"squawk box" begins right now. ♪ i always feel like somebody's watching me ♪ ♪ is it just a dream >> live from new york where business never sleeps, this is " ""squawk box." >> welcome to ""squawk box." we're live at the nasdaq market site in times square >> s&p 500 up about four points. the nasdaq, however, and we'll explain why this is the case

>> pretty much across the board. they're doing particularly well, we should say, in spain, and finally, if you are buying wti crude by the barrel this morning, the price tag is going to cost you $46.84 >> it's $600 million for the right shoe, and $600 million for the left shoe. have you ever bought these things how much do those cost, and my wife says $400 i say that's not bad per shoe >> i was going to say, that is a mass i sale at $400. this $1.2 billion is really drars 600 million for one shoe and $600 million --

>> for the right one >> they are pretty cool. i mean, i don't -- they're beautiful shoes. >> i don't want to think about them as a -- >> do you know about rent the runway >> no. >> can you rent shoes? >> that's a good idea. these things are so expensive, right, and then we have two german shepherds, which doesn't help, obviously. >> are the dogs being walked in the -- >> no, you leave your shoes around >> i thought that 1.2. it's a great name. it is. very high. >> it can help michael kors. >> a lot of respect in my house. >> i have them in my bag >> you do? >> are they jimmy choos?

>> they have to be jimmy choos >> i don't own a pair. you? >> not yet >> never say never >> exactly they don't make anything for us, do they? >> i don't think so. >> maybe they do >> depends what you like they may all right. japan's soft bank has approached uber about taking a multibillion dollar steak in the company. according to the "wall street journal" the report say the talks were film, and any deal would likely need to wait for uber to hire a new ceo the uber report comes less than a day after soft bank teamed up to invest $2 billion into sing more ride sharing company grab shares of softbank higher about .75% on today's wall street agenda, the earnings reports are starting to come fast and furious. 3m, ka the pillary, eli lily, general motors, mcdonald's, united technologies are all out before the opening bell today. after the close, we'll hear from amgen, texas instruments,

chipolte and u.s. steel. there's a pair of economic reports this morning the s&p kay shiler home price index and july consumer confidence plus, the fed, of course, begins a two-day policy meeting the decision is due tomorrow at 2:00 eastern time. >> there's earnings per share from continuing 7. adjusted earnings per share is $1.38. that is 9 cents above the estimate of $1.29. dupont second quarter sales $7.4 billion. that's above the $7.292 billion that was expected. still expecting a close. the merger with dow chemical by august the stock is basically not doing much on this news.

>> i think this means something. we'll see whether kayla thinks it means something john mccain returning to work today just in time for a key health care vote kayla joins us now with more huffington post is shaking in its boots this morning saying that the indication mccain is coming back means that this might not be dead and mcconnell might have the votes >> the conventional wisdom, joe, would be that he wouldn't in the state that he is in right now after his diagnosis last week wouldn't be coming all the way back from arizona for a vote that would fail. it is worth noting that the statement his office gave yesterday, it gets more real estate to the defense and sanctions votes that he will be participating in as well it is true that his presence back in washington could end up being a galvanizing force for health care where several republicans are still at this stage noncommitmental.

senate leadership saying those concerns can be dealt with after the vote passes to proceed it means voting to proceed that will occur tomorrow >> so far senator susan collins is the only republican who is an outright no, but there are a half dozen more who are undecided saying they don't know what they're voting for. while the finished product is unclear, the starting point will be the house bill from back in may. then the senate will have 20 hours to debate and make their changes. a statement out yesterday from the trump administration saying it's "strongly encourages all senators to support it." this, an official word after the president used his bully pulpit to do so >> we as a party must fulfill that solemn promise to the voters of this country to repeal and replace.

what they've been saying for the last seven years but so far senate republicans have not done their job in ending the obama care nightmare. >> so far we still have a 12:45 lunch on the calendar for all senate republicans that happens nearly every day in the middle of the week when they're in session >> president trump four minutes ago, kayla that's on top of my twitter feed, and here's what he said.

eye cranian efforts to sabotage the trump campaign quietly working to boost clinton where is the investigation, a.g. there we go again with throwing down some shade on our buddy jeff sessions. >> it is curious that he chooses to do this in a public way, joe. i would imagine that he knows how to reach the attorney general directly if he had concerns about something that he believed >> are they talking? >> apparently he went to the white house yesterday. >> he was at the west wing yesterday. sarah sanders confirmed that general sessions was at the white house. he did not meet with the president. >> they are looking at their office and seeing whether it would make a sense to make a change >> not him

>> then after they pulled back after juliani said it's not him. by the way, he said it's not him, and if he were jeff sessions, he would -- >> he said that. that doesn't mean it won't then ted cruz. >> ted cruz floatation is interesting to me because he has won a lot of supporters throughout this health care process in the senate. he has tried to put some formative ideas on the table to try and reach a compromise, and people are saying, maybe this is a new ted cruz maybe this is ted cruz 2.0 or 3.0, and this signals that he wants, again, to run potentially to challenge trump in 2020 this could be a move to try and sideline any future ambitions that senator cruz has, but at this point all of this is just speculation. >> you know, just thinking about it

>> the unmasking there are so many things that theoretically if you had your own guy in, and i think that's maybe that's what trump is frustrated about at this point too. you know, where is sessions on this he recused himself from russia it doesn't mean he can't look at those things >> certainly he feels that the fact that he tapped sessions for this job means that he believes he would receive some loyalty in return or some prioritization as of what the president feels should be at the top of the list for the department of justice to be investigating on the flip side, critics have said that sessions in his press conference last week instead of saying that he is committed to the job, he should have come out and given a full-throated defense to the work of the department of justice and the independence of the department and the work that it does saying that it is free from

politicization and partisanship. some others on the other side say because he didn't do that, he is bowing more to the president than others would like it is a unique situation, to say the least. certainly the president feels that he has been slighted, as we've seen evidence again by this morning's tweet >> i'm down to where i follow three people, and i have three people following me, because i have blocked everybody else wrrng. >> limiting the utility of twitter. what's the point >> i don't know if there is a point. >> okay. >> show me what is the point to being on twitter >> close twitter, and don't use it for the next three hours. >> you know how much that tickles my fancy that those two heroes of the new age are --

they should really -- are they arguing? that's great a little bit of argument >> dpood >> kayla, thank you. >> it's not about hair right? >> shares of google parental fa bet under some pressure this morning. the tech giants results beat wall street expectations, but investors disappointed by key metric what the firm earnings in revenue per ad clicks. the company also saw its net profit decline by nearly 30% or as a result of that fine of nearly $3 billion from e.u. regulators >> every bit of that re new

comes at a lower margin than desk top search. there's really no better business model than desk top search was >> you're not convinced that there's going to be a moment at which they're going to figure out how to capture that same margin on a mobile device? >> well, i think there are opportunities. if you look at the google pixel device they launched last year, that is an opened and operated piece of hardware where you were logged in google user, and they don't pay any traffic acquisition costs to the likes of apple and samsung i think you have hardware initiative that is are tied into better ad targeting as well as better unit economics. you have to scale that over the next couple of years >> i think sustained 20 3erz top

line growth, $85 billion to scale, in terms of an advertising business, is something a lot of companies would envy i think at the end of the day the advertising ecosystem continues to surprise you in its strength, albeit at lower incremental margins. >> i thought you were going to tell me. >> what? >> that's why i need to keep it. >> can i just -- why what time is 6:14? >> why are we -- >> primetime for the president >> it is again, i mean, if you are following the sessions trump relationship, these are -- i needed to see it >> this is a modern day --

>> no, i mean -- this is a modern day reality show. >> it's very important the nasdaq is off the record close because of google. it matters to investors. >> there's a second screen reality show going on right now out of washington this morning >> okay. >> keep to twitter >> there's another reality show going on in europe, by the way, when it comes to alphabet and google, which is to say the e.u. how look at that fine and potentially future fines are we out of the woods? zblie think we have two vepgs every investigations that are still ongoing. they try to explore why someone has a certain amount of market dominan dominance. it posted the last fine and decision we said that google would likely keep all options open. they said that on the earnings call last night to both appeal

as well as to express some remedies to the e.c. we'll have to see what that might change in terms of user behavior or advertiser behavior. >> that's a question mark, though, on the european business let's be clear, right? >> 1 00% i think going forward regulation is something likely most of the large cap internet companies could face more of going forward than not when you look at their scale and their size however, whether it really changes the user economics or the unit economics and the business model, i still think it's a low probability event at the end of the day >> do you buy google here? it seems like you're staying focused on the revenue growth overall as opposed to the individual metrics the forest through the trees instead of the treateds wheres >> we raised our price target overnight from 1,050 it's very rare to see this combination of reasonable free cash flow multiple on sustained 20% top line growth, especially when measured against a relatively low growth global gdp environment wrrks.

>> let's make it slightly more kplikd if you could buy google or alphabet in this case or buy facebook, what do you do >> we have a slight preference for alphabet over facebook >> because >> we think the computing utility elements of alphabet are very underestimated by investors. facebook at its core is a media consumption property >> right >> alphabet's mobile computing ecosystem is something you use every day. >> okay. final question we're going to show it in just a little bit, but there's been a bit of a throwdown between elan musk and mark zuckerberg over a.i. my question is actually who is more advanced on the a.i. front, artificial intelligence, between facebook and google? >> alphabet is much further ahead on artificial intelligence and machine learning we believe on those topics alphabet is actually the industry leader by a wide margin today. the ceo of i-robot wants to use rumba to sell information to

companies like google and amazon >> he has his own views about a.i. too wrrks mr. roomba. >> we'll tell you why after the break. where's jack? he's on holiday. what do you need? i need the temperature for pipe five. ask the new guy. the new guy? jack trained him. jack's guidance would be to maintain the temperature at negative 160 degrees celsius. that doesn't sound like jack. actually, jack would say, hey mate, just cool it to minus 160 and we're set. good on ya. oh yeah. that's jack. good on ya. we, the people, are tired of being surprised with extra monthly fees. we want hd. and every box and dvr. all included. because we don't like surprises. yeah. like changing up the celebrity at the end to someone more handsome. and talented. really.

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yogig-speed internet.me? you know what's not awesome? when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids. and these guys. him. ah. oh hello- that lady. these houses! yes, yes and yes. and don't forget about them. uh huh. sure. still yes! you can get it too. welcome to the party. introducing gig-speed internet from xfinity. finally, gig for your neighborhood too. welcome back the company that makes roombas wants you to use the robotic

vacuums to map your home and then sell the data to tech giants like google, apple, and amazon i-robot ceo says that the data could help make the smart home smarter. the data could be used to improve dosound system acoustic to schedule air flow from air conditioners by room, and to adjust smart lighting by the position of windows. >> how does it know where windows are if it's bumping boo walls? >> is that worth $400 something?

>> a.i when are you going to get to talk about your story with musk? >> 6:30. >> k on. >> i love that story >> hold the phone. >> k on. >> hold the phone. people don't even say that anymore. hold the phone >> no. why would i hold the phone >> hold the phone at 6:30 we're going to tell you about it >> a lot of things are becoming -- in the past. where i'm currently living >> hold the line >> right, joe? >> hold the line >> i know a lot of the old -- >> i don't like moving forward very much. maybe you can tell >> no comment. nasdaq set to come off its record-closing high, and the fed begins its two-day policy meeting now. let's talk to eric, multiasset chief investment officer $365 billion in assets under management chris russ, fund manager of needham small cap. gentlemen, good morning to you both eric, i'll start off with you. in terms of the nasdaq and the run that we've seen, obviously,

record high yesterday. we have google posing a bit of a problem today. are you concerned at all about the strength of the fang stocks as we enter the very heavy earnings week? we've got facebook and amazon also on tap to report. >> i'm concerned about the overall level of complace ecencn markets right now. yesterday was the eighth straight day with vix closing below ten. that's a rrd it looks like today will be the ninth. we've had 270 days without a 5% correction in the s&p 500. there is just a remarkable level of complacency right now as we go into kind of a challenging seasonal time in markets, though, at the asset class multi-asset level, we're not trying to take big directional bets on equities versus fixed income right now. that said, there are actually a lot of interesting opportunities to take advantage of divergences between markets where you can take advantage of valuation. >> whatsoever divergences? >> in the united states we would rather be a smaller company stock. that's something that chris is going to agree with than large cap stocks 18 times forward earnings. not terribly overvalued, but you

have to question where is earnings where are going to be the major drivers and large caps going forward, whereas in europe, parts of the emerging markets, you can get access to better marginal improvement in economic growth at better valuations. >> chris, within small caps, whatsoever sectors are you looking at >> technological ini don't he vegas continues. you are just talking about the roomba what is the components that go into that, to collect that, the sensors, the storage? what's behind all that irrespective of what's going on in d.c. or what they approve or don't approve and when that occurs, technology continues to move forward we're going to get a new iphone this fall at some point. you have component constraints >> whatsoever companies are you looking at some in ermz it of suppliers to the iphone that are in the small cap universe? >> he with like semicap equipment still, which is a part of the whole supply chain.

