"squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. >> good morning. 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 andrew ross sorkin is live in france at the cannes lions you saw him talking to one of the new heads of wpp, he will be back talking with another guest. >> good morning. let's check in on the markets. u.s. equity futures at this hour are indicated higher after a down day for the markets yesterday. right now the dow indicated up by 118 points. yesterday the dow had its worst

day since may 29th it was down for a sixth session in a row it was down by 287 points. that was off the worst levels of the day, 420 at one point. now it's up by 120 we'll see how things shake out the s&p is indicated up by 10 points nasdaq indicated up by 22. yesterday you saw a steep decline in the chinese markets this time around the hang seng closed up by three quarters of a percentage point the shanghai was up by a third of a point, the nikkei up by one and a quarter points let's check europe and early trading there. green arrows across the board. the ftse is up by 1.2% then check out treasury yields treasuries, the yields have been under pressure as we watched this play out with the stock market the ten-year is back above 2.9%.

late yesterday finally happened, probably didn't come as a surprise to anyone at this point. it's largely symbolic, but general electric, the dow component -- one of the oldest, original dow components, getting booted now getting booted getting booted from the dow after all that time as part of the index. stock has been battered this year, recent years, really since -- well it's just been battered looking forward a lot of positive things. nick hayman has a lot of reasons why flannery may be turning things around. >> at $12.54 >> the company saying they're still focused on executing performance. it will be replaced by walgreens. the change will go into effect

next tuesday much more on this story coming up i look at it as symbolic >> it matters. that's why you see walgreens up. >> it's largely out of ge's control. it's not anything new about the fundamentals of the company. >> no. no >> it's like the cherry on the crap sundae. >> i did hear that caught my attention. enjoy. here's the cherry. i used to say, you know what that is? that's when you sink like a 15-footer for an 8 yes! that's what it's like. the cherry on top of the -- i can't use the word i would like to use >> if that's the cherry on sop top of the sundae, does that mean the pain is over? >> it's like the final insult. >> maybe the pain is over. we'll talk to nick about all of

this >> i'm not going to rehash all of the recent stuff. you know, when you're transforming an old line company into a fast-growing start up, you want be a wuss you remember that quote from that harvard review. not many dow components that are these sort of -- what's the word flexible startups. >> why do they call it the dow jones industrial average when industrials are such a small part of what they are? dgia, but it's no longer the industrial average >> we'll move on not harping on the past. i hold no bitterness i don't own ge anymore all my options expired >> it's been painful >> consumer stocks the replacement is interesting >> consumer stocks still don't

make up a huge portion >> kraft >> kraft, coca-cola, procter & gamble is the other part of this it's a changing dow. nike got added in. i forgot at&t was out. when i saw telecom was the lowest makeup of the dow, i thought, no, at&t is there, but it's not >> such a storied company. thomas edison, a list of great ceos i guarantee welch is watching closely still, i can tell you this pains him greatly >> nobody likes to see the decline of a company >> 111 years, original dow component. it's finally off >> we will talk to nick hayman about the future of ge we will also talk about starbucks. shares are under pressure after

indicating weak guidance and some store closures. i think they're closing 150 versus the 50 they would generally close. starbucks expects global same-store sales to rise 1%. they were looking for 3% based on the company's earlier guidance they also plan to close 150 underperforming u.s. cafes in fiscal 2019. that the triple the number it closed in recent years it also will be slowing the growth of licensed stores in airports, supermarkets and retail outlets starbucks announcing they will raise the quarterly dividend by 20% and plans to return $25 billion to shareholders through fiscal 2020. we'll hear more on this story. kevin johnson is sitting down with cnbc. that interview will be on "squawk on the street" at 9:00 a.m. eastern time. >> wow we're following a developing story on immigration big business now weighing in on the trump administration's controversial border policy.

jamie dimon in an internal memo to employees obtained by cnbc said separating children from their parents is cruel and contrary to american values. dimon said his heart goes out to those impacted satya nadella sending a letter to his employees calling the policy abhorant and cruel. let's get to washington for more on president trump's trade agenda kayla tausche has more >> immigration is engulfing the focus of the white house now and today it will continue its sales pitch on zte with republican lawmakers midday many of whom believe zte is a national security threat despite the administration securing a deal to enforce some new

restrictions on zte but overall restore its business more than a dozen lawmakers plan to attend. the senate overwhelmingly approved a measure that would limit the president's dealmaking ability. the white house still hopes to remove that provision as the bill goes forward. today the commerce secretary will be on the hot seat on capitol hill defending the administration's strategy to impose tariffs on a national security basis orrin hatch convened a hearing on the topic after ross began investigating autos and auto parts. hatch saying he believes the strategy undermines the success of tax reform. questions will rise on ross's fences as well after it is alleged he borrowed shares to sell short in a russian-linked shipping company while a reporter was pursuing a story about ross' finances in a lengthy statement ross said he divested a known stake in the

company, navigator holdings, in may of last year in october he said a trust agent disclosed another stake he had gotten while serving on i board. ross said he borrowed and shorted the stock in order to offset his holding in navigator. saying the bottom line is i have complied with the ethics laws of the united states. that reporter or another might feel those ethics laws should be different is their right as a citizen however they do the public a disservice by asserting actions by public servants that have been reviewed and approved by government ethics officials are not in compliance with the law. it could be a tense couple of hours for the commerce secretary on capitol hill. >> wilburs are s arross is on lot, too so we'll watch carefully. joining us is jason pride.

also joining us is rj gallo from federated. let's talk about this. jason, watching what's happening with the markets, trying to figure out if investors care about trade concerns or if they think this is a negotiating tactic and something to look through. your thoughts on this? >> i think investors should care but not get overly worried when we do the calculations, you basically find out the tariffs that have been announced so far and put into place amount to about 0.1% of gdp. that ultimate afteffect is not alarming and is materially dwarfed by the stimulus coming through in the form of tax cuts and tax reform, which is 0.5% of gdp. at this point it's something to keep an eye on but the magnitude

is not big enough to change the directional thought process on where the my and profits are goin going. >> escalating further, if you got to the point of the u.s. putting tariffs on 25% -- 25% tariff on all chinese goods and multiple other nations at the same time, you could see something closer to a 1% effect on gdp and something more alarming and have a bigger impact on the economy and financial profits. >> let me push you on this we're at the point where the dow has lost its gains for the year. talking about a year where the tax reform was passed. the economy has not hit levels that we've not seen and the unemployment rate is at historic lows would you imagine we would be talking about the dow making no progress in a year like that what will we look back and say this year was all about in the markets? >> we also have to look back at

2017 and webbing nirecognize wen gains that year, we got prognostications that we would have stronggains again in 2018 so it shouldn't be that surprising to investors. from our perspective, this is a fairly healthy moderation in valuations in an otherwise long-term mick economic expansin that doesn't seem to have good signs of ending. we're cognizant of how long this expansion has run. we think investors need to do their homework and assess what could bring about the end of the expansion, so long as the expansion continues it's more likely than not that equities will notch in gains. >> let's talk about the bond market treasuries, every time we turn

around, we think we're headed for the ten-year to hit 3% every time that happens, something comes along and weighs down on the yields again >> muni bonds and treasuries have strong correlations in terms of rates direction your point about you hit 3%, you get above it for a short period of time and something happens, whether it's italy or the next tweet regarding trade conflict, there's been resistance to u.s. rates remaining above 3% on the ten-year the muni side has done better. issuance in munis is down 25% compared to the past couple of years. that's the tailwind to the tax bill so munis are almost flat on the year a bit to the negative. generally all fixed income are posting mildly negative returns because we have been in a bond

bear market for this year and really since brexit occurred >> you don't see an end? >> generally returns are tough >> no. a lot of the worst is behind us. the fed is normalizing monetary policy rating rates raising dots, which tells you where they expect rates to go and shrinking their balance sheets that's a challenge to bond returns. if the ten-year can get above 3, the next discussion is how much further does it go our view, by the end of the year is the ten-year should be around 3.25 long-term, we have a lot of headwinds to global growth the trade conflicts are a challenge, eurozone cohesion is a challenge. i doubt we'll see 4% in years t come rates have backed up quite a bit and we may be in the seventh inning >> rj, jason, thank you both for your time.

>> thank you the dow has the longest losing streak since what year? >> 20 -- >> 2017. you couldn't say the longest year since 2018. just to say it at all, this is the bear minimum okay let's -- let's get to cannes, france andrew, i know you're all about substance. you know how i watch you i watch you closely. you've been talking to media and tech players was it a working dinner last night? was it nice? where was it was it a view place or a fine cuisine place? just bring me in vicariously to your life. then i have another question for you. >> here's what i will do i will introduce our next guest because he was at the dinner >> oh, a working dinner.

>> can we do that? >> yes but hold on. earlier i thought i saw you on the air with this great combo with this shirt that was checkered. >> he took it off. he should be happy >> do you have a different shirt on now did you change your shirt? >> i do. >> how many outfits do you have that you're going to go through? is it for each show? do you have a different look did mary duffy give you -- >> no. no what was happening there, which is more embarrassing you have such an eagle eye >> was that yesterday's jacket >> no. it's hot out here. it's hot out here. and hot, like sweaty hot and so i had to change shirts because -- you know what i mean? i was trying to -- i have this beautiful linen ralph lauren blazer, i like to advertise it when i can, it's so hot out, we decide to go no blazer

and then we were having a conversation on whether my next guest should be wearing a blazer or i should be wearing a blazer. >> you had your "worldwide exchange" shirt on, now the "squawk box" shirt later today maybe -- >> no shirt. like the guys behind us. >> like the bathers behind you never mind i'm sorry. you're right >> no. no >> i like the look >> about dinner last night >> yes >> jon bon jovi was at dinner does that count as a work dinner >> yeah. he was at dinner, along with the guy i'm about to interview, who would comment on jon bon jovi. brian lester is here, just by happenstance we were at that working dinner >> it was nice just to confirm, it is hot out here i want to back up what you're

saying >> you were telling us you watch the show every day >> i do. >> you like the blazer look? >> i like the blazer look. i saw you wearing the blazer, i thought i should wear a blazer then i realized it was incredibly hot i was going to go with the andrew look. >> because they are trying to -- joe does like to live -- tell everybody about the dinner last nice >> very nice at the hotel it was beautiful >> how much did you drink? >> couple glasses of rose. that's standard for cannes >> good. okay let's get to the real stuff. >> okay. >> you have a big business the business got a lot bigger in the last week. we had randall stephenson on the show when the deal closed. how has your life changed? >> it changed when i came to at&t about nine months ago i worked for wpp for 12 years. that was a great thing i ran group m prior.

