exclusive interview this morning. it's tuesday, june 5th, 2018, and "squawk box" begins right now. ♪ i'm gonna run to you ♪ yeah, i'm gonna run to you >> announcer: live from new york, where business never sleeps, this is "squawk box. ♪ i'm gonna run to you all right, good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen let's look at u.s. equity futures this morning at least right now it looks like things are set to open higher once again dow futures indicated up by about 40 points after the dow was up by almost 180 points yesterday. a couple days of big gains that we've seen for the markets and as joe mentioned, the nasdaq was the real outperformer. it was up yesterday, actually by about 0.7%, very close to what we saw with the dow, but that did put the nasdaq at another record close it's the first time we've seen a new high for the nasdaq since

march 12 russell 2000, small stocks also closing at record levels as well s&p 500 closed at its highest level since march 16th it now looks like the s&p 500 is set to open up another five points this morng with the nasdaq indicated up by about 28 points let's take a look at what happened overnight in asia you'll see that the nikkei ended up by about 0.25% higher, a gain of 63 points to 22,539 hang seng was up by 0.3%, and the shanghai positive up by about 0.75%, closing at 3,114. meantime, in europe in some of the early trading already taking place this morning on the continent, you'll see that most of the markets are higher. the dax looks like it's up by about 1% the cac in france up by 0.6% and the ftse a little lower, down by just over 0.4% if you look at what's been happening with treasury yields, you're going to see that this morning the en-year yield continues to creep a little

higher, 2.928% right now. our top corporate story, maybe it's also a political story, starbucks executive chairman howard schultz will leave the company at the end of the month. that decision already stoking speculation that he's considering a run for president in 2020. schultz told andrew ross sorkin that he's concerned about our country, the growing division at home and our standing in the world, and that he's figuring out the next chapter in his life, which could include pu service. shares of stbucks were little changed yesterday after the news andrew is in seattle, and he will join us with howard schultz at 8:00 a.m. eastern for an exclusive interview. elsewhere, it is day two of apple's worldwide developers conference ceo tim cook kicked off the week with an announcement about the money generated by the app st e store. >> i couldn't be happier to announce that we now have over 20 million apple developers around the world

we're also happy to announce that this week we're going to achieve another huge milestone the money that developers have earned throu the app store will top100 billion. >> joining us now, the global head of technology research at hsbc steven, i wonder if more of the story is the, sort of the overhang that we all sort of seem to be coming to the conclusion that we don't know about the long-term effects of a lot of what our kids are doing and what we're doing, and actually to have a company say we're going to -- i don't know how it'd work, but we're going to find a way where -- we're going to limit your use of certain apps and time spent on the iphone think if they did that without asking you about it, where all of a sudden, it would cut out. you'd be furious if you were doing something and they said, like big brother, no, you're not allowed to do that

so, i guess if it's self-inflicted it might be something, like if you set it for yourself it might be like a diet or something. but remember with facebook when one of the co-founders admitted -- >> they had been trying. >> facebook admitted, we don't know what it's doing to our kids. >> but also admitted that what we've been doing for years is to try to find ways to get people to spend as much time as possible -- >> and we don't know the long-term effects. is that the biggest thick thing? what's ios 12 going to do? >> look, we're addicting to these devices and we have to balance our time the first step is measuring and analyzing. that's step one. >> it's not cutting down, it's giving you -- >> i think it's a tool that -- >> it already does that, my battery use -- >> i came in with 2% this morning on my battery. i couldn't wait to get in and plug it in. >> if i get below 70%, i get nervous. >> you fill your car up with gas every day. >> yeah, exactly. >> the key themes and takeaways

from this ios 12 launch are around a few different areas first of all, performance. they're increasing the response time and launch time and they're making that backward compatible to prior-generation devices as well second theme i think's around augmented reality. we continue to see this move towards more depth perception, whether it's in anemojis or increased interactive augmented reality games we're going it see. third, i think machine learning's important we're seeing that with photos and also with siri getting better and better, having more voice controls as well so, i think they're giving us enough tweaks and enough enhancements to keep us interested in these products. >> so, if you tell siri something about that you want to do on the iphone, maybe it can actually figure it out it certainly can't figure out dictation for me yet, but it's getting better i guess i need to give it another shot with some of the normal commands that i'm still typing in. >> yeah, i think we're seeing continued improvement on this. the ai is learning and it will get better over time more importantly, i think they're integrating more

third-party apps so you'll be able to work across other applications, saying hey, siri, order me a cup of coffee at the local -- >> starbucks. >> starbucks, yeah. >> try to merge, try to keep us, some synergy, since that's going to be talking about that all morning. hey, it seems to me that apple's stock has kind of come to grips with these incremental additions. they're no longer looking for a flying tesla automated car with an apple tv set. so, now the valuation that ople have been talking about for so long, i mean, it was reasonable in terms of, i mean, if you look back at the internet bubble i mean, apple shares were what, like ten times -- >> especially net of cash. >> yeah, net of cash so, you think it's a trillion-dollar company. it's over 900 already. >> if we go back six-nine months ago, there were a lot of expectations for a big iphone supercycle that was a bit of a

disappointment maybe the iphone 8 wasn't differentiated enough and the iphone x, maybe the price point was too high, but we have enough interest to keep the iphone units relatively flat with a moderately rising blended average isp, so that 60% of the business is relatively stable, and as long as that's stable, that's more comfort of a foundation and we can grow -- >> w's the growth? >> services -- >> services. that's been the surprising issue. >> some of the wearable stuff. >> but services in particular, that's been the big surprise. >> i'm most excited about services a couple numbers they've given us they said the active install base of device is 1.3 billion, they have about 270 million subscribers, growing more than 30 million quarter on quarter. if you just think about the subscriptions you can have yourself, apple care and icloud and apple music, you could have three by yourself. so that active installed base could be 4 billion-type number, if you will, of subscription opportunities, and they're going to continual add more services to this bucket as well. >> that's what's been such huge surprise, i think, to the street. >> and it's the highest margin business and is growing quite

nicely, so that helps keep the story going. and on the stock buybacks and capital return programs, we're modeling about 8% operating profit growth in fiscal '19, but if you buy back 8% of your shares or so, you get high teens-20% eps growth. >> this is not an expensive stock from your perspective? >> on the reported consensus numbers, roughly around 15 times pe multiples and continuing to grow eps on that if we grow with just the eps growth and keep the same multiple, then the stock can continue to work. >> we're going to talk to a couple of general tegists after you, and one of the points being made is yesterday or the day before i heard -- maybe it was yesterday. day before was sunday. but saying safety is now f.a.n.g. stocks. >> yes that is what i wanted to start with, too, but -- >> safety used to be value stocks, and now people are sort of saying -- >> but that's what i want to talk to with these guys is that entire idea. why don't we bring them in now ed and eric are here you can all talk about this issue. just the idea that the.n.g. stocks, as joe's talking about,

they are value stocks. if you look at the earnings per share that they've brought in, it's grown much more rapidly than their prices have, the stock price has. so, does that make them a new value stock? >> well, a value stock is what the put pale is, but it's also the growth rate and dependability of the growth rate so, if you really believe, as many people do, that these stocks as a group are going to continue to grow earnings 10%, 15%, 20%, if they're selling for 15 times earnings, that's a cheap stock. >> but are you a believer? you're saying that this is the theory and how it goes do you put your money where your mouth is with that would you buy these stocks at these prices >> well, the approach we take is quantitative, and also it looks at stocks not just as a thing in itself, but compared to other in their industry, in their sector, both in the united states and around the world and when you do that, you find, actually, there's some pretty good value in some technology stocks, both in the united states and things like indian software companies look pretty cheap to us. >> eric, do you agree? >> we're not going to call the we will say they're goodocks quality, and that's a big change from kind of the last cycle.

i read a bloomberg story yesterday that pointed out that if you take netflix out and you drop microsoft in, then it makes a lot more sense. >> yeah. the quality of earnings, the consistency of earnings is very strong i'm going to highlight a couple things that are key themes for us right now that apple epitomized one is the buybacks that they announced $100 billion even if they don't do that much, the s&p 500 companies have announced $650 billion worth of buybacks that's 3% of s&p market capitalization throw that on top of the 2% yield. mpanies are committed to giving you 5% of the value of the s&p 500 over a 12-month period whether the buybacks come through is another question. but that says there are still some opportunity here. the other element is whether there is continued spending on capex or increased spe capex, and that could extend this cycle and you're starting to see more and more evidence that that capex spending is picking up it's not anemojis making us more

efficient, but other aspects of this technology that is disruptive and increasing productivity. >> important point if we're going to continue this cycle, we have to get productivity growth up so, as much as an investor and money manager, i'm delig to hanies buying back stock, but i would much prefer that people put money into productive investments that can extend this growth cycle and bull market. >> agreed. >> i've been a technology analyst for a little more than 20 years and one of the things that gets me most excited today is really the breadth of dd that's going on. the last five, ten years, we've kind of been sitting on a one-legged stool called smartphones. now that we see the breadth broadening out, in your areas like data center, the capex that's going on, significant amazon big increases even apple's capex is up a lot maybe this is u.s. tax reform, maybe accelerated expensing, asia infrast going on, but i think there's a lot of reasons to drive this breadth of demand, this increased digitalization that's going on across all industries we recently wrote a report on disruptive technologies leveraging every hsbc analyst around the world, and i was shocked to hear things like the digital oil field and using

blockchain to track conflict-free diamonds the point is digitalization i think is driving a breadth an't put our finge it d becae like we could with smartphones. >> and i would argue that productivity numbers are being sharply underreporteand undermeasured by what the departments that measure these things say. >> yeah, well inflation is hard to measure, productivity -- everythinghard to measure, but i think it's pretty clear that our productivity has been growing more slowly, in the last five years or so, than it did in the past and also, there's leads and lags so, it's not uncommon. we've had many times before, a period of low productivity followed by a period of strong productivity growth, but you also need the drivers of productivity growth, and that's more intense capital spending, whether it's on technology products or in plant and equipment, but things that will allow us to have capital deepening, more caliper worker that will allow greater productivity growth in the future. >> steven, what other technology stocks do you like outside of apple? >> so, we have almost 100 names in asia, primarily in tech

hardware we don't have much software going on there we like names in the supply chain, anywhere from cameras to contract manufacturers to semiconductor makers, including names in korea as well like samsungs of the world. so in general, we still like those, but newer areas where we're seeing some readth going on, things that are going like in automatic electronic and data center spending so, we're increasingly starting to look once again, the last five, ten years that have been so smartphone-centric. >> do you think we need a new dow theory that replaces the transportation area into the nasdaq i mean, if the nasdaq hits a new high, will the s&p follow and will the dow follow eventually >> well, i think you have to update things for the way the economy works today. and as important as transportation is, it's clear that technology is at the heart of the economy and is at the heart of the move to improve productivity, not just in the technology field, but health care -- >> are we going to hit new highs in the dow and s&p think we will. >> now that the nasdaq has done it is that a leading indicator? >> i think it's a pretty good bet, yeah. >> should i wait -- >> that's a good theory.

>> i know. >> i like that >> yeah. i don't know what i'll call it the kernan theory, maybe do you think i should download the ios thing immediately in the fall, or should i wait until they work the bugs out, because crazy stuff happens initially, doesn't it >> yeahink apple's being much more careful with their introductions now. and i think the first itn, the first version will probably be much more polished than issues we've had in the past the fact that they opened up focusing on performance, they want to make sure you're having a seamless experience there, so i think it will be safe to download initially. >> can't -- f.a.n.g. okay take out netflix >> well, there's alphabet and apple, so two as -- three as. >> i want to buy a vowel because we do the jumble so, what's missing now there's two as missing what's the "a" now is it alphabet or amazon >> alphabet.

