♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to"squawk box" on cnbc we're live at the nasdaq market site in times square i'm melissa lee along with andrew ross sorkin and joe santoli. let's check in on u.s. equity futures. the dow lookingto lose right now 8 points at the open the dow yesterday broke a three-day winning streak we should note notable levels on the nasdaq which is poised to open higher by 6 points. the nasdaq yesterday with a fresh all-time intraday high in asia, sefsh watchieverybody that the shanghai brushed a one-month high to close slightly lower there. the nikkei is up by a half percent. the hang seng was up by 0.9%

in europe, all eyes on this key crucial meeting here stateside between president juncker and president trump. we have the dax down by a quarter point. ftse down by 0.6%. treasury yields continue to back off those six-week highs we continue to hit. we have the ten-year note at 2.939% the two-year is at 2.654%. news just breaking we mentioned this at the top of the show fiat chrysler says its former ceo, sergio marchionne has died. phil lebeau joins us now on the "squawk" news line to reflect on his life and career and what it means for the company going forward. phil >> andrew, the statement was just released by john elkin, the chairman of fiat chrysler, a close friend of sergio marchionne, and someone who worked side by side with sergio over the last 15 years

sergio marchionne first saved fiat, which was struggling mightily in 2004, then orchestrated the acquisition of chrysler out of a government supervised bankruptcy in 2009. truly turned fiat chrysler from a company with two struggling regional auto americas, taking those two, putting them together in a global automaker that has become wildly successful over the last nine years. was also the architect of the ipo of ferrari, a move people were skeptical of when it was proposed in 2004 and then in 2015 so this is a sad day for fiat chrysler one that they have not had much time to prepare for.

it was just on saturday that the board of directors of fiat chrysler and ferrari both held emergency meetings where they made the decision to replace sergio marchionne as he suffered a rapid decline in his health. >> phil, just speak about sergio i know you knew him well i had had an opportunity to spend time with him over the years. he was one of the great colorful characters of the industry but also a sweet man >> very sweet. while he was often portrayed -- at least initially, as someone who could be gruff and demanding, there's no doubt that he was a hard charging executive. it was not uncommon to hear stories about him reaching out to people in the company on a sunday morning because he was working on a particular project. you bring up a great point that his personality was one where once you got to know him, he was a warm individual. and that came across -- probably

came across more over the last four, five years when he was not going from crisis to crisis in order to keep the company -- not necessarily afloat, but certainly keeping it from dire fin financial conditions you saw that personality much more often it was not uncommon to hear people refer to him simply as sergio and in very fond terms >> the number of employees this man touched, i think about the number of jobs -- people talk about people responsible for other peoples lives, and what he was able to do, both in terms of what chrysler ultimately became after the rescue, but also in terms of what was taking place in italy >> there's great loyalty to sergio marchionne from the blue collar workers, whether you talk with somebody who is at a jeep

plant in toledo, ohio, to executives within fiat chrysler in auburn hills, michigan. to the executives when you would encounter them and work with them or deal with them at the fiat headquarters in italy this is an individual who he got a lot of loyalty out of the rank and file and all executives and all employees at fiat chrysler, because he did care about them he didn't simply look at this in terms of, all right, well we'll chop x number of jobs and do this he looked at this company in terms of building it, growing it, almost as someone who was looking after a family would look after a company that's the approach that sergio marchionne used over a number of years. that's why there's great, great loyalty to him within fiat

chrysler. >> phil, where is the fiat story right now? he was the architect of a massive turnaround, a shrilimdo in businesses, it seems like we're at a critical period for fiat in that jeep, a brand which they're so reliant on in terms of revenue mix, they're planning to launch nine new models. there's criticism that fiat has been overly reliant on north america and needs to expand internationally. where are we in this story in your view? >> it is a critical time many thought the feenl ainal acr sergio marchionne as a business man and executive would be to orchestrate a merger or some type of a final transaction for fiat chrysler, whether that's spinning off jeep, spinning off ram, taking maserati and alpha ro m romeo and cobblie ining those

together with other niche auto brands i can tell you this with people who dealt with sergio marchionne that he was looking for the right deal but he was only going to make it if it was the right deal not only for the employees of fiat chrysler but for the elkin family as well while he planned on retiring by 2019, this was a retirement that might have happened a year ago, two years ago, but he was working on this with the elkin family that's why they kept saying let's do a transition to the next ceo once we think we have a blueprint for the future, and that now falls on mike manley, the new ceo of fiat chrysler on a tough day for this company, heartbreaking day, this is also the day in a couple hours when they report second quarter earnings and we will hear from mike

manley for the first time. he will have the earnings call and certainly with some heart felt thoughts regarding the passing of sergio marchionne >> among the other ways that sergio was unique was his openness about pushing the idea that there was this compelling industrial logic to some kind of a deal you often don't find ceos that say we should put these companies together and campaign for that for a while he had the trust because of this turnaround and the way he managed the company, do you think mike manley will be able to inherit that legitimacy and say whatever he thinks is the right way strategically forward from here comes from mike

manley i thi . >> i think mike manley will say if there's a deal to be done, let's do it on our terms you're right about sergio marchionne in terms of his bluntness with regard to change, is that need to be made within the industry perfect example is when you look at autonomous drive vehicles more than once when i was talking with sergio marchionne and other people as well, he would say why are we all investing on the same technology which is really just going to get us all to the same place, which is self-driving cars and computer algorithms. you know, there's no special sauce within that. there's no car that will say, well, it can take you down the road by itself while another car cannot ultimately the entire industry will be built on the same backbone he thought it was lunacy that everybody was pouring billions

of dollars into the development of these vehicles when everybody was going to get there that's why for years he has resisted and did resist investing those billions of dollars. his response was that's not the right thing for our shareholders when the time comes we'll make a deal you notice fiat chrysler is one of the close partners with waymo, because sergio marchionne said why am i trying to build things these guys are already trying to build, why not partner with these guys? so you're right about his vision in terms of the lunacy of manufacturing a dozen or two dozen auto manufacturers around the world chasing the same thing and spending money that they could have been sharing with shareholders or spending in other fashion. >> phil, thank you for those reflections on sergio

marchionne's life. there's people who are talented and others who are truly gifted. he was one of those. we'll see you and spend more time talking to you, phil, in a bit. sergio marchionne. the trump administration planning to offer up to $12 billion in aid to farmers hit by tariffs on their goods it's an emergency bailout intended to try to ease the pain caused by the escalating trade war. sonny perdue said the assistance was a short-term fix that allows president trump some time to work on longer term trade deals. shares of deere rose sharply on that deal. we'll talk to ben white about it at 6:30. lots of debate about what the subsidy means and whether there's going to be asks for handouts in other industries >> of course there will be don't i think the line is getting long as we speak this is an off balance sheet

executive branch thing >> then you also get into a situation -- talking about picking winners and losers, that's when this gets complicated quickly. in addition the other big news of the morning, at&t reported a mixed second quarter missing on revenue, it did beat on the bottom line the company raised its full-year adjusted earnings guidance on the call randall stephenson put emphases on at&t's content now that it owns time warner >> we now assembled the key elements of a modern media company. it begins with owning a wide array of premium content we are absolutely convinced that there's nothing that drives customer engagement like high quality premium content. whether it's netflix, amazon, google, disney, comcast, everybody is pursuing the same thing. >> joining us is john hudlick from ubs he just lowered his price target

from $37 to $33. good morning >> thanks for having me. >> what happened >> i would say that the quarter was largely as expected, but showed accelerating revenue declines, ebita was down 6%, just for the communications business earnings were light. the time warner business was solid. but, you know, as we lock ahead we're looking at more spending on content, higher integration expenses, and we thought staying on the sidelines makes sense >> when you math out the additional expense of the investment that needs to be made on the time -- in the time warner business to turn this company into this sort of content powerhouse that randall wants it to be, what do those numbers look like? >> there's the addressable advertising part which they should see ramp over the next couple of years, and then the direct to consumer effort led by

netflix and amazon hbo spends about $2 billion a year and you'll see that go up they framed it a bit by saying they'll reinvest some of the synergies. so i think that brackets it. >> when you say brackets t ab additional 2.5 billion is the top end of the kind of money that they would invest in hbo? >> it will take time, but that's a good thing >> how can they afford to do this organic revenues are shrinking all the businesses except the ones they owned for 16 days just not growing at all >> the way the company does it, we do it, three times. >> it generates cash flow. an incremental billion or two in content, this is a massive company, it's doable it could put pressure on cash flow and earnings. the key is turning around the

wireless business. it's by far the biggest business >> verizon's wireless business was fine compare and contrast the results from verizon versus at&t and the stock reaction after that. what is the better telecom >> wireless is the place to be it's a benign noncompetitive environment. it's because we're seeing sprint and t-mobile getting together, we're calming things down a bit. we saw it in both companies results. the key is average consumer spending that's starting to improve >> we have throw analysts in the last 24 hours use the word benign environment long-term, if the deal with sprint is approved, i don't know if you think it is going to be, if it is, does that create a better environment for verizon/at&t or ultimately a more competitive environment the way sprint and t-mobile say it

will >> that's a great question and multi-faceted question if these two companies are not allowed to merge, the market is going to evolve into a two-player space as we move to 5g i don't think t-mobile and sprint have the financial resources to invest in 5g. look at it the way it is now, you would say the traditional market could get better. i think longer term things will -- >> you think the deal happens it will get more competitive, puts more pressure on pricing and is worse for all three of -- not all three, but for at&t and verizon. and the question is, if that's true, why is that not reflected in the stock or is there a view that people don't think the deal will happen >> people don't think the deal will happen. the street expects it to be much lower than that. as you remember, the doj blocked at&t's acquisition of t-mobile a true years ago >> you don't think the world

changed? >> not enough. i think the fcc looking forward, looking at 5g, taking this consumer interest in the account could approve t but the doj will land where they did with that deal >> john, thank you let's get you caught up on the broader markets. joining us is michael tyler from eastern bank wealth management on set is jack caffrey from jpmorgan private bank. michael, starting off with you you think at least during earnings season the micro story will prevail trade, fear of rates rising, all that goes to the back burner >> at least for the moment if you look at what's driving the stock, it's the fact that earnings that have been reported so far have been strong. better than expected and the guidance coming out of corporate earnings has been better than expected that's holding up the market now, close to its january highs. but that's going to last another two, three weeks we'll see if there's any surprise, negative surprises

coming out though it seems unlikely at this point. but after that people are going back to worrying about tariffs and about the fed, in particular i think about the tariff issue that has the potential to derail the markets. >> it sounds like q2 earnings in michael's view may not be the broader catalyst for the markets that we hope it will be because we'll trade around it. we'll have 50% of the s&p 500 by the end of the week having reported after that it's back to the macro -- >> then we go back into a -- the dynamics of news flow changes. if you don't get company updates, guidance updates, if we don't continue getting good employment data on a weekly or monthly basis we'll find out talking about what dominates the headlines, geopolitics, trade politics, what the potential impact of changes to fed policy accelerating or deceleratindeceg news affects emotions. news affects things, and we hav

