slowly try to go through august and enjoy every day. we know what's coming. "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. >> talking about what we know is coming, death, taxes winter >> winter is coming. >> and back to school. no, not too soon we all want the kids to stay and enjoy. welcome to "squawk box." we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. futures under a slight amount of pressure the nasdaq just went positive. the dow futures down just about 8 points, this comes after the dow closed above 22,000 for the

first time ever. it's down this morning by about 8 points s&p indicated down slightly. in japan, the nikkei closed down by 0.25% the hang seng down by a similar amount the shanghai down by 0.3%. if you look at what's happening in europe, things are mixed. the dax is down by 0.2%. the cac is up by that much the ftse is relatively flat. up by 0.1% check out the dlollar this morning. has been a rough month or so for the dollar dollar is up against the euro this morning 1.1844 is where the euro is trading. dollar/yen at 110.59 crude oil prices, yesterday crude closed close to $50 a barrel 49.59. this morning up 20 cents 49.79. a couple stories we're watching this morning. check out the rally in shares of

tesla. to topping wall street estimates with a narrowly than expected quarterly loss deliveries came in strong. on the earnings call elon musk reassured investors that the company can keep up with demand for the model 3. >> what people should absolute i will have zero concern about, zero, is that tesla will achieve 10,000 unit production week by the end of next year >> we'll talk to a tesla analyst in came minutes. in deal news, invesco reportedly in talks to buy guggenheim partners etf business discussions are in an advanced stage. the etf unit has roughly $30 billion in assets under management invesco manages about 125 billion in etfs. both firms said they don't comment on market rumors. on the earnings agenda

clorox, kellogg and yum brands report results before the opening bell after the close, kraft heinz and viacom weekly jobless claims are out at 8:30 that's followed by the ism services index and factory orders at 10:00 a.m. aetna just posting moments ago, and it's a great big beat for aetna on an adjust the basis. and on a gaap basis. $3.42 versus estimates of 2.35 i have not seen the -- it just happened we don't know where the stock will open. but the high is 157, and it closed at 154. once we get a bid and an ask, don't be surprised the company also boosted its full year 2017 earnings

projecti projection adjusted now -- that's a quarter, i think is that -- i have two different numbers here >> for which one >> 945 to 955. and it was 899 899. so that is quite a bit better for aetna. which, thinking about that, you say aetna, that's the way advertising works. i said, aetna, i'm glad i met you. whoever came up with that, pretty lame, isn't it? madison, you think they paid a lot for that because it rhymes, barely, with aetna? >> if you're an insurer it's tough to come up with aflac! >> that's good >> how about you're in good hands. >> with all state? ♪ state farm >> that guy -- ♪ >> they spend money and they stuck with it. it's the consistency

aflac on its own, if you heard that for year -- >> what do you think is better, aetna, i'm glad i met you -- aetna, i'm glad i met you. it's like oklahoma is ok, the state motto. they did say revenue numbers were down. the decrease was primarily because of lower premiums in the healthcare segment the temporary suspension of the health insurer fee in 2017 the tax rate, effective tax rate was 35%. compared with 41.4% in the second quarter >> bertolini will be on closing bell you never know what he will say. sometimes he says stuff -- he cuts his own compensation and gives everyone a raise, but then says things about obamacare -- he said something about obamacare a couple months ago -- >> because he can't be put in

some box on where he comes from the political spectrum he talks openly about the business and what they can and can't work with. >> now i do have a bid and an ask on this. that's a new high. new all-time high for aetna. for those who say that the one thing the affordable care act did was, you know, for the government takeover of the healthcare industry, the insurers have done pretty darn well almost without exception whether it's united health or aetna. >> though many of them have been pulling back >> it's a long way from government takeover of healthcare it's a big insurer takeover of healthcare >> i don't think that, honestly. >> i know. i know you >> it's not the exchanges where they're really -- >> i know. but they have -- >> that are making money >> those on the left look at

this and it galls them they think that single payer, where you get rid of the profit incentive, they think the administrative costs are less, you don't need that profit incentive, therefore healthcare -- they don't think of it as the private sector is more efficient and there's accountability they think you don't need a profit, so you can spread that out and lower premiums >> this goes back to the tweet storm of mark cuban, if you get rid of the middle man, in the same way that you might argue you want to get rid of pharmacy benefits managers or you want to get rid of middle men. you want to make the system more efficient. you want to get rid of the lawyers, all the h&r block which is sucking a lot of money out of the system to deal with this >> if you listen to each side as far as points go, you would end up -- that's why a lot of

debates, you can take either side >> and we do >> we do >> we do, sometimes we switch. but it's all done with love. >> now we're switching to political news you may have thought that was some today president trump throwing his short behind an immigration bill designed to cut legal immigration. kayla tausche has more on the details on this. >> reporter: good morning. the president publicly backing the raise act, a bill sponsored by senators from arkansas and georgia to reform the country's green card system, replacing a lottery with a merit-based point system that prioritizes english speakers, high skilled workers and those with nuclear family here it faces an uphill battle in congress pushback is already there. it was first released in february, now it has the president's backing. senior adviser to the president, steven miller at the white house press briefing, said the changes which would cut legal

immigration by half in the next ten years were not dramatic. >> talk an every day guy in the street, he or she will say this is the most common sense thing i've seen in my entire life, and it's right down the center of american politics and american and political views. >> he said the bill is also already polling well in key battleground states and the choice to focus on emigration refor immigration reform is not coming at the expense of other efforts. the administration faces yet more pressure to face the cost sharing reductions for obama plan costs an announcement was expected yesterday but didn't come. republican senators and governors pleaded for the payments to be made. last night a coalition of health plans, business groups and medical professionals added their names to the list writing without these funds consumers access to care is jeopardized.

mreem yum premiums will increase dramatically and they will be left with fewer coverage options. we believe it's imperative that the administration fund the cost sharing reduction program. as for the action against china on trade, the president is set to unveil those actions in a speech set for tomorrow. >> as usual, a lot of different things that we'll be following with this. let's go back to immigration you mentioned this is something that will have a tough time in congress from what i've seen maybe 30 senators would support this bill 30 republicans, zero democrats there are two issues, one is changing the system, so that it is based on merit, on people that we think will be able to be most helpful to the economy. the second is cutting immigration drastically from 1 million to 500,000 there are all kinds of economists on both sides of the aisle who say that would be

pretty disastrous when you look at such a tight labor market already. >> especially for the agricultural industry with so much of the employment in that industry, much of which is not legal immigrants working there, various government agencies produced statistics to that end. but the workers to work in these jobs would intevitably disappear if this reform was put into place. one thing that surprised people is that the president said on the campaign trail and sense taking office that he's all for legal immigration. people with the right documents to ender the country legally should do so when he builds the wall he would put a big, beautiful door in the middle of the wall so people who are legally allowed to come to the united states can do so. this seems to go against that. the senators yesterday at the white house were talking about this being a starting point, if you can't reform the system that

you already have in place, then how can you do something even broader than that? you're right, it doesn't have broad support in congress yet, but legislation changes between the time it is introduced and the time is gets voted on. >> all right thank you very much. >> we have to make sure we get the cost sharing stuff for the insurance companies. like aetna, they need some help here don't they, sorkin government has got to do their part here. >> the problem is that you will probably see -- see premium costs go up, 30% and more. >> seems weird that they're saying, geez, we can't do this it's too expensive yet they're beating numbers by a dollar, trading at all-time highs. >> but as they're pulling away -- >> will you look into that for me >> will you look into that. >> i don't write columns in famous newspapers. >> that's the nicest thing you ever said. >> i didn't say it was a good column i just said you write --

>> okay. >> take it and move on >> take it for what it's worth >> i said it was a famous newspaper, not good. >> the dow closing above 22,000 for the first time joining us for that is ed keon portfolio manager from qma and covering the economic angle is brett ryan, senior u.s. economist at deutsche bank tomorrow is the number, you saw the adp number already i have people arguing the labor market is tight, that there's no wage games, people not working as much as they want to work so is it tight or is it not? >> it's getting tighter. the amount of excess slack left is low when you look at the part-time employment for economic reasons, it's close to the previous cycle trough. when the labor market was at its peak in 2006 we should exceed 200,000 jobs

this month in line with the average the thing the market will be focused on is earnings until we see more wage inflation, we expect 0.3, that rounds down to 0.24. nowhere close to 3% in the previous cycles. until you see that, fed officials will say it may be lower than we thought. >> if we're that triight and was don't go up, what is happening is it different this time? is it globalization and everything else? >> i think there are many -- there are a multitude of factors. one of them is demographics. the second one is, i think, you know, some extent globalization, but importantly productivity growth you can't raise wages unless your profits are doing better. unless you are getting better productivity out of the work force. so, to that extent, sometimes in economics it's the chicken and egg argument from the fed perspective they

see productivity growth as one of the main factors weighing on wage growth. >> later, ed, you know -- i know you follow jeremy siegel, he's been steadfastly bullish you've been bullish but maybe not so much domestically as maybe around the world he says 23,000, 24,000 if you get any type of -- any positives on tax reform. does that make sense >> i would love to get pro growth policies, if we could get a lower tax rate but as i read the politics, it looks like there's a big push from republicans and democrats to have revenue-neutral policies which may do us some good if it reforms tacks, b taxes, but byo it won't change corporate profits or -- >> you're not arguing for something that's not revenue neutral, are you >> i would love to have something that's not revenue neutral. >> you >> yes >> you tell me -- you're from massachusetts, you're a kennedy democrat when you say you like pro growth policies, i think you mean growth in government pro growth in government >> no.

no you can be a dedicated capitalist and still a democrat. >> not really. okay so now -- i think andrew is more down the line than you are you want something that's not revenue knut rneutral, my friend absolutely not one of your own -- why, ed come on. >> my job is to make money for clients. >> you think dynamic economic growth is possible if you stimulate the private sector >> i'm skeptical that we can get prolonged 3% plus growth lasting for years and years. >> there you go. >> but i think you can get 3% growth for at least a couple of years. >> would do it without paying for it >> i would do it if we give the right boost and have the right structural changes to improve productivity and the economy -- >> doesn't do anything to spend it on infrastructure and entitlements >> i would be happy to do that, too. >> that makes sense. the classic democrat, if you blow up the deficit, spending

money for transfer payments, it's okay, but not for tax cuts. >> tax cuts and also if we did have infrastructure, i think that would be a great idea >> the question is not, by the way, do you believe in dynamic scoring on a revenue neutral basis. it's how far you believe that the dynamic scoring works. that's the fundabilimental ques. i think most democrats do believe in dynamic scoring, it's just a question of how far you're taking it and what kind of multiple you're mutt r pputtn this stuff >> this new push, they already said, i've seen them, they said they're nottchit you won't get any if it's not rove r reven revenue neutral. i don't see any democrats who will do that can you name any >> this democrat >> you're running? >> we have policies that improve the productivity growth of the economy i think some things that

would do that would be corporate tax reform and sfrinfrastructure >> i'm warming up to you, dude i think i converted you in the green room >> i've always been that way i'm a kennedy democrat he cut taxes back in the '60s. >> he's been dead for 50 -- more than -- >> he lives in my mind >> he was president for two years. my god reagan, nobody else? clinton? >> clinton did a great job, too. >> you're a clinton democrat >> so did reagan >> but i grew up in massachusetts -- >> living in the past. kennedy's grandkids are doing things now any way, right >> says the guy whose play list is -- >> exactly all my music is from the dendkkd era. you're young, right? >> during that time, that was the first time that the fed did operation twist. >> no, he really was not like

your present day democrat. he wasn't. tax cuts you know, deregulation i don't know the party lost its way somehow thank you both coming up, when we return, shares of tesla surging on better than expected quarterly numbers. we will dig through that report and show you what elon musk said about production hell. that's when "squawk" returns ♪ because, when you really, really want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready,

