it is a great country. happy july 4th "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 live at the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen and melissa lee is hanging out with us today our guest host this morning is joe terranovterranova. you guys hang out a lot, right >> we do >> oh, boy >> we're not on the same show, but -- >> oh, boy >> joe and i go way back >> we go way back. >> i know. >> you do? >> i think of them as -- do you guys not think of yourselves as

half time and at the end of the day as all one big franchise >> we're in the umbrella of "fast money" for sure. >> it's not me, is it? >> we actually began half time together >> it's true half time started off as a seven-minute show in power lunch. >> there's a bunch of traders. some are on at noon. some are on at 5:00. we're all part of a big, happy family usually i'm backtracking, scrambling trying to say i understand but it's because it's confusing. how many traders are on -- what do you -- >> half time >> there's like six of them, right? >> yeah. >> how many do you have? >> about six >> that's 12 we need to keep track of it's a half time report, it's "fast money. >> thank you, joseph >> we're kind of like the yankees lineup

>> yeah. >> i also want to know your tie. >> yes yes. i had to look for this to find i it >> that a vineyard vines >> it is i was just thinking about how great things are i was. in a lot of ways in contrast to what you read >> that part is true >> 50% of the country is ecstatic the other 50% is like, you know, they go to bed, hide under their pillow afraid to get up it's weird let's get you ready for the holiday dash sho holiday-shortened trading session. let's look at u.s. equity futures. dow up about 113 points higher nasdaq up about 28 points. treasury yields right about now, the ten-year note, 2.875 if you want to get a 30-year

mortgage, it will cost you 3%. crude oil at this hour, if you want to buy it by the barrel, t wti, 74.75 >> it was weird yesterday. it looked like the dow was going down by 200. the nasdaq was weak at the beginning. at the end of the session, the nasdaq was up 60 tech roared back the trade concerns sort of evaporated or you have another weird explanation? >> it's all about technology so far in 2018. that >> that's what i saw in your notes? >> if you take the overall performance of the s&p 500, 36% of the gain is attributed to amazon another 18% to microsoft 15% to apple

8 h 84% of the gain is for technology stocks. what's important to understand is the bye bauyback window. that's why you saw some weakness in the market. earnings will come in the next couple of weeks, you'll see technology companies perform probably very well it's a technology story. >> that doesn't explain yesterday. >> why not >> because there were fears and concerns that were evident in the morning. we talked about it for three hours on "squawk box." >> but in reality, before, when we're sitting here 24 hours ago we were looking at a s&p 500 opening up lower by less than a half percent then wehigher by a third. >> the nasdaq is right on. >> the softness yesterday morning had to do with the chinese economic information that came out over the weekend that was softness. then concerns about devaluation

of the chinese currency. that's why the market came in weak clearly the united states right now and you can see that in my notes, i believe we will focus on u.s.-centric assets, small caps, mid caps we stand out now clearly as having the greatest economic acceleration above the rest of the world in this synchronized global growth that everybody talked about, that seems to be dissipating. but we're doing great in the u.s. >> we also didn't see the complete reversal that we saw within the asian markets we had a severe yuan depreciation the pboc came out, intervened. asian markets turned around. that's why we're seeing futures up this morning. >> also seeing a turnaround in europe here's another reason why europe turned around. angela merkel reached a compromise deal to avoid a political collapse there will be tighter controls on the shared border with

austria and transit centers on the borders. it will likely head off new elections. a look at european markets at this hour. the dax higher by 1.25%. the cac as well as italy and spain up by more than 1% so strong gains across the board in europe. we'll talk more about europe's migrant crisis with david miliband he will join us at 7:40 a.m. >> president trump taking another swing at china this time over mobile phones his administration now set to deny china's biggest cell phone company, china mobile access to the u.s. market. the government moved to block the company from offering services, recommending its application be rejected over national security concerns shares of china mobile falling to the lowest level in four years. that's not deterring another

chinese company from wanting to come to the u.s. xiaomi is pushing ahead with plans to enter the u.s. next year they say its u.s. connections should help it avoid the political resistance some of its peers have been facing checking asian markets at this hour, you can see it's mixed hang seng is bearing the brunt of the issues. i think pompeo headed back to north korea. >> on thursday he's leaving. yeah >> i saw some scuttlebutt that the next invite might be for kim jong-un to come. >> come to new york city >> that would be a traffic nightmare. >> a symbolic moment you think it will happen >> for a guy who didn't leave the country until singapore, now traveling to new york city >> how would he get here

whose plane? that was the big issue last time his plane doesn't go that far apparently >> i guess we could pick him up. we have corporate news to tell you about >> we could send wheels up >> will he have to share the plane? >> we've been bugging buffett for a card he sent me a card. >> i remember. >> had my name on it and everything no value whatsoever. >> king air can't get that far >> but he has a couple jets. >> i'm not saying we will get anything from him either if you don't pay for it >> in corporate news more trouble for facebook. the u.s. government now taking a closer look at facebook's privacy practices. the fbi, s.e.c. and federal trade commission joined the justice department's probe into cambridge analytica. the post says the investigation focuses on what facebook has reported publicly about the fate

ta -- data it shared with cambridge, whether that data squared with the facts and whether it made timely disclosures to the public about it facebook said we are cooperating with officials in the u.s., uk and beyond we pledge to continue our assistance as their work continues. this report coming as facebook suffers another privacy mishap they say a software mishap blocked some people. the bug was live the end of may and the first week of june >> facebook shares are down 1.5% they had so many questions left unanswered during their testimony. they said we'll get back to you. they got back to them and they found out things that make you question facebook's -- >> but you're saying the stock

hardly moved >> it's down 1.5% on this news >> i'm saying that's marginal. >> it's enough to be concerning. >> if you get a longer chart out there, the more important point that i would make is despite all of the hot air that we blow about this all the time, nobody from a user perspective from an advertising perspective seems to care one bit >> i think the perception was that eu regulators would be hard on them. i think when he went over there, i think there was leniency that was evident in shares taking off once he left from europe there did not seem to be the strict regulatory concerns that people were afraid of. >> most just said could you write down how you do this

how do you start a company from scratch? we still make nice leather goods. but to start a company from scratch like this. >> a technology company. >> could it still be done? can had happen >> no. it can't happen. >> that goes back to the blessing of the united states. europe is void of the technology that we have here. the second leading exporter of technology globally. >> that's why our markets are up so much and europe's are not they don't have the tech sector. >> it's hard to be an entreprene entrepreneur it's weird we need to cherish that as well. we have a permanent leisure class here that capitalism created. things get so good that they become socialists. paul kruger, i've seen him in first class on a beautiful boeing jet with those things on. so he can sleep. totally rails against the capitalism that created the airplane he's flying on.

it's weird what happens terranova. it's a permanent leisure class but then disdain for what got him there. do we can't socialism here i was in hungary, every building you see during the communist era -- i withdraw the comment. >> those who are pursuing socialism -- >> sustained sustained. that's his new tactic. blurt out something -- >> withdraw it >> the judge will rule objection sustained. then i don't have to listen to -- i withdraw the comment in washington, trade taking center stage i don't want to get held in contem contempt let's get the latest from my man who is smiling already eamon javers >> good morning, joe >> good morning. how are you doing? >> i'm great >> happy fourth of july.

>> right back at you let's talk about the wto there's some question here about what the president's intent is in terms of the world trade organization not exactly clear. the white house is knocking down reports that the president said behind the scenes that he wants to get out of the wto. yesterday he was asked about it in the oval office he said this. >> wto has treated the united states very badly. i hope they change their ways. they have been treating us very badly for many, many years that's why we were at a disadvantage for the wto we're to the planning anything now. if they don't treat us properly we will be doing something >> the president there saying we're not planning anything now, but if they don't treat us properly, we will be doing something. not clear what that something is, whether it's full withdrawal from the wto or something just short of that there's something on the president's mind here we talked to people in the west wing who say the president said

again and again behind the scenes that he wants to withdraw from the wto not clear what he has in mind for after the wto in terms of a new trade regime around the world. this is a president who likes one-on-one negotiations with individual countries he's skeptical generally of these broad trade groemtagreemes across the board that might propel the president to that kind of rhetoric i also asked sarah huckabee sanders at the white house press briefing about this issue that came up yesterday with the u.s. chamber of commerce launching a campaign against the president's tariff agenda. the chamber of commerce business works with republican administrations, but yesterday said the white house is threatening the economic gains it's made so far by pursuing this tariff agenda around the world. sarah sanders said the president is focused on protecting american jobs and american industry so a schism opening up there between the professional

business community and the trump administration, which very much sees itself as focusing on the long-term here >> who -- well, he wants to keep i.c.e. but keep the wto. >> if you're doing acronyms today, wto down. >> the cut isthe scuttlebutt o mexican election, there's some ground that seems to be common among the two. they're talking about some type of unilateral arrangement. maybe that is not even part of nafta. that would help lopez keep some of his campaign promises but also help president trump keep some of his. it's bizarre these two are -- >> the president said yesterday he spoke to the incoming

president of mexico. and they discussed doing a one-on-one trade deal with the united states and mexico i think president trump likes that because it rattles the cage of the canadians you're right you do see this overlap between the populist or trumpist right and the left the left wing protests of the g7, g20 going back decades they've been skeptical of the international trade. >> just when you say you're right, joe when you say that, i like it so much >> don't get used to it. >> i won't i never hear that with people sitting here ever ever >> who are you looking at? >> it's so refreshing for you to

just listen to logic, think about it yourself and realize the end conclusion is that i'm right. >> right >> it should happen more, but it doesn't. >> you're right, joe >> thanks. >> nice to have you. >> yeah. >> what are you doing in an hour >> in an hour? i'll be back on your show. >> good. >> i'm on again at 7:30. >> how about in a half hour? >> i'll do some research now to figure out what you're wrong about between now and then >> all right let's get back to the broader markets and the economy. joining us for that is steven roshito and ryan dietrich. our guest host, joe terranova is still here so we have a jobs number on friday, steve, you're sticking with 175 >> yeah. on average it's been the correct number it has not hit the point estimates. on average it's the right