>> anything with a higher beta is going -- >> we're not seeing a big market break, but we are seeing a rise in volatility going forward, and this environment in our global allocation or multi-asset income funds, we would rather be capturing income now to be able to reinvest at higher interest rates. we're going to see peak qe rates that will be rising, we think, and at better valuations when you do see some volatility in emerging markets, we're playing emerging market depth where you can take advantage of the dynamic, capture a higher

yield, 5%, 6%. >> are you investing in individual wonbonds or through the -- how are you allocated >> in you are on strategies we're able to lessen the individual bonds we like high currency sovereigns we like some currency sovereigns we like shorter duration >> are you worried that the rush to the exits in eerj manying market bonds is going to be fierce because people have been reaching for that yield? what's the average yield at least 5% >> it's north of 5%. the hard currency markets, which are almost average investment grade about 5% local currency, you can get more you're always going to be subject to the potential for volatility if you do get market breaks. the balance sheets of emerging markets, the improvement in growth is the better situation than the last time we saw kind of a taper tantrum in emerging markets got hurt >> overall, chris, last word in terms of the markets what are you foreseeing? are you seeing any sort of rise in volatility ahead? >> it's certainly been a concern that it's been down there for this many days, but we've been building up some cash positions

to take advantage during the earnings season here,which we're really excited about, uz bah we're going to hear hopefully some good things if we don't hear good things, with he can put money to work in long-term good stories >> chris, and aaron, thank you appreciate it. >> coming up, tensions rising between elan musk and -- oh, no. this between north korea and china in this case andrew doesn't really -- you want to get right to that business network >> okay. >> all right >> but if the world ends, it's not going to matter a lot. >> binary. binary decision. >> china is beefing up border security in anticipation of a potential crisis this is what's happening in north korea. former state department officials will join us next as we head to break a look at yesterday's s&p 500. winners and losers

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snierchlt welcome back you're watching "squawk box" live from the nasdaq market site in times square. >> the dow and s&p are up, but we mentioned earlier, the nasdaq is down large part off of alphabet's earnings niez you are looking right now. the nasdaq off -- the dow would be up 67 points.

65 points, and the s&p 500 up close to five points we've mentioned it a handful of times, but we're going to bring it to you right now. >> zuckerberg says the following. i think people or nay sayers are trying to drum up the doom's day scenarios i don't understand it. it's really negative in some ways i actually think it's pretty irresponsible. i have to watch him on facebook live he was literally in his backyard barbecuing with pros i wi-- priscilla. they were doing briskit. they couldn't get it hot enough. >> in between -- >> in between they were chatting about a.i.

>> he was chatting with the people in a very modern kind of way. anyway, this morning about two hours ago when most people were still sleeping, at least on the east coast, that is, musk responded on twitter tweeting the following. he said, "i have talked to mark about this his understanding of the subject is limited." fire another twitter user said the tech titans should write a blog post on the topic to which musk responded "movie, on the subject coming soon. take that for a little bit of a tease. >> elan already talked terminator or something. is that the movie he is talking about? if mark zuckerberg can't figure out how to work his grill, maybe he doesn't understand artificial intelligence >> the musk narrative, he said we better learn how to merge our bodies with machines these things are kind of -- i know elan is so smart, and he is such a big -- >> why do you think it's so far out there?

>> you think within ten years -- >> he has a company neurolink which is specifically geared to interface with computers >> actual fears about when as humans we need to start worrying about machines i think we've got some time to figure out ways maybe of dealing with that. i mean, i know he loves to talk futuristically and, you know, we can all be living on mars and everything, but i'm with zuckerberg on this chill. >> let me ask you this, though, five years ago -- >> i don't think -- that's not -- i'm not up at night thinking about how a.i. is going to, you know, hurt me or kill me or turn off the lights >> you just said you don't like to move forward. >> i just think, you know -- be real i think zucker berg is absolutely right autoif you get tut computers

mammograms and all these other things, all of a sudden you can open up the world and there's all possibilities. he is looking at it on the bright side. as well he should. i think it's interesting that elan looks to recognizes, by the way, recognizes there are down sides to this. at google, alphabet, we've been talking about that with earnings they have deep minds, which is one of the probably most advanced a.i. units in the world. they bought it out of london they have an ethics board, and they spend a lot of time talking about the ethical implications of what they're building i don't think it's too far afield to suggest there are some issues with this, but i also understand why zuck wants to be optimistic >> technology always advances more quickly than the ethical expression that follows it why not start that >> it's not a novel -- there is a whole jagenre of science fictn books that have been written for the past 50 years about machines i was kidding about

"terminator. there are guys that won hugo awards writing what elan musk is saying okay it's not, you know, profound or a novel idea to talk about whether it's anything near-term, i this i about things like this. i don't know maybe you guys -- you may see some type of the very beginning of an issue with where there's a problem, but i wouldn't even doubt whether -- we're going to be happy when we're dealing with machines, but you're going to download that great brain of yours on to hardware, and the hardware, and you are going to be able to soar. we're going to be able to talk to each other. every morning. >> forever >> forever >> because it's so good, and the chemistry is so great that we may never -- i have thought that that would be -- everybody has their own -- >> that was our chemistry, though, that might -- i don't know

zplie just would worry more about this than the terminator scenario in geopolitical news according that i new wall street journal report china is beefing up defenses on its 800 mile border with north korea preparing for what could be a potential crisis, including a possible u.s. military strike joining us now former assistant deputy secretary of state joel ruben. shouldn't be surprising at all you think about, you know, saber rattling or just prayigmatism. there may be something that the united states might feel compelled to do, and this is just planning for it or even the possibility of it. seems prudent. >> andrew, joe, melissa, it's great to be with you this morning, and we have a chaotic situation in our policy towards

north korea and then what north korea is doing and to try to use the market language on this. the chaos is creating uncertainty, and the result is you see china, for example, pricing in its response. it is adopting a policy of reactions to this chaos skplk a wall is a contingency planning effort it's not the only effort, i'm sure, that they're engaging in, but certainly it doesn't demonstrate a lot of confidence in our ability to resolve this right now. >> are you -- you said there's a chaos in our current policy towards north korea. i mean, how far are you going? are you going back ten years, 20 years? how far back are we going with that >> this is multi-decades the obama administration there was a deal with north korea in 1994 on its nuclear program, and that is really sort of the key pivot point in understanding how we got to where we are today it was known as the agreed

framework. it brought some clarity to what north korea was doing. they dig cheap on the flip side in our side in 2002 in the bush administration, we terminated that program, to use the phrase, from the previous discussion, and that meant that we were left with no real policies. for essentially the last is a years we've been floating and we've been watching north korea expand its programs. they have now created intercontinental ballistic missiles capable of reaching up to alaska. some estimates are stating and developing their nuclear program, and we don't have a real policy on how to address this this is a bipartisan failure, quite frankly. >> in the type of precautions or planning that china is involved with, it could be refugees, right? i'm wondering if there are -- they're building a wall over there, and actually they already had a pretty good wall, as we know, but i'm wondering if that's border security that's

part of it they're probably worried about if there was some type of radiation from whatever happens in the next two, three -- nothing is off the table, i guess. there's all kinds of planning that they're thinking about it planning for contingenciecontin. >> yeah. there are some basic physical facts associated with north korea. that is what is consistently impeding progress in addition to, of course, the leadership of north korea, which is in and of itself extraordinarily complicated and messy. the physical facts are there north korea's border with south korea, just underneath the border is about 40 miles south at 24 million person, city north korea has tremendous amounts of artillery

>> that's been china's core concern about military conflict in addition to the potential for nuclear exchange >> to which we feel that china is now sort of acknowledging that they have no power to help in this situation, so they're just taking care of their own interests in what's happening now? i mean, should we feel like they're saying -- they're saying, look, this is -- you know, we're giving up. we can't do anything with these guys >> i think it's a dualitq. i think, first and foremost, united states we're supposed to lead, and we're supposed to be leading on diplomacy, and there's been an ongoing process known as the six-party talks for a number of years. that really hasn't gotten the job done clearly

>> that was awe great opportunity to do it china is looking at this, and, well, they're hearing saber rattling from the u.s. or demand, the u.s.'s policy has been to ask china to resolve it for all of us, and china doesn't have that leverage alone at this stage china maybe frankly reading the tea leaves and saying, well, if they're expecting us to resolve it, that's not going to work we can't just do this on our own. china does need to do more i don't want to give them a pass on this, but understand they have limits as well. >> investors are always trying to figure out what to do about all of this news how to handicap it whether they can somehow figure out a way to price it in invariably, most investors say this is a binary -- there's a binary outcome here.

therefore, you can't do anything about it i know you're not what would you do about it? >> what i would do is that as an investor, first and foremost, i would be paying attention to the sanctions activity today as it turns out, house of representatives is going to pass a saekzs bill with a large bipartisan vote. she's going to be sanctioned related to iran and russia, and also north korea they've added that into the package. one can expect that sanctions will continue on the north korean file. sanctions are a tool to get to a solution, and right now we don't currently have a clear stlat eejic diplomatic approach to get there. one should essentially expect that sanction's approach to be leading our efforts, and that means it could impact extra territorial players such as china and others who are engaged with north korea and people have

to be on the lookout for those kinds of impacts >> well, thank you appreciate it. thanks for listening to our earlier conversation if you want to do some reading, it is not -- this isn't mandatory. i'm not signing it to to you you know how people sort of do extracurricular activities >> verner is a famous -- scientist won the hugo award actually has -- i don't know whether he wrote it before our friend, but his essay is called the coming technological sing later. a lot of his fiction is about where we are in the future >> the precedent you set, how much will you pay me per page to read this? >> he has paid you per page to read this thing? >> years ago he really wanted me to read arthur brooks.

he thought if i read that book, it would open up my mind to another way of thinking. >> i'll pay you to read -- >> how much did you pay? >> $1 a page >> $1 a page >> there were 30 pages index not part of the book >> i charged he wanted me to pay for the index pages too. >> if you read them. >> he didn't read them i don't think he read any of them does it look like he read anything about arthur brooks does it look like he has read anything >> i happily cashed the check. >> you did >> yeah. i want you to read the road to surf the net >> $1 a page maybe he will do it. >> coming up, a veteran media executive will be our guest host at the top of the hour former frontier communications ceo maggie widerodder joins us on set eli lily brings us earnings. david rick will join us at 7:is a a.m. eastern time first on cnbc then we'll get gm's quarterly report in the next hour. we'll get the first word from cfo chuck stevens.

