good morning, everybody. welcome to "squawk box" here on cnbc we are live from nasdaq market side in times square becky quick with joe kernen. look at futures. green arrows across the board. dow up close to 50 points after a strong week last week when the dow was up by 250 points many of those gains came from boeing we'll look at boeing shares in a bit. boeing having another strong morning once again this morning. s&p 500, nasdaq closed down for the week last week, all three major averages up for the month of july. today is the last day of july. see where we head as we get closer to opening bell. overnight in asia, take a look you'll see the nikkei was down slightly, down by less than two-tenths percent hang seng up by a quarter%, and

shanghai up. early trading in europe, modest advances across the board. cac is up. if you look at crude oil, last week was big for oil up $4 for the week, in spitting distance of $50. up to 49.78 a barrel. corporate news the big one, charter communications announced it is not interested, i repeat, not interested in buying wireless carrier sprint follows news friday that sprint was interested in merging with charter to create a media outlet controlled we understand why a deal is attractive for softbank. could kill any chance of deal between the companies. "the wall street journal" saying the ceo could make a formal offer anyway

take a look at shares of sprint. put context around what's going on sprint up close to 6%. charter up marginally as well. surprising sprint is where it is sprint had been talking back and forth to t mobile. that's been the natural partner. t mobile effectively spurned sprint and sprint has gone on this sort of merger talk spree with anybody who will listen >> surprising to see it up more than 5%, even though charter says good for them. >> that part is surprising what's going on, you've been hearing chatter about sprint warren buffett's name was raised as somebody, any name they could put out there, all in part i would contend to bring t mobile back to the table. we'll see whether in fact something happens here a busy week for earnings as joe mentioned, economic data coming up on the agenda. today we get chicago pmi, pending home sales

tomorrow, personal income, ism manufacturing index, july auto sales. wednesday look for the adp employment report. thursday, ism services index and factory orders, topped off by the july jobs report friday morning. on the earnings front, about 120 companies reporting in the s&p 500 this week, big names, pfizer, apple, aig, tesla. viacom in political news, day one for the new white house chief of staff, john kelly. >> good morning. the new chief of staff has a full plate after a weekend characterized characterized by threats president trump and shinzo abe talk about a grave and growing threat from north korea following a missile test with longer capabilities, this time with the potential to reach new york or chicago. the u.s. responding with show of

force, fly over of the korean peninsula that took place over the weekend. pacific air force commander in a statement saying diplomacy remains the lead, however, we have a responsibility to our allies and our nation to showcase our unwavering commitment while planning for the worst case scenario. domestically, the president threatening congress and insurers in a series of tweets after failed votes in the senate, calling republicans quitters and saying the white house will not pay benefits for lawmakers or subsidies for insurers that the president called bailouts. the white house is expected to make decision on those reimbursements this week secretary price when asked about them was noncommittal. >> that the court made a decision that those payments were made illegally. that's working its way through the court system, and it will. but again, what the president wants us to appreciate and wants everybody across this land to appreciate is that the system is

being propped up in a way that makes it so it is not working for people >> the white house hammers health care, tuesday small business event at the white house could serve as a venue t start selling tax reform as you mention, the cabinet will see a fresh face president trump's new chief of staff, general john kelly will begin that role today. an attempt to regain footing and reset the agenda going forward back to you. >> lot of people are talking about the role of chief of staff, what to expect and what to expect with this president who does have his own way of doing things. >> well, the chief of staff is generally exactly as it sounds, the chief of staff, but there are some questions about the effectiveness of reince priebus and the respect that other officials internally have for him because very few people ended up reporting to reince priebus. secretary kelly, call him secretary kelly, he is the

outgoing homeland security secretary, but general kelly is said to be asking for everybody to report up to him and is trying to consolidate some of the power centers within the white house, but we'll see how it plays out in reality versus in theory. >> already working just called him general kelly. like i don't know. i think i would probably ask him if i was going to do something, general, sir anyway, interesting to watch how do we know, it is like monday what's going to happen this week have you thought about that? if you think about last week and what happened. >> news cycle and all the things. >> on the cusp of another week. >> many republican strategists called last week the worst week of the administration. >> not for us. for who? not for people watching in the news business. >> but in terms of -- >> terrible for the country.

>> to have -- sandra, don't get dramatic anyway, kayla, thank you i wasn't trying to start anything >> look at the "the wall street journal" headlines trump deepens gop divide fuels frustration in his party why are you not thinking this is a terrible week? relatively horrific week for everybody. >> "new york times" has elites on both sides don't like trump elites on the republican side, bill crystal, all the elites, i didn't know you would be in an off mood today >> the situation concerns me greatly. >> john kelly is an up tick. getting new blood to get a more orderly reporting.

>> being head of homeland security made me feel a little safe north korea is a huge situation. you have in geopolitical news vladimir putin saying russia is expelling 755 americans from diplomatic staff in the country, could impose measures in the future this comes as the president is ready to sign sanctions against russia passed by congress. state department calls the decision to cut hundreds from diplomatic staff regrettable, uncalled for act. >> maybe worse if we were in venezuela. i might be more concerned. following a developing story out of venezuela protests turned violent in the wake of that election. president maduro pressed ahead with a vote to create a constitutional super body to rewrite their charter, despite threat of further u.s. sanctions and months of opposition protests opponents say it gives him the power to rewrite the country's constitution >> there are so many questions about what happened with the vote that outsiders say probably

half the yes votes were legitimate yes, leading to all sorts of things they say the vast majority of venezuelans would not be in favor. hsbc second quarter profit rose 57% the bank says it continues to see benefits from a turnaround plan that it launched for 2015 announcing $2 billion stock buy back heineken reporting better than expected results for the first half of the year strong profit growth in europe, thanks to a late easter holiday, early start to warm summer weather. and sanofi, french drug maker reports strong sales growth in consumer health and vaccine divisions. i would think the failure of health care puts you in a great mood the democrats are taking self

east, celebrating. it was a great week for health care how about the markets? let's take a look at the markets this morning again as we see positive numbers almost every morning. it is jobs week. we're going to look at the broader markets now. but a series of new highs again, 20% since the election head of investment strategy, how are the earnings weren't earnings pretty good last week? >> really good >> isn't that something? >> we have 6% top line growth, double digit earnings growth doesn't seem to matter what's going on in washington >> it is like the second year in arow of seeing double digit earnings growth. >> we emerged out of earnings recession about a year ago and indeed, this type of earnings growth is more than enough to support current valuations level >> that's not something that everyone thinks right now.

>> well, people are nervous, there's been a bit of a narrow lead to the market technology up over 20% for the year but earnings growth is across the board. and of course it is important to look not just in the u.s. but outside the u.s. >> revenue growth has been good, too, better than recent years. >> that's right. i think that's the more important number earnings can be quite cyclical top line growth is more longer term signal to what earnings will be going forward in the future. >> tells you the economy is doing well now >> we had blockbuster consumer confidence 121 on consumer confidence consumers are pretty happy as well. >> weak dollar means revenue can only get better. >> that's right. the weakness of the dollar is not enough to derail outside the u.s. then there's opportunity in developed markets in dick as priced at a 50% discount to the u.s. much of that performance came from weakness of the dollar.

in local currency terms, still have relatively attractive valuation. >> so the market in terms of north korea, i guess it's the black swan that everything would be effected if something really awful happened even casually not helping that much does the market know anything or the market is wait and see >> if you're thinking about black swans or something like north korea, the only thing that's going to work in that scenario are super long duration bonds. zero coupon bonds will make money if there's derailment of the geopolitical situation but that's such a black swan, it is a risk not worth taking >> is it a zero percent chance he would try to launch a nuclear war head or let's say it is a

one-hundredth chance, i can see the market go down 50% if that happens. >> yeah. >> the market either doesn't believe that's a real possibility -- >> or burying our head in the sand. >> i don't think you can price it in. i should say two things might work in that scenario. zero coupon bonds -- >> nothing is going to work. cash might not even be good. >> depends on volatility >> going to pay off the puts i don't know, it is something i don't think we can fathom. maybe that's why the market doesn't consider the possibility at this point. >> you would have to do exotic options. >> it is not that nobody calculates, it is such a by narrow situation, if it happens -- >> all over the world, only happens once cash won't help. >> we could be preppers. >> i heard from a hedge fund way

there's a way to hedge against buying south korean companies, sounds complicated for most of us >> you can always factor out the worst case scenario. >> in worse case scenario, you would have shorted samsung years ago, right smart thing to do, but would have been a terrible thing to do, a dumb thing to do ultimately if you've seen what happened to samsung. >> we have nine and a half of ten indicators looking bullish to take the risk of north korea becoming much more volatile than it is is a tough thing >> not just north korea, the relationship with china is fraying, potential for trade sanctions to come as a result, our relationship with russia is fraying, heard people the worst we have seen since the cold war. does that matter >> i think that volatility is likely to tick up a bit, even in the absence of black swans

coming to fruition the notion we can have the vix below ten for a protracted period of time is unlikely even modest upparticultick in vy is likely to ensue in the next it year. >> thank you see you in the near future when we come back, snap's first lock up expiration is today. they can sell shares the first time since the ipo, could be a sell signal for a stock under pressure mark ma haney will join us next to talk about it are you ok? what happened? dad kinda walked into my swing. huh? don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital.

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so why hasn't the way we pay for them? introducing xfinity mobile. you only pay for data and can easily switch between pay per gig and unlimited. no one else lets you do that. see how much you can save when you choose by the gig or unlimited. call or go to xfinitymobile.com. xfinity mobile. it's a new kind of network, designed to save you money. looking for a come back. the ousted uner ceo says he is steve jobsing it, hopes to return to lead the company again. always felt this may be the case i think. >> i just don't see how people write him off easily, he is not a ceo brought in to run the place, he is a major owner, biggest shareholder. i don't think he gets brushed off so quickly. >> kalanick resigned from his position in june, referencing

apple founder who was fired and later returned after meg whitman declined to be considered for the ceo job, the search is down to all male ceos, one is a person of color also a piece in "new york times" that said that the second they heard meg was out, a board member they showed the reporter the text messages and it was -- >> a board member? >> board member seemed to show the reporter what the text messages from the board members were back when they -- they all learned about it from meg whitman tweeting about it. not because she apparently called she was the horse they were betting on early investors and employees and insiders at snap, parent

company snap chat can sell shares the first time since the ipo. it is expected to put pressure on that stock. plunge below debut price now down to 1349 you remember the original ipo price was $17. joining us to talk about it, mark mahaney is this a buy on the dip situation or is there more room to go down, sir? >> well, this lock up, you always have selling pressure going into it. my guess is this helped find a floor on stock you have earnings coming up, big indicator what happens with the stock. we like the shares, estimates haven't changed much, still like it, have a $31 price target and are sticking with it >> is that a turnaround, the stock will turnaround after we