number that's what economists should be doing focusing on where we're going in the longer term, and our estimate is 2.5% for 2018. it won't be stronger or weaker >> what do we expect for the next fed meeting how will the beige book numbers we get, how will that influence how we get there >> the fed has made it clear they want to do two more rate hikes over the course of the year, four in total. i don't think there's a dynamic change in terms of whether it comes earlier or later it will come in the final month of each quarter and finish 50 bay disappoints hisis points hi. until then you will get confirmation on where they're going. i think there's risk at the front end of the treasury curve with the two-year notes moving up another 10 points, 20 basis points >> so the conversation in the second half of the year is going to be about the yield curve

reverting. what that might mean, we could flip a coin. what do investors do with that conversation it will be a head wind >> the reality is the curve will revert every long business cycle there are two reversions it will go to zero between twos and tens i think this time through, which is what it did in the 1990s. that starts the end of the business cycle clock there are lee long business cycles, the '60s, the '80s and the 'the 090s. >> so it doesn't necessarily equate to an immediate recession, it means it's more of a warning signal to the investor >> it is but it will probably, because there are asset liability mismatches that will come to the surface as a result of the curve flattening >> like what >> there could be a number of things for example, i'm concerned about what's going on with ge. here's a company, loaded down

with debt, every time they sell a cash producing asset the equity investor base goes out and applauds, and yet you create an inverted pyramid with a high level of debt and less revenue to support it. this is the thing that eventually goes unstable it amazes me that the rating agencies have not pushed on ge yet. i think one reason they're concerned about it is the entire credit market could reprice on that when you tloth oyou trot out coe america, who do you bring out? jack welch >> the market is not filled with scores of ges, but filled with scores of companies that have balance sheets, so what would an inversion of the yield curve signal to the stock market as opposed to the economy we just lost ryan. >> he left

he left. >> the jack welsh comment. >> i know it's off topic, but you lay it at the feet of jack and not jeff >> i think jeff tried his best to correct it once you get into these established processes, where for gm, gm was going downhill for years yet anybody who came in and who was smart could not correct it this was established internal mentality that becomes very hard to turn around >> i disagree with everything you just said. as i usually do. >> i like that >> you're entitled to your opinion. poor ryan, feel bad for him. >> he took off he's back. ryan, from your standpoint, talking about the inversion of the yield curve what does that mean for stock market investors? once we invert, we're at 30, the spread of twos and tens, when we

get to inversion what does that signal >> i'm glad to be back sorry about that you talk about the inversion of the yield curve. let's not forget about the rates. we have a flat yield curve rates are going higher the last time we saw the yield curve this flat with rates going higher was 1994/'95. to us we think the fact that rates are going higher, that is more of a positive sign. we all know we're not inverted yet. when the yield curve before it inverts, you have six to nine months of good equity gains. it's a concern, there's more major positives out there. repatriation, bringing cash back, using capex to invest in themselves, and earnings continue to be strong. we are not super kenned about t concerned about the yield curve yet. >> thank you both.

joe will stick around for a bit longer here. when we come back, it's ban blockbuster year for ipos. and bad news for shopping malls. let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

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welcome back to "squawk box. the ipo market is on pace for one of the best years on record. in the first half of the year, 120 countries used the initial public offering to raise more than $35 billion, that's the highest volume since 2014 and the fourth busiest year to date on record. companies that have gone public in the u.s. this year are trading on average 22% above their ipo. have you bought any ipos this year >> i have not. it's certainly not surprising that tech company ipos are doing

well that right now is, again, as we talked about before, where the fundamental support is that's where the money is going towards. in 2019 that's where you will see the bounty of ipos >> you don't get allocations, i assume you get offers? >> i do. >> you have a policy, you're not into it? >> with partners, it complicates thing. i try not to be involved in complicated strategies >> you layer in technology, the chase for technology, but also the willingness to go risk on. in particular tech and biotech >> yes, i would agree with that. i think there's a high degree of confidence you have to acknowledge it feels different in the business environment than it did in prior

years. that's where you get the comfort to comfort with ipos >> did you know malls are the emptiest they've been since 2012 vacancy rates. >> the malls that are still around are crowded >> the vacancy rates are high. the vacancy rate hit8.6% in the second quarter strip malls saw vacancy rates of more than 10%. >> that doesn't help when your anchor tenant is jcpenney or sears. >> when is the last time you hung out at the mall >> short hills mall. >> beautiful mall. >> that's thriving >> i was at the livingston mall. >> the retail apocalypse is not happening. we had feared that a couple years ago. there's been a strong recovery in a lot of the brick and porter repail stotail stores. >> what do we think happened we thought apocalypse.

border adjustment tax. no fashion >> i missed that no fashion era. there was a period in time where fashion was -- you were always waiting for new things like pants that come up -- jams or something >> you don't remember a whole period for years -- >> i don't >> when athleisure was big >> every day you would have fashion retail people coming on saying there's no new fashion. >> ties get thick, they get thin >> that's my point every was taking their money they would buy an iphone instead of jeans nobody wanted to buy branded anything you don't remember that? >> no. >> you're not wearing lululemon on the weekends? >> i am.

>> he's wearing them now >> those are the pants >> do you see this he's wearing -- he do a downward dog in that. >> they look like regular pants. >> they do but they feel like jeans. i have like six pair i alternate. i'm not wearing underwear. no coming up -- >> that's too much >> that's your boy dillon. >> my gosh >> yeah. absolutely >> okay. >> i got this right. >> yes >> i got that right. >> yes you are spot on on that one. >> he did. commando >> apparently. >> get ready for the second half of the year. a look at the trends in the restaurant industry has could shape the next two quarters. these pants stretch. the volatility increases of my weight -- and what it means for your portfolio next. as we head to break, a look at yesterday's s&p 500 winners and

losers ♪

♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. ♪ good morning welcome back to "squawk box. u.s. equity futures, we are in the green on this shortened

trading day, on tuesday ahead of july 4th dow looks like it will open 113 points higher. nasdaq up about 34 points. the first half of the year is officially in the books. we're seeing trends develop in the restaurant business. here with more is kate rogers. >> it's been a mixed first half of the year for the restaurant industry, here's they predictions for the second half of the year. one, mobile ordering and delivery continue to dominate. mobile order and pay still the name of the game and delivery will play an important role. you can expect more integration like what we're seeing from chipotle bringing delivery to their mobile app later this summer and dominos allowing customers to choose hot spots where they can have items delivered value wars will continue value from fast food to coffee mcdonald's will continue its one, two, three dollar promotion. other names like darden are

seeing success in value at olive garden as is dine brands with applebee's coffee giants are offering discounts in the afternoon and analysts say innovation is key. it will mat ner markter in markd menu ihop changed its name to ihob to debut a burger and menu changes beyond that matter we've also seen it for mcdonald's with their fresh beef quarter pounders dunkin' donuts brought doughnut fries to their menu. and chipotle is trying out a mexican chocolate shake and quesadillas. i tried the mexican chocolate shake, it's good >> i said earlier, i'm not eating >> why >> because i just got back from italy and i did eat and drank. so -- then you come on with this >> it was good it was heavy

>> looked things >> the doughnut fries. how many doughnut fries could andrew eat >> i've done -- >> a dozen is a doughnut >> i could do seven glazed i'm not proud of that. >> so that's like 70 doughnut fries. >> they look good. >> we'll have to limit that in the future i don't think we should have that contest anymore >> have you seen these annie's things with cinnabons. i was in a mall, i seen it over there. >> the way the restaurants can continue that innovation, mcdonald's brought the fresh beef quarter pounders earlier in the year, but they can keep innovating and bring customers new and exciting items >> patrick doyle set the template years ago at dominos, it was about developing the technology, developing mobile

ordering, now other companies are coming about and trying to replicate that even chipotle, which i'm long chipotle that's part of the big ackman story. but the partnership they have with door dash, you can seeing new customers, they're getting it through mobile ordering it's real. i think there's validity behind it >> that dominos renaissance, that was like -- not different from howard schultz when he came back starbucks was lost amazing that the guy at the top can totally turn the ship around >> mobile ordering has not gained traction. >> it's a more complicated menu. >> and chipotle has a second make line for that they're putting that in place to get items out the door quicker they're also testing a window in a wall >> they just need nachos >> they have that. >> now >> i don't think the line will

slow down. i sometimes go to the one on 8th avenue >> chipotle? >> yeah. that line if you're there at prime time for lunch, that can be a serious project but it moves it moves quickly but if you get into other products, it's an issue. >> brian niccol talked on this special investor call last week and talking about speed and getting people out through the line more quickly was a main topic. >> there are places in the heartland where you can get your food -- >> you go to chipotle at bryant park lehere or at 8th avenue -- >> is the line long? >> at 12:30? >> so move >> i sometimes read a book on my kindle while i wait in line. >> it's not like that everywhere else >> this is what's going on in this great city of ours. and the great economy we're generating here. >> don't suck up to me now >> this is a free market here.

fabulous >> chipotle, they have nachos and added something else, quesadillas? >> they're testing it. they have an avocado tostada, a mexican chocolate shake. >> and hold on, one other thing, happy hour, early. have you seen this 2:00 p.m. in the afternoon >> they all want to bring people back in after the lunch rush and also with the coffee companies, doing the same thing. they want to bring in foot traffic in the afternoon >> they're not doing alcohol in the afternoon. >> no, but cheaper drinks and deals. >> alcohol now at some starbucks. >> this is the taco bell guy, isn't it >> yes, brian niccol >> both of them need to move towards and meet somewhere in the middle maybe taco bell a little less -- >> you love taco bell. >> i do. >> we have had a guest waiting

patiently. r.j. is here, senior restaurant analyst from morningstar you just lead this we only have time for one or two questions. >> rj, how are you >> good, how are you doing >> i guess name your top challenge for the industry going into the second quarter of the year >> the top challenge is the ripple effect from amazon whole foods. that's the big unknown now amazon will push whole foods more aggressively. that will make grocers be more promotional and what does that mean for key value will that get more aggressive and promotional? that could put margin pressure on the back half of the year the other is we're not done with store closures we're seen chipotle and starbucks announce store closures probably more to come. those are the big ones that i think to keep an eye on. the technology side, these are all good things, but it may take time for consumers to learn and integrate with their day-to-day lives. >> on the tech side, when you

talk about amazon and whole foods, are you talking about more delivery -- they're already playing the music on us. more delivery services >> no, more talking about the discounts that you get at whole foods. even in the prime day announcement last night they're talking about more discounts that will have a ripple effect across grocers and restaurants >> are you a believer in uber eats >> i think it's very interesting. i think you have to have that functionali functionality. and chipotle announcing integration with the app, that's interesting to see it play out if you can order through an app, that could be a game changer >> thank you for your patience >> no problem. >> thank you, kate >> thank you. coming up, we'll get you read did for the oy for the aut. the executive edge is next you always pay your insurance on time.

