great number best we've seen in years we saw number one all the way back to 1950 of more than 16% growth he said it was the end of quarter. after the recession from the truman era that at one time. i thought there was something whacky with that. >> thank you for being here. >> it was great to see you. >> thank you have a good weekend. have a good weekend, everybody make sure you catch the president 9:30 this morning. "squawk on the street" begins now. ♪ good morning welcome to squawk "squawk on the street." we're live from the new york stock exchange carl and jim have the morning off. sara and melissa join me, carl there you see looking as though

it may be a higher market. keep an eye on the nasdaq after yesterday's blood bath in facebook had the impact. 119 billion in market cap loss from that alone. record european markets on the green. you can see it there spain and italy showing a positive number so far in trading. 10-year note yield hanging in there at 2.956 it's been moving up. crude oil below 70 $69.50. the road map starts with stocks, as you saw, are set to at least have a somewhat higher open. second quarter gdp jumps 4.1%. that's the best pace we've seen in a quarter in nearly four years. plus, technology in focus. twitter user decline, amazon profits surging, and intel delays the roll out of the future technology. bob swan will be joining us on cnbc starbuck delivers a dividend boost for investors.

kevin johnson will join us exclusively. >> we're going to give you a look at a live shot of the white house. president trump is set to deliver remarks on the economy at 9:30 a.m. eastern after investors got a first look at the second quarter gdp number which came in at 4.1%. missed estimates forecasts calling for as much as 4.4%, but, sara, it's the best number we've had in a quarter in a number much years. >> going back to 2014, in case the president says it's the best number ever. look, he's right to take a victory lap here there are places in this gdp report he can point to to show that his policy is working fiscal stimulus, corporate tax cuts, individual tax cuts, the consumer spending component. this is a consumer economy growing 4% that was better than expected. and that marks a significant pick up. just in terms of the other components that are important to watch in this number, and to see whether it can continue and sustain itself through the rest

of the year, you have some quirks like trade, exports, perhaps some shipments of soybeans, which are very important economically to the country were sped up ahead of anticipated tariffs. inventories took 1% off gdp. these are the sort of more volatile components. overall, a very solid picture of demand at the consumer and the business level with business investment, nonresidential growing more than 7%. >> decline in iner have stovent surprise that was a little bit of a surprise in context, though, as we saw the markets fluctuate surrounding the release of the number, we've, putting up the 4.4% estimate. a lot of economists are using 4.2% they're seeing gdp as in line on that top line number estimates have been sort of coming down in recent days that's something to keep in mind as we're looking at the market reaction to the number 4.1% versus 4.2 is a different victory. >> the parade of economists we've had on in months and

years, at this point, would point out this question of has demand been pulled forward as a result of the enormous stimulus coupled or the spending, i should say, coupled with tax reform itself to the larger question is it sustainable so you do end the year with at least a above 3% gdp number, as for example, secretary mnuchin said he believes is possible if you pass tax reform. >> how sustainable is the bump up in spending especially if we get higher inflation. you see. the pce is higher in this report and higher, as a result of the commodity, inflation, and tariffs we've seen you can go to a number of earnings reports to see that that's one question. all in all, it's a pretty firm snapshot at this point the question is, does it raise the annual gdp forecast above 3% we know that was the president's goal post financial crisis, this recovery has been averaging about 2.2% annual growth

that's why it's been called, like the slow growth disappointing recovery not all encompassing can president trump's fiscal stimulus put us above that point on an annual basis that's why the second half is key. >> the broader perspective is it's not too high. barclays was up 2.5% you would think the fed is 100% in play for the path of rate increases. you know, this is good enough. this is strong it's not too hot and it certainly doesn't raise the mandate of the fed to speed or, you know, back off the rate increases. it's golding locks. >> or what fed chair powell in a pickle he wants to raise interest rates and a president said he doesn't approve it it keeps them on the slow and steady path. two more hikes this year. >> we did see numbers on the deficit rise to as much as $1

trillion recently as a result, of course, of lower tax receipts from corporations. perhaps as low we've seen in 75 years. a booming, economy, though would seem to generate fairly high tax revenues even if you're paying a lower rate. >> this is in the administration's argument. you pay for some of the stimulus, which is going to drive up the deficit by higher economic growth. that's why it's so important to see these kind of numbers sustained. do they pay for themselves well, not yet. if you continue to see 4% numbers, then you're talking yep. >> and again we're waiting on the president to speak at 9:30 a.m. eastern time on the economy and see what sort of comments he'll give on the gdp number out shares of twitter plummeting after the social media company reported a decline in monthly active users gave weak guidance. twitter matched the street forecast of 17 cents a share and revenues beat here one million

yearser users. some will say it's a clean up. the bulls will say a cleaner twitter is better in the long run. it's a better number to look at. the platform is not the place for bullies anymore. which have been sort of a reason to not engage with twitter so we'll see but it certainly was a disappointment and a third quarter guidance that was ultimately disappointing the street. >> sort of gave a little bit of a flashback to facebook, by the way, closed down more than 19% yesterday. one of the big concerns is the slower user growth and the concern is the privacy scandals and the public scrutiny over election interference was taking a toll on user growth, results, and spending and get the companies to start fixing it that was a theme you saw it in facebook and twitter. the question is, are investors going to put up with that? either way, the companies feel they have to do that >> the similarities are definitely there especially when you take a look how the stock was poised into the report twitter had been an outperformer this year.

going gang busters along with square when you have the companies that are priced for perfection, you get any sort of disappoint you see the pullback the context, though, here twitter is down 13%. facebook lost, according to bespoke 3.7 twitters >> it adds up. >> yeah. on the markets it's not even going to have -- >> melissa, they are talking about monthly average users. >> yes. >> a good decline on a basis based on the current level of visibility they want everybody to be thinking about daily average users. >> a number which they do not release. >> we know it's up 11%. >> right. >> we got that. >> we did. i love the way they talk about health health of the platform and trying to increase the health of the platform, but i guess you cut out calories when you're potentially getting -- >> they're trying to get you to look at engagement they're trying to shift the focus to daily active users. and, you know, it's a little bit

reminiscent of facebook when it switched and said we're going to release this new metric that we've never released before and that is the amount of time people spend engaged with other cross platforms. across platforms you know, i think that gives investors pause when a company said look at this. not this when they're not releasing the daily active user actual number >>well, i mean, they're fairly new business models. the whole social media industry and they're trying to condition investors, i guess that number is a 11%. >> yeah. right. the actual number. >> we don't have the number. >> right exactly. >> we know that it grew. >> obviously they have it because they were able to calculate a percentage increase. >> trust us, they agree 11%. >> we have the revenue numbers, which people pay less attention to up 24% the first time we saw international contribute more to domestics. talk about a divergence tech

stocks amazon blew past the forecast. the boost coming from continued dominance in online retail and growth of the cloud business amazon web services. revenue is just shy of analyst estimates. within the company's guidance, amazon shares set to open at a new record high. pick whatever metric you want, what is impressive here is the web services business and this new advertising business is making amazon a profitable company. if you're a retailer, you've got to be freaked out they can just keep prices low and keep domina dominating industries because they have a strong backbone. >> so many we talked about the advertising business becoming an important third player after facebook and goog you can imagine, because people go to the amazon platform with the intent to buy, clearly and that's attractive to advertisers. up 64% that's after an accounting adjustment that's a huge number

by the way, that's high margin revenue. high margin revenue, as well, at aws which is up 49%. reacceleration of revenue growth these are higher margin revenue categories higher than the good old fashioned retail business. and they can't seem to control the profitability. amazon try to kind of control to the extent that they didn't want to make that much money. it seemed to work well for them. now it feels as though it's out of their hands they had the high margin businesses not to mention over 100 million people paying them for amazon prime. >> and the decelerated spending on head count and fulfillment. you have to wonder how much of the lever did they push in order to achieve the profitability i agree with you in terms of the higher margin businesses those are highlights on the ad business, a lot of analysts are saying it's just getting started. as a percent age of total revenue, it's small. and people going to the site