hear the earnings report is that the trigger? what's going on here >> there are two catalysts on the stock. first is just like with twitter, users matter most. it is daily average users. they need reacceleration we think they'll get that end of this year, beginning of next year in part as they fix the android integration problems they've had. and they continue to roll out new features that's point one required for the stock to move. second, they rolled out self service advertising solution, need that to stabilize ad revenue growth one of those two factors is the catalyst behind the stock. >> lot of people worry about the competition, namely facebook you look at the numbers they have, does that give you more hope or less for snap? >> it's the single biggest risk group since we initiated on the company. it is going to be because

facebook and instagram have enough innovation, come up with their own innovative features that it undermines growth, we like on-going productivity and innovation, snap maps was one of the more interesting features in the space for awhile they have to continue to do that if they do, this team has a pretty good track record shares should work >> wroyou're expecting stock too up, what do you think the true down side is >> i don't think we are far from it let me throw out numbers the stock is trading ten times sales. high multiple, but twitter is growing five to six time sales and its revenues are declining facebook also trades close to ten time sales with 50% growth i think there's a lot of valuation support for the stock here >> glad you brought up twitter bar ons had a story on twitter

over the weekend could be on way to hat size, because of comparisons you compare twitter to facebook, facebook is growing, twitter is struggling how do you see twitter now >> we continue to have a sell on twitter. the market is assuming that revenue growth there, they can recover to revenue growth. regain that momentum and not only that, has to be decent growth, talking 10 to 20% at least implied with that kind of price to sales multiple, that's a hard thing for this company to pull off. advertisers, surveys, both come back to us looking for those things to turn if we don't, they'll turn their term stock remains under pressure that stock continues to fall, $14 is the price target with twitter. >> what do you think happens to that company, need to get

bought >>. >> i think that's a reasonable outcome, but that's many years out. i think that's a scenario that three, four, five years out before acquisition occurs, and if it did, would probably occur with a yahoo multiple, five, six, seven times cash flow, not sales, and that's a much lower price than today. >> appreciate it very much hear you're on a cell phone this morning. and it is working. what service is that, given we were talking about sprint? >> verizon all is good. >> very good mark, appreciate it. see you soon >> thanks. >> sprint hired that guy they can't do any better than that he's everywhere. again, it is like can you imagine being that guy wherefore the last ten years, hasn't had to do anything first it was verizon, now it is

sprint seriously. i mean, that's this guy's job can't find anything else coming up, big changes and new challenges for the white house north korea is testing a long range missile that could hit major u.s. cities. u.s. responded flying bombers over the korean peninsula and testing missile defense system expert analysis next 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.

san fee.

♪ good morning u.s. equity futures, last time we looked in the black up 43 on the dow nasdaq looking to rebound after volatility, interesting trading toward the end of last week. s&p 500 up a little over three quick look at treasuries which were back below. 229 with ten year. oil has been strong, up close to $50. all the things playing into the overall scenario what are they drilling can you hear it? >> jackhammering above our heads. why we're talking louder, turning up the volume to hear everybody. >> it is not outside, it is inside. >> above our head. >> can we talk to somebody about this >> it is annoying.

>> what are they doing come on. what are they working on >> this is a live television show on. >> why do they start at 6:00 a.m the only union in new york city that is starting at 6:00 a.m. >> probably because of traffic get into the city earlier, get out of the city earlier, we get it in geopolitical news, president trump spoke with shinzo abe this morning about the need for more action on north korea. over the weekend north korea tested an intercontinental ballistic missile, the second in a month. united states and allies responding by flying supersonic bombers and fighter jets over the korean peninsula yesterday in a show of force the u.s. ambassador to the u.n. nikki haley tweeting late yesterday that she's done talking about north korea, adding china must act. her comments echo sharp words from president trump over the weekend, the president tweeting

i am very disappointed in china. our foolish past leaders allowed them to make hundreds of billions of dollars a year in trade yet they do nothing for us with north korea, just talk. we will no longer allow this to continue china could easily solve this problem. for more, let's bring in former defense intelligence officer and department of national intelligence official now with the rand corporation and patrick crow nan, from the security program for new american security. mark, start with you how dire is the situation now, in terms of security threat? >> i think the situation is very significant and it's becoming more perilous with each of these tests. what we're seeing from the north koreans is an effort to solidify their regime in the face of what they see is threats from the outside world. one of the problems this presents is that the north koreans over time have a lot more ability to provoke u.s. and

its allies and others in the region into providing them with sorts of things they're looking for over time, that is stability for the regime, whether from funding or from other things they're trying to get the u.s. and allies to stop doing, such as military exercises to bolster our defense. >> the latest missile, some say could reach as far as new york heard denver, chicago, los angeles all in reach where do you think we stand in terms of what they would be able to do at this point? >> i still think it is too early to tell. a lot of data is coming back now, analysis being conducted on what happened with tests, there's dispute about the capability of the missile systems. the program highlighted by chief of staff of the army over the past week is beyond what we had expected it to be at this point. some of of the intelligence community estimates on when this

capability would be online have been revised forward looks like possibly within the next year and a half there could be a working intercontinental ballistic missile. the degree to which that missile will have an effect, again, as you know, depends on the range but even if it is able to range targets in alaska and hawaii, that presents significant challenges for the u.s. in terms of protecting our population, and also from a military standpoint, being able to protect our most important military assets. so regardless of the range, i think this is a significant problem and north koreans have shown determination and ability to move forward withthis program on many levels. >> patrick, we will get to you in a moment. mark before we do, just about every military expert in recent months says there's no alternative, south korea is our ally, within striking distance and anything we did would have massive detrimental impact on

south korea. what do you think? >> yes i would agree with those sentiments, even before this capability comes online, the north koreans have a significant number of tools at their disposal to bring significant destruction to the south korean people so many of the discussions about decapitation, surgical strikes carry significant risk, not only risk of retaliation from north koreans but question of what happens if those strikes are in fact successful. you leave north korea with a situation that may be much more chaotic than currently exists and potential for loose nuclear weapons, loose wmds in north korea, that presents a whole host of new security challenges that will be very difficult for the united states to deal with >> patrick, let's talk about what that does leave us with, that's the option of trying to get china to put additional pressure on north korea. obviously they're the lifeline, doing most of the trading with

that country, and president trump laid it out cleanly. our trade with china is at risk if they don't do anything. where does that stand? >> the overall u.s. china relationship matters more to both beijing and washington than it does dealing with north korea's nuclear problem. that's the reality we have nuclear deterrents with north korea. even though it is on the cusp of crossing a threshold, being able to reach the continental united states with an intercontinental ballistic missile, the united states has to cajole and pressure beijing to try to clamp down on banks and other entities doing trading in business with north korea. china has resisted a lot of this pressure and they're not happy with congress passing sanctions bill now pressuring the white house and the united states to sanction chinese entities doing trade with north korea so china in the short term is going to react negatively to new

u.s. sanctions that's my prediction this is going to lead to downward spiral in the short term in u.s., china trade and relations, but will maybe come out in the coming months with a new deal with china. both on trade and on maybe agreed diplomatic approach to north korea. at the moment, things are going to get worse before they get better. >> things are only going to get worse before they get better, but you think at the end of this months from now, we will be in a situation where china is putting a additional pressure on north korea? >> china will put increased measure on north korea to get back to the bargaining table, they'll put gradual pressure on the united states to get back to the bargaining table >> you sound like we're moving toward the chinese plan, more talk, more diplomacy which president trump says we're not going to do any more >> the reality is we're stuck in unsatisfactory middle policy between doing nothing which is

unacceptable, trying to eliminate the problem which is not acceptable at any cost people can bear, so we can only contain north korea's nuclear weapons, manage down this problem over time, ultimately that leads to some kind of diplomatic framework it may not work, but it is going to be tried. >> mark, would you agree with that assessment, eventually we will end up with a north korea with nuclear powers? >> yes i think all indicators point in that direction, and i think patrick highlighted the point. on this program, missile program in north korea as well as nuclear program is not recent. this has been going on since the 1990s, developing these technologies and view these as central to their regime security i think as we look at getting china involved we have to be very clear about what it is we're asking them to do. china's ability to convince and persuade north korea to give up this capability i think is limited. the relationship between china

and north korea diplomatically has been frayed and been fraying for some time. i think the best means that might be available, but i think unlikely they're going to work, is to get china to really take on some very tough sanctions against north korea. but the chinese over time have shown significant unwillingness to do that the other key player here is russia over the weekend the russians retaliated against the united states sanction bill, getting u.n. security council action by continuing to pursue that would have been extremely difficult if not impossible barring those two being able to step up and put some pressure on north korea themselves. >> i can understand the president's frustration, the answer is there are no solutions, you're stuck letting someone who is probably not a stable actor, same character we are dealing with

detente works with people that are rational and sane. talking about other leaders you don't think are those things, thinking they're going to be nuclear armed powers at that point, i understand the massive frustration. what would you do, mark, in this situation? >> i think what the united states needs to do is really think our security posture in east asia and we need to start coming open to some of the questions that north korea nuclear weapons program and ballistic missile capabilities bring to the table a few of them manifest themselves over the past weekend. part of us argues maybe the united states needs a more aggressive or much more forward leaning security presence in the region from what we have which is significant the second piece is looking at south korea. south korea asked to renegotiate, relook at the missile range restrictions put on the offensive strike capabilities in addition, questions about bringing in more advance missile

defenses and also there have been arguments in japan that the japanese need to look at having some sort of retaliatory offensive strike capability. the big issue here is that we need to think seriously about how to deal and live in an environment where north korea has these capabilities how do we think about deterrents, how do we approach our allies, more importantly how does this come up with china as we look at china, a lot of things on the table now could be on the table in the near future, things they don't want to see happen. >> thank you both for your time. >> thank you coming up when we return, tomorrow, key day for future it could create $6 billion in new market value out of thin air. we will explain what that means. later, pharmaceutical industry ceo joins us, and tax policy in focus.

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welcome back to "squawk box. time for the executive edge. bit coin about to get an upgrade of sorts set fo take place tomorrow depending how it plays out, we could end up with a split in bitcoin. >> hi, andrew. tomorrow, august 1st, bitcoin goes through a major software upgrade that if successful could create two different bitcoins and bitcoin cash the goal is to increase network capacity, make transactions more evident, not all investors are supportive, leading to confusion and concern around the faith of the currency some told customers they won't support bit coin cash. smaller ones will, but the level of spufrt in bit coin cash is unclear as most demand seems to

be confined to asia. disagreement over tomorrow's upgrade resulted in high volatility in the price. reached around 3,000 in early june, below 500 early july since then trading around 2700 the new bitcoin is trading in futures market around $300 so much cheaper than today's bitcoin. which should you invest in most established funds say if you have long term conviction in bitcoin resiliency, depressed prices from uncertainty should represent an attractive buying opportunity. i am watching it closely still have some left from one week on bitcoin challenge. see how it trades and if we see a shift to new bitcoin cash. >> i still have that it is worth about $20 now. exactly what we said would be the problem, right these things could get forked effectively. >> and more to come, too

>> that was my question. how much more is to come >> experts say another in the fall this is what happens when a currency is in infancy these type of software upgrades are needed to evolve and become accustomed to demand. >> why when they do upgrades, does it have to effectively open the spigot >> think about it like microsoft windows upgrade, when a new one is available, some transition, some stay on the old one that's why this type of new bitcoin is needed. only difference is there's a monetary value attached. >> appreciate it great to see you thanks. "dunkirk" taking top spot at the weekend box office warner brothers world war ii film down only 44% from the first weekend earning 28.1 million according to com score it grossed 108 million

domestically since release the new release, the emoji movie, did that need to be made, coming in second 25.7 million started with strong sales friday, met with harsh reviews, decrease in sales over the weekend. >> saying it got the poopy version. >> write some plot. >> yes, pretty much. universal "girls trip" third place second week in a row, the comedy bringing in $20.1 million. when we come back, u.s. olympian christian son is preparing for a volleyball rematch. talking sports, sponsorships and more. right now as we head to break, quick check of the european markets now things in the green, but barely. the cac is literally flat.