stay tuned you're watching "squawk box" on cnbc

eli lily out with -- the drugmaker earned $1 .11 a share. also beat forecasts. lily did raise its outlook to $4.20 a share. the consensus was at $4.12 it's at the lower end of the guidance we will talk to eli lily ceo david rick, 7:15 a.m. eastern time first on cnbc. we do want to get a check on the futures here especially as the nasdaq just yesterday coming off of a record close. we paid our losses here at the nasdaq as we have gone through the premarket session. looks like now the nasdaq could lose about 3.5 points. s&p looking at a buy about five here, and, of course, we have a lot of earnings ahead still, joe. >> we do we've got four more tweets that we haven't mentioned that -- i know andrew loves these. at one point the president said

the problem with the acting head of the fbi and the person in charge of the hillary investigation, andrew mccabe, about $700,000 from him for his wife or his wife i don't know -- then big day for health care. after seven years of talking we'll see whether or not republicans are willing to step up to the plate. obama care is torturing the american people. the democrats have fooled the people long enough repeal or repeal and replace i have a pen in hand then, finally, so great that john mccain is coming back to vote brave. american hero. thank you, john. now you are up-to-date time now for the executive edge. two popular food chains reporting. mcdonnell's stock up more than 25% this year. chipolte just hit a four-year low. joining us now at the tale of two stocks, cnbc's susan --

they're so different it helps if you're not worried about, you know, not feeling well >> e. coli all the good stuff >> that's -- that's the first thing i would make sure of probably you know then you can argue about the health and whether, you know, people look at that movie they did about being the pounder -- >> the one before that the guy goes in and eats mcdonald's -- >> with the morgan sper lock -- >> anyway. >> fast food nation. tale of two restaurants and interesting fortunes between the two mcdonald's set to report earnings in just under an hour's time should be growing around 3% in the second quarter the rollout of digital ordering, delivery and value promotions, including $1 beverages are helping drive orders and then you throw in over $20 billion in cash returns, refranchising, 95% of stores and menu innovations like fresh beef quarter pounders coming your way, and that's why mcdonald's shares are up from 40% since november last year going in the opposite direction another restaurant chain set to

report today after the close, chipotle hitting a four-year low this week. another round of bad press following the norovirus at a virginia location and reports of rats in a dallas store, once again shaking investor and customer consumer confidence sales have fallen off at least 10% in the past week and investors have been rushing in to either downgrade the stock, or reduce the charter price. second quarter results still going to be positive, after the bell today in comparison to the 24% drop in sales last year. so it's an easy compare. it's not going to be hard for chipotle to come out ahead but it's the guidance forward for the third quarter. which still looks a little bit lofty given the events of the past week, and that i'm sure will move the stock later on today. guys >> thank you >> all right >> have you updated andrew, your view -- oh, no mcdonald's you're a nonbeliever there again. >> what do you mean i was a

nonbeliever? >> in the anticipation of what he was going to do the stock shouldn't be up based on anything that's actually happineng. >> remember -- >> you do at the time -- when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.

as the senate prepares for a possible vote on repealing some

or maybe all of the obamacare provisions, several of the policy implications remain unclear including how the federal government will handle cost sharing reduction subsidies. for a look at the impact of the debate on the health care stocks ana gupta, managing director what are you telling cliepts in terms of what could happen here? >> in terms of the bill itself i think the vote today is likely to be successful you know -- >> the debate? >> it's like burn the ship, though it would force the senators to coalesce at some point around a replace bill but the timing of that is a little uncertain and september, middle of september is the deadline for the insurance companies to decide if they participate in the 2018 exchanges and so, if you do not have funding for these csrs by the middle of september, i think it's very likely we see some more exits even though state insurance

commissioners are really pushing hard for the bill to pass, and are likely to give them some rate increases, not all states have committed to that >> you want to be in a space but you don't want to be too subject to the whims on capitol hill what are the quote/unquote defensive stocks in your universe >> the defensive ones are those that exited exchanges, united health is defensive, humana is defensive, aetna is defensive, as well. there's more upside, really, because it's all about favorable tax policy estimates do not include repeal. and the companies have priced their premiums outside of exchanges to assume that repeal is not happening, have not factored in the tax. the stocks that are most exposed are molina health and to a lesser extent -- >> in terms of the market swings day-to-day and the stock swings day-to-day do you find they've been accurate in sort of predicting what is happening on

capitol hill or what may happen >> i think they've gotten better you know, we started out in march with the house that was much more volatility, and now you see modest declines for those, i think, where investors are trading up in to the potential of a favorable outcome. but i don't see them doing anything too irrational at this point. >> all right ana, thank you >> thank you so much >> coming up, a veteran of media industry weighing in on mergers, cord cutting and a lot more. former frontshare communications ceo maggie wilde rotter is going e' be here shs in the "squawk" green room right now.

the earnings parade continuing dupont, united technologies, eli lilly, 3m, gm, caterpillar and mcdonald's all reporting this morning. the numbers and reaction on wall street is straight ahead battling america's opioid epidemic the former chairman and ceo of pfizer joins us to discuss his latest venture and the biebs says i'm sorry to fans, canceling his final tour dates due to some unforeseen circumstances details straight ahead as the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york city, this is "squawk box." >> noise canceling head phones this morning good morning, welcome back to "squawk box" right here on cnbc. we're live at the nasdaq marketsite in times square i'm andrew ross sorkin along with joe kernen and melissa lee. becky's got the day off. take a look at the futures at this hour.

we have some green arrows on the dow and s&p. we have some red arrows on the nasdaq we'll explain why in just a moment dow looks like it would open up about 77 points higher the s&p 500 up about 5.5 points. the nasdaq looking to open down about 4 points in large part as a function of alphabet's earnings which we'll mention in just a moment but tell you what's making headlines. earnings season accelerating with no less than five dow components out this morning. dupont was up first. reporting profit of $1.38 per share, nine cents above estimates on strong sales in its agriculture business dupont still expecting, though, that pending merger with dow chemical to finally be completed next month also on the docket this morning, got to watch out we'll bring you the numbers as they come, united technologies, 3m, and mcdonald's united tech just crossed it earned $1.85 per share and the second quarter beating forecasts by seven cents revenue also beat estimates and raised the lower end of the full year earnings outlook.

and then at the bottom of the hour we're going to be hearing from general motors. we'll see how the bottom line was with auto sales. >> softbank has reportedly approached uber about taking a multibillion dollar stake in the company. the japanese company has invested in three ride sharing companies in asia. "the wall street journal" reports talks are preliminary and any deal would likely need to wait for uber to hire a new ceo. the uberreport comes less than a day after softbank teamed up to invest $2 billion in the singapore ride sharing company grab taxi. shares of softbank moved higher by 0.8%. michael kors is buying luxury shoemaker jimmy choo for $1.2 kors will pay roughly $3 per share in cash a 36% premium to jimmy choo price the company announced that it was for sale and this next piece plays into just -- you see the dow is up about 80 points now.

now europe is up europe is all up 1%. so i think that's pretty much is across the board but is there any -- >> dupont -- >> earnings are all good when does -- >> are you attributing this to -- >> no, no, no. >> -- session? >> no i'm just wondering whether, if it becomes -- if they were to go forward with this -- >> health care >> health care which gets them points on the board. it also frees up some possibility of -- >> tax money >> i just wonder whether that ever actually -- but -- >> the failures haven't really hit the market too badly either. >> people say that it's great -- people say that it's icing on the cake i don't know i don't know earnings are good, and europe's up, so that's you know, 70 points 80 points. it's not that much but just wondering because mccain's coming back mccain's coming back >> in fact he is expected john mccain to be back on capitol hill today he recently underwent surgery and was diagnosed with an aggressive brain tumor his return will be just in time for a critical vote on health care legislation

could give republicans a crucial vote in support of a motion to move forward with debate on the issue. it's still unclear what they will ultimately be voting on whether it will be the most recent version of the bill, an updated version, simple repeal, maybe a combination. the party is still working to obtain enough votes. >> if they -- i mean if they didn't flip the moderate senators on the repeal only, and i don't think you're going to flip, man it would be the other one where they had to flip mike lee and moran from kansas, the two guys that added to -- to rand paul and the lady from north -- maine >> collins >> yes right yeah so, that's maybe -- i don't know looks like it will top -- but they don't care what it is it's a vessel, i've been reading whatever passes today is a vessel for all the amendments to come during the debate

and some introduced by democrats even >> and then, house planning to pass a bill today to toughen sanctions on russia for its alleged meddling in the 2016 presidential election. that vote follows a bipartisan agreement reached over the weekend between house and the senate negotiators that comes amid growing scrutiny by congress and special prosecutor looking into possible links to russian officials in the trump campaign. the bill has already passed the senate, but, seems like it might complicate things. but the administration and the white house says they're going along with it. >> you mention trump tweets. i hate to disappoint you and leave any of them out, andrew. there's a new one. >> oh. the second screen reality show continues. >> jared kushner did very well yesterday in proving he did not collude with the russians. but like the democrats, you want kushner under oath because you think he's like right, basically? >> no, i don't think he's lying necessarily. >> but you want him under oath >> i wouldn't understand why he wouldn't any of these people -- >> -- al franken said that i was watching and they were

like, it was like -- >> you know what they watched "squawk," they heard me talking and then they go on the air and they say -- but did you see he said barron trump was next up. >> that was the best part of the tweet. >> next up 11-year-old barron trump to see if he's read any russian comic books or anything. really collusion i think in today's world. alphabet shares are trading lower right now. the company reporting a steep drop in second quarter profits due to a massive antitrust fine from eu regulators the google parent reporting a 10% drop in the key cost per click metric what's going to be a trillion personnel now, now people are saying amazon is the trillion first. it's going to be amazon, google or apple facebook has purchased a start-up called source three to help it crack down on users who share pirated videos and other content without permission terms of the agreement haven't been disclosed

let's get a check on the markets as attention turns to the fed meeting starting today joining us now is tom lee, managing partner, and tom manning, president and ceo of fl platinum investment management company and our guest host for the rest of the morning is maggie wilderotter the ceo of frontier communications. welcome to you all two toms on the set. >> uh-oh >> so one's going to be mr. manning, one mr. lee i will start with you mr. manning. you think we're just going to be range bound for the rest of the summer earnings are not going to do enough to help us go higher? >> there's some great earnings out this morning it looks like, the head line numbers. google disappointed last night, weighing on the nasdaq it is the summer, it's quite time of year we've already had a nice move early on here in q3 and i think it's time for a pause. just because largely we're in summer, it has been that type of a situation over the years, and i think it will continue this year i think activity will pick up in the fourth quarter >> tom, where do you stand on the overall markets, is the

nasdaq pretty much at a record high >> well, i think earnings are definitely confirming business conditions are decent, right they're not like amazing, they're not really accelerating. and i think it means you want to focus on companies that are still secularly growing. so i think in some ways, as much as, you know, people sort of talk about f.a.n.g., i think f.a.n.g. is still a good place to be, just because there is real underlying growth there i think rest of earnings haven't been that spectacular. >> maggie, what's your take on where we are right now in terms of business conditions and how the markets are doing. the markets are telling us that things are gangbusters really. >> yeah, i think there's a lot of confidence in business. i think there's also a lot of consumer confidence. and that combination has made it very strong for businesses to perform. i think you're going to continue to see in '17 as we've seen there's been very good profitability in companies they're very focused on growth innovation

and people have their heads down so i do think that we'll continue to see good numbers throughout '17 in specific sectors. i don't think it's across the board. but i think overall, the companies are doing well and the market's responding to that. >> do you like technology, too do you think that's a place -- i mean i'm just trying to get a sense of whether people still say the consensus trades are still the way to go in this sort of market environment. because technology certainly has been been often called a crowded trade. >> i think as long as the trend continues and doesn't show any signs of a beating look at the economic environment it seems conducive to continued slow growth in companies that can produce topline growth as well as bottomline growth should continue to perform well here and multiples should expand vis-a-vis the rest of the market so for now we continue to remain positive on the technology sector, and other areas that are providing growth in the market >> such as >> not as many

to tom's point, certainly a lot of land mines as you look through some of the traditional sectors that tend to grow in good economic environments like consumer discretionary, and particularly retail. technology, and certain segments of the health care industry, biotech actually performed quite well over the last 30 to 45 days >> you like the ultimate contrarian type environment? >> yes, in fact, i think it's great -- >> telecom and energy? >> i think that's why it's great you have someone who ran frontier i think in some ways it's a catalyst for telecomin the nex 12 to 18 months. what people forget is the last, well, you know, last eight years we've had a business unfriendly attitude towards the telecom sector kind of unfair, cutting into regulations. i think title 2 is really going to settle a big trade balance problem with the telecoms. i think it sets the stage for some consolidation to take place. and the groups trading at 5 p/e discount to utilities.