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one that keeps you connected to what matters most. welcome back to "squawk box. tesla reporting a narrower than expected second quarter loss boosted by revenue gains the model 3 launched on friday and shares are up more than 60% year-to-date here's elon musk on the conference call talking about the challenges of ramping up model 3 production to meet demand >> when i said manufacturing hell and supply chain hell on friday, i meant it you know, but we know this we signed up for it, we're not blaming hell because we bought the ticket >> joining us right now is colin

rush, managing dirctor and senior research analyst at oppenheimer. if you buy a ticket to hell, you can't blame hell you think it will be hell or he's just trying to -- >> he enjoys a little attention. i think he wanted to make it dramatic and entertaining last night. he did he rambled on a bit we learned they still have the same targets they produced cars on schedule and they have a lot of work in front of them. >> he keeps talking about the production hell issue. last week he was talking about the s-curve in the production issue. do you think they'll be able to make the numbers i'm not talking about just next quarter or the end of this year, the real ramp over really the next 12, 18 months >> they haven't hit any production targets they sit. it's a slippery slope. what they have done is impressive despite the very aggressive targets they put out. our expectation is they'll be

slow as long as they're making progress the stock continues to move higher. >> okay. what do you think this stock is worth at this point? >> we're on the sidelines from a valuation standpoint, we're trying to look at actual cash flow on the platform over the next seven years we've gone out seven years in the model. what's at stake for investors is the future of transportation will autonomous vehicles come to market and will tesla be the disruptor? they're signaling they're in front of other carmakers on that front. that's what's at stake we got almost no information on that front last time >> how far ahead are they? we had mike jackson on yesterday from autonation. we asked the same question he seemed to indicate when it comes to electric vehicle, not autonomy yet, battery powered vehicles, that we're at a change over the next several years, and that -- but that he thinks the other manufacturers are just marginally behind.

meaning that the distinction is not going to be as great as we think. do you agree >> i would agree >> you do. >> there's been a huge amount of technology investment on behalf of major oems in europe and the u.s. along with tesla. it's a secret time for that technology people are doing testing, not sharing data the actual performance of these vehicles is uncertain now, except the folks that see those inside >> to put in context the current valuation of tesla, what kind of market share do they have to have three years from now for this to make sense >> for this to make sense you have to start thinking about numbers in the high single di t digi digits whether they make progress with the semi truck and the commercial vehicles -- >> that would be comparable to what -- what auto manufacturer would that be comparable to. >> looking at names like bmw, ford, similar market caps to where tesla is now they have a lot of ground to

make up in terms of number of cars, if they're disrupting the market and capturing a percentage of market growth which they've done in the luxury vehicle market, it starts to make sense but very hard to do the numbers now. >> colin rush, thank you >> thank you when we come back, shares of choice hotels under pressure the budget lodging company's second quarter earnings beat the street but third quarter guidance was lower than expected the incoming ceo will join us after the break to talk about it. right now, a look at yesterday's s&p 500 winners and losers

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box" on cnbc look at u.s. equity futures at this hour after a big day yesterday. the dow looks to open off about 12 points. nasdaq down marginally the s&p 500 off by 3 points. some stocks to watch, iac interactive second quarter profit and revenue topping analysts forecasts aic is up about 60% this year. shares of cheesecake factory are sliding. the chain's second quarter

earnings and revenue missed estimates. the company broke a string of 29 quarters of same-store sales growth and take two interactive swung to a first quarter profit. revenue rose 34% driven by increased spending on virtual goods and downloadable add-on items for older games alibaba has struck an agreement with french luxury goodsmaker caring to prevent counterfeit goods being sold on alibaba's platform the two companies will create a joint task force to fight counterfeiting and as part of the agreement caring is agreeing to dismess what it had going, that was an intellectual lawsuit filed against alibaba and its ali pay unit in the u.s. there's a new ceo checking in at choice hotels. joining us now for his first m

television interview since that announcement is patrick pacious. thanks for being here today. >> thank you great to be here >> earnings came out yesterday looking through the earnings report, you guys had strong things that you came in with, earnings for the second quarter better than expected guidance for the third quarter only about a penny below where the street was expecting guidance for the full-year, the range within the realm of where the street was the stock was down about 4% in the after hours. what do you think that reaction is due to? >> i think generally there's a softening in the industry. the good news for choice hotels, we continue to beat branded competitors in the mid scale and economy segment. and also the great news for us is the development environment which is new hotels entering the pipeline and that we're opening was strong for the first half of the year we had the strongest first half of the year since 2009 we hoopened 162 hotels, in the

second quarter we signed up another 176 new hotel contracts. many of those new construction hotels which will improve the product mix. >> why is rev par softening? >> i think there's some calendar shifts that occurred in the second quarter that created some of that noise. easter shifted between the two quarters, that tends to have an impact on the calendar and i think when we entered the year we thought consumer confidence would be higher than it has been. it's still strong, we love where the employment numbers, gas prices, those things that drive travel, they continue to be great long-term trends what is causing any wobbliness in consumer confidence it still looks strong. >> it's very strong. if you look at the 30-year average on rev par growth, it's about 3% so we're not that off of that historical number. >> where are bookings at this point? >> for us our booking window is fairly narrow. because that mid scale traveler

doesn't travel -- plan travel three, six months out. bookings continued to be strong. we are seeing a bit of shift to some convention business moving from the third quarter to the fourth quarter again, calendar shifts, some jewish holiday mix is moving from one quarter to another. those types of things do tend to move the numbers around between the two quarters >> you think the street is overreacting to what they're seeing with some of these numbers not being what they thought. >> i think when you look at our financial performance with the development pipeline and the great news in the second quarter was our ability to charge more so the effective royalty rate which is what franchisees pay to be in the system is up significantly over the last six months that's driving better financial performance for us as a company. >> why why are you able to charge more to the franchisees >> we've been investing a lot in the value proposition. the travel industry is going through digital disruption we put a lot of key tools in place to help owners price

optimize and manage inventory better so owners are paying more and wanting to stay in the system. when we re-license a hotel, they're paying more to stay in the system those joining us, we've been able to improve the rack rate that we charge for new owe teew. >> how do you do that? making sure they're advertised online if you have rooms available last-minute type of thing? >> that's one way. we introduced a tool late last year where we took a process that takes the average hotel about three hours every day to figure out what competitors are pricing hotels the next 60 days out. we've used a tool that takes historical data, runs it through an algorithm and takes a several hour ro social security do hour process down to five minutes. so we're making the day more efficient. >> where is joyce >> steve and i have been working together the last ten years. as a company, choice has had two

ceos in the last 20 years. our transition process has been deliberate and long-term the board, steve and myself have been working on this the last three years. >> when did you become -- >> he hasn't >> not yet >> not official. it's official he's -- >> that he's going to be >> they got you doing the media. he loved doing media >> of course he did the 1st of january is when the transition will officially -- >> i used to -- see, andrew needs, like, ritz carlton on here then he sucks up to them i suck up to joyce, you get free breakfast at the comfort inns. >> and free wifi >> and free parking. >> free waffles, and a waffle-like thing where you pour -- make your own waffles. >> absolutely. >> lou do you mahow do you make type people don't show up in the lobby and make their own fr breakfast. >> >> don't look at me

>> the hotels are fairly confident. >> you did "undercover boss. >> steve did >> will you do that, too >> is "undercover boss" still going? >> i don't know i'm a netflix and chill person. >> netflix and chill wow. >> you got it, baby. what do you see between the comfort and quality and sleep inns versus the higher upscale brands like cambria? is there a difference between where the consumers are? >> what we're seeing is particularly demographically what's happening, you have all these baby boomers retiring. we expect the long-term trends for leisure travel to be strong. when those boomers retire, they're no longer traveling on the company's dime, they'll travel to a mid stale hotel. the key driver is mid scale. the hotel developers want to build upsalcale, and cambria isa

huge business for us we just opened one at l.a.x. we have six, seven additional hotels in california already in the pipeline so, we're confident about that as a real growth opportunity for us as our hotel company, we don't have six, seven brands in the upscale segment, it's a great white space for us to exploit. >> andrew, have you -- do you take the fam out on the road trip where you would stop at the comfort inn? ch . >> absolutely. >> you don't always fly private somewhere. take the kids, go across -- it's so much fun. you stop in the comfort -- swimming pools, you go swimming. see the country. >> what's between new york and california is there something there >> he did vacation in pennsylvania >> i was just in pennsylvania. i was in new jersey. >> you were in bucks county where you have 30 acres.

go where you stay in a comfort inn y inn. you might vote for trum np p in2 if you do this >> let's ask him what do you think about the trump hotel companies competing with you at the lower price point with this american brands brand? >> choice hotels is a dominant player in mid scale. >> you welcome competition >> we are about 25% of the total supply and that continues to grow our comfort inn, sleep inn and quality inn brands are seeing significant growth in rev par and units. when someone comes in and enters the space, that's a high mountain for them to climb for that particular brand, they're priay arimarily a luxury brand. going from luxe wi ury to mid se or economy is a jump >> would you advise them of that. >> when i look at them, they don't have the mid scale

consumer like we did >> they are look to pick off properties will they buy properties from you? >> they don't buy, i think they'll franchise. >> i thought there was some underperforming hotels in the midwest that they were going to try to at first go after, some days inns, no? >> we'll see we monitor anybody trying to enter our pace we feel confident with what we have. >> you don't think there's a special competitor you should be paying extra attention to. >> we never discount anybody's entry into the space >> would you -- you had 11 kids in your family huh? >> yeah. >> you were number 10? so you are used to living in hotels ron barron loves you i'm wondering where you got that information. your mother was a first female at georgetown medical school >> that's right. >> wow amazing. worked your way through duke

you gave out parking tickets i got everything on you here you in the navy? >> i was, six years. >> wow >> pat, thank you for joining us today. come back again soon >> appreciate it >> give money to ron barron. he knows more about the company he invests in. it's scary coming up, the search for the next uber ceo. the candidates still in the running and the latest word from uber's all-hands meeting this week. and burger wars. the ceo of fat burger is here bringing us lots of burgers to try. >> i don't think so. wishful thinking here. >> i'm sure he wouldn't come empty handed here to talk competition and casual dining. stay tuned i likehola ccote shakes, too you're watching "squawk box" on cnbc