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i can see scripps, the combination according to discovery will accelerate growth across linear platforms around the world. create a global leader in real life entertainment 20% of the viewership in the united states. adjusted earnings per share in the first year, after the close. expected to close by 2018. comments saying this is exciting new chapter for discovery. scripps one of the best run media companies in the world with terrific assets, strong brands popular talent

our business is about great story telling, authentic characters, passionate super fans coming together, scripps will be stronger, flexible, more dedynamic media company. it can be fully optimize, monetize theed >> meantime, we're going to come back to that speaking more about that transaction. adidas announcing it will be the official sponsor the volleyball team in town for a rematch against brazil airing. >> there's a crazy rivalry with

brazil what is that about >> it gets two story programs in the history of volleyball. consistently been at the top brazil has a great culture of volleyball in their country, in the united states. traditionally been very good also we have two of the top teams in the world a long time. >> you're wearing adidas gear f the sponsorship? because also you can be sponsored by a different company, as well, right? >> yes >> so how does that work >> yeah, so i think the adidas is overarching usa volleyball so we're required to wear aditdous at all times when we're on the job for usa volleyball aside from shoes when we're performing, because of the performance tools essentially. so adidas has been great for us. >> do you think there's ever going to be a professional volleyball league in the u.s.? >> you know, i hope so

our new branded ceo jamie davis has talked about trying to figure that out and trying to get that going so really hoping for it right now there's not. >> is there a model? is there a country where there's -- where it's a really, really big deal? >> yes right now i play in italy. italy has great, very strong professional volleyball league so there's some very strong leagues in italy, russia and poland the main three a lot of players go overseas to play in. >> when do you play over there >> from september to around may. >> what is holding it back in the united states? what does it really need to boost it to the next level >> i think just exposure and popularity so i think adidas partnering with adidas is going to be very helpful for us to get this big brand behind us that are supporting it, and really exposing volleyball to the american population. >> how did you get into volleyball like you're a tall guy >> yeah. >> you ever play basketball? >> i did basketball is actually my first sport. >> okay. >> and then, growing up i grew

up in hawaii so volleyball is kind of a decently -- >> and played on the beach or were you playing -- >> both. i kind of grew up playing on the beach to start, and then transferred indoor and realized it was a lot of opportunity in college. >> last question, how do you compare beach volleyball versus indoor volleyball? >> it's totally different game a couple different rules same concept smaller court. obviously two players versus six players. >> right >> but, much, much endurance oriented playing in the sand you're not jumping as high and moving as fast but you're very mental, very endurance oriented >> thanks for coming in this morning. >> appreciate it >> all right, coming up much more on the news that just crossed, discovery communications is buying scripps network. $90 a share in cash and stock. we'll talk more about that and later ken duberstein will join us on the white house shake- shake-up w psint reagan's chief of staff for a little while. because, when you really,

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another shake-up at the white house. new chief of staff john kelly takes office, as conflict with russia and north korea escalates. earnings and the economy front and center as wall street gets ready to kick off a new week your earnings score card is straight ahead plus we are keeping an eye on oil this morning after the trump administration considers sanctions against opec member venezuela ahead of next week's big meeting. what it could mean for oil prices coming up as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." good morning, welcome back to "squawk box" right here on cnbc we're live at the nasdaq

marketsite in times square i'm andrew ross sorkin along with becky quick and joe kernen. take a quick look at the futures this morning things are looking up. dow looks like it would open up about 44 points higher nasdaq up about 12 and the s&p 500 looking to open up about 3.5 points higher a couple big headlines making news this morning. the price of crude oil continues to rise. it topped $50 per barrel for the very first time in two months earlier this morning that comes as u.s. crude supplies tighten amid the threat of sanctions against opec member venezuela. and charter communications saying it officially is not interested in acquiring sprint it made that declaration in a weekend statement but may soon be more closely tied to the wireless carrier reports say sprint's majority owner softbank considering a bid for charter, which currently has a market cap of more than $100 billion. national association of realtors will be out with june home sales at 10:00 a.m. eastern time that measure of home sale contracts, but not yet closed. expected to be up 1% following a

decline. some breaking news just in the last few minutes discovery communications is buying scripps networks interactive for $14.6 billion in cash and stock the deal is official it's worth $90 a share compared to the friday close for scripps of $86.91. however, scripps had been trading around $67 a share when word first surfaced that it was exploring the sale >> discovery is trading at this point, should be interesting to see where that goes. a big, widespread between them right now but we'll see what happens. >> they expect it to close in early 2018 >> yes >> now to politics developing story out of russia vladimir putin says that russia will expel 755 americans from its diplomatic staff from the country and could impose additional measures in the future this comes as the president's getting ready to sign new sanctions against russia that were passed by congress. the state department calls russia's decisions to cut

hundreds of its diplomatic staff a quote, regrettable, not called for act. >> i wonder how many they have left >> about half the staff. >> president trump, meanwhile, spoke with japanese prime minister shinzo abe this morning about the need for more action on north korea over the weekend, as you know by now, north korea tested an intercontinental ballistic missile that went quite a bit higher than the first one that was also launched earlier this month. the u.s. and its allies have responded by flying supersonic bombers and fighter jets over the korean peninsula yesterday in a show of force and u.s. ambassador to the u.n. nikki haley tweeting late yesterday that she is, in her words, done talking about north korea. adding that china must act her comments echo sharp words from president trump over the weekend. the president tweeting, i'm very disappointed in china. our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do nothing for us

with north korea, just talk. we will no longer allow this to continue china could easily solve this problem. again, the backdrop another shangup at the white house general john kelly taking over as president trump's chief of staff. joining us right now is an it it mcbroide. former assistant to george w. bush and chief ofstaff to firs lady laura bush and anita, thank you for joining us this morning. >> sure. good morning >> let's talk about this what's the traditional role of a chief of staff what should this person be doing? >> well, imposing order, of course, on the white house and making sure that the staff knows they are staff and have to report to the chief, and then ultimately, to the president it requires -- a white house requires discipline. and a chief of staff has a very complex role managing the congressional relationship managing the cabinet managing the white house staff managing the president's time. his agenda you know, andy card used to say,

one of the nine chiefs of staff that i worked under in three white houses, you know, used to say someone may want to see the president or need to see the president. if you want to see the president you likely want. if you need to, you will but the chief of staff needs to know what you're going to be talking about. >> why is that why do you need such order imposed? >> well, there are so many competing things going on in a day. and a white house always needs to be prepared for crises. and you've already talked about two crises this morning, with north korea. the aggression there and then, also, this action by the russias, in expelling our diplomats and closing facilities those are things you wake up every single day at the white house, and you have to be ready to deal with the crisis. so you don't need chaos amongst your staff, and your inner workings, and certainly don't need any of the tension between staff to be playing out in such a toxic public way because ultimately, that doesn't help the president

that means the staff is a distraction, and that's not a good recipe for success. for all the big things that you want to accomplish >> general kelly is somebody who is used to an orderly line of reporting. used to doing things sort of in a military type of style >> right >> do you think he will be successful imposing that at the white house? >> well, he certainly has led two very complex organizations, both the military organization, and a civilian one, by being a cabinet secretary. and i think that's an important thing to note, too he understands what that cabinet relationship is to the white house. so i think that that certainly seems to be the strength of personality that the president responds to. and that -- and that the staff will respect but i think the big thing is to, will the president allow him to do his job the way he needs to do it, will he allow him to manage all the free wheeling access that comes in and out of the oval office. and that includes the family that's going to be hard to

manage, so we'll just have to wait and see i sure hope so >> i think of a couple different things it's hard to imagine a daughter not being able to talk to her father >> sure, ofcourse. >> or a son-in-law kind of being able to walk in. >> sure. >> and we just had new staff members like anthony scaramucci who was told he reports directly to the president will that line of direct communication end there? is this going to go through general kelly? >> well, i'm sure general kelly has had a conversation with the president, and with the senior staff, about that. i mean, there have been reports over the weekend he's been calling senior staff over the weekend, talking to them i'm sure, you know, trying to set a -- in order and discipline, but also the relationships, where they feel comfortable that they, you know, should go to him, and let him know what they may be talking to the president about. and i think, you know, of course every president needs to have family around them, friends, and people that are bringing information to them. >> right >> from the outside. you know, you're not -- you can't hold -- wall them off from

everything but, the chief of staff needs to know everything that's going in and out of that oval office. >> in terms of everything that's going on in terms of policy decisions. >> absolutely. everything in terms of policy. decisions. because it has an impact and the chief of staff would have the broadest view of what the overall strategy is. and can work with the senior members of the team to make sure every "t" is crossed and every "i" is dotted before there's any public pronouncements on anything >> general kelly is somebody who speaks truth to power. >> that's right. >> the secretary of homeland since found out about the no travel -- the travel ban >> right >> was unhappy that he didn't know about it and went in and told the president that directly so for him to still be seen as somebody that the president wants coming in, i guess that's a very good sign >> well i think that shows that the president respects that. respects that he has the confidence to do that. and is not afraid to speak that truth to power >> of all the situations that

we've talked about with russia, with china, with north korea, what do you see as being the primary issue and maybe the one that's going to take the most of your attention from the white house? >> well, both of those, hard to separate both of those i mean, a threat of aggression against the united states by a very unstable north korea, i think of course that's very worrisome. and then this relationship with russia has dominated, you know, so much of this president's time, from his campaign, and through now governing. so both of those are very serious. i don't think you can prioritize one over the other >> all right anita, want to thank you for your time today. >> thank you very much for having me. as we talk about all of this, oil hitting a two-month high u.s. government is considering imposing sanctions on venezuela's vital oil sector jackie deangelis is here and she has more on that story >> good morning, becky well, this weekend's events and the threat of u.s. sanctions on venezuela could come as early as

today, not only present a serious impediment for venezuela's economy, but also create a side risk for crude prices which did pass the $50 mark venezuela's economy runs on oil. crude is this regime's lifeline. production is estimated a little more than 2 million barrels a day. take that off the table, and the global market could see that black swan type of event that makes crude prices rise. makes traders nervous. according to the eia's latest numbers u.s. imports of venezuela's crude were a little bit more than 25 million barrels in april do the math. that's a little less than a million barrels a day or a little less than half of what the country is producing venezuela also sits on more oil reserves than the saudis roughly 300 million barrels. so the deterioration of the country's situation is a global consequence here in more than just one way right now, crude shipments to the u.s. are not expected to be impacted it's considered one of the harshest options that's not to say that it can't come down the line venezuela is geopolitical flashpoint

traditionally we look at the middle east as the most important international supplier of oil but of course, this country's contributions to the market and its reliance on oil revenue can't be discounted at this time and guys, i was going to talk about rising gas prices today, because of the rise in crude prices if we cross that 50 mark, remember, prices always rise a lot faster at the pump for consumers than they fall so this poses a little bit of a threat >> we're talking about pretty historically low levels at the pump right now anyway. >> absolutely. definitely you know, a couple of months ago i came and we had the conversation that consumers were getting, an early christmas in july but certainly the last month here in august, we could see another 10 or 15 cent spike. >> jackie, thank you very much >> sure thing. >> okay coming up when we return, another busy week of earnings ahead about 120 companies in the s&p 500 set to report results. the big names, including pfizer, apple, aig, tesla and many more. your earnings score card just minutes away and later we're going to talk drug pricing with the ceo of pharmaceutical research and