telecoms could be a huge area. >> when you look at the sort of chess board of potential consolidation, how do you see it play out once and if this at&t, you know, goes through >> you know, i actually agree with tom that there is a big opportunity for consolidation. i look at telecoms and i agree i think it's been an environment where the companies have an unlevel playing field, and with a light touch regulation from the ftc, which is really what, you know, the chairman and the commissioners are doing right now, they can roll back the bad situation of this unbalance of trade. and with that you've got companies that have very large infrastructure costs, and they have high content costs, and they have lots of competition. so i -- and there's a big changing innovation environment for telecom as well. so i think having more scale in those markets is really going to be important for the winners >> but, tom, in terms of your

thesis on telecom it's main consolidation. which is a very hard thing to invest in. >> sure. >> the prospect of consolidation. >> yeah, melissa, it's interesting the telecoms should have good industry structure, but it's fairly concentrated but they have this cost problem because of the net neutrality. right? they have -- they have -- content. but the other is a fourth player market is still too competitive. like canada has three players and i think it's natural to move to three the credit markets are pretty confident in telecom stocks. they trade tighter than most sectors but the equities have been horrible. so, you know, we've got an opportunity. >> and i think you're going to see consolidation not just with the basic players, whether that's the wireless players, or the wire line players, but you're going to see the consolidation with content, as well because the network is not as important as it used to be as it becomes more commoditized over time, and what's different is what runs on that network and i think all these players see

that so i think there will also be innovation in addition to the consolidation. >> are you invested at all in this sort of thesis? either telecom or telecom as the pipe for content >> well, you know, i think the entire sector's becoming much more interesting if you look at where valuations were last year, it was an expensive group for much of the year with the decline in prices, you know, point of valuation plus catalyst can make a very interests investment thesis. we have not added to our positions in those areas yet but they are becoming a lot more interesting to us. >> does that mean, maggie, that in terms of the pricing for things like mobile plans, they will continue to go lower? i mean it's sort of like a years because it almost seems like the companies are treating it as a loss leader for other scenes in the future >> it's a little bit of back to the future we've had these buckets in the past where it's all you can eat to get consumers to use the product and businesses the one thing that everybody focuses on is really more the consumer products. but i'll tell you, in most of the telecoms, business, you know

the commercial side is a huge part of the revenue stream so actually innovating, and especially providing safe environments for companies is also going to be really important as to who wins and who loses, especially in the cyber world that we live in. so you will see more competition for pricing. which is another reason why i say the regulators are backing off. is because it is very competitive out there. and you don't see just everybody raising prices and everybody else following >> okay. our thanks to the two toms tom manning and tom lee. maggie is going to stick with us for the rest of the show >> we've got a lot to talk with her. got to talk names. that's just a tease. she's here for awhile. >> now to some very serious news here justin bieber has canceled the remaining 15 shows of his world tour due to unforeseen circumstances. bieber has been on the road in support of his well received comeback album purpose since march 2016 playing 1 54 concerts >> we know all this.

we know all this >> what? what do we know? >> he had exactly 154 to go, and we know that purpose as well is going -- actually didn't -- you know -- >> you have no idea what i'm talking about. >> did you know he was well received >> no, i didn't know >> i've been listening to it on spotify. >> no! >> pop rising. you ever hit on the pop rising you can actually find out what's going to be hot next week. this week. >> are you honestly -- are you honestly a belieber? >> i am a belieber >> you are >> why not >> you know who -- mont claire, his spiritual adviser is out there so he hangs out in mont claire >> spiritual adviser >> yeah, i think that's somewhat -- >> maybe he could do a concert out there. >> maybe he'll do a local one and just show up >> oh, there's more to this news explain what happened? >> why did he -- >> that's a big tease. we're going to -- >> come back to it >> we'll come back to that >> elon musk >> elon musk, now we got bieber.

>> and we got -- >> crazy story >> and eli lilly ceo david ricks is going to talk quarterly results and the state of big pharma i don't know whether he's a belieber and former pfizer ceo jeff kindler will be our guest. we'll talk health care reform, the presidential remarks yesterday afternoon about drugs and gmc cfo chuck stevens will join us. stay tuned you're watching "squawk box" on cnbc because, when you really, really want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital.

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eli lilly out with earnings. the drugmaker beat on the top and bottom line. also raised its full year outlook. joining us david ricks, ceo of eli lilly. thanks for joining us. >> thanks for having me on >> you are at the end of trying to replace some of those, i guess john lickliter spent a lot of his latter stages of his career dealing with some patent expirations. now there's some new drugs coming online, and i think a couple of them sales actually beat expectations, which helped results this quarter can you go into which ones did that, and what the revenue numbers were >> that's right. strong quarter for us, really driven by the new product story.

which started under john's tenure we see that tinge. products like trulicity and taltz drove that new products were a little over $1 billion in the quarter, 18% of the company now products launched since 2014. so, it's really new product growth story that led to 8% topline growth held expenses flat grew growth margins. and 34% reported growth on the bottom line. >> so you're all over the place. what is that for psoriasis >> that's right. moderate to severe plaque psoriasis. part of a new class of breakthrough medicines for patients with these conditions we're about 40% and complete clearance of their skin, something that wasn't possible just a couple years ago. >> not treating the symptoms, treating the underlying cause? or -- >> that's right. yeah there's io 17, an antibody that attacks that protein, sequesters it, and that relieves the

plaque this is having a profound effect for patients >> you've got psoriasis, trulicity was diabetes it competes with a novartis drug that's at a run rate now of almost $2 billion a year >> yeah, that's right. and trending upward. this is part of this glucagon-type pep side class it's a once a week therapy in a very convenient auto injector. everything else is a daily therapy. and these medicines really work to help people lose weight and reduce blood glucose which are important problems with type 2 diabetes >> you're adding through acquisitions, and not maybe companies but of drugs for oncology, too. i didn't -- i mean, eli lilly is, you're all over the place. and also, there was a little bit of a setback for an r.a. drug, a rheumatoid arthritis drug with one of your partners will that hurt future results? >> yeah, well, so, just to take

these one by one we had two licensing deals in the quarter. one just announced yesterday one late in june for diabetes. another product like trulicity an injectable for diabetes and yesterday with nector in aisle 2 which can add to our autoimmune franchise, an exciting new mechanism to arrest autoimmune diseases like lupus and krone's, we did have some mix results on a rheumatoid arthritis compound which is launched in europe we got approval in japan, but the fda told us they weren't going to approve the package and we've announced today to expect about an 18 month delay as we work with the fda, perhaps do some additional clinical work to get that drug to patients. but we're committed to do that and there's a lot of other uses for various -- >> i'm sorry we don't have a lot of time left i want to talk about the better deal the democrats have been rolling out as far as, did you

like the drug pricing stuff or not? >> that's specifically what i wanted to ask him to that point. this is what chuck -- >> a better deal >> chuck schumer had to say just yesterday, we're going to fight for rules to stop prescription drug price gouging, and demand that drug companies justify price increases to the public. dave >> yeah, i just looked at that last night i'm not real deep on it. but, this is actually a case where i think some of the problems that they're outlining we actually agree with patient out-of-pocket costs for prescription medications have grown dramatically but not for the reasons that are outlined in their paper. which they're talking about list price increases. mostly this is driven by insurance design changes high coinsurance, high deductible plans in fact patient out-of-pocket costs for medications have grown 50% due to those changes in the last three years and we advocate for policies that would pass through the substantial rebates we already provide the insurance system, and government programs like medicare if all we did was that, lilly

announced in march, our average rebate is 50% in the united states >> sounds like you think that the biggest problem is not on your end of it, but through the supply chain maybe the pbms >> if you looked at patient out of pocket cost that is by far the biggest driver is insurance design now they also highlight these bad actors, the valeants of the world, which you guys report on and that's a problem, too, but we think scott gottlieb the new fda commissioner has it right, which is to really increase competition in what are those arbitrage opportunities in the generic market that have gotten a lot of headlines >> if i may just sort of switch gears a little bit and talk about alzheimer's just a bit so many people have loved ones afflicted with alzheimer's you had a major setback in december in terms of a trial which was a disappointment you were going to apply for fda approval but at the time you said it doesn't mean that alzheimer's research at lilly is over what can you tell us about that particular pipeline, some of the other trials involved with that same compound, and if that could

actually be upside for investors who pretty much took that out of your market cap in terms of potential pipeline >> yeah, that's right. well our research continues in alzheimer's. including where we have a pre-symptomatic trial going. our main focus is on our base inhibitor which is in phase three in combination with astrazeneca treating mild alzheimer's, so the early stage ofdiagnosed disease and two other very promising projects coming forward, antibodies to treat alzheimer's, attackingth plaque so our -- we're in a situation where we think we're learning every day, unfortunately failure is part of the business. that's the risk we take. but each time we fail we advance our knowledge. we remain committed to alzheimer's research although we are taking on board, and reflective of the mistakes we made, and learning about how the biology actually functions of course this is a huge health problem, and the first company to come out with the medication that could slow down this

disease, obviously that's an enormous opportunity, and for patients, who are desperately waiting for something. so we have six medications in the clinic, for alzheimer's today and our commitment continues in that space. >> all right, thanks is lickliter gone completely >> he is gone. june 1st he passed the gavel on the chair of the board he's still in town very active we stay in touch and i know he misses doing this on earnings weeks -- >> are you -- do you have any jesuit educated people around left over to man the ship here i -- >> well, i'm a product of the indiana land grant university so purdue -- >> lickliter always thought he had a good thing there with that -- the jesuit -- anya -- >> i'm jesuit educated >> maggie, there we go >> i got two high schoolers and a jesuit program did >> you do? >> he's a slow learner he's getting there >> future generation

>> you're overcoming that deficiency all right, thank you >> thank you for having me on. >> you're welcome. >> when we return we've got caterpillar, 3m and general motors all set to report earnings the numbers, market reaction straight ahead then, gm's cfo chuck stevens is going to join us first on cnbc to talk about the quarter and the state of the auto industry which has been in the news recently mes.awk box" returns in just mont for your heart... your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember.

good morning, welcome back to "squawk box" here on cnbc we're live at the nasdaq marketsite in times square among the stories front and center this morning we're watching shares of barnes & noble. after the investor asset management issuing a letter about the board this morning saying it had acquired a meaningful stake and the current value of the stock is unconscionably low said the company should begin to explore strategic alternatives including a sale citigroup will be holding a meeting for analysts and investors. the first time citi has held such a meeting since the financial crisis the bank said the restructuring is complete and now that the fed has include its capital plan it's time to talk about the path to growth. and the latest reading in home prices in about 90 minutes time. the case-shiller report for may is expected to show a 5.9% year-on-year increase. that would be a slightly faster pace than the 5.7% rise registered in april. >> gm earnings just crossing the wires as we speak. >> andrew, this was a strong

beat by general motors in terms of earnings per share beating the street by 20 cents gm earning $1.89 in the second quarter. the consensus was for $1.69. revenue, however is lighter than expected coming in at $37 billion. the street was expecting $40 billion. but remember, they're no longer considering operations in europe those are discontinuing operations, so as a result you're going to see a little bit of a difference there when it comes to revenue the margin overall for the quarter, better than expected at 10% even in north america, they earned $3.5 billion, due in part to strong sales in the crossover utility vehicle market where their sales were up 18% in the second quarter margin for north america 12.2% also earned a half billion dollars in gm international basically china, as we were looking at there, and finally no change in either the guidance to production, remember they gave us that production guidance back in june, as well as to their earnings per share speaking of the financia performance and where gm is at

relative to the industry, and where people are looking for them to go, we're going to be talking with chuck stevens, first on cnbc, coming up in 20 minutes, the cfo of general motors we're not only going to talk about these numbers and the second best quarter gm has ever posted financially, but we're also going to talk about whether or not this is a company that's going to start ending production of certain sedans. here in north america. because that market, guys, is very slow right now and it doesn't look to be improving any time soon. that's coming up in about 15 minutes. back to you. >> all right, phil lebeau, thanks we also have 3m just reported moments ago. $2.58 a share. the estimate was $2.54 so that's four cents ahead and the number i have for sales is 7.8 billion the estimate 7.857 i don't know whether that's just slightly below, if it's exactly 7.8. they do break down the sales, consumer sales 1.14 billion, health care, 1.44.