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welcome back to "squawk box. the ginger snaps i forget the name of this band do you know them >> i do. >> time for the executive edge earlier this week uber's head of hr told employees that the company would get a new ceo

within six weeks joining us to talk about the executive search process, deidre bosa, going to be a female >> doesn't look like it. >> that was andrew's prediction, wasn't it? i thought they were going to try. >> you said no way immelt. out of the running >> no, he's not out of the running. as far as i hear if that happe >> if that happens -- >> i would be very surprised >> i'll throw it back at you so hard >> i know. >> i'm sure they would like it to ab fbe a female, and meg whin put an end to rumors this is not your typical executive search this is filled with board room drama, candidates pulling themselves out of the race, like meg whitman, and meddling former ousted ceo that reportedly wants back in. not to mention all the leaks

the recruitment firm has been tasked with finding a new ceo for the firm but it comes down to uber's board. aryianna huffington is seen loyl to kalanick, but others like matt kohler wanted to go on with process and put in a new ceo because uber needs one quick throughout the year of turmoil rivals have been raising money and increasing own market shares lyft closed a 6$600 million funding round in april china's didi raised 5$500 billions this year, and grab in southeast asia is raising 2$2.5 billion. on top of that, uber is still facing regulatory challenges and battling alphabet's waymo in court over self-driving technology the question is who is willing to take all this on, step into a position that kalanick himself has not been able to step away from cheryl sandberg is name

mentioned. jeff immelt, he is still in the running, as you say, there's some speculation about whether he could actually do this job. he's not in the same breed as a meg whitman who has a lot of experience >> sheryl sandberg, i can't imagine she would leave facebook for this >> no. reports suggest she's not interested in doing so a recent report said it is down to all males this six-week timeline, they desperately need a new ceo. will they get the one they should have? >> the other question, i'm leaning from what i know now much more towards where becky i think stands these days, which is that whoever is going to be in this role will ultimately have to work with travis kalanick >> right >> so there's certain types of ceos that you could see doing this job but they would come in and say they need to not clean house but they need to run it in

their own image, if you will that's a different type of person than somebody who might want to be a partner, if you will >> absolutely. so you would hope that they would work with kalanick and not against him, right >> that's not going to work. >> swisher saying he wants to steve jobs it and come back. there's a few steps in between that he may be missing if you're fighting that kind of force within a company, such a big company, who wants that? >> then again travis would have to agree to work with somebody, too. >> then we get into the softbank dynamic, if masa came in it's a very -- we have not heard the end of it. i think there's going to be more drama to come. >> thank you for that. coming up, the ceo of casual dining restaurant fat burger will join us next. we'll talk burgewar rs, minimum wage and more.

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welcome back to "squawk box" this morning the casual dining space has been struggling for some time and has been called the weakest link in the restaurant industry, but fatburger is betting big on its future and is here to announce something right here on "squawk box" and that it's planning an initial public offering.

andy wiederhorn is here and we welcome him. you're going to pursue an ipo. >> we are. we're testing the waters right now. it hasn't been qualified yet by the s.e.c. but it will soon. >> what does it mean to be testing the waters >> so you're just exploring everyone's interest as investors and talking about the brand and what the offering would look like but you can't take orders. >> and when you think about an ipo, why now >> well, for us we've created a new holding company called fat brands, which is a global franchising company. and we have management teams and platforms all over the world and restaurants in 32 countries around the world so for us, as we acquire more franchise brands, we can distribute them to our franchisees everywhere an ipo is the perfect way to access capital to acquire brands. >> right now you have two major brands. >> we have two today and are in the middle of the acquisition of another brand. we will acquire one or two a year. >> and all in the same sort of

fast food -- what category -- >> fast casual you might wander to casual or wander to qsr but consumers love american brands. they certainly love burgers, shakes and fries they love chicken, pizza, steak, coffee, dessert. we're not going to pitch korean barbecue all over the world because it doesn't work everywhere core brands like i just mentioned really do, so that's what we'll look for. >> and what is the distinctive quality that you have to manage these brands better than the next guy >> we're looking first for fresh, tasty, authentic looking brands our symbol will be fat you want to make sure you can manage it properly so we have management platforms in place in asia, in place in the middle east, in place in europe as we bring a new brand in, we already have a team there. it's really expensive for brands to expand internationally because you have to set up a whole team. >> how much of this is a technology story in terms of the

back-end technology to run all this >> it's not really for -- it's about the food first it's always about the food first. >> in terms of delivery and everything else. >> it's really driven u.s. sales. we're seeing double-digit comps in u.s. markets with delivery. and the apps are just -- the apps are so much better for the operators than making their own apps one by one. when you have a delivery app, a consumer can go one place and choose everything. for an operator, it's marginal revenue. >> when we introduced the segment, we said that fast casual has actually struggled largely. >> absolutely. >> what's going on in the business >> for us delivery has just killed it. we've made just huge -- >> you're saying killed it in good way. >> very good day, double-digit increases. there was worry that it would displace workers but it really hasn't it's just added to our numbers. >> can we talk about men wage for a second >> you best. >> what's that going to do to your business? >> it's going to raise prices. the american voter must have known what they were getting

into what they supported it. everyone wants their employees to make more money in a minimum wage environment a restaurant makes 10% or 15% bottom line. 30% of that is wage cost if you increase that wage cost to 45%, that's the whole margin so you'll have to have a price increase as minimum wage continues to creep. >> what are you paying right now on average >> we pay between $11.50 and $13.50 an hour. >> people talk about technology replacing some of these jobs can you do that or not really? >> it's really displacing -- we have less people taking orders but more people in the kitchen making burgers. >> thank you for coming in. >> thanks for having me. >> thanks for sharing the news with us. when we come back, the dow crossing the 22,000 mark for the first time ever. we'll talk market strategy after the break. plus we are watching currencies the euro hitting its highest level against the dollar since january of 2015. "squawk box" will be right back.

good morning, everybody. the rally rolls on the dow tops 22,000 as we await another round of earnings reports and tomorrow's key jobs data what you need to know ahead of today's trading session. we have lawmakers battling it out over health care and tax reform should president trump switch gears and focus on rebuilding america? the ceo of infrastructure consulting firm will join us with a look at shovel-ready projects. shares of tesla surging. the electric car maker topping expectations in its latest quarter. what ceo elon musk said about production hell and a pickup in cancellations of the model 3 the second hour of "squawk box" begins right now

>> announcer: live from the beating heart of business, new york city, this is "squawk box." good morning and welcome to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square take a quick look at the futures at this hour the dow will open off just slightly about five points, s&p 500 up about a point and a half. the nasdaq on the flip side looks like it would open up higher we'll call it 4.5 points higher right now. a couple of things making headlines. tesla shares are rising in the premarket trading. the electric car maker reported a smaller than expected loss while revenue beat forecast and also said it had more than 1800 daily reservations for its new model 3. however, they also saw negative cash flow of $1.1 billion during the quarter. alibaba has stuck a new agreement with the parent company of luxury brands like

gucci and st. lauren the two are forming a joint task force to fight counterfeit goods. we'll see whether this changes the dynamic in terms of how brands think about alibaba the counterfeit issue a cloud that has hung over them for quite some time. several key economic reports are on today's calendar. the labor department out with its weekly jobless claims in about 90 minutes and then at 10:00 we'll get the institute for supply management's nonmanufacturing index which is a measurement of the services economy and tomorrow is jobs friday. >> and we'll be talking about this in a second with an analyst about a quick stock to watch health insurer aetna reporting earnings of $3.42 a share, well above estimates. over a dollar above estimates of $2.35. that's an all-time high. we'll hear about the results and

talk health insurance in just a bit. and later on cnbc today, aetna's ceo will be on "closing bell" today at 3:00 p.m. in a cnbc exclusive interview. it took 154 days for the dow jones industrial average to rise from 21,000 to 22,000. not bad, but that is still more than four times as long for the jump from 20,000 to 21,000 joining us more is john hurtle also bob michelle who is hope of global fixed income at jpmorgan asset fixed management gentlemen, welcome to both of you. it's good to see you why don't we start talking about when you hit round markets, you have retail investors who start to pay attention the front page of "usa today" says is it too late to invest? have we missed this big bull run? what are you telling people that are seeing 22,000 and thinking

it's time to tune in again. >> first of all, the fact that they're asking that question means they haven't capitulated yet. i don't think it's too late to invest we want to buy carefully and buying on pull-backs. >> would you agree with that looking at where your options are for making money right now. >> i think we're in the later innings. i think right now we're seeing what's an ideal environment. you have economic performance, which has been remarkably stable you have central banks, which are being overly conservative in my view in how they're going to normalize the balance sheet. it's created this ultra low vol environment which i think is intoxicating and with all the qe money that's still being printed overseas and exported into our market, that's creating asset price inflation. >> why do you think it's the later innings? >> because the central banks are telling us that. they're telling us that this time they're serious about normalizing the balance sheet.

we expect to hear from the fed in september that they're going to start running down their balance sheet. we expect at the start of next year that the ecb will end qe and at periods of time during this past year the bank of japan has begun to taper as well so this time next year we're not going to have the $150 billion a month in new cash being printed that goes into bonds and spills into other asset classes. >> you're talking about a big, fat balance sheet, $4.5 trillion that's going to take a long time to run down and we haven't even talked about raising rates to get back to where -- >> we talked about four years. >> is normal 3%, is normal 5% to 6% what's normal? >> normal to me is some sort of real inflation rate. and if you look at personal consumption expend tours, we're at 1, 1.25%. how about we get to 1.5% first

and that's a zero real yield historically the real fed fund rate has been 2% that means you can go up to 3% and you're just adding normal range. i don't know if we're going to get there, but how about just doubling personal consumption expenditures and saying 3% into a bad stopping point >> john, when we talk about these big numbers, the indexes, it can be misleading for the dow it was two stocks, boeing and apple when you look at other areas, like the transports, they had a lousy month of july. what's that telling you? >> it tells you this is perhaps a stock picker's market and simple market cap index probably isn't the way to go. >> i walked into that. >> so this is -- indexing and active is a continuum, not a light switch, and you need to dial it up and down based on circumstances. bob mentioned europe and the fixed income markets but we would say, for example, bob mentioned we might be in later innings. europe is cheaper still so

europe is moving well. that's the key story today the u.s. we don't believe is at the end of the rally but it is slowing down its valuation tells us a 4% real return going forward europe is 6, emerging markets is 8. as chief investment officers we're really looking across all asset classes saying where are the returns today. the thing that's interesting about europe is not only is it cheaper, but thecycle is much me so europe had 7.5% sales, 26% increase in earnings so it's a much more cyclical economy. so when you're in that cycle, the power of that earnings cycle, and we really care about cash flows when we look at the choices around the world to assemble complete solutions, we're comparing real yields, real cash flows, and that's compelling. >> but that's not even a clean story because the euro is up 12% this year. >> 13% this year. >> see, it's still going up. that's a big headwind for