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looks like more today. after another record close for the dow on friday, we have the jobs report this friday. joining us now senior equity strategy at ubs wealth management steven desang 'tis managing editor at jefferies. david, i don't think he agrees with you, necessarily, stephen you expect stocks to grind higher equity markets well supported by solid earnings growth. equity valuations higher than average but supported by the macro environment. so -- >> you sumd it up for me yeah >> i'm just reading what -- he doesn't think so we're going to talk to him in a second >> yeah. i mean i think this is a good environment for stocks you've got earnings growth that has clearly rebounded. earnings looks like this quarter are going to be up about 10% pretty healthy sliern. i think that persists for the balance of the year. and likely into 2018 tax reform could be upside to

that, as well. with interest rates and inflation pretty low, that's a pretty -- that's an environment where the fed doesn't have to be aggressively raising interest rates. that's a pretty good environment for stocks and certainly relative to bonds, stocks look pretty attractive. >> and how long have you been sitting in this? >> we've been fairly constructive for awhile. >> since the lexz? >> since before the election >> since before the election that's the same question i'll ask you, steven. so you think valuations are stretched, and it's going to be tough. how long you been sitting -- did you decide that before you came in today you had been bullish >> no. >> how long have you thought that because it's 20% since the election you've been negative the whole 20%? >> no, we've been more cautious just in general. especially on those smaller cap stocks >> since when? >> since really when -- before the election i thought, you know, we've had a pretty big bump in the fourth quarter from a performance standpoint, without really anything transpiring we do have double din it earnings growth. and so i think the equity market, high single digits,

probably makes sense kind of tracks along with -- >> for here -- >> i think just in total >> we're already above highs >> i do know that. we've got to look at the earnings growth, it's going to be still somewhere around 8% or 9% that's fine. i think when you look at 18 times for the overall market, when you get down to, you know, small mid cap names trading at over 20 times earnings, i think you need a little bit more juice there, than the one thing with volatility being so low, you keep seeing these headlines coming out of washington, that at some point are going to start to -- they're going to start to matter and we do have some mandatory stuff that needs to get done in september. that if these guys can't shoot straight, they're going to create -- they're going to create a pocket of worry here. >> does jefferies or do you have an s&p target for the end of 2017 >> so essentially it's actually out of hong kong, he raised it to 2500. not a lot of upside.

i think it was 2450. so not a lot of upside from here i think we're thinking more of a rotation inside -- >> -- does the -- >> global strategist >> so you can't track him down if he's totally wrong or something? >> you could find him -- you could always find somebody nowadays in this world and he does -- i think this thing is much more of a rotation where the earnings growth that we're getting for large cap companies are coming from abroad you've got a weaker dollar you've got better growth outside the u.s. i think we feel better with the multinational story as opposed to being more domestically oriented >> okay. >> and as you get to the small midcap names, more domestically -- >> i just want to echo something that he's saying we're also a little bit -- we're overweight large cap versus small cap. and i think part of it is that u.s. multinationals are benefiting from the weaker dollar you do have a better growth environment, or at least acceleration in growth overseas.

then the other thing we're later in this economic cycle and small caps typically do best earlier in the cycle so i just think that our positioning reflects some of that that we are later in the cycle, still healthy, but large caps look a bit more drastic here >> all right we're going to leave it there. come in every morning. i don't know last week it looked a little dicey there. one of those days. with the nasdaq looked -- it was up 50 or 60, and then the next minute i looked and it was down 100. we're starting to see some -- >> all right >> yeah. starting to see some -- a little volatility >> it's just us looking for volatility and is it wait a second, moves we used to be more accustomed to, we're not accustomed to? >> you got to admit, in a supposed single digit stock market world for years we're up 20%. i mean, it's gone far past what

most people thought. and continues so we'll see whether that -- hard to buy here i guess. coming up, earnings are driving the markets higher as we've seen over the past several weeks. we're going to run through the earnings score card in just a few minutes. up next, did the emoji movie have what it takes to topple dunkirk at the box office? not a lot of dialogue in dunkirk. haven't seen it yet, have you? >> no. >> find out after the break and talk box office results. "squawk box" will be right back. she's nationally recognized for her compassion and care. he spent decades fighting to give families a second chance. but to help others, they first had to protect themselves. i have afib. even for a nurse, it's complicated... and it puts me at higher risk of stroke. that would be devastating. i had to learn all i could to help protect myself. once i got the facts, my doctor and i chose xarelto®. xarelto®... to help keep me protected. once-daily xarelto®, a latest-generation blood thinner... ...significantly lowers the risk of stroke in people with afib not caused by a heart valve problem.

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welcome back to "squawk box" everybody. dunkirk taking the top spot at the weekend box office again this week. the warner brothers world war ii film was down only 44% from its first weekend. it earned $28.1 million. the film has crossed $102.8 million just domestically since its release. sony's new release the emoji moving coming in second place. the animated film garnering $25.7 million. and while it started out with strong sales on friday, it was met with pretty harsh reviews and a decrease in sales as the weekend went on. when we come back, the earnings parade continues this week the names that you need to watch straight ahead

right now, though, as we head to a break, take a look at the u.s. equity futures looks like the dow is set to open up about 47 points higher nasdaq up by 17. s&p up by 4. 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.

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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 at this hour a marriage of two well known cable network operators announced this morning. you heard it here first. discovery communications buying scripps networks for $14.6 billion in cash and stock. the two companies expect that deal to close by early next year also, first 30 buyers of the tesla model 3 now have their vehicles in hand the company handed them over late friday. the challenge now for tesla, according to ceo elon musk is ramping up production capacity fast enough to fulfill orders in a timely manner. said the company would go through at least six months of

production hell is what he's calling it also a tax on sugary drinks going into effect in chicago on wednesday. comes after a judge threw out a lawsuit against the measure brought by retailers the tax is one penny per ounce >> in an appeals court has ordered the faa to take another look at airplane seat size a passenger advocacy group challenged the faa in court asking after the agency refused to impose rules regarding the seat size. the faa said it's a matter of comfort, not safety. but, friday, a federal appeals court in washington, d.c. said that the faa used outdated or irrelevant tests when it came to that conclusion. the advocacy group says small seats and rows that are too close together can slow down emergency evacuation the three-judge panel says the agency needs to come up with a better response to the safety concerns >> it just seems like common sense. cramming more people in an entire space it's obviously going to be tougher to get out and i've been on a lot of planes

recently, carrying an infant down the aisle, it's really hard when you go sideways you bump into everybody on both sides of the way down i'm a small person i don't know how, as people have gotten bigger and bigger we have shrunk the airline seats do you remember a few years ago, jane wells did the story on it's a small world out at disney land they had to put in bigger seats because our butts have gotten so much bigger. >> did she play that song? >> yeah, it gets stuck in your head forever as we're making those seats bigger and bigger we are shrinking airlines >> i mean speak for yourself my answer is not bigger. i don't have a problem >> people in general have gotten bigger yet over that time -- >> -- in the united states has gotten bigger. >> in some spaces it's 31 -- >> not everybody >> not everybody >> sideways have gone from 18 1/2 to 16 1/2 inches. >> he looks good >> you've got a big ass? >> you've got me pinned down here >> you don't >> you're bigger than ever >> americans in general -- if you look at americans, bigger all the way around

>> you said their ass is bigger. >> i didn't say that i said bigger butts. >> i'm not sure. i think physical fitness is coming back a little bit >> if you look at the general size for americans 50 years ago or now -- >> 50 years ago. >> or 20 kwleers ago >> i think there's a health kick -- >> 20 years ago look at the number of americans who are rated obese now versus 20 years ago. and that's when you're looking at -- >> i just got off a strict diet. >> most unfortunately most of the country is not you, joe. >> right i can -- i can tell them what to do stop eating. >> if you don't put it in your mouth it can't stick to your rear >> that's right. >> after the busiest week of earnings season, we're kicking off one more big week with the likes of apple, underarm our, pfizer joining us with a breakdown of where we are thus far, with the results and what to expect, investment advisory services and

chairman and advisory investors. looking very sharp >> thanks for noticing i work hard for this >> you do. so where are we? >>.4%. that's where it is as of friday. pretty good. analysts thought 6%. surprise is already 3.5 and i would say that you've got a good chance, 90 plus percent of exceeding double digits. so very strong >> let me ask, does that mean the big analysts have just been fundamentally wrong? is that what's really going on >> we've been surprised at the magnitude of surprise. usually 2% to 3%, you know, it's always -- it's never one thing it's a confluence of things. it's conservative guidance by companies. and it's analysts, you know, kind of, you know, basically making sure that they don't get in front of, you know, the numbers. so i think it's a combination of the two. and, to some degree i think everybody's surprised at how well this economy can do with the macro environment being what it is. >> those numbers and those estimates, those are the

immediate estimates going into these earnings reports what do they look like a month or two out because i feel like there is the opportunity, sometimes, for these analysts to sandbag the earnings in advance? or at least their estimates. they take them down so that everybody can then talk about the pop later. >> you see that. >> yes, you do >> you see that all the time >> and the company's guiding do it >> they do they guide lower you know, you -- it's semantics. markets respond better when you outperform your number >> right >> are these gap numbers >> these are actually, this number that i'm providing you, these growth numbers, are actually what we do is these are the final numbers that basically are reported, mixed in with the ones that still haven't reported >> are they gap? or do they -- >> most of them are gap. some are adjusted. there's not one ubiquitous standard most of them are gap but there used to be all sorts of different accounting standards. and that gets in to the minutia