industrial 2.77. outlook at this point. actually in the press release itself, it looks like there's an outlook which -- at this point down about 5/8 of a percentage point. >> caterpillar looks like it's a big beat here. more importantly, though, focusing on the outlook of 2017, raising its outlook for 2017 given the strong performance in the first quarter -- excuse me second quarter and the first half of the year now expect profit $3.50 the mid point of sales and revenue outlook range or adjusted per share of about $5. previous outlook had been adjusted profit per share about $3.75 so raising by $1.25 for the full year on djusted that's a big raise for cat here. there you see the stock responding and interestingly, because just in the past week or so, it's gotten a number of upgrades, including one yesterday i believe from beamo so there's a lot of positive sentiment going

into cat, going into these earnings -- >> how much did they beat this quarter? did you say? >> i don't have the -- >> i just wondered what they -- because they're raising the full year >> i think it was as much as the beat -- >> and whether they're actually -- >> adjusting -- >> yeah the 3m just here is the outlook. 870 to 905 so they beat by 23 cents but they're raising by -- >> $1.25 >> expect that to continue to happen in future quarters. 3m just quickly, the old estimate was 870 to 905. they raised the lower and by a time to 880 but didn't raise the high end >> will be interesting, can we pull up futures here so see if we have much impact here in terms of -- >> we should get -- cat, do the multiplier on five points on cat. >> look at that. so dow joins looking triple digit gain here. >> multiplier? >> yeah, around seven. so 105 points here nasdaq still suffering under the

weight of alphabet earnings coming in disapointing so we're going to be off that record high in yesterday's close as for the dow a big impact on the dow, 105 points at the open. s&p looking at about seven points at the open and we're not done that's the thing we're not done earnings. >> we want to -- we're not done with our guest host this morning. far from it. former frontier communications ceo maggie wilderotter good morning you know, the thing we didn't get to talk about, you were talking about consolidation in the industry but i think you sort of existential question about this industry is the future of technology, and particularly 5g technology, this idea that the technology wirelessly can be so fast that anyone who actually owns wires could effectively be put out of business i mean that would be what the proponents of some of the technology would suggest not to say that you're not going to need the wires underground to get you to these wireless access points but this idea that cable, for example, which has always

had a virtual monopoly into the home, that last mile can be done wirelessly true >> to some extent it is andrew i think if you're in the telecom business or the cable business with wire line products and services you have to look at your infrastructure will be replaced to some extent with wireless in that last mile if we can get 5g down to those >> right >> i think that that's very promising to do. but if you think about the back fault for all of that information, and we see this infinite demand of information tinge to grow on the content side >> right >> that the wire line business will continue to be very formidable i just think it will shift >> right but critics of 5g will tell you that if there's a drop of rain outside, or if the wind blows and there's a leaf in the way, all of a sudden the technology doesn't begin to work. >> but you know, we said that,

too, about digital when we went from analog to digital we all sounded like we were under water for the first six months using digital i think as you work through these technologies to perfect them, you can get 5g to work in a very good way. >> realistically, though, what do you think a time line like that looks like? and the reason this is so important is because, even if you do have the back haul, if you're a comcast or spectrum or whomever, name whomever you want, it does suggest that you're going to need a potentially a wireless strategy. >> well, i think you need a wireless strategy in terms of whether you do that in partnership, from a commercial perspective, or from a direct to the home perspective i think those are all different options. i also think that comcast of the world, frontiers of the world, they own the customer relationships. so there's a lot of power in those relationships in terms of how they deliver products. >> and do you think those relationships could get upended? >> i think to some extent they could if these guys don't do

what's right and what they should focus on. look it, technology has been innovating in this industry for years. and i think will it continue to. comcast has also placed their bets on content. it's not just about the infrastructure >> let's talk about the content piece of it. and at&t obviously also making a huge -- >> and verizon, look at yahoo! look at aol, look at their -- >> that's maybe a different bet. maybe we're confusing the issues, maybe not. >> maybe you're confusing the issues >> so, do you think there's going to be a day where there's going to be a lot of the content that's going to be exclusive to the distribution providers the directv had its deal with the nfl. you could only get those games if you have directv. at&t has said no, no, for hbo for example if you want game of thrones we want to make it available to all the platforms >> right >> long-term, five years from now, ten years from now, do you think there's going to be programming that's going to be exclusive to each network? and that people are going to

then buy along those lines >> i think there will still continue to be exclusive programming. i think it will be more pit driven than day-to-day but i think there's a huge shift going on to the small screen so it's not just about the networks having exclusivity. i think you're going to see exclusive programs for mobile. versus tv, versus -- >> but mobile on every provider or verizon is going to have one exclusive thing for itself, and at&t will have another exclusive thing for itself >> i think there will be innovation on the business models i think you'll see day and date in those environments where verizon might have an exclusive for a year or 18 months before it's open to everybody else. just like you do on an hbo, as well i mean they do certain things that are exclusive for them. and they're a hit. >> right >> and then they do -- >> no, no, no. but it's exclusive to hbo, sure. right. but it's available on every platform >> right >> so what i'm wondering, whether each platform gets effectively chopped up, and you

start buying, in the same way that certain people buy directv simply because they want the nfl ticket, right? that people are going to buy on to at&t or buy onto verizon, buy into comcast because you can only watch whatever it is there. >> i think -- i don't think it's a zero sum game. i think there will be some exclusivity. but i also think that there's going to be a shift that consumers will drive what they watch, versus just packaging from content providers, or deliverers of that content so for example, we all might change on a dynamic basis what we watch every single day. and, i think the generations, the millennial generation is used to having that flexibility of doing on demand what they want to do, when they want to do it and you'll see different payment structures associated with that. so i do think that the providers of content, and the deliverers of content have to look at rechanging their business models to accommodate that. >> maggie, you're going to be sticking around. thank you. >> you're welcome. >> coming up when we return, in the midst of the opioid

epidemic -- >> imprexion is nonaddictive approaches to treating pain run by former pfizer chairman and ceo jeff kindler joining us right after the break. check out futures at this hour green arrows after the nasdaq has turned around despite the alphabet earnings. dow looks like it would open up 108 points higher. s&p 500 up about 8 points.

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welcome back to "squawk box. maybe getting the gmos back or something might be a good idea ones that prevent norovirus. dow jones up 108 now after that

strong report from caterpillar and other dow components mostly positive except for this 3m now down a little over 2% but you can see, caterpillar up 4.5% europe was strong this morning here's a look at some of the big companies reporting this morning, as we said. gm, 3m, caterpillar, united tech, and du pont. joining us now -- >> we have a very special guest this morning we do. we haven't seen him in awhile. he's here. jeff kindler, former chairman and ceo of pfizer, currently ceo of private yet imprexion taking on pain management in the face of the opioid epidemic before we even start this, you walked in here and you handed all of us what looks to me like a pepper >> exactly don't eat it >> don't >> don't eat it. it's very spicy. >> so you brought this for us. >> yes >> for what reason >> our company is using a

synthetic high science version of the natural ingredient in chili peppers, tabasco, all that kind of stuff called capsaicin capsaicin's been around for thousands of years and everybody understands that it reduces pain, in a very safe way so what we did, our scientists at johns hopkins found a way of synthesizing capsaicin and directing it directly into parts of the body where you experience pain what we found in our midstage trials is we can produce a really robust reduction of pain in a very safe way using this synthetic version of this natural ingredient >> what was the eureka moment to even think of doing this >> well our chief scientific officer james campbell was the head of the department of neurosurgery at johns hopkins, and he's been studying pain for years. >> right >> and again, as i said, there's a lot of knowledge about capsaicin. the problem was, andrew, that people couldn't figure out how to use it as a drug, because it stings it hurts like when you eat it, it's

painful, right so we knew if we could get it injected into the nerve fibers where the pain is transmitted we could create a lot of pain relief but what we couldn't work out for many many years was how to do that without the pain from the procedure itself being so agonizing. so our scientists worked on this for a couple of years and they developed a really innovative way of delivering the treatment that reduces the pain and in our most recent end stage trials we showed the greatest degree of pain relief of any trial in the anal geezic area >> so this is already -- capsaicin is already used in otc arthritis pain topically >> correct >> in terms of what your scientist did is concentrated -- how did they change it in order for it to be injectable and maybe more powerful? >> absolutely right. first of all, it is a higher potent version and that's how we synthesize it to make it higher potency. but more importantly, we inject it directly into the source of pain we call it molecular neurosurgery

if you imagine my arm represents the nerve fibers at the end of the knee, and we're developing for knee osteoarthritis in particular, among other things and these different nerve fibers send different pain signals to the brain, so touch and heat, cold, movement, et cetera. one of them is called the trip-v 1 receptor that's the one, hit it with a hammer, send the message out what capsaicin does is inenvelops that nerve fiber and deactivates it and it lasts as long as six months so if you're results continue to bear out the way they have today, we have the opportunity of giving patients the chance to go see a doctor, let's say twice a year, go in for an hour, get this very safe injection, and enjoy six months of meaningful pain relief. >> it's not addictive in any way? >> it's not addictive. in fact centrexion therapeutics is devoted to nonsteroidal,

nonopioid therapeutics a third of the world population, 100 million people suffer from chronic pain and the treatments that we have available in many ways are not effective or even unsafe >> when you look at the market, and the pricing for this, i don't know if you heard one of the earlier segments with ceo of eli lilly we were talking about the democrats' plan that came out yesterday, they effectively attacked pharmaceutical industry >> right >> and suggested that they want to really go hard at pricing that even factor into your thinking when you're trying to develop something like this? >> absolutely. and let me say, a general statement about it and then apply it to this so, these proposals that we're hearing, they've been around for awhile they've made some comments about the problems with them but i think we're missing a much bigger point here about health care and a world famous cardiologist had a great article about this in the "journal" a week or two ago, i strongly recommend, he made the point that we don't have a system that really assesses the value of different interventions to patients. that's whether the

pharmaceuticals, hospitals, doctors, and the reason we don't is we're barely skimming the surface of our understanding of the patient journey. what's really exciting right now, the real opportunity we have, and i know i were talking earlier about elon musk and mark zuckerberg and i'm not going to get into the middle of that but we do know that machine learning and artificial intelligence can capture big data and get us to really understand the patient journey. let me use pain as an example. people with knee pain have a number of morbidities, other conditions they can be sedentary, obese, have diabetes, have heart disease, have sleeplessness. it's the number one cause of disability we need to look at the whole patient, everything that's happening to that patient. we need to think about what is the right combination of physician interventions, pharmaceutical interventions, hospital interventions, that helps those patients >> jeff, don't most nerves have that receptor? how do you specifically just -- just encapsulate the nerve for

the one that's causing the problem? >> well, that's a great point. >> i don't want to be able to not feel anything. feedback and pain tells me, stay off your knee, balls you're going to -- you're not going to have any cartilage left at all if i'm not feeling anything i'm going to go out and play squash, and i'm not going to have any knee left. >> right it's a great point and joe, here's what i'll tell you. and you're more of a biologist than i am. but as i understand this, it's been explained to me there are different pain fibers that send different signals. we are very selectively affecting only the pain signal, not touch the movement, et cetera now to your point there is certainly the question of if we really totally eliminate the pain is somebody going to run a marathon and do damage to the knee we don't think that's very likely first of all we don't totally eliminate the pain we have all these other sensors. and a lot of these patients are sedentary and overweight and hopefully getting them up and exercising is probably a good idea >> can you democratize this, can you get to the point where

