall street journal" op-ed omb director mick mulvaney introduces what the white house is calling maganomics m-a-g-a-nomics director mulvaney joins us this morning. thank you for joining us, mr. mulvaney, we appreciate it >> i really appreciate the dr. evil mr. biglesworth at the outset >> we have a lot of those. >> that and the coneheads in the first five minutes of the show >> exactly it's all about pop culture you know the political environment at this point, sometimes we run for the relative comfort of popular cultural references. it's very tough, mr. director, you know, you see it

well, talk about your -- i want to talk about your op-ed because you know like anything else there are two entire groups of people that think we can either do 3%, or 3.5%. there are others that think that the demographics are for whatever reason, a lot of them, you know, have a horse in the game because they were in power for eight years and didn't get anywhere near 3% so they got a reason to say we can't do it but there is a real debate going on about whether the current situation in the u.s. can even allow for that so we'll get to that in a second >> sure. >> what about health care? can we just -- do you think t t that, you know, the gop's lost two already. do you think that you can hold ranks with the rest to get 50, that pence can then bring it to the finish line? >> i do. even though i'm here now at the white house and i'm not an elected office i was seven months ago, and i remember what the pressure was like to get rid of obamacare it was what i ran on it was what most people who are in congress now have run on for

two, four, six, you know, seven years, and they have to do something. and they know that i think you saw that dynamic take effect in the house they had difficulty getting to it in march. but ultimately, were able to pass the bill. i think the senate is going through the same thing at the end of the day, i'm absolutely confident they pass something to repeal obamacare >> everybody has got an opinion, obviously "the new york times" op-ed section, but "the wall street journal" op-ed section it used to be they would ascribe a lot of the -- or attach a lot of the blame to the conservatives for not going along with it. they are clearly -- they clearly have the moderates in their sights today, as being at fault here, that they're getting everything they want, and it's still not enough and that just might mean that they just can't admit that they -- they're afraid of the political consequences for doing anything and do you think that that is the case and will they be able to come up with the political courage to vote yes on this >> the last part is yes. we will find the political courage over there in the senate to pass something.

but what you're seeing in the senate is exactly what you saw play out in the house. the narrative was that it was the right wing, the freedom caucus that sank the bill the first time in the house. that was simply not true roughly half the freedom caucus would have voted for it in washington it was a combination of sort of center left in the party, and the right wing of the party in the house that had to come together to work something out and that's the same dynamic you're seeing in the senate. just like they got it done in the house, i do think they're going to get it done in the senate >> you know, you probably still have you're nostalgic toward the freedom caucus i guess what about leaving some of the obamacare taxes in and as for as maganomics, that is not maganomics, leaving you know, those taxes in your view could probably be better spent in the private sector. >> yeah, listen, absolutely that's the case. no question. but a couple different answers first of all, yeah, i think there's a lot of folks who would like to get those taxes out. but if leaving them in is what it takes to get the bill passed,

keep in mind getting rid of obamacare has a positive impact on gdp even left leaning think tanks have said there's a disincentive to work woven into obamacare so you're right on the taxes keep in mind we have a second bite at the apple as we try to take up tax reform in the fall maybe we get a chance to fix that later getting rid of obamacare is part of maganomics because it's part of getting us to 3% growth >> i think reagan never did less than -- what did they average, that administration averaged about 3.6, dnc it? >> 3.4 >> average is it so different now in terms of population growth, that's the one part of gdp, and product it growth is it so different now that's what people say no population growth we've wrung everything we could out of productivity so it's impossible to do any better than 2% why is that not true >> i get that a lot from the folks. listen, face it, as you mentioned i think in your introduction, there is a group of people in washington, a nationwide group with a vegsed interest in not seeing us get to