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time for the executive edge. on the agenda, automakers will release june sales numbers phil lebeau has what we can expect >> strong sales continued last month. this is an industry now where the first half of this year the sales pace was probably better than most people were expects. we were hearing people say sales rate will be 16. 7, 16.8, well

it's higher than that. relatively strong demand continues. prices are still rising. people are willing to pay up when they're in the showroom trucks, crossovers, they remain red hot. cars and sedans not so much. we talk about the sales pace we're on pace right now for the fourth straight year with sales in the u.s. for the auto industry topping 17 million. right now we're roughly in that 17 to 17.05 million. by the way, that's the expectation for june 17 or 17.1 million later today we also get the first numbers we've seen from general motors in three months gm now reporting sales on a quarterly basis. we'll get q it sa2 sales number. they won't break it down by month, but it will give us insight into what is selling and working for general motors what's not working, shares of general motors because over the last three weeks this stock is

down 13% it popped up to 45, once they announced the softbank deal, people said maybe this is it, maybe the stock will get momentum and move up to $50, move beyond that not so much. back down below $40. we get the first numbers a little bit after 9:00 this morning. back to you. >> will we get a breakout of china sales and any potential impact for tariffs >> for general motors, we will get some indication about china probably not from gm in the u.s., that's just quarterly sales for the u.s., but in the next few weeks we'll find out how things are working in china. in terms of tariffs we won't get indication from gm or other automakers beside commentary about concerns about potential impact we want to watch friday the 6th, let's see what happens with certain vehicles not only that are shipped over there, it's only a handful for automakers in

the u.s., but the ones coming back from china like the buick envision, we reached out to general motors, we'll have to see what they say in terms of passing along price increases. >> thanks. coming up, it's summer beer season anheuser-busch has a brew inspired by george washington's recipe great for tomorrow taste test coming up at&t provides edge-to-edge intelligence, covering virtually every part of your manufacturing business. & so this won't happen. because you've made sure this sensor and this machine are integrated. & she can talk to him, & yes... atta, boy. some people assign genders to machines. and you can be sure you won't have any problems. except for the daily theft of your danish. not cool! at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on.

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. july 4th, independence day is one of america's favorite days to barbecue and most celebrations aren't complete without a cold beer joining us now, anheuser-busch sales president. you do introduce some different summer brands as far as innovation goes. >> we do >> four of them this year? >> yeah. we have some here today. summer's key for us. it's a key beer selling season some of the brands we have here today, we have kbbudweiser freeo reserve. it's inspired by george washington's recipe that was found in a military journal. and it's great for pairing with burgers which is key for july 4th. >> everything else george washington did, he knew how a

brew beer. >> which is pretty inspiring, right? it's a great formula >> it is inspiring he'd right straight into where the bullets were there was some, like, halo around him or something. he was the father of our country. makes you wonder whether something big was actually happening there transcendently, doesn't it right andrew >> transcendently? >> never mind. what else? >> transcendental meditation. >> so we have bud light orange here >> it's brewed on real orange peels. it's hot right now, particularly hot in the northeast so it'll be great for july 4th then kind of moving around, michelob ultra is one of the key brands right now it's the fastest growing beer brand in the last few years. >> because it's low carb >> it's lower calorie as well.

we've taken it to michelob ultrapure gold >> how low carb? only 85 calories >> exactly >> wow >> for me. that is -- well, you know, there's the -- there's the liquid there >> but the challenge is that's only for one how many of those are you going to consume >> i got you >> aside from this, you also have spike seltzer >> yes >> how's that doing? >> both alcoholic and non-alcoholic is exploding so we brought it into alcoholic seltzer a couple years ago gluten free. and it's great it's refreshing also it's a little bit of a different taste profile. >> is that like the old zima or no >> very different. >> do you remember zima? that was like drinking sprite,

remember >> yeah. mid-'90s exactly. i remember a long time ago. >> seltzer -- now i'm hearing if you want to drink water, it's healthy. but -- >> there's a lot of sodium >> in seltzer? >> i've been drinking bubbly, the pepsi one. and lecroy or whatever am i not supposed to drink that? >> i think it's what you want. >> i drink it like water, though is that a problem? >> not as much as soda >> you still have aluminum cans? >> we do >> so what about the trade tariff >> we're not huge fans of what the administration is doing in that respect if you look across the beverage industry, we think it's about a $350 million incremental cost to the industry and for us within beer, we think it puts at risk probably about 20,000 jobs. >> beer sales overall are down when you launch these sorts of offshoots or seasonal flavors, does that cannibalize your market does it draw away from somebody

who might otherwise buy bud light anyway now they'll buy bud light orange >> if innovation hits the right way, it could be 3% to 5% of the industry when we do these things, we look for them to be incremental and not cannibalistic to the existing portfolio >> brendan, thank you. and happy independence day people write in, we're not celebrating a date it's independence day that falls on july 4th. you got that >> i'm learning every day. >> excellent >> thank you >> thank you very much coming up when we return, it's jobs week in america. we're going to get you ready for friday's unemployment number and then later we talk to linda mcmahon the business administrator. "squawk box" returns after this. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time.

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green arrows stocks pointing to a higher open on wall street following yesterday's late day rally jobs in america. new numbers this morning in which sectors are hiring and which are not. plus on this independence day holiday, we'll introduce you to a small business serving traditional all american eats courtesy of our nation's greatest heroes. 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 welcome back to "squawk box" here on cnbc we're being patriotic here we're live in the nasdaq market site in times square

i'm andrew ross sorkin along with joe kernen. melissa lee is hanging out with us this morning. joe terranova as well. dow looks it would open 95 points higher. nasdaq open about 34 points higher and the s&p 500 looking to open eight points higher on this shortened holiday trading day. ahead of a holiday, we should say. couple things making headlines right now, it is a halfday for wall street markets. closing at 1:00 p.m. eastern time of course they'll be close tomorrow for the independence day holiday. excuse me. and then morgan stanley and goldman sachs, they got help from the fed on the recent stress tests that's according to "the wall street journal." the fed told those firms ahead of time they would flunk a key part of the test unless they slashed nearly in half also giving the idea of freezing out pay at higher returns for a conditional non-objection grade. that may explain what took place

last week. u.s. automakers will be reporting. general motors will issue their sales for the second quarter the other automakers will be out with sales for the month of june edmunds.com thinks it rose 3.4% last month and that compares to a year ago few stocks on the move this morning. facebook shares are under pressure "the washington post" reporting that u.s. government is taking a closer look at the social media giant's privacy practices. the fbi, s.e.c. and federal trade commission are set to have joined the probe into the an lit ka scandal shares down 1.5% this morning. glenco is core under a subpoena. the doj is looking at foreign bribery laws the document relates to the business in nigeria, congo, and nigeria over the past decade stocks managed a nice

bounceback yesterday to start the second half of the year rally. dom chu joins us with a look at what might drive the markets from here. are there other factors, dom >> there are always a lot of factors at play. and a lot of times traders like to look towards history in terms of how they view the current situation and what could happen going forward. that's one of the reasons they look at seasonal trends in the market and one of the things they look at is whether or not they do say -- take a look at the trading for the major u.s. indices. then look at how they've done on average. here's how the numbers bear out. if you look at the russell index, it's been on a tear as of late it's up north of 3% on average the s&p 500, our main benchmark,

up about 3.5%. it's a positive trade 71% of the time the dow is up about a full 4%. it's a positive trade 71% of the time and the nasdaq has been pacing things all year and it could continue if history bears out. that's a positive trade 3/4 of the time maybe that nasdaq momentum continues. now, you throw into it a little bit of a nuance here it is a midterm here how often does that happen we haven't had that many of them if you go back to 1982, in the third quarter which we're in now, it's not a great quarter. markets on average, the s&p 500 down north of 2% it's positive only 56% of the time however, you carry that into the fourth quarter, a seasonably strong trade in the fourth quarter that even bears out more so in midterm election years on average it's up 8.5% in the fourth quarter it's a positive trade nearly 90% of the time. as we talk about these seasonal

trends, it's not to say that traders automatically say this is going to happen it's just guidance for what we could expect in the future back over to you >> it's always good to check out just what has happened historically without any fundamental backdrop a lot of times we describe things based on fundamentals and we find out it had nothing to do with that at the time. >> you talked about trade. all of those midterm election dynamics >> unless it isn't joining us now gene goldman. director of research at siterra. also chief economist at raymond james. i don't know if i agree with gene on this it'll be interesting to hear this gene, basically you think things are pretty good. corporate profits rising 19.8% and you talk about getting a continued boost from tax reform. but then when you talk about