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welcome back to "squawk box" i'm phil lebeau on a day when general motors posted better than expected earnings for the second quarter let's bring in chuck stevens, cfo for general motors and the company's headquarters in detroit. chuck you beat the street by 20 cents, earning $1.9 a share. what drove the profits in the second quarter >> yeah, i would think, phil, to start out with, another very strong quarter, and obviously we're very pleased $3.7 billion of profit, 10% margins, and again, are really supported by great performance in north america $3.5 billion of profit, $12.2% margins. and continued strength in china. another half a billion dollars of equity, and so you know very, very much on plan. when we looked at the first half of the year, and as expected, a strong first half which will support our meeting our objective for the year >> let's talk about north america, strong results in the second quarter but a lot of questions are mounting regarding what you might do regarding car

production, sedan production, in north america. first of all, are you considering eliminating certain models and saying you know what, we just can't make money on these models anymore, declining sales, declining demand, let's just cut them? >> i'm not going to comment on future portfolio decisions, or discussions that are ongoing i will say this, though, phil, we are all always going to be very, very focused on aligning supply and demand and as we've seen the ship from passing to cars to crossovers we've taken action to reduce our production of passenger cars. more broadly we're going to consistently and continually look for ways to improve our deployment of capital, and you can see it in a number of decisions that we've made over the past number of years on where we can deploy capital to earn a adequate return and continue to improve the core business so, that's the way i would think about the whole passenger car question alignment of supply and demand,

continued discipline from a pricing perspective, and efficient deployment of capital. >> chuck stevens, the cfo of general motors joining us on a day where they beat the street by 20 cents earning $1.89 a share. chuck we'll listen to that conference call today. guys a lot of questions swirling on wall street about whether or not general motors is going to have to shift its production outright cut certain sedans here in north america, and move that production over towards crossovers and has to be, as you do, are in demand. guys, back to you. >> phil, thank you for bringing us that interview. coming up when we return we're going to talk mcdonald's earnings the numbers and restet reaction next check out some of the other companies that reported this morning. don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that. buth my fathe! without that cash from - aflac! - we might have to choose between hawaii or your face. hawaii! what? haha...hawaii!

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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" right here on cnbc we're live at the nasdaq marketsite in times square i'm andrew ross sorkin along with joe kernen and mem issa lee. becky quick has the day off. our guest host this morning, maggie wilderotter, former ceo of frontier communications we have a lot more to talk to her about in just a bit. first want to check out the futures right now. we are looking in the green with the exception of the nasdaq, which has oscillated a little bit in part because of those alphabet earnings. we'll talk about that in just a moment dow jones looks like it would open up much higher about 135 points higher. looking like it's going to rip s&p 500 looking to open about 7.5 points higher. and we do have some news that is crossing the tape. joseph >> yes, i guess mcdonald's is reporting that, let's take a quick look through the numbers of mcdonald's. check it out

mcd reported just moments ago, looks like $1.70 $1.70 on revenue of $6.05 billion. i don't -- i don't see an outlook yet for mcdonald's >> stock up 1.4% >> is that a new high. 156. 156, the all-time high for mcdonald's this is a little slow, but that $1.70 that we're looking at may not be as important as the comp-store sales, especially in the u.s. people key off of that that was 3.9% which is solid global comp sales up 6.6%. the $1.70 i now see was eight cents ahead of expectations. and if you don't look at comps, just look at systemwide sales and constant currencies, it was up 8%. also, $1.8 billion was returned to shareholders through share

with purchase, and through dividends, and the yield on the stock isn't necessarily why you buy it but it's not bad. 2.5% let's go through the quarter with bob darington, managing director and senior analyst at kelsey adviser group numbers just hit at this point, bob, and you know i guess you look at the stock and they're pretty good. you don't need to look much past that, do you >> well, listen, this company is humming. i think being in conjunction with the franchise partners with this organization have done an incredible job, not only improving the value proposition, new product pipeline, giving reason for consumers to return more often, and especially the predatory advertising levels that this company has, has them operating well ahead of i think most peers, and certainly ahead of street expectations and our estimates. >> we talked about it in the past that it's nice to get, i

guess new mcribs or whatever they are introduce, i don't know, apples, and going urt. that's all fine. but easterbrook said our relentless ommitment is doing what we do is great restaurants, fresh food, doing it really, really quickly in a really clean setting, and if you mind your ps and qs, this is what happens and it's been amazing to watch now, this sounds like mckinsey got involved they do -- they're introducing more velocity growth plan accelerators, at more restaurants. you know what that is, bob you follow the company how do they do the velocity growth plan accelerator? >> joe, you make it sound pretty easy you know, listen the accelerators, as the company talks about, are things that are really driving the business. the things that they've -- their research has focused on and has the greatest impact on their overall traffic trend, consumer interest, and ultimately,

financial performance. those include things like the apps that the company's been rolling out, the delivery program in conjunction with uber eats new product innovation you know, again, this company is focused on those things that are most impactful to their business, and it's really making a difference >> in two words, they were french fries for me, that's the -- that's the velocity growth plan accelerator, is they're still their fries. and, well, throw in the egg mcmuffin -- >> they've also got fresh burgers. they're doing fresh hamburgers that's a big deal. >> bob in terms of the changes to the business model, the move to franchise is definitely there. the interesting thing to me in the earnings really underscores that change in the second quarter revenue from franchise restaurants was up 6%. second quarter by company operated restaurants is down 9%. that's a huge disparity. why such a huge disparity?

>> well listen, you've got to remember the company is refranchising company restaurants as they do that, the sales number comes down. comes down the franchise royalties go up. they beat revenue, hour and street expectations. the combined number of company sales and franchise revenues >> is the refranchising part of the story fully baked into the stock? i don't know if it's fully baked in, but i think the company is well on their way of being -- meeting their plan to refranchise down to roughly 95% franchise operated they're well on target with that in fact, i think in this next quarter, we likely will see a substantial closing transactions, especially related to some of their overseas markets. >> 75 cents away from an all-time high. so, it may happen today. thanks for your time and analysis this morning. >> you bet

>> a few more reports driving the dow this morning on top of mcdonald's, 3m came in four cents before estimates, revenue falling slightly below forecast. the consumer productsmaker raised its full year outlook that's right now a drag 2.2% united technologies beat on the top and bottom line. the maker of pratt & whitney engines and carrier air conditioners said it improved sales at three out of its four businesses that stock trading slightly off. and caterpillar the big winner on the dow, the heavy equipmentmaker earning $1.49 a share, 23 cents above estimates revenue beat forecast as well it also raised its full year outlookignificantly. that's up to 5%. revenue also beating forecast. du pont which plans to complete its merger with dow chemical next month saw results boosted by higher agricultural sales on top of all this the fed will kick off a two-day meeting today. steve liesman is here with exclusive results from cnbc's fed survey >> yes, and we're on the fiscal and the monetary side because

both are really important. and when it comes to both of those things the market is dialling back its expectations both for monetary and fiscal policy here are some of the top line numbers. 100% see no rate hike coming at tomorrow's announcement. but 72%, which is a bit above where the market is, by the way, when the fed market, do see that third rate hike coming by december, and the balance sheet decline in eptember. nobody's before that a few were after that. that is two months earlier than the prior survey, i suppose if there's a possible surprise tomorrow, it would come with the announcement of the balance sheet decline. it is not expected in the market according to our survey. now, looking at the outlook for rate hikes, you can see that since march it's come down we were looking for 2.3% next year now it's down to 2%. 2019 also down 0.3 to 2.4% and the long run average, remember yellen said the fed didn't have really very far to go is now down to 2.7% from 3%

and that's gone hand in land with a decline in expectations for fiscal policy which you might expect quick thing on the economic impact of the balance sheet decline, most see it as negative but not extremely negative just a little bit for economic growth a little bit for stocks. and bonds would take the brunt of it according to our survey by the way 44 people involved there. now i wanted to show you that the balance sheet target is 2.5 trillion they believe. it's now 4.5 so 2 trillion to go and they'll do so over about 4.5 years i told you about the expectations for fiscal policy you can see how they've dialled back here. health care is now seen in the second quarter of 2018 that's three quarters later than the march survey financial regulation reform, third quarter of 2018. two quarters later infrastructure, later, as well tax cuts just a little bit later. one quarter later. there's still a lot of belief in that although now let's take a look at what we call our never column the growing never column those who think it will never

happen, 31% say health care will never happen 25% say financial regulation -- regulatory reform will never happen and 21% on infrastructure. like i said a lot of belief still in tax cuts. i think the question of how you use the survey is trying to figure out what's dialled into the market here. is the expectations for fiscal reform, is it still out there priced in, such that there's upside if it happens and downside if it doesn't >> the all-america survey? >> the other way to use this survey is as a joke. >> 44 -- >> all-american -- >> 44 -- economists and -- >> can i ask you a question, a serious question >> sure. >> what do you think is going to happen request yellen and when will we know >> i think yellen is, from what i'm hearing, is not going to be reappointed. >> and you're -- >> when is it going to be? >> what's weird is i hear this criteria looking for a strong fed chair.

i'm not sure strong relative to what in >> be a very large person? >> a very large person or somebody who can bench press here's the funny thing, yellen came in with all these hawkish -- all these dovish credentials. she's the one who's raised interest rates several times she's the one who's beginning this process of reducing the balance sheet. and she's brought the committee -- >> how many people >> here's -- let me -- cohn. >> i think the cohn story, by others, is overstated. i do not believe -- >> -- look at me -- >> i do not believe the president is quite as far along as perhaps some of the reporting has suggested he is in picking his choice i understand there are still casting about, although that -- still casting about -- >> give me the top five? >> i think cohn is a top choice. i think john taylor is a top choice kevin warsh is a top choice. they think taylor is not strong enough and warsh is too young. so they're not decided on it there's always glenn hubbard out

there, seems like a good idea. >> a wrinkle to that on warsh? >> yeah. >> that he's not dovish enough >> well, this is -- that's interesting. but the trouble with kevin is it's a little hard to discern from his very strong and well written pieces, what he means about policy because there's a lot of head shaking in the room when kevin talks. >> can i ask you about tax reform >> sure. >> because people are still very positive in the business world about that even if there's a 7% change it could be a big deal for the economy. >> well that's the thing i mean, the democrats and republicans in the previous administration were 3 percentage points apart and couldn't make a deal a lot of people think they could get to some somewhere in the mid 20s, it would be a big success, it would be a process, you know, on the road to getting it right. >> yes >> the question becomes whether or not this president would settle for something less than the 15 he's after, even while it appears to me that a lot of republicans say 15 is unrealistic.

along with the possibility of repatriation, which could be huge >> yes >> all of this would be an improvement. and what has made me bald is this idea that democrats and republicans agree on this and they cannot get together, put two people in a room, say you're 25, you're 28, let's settle the 26.5 and go home for the time. >> that's why it's an unexpected positive, too, i think because there is consensus on both sides of the aisle that something has to be done >> consensus does not appear to be enough these days to reach a decision >> yes well depends on when it comes up >> i'm getting the gotta go in my ear from the producers. gotta go >> just like -- what was it? >> the inability of democrats and republicans when they agree upon something to agree upon something. >> okay. so i got to -- all right thank you. coming up, when we return, it's a big day for health care senator john mccain is heading back to washington, president trump already tweeting about the critical vote senator john barrasso is going to join us at

8:30 eastern time. plus the twitter dis that the tech community is talking about. elon musk has a few choice words for facebook's mark zuckerberg we've got the details. and forget relay races and water balloon fights, inside one summer camp that is all about the money. stay tuned you're watching "squawk box" right here on cnbc. we asked people to just go about their day to try a new feature from match. so sara, what did you do today? i grabbed a coffee... yes, you have to do that..