89 days of the quarter where valuation is driven by blips >> michael, one thing we will get besides earnings is this gdp report for the second quarter. what's the market set up for, priced for, stock and bond market seems like there could be a wide range of prints and noise under the surface. >> i've seen numbers as low as 3.8 and as high as 5.2 i think it will come in somewhere above 4. i also -- don't forget, this is the period at which the government restates the last several years of history so it's going to be difficult for people to figure out what the news is and what the current print tells us markets overall are looking for a mid to high 4s number. >> jack, is a hot number, is that good for the markets? is that bad for the markets? >> we've been shifteding away

fr shifting away from bad news is good news, to almost good news is not bad news, because good news at least supports earnings. but good news starts making things more complicated when you think about dueling mandates in terms of employment versus inflation, in terms of markets prefer predictability to unpredictability so what's the path forward how much will a tweet affect or an interview affect perspective. >> by people you mean the fed. >> a variety of market participants guessing what other market participants might do with criticism >> appreciate it. coming up, we'll talk about the legacy of sergio marchionne at fiat chrysler news just breaking in the last half hour that he has died we'll talk about his life and career when we return.

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>> certainly his ability to run five, six different companies at any given time his ability to master these incredible deals and at the same time motivate people and make people feel so important if you were talking to him you had his full attention it's a shame he didn't get to master his final deal of some kind of big merger with another manufacturer it's really an incredible loss it is tragic for his long-term partner and his sons >> do you think that what would have been that final chapter, engineering a deal to sell fiat chrysler, do you think that's off the table? we got a statement from the largest shareholder saying they're committed to the company remaining independent. you have the new guy coming n mike manley, and new guys are

not apt to sell companies they just came into and do you think maybe a spinoff of jeep is off the table too because he wants to hold that asset where he cut his teeth >> absolutely. mike manley has been running jeep for the last number of years very, very successfully. he also took over the ram truck division so, he's very much an insider, very much one of the lieutenants. i don't think the company is looking for a merger anymore as much, a spinoff. i think the alliance that they have with waymo for autonomous driving and autonomous vehicles is another sign of sergio's mastery in terms of understanding what to invest in. this is a company that is so much more healthy than it was when he took over in 2009. so he's leaving behind an incredible legacy for both mike manley and for others to follow.

so i think one thing that's really upsetting to me is just what would he have done in retirement i wanted to hear him speak more, more freely once he was out of this role. i wanted to read the books he was supposed to be writing we just all have been robbed of an incredible person >> where does it leave the company in the sense of a company that straddles two continents at a time with a trade war and huge exposureto the north american market and 25% tariffs. how do you navigate this now what would fiat chrysler like as an outcome to these trade negotiations >> i have not spoken to a single manufacturer's executive that don't want the trade wars to go away there's nothing good that comes out of these tariffs one thing mike manley will have to look at is fiat in the u.s. they only sold about 8,000 units

in the last six months that's what toyota sells a minute practically we have to look at some of these brands they have to figure out what to do with chrysler, which may be able to continue in the alliance with waymo nobody is winning with these tariff wars. it's just something that is not helping anybody. certainly not saving american jobs >> we'll be listening for all of that on the earnings call today. thank you, rebecca >> thanks. coming up, president trump tweeting about today's trade meeting with the eu. i have an idea for them, both the u.s. and the eu drop all tariffs. that would finally be called free market and fair trade we'll talk it over with politico's ben white next. look at yesterday's s&p 500 winners and losers

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box. our top story is a sad one fiat chrysler says its former ceo, sergio marchionne has died. his health declined suddenly following complications from shoulder surgery his death coming days after he was replaced as ceo.

we'll talk more about his legacy at the top of the hour sergio marchionne dead at the age of 66. we need to switch gears to earnings news. deutsche bank reporting better than expected results. net profit fell 14% from a year ago but still topping expectations that stock down about 1% in the premarket. kraft heinz recalling 15 ounce cases of its taco bell salsa the con queso mild cheese dip. do you have this in your cabinet? >> oh, no. >> here's the issue. there's a risk of botulism botulism is rare, but potentially fatal form of food poisoning that can cause paralysis. the move follows recalls of ritz crackers and goldfish crackers because of possible salmonella poisoning. >> of the whey powder that's in the crackers >> who knew there was any protein in these crackers. checking u.s. futures at

this hour. dow opening off about 5 points nasdaq in the green, about 6 points up. the s&p 500 would open just marginally off >> couple of stocks to watch lg display is slashing its investment plans for the year. the apple supplier reporting its second straight quarterly loss on sagging sales of the lcd screen shares of irobot are soaring this morning they praised the outlook for the year one lucky person in california is waking up a half billion dollars richer after weeks with no winner, the mega millions jackpot hit 5$522 million prior to last night's drawing. i'm jealous. there was just a single winning ticket sold. only one the winner has not come forward

yet. we do know the winning ticket was sold at a liquor store in san jose one winner one winner >> wouldn't you be worried about the curse of the lottery if you won? >> i would not i know others would. i know the math is against me, but yeah wow. >> yeah. >> wow half a billion do we know what the largest lottery in history is? >> jackpots have been larger, but i don't know about a single winner >> i'll do a little google action it is a busy day for trade in washington. president trump is meeting with jean-claude juncker over potential tariffs. eamon javers joins us with the latest >> reporter: tariffs are in the swirl. yesterday the administration announced plans to aid farmers in light of the retaliatory tariffs put on the united states

here's what the farm relief will look like. it will be about $12 billion in funding. direct payments to farmers, and they will purchase surplus crops, and disbursements will be due by labor day the president yesterday out on the campaign style rally talking about his relationship now with the european union ahead of this meeting with the eu commission president juncker today. here's what president had to say about negotiating and setting up this meeting with the european unio union. >> i said you have to change they didn't want to change i said, g we'ood, we'll tariff r cars they send millions of cars, mercedes, all of them. bmw. so many cars i said we'll have to tariff your cars they said when can we show up? when can we be there tomorrow okay?

folks, stick with us >> so reassuring message there from the president to his base about the tariff proposals and the idea that this is all going to work out. the president also tweeting last night the european union is coming to washington tomorrow to negotiate a deal on trade. i have an idea for them, both the u.s. and the eu drop all tariffs, barriers and subsidies. that would finally be called free market and fair trade hope they do it. we're ready but they won't so the president apparently set to propose this to juncker when he comes to the white house today. that meeting will happen later on this afternoon. it is scheduled for just 15 minutes one-on-one between the two leaders. they'll go into the expanded bilateral piece. that's the part where they bring in other aides and staffers to see if they can hammer out a deal we'll see whether the president actually proposes that idea and how the eu responds to it later this afternoon >> okay, thank you for that. want to talk a bit more about today's political headlines. wanted to bring in politico's

chief economic correspondent, ben white, also a cnbc contributor. want to get your take on this tariff situation, the farmers, what you think is really going to happen. do you think there will be handouts for everybody when this is all over? >> you mentioned this idea before of picking winners and losers once you start down this road, everybody will line up for this assistance it's remarkable that president trump it dusting off depression era programs to pay off farmers hit by his own trade war remarkable times that you see a republican president putting these tariffs on, handing out aid, now republicans on capitol hill are livid about the whole thing. >> give us a preview you talked to some many people behind the scenes in washington. what do you think will really happen today >> nobody really knows i talked to a couple people in the white house who say if juncker comes with serious concessions, this multi nation deal to lower auto tariffs, if he has a lot to say, that 15

minutes with president trump could go longer. if he's not willing to give what president trump wants, it will be short you will see trump tweets afterwards criticizing him and then maybe the talks do something. it is all what juncker brings to the table and how the president reacts >> larry kudlow was reported as saying he expects juncker to bring a significant trade deal to the white house today i'm not sure if i should believe that or not. then you got the ec commissioner saying we're already getting together a list of retaliatory tariffs. >> right i know that larry is hopeful that juncker will come through with something he initially talked about two to three years of europe dropping all tariffs on u.s. cars part of the problem that juncker has and the eu what is they're never quite sure what's good enough for trump he's all over the map in what he wants from them. this idea that there will be complete eradication of all tariffs between the u.s. and eu, the eu won't agree to that

we have 25% tariff on their trucks coming into the u.s there's lots of tariffs that happen could they get so some temporary deal between the u.s. and the eu they could nobody in the white house other than trump and peter navarro wants these tariffs to go in the u.s. auto industry doesn't want it. there's a huge desire in the administration to avoid this the brig gig guy in the big chas what matters >> one thing that the market might fear most is the idea that the president thinks the aggressive posture is a winner for him, he wants to maintain this, stay on offense the whole time and don't engage in a true process to find a middle ground. that's his general approach to this, be tough all the time. i think eventually he does want to see some results from it. ultimately with china, with the eu you can be tough for a long time, but eventually you have real world economic impact, that hurts his people, hurts farmers, so he needs to make deals

eventually not be handing out bailout packages >> got to ask you about a different type of business deal, washington related we have not talked about it this morning. michael cohen and trump on tape potentially making a deal in cash do you pay in cash you are paying with a check? what did the tape really say this was revealed on cnn last night. >> we could parse that for a long time. what is going on here? why is this spilling out into public view the way it has >> there's many interpretations of why it's spilling out it's spilling out because michael cohen's attorney gave the tape to cnn. they're trying to make the best case that michael cohen didn't do anything wrong. >> why do they need to be doing that in public >> partially they want trump to give him immunity, give him a pardon eventually. sort of indicate to trump we have more of these tapes, you probably don't want them becoming public.