of being a consensus estimate. >> people always talk about the multiple is always so much higher if you actually use gap instead of the, you know -- >> well, and the multiple is always higher when you look at it on a trailing 12 months but that's why people like to look at things on a forward 12 months, right? and expectations there -- >> double digits, you know, it doesn't matter what the analysts said, double din its is double digits that's pretty good >> yeah, and i think the interesting story here, and this is not news to anybody, i think we talked about it a few weeks ago is that financials and technology are driving this. i mean, technology is creaming i mean they're absolutely creaming it. you're at 19% for the quarter or the same quarter last year financials 11% >> right >> really strong numbers consumer, you know, the consumer is a little bit, you know, it's negative but that's a function of retail. it's not really a pox on the consumer -- >> does it make sense to you that the multiples on some of the consumer staples whether it's p&g or clorox or whatever

are now running higher than some of the tech guys you say are killing it does that -- do you look at that and think what >> well, i don't -- i think there's idiosyncratic issues around a lot of this stuff particularly individual company multiples. what i find remarkable is that in general, in general, value is trading at a bigger discount on a multiple basis than growth yet has a much higher expectation for growth over the next twelve months seems kind of paradoxical doesn't it you expect a higher multiple for companies that are going to drive earnings, right? yet value, expectations are higher than growth and yet they're trading at a much lower multiple >> we hear that it's because of the global markets are doing well, and synchronized recovery. europe's doing better. we're hearing -- how much of what you're talking about is domestic i mean, can't provide -- multinationals obviously benefit when europe is better and a weaker dollar. but is it -- is it double digit here in this country? is the -- do the domestic economy strong enough to

generate double digit earnings gains for all our companies? >> it's able -- i think it's interesting when you see technology when people make a technology investment they're enhancing productivity downstream. a lot of the gains in earnings growth are through greater efficiencies so the labor, the global labor environment and technology conspire to basically create profit growth through cost cutting efficiencies, and things like that. >> -- up, too, though? >> yeah. and you have enough revenue growth at the top line consistent with the 2% to 3% growth economy it is remarkable this is a little bit unusual to see this kind of earnings growth at a such slow growth economy, 2%. >> i'm just wondering, maybe it's not -- i mean, so domestic revenue growth is what if you don't take into account a weak dollar and multinationals, what are you thinking? >> it's hard to say. i mean it's hard to say how much of the s&p 500 actually get their profits come from overseas -- >> what's exactly? >> it's really tough to say.

i would still say that basically, at s&p, the view is that you're still 60% to 70% predicated on u.s. operations to drive your profit growth that's kind of the number. very anecdotal it's just a function of how companies report and again, it gets back to what -- >> small caps you can count on a lot of that in >> that is domestic. because they typically don't have the ability to have distribution for two reasons one brand, and three just logistics. >> right trying to figure out how things are going here i don't know you know, we hear that the employment number doesn't include a lot. and part-time and all that we did 2.6 on gdp i'm wondering whether, you know, we're all watching to see what we can do. what the potential really is whether we're stuck at two, or whether with deregulation and animal spirits, even 2.5 or 2.75, or even 3 which is what

we're shooting for >> steve liesman pointed out that we're running above where we should be just because of the population and demographics. >> -- i'm getting to feel better about gdp. and he says it's working you're working with liesman and i'm being successful and i said when i finish with him i'm going to start with andrew this is a much tougher nut to crack. right? >> practice. >> if i can get liesman even to 2.5, where he says that's possible, you know, in communist countries it's very difficult. >> i would say 2.5 >> if i could get you to believe it's possible then i'll work on 3 after that because it's coming i think. >> i hope you're right >> as america gets greater and greater. >> i can only hope you're right. >> even if you're wrong about it >> i would prefer to be wrong about it i genuinely would prefer to be wrong. i would love to see 3% growth. love i would love how about this not only would i love to see 3% growth i would love to eat my

own words. i would love to tell you that president trump is responsible for it >> you have never eaten your words. >> i would be -- >> in six years you've never even -- you haven't even a letter as many times as you've been >> if we can get to 3% or 4% growth i would be ecstatic i would think the president. i would thank washington i would thank mike here. >> july 31st >> july 31st -- save the tape. 7:38 >> okay. i'll basically eat crow. how about that >> real crow >> real crow you go get the grow. >> if we get to 3. >> but not for a quarter you got to get there annualized. >> i know. >> and i will eat the crow and enjoy it >> what kind of grow >> fried >> raw -- >> everything fried tastes good. >> taking the feathers off would you eat like crow feet >> i don't know, we'll see mike, thank you. >> you're welcome. >> this is going to be good. this is going to be highly rated when this happens. >> folks, we do have one other corporate story to bring you today. cable operator charter

communications says that it is not interested in buying wireless carrier sprint. this comes after news on friday that sprint was interested in merging with charter to create a major media outlet controlled by softbank charter out with a statement last night saying we understand why a deal is attractive for softbank but charter has no interest in acquiring sprint charter's statement could kill any chance of a deal between the two companies. but "the wall street journal" reports that softbank ceo masayoshi son could be making a formal offer anyway. check out shares of sprint you guys see the stock, oh, it's up but not by nearly as much as it was. only about eight cents now that's 1%. earlier today it was up by about 5.5% >> coming up we're going to talk drug pricing with the ceo of pharmaceutical research and manufacturing in america better known as phrma, and they don't like -- they're very cheap with their vowels and the guy's name is u-b-l.

it's weird it's like vowel are expensive. his name is what ubl? and u-b-l? and 3679 h-r-m-a can i buy a couple vowels? much more on the shift in power at the white house former reagan chief of staff ken duberstein will join us. you always pay 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.

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welcome back to "squawk box. developing story out of venezuela. protests have turned violent in the wake of the nation's election the president there pressing ahead with the vote to create a constitutional superbody to rewrite venezuela's charter, despite the threat of further u.s. sanctions and months of opposition protest opponents say that the election gives the government the power to rewrite the country's constitution the pharmaceutical research and manufacturers of america better known as phrma recently launched a campaign to discuss drug costs joining is president and ceo stephen ubl. the fine line, i think we're all aware, though, we had scott gottlieb on, we understand the promise of a pill. the promise of pharmaceuticals, as opposed to hospital stays,

for example, so we understand if you can get something that really works, it's the best deal in town. but then again, you do see, you know, some attempts by the industry to maintain prices that seem to be high. so, we don't want to hurt innovation but we would like it to be more affordable. you know, the price inflation for health care is so great. a lot of it is pharmaceuticals, right? how do you walk that line? >> you're absolutely right we're living in the golden era of medicine. i mean things that you would have referred to as science fiction a few years ago, harnessing the body's immune system to fight cancer or taking cells out of the human body, re-engineering them, putting them back in the body to fight cancer it's incredible stuff. but, if you look at express scripts a leading pharmaceutical manufacturer, drug spending went up 3.5%. and prices went up 2.5%. but what's not moderating is what patients pay out of pocket.

so increasingly, even though pbns and plans are negotiating incredible discounts and rebates they're not making their way to patients at the point of sale. so 50% of the time, in the commercial market, for example, patients are paying the full list price of the medicine so if you or i go to the hospital or the doctor we're paying a negotiated rate it's only when you show up at a pharmacy that you're paying the full list price for medicine so we think the administration, others, should take steps to ensure that patients are benefiting from the truths of those marketplace negotiations >> why isn't it -- and when, you know, we've got some friends that are in the pharmaceutical industry, they speak about pbns and express scripts like these guys are the devil a lot of times. doctors, do, too, there's no transparency and you have no idea -- if we know that's, or at least one group of people says that's where the issue is, why don't we try to handle that? why don't we try to do something about it are they immune?

>> no. i think policymakers are beginning to focus on in inefficiencies in the supply chain. our members retain about 60% of the list price of the medicine that means 40% is being absorbed by other actors in the system. whether that's plans, pbns, pharmacies, whole salers, industry leaders, as again a practical matters on the one hand pbms control 80% of prescriptions in the country they use that leverage to help control costs and drive a hard bargain. the problem is the fruits of those negotiations over the last few years, they negotiated over 100 billion dollars in negotiated discounts they're not making their way to patients so, we degree that affordablety is a challenge for many patients >> do you think that the pharmacy benefits managers are middle men that are ineffective? if we negotiated discounts aren't making their way to customers, what's the point? >> i think the model's right for disrupti disruption we think the pricing model in

our industry needs to evolve away from this rebate and discount model towards models that really reimburse the product based on the outcome achieved by the patient. and increasingly our members want to put their money where their mouth is they're sitting down and saying for diabetes patient, let's look at the metrics that really matter in improving care for people with diabetes whether it's a1c or keeping people out of the hospital, and you shupt have just one drug, one price. they should be reimbursed differentially based on the outcome achieved by the patient. >> on a scale of one to ten the pharmaceutical business in terms of market forces being generated on it, how much of it is free market >> it's a fiercely competitive market i mean you look at the hepatitis-c examples -- >> my point is you've got patent protection what is it eleven, twelve years? you've got orphan drug status. you've got the government involved with all types of regulations. you have the epipen, whatever that was they wouldn't let the generics come in for whatever reason and you see -- >> medicaid -- >> these aren't free markets free markets have a way of

letting competitors come in, and keep everybody honest. and you have to mind -- it doesn't seem like it's a free market so therefore prices aren't held down like they would be >> i think there are policy changes that would enhance competition. much of the negative press attention focused on our industry over the last year has been focused on so-called bad actors people like martin shkreli, valeant, even mylan. these are old drugs essentially without effective market competition. they don't have patents. they're off patent medicines i think the fda commissioner is beginning to take some steps to improve -- >> he's been here and talked about that do you support the steps that he's taking? >> absolutely. because the whole industry gets a black eye. and actually those companies are very little in common with our members. you know, i was just with one of our largest companies, they spent $7 billion in r&d last year and launched one drug these companies are taking substantial risk, and making sustained investments in r&d over a long period of time

those other companies didn't bend anything for taking advantage of regulatory arbitrage. >> that's interesting that the industry is behind some of these efforts the fda commissioner scott gottlieb is trying to put in place at this point >> absolutely. i mean i think the commissioner is focused on reducing development times. if it takes ten years and $2.5 billion to bring a drug to market we're always going to have to wrestle with costs so reducing development times and encouraging competition, i mentioned the hepatitis-c example. we now have three companies in that space it's a cure for that wretched disease but prices have come down by 60%. you know, the patents, they're all under patent, they're just different modes of action going after the same disease so it is a fiercely competitive marketplace but there are changes we can make to make it more competitive >> i don't know how you -- a lot of times you'll have a company that has like five drugs, they know they're coming off patent they're going to go -- the revenues are going to go down like 80% so they're in this box. you know, and everybody's judged quarter by quarter, by wall

street so you know that -- i remember eli lilly had these patent experts, and so sometimes there's -- we need extended release version. or -- >> right >> but it seems like, i mean i understand the rationale and the front end of why you do it but it seems like there's some unintended consequences that aren't great >> you have to be careful. incremental positive changes in a product can be clinically meaningful and we're always standing on the shoulders of somebody else. which link in the chain are you going to pull out? obviously we need to make sure -- >> lawyers that are involved with either patent attacks or, you know, defending patents -- >> the whole -- the broader point is, we were the only item in health care that the price has actually come down >> right >> because of patents. 90% of prescriptions are generic medicine as you point out after the patent expires the price goes down 80% or 90%. hospital care -- that doesn't

happen in hospitals. physician care can you imagine if you had bypass surgery at $100,000, and after five to seven years, it became 80% off we're the only item in health care where the price has come down >> okay. all right. never mind you're right stephen, thank you >> great to be with you. >> how do you pronounce it >> ubl people have been telling you to buy a vowel for years. >> vowels in phrma are they going up in price or something? >> great to be with you. >> talk to bannon. got a bunch of them. >> twelve years. he'll get that when we come back, we've got some stocks to watch this morning. in the meantime take a look at the futures. we've been in the green all morning long dow futures indicated up by about 56 points. s&p up by 4.5 and the nasdaq up by 15. stick around, "squawk box" will be right back. these days families want to be connected 24/7.