2019 and 2020, you think fed gdp approxima projections are too high is the fed at 2.4% for 2019 and 2.0% for 2020, those are too high for you >> yes, we do think they're very high >> 2% is high for 2020 >> 2% is high for 2020 >> i'm sorry to interrupt, but we're going to get a continued boost from tax reform. where is the continued boost from tax reform if two years from now we're back to whatever, the slow growth of the eight years we saw why would the growth rate of the united states which was typically much higher than what we're used to, why would that revert back to the slow days that we saw when we've he did regulation, we've had tax reform why do we have to go back there? is it my fault because i'm a

baby boomer? >> you make great points, but think about this tax reform has been a boost near term given even pmi yesterday and data we'll see this week more importantly, though, 2019 and 2020, tax reform will wear off, interest rates will start to rise even more. we think this will pressure economic data. also you look at the rising dollar i know today the dollar has weakened a little bit. but the rising dollar is going to impact our exporters. it's going to definitely impact some others. and i hate to bring up the "t" word, but trade. obviously trade. >> can you look at what the u.s. economy has managed to do over the years and i know interest rates are going up, but they're going up to levels that are much lower than periods in the past where we were able to generate much higher economic growth than 2% we average 2.8% for years and

years and years. and 40% higher than europe for 40 years so there must be something that's changed fundamentally in your view. i guess what are you talking about? the population growth and productivity is that the same old mantra we hear again and again from people who think we can't grow faster >> definitely. but think of the labor market. it's also tugtened we've seen unemployment rate of 3.8% lowest since 1960. but we're not screaming a recession is coming near term. what we're saying is this business cycle, yes, is going to linger a lot longer than normal. you've got rates rising. >> that will be a fundamental disappointment from what we've been sold on tax reform and what it can generate. you're saying that mnuchin and everybody that is talking about what tax reform is going to do, they're going to be totally wrong. because they're talking about 3% or above we're stuck back in the 2% that we had when there was all the

over-regulation and redistribution anyway, scott, is that where you are too? does that all make sense to you? >> yeah, i think so. on a short-term basis, you're obviously going to get some support from the tax cuts this year and 2019 as well but this is really a demographic issue. there's only one recipe for growth it's the amount of labor you input, you know, times the productivity of that labor if labor force growth is going to be a lot less than we've had in previous decades when we had the baby boomer generation come in, those trends are way behind us some of the labor force growing 2.5% or so, it's probably going to be growing half a percent a year if you look at the bls projections, about 40% of that was projected a couple years ago to be immigration. now we're cutting immigration in half so unless you get some sort of magical gigantic boost

unprecedented in productivity growth, you're really not going to get anything close to 3% gdp growth 1.5% to 2% is the bogey. and that's, you know, based on the demographic projections and simple logic. >> scott, gene this is joe. for both of you, it's a little difficult to forecast what's going to happen in 2020. that's a challenging job for both of you. but let's kind of walk through the scenario as such you're forecasting 2% gdp in 2020 how much of that composition of gdp is really incorrect forecasting? what i mean by that is is the economy now is technology based. and if i would have three or four years ago said to you the composition of the s&p 500 was going to be 25% technology, you probably would have laughed that off. who knows what the composition of the s&p in 2020 could be. technology could be 35%, 40%

so obviously it's making a much larger contribution to the capital markets and the economy itself and it's very difficult to measure what that contribution is which i would argue with both of you is a very positive one. >> i think to some extent you look at your cell phone and you've got a dictionary, encyclopedia, positioning system, everything else. all that, certainly, is really transforming the u.s. economy and how people live. but i think when you get down to growth in the economy, you know, we're looking at the demographics leading to a slower trend growth >> how do you statistically measure what you just identified the contribution >> certainly the bureau of economic analysis, they make these changes over time. but we've had technology changes, you know, as far as we

can see for a very, very long time i mean, computers have been coming into the workforce, you know, in the '60s, '70s, '80s. >> when we were growing at 3% easily >> again, you had the demographics you had the demographics really driving that growth. >> all right all right. you know, a lot of your peers are saying -- i don't know it might be uncomfortable. that is probably the consensus anyway, we'll leave it there we do have -- we keep all these videos and tapes and everything. so we'll check back with you in 2019 or 2020 to know whether this happens or not. you might not be back by then. >> oh, boy >> wish them a happy fourth. >> happy independence day. coming up, jobs in america the government will put out its employment report on friday, but today we'll get a private firms reading on who is hiring and where. stay tuned you're watching "squawk box" on cnbc we all want to know about the new thing.

you know, the new, new thing. with xfinity's retail stores, you can now see the latest. want to test drive the latest devices? be our guest. want to save on mobile? just ask. want to demo the latest innovations and technology? do it here. come see how we're making things simple, easy, and awesome. plus come in today and ask about xfinity mobile, a new kind of network designed to save you money. visit your local xfinity store today. welcome back to "squawk box" this morning take a look at u.s. equity futures this hour on this shortened trading day. u dow looks like it would open up higher. s&p 500 looking to open about nine points higher paychex is releasing its jobs and wages joining us now is marty mucci,

the ceo. good to see you again. >> good to be here thanks >> put this in context we hear hiring and waging declining, that doesn't sound good and it doesn't seem to match up what we're seeing in the broader economy. >> well, i think what you're seeing from the small business sector, under 50 employees, what you're seeing is basically a moderation it's moderated and it's across the country all regions and sectors of jobs. probably the biggest question is why is that wage increase below 5% -- 2.5% it's fell just below that. we surveyed clients and what we're getting a 65% of those clients said that they're seeing not enough profit to increase the wages. so it's an interesting time. why aren't wages going up more given the shortage of labor? >> when do you think that's got to give at some point? i think that's a conundrum that larger businesses are facing as well and larger employees.

that there seems to be a shortage in skilled workers. companies are looking desperately for skilled workers. in your experience, what's the first thing that gives here? >> well, i think what you're seeing is small businesses do have a little bit more difficult time than large businesses attracting employees they don't have as many benefit packages they don't have the recruiting power and flexibility to change where they are or what the technology is they use so we're seeing that these small businesses are struggling a little bit more to be able to attract the employees that are out there in this tight market i do think it'll give, but we have not seen it yet it's still below 2.5% wage increase which is very interesting at this point given that market. >> all right so where are we seeing the most employment growth? where are we seeing the most wage growth across the country >> yeah, the wage growth is in the west now, we have a number of minimum wage increases a lot of that wage increase is coming from part-time jobs and

other services leisure and hospitality. because there's the most minimum wage increases going on since the first part of the year in the west side of the country in the south, we're seeing the best job growth. so part of that is construction is up, manufacturing is up in the south. and part of that is still the recovery from the storms last fall where you're seeing a lot of reconstruction going on in the repairing and the building it's on both residential and commercial south has got the best job growth west has got the best wage growth >> and the only area to show growth was financial activities. wh what sorts of companies are those? >> financial advisers and professional businesses lawyers and those kind of things not really sure why we're seeing that it did come off of a sluggish period though. we may be seeing a bounceback there. what's interesting is leisure and hospitality and other services those personal care things are down year over year quite a bit. and we think some of the minimum

wage increases are impacting that across the country. people trying to hire these employers trying to hire a little bit less because they can't afford to hire minimum wage impacts we're seeing more employers invest in automation >> and marty, if you can, if there are dots to connect, can you connect them in terms of what you guys find at paychex and what we should be expecting from the jobs report on friday >> yeah. i think what we're seeing a rise in the tight market. i assume we'd be in the 200,000 range again. we've been steady in seeing that job growth and larger businesses seem to be hiring more. so they're able to raise wages, add the benefits, and get the employees. and those labor markets. so my guess is it would be somewhere 180 to 200,000 jobs on friday >> marty, thank you for your time this morning.

marty mucci of paychex a programming note here, we'll be talking to linda mcmahon at 8:30 a.m. eastern time coming up, attention amazon shoppers the e-commerce giant releasing details with one of its most important days of the year stay tuned you're watching "squawk box" on cnbc you're gonna do great! thanks, dad! break a leg! aflac?! not that kind of break. oooh! that had to hurt. aflac?! not that kind of hurt. yeah, aflac paid us cash in just one day to help with our car payments and mortgage. aflac! perfect timing! see how aflac helps cover everyday expenses at aflac.com.

amazon has announced its annual prime day mark it on your calendar it's july 16th prime day is the company's biggest annual sales event and will be longer this year than ever before. so not just 24 hours, folks. it's going to be 36 hours. the event will also expand to new markets this year including australia, singapore, the netherlands, and luxembourg.

meanwhile ebay will offer thousands of exclusive deals it's going to try to one up them on july 17th and it is a way to consumers to skip monthly fees, ie prime. what do you think? >> prime day is always a huge catalyst right, joe >> absolutely. >> there was an interesting article on the verge or one of these sites about a guy who's now doing the math again now that prime's gone up by $20 -- >> oh, is it worth it? >> is it worth it article. and it's kind of interesting a single person, not a fan we're like a complete prime family we definitely make it worth our while. but for this fellow, it's on the cusp >> that it would change the consumer behavior that much? >> that would make sense for him. >> i have to say, if you look at walmart's app in the walmart

website which i've done in recent weeks, you get free shipping for the most part orders of more than $35 which is most orders out there. the prices are pretty good there's competition out there for sure in other media news here, mr. martin sorrell is in talks to make his first acquisition since leaving wpp. he's in talks to buy media monks. a netherlands digital company. it's unclear how much he will pay to acquire the company, but sources tell the ft media monks is valued at about $233 million. >> he's got that on him, probably. >> back pocket >> most of the time. and, you know, i don't know the details of any of that, but it'd be tough to sell him short with what he did. didn't they make little wires or something? what was wpp that was nothing it was like a little wireless -- >> no. >> they made little wires. it was the subpoena it --

opposite of a wireless company >> it made wires really so it was an industrial turned into an advertising company? >> back in the day >> it was water and plastic products a manufacturer of wire baskets >> media monks could be anything >> yeah. but ten years from now -- i don't know he's a talented. coming up, german chancellor angela merkel looking to avert a political collapse xt'll spak to david miliband ne stay tuned you're watching "squawk box" on cnbc introducing e*trade personalized investments professionally managed portfolios customized to help meet your financial goals.