let's talk about pardon. >> you think this is about a pardon deal. >> it's possible ultimately the big question is does this matter politically or legally for trump? politically, i don't thinken in of this matters. people know he had affairs republicans don't care there is some legal liability in terms of campaign finance violations if they're trying to cover it up, maybe you have a campaign finance violation. all of that is in play politically at this point it doesn't matter for trump >> the support among his base is still strong that emboldens him to do the trade war, to stand up to michael cohen, anybody else. >> you have to remember, he's at like 90% among republicans a remarkable number for any president within their own party. i think trade, if it impacts people, if farmers get mad, and manufacturers get mad -- >> you have also seen the articles now over the past couple of weeks of these little towns across america where there

are these announcements, broad layoffs that will impact -- the quote in the paper by these workers being laid off are, you know, maybe i'm a collateral damage i think the president is trying to do the right thing. i support what he's doing. that's almost antithetical the way historically people vote is there a prar diaradigm shifte >> he has a psychological hold on his base that we have not seen in a long time. people believe in him, they like him. you do see these quotes i might have lost my job but we'll all be better off in the long run. i believe in my president. i don't believe that's unshakable if it gets much worse, big broad layoffs, then that could break the psychological hold right now the 5th avenue quote that he could go out there and shoot somebody is holding true >> ben white, thank you. coming up, we expect

coca-cola, general motors, boeing and more in the next hour we'll bring you those numbers. and republicans rolling out a framework for tax reform 2.0 kevin brady will join us at 8:00 a.m. eastern time. stay tuned, you're watching "sawbo oquk x"n cnbc or is it? this farmer's morning starts in outer space. where satellites feed infrared images of his land into a system built with ai. he uses watson to analyze his data with millions of weather forecasts from the cloud, and iot sensors down here, for precise monitoring of irrigation. it's a smart way to help increase yields, all before the rest of us get out of bed.

time for the executive edge. a round up of some sweet moves lululemon appointing calvin mcdonald as its new ceo. he will take the helm next month. john malone retiring from the board of charter communications malone says he wants to cut back on travel and focus on fewer board positions. he will become the director emeritus and the head of amazon's film division is also leaving the company. the tech giant has not specified why he's leaving, but he will remain a the company for a few months during the transition period >> i'm adding two items. one is the ritz crackers story this whey protein.

it's not really that these are ritz crackers that have a layer of cheese on them and also the goldfish that have some cheese in them. >> it's the cheese flavors >> therefore the whey protein. the second piece, we were talking about the lottery. someone won 5$522 million this morning in san jose. we said what's the biggest one ever biggest one we believe is 7$758 million, that was in massachusetts last year. the biggest jackpot ever was 6 $1.6 billion, but split between three people >> oh. that's close to the 522 million. >> yes congratulations to today's winner i'm envious, jealous if you want to send me a check -- >> unless she faces the curse of the lottery. coming up, president trump planning up to $12 billion in farm aid to ease concerns over trade disputes we'll get reaction from the

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welcome back to "squawk box. this one's fun trip adviser releasing its ranking of u.s. amusement parks. coming in number one, islands of adventure in orlando edging out magic kingdom for the top spot home of the six top ten. rankings were based off trip adviser user reviews from the last year. >> have you been there with your kids >> you know, we've done disney we're waiting on universal because we have not read the harry potter books i want them reading the books before they see the movie, before we go on the rides. sop we have a strategy. >> you homework to go to a theme park >> i think that works. >> we're about a year or two away but i think this could be the year of harry potter for the sorkins. so we'll see a high level departure to

tell you about facebook's top lawyer who handled the company's investigation into russian meddling in the u.s. election, he's stepping down at the end of the year colin stretch has worked there since 2010 coming as the media giant is the subject of probes. he has planned a -- played a key role in drafting the response to the cambridge analytica scandal. he was thus far removed from the headquarters in silicon valley quote, as facebook embraces the broader responsibility mark zuckerberg has discussed in recent months, i concluded the company and legal team need sustained leadership inm menlo park facebook reports second quarter results after the close today. a lot of people are going to be watching that profit forecast to rise 30% while revenue expected to increase by more than 40%

this would be the first time we'd really be able to see if there was any impact from the scandal. but thus far, at least analysts not expecting much >> the market clearly is not -- >> the cambridge analytica bottom it's well off of that at this point. >> in fact, this launch started when he agreed to testify late in march. >> so the hill testimony was the bottom in the stock. >> i think the date was when he said, fine, i'll go. >> okay. then off to the races. all right. let's take a check on the markets this morning we are looking at a mixed open here very little change it is a very busy week for earnings very busy morning for earnings looking to open lower by 11 points the nasdaq looking to add about five keep in mind the nasdaq, the nasdaq 100 hit a fresh intraday high yesterday so we'll continue to see this and watch the futures. taking a check on what is going on in european with the eu

president jean-claude juncker here in the united states. the dax is down by 0.2%. ftse down 0.6% we have the shanghai closing down just marginally the nikkei up by 0.5%. hang seng up by 0.9% we have earnings just in >> in from coca-cola a lot of people watching coca-cola as the bellwether for so much. 61 cents per share that's 1 cent above estimates. organic revenue beating estimates. north america came in below forecasts. sara eisen is going to have much more in a few minutes. we will be speaking to her to break it down for us coming up, nasdaq set to report quarterly numbers we'll bring you that with adena

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breaking news this morning sergio marchionne, who engineered two auto turnarounds has died a look at the legacy he leaves behind the earnings parade continues. gm and boeing and others set to report within the hour the numbers and market reaction coming up. plus is the housing market on firm footing? as the second hour of "squawk box" begins right now.

live from the beating heart of business, new york, this is "squawk box. >> welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin along with melissa lee and mike santoli. take a look at equity futures on this morning the dow would open 21 points off. nasdaq up about 2.5 points and the s&p off marginally breaking news this morning former fiat chrysler ceo sergio marchionne has died. phil lebeau joins us with where fiat chrysler will be with his legacy >> this is a sad day not only for fiat chrysler but the entire auto industry. sergio marchionne, he was a giant and he was beloved within his company and within the auto industry

in fact, you rarely heard people refer to him as mr. marchionne it was simply sergio as in what does sergio think let's go talk to sergio. he will be missed. john elken announced the passing of marchionne. saying unfortunately what we feared has come to pass. sergio marchionne, man and fr friend, is gone. i believe the best way to honor his legacy is to build on the legacy he left us and continues to develop the human values and responsibility and openness of which he has most ardent champion second from how much he will be missed as a person, let's talk about the legacy of sergio marchionne as a business executive. this is a gentleman who not only saved fiat starting in 2004 when it really was a faltering regional automaker, that many

people thought would ultimately be folded into another company he said, no, we can build fiat then in 2009, he orchestrated the takeover of chrysler out of bankruptcy remember, there were many in the obama administration who thought that chrysler should just die, go away. sergio marchionne said no, we can work with them and he put together fiat chrysler once he put them together, he was the visionary who said the real jewel here is the jeep brand. let's turn it into a global brand. guys, if you think back to 2009, the vast majority of jeep sales were in the united states and also in canada since then, the growth has been stunning it's gone from annual sales of about 338,000 in 2009 up to almost 1.4 million last year he has expanded that brand, made it a global brand. that was the vision of sergio marchionne and guys, it is, again, not

hyperbole to say he will be missed at chrysler and also in the auto industry overall. >> phil, if we can switch gears, we have general motors out with earnings the stock is moving a lot on the back of it it looks like a beat on the eps for the quarter they just reported but the guidance is really what's moving the stock. >> that's what's moving the stock and for good reason. and the numbers -- let me go over the quarter and then the guidance which is pushing the stock lower. also revised guidance out from fiat chrysler as well within the last couple of minutes for the quarter, general motors beat the street earning $1.81. 3 cents better than consensus. revenue coming in better than expected $36.8 billion. free cash flow of $2.6 billion beats the estimate by a little bit. operating margin of 8.7% but it's the guidance, guys. this is why the stock is getting hammered so far at least in premarket trading.

the company experienced a $300 million impact due to commodity prices increasing. there's no direct impact that they're laying out in terms of tariffs. but because of tariffs on steel and on aluminum have driven up prices for the -- for those commodities worldwide. they're noticing it at general motors a $300 million impact on commodity prices in the quarter. that's huge in the auto industry, guys for any company. the company is now revising its full year guidance because they do not expect those price increases to go away for the full year, general motors expects to earn $6 a share. the street was at $6.41. free cash flow is also taking a hit. it was expected to be in the mid-5 billion range. for the year, they are expecting a net impact from commodity price increases of a billion

dollars. that's the story of general motors i don't know if we can call up fcau because the company just announced its second quarter earnings they are also revising lower no surprise, it's the same thing. it's commodity price increases here we're not going to get into all the numbers because they report in euros but a good example, they're adjusted in euros. 7.5 to 8 billion euros it was expected to be better than 8.7 billion you're looking at roughly a 10% drop in the adjusted number. $3 billion for the year. guys, don't be surprised if we hear the same thing from ford when it reports later today. and don't forget we're going to be talking with chuck stevens, cfo of general motors coming up later on this morning. no doubt the big topic will be the new guidance from general motors >> we should note that fcau shares here are trading down

5.6% in milan they have been suspended because of a 4% drop this is the only exchange right now where we can see fcau actively trading on the back of this guidance. ford is about to report earnings as well. we're seeing that stock move lower by more than 1%. perhaps in anticipation that ford could say a lot of the same things and that is these higher commodity costs, if you carry them out for the rest of the year, could really hurt revenue as well as earnings. >> not just the automakers, melissa. the suppliers as well. the manufacturers are going to get hammered on steel and aluminum prices. and we can't stress this enough. general motors sources about 90% of the steel and the aluminum it uses from within the united states so people would say, well, they're not directly impacted by the tariffs. huh- huh-uh it's a global commodity. when those tariffs went into effect, boom the prices went up now we're seeing it at general

motors, fiat chrysler. i'll be curious to see what we hear from ford later on today. we're also seeing it in a number of other industries. manufacturers are now feeling the impact of these commodity prices moving higher >> all right phil, thank you. phil lebeau bringing the earnings out from gm and fiat chrysler president trump just tweeting this every time i see a weak politician asking to stop trade talks or the use of tariffs to counter unfair tariffs, i wonder what could they be thinking. are we just going to continue to let our farmers and country get ripped off lost $817 billion in trade last year no weakness. >> okay. coca-cola results just hitting the wires in the past few minutes. and sara eisen, our coke expert, is with us this morning to break it down for us >> good morning. i'll give you some added color from my conversation now with james quincquincy, the ceo of coca-cola.