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welcome back to "squawk box. a little bit of deal news for you this morning michael kors is buying luxury shoemaker jimmy choo for $1.2 billion. courtney regan has been working the phones and joins us with more >> good morning. actually just got off the phone with michael kors ceo before he speaks to investors when he's doing now about that $1.2 billion purchase of jimmy choo that was announced overnight so, michael kors ceo john idle tells me this is just the beginning of the acquisition plan for michael kors. in fact the company is forming a luxury group and will be looking for other brands, particularly those that serve an international luxury consumer. he also said jimmy choo was attractive because of its commitment to luxury style and the aforementioned international

reach. it adds diversity to the offering plus he says it's not overexposed. we all know michael kors has been accused of that by some folks. michael kors does say that it will continue to open jimmy choo stores at a slow rate. the company's only been opening about ten a year jimmy choo will continue to be run by ceo and operate at 100% side load for michael kors don't expect to see michael kors running retail locations suddenly jimmy choo shoes and accessories popping up there as well he also said he doesn't expect jimmy choo to hit double digit growth at 20% or something but rather, he'slooking for that continuation of steady controlled development just as the management team has kind of done so far. joe? >> okay, court, thanks president trump just tweeting working on a major trade deal with the united kingdom. could be very big and exciting jobs exclamation point the eu is very protectionist with the u.s stop

could have been stop, could have been sad i would have liked there then -- we didn't show this one. did you see it actually this is from potus, not from @realdonaldtrump. he put out all of the organizations that are supporting opening debate on obamacare repeal and replace and that was another one of his tweets but that came from potus -- what's the difference? have you figured that out? the difference between @potus and @realdonaldtrump >> i think one is more official than the other >> potus seems to be controlled by the communications office or someone along those lines. >> you don't think it's him? >> no. >> too reasonable? >> they're very measured those tweets >> measured. >> nod rated >> modulated >> or more measured. >> it's all relative it's all relative. >> talking about turmoil we're going to talk about a little bit of turmoil at 21st century and fox and uber

companies both public and private contend with genter inequality but even as diversity gains attention in the corporate world our next guest says there's still a lot more to be done. joining us co-ceo at executive research firm and chair of the corporate board initiative at the women's forum of new york. good morning >> thank you >> so here's the question. >> mm-hmm. >> everybody says they want to have a more diverse board, more diverse management, more diversity across the board >> mm-hmm. >> and then, there's always the practical reality of how you actually make it happen. which is to say, do you have quotas how you approach hiring. if there's a female and a male that are up for the job, that have the same type of background, are you supposed to pick one over the other? how do you think about this? >> you always pick the best person oftentimes the best person, most qualified is a woman, if you look at the right pool of

candidates and in many companies out there that are doing it right now, and women's forum of new york is honoring those companies that have at least 25% or more women on their board, and companies like general motors, you know, not necessarily female type of product, you wouldn't think. but women do have views in terms of how a car should be designed. and so you look at candidates, and you pick the best ones, and you often find women who are not necessarily in ceo position but in other positions and are highly, highly qualified >> just getting down to brass tacks, in terms of making the decision, you say to yourself, i have a job oepg. >> mm-hmm. >> do you have to say to yourself, consciously, we're going out and we're looking for the most diverse group of people, candidates, that we possibly can i don't want you coming back in this room unless you're handing me a group of half a dozen people, and half of those people should be women? >> yes so when i do searches, my slate

of candidates are at least half of the candidates on the slate are women. and our placement rate is 85%. women or minorities. ceos and board directors have to be intentional, and focused, about putting more women on boards and they have to open up the pools of candidates to beyond the usual names. >> right >> and beyond ceos but you have to tell your search firm or whoever -- >> how much of that is a cultural phenomenon? meaning you have to have the right culture to get to that place. and we were talking in the beginning we mentioned uber. it seems to me that in start-ups, especially, early on, right, a start-up is usually a founder and a couple of their friends. and so it's your own cohort for the most part. so if it's a guy it might be a couple of guys who get together. if it's a woman it might be a couple of women who get together >> it is about -- >> how do you set that up properly >> it is about from the top. it's the ceo at the top, on the

boards, it's the chairman on the board at the top, as well. and the women's forum did a survey even on this whole perception, a lot of male board members don't think there's a problem with women getting on board. >> can you talk a little bit about what you learned >> we did a survey and other surveys have been done like this, too, which shows that men do not see that there's any issue with equality on board and women say there's a huge inequality and then men also say that equality has already been achieved and why do they say that because 60% of boards do have one or two positions filled with women. so, they say one and done, or two and through, when it should be four and more >> but talk about the companies that have a lot of women on their boards, and the results. the shareholder values that they've created. >> yes, so if you look at credit suisse, the peterson institute, they have done surveys about the

financial returns. >> right >> and so you look at credit suisse and they look at 3,000 companies, and the r.o.e. was 16% versus 12% and the net income growth was 14% versus 10%. of 3,000 companies and they repeat that survey like every two or three years so, the financial and the business case has been made. but you still need to have in terms of the top you still need to have your ceos and board chairs and looking around and room and saying gee we all look alike. we need to do something about this and companies, like i said, general motors, macy's, boyle was a company that went public at ing four years ago it had no women on the board now they have over 40% why? because rod martin, the ceo, was intentional. >> right >> i was at frontier, i had five women on our board, in our top operating group, 50% were women. and the last year i was ceo we delivered an 85% csr

>> you think that was intentional? or do you think that it just -- it was not an unconscious choice but a choice just given who you are? >> it's totally intentional. what you want to do in the telecom space, 60% of the decisions are made by women, in the home, and new businesses in our case, for rural america, small business is our livelihood, and a lot of them are run by women so you want to have that right kind of a balance to deliver the right capabilities to your customers. breakfast of corporate champions is coming up you're going to celebrate. >> november 14th and andrew -- >> i'm going to be there >> you're going to be a moderator for the ceo panel. >> i am indeed >> andrew, 60% of the decisions in the home are made by women. how about -- >> and almost 90%. >> how with us >> 90% >> 85% of purchasing decisions are made by women. >> that's not a joke >> i'm just talking about telecom. >> that's low. >> you guys may not control the tv >> i'm talking about important

decisions made in my home are made by my wife. thank you, janice, we will see you in just a little bit >> we have to look at the u.s. as number 14 in the world. >> on this issue >> on this issue and we're moving half a percent a year for 20 years. so at that rate, fearless girl down on wall street is going to be 70 years of age >> right >> imagine your daughter -- >> -- not going to happen. >> we'll see you november 14th >> let's celebrate it. >> breakfast of champions. >> thank you very much >> coming up, why investors aren't too happy with google parent company alphabet after its earnings report. we'll talk to an analyst plus a crucial senate vote on health care today president trump tweeting after seven years of talking we will soon see whether or not republicans are willing to step up to the plate. the republican senator john barrasso joins us next my experience with usaa has been excellent. they always refer to me as master sergeant. they really appreciate the military family, and it really shows. we've got auto insurance, homeowners insurance. had an accident with a vehicle,

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♪ good morning, and welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square. among the stories, front and center, five dow components reporting earnings this morning. four of them, dupont, caterpillar, united technologies

and mcdonald's reported better than expected earnings 3m was the only one to miss estimates, and you can see big movers in the dow helping what was a triple digit gain. haven't looked on the last five minutes about whether it was still up over 100. but caterpillar and mcdonald's are really chewing the dow this morning. terms of seagate are getting hit hard in premarket trading. the hard disk drivemaker reported 65 cents a share. analysts were at 98 cents. and americans are spending a record amount of time on home improvements according to a harvard university study, 316 billion dollars will go towards remodeling this year that's up from $296 billion last year analysts say that's a reflection of the strong housing market and growing consumer confidence. and let's look at the future, which were alluded to. yep, still up almost 140 points on the dow up over 8 on the s&p

nasdaq down on mostly move in alphabet not helping only down two points now >> biogen is about 4% on its earnings let's get back to our guest host maggie wild reporter former chairman and ceo at frontier communications i know you stepped down, you're not executive chairman, haven't been for awhile now, but the stock is down 81% over the past year and josh resnik of jericho capital in may said that frontier was one of his top short positions. i want to ask you a couple things about this just to get your response. in may, when the stock was down 30%, he said this is the longest standing short in my career, now clocking in at almost five years. sadly that relationship is likely coming to an end soon because we think it's going bankrupt it is going bankrupt >> well i've been out of frontier 100% for almost two years now. so i'm not active on the board i'm not involved with the company. i am a shareholder i'm not a happy shareholder today.

because i don't like where the stock is, either i think there are things that the company needs to do to really focus and turn it around. and it's about sales growth, and it's about managing the business appropriately to be competitive in their marketplace i will say this, they've got great revenues, they've got 40% operating margins. they've restructured their debt, so they have long, long way before any of those debts come due. but they have to get with the market the last thing i'll say is that the rise in acquisition, they have purchased the best networks in california, florida, and texas. and what they have to do is show what they can do on those networks for their customer base >> and following up on that, i just want to get your comment on this, one month after celebrating the verizon deal she left her position as ceo and was promoted to executive year, less than a year after that she quietly resigned as chair, left the board completely, curiously, though she continued to serve on the boards of costco, hp and

juneau which begs the question why should she leave the board of the company she probably knew the best >> look it, after ten years as ceo of a company we had a very pro-active transition, it wasn't quiet. we had announced when i decided to step aside as ceo that i would only stay on the board for a short period of time i don't believe that ex-ceos should hang on the side of the building i think they need to move on so the new ceo has the opportunity to do what they need to do which is exactly what i did. so it was a totally planned strategy over a five to seven year window. wasn't something that happened overnight. >> the insinuation here is that you knew something that others don't, you stepped away from the company entirely, and the stock continued to go lower. but -- >> absolutely not true as i said, the last year i was there, we had very strong performance. >> thank you for addressing that maggie >> you're welcome. >> check out shares of alphabet. the google parent reporting steep drop in second quarter profits do to massive antitrust fines and eu regulators. the tech company reporting a 23%

drop in the key costs. joining us now, michael graham, senior analyst michael good to have you we had an analyst previously on earlier today and said the focus on the overall revenue growth 20 plus percent overall revenue growth for i think five quarters straight and yet we are focused on cost per click, traffic acquisition, margins that are down year-on-year. what's the right take on this company here >> you know, i think revenue growth is really important, and it's really the core google properties revenue growth rate which was 19.6%. so just getting to the psychologically important 20% level and i actually think they can do that again next year. i do think after 2018, though, the growth starts to become a little bit harder to come by a big part of the reason that the growth has been able to reaccelerate is due to ad load they raised the ad load on mobile search quite a bit and raised the ad load on youtube quite a bit so that's helped that growth rate recover one of the things that we're

really focussed on in addition to revenue, though, is gross margin because their fastest growing revenue streams are the ones that have the lowest marnens, and so we're actually looking -- >> so youtube, mobile apps -- >> and all are great businesses and by the way, google is a very well-run company i've had a buy on it since 2011. until just a few weeks ago when we decided that, you know, there were other good opportunities, so we do think gross margin is going to come down over the next several years. and you know, internet is a pretty interesting sector, it's sort of, there are a lot of really attractive stocks to look at we like netflix and amazon, facebook, all of those we think have really robust growth profiles google is a great company, a bright future -- >> so you would buy on this pullback -- you have a -- you wouldn't buy on this pullback? >> i would wait a little bit i mean we're not getting, you know, much of a pullback as joe said earlier just down very slightly today. i think it's going to be one of these things where estimates are going to have a hard time going up you've got a historically high

multiple, and so i feel like over time, you know, some of the other stocks might outperform. >> michael, thank you. michael graham, canaccord committee. president trump firing off several tweets this morning. a few about health care and one that i just saw that i don't think we've mentioned yet. we probably don't. we've got someone that's here to do that. i can read it right now. actually, there's two that have recently come out. let me just read this. this will be an interesting day. for health care. the dems are obstructionist but the republicans can have a great victory for the people i think that's the most recent one. he followed that up with, will be traveling to the great state of ohio tonight. he's right great state. great state of ohio. big crowd expected see you there. earlier the president tweeted obamacare is torturing the american people, the democrats have fooled the people long enough, repeal or replace. or, just repeal -- that's all.