>> why not amazon or apple >> it's three. >> huh >> it's three. >> does it cover all of them the "a" covers -- >> well, google. you can go with google, but it's really alphabet. >> okay, okay. but amazon -- >> there's nothing great >> you can't -- see we need to keep netflix in there even if they don't have anything -- >> we need to add the "m." >> we need an "n." >> it's complicated. >> will you work on that you're a genius. >> i'll get back to you. >> technology. some other stock's got to start doing better. >> beyond technology, what other things are you watching? are these trade concerns really issues, or is this something that is just shaking people right now? >> yeah, i mean, i think he hit it on the head that there's a lot of opportunity and a lot of growth going on in asia. trade concerns are noise right now. even if all the trade, you know, proposals, tariffs, et cetera, that have been proposed are implemented, it's between 0.1%

and 0.2% of gdp in terms of global impact. this is a level growing at 3.9%, so we're nowhere near smoot-hawley territory with the trade wars and there's bargaining and positioning, it's not clear what will actually be impleme implemented. at the same time, over 90% of emerging mart companies have purchasing manager indices over 50 the growth across emerging markets still is quite strong, and the emerging market equity index is over 70% asia so, argentina, turkey, there are some real issues and concerns and some fragility in emerging markets, but when you look at where the opportunity is, where the market cap is, there's still good opportunity and they're earlier cycle than the u.s we're still biased towards emerging equities and we're buying some of the debt selectively right now to take advantage of some of the knock-on effects, some of the concerns, contagion around some of the more fragile markets. >> ed, quick last word >> we still remain optimistic. we also have overweight positions in emerging markets as well as the u.s.

i think the s&p will get to about 2,900 by the end of the year, so another good year for investors, i think. >> right want to thank all of you gentlemen for being here today we appreciate it. >> so, there really was a smoot. smoot. reid smoot willis hawley. what are you talking about, willis then they -- maybe not. >> no. >> no? >> no. >> but smoot there are -- >> "diff'rent strokes," no. >> no, okay. coming up, president trump abruptly calling off the eagles super bowl celebration at the white house. details coming up next

♪ 'cause i'm already gone ♪ and i'm feeling strong okay, um, i'm somewhere else, um, i guess, fors story. president trump -- >> the magic of television. >> yeah, yeah. honey, come over here! he's somre else! we've got to watch and stay

longer on -- is that what happens, do you think? >> well, probably not when you do it so smoothly. >> okay, all right well, we are here. it's a different look, and i'm going to tell you something about the eagles president trump abruptly -- is this your idea >> no, it's not mack's idea. >> president trump abruptly calling off the eagles celebration today at the white house. he tweeted, "the philadelphia ed to the white house unfortunately, only a small number of players decided to come, and we canceled the event. staying in the locker room for the playing of our national anthem is as disrespectful to our country as kneeling. sorry! instead, the president's holding an event to play the national anthem with the united states marine band and the u.s. army corps. so, i'm going to give you the option to take any side here that you want. you can trash the eagles if you feel like trashing a sports team from philadelphia. >> no, i love the eagles i'm thrilled that they won. >> you can take a side on the national anthem debate and patriotism and -- >> here's my side.

i thought about this last night when i saw this. >> i'm not saying anything. >> my thought is it made me sad to see sports politicized because i'm a huge eagles fan. i would love to see this all happen, and i hate that the one area that used to bring everybody together is now politicized and dividing that's my thought on it. >> excellent. >> it really did make me sad. >> i don't want to weigh in on this either. >> oh, i will. >> okay, go ahead. a huge step for the won of saudi arabia yesterday -- >> no, it's good but it's crazcrazy! >> ten women drivers got their licenses. >> only ten of them? >> video of women to be issued a driver's license in riyadh trended on social media while the law overturning the ban on women drivers goes into effect this month women who already had international licenses are allowed to replace them with saudi licenses that's why it's only ten so far. this has been a really long time coming and this is something that women used to get locked up for in saudi arabia, when they would drive and post video about it and do things this is a jailable offense >> it's amazing that we're

talking about it in, what year is it, 20 -- >> '18 >> 2018. surreal. anyway >> yay >> yeah. and squawk, the new guy going to open things up, so, mbs -- >> relaxing a lot of the strict religious guidelines. >> right jury's still out he's done some pretty hard core things but i don't know. >> got to watch and see. >> exactly. squawk booze news. singapore is preparing for the much-anticipated summit between president donald trump, north korean leader kim jong-un. bars are capitalizing on the summit with speciality cocktails. the pub escobar is offering the trump, a blue coke and bourbon-based cocktail and the kim is a red-colored drink with the korean spirit soju as the base of the alcohol. both drinks use equal portions of alcohol to avoid controversy about which is stronger. >> or which will make you

loopier. >> or which will make you loopier. and i don't know i've never been to singapore. me neither i did see an yesterday in the "wall street journal" about how their airport is the most amazing airport in the world and singaporeans go there just to hang out, even if they don't have a flight. >> so their infrastructure is nice. >> and that doesn't surprise me at all no chewing gum there spit gum out and you get kind. >> unfortunately, that's the incident so many people think of when you think of singapore. their tourism organization needs to -- >> that's why i bring my 6-year-old there. >> right, but they need to work on that. >> yeah. >> they come over and chew some gum, if you want depose of it properly. you're not allowed to chew it at all? >> you can chew it you just can't spit it out. >> okay. >> like i said, i'm not taking my 6-year-old any time soon. >> you know, that's not -- there's nothing harder than getting off the bottom -- >> i agree, and no broken windows, if you want to make sure that everything is -- >> broken windows rule.

>> if you're really going with the idea of you want to police things and making sure -- charlie munger will talk endlessly about what an amazing society that is as a result of all these rules, so. >> good. >> you'll find people who will come down on it. when we come back this morning, we'll be on the other side >> in a different look you're going to want to stay through this break to see where we're sitting when we come back. >> just wait >> definitely. it's going to be unreal. memorial day marked the start of summer travel season. we'll talk to the ceo of choice hotels about new trends in lodging and the impact of higher gasoline prices. does that mean people will actually be traveling less this summer we're going to find out. right now, though, heading to break, look at yesterday's s&p 500 winners and losers ♪ the heat is on ♪ whoooo.

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>> announcer: tech on a tear what's fueling the rally and headwinds to watch out for ♪ >> announcer: welcome back you're watching "squawk box," live from the nasdaq market site in times square. good morning, everybody! welcome back let's take a look at the u.s. equity futures a couple big days of gains that we've seen compiled between friday and monday. yesterday the dow was up another 178 points the nasdaq closed at a record high, first time that's happened since march 12th you're going to see this morning that dow futures are still in the green, indicated up by about

17 points. s&p futures up by about 2 and the nasdaq futures up about 22. travel season just under way. the hotel industry has been evolving sparked by new technology, new trends and new demands from customers joining us now is pat pacsous, president and ceo of choice hotels international. pat, good to see you we used to have your predecessor on a lot i could always remember his name now i see in the notes, your name rhymes with spacious. >> spacious. >> that's right. >> which is like with a lot of the rooms you offer. >> absolutely. that's our big goal. a lot of all-suites products, so when you come into our hotel rooms, we want you to have a spacious stay and reflects my last name, too. >> that's amazing. and that's in -- i think that's in some of the craigslist ads that the company -- we need a good rhyming last name or something. probably not so, three weeks ago, earnings were good, stock's been doing well what do you need to do i think choice left you in a

pretty good position, to some extent. >> yeah. >> what do you think you need to do to keep it going? >> we are an asset-light model, a pure play franchise business, meaning we have to focus on the return on investment that means we're delivering to guests every day and a changing environment where everything's moving on digital, you have to make sure your customers know how to find your product, whether through the internet, mobile phones. we even through research figured out how to book a hotel room through alexa. if that's how the future is going, that's how we have to capture those customers and deliver them to our hotel rooms. >> so you hope for things like, i don't know, maybe tax reform is good for the economy, the gdp growth's better, people travel more, gas prices aren't out of control completely yet those things are beyond your control. what you can control is where you advertise, how people find out about choice, or your individual brand names and how easy it is, the experience of booking a hotel. that's what you can control. >> that's right. and we -- look, the environment

is very favorable economically so, the unemployment rate, particularly for people without a college degree, is really favorable now. and that's really the bulk of our travelers who travel in that midscale segment so, think of those folks making sort of $75,000 a year that's the sweet spot of our customer base. and we've been making significant investments in our comfort inn brand, which is our largest brand. so, we're always making sure that our brands are relevant as a company and as a franchisee base, we've invested $2.5 billion to make sure that the comfort inn brand in particular is upgraded, the rooms, the lobbies. and just last month, we announced a new logo for the brand itself so that the customer will now know that the upgrades that are made on the inside are now represented by the new logo on the outside as well. >> let me ask you this we just did a road trip over memorial day weekend, drove to ohio with the family we didn't know how far we were going to get each night, where we were going to stay. so like you said, we were finding new ways to find hotels. i would look on google maps and think okay, we have about an hour left before the baby has a

meltdown, what hotels can i find there? do you advertise on google >> well, through our mobile app -- so, for our customers who come on to our loyalty program in our mobile app, you can literally go on and figure out, if i'm going to drive for another two hours, what hotels are at the next exit that may be two hours down the road? so, there is a mapping feature within our mobile app. we do have, obviously, google maps and those opportunities to help our guests find our hotels as they're driving down the highway. most of our hotels are in drive-to locations so that consumer that is driving is worried about what are they paying for gas, how many hotels are there going to be along the way, that's where we come into play and really help those travelers find a great hotel stay. >> i made a waffle in -- >> i did, too! i did that over memorial day weekend. >> yeah. you stayed in a comfort -- >> i stayed at four different hotels. >> you did and that's all -- so, flat-screen tvs are really cheap now. >> yes. >> so, if you're going to upgrade them, ga flat-screen tv a suite -- a floppy couch that

makes you feel like it's a suite. and then the sausages, the patties, with a waffle maker, with the free breakfast, right becky has copped to her relatives used to hang out there. >> they did. >> one of them. >> it was my uncle joe by the way -- maybeis on not watching, is he? and he vs at the hotels we stayed at in ohio because he was out from phoenix, and he did the same thing he wasn't staying there and had the breakfast. >> kind of walk in the lobbies you go in the bathroom first and then come out from where the rooms are and kind of just walk in that's -- >> we've got a very welcoming brand and most of our hoteliers want people from the local neighborhoods to come in. >> looks like you and starbucks. >> the roatrip is great, like once every couple of years like, a long one, and that would include, i think for anybody, like a comfort inn. >> yeah. when you come to our hotels, you'll get free parking, free wi-fi and free waffles so, it's an all-in-one deal. >> all right, well, good you could bring a couple, some of that stuff next time, if

you -- or not. >> some waffles? >> waffle makers here? >> yeah, waffle maker, make them here. >> with corporate travel, you tend to know far in advance. >> right. >> do you see bookings a long time out what does the bookings situation tell you about the future of the economy? >> so, our business is primarily in the u.s it's two-thirds leisure, one-third business, because of at, the leisure traveler doesn't book that far in advance. but what we are seeing in the longer trends is consumer demand is up significantly. consumer spending is up. discretionary spend is being spent more on experiences like travel as opposed to durable goods. and the long-term trends, as more baby boomers retire, they're living longer and they want to spend that money on travel, is really a great, great benefit for us and good for our investors, because we do see, you know, significant amount of hotel development going on right now, new productoming out. our cambria brand, which is now in the up-scale segment, we're seeing a lot of investor interest in that brand. >> woodspring is downscale what's that? >> that's a brand we bought at the beginning of the year. fantastic extended-stay brand. >> economy.