3% because if we do it's going to make the previous administration look really, really bad and have long-term political ramifications in the country. but, things are not that different. yeah they're slightly different. we are getting older, there's no question about that. but every time people push me on that issue and say oh, we're a nation, folks dropping out of the workforce because they're retiring, we'll never get to that level of product it again beale point out that there's almost 7 million people in between what we call u-3 and u-6. u-3 would be the unemployment level, the real unemployment level, u-6 is sort of the marginal a attached or working part time even though they don't want to. am 4r7 million people who could enter the full-time workforce tomorrow if we had jobs. think about what that could do to productivity growth and what that could do to offset the aging of the population. >> well, i guess and now we get to whether this actually happens that some of the maganomics initiatives that you want really ever come through and they all seem -- it seems to be one is

dependent on the other, and that's dependent on the other and that's dependent on the other and it's all got this political backdrop that's mired in russia and all this other extraneous stuff have you ever seen a political environment like this, director mulvaney >> i haven't but i've only been here seven years so i still don't count that as a long time. yeah we have to have a lot of things happen, there's no question there's a lot of stuff that we can do and will do by ourselves. especially in the regulatory era. by the way, i don't think they get nearly enough attention when we talk about economic growth. everybody moves immediately to tax reform, but there's things we can do in the regulatory realm that we think have a better larger impact on gdp growth than just the income tax -- the tax reform. we've also talked about energy dominance. the things that we can do ourselves to help restore american energy not just independent but dominant what that can do to economic health yeah at the end of the day we're going to need congress to go along. we can't do this by ourself.

but we're hoping to lead by example, start to show people what you can do when you start to take the rates off. you start to unleash the american economy you can make it great again and hopefully congress will get the message and come along with us >> you might get the conservatives, in the freedom caucus on health care. what about the budget? you say you're not an elected official but you have to be the whip. they want -- you've been asked to help whip the freedom caucus into supporting the trump budget >> yeah, meadows called me last night, and said were you going to call me to whip me on the budget i said no. and the people who published that head line ended up changing it yeah, i am working with the administration to try do get a budget passed. why is it so important to us because of these arcane rules in the senate that if we can get a budget passed, it means we can get a tax package passed with only 50 votes. no budget and we need 60 votes and that means at least eight democrats, and you can noj imagine that the tax package will not look as good as if we have to get eight democrats to vote for it. so we are pushing the budget for one reason and one reason only,

which is -- not one reason only but primarily we need it as that vehicle to get tax reform. shouldn't be surprising that the omb director is trying do get a budget passed on the house and the senate >> i haven't done the math on what leaving the obamacare taxes means for -- i mean how much tougher does that make a 15% corporate rate will it i mean if it were to all go through >> it certainly factors in to the consideration, i think what you're skipping over is whether or not that tax package is going to be deficit neutral or not i think i've talked on this show before that in the white house we see deficits a little bit differently. we think there's a certain kind of deficit that comes from welfare transfer payments to regular government spending. those really don't contribute much to economic growth. there's infrastructure deficits that might come from infrastructure still a misallocation of capital but at least you have something to show for it at the end of the day. and then there's deficits that might arise from letting people keep more of their own money that is by definition a more

efficient allocation of capital. so we're willing to tolerate short-term deficits. this is the budget director, supposed to be the biggest fiscal hawk in town, we will tolerate short-term budget deficit if it's part of what gets us to that long-term sustained 3% growth. >> do you think that it's possible to do this obamacare repeal and replace and not have political damage in 2018 i mean once it sinks in do you think there's enough republicans th that wanted that promise fulfilled. the other side they aren't going to vote for republicans anyway these moderates i'm not sure where they think they're going to lose all their votes. but if they don't, which is worse, not doing anything or doing something where the left is going to be able to say you pulled out the rug from disabled people -- >> it's easy not doing anything is worse on both fronts. it's bad politically because you run on something for so long promising to do that and then you don't deliver and that hurts

