business never sleeps. this is "squawk box" becky and joe are off today. let's show you what's going on at this hour the s&p would open lower by a little more than one point and the nasdaq would open lower 16 in japan was lower by 3/4s of a percent. european equities were also negtefb. weakness related to tough earnings that came out but it's all flat to lower what's going on with treasury yields in the united states and we're seeing multi-week highs in europe as well the 10-year note in the united states once again we're talking about

reapproaching the 3% level two years of 2.67. wti at hour. a 59 of 76 cents tprrsz brent is at $76.49. the cbs board will reportedly meet to discuss whether ceo should step aside. the wall street journal says the media giant's directors are said to over see the probe. among the guests ready to talk media this morning >> have you read the article >> oh, yeah. absolutely there are are a lot of women on the record and very, very detailed when you've looked lat the various stories that have come can out. i think to what degree are they billing to put their name out there and gave lot of details

craberation from way back. >> two questions one is does the time, meaning distance between today and when the -- when the bad behavior okrbgsd does that part matter and c does this for others who potentially might be closer in time somehow come forward if they exist i think about the harvey weinstein situation. but it was different in that allegations were much more recent and severe. accused of criminal activity >> so how does that relate >> i don't know. 20 years ago is the question should you by punishing somebody

will that happen to me i say okay we're going have an investigation and answer that same question pep they're not like the harvey wine stein but they're pretty tough accusations. >> amidst all o the other stuff from a business standpoint which makes the conversation all the more interesting >> and add charly rose as another layer to the whole thing. >> the other comcan ponent has been somewhat of a sphrlgs components do you believe there are actors, brothers that would not do business of -- by the way i should say full disclosure cokeis own bide showtime which is owned by cbs.

>> did he hit on you >> no. but this idea of whether creatives didn't want to work with cbs >> all of those among all of the relitant questions you need be answered i don't thinkwe're going to hear an answer today given the over lay, as you said, of the viacom it it -- it did. 80% of the voting moir verities it did come can out publicly on friday and she was upset about the insinuation she could be behind the accusations or making me mad. >> the authorer of the author to

i stuarted investigating this pri. >> as we mentioned james stewart is going to be with us an a writal bit trying to break down what this means and wear >> bmw raising prayses of two vehicles tprrsz and now confirmed move which is said to take effect today x duds 5 and x7. also earlier this month china slapped an additional tariff on u.s.-made cars pfrpblts back in full swing today. cater piller they're going to report results

before theope film skwr it investors will also listen to commentary about the impact of shah tensions. >> didn't you have the reaction about? wine market was a blast from the past and and i wasn't trying -- they're expecting blowout numbers. really high. >> thee conomy gots lots of focus on the sent aed political shows. quote an economic turn around for when easter -- >> the basics of this number

were consumer spending and business investm it it's doing terrific rising by better than 4% and i know some people have tries to downroid by saying the tariffs by the way we don't know that. i'm glad to see exrising whatever the reason. >> i don't think this is a one or two year phenomenon i think we're in an era of four or five years of sustained three% growth at least let's discuss how you invest all that chief investment officer at it it it it fudoucheiary trust mun ey it. >> reporter: binged on history,

i don't think it is. areio going to it it it it it it it -- it neither of which can was sustained. both growth waits were faster than what we had in the second carted quarter today but nothing structurally has changed with the feit stkpwhrrpbgt and that's straight to the bottom line for these corporations why -- >> it does in a cup cannel of quarters but then to beast gdp, that incomes to the be spent in terms of hiding,invest mints spending we've had that to show up in investments. it's not tkhraoer me it's going

to be a permanent -- >> is this as good as it gets or you getting defenses >> i'm getting defensive because especially this july i have seep you central buncke and the reason is,and route in 2008 thinking that the world economy is very strong you had the it -- feeling healy all and foreign minister global economy peeked not because the economy was strong but because the dollar was weak you have to remember summer of 2007

what would you put in the category of run up to this summer >> you do not have the same symptoms you had a few issues in 2007 but no two turn downs of the economy are going to bow similar. here on the other hand in contrast to 2007, 2008, you have had almost a dig aide of continuing economic recover canny. youall have the issue of central bank that's the big difference i thing that you have and the similarity with 10 years ago >> how are you investing relative to your role? >> it seems like this is a golden age for goethe.

tprofrls if so i thing in the totalality of things i could starting to think about getting more defensive already we pulled back our exposurers to high-year-olds so on the fringes we're starting to prepare for the next part of the cycle. >> i mean we're 2% from an all time high. >> one could argue why aren't we higher we're on track for apearnings quarter 1% if next year when you take apart the drivers of the lift, we're not going to eat all of nem.