i was a big media buyer. i came to at&t because at&t has great assets to build a significant advertising business then we got sued by the government, so we've been doing planning in the background for how we can expand the business last week when we received the judgment from the court, that was good news. now we can get to work >> one thing you talked about is taking the ad load, the number of ads in a given hour down across the board of all the programming on time warner >> yeah. >> and make them higher margin for the ads you are showing by targeting them in a more prog m programatic way. >> yes we are in sort of a time where there's more content than ever there's more great content than there's ever been across more devices and channels but everybody still hates advertising when it interrupts

con t content. it's our job to make it a better experience there's two-ways to do that, make ads more relevant and targeted the ads you know right now the other is to reinvent advertising. >> everybody talks about reinventing advertising. what is that >> at&t is in a unique position to do that because we're content owners time warner is one of the best content libraries in the world and we're distributors of content and we have technology and data imagine you're home, you're watching your big screen on your living room wall, directv, you also have an at&t phone in your pocket we're the only company that knows you have a big screen on the wall and a small screen in the pocket instead of us interrupting content with a traditional commercial break, we can show an icon on the screen that may indicate there may be a mixed reality experience, or more information about the car you just saw, dress you just saw

>> do you have the technology to do that now? >> yes >> let me ask you about technology broadly there's a news story today in the papers about nexus, a $2 billion ad tech company. you used to be on the board. >> yeah. >> the report says at&t is about to buy it. >> cannes is good at a few thing. really good at rose, heat, parties and rumors so there's lots of rumors that come up at cannes. >> do you want to speak to it? >> no. i will say this. we have a big opportunity in front of us. we're going to build what is today a $2 billion advertising business into something more something can. so you would expect us to look at every opportunity to accelerate our time horizon. >> do you need to buy more tech? >> we need more tech >> final question shg wh, what think of the move for more and more consumers to buy services that don't have advertising at all?

netflix is one hulu is doing a good job, though there is an advertising piece to it, to sell people to a nonadvertising business. >> i think video on demand is a great service because you can't possibly pay for all the content now through a subscription the world needs advertising, we just need to make it more relevant >> thanks for playing along. joe, was that good enough for you? >> i have a question for brian i don't know brian well. seems like a really competent guy. brian, have you look at the synergies between advertising and sponsoring great golf tournaments at at&t? the way that it -- it seems to be the same demo that you're looking for. i know you do a couple are you thinking about maybe doubling the pro ams, tripling the proams wondering if you can -- i don't think you can do too many golf

tournaments to get the at&t name associated with pebble beach >> everybody talks about programatic advertising, data advertising, nobody talks about how important golf is to advertising. >> thank you that's all wanted to see if you're on the same page. >> yeah. >> honestly -- >> you're our favorite new guest. come in any time you want in new york >> andrew, he confirmed what you are saying i don't understand how you actually had to change your shirt. >> you're all sweaty you can't wear a shirt that's sweaty and wrinkled. >> do you have one for the 8:00 hour >> now, by the way, we actually ran across the street. i have an extra shirt just in case >> it's like broadcast news. >> 95 degrees probably

>> exactly coming up -- >> how hot is it 90 degrees 84 84 with the lights on. >> how hot is it if you're going to say that, you have to have a line, andrew. come up with one goggle it. how hot is it? all right. coming up a shakeup for the dow jones industrial average >> i have the cold lines >> you have your hands in others pockets? >> yeah. >> ge is out, walgreens is in. we'll talk about that. hi!

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for just $5 a month for 24 months. upgrade online now. ♪ that's chicago we have that guy on. >> the dow jones industrial average giving ge the boot and adding walgreens it's walgreens boot. is that a play on boot dominic chu has more on what the move means for general electric. kind of the end, not the beginning of anything. there are index funds, but it's like symbolic at this point.

shows how far the mighty have fallen maybe -- maybe this is the beginning of a new era for ge, where 12 is the low or something. >> i don't know. seems like a contrarian type play years from now will we look back and say remember that day back in 2018 when ge got kicked out of the dow was that the beginning of the run up higher? i don't know i wish i did the folks who get paid to know or at least think they know are the analysts out there who have their take on ge it remains to be seen whether getting kicked out of the dow jones industrial average is any reason to upgrade or downgrade a stock. i can't see it as being a reason maybe they do it today or tomorrow or the next couple of days the current state of play, for ge shares, generally speaking, as in most cases, the analysts are relatively bullish on it only about a quarter, 28% of

analysts out there covered by fact set say ge is a buy or overweight rating. almost two-thirds, 61% say it's a hold or a neutral. 11 of them say sell or underweight. if you look at the price target, the average one does imply that ge could get up to $16 and change if these things play out. that would imply 27% upside from current levels excluding the down 2%, 3% that we're seeing so far. if you want to look at the heydays of ge, you'll remember them, joe, so does becky and andrew going back to late august of 2000, this was on a split adjusted basis, $60.50 stock intraday back in august of 2000. if you look at that, about a 0 $600 billion company, the thereabouts. ge has been waning since then. as its influenced has waned on

the down, so it has on the s&p 500. next hour i'll look at how much ge has been on the outs in terms of influence over the course of the last few years maybe a contrarian indicator for everybody out there the fact it gets booted from the dow after 111 straight years as the iconic indexes benchmark. >> we have an analyst whose hair is so white now from trying to follow this stock. he's the most well known guy to follow it. he will make it simple for you he has five reasons why this may be the time to buy it. i don't think it has anything to do with getting thrown out of the dow. nick hayman is from william blair and joins us on the "squawk" news line you had these out before the latest news. it doesn't mean anything it's symbolic. it means something to people who

manage money your five reasons were already in effect before this. >> yeah. oil prices are clearly moving back up. they're near four-year highs that's going to benefit ge's stake in baker hughes. we continue that to be a source of outperformance rather than disappointment as it had been since 2015 clearly we think that the company that just visited them on friday has the resources in place to self liquidate and fund all the liabilities at ge capital. >> those are the regulatory and shareholder and bond holder lawsuit issues you're talking about? >> wmc bondholders, they reserved 400 million liquidating in line. 7$700 million for the wind down of the 40 billion, 45 billio

vendor financing portfolios. so you'll end up with $5 billion of extra cash at ge capital, and the leasing business the healthcare and oil and gas business are better than expected power this year and probably next year is less than expected. but these wash out to still allow the company to be in line with their guidance. and free cash flow will be better than the 6 billion or 7 billion they guided to this year versus the 5 billion to 6 billion last year. and i think the company is well positioned to see its underfunded pension plan, 29 billion at end of last year. you will see that reduced by 12 billion. >> the dividend is safe? >> dividend is safe. >> cash generation, asset sales likely to exceed 20 billion.

>> they will come through better than 20 billion. at 16 billion, 17 billion today. 3 billion from distributive power. a billion from lighting. you will be closer to 21 br 1 billion, 22 billion. >> some people said if it earns a dollar a share, if it's out of the dow it longer deserves a premium multiple at all. you don't think it goes there. you think it commands a multiple of what? it's still ge. >> this is a company that's going through a lot of transformation across every aspect of its business a simplistic way would be free cash flow yield. if you get a 5.5% free cash flow yield on $6, $7, it's a 1$14 billion stock. $10, $21 billion stock. >> i see people doing this weird

revisionist history. i'm not sure there's anything to it i've seen it poz ssited that iml was left with a mess and it took a long time to clean it up from wel welch. all along we've been saying that there is another narrative that it was left in pretty good shape, and that it was just run into the ground over the last 15 years. >> there's been serial capital misallocation here for a long time >> since when? >> since 2004. >> that's after. so that's after. >> the other thing -- >> buy high, sell low. >> that surge to '16 to '17 for ge digital has been refocused. it will be break even in cash by 2019 >> all right nick heymann, you're great probably your father had hair,

your gray hair is not from following ge at least you still have hair supposedly i'm not sure now >> take care, joe. coming up, we'll get back to andrew in cannes, france what do you have for us this time around? >> we have roger lynch, ceo of pandora. he will talk to us about all things media and music when we come back, and julia boorstin will join us und built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

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you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box. let's look at the u.s. equity futures. a reversal of what we saw yesterday or to some extent. yesterday we were watching the dow futures down by 300, 400 points this morning futures are indicated up by 30 points. the nasdaq up by 23. andrew joins us with another special guest. >> i should say julia boorstin is here. she's not a special guest, but special nonetheless to this interview. and we should say that roger lynch is here, ceo of pandora. good morning >> good morning. >> you can do this this is your expertise >> this is the big question. everyone is talking about the announcement you made this past thursday about your first big social media integration, and it's with snap

why are you doing this and with snap, not facebook >> snap has a cool new feature they're coming out with, and it was an opportune time for us wh one strategy i wanted to bring to pandora is integration like this it was a confluence of our product road map intervening with theirs. >> it allows users to share music on snap to pandora, to get people over to pandora to listen as part of your free tier. do you think this will drive more subscribers to the paid tier it's a relatively small business with just 5 million subscribers. >> it drives people, if you're a paid subscriber you can share the music. even if you're a free user you can share the music and the person receiving can listen to the song >> what's the better business these days this is a big issue across

media, would you prefer -- it's true of hulu and others where there is a premium model, an advertising version and another version that eliminates the ads. where is the higher marg for you? >> the margins on ad support are higher than subscription, but subscribers are valuable, too. from our standpoint at pandora, we want to meet consumers where they are there will always be a large segment for consumers for whom paying is not what they are willing to do. it's not even an issue of income, it's about paying for services we have a subscription tier that grew 62% last quarter. >> you have spotify on the beach. you have youtube music relaunching. you have iheart media, more radio but still digital ads with

music. how do you distinguish yourself? >> we're about two-thirds of the entire market. we just doubled down on that with the acquisition of ad whiz. >> are you concerned about rising competition from youtube music or apple music >> from an advertising perspective, it's still a nascent market we're the leader in it, but more entrants in it will help it grow faster >> how do you feel about video apple is getting into video. you hear about spotify thinking about doing in video five years from now do you think music will be a part of a larger service? >> i think the lines between a music service and video service will blur over time. i do think that's the case i think it will be driven by

consumers. consumers will stop thinking about discrete services and think about entertainment packages does that mean you're in that business or you sell yourself to somebody in that business? >> that was my former business you know, i know others have tried it, no one has cracked the code on that yet, other than music videos i think it will take time. it's not something that i think will happen this year, but i think longer term it's a trend we'll see. >> roger, thank you. julia, thank you guys, back to you. >> thank you i liked that you're right, julia, they're both special guests. andrew, i'm getting a lot of twitter stuff here were those different sunglasses than yesterday's sunglasses that you had? you're just showing off now. >> no. the same same >> they are. >> same sun glass as yesterday easier to see you now. the brightness -- >> it's tough.