with the intent to buy they're going to it as a substitute for search. you want to see what something costs. what better place to go than amazon they'll tell you how much it'll cost and how much to ship. >> revenue growth was okay and unit growth was a little weak in terms of selling stuff. >> yeah. >> some analysts -- >> i think i was watching your show where jean was puzzled by the positive stock reaction to the revenue miss i guess the profit levers are so powerful here. expense control, as you mentioned, and just the growth of these businesses. aws is now a $6.1 billion business. >> $6.1 billion. that's the quarter. >> yeah. >> we were talking almost $25 billion and growing 49%. when do we see that kind of growth there it is. >> for such a big company. and now the race to a trillion dollars is on again. >> yeah. we'll be watching amazon's market cap today to see how

much -- >> a favorite parlor game. >> will it pass apple? >> the stock reaction is up 4% yesterday lost 3% going in keep in mind. >> and watch the presidential twitter account. >> okay. i will. >> he tends to attack them, sometimes. >> oh, yeah. >> yeah. "washington post," even anti-trust he brought up recently. >> he has. all sorts of things. we have a huge show for you, speaking of presidents still ahead an exclusive with kevin johnson. that's the coffee house chain reported revenue and profits that were a record but not necessarily anymore than analysts had been anticipating by the way, we'll also round up earnings and hear from the ceos of intel and expedia, as well. another look at futures as we count down to the opening bell 17 minutes from now. president trump will address the economy around 9:30 eastern. we'll go to the white house live for that more "squawk on the street" when we return.

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we are watching futures here as we get the first read on second quarter gdp it's a big one 4.1% growth. just shy of estimates. still the fastest growth rate since the middle of 2014 third best growth rate since back in 2018 first quarter gdp also revised higher to 2.2% from 2% president trump will be making kmenltds about that number at 9:30 a.m. eastern. we'll bring it to you live at the white house. stock futures pointing higher. moodies analytics joins us also david mcintosh joins us mark, you've been critical of the president's policies in the past how much would you say the fiscal stimulus, the tax cuts had an impact on the super fast gdp? >> i think it had a big impact the tax cuts are deficit financed they're all over the report so without the stimulus, growth would have been probably closer

to 30. and the quarter got reduced by the effect of the tariffs. a lot of exporters tried to get ahead of the tariffs if you take it out, growth is close to the 2%, the growth we've been getting this sun sustainable strong. it's juice bid the fiscal stimulus. >> unsustainable strong. i want to get some initial reaction from the president who is just tweeted 55 seconds ago "great gdp numbers released. will be having a news conference soon." david, is he right to claim victory? >> i think he is i think mark is right. it's a as a result of the stimulus but it's definitely sustainable. what its done is kick start the economy to the next level. particularly the tax cuts. and that will be sustainable over many more quarters. the key here will be more good news like the president had with the agreement and principle with europe we would reduce tariffs

rather than get into a tariff war. i think that will bring another wave of growth into the economy. >> mark, does this influence how you look at the fed and the fed's path for the next year >> no, this is a totally script. when the tax cuts were implemented and the government spending increased passed earlier it was clear we were going to get this kind of growth through the remainder of this year and the first half of next. and at this rate of growth, unemployment, which is 4%, will continue to decline. it'll go into the low 3z by the end decade and combine it with the inflation at the fed's target accelerate to over that's with the script they've laid out for us and a script it looks like this report is consistent with that script. >> david, don't hear a lot about

deficits mark mentioned it, of course we have a trillion dollar deficit on hand with the lower revenues coming in the counter argument is economic growth will be higher for some time and it will generate additional revenues making up for the shortfall. is that your expectations? >> i do expect that on the revenue side the disappointment is actually on the spending side where the republican congress has failed utterly to make any real meaning of holding flat the spending levels that's how you tackle deficits is by keeping the break on the spending and they haven't done it the revenue will make up for itself with the growth in the economy and, frankly, had they even just kept spending flat, i think we could see us moving toward a balanced budget, actually. >> hey, mark as it relates to your comment on unsustainability, the two strongest metrics are personal consumption expenditures,

consumer spending up 4% and real final sales it looks up 5.1% that's pretty healthy demand how long will that last? >> about a year. that's the length of time where we're going to get the increases and the cuts in taxes flowing through to the consumer. that's going to juice up growth. the other -- at least in terms of consumer spending then it goes away. by late 2019 is we make our way to 2020, the tax cuts benefits are over and spend willing come back down to earth the other factor juicing up final demand, of course, are the exports. right. so that's very temporary that's going to go away, you know, immediately and so there's going to be a bit of a hole in q3. >> and the soybeans depleting inventories. thank you very much. and a look at futures.

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just go to geico.com. geico helps with renters insurance? good to know. been doing it for years. that's really good to know. i'll check 'em out. get to know geico. and see how easy homeowners and renters insurance can be. you're looking at a live shot president trump set to address the economy in a few moments we'll take you there live after the release of second quarter g gdp 4.1% marks the fastest growth since 2014 punctuated, david, by 4% growth

in consumer spending. >> also, this morning disney shareholders and fox shareholders holding their special meetings they'll vote on the disney deal to acquire the fox assets. rupert murdoch and bob iger they're not expected to attend no drama no drama here. no doubt this thing is not in doubt don't hang out outside expecting any celebrities. we'll monitor it, though, and let you know when the vote clears prior, of course, a couple of weeks back when our parent company was successfully in the mix. there was a larger question and should comcast come with a higher bid the question now is much more about sky and will disney choose to try to compete there with the 14.75 recommended offer that comcast has for that satellite business again, as i reported, that

doesn't seem to be likely either more likely is the fact they're done on both fronts. no shortage of things for us to be following this morning. of course, including starbucks earnings that are out. we're awaiting kevin johnson. >> i was going to say on disney. disney's stock has been doing very well lately right. it's up 14% in the last three months so are you -- there's no drama here, is there any mystery? >> none. >> right. >> none. the only questions now are disney strategy in terms of integration, closing the deal, of course, they need china and they still need the eu they have the doj approval the integration. then they're rolling out these important platforms ott platforms direct to consumers and how they're going to do it people are wondering is three too many are they going to piece it down to many different silos? should it be one service those are things that investors will be focussed on in the future. >> intel shares, by the way, are

trading lower sharply by more than 6%. the concern on the data center revenue. that was a miss. it was up 26.9%. it was a miss of about $100 million on that revenue side and, also, the next generation 10 nano meter chip this was an issue because they kept delaying the roll out of the new chips originally supposed to be rolled out in 2015, if you can believe that and now 2018 and now 2019 the pc with the new chips will be there. so we're seeing a sharp decline in shares of intel. >> and the interim crow comie -- ceo coming on squawk alley the coffee giant starbucks plans to increase the dividend joining us now is starbucks ceo

kevin johnson. we'll probably get interrupted by an opening bell and possibly a presidential conference. 3 to 5% is what you're guiding towards in terms of comps. we asked you last time you joined us, not long ago, jim cramer and i, why continue to stick with that. you're at the low end of 3 what gives you the confidence you can continue to meet that guidance range >> well, good morning, david thanks for having me on the show this morning as you pointed out, this was a quarter we posted double digit growth on top line revenue and earnings per share we did not deliver on our same store comparable expectations we had internally and we're accountable for that we're focussed on the two targeted long-term growth markets in the u.s. and china. we've got a clear action plan in each of those cases that we outlined yesterday for investors on our call. i think, you know, we're seeing good signs of those the action