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our services more reliable than ever. like technology that can update itself. an advanced fiber-network infrustructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most. welcome back to "squawk box. major league baseball welcomed the latest member to a very exclusive club yesterday texas rangers third baseman adrian beltre cemented his place in history by collecting his 3,000th career hit he ripped a double down the left field line beltre is just the 31st player

ever to get to 3,000 hits. and the first from the dominican republic he also joined two hall of famers, george brett and wade boggs as the only third basemen in the 3,000 hit club. i was talking about this with dom earlier. pete rose. 4250 or something. i mean, it's -- such an unbelievable record. of course he had more games, more -- but congratulations. that's pretty good 3,000 hits let's take a look at some stocks to watch this morning. dow component boeing, riding a sixth session winning streak it's risen almost 15% over that time and it's added 212 points to the dow jones industrial average. just by itself, over that period, the dow itself is up 218 points over those six days and coach was downgraded to hold from buy at jefferies. which says that the positives that went into that buy rating have now all played out, and are

reflected in the stock's price that includes the power of its brand name and acquisition of kate spade gopro was upgraded from equal weight to underweight at morgan stanley. current alcohol eggs are already reflected in the stock price and software improvements may help drive future sales coming up, former chief of staff under president reagan ken duberstein is our guest. his thoughts on the shake-up at the white house. and then tax reform now front and center after the repeal of obamacare fell short americans for tax reform founder grover norquist is going to join us next. "squawk box" returns in a moment you always pay

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a tax code overhaul. president trump set to make his pitch for tax reform this week as new chief of staff general john kelly takes office. discovery is the new owner of the food network and hgtv the media company buys scripps network in a deal total valued at $14.6 billion plus why one start-up wants you to put down the hammer >> now name that wood. oh >> and use a phone to renovate

your home. we'll talk to the ceo as the final hour of "squawk box" begins right now live from the most powerful city in the world, new york, this is "squawk box. good morning, and welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square i'm joe kernen along with becky quick and andrew ross sorkin the futures right now, been up for most of the morning. we'll take a quick look at the dow, the nasdaq, and the s&p actually up a little bit more than they were almost 60 points now on the dow. could be another record. up 4.5 on the s&p. nasdaq indicated up 7. oil prices have been at the high end of the recent range now almost 50. down a little bit today but 49.68 on wti crude >> among today's top stories, a media deal to tell you about this morning the discovery communications is buying scripps networks interactive for $14.6 billion in

cash and stock the deal was worth $90 a share compared to the friday close for scripps of $86.91. word had already gotten out about that deal at that point. the stock has picked up. but this is a premium about 35% to 37% over what that stock had been trading at before also, cable operator charter communications is saying thanks but no thanks to wireless carrier sprint this comes after news on friday that sprint was interested in merging with charter to try to create a mega media outlet that would be controlled by sprint parent softbank. charter out with a statement saying we understand why a deal is attractive for softbank, but charter has no interest in acquiring sprint according to "the wall street journal," softbank'sceo could make a formal offer anyway shares of sprint had been up by 3.5% earlier this morning. now it's up by just under 1% and on today's economic agenda, chicago pmi at 9:45 a.m. eastern time 15 minutes later, we get june pending home sales >> a couple stocks to watch this

morning. facebook getting downgraded. the firm sticking with its $140 price target the analyst citing the tech giant's remarkable run this year and unaccounted risks to growth. they're looking at that stock now at $172.25 shares of snap could be on the move today the lockup period following the company's ipo in march expires today. that allows early investors and some employees to sell their stocks snap trading below the ipo price of $17 a share right now also astrazeneca says the fda has granted breakthrough status for its drug for nonmetastatic lung cancer. shares now at 30.52, up almost 1% >> and it's monday and it's general john kelly's first day as president trump's new chief of staff joining us now ken duberstein. he was president reagan's chief of staff in 1987 to 1988 ken, good to see you thanks for joining us. >> good seeing you >> you lose some weight, my man?

>> yeah. >> you look phenomenal >> i've been doing great >> see i told you. people aren't getting fatter they're getting thinner. i am, too. so i've been thinking about what the role of chief of staff, and there's got to be at least five different roles that may be of lesser or greater significance, or importance, depending on, i would think, the president so let's go back and what was the most important thing that president reagan needed from his chief of staff a hierarchy of duties? or working with congress to get things done? what was -- what did he need >> he needed all those things. and then some. you know, the role of chief of staff in essence is to be the reality therapist for the president. to tell him what he doesn't want to hear but what he needs to know so you know, that is important regardless of who the president is but you also have to help him

organize the white house staff so that you can win on capitol hill to be an effective president means winning on capitol hill. if you translate it to today, john kelly reorganize the white house, tame the staff, so to speak, so that they can push on tax reform, and infrastructure, and getting a debt ceiling increased, and take the drama out of everyday life in the white house, and drama as it always is, but take that extra edge off and get things done quietly, effectively, and on target and also tell the president sometimes what he doesn't want to hear. but what he needs to know. >> people thought about -- sorry to interrupt people thought reince priebus knew so many people in congress, and knew so many republicans that that was going to be a strong point, legislatively.

now, general kelly doesn't, you know, doesn't have that same relationship, i don't think, with as many of the people they need to get on board in congress but maybe in terms of people things in order and a chain of command he seems to be stronger there. could that make it could a stronger chain of command make it easier to work with congress, do you think? i guess you don't want leaps you don't want people, you know, you don't want ten different people making decisions about what the president's doing either, i guess. >> absolutely. you need a chain of command in the white house. you need to organize in a way. people are always going into the oval office. the chief of staff needs to know what that person is saying, and when he's coming in or she's coming in. not only before, but more importantly afterwards, and what did the president say. but you've got to organize the white house staff, in a way,

that you can maximize getting things done. what john kelly brings is stature, is age, is some wisdom, the military bearing but most importantly, he's been in government before not just at dhs, but at the pentagon, even on capitol hill that makes a big difference. reince's background was all political in the sense of the campaigning. and the rnc. john kelly has a background in government itself. >> ken, but there's one missing link in think which you didn't mention, which is trust, and the loyalty of the president i think this president may be somewhat different in that you're right, experience counts and matters in a major way, but it seems to me, at least, from the outside, that when you look at the people that the president has trusted the most, the people that have been in his inner circle the most over the years, those are the people who actually talk openly to. it's very difficult for him to

open up to people that have not been part of that circle >> yeah, but what the president has to do is empower john kelly. it is interesting that he is going to participate in the swearing-in ceremony this morning at 9:30. he's got to make it clear that he is the white house chief of staff, and things flow through john kelly if he empowers him that way, then it seems to me that many of the problems will certainly disappear, if not be diminished. >> i'm just wondering what the prospects are. because if you look at supposedly, as hearsay, but you hear about secretary of state rex tillerson, that he's tried to do certain things, bring his own people in, and had some pushback from the president. and you know, when you've got a president who was a ceo or whatever, dealing with another ceo, it's like we know how co-ceos were that doesn't work at all do you think a general, though, the president would be --

president trump will be able to subvert himself, essentially, to some of the things that general kelly tells him to do or asks him to do? or there will be head butting there, as well i mean, these are two strong wills, you would think >> yes the entire john kelly, make sure that his presidency is effective. to get people on the same page to have some accountability. that's the key to what's going forwa forward. if president trump were to undermine it, then there's a problem. but it seems to me that's why the stature, and the bearing of a four-star general certainly can make a difference. but john kelly also has to realize that when they're playing hail to the chief, it's not for john kelly, it's for the president of the united states >> hey, ken, what's the toughest issue you had to deal with in the white house? how did you get control of it

when you were trying to set up your chief of staff position >> well, remember, we were coming out of the iran/contra episode and the scandal. and so, making sure that we focused on positive agenda and not get taken down by all of the events of the day. they're related to iran/contra but you always have to be pushing that positive agenda that's why i said, in john kelly, help enforce discipline, inside the white house, organize on tax reform. the president needs some victories on capitol hill. that's what the american people expect that's what people in the white house expect that's what congress expects but the president has to push things over the line it takes leadership. ronald reagan was willing to do that when i came back to the white house, president reagan was at 38% in the polls

i wasn't simply a lame duck, people were saying he was a virtual dead duck. and by the time he ended two years later, he was at 68% job approval, we had had our successful meetings with gorbachev. we had enacted all 13 appropriation bills. we'd gotten the supreme court nominee through. we'd gotten a canada free trade done we had welfare reform done not bad for a lame duck or dead duck president you've got to focus on accomplishments. that's why they're there >> so the -- the prospects, in your view, just your gut feeling about whether this two years from now will we be talking about chief of staff general john kelly >> i think in two years you will be talking about chief of staff john kelly but the question is, did he get

tax reform done on behalf of the president, with the president's leadership can he get a debt ceiling smoothly done, appropriation bills done, infrastructure, and something on health care that's john kelly's responsibility as the chief of staff to the president >> all right ken duberstein, thanks thanks for your time this morning. appreciate it. >> thanks a lot. >> see you later >> bye-bye >> when we come back, what do companies like sprint, alibaba and potentially uber have in common one man, softbank chief. we'll take a look inside his empire next. plus is tax reform on the horizon? americans for tax reform ceo grover norquist tweeting, watch for a bill by september 28th he will join us at 8:30 a.m. eastern time and later forget tinder. a home start-up is calling itself the renovation matchmaker we'll talk to the ceo. stay tuned you are watching "squawk box" right here on cnbc

welcome back to "squawk box. softbank ceo's masa-son's $100 billion vision fund may have major implications for investing. deirdre bosa is here today to

give us a look inside the empire >> good morning, guys. thanks for having me on today. we talk about masa-son's ambitions. it's far from charter or the u.s. cable market he's after he's building what he refers to as his 300 year vision and he's not content with his current empire which already reaches across the world he has sprint, of course, a big chunk of alibaba, arm holdings and his finger in many, many other companies that we talk about on a regular basis now the nearly $100 billion vision fund is his vehicle to extend that reach further. it is completely unprecedented in size and ambition and it could have major implications for the vc world. it could have major implications for the tech industry at large so far the vision fund itself has employed only a few hundred million in two start-ups but a bunch of softbank investments from one web to nvidia, they're expected to be offered to the vision fund according to people close to the matter. and there are reports just in the last few weeks connecting softbank to some of the buzziest

names uber, slack, just to name a few. clearly masa is a busy man he's rubbing shoulders with the white house. here's a list of who's invested in the vision fund, the saudis, qualcomm, apple among others he says he'd like to be remembered as the crazy guy that bet on the future, and so far he has shown that he's willing to bet big, and bet often >> what's the distinction between what goes inside the vision fund, and what goes technically inside softbank proper, if you will? >> so the number of investments that we had up on the wall, he has this plan to invest $100 billion within five years. >> right >> and he has sort of set up these guidelines, robotics, artificial intelligence, machine learning so they're supposed to be companies with that angle. that's why you see envied yeah it's unclear how sofi fits into that that's one of the concerns about this fund, as well where are they going to put all of this money? the companies that come in, what is the strategy?