>> i'm all in favor of the sunglasses when you're standing outside in the sun >> all right i just wondered. same sunglasses. i thought he would have a different pair >> joe is just getting jealous he thinks you have more andrew changes than i have. >> andrew gets like that with mary duffy, the person who makes us look this good, or as good as we can look. >> as good as we can coming up, our guest host, david nok,va he will talk china, trade, anything that we decide to talk about.

. welcome back to "squawk box. the canadian senate approved the recreational use of marijuana that will make canada the first g7 nation to realize recreational pot the law is expected to go into effect this fall we have conflicting ideas about it, i guess. not us, we're sort of together on this. but society as a whole >> we're in the minority >> pro hib bprohibition doesn't work either. >> it's nothing more than states wanting to raise revenue

>> you have to be 18 >> i suppose i'm not sure you can buy pot before you can buy beer when you legalize it -- i walked down the streets of new york city, you can smell pot wafting out wherever you walk. down by nyu, uptown here all over the place when you have children, as we both do, who are either teens or younger, it is not good for a productive member of society >> i kind of think that. it's not great to drive under the influence. >> you can't even tell there's no test when a police officer pulls you over to see if you're driving under the influence of marijuana >> and millennials need to be less motivated >> i just -- >> they'll never leave the basement ever. >> the main argument anyone puts forward on this, it's good to raise revenue. we're on the losing end of this

battle >> go long pepsi with the snacks >> and taco bell. coming up, exclusive comments from iran's opec minister after the break here.

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let's get to vienna.

brian is there for this week's opec meeting he was in london yesterday joins us with some news. hope you were well received there, brian good morning >> good morning, joe yes, we're at the opec seminar for your listeners and viewers wondering what's going on, here's the bottom line app year and a half ago opec decided to remove a million barrels a day. now the demand is up and prices have come up they want to push more oil back onto the market. maybe good for u.s. consumers. saudi arabia along with russia would like to add more oil to the world. iran with iraq and venezuela simply don't want to there's a lot of reasons we don't have time to get into. but iran has its own reasons we talked a lot with iran's opec governor he wouldn't go on the record about a lot of stuff, but toward the end of the interview, he did

sbru agree to go on the record and he also took a poke at our president. listen >> if they do not have anonymity, it is in place. likely nuclear was in place and trump pulled out >> but do you think that russia and saudi arabia will be able to get there to dial back the cut to increase production >> i don't know. that is their position to explain. what i'm saying is there a value everybody should honor anybody wants to walk out, they're most welcome we are going to stay on the end of this. >> you will honor the current opec deal because you believe the deal is in place what do you think about the people that are trying to change the deal >> they can do it. they can walk out like trump

>> so you think international politics doesn't play a role in the global oil markets there's basically iran's opec governor saying if somebody wants to change a deal, but to change it they're probably going to have to walk out as he said like president trump did from the iran nuclear deal. >> right yeah you figure you ask a representative from iran something about trump, they're probably going to take a shot. ask someone from cnn about trump, could be the same -- no, that's neither here nor there. brian, where are you right now where is the meeting is it in one of the nice o'tells at vienna? >> the it's a castle >>. >> i guess hoffburg palace it's where the stallions are this thing was built -- it's like the kernen summer home in the hamptons it's spectacular if you're going to get on the road and get jostled by reporters from the world

covering opec, this is not the worst place to be. i'm just throwing it out there >> i know. and i know where you are we'll be there sunday. i won't mention the name of your hotel. i don't want to cause a mop scene there, but how is it did you check in do you like it i know where you are >> it is but here's the thing that bothers me about hotels. you got to put your key in the slot to get the lights on. and it's like, come on, now. i'm a simple man i need to flip a switch. >> i'm going to give a clue. you're near st. stevens. beautiful example of gothic architecture anyway, thank you. thanks, bri. we'll ch when we come back, our guest host at the top of the hour, david novak. he's the former ceo of yum brands he's here to talk leadership, trade, and a lot more. we'll hear also from ohio senator rob portman. "squawk box" will be rhtac ig bk. your muscles look good,

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dropping from the dow. general electric, a fixture in the index since 1907 being replaced by walgreens. what the move means for your portfolio and the markets. jimmy dunn joins us. plus corporate leadership, the state of the economy, and the president's agenda guest host business magnate, philanthropist david novak and we talk about twitter's efforts to expand the company globally as the second hour of "squawk box" begins right now.

live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc we are live at the nasdaq market site in times square i'm becky quick along with joe kernen andrew is in cannes, france, this morning he's been bringing great guests all morning and he's got lots more to come before we get to him, let's look at the u.s. equity futures and see what's happening this morning you will see we are watching the dow futures up by triple digits. yesterday we were down 300 to 400 points throughout the morning for those futures. you can see right now they're indicated up about 113 points. with yesterday's decline, the dow closed losing all of its gains for this year. the nasdaq now up 21 the board of 21st century fox today meets to decide on

whether to decide comcast bid for assets the universal parent has a $65 billion cash offer on the table for those assets fox had previously agreed to sell the assets to disney for $52 billion in stock american airlines says it has stabilized a computer problem that caused numerous flight cancellations over the last week. the system that failed affected about 2500 flights at american's regional carrier which is called american eagle there will be additional cancellations today as jets and crews are repositioned and we'll be getting an idea of how much higher they're impacting rates later this morning. the national association of realtors is out with may existing home sales. sales fell by 2.5% in april, but economists are expecting a 1.5% increase this time around. few stocks that we will be watching once tradie ininge inis morning. starbucks expecting sales below

y analysts were. and the company is also going to close about 150 underperforming stores in the u.s. next year but that won't matter because you can go to the other store across the street or on the other corner if you want so there will only be stores on two corners instead of three kevin johnson sitting down exclusively with cnbc this morning. catch that interview at 9:00 a.m. eastern at&t reportedly in talks to buy digital ad firm appnexus backed by what investors that include wpp and news corp. it filed confidentially foreign ipo in 2016. but it has not gone public yet general electric booted from the dow. dom chu joins us with more on a huge move we've been following joe said earlier this is kind of the cap on what we've been

following for many years with this company >> we've done stories in the past whether this is a indicator or not we'll see how other stocks that have been kicked out of the dow have done. let's look at the waning influence over the course of the years. they are on the dow, of course, a price weighted index if you look at the last 20 years, that performance has been staggering how about the waiting in the s&p 500? how much heft does it carry? howard silverblat went back to every december to 1980 turns out to ge was a $14 billion company in december of 1980 and the total s&p 500, not even the dow. by 1990, it was almost 2.5%. worth $50 billion. just after its peak in august 2000 it was a 4%-plus weight in the s&p. and in december of 2010 it was a 1.6% weighting if you look at today, after the

charts and that big drop we've seen so far this year over the past 12 months and of course since its highs, now it's worth about 0.5% of the overall s&p 500. that's how much weight it carries. it makes it slightly bigger than honeywell which at one point was kicked out of the dow. and slightly less than 3m. so the question becomes whether or not general electric has lost some of that iconic luster in being one of those bellwether industrial companies in america. it's not just the dow where it's losing some influence. it's also losing it in the s&p 500. it is now the 44th ranked company in that blue chip index. >> no question it's losing that. just i don't know whether this just puts an exclamation point on it or what. but it's been losing it for years and years. our next guest, that's the story we're talking about. so i guess we'll begin with that he'll be with us for the next two hours. david novak.

lead founder, ceo of both and a cnbc contributor former yum brands cofounder and ceo. thanks for joining us. leadership, general electric, one of the storied -- thomas edison 111 years in the dow >> almost makes you want to cry looking at those numbers >> you've watched this closely as anyone. and you know all of the players involved what -- how do you explain it? could ogo tenants have helped over the last few years? >> well, i think what we teach in leadership is the importance of leaders being hard wired showing they care about the people, get people motivates then they literally perform. you've got to hard wire yourself so you can make sure you get the results every single day i think in the case of this, it's obvious it's not a question whether it's

lost its luster. it has lost its luster nobody thinks of ge today and thinks, wow what a company they've got to go a long way to get their reputation back. it comes down to leadership. i always say show me a good leader and i'll show you a good business i don't think you could look at the past regime and say that good work was done in fact, all the evidence suggests that everything was done to basically take the business down the tubes. you know, i think that's a big problem. obviously when you don't have the right leader taking great assets forward >> i wonder -- for example, blockbuster. what do you do no one could have saved. when the world moves away from you, sometimes you're stuck with it >> well, i don't know. >> did the world move -- >> if you go back to blockbuster, they could have bought netflix >> and started with the mail stuff. they transitioned into this

unbelievable business. >> right. >> so you don't think the world left ge behind you think ge was -- >> i think ge sold a lot of things at a bad price and bought a lot of things that made it worse. >> is that arrogance or hubris >> i don't know. i think it's just sometimes people aren't prepared for the job, make mistakes, and then they get compounded because you press for more and better results. you know, i think -- >> do you ever -- i heard ge copped to paying too much for something or for selling something for too little i never heard over the last 15 years, never heard anything like that everything was -- >> i think what you have heard, though, is the trust and belief in what the company was doing and how it was going to grow began to erode and when that happens, you see the kind of stock performance we have along with -- which was also driven by poor business results. >> it's also where transparency

and, you know, transparency sometimes gets clouded by just a real hard core communications department or public relations department that's what you want you want to put the best face on everything you're doing at all times, right but that can actually affect, you know, how you even do the accounting at the company. how you hit your numbers i think it all -- and it eventually builds up to where it almost -- >> putting a face on, that's -- anybody can do that. what you have to have is substance and you have to have real performance and you have to have the numbers and results to really back up what you're talking about. so you can sing a good song, but if you can't back it up with continual performance, hen, yo know, you don't have the credibility that you really need to get at. >> let's shift gears and we'll talk about what's on everyone's mind that is china and you know a lot about it, obviously. >> yeah. >> how should we approach it have we -- do we have a point?

do we have -- i mean, is there a reason to take a stand at this point in your view it may not be the right one. but have we been slighted over the years? >> i think it's very challenging to do business in china. you know, companies come in, they get 49% of the company. they give away, you know, their intellectual properties. they don't have control. they don't have the ownership they'd like to have. we have issues with intellectual property i think there's definite challenges for american companies in china to do business and there has been what i would say an imbalance i think we got a president here who definitely likes to use leverage and stir the pot and i don't really know where this is going to shake out i don't know if anybody knows where it's going to shake out. but what i do know is that a trade war with china is not a good thing for our country, not

good for them. hopefully you have some logic prevail and we'll get to the right solution >> what if you win a trade war there's a saying nobody -- everybody loses in a trade war. what if you extract concessions just because they say it hurts us >> i think it's going to take a long time. >> so this is not going to work? >> i think people may come to the table. there may be good negotiations but i don't think anybody really wins in a trade war. one of the things i don't like what i see happening right now is that positions are already getting entrenched people are going public with their beliefs. you know, obviously united states made its point of view very clear if you read what's going on in china, china's op-eds, now they're coming back and saying, look we're going to do the same to you. you know, one thing i do know about dealing with the chinese is that face is very important so the deep er both sides get entrenched -- >> that's been my point too.