he stressed they are underlining guidance, not changing it for the year which means they're going to continue to expect this kind of growth 4% organic revenue growth. i said, really, you're underlining guidance even though other consumer companies have lowered it because of the input costs. he said you're going to see a 3% head wind but operationally we are doing better to your conversation just now with phil lebeau, we did see import cost inflation showing up andrew, when you broke the numbers, we mentioned we saw top line growth across the world north america wruz actually negative and the reason he said we're affected by steel and aluminum tariffs, not just that but the freight costs are higher in the u.s. all of that led to a negative price mix which is basically that they weren't able to add the volumes for the pricing they were taking as a result of this higher commodity cost inflation. and that showed up in the juice

business they made the packaging smaller and they passed on higher prices to consumers and that was why you saw that negative number in north america. he also underlined the fact they had a better quarter to sparkling in the united states diet coke saw flat growth for the first time in years. basically that's where they were again this quarter he said a big improvement from where we were in previous years. and he said what's notable is that the improvement in diet coke did not come at the expense of coke zero sugar i also asked james quincy about the marketing plan to win back the market share he said if others spend more, it will drive more category growth. so spinning it positively for coca-cola as well. also want to mention water and sports drinks was also a bright spot in this quarter

topochico the mexican sparkling water drink doing well the global economy is doing pretty well, but whether it's a trucker strike in brazil or weird weather in greece this week, there's very volatile and unusual things happening but in aggregate, it is okay much more commentary from james quincy coming up on "squawk on the street." we've got an exclusive with him at 10:00 a.m >> did he speak specifically what he thinks is going to happen on the tariff front >> he didn't and coca-cola as you know as many other companies have been careful not to wade into the politics too much. what he would say, i think, is there's a lot of local production and coke is lucky they operate in more than 200 countries and have a lot of production and bottling facilities in each of those facilities so while they feel the impact of tariffs and that showed up in the north american results this

quarter. they don't feel it as much as the others but it's something we'll talk about in our interview later. >> and i just want to talk about the seltzer craze. >> you're obsessed >> i like it >> that's very on trend, andrew. >> thank you and now there's a lot of smart waters now bubbled up has a -- >> right so dasani now has sparkling. >> what's coke's big business there? which brand is working for them? >> i mentioned the mexican brand. then they've also got dasani working really well overseas and the sparkling dasani >> you're right. i forgot about that. i've got to add that to my repertoire >> it's good for you no sugar, right? >> yes though i just want to point out because my dentist said this, not good for the teeth >> that's a myth, right?

>> good for your health, but apparently -- is it a myth it's not good for the enamel >> i thought it was a myth or i thought you had to drink an enormous amount for it to matter >> i've been drinking an enormous amount. a straw, not as bad for your teeth. just so you know news you can use broaden out the conversation now beyond -- >> straws are bad for different reasons. >> now you get paper straws that will get soggy joining us for more on the markets, u.s. investor from allianz. good to have you both here richard, you're concerned about inflation. we happen to be sitting here, we got gm, we got fcau, we've got coke all talking about the increased costs they face because of tariffs. >> absolutely. absolutely well, first of all, melissa, remember the economy's strong. that puts -- that taxes it

that's normal stuff. the thing most investors are missing right now is that public policy is also very pro-inflation. i'm not saying it's right or wrong, it's just the policy is pro-inflation. tariffs by definition always raise prices so we've got a situation where we had normal inflation. i think that's the biggest issue out there right now. you think about what do most investors especially individual investors look for, they want income it's the worst thing to happen when you're an income investor >> where do you stand on this? >> i think inflation is certainly a worry right now. but we haven't yet seen it come through in a lot of the numbers. we have a core pc at 2% in line with the target. but things as average earnings are yet to show signs of life.

certainly that's a risk out there. i would put more of the tariff wars, the fed continuing normalization. and of course the fed is watching inflation but i think they're also looking at the strength of the u.s. economy as richard mentioned that's driving that. >> you mentioned wait cycle. what does that actually mean for investors? aside from income oriented ones. >> look. everybody confuses a late cycle environment with late in the cycle. late in the cycle means the abyss is approaching quickly and we have to hunker down a late cycle can last for a long period of time especially in the current environment when you consider this economic cycle has been really drawn out you know, the early cycle are quite normal they were just drawn out the late cycle could last a couple of years depending on what happens the normal thing that ends a cycle is you get too much inflation, the fed overreacts to that, they tighten too much. inventories are built. and then nobody buys anything

because you can't finance it and the whole cycle falls apart. we're not there yet. we're just not there >> but should we be worried about that we had that report that they were going to pair back. and now we're having these concerns about inflation i mean, all this adds up to what or maybe nothing >> we're kind of in the same camp a late cycle environment typically has meant equities can do quite well. actually, it's not until one to six months prior to recession where we see a selloff in equity markets. what you typically see is equity markets can move upwards, but there is more volatility we're starting to get that now there could be sector rotation currently we've seen at lot of technology lead the way. we might get some rounding out as we get to later cycle historically what we've seen is investors do well if they stay in this market we do not see a recession on the horizon in the next months >> thank you, both >> thank you coming up, a lot more on

"squawk. nasdaq ceo adena friedman is going to join us to talk earnings, the ipo market, and the state of the markets stay tuned you're watching "squawk" right here on cnbc thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms...again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management. at fidelity, our online u.s. equity trades are just $4.95.

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welcome back to "squawk box. the nasdaq out with the quarterly report this morning. earnings of $1.18 per share. coming in a penny above estimates. for more adena friedman, nasdaq president and ce o rks you probably feel comfortable sitting here. >> it's nice to be coming home and then come to the studio. >> let's talk about the earnings let's talk about this quarter and what's going on. the highlight right now. >> sure. well, we're really excited about the fact that our revenue growth continues to be strong this year so our revenue growth was 7% for the quarter. and that resulted in 17% increase in our eps. and so when we look at what's driving that, the most -- the thing i'm so excited about is the fact it's cutting across all of our businesses. and it's really a testament to the relationships we've been developing with our customers. so two big highlights. we had a 74% win rate in our ipos for the quarter

and when we look at that, so far a hundred companies have gone public on nasdaq it's been a strong start to the year in terms of ipos. and one other thing which is the market technology business which is one of the things i like to talk about we had two key wins in the quarter. the national stock exchange of india who's never worked with any company outside of india before has chosen to partner with us to develop their next generation clearing and settlement technology. and the swiss exchange and they've been a client to us on the trading side of their business for a long time they're not going to be working with us on the technology. >> people always forget. we sit here at the nasdaq and it looks glorious and it's about stocks trading but this business is really not -- that's just a small part of the business. >> it's an important part of the business, but it is definitely -- the other parts of our business are growing and are becoming a large part of our business, yes. >> do want to talk about the ipo market which by the way is part of this side of the business

here's the headline in "the wall street journal." tariff talk has slammed the ipo window shut for car makers goes on to talk about a whole other series of ipos that may get shut as a result of trade. are you hearing that >> so i would say that it has been the busiest year so far that we've had since 2014. and the amount of -- we have 20 ipos coming just last week and this week onto nasdaq. the calendar for the fall is unbelievably busy and the number of meetings of prospects is the best we've had in four years >> all of the headlines, doesn't matter >> it has to do with what industries you're talking about. so we've had -- we've got a 70% win rating in tech tech health care financials have been the strong point ifs for the year some of those companies might have some impact in terms of looking at their global business, but a lot of them really are not going to be directly impacted. >> give us a hint about the two

big unicorns everybody is waiting for probably as a 2019 project. uber and airbnb? >> we talk to a lot of companies. we're excited about having them all come to nasdaq >> you guys coordinated this response you can't give us anything else? >> i think at the end of the day, we are here for them. >> let me ask you a different question how important is it for companies like those two big names to go public and what that ultimately means for the business, for the retailer investor getting into this market all of that. >> that i think is the most important thing. which is at the end of the day when companies go public, it means every investor getting to enjoy the growth of that company. when they're a private company, it's a subset that gets to enjoy. if we want to look at the long-term health of our economy, we want to look at long-term wealth creation in this country and making sure everyone has equal access to that going public is an important

part of keeping a healthy economy. in terms of job growth, business growth, and wealth creation for the average investor and that's why it's so important that companies do choose to come into public markets. >> in terms of the pipeline, are you seeing any slowdown in interest in listing here from chinese companies because of the trade wars >> you know, it's interesting. we actually have a large ipo coming up tomorrow. it's coming and listing tomorrow >> presumably that deal was set in motion months ago or years ago. >> at the same time they've had the choice all along as to whether or not they wanted to choose to list in hong kong or shanghai or whether they wanted to list here they made that decision fairly late if the process. so we're very excited about that we have a secondary car -- basically an online car sale organization they came public just a couple weeks ago. so we are actually still seeing an enormous amount of interest from chinese companies to come here so we're excited about that. >> any shift in terms of

governance, dual class share versus one single class? i'm thinking about facebook and mark zuckerberg and some of the things that's happened in the past year. >> we haven't seen any change on that our view on that is pretty firm. which is allowing companies especially founder led companies to offer stock and still cap the public markets it's a better outcome than them staying private. >> adena, thank you. >> thank you very much >> i know this was easy for you. >> it's been great thanks coming up, this morning's top stories. we'll look at stocks on the move ahead of the opening bell. also check out fiat chrysler it's down 10%. we're also expecting earnings from boeing. and we have a programming note for you. today on "closing bell," two big interviews tony blair will talk brexit, the global markets, and trade. then jack lew on the president's economic plan and the fed's path for interest rates "o exclusive interviews today onclosing bell."

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we'll have more on this and the legacy he leaves behind in just a few minutes. also coming up, investors awaiting boeing's results. those numbers expected in just a few minutes. and later in the hour, chuck stevens in a first on cnbc interview. that stock under pressure this morng tinonhe back after their guidance slash "squawk box" will be right back. you always pay your insurance on time.