plan helping us build momentum and we outlined a set of things we're doing in china to enable delivery in our stores u.s. and china two different markets, clearly. >> yeah, well, tell me about the u.s. you said you're starting to see momentum in terms of the things you're doing give us some specifics in terms of what is encouraging you >> yeah, first of all, in the u.s., in the morning day part, we are growing transactions, growing comp, our core business in the morning is healthy and strong when we look at our core beverage platforms, coffee, espresso, tea, refreshers all growing. the changes we're having in the u.s. relate to the afternoon day part we've seen some declines and specifically around the category of blended. our frappuccino business [ applause ] the cold beverages is helping to

shore up that. [ opening bell ] >> let's get to the opening bell i think it was last time we had you on, we were broke by the bell we're awaiting the president who is going to -- talking about the gdp numbers. taking number of, as far as we know, other questions. kevin, let me come back to you and talk a bit about china here. you had a negative 2% comp i know the chinese market, as you have said, is not necessarily about same-store sales as much as overall sales

because you're opening so many new locations. nonetheless, you did, for the first time seem to indicate there is at least competition there that you're starting to see. is it worrisome to you at the higher end that there are new competitors in china who may be taking share >> first of all, as you pointed out, david, china is all about new store growth we're building our footprint in china. we're just north of 3400 stores. we've increased our new store builds to 600 per year we're entering 100 new cities over the next three years in china. all of those cities are larger than the city of los angeles, so big, big opportunity in china. this past quarter, we grew transactions in china in the mid teens, and that was driven by the new store growth building out the footprint of starbucks in china is the priority, and, you know, clearly we've demonstrated there is a great business in coffee in

china. so we're going to have a lot of competition and we're used to that we've always had competition, and, you know, we're seeing a bit more of that in china. we're going to stick to our strategy and to our game we've been in china for 20 years and we'll continue to build new stores and build out the brand around premium coffee, a premium experience, and custom hand crafted beverages at scale. >> kevin, it's sara. i'm wondering for you think the credibility toward the stock is taking a hit lately because of some of the big management shake up issues. schultz and the somewhat surprising resignation of the cfo. when i talk to investors, they're sort of shell shocked from this. do you think it's impacting the stock's evaluation >> sara, first of all, if we look at the transition that howard and i have orchestrated, this has been a multiyear transition, and i think it's been very thoughtful and very intentional every step of the way. so, you know, i don't necessarily consider that, you know, to be sort of an abrupt

change you know, that said, you know, howard is, you know, howard is an iconic merchant and, you know, the founder of the modern day starbucks. those transitions should be thoughtful and that's how we handled that in the case of scott his decision to retire and we thank scott for his contribution and he's going to continue through november and then in a consulting role. that, too, will be a smooth, successful transition. and so i think we're handling these in exactly the right way positioning starbucks with the future, you know, the past year we've stream lined the company focussed more on the core business we outlined our action plans yesterday and, you know, i feel like we have line of sight to the things we have to do and now it's up to us to execute. >> kevin, it's melissa i think the question that investors are grappling with is are starbucks best growth days behind it? we're taking a look at the biggest core markets, and when you take a look at last year's

same-store sales in the u.s., for instance, they were up 5% and this year they're up 1%. in china last year 7%. this year down 2%. you wonder is starbucks reaching a saturation point here? >> well, look, certainly this quarter we've posted a top line revenue growth of 11% and earnings per share of 13%. it now, you know, the u.s. is in a different stage of growth than china. you know, the u.s. we have to be much more driving same store comps. china is about growing new stores we have significant growth opportunity, long-term growth opportunity in china in the u.s. when we look at where we're building new stores we have growth in the middle america and the south. and with the latest global agreement we struck with nestle, we have the opportunity to take the starbucks brand to cpg

channels in 189 countries that nestle has a presence in you know, clearly we're driving growth at scale and we think we've got a solid set of strategic priorities and we're actually -- against those. >> i want to ask you about president trump. we're waiting for him to speak at the white house on the south lawn now after getting the 4.1% economic growth figure do you think it's a direct result of president trump's stimlatisti stimulus policies? >> i'm sorry, i didn't understand the question. >> the stronger economy, the 1 4.1% growth figure fastest growth since 2014. >> well, you know, certainly the economy is doing well, and, you know, i think over many years since, you know, since the macro economic challenges we faced a decade ago, you know, we've been on a recovery path and, you

know, i think there's a lot of factors that contribute to it. we see unemployment low and a healthy economy. >> kevin, when it comes to the u.s., again, and that afternoon day part that you've talked about, i know digital membership and membership rewards are very important component. you're at 15.1 million what do you think a growth rate we can assume is your digital memberships over time? >> well, david, certainly we grew our active rewards members by 14% year on year to 15.1 million you mentioned in addition we grew the average spend per member in the mid single digits. so that set of digital relationships is very important. in fact, we think it's one of the things that every brick and mortar retailer must do. extend the in-store experience to a digital mobile experience in addition to the 15.1 billion active rewards members, we also

attracted 6 million digitally registered customers who have established the digital registration with starbucks and yet haven't joined the rewards membership so, you know, our job is to continue to expand the apture of reach to customers digitally and bring them into the rewards program where we can use our personalization engine and provide them relevant offers and suggestions and that just deepens their engagement with starbucks. so the digital agenda is healthy and strong in the u.s., and it's also healthy and strong in china as we've launched social gifting now in partnership with allalib. some phenomenal progress in the u.s. and china. >> we're going to leave it there, kevin, as we await the president in a moment. thank you for bearing with us through the opening bell and appreciate your type and -- timn insights. >> david, thank you.

>> kevin johnson, ceo of starbucks. >> pretty strong open here consumer discretionary is in t including amazon, which is in the consumer discretionary group. also, guys, chipotle and expedia which managed to surprise the street in a positive way chipotle's new ceo, the exexecutive from taco bell to raise guidance for the first time we've seen in that stock. and expedia showing strong growth rate of 12% we're going to talk to the ceo of expedia in the next hour >> after the historic day yesterday, facebook shares found the bottom it's up a half a percent i suppose that's something. >> it is something we'll see how it trades for the rest of the session. twitter, by the way, is down by 15%. no surprise given the premarket action here. we're watching the bio tech spaces been a space that was effectively on a rally over the past three months. the ibb up 15% or so

the company also saying it won't raise prices again this year so sort of following the lead of the other big drug makers in the space to avert the president's ire by twitter but the concern about amgen it was a beat thanks to products that are now facing competition by generics as well as bio similars how much of this will be sustainable in future quarters that's a question for amgen. we had numbers out that stock is trading about flat roller coaster ride this week with biogen. >> yeah. the alzheimer's drug up first and then. they didn't need the end points. >> the study was muddled in terms of t terms of how they collected the study. the patients with the highest dose were not genetically predoes posed to alzheimer's so the disease progression is

slower in general in those patients there's questions how the study was perceived and how it was executed and that sort of muddied the waters for biogen which is showing a decline of 1.3% biotech under pressure as we have technology as a whole, i believe, it is higher. >> yeah. amazon is up about 2.8 the market value is above $900 billion. you can do your own figuring out of what exactly bezos' network is. >> another favorite parlor game along with the market cap trillion dollar. >> yeah. he's the richest guy around. i think that's safe to say. >> in history. >> almost down 7% after the numbers it was the margins that people are concerned about. >> margins. >> data center, revenues, obviously this is an interim ceo, as well we had that ceo -- the abrupt ceo change about a month ago there are a number of questions when it comes to intel. >> we are speaking to bob, the current ceo of intel

a couple other things to follow through yesterday. comcast shares up 2.2% over a gain yesterday on what was a strong quarter, certainly. 260,000 broadband additions, and that is being rewarded, yet again. a recent high, at least for that stock, of course also, to note, nxp, again, another guest we'll be having. we wondered for quite a few days, jim and i talked about where would the bottom in the shares of nxp, if and when the deal with qualcomm did end, of course as it did the other night. might have gotten an answer. we're up 1.7%. rick will be our guest this morning on "squawk on the street." ceo of the company 21 months they waited. an interesting statement from the chinese anti-trust authorities. they're saying why didn't you wait longer?

we were still doing our work of course, it was caqualcomm who lead the decision. and the belief it was never really going to be forthcoming coup >> if what the chinese regulators are saying is true there could have been remedies, potentially, to resolve what they had questions about, maybe m & a is still possible in the space? i mean, if one thought it was a china trade war that really was the driving force behind china not ruling on the merger in the first place, if you take their statements at their word, perhaps, there could be deals in the future that could be done. that could be a hope. >> yeah. and because, as we've pointed out, the decision by mofcom.