anyway i have a pen in hand joining us now republican policy committee chair senator john barrasso senator, good to see you >> good morning. thank you. >> we've got the basic outline of what's happening. i don't know whether you are in a position to fill in some of the blanks, or at least provide some color mccain's coming back does that mean that vote, his vote, will bring this to a debate are you confident that's what's going to happen? you've got the vote? >> i'm confident, i'm committed to it. we're going to meet today at noon the vice president will be joining us, and then we will vote after lunch on this motion to proceed to what's actually passed the house and that will begin the legislative process. i am so delighted that john mccain is coming back. you talk about somebody with courage, and with character, and with credibility i mean that is john mccain people are going to be just so happy to see him i'm glad he's here engaged in the fight. >> i've seen it said, senator,

that whatever it is today that's voted on is just a vessel to get to the debate where there will be amendments and everything else but, can you give us anything? i mean, it's not a clean repeal, because i assume that murkowski and cap ito and some of the other senators that wouldn't go for that, i don't think they looked like they were ready to turn so maybe makes me think you got mike lee and senator moran from kansas are they on board now, do you know, with some type of repeal and replace that you had before? >> well, the first vote of course is to just get to the debate on the floor. which is the house-passed bill and that can be amended. i was in the wyoming state legislature for a long time. this is what legislation is all about. you then offer amendments. and i am sure someone will offer the amendment to repeal the whole thing. someone will offer an amendment to proceed to the senate bill that we've been working on, which actually lowers premiums by 30% a replacement bill that protects the most vulnerable.

the people that medicaid was set up for in the first place. and to actually give people more freedom and flexibility by getting the power out of washington, and back to the states and that's what i'm proposing right now. >> you couldn't do the just moving the debate last time. who has turned >> well, this is just a motion to proceed to debate the bill. we've been saying for seven years that we need to repeal and replace this and -- >> -- the house version? >> you move to the house version. that's what the legislation is all about. we're using the budget process as you know so you have to pick up what passed the house that's the starting point and then that's where the amendments come so we will vote on many amendments it's a bipartisan process. republicans will offer amendments democrats will offer amendments. some to improve the bill some may want to put on amendments that would kill the bill but ultimately, you get the final amended product and then vote up or down on what that final product looks like my goal is affordable health

care for the american people that's what's been promised. the democrats from bill clinton to bernie sanders will all tell you that obamacare failed in its basic promise. prices have gone way up. control, individual control has gone down. choices have gone down and the cost to the taxpayers have been extraordinarily high >> so, senator, one of the things that everyone has talked about with the pros and cons of doing this reform is medicaid. and access to health care. can you talk a little bit about what you think can be compromised in order to get a bill done? >> well, you're absolutely right. and a lot of it has to do with the fact that some states expanded medicaid, and others did not. i'm from a state that did not. but as a doctor, i will tell you, medicaid was set up primarily to affect and help people who are most vulnerable >> right >> no-income women, children, and people with disabilities well, with obamacare, it expanded medicaid, and paid

bonuses for states to sign up able-bodied, working-aged individuals. my goal is to get those people on regular insurance and we have that in the republican bill. but what we found out with this medicaid expansion, is it's crowded out those who are the most vulnerable, because now there are so many people on this expanded medicaid, that one out of three doctors won't take new medicaid patients, which means it's harder for those who are the most vulnerable to get to see a doctor in the first place. >> it's also hard for the hospitals who wind up picking up the tab for the nonpay on medicaid, as well. i mean it can be up to 20% for hospitals, and they still have to give treatment. so, it's -- there's a lot of gives and takes i know going on here is there a way to maybe ease out from those states that have actually implemented the medicaid part of obamacare to make it less painful for them to make the transition? >> well that's why i'm happy with the senate bill because the house bill just

abruptly stops the transition -- and doesn't really provide for a smoother transition. i support a smoother transition for those states and specifically for those people, so they can get on regular insurance. there are people that have been left out under obamacare that are included in terms of the ability to buy actual health insurance under the republican plan >> i know you're focused on this, senator, but, you can do more things than just this at once the president this morning has got some different things that he's interested in one is more talk about attorney general sessions, which it doesn't seem like he has the confidence of the president at this point do you have any insight into what is likely there, even one of your colleagues, senator cruz has been mentioned as a possible replacement. do you know anything >> not anymore than has been reported but i will tell you i worked with jeff sessions for 9.5 years in the senate. he is one of the most honest people you would ever know he is a man of very high

integrity. and he is an eagle scout and i know the president was with the boy scouts yesterday. to me jeff sessions embodies all of the things that are great about boy scouting and eagle scouts, so jeff sessions has my confidence >> senator, would you therefore encourage the president to stop the tweeting and the commentary? >> the president will speak for himself. i'm focused today on health care, affordable health care for the american people. that's where the efforts are today, i'm continuing to work with my colleagues to get to the 50 votes that we need this afternoon to move to proceed to the house passed bill, and i know vice president pence will be here if it's necessary to break a tie. >> good. so get there so we can do tax reform, too. that's important to the american people >> well, tax reform, infrastructure -- >> yep >> obviously the president has been very successful eliminating so many of the burdensome regulations that were out from the past administration, and i was home in wyoming this past weekend, and i continue to hear that we're hiring more people.

people are getting put back to work and a lot of it has to do with eliminating these expensive, time-consuming regulations. >> senator, who came up with the new -- the new democrat platform was that schumer himself, the better deal? you know, the -- you guys worried? i don't know about 19 and 20 at this point you guys worried >> you know, this resistance movement out among these democrats and really, you know, bernie sanders and elizabeth warren have taken over driving the train for the democrat party, way to the left there for british-style health care system and they even blocked, and i will tell you this as a guy from wyoming, they blocked the national day of the american cowboy, which has always -- we've done it for the last twelve years but the democrats have even blocked that they are blocking everything we need to get beyond this the country needs to move ahead and i'm focused on jobs, paychecks, prosperity for the american people. >> from being from wyoming,

senator, that's low, you're right. that is low. no cowboy day. that's you anyway, appreciate it, senator barrasso >> thanks. thanks for having me >> great politician and a great american up next, the camp that's teaching 7-year-olds about supply and demand, currencies and entrepreneurship i love this. stay tuned you're watching "squawk" right here on cnbc. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. 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,

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to keep our community safe. before you do any project big or small, pg&e will come out and mark your gas and electric lines so you don't hit them when you dig. call 811 before you dig, and make sure that you and your neighbors are safe. 811 is available to any business our or homeownerfe. to make sure that you identify where your utilities are if you are gonna do any kind of excavation no matter how small or large before you dig,

call 811. keep yourself safe. welcome back to "squawk box," this morning sorry. we'll let you all in on the secret in just a minute. we've got to talk about camp for a second as everybody may know, i love summer camp. i went to camp cedar, sleepaway camp summer camp most often means relay races, skinned knees, water balloon fights apparently we can add fx markets and global economics to all of this joining us is rich martinez, president and ceo of the young american center for financial education which runs summer camps for kids all about money rich, this is like, you know, right up -- this is perfect. for "squawk box. how did this happen? what is this >> well, we have a lot of different aspects to our organization one is the world's only bank for young kids under the age of 22 so it's normal for us to get

kids started talking about money at a very early age. >> so where do these camps go on how does it work tell us. >> yeah, so at our headquarters site in denver and we also do it at our lake wood sites but it's a day-long -- or week-long day camp where kids come to our sites. for this junior money matters camp for 7-year-olds they got a chance to study basic money management, as you talked about, global economics, and then, of course, our free enterprise economy, and then getting them set up to start earning money and become entrepreneurs. >> is this a sleepaway situation or how does it work? >> no. it's a day camp. so they're with us from 8:30 to 4:30 monday through friday >> what are the ages >> so, this camp is 7 through 9. but we do camps 7 through 13 >> now do most of the kids say to their parents, i heard about this camp, i want to go to this camp are most of the parents hedge fund managers who want their

kids to become -- how does -- walk us through the thinking here what's visiting day like >> well i think it's a lot of kids that are very interested in money. there's also the parents that are saying, you know, i want my kids to learn from somebody other than me. maybe they've made kids to leam somebody other than me maybe they've made mistakes, but having a third party in there. we also do school-based programs these kids have heard from older siblings, their classmates and want to come to this camp. >> in the early days, bill daniels started a bank for kids in denver and was very focused on teaching them about money at an early age so they could be responsible. is this sort of the next step of education for kids >> yeah. it's two different sides the bank is the real piece the camps are the simulations to get them ready forthe real banks. they fit together nicely. >> is there a waiting list or how popular are these camps? >> yeah. so, this summer we'll put abo

about,000 kids through summer camp on our site they fill up very, very quickly. we open up enrollment in january and we are about 80% full by march. and so it is -- yeah, it becomes slim pickings on those spots when it gets towards summer. >> financial literacy is very important. >> it's low. >> it's low so we need to make it -- did you make lanyards? what good was that why couldn't i learn something about money? i haven't made a lanyard think about if you had learned -- >> by the way, it's gone off the charts my wife is going to be objeupseo saying this. my boys will try to buy toys from each other. they're trading the toys. >> excellent. >> and track -- by the way, curveball for you. 6 1/2-year-olds, what do you think a proper allowance is in this day and age zero >> yeah.

no about 20 bucks a month sounds good. >> what? >> inflation going on there. >> it has to be pay for performance, though. you have to do chores. otherwise, you get no allowance. let's teach them right early on here. >> my kids ask for money and i give them money. >> we don't do that. >> i do. >> i think we're doing about $2. >> i need money. they need money. >> now my kids are using the money to buy each other's toys from each other. >> that's okay that's the art of negotiation. that'snoerood ath gskill. i agree, joe, leave your wallet in your pocket i think that she's a very nice girl... you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers

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let's get down to the new york stock exchange. jim cramer joins us now. what's going to be the star of the day? >> between caterpillar and mcdonald's caterpillar has a very strong story to talk about all the transportation, resources, construction every single line looks terrific mcdonald's, i can't believe how much easterbrook has blown away overseas people kept saying this has to end. you can't keep this streak up. he has accelerated the streak. caterpillar, blowing away the numbers. have to raise numbers very big and mcdonald's has to stay on that that stock could very easily see much more to gain than just 3 bucks today. >> jim, thank you. see you in a few minute. >> thank you, melissa. great to see you. tonight on cnbc, do not miss a new episode of "the profit."

to keep our community safe. before you do any project big or small, pg&e will come out and mark your gas and electric lines so you don't hit them when you dig. call 811 before you dig, and make sure that you and your neighbors are safe.

811 is available to any business our or homeownerfe. to make sure that you identify where your utilities are if you are gonna do any kind of excavation no matter how small or large before you dig, call 811. keep yourself safe. our guest host this morning, peggy, you threw in a quick tax reform plug. that's something that -- that is bipartisan, isn't it >> it is. >> although i'm not saying you necessarily need to -- you're on the other side of the aisle necessarily. we have some similar viewpoints. >> absolutely. >> free markets are good. >> free markets are very good, yes. >> jobs are mostly generated in

the private sector. >> yes. >> nice to have a government that puts some goggles on, maybe, as long as they're wide enough what you were saying about -- i didn't get involved in the net neutrality situation but the position that it makes things totally not neutral. >> it makes it totally not neutral. roll it back let the marketplace decide that's how it should be. >> what happened to the last fcc guy? he seemed to share that opinion for a while and then totally flip flopped and went to basically a utility model. >> yeah. i think taking, you know, reform from the early 1900s and applying it to the new world is not a good solution. >> the new world companies are the ones that benefit. >> they did actually. >> not frontier, if you could invest in one telecom type company today, which one would it be? >> if it were not frontier

>> i'm a big shareholder of at&t andverizon, i hold their share as well. they're great companies and zbrat futures ahead for them as well i have to give a shout out to costco, which i'm on the board of great company. doing great things. >> come back because i want to talk about walmart and amazon. >> exactly. >> squawk on the street is coming up right now. good tuesday morning welcome to "squawk on the street." i'm carl quint nanilla with dav faber. strong earnings, watching the senate as mccain returns for a health care vote the president tweeting and pressuring jeff sessions futures are up germany is s