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. earnings alert boeing hitting the wires phil lebeau joins us with the numbers. the stock looks to be trading lower. >> and there's a couple of things that are going to be catching the attention of ammisam is analysts we'll talk about those in a minute estimates 7 cents better than consensus. revenue slightly better than expected at $24.3 billion. free cash flow of $4.43 billion. the guidance, couple of notes here the guidance for revenue up a billion dollars for the full year to between $97 billion and $99 billion. operating margins for the commercial airplane market will be more than 11.5%

that's an increase second consecutive quarter that's happened so the question becomes why are we seeing shares of boeing moving lower the company is taking a charge in the second quarter. $426 million this is for the tanker that its building for the air force the first one is expected to be delivered in october this is so they can incorporate changes that were discovered during test flights. nothing dramatic during those flights, but they're going to have to change some of the design and the manufacturing for the aircraft and as a result the company is taking charge of $426 million. we should note, we asked this specifically to boeing is there any noticeable impact in the bottom line or in the financials from tariffs or from commodity price increases? that is not being stripped out by the company they are not saying there is a noticeable impact. so again, boeing beating the street $3.33 a share.

7 cents better than consensus. guys, back to you. >> phil, stick around. mike, you know, what's notable about boeing is it has outperformed the markets for the three months leading into this earnings release >> yes, exactly. it was kind of the poster chil for very expensive momentum stocks in january. it's almost returned back to those highs. expectations pretty high seems like the revenue guidance isn't that much higher than the street was looking for >> and the operating margins, guys, is part of the reason why you see the stock under pressure the operating margins would be higher were it not for the charge on the tanker program. >> yeah. it's down now 2.6% right now phil, it's a busy day on your beat also this morning, fiat chrysler says it's former ceo sergio marchionne has died. let's get more on his life and legacy we're also joined by the executive analyst at kelly blue book great to have you back here. we've had a couple of hours to digest the news.

what has the auto industry lost? what has fiat chrysler lost? >> not just the auto industry, really the world has lost an amazing leader somebody who is incredibly dynamic, who motivated people, who gave people opportunities that some were like wow you're putting that person in that position but many of them flourished and many of them really wanted to do well for him and themselves. he was one of those leaders i would never ask somebody to do something that he himself wouldn't do. and that's an incredibly admirable quality. there was nothing beneath him. he was very open and wanted people's feedback. wanted to hear from his constituents really an incredibly dynamic man. >> go ahead, phil. >> i was going to say, the other things that stands out, sergio told it the way it was he would say it and he would also say things that others in

the auto industry, they might have said in private but they wouldn't say publicly give you two quick examples. i don't know if you remember, but shortly after they came out of bankruptcy with chrysler, they were repaying the government and he was quoted as saying these are shyster loan repayments here. he used the word shyster, this is so bad. and the chicago auto show happened to be going on. i walked up to him and some of his handlers in the pr department at chrysler were like i'm not sure he's going to talk about the shyster comment. he looked at me and said, i said it, i meant it, and it's how i feel it was refreshing. you don't always hear that from executives especially in the auto industry. along those lines, more than once when i would bring up elon musk as he was disrupting the industry to auto executives, there would be maybe a scoff or a, well, yeah, it's interesting what he's doing. sergio marchionne made no bones

about the fact he said, look the guy's disrupting the industry i think what he's doing is amazing. that didn't mean that he didn't want to beat tesla, but he called it the way it was and it was refreshing that he was not afraid to say what a lot of other people in the auto industry were afraid to say. and that's going to be missed. >> right rebecca, if you could compare and contrast we're going to hear from mike manley it's not an easy time in the auto industry. what are you hoping for from mike manley? >> well, i certainly hope that, you know, i wish him all the success. he's had years of being very much a close pupil of sergio mike is a different person though he's a different personality he's much more quiet as phil says, sergio was just out there and would say anything that needed -- sometimes needed to be

said or said things that others would not. you know, mike manley is a brit. he comes with a different background in terms of just a quieter personality. not that he's not without a forceful personality, and again he's done a masterful job of bringing jeep from 300,000 units to over 2 million units of sales every year so i think there's, you know, incredible potential for mike manley, but it's definitely a difficult time he was one of the top three people that were up for this position it just wasn't supposed to happen until april and of course the tragic passing of sergio was really unforeseen just a couple of days ago. >> we have some steep declined in the auto sector today ford still yet to report rebecca, thank you and thank you to our own phil lebeau separately, glaxosmithkline out with quarterly results beating estimates on both the top and bottom lines

announcing a equity investment in 23 and me joining us now is hal barron and richard scheller meg tirrell is also with us this morning. we can talk about the earnings, but i want to talk about this deal real quick. how did this come about and what's the plan for glaxo? >> well, hal and i have known each other for a long time because we worked for over 12 years together and we stayed in touch after both of us moved on. and it was a natural get together, meeting of the minds when hal joined gsk and brought forth the idea of using human genetics to help with the probability -- increase the probability of success for drug development. >> we're really excited about this collaboration we think that we're previewing

today our new r&d strategy at the center of it is how to increase the probability that potential medicines we're trying to develop actually make it to patients and in other collaborations we have using human genetics to find the best targets suggests when you get a genetic target and pursue it, it's twice as likely this could be helpful for patients we're also excited about the opportunity to leverage the patients to have them be involved in the process. we're particularly excited about that component of the collaboration. >> 23 and me has over 5 million customers and over 80% consent to have their information used for research >> guys, it's meg tirrell. i was interested to see this collaboration. 23 and me is different you do jenotyping but then you

have the customer participation with surveys and things like that why 23 and me, dr. barron? why that model and is there any limitation based on the kind of genetic information that 23 and me generates? >> well, thanks. that's a great question. the key thing i think that makes the 23 and me collaboration very special is two things. first of all, the size over 5 million customers that 23 and me has gained access to is really very, very much larger than anything. about ten times larger than other data bases out there possibly more important is the customers of 23 and me, i think it's over 80% of them have actually signed up with the intent of being able to help with research to actually contribute to our efforts to find new medicines for patients. and the ability to recontact them because they're so excited about the opportunity to participate. makes 23 and me a very unique and exciting partner.

>> i think people miss the idea that with over 5 million customers, it would be impossible to completely genome sequence everybody that would cost billions of dollars and would be more information than anyone could even store in any data base. so in fact, we do genotype people but when we find people with interesti ining genotypes, do their sequence. this is a more efficient way to capture the important information. >> can we look at this as a data deal that you're investing this money to get access to that data and is there any concern that when it's being used for commercial purposes to theoretically develop better, more effective drugs that that consent rate would go down >> well, the collaboration is really more than just data i think the collaboration is being able to use the data to find targets but to really be able to access

the patients who have agreed to consider this tas a research opportunity. we think we might be able to help those patient who is actually signed up for 23 and me there's a discovery phase and then the development of drugs that might follow that i'll let you -- >> our customers proactively consent that their data can be used to discover new medicines to help people and our customers are excited about contributing to that research so who knows maybe the consent rate will go up >> richard, is this an exclusive transaction meaning could glaxo's other competitors make a similar deal for you for this type of data >> this is exclusive for four years with a potential to extend for a fifth year so glaxo will be our exclusive partner. >> and hal, you know, not that you want to tip your hand but

when we've looked at deals like this before, pharmaceutical companies have tried to buy out the entirety of these companies. could you see down the line trying to acquire 23 and me in its entirety >> well, i'm really excited about the collaboration today and the opportunities it's going to have. you know, it's a private company. and i think the structure we have with equity is going to incentivize us to have great advances for 23 and me and terrific advances for gsk. >> okay. we're going to leave the conversation there hal and richard, congratulations on the deal. good luck with it. thanks for the conversation this morning. >> thank you >> and thank you, meg. >> thanks, guys. when we come back, a lot more on "squawk box. home buyers pulling back on closing the deal as prices rise. a closer look at mortgage application data and where rates are headed we'll talk about that next check out the futures this morning on a wednesday dow looks like it would open down off about 107 points.

nasdaq looking to open ten points down. the s&p 500 looking to open six wints off weill return with a lot more in just a moment

mixed quarter from boeing sending the shares lower today. that is weighing on dow futures. stock down by 2.6% it was a beat on revenue but commercial airplanes came up a bit short on sales versus estimates. so we're seeing that stock being weighed down by that also take a look at the automakers across the board, we see some weakness gm taking down the full year guidance citing a total year impact from higher costs related to tariffs and the trade war fiat chrysler also taking down guidance on a number of full year metrics across the board weakness. and the dow, 100 points looks like to be the loss at the open here s&p looking to be open down by six points >> just setting up >> all right meantime, weekly mortgage application data released a short time ago diana olick joins us with more >> home buyers continue to pull

back as affordability becomes a bigger issue total application volume fell 0.2% last yeek. the drop was all on the purchase side those applications fell 1% for the week to the lowest level since may. they were up 2% compared to a year ago potential buyers have been up against a pricey and limited market but supply did increase slightly in june according to the realtors so we should be seeing more purchase demand. prices, however, have not eased up applications to refinance a home loan did gain 1% for the week but were 30% lower than one year ago when the average rate on the 30 year fixed was 60 basis points lower 30 year fixed holding at 4.77% for borrowers putting 20% down rates did make an impressive move higher this week following that spike in the ten-year treasury when the housing market is this expensive, even small rate moves matter we saw a big drop in sales in june with core logic pointing

squarely to high prices and higher interest rates. that story and all this data on cnbc.com back to you guys >> thank you for that. coming up when we return, gm's cfo is going to join ilph lebeau that interview after the break "squawk" returns in just a moment sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. whenshe was pregnant,ter failed, in-laws were coming, a little bit of water, it really- it rocked our world. i had no idea the amount of damage that water could do. we called usaa. and they greeted me as they always do.