>> many people said undermines the integrity of the anti-trust process over there because it's so much conceived, really, a part of the overall -- >> we're going to go to the south lawn of the white house now where president trump is set to address the economy. >> good morning. moments ago, the numbers for america's economic growth or gdp were just released, and i am thrilled to announce in the second quarter of this year, the united states economy grew at the amazing rate of 4.1% we're on track to hit the highest annual average growth rate in over 13 years, and say this right now, and i'll say it strongly, as the trade deals come in one by one, we'll go a lot higher than these numbers, and these are great numbers. during each of the two previous

administrations, we averaged just over 1.8% of gdp growth by contrast, we're now on track to hit an average gdp annual growth of over 3% and it could be substantially over 3% each point, by the way, means approximately $3,000,010 million jobs each point you go up one point, it doesn't sound like much. it's a lot it's $3 trillion and it's 10 million jobs if economic growth continues at this pace, the united states economy will double in size more than 10 years faster than it would have under either president bush or president obama. perhaps, one of the biggest wins in the report, and it is indeed a big one, is that the trade deficit very dear to my heart, because we've been ripped off by the world, has dropped by more

than $50 billion $52 billion, to be exact dropped by more than 50. think about that the trade deficit has dropped by more than $50 billion, and that's added and adding 1.2 gdp. that's a tremendous drop we haven't had a drop like that in a long time you have to go back a long time before you find it by increasing growth to 3%, over the next ten years, that would mean 12 million new american jobs and $10 trillion of new american wealth, at least. and that's not including the fact that since i was elected, we've created approximately $7 trillion of new wealth the year before i came into office, private business investment grew at only 1.8%

last year and jumped to 6.3% that was my first full year. we had to do a lot of things to get it to grow and this year it's growing at 9.4% so that's a very tremendous increase there hasn't been an increase like that in many, many years. decades. and i think the most important thing, and larry kudlow just confirmed to me along with kevin hassert that these numbers are sustainable. it isn't a one-time shot i happen to think we're going to do extraordinarily well in our next report next quarter i think it's going to be outstanding. i won't go too strong, because if it's not quite as good, you won't let me forget it i think the numbers will be outstanding. we've accomplished an economic turn around of historic proportions. when i came into office,

1.5 million fewer prime age americans were working than eight years before we had lost almost 200,000 manufacturing jobs under the previous administration, and you all know they say well, you have to lose manufacturing jobs it'll get worse and worse. manufacturing jobs are obsolete. no more than 10 million additional americans had been added to food stamps in the past years but we've turned it all around once again, we are the economic envy of the entire world when i meet the leaders of countries, the first thing they say congratulations on the economy. you're leading the entire world. they say it almost each and every time america is being respected again and america is winning again because we are finally putting

america first. everywhere we look, we're seeing the effects of the american economic america we have added 3.7 million new jobs since the election. a number that is unthinkable, if you go back to the campaign. nobody would have said it. nobody would have even in an optimistic way projected it. we're in the midst of the longest positive job growth streak in history. new unemployment claims have recently achieved their lowest level in almost half a century the african-american unemployment rate has achieved the lowest level in recorded history. african-american unemployment is the best its ever been in the history of our country the hispanic unemployment rate has reached the lowest level, like wise, in history. the asian unemployment rate has

recently reached the lowest level, again, like wise, in history. women unemployment rate recently reached the lowest level in 65 years, and soon, that will be in history. give it another two or three weeks. veterans unemployment is at its lowest level in 18 years, and that number is rapidly going up. on top of which we just received and won from congress choice where veterans can go out and see a doctor, if they can't get service, the service they deserve. unemployment for disabled americans has hit a record low, lowest in history. more than 3.5 million americans have been lifted off food stamps something you haven't seen in decades. 3.5 million americans have been lifted off food stamps

that's because they're able to go out and get a job they're going to love their jobs 95% of american manufacturers are optimistic about their company's outlook, and that's the highest level, also, in history. and that's an old survey been around a long time. manufacturing wages are expected to rise at the fastest rate in over 17 years. business and consumer confidence has reached historic highs so far this year, american exports are up nearly 20%. i've only been here a little more than a year and a half. over the same period, in the year before i took office, we've become a net exporter of natural gas for the first time since

1957 gotten rid of tremendous amounts of regulations, which allows us to do things and we still have tremendous regulations on clean air, clean water, the environment it's important to me and everybody. we have unnecessary regulations that were hurting our economy and hurting our country. we have eliminated a record number of job-killing regulations, and with the help of republicans in congress, we passed a one democrat vote the biggest tax cuts and reform in our history. as you know, the democrats want to end that and raise everybody's taxes. that will be a disaster for our economy. as a result, more than 6 billion americans are now enjoying new bonuses, better jobs, and far bigger paychecks yet every single democrat voted against a tax cuts every single one, we didn't get one vote they voted against working families, they voted against

small businesses not good in the first three months after tax cuts, over $300 billion poured back into the united states from overseas we think it's going to be, in the end, when completed over $4 trillion will be back into our country. apple, alone, is bringing in $240 billion, and they're building new plants. they're building a magnificent campus they're spending wisely but they're spending it in our country. not some other country that was made possible by the new tax cut and reform plan. at the same time, we're finally cracking down on decades of abusive, foreign trade practice. we were abused by companies. we were abused by the companies within companies, but in particular, we were abused by countries themselves including allies abused by like no nation has ever been abused on trade

before because we had nobody watching they stole our jobs, and they plundered our wealth that ended yesterday i was in granite city steel in illinois, it was an incredible sight we had an audience of steel workers. some of the roughest, toughest, people you've ever seen, and half of them had tears coming down their face. i don't know if these people ever cried before in their life, to be honest half of them had tears coming down because we opened the tremendous united states steel plant' they're opening up seven other plants and the steel industry is back they're open for business. we need the steel industry and the tariffs did it and nobody mentions the fact that these plants are creating tremendous numbers of jobs

tremendous and billions of dollars are pouring into the united states coffers. billions of dollars. but we're getting jobs, we're getting money coming in, we're respected, and eventually, the steel prices will start to go down all the new plants will be competing against each other but we won't have foreign countries dumping, that's the word they use "dumping" steel all over the place and destroying our factories and plants and companies and destroying our jobs. since i was elected, we added 400,000 new manufacturing jobs remember that was on slebsolete. manufacturing jobs are among our best jobs. we're just getting started we've also liberated millions of

americans from the crushing burdens of obamacare the cruel individual mandate penalty is gone. that's when you pay a lot of money for the privilege of not having to buy bad health care and pay for it it's gone. nobody thought we could get rid of it. it was the most unpopular provision by far probably on anything but certainly in obamacare and obamacare is now on its last legs, fortunately. and through associated health plans, we're giving americans the ability just opened millions of people going to be signing up millions and millions. we're giving americans the ability to join together to purchase much better and more affordable health care and health insurance, including bidding across state lines so all the insurance companies are going wild they want to get it. you're going have great health care at a much lower price it will cost the united states