>> economy segment, yes. so, 122 rooms in those hotels. they really perform for our woodspring owners. telsthat's a brand that was 240 we bought it we've already had a record number of franchise agreements sold for that brand, and we really expect that brand now that's part of our portfolio to accelerate its growth and really expand. >> and you're airbnb-proof, i would think. >> yeah, air bn sbnk more a longer stay, so think seven nights our traveler usually spends about two nights with us, and they're more in urban markets and destination markets. >> that's what i mean, yeah. i can't imagine -- >> we're more in the drive-too locations. >> that doesn't keep you up at night usually. >> that's right. >> great, pat. thank you. >> thank you very much. >> appreciate it. >> pat pacious. >> when we come back, andrew is in seattle for an exclusive interview with outgoing starbucks executive chairman howard schultz that's coming up the 8:00 a.m. eastern time. before that, we'll talk about the starbucks shake-up with former yum! brands ceo david novak. stay tuned you are watching "squawk box" right here on cnbc

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a primary place for people to have conversation to me, it's a social place perhaps, we can be a catalyst for some people.

it's not in our collective interest to have a t war that would have such an adverse effect he wants to take the corporate tax rate from 35% to 20% for what purpose is that profit going to go back to the people who need it the most no we as a company, the board, me personally, kevin, have been deeply concerned about a number of issues, social issues that, for the most part, have not been addressed by the republican administrations in the past, and hopefully, will be addressed by the president-elect. what is our moral obligation when young african-american, young boys are being shot in the street and there's such raciali? we thought we needed to take a position the only way our society and the promise of america and the american dream can continue to exist is to ensure the fact that those people who are at the lower end have the same

opportunity that people have at the right zip code in america. >> everyone wants to know whether you are laying the groundwork, not necessarily now, but perhaps four years from now, to run for the big office. >> andrew, i am all in at starbucks, and that is my focus at this time >> i imagine we're going to come back and you'll be asked that question again in the future >> in fact, he's going to get a bit. right now it's time for "the executive edge." howard schultz is arguably the architect of starbucks he has announced that he is stepping down as executive chairman later this month. right now to talk about all of this, we are joined on the squawk news line by david novak, who is the former yum! brands ceo, also a cnbc contributor and the founder of the digital leadership platform ogolead.com. >> great to be with you, becky. >> let's talk about this you're a digital leadership, you're a leadership guru you see this man who has built this brand, and this is really the changing of the guard here what do you say about howard

schultz? >> well, first of all, he's had a remarkable career. he's an iconic leader. he's noevinnovative he's a breakthrough thinker. he started in 1993, i think. i mean, who would have thought you could sell a $4 cup of coffee back then, you know he just broke the ground they're a global powerhouse. you know, i think they have 28,000 stores in the world, and thng off in china. so, he's done a remarkable job i've always said he's the entrepreneur of our industry, like ray kroc was for mcdonald's and certainly, he and jeff bezos would have to be two of the top entrepreneurs and most successful leaders in our country. so, i have nothing but respect for the job that howard has done >> he leaves some big shoes to fill there what happens next with starbucks? >> well, you know, i think the biggest challenge you always have when you have an iconic leader like howard schultz retires, you just don't want

your team and your employees saying i remember when you know, i remember when howard was here and you knowthink that's what kevin johnson has got to do is create a lot of new memories at starbucks and keep blazing new trails now, one of the things i think starbucks has done very well is they have had a very good transition you know, you know what you're getting with kevin johnson they've had -- you know, he's had a year underneath his belt as a ceo he was president chief operating officer before that. i think he's been on the board since 2009 so you know, the board knows exactly what they're getting howard schultz knows exactly what he's getting. you know, he still owns a lot of stock, and i'm sure he wouldn't turn this over to somebody who he didn't feel could take the company forward. and i think that kevin shares the values that howard shared as he built the company so you know, i think it's been a very good transition now it's up to johnson to come up with major innovation he's done a very good job in

china, you know. starbucks is growing leaps and bounds in china, which is great. and they've done it without a local partner. so you know, i think that he's an excellent leader and i also thought he did a very good job when they had a crisis a few weeks ago -- >> that'not done yet, though and that's going to be -- i think it's kind of interesting that schultz is leaving before the final chapter on that is written, david i'll talk to you about that in a second, but schultz left one other time, and i remember -- do you remember the stock really suffered the first time. >> yeah. >> and he came back and totally -- i mean, the barista there was a whole change in the model when he left it was about five years ago, i think. >> yeah. >> then he came back and it came right back, stock came right back so, we've seen it before but you know, the position that they're in right now, that they're putting all of the different store operators in on how to deal with what that means to have, you know, the restrooms open to everyone, and how long

you can stay and whether -- you know, this is a tough issue. i don't know how you would have handled it, if someone had told you at all of your restaurants that you don't need to buy anything and you can stay as long as you want i mean, that's putting the onus on the individual person, the manager in that place to decide when to draw thee.it's going to that's going to be a nightmare to try to navigate through for kevin johnson, and schultz isn't going to be there. it's like, he instituted that, and he's on his way out. >> well, i think that howard schultz when he created starbucks, he made it a third place. this is supposed to be a social gathering place. so, he has a very unique challenge. and i think they had the incident, and i think to do nothing would have been worse. and i think what they said is that, you know, we have to do a better job of this they went through bias training, you know, they took four hou out of the day to do that. that's an enormous cost, you know so, yeah, it's another perfect, but they're not sitting still and doing nothing, you know. they're trying to educate their workforce and help them do the

best possible job they can do, handling, admittedly, a tough challenge. so yeah, the story is still to be written on this, but you know, i give them credit for stepping up and doing something. >> you know, looking at what haens next with kevin johnson, you said he has to blaze new trails, but you're not suggesting a departure, a sharp departure from the status quo, are you? >> no, i'm not you know, i think -- what happened when howard left the first time was he had a successor come in who did make a big departure from where they were at, very focused on cost and productivities and numbers and measurements in the stores, when you know, while you know, obviously, starbucks is disciplined from a financial perspective and measurement perspective, he took it to an extreme. howard came back he thought that they lost the focus on the coffee because the quality of the coffee wasn't as good as it used to be. then he took -- i remember, i remember him talked to our team, you know, he took a day out of

training, at least one day, i believe to get everybody back into focus on what makes starbucks great, what makes it quality, and this ishen he came back. now, there's a big difference right now, i think, between what happened then and what the situation is now, because i think with kevin johnson, you've got a guy who's been around in one way, shape or another for almost ten years so, you know, he understands starbucks. he's already demonstrated himself. the board has to have confidence in him howard has to have confidence in him before he would turn over the keys, and he's seen this guy in action for a long time. so, i think it's very, very different. what i mean by blazing new trails is, is that in this business, you have to be innovative all the time. you have to be looking for new ways to bring a unique toimage o the known quantity, the brand that you have. you can't sit on your feet and i think you also have to demonstrate that the culture is the same, and you take the culture to the next level. you don't let the culture slide

back that's what i mean when i said you can't be -- as a leader, you've got to make sure the people don't say, hey, i remember when howard schultz was here no, it's a new day, and it's up to you to pave a new future an a bettere for starbucks. and you know, i think that's what his big challenge is going to be. and by the way, you know, there's no question, becky, he has big, big shoes to fill >> you think howard schultz has a future in politics >> well, i think he's the poster child democratic candidate i mean, he's got an unbelievab great business track record. he's got a great social track record, you know he's balanced the need to make profit with his social agenda. you know, they've offered free health care to both full and part-time employees, stock ownership, college tuition, you know so, i think this is a guy who's very well positioned to have a

unique point of view that he can bring to the political landscape. and there's no secret that he's not a big fan of trump and he's, you know, he's expressed concern about where our country is today, the big social divide, and you know, our status abroad. so, i think he's certainly got a great base to build from, if that's where he decides to go. but i think whatever howard does, he's demonstrated he's a winner he has great capability to do a lot of things. >> all the democrats are going , with just looking around -- i don't know where we'll be in five, six months, but we keep playin sound of howard schultz talking about how against the tax reform bill that he was and i don't know i guess we could ask him, if he were president, would he repeal it would he raise taxes would he, you know, would he change some of the things that

have already been done when we're getting jobs reports like we got on friday and we're at, you know, all-time lows in african-american unemployment and 3.8% is the lowest in i don't know how many years for the jobs and i don't know what gdp's going to be this quarter, but like it's going to be well above -- or could be well above 3% so all democrats are going to have to figure out how to run against that you know what i mean >> oh, absolutely. a good economy solves a lot of problems for whatever is in charge >> we know how empathetic and compassionate the obama administration was for eight years in terms of trying to help the people that needed help, and, you know, there's a lot of people that would argue that sometimes the best intentions don't translate into the outcome that you initially set out for >> yeah. i don't know if howard's going to run for president, but he's got a much different -- he's got

a great -- he's got a much different story, joe obama was a community worker okay >> i know. >> so this is a different st but i'm not saying i'm voting for the guy. >> i know. you're dealing with the same type -- there are ways of doing it you think the private sector can grow the economy for lack of a better word, i hate to say trickle down but you try to make a conducive environment for business or you keep the pie where it is and redistribute it in a fairer way. >> i think what he would do if he was running for president, it would be more of like what jim collins says the magic of the end you know, we can grow our economy and we can help people that need help this would be his story. and his business acumen would give him some credibility on that you know, he did a lot of

things -- he made a lot of money and did a lot of things other people didn't in business on the social side. that's why i think he brings a unique story whether he runs for president, i don't know i mean, thisuys a -- >> crowded field crowded field. trump makes everybody think, you know, you just announce and you can be president but there were 17 other guys that wanted to be president too th trump >> we'll see not many have a better resume than howard shultz >> thanks for your time today. >> we'll talk to howard shultz himself. he will be joining us at 8:00 a.m. eastern time. andrew is in seattle he'll bring that in a bit. coming up, your list of stocks to watch before the opening bell when did twitter sto gcko to $40? oh in the last year we'll be right back.