it i mean the economy's good, corporate profits are good, the commentary's good, the fundaments seem to beeralliy good and it i proof this is whole thing with holding back. we're% away from a high. stkpwhrpl are you finding any value in the names that suffers carnage last week? >> i ring foal matter of principle. >> we hold, we own he's never the only piece of bad news and i preface that by saying it was a good quarter

se so we would be wait and see on that. >> did you lighten up at all in the wake of what you saw since you're holding snowing. >> no no i don't look at specific issues. but i'm if weing to go back to what scot tese before. the s&p 500 reached an time high in december of 2007. that was the beginning of the great recession. so if you were taking the cue from the stock market, you would have got completely the wrong message in 2007/2008 and i thing the bond market was sounding the alarm going negative in 2006, november exactly a year before the recession began. the point is the stock market can reach the high, the earnings can look good but that can't

give kwhrou thecomefort you make and reactling the way it is or the bond market looks the tae is tet re not because of a great warning sign that impending doom is oon the rurisen >> if you recall what happened in the 19 nineties allen greenspan was spouse to say that ininterest rate said were extremely low. that did not protect him from the 2008 crasis fop if. >> thank you, fies good to esee you e. >> coming up when we return. remember those flame therefores elon musk has a new product he's

selling and it's already sold out. then in the next one the c stay tuned. you're watching "squawk"

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welcome back to "squawk box" surff's up elon musk's company now marketing surf boards made from similar carbon fire as tesla interiors. despite the $1500 price tag all 200 boards have already sold out. if you have your heart set on riding the waves on the tesla board, some have already suffered on e bay for up to $4,000 he did look, this is probably a high margin product. so could can help with cash. >> pretty sharp looking. >> apparently fits in the middle

sand the model 3 and what's th other model? but it fits in all of them so if you own a tesla -- >> do you follow hampton guy on twitter. he works for people who live in the hamptons in the summer he makes fun of his customers online and one of his funny lines was oh, got to go pick up this guy's golf clubs because they don't fit in the back of his tesla. so that's re why they're advertising it fits in the tesla. war of words between president trump and the publisher of the new york times. president trump said they discussed the amounts of fake news the president's words being put out and the skwrurpbltests being the enemy. he released a statement saying

he told the president directly that quote his language was not just divisive but creasingly dangerous. >> said in front of the person who work ozicationally >> i wrote a call foreman the new york times my understanding of both the statement and the meeting was what he was saying was not just speaking about journallingests as enemies of the state or the people has created violence teishin there's been a remarkable amount of violence against journalists. i also think the idea that somehow they were talking about fake news together is the sentiment that the president put out on twitter, i can't fathom that he would have stood for that being the sentiment >> i don't think he takes the premise at all of fake news.

secretary of state is expected to focus on digital economy and infrastructure meant for the one belt, one road program from the chinese government state farm won't actually say what this is about but it's clear this is definitely about try to counter the investment initiatives the secretary of state is going to sit down with with cnbc after he makes that speech this afternoon. you can see it tomorrow morning here on "squawk box" 6:00 a.m. >> what's your first question? >> isn't this a counterer to the one belt one road? and see what he says and how much is really about pushing back against chinese economic imperialism i think is a lot of it

>> and at the delivery and alpha conference, he offered one piece of advice he would give president trump. >> if he asked me for advice i would say probably listen to your advisorers a lot more maybe than you have. i would say i don't think tweeting is as helpful as you think it is. i don't do any tweeting because i don't know how to do it. it's hard to change 72-year-old men and he's set in his way. it. >> you can watch the full interview on our website, delivering outcome caught com. there's a video that says tracks citizens on any crime. here's what she said about it.

base cruelty you fly into the u.s. and it's sort of unwhat puts you on this list but then they get a photo and then are directed to fill out these reports with with every single thing you do from the moment you're at airport to whoser car you leave with in the arrival city >> it's not targeting ordinary american cans. >> i don't go specifics of it. i'm going to hold my a comments. reserve my comments. >> think about it during this next story mcdonald's has a surprise planned. starting this first customers will receive mack coin the coin cans will be redeemible for a free big mac starting friday and through the rest of

2018 they will have it five unidick zions, one for each fry. >> when you said mac coin, i thought -- 50 years old. >> start collecting your bigmac coins. >> it's basically buy two for one. am canning up. this week's washington agenda is going to sleep as we head to break, warns and losers. imagine traveling hassle-free with your golf clubs.