nothing. nothing. think of that. it will cost us nothing. and the secretary azar is coming out with another health care plan somewhat different result the same much less expensive health care at a much lower price. it will cost our country nothing. we're finally taking care of our people finally, there's another matter that's of profound importance, to me, and i wish to discuss it now before we leave, because there's nothing like what we've been working on. it's so important for the lives of not only for americans but lives all over the world at this moment, a plane is carrying the remains of some

great fallen heros from america. back from the korean war they're coming back to the united states. mike pence, our wonderful vice president, will be there to greet the families, and the remains and i want to thank chairman kim for keeping his word we have many others coming but i want to thank chairman kim in front of the media for fulfilling a promise he made to me, and i'm sure he'll continue to fulfill that promise as they search and search and search these incredible heros will soon lay at rest on sacred american soil even during the campaign, people would come up to me a long time

ago, many decades ago, oftentimes they were older in some cases they were younger, great grandfathers, the great grandfather, my grandfather, my father they asked if i could do something about it we don't get along too well with that country they said "whatever you can do." it's something that was important to me. many people asked. i've asked the vice president and others to just pay a special tribute, and they'll do that so we honor the sacred memory of every incredible american patriot who fought and died in that war in everything we do and every action we take, we are fighting for loyal, hard working, patriotic citizens of our blessed nation we're making our country great again. we're respected again all over the world.

our military will soon be stronger than its ever been, by far. that will produce thousands and thousands of jobs. nobody makes equipment like we do nobody whether it's planes, missiles, or any form of military commitme equipment, we make the best in the world by far we're making it possible for our allies to buy that equipment quickly. they don't have to wait for two-year approvals and more. we're doing great. and i'm honored to see that 4.1 number perhaps i'm even more honored to see that deficit shrink. the trade deficit shrink so much with that, i would like to ask kevin hassert and my good friend larry kudlow, if they could step forward and say a few words. thank you all very much. it's a great day [ applause ]

>> thank you very much, mr. president. thank you for your leadership and for the faith you put in me when you offered me this job thank you for standing up for our veterans my father and my uncle both fought in the korean war, and you can't imagine how much it means to those veterans you didn't forget their comrades as an economist, it's my duty, sir, to remind that we should not make too much of one number. right. how often do we hear economists say that but when i think back to the first time i met with you in the oval and we talked about your vision about how to make america great again, you might recall that in the end, i agreed. yeah that ought to work and the fact is, if we look at the data today that we can see the proof in the puding that the president's policies are working. it's not just in the top line but it's in the details. so the president said if we deregulate the economy and have a tax reform, that there will be a capital spending because the factories will come back to america. if you look at the data, the factories are booming again.

the president said that if we emphasize energy production here in the u.s., it could become a dominant energy economy. even energy export if you look at the data today, one of the reasons why the data is so strong that drilling and mining activities skyrocketed in an almost unprecedented way. and, finally, and this is the thing that at times, sir, you looked at me and smiled about whether i agree with you you said you would bring the trade deficit down you have the $50 billion reduction proves if you stand up for american's work es a workers know, you can make a lot of progress. thank you very much for your leadership, sir. >> thank you [ applause ] >> it's a little warm out here so i'll be as quick as i can i want to reiterate what the president said and my pal kevin. we've had a pro growth agenda. it's been in place for a short

while. it's already beginning to work low tax rates, roll back of regulations, unleashing energy, and trade reform to fix a broken world trading system i just want to note in the numbers and this is becoming a trend, business investment is booming. 9 to 10% growth in the first half of this year. i believe that's going to continue why do i talk about business investment well, that's the key to productivity, which is the key to growth, which is the key to rising rising real wages and very strong jobs a point we've made a million times and continue to make it. the tax cuts on the business and investment side will be boosting wages, livelihoods, and jobs for middle american ordinary working folks. it's starting to take effect that's why i agree with the

president. this is a boom that will be sustainable. frankly, as far as the eye can see. this is no one shot ever thank you, sir i appreciate it. [ applause ] >> reporter: mr. president, is michael cohen telling the truth? is michael cohen telling the truth? mr. president, is michael cohen telling the truth? >> looks like the president is not going to take any questions there. president trump at the south lawn of the white house pulling the 4.1% gdp number that we got this morning for the second quarter, an amazing rate said we're looking at the highest annual average growth rate in over 13 years. clearly a victory lap. he's excited points to some of his policies they're working and lifting our economy. also, says that these trade deals come in and we're going to go even higher says we're on track to hit an average growth rate of 3%, could be

substantially higher kevin hasset, larry kudlow backing up the president saying the deregulation and the tax cuts are working our reporter is with us now from washington what other headlines, can will, did you get? >> reporter: it was interesting, sara, to hear the president use the second quarter gdp numbers, essentially, which he has been touting for the last several days as a peg to talk about his economic policies and how they're working. notedly about the gdp. he answered one the key questions economists had how sustainable is the 4. 1% growth that we've seen in the second quarter was it a one-time stimulus that was strictly because of the tack tax benefits the president said that larry kudlow and kevin said that growth was very, very sustainable and you heard larry kudlow echo those comments saying business investment up 9

to 10% is what he's looking at yes, maybe in response to the tax cuts, but he sees the trajectory of that being able to continue for the long run. also, interesting to hear the president talk about growth but talk about how much happier he is to see the trade deficit coming down. of course, this is one component of the calculus of gross domestic product he said in the second quarter, the trade deficit fell by $50 billion, in his view, is proof positive that his trade policies and specifically, sara, those tariffs are working. >> and that's where it's not sustainable. it's just, i mean, next quarters are pulling forward the shipments of soybeans ahead of the tariffs. >> yes, that is one part of this, but he also believes that perhaps there is less foreign steel and aluminium coming in, which is the other side of that ledger here. perhaps it's not sustainable perhaps as some of the deals he's inked this week, the handshake deal with the european union that will eventually

resolve some of those tariffs, that will certainly have an affect on that calculation we'll see exactly what affect it has but certainly the president both yesterday in stump speeches in illinois and iowa talking about the tariffs and the affect on gdp he believes it is the right direction for the long-term of the u.s. economy. >> also, with us, kayla, is steve liesman and rick santelli. on the question of how sustainable, larry kudlow said it's a boom that will be sustainable as far as the eye can see. >> so, i think there's two pieces to unpack in that i think there are some pieces of this quarter here that are oneoff items, but i think there's a possibility of some gathering momentum from the tax cuts i think, if anything, the tax cuts unleashed an animal spirit sort of thing that may have brought some business investment forward. the kind of economic affects of the tax cuts are one that will

accrue over time, as you get more business investment, hopefully, more productivity a lot of stuff talked about in there, as you suggested, is the result of oneoff stuff the 9% surge in exports. probably soybean related also, the big increase in business investment in the oil fields is followed up both the deregulation by the trump administration, but also the rise in the price of oil that's one thing that economists want to unpack when they look at it so i think there's truth in the things that president says i think he's probably right to take a victory lap i think he may have gone around once or twice more than warranted by the data. >> rick, how do you explain the action in treasuries saw little bit of buying saw a little dip in the dollar it was an overall solid number. >> you know i think it was more about expectations i think rates inched up as many thought maybe 4.8 to 5.2 is a

