good morning welcome to "squawk box." i'm becky quick along with andrew ross sorkin joe is out, but sitting in with us once again is kevin o'leary thanks for being here. >> i've really enjoyed it. this is a great show in case you didn't know. >> well, we love having you here and you come to splplay every dy let's take a look at the futures. there have been some global concerns about the stepped up rhetoric from north korea and from the united states you can see this morning that the dow futures are indicated down by about 51 points. yesterday was the first time in ten sessions that the dow actually closed lower and you can see this morning that the s&p futures are down by about 11 1/2, nasdaq down by 46. again concerns about north korea showing up in the marketplace, but not in any extreme sort of

measure. overnight in asia, you saw similar concerns as markets in both japan and korea came under pressure the nikkei down by 1.3%, that is a 2 1/2 month low. hang seng off by a third in europe, you can see similar concerns playing out there the cac is the biggest loser in the major averages declines of over 1.25% and for stocks in italy and in spain if you want to check out what has been happening with currencies, the yen has been picking up some ground this morning. it is considered a traditional safe haven right now it looks like the dollar-yen is at 109.77, dollar up against the euro. also seeing a big move in the swiss franc, seen as asafe haven trade. you check that out this morning, but we've also seen gold a little stronger and u.s.

treasuries picking up a bit as well >> and big news, disney says that it will pull its movies from netflix and launch its own streaming service, it will take several years to complete. disney making that announcement as it released quarterly results late yesterday we'll be hearing from bob iger and get wall street's reaction in just a few minutes. mr. wonderful may have his own reaction you would want disney to eventually sell to p apple >> i'm a disney shareholder. and this is between 95 and 110 every time we go through the espn cutting dispute which occurs every quarter >> and those concerns were brought up again >> 28% decline is probably one of the fiercest we've seen, but we know it's coming. and here is the response okay, we'll just serve it up ourselves directly to you. that is an interesting outcompany, but it's not just for disney for netflix, it means that netflix has to go this to the movie making business which is a

crappy business. since the beginning of time including all the hits and losses of color, sound movies, the average return is about 7% >> i was a little surprised that the street took this news so badly last night because you would think the idea of going over the top, maybe it shows process. >> i will use it probably as a buying opportunity when the stock breaks 100 i'm so used to this disney, you know, fib rue lags, but the can he has such assets and if they are going to serve it up, tell me if you have kids that you won't be buying that service. of course you'll buy >> if i could pre-subscribe, i would. we'll talk more about this in a minute we should tell you shares of priceline tumbling in early trading on weaker than expected outlook. top beiping estimates easily. revenue of $3 billion also

beating estimates. third quarter guidance was lower that expected. also a little bit of deal news for you this morning u.s. credit card processing company vantiv is making a form allege offer to buy worldplay for $10 billion. the deal first noinsed announcey july.lay for $10 billion. the deal announced in early july jpmorgan was previously in the mix. and develop vernight, nort korea responding to a stern warning from president donald trump by threatening the u.s. pacific territory of eamon jave more >> this is rhetoric that we're not used to hearing. a new approach now from president donald trump toward north korea. he was responding to reports that north korea had successfully miniaturized a nuclear weapon that could fit on top of a missile here's what the president said

yesterday. >> north korea best not make anymore threats to the united states they will be met with fire and fury like the world has never seen he has been very threatening beyond a normal statement. and as i said, they will be met with fire, fury and frankly power the likes of which this world has never seen before. >> he was responding to reports in the "washington post" and confirmed later by nbc news that the u.s. intelligence community has assessed that north korea has successfully miniaturized a nuclear weapon that would be small enough to fit on a missile. it's a key milestone, but it didn't mean that the north koreans have a nuclear capable icbm the reentry technology is a tricky piece it's not clear that they have

mastered that. but they did achieve miniaturization sooner than had been expected by analysts in response to the president's comments, the north korean issued a statement of their own in part threatening guam north koreans saying that the korean people's army strategic foo forces xanling the operatiexami plans in the areas around guam with medium to long range problem kets in order to contain the major military bases including the andersen air force base so that escalation of rhetoric there on the north korean side responding to the president's rhetoric, all of this as the united states has been trying to get china to interview with the north koreans and we saw the united nations imposing new sanctions as well within the past week. so a lot of moving pieces here we'll have to monitor it throughout the day >> and you're right in that we're not used to the rhetoric

coming from the united states. we're used to it from nooek. what changes is the time frame if they are further along than we had anticipated, that may make people wonder if we have time for the which i ceconomic substantials to take place >> that's right. and the question is the role of dhooi in all of that remember north korea and china sharing that border and question is will china enforce the sanctions and also will they police some of the black market activity going on that allows north korea to finance that nuclear program. this is a country that is pretty much isolated from the rest of the world, but still manages to get some revenue in from global trade. will that be the way to solve if china can tighten the screws on that and then of course you talk about the president's rhetoric here, one of the questions will be was this a clib brdeliberate mirroring of the north korean

rhetoric because that's how they speak, or was this donald trump sort of making this up as he went along or is this a deliberate strategy here very much sounded like some of the sort of baths of fire and the other pieces of rhetoric that we've heard from the for examplians in the past >> we'll hear more about all of these issues i know we heard from the russians saying that they would like too see a deescalation of the receiphetoric. but what about the chinese, japanese and south koreans in the immediate arena? >> yeah, and the japanese have issued their own intelligence assessment and concluding along the sale lines that the united states has that the north koreans do now have this miniaturization capability but you talk about south korea and seoul, it's so close to the dmz, so close to where any fighting would take place if there was a war touched off on the korean peninsula, it's a little terrifying to think about

the level of casualties that you could have in a very short amount of time if something were to break out on that peninsula and of course thousands and thousands of american troops on that dmz as well so a lot at stake here for all the players. >> soul owing teoul the only pl even before the escalation the real estate protss closest to the river have lower property values because those would be the first places that would be overrun in case of some sort of a war breaking out >> and it's horrific to think about what could happen here so the consequences are dire the president definitely escalating his receipts tore rick he's surrounded -- he's in bed minister, but he's surrounded by all of the apparatus of the u.s. military.bedminster, but he's sd by all of the apparatus of the u.s. military. >> when you watch the comments being made, premeditated, planned, thought out in terms of what he wa terms of

delivering a specific message that he think he talked about with his advisors in advance or something that he con koscocted the moment >> i don't have any reporting from inside the white house on this, but if you look at the timing of this and you look at the president's body language during that comment, this came during an opioid conference that the president had previously scheduled. but it was several hours after we saw the news break in the "washington post" that the north koreans had achieved this nuclear capability so the president knew this question was coming from the reporters. he had time to prepare it. he was sitting back with his arms folded. he very much seemed like this was a prepared comment that the president made and he hit that fire and fury sound bite twice he wanted that piece of rhetoric to get out there into the conversation around the world. it felt to me just as an observer from the outside that this was a deliberate decision by the president >> i'd agree i thought the same thing watching it. thank you very much.

we'll talk to you again soon in the meantime, lockheed martin says that it is seeing grows interest in its missile defense systems in light of the north korea threat the pentagon's biggest weapons supplier saying it's seen a recent uptick in his still defense questions coming from its clients. shares of lockheed are up 20% year to date back to the top story of the morning, it is disney rolling out the quarterly results and announcing that major strategic shift. the company ending its deal with net fli netflix and in 2019 and launching its new streaming service and also launching an espn service >> we had a deal that gave us the option to move our films from the netflix platform to somewhere else starting with ka calendar year 2019, so that's what we're doing we're creating a disney branded service that will have those movies on it and if you look at

the 2019 slate, it includes frozen 2, toy story 4 and a live action remake of lion king as a for instance so an incredible slate >> joining us now to break it down, senior analyst at fdr kacht capital. mark, good morning we're making a lot of this disney over the top service, but i wonder whether the bigger news is the espn over the top service. >> actually, i don't think so. i think espn is a niche sports network. it won't be the flagship espn. it will be the stuff that can't make the cut on espn it will appeal to sports enthusiasts, there is probably a lot of those but that is something that is a complime complement, not a read placement. so meaningful, i think the disney brand itself is more important.so meaningful, i thine disney brand itself is more important. >> why are investors not applauding this as much as bob iger wants >> i think the issue is that

this accelerates the wave seen as threat to the traditional tv bundle as you get the disneys of the world giving you better and better quality online over the top subscription services, sports separated from the entertainment, others will respond. fox isn't going to sit still they will respond to this. discovery is responding. cbs is responding. a consumer can get great entertainment, great sports without signing up for pay tv. disney makes a lot of money for that, so i think the concern is cannibalism. >> let's talk about espn again if you are interested in lacrosse and you played it at boston college and you want to follow your team, you really don't get to do that easily on espn new but if iger will service it up and split it up into all these long and skinny tails, doesn't that service become far more interesting, knlts i mondcondit monetize small verticals in a

way i never could before that has kept me in the stock. this is the way i can watch my own team and i'll pay for it just for the game. >> lacrosse is a niche sport compared to football so i think it's unclear if there is a critical mass of niche sports subscribers that can move the needle for a something someg as disney. i'm a little more sceptical than you are i think. >> how much programming does disney have, what does that look like relative to a net flex sflx service or hbo or something else do they need to buy additional content? >> when you're talking about the entertainment side, disney pixar, maybe star wars, maybe marvel, that is the best content collection, entertainment collection i think that you could point to anywhere. so you look at netflix as largely an entertainment

service, not a sports service. this seems like a very strong alternative to netflix so i do think that the future for netflix is one of more competition, that is something that i think constrains their ability to raise rates long term might cap their addressable market opportunity because some people might want this disney service instead of netflix and if you are buying netflix new, you're making a long term bet 00 their ability to make a lot of money through pricing and growing subs disney might have just capped that opportunity >> did you cover netflix because that stock was only down about 1.6% your point that it's not just disney but others, down by almost 4% this morning in the pre-market >> i do cover netflix. valuation is my main concern and i think the competitive response from the dinosaurs of traditional tv has been very limited to date. but i think what we're hearing with any disney doing this, the gloves will come off

they won't be alone. >> reports suggest that netflix users in the united states and canada, 30 prls % of their usagn disney or pixar films on the service. a, do you believe that and b, how much does netflix pay to disney right now >> so we don't know precisely. i'm skeptical of your 30% figure but i do think that netflix is paying something in the zip code of $200 million to 400 mmd i think it's closer to $400 million per year to disney disney will lose that, so there will be eps pressure to build this up. but i think the bigger issue for netflix is that disney is now a rival as opposed to a source of something that is appealing on your service they will still have disney content, not the big movies. and i think that is the bigger issue for netflix. >> but there is this conversation that you could hold back some of the marvel stuff, you can -- that some of the

disney stuff could stay on netflix or get sold to other places >> yeah. i think disney is thinking about what to do my bet is that they will decide that they need to go big or go home and they will take star wars and they will take marvel and put it on their owner ewner is advice >> is this the end of the secondary demarket? service. >> is this the end of the secondary demarket whether its hbo or whomever, creating consetent, putting it their own platform, letting it run and then they go off and sell to amazon or they sell to netflix or what have you is this a signal that that whole market will change >> i think in a whole market is definitely changing. there is pressure to put it on their own platform