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he built a corporate empire. >> starbucks is a primary place

for people to have conversation to meet. it's a social place. perhaps we can be a catalyst for some people. >> the move giving rise to speculation of a possible run for president. more on this breaking story is just minutes away. plus billionaire, investor, philanthropist, and home depot cofounder ken langone joins us we'll hit the issues that matter most to your money plus day two of apple's worldwide developers conference. a big announcement from tim cook and what to hear today as the second hour of "squawk box" begins right now. ♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. >> moorrning, everybody

i'm becky quick along with joe kernen andrew ross sorkin is going to join us at 7:30 time with more leave starbucks.'s decision to he's going to have an exclusive interview with shultz at 8:00 a.m. eastern time. in the meantime, the u.s. equities have been higher at this hour. the dow futures right now are indicated up another 16 points s&p up by just over two points and the nasdaq which closed at a record high yesterday is indicated up another 21 points this morning we're going to talk more about that in just a moment. point out the russell 2000 also closed at an all-time high yesterday. let's talk about a few headlines. our top corporate story this morning is the news we mentioned starbucks executive chairman howard shultz is going to leave the company at the end of the month. that is already stoking speculation he's running for

president in 2020. shultz told andrew he's worried about the company, our standing in the world, and that he's figuring out the next chapter in his life we'll hear more in a bit shares of starbucks on the news were down about 1.25% on the news of shultz's departure again, andrew will join us in a bit with more. apple taking the wraps off l new features of the iphone including ios 12. siri also will be able to learn more about you for example, if you want to know -- if it knows you buy coffee in the morning, it can suggest the play you order through an app ahead of time and president trump tweeting this the philadelphia eagles football team was invited tthe white house. unforta small number of players decided to come so we canceled the event.

instead the president is holding an event to play the national anthem with the united states marine band and u.s. army chorus and the nasdaq scoring a record close first time in awhile mike santoli is joining us now i want the new dow theory to be the nasdaq because i -- >> maybe the semiconductors. i've heard the argument of those with industrials >> because the transportation is still important things need to move technology is important too. i'm wondering whether this means that the other averages, we loo. >> i think pointing in that direction, one thing is the leadership of the market is intact obviously the nasdaq had a shallower pullback it held up better. if you look at the chart that got you back to 7,000, it shows you it's the same large growth stocks also leading us right now. i will point out it means it's a

more selective market. it doesn't mean it's too narrow. but only tech have outperforme the market sincearch when e nasdaq last made a new high. the top five stocks in the s&p 500 are also the biggest five 15% of the s&pnasdaq right now 25% of the nasdaq composite. i think it also means for the broad market, the s&p 500 is right up at this level 2,750. a lot of people have been watching for awhile. has not been able to hold above this level hardly at all in the last four months that's a bit of a decision point for the s&p. i still think it means that we're moving in the right direction. this recovery period has done most of its work, but you still have to prove alittle more has a late '90s feel to it i don't mean the level of excesses if you look at last week, you had some global turml that depressed bond yields a bit. got people thinking it was going to be easy meanwhile, the numbers were great. and the u.s. stock market kind

of benefitted from all those things together. that was what happened in the late '90s. not saying that's the rule here. but that was the direction things were pointing >> you point out you don't think it's the same excesses we saw in the late '90s because that's what led to the collapse in 2001 >> there's nothing like the same valuation. my favorite data point right now is aol when it was the poster child for the tech boom back then and bought time warner. at the peak, it had 20 million subscribers in 2000. >> 20 million. >> what we're talking about in the nasdaq and s&p right now has massive cash flows and there's something underneath them. that being said, they're expensive and still have to e w valuations over the long-term. >> thank you >> let's get to our guest host this morning ken langone, cofounder of home depot. and authorecently of "i love capitalism." and ken, you're still -- you're

not necessarily still on the opening book tour, but you're still talking a lot about this still fresh in my mind the reviews the book got the peggy noonan piece and you looked around and saw that there's actually 50% of millennials think socialism might be the way to go we have lost our way somehow in talking about the benefits of capitalism i think the book needed to be written. >> i don't think we've lost our how about the messaging >> all right but i believe that young people have a habit i'm completely confident in america. i think we've got a lot of work to do. we've got a of plet me give you in

a big plus from donald trump huge plus. howard shultz, jamie dimon, mike bloomberg. if we get those kind of people to say, hey, he won and i can win, we're going to dramatically open the pl of talent for people to become president and by way, that's good. one of the problems we've had in america, we've surrendered the right to run for president to a guy that was a senator or a this or a that the or the other thing and they've not done well for us trump to me is a very simple statement. the american people something very dramatic in electing him because they're fed up and they're disgusted and they're disappointed and they're frightened and he tapped into that. people want to beat trump, go out and ask the people that voted for him. maybe. i feel positive that somebody

like howard shultz may be considering running for president. can only be good the more talent we get in the pool, the more like lie we alyeo ha >> people think it's easy. the rock might run and kanye west might run and, you know, oprah might run and jamie dimon might run. those are all talented people, but repeating what trump did mugt not be as easier as a lot of people think. >> i'm not suggesting they're going to win, but i think to the extent they believe now that the definition of who's eligible is now wider. you bring more people in think of the talent pool you have the more likely you are to have good talent. >> okay. along with what you're saying comes a great diversity of ideas. some of the ideas that will be positive of this great group you're talking about will be an

the k -- ab book. >> i was going to say, the big issue is you don't like status quo and you don't like people who are life-long politicians who don't bring something to the job. >> these guys have failed us we talk about people say about trump's lack of integrity. bush the father, clinton, bush the son, obama they all had one thing in common every one of them. they all promised if they were elected president, they were going to move the embassy of the united states to jerusalem from tel aviv he's the only guy that did do it.ll said they were going to bush the father got up how many times, i can't count, read my lips no new taxes. and guess what it's only a campaign promise, you can break it if you want guess what the american people said you can break it

the am people are speaking in my opinion loud and clear and we've got to address their concerns and whoever it is, would i rather have somebody who thinks like i do that capitalism worksk the human initiative is the most critical drive in this country all of that.they'll learn. they'll learn. i know howard. i have a lot of respect for howard i would have concerns about some of howard's stands he's a little bit, to me, too far to the left. not in a sense of philosophy but in a sense of what we expect from each other. when we all understand as a nation that we all have an obligation like kennedy said ask not what your country can do for you, ask what you can do when we get back to that theme, then i think we're on the way. we've got a lot of problems to fix. education is a disaster. it's not bad it's a nightmare in america. big-time income inequality, we've got a

fix it one lehe other i argue that if you improve education you'll make people more qualified and you'll be able to pay them more money because they're able to take on more meaningful tasks. so this all ties together. all ow ie more the merrier. and i think trump has more saying, he ran, i could run. >> so you wouldn't hope that the candidates that end up becoming the most popular read your book? you don't think that can help in terms of -- you wouldn't prefer if someone -- what happened? you did one book tour and now you don't talk about your book anymore? >> i'm talking about my book when i talk about all these things understand two things. my story only happened for one big reason my grandparents came to america. if my grandparents didn't come to america and i ended up in

southern italy where they were, trust me you'd never know about me. you'd never know about anything i've done. this great country has as much right to claim what i did as i do myself. and the other thing is in my book, say it againi am a product of hundreds of people that have helped me along the way. i'm not self-made. there are a lot of pe who can say i'm self-made. i'm not one of them. what i'm saying about my book is it's alive and well. i'm not saying if you want to run for office, read my book that's a little heavy, i think >> my only point is that you illustrate that capitalism is a bad name and we hear marx was right on his 200-year anniversary of his birthday, that we now know he was right -- >> who said he was right >> the op-ed piece in "the new york times." >> who reads "the times" anymore? i can go through the sunday "times." they ought to stop the business section.

cut it out >> you're preaching to the choir on this. my only point is they have - >> i still read it >> in terms of messaging, it is true that 50% -- if people that want to change the status quo want to see capitalism as the status quo and want to turn that to shared misery or socialism, that's a problem that's why your book was so effective. i don't know why you're running from the basic thrust of the book >> one of the things the book sas capitalism has winners and losers >> now i'm trying to talk you into it. it has elevated more people, taken more people out of abject poverty than any other system. we can't let it be criticized for some of its faults we need to make sure it stays within, you know, certain boundaries >> i've said this before on this show we have 3,000 kids that started with us pushing carts in in the parking lot. >> at homeepot >> at home depot that was the entry-level job

okayday are multimillionaires. that's capitalism at its best. if you want to really make capitalism work, make sure there's something in it for everybody provided they do w they have to do to share in that success. that's all and it works >> that's something you probably agree with howard shultz to an extent >> hs run eat company. he's done a grt thg. when i hear him talking about some of the social programs he wants to do. i'm not sure they're going to work i happen to believe the more human initiative there isin th equation, the more successful the equation becomes it's that simple and by the way, the one ing i hope comes through in my book -- it's naul there. by the way, i had a wonderful thing happen i mentioned in my book i joined a laborsnion

the head of that local and in it he had my applications for a union card in 1954 and 1955. okay look is it going to work for everybody like it worked for me? i don't know all i knowi worked my ass off. my wife sacrifid for me >> well,he sacrificeat the beginning. >> she married me. going on a first date, my god. >> i'll never nd -- >> elaine. >> yeah. >> she's the best. >> she is. >> she is the absolute best. no hard feelings >> no, no. she i love her >> we are -- i don't know why that chair's open again while you're here, but it is it's amazing >> y want to be happy. we traded a liberal for a conservative >> once again, he had a real place to be. >> he's out there where mecca is for those guys you know, seattle.

>> for what guys >> the liberals. those guys come on. give me a break. the $15 an hour minimum wage city by the way, we have to do something about minimum wage but let's be careful let's be careful that in doing adjusts to minimum wage, we don't motivate businesses to say i can't afford it at that price. and how to get rid of that position >> very quickly, let's talk about the unemployment rate from last friday. 3.8% lowest level we've seen since the early 1990s. right now we keep hearing this thing that employers can't find employees to fill the jobs they have open because of the skills gap. that'sng we've hea time and time again. >> it's getting harder to hire people but i'm not sure that number's right. let me explain why when people dropped out of the workforce, they were no longer considered unemployed. how many people have dropped out of the workforce and like not

working anymore that aren't coming back into the workforce i don't know that answer maybe i'm worried about something that doesn't exist but i got to believe there are some people that think, this isn't bad. i couldn't afford this or that, but i'm making ends meet my husband and i have a better life >> there's some of that. steve leisman has run some of the numbers on that. those who retired, baby boom age. others are those that decided not to come back to the workforce. >> the biggest things to me that excite me is the mins,eir unemp they've been keeping records, their wage rates, we've got to make this a party for everybody. it only works when everybody's in the game or has a chance to be in the game but if we do that, america's best days arahead of it like you can't believe. >> all right we will have me to come from legendary, iconic -- and you got

invomed now. you've got a lot of interesting investments. >> yeah. >> you're still doing it >> all the time. every day. this is what brought me to the party. i absolutely love my work. you said to me you got to pay us to go to work. i said how much you want. >> you see the coat you gave me made out of old bottles or something. what >> 61 years ago this past sunday, june 3rd, was the first day of my career in 1957 as a trainee in the equitiable life investment on madison avenue $82.50 a week. >> that's what you were making >> yeah >> ken is with us for the rest of the program when we come back, though, tim cook speaking at the worldwide developers conference yesterday. we'll hear more of his comments next

welcome back, everybody. the apple developer's meeting is about to enter day two one was the tim cook show. josh lipton joins us with what to expect on day two >> becky, apple ceo tim cook took the stage outlining for

developers why they should be excited about writing apps for the iphone, ipad, and mac. >> we're also happy to announce that this week we're going to achieve another huge milestone the money that developers have earned through the app store will top $100 billion. >> apple unveiled its new mobile software ios 12 which rolls out this fall. it comes with new bells and whistles one, a so-called shortcut app for siri let's say you were heading out surfing it it would tell you about the surf conditions, look up the weather, and eta to the beach apple also unveiled new a rrr software too there's now group video chat

accommodating as much as 32 people on facetime and new features to limit screen time urged the iphone maker earlier this year to create software that would help parents limit phone use. so now apple is going to roll out these new tools such as one called screentime that tells users how much time they're spending in apps they use. they can also set time limits on app usage. saying the new tools look like a clear win for parents as well as shareholders given this should strengthen apple's ecosystem for years to come. back to you. >> all right coming up, andrew joins us from seattle to talk about the news of the morning. howard shultz stepping down as executive chairman of starbucks. and make sure you stick around because at 8:00 eastern, shultz will be joining andrew live to discuss his decision and so much more check out the futures at this hour we are in the green at least a little bit after a solid session yesterday.

good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. oh, boy. among the stories front and center, mexico announcing retaliatory tariffs now against the u.s. it'll include 15% to 25% tariffs on u.s. steel products, 20% on pork, apples, and potatoes from the united states. and 20% to 25% on u.s. cheese. washington state, meanwhile, a suing facebook and google. the states attorney general says the tech giants violated campaign finance law by not disclosing who bought election ads. and amazon is reportedly increasing its investment in india to 7 billi$7 billion e-commer e-commerce giant is said to be taking steps following the acquisition of which we talked about flipkart when we come back, we check in with andrew who is in seattle getting ready for the interview of the morning

andrew >> hey, becky. we are getting ready howard shultz just arriving here at the starbucks roastery. it is the end of an era. he announced yesterday that he is stepping down from the company. lots of speculation swirling about what he's going to do next we're going to talk about that and a lot more when we return live from seattle. whoooo. when it comes to travel, i sweat the details. late checkout... ...down-alternative pillows... ...and of course, price.