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♪ . good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square

120 companies have gone public this year raising $35.2 billion. that is the busineest pace since 2014 not having as bullish a year, retail real estate u.s. retail vacancies rose to 10.2% of available space during the second quarter much of that was related to store closures by toys r us. and vanguard is eliminating fees for customers who guy those of its rooivals. only on vanguard's only offerings. the move is designed to attract more customers to vanguard and offer them others like financial advice >> i get it. it makes sense in washington, trade continues to be the big topic of interest as promised.

as promised, eamon javers rejoins us now with the details. >> you're right, joe it is the big topic here in washington, d.c. today see what i did there it is the big topic in washington, d.c. and the trump administration is insisting its going to push forward despite the likes of the chamber of commerce. sarah huckabee sanders was asked yesterday just what the long-term means in terms of the administration's suggestion it's going to push ahead for the long-term. despite short-term paying for some businesses that are feeling the brunt of the tariff retaliation from other countries. here's what sarah huckabee sanders said yesterday >> look, we're not setting a timetable and there are a lot of different negotiations going on. we've made progress on a number of fronts. and the president again is km s committed to making sure we have good deals he'd be happy to get rid of

tariffs on all barriers. >> wilbur ross was on cnbc yesterday. he also said there's no set level of market reaction that is a negative market reaction that the administration is looking at here to reverse itself on tariffs and trade. so it's all systems go here for this administration in terms of tariffs and trade. at least for now, guys >> eamon, every day we've got some interesting stuff going on. so stay down there for us. keep your ears open, keep your eyes open. can you keep your ears open? >> yeah. >> you can >> sure. >> let's do that all the time when i toss to you start with, you're right, joe. that's music to my ears. >> just do that every day. in geopolitical news, angela merkel has reached a deal to

avert political collapse and the creation of transit centers for migrants at the border the deal is ratified by all parties. it will head off the possibility of new elections less than a year later than the one in september. we will see whether this is a lasting sort of a detaunt for chancellor merkel. >> let's talk about this a little bit more. 61 million people forcibly displaced by the end of 2017 protesters across the u.s. are speaking up for immigrants who have been separated from their families joining us now david miliband. he's a former british foreign secretary. good morning to you. >> good morning. good to be back. >> let's talk about angela merkel first and then what's going on here at home. this is the way "the new york times" described it this morning. chancellor angela merkel who staked her legacy on welcoming hundreds of thousands of immigrants into germany agreed on monday to build a border camp

for asylum seekers and to tighten the border to save her government >> and it always -- she's on 64% approval ratings, angela merkel. and the party threatening her only run in bavaria. i think that german politics is a consensus system that's what you said rightly, joe. you reported that they've got to get agreement from the other coalition parties. but i think you're going to see that and remember the great unifying factor in europe in the moment in the wake of real challenges actually is the other story you've been talking about. the trade attack from the u.s. is bringing europeans together and reminding them of their shared interest. so i would say that these reports of mrs. merkel's political death are widely exaggerated. >> okay. let's talk about where we are back home here given what's taken place over the last month.

i haven't had a chance to talk to you about all of the machinations all happening back and forth. but where are we now in terms of the separation from children and their parents? what's actually happening on the ground >> so where we are at the moment is compared to the 1990s, there are about half as many people coming across the border than at that point secondly you'll remember the 2,500 children taken away from their families 2,000 of those are still separated. and the most difficult cases, the administration has deported the parents already across the border back to south or central america. and so there's a real chronic problem for the government there explaining how they're going to reunite these families we know from our work, we do humanitarian work around the world. we're reunifying families and that's the first thing you do. for a traumatized kid, what they

need is to be with their parents. it's worse than ironic it's tragic, really, that it should be here that those families -- >> so there are 2,000 children still separated. how quickly do you think they'll be reunited and what are you guys doing >> we work with the foster families that deal with unaccompanied children not children who are separated from the familys, but kids who are coming across here without any family members i think there are some easy cases amongst the 2,000 where the parents are known, where the kids are able to speak to be reunited the youngest kids who can't speak, don't know their names, the parents are not here, that's a long-term problem i don't see an immediate resolution to at all. >> those children -- i'm sorry if this is an ignorant question. but the children who come to the border and don't have family members, are they coming as a refugee? and what are they fleeing? >> they're fleeing from gang violence, from persecution, real conflict. >> so the parents are sending

them saying go across the border. >> some are. some may be here, of course. so the important point we make is some of these people will be refugees and some of them won't some might be coming for economic reasons and the part is every case gets properly dealt with. >> here's my question though >> it's simple >> if you were king for the day, what would you do? how would you create -- what kind of immigration policy would you have what would you do to some degree have to disincentivize people coming for economic reasons. >> the biggest thing you have to do is run the system in the u.s. it's taking 286 days to deal with a case. the germans had 1.5 million people arrive in 2015-16 they've got the processing time down to eight weeks. if you can say to people, we will give you a proper assessment of whether or not you're a refugee if you're not, you can't stay. if you are, you can. then that's the biggest difference a government can

make >> you've been coming on for years. has it gotten tougher -- >> am i looking that old >> your job's gotten tougher i saw some comments from one of the leaders in poland about how they've managed to enforce their borders. and hungary is -- i was just there. it's setting itself up as a model for how you should protect your border and the benefits of sort of going against what other european countries -- it just seems like your job has gotten harder you look at some of the elections and what's happening >> you're making -- i started here in 2014 >> must be harder for you. >> i started in a relatively benign political alignment now we're running into real polarization people say to me how hard is it to run an agency helping the most vulnerable people in the world at a time of backlash against them i always say, look, that's not the right diagnosis.

yes, it's polarized but for every american who says i don't want a refugee, i'm afraid of a syrian, i don't like an ethiopian. another will say that's my family, that's a work mate, that's our history and we see a real mobilization and the important thing is that i say to you not as someone in politics but as someone as an expert witness about what's going on around the world and in the u.s. and refugee system is this is a manageable problem not an insoluble one and one in every 110 people on the planet has been forced for their home by politics and violence that means 109 out of 110 haven't. >> to create the system you're talking about, sort of a rapid response system to be assessed would take what? both economically, systemically, systems in place how long would it take to get that in place? what would you have to do? >> i think you have to mobilize the judicial system. senator cruz said you need to deploy systems like that secondly, you've got to make

sure the administration does keep the families united thirdly, you've got to work with the countries they're coming from the long-term solution for poland or someone else, you've got to make sure that we're in the diplomacy business for these conflicts rather than in the reaction business. >> david, real quick are most of these refugees working age? i think in terms of the u.s. being near full employment and we need -- we're going have a labor shortage. >> most of them are under the age of 18. 55% are kids you're right that these are people who are productive workers. they have a higher rate of starting business than the native born population >> david, thank you. it's good to see you coming up, an american business story that will feed your appetite and warm your heart. we'll introduce you to a restaurant hiring military heroes when "squawk box" returns.

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at the american hero smoke house, the staff not only serve

delicious bsh carbecue, but manf them served our country. thanks for coming in >> thank you >> so most of us didn't even know this existed. so how long ago -- are you founders as well as ceos >> we started the business about a year ago we have a number of companies. we wanted to do something to give back, so we started to look how do we hire veterans. my family has been in this country since the 1720s. two of my relatives, my grandfather seven generations back fought in the revolution. i've had a number of relatives, 18, fought in the civil war. i've had a number of relatives that lost their life in vietnam. two classmates of mine so we always like to recognize our heros in the community not just military, but first responders, other heroes that

kpeexemplify the american spiri. >> yeah. okay so what was the process? you diecide you're going to star making barbecue and actually start. how do you advertise for vets to bring them in as the key demo for your company how do you do that >> through a network we have a lot of friends in our company. we have about 800 employees. so just network. we look to find people >> and how many, like -- they're nearby >> we have eight locations presently. and looking to expand. >> in new jersey and just on the -- >> six in new jersey one in california. one in pennsylvania. >> okay. so once you decide you're going to do it, how do you work on the product offerings and everything that goes into starting a restaurant is it an entrepreneurial venture or is it a -- it's both to try and help pay back the vets >> we try to find businesses

that we start and grow we started our company with a $600 contract to put nuewspaper on airplanes we are now about a $40 million company. again, the restaurant is a new venture for us but we look for menus the community is wanting we try to bring southern barbecue and other offerings in a family environment. >> so you offer discounts to veterans and service personnel you offer a 100% discount to gold star families so thank you for honoring their service. you're committed to hiring veterans how many veterans do you have on your workforce, what percent is it the vast majority? 100% >> it's actually difficult too find veterans to hire. we have about 30 veterans that work for our company as far as the discounts, the gold star family, most people don't know what a gold star family is. so even our own employees we're

educating. but a gold star family is a direct relative of somebody who lost their life in service to the country. >> andrew, we had a gentleman on yesterday funding vets -- >> funding vets. they were doing it quarterly, $25,000 for each new start-up. they were trying to really support start-ups. and his company, if you remember, also provides loans. >> street shares >> so this is a good model for a private sector, sort of solution to -- we all sort of feel like we'd like to do more given some of the problems at the va that have been highlighted over the past few years. so you guys are also profitable and doing well and you can continue to do this? >> yes >> you're the one signing that stuff. you better -- >> well, sometimes i need him to cook the books

>> yeah. not just the brisbrisket okay, good >> the other part is branding. we're coming out with a wall of heroes and recognizing people such as sergeant john bazlone who was featured in the movie "the pacific." and people like mary walker who is the only female medal of honor recipient. so we're trying to educate people about, you know, heroes in our lifetime and keep the memories alive >> it's a good time to do it, too, with independence day tomorrow gentlemen, thank you >> thank you very much coming up, oppenheimer upgrading roku this morning. we'll talk to the analyst who made that call next. stay tuned you're watching "squawk box" on cnbc for your heart... your joints... or your digestion... so why wouldn't you take something

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it looks like a lot of the value you see that's not being appreciated is from the roku channel. can you explain that >> sure. so effectively, you know, when this company went public, the bulk of the business was acting as an ad platform. so using their operating system

both on devices and the operating system on tvs to create an opportunity for advertisers to place ads in front of audience and to get a cut of that. but it was basically other people's content and the roku channel allows them to play more effectively as a content provider granted, we don't see them making their own content like netflix. but we see the opportunity to roll up a lot of the long tail content. so once you get out of the top 12 applications on the smart tv systems, it's just too hard for people to find the content and because they controlled the home screen and we can talk about the samsung deal, it gives them an opportunity to do that and extract more value for themselves >> explain the samsung deal and what that's going to do in terms of monetizing some of the time spent off of the platform. >> sure. so again, obviously, you know, if you looked at what they could

do with their own platform, they could target call it 25% market share. right? that's kind of people viewing on a roku enabled tv or device. right? the other 75%. samsung has made a deal with them to put the roku channel on the samsung home screen. now, we don't know any of the economics around that. we would assume samsung is presumably doing this for revenue. you do is that deal, potentially you could do a deal with other makers and then there's international opportunity. so once you can take the application off of their own device, their own operating system and have it effectively sit in the ecosystem, it opens up the other 75% of the market >> jason, it's joe i read your note and say to myself, wow, this is a great potential m&a target or do you believe that premium should be factored into the

price of the stock at some point? >> we agree there should be a strategic asset. obviously if you look at the giants, amazon has their own strategy google appears to have their own strategy for now i'd say kind of facebook doesn't really have one. right? microsoft continues to go after the game platform as their strategy with all the m&a going on, one would think that this is interesting. look we don't think it's baked in, hence, we think we can get to $50. that does put a premium if i look at platform growth profits. that would put them at a 25% premium to kind of put trade on gross profit one would think that m&a premiums tend to be more than 20%. so no, i think our $50 does not bake in a take out premium if that would happen, it would be worth more than that. >> jason, thanks for phoning in.