it's very early days so we don't know that yet. i know that in the lead-up to the segment you guys mentioned uber as well >> i was going to say the uber relationship is so, we don't really know what's happening >> and that's going to be a complicated one because we showed you who's involved in the vision fund, the saudis. the pif also has a big investment in uber and remember, it's very complicated, because softbank is also investing a whole bunch of ride share companies that are uber's rivals. like massive monster investment in grab, hola, so you see this building >> final question, when you think about what they're doing, the vc community seems to have very mixed views about this. some seem to think this is great in part because they're able to exit at sky high multiples >> yep, finally. >> others are anxious that they're actually going to get bid out of businesses that otherwise that they would want to get into but at prices that

don't make any sense therefore it's going to tar the entire ballot. >> i have a number here. $100 billion is the fund that is almost as much as all vc backed companies received last year so this is huge fire power and you had oak tree capital, howard marks saying last week he was raising those kerngs that this has the ability to take winners and losers in the tech space because it is so big and change the way that vcs invest themselves >> thank you great to see you apple among the big companies out with earnings this week. analysts will be looking for more clues about the iphone 8 and joining right now, the maxim group. what are you anticipating? china, china, china? >> for the june quarter, it's what i call a lame duck quarter. and what i mean by that, it doesn't really matter what they say or do. and this is because, everybody knows that the june quarter, the

results -- >> right >> you know, we're at the end of the product cycle. and everybody gives them a pass for whatever results they're going to provide because, everybody's delaying their purchase for the next iphone and then for the september quarter guidance, this is usually when, at the end of the september quarter of last 10 to 15 days, you have the new iphone that's released. but it's always supply constraint so whatever guidance they're providing, that's a complete reflection of the supply that they're going to have on hand. and so, it never tells you anything about what the real demand is. what really will matter is the december quarter guidance three months from now. >> so is there anything you're looking at, though, in this quarter that we should be paying attention to or is it just completely nothing? >> there's a lame duck quarter in my opinion, this quarter. but what will be important between now and the next three quarters, is what the supply chain is talking about in terms of what is apple telling them as far as units they need to be gearing up to be building for.

>> let's talk about that speculation. it's all speculation because we just don't know. >> sure. >> but you read the reports. and there's suggestions that it's -- that maybe they would announce it in september maybe it gets pushed out maybe they'll announce in september but it won't be available until christmastime. that they're having a hard time getting the touch button technology if they're going to build it into the screen you've read all of this. >> yep >> i don't like to get too gossipy but how do you then take that information and put it into whatever your estimates are going to be? >> okay. so at this point in time we don't know for sure if it really is going to be delayed or not. so impresume that it's not going to be delayed. let's say it is delayed. if it's going to be delayed let's say it's delayed till october, october 1st instead of september 15th that ships out 10 to 15 million units from the september quarter to the december quarter. and that's also going to create probably some overspillage into the march quarter so that's really just simply a shifting.

if you believe that iphone users that are intending to refresh are going to say iphone user, oh, man, i'm going to have to wait another two weeks, oh -- >> but you do consider this a super refresh? whatever is about to happen is going to be super cycle? >> i absolutely do consider it as a super refresh from a refresh as far as what's going to go in there wireless charging, augmented reality. we do think augmented reality is going to be the future of computing. we think what's going to be implemented into iphone as far as augmented reality, the processor that's going to be in there is going to be a little bit weak so it's not going to be a true game changer. we're talking about the foundation for that. but at the end of the day giving the form that has to change and additional functionality and the survey work that we've done in china that shows that iphone users in china remain iphone users. they're not going away there's huge pent-up demand there. it's going to be a screamer. >> full disclosure he's got his phone, people. >> yes >> thank you president trump just moments ago tweeting, if obamacare is

hurting people, and it is, why shouldn't it hurt the insurance companies, and why should congress not be paying what the public pace? i don't know how this is going to work itself out >> this follows that -- >> take away health care from congress >> we're not going to pay -- >> yeah. >> give them obamacare >> they've got a big subsidized for what they pay for their staffs for congress. which is a way of getting around because when obamacare passed it was supposed to be that all congressional houses, all congressional offices were also following the law of the land and buying their insurance that way but they get a huge subsidy. >> tom price said that president trump can do through executive order. and the question is, if you -- >> if you defund it -- >> then do you own it? >> then you are probably going to get the blame for anything that goes wrong here >> exactly you got to love the way -- you want single payer. >> and by the way, if it's defunded then the premiums that we're already seeing going up

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welcome back, everybody. the average employee spends about five hours a week using mobile devices to check personal e-mail, shop online, or scroll through social media sites that may not sound like a lot, but staffing firm office team crunched the numbers and that adds up to about $15 billion a year in lost productivity per year the report also found that men more commonly check their non-work e-mail while women spend more time on sites like facebook or twitter. hmm. maybe that's a productivity problem, all the lost productivity trying to figure out where it is, it's going straight into shopping online. and checking our e-mail. when we come back, is tax reform next on the trump agenda we'll be talking to the founder of americans for tax reform, grover norquist. that's next rit ren quk x.ghhe o

one more, right above the one on the right would even it -- would even it out a little

bit more good morning and -- you must -- i mean as parents drive by welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square, among the stories front and center, this morning crude oil prices are slightly lower this morning, after topping $50 a barrel earlier. that was the first time crude had been above 50 in two months. as u.s. inventories declined, traders keeping an eye on the threat of sanctions against venezuela based on some of the developments, political developments in that country wells fargo is cutting 69 executive jobs in its retail unit all part of restructuring following last year's sales scandal that involved the opening of more than 2 million unauthorized accounts. and the national association of realtors, realtors, is out with its june pending home sales report at 10:00 eastern this morning. that measure of home sales

contracts signed but not yet closed is expected to be up 1% for last month and another tweet just coming in from president trump highest stock market ever, best economic numbers in years, unemployment lowest in 17 years, wages rising, border secure, s.c., no wh chai os. >> s.c.? >> south carolina. >> the supreme court >> oh, supreme court >> scotus. scotus >> interesting >> interesting >> no white house chaos. i like on my -- you know how to do that? if you hit the capital thing twice it comes out all caps. >> so are we going to give him credit for the stock market? this is a trap >> you want to -- >> because if you do -- >> you want to -- >> no they've said they use it as their own barometer >> how many times have you made so if it goes down he owns it, too. >> no, no, no, no.

my point is if we're going to do this then you've got to go back to the obama years just what it is. >> oh the fairness of -- >> if you want to give him the credit for the stock market this time, then you used to say every time that -- every time the stock market went up you said that the stock market went up despite obama. this time, you turn around and the whole thing is cockeyed. but anyway >> andrew, for what it's worth, since 1999, the stock market, including obama, which you would say he doubled it, is up 4% a year >> right >> that's because the stock market in 2009 had lost 40% of its value. >> right >> okay. >> right >> so it lost 40% of its value -- >> you're going to base all -- >> i'm just going to tell you when you lose 40%, when you get back to the same level that it was in 1999, it doesn't necessarily -- okay. and you want to talk about the fed and the fed's role from 2009 >> right, what about the fed's role now >> fed is in a tightening mode now. >> and you think the fed's in a

true tightening mode now >> i think the fed went from -- >> we are still in like dovish land >> did you take calculus this is the second derivative. we went from a total -- you didn't -- >> go talk to any of your friends, and you know -- >> in high school. >> and you know that -- >> someone did get out of high school you know what the second derivative is? >> i'm not going to get into some math equation with you. >> second derivative says where are we're no longer -- >> that's not the point. all i'm saying is just be consistent that's all i'm saying. >> you're right. i think that -- i don't think -- can you show me the business, the pro-growth policies. >> right >> that resulted in the stock market doing so well under obama? tell me what the pro-growth policies and, where was -- if it's the only administration in history not to get a single year of 3% gdp growth >> do you think -- here's a question for you do you think that any of the growth we're seeing now was set up eight months ago?

or even twelve months ago? >> by what by which policy? >> meaning, meaning you don't think that there's a natural progression -- >> absolutely -- i absolutely think -- >> here we are >> i absolutely think -- >> and to suggest -- >> we've been recovering since 2009, yeah i do think that. >> it might take us awhile to work this debate out in the meantime, president trump's going to be beginning to build his case for tax reform. of course, questions remain whether a tax bill will come by the end of this year joining us to talk about it right now is americans for tax reform president grover norquist and grover, it's great to see you. thanks for being here. >> good to be with you >> so, we are looking at what happened to the health care, the obamacare repeal bill. do you think tax reform is going to be easier >> it will be easier for a couple reasons or more sure i think we'll have a deal out of the white house, the senate, and the house, by september 28th the white house and the house and senate leadership have made it clear they're working together to write this bill.