you politically. let's not lose sight of the fact that if you don't do anything, obamacare stays. and that's one of the things that's been lost in this discussion everybody focuses on the cbo score about how many people might or might not have coverage under the new senate plan. what they're ignoring is how many people are losing coverage today because of obamacare and how many people will lose coverage before the end of next week because of obamacare? leaving it in place is absolutely disastrous, not only politically but practically. all the more reason i think they'll get something done in the senate >> all right director mulvaney, thanks and don't be a stranger. great to have you on as usual. hope to see you again, soon. >> thanks, y'all coming up big banks are out with earnings. a rundown of all the numbers and the reaction from an analyst right after the break. plus, this is doable and it's not just jurassic park can we bring back the woolly mammoth to roam the earth again? the greatest subjects and fascinating things to write about and this one i'm really on board with at 8:40 a.m. eastern time

later, i don't -- >> i do. >> if you love cats -- i'm the only one here -- >> i'm allergic. >> they have a very bitter taste, i think >> put ketchup on, it's not as bad as you think >> if you love cats and need a place to live you won't want to miss this. an arizona home -- i've seen things like this these people have 60 cats they get arrested stay tuned you're watching "squawk box" on cnbc you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if

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jpmorgan, citi, wells fargo and pnc all out with earnings this morning joining us now to decipher the numbers, the director of bank and equity strategy. marty, great to have you with us let me kick it off with j.p. we've had the longest time to digest jpmorgan. the stock down about 1.5%. why? >> when you look at the actual eps numbers, they didn't beat but they had a litigation that was a benefit. they also had low loss provision that was lower so those are two things that added about 15 cents to the eps number which are looked ats being very temporary. so you're not seeing at its core

sustainable -- >> the quality of the beat wasn't as good the other thing that another analyst we spoke to earlier said was the net interest margin was sort of disappointing. you would have expected it to be a lot better given the rate hikes that we've seen. >> well when you look at there's a big difference between the money center banks and super regional banks you've got to look at jpmorgan and citi and even wells compared to pnc pnc's margin was up ten basis points over the last year or more the others were relatively flat. balance sheets are different have more corporate deposits, versus pnc has more retail deposit. we think the super regional banks will show the strength for the rate rise that the money center banks don't really get at this point >> forced to choose an investor at this moment in time would you choose regionals over some of these big banks, jpmorgan, city, wells? >> that's exactly what we did. we downgraded the money center banks and looked at the super regional banks and looked at things like suntrust or zion who had a lot of lunch to these three rate hikes to get that

benefit and surprise on the upside >> at the same time a lot of people will say, it's going to be $90 billion in buybacks and a lot of that is going to come from money sernted banks. that's not going to provide some sort of catalyst or upsick we also saw jpmorgan if it had been successful with worldpay. >> what we saw this year was a distraction around all of the things around trump. it was the tax reform or it was going to be infrastructure spending that got the bank stocks up in general. we saw that pull back as the frustration built. now what we're looking for is the one-two punch of capital in the super regional banks giving the bargen benefit we're getting that now we've got the capital already. their stocks in the money center banks reacted to the capital so that is a positive. but they don't have the second, which is the net interest margin which you get in the retail deposits in recreating that positive spread. >> you don't think that's in the

stock? if we're forecasting maybe a rate hike in december, and balance sheet normalization, everybody knows about that don't they >> there's a surprise -- everybody looks at the assets. what they forget about is this is really about deposits when rates were zero, you couldn't create any spread on deposits when you can't create spread on deposits, what makes a commercial bank different than a consumer finance company it's going to be the fact that they have deposits that they can make money off of. with rates where they were you couldn't do that in this first 100 to 125 basis pointsof rate move it will be better than what people expect it won't be quite as beneficial because we're start raising rights but right now we're getting that benefit which is better than expected >> marty, thanks a lot >> let's turn back now to the broader markets. joining us now is isabelle ilago from blackrock so, this morning we're seeing a slight increase in futures is there anything from a top level point of view that you'd emphasize about the financial