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welcome back you're watching "squawk box" live from the nasdaq market site in time square good morning among the stories front and centerer, the board set to meet today to decide whether les moonves should step aside. they're set to select a special committee to over see the probe. among our guests -- and james

stewart. heineken shares are dropping in european trade this morning. the second largest beer make blames some of its more profitable markets and expansion in brazil. that stock is off by more than 4% at this deutsche bank has moved half of its clearings. and winning financial business ahead of brexit. u.s. equity futures suggest ess&p would opener nasdaq opened lower by 19. >> take a look at this week's december agenda. good morning to you, sir we can talk about a lot of things the boost on gdp on friday in

terms of president trump and what win that gives him in his sales or not, not just for the rest of the week but perhaps the rest of the year many officials were on the sunday show. unemployment is very low right around 4%. so the economy is booming. a great narrative for the president to tell. the president said you got until labor day. six to seven day as week during the midterms i republicans are very much trying to focus on the message and paint this picture that the trump economy is a great economy. >> talking about the issue of taxes, did you see that piece over the weekend that suggests the republicans are not tacking about the tax cuts that is not an issue that's been a popular one? >> they hadn't been hitting it

that much. a lot of republicans say they should be talking about it more. >> they were hypoing it all throughout the year, like it meant real money in the pockets of voters. what we're seeing is a lot of voters it's not the top. health care is a big issue for voters for the first time ever democrats are spending mun protecting the affordable care plan i think the needle trump is going to try and thread but they're hit theing three m's, ms 13 and migration not divisive cull cantural issues as posed to the economy and tax breaks >> if he doesn't get funding for the wall

>> that's not going to happen before the midterms. republicans are -- about the concept of closing the governmentfore the governmente lection. but do look for a fight before we -- that may be another time for the president to start a big fight. fervors remember he hates very much the last spendinging bill he signed in the spring. he didn't get what he wanted don't look for it to happen in the midterm. >> how much of a problem are the nick broth rbis and the trade and protectionest trade policies i think the comments are interesting how they're distancing themselves from

trump. they're still working with jared cougsner on justice reform so don't expect to hear him say nancy pelosi should be speaker now. >> i think they're trying to make it somewhat clear maybe it's a warningtuate as well >> so they won't be backinging republicans across the entire thing but doesn't mean they're going to back democratic candidates the coke brothers would much rather have a republican speaker than nancy pelosi. >> and the constant referrals thothough, do you think he's raising from a regular toy perspective -- is that stphraoel because a lot of investors are trying to figure out what could

happen >> this is to separate the from the actual tweets right now. i think this is very mauch fixation on amazon as a company and on bezos, the owner of facebook what do you think of secretary state mike pompeo's speech >> you'll know with more about it when you talk to him later this afternoon i think it's a counter point it's a relationship between china the united states. the two powers for the next 100 years and china is taking a long view building relationships around the world what relationships can we set to

counter weight china >> we don't talk about pack much and mike pompeo you've been sleeping there pakistan has taken on numerous loads because of one boat one load they're about to go broke. they're thinking of going to the imf for a bailout, which would mean -- unless they can cut down the chinese debt dramatically, but u.s. taxpayer could end up going to chinese state-owned companies. that's something wevent seen before ever in a chinese bailout because of the very recent chinese imperialism. >> i think you should definitely push the secretary state on that this is the way china has been pending its role throughout the

region, by helping them finance and use uging chinese debt to facil that >> the chinese take them over. >> a fine ages influence chine has around the world fell. >> oh, you can't pay very sinister sometimes your guy, john swan, has a piece talking about wind energy. the trump administration pursuing a number of wind energy products but he hates wind energy >> he's spoken to a number of people who spoke to the president and he hates wind. he hates the way the tur pine look se that same time his

administration is going to be a lot of things boosting wind energy there's a difference between the ret the policy he hates when the policy -- >> maybe it's the golf side of the president. >> hate to win it's interestinging because it's such an iconic building. he hit the fbi building. >> it's brutalest architecture it's augly >> it is not the best looking building in washington as the president said prime real estate right on ma pa avenue they're work on a deal to get a new head quarters. the president wanted to make sthur fbi gets the best building they can >> but is he going to build condo threes what? >> i haven't seen that >> maybe he doesn't like having

a few. >> you don't like brutalest architecture >> it's iconic in its own way. no, knock it down. >> have you been to san paolo? it's loaded with that stuff. it's awful >> good to see you ready or not here comes another big tweak for earnings and look ahead to names to come can. and then in the next a news-making interview with harley davidson. year, i am sorry about that. [music playing]