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>> melissa, let's bring in chuck stevens. let's get right to the main thing that's bothering investors this morning you guys bringing down your full year earnings guidance and this primarily has to do with the impact you're going to be expecting the remainder of this year. all of this having to do with tariffs. explain what you're announcing today. >> yeah. i think first just to provide a bit of context, phil, when you look at the second quarter results, very solid results. in the face of your more difficult macro environment. $3.2 billion of profit and 8.7% margins are solid. with that said, as we move through the second quarter, there are a couple of dynamics that impacted our results in the second quarter and obviously our guidance going forward. that is -- as well as perhaps

specific to general motors significant currencies in south america and argentina driven by political uncertainty there. the unmitigated risk associated with it, we put it in the range of about a billion dollars for the year and obviously will continue to work the optimize around that. but that's the market reality that we're dealing with right now from a macro standpoint. >> chuck, let's talk about the market reality when it comes to tariffs. you source about 90% of your steel and aluminum in the u.s. while you are not directly impacted by tariffs, the steel and aluminum tariffs, that impacts the entire global market which ultimately drives prices up, correct? >> well, what i would say and i'd go back to my earlier comment, we're seeing -- we have seen an escalation of commodity prices across the spectrum of

commodities that has been driven by market forces and there are a number of market forces at play so i would just say, we're addressing that challenge. that challenge is greater than what we expected when we entered the year and we'll work to mitigate as much of that as we can >> melissa, go ahead >> melissa lee back in studio. i'm just trying to understand how much of that guidance cut was due to increased commodity costs. so it's as much as 60 cents lower from the high point of your prior guidance. how much of that was because of increased costs? i'm asking this because i'm just thinking if the president said, you know, this trade war is over, the tariffs are gone, how much can we expect guidance to come up because of that? >> yeah. i'm not going to attribute the commodity price increases to tariffs or removal of tariffs or any other announcements. i would say of the billion dollar head wind we've had that we've ire identified for the year, roughly half of it is related to currency. that's primarily in south

america. and roughly half of it is related to commodities it's not just steel and alumi m aluminum it's resins and fuel when you think about our logistics costs. and again market forces are driving this it's driving it in a much more of a magnitude than we expected when we started the year and that's what's fundamentally driving the change for the outlook of the year. >> i'm curious from your perspective, what kind of an impact have you noticed -- and i know there's a not a lot of vehicles coming in from china. but what are you doing in terms of as a corporation with regard to those vehicles? have you announced how you're going to adjust pricing here in the united states because of the tariffs that have been put in place? >> if you start overall from an overall trade dynamic, at this point in time there are a number of moving pieces, a lot of

uncertainty and volatility in that we continue to engage at the appropriate levels with the government across a wide spectrum of potential implications we've done nothing specific to the envision relative to pricing or plans for the rest of this year and i wouldn't anticipate that in the short-term. we continue again to monitor and evaluate the situation as you can imagine, this is a pretty complex set of dynamics when you think about the global footprint, the global supply footprint, and how ultimately this will all come together. so we continue to monitor, evaluate, and engage appropriately. >> chuck stevens, the cfo of general motors joining us on a day where they did beat the street on the top and bottom line frankly, had a solid second quarter. but it's the full year guidance, that's the reason the stock is moving lower back to you. >> thank you for that. i know we'll be seeing a lot more from you today because coming up when we return, breaking news of the morning

it is the sad news that the man who saved fiat and chrysler sergio marchionne has died we'll look at his legacy plus kevin brady will talk to us about tax cuts and a lot more. "squawk" returns with a big hour just ahad ed with tripadvisor, finding your perfect hotel at the lowest price... is as easy as dates, deals, done! simply enter your destination and dates... and see all the hotels for your stay! tripadvisor searches over 200 booking sites... to show you the lowest prices...

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earnings front and center. general motors, coca-cola, boeing among the names reporting. the numbers and stock moves straight ahead "squawk box" news maker. republicans roll out tax reform 2.0. we'll talk to the man behind the proposal kevin brady. and breaking news on a titan of industry. fiat chrysler says its former ceo sergio marchionne has died a look at his life and legacy coming up 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. welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin along with melissa lee and mike santoli. the futures right now under some

pressure boeing a large part of that. we'll talk about that in a moment dow jones looks like it would open down 100 points s&p down five points right now and nasdaq five points as well check out shares of the some of the automakers this morning. red arrows across the board. trade tariffs, it's a long story. we will get to it in just a moment the other breaking news of the morning and it's sad news. sergio marchionne has died we want to get to phil lebeau right now with more on his legacy and career. phil >> andrew, we're starting to hear condolences come into fiat chrysler from other auto executives bill ford sending out a very nice note this morning regarding the passing of sergio marchionne the word came from europe early this morning from fiat chrysler that sergio had passed away after a rapid decline in his health over the last week. a statement from john elken who

is the chairman of fiat chrysler says unfortunately what we feared has come to pass. sergio marchionne, man and friend, a gone i believe that the best way to honor his memory is to build on the legacy he left us, continuing to develop the human values of responsibility and openness of which he was the most ardent champion my family and i will be forever grateful for what he has done. again, those are the words of john elken, the fiat chrysler chairman think about what he did over his career starting in 2004 when he essentially saved fiat which was a struggling regional automaker, nursed it back to health, and then in 2009 when chrysler was essentially left for dead by the obama administration, he came in and said you know what i can buy these guys out of bankruptcy we can put together fiat and chrysler, make a global automaker. and it has been wildly

successful he also was spearheading the ipo of ferrari starting in 2015 when a lot of skeptics said you're going to dilute the brand, you're going to ruin ferrari it has been just the opposite. it has been a raging success sergio marchionne has passed away at the age of 66. we are starting to hear from many in the auto industry. his legacy is one that will be talked about for a long, long time >> and a good man and a sweet man. we've talked about that as well this morning i do want to transition to sh s shares of general motors because they are falling in the premarket. we have you here to explain. >> right we just heard from chuck stevens, the cfo of general motors the biggest impact here, they've lowered their full year guidance going from essentially 630 to 660 down to $6 so they're bringing it down. free cash flow is going to be

about a billion dollars less than previously expected the main reason is they're noting a $1 billion impact that's what they're expecting. for the full year in terms of commodity cost includes, foreign exchange as particularly with currency in latin america. that $1 billion hit to general motors is the reason that they're bringing it on their full year guidance and by the way, today we also receive received the second quarter from chrysler what they're seeing on the cost side of the equation fiat chrysler's conference call with new ceo mike manley is about to begin any minute. we'll listen to that to see what he has to say regarding the results and also about sergio marchionne and one last note for you as if we don't have enough news. waymo which is a partner with

fiat chrysler, remember it's the chrysler pacifica hybrid minivans doing the self-driving test in phoenix. waymo has announced it's partnering with five companies including walmart, autonation, and avis where it will be providing customers of those businesses rides to those businesses as part of a promotion. so what you're starting to see her is waymo laying out its business case and saying, you know what? we can be the company that works with other companies providing rides. and this is an interesting piece of news that has just come out from waymo >> that's genius customers can get a free ride, go to walmart and get groceries and get a ride back. >> or instead of getting a loaner car from autonation, they will provide you the rides >> getting back to fiat chrysler it's off the worst of the

premarket session right now. primarily because of that guidance cut it's sort of a tough time for mike manley. rise in commodity costs. rising rates sort of plateauing sales in north america. this is affecting the industry across the board >> exactly now, he does have a couple of things going in his favor. that's primarily the jeep and the ram brands and jeep sales remain very strong they're growing that brand in km china. and ram remains strong in the united states. they're going to be dealing with higher costs for the remainder of this year as all automakers are. and plateauing sales so it brings up the question, especially if we see some change in the nafta agreement, then you got real problems for not only fiat chrysler but also general motors because both companies have substantial operations both in canada and in mexico and they would really be hurt if

there was a major change to nafta. >> and when we talk to chuck stevens of gm, it was interesting to hear him give us a little bit of color on that $1 billion cost half of that being currency. half of that being commodities if that commodity issue actually went away, we'd still have that additional cost for them >> right the foreign exchange he was very careful not to take a shot at the administration regarding tariffs. but you and i both know, the cost especially when you look at steel and aluminum, yeah they source 90% of their steel and aluminum in the united states. but it's a global market and those prices are going up because of the tariffs so for them, for fiat chrysler, all the automakers, they're noting an increase there >> phil, a lot of this talk about cost and currency, none of the automakers right now are saying a whole lot about a change to the outlook for

overall volumes. that has been shadowing the industry the idea this has plateaued. >> right there's no change in terms of expectation for global autosales. i think globally it's going to be up maybe 1% something like 95 million new vehicles are expected to be sold and here in the united states the run rate is still over 17 million. we're looking at four straight years with very high auto sales. we haven't seen it at this rate over five consecutive years forever. >> thank you for that. we will talk to you very soon again. meantime, when we come back, republicans rolling out a framework for phase two of tax reform in the midst of a trade war. house ways and means chairman kevin brady will join us after break. we said we were getting close to triple digits in the red dow looks like it would open off

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with lawmakers to build onto the new tax code law calling it tax 2.0 kevin brady joins us right now with some of the details goorpg good morning to you. >> morning how are you doing? >> we're good. explain what this tax plan 2.0 looks like >> for families and small businesses, it's pro growth. higher paychecks also it's about changing the culture in washington. the original tax reform is changing the direction of the economy in a better way. but washington tends to wait 30 years in between tax reform. we fall behind our competitors around the world we junk up the tax code. we think we ought to do it differently. improve the tax code every year. make it more competitive and innovative the other parts of 2.0 are some changes in savings to allow businesses to offer more plans, encourage workers and families

to save more and earlier in their life finally the part we think as well we think america needs to continue to be innovative. there's a new proposal that helps brand new entrepreneurs take that next step and growth >> when you say protecting middle class and small business tax cuts, just put some meat on the bones. exactly what is the strategy what are you trying to do? >> you know, there are goofy budget rules in washington so we were able to make the corporate rates permanent because we had to get competitive. now this makes the family and small business rate cuts permanent as well. we want families to be able to count on this as well as our small businesses. >> is there any thought, though, and i'm curious where you land on this. that you might want to have the flexibility to change the rates in the future? and are these tax cuts as great as they have been in terms of spurring the economy there's no question there has

been a boost as a result of it "a," whether it's just a temporary sugar high and whether ultimately all of this is going to pay for itself. >> i think two thoughts. one, that's why we think every year just like the most successful businesses who are waking up every day thinking how do we become more competitive and better, we think congress ought to be always be focused on how we do the same with our tax code our competitors around the world are not going to stand still it would be higher if we hadn't got this economy going and changed the trajectory of the economy. i think we still have in washington a spending problem, not a revenue problem. because one point i always lik to make. washington per person has been taking more from americans almost at a record high. taxpayers are doing their share. i think washington isn't doing theirs so i think getting the economy going was a critical part of