is there a way both sides can look like they're saving face and walk away winners? >> i don't know. i think maybe trump may pull a rabbit out of his hat. one thing for sure, you know, i think the tax situation is helping business you know, the deregulation is helping business what i'm concerned about and i think like so many others in business is that this could take the bloom off the rose, it could slow down the momentum i think we all know any time there's uncertainty, any time there's uncertainty that hurts the economy and hurts the growth prospects. you know, i've talked to ceos. they're bullish about the future at the same time, there isn't anybody i've talked to that isn't concerned that what's going on right now could really dilute the momentum that we have in the economy and all the optimism we have for things going forward. >> yeah. we do hear, you know, a lot of people say we need to do something but this isn't the right way. i don't know they have all these ideas of

getting allies involved with china. but then i look at -- that's what we've been doing for 25 years. and we've been doing it the other way. so i don't know what way they're talking about. they don't like this way but they pretend they have a better way, but i don't know if they do >> i don't know if they do either, joe. what i do know is the pot is definitely being stirred okay >> so you're not -- you wouldn't faint if there was a favorable outcome. you wouldn't faint either way. >> i think there's going to be some compromise and logic will prevail in the end >> okay, david stick around a lot to talk about. all right. coming up, jimmy dunn, senior managing principal joins us to talk markets the ongoing trade fights where investors should be putting money to work and exactly where you should hit it on each green at shinnecock to try to get the lowest score possible. we'll be right back.

welcome back, everybody. volvo is opening its first final assembly plant in the united states tod phil lebeau joins us now from ridgeville, south carolina he has a special guest with him too. phil >> hi, becky the ceo of volvo joining us on a

special day here as you open up your final assembly plant here in south carolina. how important is it you finally have a final assembly plant here in the u.s.? >> it's really important i never have any doubts we need this factory it's forced credibility with our partners, retailers. but also we need to come closer to customers to be able to continue growing we know -- need to know how they think and need to know their preference so very crucial to be here finally. >> you made this commitment long before donald trump was elected president. but since he's been elected, obviously the world in terms of auto trade has been turned upside down. you' they're in the heart of dealing with a lot of this how has that changed your approach in terms of global sales and your manufacturing footprint and importing and exporting vehicles >> first of all, we are very

glad we have this factory now. otherwise i think we stay to our believes that we believe in free trade that's good for the consumers. but we could also understand that trade has to be fair and has to be with trade this factory is really in a very good way demonstrating that. we will employ in three years' time, 4,000 people half of those will be building cars for export. we will also export from the u.s. as many cars as we will import into the u.s. you could say volvo would have a neutral trade balance. thanks to this factory i think that's a good example of how jobs can be created also with exports >> you get about 75% of the vehicles you sell in the u.s. right now from your facilities in europe. and obviously the trump administration has said, you know, we're not crazy about the fact that vehicles coming in

from europe have a much lower tariff than what we send over there to europe. do you think the european union adjusts that and changes so there is a level, uniform auto tariff >> we believe in free trade. that's good for the consumer i think the harmonizization should be on a low level i don't understand why we need any duties so yes, i think it was very good china lowered their tariffs. now they are back up and the european union also i think should follow america on the low level. if we do that, i think the whole business would be more strong. and the consumers would have better products. >> there are a lot of people worried about what we call the trade tariff whiplash. china lowering and coming back we're going to retaliate, raise it again are you noticing that whiplash and does it change your planning >> i think, of course, what i understand there is a interest

also from the european side to really sit down and discuss lower tariffs. so we hope we can put it aside and really sit down and meet here and have a good agreement with a two-way fair trade system between europe and the u.s >> quickly let's talk about your business here in the u.s sales up 40% this year you're coming off record global sales last year. still confident that the u.s. market has not hit that plateau that you can continue to grow your sales >> the market is good. but u.s. is also continuing strong and we are of course gaining market shares. we're less dependent on the market so we have great products now. suvs popular in the u.s. now we have three very modern suvs so that is coming very positive to our customers right now we're growing with

that it's good development in the u.s. >> the ceo of volvo on a good day -- he's off to his next interview already. final assembly plant here in south carolina. >> he's a busy man lot to do today. >> he is >> we appreciate your time when we come back, jimmy dunne on the market's wild swing and what he thinks is happening underneath it all. also a look at the futures as the count you down to the opening bell on wall street. we've been watching all morning and the dow has been in positive territory. at this point only up by about 80 points. s&p futures up by 4, nasdaq by 11 "squawk" will be right back. time now for today's aflac trivia question. what was nintendo's first e sw wn bc "ua thanerhecn'ssqwk box" continues thanks, dad! break a leg! aflac?! not that kind of break. oooh! that had to hurt.

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now the answer to today's aflac trivia question. what was nintendo's first product? the answer japanese playing cards you may have heard the saying some people just can't hold their beer. for one pittsburgh pirates fan,

that is a literal statement. the pirates were hosting the milwaukee brewers ironically and in the bottom of the sixth, a foul ball heads into the stands the beer explodes on top of the dugout wow. >> the woman caught one in her beer >> and then chugged the beer >> my kind of woman. >> she got a standing ovation. >> the catcher was mad it's like, geez. got to see this one more time. coming up, sandler o'neil senior managing principle jimmy dunne on what's really affecting markets. we'll be right back. we're live in cannes at t t twitter beech. when we come back, the head of

revenue for twteitr. by the way, i'm @andrewrsorkin see you in a bit anyone can get you ready, holiday inn express gets you the readiest. because ready gives a pep talk. showtime! but the readiest gives a pep rally. i cleared my inbox! holiday inn express, be the readiest.

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good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. and among the stories front and center this morning, mortgage applications jumping 5.1% last week according to new figures from the mortgage bankers association. new purchase applications and refinancing activity were higher for the week the average 30-year mortgage rate was unchanged from the prior week remaining at 4.83%. recreational vehicle maker winnebago beating estimates on both the top and bottom lines saying the new products are performing well and it's effectively managing its costs an all-star panel of central bankers are gathering later this morning. an ecb event will feature fed chairman jay powell, mario draghi, and kuroda

>> wow that came up on you cold, didn't it >> yeah. >> good job. the trade situation with china escalating for the latest let's get to kayla tausche. >> they believe they have more to lose in what they're calling a trade dispute. today we could get more clarity on one piece of the puzzle that's a deal between the white house and zte. today president trump will continue his sales pitch to lawmakers to forgive zte with a fine and board changes but allow it back into business giving the u.s. a bargaining chip in talks with china but many of the dozen plus republicans attending today's meeting still see zte as a national security threat and want to thwart the deal. today the commerce secretary will be on the hot seat on capitol hill this time defending the administration's pursuit of tariffs to protect national security

the senate finance chair orrin hatch called after they were investigating auto tariffs "the wall street journal" reports german automakers may propose lowering eu tariffs to avert new u.s. tariffs we'll keep you posted on that. today ross could also field questions on his finances after forbes alleged -- while a reporter was pursuiting a story about his holdings in a statement to cnbc, ross said he divested his stake last may. in october a trust agent discussed another he got while serving on the board ross says he borrowed and shorted the stock to offset his stake in order to affect the divestiture as quickly as possible quote, the bottom line the s that i have come ply e plied -- however they do the public a

disservice by public servants that have been reviewed and approved by government ethics officials are not in adherence with the law we'll broing ying the highlight it starts. >> thanks. we have this big opec meeting going on right now joining us is managing director at suntrust it would be more interesting at $80. we were ready for higher prices. something happened we took a wrong turn on the way to albuquerque, right? i guess that was -- did trump talk it down in saudi arabia sort of orchestrate it with russia what really happened it would be a different meeting at $80 >> it would, joe i look at it as a tug of war right now. just earlier you were interviewing and talking about the tariffs obviously on the

demand side and what china's going to do. so i think there always seems to be a black cloud over oil. right now there's two of those that's what's going to happen on the demand side with china and tariff and retaliations and what's going to happen with opec and, you know, will saudi and russia add more than what venezuela and iran are, you know, basically are leaving out of the system. >> are they on the same page we heard some views that maybe they're not. that saudi arabia might pretend they don't want to add that much but russia actually needs to add more just to cover all of its expenses and saudi arabia would like to hold the line. is that what's happening or are they totally in sync? >> joe, i think they're in the same book, joe but i don't think they're on the same page yet. they're very close and i think that's what's made this sort of made this last year

and a half work. both of those superpowers have stuck by this 1.8 million barrels a day cut. going forward, it's going to need those two to continue those two along with the u.s. are going to be the three certainly most important as far as supply is concerned >> so, you know, we used to just talk about the revolution in this country with horizontal drilling and when do we do it, when do the spigots get turned back on. i thought we were the swing producers. now we're talking about reading the body language of opec every day. don't we matter anymore? i like when we matter. >> we matter more now, but it's interesting. now that china is importing almost half a million barrels a day from the u.s., you have that swung in there as well so u.s. right now being the number two producer, you have russia then u.s. then saudi. it's a battle between those three as far as who's going to be the number one producer here in the next not even the next few years but next few months. >> all right

great. all right. neil, thank you. we appreciate it >> thanks, joe >> we got brian sullivan over there. keeping an eye on exactly what's happening. i don't know if he can ry handle it over in vienna, so i'm going to go -- >> you're going to give him backup and moral support >> although the meeting will be over missed it by that much >> you'll be in the same place. >> so i guess i can't work while i'm there. >> one of the things we're seeing now is the increase in gas prices i don't think people are talking enough about that. >> i thought they came back down a little bit >> it's gone up. it's definitely up versus last year when you have that increase in gas prices, nothing affects the consumer more than that. particularly in buying the staples and things >> taco bell, you've seen it first hand. >> whenever the gas prices go up, man, our business would be in tougher shape so i think it's really going to be interesting to see how this shakes out let's focus on the markets overall. for that we bring in long-time

wall street deal maker jimmy dunne. he is senior managing principal at sandler o'neill and partners. it's great to talk to you. but right now might be the perfect time to have you on. we've been watching the dow yesterday with its losses basically flat for the year is what we're talking about with this market. there are so many competing forces catching -- for investors' attention you look at the great economy. you look at the tax reform bill and what that's meant for a lot of companies and higher profit along the way. but you also have concerns about trade and other things that could drag down some of those forces in the future what do you think is the right way to look at this? which is the most important? >> nice to talk to you, i think you just handled a mouthful there. but the reality is the underlying economy from all the banks and financial institutions that i talk to is really, really strong i think it's stronger than people actually realize or that

you might even hear in the press. i think that has another effect which david was talking about earlier which is it's led to a lot of discussion from the white house about things that we shouldn't be involved with whether or not italy is in the european group or not. i mean, i think the economy is so good, i think that's added a little bravado which i think could hurt us down the road, frankly. but with that being said, i think when we talked in february, i thought i'd -- rising rates, you know, in total is going to be tough for the stock market and i thought that financials would benefit marginally on that better than most company and the financials would outperform the regular dow which it has over that period of time. but i wasn't as positive on the overall stock market, just the fact we're going to get rising rates. and it's going to be a sustained period of it so i think the economy is very good i think financials are in good shape. i think the one thing that's

happened is there's been a little bit of a lag in loan demand and i think that's result of tax reform and all these other things have added a lot of cash to people's balance sheets sop they're not quite borrowing at the pace they used to which that will change but it isn't a terrible thing right now. but i would be a little concerned about the stock market overall. i think financials will continue to outperform. >> are you seeing more public companies go private now >> well, it's interesting, david. you know, certainly in fin tech. we've been in some big transactions blackhawk which settled a couple weeks ago, they're a great company that basically was a good public company. but giving what's ahead in the future and the difficulties of having a couple billion dollar market cap that can compete, there's a lot of things they have to do and invest. and to do that under a private ownership has a lot of benefits.