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welcome back u.s. equity futures suggesting a flat open. the dow wouldope lower so still some weakness in the wake of what we saw thursday and friday related to facebook and twitter. here's wpi $69.56 for a barrel of oil

and american can airlines flights resuming after the company experienced a brief flyings-wide outage. it failed for roughly 30 minutes before services were resumed a connectivity issue was responsible. wormings market movers included comcast and shaping up to to be just as dramatic joining me now with an earning's score card good morning >> we're on a good pace stpwhrp that obviously was expected. but how would you sum up the season thus far? >> sizzling hot. we're 23 1/2% for the quarter. utilities and real estate but across the board technology's

strong, 26% -- when i look at consumerercretionary -- and growth rates in the high teens this is news i'm going to say a cup cannel of things i'd say about 25/30% of these earningsing are against a weaker cops so i think the challenges are in 9, but right now you can run next couple of quarters and feel pretty good. we've actually deployed interesting artificial intelligence we're loobing at pause taofb negative commentary and that number is pretty strongper usualty has a good efficacy to

perform and right now we're that second highest in tefb 10 years. and even with all the trade stuff out there. >> i'm actually divided by told number it gives some conformation and it looks like a new friend >> his disparity were pretty dramatic energy up. 145% when it comes to earnings reale estate. do we see performance related to that it's not my sense that we do >> not really. let's just take it back to the evaluation conversation. i'm comfortable at 17 times.

at 17 1/2 this market and this is the way he's behaved his last couple years, mark takes a hit 17 not too bad next year earn rings going to get tough bases on cops. what you don't have is a better growth forecast for gdp. right now it's still in the twos so if you get threes it's a mitigating factorer. >> four to five years at three plus percent that would supporte valuations remaining. >> and back to thether question the u.s. treasury. >> thanks. >> coming up can apple help tech

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welcome back to "squawk box" wells fargo apologizing to customers who follows complaint social media about mobile deposits not working the bank declined comment beyond the statement saying it was working to resolve the issue speaking of financials, you don't want to miss this exclusive with jamie dimon that's today on "closing bell" at 3:00 p.m. eastern time. >> got to watch that welcome back to "squawk box. making headlines at this hour, gvc holdings teaming up with mgm to create a sports betting joint venture in the united states shares trading higher on the news the companies are taking advantage of the recent supreme court ruling which cleared the way for gambling on sporting events gvc holdings is higher by a little more than 5%. each company is going to establish a separate

headquarters in a major u.s. technology hub all right. it's another busy week for earnings much of the focus is still on big tech apple set to report. we'll get the iphone maker's results after the bell he is chief strategy officer, ahead of research. how are you? i cannot remember a quarter from apple that had less hype than this one nobody's talking about it. >> i'd agree with you. really this quarter, it takes a back seat. because the core issue right now is what's the fundamental profile for 2019 the trifecta of new phones coming out is demand picture going to be flat, up, or down? right now the street is taking a wait and see approach. we think it's buy is positive going into the demand cycle for next yiear. >> what numbers should we expect >> i think 42 million is that line there could be upside on asps

but in terms of guidance as well as any tea leaves in fiscal '19 because this is a grand event for cook and company preside last year was ultimately a disappointment china's going to be a linchpin of growth. can you start to see the demand that many of the bulls were hoping for >> a couple things you mentioned asps average selling prices they have been able to offset only of the sluggishness of the iphone numbers themselves. does that continue >> yeah. i think it continues to trend up that's been one of the best positive events we've seen over the last year. but with three new phones, you're going to see part of asp trending across the board. the thousand dollar ifoep was not getting many to come into the stores or go online. >> what are the price points going to be, you think >> on the three phones, you'll have an iphone x, call it a ten

plus -- >> it's not going to be more than a thousand dollars? >> and then you're going to have a lower priced phone in that -- >> and the highest margin product of those will be which with un? >> it will be the higher price >> i was under the impression that the iphone x right now is not the highest margin version because of the cost of the screen is that not right. >> they're going to come out with this. will consumes come out and call 220 million iphones. flat year over year. this is a seminal period because software services, that's the linchpin of growth going forward. we think that you'll see upside this quarter, but if this is not a successful iphone cycle, then ultimately it calls into question what that is going forward. >> service has been

unbelievable >> we would say the valuation of that would be $350 billion >> on the media end, they obviously have the music business they're investing heavily in television programming, films, estes. they bought texture which is the magazine service does that all get wrapped into one offering do you see multiple offerings? what does that look like >> i think their biggest calculation was not getting into content quicker. i think now you'll see that going into fifth gear. i ultimately think that video contents get rolled out into 2009 in a subscription service but also content is going to be there. >> into a separate service. >> a separate service that sells into the iphone base. >> do you think there's deals that need to be done do they have to buy libraries of films and tv programming and other things like that >> i do. and acquisitions, obviously, have never been their core dna but when you look at some

studi studios, i could see apple being a lot more in there. >> is that finally going to push the multiple higher? it's always traded at such a discount anybody who pushes the stock says look how cheap it trades. it trades like hardware. when we talk about software, is that finally going to be the thing that gives apple that higher multiple? >> yeah. i think that silver bullet to the multiple expanding as well as the content of the video side, can they monetize 1.3 billion devices out there. and if they're successful and that's key to the multiple expanding as well as the iphone product cycle. you just don't want to see it going off the road >> how much of a wild card is trade and issues in china? >> it's a big wild card. if you look at consumers, especially in china, with

tariffs, plus the foxconn facility china is one of those key variables which i think everyone is looking to see anything they talk about tomorrow. that could put a wrench in the product cycle over the next year >> thanks. good to see you. coming up, a big hour ahead. and the question, les moonves' days, are they numbered? we'll talk to media watcher ken auletta about all of it next plus a cnbc news making interview with the ceo of harley-davidson. stay tuned you're watching "squawk box" here on cnbc