results as we're getting them? >> well i think we're in an environment where people expect moderate rise in interest rates and that's structurally positive for banks. so, in that environment we're like financials. there's going to be up days, down days, on a slightly longer-term basis, we've got a sustained expansion and this is an information in which financials can outperform. >> what about the popular kids the big cap tech names the platform companies, the ones, you know, the amazons, the facebooks that are up so much this year. >> so the tech companies again same story this is an environment look, you can think of it as tech, you can think of it as momentum either way you look at it. there's a lot of tailwinds there. and you're right, they've performed very well. there's likely to be the occasional pullback. but the fundamentals are very strong the earnings picture is very strong, the balance sheet prospect is very strong. so we're quite constructive. >> earlier we had steve ballmer on who raised the specter as i'm sure you've heard many, many times about valuation in these markets. when people say to you, come on,

you know, look at some of the multiples, and by the way for some of those popular names they're not even at high multiples but there are packets to the social media names netflix that you could point to over all though is there a case to be made that things have gotten ahead of where the fundamentals for the economy and everything else are? >> so we don't think so. and in fact, you know, our sense is we're in a bit of a new regime as far as interest rates are concerned. but they're going to be permanently quite a bit lower than we were used to and that means you need to think returns, you need to rethink valuations when you discount earnings at a much lower interest rate you can justify much higher valuations we think that's the case across the board. >> that's a real goldilocks -- you're saying we're going to get just enough rate hikes to make financials attractive but structurally they're going to remain low enough for equity prices where they are. you've got to thread that needle >> there are risks but you're right the baseline is very much a goldilocks environment in which we think people should invest in equities, and up their risk taking. >> all right

isabelle, thank you for -- gracias, thaus for joining us. coming up retail sales and cpi are about to hit the tape. the inflation number is going to be really interesting this morning. plus the lobster harvest and a record catch our contessa brewer is live in maine today contessa >> lobstermen are experiencing record harvests. i'm confess is abrewer off the coast of maine we'll tell you how they're opening new markets and creating new demand to keep prices steady liberty mutual stood with us when a fire destroyed the living room.

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welcome back to "squawk box. we've just spoken to jamie dimon. he was asked whether gridlock in washington could lead to slower growth, and he said, if gridlock goes away, we will growth faster but if it continues, we won't grow slow. where he did say he's seeing improvement is in the european union. he revealed he met president macron of france just a couple of days ago. he said there's been a sea change in the environment in france, france being rational, pragmatic and strong, and very, very good for the business climate and citizens of the eu he said he completely applauds president macron's approach. he revealed again a copy of the bond jpmorgan issued in 1915 to help fund france through the war. that was his gift and he said that president macron, quote, is clearly making france far more attractive for banks and business so, a clear statement of

potentially what to expect in the future post brexit he was also asked about his comments earlier in the week about papering and he backed away and said they're taken out of context and not predicting or worried about the outcome in and around normalization >> pretty interesting. u.s. president said similar things about macron. very similar that's interesting we're just seconds away from retail sales and cpi rick santelli has it rick >> all right here we go a litany of data points all for june let's start out with cpi, shall we unchanged on head line that's 0.1 light 0.1 when you strip out food and energy that's 0.1 light and if you look at year over year core, that's 1.7. so that's actually as expected just head line cpi and year over year perspective, 1.6. that is 0.1 light expectations what's note worthy there is that actually is 0.3 lower than the last look at 1.9 all right, let's look at some retail sales, shall we

on the head line advanced read for june not good down 0.2 we were expecting the number in positive territory we did get a couple of tenths better revision. like many things we grade on a curve on this rescission down 0.3 to down 1 pns still positive 0.2 but still a negative number nonetheless. if you now strip out autos, autos is down 0.2. that's not necessarily good. strip out autos and gas, it's down 0.1 the control group that's plugged in to data points is down 0.1. so it's all minus signs. level not good here. the response in the marketplace, we're looking at three basis point drop in tenths we do this data all the time usually the response strong weak is very minimal lately on head line shock especially considering its preopening ek times. that's a pretty decent drop. 230 down to 227 is technically