>> i never understood, i mean i i understand -- >> we had the ceo on ahead of the ipo. >> but they're trying to turn into a platform company. the question is why these other hardware companies are not either doing as well or taking share or what ultimate happens does this not turn into a gopro situation? >> i think it's different than a gopro situation. i think they're attracting the advertisers and at a valuation of about $4.5 billion. come on. >> you think this is just an easy take out for somebody >> yes, i do >> who's your buyer? >> he mentioned facebook he mentioned microsoft not having it. there's some unknowns clearly in the technology space. >> but you don't think the premium's already built in on that >> no, i don't >> interesting >> all right joe has been our guest host. begs to question some of your earlier comments

so you pointed to the influence of a few gains in the year how do we view that? other companies that haven't gone up are going to go up to catch up or everything's way ahead of itself based on the companies that have taken us there? >> we are in an environment right now where investors are rewarding growth, specifically domestic growth because they're seeing the growth here in the united states for the reasons we've talked about the lifting of regulations, the tax cut, a business confidence in the c suite so again, it's a u.s. centric focus i think right now first and foremost i don't think you can dismiss what is going on right now in technology and the significant earnings acceleration we are seeing. >> do you think we're capable of growing faster than 2% >> we are growing faster than 2% >> long-term >> we are growing faster than 2%, so --

>> well, we'll be back to 2% in 2020 are we going down from here? >> who knows what's going to happen in 2020 >> i know. but do you think it's possible we can overcome demographics and productivity to grow again like that or are we stuck? >> if the world in 2020 presents itself as the world is today, we are not a 2% economy. >> joe, thank you, sir this was a pleasure. >> happy independence day. coming up next -- >> half-time report. >> m.i.t. -- >> i know. you're doing it. >> m.i.t., his school out with annual innovators -- whoooo.

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stocks are jumping futures pointing to a higher open ahead of a shorter trade on wall street. facebook under pressure. back in the red after reports the government is looking at how it handles user data plus is cryptocurrency a winning shot we're going to tell you why one nba team is cashing in on ethereum as the final hour of "squawk box" begins right now. ♪

live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back welcome back to "squawk box. we are at the nasdaq market site in times square. i'm joe kernen along with andrew ross sorkin and melissa lee. becky is off today it's a shortened trading day for wall street. the markets are going to close at 1:00 p.m. eastern time today. that helps a lot of people means nothing to us, though, really what about you, melissa? you doing your show at 3:00? >> no. there is no "fast money. i am only working -- >> there's no "fast money" at all? >> only working for you guys >> wow >> so you're here. good, good because you still -- >> i would still do "fast money" even if there were -- >> i know you would. let's get a check on the futures which are solidly higher

wow, even better than before despite all of our guests saying that, you know, i don't know they weren't very patriotic on independence day today america can't grow again at anything above about 1.5%. that's all we get. the 10-year right now. with rates this low, we can't do better than we're doing? i don't know no one's going to stop investing at 2.8%. that was the point i was trying to make, you guys. is that in the past the way capital is treated in a system and a capitalistic system, rates do matter. when they go up, it does matter. i understand that. but the return on capital if we were to go from -- if we were to double if rates were to double, that's still a business environment that can deliver ifyou have -- >> if they go gradually, yes >> just saying 2020 will be back to sub-2% growth, i'm not sure we can guarantee that. i'm trying

>> i know. >> especially on independence day. >> but i like you're weighing all the possibilities, the options. on the good and bad side >> you're selling your own sort of -- >> i like you're down the middle >> yeah. i'm called that a lot. people see a picture of me, people say that guy. i remember him >> right down the middle. >> on independence day you can be independent here's what's happening this hour amazon announced its annual prime day. mark your calendars, folks it begins on july 16th it starts at 3:00 p.m. eastern time and by the way, deals continue not for 24 hours but for 36 hours. because prime day is really more than a day up from last year's 30 hours they should call it prime 48 you can check out the whole thing. you also get discounts at whole

foods on prime day too. >> that should be interesting. separately "the new york times" prosaying campbell soup looking to ining to explore kraft heinz may be interested in acquiring the company. "the washington post" reporting that the u.s. government is taking a closer look at facebook's privacy rules. the justice department's probe has been joined into the cambridge analytica scandal. it focuses on what facebook has reportedly public by said about the data it shared with facebook whether it made complete and timely disclosures to the public and to investors deutsch bank making a call delta, united all downgraded the firms said the market

underperformed during g geopolitical risks pointing to the current trade tensions you're seeing -- look at united continental. that's up by more than 1%. let's get back to the broader markets. a great to have you with us, gentlemen. jeff, you actually think we're going to see better growth in the second half of the year. because of that tax cuts >> tax cuts are playing part of a role some is we're still in the sweet spot of rising wages they're rising modestly. think of that as empowering the consumer and then partially because of high business confidence we saw a pickup in capex we think that's getting another lift from the tax bill. >> does that necessarily then mean gains in the stock market >> it doesn't. it's really what's baked in. our feeling is that -- we've kept somewhat of a steady path in here at the beginning of the

year we were very cautious we thought there was too much optimism now we think there's too much pessimism. one area and this is to joe's point earlier about how fast we can grow, i think the markets underestimate the potential for productivity gains >> that -- you know -- so we're still looking at those two things, those two bugaboos people talk about. i guess you canreduce it to that, but i don't know you never know how things are going to -- terranova was saying that earlier technology you never know exactly what changes on the edge of those two things >> what can if anything offset those two things if we are to believe that, you know, demographics and productivity -- lack of productivity growth are -- what is there and what is structural about the economy right now and then we're doomed. >> first of all, those two things population growth and productivity growth. that's just arithmetic in the long-term gdp. on the population side, it's

going to be hard to see the types of gains we've seen over the last several years because the labor market's at full employment likely unemployment rate is already low. we're stuck with the sort of labor force growth that's dictated by demographics so to get strong gdp growth, we need to see it accelerate. which is why forecasting productivity growth is difficult. but what we do know is that the past couple years including the last year, we've seen the trends that have been quite a bit lower than they were in the late '90s. what would make us more confident that that would change is that capital spending pickup. >> so-called baby bust in the '80s that followed there was the boomers and then the baby bust in the '80s. and it was -- everybody talked about it that was the consensus so how did we grow in the '80s >> the '80s weren't a great time for productivity growth. >> how did we grow -- we grew at better than 3%. >> you still had good labor

force growth because of -- >> there could be another one off this time. >> i mean, the last ten years have been quite disappointing. >> yeah. but a lot of it -- you don't think any of that was self-inflicted you don't think regulation you don't think obamacare. you don't think anti-private sector redistribution? yeah, it was all self-inflicted and we still grew at 2%. >> i mean, we're seeing an opportunity. i actually have a piece in this week's baron's about this to increase our labor force through bringing people in off the sidelines. and one of the really untapped resources. >> like whom >> the biggest resource ex-offenders people who have a criminal taint. we are seeing pockets of our harland for third. we are seeing companies that have special iessed. cincinnati is one of the real

areas. there's some academic evidence if you do it right, you source them right and you support them right, actually lower turnover >> the opioid epidemic is also taking people out of the job market and if we see companies relax their drug testing standards which we saw in -- i think it was the last beige book. there were ideas companies were exploring this that could also increase the labor force. >> this is one of the disappointments of the last several expansions participation rates of prime age males and females has been coming down. that's not demographic that's likely reflecting in large part opioids and other social problems that i think are some of the issues you've touched on yourself. >> i mean, we -- there are three things that are different this cycle in the workforce long-term unemployment never reached these levels and have been as persistent. the opioid epidemic. >> you look at criminal justice reform and how many -- a lot of

these people you were talking about weren't violent criminals. they were pot smokers or users of -- >> my starting premise and i say this as the father of young men, every is stupid. you make a lot of -- make judgment errors at that age. but what we've done is criminalized errors in ways we haven't in the past. >> we've seen that in some of our recent guest we've had on. you can just watch a young man go from 18 to 30 or so and he's still paying for the crimes of his youth. i thought you were in chicago. >> i am in chicago >> but you know what's happening in cincinnati. >> yeah. there's another pocket of excellence in western michigan that's usually one business leader and chose the model there's consistent models in different geographies of how you do this the right way. and 16 million people have a felony record who are outside of jail or prison that's not opportunity

>> i think we can do increased gdp and criminal justice reform -- >> at the same time, right >> and your social virtues you know, we can do that and we can do a pro-capitalism gdp thing. we can find common ground. >> it's a great day for america. >> exactly >> jeff and michael, thank you very much. >> i can't read this next. coming up, the notable names you don't know in technology we're talking about the mark zuckerbergs, elon musks of the world. highlighting new innovators. details from that list is next in the next half hour, we're going to talk to the u.s. former bbassador about trade stay tuned n to you? well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety.