we saw this same thing with financial interests. another great fin tech company in boston. but i think to invest and to do so a lot of the things you have to do and not to have to do it over the quarter, there is some benefit to that. we operated as a private company close to 30 years now. there's ban lot of benefits. i think we could operate the other. you're going to have a currency you can really use otherwise it's, you know, there's some reason there's a lot of benefits to be private. and there's a lot of pools of money looking for good businesses and they can make companies better without the strain. you know, i think buffett and dimon have talked about that

trying to predict earnings and you're managing always to a number rather than what's right for the business surgeonly i'm not against companies going public i think we could be a public company if we had to be. but the reality of it is there's a lot of benefits to being private. and certainly there's enough private equity money to enable them to get private. >> let's talk about that, jimmy. you think that's the new normal or is that a reflection to where we've been with low rates and easy money floating around if you think the fed will be on this sustained push, that sort of pool of money dry up at some point as we wind down the balance sheet and raise rates. >> we'll do everything to dry it up but i think there's a lot of it. and it's not going to happen overnight. i think the one thing we can say

about the crisis as painful as it was to go there u, it put back the notion that 8%, 9%, 10% return is a good number. that we got to a period of time ten years o where a bank wasn't doing 22% return on equity, you sort of felt like, geez they were country bumpkins well, after the reform from the crisis, a lot of financial companies have to carry much more capital and they've made the notion that 8% to 12% real rate of return without a ridiculous amount of leverage is a number that's valuable and i think you're seeing -- you've seen it with buffett. he's taking a lower return and making larger investments. and i think that same philosophy is carrying through.

that basically private equity firms are starting to recognize it that if you can buy solid companies with capital that can afford a dividend at some point in time, that whatever it may be depending on the nature of the business is a better return. i think there's a lot of money out there. and i think it's a path that you'll see for some time >> we always talk a lot about leadership on this program you know, i enjoy doing my podcast with you y eearlier in e year i think it would be great if you share with the listeners your view on how to find really great talent what you ask for in interviews i found that insightful. >> i enjoyed doing your podcast. i've enjoyed listening and i've learned from your podcasts i love it. you have different types of people on there. you have athletes and ceos and mayors you got everybody in the world i think the idea is you want to get people from different skill sets you're a great interviewer,

david. i enjoyed it immensely i think what i said during the podcast which people have reacted to is when i look to hire somebody, i'm looking for what i call a refined desperation. where i can see the pain in their eyes, i can see their hunger, their desire and i hope to see a little humility but i also see someone that's going to go to the limit to be successful and so that's the best definition i can have for it everybody kind of fancies themselves as a good intervie r interviewer. i happen to think i was a good interviewer though i don't do it much anymore but the reality of it is, there's sort of a culmination of a real humility and a real hardened desire to succeed timmy burn a guy who worked with us was a great example of that unfortunately he died in 9/11, but he was a guy i could really tell that, you know, he was

going to do what it took within the rules humbly and appropriately to get done what had to be done and i could remember that interview like it was yesterday. but that's kind of what we're looking for. we developed a lot of that type of mentality >> i just got to know. so when you're watching one of the majors and you hear this guy has a chance of, you know, setting a record at a course and here he's beating jimmy dunne's record, it's just so crazy. it's beyond the pail tommy fleetwood did not. he tied your record. what i want to ask you about shinnecock and i know you probably watched it, can you believe where the tees were and where those guys are hitting the ball and how did you shoot a 63 when those guys are hitting 8 irons

and what were you hitting in 2 irons or 3 irons on some of those? >> joe, you're talking about basically two entirely different golf courses one is a round of golf from a 6300 yard golf course with good friends. the other is the united states open at 7400 with all the pressure on sunday so what tommy would do was unbelievable i was pulling for him to make that putt on 18. he's a terrific guy, a great player i wish he had made the putt on 18 and scores that you shoot in a tournament are what count. not what you do with your pals which is what i did. >> i've kidded around. like 15, if i played saturday -- i've said this ten times i would not be finished yet. if i had to put it in the hole, really had to finish if i couldn't walk off and say i'm done, i would still be playing. it would never go in the hole on some of those. when you watch brooks koepka or dustin johnson, i mean, that was

just -- to conceive the way they hit the ball, i don't know who's the best out there you think phil and tiger can finally win again with these young g young guns >> i think phil will win again i don't know if tiger will win a major. but in the 63 that tommy shot was rickie fowler shot 65. saw him on the 10th tee. i could tell he was thinking about going after that record which i really wish he had broke. but it's not even a record you know, forget about me. i'm irrelevant but there were a lot of good scores on sunday i think the tournament was fantastic. i think they did a great job it was just sensational. if you and i went back there on sunday to play those back tees -- >> don't put me with you no i'd be -- >> he's not worthy, jimmy. >> no. i'm not. i'd be shooting 30s on

individual holes, i think. >> you should congratulate jimmy for your 63. but i'd also like to congratulate you for your 30th anniversary in leading your industry that's great do you have as you go forward, how do you see evolving the firm to continue the success? >> well, we've always -- david, we've always had a real simple philosophy we put the client in the middle of everything. and we try to surround him with a variety of different services or surround him or her with a variety of services and make a significant contribution we don't leverage capital. we don't take big principal risk we're never in an adversarial situation with our clients we try to do whatever we can whether it's through equities trading. m&a. advisory whatever we could do to get that incoming call from them. within financial services, there's a lot of room to

operate. whether it's fin tech or insurance or mortgage-related business or reits or commercial banks or savings banks, there's going to be a lot of transition. there's going to be a lot of transactions we'll be in the middle of it >> jimmy, always great to talk to you we miss seeing you in person visit soon, okay >> i appreciate it and thank you very much. and david, congratulations on what you're doing with the leadership and what you're doing with the missouri -- university of missouri and your leadership program. and anything we can do to help, i'd be glad to do. >> thanks. appreciate it. coming up, he's in charge of building partnerships between agencies and twitter around the globe. twitter's head of revenue and partnerships matt derella joins andrew in cannes and coming up senator rob portman joins us wtaweill lk trade, china, the state of the economy "squawk box" will be right back. what about him? let's do it. can ca

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. welcome back to "squawk box" this morning we are live in cannes at the cannes line festival we are here in mawith matt dere. of course julia boorstin is also with us. good morning >> good morning.

>> part of your job is to monitor all this content given the news every single day whether it's the president tweeting or so many ceos we've been saying are tweeting about immigration and other things is there a way for twitter to monetize those tweets? >> you know, i think there is an opportunity for marketers to get next to the conversation that makes the most sense for them. you know, in addition to all the tweets happening, there's also a tremendous amount of conversation around the world cup. we're seeing that's a tremendous opportunity for marketers to connect with that conversation and also connect with brand content. every single goal in the world cup is actually going to be on twitter. so it really depends on the marketer and what they want to do and we give them the controls to actually direct their messages to the right audiences and the right content. >> of course there's so much information about the world cup. but what's so striking is the news is not just being reported on twitter

the news is happening directly on twitter twitter referenced the ceos speaking out against president trump directly on twitter. you're not just following the news, you're making the news is there a way you can more sell ads directly against even president trump's tweets >> that's not something i'm hearing from marketers i think what i'm hearing from marketers is they really want trust back many the market and want to reach audiences. they want to connect with moments that actually care that their audiences want to reach care about world cup is a good example. i can think of many others for example, you think about technology it's every day is like the biggest technology conference and it's happening on twitter. whensamsung goes to launch a product, they're broadcasting live to the people they had over 8 million views around their live stream it was a tremendous launch >> how much technology do you have to use to actually -- i assume there are people who want to be next to certain types of content. i imagine there's a lot of content they don't want to be part of.

especially some of these political issues, maybe issues the company may say, you know what our ceo may want to speak out on but we don't want to have advertising against one side or the other of it. >> absolutely. i think advertisers want control where their messages are going one of the things about content partnerships we have, we announced 16 last year we had 30 this year that we announced with fox sports and news and entertainment they're actually in control of where their messages run they have a sponsorship model. and that control is something i'm hearing more and more here at cannes. i would just say, though, in addition to being brand safe and having that control, in the end of the day, marketers need to see return on the investment they're making we had six consecutive quarters of growth. one of the things i don't think is enough has helped us deliver more ads that's why you're seeing 20% year over year

>> you're now competing directly with amazon and facebook for the sports right is that a problem? >> the fact we went from 16 partnerships to 30 just in the u.s., we get back to what we're great at right? twitter is the best at showing what's happening and what people are talking about. at wree e joth'she wsemar opportunity. >> all right thank you. great to see you >> appreciate it with expedia's add-on advantage, booking a flight unlocks discounts on select hotels until the day you leave for your trip. add-on advantage. only when you book with expedia.

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stocks look to stage a rebound. futures in the green with the dow riding a six-day losing streak in the hot seat, wilbur ross set to face questions from the

senate on car riffs. we'll talk to a man who will be if had the room. senator rob portman. we're live in cannes with a lineup of advertising and media moguls we'll talk to alexis ohanian "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 andrew ross sorkin as you know is live in cannes there he is. we're going to check in with him in just a little bit you know, you can't see where his eyes are looking half the time and with what's going on on that beach, that might be a good thing. let's get a check on the markets. the futures right now are indicated up they were triple digits earlier up almost 99

on the dow jones up about 5 on the s&p. up 15 on the nasdaq. there are signs in the ongoing trade disputes that we're talking about and the new signs of that possible progress between the u.s. and its allies are "the wall street journal" are german automakers are proposing the appeal of all tariffs between the eu and the u.s. novak, you're saying there could be some things that happen, right? you shake it up and you never know under the proposal, the eu's 10% tax on imports from the u.s. would be scrapped. in return the europeans want president trump to remove the threat of imposing a 25% border tax on european auto imports into the u.s and richard grinnell, the ambassador to germany will bring that offer to the white house today. that would be good, right?