>> if i'm a producer, disney is now a new customer netflix is basically you get your price of production plus 40%, but they keep the content in perpetuity. with another contributor like disney, the deals could get more lucrative for contents makers, particularly family. those old cartoons will be valuable in a big way. park your kid in front of it for one monthly fee. i'll bullish on the stock. what are you saying for the call on disney itself as a result of what you know now? up, down, sideways >> look, i think the stock is stuck in a range i think that earnings go down as they invest in this ramp i think that the concerns around the secular risks to their bread and butter go up and i think it's not clear yet how affective competitively they will be with their service but our bias that particularly the pixar stuff is likely do

well >> and ban tech the company that disney just acquired a big chunk of to power all of this, they not only will power this new disney channel, they do h bchlts o, mlb, a lot of others. is hbo and other competitors going to have to find a new technology platform? >> well, i think hbo is going to at&t so that will be a new tech platform so i don't think that is a big issue. i think bam gets disney industrial grade technology at kind of the top level of skill in the market. gets them big, gets them there quickly. >> okay. appreciate it. thank you. when we come back, more saber rattling with north korea dwrifg the dow driving the dow to snap its ten day winning streak we'll ask if there is a bigger pullback ahead careful joe, they've got you outnumbered.

the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here. find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen. . let's get a check on the markets. futures are under a little bit of pressure. not by much. dow futures only down by about

31, but this is striking when you look at the ten days in a row of gains that we've seen for the dow futures. nine of them new record levels so let's continue to keep an eye on this. s&p futures down by about 8 1/2, nasdaq do you know by wn by 38 treasury market, you will see that the ten year at least at this point isyielding 2.246% bids picking back up putting pressure on yields as that is seen as a safe haven trade two year 1.339%. and if you take a look at gold which is also seen as a safe haven trade every time you get concerns, you to see a pick up here gold price up by about on $10 this morning to $172.8 0. joining us for more is chief investment strategist at jame j jannen and rich stein burpg from steinberg global asset management gentlemen, welcome to both of

you. mark, let's start out talking about the potential threat with north korea. we know that the rhetoric has been there for a long time coming from north korea. yesterday the united states stepped up that rhetoric through president donald trump what do you think, does that concern you? >> it does we raised it as a concern earlier by saying it moved from a red hairing to a black swan status we don't know what implications. obviously the immediate impact is a military confrontation that is while perhaps somewhat expected, unknowable with regard to the economic impact and of course it involves some of our allies and some of our nonallies by way of china. so the recipe is something that aunt written down on paper and i think the market's reaction is one trepidation if not outright selling. sell first, ask questions later. >> i understand what you're

saying that makes sense but it's not the reaction we're seeing futures indicated down but only about 30 points. why is there not more of a reaction >> i think largely we haven't had an impulse yet a rocket hasn't landed in chicago at this juncture >> we're still talking about an event for the most part the market is writing off. sxwkted. >> exactly and fundamentals have been supported. >> and rich, how do you try to figure this out, how to do anything with your port follow i can't, or is this an issue that we just think it's a binary issue unless something big happen, we won't worry about it, and if something big happens, then your stock prices are the least thing that you will be worried about? >> this has kept us up at night,

but it's a teflon market these are not sticking to investors' psyche. there has been a focus on earnings growth which this quarter came at a 10.1%. if things get works it will take a while. so i think this is a continuation of rhetoric, it's indicative of what the administration does, respond with words and then things get patched up i think investors have to get back to having that on their radar screen more, but until it's a more imminent threat, it will be focusing on the cool kids everybody wants to play with the cool kids and the only way that the markets will have a pullback or be affected is if the momentum and pullback in indexes creates a pullback to allow people to deploy cash again. >> so mark, there is an article

out on the street.com today talking about how one market watcher, one market historian looks at what happened back in 1987 where we stepped higher and higher all the way up to the day the dow crashed and lost 22% this one day and says at this point valuations are higher than they were there. is this snag omething we should concerned about? >> well, you uttered a couple of the most famous words that are worrisome for any investors and that is that it's different this time largely it's now if you look at not just pe but the shiller, price to book ratio, you'd have to look back to the period of 199 to 2000 9 o see similar levels and that said, you also see the fundamental underpinnings that are studenteupported so i don't think it's purely a valuation issue that the market has to collapse from i think there would have to be some type of catalyst that would

undermine the fundamentals that are supportive we've had double digit earnings growth, mid single revenue growth e. growth we have an economic environment that is pretty healthy here in the u.s. and you combine that together and i think that makes for a pretty sanguine environment for equity prices to advance accounting for obviously things like north korea, perhaps some type of trade embargo or something otherwise a political gaffe that could again change the sentiment in the market participants which i think would lead to potentially a correction not necessarily a new bear market to derail the bull market >> kevin, do you get concerns about valuation when somebody points out that this is a higher valuation than in 1987 >> no, because i look at other asset classes against it i always ask this question every day. i have new money to put to work. where do i put it. show me an asset class that is better than equities right now and i'll put my money there and i can't find one i can't buy credits. i can't buy bounds

i don't like alternatives because they are not liquid enough i can get in and out of large cap stocks globally and relative to everything else, they are still the best game in town unless i want to be in cash and make nothing >> and that has been the case for several years. >> a long time >> all right, gentlemen, thank you very much to jofor joining s when we return, a battle against a devastating disease. the stoert of a venture investor who is fighting parkinson's has driven him to raise millions for the search for a cure. as we head to the break, take a look at the winners and losers

u.s. equity futures have been a little bit weaker again, this is the first time yesterday with the markets closing down the first time we've seen the dow down after ten sessions of gains before but you have to keep the declines in perspective. futures in the red, dow down by about 34 points. s&p futures indicated done by 9. nasdaq down by 40. north korea says that it is carefully examining plans to

strike the yooud teunited state territory guam this is just hours after this stern warning. >> north korea best not make anymore threads to the united states, they will be met with fire and fury like the world has never seen >> u.s. officials said yesterday they now believe north korea has the capability to put a nuclear weapon on a missile. at the top of the hour, we'll be talking to general wesley clark, he is the former supreme allied commander of nato. venture capitalist jonathan silverstein is no stranger to solving problems he's at the top of orbin med after a surprise diagnosis last year, hifs fundraising hit close to home. meg tirrell reports on that. >> reporter: making smart bets on potential new medicines is

how jonathan silverstein built a 20 year career mistakes just got a lot more personal >> it wasn't until i saw a movement specialist when i noticed i had a slight tremor it in my left leg that he was able to put it all together and say these are all symptoms of parkinson's. >> reporter: diagnosed at age 49, he discovered he has genetic form of the disease. like other forms, there are no drugs approved to cure it or low its course so jonathan and his wife natalie decided to take action >> given the fact that jonathan works in this space, we are uniquely positioned to potentially make a difference. >> reporter: they founded the silverstein foundation with $10 million of their own money >> i sent out 1,000 letters to venture capitalists, ceos, to hospitals, research labs they came back with literally dozens of ideas. >> reporter: he's been traveling

the world meeting with researchers, even donating blood, tissue and stem cells about. >> a guy from mike in ohio september me a check for $18 and he said i've got parkinson's, let's get it done and that is as good a motivation as anything. >> reporter: silverstein knows first hand how difficult drug development is, but he's also helped fuel advancement of successful medicines before. >> i've seen miracles happen and now i have to create another miracle. >> joining us now jonathan silverstein, orbimed and founder of the silverstein foundation. thanks for being here. >> my pleasure >> in the last two days, you've been in two different states you're now in a third state. the amount of work you're doing and the pace you're working is just absolutely inspiring. and you already have some updates from even then you've founded a company, right? >> that's right.

we're launching today a company called prevailed therapeutics. and it's in conjunction with reregenics bio we're excited about the management team which is led by a researcher at colombia and the board will have some pretty big names on it founder of lexeon and as well as his co-founder and peter thompson is an entrepreneur so we're excited about that company. it will be focused on bio logics and gene therapy approaches. which is an area where we think there is a lot of promise. and not a lot of people have attempted to treat the disease in those areas >> and you know firsthand how difficult drug development is having worked in this space for two years. but one thing that you said resonated with you is being hopeful. what is it about the state of science and what you hope to do

that makes you hopeful >> i think the pipeline for parkinson's drugs has never been better we have nucleus and antibodies, very have activators, reduction therapies on clinical trials these drugs all look really promising to me and i think that they will be a good bridge to the next set of drug which is will hopefully be cures. >> and you're thinking of even obviously taking these yourself. you also wrote an op-ed for us on cnbc.com where he said being a patient has changed your approach to venture capital whereas before you may have looked for slightly less risk heavy projects now you're looking for cures >> i think as a venture capitalist your first opportunity to is make money for your investors. but as patient i have different needs. so easy to go for the low hanging fruit. its hard to go for cures but it's possible. i mean, i think henry ford said if you think you can do

something or you don't think you can do something, you're right and i think we can do something. >> jonathan, you bring up a great point though when you're a venture capitalist, your goal is to try to make money first. how do you convince people to put their money in what can sometimes be called cures for orphan drugs that places where you're not going to see a large market obviously you've already ponied up and put $10 million of your own money into this. how do you convince others to do that >> well, i think parkinson's is large market parkins parkinson's with dba is only about 50 patients in the united states but still a pretty large market. and many of the drugs that we're trying would work in the large are parkinson's population so i think what we can see is getting a proved on an orphan drug and then using it as proof of concept to get to a larger market >> what is your definition of a

cure is to delay the onslaught of the effects of the disease or to actually eradicate it? and i'm talking about you personally what do you hope to achieve? because your enemy is time now >> yeah, my enemy is time. but i'm not nervous. i've done this before. i think that i can do it again my definition here is, you know, feeling as good as i felt before i ever had any symptoms. and i think that is possible there is a lot of approaches which we haven't taken yet because they are a little too risky and we've been fortunate to get some funding from the outside, most recently actually today we got a $5 million grant. and they are not even in parkinson's yet, but they have a great interest in the field. and i was just really touched by the fact that the management team said we want to advance the ecosystem in parkinson's and we believe in the way you're approaching it

and they gave the money with no strings attached and i'm hoping other phrma companies follow suit >> can i ask a question about the economics. there has always been a question of how much r&d money the big phrma companies should spend, whether the bit will come there occur backed companies, whether foundations ultimately fund all of this or the government. how do you think about that mix? >> i think it needs to be a little bit of everything there are big projects which are done by the niah or much bigger foundations like the michael j. fox foundation where they are looking for bio americas that could bio markers that could be helpful for everybody. and phrma companies need to he focus on drugs that target knows bio markers or those specific animal models. and i think it will be a combination of everybody focusing together. and what we've fritried do is

really get a group of people together that have diverse backgrounds, so people who have more chemists, discoverer, drug developers, people who have taken drugs from an idea all the way through to approved product. and in addition to people with obviously parkinson's, domain expertise. and when you put all those minds together with different approaches, special things can happen and that's what prevailed and we hope will be the first of many companies that will spin out of the incubator or the foundation, but a non-for-profit incubator in some sense. >> thank you fascinating. >> really appreciate your time today. thank you. >> thanks for having me. >> and meg, thank you for bringing him here this morning >> by the way, we had the web address for anybody who wants to donate, they can go to silversteinfoundation.org. >> very creative name. when we come back this

morning, tensions rising between the united states and north korea. we'll talk former general wesley clark. he served as the supreme allied commander of nato. and then barney frank will join us on the 10th anniversary of the financial crisischanged sin. and later this morning, william cohen will weigh in on north korea's nuclear capabilities the governor has declared a winter weather emergency... extreme risk of burst pipes and water damage... soon, insurance companies won't pay for damages. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. get ready, because we're helping leading companies see it- and see it through-with digital.