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a developing story questions about les moonves' future at cbs swirling after allegations of sexual misconduct we'll tell you what might happen at the board meeting today caterpillar set to release quarterly results. and what the numbers can tell us about fallout from the trade war coming up. cnbc exclusive a news making interview with the ceo of harley-davidson the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box. good morning welcome back to "squawk box" here on cnbc i'm andrew ross sorkin along

with scott wapner and michelle caruso-cabrera let's look at what's going on at this hour. right now dow looks it would open up higher s&p looking to open up margely hi -- marginally higher. here's what's taking place overseas you're looking at red arrows across the board not terrible, but down nonetheless pretty much everywhere as we said on the banner right there the dow s&p 500 still on pace for their best month since january. we're going to get a fresh read on the housing market this morning. the national association of realtors will release its june report on pending home sales that measures the home contracts signed but not yet closed. dow component caterpillar expected to report its second quarter earnings bottom of the hour analysts believe they will report on revenue of $13.9

billion. we're going to have those numbers for you as soon as they're out. stock so far year to date higher by 25% walmart is said to be exploring the subscription video streaming service. however the project is only in the exploratory stanls and hasn't been green lit as yet >> and we should tell you, big story of the morning cbs shares are falling on news of allegations of sexual harassment on sexual misconduct against les moonves. julia boorstin has the latest details. >> les moonves is very much in the spotlight this morning a source close to the situation told me it's sure -- we could

hear details of the investigation on the team conducting it as soon as today the question is whether the business will support moonves in charge or whether the board pushes him out the investigation saying quote, the board will probably review the findings and take appropriate findings that statement came just ahead of the publishing of the new yorker article in which six women accused moonves of harassment and intimidation. moonves saying in the article, quote, i always understood and respected and abided by the principle that no means no and i have never misused my position to harm or hinder anyone's career viacom shares moved higher on friday on speculation this increases the chances for merger between cbs and viacom for which shari redstone advocated and moonves opposed.

you see cbs and viacom shares trading lower this morning refuting the insinuation that she was behind the allegations of misconduct. saying, quote, she hopes the investigation of these allegations are transparent. and cbs earnings are coming up on thursday afternoon. back over to you >> thank you for that. stick around joining us on the news line right now is new yorker magazine staff writer ken auletta also author of "frenemies: the disruption of the ad business and everything else" and one of the great media watchers of our time he knows les moonves and cbs well you read the story friday night and thought what >> i thought it's a real problem for cbs and for les moonves. the thing that really struck me was that the board of directors

which is appointed by moonves which is loyal to moonves -- before the article even appears, before there's reaction, they announce they're going to investigate. that's a sign of weakness onle moonves. >> as a journalist, i'm assuming the board had access to a lot of the article in advance before it comes out so they can actually comment on it. right? >> they didn't have access to the article. i think what they had access to was i suspect what happened is that moonves who is being called, issuing -- actually issued a statement very late to the new yorker they waited until friday morning to close the piece normally they close it by thursday night i suspect what happened is he disclosed to the board what he said and what the article was going to allege. and that's what they acted on. but it's -- it is remarkable that the board would take that action without having read the article. >> so the board's going meet

today. they've already announced they're going to initiate an investigation. do you believe that -- or how would you handicap the possibility that he is suspended during the period with which this investigation i imagine will take weeks if not months to take place >> i don't know whether he'll step down, step aside during the investigation or whether the board will compel him to i do know this it weakens him and strengthens shari redstone in their battle if she wants to replace him at some point, the odds are that she has more leverage to do that now. and if she wishes to merge viacom and cbs, the odds are she has more leverage to do so >> we were talking about this the 6:00, many of the allegations in the article clearly on the record in the piece but a number of them took

place 20 years ago and how you think that boards are supposed to look at this type of conduct or alleged misconduct given the timing. and how you would compare that to some of the other allegations of other men more recently >> look. it is a basic question, but there is today a fever about this and i don't mean this in a negative way people are concerned about male abuse of power and if, in fact, les moonves did what they claimed he did in the '80s and the '90s and there was an example in the 2000s as well where he not only accosted women allegedly but threatened them or fired them because they denied his advances that's a serious charge. and it's very hard in this climate to -- even if it's 20 years old -- to say let bygones