this >> chairman brady, are we soon reaching a tipping point a lot will say the tax reform helped corporate america we've certainly seen it in results. but we're at a point where the tariffs are also impacting corporate america. just this morning we heard from general motors saying they're going to face additional cost ifs for the full year. they took down their guidance. same with fiat chrysler. coca-cola mentioned the higher costs of aluminum. are we at a point where the gains from tax reform are being taken away by tariffs. are you worried about that >> the answer is yes first, the relief wasn't just on corporations yes, we had to make some competitive moves. it's gone far beyond that. as to the second question, yes i do worry tariffs are taxes they impede economic growth. they pick winners and losers we do worry about that so far i think our economic growth has been strong enough to

overcome that. but over time, there is going to be that impact and back home i can tell you in texas, you know, our manufacturers are losing work to foreign competitors because of the tariffs we're seeing energy projects go up in price because that's why we're working with the president to target these to china and unfairly traded products taken off the fairly traded products in our relationships with countries like canada, mexico, and europe >> speak to this it does feel like the economy -- it doesn't just feel like it the numbers have shown that we have been growing. clearly when you look at things in the country, things have improved the deficit is now going to hit $814 billion that would be a 21% increase from 2017's deficit. does that concern you given the tax cuts >> it does, but it's not the tax cuts revenues are growing in

washington, not shrinking. it's the spending that is far exceeding that people have been taxed at almost near record highs. that's not the problem it is the spending side of this. >> there is no real evidence that -- you talk about competitiveness, this is not an overtaxed country certainly on a personal level if you look in aggregate what the government takes it's not just a spending problem. we seem like we got competitive. what other countries have a lower personal tax burden that we're directly competing with right now? >> look, it's really on -- as you know, from a growth and competitive standpoint, it's not the individual rates it's the business rates on the competitiveness. and we know that now we have one of the more competitive designs in the world whether it's canada looking at lowering their rates to 20%.

australia, other countries we know from the experience with the reagan tax cuts, they don't stand still. this competition is real so the point of this is let's never let america fall as far behind as we did in the past >> chairman brady, always appreciate your time good luck with it. talk to you soon >> thank you and let's get you caught up on a few earnings out this morning. we got so many dow component boeing, the jet maker earning $3.33 a share. above estimates. revenue also coming in up above forecasts. boeing raised its full year guidance although taking another charge to the tanker program. that stock down 3.3% the reason is it's behind a bulk of the losses right now. u.p.s. coming in above estimates. results were boosted by higher e-commerce demand in the united states that stock up by just abo about 0.5% coca-cola reporting quarterly profit of 61 cents per share that's a penny above estimates organic revenue beat estimates

in most regions. north america came in below. we have a programming note don't miss coca-cola ceo james quincy on "squawk on the street" at 10:00 a.m. eastern time coming up, facebook's moment of truth will investors feel the impact of the recent gaffes and check out futures. we mentioned the pressure on the dow futures. now we're down by just about 92 points or looks like a loss at the open s&p looking to be down by five nasdaq in the red by 1.5 stay tuned you're watching "squawk box" on cnbc what about him? let's do it. ♪ come on. this summer, add a new member to the family. at the mercedes-benz summer event. lease the glc300

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facebook set to release results after the bell today amid a flurry of negative headlines for the company. joining us now head of internet research at oppenheimer. jason, great to have you with us >> morning >> do you think we'll see any user impact? user engagement impact from the cambridge analytica fallout? >> so not in the u.s i mean, i think the expectation is u.s. growth will be stable at roughly the 2% growth we saw last quarter europe is expected to slow down on gdpr. not really cambridge analytica but the implementation of gdpr

the way people went through the process were probably not as onerous as the worst case scenario so we think minimal impact we think this should be a good quarter for facebook >> we saw facebook shares rise on the back of that report are investors right to sort of project the good quarter that alphabet had onto facebook >> i mean, look. i think you were coming off of a negative quarter for netflix that put fear into faang then you came off a good quarter for facebook which is the most underowned of all the faang stocks the idea is, okay, you make sure you're long facebook and amazon. that's probably the setup here the question will facebook is actually cost. all the checks suggest that it is going to be good. how much legal cost did they take on in the quarter will they break that out separately they talked about a high level of both operating and capex

growth this year and it being particularly back end loaded it's a question of what's going on at the margin we're looking for earnings to be up 34% they may miss kind of the top headline, but then the organic growth should be good. >> you mentioned faang really faang kind of breaks down into amazon, netflix where people pay out of pocket for people are aware of buying where facebook is ads sales driven the reads from google's numbers was the wave of digital advertising growth coming from everywhere else is so strong that facebook and google somehow can't help but pick up their fair share of it >> we think you may have a slight slowdown, but the overall growth is going to be quite strong we're looking at revenue to be up 39% relative to 42% in the first quarter.

that's very strong i mean, again, you have some advertisers complaining that facebook is raising rates. on the other hand, conversion rates are getting better these platforms really understand how to best match a brand with a consumer. and as a result in an auction market, those who are willing to play are going to get those. again, concerns about data privacy, gdpr, probably get overshadowed by what we think will be very good top line growth >> investors in the past have been worried about expenses. we've seen a couple times where the company will come out and guide on their spending in the after-hours session. and that will sink the stock are you worried about that this time around? the company is guiding 45% to 60% in increase in terms of the expense guidance for the full year >> we're at 51% for the full year again, the way it pans out, it is back end loaded in the first

quarter. again, could there be additional legal kind of one-time expenses? and the question is will they break that out perhaps they talk to the higher end of the range and is there commentary around part of the additional expenses because of cambridge analytica and so forth but again i think street numbers have -- historically this number has beaten the guidance. lower expense growth so the idea is that street numbers should be fully baked. again, when you look at the multiples trading, this company should be growing anywhere from, you know, 40% to 50% earnings growth this year i mean, that's a disconnect, right. the market is already discounting a lot in the stock >> all right jason, got a $225 price target thank you. >> >> thank you. coming up, why economists are bracing for a big day on friday steve leisman is here with what's coming up >> get your seat belt on big gdp numbers expected friday.

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good morning and welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square slew of corporate earnings just crossing the tape this morning we've got a mixed bag of numbers from hilton worldwide. it matched consensus with 70 cents per revenue. you're looking at that stock right now. i don't know if we can show you what's going on with it in the premarket right now. let's flip the board around and show you what's going on with anthem reported a profit of $4.25 per share. that's 9 cents above estimates revenue also topped street forecasts. health insurer also raising its full year outlook on the strength of higher premiums and medical costs. that stock down in the premarket marginally

irobot. >> i have one. my mom gave it to me and i tried not to read into that too much but i have one >> i want the review in just a moment but we should say the revenue up by more than double the street forecast i'm sorry, the profits actually doubled forecasts. earnings of 37 cents er share revenue was above analyst estimates. also raising full year guidance amid sales growth in all renals after melissa lee -- i mean, now next quarter is going to be bigger >> i've had it for years now >> only one? >> it goes by itself so it goes around. >> right and it works >> yeah. >> well? >> just when it needs to vacuum? >> no. you program it >> how often do you have it vacuum every couple days. i forgot what it was it happens when i'm not around. >> 40% of the stock, the shares are sold short

irobot is thought of as faddish. >> they also make the unmanned things that go into, like, if there's a nuclear spill or whatever it is >> when this company became public, the roomba was a joke on the side it was supposed to be real industrial robots. a busy week for economic data including what is expected to be a big gdp report on friday steve leisman joins us now with a preview on what is driving this growth. some of the estimates are 5% >> we have some fives in there we have a few threes and the cnbc rapid update which is the median of ten tracking forecasts on the street running at 4.2%. that's a really strong number. you can see that by looking at our first chart which shows we've been running at threes which is also pretty good, by the way. there's an upward shift there. we came back down in the first

quarter to 2%. what we've shown is that four quarter average is the best way to know where the economy is because all these numbers over a five-year period will be revised. but the four quarter average is the least revised of the number. so you take everything with a grain of salt. now, let's look at who is where and where you find this is a melissa is correct barclays 5.2% there's me much followed atlanta fed at 4.5%. deutsche bank and mufg at the bottom which is remarkable in and of itself if the bottom is 3.8 prst now let's look at the next chart. this is not the first time this has happened also, our viewers are smart enough to know what we're talking about is the quarterly growth rate annualized nobody said that a 4% or 5% number couldn't be achieved. the question for investors is whether or not we've permanently

upwardly shifted the economic growth so let's take a look at the components now and what i'm using here is action economics breakdown of their forecasts. they're at 4.1%. here's how they get there. everyone has their sort of own secret sauce on this consumer is strong tax cut, better wages, more employment investment this is interesting to me. a lot of other folks are up. that's a number that's going to be a big swing number. housing is the only negative in there and a lot of people are either zero or a little bit positive then you get government which you know they're spending like crazy. that's going to help gdp trade is going to help and inventories are going to help. the extent to which both the trade and inventory numbers might be helped a bit by the tariff situation did people export a lot ahead of the tariffs and bring people in.

those things should work in opposition if i could point out the two parts that are not sustainable about current growth, it's the trade and inventory numbers. and also a bit of a snap back from the first quarter which was weak they say the strength of the second quarter will be evidence that the cuts are working. though it's hardly a great revelation if you borrow the money and throw it at the economic at once growth will pick up. i think there's more to it than that when we talked to kevin hassett, he has a theory of the case which is they're going to change the dna of the economy they're going to lower taxes, create more capital investment, boost productivity, and then that will increase wages and have an upward shift in gdp. let me just finish the thought that could be the case the point is that over a six-month period, it's almost impossible for that to happen. so it's a little hard for me to understand or buy the idea of

what we're seeing right now is tax cuts that could be in our future. >> we had a conversation with kevin brady about his tax reform 2.0 plan we talked to him about the cbo projections in terms of both revenue but ultimately what th increased deficit looks like are these paying for themselves? >> no. >> no. >> and what's interesting -- >> kevin brady suggested that's almost the wrong question. in he would say revenue has gone up and the issue that needs to be dealt with are costs. >> revenue hasn't gone up nearly as much as gdp >> revenue has gone down, as i understand it. because you reduce taxes there is some growth the federal government budget is closely related to growth. you'll get a boost but you cut them very severely so you're going to have less revenue. you can then go argue the other side of that it's not, i guess, logical that the reason there's a big deficit is spending. but you didn't correlate your

spending one of the big upward shifts in forecasts this year from economists came with that surprising cr, that continued resolution everybody was floored by that. they're like, wait a second. nobody had forecast that that was really not in the cards. it was that upward shift and that's why some people are a little pessimistic going forward. they think the impulsive government spending runs out and the initial run of the tax cuts i'm interested in what you guys are seeing is anybody pro forma-ing, if that's a verb, the tax cuts on the earnings when we see these numbers, how much is because they had a district gift to the bottom line from the tax cuts and how does the street value that? >> i think we saw that in the last round it was first quarter we saw the impact >> but it should -- >> a lot has been flat for six months. >> so they're taking it out? >> they're just not putting a big -- >> and that's for four quarters.