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welcome back you're watching "squawk box," live from the nasdaq market site in times square. welcome back to "squawk box. it's time for the executive edge new hampshire has sued purdue phrma maker of oxycontin, it is accusing of engaging in deceptive marketing practices that helped fuel addiction the suit is marking the largest state or local government to actually make these types of accusations. the complaint claims that purdue significantly down played the

risk of addiction posed by oxycont oxycontin. and fidelity is letting their clients use their website to view bitcoin holdings xt pe the experiment will help them learn how they interact with those currencies most have shied away so far because the sector remains largely unregulated. bi bitcoin is trading at record highs. coming up, we'll break down the quarter and tell us how consumer tastes are changing and we mean that literally and now a check on what is happening with european markets right now. when this bell rings... ...it starts a chain reaction...

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welcome back, everybody. international flavors and fragrances out with earnings they beat on the bottom line but revenue fell a little bit short of expectations. sales increased in flavors and fragrance businesses, though joining us right now is andreas fibig the ceo of iff >> thank you for having me >> what are the driving forces i know that revenue was up in both of your major units

but what are the things that are driving those sales at this point? >> what is really helping right now is that we have done over the course of the last two years five small exhibitions, and they're all good drivers for the business one is the active cosmetic business where we do the active cosmetic ingredients the other one in the flavors space where we have created as you call taste point just for the middle market for smaller customers. because we see, particularly in the u.s., but also in europe, that some of our smaller customers have a much higher growth dynamic than the big ones and these elements are helping really driving the sales >> who are these types of customers? >> they're smaller customers when you go to a whole foods market you see a lot of these new, innovative brands. smaller companies. and we have tiered toward these customers. >> are you talking about the flavors in particular? >> yeah >> in the flavors business it's 40% savory, 30% beverage, 20%

sweet and 10% dairy. >> yes >> you're making things for every single item? >> absolutely. we make over 35,000 products and basically every product is tailor made for customer it could be a strawberry flavor. it it could be a sweeter formulation. many of our customers are asking us how can they reduce sugar everybody wants to reduce it but wants to keep the taste profile. and we're helping the customers to doing exactly that. >> can i ask how do you do that without using either sugar, or something that is like a steve yeah kind of thing that other people are worried about on that side of things >> what we do is, and these could be synthetic or natural molecules, out of natural ingredients, where we basically boost the taste of sugar, reduce sugar let's say by 20% or 50%, boost the taste in your mouth, and keep the mouth feel, as well and that's something which is actually flying off the shelves right now, pretty significantly, because it's a big issue

>> what are you doing to do that to accomplish that >> we found molecules we're bringing together with the sugar, which boost basically your -- the molecule on your tongue, and in your mouth, and that's -- >> it fools you to think that you're tasting something sweeter than actually the caloric count would say? >> exactly >> i looked at a deal recently in retail, and i was looking at their books, private equity deal, and i saw a line item on the statement for fragrance. they were injecting smells into their stores all right? are you in that business do you do -- >> we do this, as well we see it from retailers, but we see it in hotels, as well. the design fragrance for them, kind of a signature fragrance for the hotel or for the retail store. >> is the sci-nnabon thing real people say they spray some sort of smell i don't believe it

i think it's just the cinnabons themselves which do it >> i cannot tell you we have something which can enhance the smell of coffee. >> inside the coffee don't you get a lot of pushback from people saying why would i want to put a molecule that is not natural to the coffee inside of the coffee? what benefit could that possibly have for me nutritionly? and is there a risk inherent in doing this >> the topic, particularly in the flavor segment, probably more than 90% of our from our customers is from natural molecules. you take ingredients that are 100% natural >> andreas very quickly, 75% of your sales are outside the united states. how has the weaker dollar helped you? >> it certainly is helping you know, we have big businesses in europe. exposure to the euro is important to us. business is doing actually very well, and the dollar is helping right now. >> thank you for your time we appreciate it >> thank you >> coming up when we return.

a strategy change for disney taking a bigger piece of the streaming business comments from ceo bob iger we're going to talk about it after the break. plus president trump sending a strong warning to north korea. we're going to talk to former nato extreme allied commander wesley clark and break down what it means for the markets whoooo. looking for a hotel that fits... ...your budget? tripadvisor now searches over... ...200 sites to find you the... ...hotel you want at the lowest price. grazi, gino! find a price that fits.

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good morning the futures pointing to a lower open as president trump warns north korea threats will be met with fire and fury we are live in washington with the latest developments straight ahead. disney cuts the cord on netflix and announces its own streaming service. we'll take a look at the company's big plans and the latest quarterly results when we come up. mr. wonderful hitting the sweet spot with wicked good

cupcakes what's driving sales and talk about the state of small business in america. the second hour of "squawk box" begins right now live from the beating heart of business, new york city, this is "squawk box." good morning, welcome back to "squawk box" right here on cnbc we're live at the nasdaq marketsite in times square i'm andrew ross sorkin along with becky quick, in for joe today kevin o'leary, shark tapg investor, cnbc contributor, and mr. wonderful. which we discovered, by the way, you're not even sure where the name came from >> i don't know where it came from but it stuck i show up at the airport, and you know, the limo's waiting it says mr. wonderful i asked one of these guys, do you know my name he said you're mr. wonderful i said no my real name he said you're mr. wonderful that's pretty scary. >> wonderful story quick check on the futures here's what's going on you do have some red arrows

across the board we're going to talk about the north korea threat in just a moment that weighing on stocks right now. dow looks like it would open down about 27 points down. nasdaq off about 37 points the s&p 500 to open off about 7.5 points oil right now if you want to buy wti crude by the barrel it will cost you $49.47. and check out currencies, as well we've been watching the dollar throughout all of this, and right now, we're at 1.17 >> as andrew was just alluding to, that big developing story overnight. north korea says that it is reviewing plans to strike the united states territory of guam with missiles. that announcement comes just hours after president trump made this stern warning >> north korea best not make any more threats to the united states they will be met with fire and fury like the world has never seen

>> eamon javers is live in washington he has the latest on these developments eamon? >> yeah, good morning, becky those comments that you just played from the president came a few hours after reporting from "the washington post" that was later confirmed by nbc news that north korea, according to u.s. intelligence, has successfully built a miniature nuclear weapon that could fit on top of a missile. why that's important is because it's a key milestone of nuclear capability it doesn't mean that they have a nuclear capable icbm or intercontinental ballistic missile but it does mean they've achieved miniaturization sooner than expected. that means that they could put a bomb on top of a missile, launch that missile across the pacific ocean. the key technology there is building the re-entry technology a missile that could survive the heat of re-entry and then successfully impact on its target it's not clear that they're anywhere near that yet but it's still a concerning development. that's what led to this escalation of rhetoric by the president, and then also, by the

north koreans, who put out this statement in response to president trump yesterday. north koreans saying the korean people's arm strategic force is now carefully examining the operational plan for making an enveloping fire in the areas around guam with medium to long range strategic ballistic rocket in order to contain the u.s. major military bases on guam, including the anderson air force base so it was an escalation of rhetoric, becky, on both sides yesterday. we'll see how things play out over the next hours and days here the president, of course, remains in bedminster, new jersey, which the white house skriebs as a working vacation. >> eamon, thank you very much. joining us is general wesley clark. he is refired tour star army general and the former nato commander and a senior fellow at the ucla center. thank you for being here today >> thank you >> we are very used to

ridiculous rhetoric coming from the north koreans. we are not used to stepped up rhetoric coming from our president in terms of fire and fury, what does this mean to you? and do you think that this was very intentional message sent to the north koreans? >> well i think it was an intentional message. it probably was meant to reinforce the united states' commitment to our south korean allies, and to make sure that north koreans understand that the united states intends to stay in south korea, and our deterrent is strong, and we're ready to take whatever action is required the way it came across was a little more bellicose than that, and we don't want to get in to a name calling contest with the north koreans. >> this language, though, i mean, some people have pointed out that maybe this is speaking their language do you think this is the type of language that will come across how do you think the north koreans will receive this? >> well, you know, the north

koreans don't receive language the same way we do >> right >> the north koreans, they know that we have a deterrent i think all the president really had to say is, that our deterrent is strong, and we stand with our south korean and japanese allies. but i think that when you carry language back to the north koreans in that kind of challenging way, that it encourages them to then escalate the rhetoric and escalating the rhetoric reaches into a position where we don't want to be that is, we've always known that there was a risk of miscalculation on the part of the north. and as they've made clear, they could attack if they thought we were going to attack let's stay away from the brinksmanship on this. this is a condition that's been a long time in developing. we understand the character of the north korean regime. secretary of state tillerson said he wanted to open a dialogue i think that's the right way

forward. there's time to do this. china and russia working with us, keep the rhetoric down and work for a stable condition on the north korean side, and stability in northeast asia. that's what we're looking for. >> general clark, homeland security has a color coded advisory system in terms -- for terrorism here in the united states if you were to color code where we are relative to north korea right now, green being at the very low end and red being at the worst end, the most severe end. where are we >> we're in the yellow zone. because the rhetoric is heating up the exercises by the north in firing the missiles has increased. this is part of the north korean strategy to intimidate the united states and intimidate the south. and it raises the risk of something accidentally happening

or some miscalculation we're not in as good a place as we should be but we're not on the brink of conflict >> were we in the same place two days ago, though >> well, we were but we probably didn't know it >> general, i have a question for you. i want to take the other side of the coin and preface this question with please don't shoot the messenger. part of your job as a general is to prepare for war and think about the outcome. now, i'm in the financial services business. i create indexes for markets all around the world and yesterday when the news broke i called for the futures on all markets they're not moving they don't care. maybe people think it's because there isn't going to be an engagement but maybe there's another side to this. what happens if we dance in other words, we go to war, this is horrible, i know people's lives will be lost, but finally get this over with, and unify this country the outcome would be one of the most powerful economies in asia if we finally solve this problem. and maybe the market is actually

thinking to itself, and i'm not saying this is the case, but i'm speculating it now, okay, there's a war. ten years from now does it look like a unified germany is that why the markets don't care what is the probability of that happening? if you were in charge of actually doing it, how could you make it happen quickly and with at least the smallest loss of life to unify this country back together we've been listening to this stuff for 60 years i think it's time to get rid of it is that one way the market looks at it? >> well, i think the market right now in general, and i'm an investment banker also, i'm looking at it, i see the market generally underrecognizing geostrategic risk. geostrategic risk in northeast asia is rising here's the truth, there's no easy military solution i heard the same kind of talk in 2002 about saddam hussein. why don't we just go in there, you know, clean this up, and sure enough, we got the united states army in there and three weeks, baghdad was no problem, and do we like it now?

does it look like there's a stable democracy in the middle east and is everything fine so generally when you try to get a quick, easy military solution, you probably don't i think one of the reasons the market hasn't reacted more strongly is, they know that there's been tension for a long time in korea. they know the united states intends to fulfill its obligations to our allies in the region and they see the rhetoric as nothing but rhetoric at this point. it has danger inherent in it but they also understand, there's no easy military solution you don't go wheknow where all e weapons are. you can't spend special forces in to get them you don't want to use 70 nuclear weapons on north korea china has a stake in this. japan has a stake. if you start war, there will be hundreds of thousands, maybe millions of casualties it's nothing whatever like the unification of east germany, and west germany in the 1990s.