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welcome back, everybody. howard shultz stepping down before the end of june andrew joins us from seattle he's got the story and soon he has the interview. andrew, good morning >> good morning, becky it is the end of an era at starbucks. we're going to be spending time at the top of the 8:00 hour with howard shultz himself announcing he's going to be stepping down from starbucks after a nearly 40-year career taking that company from 11 stores in seattle to 28,000 around the world one of the things he said he may do next is explore the possibility of public service as well as philanthropy and of course that has led to all sorts of questions about whether he has a career in politics in the future we're going to talk to him all about that a couple of quick notes about what's happening here in

addition at the starbucks level. mike ullman, somebody that "squawk" viewers know very well is going to become the chairman of the company mellody hobson, another well known investor to the "squawk" audience becomes the vice chair of the company kevin johnn who sat with us here a year ago with shultz when he became ceo will continue in that role. and will be taking this company forward. i want to read to you just one line from what howard shultz told me yesterday. i got a chance to spend some time with him. he said, i want to be truthful with you without creating more speculative headlines. for some time now i've been deeply concerned about our country, the growing division at home, and our standing in the world. one of the things i want to do in my next chapt ser er is to f

out about giving back. i'm not sure what that means yet. we'll talk to him in a little bit, but it is big news here i got a chance to spend time with not only howard but also when they made the announcement inside of starbucks -- people talk about the starbucks culture and it is hard to articulate i know it's going to sound like you've drunk the kool-aid. but when he made this announcement internally and there are hundreds of partners here, that's what they call employees. there was some crying in the room this a bit of a replay from whe he stepped down as ceo there were people there, hands went up and i thought originally people were going to ask questions. but it wasn't questions. it was thank yous over and over over again one woman told a story about how howard shultz by working for starbucks howard shultz had effectively saved the life of her father you know, i know it's almost hard to believe when you hear some of these things

but there is a remarkable and special culture here we're going to talk about that as well. so that's what's on tawahultz a 8:00 >> hey, andrew we had david novak on earlier about leadership and he threw lots of kudos towards shultz with that company. part of the conversation was what happened the last time howard shultz stepped away from the company. the company turned tack and didn't work howard shultz had to step back in and prop things up. david novak seems to think this time will go differently, but it'll be interesting to hear from howard shultz himself why he thinks this time may be different. >> there is no question there are many turns ahead they're now opening two a day in china. here in america same store sales

has gone sideways. we're going to talk about that as well. so no doubt lots of questions. >> andrew. andrew >> yes, sir. ken langone. ken, do you remember -- hold on. you were in new rk the last time i was here. >> yeah. every time i come, you leave are you afraid of me or what i'm not going to beat up on you. >> a little. >> i think your politics suck, but you can't have everything. i'm only kidding you're a good guy. >> hey, andrew i have a serious question. and i don't know if we're going to be able to actually talk to mr. shultz we keep playing sound bites about the tax renoform and he really didn't like the idea of it and thought the money would go to the wrong people we've got a little bit of benefit of hindsight i don't know whether you attribute some of the positive things happening to it or not. but it is the law now. and i'll bet you -- we probably can't ask him policy questions because he hasn't declared or

anything it's all just conjecture but i'd be really interested in whether he'd answer policy questions about whether he'd try if he were president to raise taxes on corporate -- >> i think we can ta -- look we can talk to howard about anything there's no question the tax issue is a big one he was critical of the tax policy, but alsoe the tax policy some credit in terms of some of the reasons that they were doing certain things earlier this yea so we wio doubt have a conversation about tax policy as well >> i would ask also,andrew -- i phrase it. remember when we were in davos and lloyd who was a big hillary backer as howard was basically said that neither the market nor the economy would be here if my candidate had won. i just wonder if you asked howard shultz on - >> i'm taking notes right now. and i will ask him that very

question done >> i was going to e-mail you and said maybe i'll just ask him live and it will be better then you might have to ask it. >> better to do it on the air. >> excellent excellent. good >> we're going to hit all of those and a lot more >> you can channel me a little bit. r you could ask it your way. >> i wouldn't blame you. >> you know i'm always channelling you. >> yeah. we channel each other. that's our yin and yang. it works >> thank you we're looking forward to it in a few minutes with that interview. >> we come back this james patterson joins us to discuss his new thriller cowritten with bill clinton. he will join us after the break towards the opening bell, check out the futures. things have been ie green all morning long after big gains yesterday. yore going to see right now looks like the dow was indicated

up about 20 points right now the s&p indid up by three stick around "squawk box" will be right back. and the alzheimer's association is going to make it happen. but we won't get there without you. visit alz.org to join the t.

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♪ we're back we're back we're back we're back >> -- my experiences at home depot? real stuff the cancer hospital. >> let me introduce you. here's a thriller about cyber terrorism and a sitting president that ditches the white house to catch the bad guys. that's the story in "the president is missing," a new thriller by former president bill clinton and our next guest james patterson. one of the world's best selling authors. president clinton always said he wanted to write a thriller

he got into thrillers in the '90s and he's read all yours you could make a pretty good thriller with someone who has -- like, he could tell you the ins and outs of the white house. >> i think that's what separates this book in my mind -- this book -- it's just so authoritative. there is an attack against the united states in the book. if that kind of thing happened, it would happen something like this there's an attack on the presidential motorcade if it happened, this is how the secret service would react so i think if people want to know what it's like to be president, you'll get more out of this book than you were through a president's mem woirms >> 350 million books >> and that's just this year >> 350 million books you have sold a lot. you didn't necessarily need this, but in some of your books,

you brought us worries about privacy and amazon and things. >> the big thing here, the cyber terrorism that takes place here, we had sort of the best people in the world in terms of research, this is real what happens in this book, the h book also be important i think that's what we're dealing with here. definitely it's a page turner. but there are two big issues to me one is the notion of, you know, let's really take seriously what the president does it's an unbelievably important and stressful job. i'm not being political. but let's make sure whoever we put in there is up to the job. >> let's talk about what happened yesterday just quickly >> yeah. >> the beautiful book tour was sailing along, and it kind of hits a bump in the road because you were with president clinton and it got focused on monica

lewinsky is he goin be back on the book tour with you >> yeah, yeah. >> he will ey weraround the block noblee already. he was never supposed to be on this show. he doesn't like this show. a business show i'm just wondering whether that kind of -- i don't know -- were you surprised? you seem surprised yesterday you knew that was going to come up with the me too movement. >> -- the depth of what craig went into, it just seemed a bit much >> it could get worse than what happened yesterday >> who knows yeah, could be >> but the president will be back with you again? >> yeah. yeah we're on schedule, absolutely. we do "the times" tonight at nyu. yeah >> let me ask you just about cyber terrorism and the idea of giving a realistic view on these things on the one hand it's great and

gives us insight into it on the other hand, does it make us less safe if we're hearing some of these things i've had security experts say to me, i'll telu something that i won't say on air >> we had to hold back some things in terms of -- we're not doing a blueprint. but essentially what happens here could happen. and i think that, you know, we have -- the president's talking about increasing the budget on defense right now. we're putting very little against cyber terrorism. that's probably the biggest threat the united states has nobody -- russia's not going to drop a bomb on us. that's suicide i don't think north korea will either that's suicide but cyber terrorism, that's a big deal at any level it's a big deal and we're not prepared for it. so i would rather that this book be something to wake people up than that we actually have a terrible experience and that's what wakes us up >> ken, what kind of experiences in whatyou've seen at home

depot or other companies you're an investor in, this is an issue we talk about time and time again but it seems corporations are behind on cyber terrorism. >> look at the number of breaches we had. we had one everybody's had them starbucks had it you're right my hope is the people who make decisions in government are conscious of the threat. >> and the people who can influence. one of the things we wanted to do is when we get back to this beach read that has some importance to it thl public isn't aware of that and they need to be aware of it. and they will put pressure then on their congressmen >> will they respond >> hopefully they will you know, probably it takes a disaster for people to wake up, unfortunately. >> i think people will glaze over >> they're glazing over right now. >> that's what i'm saying. so either -- >> but they shouldn't. >> that's why i'm saying one would hope in government or wherever decisions are made, they're sensitive to it. and i agree with you >> well, the president watches this show, so hopefully he'll be

thinking about it more than he was thinking about it yesterday. >> i think he thinks about it. >> yeah. i'm sure he does. >> contrary to the thought of his adversaries. >> no, no. i know president trump very well i'm sure he does think about it. >> as i said, i think -- if that book does nothing more than to cast an alert that we address it because it is a serious issue. for example, you could conceivably shut down all the power in america >> yes that's right all your bank records. everything not just shut it down, butake it disappear you have no bank records, you have no money. >> power and we've seen on the east coast we've had some storm events where we're shut down for a month or so and there's gas lines, fights in the gas lines if it were for water, i don't know i was thinking sort of -- apple is trying to help people not be on the iphone quite as much.

they're actually going to build -- >> kind of sort of >> can you even -- you know, notwithstanding you have no money or financial records, but my god you'd be off your iphone. there was a cyber attack. >> that would be the good thing of it. >> exactly >> the kidf ths for o days >> it's mind boggling how much we depend on this infrastructure >> absolutely. it's as important as electricity. >> who came up with cyber security as the angle for this you or the president >> i don't like to say who did what it was a good partnership though we went back and forth which is cool we rewrote those half a dozen times trying to make it as intense as we could make it. so it was really -- it was a lot of fun for both of us too. it was a kick. i grew up in a small town. he grew up in a small town i remember when i was 8 or 9 years old, eisenhower came to town i never forget it. the idea of that kid, me, not a

kid anymore but whatever coming from this small town, i get to write a book with the president. i've played golf now with bush, trump, and clinton that's cool. my handicap is i push the ball to the right a little bit. >> you fade it. >> 10 o for 11 >> oh, yeah? >> not too bad >> somehow my problem is always to the left. so that's not normal for me. >> he wants whatever score he wants. that's fiction again >> they all do >> all right, jim. we managed it. we appreciate it thank you. >> thank you. when we come back, stocks to watch ahead of the open. at the top of the hour, howard shultz in an exclusive interview. and then later, michael ruben will join us the e-commerce site is buying gilt from hudson bay company "squawk box" will be right back.

all right. welcome back, everybody. let's get back to our guest host this morning ken langone. ken has been talking to us about a lot of issues including jobs in america your thoughts on where we stand right now with job creation? >> we've got to figure a way out to bring people into the work process where they have a chance to carry themselves. and we're failing badly with public education we're failing horribly we of the 30 most developed

countries on earth, we're number one for how much we spend per student and we're 28th in results. so we're spending the money, we're just not getting the results. and forget about who's responsible. it's a problem in total. needs to be fixed. until we fix it, these kids that are only qualified to go to -- by the way, i love mcdonald's new ads. america's first job. isn't that great what they're saying is, hey, you're not going to end up here, but it's a good start. >> right >> don't put mcdonald's in a place where they say we can't afford $15 or $18 an hour for a counter clerk. you've got to -- we have got to do -- we have got toe almost a marshal plan to bring education up to better levels than now >> how do we do that as you pointed out, we're spending a lot of money. by the way, the public school system is different depending where you're at. >> of course

my kids want -- we raised our kids imanhattan. fabulous public school system. the parents were involved. they had the power to hire and re they didn't take nonsense. the quality of instruction was high and the kids all benefitted and we paid well and we had facilities for these kids i don't argue that an affluent community is going to do a better job but the fact of the market is, whenever people push back i say let me guess your kid goes to a private school yeah why didn't he go to a public school >> my kids go to a public school. >> you live in a community where the quality of public education gives you comfort. we have got to fix it. this is the biggest single problem confronting america. he's talking about cyber space think 50 years from now if we have not prepared these kids to be intelligent what are we going to do? i know i'm a product of public schools and thank god i got a good education even though i fought like hell

not to get a good education. i did everything i could to resist but it got through. >> something soaked in through osmosis. >> and i'm also passionate about income ineality. we've got to fix that. that gets too big, russia here we come. but that said, that's a joint problem with education those two problems in my opinion are like ham and cheese. they go together k >> all right coming up, the interview of the morning. andrew's going to tell us what's brewing. >> what's brewing? we are live in seattle this morning. when we come back, howard shultz with the news of the day perhaps the week the end of an era at starbucks stepping down from the company we're going to talk about the company, where it's going, and where howard shultz gisoing when we return back in a moment but as it grew bigger and bigger, it took a whole lot more. that's why i switched to the spark cash card from capital one.