significant. if you think the data ends here you are wrong. 9:15 industrial production 10:00 we'll get our preliminary july read on university of michigan sentiment survey and the dollar index is taking it on the chin again when janet yellen talks about, hey, we're going to import a little inflation. yeah, weaker dollar, that's where it's coming from i'd rather see my neighbor buy more things from foreign countries with a stronger dollar joe back to you. >> okay. i see what you're saying i don't really think you care what your neighbor does, rick. but, i understand your point thanks, rick your neighbors are so far away -- >> do you even see their house from your -- >> the neighbors most interested in are wisconsin and indiana i keep thinking, maybe there's a move in the cards, of course, as we welcome all the wonderful opportunities here in illinois after that wonderful budget

deal you waited over two years, what do you get >> no, no, no, kansas tried to cut taxes. look what happened there raises taxes is the way to go, rick let's get to cnbc's chief economist steve liesman. >> senior economics -- >> it's been awhile. >> since yesterday >> i didn't call you chief economist -- >> you called me chief economist. >> tried to throw you off. >> i thought maybe 24 thursday -- >> cnbc had a chief economist. >> they did. bill wallman >> and then you had another person, the woman with the chickens >> kathleen hayes? >> marcy -- >> oh, that's right. we did >> i used to appear -- >> why don't we hand that title out more >> i don't know. i'm not an economist >> your work is better than the economist -- >> sometimes my work is pretty good sometimes it's pretty good i want to talk about this thing right here which is you have two things going in the same direction. you have the inflation coming in weaker than expected retail sales coming in weaker

than expected. it's got to give a little pause here i'm looking at the inflation data and i'm seeing here, really muted gains for even some negatives. obviously a big decline in energy we expected that a decline in vehicle sales vehicle sales prices 2.8 down in gasoline but other things are down. airline fares, joe get on the phone with andrew talking about him, minus 2.7% on airline fares. apparel prices down. down across the board. going now to the retail numbers, and you see also, broad-based declines here, and it may even be worse than it looks because you had a 0.1% gain in motor vehicle sales when, in fact, we know the unit sales dropped that month. could have been price issue. but then looking broadly, food and bench down 0.4 gasoline we knew this was going to be down, down 1.3 clothing down, sporting good down, joe. it's really hard to square with what we think we know about the consumer

>> you can read the nonstore number yet >> the nonstore number is up 0.4 drs >> 0.4 >> for that, your expression is perfect. for that particular category which is always up, miscellaneous stores down 3.1. i'm not sure what's in that because we had a lot bit of bug, but department stores down 0.7 as rick size says the part that folds into gdp down 0.1% thap that's going to bring down this idea of where we are in terms of overall gdp depending on what happens with price >> don't you feel like in a way it's still the inflation number that's more important? even as big and as important as retail sales, we kind of know that story it goes up, it goes down but look it's the cpi thing, did you see what the 10-year did and this all after the results this morning >> i think that's important. i think you told the street that consumers were buying and going and buying like crazy they'd be like oh, i don't really care about inflation. it's this notion that you have

that when we had a great discussion on this yesterday i thought which was, there's different kinds of inflation thaz inflation that comes along with productivity, technological change and inflation that's telling you there's a little bit of weakness in growth and i think that's a little bit of what this is kind of suggesting to us here >> from the street perspective, this is good >> you -- >> it's good in that it doesn't move yellen -- >> let me tell you one very quick footnote to this which is joe was talking about my work. i came in this morning and john riding had a note that because of all the online sales he thinks that retail sales is not picking up all the consumer spending that's out there. and i went back to 1989, just this morning, but in the middle of my first cup of coffee, retail sales is revised up 60% of the time upward so john may have a case there -- >> remember the amazon tip last summer that ended up not happening.