and china doesn't want the unification to happen. the last thing china wants is a unified korea as an american ally on its border in northeast china. so there's a lot of differences. and i think what we have to do with this is, we've got to strengthen the deterrent in the south. we've got to have dialogue, supported by north korea's neighbors in the north we've got to keep the pressure on and we've got to look for ways to cool the rhetoric and see stability. there's no easy solution to this >> general clark, the rhetoric is one thing but the real issue that changed at least from our knowledge of this, in the last 24 hours, is the idea that there is military intelligence that suggests they can miniaturize the nuclear bomb meaning they could arm a missile. that changes the scenario drastically. where does that leave us what does that mean? and how do we get the time line wrong for so long? >> well, it means that first we need to strengthen our strategic missile defense.

that is in place it could be stronger there's legislation in congress to do that we should move on with that right away but, when russia developed nuclear weapons, when china developed nuclear weapons, we were faced with the same dilemma. suddenly the equation had changed. here what we have is a strong u.s. deterrent against north korea. north korea certainly knows that if it crosses that demilitarized zone and initiates conflict it will be totally, utterly destroyed. the question is, can it inflict any damage whatsoever on the united states or on our allies the only thing that's changed is, yes, there's a possibility that a nuclear warhead could reach the united states. that's certainly frightening we live with that for 40 years during the cold war with our commitment to our european allies we've lived with it with our commitment to our japanese allies now, with the case of china. so, yes, we don't like the fact

that north korea has a nuclear weapon but it's not a situation that is impossible to see our way through. this is why the united states has to think very carefully about what our objectives are. it may be all right for president trump to say it's intolerable. but if you say that, you have to see forward to how it is you're going to convince them to get rid of that nuclear capability you know, the only person we've convinced to get rid of the nuclear capability was moammar gadhafi. prime minister tony blair -- >> and look what happened. >> as soon as he got rid of it, two years later we said you know we don't like that guy much anyway that's a real lesson to kim jong-un. he could look at that and see, even if he was generous, what's the odds that two years, three years now, someone wouldn't say, now that they don't have nuclear weapons, we didn't like him anyway so, we have to see it from his side, and we have to think what our objectives are our objectives are to stabilize

the situation in northeast asia. >> general clark thank you for your time today. we appreciate it, sir. >> thank you okay we have some corporate stories to share this morning. a $10 billion controls border takeover deal is done. a month after it was first announced credit card processing company vantiv is buying brian's wordplay the two companies have been talking since july 5th to work out the details. the new company will keep the wordplay name and be headquartered in cincinnati. also fidelity investments has jumped aboard the bitcoin band wagon to a small extent. it's going to allow customers to hold bitcoin to view the value of their investments on its website. that will be done through a digital wallet provider. in this case it will be coin base which will provide the value of bitcoin holdings to fidelity and valueact has sold 7 million microsoft shares it sold a similar amount in may but still holds about 9 million shares valueact had bought microsoft below $30 in 2013 and pushed for

changes. microsoft stock is now, of course, well over $70, and i do believe that one of valueact's executives is still on the board of microsoft >> hmm >> so people should watch that >> we're also keeping tabs on disney this morning. the company saying that it will pull its movies from netflix and launch its own streaming service. this is a process that's not going to happen overnight. it will take several years to complete disney making that announcement as it released quarterly results late yesterday you can see disney shares down by 3.7%. netflix shares also down by 4% netflix also declining to talk about this news on the news disney that will be pulling its films to include in them a new disney branded streaming service starting in 2019 here's what disney's ceo bob iger had to say. >> we had a deal that gave us the option to move our films from the netflix platform to somewhere else, starting with calendar year 2019 slate

and that's what we're doing. so we're creating a disney branded service that will have those movies on it and if you look at the 2019 slate it includes "frozen ii," "toy story 4" and a live action remake of "lion king" as a for instance so it's an incredible slate. >> we'll get the street's reaction to the numbers and the announcement in just a bit when woo he come back we'll be talking market reaction to the news about north korea we're watching curvesies this morning as the yen hits an eight-week high on some of these latest concerns about tensions there. the futures, though, they're down but not by much we'll have a much broader conversation about the markets when we come back. stay tuned you are watching "squawk box" on cnbc these days families want to be connected 24/7.

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we're always working to make our services more reliable. with technology that can update itself. and advanced fiber network infrastructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most. welcome back to "squawk box" this morning take a quick look at futures right now we are in the red, or at least it looks like we're going to open up that way. the dow looks like it would open off about 44 points. the nasdaq would open off about 40 points down and the s&p 500 would open down a little over 9 points we want to talk markets, in particular i want to talk about how you guys are even thinking

about north korea this morning joining us is anastasia am rosa, global investment strategist at jpmorgan private bank which has assets of more than $1 trillion. also andre -- every time -- it's tough. it's tough founder and ceo of zoe financial. when you guys woke up this morning, or even yesterday when "the washington post" first broke the story in terms of what was possible with a nuclear warhead, did you think to yourself, that there's a -- not a trade here, but i need to think about this in terms of where the markets are going to go >> i think it depends on your time horizon so if you're very tactical, which anastasia will talk about, then of course, this is going to generate volatility. it's going to generate opportunity. for our clients that are trying to invest to retire one day, i think it's very dangerous to make investment decisions on some emotional reaction to something that could happen, and has very little probability of

occurring. >> are you in the same place >> so we did look a little bit closer at the volatility that's coming out this morning. i do think the markets are reacting as one might predict. you've got gold that is up, and deals for clients who are looking to hedge some of these geopolitical risks which we can't predict which way it's going turn out i think there's a few opportunities that stand out one thing we've been looking particularly is gold and even though it's up on the year, if you look at gold volatility, it's actually the lowest level that it's been in ten years. so, for more tax for some of our clients who are more tactical looking to position there. the big theme that we've been talking about within parts of our private bank is the dispensing that's an ongoing theme for us for several years now, because we do look at risks not going away whether it's, terrorism threats, whether it's rogue states, just not going away so because of that we are looking to -- >> i don't know if you heard,

kevin had a very provocative, should we call it a thought experiment for now >> just testing the general. >> testing the general but i'll test you, do you think that investors could potentially even see past something terrible happening in north korea, meaning or something terrible with us in relation, and try and see past that and say, maybe ten years from now, actually the world's going to be a much better place and therefore we shouldn't worry about any of this stuff you're more day-to-day >> i think yes, investors can see that but it's really difficult to predict the outcome. one thing that i would say, we all know which way the geopolitics of it are going to go the way they're going right now, china is looking to export less, or actually no coal at all from north korea, so somebody might have to fill the void in coal imports in china whether it's domestic production, or whether it's imports. >> most of the hedge fund managers look at this and still look at it completely in a binary way and say i can't even trade this

i can't think about it i'm not going to think about it. it's either going to happen and it will either be terrible or not but i can't enter my true investment picture >> that's the way that i look at it like what is my edge on this and the answer honestly is zero. therefore, why am i going to make any kind of bet on it if there is really no edge on it. >> anastasia, i have a question for you regarding your clients, and maybe this is what's going on out there in the market, why it's so resilient. ubs put out some data about their high net worth clients they're servicing. they're holding 38% cash, and they have for the last four years. has the risk been built in where people just say, look, i'm willing to put money in the market but i'm going to hold back so much that i don't really care if there's war in north korea. is that where we're at >> i think that's right, kevin i think investors have been very cautious ever since the financial crisis and i think investors have been continuing to deploy that capital very cautiously.

i think in the same ubs report that you saw yesterday, clients continue to be concerned about politics, they continue to be concerned about geopolitics, national issues, international issues, so i think that's what's driving some of those cash balances but, you know, in a market like we've had so far this year, everybody's looking for an opportunity to deploy cash at better levels. and we might be getting it >> you think this is a pullback? >> well, this is a start of a very small pullback. it's very tiny but that's what we've had so far this year. and that's what you might expect when the economy is on solid footing. if you think about it, we're in a perfect sweet spot in the markets right now. because the global economy is fine the u.s. earnings are fine and at the same time, the fed is fine the fed is not looking to choke off thisexpansion just yet so for that reason, that's why we haven't had a pullback. >> i think everyone has a plan until you get punched in the

face, right? i think from our perspective, we are actually putting north korea aside, starting to dial down risk, and the way that i would describe it is everything looks great from an economic standpoint but valuations continue to get more and more expensive, and at some point you have to have a plan, even though you might get punched in the face, right, of what does that mean? what if the market is going to have 15% dialback? how is that going to look like and for a lot of our clients they used to have an 80/20 equity bond. and now it's 92%, 93% equity in bonds. it's time to get it back through what they thought their plan was originally >> okay. thank you. appreciate it. when we come back, disney's major shift in streaming plans up next, though, the arrest of tiger woods on may 29th comes to a head today when he is arraigned. we have the tas ghdeilrit after this break "squawk box" will be right back. you always pay

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center at this hour, mortgage applications rose 3% last week, according to some new figures from the mortgage bankers association. both new purchase and refinancing activity increased as the average 30-year mortgage rates dropped three basis points to 4.14% also the state of wisconsin won't break even on proposed foxconn plan for at least 25 years. this is what i was trying to talk about earlier this week that's according to some new statistics the state's legislative fiscal bureau and nonpartisan entity foxconn hoping to open the lcd screen making plant in 2020. which raises the question whether it's worth the 25 years. >> i saw the headlines on this report and my question was, does that include the number of jobs that are created and the -- the taxes the employees would be paying in i'm not sure i don't know the answer. >> my understanding is it is somewhat dynamic not fully. >> these plants are the size of seven, eight football fields so the amount of jobs they create just building them is fantastic. i mean, a facility like that, if

it actually happens, is a good thing no matter how you cut it no matter what the subsidies were because you're just basically subsidizing productivity in my view you're building a plant that's going to employ thousands. you're getting state-of-the-art technology and robotics in there and you're keeping the supply chain domestic i don't see any bad news here. >> i do think it's a little different when a city pace to fund a stadium that's being built for the nfl or something along those lines, because the taxpayers end up on the hook they end up paying the bill for that this is a different situation. taxpayers aren't paying for anything you just are granting some -- >> but you have to look at the whole supply china basically if the manufacturing facility stays domestic -- >> right -- >> the dry cleaners -- >> i don't know how dynamic, back to andrew's point, i don't know how much of that they have captured if any of it. >> well, i think it's -- the point is, give me the negative case to it why wouldn't you want to do this is a better question, because i can't find one reason this is a bad thing.

and what would it be what would be negative >> well, i think the only question is, if it takes 25 years, could you use that money more productively? i disagree, i think money's fundable i disagree it costs something to build the stadium, it doesn't cost anything to do this money is money >> no but it's tax receipts you're going without but it's tax receipts you're going without if they don't build the plant there, too >> but the question is could you find somebody else who could come in who would do it for a marginally better pricing. i don't know >> but there isn't anybody that's done it bigger than they have they have done this in other jurisdictions, obviously, in asia so successfully, that 2 million jobs left this country to go work there that's the way you should look at it. there's 2 million people associated with supply chain making just the apple phone. they're not here well here's how you get them back and i think there's a very strong argument for why, you know, i don't care how many years it takes, what does a phone look like in 25 years? maybe it's plugged into your head who knows. you still have to manufacture something to make it

might as well be domestic. >> by the way, it does assume that they're still going to be building all of the stuff 25 years at this plant. which actually goes to -- there's two issues that are up for grabs. one is whether all of these jobs actually turn into robotic jobs, which they very well may i think we should all assume that maybe disagree with that >> yeah. >> in which case the numbers actually look worse. i just think it's complicated. >> 175 years ago 40% of the jobs in america were all around farming. now there's 2% we didn't know it was going to be search optimization, and i mean -- >> look i want everyone to get -- i think it's great for wisconsin. for the people it seems like it's great for wisconsin however, i think there is -- there's a true cost and i just don't think people necessarily appreciate what it costs >> if you put it up for another state someone will take it i guarantee. i think this long-term has a lot of positive ramifications. and you know -- should you give trump credit for this? did he not go to that state and say i will bring you jobs? >> yep >> did he not deliver? doesn't matter where you stand on loving him or hating him.