corporate earnings and that's another challenge for the ecb to have to deal with. >> so we would still rank order, stocks over bonds in the united states, non-u.s. over u.s., emerging markets over developed markets. so that three is really a 4% real return, 6 and 8 so if we look at cash flows, that's where the valuation is today and the momentum is now looking better overseas than in the united states. >> what stock do you like if this is a stock picker's market? >> overseas, for example, we like the pharmaceuticals, glaxo, novartis, roche, astrazeneca so straightforward, we like the indexes, we like those names better. >> bob, when you're somebody who's representing the bond markets and trying to look for opportunities there, what do you tell people at this point? because anybody who's been pushing bonds has gotten overwhelmed by what we've seen with the gains in equities. >> well, we're getting

overwhelmed in bonds too every time one of the member on my team wants to take profits, you raise some cash. the next universe of new cash is printed by the central banks next month, it comes to you and you have to invest that. so there's a lot of evaluation fatigue across the markets i think you keep it simple i think corporate credit still looks pretty good. i don't much like the interest rate level, but i like the credit spread level, so we could hedge out some of the interest rates. that tells you we're going to be a little bit shorter on the duration side and i think bank capital notes still look pretty good in this highly regulated environment. banks raising capital are basically investing it in riskless assets. >> all right, bob, john, thank you guys both for being here. >> thank you. coming up, an outlook for health insurers with analyst ana gupte. at 7:30, an update on shovel-ready jobs in america the ceo of cgla will join us

with a list of projects and whether or not they're going to get done under the trump administration and then tesla surging on an earnings beat. the numbers and what elon musk said about the conference call -- or on the conference call about the model 3 that's straight ahead. and a quick shoutout, happy birthday metallica singer james hatfield. >> i think he's 54 today. >> turning the page on 53. so that's a request to play a little bit of that turning page. you're watching "squawk box" on cnbc ♪ we got a yes! what does that mean for purchasing? purchase. let's do this. got it. book the flights! hai! si! si! ya! ya! ya! what does that mean for us? we can get stuff. what's it mean for shipping? ship the goods. you're a go! you got the green light. that means go! oh, yeah. start saying yes to your company's best ideas. we're gonna hit our launch date! (scream) thank you! goodbye!

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it all adds up to our most reliable network ever. one that keeps you connected to what matters most. welcome back to "squawk box. take a look at the futures right now. we are looking -- well, i don't know the dow looks like it's going to open down a little bit, maybe seven points right now s&p 500 off two points, the nasdaq looking up about three points higher. i want to check in on shares of yum brands the parent company of kfc, taco bell and pizza hut had a quarterly profit of 68 cents per share. the revenue also came in above forecasts. >> check out the shares of aetna. the earnings the company posted on an adjusted basis, $3.42 a share. the analyst estimates were $2.35. revenue was also above forecasts and then the outlook was also guided higher. joining us now for what's working in the health care

sector, ana gupte, senior analyst. aetna is not one of your top three, like united health, humana and anthem. >> yes. >> but i think that aetna's earnings were reflective of what companies that are well positioned are able to do. is that fair to say? >> that's fair to say. all of the five companies that reported so far have had massive beats and raises we have cigna tomorrow aetna's was particularly strong. there is a piece of it that's one time they raised numbers by about 60 cents, which reflects continuing operations utilization is at an all-time low. i no longer get pushback from investors about the cyclical rebound of medical trend it's not just because of high deductible plans it looks like value-based care, primary care docs that are contracting with these insurance companies on a risk basis, it's

all driving down the consumption of services. >> why >> why they are going at risk so if they can reduce the inpatient hospital admissions or even move a patient from an outpatient surgery center into an ambulatory surgery center -- >> do the doctors get a better -- >> a better piece of the action. >> do people who are buying these even realize that, that doctors are beingin sent i'vized not to put you into the hospital or not to have some of these issues >> i don't know that they know that but seniors usually have a physician that's assigned to them. >> i agree it's not a good idea to incentivize doctors to keep you in the hospital or do any of these things, but to incentivize them to keep you out >> it's suppose to be with disease management, keeping them healthier, improving quality and outcome. >> it's a big trending and good trend. like dialysis centers, you can

either go in the basement of a hospital. >> which is why these dialysis treatment centers have been doing so well. >> or surgical centers and it's -- you know, hospitals, i don't know why they don't -- you don't think of them as private sector so it's anything goes no accountability, no one watches the ps and qs. >> the last couple of times we've seen you, you have been bullish -- >> yes. >> -- that somehow the aca was going to be repealed and replaced with something. >> yes, yes. >> you've come on and told us that was going to happen each time. >> yeah, yeah. >> and thus far that has not happened. >> right. >> what has that -- why do you think you were wrong when you look back at that? >> yeah. >> and how has that changed your investment outlook >> well, for the five diversified guys, as i've said to you before, it's mainly about tax policy but fortunately neither the street nor the companies have built that into their estimates for next year or their pricing. >> this is what we forget and that's where i wanted to go with

this that employer benefit health care is the lion's share of what happens to all these companies. >> and military. >> and military. what percentage are the on exchanges? what percentage of insured people are on these obamacare exchanges, do you know >> it's 10 million people. we have 160 million in the employer market, 55 million seniors. >> and it was supposed to be a lot more except they're all on medicaid, so if you want to delve into medicaid providers -- >> no, but i want to go back to -- i want to go back to this because every time you've come on in all fairness, you've been -- with apologies, you've been wrong each time. >> they'll come back in september. >> andrew, who knew that john mccain was going to be so mad about trump's comments about i like people that aren't captured that he would because he hates trump -- >> i think there were a large number of people who did not

believe that this was actually going to happen. >> there was one guy, andrew it was one guy they got all the way to the finish line except for one guy and who could have -- >> this is a binary outcome. it's a binary outcome. trump is not a deal maker. >> but the next issue is are they going to fund -- >> fund the subsidies. >> the subsidies and if they don't, if they choose not to, what does that mean for the insurers? this has to be decided in the next month when they're figuring out what the premiums are going to be for next year. >> you have three insurers that have exposure. anthem just walked away from california, which is a big deal. they didn't even wait for a decision on the csrs and california is kindof your, quote unquote, model exchange that's been working. molina reported they're in the middle of a massive ceo transition i think they should exit they're having so much trouble and it's hurting their balance sheet pretty much at this point.

centene is probably the only one that's committed. >> do you have an idea how we get medicaid under control what is forecast for the growth in medicaid over the next ten years if we do absolutely nothing? that's not what it was intended for. unfortunately, you know, all politics are local and every governor, you just heard mccain actually, he had other reasons, i was kind of just making a point. but he said in arizona there are a lot of people, and the governor of arizona told him, look, this is the amendments we need or else people in arizona are going to be hurt so all politics are local. how do you ever get medicaid under control when each governor thinks he has an obligation to his constituents to stay on the federal government gravy train basically? >> yes, yes, it's a double-digit growth increase right in medicaid it's already at 535 billion and growing. >> she's in the middle of answering this so how does that -- how do we

get that under control and will we we probably won't. >> well, without repeal and replace, it's a runaway entitlement at this point. i mean the state budgets, they fund roughly 45% of everything that's not obamacare, so it's not a complete freebie if they start getting into budget constraints, they're going to have to ratchet down a little. >> trump could do something with executive orders >> there are waiver processes that are in play right now there's a lot more that can change but if there were repeal, i think it's a little underappreciated that even if repeal had gone through that the medicaid program, there was flexibility on the executive order side. >> can you help explain, joe had a good question that he asked me to check out and i'm going to ask you to check it out. how can someone look at aetna and how well they're doing and look at what is supposed to be the disaster that is obamacare,

which is supposed to be hurting everybody. explain that >> no, the parts of the business that these people -- see, that's the thing. aetna is totally hitting the cover off the ball but they're not going to stay in business, in businesses where they're losing you would think, wow, they're making a lot of money here, they can afford to subsidize the exchanges here but they don't think that way they think, look, this business we have in this state is killing us so we're out. so i see -- they ought to say, look, our profits are so great, we can afford to help the exchanges here, but they're not -- that's not the way for-profit companies work. >> they're publicly traded companies. shareholders are not happy. >> they're not the red cross i think they should be able to look at the stock, look at what shareholders are enjoying. maybe they should be subsidizing something. that's just not in their corporate charter and shareholders would say what the hell are they doing. which is the flaw of the aca

trump will think these payments. thune wants him to. >> a lot of pushback. >> if the house is burning, you've got to put the fire out. >> although, there's still a legal question even if he decides to go ahead with it, the legal decision could come down. >> congress would eventually step in. >> these will continue, will they not >> i think they do it month to month, maybe stretches it out until the end of september. >> how do you have a business plan, if you're an insurer who's trying to figure out what you're going to be charging for next year, how can you do that if it's month to month. >> the uncertainty is just crushing if they wanted to, they could all come back in 2019, so why even stay for '18 with all this overhang, right? >> sounds like a lot more turmoil. >> maybe, andrew, maybe if -- this is you speaking maybe if they're allowed to operate in all these very lucrative markets, maybe part of being able to do that and get clearance to do that should be that they got to operate in some of these other markets where they don't do as well. >> i think the point and you

were making it, maybe it was articulated better, a twitter follower of ours says all insurance companies -- they sent it to you too. >> i see it. >> beat on profit, yet we should fund subsidies. >> the taxpayer. that they should be doing it. >> but you think that we should be funding it, the taxpayer. >> i think we've got to figure out -- there's got to be an answer to this. >> there isn't i don't know ana had an answer, but you're giving her all this grief for being wrong about whether it happened or not. i mean the best laid plans for seven years they were going to do it and then they finally are in charge and it's like they're all feckless and scared. scared of the consequences it's unbelievable, it is i mean they may pay dearly in 2018 did you see some of the state races? democrats are winning all over the place right now in some of the state races. now there's a seven-point spread in which party do you want to run things in favor of democrats. a month ago it was even. now it's a seven-point spread so this is coming home to roost it's good news for you.

>> wow. >> it's coming home to roost. >> ana, thank you for coming in. >> he's saying all the things i would normally say. when we come back, while lawmakers battle it out over taxes and health care, is now the time to move on to infrastructure projects? we'll get a list of shovel-ready projects that the president could be looking at. at 7:45 this morning the glass door local pay report is out. l lkage growth and where people are getting paid in just a bit. "squawk box" will be right back. so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver.