>> not happening right. we need to go back and look at whether or not the internet is the source of this upward revision but you could imagine that the structure of the course of the data changes and the government oh, my god is behind the times, takes the data crunches over there. so maybe it's not as bad as it looks. but it's still not as strong as it should be and i think bottom line just to finish off here, is that it suggests that yelling was maybe right yesterday to say you know, we're going to take a little time we're going to take a look at the data and be a little more cautious about that next rate hike while the balance sheet reduction possibly proceeds apace. okay >> good. steve, thank you did you see balmer nothing that we do matters i mean, like the government does this, does that, the more government, less government, more entitlements, it's -- that's what he said. >> i don't think that's right at all. >> no, you said that many times before though that -- >> for what? >> obamacare didn't hurt lower taxes doesn't help -- >> steady line -- >> oh, no i've not said that at

all, joe >> that's why you're -- >> i've not said that the all. i believe it matters a lot what government does and i believe the size of government should be limited and allocate that to government -- >> but the same size as -- >> so even under the obama years -- >> you're missing one of the things on health care joe which is one of the problems with health care is keeping the government controlled portion of the economy to a certain limit so there's still big parts of the economy that are subject to gains in productivity, that's the economic concept for the concern about the growth of government controlled health care is that you keep it tied to productivity >> now you are preaching -- >> yeah, well -- >> 2016 -- >> 2016 was a -- sometimes i don't want to listen >> i know. >> 2016 was a record catch with 130 million lobsters

contessa -- are we sure, contessa in mountain this morning casting a wide net for all these delicious details. don't let the lobsters know what we're talking about. are you sure it was 130? how do you know? >> i did catch some. in fact i'm not alone, because they're talking about this historic catch, 131 million lobster. it was a big, big harvest. and, in fact, they've had a number of these banner years, joe, but what they've learned about a historic harvest is not always a good thing. in 2012, they caught all these lobster and prices just plummeted. >> china saved our bacon the price was at an all-time low, i think the statewide average was $2.69. and we aggressively opened the market over there and it became very popular within the middle class. that very much saved us. >> so this summer they're calling it almost twice that

price per pound in large part because of all this growing demand in china. and china's taste for lobster just keeps growing in 2010 look at this, the u.s. net 1.3 million worth of lobster to china last year, 84.4 million dollars worth of the tasty crustation. it seems insatiable. at maine coast a lobster distributor almost half of their overall business now is chinese exports. they keep trying to open other new markets internationally. lodgestics is a big obstacle but of course the lobster are delicate and the distributors have to control transit time, temperature and handling if there are american customers who worry that all this international demand is going to drive up the prices, consider this, chinese customers are paying between 50 and 100 bucks in a restaurant for a 1.5 pound lobster. here in maine we pay $14 at the wharf. at a, you know, lobster shack. and then we pay $32 in a portland restaurant. if you have a bigger appetite than that, this bad boy, will

set you back oh, a measly 70 bucks at a manhattan restaurant. chump change look at him. he's like three pounds you can work out with him, joe >> can you bring three back -- >> you see that guy tried to bring one on a plane contessa, we've got to go. but are big lobsters as good as average size lobsters in terms of tenderson and taste do you know? >> no. i'm a true mainer. no, they're not. the smaller lobsters are flavorful and tender the big lobsters have a lot of meat so if you're a hungry man, you know, you get a big lobster. >> right >> do you have crabs, contessa >> yep, yep, we didn't catch any scallops, no but we caught crabs. >> okay. >> it was awesome. >> all right thank you contessa brewer. up next, the quest to bring back the woolly mammoth.