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the end of an era. starbucks executive chair howard shultz steps down. a "squawk box"lusive interview with the former longtime ceo live from seattle straight ahead >> and a man who never holds back >> i happen to believe the more

human initiative there is in the equation, the more successful the equation becomes that simple. >> billionaire ken langone is our guest host the home depot cofounder sounds off on the markets, the trump economy, and why he says capitalism works pl retail news rulala buys gilt we'll talk to michael rubin as the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick. and our guest this morning is joe langone author of the new book "i love capitalism: an

american story." that's not actually you, is it that's a generic -- >> from the neck down, that -- >> because that person has hair. >> i had a hair. my wedding, nice bush black hair on top too >> still weren't that good looking. >> no, i wasn't. my wife, god bless her she looked the other>> very nice a saint really >> she is a saint. >> the futures right now indicated up ten on the dow jones. up 18 on the nasdaq. up two on the s&p. let's get right to andrew now. he's in seattle with a very special guest. good morning, andrew, again. >> hey good morning, joe. we are live in seattle with the interview of the day, of the morning. howard shultz is here announcing yesterday he's going to step down from the company after executive chair of near 40 years. growing this company from just

11 stores here in seattle to now over 28,000 in 77 different countries. talked about the future, potentially some philanthropy and a lot of speculation about a comment you made about public service we'll talk about as well thank you for being here >> thank you >> the last time we were together here, kevin johnson was sitting next to you. >> yes >> you were handing over the reins of the company as the ceo, but you said i'm all in. i'm all in for starbucks so here we are a year later. why now? >> well, whether i leave starbucks or not, i will always be all in in starbucks but this has been planned for over a year. and my confidence and faith in kevin and the leadership team, the long-term opportunity for starbucks, the company's in a great position and it's always been a team sport. right time for me to leave and i have other opportunities and other things i want to do. >> i want to talk about those other opportunities in a second.

but just in terms of the timeline, you talked to the board about a year ago but had planned from what i understand, to step down in may. >> the truth of the matter is i thought this was going to happen in may then we had the unfortunate situation in philadelphia. we thought given what we wanted to do in philadelphia and the obligation we had, we push it back a month or two. >> so you talk about the opportunity ahead. >> jyes. >> why are you stepping down from starbucks right now >> it's been planned, as i said. i know there's speculation about whether or not i would run for public office. and what i really believe is there's a lot of things i can do as a private citizen other than run for the presidency of the united states. and let's just see what happens. i've got lots of things that i'm thinking about i'm writing a book it's only been 24 hours. but we've talked many times about how concerned i am about the country, our standing in the world. and i think there's many things i can do as a private citizen to

advance the cause of the promise of the country >> but a lot of people look at the timing they say 2020, two years away. if you're going to do it, you've got to -- especially runningpub got to get away from the company. what are you thinking in terms of running or public service over the next 12 months? >> well, i've been engaged in a number of, i think, very important issues facing the country in trying to advance the cause of the national conversation about such things as immigration, as an example. let's just take that i don't think we've got a very humane policy. i think we need border security. but there's a lot of non-truths. as an example, two-thirds of the undocumented people we're talking about are not people that have crossed a border they're here because their visa has expired. that's one thing we talk about trade. we're in a trade battle here that i do not understand

our probleis not china our m is here in the u.s we have a $21 trillion debt. we're paying $400 billion of interest these are things that are unsustainable. we have a budget process that is broken we got a situation with veterans in which we talk about taking care of veterans, but then the va doesn't work. and we have a tax policy as you know that we talked about a year ago and i was with you i was disappointed corporate america did not need a tax cut to 21% when we could have done so much more for the people of the country. 45% of the people in america don't have $500 in the bank for a crisis all of these things, i think, are concerns of mine as you know, i am living proof in many ways not unlike your guest host of the american dream. so i'm very sensitive to these issues of ensuring the fact that we do the kind of things that restore the promise of the country and our the standing around the world >> so that language, by the way,

is of somebody who could be running. >> no, no. >> let me ask you this what would be the tipping point for you? what do you have to figure out whether you want to pursue what you call plic service? >> that's a leading question that assumes -- i'm not thinking specifically right now what i'm thinking about is what i can do to advance the country as a private citizen there's lots of times, lots of speculation. i ally honestly don't know we talked about this yesterday. >> let me ask you a different question that relates to that. people talk about the presidency 2020 you use the phrase public service. and i want to see if there's a distinction here would you ever run for governor or senator >> i can't be nailed down today on the specifics of what i might or might not run for you know, i want to see what it means to be a great american citizen. i don't know what that means

right now. but my concern for the country and the standing in the world, the lack of dignity, lack of respect coming from the administration i think we can do much better. i think the political class as a whole. not only this administration has been reckless specifically with regard to $21 trillion in debt and t being ascally conservative as we need to be. and we are going to pay for this in terms of the next generation. and it's unfair. >> i want to get into the policy issues, but i want to ask you president. idea of a ceo as this was sort of an unthinkable issue or idea just a couple years ago. how much -- and now you see the stories whether it be bob iger who said he wanted to continue doing this o oprah's name gets bandied about. mark cuban's name gets bandied about. do you think president trump's , his election, has changed the dynamic with which

somebody like you could think about public service in a way t's an interesting question. there is a bifurcation i want to say this respectfully and so no one misunderstands what i'm about to say. but there is a bifurcation by saying ceo i have run a public company for 26 years as a fiduciary. the current president ran a private company from what i understand there is -- running a private company with -- i don't know if there was a board. i don't know what responsibilities he had to other shareholders bob iger has run a public company. so when you're talking about a ceo in terms of public office, there is a very big difference between someone who has run a global enterprise like myself who has traveled to china probably more than other ceo in the last ten years who understands those issues versus someone who's running a private company with very little fiduciary responsibility to other shareholders i'm not saying that's good or bad, but it's a big difference

so i think, yes, president trump has given license to the fact that someone whot a could poten for the preswhether or not thatg to do with me remains to be seen >> i want to reayou, this is professor douglas brinkley says the history of business leaders in the white house has not been good. you basically have herbert hoover and donald trump. what do you make of that just the idea also of having political experience >> i think the rules of engagement for running the united states of america in a global society is very different and comparing it to hoover or the current president. what i specifically mean by that is we have serious problems that we have to address and i the issues that we are facing in terms of the dysfunction and polarization that exists within the government is really based on a systemic problem of ideology ani think we need a very

different view ohow the government and how thery should be run. and it's been a long time, i think, a long time since anyon within government has really walked in the shoes of the american people. and done the this that would demonstrate the humanity of what is the values of count a the guiding principles of the promise of america. >> let me ask you a different question you're going to be writing a book about social responsibility the new role of leadership specifically about that, you really were the early champion of this idea of a moral leader and stepping out on public and social issues to something that's become a litt bit more fashionable in the last year and a half for some ceos but not without criticism and not without controversy in that it can put companies in a very difficult situation given the and i just want to comment to you and becky and i got to spe

time with warren buffett over the weekend about a month ago when he did his annual meeting. he's made the cot multiple times that business shouldn't be in the businesof politics. >> i agree with warren and i don't think starbucks has been in the business of politics i think that's been misconstrued creating a different type of of business model whh u21,000% since we went public in '92 the price of admission has been met coupled with a social ctage educational background in formal stock options for our people health insurance 20 years before the affordable care act. free college tuition and an engagement with 100 million customers a we about what we feel is our responsibility to raise the nativersabout things that think are important. we think that is acretive to the

brand. others have criticized us fo that it speaks to the fact rules of engagement for a public company and ceo are different today. in large part because it has been so polarized. we haven't h a balanced budget since president clinton. think about that and we talk about immigration. just far moment. ronald reagan in 1986 passed an immigration bill as a republican president. sowhy can't we come together, move the ideology out, and do what's in the interest of american people? 70% of the american people want a good immigration policy. 70% of the american people want the kind of policy legislation that takes the guns of war out of the american people's mean, it doesn't make sense to me >> but the reason i'm pressing on this is when you think about the leader of a company, we have so many ceos who are watching

right now about should they step out on a particular issue, what it does and the jeopardy in certain instances, it can put a company in. >> but i think you just can't jump into the deep end of the pool overnight the kellture and val-- culture d values of the company are embedded in your com e talked yesterday, the litmus test for me has been one thing. does this decision, this policy make our customers and our people proud if the answer is yes, then we're on the right side of the debate. if it's not, we shouldn't do it. we're not in this to be political. we're in this to advance starbucks. >> let me ask you one other question relating to tax policy. we talked about it here. you've been critical of president trump's approach to tax policy and the corporate tax rate going down. >> yes >> and yet earlier this year you gave the administration credit for the fact you we raising

wages of employees at starbucks. >> i'm not suri gave the administration credit for that what i said was -- and we were together in your conference early on about this. what i said specifically is i did not believe the majority of companies in america were going to take a corporate tax cut from 35% to 21% and do all the things the administration was spewing about in terms of advancing the economy and creating jobs and doing all these great things and id most companies were ing to give it back to the shareholders what we decided to do was almost 50% of the benefit, we gave to our people i didn't give credit to the administration for that. i gave credit to the fact the leadership of starbucks did the right thing. and that is success is best when it's shared. and also this is very important. that when you're building a great enduring company, not every business decision should be and is an economic one.

and this is very important with regard to the street who has a very short-term mentality. and as a ceo who has run a public company for 26 years, trying to communicate to the street, we're building a great enduring company there will be a downturn in comps which we've had recently but over the long-term, we're going to be fine >> how much credit, though, do you give to e the trump administration for the economy today? you look at the unemployment rate, you look at where the market is. >> first off, i think it's very wrong to use the stock market as a proxy for the u.s. economy interest rates are going up. if i had to make a bet, and i'm not an economist, i don't believe that the stock market is going to continue to grow at the level it has between now and 2020 you're going to see a sea change so listen. the economy is strong. i give president obama credit for that i give president trump some credit for that. but you also have systemic problems in the country.