remember, for health care the house wrote a bill then the senate played with it and the white house was, you know, talking from the sidelines there. this time all three are working together they're not going to come up with one pill and ping pong it back and forth it's going to be sort of prenegotiated. and the pieces of it are a lot easier they're focusing on taking business tax rates down. from 35 for corporations down to 15 or 20 the white house keeps pushing very hard for is a remember, you have to add state corporate income taxes so 15 is 20. and 20 is 25 so you really want to get that rate down, and then equally important, both for the economy, and politically, is the subchapter "s" pass-through corporations, farthernerships, taking that down to 15 or 20 that gives you the political heft for tax reform. the fortune 500 companies, silicon valley, everybody with

money parked overseas. 15% rate it can all come right back, because that, even with the worldwide tax system, our 15 would be lower than most other countries, not higher than most other countries. and then the small business community, the pass-throughs, they'll see a significant tax cut on their business income, not their personal income, but their business income. that will be extremely powerful, add to that they're looking to go as far on expensing, this is where there's still a judgment call, between 15 and 20, on rates. do you go to full business expensing? or do you go to full business expensing for three or four years, and then back to 50%, 40%? >> because you can't do everything with the reconciliation >> yes >> determine it the way you want >> and 1031 is probably staying as opposed to going away which is deferring capital gains on like kind exchanges, buildings, houses, and land. because you're not going to pull

business expensing for land. and add to that, that tax gone, amt gone, those are consensus issues and on the personal side, that's pretty well laid out. double the personal exemption for an individual from 6 to 12, 12 to 24 for family of four. and, reduce the number of rates. >> let's talk politics for just a moment >> yeah. >> over the weekend, the president tweeting that he wants to see the senate go back as to the obamacare repeal once again. he thinks they're quitters if they don't do that mick mulvaney saying over the weekend that he thinks the senate shouldn't be voting on anything until they vote once again on obamacare repeal. as somebody who is so focused on tax reform, do you want to see them moving on or do you think they should go ahead and continue to work on health care before they get to that? >> no. you continue to work on it for two reasons. one, the one does not interfere with the other these are on two separate tracks there's a trillion dollars of tax hikes in obamacare

a trillion dollars over each decade the more of those tax hikes you can get rid of when you reform and replace obamacare, the better off you are for lower tax rates. and they do not in any way contradict each other. we can walk and chew gum at the same time. all you need to get is one senate vote, and mccain's argument for not voting for health care reform, after having run tbs on the subject, i don't think that stands. he needs to decide what he does want there but, i think it's entirely likely they come back and get that extra vote and move forward there on some health care reform >> grover, last time we saw you back in march, when you were talking about the carp rat tax rate, you thought in terms of making it revenue neutral you thought we could be looking at 28% rate, very similar to what obama had proposed why have you changed or have you? >> well, some people would argue you can only go to 28 if you are trying to make it all of it permanent.

i'm not sure that you will have permanency for all of tax reform there will be pieces of it that have to be permanent efforts to make it territorial tax needs to be permanent if it's going to happen death tax, amt has to be permanent, they can't be temporary. but you can make certain things temporary and get a strong pro-growth policy. like full business expensing taking the corporate rate to 15. it could bop back up again in 10 or 15 years. but i think a 15% rate, and full business expensing are the kind of pro-growth reforms that like the tax credit -- remember every couple years they'd pass it for a few years and it was supposed to last but it never did and it was finally made permanent because it was understood by the business community it's so important to economic growth the lower rate, and full business expensing fall into that category. i'm much more interested in passing those two for the next four years, because i believe once you get there, that is never going away

>> but not revenue neutral, then just for the final -- >> no, not revenue neutral within the window. they'll probably have a ten-year window but it could be 25 if they wanted it's up to congress to decide how long the window is i like 25. it's a generation. congress should from time to time be thinking in generational terms when you make big decisions like this. not the next few years but, ten years, it gives you an opportunity to have strong economic growth, and set forth policies that people will want to see continue. this will be a net tax cut remember, this is one of the first times they're using dynamic scoring. and with lower rates, and more -- faster depreciation schedules, and 1031 protected and things like that, you will see strong economic growth, and that gives you at least a trillion dollars over a decade more to work with, plus they'll be eliminating the tax deductibility of state and local taxes, which puts pressure on

left wing democratic mayors who every time they raise taxes on their citizens say oh, the feds will pay for part of it. that won't happen anymore. when you get a tax cut it will all be yours when they raise taxes you pay for all of it. >> apparently steve bannon has a plan in the white house to bring the top rate to 44% from 39.6% in order to try and pay for some of the middle class tax cuts would you be okay with something like that if it were to pay for broader tax cuts >> of course not because higher rates, at that market -- at that level don't actually get you more revenue. they slow economic growth. and the only reason to raise the top rate up, remember it was 90%, not too many people paid it, but it was 90% at one point during world war ii. the reason for that is to convince all middle income people, oh, it's not so bad. you have high taxes, but imagine the kennedy kids they're payingeven more. so higher tax rates are not to raise revenue. they lose revenue. obama, remember, even admitted

that on capital gains and higher rates. he thought it was a good idea because he liked to punish people who made more money but he realized the government got less money he didn't care it was all about the optics of playing the politics of envy, and slower growth was the cost of doing envy politics so no, all rates are coming down the president ran on it. and the head of ways and means has made it clear that's a complete nonstarter. i don't know where that idea came from, bannon certainly is not talking about it publicly. the only thing i've seen in the press is some republican congressman who refuses to name himself or hefself says they think they heard it. if it was a good idea, and it was going anywhere, i mean, the dead cat bounced this dead cat didn't even bounce i'm not sure if it was ever real i don't mind it as a very bad, very stupid, very destructive false effort to get people focused on something that is

never going to happen. but, it is a good idea, every once in awhile, to remind ourselves marginal tax rates matter higher marginal tax rates hurt the economy. they don't help. >> grover, it's good to talk to you. and i have the feeling we're going to need to talk to you a lot more >> this will all be wrapped up by september 28th. >> okay. we'll hold you to that we'll talk to you again long before then. >> the deal will be written and on the floor by then we'll go with that >> okay. thanks, grover >> thank you and tesla delivered its first mass market sedan. 30 model 3 vehicles were handed over to tesla employees who were the first to order it. phil lebeau joins us now with more on that story phil >> andrew, we were there in fremont, california. had a chance to driver the model 3. this was the event that tesla shareholders, tesla fans, and tesla employees have been waiting for. there were a couple of thousands of them there outside the plant as elon musk drove on the stage in a middle 3. they delivered 30 on friday.

these all went to tesla employees who had ordered the vehicles they're the first one to get them we do have an update now on how many reservations there are. more than a half million of people have been collected by tesla. so they're going to have to work through that backlog over the next year to year and a half elon musk talked about it friday night when he was on stage >> i thought, you know, that really mattered to us. we really care we're going to do everything we possibly can to get you the car as soon as possible. so, we're going to work day and night to do right. thank you for doing that >> a couple of pieces of news. first of all, the first model is being built are the long range versions which start with a base price of $44,000 310 mile range but there's a larger battery pack in them. also you go zero to 60 a little bit faster than the standard versions which start at $35,000, have a lower range of 220 miles

when fully charged knows will start going into production oh, maybe two to three months down the road and the real challenge now, it becomes ramping up production, first going to about 20,000 for the month of december, by the end of this year, and then getting up to a half million at least that's the target for next year guys there will be a lot of questions on the tesla earnings call wednesday afternoon after the report q2 earnings the numbers once again they're not going to get a whole lot of attention because the focus is going to be on model 3 production i know whenever i say that people say yeah it does matter if they post a loss and what's going to be the, you know, the numbers that people can base the stock price on i don't think the stock's moving based on the earnings report they're based -- the stock is moving on whether or not people think that they can ramp up production as they have targeted for the model 3. so, after driving it, guys, on friday night, i can tell you this it's impressive. i thought the acceleration is going to stand out, and you'll hear this comparison out there

can it beat the chevy volt this is not to be compared to the chevy volt this vehicle is squarely targeted at the 3 series, or and the c-class. those are the vehicles that they're really targeting >> all right, good all right, phil lebeau thank you. we can't wait to see one of those on the road. so andrew, jeff immelt >> yeah. >> ge. >> yeah. >> six bucks in '09. >> yep >> so he quadrupled ge stock price. shouldn't he get an award for greatest ceo in history? >> no. good point good counterpunch. i give you credit for that one that was very clever and smart. i agree. seriously. i agree. >> think about going back and -- >> i agree >> ge is widely -- >> i'm -- >> it's the same thing >> finally agreeing. your joints... or your digestion... so why wouldn't you take something

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welcome back, everybody. home renovation website sweetened is looking to try to bring transparency and technology to the 300 zillion dollar renovation industry by simplifying the process for renovators and contractors joining us is gene brownhill sweetens founder and ceo thanks for being here today. >> thank you for having me >> you think of industries where customers and the contractors really don't trust each other on either side. there's not a whole lot of love to go around how did you get into this business to begin with >> oh, well, i was in architecture school for undergraduate and graduate and i

tried to renovate my own house here in brooklyn and i ended up hiring the wrong general contractor so i thought my goodness, if i can hire the wrong general contractor, anybody can. so, i created sweeten. it's a two-sided marketplace where we actually vet the homeowners and small business owners the same way that we vet the general contractors. >> you know, the way -- the problem with this industry is probably that homeowners get in thinking this is going to cost a lot less the contractors probably think we're ridiculous in how we come up with these expectations how do you fix that? my guess is it's hard to match two people up who walk away as a match made in heaven >> yes so you know it is really challenging. because it's so opaque, right? nobody knows how much a renovation costs and so we really try to share that information whenever possible with our homeowners >> so the homeowners know this up front >> absolutely. and you know, people always think about homeowners don't trust general contractors. but the thing is, general

contractors don't really trust homeowners they don't trust that a homeowner will actually hire them if they give them the real price and the real time line >> that's why it happens >> yeah. >> so you are taking transparency and saying we're going to be realistic from the get-go >> absolutely. >> as a result do people walk away satisfied what kind of ratings do you have how many people have gone through -- >> yeah we've done thousands of renovations at this point. you know, we actually point. we have our homeowners rate them at the end of the process. they know they have to do a great job for our projects because it directly effects their deal flow. it's like your uber ride or any other systems. >> there's other advisers that do this too. what should i tell her, do you have a lot of competition in the space right now? >> it's a huge market. $300 million most of it is small projects

$240 billion of that market are small projects less than 250,000. it's a huge market and certainly there's other folks in the space but there's no one else that is actually curating the general contractors and matching them so that not only do they love our product but they keep winning with us because we distribute the winning and monitor the projects overtime so we're there from the beginning all the way to the end and i don't know any other platform that does that. >> thank you for your time today. we appreatcie it. >> thank you. >> jim cramer is going to join us from the new york stock exchange we're back in a moment

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>> i'm looking at the nasdaq i think you said don't look for a big come back on friday but maybe by monday things are back on track it may happen but maybe it doesn't. >> it looks better today. >> it does we had that odd reversal on thursday and you hear certain gurus have been right and they have gotten negative i think it's case by case. i was doing a lot of work on the transports this morning and they have been the losers but i went

over every one of the conference calls but things aren't as bad as they look automobiles have been bad for the rails. and i'm seeing okay numbers. >> what do you think we'll see on friday? do you feel that gdp can stay at 2.5? do you feel an up shift? >> i wish that autos would come back i do think there's parts of the country that are really strong and southeast is great california is terrific northeast trying to come back. midwest surprisingly not as strong as i would think it is right now. any big earnings numbers this week that will influence things do you think

maybe it's time for health care. >> okay. great. we'll see you in a couple of minutes with squawk on the street we'll be right back. (baby crying)

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>> dow up nearly 20%. >> right to the wire here we go. >> there's no time to battle it out. >> join us tomorrow. >> that's why we have tomorrow. >> please. >> squawk on the street is next. ♪ >> the dow will open with a run at another record. the index inside of 22k as we watch earnings a new white house chief of staff. small gains in europe. oil gets above 50 for the firs