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a number of sports team owners and commissioners gathering in sun valley and the future of the nfl is in the spotlight.

our julia boorstin is there with more julia? >> hey, melissa. three of the biggest names here tell us that the nfl is working to make changes to make this coming fall football season more engaging than ever and this is coming off a 9% ratings decline in the regular season football games this past fall now we caught up with nfl commissioner roger goodell, about his plans to introduce fewer, slightly longer, ad breaks >> one of our big efforts is to try to make sure that we make the experience, whether they're watching on television or whether you're in our stadiums, make it a more compelling experience for our fans. and that means trying to do less breaks trying to make sure that we're not overcommercializing, trying to find ways in which we can take down time out of the game and make the game focus on the action which is what the fans all want. >> new england patriots owner robert kraft says he expects ratings to rise on these

changes. while cbs' les moonves tells us since cbs is paying over $1 billion a year for nfl rights, they're happy to see the nfl change things up moonves also told us he's not concerned about the fact that amazon is going to be streaming thursday night games he thinks it won't hurt cbs' ratings, and goodell says that he's optimistic that amazon will give viewers yet another valuable way to watch. >> we're very excited about it we think it's going to be a great thing for our fans it's a great platform. it's another way for our fans to engage for the game. and i think they'll bring a great deal to the nfl, to all of our fans >> we'll hear more about the changing sports business and amazon and all these players getting into it when we sit down with casey wasserman he's a sports mega agent he'll also tell us about his plans to bring the olympics to los angeles. guys, back over to you >> all right julia, those agents, parasites all of them.

thanks best-selling -- i'm kidding. >> anyway. >> talking about -- >> in case he's watching he loves that when he gets a shout-out. author ben mezrich is out out with a new book "woolly" the true story of the deextinction of one of history's most iconic credit yours the race to resurrect an extinct species the woolly mammoth we already had a discussion off camera and i said, similar to jurassic park but not nearly as hard, you don't need to take the dna out of the agar and reproduce and you immediately said, well, it will be better because woolly mammoths aren't nearly as mean as a raptor >> we love it. >> so you're already going to the end of jurassic park where things go haywire. >> the difference is jurassic park is science fiction. there's no such thing as dinosaur dna it doesn't exist we don't actually know the genetic code of a dinosaur it's too long ago. but the woolly mammoth only died out 3,000 years ago.

there were woolly mammoths when there were people building pyramids woolly mammoth dna we actually have >> where did we get it >> from the arctic it's coming up out of the ice, their tusks are worth a quarter million dollars a tusk -- >> wait a minute, it was warmer back then? >> the ice age was ending. the ice age was -- >> you guys got your facts wrong here >> right, right. >> they were in a warmer place and then were frozen this has happened before >> there have been multiple changes in the environment over time, it's true. >> from what >> from woolly mammoth cars, you saw the flintstones. >> yeah. big side of ribs -- >> right, right, right so the woolly mammoths are coming up out of the ice scientists are taking the material they sequence the dna and they're placing it into asian elephant embryos so an asian elephant gives birth to a woolly mammoth. that's the woolly mammoth project. going on at harvard. it's dr. george church who is basically the einstein of our time >> there's reason to do this,

right? >> yes it's to save the world and so the permafrost is this giant ticking time bomb. it's this frozen permafrost that course the ring of the world and it contains within it more carbon dioxide than if we purned all the forests on earth three times. >> and it methane, too >> methane, horrible stuff and it turns out that if you can repopulate the tundra with learn herbivores like woolly mammoths, these russian scientists have proven this, they knock down trees, they push up the snow, they make the permafrost colder. it can make it as much as 15 degrees colder so the goal is to release a herd of woolly mammoths across the siberian tundra. it sounds insane >> i think the premise of jurassic park was probably more likely than any of this. >> an amusement park would be more fun but this is a real, good reason to do it >> yeah. in someone's view. okay, well, that's a different subject. so how many genes do you need? >> well the harvard lab is trying to go for 23 genes.