possibility. indeed, it was it didn't turn out to be the case of that change was yesterday's data points that were factored in some of the adjustments to inventory so sale and retail and durable goods. it was still a good number one thing i would take exception with with the president, you know, i'm not sure what time reference he was trying to explain the best pace in 13 years. these are good numbers i don't want to take any thunder away i like many of the policies of the administration but i can combine four quarters recently and come up with a better pace, as we were discussing earlier take this quarter and average it out it's 3.1 if i start on the first quarter of '15 and go back to the second quarters of '14, that running four-quarter average was 3.75. taking nothing away from this, but it isn't the best four quarter pace, depending on how you combine it, but on the positive side, i really do, i don't want to get wonky. if you look at variance how much

the month to month numbers change you try to take into account as steve worked on that the first quarter tends to be weaker what i find, there's less variance there seems to be more momentum and a tighter range, and that is a positive you know, in any facet you measure the economy in you rather have a nice 45 degree line than something that moves up aggressively but is choppy. >> it's a positive but the fact checking is appropriate. president obama didn't come out in front of the white house we got a 5.1% number in 2014. >> yeah. this was the president sticking a little bit more closely to accurate numbers relative to how accurate he's been in the past i haven't had a chance to fact check all of them, but rick is right about the average. and the idea that a lot of trends, even almost, you know, acknowledge the existence of the obama administration in his comments were in the middle of one of the longest runs of job growth because it began under president

obama. so he's not taking credit for all of it. just most of it. i think there's a big question, though, about consumer spending which was a big number here 4% and i had one economist who said, look, this is from a tax cut and on a quarter to quarter comparative basis, you don't get that added cash flow again you get it once, and so the question becomes what will propel consumer spending in the quarter ahead? and another question is, the extent to which capital spending remains high if it's driven by energy you won't get that so here is what i think is the best way for the markets, investors, and folks at home to think about. rick talked about the volatility you did 2.2 in the first quarter. 4.1. we show you average it over. and the number rick gave, the 3% number, suggests there's been something of a meaningful uptick in gdp growth by a half a point to a full point, depends on how you want to count the federal

spending you had a huge pop from defense spending in there. there could be additional federal spending to go when we look at the private economy, there's been an upward trick of a half point to a full point. i think that could be sustainable for the next several quarters. >> both kaecevin and larry were talking about how tax cuts are not just boosting capital expenditures, but, steve, also wages. if they're already boosting capital expenditures and investment and plants and equipment and that sort of thing, why aren't the companies spending it on wages yet >> i'll give a quick answer, and i think the best answer is economists and nobody is really quite sure about that. everything about the tightness of the job market tells us that wages should be higher my best explanation, which i've stuck to for a couple of years, the wages are a bit distorted by the idea you're rolling off older workers and higher salaries and replacing them with younger workers at lower

salaries that's one point the other thing, maybe it's like the old 1929 song about prosperity being just around the corner maybe wage growth is just around the corner. >> yeah. rick, kudlow made the point about business investment and the key being productivity, which goes to what we're talking about in terms of wages? what is your view here are we on that road now? >> you know, david it's impossible to tell. productivity is a turtle with regard to how much it's going to change and what makes it change and feedback loops take a lot of time to give you a quantitative answer, but that's the key we need to get productivity up you know, i've read recent research that one of the problems with productivity is just globalism in general. it's like seeking water seeking a level from room to room. it ends up at the same level i think there are some countries draining that off. i think some of the trade activity kind of siphons it off so other countries move up but we give a little back.

there needs to be more work done there's literally no doubt that every tenth of gdp, as the president said, translates to serious dollars to the economy and productivity generates points in gdp. so we would need to make improvements there also, much has been said that service sector and innovation isn't measured i read many studies that dispute that i don't think the answer is that easy. >> steve, while we're on the truth subject here i don't know how much work you've done into the s.n.a.p. program but the president mentioned that fewer americans are on food stamps if you look at the recent data, i think it's only from april that's true. i'm wondering is that a result of lower unemployment? is the president right to point to that? is it a result of restrictions and lack of funding for the programs >> i have not done work on it. i think it would not be showing up in data yet i know that unemployment insurance is harder to get, so you have a combination in the

unemployment insurance world when we look at the claims every week, states made it more difficult to get plus, more people are working. so i think it's a combination of the programmatic changes, as well as uptick in the economy. i would suggest s.n.a.p. is probably going to be that but some study needs to be done. >> yeah. another look at that food stamp program. thank you so much for helping us get through that the president talking up this gdp number coming up next, more on the president's comments on gdp when we return. plus, a huge morning for earnin earnings amazon hit a new record high and the fox/disney deal got approved by shareholders.

here is a look at the hilton hotel in manhattan the shareholder votes meeting, special meetings on disney and fox shareholders are taking place. no surprise both sets of shareholders have approved the transaction, the long hard-fought deal which disney is now officially, at least gotten the approval of shareholders and fox to acquire the assets from fox for $38 a share. half in cash and the other half

in stock the deal hasn't closed yet it has received and remember how surprisingly quick it was. the approval from anti-trust regulators here in the united states it still needs the anti-trust regulators in china and that -- well, who knows given what nxp and qualcomm went through. disney is confident it's going to see that. remember how many people they employ at shanghai disney. and also the eu has to weigh in. the deal probably not going to close officially until probably the fourth quarter this year some say the first quarter of next they did get that all-important shareholder approval. >> nice day on sixth avenue there. >> a busy morning. the president just wrapping up his comments on the economy. also, talked about trade have a listen. >> we're on track to hit the highest annual average growth rate in over 13 years, and say this right now and i'll say it

strongly, as the trade deals come in one by one, we're going to go a lot higher than these numbers. and these are great numbers. >> joining us now pulitzer prize winning "new york times" winning columnist john stewart first, jim, a comment of the story of the day 4.1% economic growth that's the fastest quarterly number since 2014. >> i know. it's pretty incredible i think the economists will have a field day with this, because it does seem like a textbook case that you cut taxes. you unleash corporations and they do respond with growth. i mean, the flip side is debt and how long it can go on? growth in isolation it's good but there are potential -- including much higher interest rates. i don't want to take away from the 4.1%

i was beginning to think i would never see 4 again on those numbers. >> ever? >> many reasons but starting with the notion that took the financial crisis was economies of the world and relatively low population growth, not just didn't provide the raw material for anything. >> are you optimistic? do you think that this growth will be sustainable? i know the skepticisms is out there. you don't decide to spend billions of dollars overnight. it takes time to figure out what you do with it it could argue for a back half of the year string of growth. >> absolutely. i trust businesses to deploy their capital wisely if this is mostly investment, it will boost productivity and we'll see significant returns in the form of profits and continuing growth in the economy and greater hiring.

>> that's the key question rick santelli saying it's hard to measure what is behind it or how you're going to achieve it in the globalized economy that we currently are part of >> right but, you know, look this is a very flexible, resilient, dynamic economy. google reminded, you know, the anti-trust regulators are years behind the curve in trying to figure out what to do. they were worried about microsoft. those things aren't around anymore. the pace change is very rapid. i think it's a very exciting time and dynamic. >> europe anti-trust regulators would not say they're behind the curve and they're moving fast. you're right about the $5 billion record fine that came down on google president trump took a shot at the eu for it. >> yeah, well i kind of agree with him here. i don't think it's for the reasons he said. i don't think they're being

vindictive but i come away with the anti-trust opinions every time scratching my head and wondering what are they thinking when you zero in it's about whether manufacturing can preinstall the google apps google is not doing this it's the manufacturers, as far as i can tell, haven't complaining about this at all. and they say it's a huge advantage for google if you have google search installed on your phone. if you want to use bing, you know, a touch of the finger and it's there on your phone you can use it so easily i just don't get that at all. i mean, there must be a little bit of an advantage or google wouldn't do it they pay apple a lot of money. but it's so easy to put these rival apps on. any competitive behavior, i don't get that and i can't find any, you know, recognizing anti-trust experts who agree with this either. >> the eu would say it's the behavior the fact they're forcing these manufacturers to do that they are abusing their dominant