>> absolutely. i enjoyed listening to volvo's ceo. wanted to level the playing field. i think everyone wants to compete on the level playing field. it could happen. not everybody. >> everybody who's -- >> everybody should. >> some stocks to watch. starbucks plans to close 150 u.s. stores. they were downgraded at morgan stanley. be sure to tune in to cnbc at 9:00 a.m off camera we talked to david about there are places where even if it seems saturated, it's not saturated. and you opened some kfcs

>> if you have the population and the traffic, you know -- >> you can do it >> i think when howard shultz came back, i forget how many years ago it was i think in retail, you got to open up new units. the biggest and most difficult challenge starbucks has in all retail is continuing to grow the same store sales it's the most sensitive thing. >> it's the best determination of the health of the e retailer. >> it does because if your sales are going up, your unit economics are strong therefore you can open up new restaurants. and if you look at all the stocks, the retail stocks, it's the same store sales, new units, return on investment capital that's the formula

i think starbucks is a great brand. i mean, i walked in with a starbucks cup of coffee. >> i'm drinking one right now. >> when you got a brand like that, you might have some difficulties, but there's lots of upside as you go around >> would you like to try to write the guidelines for individual store managers on who could come in, who could use the -- isn't that a quagmire to try to figure out who could use the facilities, how long could you stay, you don't need to buy anything how do you navigate through that obviously it was a horrific occurrence that happened. >> there's no substitute for good common sense. you can't legitimate common sense -- legislate common sense. what starbucks did was say they had a major fiasco and they took the time to train their people for a half day on how to best do that now, there's no perfect answer to that. but i think it takes good judgment, good common sense. and they tried, i'm sure, to give their people the right parameters. >> did you have a policy at taco

bell or kfc? >> pizza hut >> our policy was to treat our customers well >> did you have to buy anything to use the facilities? >> we didn't have a policy that said that. no, we didn't. but i think with what happened at starbucks was particularly tough for them because they positioned themselves as the third place. >> hang out. >> this is where you're supposed to go out and be social and bring in your computers. we've got free wi-fi this was an assault on their concept. and what they stand for. so they had to do something. >> all right chinese officials meantime responding to president trump's $200 billion tariff threat eunice yoon is in beijing. >> the foreign ministry doubled down on its tough stance against president trump today. saying if someone brings on a trade war, we will fight it to the end. now, the white house appears confident in fighting a trade

war with china because president trump and his team seem to believe that they have the upper hand because china exports more to the united states than the u.s. exports to china. and though that may be true that china is much more dependent on exports than the united states is, that dependence is declining. total exports overall as a percentage of gdp have come down from nearly 40% a decade ago to less than 20% in 2016. and that's why some economists believe that the tariffs will be painful for certain sectors in china. overall, the impact on the economy will be small. and research firm capital economics recently calculated even if president trump's tariffs were placed on $150 billion of exports, that it would only decrease chinese total output by half a percentage point so capital economics pointed out that number is so small that kmn could offset the impact with stimulus measures. now, the chinese believe they

could find new customers and also diversify their export destinations away from the united states. the u.s. is a single largest importer of chinese goods. however, chinese exports to countries in the last decade have grown rapidly especially to emerging economies such as india. now, whatever the case is and whatever is true, we're probably going to find out very soon. according to my sources, they say they believe that is now almost inevitable that at least the first round of tariffs are going to be imposed because as far as they know, there are no meaningful negotiations going on between the u.s. and china guys >> yeah. we've got some stuff happening here thanks we're hearing from rupert and 21st century fox announcing it's entered into an amended agreement with disney. acquired to acquire now the same assets for $38 per 21st century

fox share. and that is a significant increase, fox says, over the purchase price of approximately $28 a share announced in december of 2017 also they're talking about a cash and stock component here. disney would acquire those businesses on the same terms except that disney offer allows 21st century fox stockholders to have consideration on a valued basis in the form of cash or stock subject to a 50/50 proration. then the caller will assure the shareholders receive a number of disney shares equal to $38 in value. rupert murdoch says we're extremely proud of the

businesses we built at 21st century fox and believe this will continue. let's get over to julia and andrew's there this is -- it's big news, but being, you know, in the media business, it just seems even bigger what do you think? >> big news and bigger i think it's not at all surprising that disney would come back at a higher price. of course we knew that fox was going to have its board meeting today to discuss that comcast offer before then. disney swooped in and renegotiated a higher price at that $38 per share but i don't think this is over yet. we could still see comcast come back in. i've heard from multiple people that this is the kind of thing that's going to go through multiple bidding rounds.

>> is sorkin there >> i believe he may be joining me >> all right >> this is higher than comcast at $35 in cash. >> this is higher than comcast's bid. it's interesting that -- and the folks i've been talking to here, you know, all day yesterday we were talking to people here about who had a better chance of closing the deal disney had a head start. i think what we've seen here with the fact they already agreed to this higher offer speaks to the fact that disney already has relationships in place. and fox seems to want to continue to move forward with disney it seems like fox agreed to this $38 without going back to comcast. so the question now is how comcast responds >> we should point out david novak is on the board. >> he is prepared to say absolutely nothing. >> you're absolutely right about that >> julia, we're going to get faber on the phone

god knows where andrew is. you put him next to a nude beach and -- >> he is right here. he's getting miked up. disney has the head start here it doesn't mean that comcast is not going to come in again but all of this happened very quickly. and, you know, really in just a week since comcast came in with their higher offer and i think that it's worth noting that this did come ahead of the fox board meeting today of course there was meant to be this fox shareholder vote coming up on july 10th. >> my guess is that's why we probably have an early and fast answer on this by the way, it gives comcast time to come back with a reply to this too. >> yeah, it does give comcast plenty of time >> faber, are you there? oh, he's not yet we'll get him on the -- roust him. he's drowsy. >> anybody who's watching or listening on the radio and can't see, we're watching shares of

disney down 1%. and 21st century fox, it's up up $6 to almost those numbers you can see again what you might anticipate as people are thinking this is going to be more of a bidding war. it's up $6 to $47. >> faber no >> it's sorkin >> all right we'll settlefor you. >> you'll settle for me. real quick, to me the interesting -- one of the interesting components of this that we're looking at is because it's a 50/50 deal in terms of cash and stock by default, it's going to cost on the -- given the way the new fox shares are, all of a sudden there's a tax hit for those shareholders

we've all recognized from the get go this could go to at least $40 if not higher. i think this is just the beginning. >> i think it's worth noting the original disney deal was for $28 a share. this jumps up to $38 a share they're paying over the original premium. the fact they're working so closely with fox and got this settled so quickly following the comcast offer indicates how tightly those companies are already working. in terms of that july 10th vote, when fox shareholders are going to be voting on this deal, fox could have announced that they were delaying or adjourning that meeting as they evaluate the incoming comcast offer they decided not to say anything about it so it's just notable that that meeting is still on the books. to vote on what's effectively this offer now that we've just now received >> also, by the way, knocks down the speculation that somehow

disney could come in at a lower bid to comcast and still somehow think that they could win. this really suggests that we're now in a true bidding war that disney is really in it and as this goes forward, imagining comcast comes back with a higher bid that disney will have to always -- at this point has now set it up so they won't have to come back at a higher bid >> a dollar is a dollar. that's how you're going to look at these bids as they continue to come in >> i would also say if i were comcast, i'd say disney was trying to steal your company, rupert $28, really? you think that's fair? i mean, i would be -- i know everybody's got to try and watch out for their own interest, but $28, really? in light of it going up? i would be mad if i were rupert. i would. what are you trying to do, iger? i spent a lifetime building this >> talking to the ceos, the media executives here in cannes yesterday and today, one thing

that's really interesting is the conversation about in wake of all this consolidation, at&t buying time warner, this battle now for fox there aren't that many mega media acquisitions left now people talking about cbs and viacom being in place separately but to have an asset the scale of fox, there aren't that many like that which explains why they're willing to spend so much money to acquire it. >> it's also after judge leon's decision which makes it a whole different ball game for everyone i'd still call that $28 insulting. just got to call it what -- can you say anything you agree with me on that, novak? or no comment? >> no comment. >> no comment, all right it's going to be interesting to watch today. this came -- i guess we should have expected it >> what this tells us, again, these key takeaways are the disney folks are still working very closely with 21st century

fox. by doing it this quickly, it still gives comcast a chance to respond. >> we're talking about an eventual yule price of 50% higher than what they originally agreed on. i don't know who looks bad from that it is a different world already. and things have been marked up since then and there was the at&t decision. but seriously, rupert who's a smart businessman is getting 50% more i'm sure he's happy, but i just wonder about the, you know, the original price of $28. it seems like it was always worth more than that, don't you think, andrew? why do you settle for $28? or is that like when you put a house on the market for where you go you know you're going to get a bidding war? >> i'd like to give rupert murdoch credit for creating this bidding war. i think when he did this, he genuinely wanted to merge with disney he liked the idea of owning a major part of that company i think there was an opportunity

early on at least in the minds of the murdochs for james to take a role at that company. i think there were a lot of reasons they were doing that i don't think they were doing it to get this bidding war going. having said that, i think he played his cards particularly well in this instance. one comment that's worth noting in terms of how as we look at the release just now, there's a collar on the stock part of this deal which -- >> we mentioned that >> -- now creates -- it effectively means that the disney shares become the equivalent of cash i think that's a very important component of this. because one of the big issues, of course, throughout this has been assuming that comcast comes back with more cash, are you better off with the disney stock? is the disney stock potentially worth less in the future by putting that collar on it, i think that takes that issue off the table in a way that maybe it didn't before. and potentially makes the stock more attractive for those who

are already owners of both >> that's an interesting point >> fascinating and i keep hearing from people this will all be resolved within a month or six weeks >> great all right. well, we're going to have much more on this maybe off camera i can get novak to say -- >> we already tried that >> more on this breaking news story. he's part of the compensation committee, we've been talking about us plus a -- anyway stay tuned you are watching "squawk box" on cnbc we're going to have the chairman ofynamveuay. wdh entll stay with us 's earnings season once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too.