>> and that would do it? >> the shaggy red hair that you think of the woolly mammoth, the big tusks, the ability to live in the cold, because elephants don't really live in the cold. and things like that, right now in existence in boston there are three prehistoric woolly prehistoric woolly mammoth genes alive in ancient elephant cells. a few miles from where i live there is living woolly mammoth right now. we're very close to -- >> genes are being expressed in -- >> living in orga ninoids. >> i see what you're seeing. >> we can do this. the science is all there it's just a matter of placing it into the asian embryo and having an asian embryo give birth to it >> how many -- you always pick the greatest subjects. you had how many that came along in the last two years? >> the woolly is everything to me the woolly mammoth is a big, good story, and it's -- >> it is a good story.

>> there's something good about it. >> hard to go from that to cats. house cats when we return, we may have found the perfect piece of real estate and jane wells got a look inside that's next. michael, can we get this data to...? look at me...look at me... look at me... you used to be the "yes" guy. what happened to that guy? legacy technology can handcuff any company. but "yes" is here. so, you're saying we can cut delivery time? yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes. your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call

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with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. a property in arizona is redefining what it means to be a purrfect home. i was worried, jane. i thought this was one of those places where they find like 90 cats in some old lady's house and they shouldn't be there. this is not that >> no, this is like 9 million cats on the wall joe, this may be the most unusual home for sale in america. yes, purrfect for the right buyer. it's called catopia. covered wall to wall, floor to ceiling, with cat stuff. now it's on 20 acres the ultimate cat house in a remote area of the arizona high

country. $240,000 but the listing has gone viral they've had 3 million hits so far, just for the listing. and even though there were lots of news stories, we are the first camera crew that's actually come out here to look at this in person. so this was her master bedroom which is all cats. liz keller, the realtor, says she's never seen anything like that the owner, a woman who is very shy, had this house built and began this sort of art project when her husband became termi l terminally ill and spent ten years and who knows how many thousands of dollars with these cat creations. but here's the deal. she only owns two cats >> every time you look at the house, you see something new and you see something overwhelming i would love to see it stay the way it is, only because you can see the number of hours that she put into this house. and the love she put into this

house. it was a labor of love you can say, why would you list that it must smell like cats. it's a terrible listing. i feel sorry for the realtor to me, i think it's a great listing. i love it. >> now they have had a few showings, but notice offers yet. and if you are wondering, no, it doesn't smell and i am definitely allergic to cats and look, mom, no benadryl back to you. >> jane, haven't you -- if memory serves, haven't you done other stories from a cat house before oh, no, no, oh, wait a minute. that was -- that was a nevada story. >> now you're being catty. >> that's good >> how many total cat pictures were there do you know? >> here's the thing. if you look around, every time i've walked into the hour, and the realtor, liz keller, said the same thing you see something new. something you didn't see before. >> a single one of those cats

they had were one that would be glad to see when their master came home or would want to be friendly to the master or like the cats i know. they do you a big favor if they come over to you there are dog people and cat people, as you know, jane. >> right yes, i know. i'm a dog person, but i do love cats i just can't get near them or it's a mess. >> i like cats, but i am allergic thank you, jane. jane wells in the cat house in arizona. >> coming up, today's top stories. ten-year yield breaking two points rht nigow more than a one-week low we're watching that. stay tuned since 1990, consumer staples have traded positively 90% of the time

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final check on the markets this morning, and these are just the stock markets, but as melissa just pointed out, ten-year now down to below three. the s&p indicated up another record indicated for the dow if that were to happen a record for the s&p as well and the nasdaq and the ten-year now 2.287

what does it mean? what is it all about i guess it's still a global world in terms of interest rates, but it's still -- >> but everyone from the banks that were expecting two more rate hikes, well, it's flattening this morning. >> thank you both. have a great weekend pleasure is all mine thank you. make sure you joino us on monda. "squawk on the street" is next ♪ ♪ does it almost feel as nothin changed at all ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla and david faber. jim cramer is off today. futures just short of the flat line today we'll get high-profile upgrades of walmart and boeing. and rates and the economy. europe is mixed, and the