market share position with 80% of the world's smartphones with android device to make sure you are not using another search engine >>well, yes, that is what they said but the question is, is that really right i mean, i was very surprised in the information they released but as far as i can tell, they didn't go talk to anybody who uses these things. and said do you like having the google on your phone i do i like having it on there. as opposed to some other ones i won't mention that come on there. and, by the way, just because it's on there, you don't have to use it i don't understand the harm. as far as i can tell, they did no consumer polling about this it's in the name of consumers they're doing this so i -- i believe -- >> it's easy money for the eu. >> yeah. >> yeah. >> and, you know, they've got the other google case working

the way up that was two something billion i think trump did say they're picking the pockets of american companies. i wouldn't want to go that far but like many things, there's an element of truth in it, i would say. >> yeah. >> the old element of truth. >> also, you know, i think the europeans are very frustrated that they haven't produced any of these. >> they want to fine every other tech company that comes to europe. >> yeah. it's a big embarrassment to them there's no european silicon valley. >> they have spotify. >> true. they've had some successes. when we come back, expedia flying higher. out with a big beat this morning on the back of the boosts and gross bookings the ceo mark okerstrom jnss neoi u greatness of an suv? is it to carry cargo... or to carry on a legacy? its show of strength...

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joining us is expedia ceo mark okerstrom. >> great to see you. >> the number of room nights booked through expedia gained 12%. that was a lot more than the street was looking for give us a little bit of color as to what drove the quarter. >> we had a great quarter. we started off the year last quarter on a position of strength, and really this is us just executing on the playbook we laid out at the end of last year importantedly we're investing pretty aggressively in building up our supply footprint. adding more lodging options to our customers. more choice generally delivers more for customers we saw some good strength there and the important thing is this quarter we saw healthy room night growth we're more disciplined in the way we spend our sales and marketing. that delivered better than expected profits on the bottom line. >> right why are we in terms of the investment spending cycle? what inning is it?

>> well, in terms of the investments, i mean, we got very early in the year ramping up our head count in our priority markets. so a lot of that is already sitting there in the pnl you can see it and the other big investment is in transition in our compute infrastructure into the cloud environment and we're going to see that ramp up through the year, you know, somewhere a little bit short of $170 billion on cloud computing this year importantly we're foregoing capital expenditures so, you know, this is an investment year but we're expecting to deliver balanced profits this year. we raised our guidance to 7 to 1 12%. >> you mentioned discipline in marketing. what does that actually mean how does that show itself? once you achieve discipline, do you maintain discipline? >> i hope so

this is just taking a data driven approach to the way that we spend our direct marketing spend. you know, a lot of spend we make in marketing channels is really automated at this point. with our transition of our data and automatic of bidding to the clout environment, we're able to invest much more data and use data science for us to be determining, you know, which traffic and customers will likely to be able to book with us and which are not and that type of compute capability is relatively new so it's a discipline we've built. we can't just stop where we are. we got to keep getting better. i hope we keep discipline and we hope this is, you know, is really a sign of things to come. >> what is your data telling you about the customer you accelerated new property addition for the second quarter. 33% room night growth, 33%

bookings growth in home away are you seeing customers choose home away over a hotel do you find them searching for both >> we find that in certain circumstances. and it makes sense if you take, for example, me, i've got a family of four. you know, in the olden days, the choice was really to, you know, really break the bank and try to splurge on a big suite in a hotel. take two rooms we hoped are side by side and, you know, put the kids in one and us in the other. that was a terrible choice now with having alternative accommodations online, and particularly the home away accommodation, which is generally a two-bedroom plus accommodation. the option is real now for us to use our apps and look online and instead of staying separate, really stay together. >> foreign exchange, strong dollar, and trade tensions how do you see the issues impacting the outlook? are they dampening the guidance a bit?

>> well, versus where we were at the begin of the year, absolute foreign exchange is dampening the guidance a bit we had a tail wind and it's dampening. generally what we see with foreign exchange movements, though, is even though our reported results move up-and-down, people still travel it just changes the patterns of people travels so, you know, we view this as part of our business we expect that as the u.s. dollar strengthens and weakens, u.s. travelers will stay closer to home or take more trips to europe the great news for us we're a global business. we're here to be the world's travel platform and help people go wherever they want to go. >> and trade tensions? some of the airlines, i mean, have cautioned about changes in terms of corporate spending and traveling between countries, as we see a bit here. how does that impact the travel industry >> yeah, listen, i think we're watching it pretty closely where this becomes a problem for us is when trade tensions

ultimately raise the cost of things like fuel or things like steel and we ultimately see that translate into higher costs for the airline industry i mean, we have had a great period of many years where airline or air fares have been going down that stimulated a lot of great leisure travel activity. with fuel prices on the rise, it's a concern we heard some of the airlines talk about the possibility of raising ticket prices. so that's where we start to hit us. >> mark, thank you for coming on today. mark mark okerstrom, the ceo of expedia. wi m dn colleger will sitow the. that's next. are you ready to take your wifi to the next level?

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share report and emphasized on the earnings call despite experiencing a level of deal fatigue the position in automobiles, the internet of things, is now stronger than it was 21 months ago when they signed the deal. nxp's ceo joins me now here. 21 months is a long time those say how can you not become distracted as a ceo planning your exit? and planning for what everybody assumed would be an acquisition by qualcomm. how do you maintain focus? what are you telling investors about the 21 month period to give them confidence >> we were busy trying to create value for the business during the 21-month period of time. in automotive, we've strengthened our position in safer driving through level three. and the internet of things, we now have clarity relative to how our technology can help assist the usage of americamachine leag and we see 75 billion connected

devices by the year 2025 three times what it is today so those factors play into our sweet spot we're well positioned to take advantage of that. being the lead semiconductor supplier we have developed technology where we can be a significant player in the electric vehicle market especially as china set aggressive targets on vehicle deployment. >> you did say when it comes to antonymous, fully antonymous qualcomm was going to be an important partner, so to speak or nxp that's no longer going to be the case do you need to do more when it comes to fully antonymous to position the company properly? >> we'll try to use partnerships and our real focus is how to take the machine learning and deploy it through microcontrollers and applications processer with a broad range that can make all of our lives easier using that information that coming up in

the cloud and the artificial intelligence. >> i want to talk about the process you went through particularly the end game. i reported for a couple of weeks that qualcomm was committed to saying no more after the deadline of the 25th it was my understanding you weren't necessarily on the same page would you prefer to see them extend the deadline one more time >> we thought since mofcom had to give an answer, it was worth considering that now that the decision is made, for it's us it's focussing on outgrowing the market by more than 50% how we can drive real shareholder value and get back on the path we were on for the last five or six years before the 21-month ago announcement. >> did you seep the announcement last night from the market regulators >> i heard rumors. >> they sort of indicated they were continuing their work and kind of gave some people who listened to it or read it the understanding that there would have been approved if it there was more time. what do you make of that >> they had plenty of foresight.

they had discussions from european and u.s. governments to tell them the 25th was the deadline they didn't take any action soeshltsed with it it's not really for us to even reflect on that. it's time to move on and, you know, qualcomm is moving on. we both have bright futures. we look forward to how we take advantage of it. >> hedge fund managers who lost money on it seem to think that hope springs eternal >> i don't think so. it's about how we create more value over the next few years on our own path. >> leverage. let's talk about the balance sheet a bit. you're returning capital you got $1.5 billion after the $2 billion reverse determination fee. you're running at a low leverage level. some investors like to see it higher how do you think about the balance sheet? >> we're going to be below that now. you know, we have $3 billion on the balance sheet at the end of the quarter after paying back