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making headlines, china's xiaomi says it's moving ahead with opening in the u.s says it should help avoid some of the political problems. to develop versionings ofr its products that are compatible with u.s. networks the technology review is out with its innovators under 35 list this year's honorees include innovators in biotech, ai. joining us with more on the list is the chief of m.i.t. review. good morning >> good morning. how are you doing? >> i'm good. you want to go through the list letterman style top to bottom or bottom to top? >> sure. i've memorized the whole thing no, i think the -- >> go ahead. >> the big takeaway of the list i think this year is how many people are working on ai about a third of the people on the list are working on it

either they're using ai for medical diagnostics. or they're developing ways for ai to learn. robot to learn from people we have people working on ai ethics on the ways ai can impact society and how you are avoid ai bias so it's really the field this year. >> who is the youngest person on the list this year >> oh, that's a great question i should have been prepared for it but i think it is probably a 25-year-old who is working on -- where is she now she is working on gene therapy -- no, sorry not on gene therapy. there she is chelsea finn she's the one working on how to teach robots to learn from watching people. >> and i was going to ask, how international is this group? one of the reasons i ask is, you

know, you often hear in terms of ai, this battle between the u.s. and china. >> yeah. it is pretty international we have people from all over the world. but china features one of the people on the list the founder of ali pay which is the payment's network. and one of the founders of face plus plus which is facial recognition users. ai to do facial recognition for business purposes and also for surveillance >> a lot of medical tech what's the most interesting innovation there >> i think some of the most interesting innovations again are using ai to do diagnosis of large data sets. but we also have i think one of the coolest things is someone who's creating viruses that target bacteria to kill them so in an era where we've got

increasing antibiotic resistance, you have things to combat disease that way instead. >> this one was interesting to me this is the university college london she made state censorship beatable by revealing the technology it relies on. what's that about? >> well, yeah. she is basically using the -- she's basically monitoring the way that sensors in more oppressive countries use the internet to block websites and signals. and devises ways for people to get around them. so she's making it easier for people to avoid censorship >> and then my final question for you, you guys have been doing this list for 18 years if you go back and look at the list 18 years ago, are there any names that have been on it that we now hear about daily? >> i mean, one of the names we hear about all the time you were talking about it earlier is mark zuckerberg of facebook

we featured him in 2007. at the time facebook was expected -- estimated to be worth about a billion. so you can see how much that has grown. we also are sergei brynn we've had a number of the people who are very prominent today were on the list when they were young. >> i think you should create a venture capital fund around these guys >> that would be a terrible conflict of interest >> gideon, thank you and happy holidays >> thanks very much. coming up, the one thing the sacramento kings have that no other team does. no, we're not talking about players. eric chemi has that story. what's coming up snex. >> that's right. they're mining their own cryptocurrency at the arena. we're ing goto talk about it when "squawk box" continues. rad. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today.

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the sacramento kings may not be scoring top free agents, but they are focusing on innovative technology and now cryptocurrency didn't they tee i did not guess cryptocurrency i assumed it was basketball. >> it's a surprise they've been more innovative off the court than on the court. if you can't get lebron, maybe you need to mine some crypto that's the approach of the sacramento kings they announced it would be mining its own ethereum.

it's one of the most popular cryptocurrencies they even installed mining machines inside their arena. the money is going to be to help scholarships and other activities in the area the team, they have the longest playoff drought in the nba right now. 12 years in a row they haven't made it. they certainly weren't getting lebron or anybody who's a top free agent they've been focused on this innovative technology. their arena is powered by solar energy they've been on the forefront of drones, google glass they were the first to use twitter, virtual reality for people who don't know, the team is owned by tech entrepreneur vivek ranadive. this is interesting. they can't separate themselves -- if you're in california and you're not the warriors, lakers, or clippers, then this is the strategy. you're shaking your head >> i want to know who bought the

mining equipment because it's not like you just turn on a computer and mine cryptocurrency to actually have a mining any sort of scale you have to buy that >> wait. where are they doing it? >> the computers are in the arena. >> physically? >> they're physically in the arena. >> maybe they can heat the arena during the cold seasons. >> it's sacramento though. so should have a lot of sun out there. >> yeah. >> they also -- they're working with mining for good that's the charity that helps you use your mining profits for charity. that's two of the things they're doing. but it's interesting you wonder, sure they're the first but like we mentioned they were the first on twitter. maybe other teams will start to do this. it's a creative way to use the facility you only play 40 home games a year >> do we know what the average price is >> the average price >> on the mining side. what it's costing them. >> the cost of mining for ethereum right now >> i think melissa is the expert on that.

>> for bitcoin it's somewhere below $6,000 >> it depends though there are places in norway or in china. >> if it gives you the electricity costs, et cetera >> but mining at $2,000 a bitcoin, there are some low prices out there >> it's a solar powered arena, maybe that helps keep costs down it's interesting it's going to be a trend to watch in all of these arena. maybe it's too expensive to min bitcoin. maybe four years ago if they'd done it, they would have set it up as a bitcoin facility >> they've got a good guy this year they've got marvin bagley. you say they've got no free agents but they've had some good -- >> you can always draft.

>> it's all about wingspan these days if you're looking at nba players, it's about wingspan that's the priority measurement nowadays >> this may be the beginning of -- >> and those long arms, he can reach in there and fix the equipment. >> bringing it back to bitcoin bhop said ethereum is going to be the next internet i read that over the weekend or something. >> if you really understand what most of the -- >> i don't but who said it? >> i don't know who said it. but most of the valley guys, all of the investments in terms of the platform they're building on top of, all of the applications are on top of ethereum >> most are built on ethereum. you don't care anymore we lost his attention. >> okay. >> i was paying attention. >> someone said it someone big we know. anyway earlier we got paychex small business job index for june which showed a slowing of job growth on main street. we're going to talk to small business administrator linda mcmahon about that and why she says that tax reform is paying off big-time for sma bins

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good morning welcome back to "squawk box" on cnbc stories front and center at this hour, nation's automakers will be issuing june sales figures this morning industry sales up 3.4% last month. general motors is the one automaker that does not report monthly numbers. it will issue second kwarlt sales, however the california supreme court now has issued that yelp can't be forced to remove negative reviews. this is interesting. the case reviewed by a judge that overturned a lower court ruling that said yelp could lead to widespread removal of negative reviews so another interesting case. by the way, there's another fascinating one at instagram right now with a fellow saying he was defamed by anonymous

folks who included him in a me too campaign now he's going after sort of jane does to try to figure out who they are and try to compel -- >> instagram to review the identities >> yes he's arguing it's defamation >> imagine if that case sided for the man. imagine -- right think of how many eggs on twitter say nasty things that may be defamatory. >> the issue in that instance is you can't just say i think he's a bad guy. if it was said in a factual way, he did "x" and he in fact didn't do "x," then it's more complicated. separately, one of this morning's big stock winners, office furniture maker herman miller beating estimates also raising their quarter ly

estimate it was the woz he said it in vienna, i guess. >> you were in vienna, he was in vienna, did you have a drink there? >> i don't understand -- it seems like it's not in any way -- i don't know what he means by that. just big, a big deal because how could it be similar to apple as a ecosystem >> so ethereum's a type of blockchain cryptocurrency. but you can build all sorts of applications on top of piit really no other currency has become that platform yet it seems to be the one developed most by the developers >> but not at the same level ripple, yes. >> absolutely. sellers are compared to ripple >> they're all ethereum all the time

june marked six months since president trump signed the tax cuts act small businesses are booming spa administrator now joins us we don't always -- it's good to see you. >> thank you >> it's great to have you on we don't always realize that the tax cut benefit of the small businesses as much we think of repatriation, you know, companies in a high tax bracket. why small businesses what are the key provisions of the act that helped mom and pop companies? >> thanks for having me on this morning. happy independence day to everyone. >> i call it that too. yeah july 4th is just a date. we got do to say what it meant >> that's right. let me give you a story about a small business owner in jacksonville, florida. i was touring his business he was in the landscape business

so tell me, what did tax cuts mean for you he pointed and said you see that truck over there brand new white truck, pickup truck. he said if it hadn't been for tax cuts this year which not only were the tax cuts but the tax reform that allowed him to write off, you know, that truck purchase this year, he said he wouldn't have had the confidence to go ahead. and he said then he had his accountant look at the 20% reduction and his income all in all he said i'm going to save about 7% to 8% on my taxes and i'm plowed that right back into my company. so i hear those kind of stories all over the country with small businesses there was another business up in braintree, mass. it was a pretty big plant. as i was touring, i asked again the small business owner whap is tax cuts going mean for you? he said, well, you see that big oven over there? it cost about a million and a

half dollars and he said because i'll be able to write it off, he said, i am going to buy a new oven, expand my square footage here, hire more people, and i already have the accounts i'll be able to fill with this new expansion so those are the kind of stories that i'm hearing all over the country. and i've been now to 39 states and i've met with over 700 business owners. business round tables. toured many small businesses that's the kind of report that i'm hearing. >> we've been talking all morning long and actually it's not just today about the two schools of thought. one is that this was, like, some type of keynesian front end loaded stimulus that is bearing fruit, i guess, near term. although it's only been six months you know, i don't know if you've even seen the effects on the near term that works but a lot of this stuff doesn't sound like it's just a one shot deal

i mean, the same people you're talking about next year they get the benefits of it the year after that and we're not even talking about the deregulation for a lot of small businesses so i don't know why everyone thinks we're going have a short-term bump in the economy and then just go back to that malaise we had for the past ten years or so. >> you know, the enthusiasm that we're hearing all over the country, you know, nfib in their surveys have talked about this is the greatest level of enthusiasm and optimism for small businesses in decades. when you look at the unemployment numbers today, you know, 3.8% is pretty amazing people are hiring. we have more people than we do have people to fill the jobs i think that's really speaking to the jobs that are being created. and the businesses that are hiring and it's a very confident business economy so i'm very bullish on it.