he said that in the campaign and look what we've got here >> but he's buying the jobs. just -- just for 100% clear what's going on here >> would you rather he buy them -- >> yes i'm with you i agree. i'm just saying there is a cost. and i would imagine that in the same conversation we've had about whether i should be the redistribution of wealth in america, this is part of that. and so anybody who doesn't think that it's part -- as long as we all agree on what it is, then it's fine. >> look at the subsidies that go into every country's support of the aerospace industry what's the difference? there isn't any here you want it to be technology you want it to be cutting edge >> all i'm saying is in the same conversation we had yesterday or two days ago about who should pay for the subways -- >> i'm absolutely right on that one. >> you said it should be based on usage >> absolutely. >> who is driving. who is all of that >> absolutely. and that hasn't changed in two days because i'm still right >> and all i'm saying is here we are providing effectively a corporate subsidy. >> look at elon musk and the jobs he's created, with the

battery with solar -- >> i agree except for the fact we're having a whole conversation on tax reform where we're all talking about tax reform in this country and getting rid of loopholes and giving benefits to certain companies over others -- >> on a state deciding what to do -- >> correct >> you're not talking about giving federalized -- >> each state should compete we had a company that moved from california to florida, why because of taxes let the states compete let it be an open market it's a wonderful thing where do you want to start a business now texas and florida. those are the best places. and that's where the businesses are being started. now wisconsin wants to get in the game good for them. let them compete i love it. >> okay. we'll take that to the bank. in the meantime, one more story for you. a lottery milestone has been reached. the jackpots for powerball and mega millions have topped $300 million. the first time both have been over that mark at the same time. no one won last night's mega millions drawing meaning that the next jackpot estimated at $382 million. tonight's powerball jackpot is at $307 million. and becky and i are going to be running out, the closest bodega.

>> that's why we have. we put in five bucks each. and -- >> no one mentioned it to me >> send in the e-mail. five bucks >> both of you never made. you will never, ever win this thing. >> it's entertainment. >> i will be laughing -- if i win i'll be laughing all the way to the bank. right? >> i'll be laughing. because it will never happen that's the way i look at it. >> i know. my dad has the same opinion, he says taxes -- it's stupid. if you're not in it you can't win it >> i'm glad i didn't say it. >> but it's five bucs for entertainment. by the way, if we're not here tomorrow you know why. tiger woods is going to be arraigned today but he will not be attending court it's related to his may arrest for driving under the influence. woods could avoid community service or jail time because he meets the qualifications for palm beach county's first time dui offender program where a 12-month monitoring program is mandated he was arrested on may 29th

after police found him sleeping in his running car with the blinker on disney surprising investments with a rollout of a new espn streaming strategy. let's turn to greg portal. greg, what do you think of this decision and what do you think of the stock sell-off as a result >> well, the stock sell-off is particularly tough, because it's investors really voicing their opinion on how disney's going about doing this but if you look at the pure strategic value of disney, a consumer company, building direct relationships with consumers, it's a very smart thing for them to be doing >> okay, let me ask you a question about the drawdown on the stock. every time we talk about espn, and you know, cord cutting, and reductions in subs, which is basically 28% in this quarter the stock gets slaughtered same things happening here again today. at what point does espn, and this new optimism of selling it over the top, as iger was talking about, come out of the equation when do we finally say i don't

care about espn anymore because disney has so many other assets and so much other content, and there's so many problems, i don't care about espn? it's not now obviously because this was a tough quarter they missed by two cents by the way, right, on the actual earnings what is the real drawdown on this it's espn between, is it not >> espn is clearly the drag. what's really surprising is that investors continue to be surprised about the trends in espn so the fact that espn's under pressure, and that the earnings are down, in that particular unit, really shouldn't be a price for investors now or a quarter from now or a year from now. the better news, and the more positive news that this is the first time disney has had a real clear strategy to execute to try to prevent some of those future losses >> you like this plan to go ahead and pull the content back, create their own portal and sell it themselves? >> absolutely. the idea of feeding someone else's platform, which is what

they've been doing with netflix, really is problematic for consumer companies going forward. because you really don't want to give consumers a platform other than yours to access your content. >> because you want to own that consumer and you want to control them, and not be helping somebody else's brand along the way? >> right and disney is one of those rare properties that's able to actually be a creative to the platforms it's part of >> greg, what's the chance that there is some cannibalization? we were talking earlier and i was saying i think the sorkin family, even though we are not subscribers, it would look like we're paying something like $20, $30 a month to disney just in terms of movies and tv shows that are bought, frankly, through itunes and other one-offs like that once a service like this were to come out, if it was 14.95, the sorkin family would get on that, we'd stop spending $30 a month how does that work into the numbers? >> there's so many different

dimensions to the pricing element of this. that it's going to take awhile before disney can really dial that in. absolutely, there's going to be cannibalization. the question's going to be whether the direct relationship as a consumer, and all of that data and usage information they're getting will put them in a position to offset those losses >> i think we can put to rest that disney's going to buy netflix as a rumor that one is dead >> i think that one died >> let's get the speculation going on apple buying disney what do you put that up? and just give me odds. do you think that's even realist ick? >> it's a tough one to see happening just because of the enormous commitment to content you would see happening there and the strategy of why that would make sense for either company is still not clear in my mind >> thank you very much >> thank you >> when we come back, wicked good cup cakes hitting the sweet spot with shark tank investor kevin o'leary. the company's co-founders will join us after the break. stick around, "squawk box" will be right back.

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now the answer to today's aflac trivia question -- in 2013 a mother-daughter duo hit a sweet spot on "shark tank." joining us now dani co-founder of wicked good cupcakes and her mother and business partner tracey noonan. co-founder and ceo of wicked new cupcakes and in full disclosure i'm an investor in this company. this is "shark tank's" first royalty deal and a monster success. dani, traci, welcome to "shark tank." and -- >> thank you for having me

>> i see you brought the product, too >> of course >> let's talk about the business right out of the gate. there's a huge speculation and started about two years ago that cupcakes were going out of fashion. you should be basically bankrupt now. >> right >> are you in the cupcake business or are you doing something else? >> we're totally a gifting company and that's the thing that has kept our momentum we now focus on the customer experience by providing our delicious cupcake jars in boxes like a birthday box. or a thinking of you box a baby box we are -- we're a gift if you think about, let's say valentine's day and women are sent flowers what do you send a guy so our product is unisex, it's an everyday product. there are birthdays every single day. we are a gifting company >> how is it like to work with your mother, dani? >> i really love working with my mom. i feel like i lucked out

meaning, i have a good family behind it to work with for example, mom, she does a lot of promotion of new products i handle all the daily operations, and i handle the location, and scott is our i.t. guy, and he's great with handling all of our finances, and all of our technical support. >> you guys are expanding into different product lines though, too? on the point that you're a gift, you're not just a cupcake company. what are the new lines that you're looking at? >> exactly so, we have these right here our alcohol infused cakes. i'm going to pass one down this one is absolutely delicious. it's my favorite, am rhetto hazel nut. we also have -- >> are we eating >> oh, absolutely. >> one bite. >> you have to try this. >> i was going to be good. you know me with carbs and baked goods. the second it starts it doesn't end. >> andrew stop your whining and chow it down >> this is a maple bacon and

whiskey. >> maple bacon and whiskey >> it is >> yeah, i'm going here. here, you want this? you go here. >> gluten free cupcake, which are delicious. we have flourless chocolate peanut butter that's to die for. >> flourless, do we have that over there >> yes, we do. >> pass that one over. >> here we go. >> oh, wow it's good >> thank you >> and we also have a new line of pies that are coming out. i can't really talk about them right now. but we'll have a celebrity who will be featured in the line >> isn't that -- >> who buys these things who is your customer what's the demographic and what area of the country. >> hold on i've got some questions. this is heaven right here. >> demographics are mostly women between the ages of 25 and 60. >> mm-hmm. >> perfect gift giving range and, like i said, there are birthdays every single day birthday box is the perfect way to say happy birthday. it comes with hats, candles, and

you can pick whether you want to put pie, cake or cupcake jars in the box. >> one of the most successful deals in "shark tank" history. the company keeps growing and they used the platform to get their company acquisition costs down to almost zero. talk about infusing. they were thinking about infusing marijuana into these at one time we had to say no we had to say no >> heaven in a jar >> thank you thank you. >> thanks for coming in. >> there was a lot of talking going on when you're eating but what do you have with your picture on it? >> that's the mr. wonderful. and it is the best flavor. >> what's in there >> i think it's got a bit of a peanut butter buzz to it, ily >>t's cookie butter. >> folks we'll be back with more news right after a quick break we check our phones 85 times a day.

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by the gig or unlimited. call, or go to xfinitymobile.com. xfinity mobile. it's a new kind of network designed to save you money. welcome back, everyone we are watching a developing story on the geopolitical fron this morning north korea says that it is carefully examining plans to strike the united states territory of guam with missiles. north korea state media reports the strike plan could be put into place at any moment that announcement comes just hours after president trump made this stern warning >> north korea best not make any more threats to the united states they will be met with fire and fury, like the world has never seen >> all this news hitting the futures markets this morning but really let's put this in perspective. we talk about fire and fury and the dow futures still down by only 51 points

s&p down by 10 the nasdaq by almost 44. >> and the spartan world championship, the super bowl of the popular and gruelling obstacle course races will be held september 30th to october 1st in lake tahoe, california. it's going to air on nbc and for those at home who'd like to train at your local gym before the big race you're in luck spartan race ceo and founder good morning to you. >> thanks for having me. >> so, are you -- you don't run it anymore yourself, do you? >> i do. >> you still do? >> not competitively i'm not going to beat the men and women out there now. they are the most elite athletes in the world >> so, what are the new obstacles for this year? >> so we've got -- we really wanted to standardize our obstacles, just the same way any other sport does you don't see anything change in football or hockey or baseball so we built obstacles seven years ago, and they've pretty much remained the same rope climbing, barbed wire crawl, walls that you're climbing over. all the standard stuff you probably have at home. >> your biggest competitor right now, tough mudder? >> they were

they were. we've eclipsed the field >> so you're doing about 60 million dollars a year in getting people to buy these tickets, and then run to exhaustion >> yeah. >> and you've done some -- three marathons in a week? can i -- let's be pragmatic here how many people on the planet can actually do something that crazy? >> well there are 7 billion people on the planet, right? and we're getting more unhealthy. and so there's a bunch of people, hundreds of millions, our goal is to get 100 million people healthy that will get out there -- >> but this is beyond healthy. i mean being able to run 26 miles three times in a week, that's spartan that was back in -- >> i ran 300 miles >> okay, but are you built in a unique way do you have -- >> absolutely not. you and i in 30 days could go out and do any of this stuff >> no chance in hell that's happening. >> anybody on this set we can go out and do it. we are built as human beings we're animals. we forgot we're animals. we're not supposed to be sitting