the likes of which we have not had in a long time we've got a major mental health crisis you've got an opiate crisis. you've got racial divide in the country. and you also have 45% of american households that don't have $400. and you have 67% of the workforce in america among men that are not in it so there's lots of things that we have to do as a country to address the social issues. and are going back to china in trade. just one more thing. this rhetoric about all these trade wars that are now being engaged with cth mexico, with canada. and this might sound like a trite line, but it's important we should not be in the business of building walls. we should be in the business of building bridges with our neighbors and allies and our standing in the world today is not what it should be and we have to advance america's values around the world and we have to deal with the systemic domestic issues in the country and that is about servant

leadership we have not had servant leadership in government in a long time where we are working in service of the american people >> i have a handful of questions about starbucks. but hang on because i know we have questions back in new york. guys >> all right, great. thanks, andrew and howard, i -- one of the highlights of your career, i don't know iu remember that award i gave you at cnbc do you remember? you somehow -- i ended up learning what a 2% venti no foam iced latte with cinnamon -- instead of just ordering a cup of coffee, i found myself saying thatnd ordering a miles davis cd and buying a scone and my bill would come to $22 i gave you kudos for that because you changed the world, basically. i don't know how you did it. and i still order 2% venti no foam lattes with cinnamon which is amazing bumy question is when you left last time, something happened with the culture of starbucks.

i don't remember exactly what it was. the baristas changed, something changed, and the stock suffered. then when you came back, it was -- it's hard to believe thay change an entire company but i think it happened. i'm just wondering are you sure that's not going to happen again? especially when you're trying to navigate with this open policy of not having to buy anything. that seems like a tough thing to leave on your predecessors or, i'm sorry, on your successor's plate at a time when i think that's going to have to be managed. because it's going to be each store to figout a way to manage through that. that's a tough time to leave >> well, i think kevin johnson and the team have been at my side now for a number of years i feel very confident in the future leadership of the company. as i said to andrew, there will always be some sickly cat issues but 2008 is not 2018 for

starbuc starbucks. we're opening a store every 15 hours in china we have a roastery in italy and new york in september and october. the future of the company is very bright. will there be cyclical changes there will be at times but i'm confident in the long-term progress for starbucks. >> how, by the way, do you think investors should think about the company? stock went down about 1% after your news. there's been questions about almost a hybrid nature of this company now. there's the u.s. piece where same store sales are basically growing at 2% at the moment. >> sure. >> and then there's china which is continuing to grow wildly is this a value play is this a growth play? i mean, for so many years this was a growth story what is it now >> i would bang the table and say we are a growth company that is experiencing a moment in time where u.s. comps have slowed but u.s. comps have slowed in

the u.s. before. and we will without question through innovation and disruption really i think do a number of things that will be catalytic over time to address the comp issue but if you just isolate china and the growth of our international business, then many ways starbucks is undervalued. i'm very bullish long-term on the company. and our u.s. comps over time will improve i'm quite confident about that >> ken has a question in new york >> congratulations we've been trying to get together for some time let's make sure we do it now howard -- >> let me tell ou. you have built a great company and you are a great american story. so it's an honor to be with you. >> my honor is to be with you. i'm thrilled you're looking beyond your current work there's a lot of work to be done there's two things that strike me one, you haven't mentioned in all the things that need to be worked on in america, public education. that's a national disgrace >> yes >> and it's got thorny political

consequences to it that we have to push aside if we're going to fix the problem. without regard to what those problems are the second thing is, government can't do everything for us a good examp, you mentione the veterans administration. if i took howard shultz, bernie marcus, jamie dimon, and jim senegal and said here's the va fix-it i will bet you in 18 months, you'll have us well on the way to doing as a nation what we should be doing for these people that served us so well and so bravely. so i'm excited about somebody like you giving the thought of coming into public service i think it's going to be good for the country and you'll be great at it. i urge you to do it. >> thank you >> government can't do everything >> i completely agree with you i think what we're really talking about is leadership. authentic leadership i think the country is longing for truth, longing for an

opportunity in which respect and dignity. we have to ask ourselves an important question today what kind of country do we want to live in we can't live in a country which we're divided. we have to create the kind of leadership in which we are creating value and opportunity for everyone we can't do that without reforming and transforming the education system in america. could not agree with you more. >> howard, maybe - >> two final questions go ahead, ken. >> one last thing. i believe the glass is half full i think we are in the greatest nation on earth. we have so much to build on. we have issues we have problems but the sooner we address them in a positive way and stop knocking each other and stop demeaning each other, the better we're going to be to get those problems solved. that's a tall order. i don't know how you get there but that's what needs to be done >> i agree with you. can i just -- i said something

in our companywide meeting yesterday. i said i had the privilege and honor traveling across the world carrying the starbucks flag. but i carry the american flag everywhere i go. there's no other country i'd rather come home to than to thea kid from brooklyn in the projects has built and been part of something that can only happen in this country >> you're right. >> couple of just political questions outside of your own potential future when you look at the field, if you will people say, you know, will joe biden run, will others run is there anybody you get excited about? >> i think there's a lot of people who might run for president. i have not focused on that i will say that it concerns me that so many voices within the democratic party are going so far to the left. and i ask myself how are we going to pay for all these

things in terms of things like single payer or people espousing the fact that the government goin give everyone a job i don't think that's realistic i think we've got a get away from all of these falsehoods and start talking about the truth and not false promises >> question. it really comes from -- if you were to pursue public service, do you worry that starbucks would get wrapped up into it you remember when romney ran, bain got wrapped up in it quick. >> sure. i think there is an anomaly here this hasn't happened very often where if someone like me did do this, my connection and association we the company, we'd have to deal with that but we're a long way from that >> joe's got another question. joe? >> just try to focus back on just the whole philosophy of maybe redistribution versus

growth i'm not sure the stock market is the be barometer you want to look at either but it's possible we grow 3% there's a lot of reasons why that's going to happen maybe it was set up by the obama administration but fot years we didn't, never had a year so there's this never ending argument about whether growth and letting me private sector have more capital, keeping it in thepriva grow the pie or whether redistribution is the way to go. i mean, if we end up growing at greater than 3% this year, would you repeal the tax reform. in -- back to where they were if you were t? >> well, i don't want to talk in the hypothetical about what i would do if i was president. but let me try to say this in my own way. i think the greatest threat domestically to the country is this $21 trillion debt hanging over the cloud of america and

future generations and the fact interest rates are going up, we're going to be paying close to $400 billion in interest expense which i think is the number one or number two issue in terms of federal expense to the country the only way we're going to get out of that is we've got to grow the economy in my view, 4% or greater. then we have to go after entitlements again, this is where political ideology and the political class is not facing the truth and not facing reality this is about relationships. this is about getting people together in the world and toub the fact the country is on time. we've got to discuss this. it's about facing these hard truths and dealing with significant problems where it's not about trade wars and not about china. not about building a wall. it is about getting our house in order. and doing everything we can.

i said this before, about walking in the shoes of the american people. doing what's right for them. >> how do you get to 4% growth that's where the rub is. how you get an economy to 4% growth and the best intentions of a compassionate liberal sort of philosophy, the best intentions sometimes end up with income inequality gets worse for eight years because the fed stayed at 0% >> well, take the liberal piece out of it. let's take a centrist approach about getting ideology out we can get the 4% growth we can get low after entitlements and we can do the right thing. if we have the right people in place who are talking about what it is to be an american as opposed to being a republican or democrat and getting all of these issues out of the way. so we can fix the problems in the country.

>> final question. you spent nearly 40 years running starbucks. when i saw you yesterday, it was an emotional day we're now a day after. some people go to disn world after the super bowl and they win, what are you doing? >> the truth is i'm going back to work today. i still have a number of things to do at starbucksthera number i want to see and talk to. it was emotional yesterday there was a moment where i started to tear up as i was thinking if only my parents could see this it would have been a wonderful moment for me and my family. and i hope they can see it >> okay. howard shultz, thank you thank you for spending time with us >> thank you very much >> thank you for answering our questions and congratulations on a remarkable career at starbucks. wish you the best in the future. >> thank you >> thank you appreciate it. guys, i'm sending it back to you. >> great we're here with ken langone. a lot of things that in a perfect world would make sense

i don't know how you get to 4% growth if -- that's where the disagreement comes in. that we all want it, but how do you get there? >> first of all, people who areelected have to say if i have to lose the next election to do the right thing, that's what i'm going to do entitlements what the hell am i doing my wife and i said this. we get $4,000 a month from the federal government what the hell is going on? i should pay for my own health needs. i benefitted enormously by a great society and a great economy. so he's right. but he -- i was intrigued that he didn't mention education, because to me that's the biggest solver of problems going forward if we can elevate the -- >> it's also a huge bit on that.

>> counting, reading, comprehension. let's not worry about astrophysics and chemistry let's worry about the basif getting a kid ready so he can walk into a home depot store and he can read things >> people say you're only teaching to pass the tests to go along with these things. >> do me a favor how the hell do you decide whether somebody knows what they know unless you give them a test this is stupid can you imagine if someone said i want to be a doctor, so that's it i haven't got to take a test or drive a car. could you imagine the havoc in this city if people just went down to a used car dealer and said i want a car. no test and they drive away. tests are an indication to me. >> howard shultz just mentioned things like what he called the centrist idea of coming at it.

>> i had a notion this guy was way the the left i suspect he understands if he has a shot, he better not be so far to the left he disqualifies himself. >> also took shots on the democratic party and said no that's not the way you do it. don't make prozs you won't be -- >> i hope it gives all those people the courage to say he did it i can do it. except i can do a better job if they can do a better job. we don't know. but the fact of the matter is we've had a paradigm shift here. right now. we have somebody who's never in the public arena as president of the united states. never ran for anything he ran for one thing and he won. now, you can argue all you want about i happen to believe he's getting a lot of things done

i think this tariff mess is a mess and i'm frightened of it. i think we want to be careful that it doesn't go from a tact to a strategy. if it goes to a strategy, we're in trouble >> you mean a trade war. >> absolutely. >> one man's leadership is another man's -- watches in horror at what's happening and you mentioned the jerusalem move others would mention -- whether you agree with where trump is leading us somewhere so to say we need leadership and we're not seeing leadership right now, may be a different result >> he told us what he's going to do and that's what he's doing. he talked about the wall think of all the things -- he talked about jerusalem and he did something in that case maybe the tax law we passed

should be different. i'm paying more taxes because i live in new york state i'm a resident of new york state. i could live in california tomorrow i love this city my wife and i love our homes we don't want to change our life to me the annual check of the state development is one more philanthropic donation that's all it is >> the problem with what mr. shultz mentioned, $21.5 trillion in debt, et cetera there's only two ways to deal with that. either you cut entitlements with means testing and reform entitlements which horrifically, doesn't seem like he wants to take away entitlements >> although that's what he said. at that point it's hard to get to 4% growth if you start taxing to move it to the non-producers. >> there is so much waste in government >> we've heard that a lot, too, though >> but he mentioned the veterans

i was intrigued that he mentioned it because there's an example of where the private sector could do a much better job the job the government's doing is pathetic. it's pathetic. look at what's happening to these kids two months, three months and it hasn't gotten much better >> by the way, there's a guy pouring his guts into it that i know well by the name of ike pearlmeter you won't believe what he's doing to fix the va problem. god bless ike. he sold marvel to disney loves america, loves everything about it and he's trying. and he's making some progress. but if you took it completely away from the government and say do what makes sense. howard talked about his customers. make sure the vets that come there leave and say boy am i glad i came here i had a great experience that's customer service. >> it is we'll talk more with ken lon gone he's our guest host today. up next, kinetic ceo michael

rubin is standing be i that's next right here on "sawbo quk x.