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coming up when we return, the ceo of cgla on infrastructure spending and what jobs can be taken on right now he'll join us right after the break. and then elon musk making pretty interesting comments about the model 3. we'll get an update and show you where the stock is trading this morning. as we head to a break, take a look at u.s. equity futures this morning. the dow looks like it will open off, nasdaq up and the s&p 500 marginally down. back in a moment

good morning, everybody, and welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning,

opposite fortunes for two drug makers the teva pharmaceuticals earning $1.02. that was four cents below what the street was expecting you can see that stock is down by 9%. but regeneron beat estimates by a full dollar. its results were boosted by strong sales of its flagship eye drug and that stock is up by 3.8%. the bank of england has left its key interest rates unchanged. the bank also trimming its growth forecast for this year and next year citing the impact of the impending brexit. wyndham worldwide is splitting into two separate companies. one of those companies will involve the hotel business the other will be running the time-sharing unit. that's similar to moves made by competitors like marriott and hilton recently. the company expects the split to be completed during the first half of 2018 the stock is up by 6.7%.

>> okay. let's talk now and get all the answers here the white house says that overhauling the nation's infrastructure is still a priority for president trump what does that mean, still a priority why, what happened but if negotiations on tax reform, the budget and the debt ceiling eat up time, it could be while before we see movement on what our next guest says it is a winning issue. joining us now, norm anderson, president and ceo of cgla infrastructure, it's like a consulting and research firm for infrastructure you know all about this. you've got republicans and democrats both saying that they're behind this, and yet there seems to be difficulty getting out of the gate or getting off the blocks or however you want to say it who really is for it and who really isn't or are they just incompetent on both sides is it inertia or what's the problem? >> you get into all issues, how much trouble can you get in. look, i think it's an issue,

andrew and i were just talking about this, where we can't figure out what we're going to get for all the investment we're talking about making so if you look at -- there's three projects on my mind right now. the kansas city airport, a billion dollar project four companies just bid on yesterday. then you've got wind farms all over the place aap just made a $4.5 billion commitment to a wind farm in oklahoma you've got the gateway project it's $28 billion and that's a -- >> gateway is between new york and new jersey. >> new york and new jersey that's a katrina-like issue. if you sit around and continue to not do it, then you're going to run into a big problem. if you think about what i just said, i just talked about airports, i just talked about energy and i just talked about transportation three different constituencies in washington. nobody can figure out how to really talk about infrastructure as a thing that produces the kind of value that you guys were talking about earlier, 3% growth. >> we'd like it to produce that type of value, but then you

worry about things like the big dig, you worry about -- you worry about if it's not a public-private partnership, you worry about boondoggles and money being spent on things and taxpayer dollars wasted. i guess that's the republican side of worry. but how much can be really done public-private not everything can be a toll road where you get paid back you need to do it -- how do you do private investment if you can't have a revenue h-generati project? >> we've identified seven different ways to do that. one of the things australians did was asset recycling. you sell some of the federal government assets. we have about $9 trillion in federal government assets that you could sell and lead those into subsidies for water project. we pay for water we pay almost the cheapest rates in the world, huge problems. it would be fantastic if we could modernize our water system by pump priming it with sales of

federal government assets that we'd need to do. there's another thing that's really interesting on the technology side, performance contracting. go into mta, go into the transit authorities and figure out how to change out all that stuff the private sector does that on their own dime the efficiency gains because of the technology, you split those with the public sector guys. so we think you can actually double the level of infrastructure investment in the country by not doing a lot in terms of increased public spending we think what you need to do, obviously, is increase the ability of the private sector to get done what it needs to get done and there's a leadership issue going back to your original question. who favors it? hard to figure out who really favors infrastructure in the white house. it may be the new chief of staff, right because the president talks about it all the time and then the next day he talks about something else but you need a team of people to push this stuff through. >> is it just an ordering issue, that he wanted to do health care, then he wants to do taxes,

then he wants to do infrastructure >> i think it's absolutely an ordering issue if you look at this stuff, it needs to go through congress at some level the congress can't -- they don't have any time to do all the things that people wanted to do. >> if you ask a democrat what they think infrastructure is and ask a republican what infrastructure is, they both agree we need more of it but disagree on what it is i've never had people or both sides of the aisle saying i think these are great projects and let's fund it this way. >> i ran into senator lieberman and he said why don't we sit you down with my guys in the house and figure out how to bang heads together and make this thing happen i think that that's the kind of thing you need to do, but it needs to be a priority it needs to be the priority, not we'll do it after health care and after tax reform you know, we talk about tax reform as if there's a chance that that's -- there's no chance that that's going to happen this year in washington so why don't we pick an issue that we can win on and bring people together on and it's a positive and constructive issue. >> i'm a member of the media so i'm going to represent the left

here so if we go from a million people coming in the country to 500,000 people coming in the country through immigration, are you not going to have enough people to do the infrastructure? >> you know -- >> can you believe it? is that really a question? that's purely from -- i would have given it to you to ask that question, andrew. >> i'm glad that you asked it then. >> so really if we don't have that 500,000 every year, we're not going to have any construction workers >> yeah, that's not the issue at all, is it, right? >> i don't know. these are the kind of things that people wanting to ask. >> but that's not -- our issue is how do you figure out how to build -- you guys were talking about this earlier, build the infrastructure of the 21st century, right so we've got old infrastructure, which we tend to default into thinking about, but what's the infrastructure of the future what's the new infrastructure that we need to have those are all highly educated jobs those are software engineers those are sensor jobs, driverless vehicle jobs and

figuring out how to build new companies around those ideas. >> so are you optimistic that the inertia is manageable? i'm not. do you think we go anywhere? >> in terms of >> infrastructure. in terms of -- because it does -- there are jobs, high-paying jobs that are created. you have to have a long view, though the gateway, you have to think, wow, 30 years from now there won't be as much traffic trying to get to new york from new jersey but that doesn't help you when you're trying to manage quarterly by quarterly, you know, just blowing all this money. it's hard to see the long-term benefit. we don't think long term anymore. >> we don't think long term anymore, but that goes to the dynamic scoring issue that you guys talked about earlier. i think you've got to inject a methodology where every time you think about a project, you think about what its long-term benefits are jobs, taxes, business creation in the future. you know, you can imagine this -- >> but the cbo has been wrong before, so they're a tough

arbiter. >> right. >> for certain -- and depending on which side of the aisle you're on and who's in power, somebody will take the cbo score and say we'll take that and the other side, no, we don't like the cbo. so who is the arbiter of this? who is the right arbiter >> i think what's interesting, and we were talking earlier, we've got a group of people from m.i.t. that we work with it's not zero, right it's not we're going to build this bridge and get zero benefits you're not going to get 100% of what everybody says. but you're going to get a reasonable range in terms of business creation, tax and generation of jobs. >> you don't know that water will get contaminated with lead. you don't know a bridge is going to collapse. so when you build a new one, you don't know you've prevented some horrific thing from happening. >> that's a big issue, but that's also where i think a methodology would make a huge amount of sense. if we start looking at the future and instead of saying gateway will cost $28 billion and it's going to start here. >> are you worried about bridges? >> i'm worried about bridges,

but what i'm really worried about is the competitiveness of the country, right it's a huge drag on our ability to get stuff done. going back to your point on the counter factual, it's a huge drag on our ability to imagine the kinds of businesses that i would create or you would create or somebody you know would create if we had the kind of infrastructure that was reliable. >> tax reform, i don't know if i believe the democrats that they'll do anything that, but they would do something with infrastructure this is actually something that republicans and democrats could actually get to 60 votes on theoretically. >> yeah, but the issue is why, right? i ran into a democrat and she said now we get to write a big check for infrastructure, right? that's not the point the point is to figure out what we need in terms of projects and how to build that stuff and what that's going to create in terms of benefits. >> all right well, should i hold my breath? if you call me, ask for mr. blue. >> you're a nice guy, so do not hold your breath. >> you want me to live thank you. coming up, when we returning, wage growth weakening

in the u.s. despite those strong jobs numbers and low unemployment we'll get an update on growth expectations after the break in the meantime, check out the futures this morning a bit of a mixed picture "squawk box" returns in just a moment >> announcer: time now for today's aflac trivia question. which company began with a failed attempt to make granola e swhen cnbc's "squawk box" continues huh? don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that. buth my fathe! without that cash from - aflac! - we might have to choose between hawaii or your face. hawaii! what? haha...hawaii! you might have less coverage than you think. visit aflac.com and keep your lifestyle healthy. aflac!

now the answer to today's aflac trivia question. which company began with a failed attempt to make granola the answer, kellogg's. welcome back to "squawk box. despite strong jobs numbers and low unemployment, wage growth in the united states still struggling wages hit their sixth consecutive month of slowing growth in july, according to reports out this week from glass door it's the slowest pace the job site has recorded in three years, goes completely against the grain of most of the he headlines we've been seeing. joining us is andrew chamberlin, a chief economist at glass door. when i said it goes against the grain, it goes against the grain of where it feels like the economy is, and clearly where

the markets are. tell us what's happening >> well, eight years into this economic expansion with such a low unemployment rate, all economists expect wages to be picking up, but we just don't see that today we see 1.2% year over year pay growth in our figures but underneath that headline it's a very diverse picture some jobs are seeing fast growth, some are seeing declines year over year so it's more complex than the top line figure might suggest. >> and to the extent that you think there will be a trigger for higher wage growth, whatdo you think has to happen? >> well, there's no question that productivity growth, output per hour, is ultimately what drives wages so until we see productivity pick up, you're never going to see wages growing at faster than 1% or 2% per year. but in the short term, people do have some control over their earnings no one in america earns the average wage people earn the wage for their job in their city. by picking up and moving to places where wages are higher or reskilling, getting into more

in-demand positions, people can control their own fate to some extent. >> where are you on gdp growth what do you think is possible? >> well, i think we're at what's possible today given what population growth is doing, given the retirement of baby boomers. just the demographics of the country and generally slow productivity growth. i think 2.5% is probably where we're going to be for the foreseeable future. >> i'd love for you to weigh in on the immigration debate. joe raised it earlier on the conversation we just had about infrastructure in terms of what it means just to stir it up, here is mark zandy from moody's in an e-mail this morning to ben white, morning money. he said it's a huge mistake. it's hard to imagine a policy that would do more damage to long-term economic growth. it means the labor growth will come to a stand still as the large baby boom generation leaves the workforce do you buy that? >> i think mark zandy is a smart guy and general low agree with

that today we've got close to 6 million unfilled jobs in the u.s. today many are in tech and health care we don't have enough domestic workers to fill those roles so no question bringing in more high skilled labor from around the world helps the country overall. if you look at the research, like i'm a labor economist by training, there's very little evidence immigration hurts wages, especially skilled immigration. >> joseph? >> two of my favorites, zandy and ben white. >> i know. i was trying to stir it up. >> i remember that great moody's analytics forecast for what was going to happen after the election. >> although just the idea of limiting immigration, when we do have 6 million empty jobs -- >> no, but this is not unheard of if you look at canada's immigration policy you look at the rationale, and the rationale is that you don't have a lot of workers that have no skills coming in competing with americans for those same jobs, taking those same jobs, so you try to get skilled workers