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welcome back, everybody. if you are just joining us, the news we had breaking a few moments ago, disney raising its bid for fox assets joining us is ed lee of "the new york times." this new deal of $38 a share which tops their previous offer of $28 a share and comcast's bid of $35 a share in cash what should we make of this? >> well, clearly bob iger really, really, really wants this deal to happen.

it's part of his legacy, for sure this is a huge and bold move the fact that he's come in higher than comcast's bid shows that it also indicates because part of this is coming in cash, there is going to be sort of a tax on that portion murdoch had really liked hiss deal earlier because it was all stock, it would not have a tax implication right away he clearly had to come in higher so the bid -- we're off to the races. it's a bidding war >> also means there's a tax implication for the new company too. as soon as there's any cash put into that deal, it affects that as well. >> right so this comes from assets being sold like fox news and fox broadcast. they will be split off into a new fox which will now be taxed in either transaction. i've been told the lawyers over at fox are trying to look at the tax. but that gets to be sort of

exotic it's more the final number coming in really hard on this. now we're going to have to wait to see what comcast comes back with chances are they will come back. >> and ed, i don't buy it that disney can offer less, you know what i mean? i don't buy it if comcast were going to come back at $40, would they argue that's the same as $38 does comcast have to go significantly higher >> i think at this point because we're in the tax situation, i think it really comes down to the number >> there aren't regulatory issues anymore they were arguing that it was going to takelonger. you know, they had a lot of rationales i heard put forth and just that rupert wanted to end up in bed with disney more than comcast as well >> yeah. and those are -- that's all part of the merger calculus

that's an important thing to consider it's not just about how much higher, what's more likely to pass government regulators after the at&t decision which allowed it to buy time warner, they say it could be a regulatory wash on either side >> i think faber's here now. are you still on vacation? >> no, i'm not on vacation i'm at a starbucks yeah >> you're at a starbucks tough to find one of those >> i'm at a starbucks in boston. about to interview kevin johnson in a bit >> i want to hear all your comments but what would comcast need? if it's $38 now with this prorated thing, what does comcast need to do if they do decide to come back? maybe they don't but what would they have to do $43? >> the only surprising thing is the timing

there was an expectation perhaps they would wait for the board to meet today and negotiate with comcast and then come to them and say we think it's going to be superior proposal and then disney had its match they jumped that not completely surprising they would have done that rupert and iger had dinner last night. it seems perhaps they were able to nail this down. to your point and i know ed lee was weighing in on it, it's half cash, half stocks. they have increased the overall bid price to $38 now $19 in stock compared to $29 of stock that may be seen as a positive by disney holders and perhaps will benefit overall because the stock will go up they've also increased some of the regulatory givebacks, if you want to call them that now they've also gone up from what has been businesses that

generate $250 million in ebitda to businesses that generate $500 million of ebitda. again, if needed, they would be willing to divest all of that. i heard they may have even reversed the termination fee though i haven't been able to get that yet to your question, we're in the midst of what we knew would be a significant bidding war. i don't think anybody thinks that comcast is going to back off here in the brief conversations i was able to have prior to coming on air but we'll see. >> david -- >> and again the question will be, what do you need to come back with? to your point, i don't know. a lot of people, joe, when we knew this was going to begin wonder whether we'll end up with that there >> right and that'd be 50% above where they started i mean, if he's a disciplined buyer, it's a different world already from when the bid was made but it was $28 what if it's $42 that disney ends up at that's 50% higher that rupert

gets, isn't it >> yeah. and don't forget they started at 23%. when you read the proxy when we first reported on the talks. they were at $23 then they ended up with a deal -- yeah $28. you're talking about almost doubling to get to the low $40s where this thing started >> david, let me ask you from the people you were talking to who said that they understand disney understands that comcast is not likely to back down would you guess that the $38 bid is what they're thinking is a knockout bid or is it something they're thinking there's more left to go that they can then return another shot with. >> that would be my guess, becky. i think both sides know they're in a back and forth. and judging again from the sentiments i've heard from the

comcast camp and the disney camp over these last -- really, it's been months. we kind of knew this would potentially happen it's hard for me to see either side backing down. there comes a point of which you have to say no mas i don't sense that we're there yet, though, certainly you are starting to trade off a lot of the synergies you would have gotten and putting them into your premium at this point there were some benefits of tax reform that were not accounted for in the original price, remember because we got tax reform after they agreed to it. so you can make that argument. but we're going to get up to some pretty heady territory here and again, you know, it's unclear to me. i can't say with any certainty, but i would expect at this point given what i've heard previously that comcast will come back and that disney will potentially be forced to do so as well. perhaps the difference, the differential will not be as great as it was previously with

the $35 cash bid from comcast versus what was roughly a $28 bid from disney in all stock >> so i asked earlier, david is the idea that disney could pay less because they want more is that -- they didn't appear to feel that way just now they went well above comcast spp that still in the calculus if it's a penny less, shareholders should get whatever the current highest bid is what do you think? >> you know, i was hearing some time that that was not going to figure into it that it had to be numerically superior or right at the same level. you know, the fox board has an important role that it's playing here as you well know. even though the murdochs control the vote their economics are all they can vote so while they have an important role here, while rupert murdoch

is certainly perhaps the most important voice in the room, the fox board has also made it clear we're not just going to go in and worry about what you want best now that we're half cash, half stock from disney, the idea of the murdoch family being the single largest of disney stock is gone. they weren't going to have a board seat to begin with my idea is it is about overall economics. now, you can make an argument if you're the fox board that the combination of disney and fox is a better one and you want some sort of stock as a result of being able to participate in the benefits of the combination itself, >> david, just so you know, you probably haven't seen the press release they put out but they do say the 21st century shareholders can elect to receive their consideration in the form of cash or stock as long as it's on a 50/50 proration basis from all the shareholders coming in so the murdoch family could go

ahead and still elect to receive it all in stock. >> yeah. some will and some won't, becky. typically proration like this is what you do see in an offer of this nature or a deal of this nature but it's going to end up being 50/50. and again, so we'll end up with less disney stock being used overall than was previously the case which may be a benefit. you see disney stock up. which of course does add overall to the value of the deal as well anyway >> right, yeah they're actually paying more but gets less diluted, i guess you've got to get the cash somewhere too. david, we have david novak here. and, you know, he's not going to say anything but i keep looking over at him every once in awhile, he'll twitch when we say something or do something. i don't know then his eyebrow moves >> david is on the board of comcast. he can't say anything about this >> i'm trying to read into, you know, his body language. i'm not getting anything, faber.

i'm getting nothing. >> you wouldn't want to play poker with me. >> definitely not. faber, thanks for the quick action stay tuned that's the best thing to say it is fun, isn't it? you got to admit that. it's been awhile gulf oil or something. both of these companies want the prize a lot. >> yeah. >> i don't know what that means. >> this is just the beginning, i feel david, thank you, we'll be watching at 9:00 for that starbucks interview as well. when we come back, a lot more on this breaking news story. the hunt for fox "squawk box" wl bk teilbeacafr a quick break. a winter weather emergency... extreme risk of burst pipes and water damage... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most.

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♪ welcome back to "squawk box," everybody. breaking news just in the last half hour. disney raising its bid for fox assets let's head back to cannes. andrew joins us for more on what we've been watching. i don't know if you've seen

stock charts from there, but 21st century stock shares up 6%. walt disney shares now up 2% and comcast has turned positive as well. what should we think about all of this? what does it mean? >> i think there's a couple of pieces first what it indicates in looking where the stock price is, this is just the opening salvo. this is going higher we talked about whether this is going to get to a $40 handle i think the question now is whether it gets to a $45 handle. i just got off the phone with a source who confirmed what faber was telling us earlier there is going to be a higher reverse breakup fee. we'll learn more about the number i believe the call has it begun right now? i'm not on the phone because i'm talking to you but i believe we're getting an explanation on that as well as the timing why bob iger decided to go ahead with a higher bid now. the expectation over the weekend had been wait for this board meeting today that the murdochs

were going to have let them decide to describe the comcast bid as quote, unquote superior and then come back once that had happened that would have been the traditional process. this is clearly an end run around that. unclear exactly what that gets them except to accelerate the timing of all of this. clearly now this will be back in the hands of comcast to decide whether they're going to go higher or not. meantime, we want to bring in one of our great media and tech watchers and participants and friend of "squawk. alexis ohanian is here good morning to you. >> good morning. >> on this crazy news day. >> this is -- i thought i was coming here to relax a little bit, take meetings lo and behold, we got big news >> this has been the gossip around what is going to happen i'm curious from your vantage point, both as an investor and somebody who plays in this world, who is the ultimate better buyer in your mind? >> well, look. there's the investor entrepreneur and then there's

the comic book fan >> right >> and i think if you ask both versions of me, they would say the better home is there with walt disney. given their history of working with this ip and really maximizing it in a way that makes ns happy and also shareholders i'm intrigued. i know this is within the comcast world right there. it's an interesting move because we're talking about an acquisition of ip assets we feel like we're at an age where technology has shifted so much that there is value in ip but it's an old school mentality. actually, i'm a little surprised because i would expect companies like comcast to be looking at more technology-based platforms for generating content and getting it to its customers. rather than traditional ip acquisitions >> as the big get bigger, does it get that much harder for the small start-up guy >> we look at this a lot so i just went back to my vc and

we are at early stage investors. and it does -- it does actually create new opportunity because of that consolidation ultimately means just less innovation when you have that market size, that momentum, it's harder within a big organization to move as fast as the small start-up i think particularly around streaming we're seeing technology play a vital role in actually delivering this content in unique and new ways but the idea of this here, the idea of content married with the distribution channel, that's what the comcast bid would ut matly represent as well. >> yes >> on the other hand, you have in disney a pure content play who ultimately wants to go over the top without the classic distribution channel >> and are building as we understand at least technology to do it themselves. >> what's the long-term better play >> everybody is looking at a

company like netflix that are on their own platform getting into the content. it's a dangerous game of catch-up to play i think if we look long-term, there's always going to be a value for this kind of sort of traditional ip but user generated content is garnering more and more attention. the last time i was on here we were talking about twitch. the amount of time people are spending live content that's realtime just people talking over playing video games is actually going to be real competition for these sort of legacy ip carriers so i think the move if you aren't already winning here is to be investing in the technology so you can win as user generated content continues to get more and more attention and more and more market >> okay. we got a run we want to thank you in the midst of this breaking news >> this is not a tough place to come and visit we've got some great portfolio companies here that i'm here to support. just happy to come see you, andrew >> it's great to see you we want to talk more about that back in new york >> deal. >> you can tell us about the

wedding. >> you know, my lips are sealed. the only thing i can say is the rumors about the beer pong were totally false. there was no beer pong >> we'll leave it there. guys, i imagine we're going to be talking more throughout the day about the fox/disney deal and what it means to the media landscape both here in cannes and with you back in new york. back to you for now. >> yes thanks, andrew i know at the time i think comcast said we would never just do this to make disney pay up even if we don't get it. they said that's not -- >> and i don't believe it is >> i know. but it's now -- it was $28 it's now $38 whatever happens when it's all said and done, disney is paying a lot. you know, you heard ohanian say -- >> my guess is this is not the end. >> it's already getting expensive. who knows what expensive is anymore. but joining us now, steven holmes, former ceo of wyndham worldwide before the company broke up

and now there's -- you're still chairman of the companies you've done how many acquisitions over your tenure? >> probably 40 over my career. >> and you immediately off camera made some interesting -- we'll talk about wyndham, but we've got your expertise on this by disney now going half stock and half cash, for shareholders that would end up with that, you think there's more upside because they're putting cash in because it's less dilutive >> i don't know all the details of the transaction, but if you're a company that's being acquired and you're getting stock, if you get stock and cash, it actually improves the prospects of the company you're joining for the future there's more leverage, but you pay down that leverage and it creates more earnings. so it's actually -- it's not a bad thing unless you want it all stock because you want the

tax -- >> i was just going to say why did they start out with an all-stock deal that's probably what the murdoch family wanted. >> you have a concentration of ownership and that ownership would like to do it in a tax-free way if it doesn't work because prices are going higher than you want and -- >> and because other shareholders don't want that >> yeah. other shareholders may not want it and the fact is that when you get into one of these bidding wars, your price is driven by what you think you can do with the company you're acquiring and very often you see more opportunity as the price goes up because you really want it if there's strategic benefit, you want to go after it very hard that's what we did when we bought la quinta it is a great fit for the hotel group. and so we probably stretched further than we normally would because we felt there was such strategic benefit. it would be an good deal. >> it just wrapped up.