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♪ acquiring gilt grouprulala is

the brands will continue to operate independently under the new ru gilt group. joining us now michael rubin, ceo of parent company kinetic. i've gotten to know you and i know you paid a lot less than what "the post" is saying for this they think they didn't lose money. what's true? >> we did pay a lot less than the original we did pay a less. this is actually a company that i've wanted to buy since 2009. there's probably not been a deal i worked on longer than acquiring this. >> can you believe you're getting it what you're getting it for >> you don't want to gloat >> to me it was great outcome for saks i think their stock was up nicely on the news >> you know how to do it >> and for us it's a major win

because rue la la and gilt have similar business models. >> they were appealing similar groups rue la la and gilt, there's no overlap in w their clientele is really. >> i'd say tj maxx and marshalls probably had a similar bit the demographics of the customers are similar. generally a younger customer, under 40 years old makes more than $100,000 a year. but what's interesting for us if you think about it, rue la la has 600 full-time people that wake up every morning, go to bed obsessed about getting the best experience for their members we're going to add 150 employees to bring on gilt into the rue gilt family. we're going to be able to run that entire business with efficiency i just looked. i was amazed tj maxx had less than a billion dollar market cap when they

bought marshalls look at the incredible business they built we have the same opportunity the business is doing amazing. a lot of times people think the private sale space isn't doing well we believe there's now four global players and we're one of those in the global business >> are you going to change anything about gilt? is it going to operate as it does now >> i think the business model to the member and consumer will be identical. what will completely change now, it's going to be one fulfillment structure versus two one technology platform versus two. it's going to be one merchandising team versus two. it is going to be to the consumer, going to be distinctive. >> here's what i didn't unta i remeer when saks bought gilt i've been watching gilt for a long time. i never understood why saks couldn't make that work. that seemed like it was going to be a match that would work well.

>> generally what i found when you have a team focused on doing one thing really well, they generally succeed. and you could say why haven't they been as good is fanatics. within the rue la la business, having 600 people waking up and going to bed obsessed with the customer, a lot of times it goes into a different matrix department of that company becomes harder to operate. we couldn't be more confident with this. again, i'm not exaggerating when i say we've worked over nine years to buy this company. we've been at the finish line multiple different times and we know exactly how to give the best experience to the members. you know, for our brand partners, the biggest thing we hear is we love working with you, but how do we do more business this doubles the size of the business this will make us a

billn-dollar-plus business over the next few years. >> you took stuff that ebay didn't want and it was like the sort of leftovers and turned that into an unbelievable business this probablyhas more potentia in your view than what you did the first time around. you've done it before too. it'st example because if you look at it, i don't think the companies i bought back from ebay, they knew they wouldn't thrive in the big environment. but for us as entrepreneurial owners focused on running these businesses, we've gotten great results. it's the same thing here we can look at the gilt business and know exactly what to do to improve it how do we make sure we have the best brands and experience in every aspect owhat we do for our customer we're confident putting e two businesses together that we're going to have a good multi-brand growth platform. for us, some of our employees dreamed of this. there's been rumors of this for years. some said we thought this was

getting done four years ago. so did we. >> did saks try to integrate whenhey bought it? >> they did. >> merchandising, fashion, all of that was put together >> i believe so. and look saks runs a great business this was a very different type of business. if you really think about it, saks is about building the saks business if you look at the history of big retailers and you come from one of the best, when you start creating additional different businesses, a lot of times they become, you know, stepchilds to the main business. >> if you integrated it, you couldn't distinguish it anymore. so they didn't integrate it because if they did, you wouldn't have been able to unplug it. >> i think, you know it was a little complicated. the business has become part of saks today so if you look at all of the functions, they are part of what saks does. i'll tell you one thing. i really believe in something

like this. this is truly -- this has been a big distraction for saks they've been losing money with it they had it for two years. for us it's going to be immediately profitable we're going to urn the this on next month and this will make money for us we'll be able to build the growth. >> will you announce how much you're paying for it >> we didn't i think they announced it on the conference call. but it was significantly less. it was a bit less than that, but yeah >> oh. great. >> back to saks for a minute we bought something many years ago. we bought it because of their design capabilities. we bought it for their sourcing capabilities then we did a dumb thing we began to look at them as a stand alone business and we were looking at their comp sales, wait a minute. that's not why we bought it. we bought it to take what they did good and put it into 2000 stores the numbers would have been off the page so i don't know what saks did, but it sounds to me like it

never was accepted in the family in total. >> i've got to tell you something and you guys will probably remember this in 2001 in my old company, we bought ashford.com i was really excited when we bought it and when we sold it. because it was a complete disaster i mean, we couldn't got anything more wrong than we did. my point is we've done a lot of m&a. we've done some good things, bad things when something's not working, the best thing you can do is get rid of it and move on. the great thing in this partar situation is saks is going to be thrilled they're going to be focused on their core business. for us we've got a company we've been focused on owning for nine years. we now have 20 million combined customers in this business we've got 60% of the business we're doing on the mobile device it is a great opportunity for us >> this guy is sharp he's a real businessman with a social conscience too. i've got ton know him well but i like put you on the spot>e

spot as well >> so it's good to know that the national anthem thing is all fixed for hold on. please so it's good to know that it's all -- >> he wants to talk about the return -- . >> so the eagles aren't going today. you know, like goodell or not, i don't know how he dealt with it last year. it doesn't look like it's fixed. it looks like it's even worse at this point >> i told you when i was on with the nike partnership last week, this was a complicated issue and i think what happened last night with the eagles shows what a complicated issue this truly is >> how's it going to work itself out? is the nfl going to be down another 10% this year? >> first of all, our nfl results, we're up 40% this year. on a big base. the single biggest business we have is the nfl.

>> jerseys and paraphernalia. >> at fanatics the biggest e have is nfl. so our business is rocking that said, as i said last week, the risk of not getting this right to the overall long-term health of the business is at real risk. i think everyone's focused on it i didn't think last week that this has been -- this was the permanent long-term stuff. this was a step forward. you know, teams have never required that players go to attend the white house and certainly, i think players -- >> trump's sg staying in the locker room is the same as kneeling and a lot of the people that want to continue with the protests say that you're taking away my first amendment right the way it is right now. so neither side -- you didn't satisfy either side. they're both more entrenched >> i agree with that you know, i'm a uniter i think we need to unite here. i think we need to bring people together i think there will be -- i think

this is a step in the process. and i think as we go forward, the nfl is very smart. >> really? >> they are. they don't always get -- by the way, like us, we don't always get everything rightp front. sometimes you have to reiterate. i think this is a work in progress and there's more to be done >> all right thank you. >> i like that you put me on the spot >> you do like that because you have thoughts and ideas. and they're useful and you know as well as anyone >> what is your return policy? >> so return -- by the way, i like going back to a nice peaceful question. so for rue la la and gilt, they both have liberal return policies i got to tell you something. a happy member continues to come back and buy from us we've seen our best members visit the site literal 20 to 30 -- we have many members that visit the site 20 to 30 times a month to buy from us we have tens of thousands of

members that buy from us literally hundred-plus times per year >> you sell nfl paraphernalia. >> largest in the world. >> you're buying from us we have a company that processes water bottles. all those garments are made of recycled water bottles the deals with nike. >> perfect and we now make all of the nike apparel starting april 1st >> all right this deal is going to be cut in the commercial break when we come back, we are counting down to the opening bell on wall street. we'll get jim cramer's reaction to our interview with starbucks outgoing chairman howard shelts.

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what i really believe is there's a lot of things i can do as a private citizen, other than run for the presidency of the united states. and let's just see what happens. i've got lots of things that i'm thinking about i'm writing a book it's only been 24 hours. but we've talked many times about how concerned i am about the country, our standing in the world, and i think there's many things i can do as a private citizen to advance the cause of

the promise of the country >> that was outgoing starbucks executive chair howard schultz he joined us live on "squawk bo in the last half hour let's get down to the new york stock exchange jim cramer joins us now. a lot of different angles to the starbucks story, jim are you confident that the company, or the stock, and the company, can fair better this time around than last time when schultz left >> it's tough, because as howard mentioned, the same-store sales for domestically have been in a big funk, and i'm not sure i was hoping that when they figured out how to do mo loyalty, when they figured out how to do more -- geez, let's just call it engineering -- that they could get people through faster, which is a big problem, and they haven't been able to do it yet and just chinas paradigm strategy is not enough so, no, i'm not that confident yet. i'd love to be, but i think you need to see an acceleration in

domestic and they haven't been able to give it us to. they just haven't, by howard's own admission. >> jim, ken langone. >> hey, ken! >> thanks so much. you delivered a great commencement speech at bucknell. the kids loved it. everybody loved it and all i can tell you is thank you for doing that you really inspired these kids you've got to keep going. >> you just made my day, and i'm going to get off that -- as soon as this is done, i'm going to call my wife and tell her you just said that call lisa, because it means the world to me. >> and tell her on the next development campaign, i'm going to call you personally, not her, okay >> done. done thank you, buddy really appreciate it. >> thank you, jim. >> jim, nasdaq's looking good. maybe the other averages follow suit. >> i think so. i like things here. >> you do? thanks, jim. see you in a couple minutes. >> yeah, thank you. when we come back, a parting shot, probably, literally from our guest host, ken langone. we'll be right back. ♪ whoooo.

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things wrong with america, but there's a whole lot of things that are right about america, more than that are wrong i hope all of our future political leaders stop knocking america and come forward with suggestions and recommendations for fixing what needs to be fixed -- entitlements, education, the va, income inequality, huge problem this in and of itself will destabilize america if we don't fix it but income inequality also has the need for a better educational level. so, i'm an optimist. i'm thrilled you know how i feel about -- and inuding andrew ross, my buddy, seattle. let's stop knocking america. let's focus on what's good about america and build on that. and i feel strongly. look at me where the hell could a dope like me do as well as i did, except in this great country? >> there's a weird disconnect right now, ken, given where the unemployment rate is and where gdp is growing and where the

stock market is going. but yet, half the people on the street if you ask them, they say this country is just heading to hell in a hand basket. i don't -- >> because that's all they hear on television in both directions stop build on your strength be grateful for what you have. thank god you got it, and then say, god, i'm going to do everything i can to make it even better for everybody it's that simple just go do it! stop messing around. >> i -- you're preaching to the choir. i think we're at a point now where things economically haven't been this good in a while. >> and they're going to get better they're going to get better. and if you don't believe that, why the hell get up in the morning? stay in bed. >> then if you had 4% growth -- >> get out of the of our ways. >>had 4% growth, you can start, ynow -- >> we're going to have 4% growth. >> then you can start doing things for education you can start doing -- >> i'll say it again, why is it we have the immigration problem where they all want to come to america? there must be something good about this great country. >> yep if you want to hear more about

it, by the way, read ken's new book, called "i love capitalism!" it's out now ken, thank you very much for being here. >> thank you. >> always a pleasure to see you. folks, we are heading towards the opening bell, and al morning long we've been looking at the futures, had been higher until just a little bit ago. the dow is now looking to open down by about 32 points, s&p off by 2, the nasdaq up by 11. join us back here tomorrow right now it's time for "squawk on the street. ♪ ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new yo stock exchange. futures fade just a touch after monday's rally trade headlines among the leads today along with global isms, primaries in eight states. of course, howard schultz on life after starbucks europe is mixed. yields dipped back to 2.9. oil's below $65, lowist since april. our road map begins wi