in so people want -- i mean if it was said in a different way. remember how we wanted to increase the number of highly qualified people that can stay >> but to bring in people who are highly skilled and the other is to limit it to 500,000 from a million. that's a pretty big limitation. >> it is but what is the right number i don't know what the optimal number is. >> with a labor market -- >> we have a professional on the other side of the country. answer what do you think? >> do we need -- how about 10 million, is that enough, andrew? how about 20 million what's the right -- what's the sweet spot >> the sweet spot should be -- you should get that number from the research is my opinion there's been a ton of papers on this the evidence -- the evidence of the negative effects of immigration is very weak the evidence for the long-term positive gains to the country, both low skilled and high skilled labor are very strong. i know that there are fears among some low skilled workers

facing more international competition is bad for them, but if you look at it over the long period, that's really what makes the united states different as a country is open borders with talent all over the world. >> andrew, you've just come on the air and told us that wage growth is de minimus, especially when it comes to the low skilled jobs. >> right so bring a lot more of them in that makes no sense. >> what's interesting, what we see in our data is fast wage growth at the top of the scale for many tech and health care jobs and some fast wage growth at the very bottom for people affected by the minimum wage, things like baristas and food service workers. where we're seeing declining pay are retail buyer like loan officer or office manager. these people, and the reason why, they're being replaced by self-service apps and software you maybe don't need an office manager anymore. you've got, you know, all your ordering of supplies on auto pilot and you're using work day

to manage your hr system so those are the people policy makers should concerned about are these traditional, $40,000, $50,000 jobs that are seeing flat growth now. >> andrew chamberlin, great to have you on the program this morning. thank you. >> watching that interplay yesterday between miller and acosta -- what's his name, acosta he's conflating -- he was saying, you know, now you've got the wall -- he was conflating illegal immigration with green card entry of legal people coming in the country. >> if steve liesman was here or andrew was here -- >> let's let everybody -- in fact let's not build a wall, let's say anyone who wants to come in, come on in here, let's get to 400 million as quickly as we can. >> president trump himself -- president trump himself the entire time has always been in favor of legal immigration that's the -- >> i know. but i'm saying you can't conflate green card and people do they use the overall term "immigration" and throw it all into that bucket

i mean illegal immigration is something you need to control. you do you need to control it. >> we're talking about the legal aspect. >> we're talking about legal immigration. >> but acosta during that brouhaha. >> that's because ultimately it appears that the administration wants to limit immigration legally and illegally. ace'when we come bk, wll talk about tesla stick around

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unbridled, it would be scary, right let's take a look at some stocks to watch this morning. phil lebeau has more on tesla's report and ron baron is baby today, phil. >> i bet he is i bet he is. if you're a tesla fan, you like what you heard on the conference call and what you saw from tesla in terms of the second quarter now, let's be clear, they lost a lot of money in fact this is a company that went through about $360 million last quarter but overall, they beat the street, coming in at a loss of $1.33 compared to what was expected at $1.82. revenue stronger than expected not a surprise given the increase in production coming in at $2.7 billion. it's the outlook that people are focusing on. model 3 production reaffirmed for the third quarter all the way in through 2018. that was one area that people were focusing on also elon musk said during the

conference call there will not be an equity capital raise they are considering a debt offering at some point, but as of right now, they're sitting at about $3 billion in cash and from his perspective, the focus in terms of production is turning towards where to build the next giga factories. >> we're also thinking hard about where do we put giga factories 3, 4, 5 and 6. we expect to keep the majority of our production in the u.s but it's going to make sense to establish a giga factory in china and europe >> and we will probably hear about that giga factory this year or early next year, although he indicated likely this year they'll give us some word on that on model 3 reservations, guys, here's where they stand. 455,000 current reservations for the model 3. they have had about 63,000 reservations cancelled people bringing them back,

whatever you want to say those have gotten some attention from people who said, look, last week on friday they said they had over a half million reservations and now they're saying it's 455,000. this is the more accurate number compared to what he said on stage last week. the model 3 production ramp, that is the focus and a lot of people like what they heard from elon musk on the conference call last night. >> phil, thank you very much good to see you. >> you bet. when we come back, the ceo of celgene will join us. we'll talk the approval of their new drug for acute myeloid ukia > d y jeremy siegel says the next stop could be 24,000 on the market the governor has declared a winter weather emergency... extreme risk of burst pipes and water damage... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims

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just got a little more believable we'll tell you who the facebook ceo just hired as the final hour of "squawk box" begins right now. ♪ >> announcer: 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 marke site right in the middle of times square the futures have been right around the flat line for most of the morning, still are the nasdaq is doing the best for the bulls up 5 points. it's indicated to open the dow jones indicated down 7, s&p indicated down 2 we've got some top stories, though, that we're focusing on. >> we do indeed. among them the bank of england out with its latest interest rate decision. the central bank there leaving key interest rates unchanged, remaining at record lows the bank of england also

trimming its growth forecast for this year and for next citing the impact of the impending brexit the pound fell sharply after that announcement. back of england governor saying the uk public expects a smooth brexit but we haven't lenders anything new in the last three months speed limits for the uk's economy has slowed check out the dollar at this hour, it is up against the euro. still you're looking at the euro at 118.53, dollar is down against the yen at 110.32. shares of tesla trading higher in the premarket. the electric car maker reporting a narrower than expected second quarter loss it was boosted by revenue gains and more deliveries of autos it also said that it had more than 1800 daily reservations for its new model 3. however, tesla also saw negative cash flow of $1.1 billion during the quarter. that stock is up by almost 7%. and yum brands out with earnings this morning. the parent of kfc, taco bell and pizza hut reporting a quarterly

profit of 68 cents a share revenue also coming in above forecast but you can see the stock is down by 1.3%. >> other stocks to watch this morning, we talked about it before aetna scoring a sizeable beat for its latest quarter the company benefitting for a strong performance from its core businesses as well as cost controls and then there's avon products announcing ceo sherri mccoy stepping down, one of the nation's largest direct sellers, facing pressure from activist investors to make faster progress on that corporate turn-around plan avon's second quarter earnings and sales fell short of analysts' expectations. the u.s. flexing its military muscle testing ballistic missiles off the coast of california. while the united states said the test was not in response to north korea, officials say that it does show that the united states can protect itself against a military strike. joining us right now to talk more about it and the big problems that have been facing us is brooking institution's senior foreign policy fellow, michael hanlon

michael, it's good to see you this morning. >> likewise, becky nice to be with you folks. >> just last month you said in an op-ed with "the new york times," that it is finally time to deal with north korea how do we do that? >> well, it's not going to be easy, as we all know kim jong-un is a despot and he's also killing off his advisers when they're telling him something might be a bad idea. but the trump administration says there are no options off the table. we've got to consider potentially military strikes i don't think there really are any particularly appealing military options they would all have a high risk of danger. so they all come back to which i think where mr. trump has been, which is putting pressure on china to put pressure on north korea economically and squeeze them about $5 billion in north korea's trade per year is with china. about 90% of its total international commerce and that really, therefore, is the only point of major vulnerability. and forcing north korea to

choose between its nukes and its economy is sort of the simplest way to think about this. unfortunately, china doesn't tend to want to do that because they don't want to destabilize their own neighbor so it winds up being a conundrum. how much pressure can we put on china and will it be successful. >> i wonder, we've been saying for a long time that the answer is china has to put pressure on them but if china does put pressure on a guy that's pretty difficult to figure out, he's not the most logical of thinkers, what's the end result can we guarantee that put pressure on him doesn't make him behave more erratically? >> that's an excellent question. he could lash out, think we don't have the kind of stomach for the kind of brinkmanship that he might consider, knowing that he has probably 15 or 20 nuclear weapons now, therefore, we wouldn't be too inclined to keep the squeeze up. if he makes us nervous enough about a possible war, we'll back off. i think that probably would be his response even though his nuclear weapons can't hit north america yet, i don't think even if they can reach us, we

have interceptors that could shoot them down. they have a good chance to reach seoul or tokyo that's why i also think there has to be a more flexible diplomatic approach to go along with the economic fresh where we aim for a freeze in the first instance on north korea's nuclear and missile programs rather than a complete elimination. >> is that why we saw rex tillerson making the comments he did earlier this week about how north korea is not our enemy and that we are not looking for a regime change? >> well, excellent point although it appears that mr. tillerson got ahead of the white house because vice president pence has now said we're not interested in negotiation. i mean to say that we're not interested in regime change, obviously everybody would love regime change if it could happen organically of its own because kim jong-un and his broader regime is about the worst on earth. but i think what tillerson was trying to say is that's not going to be a specific goal of american foreign policy. we'd rather do a deal. we know there are no good options to create a regime change scenario. but pence is then saying slow

down we actually are not interested in rewarding the north koreans even with a diplomatic engagement at this time, so that's where you're seeing the disagreement among administration officials i think we're going to have to deal with them but stay very tough and very firm in our position i think that's the way to be a hard line, you know, negotiator in this is not to refuse to talk but to maintain the very firm stance that north korea is going to have to do some major things to get any sanctions relief or any other concession. >> michael, where does north korea get the brain power for building some of these things? where do they get the materials for it where do they get the money for it this doesn't happen by itself in what's supposed to be the most closed-off society on the planet. >> excellent question. historically they have had dealings with pakistan and probably have gotten some of their missile technology that way and perhaps some of their nuclear technology as well they had a reactor, a nuclear reactor, which they still possess which goes back to cold war days when they had some dealings with russia and china

i don't think those countries gave the entire reactor. but the uranium enrichment capability has come through illicit networks developed in south asia that have gone to back and forth trade involving missiles, nuclear centrifuges. and then there's the question of uranium ore. i think they have some of that in their own territory but i don't know if they have the ability to build dozens of weapons. they could be on the market for more of that there's the potential for them to even sell nuclear weapons at some future date in return for some of the materials they need. obviously that could be a huge concern for the united states and that's one of the reasons i'm worried about seeing that nuclear arsenal grow even if we can't eliminate it, i think we need to freeze it. >> more than anything, i guess, it's the lesson that it sends to any other dictator or despot out there. if they are successful in maintaining some sort of massive power over us by keeping nukes, by building that program up, what message does that send to any other regime out there >> you're exactly right.

this is a concern with the nonproliferation regime. on the one hand we can be lucky there are only nine nuclear weapon states on the planet today, the five permanent members of the u.n. security council plus north korea, india, pakistan and israel. but how long will that stay? what will iran do? what lessons will it draw if north korea gets away with not just having the bomb but building up continuously with countries like china and russia essentially tolerating that. so i think it really does raise ripple effect concerns but also in the first instance it's just a huge problem for northeast asia if kim jong-un thinks he basically has a regime survival insurance policy, a protection against any and all attacks by us because we wouldn't dare risk a nuclear response from him, then he may feel empowered to go cause mischief, engage in more brinkmanship let's not forget all the scenarios where north korea has carried out military attacks against south korea in the past, most recently 2010 when they sank a ship. i worry a lot about how these

kinds of things could lead to escalation. >> having said all this, are you optimistic about the situation as it stands right now >> no, i'm not optimistic. i think the trump administration while it's wrestling with options, and that's all to the good, and while they figured out that the most important lever we have here is through china, and that's correct, when we see them openly disagree with each other in public about how to potentially negotiate or not, that suggests paralysis on our part i think north korea will take advantage of that and keep building more bombs. >> michael, it's good to see you. thank you for your time today. >> thank you, becky. >> he's so smart on these things, i always listen to michael. a lot still ahead on "squawk box. coming up, we have a ceo call-in session. celgene getting fda approval for a blood cancer drug. plus jeremy siegel, his market call. the finance professor betting the dow can get to 24,000 this year on one condition. he'll tell us what it is at 8:30 eastern time. and then later, you probably