be bygones but it's a real -- it raises issue about his behave thior tht can't be denied. >> one of the chief risks for cbs even if moonves stays is the issue of creatives not wanting to potentially work with cbs anymore. producers, directors, actors, et cetera >> people are very concerned i know male executives who don't meet alone in the office with a female because they're afraid of -- this is all very unsettling behavior and in many ways it's a very good thing it's unsettling behavior but it does distort behavior and the other thing that's worth noting, there is no more successful modern television

executive than les moonves they've been number one in primetime for 14 out of 16 years. i mean, he's an extraordinary good creative executive. but if he misbehaved and if there's a culture issue which is the other thing the board is looking at, if there's a culture issue at cbs where they condone male behavior that shouldn't be condoned, it's a real mark against them >> yeah. especially in the wake of charlie rose and your point about how successful he is is exponential, why the stock hit so hard on this news. you think it's now more likely that viacom and cbs get together what was the probability of that deal ever getting done before this news about les moonves? and what do you think it is now after this >> well, the question was there's an october court case. moonves was saying even though scharry redstone and national

amusements which own both companies only owns 17% or 18% of the stock of the companies. they had 80% voting control. and he said that shouldn't be. he was challenging that split stock rule that a lot of companies, fox, "the new york times," facebook, google have. and if he'd won that, then he would have leverage. but if he's not there. and if the lawsuit is withdrawn, she's in the driver's seat without a court ruling >> ken, julia boorstin is in st. louis. i know she wants to step in. >> a big chunk of the article was describing this behavior at cbs news and 60 minutes. do you think that those allegations are going to lead to a cleaning of house and how much does that disrupt the overall organization >> oh, i think it raises serious questions.

there's no question there are issues the article didn't just concern les moonves even though that was ae center piece of it. it looked at 60 minutes and the culture question you elevate there's a real question about it i was amazed at the way cbs covered it friday evening. it was one of their lead stories and well reported story which they deserve some credit for holding a mirror up to themselves but the board is going to have to hold a mirror up to cbs and its culture and whether there is a deformity there. >> ken, before we let you go, final question at least from me. when you think about the team that's behind les moonves -- i mean, les has always been famous for being this premen douse programmer but there is a team behind him who would take his place at

least in the interim this is before there could be a transaction with viacom if you think that's where this lands. >> he has a number two who has been close to him for years and who he wanted to be number two if there were a merger between the companies. and shari redstone had wanted bob backish move in as number two and he resisted that it is not clear. i think you have to go back to fundamentals here. if shari redstone wins and has the control, she's going to decide who steps in and replaces him. because she's on that board. she's the vice chair of the cbs board. and if les is out, her voting control is strengthened. even before a court case >> so we're not just talking about les leaving. do you think we would see a mass leaving? either in solidity with les or because the others would be pushed out because they were seen as too close with les

>> i don't know the answer to that one of the questions would be does shari redstone if in the driver's seat, does she appreciate the talent he's surrounded himself with? or would she in a small way wsh people >> ken auletta, thanks for helping us make sense of a situation difficult to make sense of >> it sure is. thank you. joining us now is senior vice president of research at schaffer's investment research and also head of global fixed income strategy at jpmorgan asset management good to have you here. todd, let's start with you we had a guest on yesterday that said forget about trade and the issues the biggest risk to the market is what's happening with interest rates and multiple central banks around the world becoming less easy what do you think? >> i do agree with that

assessment if you really put a microscope of what's going on in the short-term and immediate aftermath of fed decisions and this goes back to december, 2015 when the fed began this rate tightening cycle, you look how the s&p has behaved in the one month following a rate hike, there's been seven rate hikes, 57% of the time, which is low relative to the positives. when the fed pauses, as it's expected to do on wednesday, investors seem to applaud. the chance of the market moving higher is over 6%. and the 1.75% over the next month.

you know, based on how the market is on the fed actions, i would expect that assessment right now there's a 98% probability that it holds. >> bob, the -- i was very surprised to see just the whisp whisper, the suggestion of the idea that the bank of japan might become less easy, had such a massive ripple effect to the united states, the u.s. credit market, and then eventually the stock market it suggests that, indeed, the biggest risk out there to markets is the central banks around the world becoming less easy >> i think that's true while the fed has been raising rates for two and a half years, you still have negative deposit rates in europe and japan.

japan is the big one that's where a lot of capital resides. a lot of that capital was moved into the u.s. bond market. so if they start to unanchor the long end of the curve, then suddenly japanese government bonds look a bit more attractive >> so a direct line from japanese government bonds to u.s. stocks here >> absolutely. i know that the boj cares. i think they're particularly more interested in what happens to the banks >> sure. thanks, guys good to have you on. coming up, hog in the cross hairs. we'll hear from harley-davidson ceo. it's a cnbc exclusive interview. stay tuned bcg quk x"n in"sawbo o cn need a change of scenery? the kayak explore tool shows you the places you can fly on your budget. so you can be confident you're getting the most bang for your buck. alo-ha. kayak. search one and done.