here typing and doing anything we're supposed to be out sweating, breathing heavy, running. this is exactly what we're supposed to be doing >> there's two versions of this. this is now almost like pro people, professionals. >> these are elites. >> and then there's the rest of us right? >> i would argue you're very fit -- >> how long would it take -- >> if i paid for it how long would it take to get andrew to be an elite? >> if you paid for it? i mean would you pay -- >> maximum package i can afford the maximum package. i'd like you to take the challenge. what would it be -- >> from now, six months. >> six months? >> six months, easily. >> and how much a day would he have to do >> he would train minimum 2 1/2 hours a day. >> why can't he do more? >> we could train more but at some point you're getting diminishing returns. >> so 2 1/2 hours a day. >> that's a lot. and that means sleep a lot, too? >> we get some sleep >> -- i can't eat these things >> get rid of the cupcakes >> talk about diet that must be very important. >> we're very focused on plant based diet less is more

contrary to everything we learn out there. and so, we would get him on a plant based diet he'd be training 2 1/2 hours a day. >> no meat >> very little -- >> fish? >> very little very little. >> what about protein? everyone says protein, protein, protein. >> listen, largest animals in the world, they eat plants >> interesting >> they don't mix whai proteins. >> i'd like to be in the gym beside andrew with a big steak watching him as he eats the plans and runs around for 2 1/2 hours. >> let's do it >> what about becky? she could -- >> becky could definitely do this mr. wonderful could do this. >> yeah, that sounds interesting. >> okay, can we make a pact here >> yeah, i'm not doing it. >> for next year >> i'm amazed. >> by the way, airs on nbc so it's all in the family. we could race together, bring our cameras. come on! >> i think we have to say one thing, though, you built a heck of a business. >> yep >> what you've done here is remarkable >> thank you >> we have a race in december in iceland. and so i don't know if you know

the producers of this show have you all coming out to iceland. it's a 24 hour event >> what's the date >> december 14th >> i'm putting it on the calendar >> thank you so much for coming in when we come back it's been ten years since the global fanalinci meltdown barney frank will join us on what's happened since that time. no, please, please, oh! ♪ (shrieks in terror) (heavy breathing and snorting) no, no. the running of the bulldogs? surprising. what's not surprising? how much money aleia saved by switching to geico. fifteen minutes could save you fifteen percent or more.

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tensions rising. >> they will be met with fire and fury like the world has never seen. >> global stocks slide as threats between north korea and the united states escalate ten years since the first tremor of the financial crisis we're going to talk to former congressman barney frank about what's ahead for bank regulation a decade after the meltdown. >> plus disney lets nix go ♪ let it go ♪ >> announcing it will launch its own streaming service. we'll tell you what ceo bob iger said as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box. good morning, everybody.

welcome back to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square i'm becky quick along with andrew ross sorkin and our special cotest this morning is kevin o'leary. shark right here on "squawk box. let's get a check on the global markets this morning stocks in the red amid some rising tensions between the united states and north korea. the futures are indicated lower. you do has closed up ten sessions in a row this morning the dow futures indicated down about 51 points. s&p futures down by 10.5 and the nasdaq indicated off by 44 in europe this morning, some bigger decreases the cac right now is off by 1.75%. the dax in germany off by 1.5% stocks are down in london, in italy, and in spain. and we'll have more coming up in just a moment. >> okay we'll have much more on north korea, but first today's top corporate story of the morning, disney going all-in on streaming. the house of the mouse offered a new direct espn service. disney will also end its distribution deal with netflix and pull its content from that

platform by 2019 and then launch its own streaming movie online service. here's what ceo bob iger told investors yesterday. >> we have tv library product but we'll be making a significant investment in original content both movies and television series for this platform exclusively if you're a family, or you're interested in the disney brand, you want to subscribe to extremely rich, robust, disney brand of service you'll be able to do it and we'll use the bamtech platform to basically drive or power the product >> take a look at shares of disney right now also netflix shares both down walt disney off about 4% in the premarket and netflix down as well, about 3.5% back to that developing story. north korea says that it is carefully examining plans to strike the united states territory of guam with missiles. north korea state media reports that a strike plan could be put into place, what they are saying, any moment secretary of state rex tillerson

is weighing in on that threat. and president trump just tweeting moments ago, writing my first order as president was to renovate and modernize our nuclear arsenal. it is now far stronger and more powerful than ever before. eamon javers joins us with what this all means eamon, good morning again. >> good morning, becky that tweet from the president coming just within the past few moments. it's more provocative language now today regarding america's nuclear arsenal. we also saw the secretary of state as you mentioned touch down in guam this morning on a flight refuelling stop for his flight this was previously scheduled not necessarily a response directly to north korea's threat to attack guam, but in remarks in guam, the secretary of state very much describing the president's comments about north korea as a deliberate escalation of the rhetoric. here's what the secretary of state had to say this morning. >> i think the president, what the president's doing is sending a strong message to north korea, in language that kim jong-un would understand

because he doesn't seem to understand diplomatic language i think the president just wanted to be clear to the north korean regime that the u.s., you know, unquestionable ability to defend itself, will defend itself, and its allies, and i think it is important that he deliver that message to avoid any miscalculation on their part >> the secretary of state there simply saying the president is speaking north korea's language in his remarks yesterday here's the comment that the secretary of state was talking about yesterday. the president was asked about north korea developing miniaturized nuclear warheads that could fit on top of a missile. here's what the president said >> north korea, best not make any more threats to the united states they will be met with fire and fury, like the world has never seen >> becky, despite this rhetoric, rex tillerson saying this morning that americans can sleep well tonight, saying that

there's no significant change in the military situation over the past 24 hours. so some reassuring language there from the secretary of state in guam. >> eamon, thank you very much. folks we are just getting the second part of the president's sweets this morning. we showed you the first part just a few moments ago now he's tweeting, hopefully we will never have to use this power but there will never be a time that we are not the most powerful nation in the world we will be speaking to former defense secretary william cohen at 8:30 a.m. >> it has now been about ten years since the first tremor of the financial crisis but what if you jumped into the stock market at that point mike santoli joins us. he's got that story. >> yeah, andrew. stupendously bad timing or bad luck if you did get in ten years ago today ahead of the greatest wealth destruction event in history. i decided to look back and say what if you had entered the stock market or bought a mix of stocks and bonds right at that moment what's your 10-year experience been

to me the surprising result is they're not that bad our annual return for the s&p 500 is about 7.8%, you know, per year that's not that much lower that's your total return including dividends. that's not that much lower than the roughly 10% that the s&p delivered over the very long-term. what did it take to get that decent return? well, what it took is first of all you had to wait out a 47% decline that took place in a year and a half's time once you were already into a bear market before lehman failed you went down another 40% if you bought at that moment. so it was awful and it tested everybody's patience along the way but it also took trillions of dollars in central bank intervention one of the great long and strong bull markets of all times to this date that stretched stocks into the upper end of its historical valuation so basically the idea is, yes, this is the old buy and hold -- >> as i said that makes buy and hold sound like such a good deal >> exactly time is your friend. the markets ultimately will bail you out. i also think it's important to recognize in the moment you're going to doubt that wisdom it's going to hurt if you pay any attention at all

you're probably not going to follow that advice if you really do kind of wed yourself to the day-to-day >> or if you -- >> also remember bill gross saying dow 5,000 makes some sense when dow was at 7,000 or 8,000. >> this is actually good news. for those out there watching thinking to themselves that they think we're on the precipice of something terrible, and i'm not suggesting something terrible is coming, that's actually -- >> does this speak to why you wouldn't want to pay somebody to market time for you. so much of what we do at financial services is tell people, pay me and i'll know when to go to cash pay me 2% or 20% of your profits and i'll know when to go to cash that's what the hedge fund guys say. this data you've just shown us says forget all that buy an index by an etf and sit there. >> it always feels that way when you're deep into a bull market in general it's very hard to pay somebody to dance around the moves in the markets but there were many stretches, during this period, when the 10-year return of stocks was negatively right? so if you're looking at the same 10-year return in 2010, you say,

wow, i wish somebody could have gotten me out of this, out of the way of this bear market. i do think you're still going to have that argument in the market even though the evidence suggests that that patience ultimately will get paid for >> mike santoli appreciate that. stick around, former democratic congressman barney frank is with us the co-author of the dodd-frank financial reform act he's also the cnbc contributor and the author of "frank: a life in politics" and we welcome him to the program ten years later, where do you think we are are we back on the precipice or in a much better place >> well, we're in a much better place on two counts. first of all, the economies adone very well. the argument that the legislature that we enacted in 2010 was going to be a job killer, or particularly destructive to the financial industry has clearly been repudiated by the facts. it has done very well. i was interested to see president trump announce that the economy was doing so wonderfully, in his first six months, and i did want to note,

that's despite the fact that two supposed job killers are still fully in effect, the financial reform bill and the health bill. i know he thinks he could make it even better seems to me hard for someone to argue that those two programs which have been in full effect during his entire presidency to date are totally destructive of the economy, and then brag about how well the economy is doing. the fact i think what we have done is substantially diminished the chances of there being a crash course by irresponsibility of the financial community while in no way diminishing economic activity >> congressman frank i have to ask you a question as an investor in the financial sector not everybody loves you. and i want to tell you there's one group, and i'm just asking you to explain, because you've recently been on the press with this, regional banks feel you've done them wrong. you constricted their balance sheets in a way that they can't compete with the big guys >> first of all -- >> any regional bank, frankly,

i've heard you say yes if i could do it again i would have given them some more relief. they got the same onerous terms that a mega bank had and they don't have the same revenue streams. is it fair what you've done to them would you change it? >> well, first of all, i'm sorry, i am staggering under your revelation that not everybody loves me and i will try to regain my composure and deal with that crushing -- >> i have to deal in reality i love you >> well, i kind of regard that at the same category the point is this, we did, in fact, impose on the biggest banks more restrictions. it's not the case that they all got to see secondly, if you look at, for example, the way that the stocks work with the stress tests the biggest banks have been told that they couldn't pay dividends, as you know jpmorgan chase and bank of america, no

regional bank has been told that, in that same way secondly, i do acknowledge that the $50 billion limit, at which point you should be subject to special increased supervision is too low and i felt that way and i agreed with dna in 2013. but the point i would make is this, exactly one bank in the entire country has moved from below 50 to over 50. in other words, no regional bank has had its status changed because of that. and i, having said that yes, i do agree we should raise the 50 to 100 or 125, but beyond that, no, it is not the case that regional banks are subject to the exact same rules that jpmorgan chase are so, yes, we can -- >> the regional banks provided all the loans to small business. and when they got much more onerous in terms of capital requirements on their balance

sheet they stopped lending -- >> statistically -- excuse me, that's not statistically true. it was not a sign -- >> let me finish the question. why did you even have to care about them, because the too big to fail doesn't apply to a regional bank. who cares if a regional bank with $10 billion goes bankrupt that doesn't change anything let them -- >> i don't know -- >> let the market decide >> first of all we had -- >> just asking just asking. >> well, if you keep saying just asking, i don't get to answer. >> okay, please answer >> the fact is, the fact is that i have to challenge your premise. there has not been any statistically clear sign of any failure of loans to smaller business i also misunderstood your question when you talked regional banks i thought you were talking about the banks in the 60, 70, 150 range. we generally talk about the banks under 10 as community banks. i do degree that they have had some problems, and i am for giving them some relief. i also would acknowledge that there has been a case where they are making in many cases fewer