>> it's a good topic good to have you on on the day before independence day. and, we appreciate it. thank you. and we'll see you again, thanks. president trump tweeting this morning the economy is doing perhaps better than ever before and that's prior to fixing some of the worst and most unfair trade deals ever made by any country. in any event, they are coming along were well. most countries agree they must be changed but nobody ever asked. joining us now for more on trade, former u.s. ambassador to canada bruce heyman. great to have you with us. >> good to be here >> we had a presidential election in mexico that elected amlo are we on hold for negotiations until after he's sworn in? >> not only are we on hold on nafta negotiations, but there may not be a deal this year or

2019 and while i've been hopeful all along, i think all the signs that the administration has given us now over the last year and a half is that they don't want a deal. and i'm glad to walk through that with you. but there were two specific events in the last 24 to 48 hours that added to that and last night's announcement by the u.s. trade representative on the tpa, that is the trade promotion authority that is given to the president to allow him to negotiate trade deals was extended on sunday for an additional three years the ustr came out with their press release last night and in that press release, they thanked congress for it. but they specifically said they were working on a number of bilateral deals. no mention of nafta. none zero at all and then the president over the weekend in his own press con -- you know, his own press

interviews over the weekend said he will not sign a nafta deal before the midterm election. so, you know, this is getting to the two-year point since he was elected. and so, you know, in sports you want to manage the clock >> sure. >> in publics and in governing, you want to manage the calendar. everybody knew there was an election this year and so, you know, we're in a difficult place now. >> i mean, to be fair, no nafta agreement. once a certain deadline passed and we were into the mexican elections, we knew there was not going to be a nafta deal negotiated until after the president-elect of mexico is sworn in we have to take it off the table in its entirety until the end of the year in the meantime thou, though, iw you were a markets guy prior to being the u.s. ambassador to canada what does this do the markets in your view? you've got this unique view of

having been a market participant and also seeing the inside machinations of a trade negotiation. >> so there are two things that are happening here first of all, the trade negotiations in and of themselves have created uncertainty for business all of us know uncertainty for business is not a good thing whether it's uncertainty on tax, regulation, or trade negotiations this uncertainty has forced businesses to forestall investment on either side of the border where they are going to have bilateral or multilateral trade. this is bad news for those that are involved in that trade that need these critical decisions. the second thing is that these tariffs are even worse yet because these are going to impact businesses in ways that we don't even know yet i was having conversations with a small and mid-size steel processing distributor in

illinois and he's telling me that if you're a mid-size steel producer or user of steel today, that you basically -- if you have no control or influence on suppliers over price or your customers. you're getting squeezed really hard right now so margins are getting squeezed. you don't have a cash on your balance sheet or ability to borrow, a lot of these smaller businesses are going to be impacted by the trade tariffs that have been put on by europe, mexico, and now canada i think we've got bad news developing >> we've got to leave it there thank you so much. appreciate your time bruce heyman >> one of my favorite places, aspen, colorado. when we come back, a special olympics first company sponsored deals with two athletes. the only sponsorship in special olympics history we'll speak to the owner of the company next

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welcome back to "squawk box. every four years athletes gather to compete in the special olympics this year they're taking place in seattle that's where we find our next guest. steve weber is owner of brooks running company. they're backing two special olympics athletes who are inspiring the running community with their performance good morning to you. >> good morning. thanks for having me >> thanks for coming on. talk about this sponsorship.

have you done something like this before? >> well, we have never sponsored the usa special olympic games but it's here in seattle what an opportunity it's going to be. biggest sporting event in seattle since 1990 and the goodwill games we have 350 employees volunteering and we found two incredibly fast athletes we're sponsoring >> jim, speak about just this sponsorship model that takes relative to a nike, for example. >> first of all, we have two professional athlete development teams. the hansons and the beasts we are attracting some of the best athletes in the sport we're putting people in the olympics d dezi lyndon was in the olympics and also ran in boston

we represent this glass half full inspiring part of what running is all about and it's also colleen bryant and andy bryant, not related, who are competing in this year's special olympics and actually yesterday, colleen won her first gold medal in the 5k so that's -- they fit brooks so well we've always looked for people that are inspiring others to run and participate in the sport >> i remember when you did a great campaign probably a year or two ago where it was about basically all of us consumers of the shoes, you were effectively becoming sponsored by brooks is there ever debate inside the company about trying to find some kind of celebrity endorsement deal >> you know, it's interesting. you know, we think running is an incredibly special sport because it's a phenomenal sport at the track and field and cross country level. but everyone's invited everyone can run you can sign up for the 5k in your local community and compete

with literally the best in the world. so that's what makes running so interesting and special. so we've always been an inclusive brand. no matter the reasons you run, that's what we're all about. that's what makes this sport so special and what allows us to focus on it and have a phenomenal business and brand opportunity in it. >> talk about phenomenal, nike just had some phenomenal earnings this week or rather last week, i should say. what's the sales outlook for you look hike right now? what's going on with the consumer >> it's interesting. it has been a bit of a roller coaster. but this year, here's what's happening with us. we started to grow on the back half of last year. we're seeing retail stabilizing, consumer behavior is still digital in so many ways. but all of our channels are doing well we have never been more successful we're gaining market share we're up 32% year to date as of yesterday. we see that accelerating through the back half or backlog up 42%. a lot of it is market share, but

we're seeing a stabilization at retail and, you know, i think the active run lifestyle is just trending as it has literally for the last 20 years. >> on straight running shoes, who is your biggest competitor meaning there's a white board and you have to write the competitors up on the list, who is at the top? >> everyone i've often said this that can make a shoe is literally trying to make a running shoe the outdoor brands and casual brands and the like. as you expect all of the platforms from nike to adidas, et cetera, are all in running. nike, it's one of their biggest businesses and they would show up in the top of the category in volume. we like our position we're really trying to create a product that's the best gear in the world. and i think in that, we're doing quite well right now >> jim, we're going to leave it there. we thank you it's a great thing you're doing out there. >> it's a great week in seattle.

tune in and watch the athletes this week. you will be inspired >> we'll do that thank you. >> thanks. >> i think in ceo school, they're prepared for that question who's your biggest competitor? like let me ask you. who's our biggest competitor on tv can you come up with one >> does anyone doels this? >> have you ever seen a ceo, say, geez, they're kicking our -- you just don't get that answer right? it's, we like our position. >> no, no. he's doing something that's a little bit different that's why i thought he might select a couple of very -- >> try it though >> i thought he could safe asics. >> why would you do that you'll say their name on tv. >> all right we're going tomove on now. >> did you see the roger federer news yesterday >> yes >> and nike went down. >> $300 million and he's still

wearing nike shoes so for $300 million and he can get a shoe deal. >> i think he's the top seed again too. >> but they're going to pay him the same amount of money irrespective of whether he plays or not it's amazing >> it is did get -- you're dying to get to robert -- >> i'm dying nooto move on from this conversation because it's getting awkward. when we return, manhattan real estate can't catch a break robert frank is here with that story. hi, robert >> melissa, it was one of the worst quarters for manhattan real estate since the financial crisis prices down, sales down. we'll tell you where the bargains are and who bought the most expensive apartment in manhattan in the quarter, coming up after the break thanks, dad! break a leg! aflac?! not that kind of break. oooh! that had to hurt. aflac?! not that kind of hurt. yeah, aflac paid us cash in just one day

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time now for your kensho stat of the day. the month of july tends to be a quiet month for stock, with the

al very tough quarter for manhattan real estate. robert frank joins us now with the full story hi, robert >> hi, melissa it was the worst quarter since the financial crisis for manhattan real estate. prices fell, sales declined, and inventory was up now, the average sales price for an apartment in manhattan will cost you a mere $2.1 million, down from $2.2 million last year the number of sales fell 17% and the inventory of apartments listed for sale jumped 17%, as

well the biggest problems are still at the top of the market that's mainly in new luxury condo buildings. sales for new development plunged by 37% there is now a 15-month supply of luxury units in manhattan now, three reasons for all of this number one, you've got the growing pipeline of new condos coming on the market secondly, the new tax law that makes buying a home in high-tax states like new york much less attractive and you've got fading foreign buyers now, the share of apartments big purchased by foreigners has fallen by 40% since its peak in 2015 that's, of course, because overseas economies are slowing and the big thing is governments are cracking down on using real estate for money laundering and offshoring the most expensive sale of the quarter was a penthouse in the new getty building on 24th street near the high line. that was purchased by private equity billionaire robert smith for $59 million. that is a record for downtown. it's 10,000 square feet, two-story penthouse, plus a floor below. it's got two master suites, four

other bedrooms, seven baths, two kiff kitchen, a private roof deck and a private pool on top. >> are developers cutting their prices are they budging seeing these declines >> they're having to and that's because they have some inventory left, and the people who are re-selling in their buildings who bought to flip are selling for less. so it's hard to sell a comp that was for 20% less but almost everything that was purchased in 2014, 2015, is selling now below the original purchase price which in manhattan, is unusual but everything is selling is for less than it was purchased for three years ago. for now. >> robert frank. what do you think, will you think about my suggestion? >> i will. >> it would be funny >> it would be funny and it's right up my alley >> i feel like yi didn't hear what you were talking about nor did anybody at home? >> it's a new upcoming series

that would be co-authored with andrew we call it, "the problem of the 0.1 percenters." and some of them are really funny. like, if jet fuel prices go up, they're devastated, because what they're paying for their private jets >> like finding the right personal staff >> those people have problems too. >> it would be funny, because robert -- >> what can yo do about the echo in my foyer. >> the marble is just too echoey >> too big, too much marble. >> that's a 0.1% problem >> it's an issue it's an issue. >> coming up -- >> this is -- >> this is -- >> sometimes you do these stories and you don't even realize, these are people -- >> there are viewers, i know, i know, i know >> and we care about them. >> what do you do on a holiday when one of your pilots is out and the other one gets sick? >> wwi be ghe llrit back

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a final check on the markets. as you can see, up 134 points on the dow. the s&p indicated up about 10. and the nasdaq indicated up

about 35 and i want to wish everyone a happy independence day one problem, we were talking about problems, that we don't have is not living in the greatest country in the world. we don't have that problem >> we're all fortunate >> because we are. and wave got to remember that. and tomorrow we will you going to fireworks some good ones on the east river. >> we've got a whole plan. >> the plan's in place >> we do happy independence day, everybody. >> "squawk on the street" is next ♪ good morning and welcome to "squawk on the street. i'm david faber along withsanto. we are live from the new york stock exchange carl and jim both have the day off this day before independence day. the stock market closes at 1:00 p.m. eastern ahead of the holiday. let's give you a look at