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welcome back to "squawk box. president trump just tweeting business is looking better than ever with business enthusiasm at record levels, stock market at an all-time high that doesn't just happen >> well, there's a lot that can be said about that. >> i don't know, i don't know. >> on many, many levels. >> we have time. >> do you want to talk about it right now? >> not really. we have a great guest to talk to, andrew. >> check out shares of kellogg, before we get to do that, just out with its own earnings. the cereal maker beating on the top and bottom line. it also reaffirmed its full-year forecast >> all right for the first time ever, scientists have successfully edited genes in human embryos to repair a common and serious

disease causing mutation researchers at oregon health and insurance university say they erased a gene that causes hypertrophic cardiomyopathy or hcm. it's a disease of the heart muscles that lead to sudden cardiac death. the research marks a major milestone. while a long way from clinical use, it raises the prospect that gene editing may one day protect babies from a variety of hereditary conditions. of course it raises ethical questions on concerns about designer babies, with some people fearing that could be the case some day. check out the cover of "the new york post" today there you have it. babe new world they're not talking about the pig. i see babe and think of that cute pig scientists fix genes in the womb so everywhere in mainstream media. it's on the cover of most newspapers and this is not specific, but

it's certainly related there's a $100 billion biotech company, one of the great success stories that we've seen, celgene, winning fda approval for a new drug targeted for a certain type of leukemia joining us now is the ceo and he's out with an op-ed on cnbc.com this morning, getting patients access to precision medicine is crucial. this is really -- welcome, it's good to see you, mark. how's bob, he's good >> i'm sure he's watching this morning. >> he's probably well. >> probably is $105 billion market cap, one of the great success stories. so this new drug that you're introducing is, i think, part of the motivation for the op-ed piece. and just to explain exactly how it works, there's a subgroup of people that get this really nasty blood cancer that have a very specific mutation, but only 1200 to 1500 people. you can actually target that now with this new drug that you're going to use, but it's $24,000 a

month -- $25,000 a month and you need it for about four or five months, right? >> that's correct. >> but it's only helping 1200 to 1500 people so it's almost an orphan drug. is it an orphan drug >> it is an orphan drug when you think about the size of the leukemia market. it is a rare orphan disease. around about 21,000 americans have the disease every year. it's one of the most lethal cancers. so progress has been extraordinarily slow in 30 years of research, overall survival is still measured in weeks and months, not years. so we're talking about a disease where patients get transplantation as part of what happens. >> stem cell transplants. >> a version of stem sell therapy. >> that's half a million dollars? >> it's how difficult is it to find the match donor and some of the other issues around morbidity and mortality. what's interesting about it, and let me shout out to our partner,

agios. a lot of the resources that we're talking about that go into research have to go to start-up companies. agios is a cambridge-based startup. ten years ago they didn't exist. seven years ago they had their ipo. four years ago on the back of this driver mutation so joe points out, this is an enzyme that is implicated in keeping blood cells immature immature blood cells are called blasts when patients with leukemia have blast crisis, any literally have infections and they will ultimately die with the disease. what this drug does, which is an oral molecule, is it knocks out that enzyme and it allows blood cells to mature into the normal red blood cells that carry hemoglobin, oxygen, et cetera. this is a breakthrough, it's a platform medicine. joe, you point out celgene we can build on this knowledge about how driver mutations used

to be just chromosomes you mentioned gene editing this is a metabolic driver of cancer so the platform is a brand new approach to thinking about other mutations in cancer that are not based on chromosomes or genetics but now look at how cells are mutated to survive in the environment metabolically. >> potentially what other diseases would that potentially -- >> so far we haven't really sorted out metabolic drivers, which is what makes the agios/celgene partnership so important. you talked about going from a market cap of certainly less than 10 billion to $105 billion. in that window, the portfolio of drugs we have has changed the natural history of multiple cancers. so you know multiple myeloma because you know celgene we've improved survival by five fold in less than ten years. so these learnings, metabolic

drivers, genetic driver, the whole scientific field learns from this and reapplies it so the cost of the medicine, you brought it up. what we've done proactively with payers, and this really is the cornerstone of the op-ed that i wrote and thank you to cnbc for posting it we think it's time to think about health care in a different way. it's a partnership between innovators like celgene, agios, et cetera, and the insurance companies, the payers, who today determine access and affordability. the debate has gone back and forth way too long about us versus them. we're now partnering in a way where in that price, just under $25,000 per month, we have a rebate structure that's already built in that covers for co-insurance and deductibles once those arrangements are in place, we believe that patients who have this very rare type of acute myelo leukemia will have

virtually no out of pocket costs to have access to the medicine so the more precision the medicine is, the greater the benefit to society overall because you're only treating those patients with the marker it means doctors who see aml will not look for other ways to treat. they'll say the marker exists, we understand that, and those are the patients who will get the medicine there's another feature as a targeted medicine. if you're a responder, you respond early. this isn't something where you keep going with the hope of response this is where you see the benefit early. >> within a week or two? if you're talking with four to five months to treat it. >> the average is about two months where the response will happen or not. so there's a little bit of a biomarker, if you will, about what you expect from a responder. again, think of the nature of the medicine this is driving and changing the m metabolic environment so it just stands to reason that a responder would show up earlier versus later

that's going to lower the cost of treating these patients because now that alternative is their last alternative as opposed to supportive care, tra transfusions if we compare the cost of one month of therapy to this medicine for those patients that benefit, it is highly cost effective. on top of a payer relationship, we hope that will give out of pocket costs, co-insurance relief to these patients. >> it's just exciting to think of the possibilities of saving people >> what i'm thinking is that when you think of cancers, and we say cancers now because we didn't know all along how difficult it was going to be because it was used mono lithically there's probably 2,000 different cancers that have different genetic defects or different markers. so you're going to have to cure each cancer individually if you

just try to work on the genetic basis of it. if you could find a metabolic cause or something that allows for the cancer to succeed, you might find something that's conserved in a thousand cancers and you don't have to cure each one individually >> where we are today, we are discussing, and i think appropriately so, the acute cost of these therapies they're lifesaving, life extending. we spend time talking about the cost of treatment. what we don't talk about is that for 30 or 40 years we've been building on a platform of knowledge in the cancer field that is allowing us today to unlock those doors, unlock the window to say now what do we do? the other thing that you spoke about, maybe not intentionally, is a metabolic driver and treating that is combined with other immuno logical features it's how we change survive al.

today the field of answer has broken out to certain areas, surgery, radiation, old chemotherapy, which was the shotgun approach to the patient has been replaced by precision medicine it lowers the cost of the health care system when you know who to treat, how to treat, and then you define that treatment for the window that you expect benefit. this is a very different paradigm, but it's 50 years of the nih, private companies like celgene, public companies, et cetera, working together on knowledge and building layer in artificial intelligence, layer in big data, and we are living at a time where if we slowed down on innovation with all due respect to the argument about the economics of health care, we will increase costs dramatically the age of the population is growing very dramatically. we're going to be faced with alzheimer's disease, neurodegenerative disease, cancers -- >> do the payers understand this argument

the insurance companies and then the government entities like a medicare >> they do what we're dealing with is the payment model now is a calendar year so take the hepatitis c market a couple of years ago we sat together an people talked about really and appropriately said what does it cost to cure hepatitis c, one of the most common infectious diseases. >> what does it cost over 10 years, 15 years, 20 years? >> but the payment model was not prepared, i believe, we believe, for a one-year cost of care to patients of billions of dollars. so as we think about the future and as we innovate, we're going to need to come up with almost perhaps annuity programs, some sort of longer term payment schemes that deal with the issue of an insurance company's annual budget versus what over time would be reducing the pool so take hepatitis c. now we don't have patients going to liver transplantation they don't need lifetime costs

of immuno suppressant drugs. we have to get better, we have to think more about how innovation changes the cost curve but how we pay for it in 12 months or a year. >> we've got to make sure -- >> the commissioner is doing a lot of good things. >> innovation is it. you know, it's great to try to hold down prices, but you've got to connect the dots and don't -- you know, no knee-jerk reaction because of unintended consequences please, come on back this is a good forum for you >> thanks for the invitation today. thank you so much. when we come back this morning, some breaking economic news jobless claims about to hit the tape. plus jeremy siegel says the dow 24,000 could come by the end of this year but it all rests on one thing from the trump white house. he'll explain after the break.

♪ good morning and welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square it is another big morning for corporate earnings yum brands reported a quarterly profit of 68 cents per share and beat estimates by 7 cents.

slightly ahead of analyst' estimates. teva pharmaceuticals take a bit of a hit they saw lower than expected results in its u.s. generics business as well as continued deterioration in the venezuelan market you're looking at that stock now, up almost 13.5% this morning. dish networks earning 69 cents per share for its latest quarter. 6 cents shy of estimates however, subscriber losses for the satellite tv service were lower than expected. consumer products maker clorox reported quarterly profit of $1.52 per share 6 cents above estimates. they expect profit margins to expand slightly this year. that stock unchanged on that news avon products missed estimates on the top and bottom lines but the bigger news coming from the executive suite where sherri mccoy will be stepping down, the ceo of that company, in march.

barrington had been pressuring the cosmetics maker to replace her. we're just a few seconds away from the weekly jobless claims number. in the meantime check out the futures. you know that yesterday the dow closed above 22,000 for the first time this morning markets are barely holding on to that level dow jones is up by less than 1 point for the futures. let's get to rick santelli who has those numbers. rick. >> well, we see a drop, a drop of 5,000 initial claims. that's from 245, which is the revision originally released last week at 244,000, now stands at 240,000 1.968 on continuing claims and the notion of where we're holding in the context of the big 22,000 close yesterday really, i think, gets us off the main track, which is deals look like they're going to be closing, if they stood right where they're at, at a two-week low yield. we're under 225.