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u.s. riders. i sat down with the ceo exclusively from the milwaukee headquarters to discuss the details of this plan >> i don't want anyone to think that we're running away from our core customer and the strength that the company has today this needs to be thought of, all of that plus more. so we're going to be doubling down on existing products. we're going to invest in an all new middle weight platform which is a modular chassis and a very core engine technology to go in three dramatically different spaces. custom and street fighter. and do that with multiple models all this coming within the next two or three years and then ev is that additional component which really allows us to reach out and inspire a whole generation of people that aren't even yet thinking about freedom on two wheels. >> and what you say here is

comprehensive cost reduction and allocation of resources. how does that look especially when i hear something like cost reduction, i can't help but think are job cuts. >> what we're doing is challenging ourselves as an organization we call it self-funding. but to do all this in the same investment return and capital allocation profile that investors are accustomed to. so we're challenging ourselves internally how do we need to think about how we approach the business given times have changed. one of the easiest is capital investment motorcycle development takes a lot of capital investment. when you look at the investments we've made to really solidify leadership in touring and soft tail in particular, a lot of that is behind us. we have the capability because we really refined and dialed in our excellence over the last couple years a lot of this seems like big

stuff, and it is, but we're confident we're going to be able to execute it as planned >> this is expected to take up $825 million through 2022. but he also expects this will generate over $100 billion it was a wide ranging interview. we discussed trade, production, president trump. we're going to have more on all of this in our time with matt levatich right now shares are unchanged premarket. they did end last week lower down 0.5%. for the full year, down 12%. >> is an electronic motorcycle going to be noisy? >> quiet so they've been -- they've had one that's been in the work and they've been piloting for the last couple of years called live wire they're looking to launch that next year. then they have a series of more certified evs behind it. >> you can fake a signature

sound. in theory it should be quiet but are they going to add that signature sound? >> no. i think it's more of a quiet motorcycle it's easier to ride. there's no gears the whole idea i think here is to bring on a whole new type of rider versus the core quintessential harley -- exactly. >> give us any sort of preview on how directly he addressed the trade issue and president? >> well, we sat down for about a half hour and it's certainly something that came up quite extensively in our conversation. he did say they are speaking to the administration also said that, you know, they made this decision to shift their production for motorcycles that are destined to europe specifically because of those tariffs and it wouldn't take 9 to 18 months for them to shift

that production if the u.s. if it hadn't been in direct response to tariffs. i think that's a key point there's been a lot ofcriticism on this company that the tariffs were an excuse to do that. we'll bring you more of that in the next hour. >> thanks. a lot more to come in the next half hour trump's trade war. we're going to talk to the foreign president of the national foreign trade council and a quick programming note wilfred frost going to be speaking exclusively with j.p rgmoan ceo jamie dimon at 3:00 p.m. on "closing bell. hawaii is the first state in the u.s. to have 100% renewable energy goal. we're a very small electric utility. but, if we don't make this move we're going to have changes in our environment,

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

routinely increased currency conversion rates the practice dates back to 2004 and continued into earlier this year they said they offered competitive foreign exchange rates that were before any transactions were approved i'm surprised by this. heineken, the world's second largest beer maker cut its full year profit margin forecast. some of the profit markets are also spending more on expansion. gasoline prices fell 3 cents over the past two weeks. the average price now standing $2.91 per gallon which is 59 cents higher than it was just a year ago. busy week in washington. let's get to kayla tausche hey, kayla >> hey cabinet members from the white house are making the rounds touting recent economic

successes and redefining the hard line on china addressing the business forum today to discuss investments in the region and by extension the u.s. relationship with china this follows appearances by mnuchin and kudlow on the sunday shows talking up growth and talking down recent trade disputes 3% at least could be sustained, they said. >> all i'm going to say is the eu story is moving ahead very rapidly. very rapidly and i think that, by the way, puts china in a very difficult position china is i think being isolated. i don't know if they realize it or not i assume they do not only is the eu and the u.s. coming back together i'm looking forward to a deal on

mexico and i think a deal with canada is out there >> that message had mixed reviews with republicanson capitol hill a listening session by kudlow and white house trade adviser on friday morning erupted the prior night was far less contentious than expected, according to two attendees the trade agreement with the eu validates the imposition of tariffs and that they are working. then they can fight china with a united front together. the italian prime minister, we should note is visiting the white house today. we'll see if that is an argument that he agrees with. >> all right we'll look forward thank you. earnings just out from caterpillar. earnings of $2.97 a share. that's above the consensus statement of $2.73 revenue also topped forecasts.