how do we view it? one is just the what you think of as wyndham hotels and the other is the destination or time sharing aspect of it >> exactly >> other companies have done this, haven't they >> yeah. our large competitors marriott and hilton did this once before. they've both done it before. it was just the right time for us we had to get ourself ready for this type of transaction >> how many hotels does wyndham open every two days -- what was it? >> we have about 8,000 hotels around the world we open one every two days, i believe, yeah. >> not just work days, david >> no. >> seven days a week >> david did this at yum for years and years. you get in a roll where your product is heavily desired by the customer they want to be the one to have the days inn in the market somewhere in the u.s or they want the new wyndham in china. so it becomes something that helps you build on your sales and your growth.

growth is critical >> i went through spinoffs i was spunoff when i was part of pepsico and we were able to start yum brands we recently spun off y china any time you do that, there's lots of politics everybody's vying for the best possible debt structure, balance sheet, et cetera you know, i notice where you're going to be -- you're the chairman of both companies did you find that that helped you navigate through all the politics of putting these spinoffs together? >> well, i think it helps and it will help going forward. because there's so much that can be done between these two companies which is why we waited this long to split up. where hilton and marriott did it awhile ago we wanted to make sure that connective tissue existed between the two companies. we've got that in place now. and i think i can help promote that going forward so, yeah, i think it was helpful to be the chairman of both i think it will be helpful to be the chairman of both going forward. >> did you have activists really push you in this direction to

spin off the companies >> no. we had an activist who took a position in the company and came and visited us and by the time they left, they were laughing. they were in a great mood and they said this is great, whatever you want to do. that's before we announced the spinoff. because they understood what had to happen in order for us to be positioned to consider a spinoff. and we explained it to them, what we're trying -- what our objective was. and we told all of our shareholders that. they saw the business. excited about the business i invited them to our office and it turned out great. this is one of our most aggressive activists out there >> what can you tell us right now about the state of the consumer and what you're seeing from those willing to travel and book travel in advance for business or just consumers >> it's very good. both our time share businesses are performing well. we're in a quiet period right now. so i'm not going to talk about the most recently completed -- or the quarter we're in right

now. i think the consumer is in a good place i think this is going to be a great summer travel season i think we're really positioned well i think these companies are going to do well >> david brought you in, right you guys are friends, know each other pretty well? >> david was a bit of a mentor of mine going through. >> has he told you anything about the comcast bid? >> he told me something. >> you'd have to kill us >> he said tell becky, just don't tell joe >> very good thank you. and we'd like to have you back a lot of stuff happened, but thanks for your insight. all deals come down to financials eventually. zbl >> it does >> hotels or media >> thanks very much. >> appreciate it joining us now on the "squawk" news line, porter bibb. probably no surprise to see this higher bid from disney coming in this morning we've all been of the opinion that this is nowhere near the end. are you of the same opinion?

>> i totally agree this is just the beginning of what is going to be an unbelievable bidding war but the interesting side show is the out of town tryout in the uk with sky comcast has five days now to put their best bid on the table and disney wants sky just as much as comcast does so there are two plays going on at the same time but the sky situation is going to move a lot quicker. >> that's interesting. i hadn't thought about the sky portion of it. where does that stand? because in order for fox to come out on top there, disney would have to go ahead and tell the murdochs and the fox board they would be willing to go increase that bid as well >> well, first of all, it's murdoch against comcast. disney hasn't come in yet. >> yes, but we've been told there's no way murdoch's going

to raise his bid unless disney compensates for that >> iger has indicated he wants sky. he wants the star television business in india. he wants the coverage that sky offers in in europe it gives dis any a strong global footprint. as i said, it's setting the stage for the bigger deal here over the fox entertainment assets, but it's going to happen quicker. the major deal will drag on because we haven't begun to see the end of the bidding war. >> porter, let me ask you this, before the bidding war started, shares came under extreme pressure as everybody thought they were going to overpay now that the bidding war started you're looking at comcast shares up by 1% and disney shares up almost 1%, as well what is that telling us? >> it's a little ironic because the comcast shareholders are

some of the major shareholders expressed very serious anxiety over the amount of debt comcast would be taking on as they up their bid, which they will, it's going to only increase the pressure on comcast because their investors won't be happy. >> okay. excellent. thank you, porter, for the quick analysis. >> porter, are you still there >> yes. >> what do you think prevails? this is probably going to change on a week by week basis as we see what happens but what is all of your knowledge and years of covering these companies tell you >> i don't think bob iger is walking away he has every intention of taking over the fox entertainment assets it fits his strategy of going over the top and leaving legacy media behind and going all in on

streaming. and remember he controls hulu, sky when it's all over, and comcast, unfortunately, is going to be losing a disney battle for the second time. brian robertson, remember, tried to take over disney and was shown the door by iger and company. that will happen again but it will take a few weeks before everything is resolved. >> you think brian roberts -- >> other people are saying that. he's going to be hesitant to walk away. you can get disney up to a price where you feel like you accomplished something by making them pay, basically 50% more than they were going to pay. i don't know if that's a consolation prize or not nobody knows how it will end at this point. >> my sense this is my opinion on it, but i think that he wants -- the murdoch family trust to be the largest

shareholders in disney that's his legacy. that's his estate planning i think that's the way the situation will resolve. >> right julia borestein has been on the disney call. what did you hear? >> reporter: right now bob iger is speaking to investors hosting the call now he's stressing the importance of the six-month leave time they have they've been working with regulators around the world and they're confident they will get regulatory approval. and they've already been really investing the time in this i've noticed looking through bob iger's prepared remarks here, he talks about the valuable assets, the premier entertainment properties, especially star india, and those stakes that fox has in both hulu and sky and he goes on to stress why

this combination of disney and fox is compel for consumers. and compelling for investors he said he'll be able to expand the tv franchises across the businesses to -- and this will position disney as a global entertainment company and expand the presence overseas. he ties this in with how they reorganize disney. and the fact that they've already reorganized their company to make sure these disney -- i'm sorry, these fox assets will fit seamlessly into disney stressing the head start they have on comcast there. right now they're in the middle of the q & a period with analysts and one other thing, you know, they have the leverage they have the ability to make this kind of investment. one thing they expect the investment to change they said they expect to take a more conservative approach to share repurchasing in the short term and no longer expect to complete

the $20 million share being purchased they announced in december as a result of increasing their bid for these fox assets. >> that might have be why we've seen disney shares come down a little bit they're still up by .06. >> we'll get down to the new york stock exchange. jim cramer joining us now. there's a consensus forming, jim. i'm not sure if anyone knows anything at this point iger is pretty tenacious but brian roberts is tenacious, too. do you have an opinion on the tenacity of the two players involved >> well, i know that it is incredibly additive for comcast out if you think about india the fact that disney stock is up is is a sign i would say the commentary i hear it's the beginning of war whoa it's been a war.

i caution people who say it's the beginning. that kind of says that what has been going on so far hasn't happened and it has. there's been a lot of jockeying already. >> yeah. so it's just anybody's guess, jim, at this point >> yeah well, i mean, look it's not hurting anybody's earnings yet. as soon as it hurts people's earnings they back off it's not yet as long as it's not yet the stocks go higher if it's not going to hurt your earnings, then the stocks should go higher. so we're finally at the place where it's a win-win just when we got the last downgrade of comcast it's where it's okay and i think it's going to be okay for a little bit. i don't like the whole story of, well, it's the beginning of a war. the war has been going on. >> it doesn't suggest we're done

here >> no. people want to say it's the beginning of a war but there's been a lot of war already. and i just caution people to say that it may be closer to the end than the beginning. >> all right managing director at ljh joins us what do you think? >> caller: well, i think i'm pretty much in deterrence with everyone, joe. i think two things one, the market has consistently valued disney cash flow a higher multiple than comcast. that essentially when you're using cash for stock in the transaction, disney stock is worth more than comcast. second, i think the thing that is under estimated, investors look at the industry for a long time such as myself and porter just to give you two examples associate comcast with leverage. they've used leverage appropriately. and nobody here seems to be

wanting to go much over four but what is not understood is that bob iger worked for dan burke and these were the first folks, along with the tandy corporation that did share repurchase bob has watched leverage work for shareholder advantage. it's not something that disney has historically been associated with, but it's in their toolbox, and the cfo indicated that they were ready to use the balance sheet as a tool. so i think disney has got to be the favorite in the horse race here my guess is that we'll see more bidding. i agree with what jim said just recently it's probably going to continue until start talking about -- disney delayed that in their call and they suspended the share repurchase program.

>> yes. >> >> caller: we're close. my guess at the end of the day fox will be worth $50 and disney will it. >> okay. there's a definitive answer. thank you, larry, for the quick synopsis thank you. our guest host this morning is david novak we've covered a lot of ground this morning. >> one last chance >> i think a lot is going on thank you for having me on the show. >> it's been great having you here we appreciate the guidance you've given us on leadership. we'll listen to the pod cast and have you back soon folks, as we get ready to wrap up, a quick look at what is happening. look at the futures board and a quick look at the stocks involved in the bidding process one more time, too the futures indicated to open up by about 121 points in the on the dow. disney shares up by about 40 cents and comcast up by about 54 cents and fox shares continuing to get big upside from these new

bids that are coming in. we've got to go. mistake sure you join us tomorrow i don't know where andrew will be. >> france tomorrow, i think. >> "squawk on the street" coming up next. ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber is in boston futures solid. the markets steadier regarding trade tensions tons of corporate news europe is green. ten year 2.89. a big story we begin with news