we're hovering at 223. is it the bank of england, is it the notion that central bankers like to weave but don't like to put the knitting needles away, i'm not sure but it's an interesting dynamic. to see a dollar index that's still weak although up slightly. to see rates going down while all of this is going on, equity markets continue to thrive, european forces aren't on their highs maybe because their euro currency is, but all this really does make for an interesting landscape as we get ready to look for bigger data coming in the form of ism, nonmanufacturing andrew, back to you. >> rickster, thank you for that and for a little reaction we want to bring in steve liesman, cnbc's senior economic reporter. >> i keep coming in here, andrew, ready to explain the spike in jobless claims but it's not happening. >> do you think it's july still? >> these are july numbers. >> i thought you meant on

thursdays. >> your suspicion that perhaps i don't know what day it is or time it is is probably not a bad one. >> it happened to me and he wooent let me forget it. >> you should see me try to write a check. >> it's the year that's the problem. >> the month and the year. >> when you're a reporter on tv, i'm going to get off of here today and i'm going to start working on tomorrow. so i'm not going to know that it's today the whole day >> what? >> exactly so here's the thing. this spike never happened in jobless claims which leads us to another sense that tomorrow's jobs numbers should be strong. here are some of the positives that are out there you have the adp number, which becky in the break mentioned was in loin. the claims number is good, the ism manufacturing and employment index is good and the recent trend quite good we don't know how many workers we have to fill the jobs if you tell me we've gone down in the average three-month job numbers, it could be because we have trouble with the workforce. i want to show you a couple of very quick shots first, the average three month

which had come down a little bit in the first part of this year and now it's back on the way up so that's a good sign, getting back to that decent three-month average. you know we like regression to the mean, whatever you want to call it, that we're back to those high numbers and one other thing we're looking at at the jolts report which shows that hires is below openings so they have too many openings and can't find the people. that's along with the question of do we have the workforce to fill the jobs and that could or could not as you desire lead to that immigration debate. >> i want to go back to the debate you sent us an e-mail. >> i did. >> where do you stand? where does steve liesman stand >> i am in the process of trying to figure out the literature in this regard because there's different aspects to it. the first thing is the mathmatic accounting aspect of it which immigration is a big part of population growth. labor force growth, which is a big part of growth if you reduce that, most people think you would reduce overall potential growth the other aspect which is

interesting is this question about upgrading the skills. >> right. >> upgrading the skills could increase gdp per capita, on a per capita basis, which is a good thing you bring in better skilled, higher skilled immigrants, that would be more helpful. the other question, which i can't get my brain around because there's literature on both sides is whether or not immigrants exert downward pressure on native wages there is some interesting literature on this that was cited by the white house yesterday but it's also in shocks the syrian refugees in europe, this is what was studied by this harvard kennedy school economist and there's some criticism i'm trying to get my brain around. it stands to reason somewhat in certain industries and certain places where immigrants could be exerting downward pressure on wages. >> you can knee jerk it from both sides. >> i'm trying not to knee jerk it >> no, i'm saying -- i'm saying -- i can think we have a

lot of people here that are already here that would like jobs and maybe they're low skilled and it would be nice if they could get the jobs. if we're going to bring in people and we have this income inequality issue, if you could, you know, bring in people that are highly skilled that we're missing right now, that would be the people you want and hopefully the people in the inner city and people that don't currently have employment, you don't want to -- you wouldn't think you'd bring in a bunch more people if there's not enough jobs for everyone and the reason that they don't have jobs is because they're not -- not because they're not people but because they're not trained. so you could intuitively think that might work. >> if you told me you were going to upgrade the skills of immigrants, i'd be like that's a great idea but you add the notion we're going to cut it by 50% by the way, my understanding is there's almost no chance for this to pass. >> no. >> but it's worth having a discussion about the right immigration policy in this country. >> right >> i enjoyed this conversation. >> i would recommend, there's

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a news alert, everybody. fedex saying that it will not charge additional fees for shipments during the holiday season this year for most packages that is in contrast to its rival, u.p.s., which has announced peak period days and fees right around black friday and christmas time fedex, however, says its move was not in response to u.p.s surcharges for oversized packages will remain let's get back to the broader markets. the dow closing above the key 22,000 milestone the futures right now, dow is going to open probably off about 2.5 points nasdaq up about 5.5 points, s&p 500 up just marginally joining us right now, jeremy siegel, professor of finance good morning. >> good morning. >> my understanding is that you

think that we can go to 24,000 on one condition and we teased it this way. so we want to know what that condition is, sir. >> yeah. i think we need corporate tax reform, lowering rates not -- i would love to see personal tax reform and lowering those personal rates, but i think what is more probable and what i believe congress should attack first, corporate tax reform bringing the money back, repatriation at a low rate and a dramatic lowering of the marginal rates i would also like to see other reforms with that, but i think if those get enacted for this year or even next year, i think 24,000, which is actually less than 10%, but is definitely in the cards. >> right

jeremy, let's just talk about this realistically given what we're walking into, which looks like a mine field this fall in terms of debt ceiling and also some other issues, i think the betting line right now is that we won't see tax reform until 2018. do you still stick with this idea we could get to 24,000? what happens >> well, first of all, i disagree with that i actually think the failure -- i guess you could say fiasco with the health care bill, they should never have attacked that first. they should have -- they should have tdone the tax reform, the corporate tax reform remember, even president obama said we need to have a lower corporate tax rate there are many, many democrats on that side they should have started there what they thought was they were going to get a trillion dollars from the health care reform. of course that was pie in the sky. that was a fiasco. but i think that makes them more determined to get something done here so i don't -- you say what

happens if we don't get any legislation on that? earnings are -- i mean this is the best year for earnings that we've had in three or four years. forward guidance we've got 19 times 2017 earnings that's a little higher than historical, but not high given interest rates and so, yeah, i think we could get another thousand out of the earnings to get 24,000 i definitely think we need a little bit more from washington here. >> what do we attribute what's going on in the market to? the reason i ask the president tweeting this morning about how much the market has moved, taking some credit for that. he i think tweeted just yesterday something similar. "the new york times" has a piece this morning that says the market is discounting or not even watching the soap opera in washington you're talking about all of this happening with or without the legislation frankly.

so who do you give the credit to >> well, you know, i agree what the stock market cares about is interest rates and earnings and both of those are doing well also, by the way, the lower dollar is definitely helping that has given -- >> but would you -- >> that's definitely given a boost to the market. no question. >> jeremy, when you said 22,000 back in february, and it was a great call, you said some of the policies plus deregulation and then lately you've even come to think that 22,000 was doable just from deregulation and that if you actually do do something policywise -- >> but we have had deregulation. >> that's right. that's what i'm saying. >> that's the only thing that's come through so far. >> and that got us to 22 andrew has never believed you with all your bullishness, and you've been right the entire time here we are at 22,000.

but some of it is deregulation what i like, jeremy, was back in may when you said after comey got dismissed that if trump resigned today, the market would go up a thousand points. actually it went up 500 points the next week and another 500 points the next three weeks and another 500 points to where we are now. so he didn't resign but it went up 1500 points. >> well, you know, my feeling is, is the market is going up on the republican agenda. it's not going up on the trump agenda the only thing about trump is he's not going to veto the legislation that congress has. that's the positive. >> hold on, have you heard any conference call on any of these earnings calls where the ceo has said that one of the major reasons that we've had such a great banner quarter was a function of deregulation, and this is how much we saved this quarter because of it?

have you heard that? >> i -- no most of it has been better -- the lower dollar i have definitely heard of. i definitely think the prospect in the financial sector of easing of dodd-frank is definitely a factor. the intangible factor, i'm not going to get -- >> jeremy siegel, we love you. we'll see you soon thank you. >> it's simple deregulation helps. when we come back, why one former ambassador says youtube isn't doing enough to crack down on extremiston ctent he will join us with his proof, next hey, i've got the trend analysis. hey. hi. hi.

you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn.

welcome back, everybody. technology giants are milleni millenialing to purge extremist content from their platforms it remains largely unproven and in some cases it seems like it's getting worse. joining us for more on cyber terrorism is mark gins berg. he's the former ambassador to morocco and former white house middle east advisor. ambassador, thanks for being here today. >> thanks for having me. >> google sent out a new platform saying it was going to be battling online extremism, to be fighting isis in other places and not letting them use this as a way to lure people in. you put it to the test what did you find? >> first of all, the fact that they even agreed to do this is a result of a loss of over $700

million in ad revenue because their ads were showing up on extremist content. >> isis propaganda. >> isis propaganda. >> that motivated them because nothing else had been motivating them over the last several years. we stress test their pledges the last few days. a small group of folks, several of whom developed the computer software to help expedite the removal and identification of extremist content, what we have found is, shall we say, youtube and google are failing at their test while twitter and facebook are doing much better. youtube is now still uploading even more content than when it made its pledges -- >> more extremist content? >> more extremist content. for example, suicide vest videos are now more prevalent than they were before. anwar al awlaki, the american cleric who is responsible for

radicalizing most of the homegrown terrorists in the united states, his video went from 72,000 to 84,000 during this past month. there are many more isis uploaded videos on youtube this is what troubles me i and as isis has lost it's territory, i spent a great deal of time in the middle east and i can see what's going on online they are spending far more time and effort to engage in radicalization to increase their capacity on social media and frankly of all of the social media companies youtube is doing the worst. it's letting american people down. >> what is youtube's response or google's response to what you have found have they responded? >> they ignore it.

they argue that they're engaged in several initiatives one is to do what we call as counter vailing extremism arguments to try to redirect people away but here's why they don't want to do something more proacti proactively they do not want congress or the administration to in anyway, shape or form take that shield away so they will not proactively take this content down they're relying on people like me. >> this goes back to the original battle where if you are editing stuff then you are responsible for the stuff that's out there where as if you're just a bulletin board or platform -- >> they can't honor their service to the american people. >> somebody out there somewhere is going to say this doesn't

fly. >> in europe because the laws are different there and there's first amendment rights here europe has imposed over hundreds of millions of dollars in fines against youtube this past year when youtube declared it was engaged in this effort it's general council did not come on squawk box it wrote an article in the financial times to direct his attention to the european regulators europe is far more ahead of us in first of all adopting best practices and secondly also holding youtube liable for its failur failures. >> thank you for up the date keep us up to da. when we return jim cramer will join us we'll be right back.

what do we know about tesla? it's going to be production hell or it's not going to be? >> with this company being this large it's time for elon to start getting serious about

projections that me makes and statements that me makes about howell he is doing i tote lay agree with this these conference calls are free for alls it's fine if he even had maybe a $1 billion company but this is serious company but not being treated seriously in the conference call. very light a lot of facts being thrown around and then he wants to get a debt deal. it's a continuous juggernaut of press releases and happy talk. >> so now i don't know so you're with me. i don't know, i don't know what to think. >> they love the car. >> all right. >> jim were you camping last night? what was that picture? >> my daughter is taking a two month camping trip with a tent on top of her car. >> pretty cool. >> yeah it was cool. >> thanks, jim up next, forget soda or a snack. when you buy a t-shirt or a jacket from a vending machine.

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welcome back they're installing vending machines to shell shirts and light weight jackets that come in a number of sizes and colors

and shoppers can return any item to stores or through the mail. >> what am i going to do with 15 seconds. where can go >> squandering it away right now. >> immigration. >> yeah. >> talk about the boy scouts. >> these are things for me to think about. thanks for watching today. make sure you join us tomorrow squawk on the street is next ♪ >> good thursday morning welcome to squawk on the street. futures are steady after record closing for the dow and tess laernings and ism service systems to chew on and europe is mixed and some show a slow down in big economies bank of englan