$1.2 million of debt last quarter. we'll continue to generate a lot of cash. we feel comfortable with two times from a targeted debt level. that gives us a lot of flexibility to continue to think about buy backs and how we return capital shareholders. we have an analyst day coming up in new york on september 11th. we go through more of the details of our future and talk about it and that point in time try to make a decision about how we implement a dividend. >> you mentioned partnerships. do you need to do not a large deal, but perhaps a smaller -- i mean, you're done with large deals. >> i think so. with this regulatory issue we went through, we don't see the reason to try to get into another like with we bought free scale three years ago when we closed that. you know, we don't think that it is worth going into another large transaction.

we'll do it to bring technology to us and drive our solutions in the marketplace. we haven't sold any businesses over the last 21 months because we were in the integration planning we'll do pruning of our portfolio like we have to drive the most shareholder value appreciation we can >>well, you know, to that point, did this chinese lack of decision, or this nonapproval, does it chill the waters for technology deals overall >> you know, i don't know for sure i mean, china is very important country for us we ship about half our revenue into china so we have a good relationship there and we want to continue to do that. we are deploying new technology there and kind of in an unusual position as being a dutch semiconductor company. but i don't know what the impact will be on large transactions. you know, it's not appropriate for me to speculate on that. >> and, finally, you sold stock last year. i think it was tax reasons you had a good price, too,

around $1.13, if i'm correct will you buy stock >> i haven't sold any stock in the decade i've been the ceo so i had a intox position that was changing at the end of november in the netherlands where i would become a full dutch taxpayer and not able to take advantage of my tax ruling. i had to be able to lighten my position associated with it. and, you know, i tried to buy some stock earlier when we fell down through the process, and couldn't because of the process. i haven't really had a chance over the last couple of days to spend a lot of time on my personal finances but it's a good value and i don't know why i wouldn't buy in. >> finally i can imagine over the last 21 months you think, well, i'm going to plan my i don't know if it's retirement or what is next after nxp, are you now going to be in the chair for the foreseeable future >> i'm fully committed and our management team is committed we're focussed on building a great company.

that's what we'll do i'm committed. i won't be there ten years, you know, we'll develop the appropriate succession planning to move forward but, you know, we're excited about the future and the growth we have and how much value we can create. >> and on september 11th, are we going to get any updates in terms of that growth rate? the call you were talking about, it has not really changed from what it was previously, in terms of prior to the qualcomm deal. >> it's still 5 to 7%, which is 50% faster than the market we serve. the growth in the automotive business is stronger than we had in the original 5 to 7% and the growth in the internet of things it's faster than what we had in that original. we had a couple of other areas that will grow a little slower than we thought. but it will grow at least at the 5 to 7%. >> partnership with qualcomm is that a possibility? >> we need to step back and see. qualcomm has a great connectivity platform. they're the leader so, you know, if we can work

some partnerships that are, you know, good for our customers and good for both of us, i think we would consider it. it's not a priority now. we need to let a little dust settle >> i bet you do. thank you for joining us. >> thank you good to see you. >> dick clemmer ceo of nxp when we return, douglas holtz-eakin sits down with rick santelli ♪ come on. come on, squirt. (dog barking) whatever your financial goals are, a u.s. bank wealth management advisor can help make them a reality. talk to one today. u.s. bank - the power of possible.

how do we balance market share growth in china which is important and trekt prekting our ip which is important. one trader warns there's more pain to come from the automaker ford find out which name to buy instead. more "squawk on the street" coming up.

the dow managing to hang on to about a 15-point gain here. let's get to the cme group now rick santelli.

>> reporter: thank you, czar perha - sara i like to welcome doug thank you for joining me this morning. >> thank you, rick. >> all right you know, i want to talk about today's number, but i don't want to make that the whole topic today. what did you think of today's 4.1% first look at second quarter gdp? >> we expected a strong number this is a strong number. i think the more important thing is where the growth came from. this isn't growth that came from the revisions. there was no drama in the revisions except the saving rate this isn't growth that came from one-time factors this was household spending, business spending, good solid core growth. >> you know and i find that the case, as well. one of the negatives i see a threat of is that there was so much put forward by reform that may skew growth in the short run. i understand corporations have some issues that they were able

to maximize one time when those are done, they still have a significantly lower corporate tax rate, individual/personal income taxes don't have any big one timers. isn't a tax cut the gift that keeps on giving? won't the tax rates, unless the other side of the aisle takes them away, keep more money in business and individual's pockets? not only for this year but for the year after that and the year after that >> yeah, tit will do that. i would expect to get bigger impacts out of the business side going forward. it's only been seven months. big corporations plan the cap x haven't been able to change as a result of the big business tax reforms. i expect the real impact to show later in this year and early next year. i think there's more to come out of the tax reform. >> you know and one of the other things we hear and traders have the great answers. man, we're getting this business expansion and traders say, you

know, good bull markets don't end because of old age i would take a step farther. you know, we've had a couple of administrations they've had a boot on the neck of business i don't know if you could start clicking at those times. under 3% that's a bill improvement over 2.2. and there's a lot more to come expansions typically end because of policy errors you're not going to see a policy error out of the tax and regulatory side. you keep an eye on the fed, make sure it is there, i don't see any reason to be pessimistic about the outlook. >> one final area i would like to discuss is the notion of productivity there was a study released by brookings institute that said past productivity may have been underestimated it is tough. it is hard to come up with

concrete ways and concise time frame to say we're going to work on raising productivity. >> the one thing we know works is capital deepening, more and better capital per worker. that's what the regulatory reforms were aimed at. takes time for that to pay off i'd keep your eye on that. >> excellent doug, always a pleasure. thank you for joining us today >> rick santelli, thank you. coming up on "squawk alley," the big ceo interviews continue. bob swan the stock is lower after earnings st wh ayitus it's pretty amazing out there. the world is full of more possibilities than ever before. and american express has your back every step of the way- whether it's the comfort of knowing help is just a call away with global assist. or getting financing to fund your business. no one has your back like american express. so where ever you go. we're right there with you. the powerful backing of american express.

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it gives you super fast speeds for all your devices, provides the most wifi coverage for your home, and lets you control your network with the xfi app. it's the ultimate wifi experience. xfinity xfi, simple, easy, awesome. now for eft spotlight. we are looking at energy stocks and other big oil names. >> good morning, melissa the energy etfs are mixed. look at shares of xle, oih, those are ones we commonly look at first, energy earnings after conoco's strong quarter, exxon blamed refinery maintenance costs, downstream

business cap ex surged. at the end of the day, cost is a cost upstream was a bright spot company said higher oil prices would have boosted earnings by a billion dollars but for other issues chevron said profits doubled from a year ago but saw weakness in refining. that's something to watch. interest expenses, higher impact on previous quarters, even though the company said it will start returning cash to shareholders and buying back some stock shares saw a drop. when those are down, etfs slump, and seeing 2% gain on the week i will point out they're up on the week this seems to be a today isolated story >> jackie deangelis, thank you the dow is in positive

territory. verizon, walgreen and american express. we'll continue the gdp conversation throughout the day. power lunch. >> we have to talk about amazon among other things what is amazon today how should we look at the business, look at the core retail business or as we were talking higher margin business advertising is sort of the new business >> with high margin businesses putting aside core retail business twitter is a feature today i'm sure you'll be talking about it later today, down 18.5%. >> you have a ceo saying we're willing to clean up the platform at the expense of user growth, gives you pause. up 35% this year. >> investors won't buy that. so candidate for facebook and others

dow has just gone negative. >> facebook went negative too. >> and amazon up a little, less than 2%. melissa, thank you for being here. >> my pleasure see you on "power lunch. "squawk alley" is up next. don't go away. eligible for medicare?

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good morning, it is 8:00 a.m. at twitter headquarters in san francisco, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ good morning welcome to "squawk alley." with me, david favor reprising of the