loans. but those loans haven't disappeared from the system. it's damaging to them and i want to give them some relief there is no sign that smaller businesses are having overall trouble getting the loans. there's one other factor i want to mention, much of the problem that these smaller banks in particular are complaining about have nothing to do with the bill that i co-sponsored with senator dodd much of it has to do with money laundering the drug and terrorism stuff, there is for example some people, know your customer people complain about the know your customer requirement, that's not in our bill in fact, if you look at it, as i said, much of the problems come from the whole set of bills, the money laundering, bank secrecy act, the notion that the law that tripped up dennis hastert and wound up going to prison, not in our legislation having said that i do think the banks under $10 billion have been spending more money than they should have to to try to comply with things that nobody

ever thought they would have to deal with. so i do think they should be exempted to the volcker rule once again i ask you, where's the evidence that in the economy as a whole there's been any constriction of lending, where it's needed? >> congressman, while we have up here i wanted to get your reaction to the litany of various scandals we continue to hear about at wells fargo, and why you think that those occurred, and were allowed to occur given some of the rules and regulations that you put into place >> oh. many of them began before our rules started. but i take some pride in the fact that they are now being uncovered. there's no reason to think that wells fargo suddenly in the last couple years started doing things when they were pristine before and i think it's a good thing that we have, for example, the consumer groups, which republicans in the house voted essentially to abolish, you know, can i just note for people who are concerned, that

republican vote in the house to essentially undo almost everything we did, has the same validity as those repeated republican votes to repeal the health care bill when they knew they were going to be beaten all the republicans voted for that -- >> i would just know that the "l.a. times" discovered the problems at wells fargo long before the consumer protection bureau did >> right but the consumer protection bureau was the one that cracked down on them for having done it. that is true but the fact is that before you let a consumer bureau, you did not have a credible agency whose mission it was to deal with those kinds of things. and it was the consumer bureau that took tough action about it. so, you ask me why it happened it happened because there's been a culture in the bank over the years, particularly worse in some than in others, that you only worried about making money, and in particular, this is a big part of the problem, comes up with the whole arbitration versus lawsuit thing the problem has been that these small abysses, the smaller one individual, not enough for the individual to sue.

and that's why i do regret this eclipsing of the possibility of lawsuits, when a whole lot of people are being cheated out of small amounts. >> congressman, we're going to leave it there always great to talk to you and we look forward to talking to you again. hopefully we won't be talking about a crisis thanks when we come back, just six months until athletes from around the world arrive in south korea for the olympic games. we're going to check in on the preparations, amid rising tensions with the country's neighbor to the north. plus we will talk about the north korea threat with former defense secretary william cohen. that's coming up at 8:30 a.m. eastern time you are watching "squawk box." c toothbrush really cleans... ...better than a manual, and my hygienist says it does. but... ...they're not all the same. turns out, they're really... ...different. who knew? i had no idea. so, she said look for... ...one that's shaped like a dental tool with a round... ...brush head. go pro with oral-b. oral-b's rounded brush head surrounds each tooth to... ...gently remove more plaque and... ...oral-b crossaction is clinically proven to...

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welcome back to "squawk box" this morning shares of generic drugmaker mylan taking a hit mylan reported quarterly profit of $1.10 per share that missed estimates by six cents. revenue also missed forecasts. also taking an expected revenue from new u.s. launches out of this year's guidance moving it to 2018. cited challenges in the north american market including uncertainty in the u.s. regulatory environment we are just six months away from the start of the winter

olympics in south korea. but what are the security concerns as tensions mount with north korea? contessa brewer has more on that right now. good morning >> good morning to you, becky. the state department says it is working closely on security with south korea to protect next year's games there are no travel warnings for south korea. and, in fact, more than 150 staffers and athletes from the u.s. olympics committee have traveled there in the past year. but a travel ban to north korea goes into effect september 1st and pyeongchang where the olympics will take place, preparations are on schedule more than 50,000 hotel rooms in surrounding areas secured. they're just moving forward. organizers expect some spectators will stay in seoul and commute to daily events on this new high speed train to pyeongchang. service cuts travel time from four hours to one hour that's significant >> we need that here >> half of the 12 olympic venues here were built before pyeongchang even won the olympics bid so they're well on their way. ski jumps already hosted the

international competitions there. the organizing committee tells us of the six new facilities, they're 97% completed. we're seeing real progress if it seems like a well oiled machine, don't forget south korea hosted the olympics in seoul in 1988. >> hey, they've been to the big circus before. >> and many of those venues are still in use today the country just doesn't want to get stuck with the gargantuan white elephants that we saw in rio. already nine of its venues have owners in place for after the games. ticket sales, though, they're lagging. in south korea less than a quarter of the target goals, selling mainly for the opening and closing ceremonies, figure skating and short track speed skating. of course those are sports in which the countries excels organizers say koreans are notorious last-minute buyers so they think the ticket sales will light up once the olympic torch relay kicks off in november. >> six months seems like not too far away but i can see that being, you

know, people haven't really been -- >> it's not in the media it's not everywhere. so let's see what happens now with six months out. >> what about the impact in terms of united states travel to south korea as we've been hearing all of this rhetoric >> they've actually seen it increase they say it was up significantly this year versus last year although there was a softening in may and june. whether that was because of the threat of north korea, or because of summer destinations being somewhere else but significantly, they're seeing tourism drop off dramatically from china. which is their biggest source of visitors makes up 50% of south korean visitors, and china has put in a travel ban because of repercussions over the defense system, south korea is working on with the united states. >> wow >> they banned travel companies from organizing tourists to south korea, so they've seen a real -- >> as punishment >> marketing here in the united states to try and pull some people out of here into that market to the actual events? because i haven't seen anything online for tickets >> well, they're not for sale

yet for outside of south korea so that's one reason why we're just focusing on what ticket sales are doing in south korea and what the culture of last minute buying means. they haven't gone on sale here yet. so we may see that now that we're six months out, and when ticket sales start opening to the worldwide market >> contessa, thanks very much. >> sure. >> coming up when we return, president trump gives a strong warning to north korea former defense secretary william cohen is going to join us at 8:30 eastern time toalk l tal about it "squawk box" returns in just a moment

♪ that is legendary musician glen campbell. he died after a public battle with alzheimer's he was the first artist to win grammys in both pop and country music categories with his breakout hits, gentle on my mind, and by the time i get to fee next he co-starred with john wayne in true grit. he hosted a television variety show and played guitarist for some of the best artists in history. kevin o'leary has been talking about this >> big fan of the wrecking crew. he was a member. he actually was on some of the beach boys albums. >> elvis, the beach boys, frank sinatra, the mommas and the poppas all of these acts that you were listening to even when you didn't realize >> a session guy that broke out and had an amazing voice

>> glen campbell was 81 years old. when we come back we have some breaking economic news second quarter productivity and labor costs about to hit the tapes. plus, the former defense secretary william cohen on the rising tensions between the united states and north korea. what it all means. stay tuned "squawk box" will be right back.

from second quarter productivity and labor costs. let's get to rick santelli at the cme. take it away >> all right we're looking at second quarter. these are preliminary. they're going to change a bit. on nonfarm productivity expecting a number around 7 cents. we ended up with more, up 0.9. just shy of 1% and last month's, q1 first quarter moved from zero, unchanged, to up 0.1 now let's look at the associated labor costs on the other side of the ledger up 0.6, just about half of the 1.1 we expected. and last look, well, moved in the opposite direction, from 2.2 to 5.4

so, big move on last look with regard to final first quarter on unit labor costs that productivity number up 0.9. how does that measure up it measures up that it's better than last month which rise up 0.1. but prior fourth quarter 1.8 third quarter the high water mark recently up 3.3 we really need to get these productivity numbers higher. but at least this one is a bit better still whole sale trade at inventories. yields move back down. we always debate as to whether there's still flight to safety issues in a market with low volatility that seems to be able to assimilate and accommodate everything i do think that we actually had a response in treasuries to some of the news regarding north korea and those issues keep a close eye on the dollar index and cross currents with the dollar/yen becky, back to you >> rick, we have a response but maybe not one that would seem to rise to the level of the rhetoric, and the new developments that we've heard on this front why do you think that is

>> because i think we now live in markets where people on key boards are masters of the training universe. and to try to do things that may or may not occur in the medium-term just is too long of a time line. i think traders believe they can deal with these things in a more pro-active way, and let's face it, there's a lot of issues, whether it's the middle east, north korea, that have gone on literally for decades, and with respect to how you trade these issues, you could be concerned but it seems as though that concern is short-lived in the market >> you think that's complacency? or you think that's just reality? >> i think that's reality. and actually, if you go back in time, market's been hard to handicap during geopolitical i remember in the first gulf war very clearly how everybody thought that once the green screens went, and things started to happen, that oil would go crazy. it did go crazy. before it all happened, it went down that wednesday. i remember

>> rick thank you very much. it's great to see you. in the meantime, secretary of state rex tillerson responding to president trump's warning to north korea saying that the president sent a strong message and language that the north korean leader would understand joining us right now is william cohen, former u.s. defense secretary during the clinton administration he's also the former u.s. senator from maine and he's currently the chairman and ceo of the cohen group and mr. secretary, thank you for being here today >> good to be with you >> how do you read all the developments over the last 24 hours when it comes to north korea? well i think the president has engaged in what i call bombastic language and i don't believe the north koreans are going to take that as a serious threat if he says if you threaten us one more time we are going to unleash fury the likes of which you've never seen. so the first thing they do is make another threat. i think that they are convinced that the united states is not going to launch a preemptive

attack based upon one of their rhetorical threats and therefore they're going to keep challenging the president i think the best thing to do is what secretary tillerson is doing. everybody calm down. lower the rhetoric last week the president said in the wake of a missile test by the north koreans, grave consequences were going to follow secretary mattis went out very soon thereafter and said, wait, the president's not suggesting military action, but rather stronger diplomatic and economic sanctions. which is exactly what happened we were very successful in getting those sanctions. so i think the people surrounding the president are tamping down the rhetoric and i think that's the right course to take rather than accelerating or increasing the level of the rhetoric itself. >> how effective do you think these economic sanctions will be first of all, will they be fleeced properly by the chinese? and second of all, do you think it will have an impact on how the north koreans react? >> i think there are two things that have to take place. you have to beef up the

defensive capabilities of south korea. president moon has put the thaad missile system on hold i met with him when he was in washington recently and he has concerns about why this was done and how it was done. but he has to put that back on the table and make it active right away i would suggest in addition to that the japanese consider having a similar system. that's is going to get the attention of the north korean and the chinese and others then you crank down on the ability of the north koreans to do business. and then target our allies who are doing business with north korea saying if you continue doing business with them you're not going to be doing business with us. i think the combination of having a much greater defensive capability, much tougher sanctions, and then go to the north koreans saying life could be better for you, but not the way you're pursuing. and finally i would institute a propaganda campaign.