then compare it to a year ago. it's the first quarter of 2019 >> it's less than half of the earnings growth though so it's a big chunk of the growth but not did -- >> so what is earnings growth? 20%? >> just about. first six months >> so it's something less than 10%. so underlying, what do you call it >> organic growth. >> organic growth is something in the 8% or 9%. which is a good number and you -- by the way, the other thing that's sensitive to gdp growth is corporate earnings you get big numbers like this, the pie gets bigger. two things are out there one is the share of the pie taken by corporations. and the other is the size of the pie itself >> why don't you stick around, steve. let's bring in chief fixed income strategist at janney montgomery great to have you with us. what so let's sort of pick up on this conversation what are you expecting for gdp come friday? the estimates out there, some are very bullish this morning what we've been hearing from companies that are

moving along premarket really feeling the pressure is that we're hearing about the rising costs here coca-cola also mentioned the rising costs of aluminum when do we start factoring that into projections do you think? >> sure. so good morning. two separate pieces of that question i'll take the gdp one first. we're looking if ar low to mid-4% growth in gdp a lot of that as steve mentioned and only colleagues have talked about, a lot of that is likely to be driven by trade and also inventories. inventories are a random generator. but longer term, i should say intermediate term, the cost pressures facing some of our industrial products, organizations are starting to rise but far and away the biggest cost is wages. wages are still rising at only a

moderate pace. so broadly speaking, cost pressures and corporate inflation pressures don't seem to be a major issue. certainly not one that's filtering through the bond markets in any visible way >> so wage pressure is greater than the impact that we might be seeing from tariffs on costs >> well, if you look at the breakdown of the industry here in the united states, the vast majority of what we do and what we produce is service oriented and the primary inputs to service industries, of course, are salaries and wages that's a broader fact for the economy for inflationary pressures on the corporate cost side at the same time it also has a bigger growth impact as we've seen so far this year from greater wages, greater consumer spending, et cetera. >> can you tell us what happened yesterday around 6:30 in the morning when it came to japan and interest rates there and the united states and interest rates here we had a major spike

sorry, monday. >> yeah, it was monday morning >> sorry i never know what day it is. >> they all blur together. >> what was the spike? it seemed like there was a story about a possible change in japanese monetary, but the more stories i read the less it was real is it real >> not evidently so. there's not a lot of evidence they are shifting their long-term outlook. but more than that, you wouldn't expect japanese life insurers, japanese pensions to reallocate on a story like that in a moment's notice. realistically what we saw was a lot of profit taking on probably the biggest trade with fixed income which was bets on yield curve flatteners and what was really remarkable about monday reece trading is the yield curve steepened

dramatically we had the biggest one-day steepening since february 9th this year. >> just want to jump in for a second because we do have some breaking news. donald trump on twitter this morning referencing the tape leak that emerged last night on cnn from michael cohen he says the following, what kind of lawyer would tape a client? so sad, exclamation point. is this is first, never heard of it before. why was the tape so bankruptly terminated, cut, while i was presumably saying positive things question mark. i hear there are other clients and many reporters that are taped. can this be so too bad, exclamation point of course the debate now surrounds what was a little -- the audio was a little difficult to hear. but on that tape it appeared as if michael cohen was telling the president or then-candidate trump that he was going to

create a company effectively to pay off stormy daniels and to pay off and effectively buy the rights to some of these articles and things >> right >> and in it he is talking about it and apparently trump uses the word cash. and then you hear michael cohen say no, no, no and then the tape kind of cuts off. then there's this reference to check. and depending on who you believe, the president has or at least giuliani has said it'sa reference to the president saying you pay it with a check but michael cohen's team saying the president is saying use cash and michael cohen is saying no no no. >> very interesting. right now our focus is futures the earnings and gdp is consensus for what

friday, steve? >> the consensus for our cnbc -- dow jones is 4.2%. >> all right thank you. when we come back, the head of the eu commission is going to be face-to-face with president trump today. we'll be taking a preview of that conversation. wonder whether or not he'll talk about the michael cohen tape the president is already tweeting about the meeting overnight. saying the european union is coming to washington to negotiate a deal on trade. i have an idea for them. both u.s. and eu drop all tariffs, barriers, and subsidies. hope they do it. we are ready but they won't we'll talk to miaefran ne xtchl om

president trump's meeting today with european commissioner president jean-claude juncker. joining us to talk about it michael froman now a counsel on foreign relations distinguished fellow good morning >> morning >> you've seen the president's tweets not about the michael cohen tape but about trade and what he plans to try to suggest here to the eu he says he would like free -- he would like no tariffs across the

board. free and fair. is that ever possible? >> we were trying on something like that which the administration put off to the side i think the question is is he serious about it which means not just eliminating tariffs on cars but eliminating them on trucks we have a 25% tariff on trucks the europeans have always been sbresd in getting rid of buy america proi guesses on procurement or getting into service sectors that are restricted and whether the president is really willing to put those on the table as well remains to be seen. >> do you think it would be? >> i tend to doubt it. he's been wanting to strengthen the provisions, notweaken them i think it's not just a tariff issue. it's really the non-tariff barriers, regulations, non-science based rules that keep our products out of their market and that's something that's going to be difficult for the europeans to engage on as well >> it's interesting you mention the ttip because the eu

commissioner had said that they were willing to go in, remove some of the tariffs or all the tariffs put in place then go back and negotiate what tariffs should be reduced or in place for various individual goods. and he said specifically a sort of ttip light, if you will could that be a blueprint in your view with this administration >> i don't think so. while tariffs are one piece of the puzzle, it's not the main obstacle in terms of their market it's got to be -- if you're -- if you really want free trade, it's got to be a comprehensive agreement. like the president said, other barriers but we need to be able to put some things on the table as well which traditionally have been difficult for us to do >> the president seems to want to do all that but on a country by country basis is there any way that process could arise out of this? or is the eu going to remain >> initially we're told the

administration tried to reach out to individual european countries to cut separate deals. they've now agreed or conceded that negotiating with the eu is a bilateral negotiation which is what the president has been focused on or prefers. because there's really one counterpart the table from himn these issues and celia ballstrom will be there today. i think it's a very complex negotiation. we made a lot of progress during our years there. they could pick up where we left off and try to finish it but it does require the europeans getting over some skepticism about whether this president is serious about reaching an agreement. >> what is your take on the plan to subsidize farmers getting hit by the tariffs >> my experience with american farmers they're incredibly proud, competitive, and productive they don't particularly want these kinds of subsidies or bail out programs they want free access to other markets. they believe they can compete on a level playing field.

so i think they would prefer we be on the front foot opening other markets to the exports rather than giving them subsidizes for having created a problem. >> we've been talking about the line that will probably go up. the white house from other industries. >> absolutely. there's a line first to try to get the waivers from the tariffs and then the adversely affected industries which will affect a lot of manufacturing. >> all right we'll leave the conversation there. ambassador, thank you. >> thank you when we return, we'll take you somewhere cameras aren't typically allowed. inside the smart grid control at duke energy. jackie d'angelo is there. >> good morning. if you remember hurricaneser i and harvey last year, you'll understand why energy companies and utilities are gearing up to strengthen the power grid at

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we're heading into peak hurricane season and this morning we're getting a look

inside a smart grid control room helping keep customers immune from outages jackie d'angelos is live in charlotte, north carolina. >> reporter: hey, melissa. they call this the star wars room it's not science fiction it's duke energy energy control center, and they're monitoring energy transmission in real time here now, duke is committed about $25 billion in investment over the next decade in the six states it serves to continue updating and modernizing the electric power grid here power crises can be spotted and dealt with in more quick ways using smart grid technology and problems can be averted or fixed with a click of a mouse. they can sometimes heal themselves the power grid has been front and center after hurricanes harvey and irma caused massive outages last year and cyber attacks are also a concern. >> we are, you know, focussed every day not on the defenses we can put in place or investment

or oversight working on our systems in a way to make them less vulnerable but also focus on recovery i think as we talk about the new devices, the technologies that we can deploy, we have to think about that within the context of cybersecurity. we could be increasing risk if we're not particularly vigilant adding new digital devices to our system >> reporter: but companies all across the u.s., not just duke energy, including pg & e, con ed are increasing investment, as well it's growing 9 percent a year, which is a compounded annual growth rate. now there are critics that say consumers are going to be the ones that bear the brunt of this i've seen estimates as high as 17% in terms of their energy bills, and those critics say that the benefits they receive immediately aren't necessarily enough to make up for it right now. but duke energy would tell you this is a long-term investment

when you lock at how they're securing the grid, ultimately it will pay off, guys. >> jackie, thank you and we will right back more coming up on. at fidelity, our online u.s. equity trades are just $4.95. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. is it to carry cargo... greatness of an suv?

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quick programming note later on "closing bell" two big interviews coming up former uk prime minister tony blair will be joining the program to talk about brexit and so much more and former u.s. treasury secretary jack lew also on the program. that starts at 3:00 p.m. eastern time this afternoon in the meantime, i want to thank the gang for hanging out this morning. >> my pleasure. >> we'll see you all tomorrow. in the meantime, "squawk on the street" begins now >> good wednesday morning. welcome to "squawk on the street." cramer has the morning off carl quintanilla here with david faber. boeing is down 3% on the charge. a big day for trade as the yield curve visits the white house gm cuts guidance on higher tariffs. europe is mixed.