i would try and drop free phone service to all the north koreans so they can see see what is happening in the south and compare that to their lives. >> propaganda suggests it's not true you're suggesting we open up the truth? >> i'm suggesting we drop the truth on them. and yes, an information campaign as opposed to a misleading or false fake news. information campaign, this is what your brethren are doing down south, how would you like to live like that? and i would continue to proliferate that message in addition to everything else taking place and then perhaps the north koreans will come to the table after having their eight or ten or 20 missiles they have and say okay we've achieved our goal here, we're ready to sit down and talk to the united states with our compatriots, the chinese, and the russians, and the japanese and others. i think that's the way you bring about a deal not by threatening to unleash -- >> mr. secretary, what about the goal of unifying this country? in the same way germany was

unified and became an economic success. what about the possibility i'm not a war mongerer here. i'm asking, at what point does this country be better off together and would the chinese ever let that happen? where do you stand on that >> actually, i have made that argument to the chinese. and have encouraged them saying, look, south korea's one of your best trading partners. north korea is a liability you're worried about a unified korea, with a military presence on your border that doesn't have to be the outcome. you could have a unified korea, in which case part of that agreement, the united states would substantially reduce its presence, and you would have a korea that would be productive, efficient, and one of your trading partners without a substantial military presence by the united states. that -- so i've argued to the chinese you're playing checkers, when you have a reputation as playing chess. look at this chess board and see how you could bring about something that's in your interest your economic interest and your strategic interest

so i think your suggestion is one that i've tried, and i would hope they would consider at some point in the future. you could have a unified korea it would be peaceful, rather than have this constant friction and potential for going to war, which would, in fact, disrupt the markets if you're talking about a nuclear war being carried on in the korean peninsula. that would affect the chinese. it would affect the entire asia pacific region the markets would respond then, for sure >> secretary cohen, thank you, sir. >> pleasure. the white house wants to simplify the tax code by eliminating deductions, but closing loopholes may not be so easy ylan mui joins us from washington to tell us why this morning. >> andrew, there are nearly 200 loopholes in the tax code. and getting rid of all of them will be worth an estimated $18 trillion over the next decade. the tax foundation ranked the biggest ones, and it found that most of the benefits by far goes to households, not corporations.

$15.6 trillion, versus just $2.7 trillion over the decade now the largest individual loophole is the ability to exclude employer contributions to your health care premiums from your income in other words, you're not taxed on the money that they pay towards your medical benefits. that's worth an estimated $2.9 trillion now the mortgage interest deduction, which always gets a lot of attention, is actually number five on their list at $895 billion on the corporate side, the giant loophole is multinationals deferring taxes on foreign income the tax foundation estimates that costs $1.3 trillion in federal revenue. accelerated appreciation is worth $154 billion and there's also an incentive for companies to manufacture in the united states, that's about $152 billion now when you look at the other laundry list of loopholes that could be considered as well they include railroad retirees, carve

out for student loans, carve out for foster care. republicans say that wiping out almost all of these loopholes will help pay for an across-the-board tax cut but closing any one of these is going to be hard because there's a vocal and often very valid constituency that's going to fight for each one that's why they exist in the first place. >> okay, thank you for that. coming up when we return, casual dining restaurant p.f. chang is ditching up a ding south central strategy we'll talk to the ceo right after the break. first a quick check on futures we are in the red. dow looks like it would open off about 37ois. you're watching "squawk box" on cnbc

welcome back to "squawk box" this morning check out shares of wendy's. the restaurant chain beat on the top and bottom line. wendy's said one-third of its global stores have been reimagined, as it continues a planned revamping. we're going to continue the conversation about food. the battle for the stomach is intensifying p.f. changs is one company confident it can reset its brand. joining us right now is michael osanloo the ceo of p.f. changs did i get that right, sir? >> you did, andrew shaw very much >> you brought us food we'll eat that in just a second. we've been eating thisother stuff -- >> you want to have your meal before dessert >> my mouth is watering. why do we have to kuwait >> you want to go for it >> i'm here and it's there >> go in, dig in

>> thank you very much that looks -- >> okay so while he's eating, let's talk about what's going on it feels like it has been a challenging environment right about now. >> yeah. i think that's a fair characterization you know what it is? i think there's a bifurcation happening in casual dining people who cook real food with integrity are going to do well you actually see that if you look across casual dining. i don't know if everyone knows this but everything that you eat at our restaurants is made from scratch. and i feel confident that the direction america is headed, that from scratch cooking, made to order, is going to do well. if you don't do that, i think you are struggling >> we've seen a lot of go privates >> yes >> in your spice what's going on with that? >> i think you're in a cyclical phase where public markets are more and more nervous. >> right >> and i think private markets see the long-term potential in casual dining. so i think there's an expectation that private money, if you're willing to invest for three to five years you're going to do very, very well in casual

dining >> you and others in some cases are attached to malls, shopping malls. >> yes >> we are -- you know, if you read the headlines you think that we're in the retail apocalypse >> yeah. >> how is that impacting your business, and how do you see this in the future >> well, here's what i aid i think there are malls and then there are malls. and the malls that are winning actually have some form of retail entertainment happening so whether it's restaurants, it's other entertainment, anybody who can draw people to a mall are going to do well. and that's what we do. if you look at our performance, and you know, we have a little less than 40% of our restaurants associated with malls, they're actually doing just as well as the restaurants that are in free-standing centers or lifestyle centers. which tells me that our guests are willing to travel to malls, and it's actually putting us in a relatively good position -- >> give me the down-low on your typical guest? >> our typical guest is evolving they're typically around 45 years old, college educated, and they're people who frankly care about what they eat.

>> that also applies to a younger demographic. i just tried it. it's delicious >> thank you >> now, i probably got 20 people in my office who are between the ages of 25 and 35 years old. >> yeah. >> every lunch, a big debate rages about where we're going to go get take-out or whatever on two metrics. >> yeah. >> salt and sugar. >> right >> is that something you now have to deal with. when people say how much salt does it have how much sugar how many calories is in it >> this is delicious but it must have salt. it tastes great. >> yeah. i think you're raising really good points. which is that, more and more, people care about what they put in their bodies. and this is not a millennial phenomena or a boomer phenomenon everybody wants to feel good, eat well, and really, honestly, live a little bit longer and so as a restaurant company, it's incumbent on us to work hard to think about that and so, we paid painstaking attention to everything that we do you've got some green onions in there, right we believe in our farm-to-wok platform our green onions are sourced

from a third generation japanese family farm in southern california you ask them, the farm, they will tell you that we are incredible exacting customer that we want perfect 18 inch blue-green stalks, it's got to taste great. >> i have another question, chipotle, the disaster of the imagery there. they went direct to farm, they had quality issues, they sickened people and then you had animals falling from the ceiling. that must be the nightmare for you as an operator how do you make sure that doesn't happen to you? >> it's always a balancing act we source 25% of our produce is sourced locally. because we have very strict controls in our supply chain we've got to feel 100% that we're buying things that have a clean history. that we know that we can put in front of our guests. and you just can't get people sick in this industry. >> we have to go but one thing, technology. >> yeah. >> in particular i know what you're doing on the supply chain. i don't know if it's a delivery business we had the cho of grubhub on recently big question of whether you think amazon is eventually going

to get into the space, not just through whole foods but whether they're going to try to partner with restaurants and do delivery themselves >> i'll tell you a little secret, they're a very good partner of ours already. >> amazon is they've been a very good partner to us. we have great partners in grubhub and amazon eats and i think that's an exciting place for casual dining. >> how big a business is that for you? >> right now it's small but growing at an astronomical clip and i suspect it's going to be a very material business in the not too distance future. >> michael, thank you for coming in >> our pleasure. thank you. >> when we come back, jim kraker will join us live from the new york stock exchange. we'll get his change on today's top stories. check out the futures under just a little bit of pressure this morning. looks like the dow is -- oh, there's a starbucks chart. but it does look like the nasdaq is down by about 25 points below fair value we'll be right back.

what do you think about disney what they came out with on the announcement with the short-terms for the earnings and long-term for over the top.

>> he had to do it he's trying to show how much that bundle is worth that it's worth more than the $70 that approximate public pays but the problem is the investment it's going to be huge. if you add up all the things he has to do there's a huge amount of investment. what is he going to do every single quarter a down number who would own that stock he has to do it. there's no choice. >> and stuff that's probably not going to pay off until after he is gone but he is setting the company up i would say for years down the road. >> apparently there's no search firm i think he's going to stay to see this through and he has to this is a very difficult thing to navigate. we understand how robust it s. i know that they pay for a lot for programming but at the same time have to tell you, this is a moan youme -- monumental shift.

>> what do you think about netflix pulling the disney content? does that change the metric for them >> no. they're spending so much money develop og their own programming. it's vital the marvel programming for netflix is fabulous and that could become in play it's not yet but those are some of the series that people love. >> we had a couple of analyst that suggests that other content producers are going to have to follow suit and i wonder what the landscape looks like with everybody with their own over the top services i don't know what that means for shareholders. >> yeah but i think that it's coming more than anybody who is now taking aim, reid saw it coming because if you look at the things that drive subscriber growth international, you think think it's disney but it's not that's not in keeping with the conference call. netflix is make everything up on

the conference call and i don't think they are. >> we'll see you in a couple of minutes. right now a quick programming note, tomorrow on squawk box david runsinbete will be our guest host we'll be right back. your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall.

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he told heine could suffer politically for his support of donald trump during the 2016 campaign in the e-mails from last summer the netflix chief writes i'm so mi mystified that it moves me from different judgment to bad judgment and not what anyone wants in a fellow board member now peter thiel spoke on his behalf at the rnc convention weeks before hastings sent the e-mail but if you think things are getting politically correct one way or another this is an

example of how complicated it's getting. >> in the last six months since i travelled the country, particularly places like texas, fargo, tiny towns, i learned that the politicians on both sides is very high and when you talk about mccain, that speech get nothing done and then votes down the change and he got nothing done too, most young entrepreneurs today in my staple have a very very low regard for politicians period so what i have learned is that when we make assumptions sitting here in new york and boston and talking about what is going on in washington more than half of america couldn't care. that's what i think. >> what do you think about getting involved in politics or even speak publicly about their own politics or giving money and i say this because jami jamie dimon was just on our air. he tried to stay out of politics but gets pulled into the

political situation. this is an example. >> it's a great question if you asked me six months ago i would have said freedom of speech should rule always. now i tell them stay out of politics 50% of your customers will be unhappy with whatever you do. >> it's gotten uglier. >> it's gotten uglier. particularly on how fast social media hits my companies they're using it to acquire customers. if there's partisanship you lose customers so now, we debate this all day long because we're on probably different spectrums, i don't know where he is but, you know, it's a very interesting -- >> it's on the day. >> the point is i think you don't want to hurt your business and politics is now hurting business. >> do the managers respond in kind to that do they see your point of view >> i look at their sales quarterly and i point to specific cases where they have gone into their, their city and done something for one side or

the other and then my own team that shows them the social media, the blistering social media, you have no idea how you can read it. you do, you're obviously signature here it's brutal. >> thank you for being with us. >> it's been so much fun. >> the diversity of conversation here makes this show amazing think about all the guests we had probably 30 or 40 since have been here it's been wonderful. >> it's been a pleasure. >> you made it wonderful, mr. wonderful. >> now i have you wearing a jacket andrew. >> it's a big mistake. >> that does it for us today make sure that you join us tomorrow right now it's time for squawk on the street. >> good wednesday morning and welcome to squawk on the street. some flights to safety this morning as we watch developments