and they're raising the full year earnings outlook. stock's up 3% in the premarket so apparently the last quarter was not the high water mark. >> yeah. they were originally at $9.10 a year now between $10.50 and $11.50. definitely a raise there let's see if that helps the stock. >> it is now >> one year performance, higher by 27% not bad. but last six month performance, it's gone nowhere. >> part of the issue is obviously trade and -- this has been in that mix of wondering what's going on with the trade impact on the company moving forward. stock's up 3% this morning at least right off the bat.

so that's a pretty decent move off of a beat and a raise. >> let's talk more on trade. we're joined by -- >> glad to be here >> how do you assess the current situation with trade considering the meeting that the president had with jean-claude juncker that led to the truce between the u.s. enae eu and yet the situation with china >> well, happy meetings are always better than unhappy meetings i think that particular agreement is less than meets the eye. they got -- we got some soybeans in lng eventually. they got no tariffs as long as we're talking. the negotiation is likely to be a long one the obama trade transatlanta trade partnership all over again. we've been arguing about that

for 30 years i don't think it's going to be a quick negotiation. so i, you know, good thing they didn't break out fighting. but it's not exactly a success and the china story as you've said is not right now a happy one. there don't seem to be any talks at all going on with the likelihood of additional tariffs at the end of the august so a lot of gloom on the horizon. >> those new talking points out of the administration, i think has something to do with kudlow. no barriers, no subsidies, no tariffs. that would be great. except how are you going to get all the vested interest in both the united states and the eu to give up? in particular both organizations, eu isn't a country but whatever you want to call it, they love agriculture subsidies. we've got a lot of them too. >> yeah. this idea of the three zeros is, you know, it's a good idea it's not original.

it's hard to get to for exactly the reason you said. the way you get there is you keep taking things off the table until there's little left. say okay we're not going to talk about agriculture. that's off the table we're not going to talk about gmos or geographical indications. we're not going to do this standard because it's too hard pretty soon you have very little left then you can reach an agreement. i hope it doesn't go that way. i hope they buckle down and actually focus on some of these health, safety, and environmental differences that have been dividing us for years that would save companies literally billions of dollars in cost savings and production savings if we both had the same standards. >> can you drill down into that? that is the hurdle for decades now. right? that they have certain impositions that they want to place on products. can you take one example of why

this always seems to scuffle the deals? >> well, to begin with, both sides have regulators in this area and they both say regulatory har monization is a really good thing. if the other guys would do it our way, everything would be fine both sides say that. and it's frustrating because the goal is the same we have different standards for seat belts, for example, in automobiles. the standards are -- have the same purpose to make sure people don't die in crashes but we do them in a different way. that forces manufacturers to produce automobiles that have two different standards. >> wasn't there a time before this talk about harmonizization would say, okay i think you're seat belt rules are okay and you can think ours is okay and we don't have to harmonize the two? and it's changed >> we were heading in that

direction in the last administration under ttip. it was slow going, but we were getting there sort of inch by inch and then, you know, the administrations changes and ttip got put on the back burner it's a good way to go. mutual recognition, your standards are okay, our standards are okay we'll accept each other's standards is the simplest way to do it. there's still some resistance. >> william, we appreciate it thank you. okay when we come back, a lot more to come get your coding hats on. we're going to talk to the cofounder of a start-up that's using the magic of harry potter to teach kids how to write code. he's going to join us after the break. i think the sorkin boys need to watch that one but first a quick check on the markets. dow futures looking up 18 points higher p 0 jt oua int. back in a moment ♪ my ambition is to show my kids the world. ♪ ♪

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the time warner merger and what they say is better than expected wireless business trends emerging. a little bit of good news for at&t got a little dinged after the last report, right >> i think it got downgraded as well i don't remember who did it, but i think that was in the last week >> shares of caterpillar coming in above the consensus revenue also topping forecasts caterpillar up by 3.5% we're going to discuss with an analyst the quality of the earnings later coming up, this morning's biggest movers plus one-on-one with mike pompeo don't miss my exclusive interview with him we're going to sit down with him this afternoon if you're working at that time, also see it at 6:00 a.m. tomorrow eastern time here on

"squawk box. rolling out a policy related to the economics of asia.

♪ that harry potter music is there for a reason cano is adding magic to its

products joining us now to talk about is alex kline good morning to you. >> good morning. thanks for having me >> so i'm hoping the sorkin boys are watching this right now. tell us about what this is, how it works, and how old you have to be to do it >> so the harry potter cano coding kit lets all ages build a wand step by step that wand is the is the first wand that actually works you make meteorologic on screen. you make owls float, toads transfigure. then you learn how to code your own spells it's a really simple way to bridge the gap between the small class of wizards in society. the 1% of 1% who understand technology, who write code, and the rest of us the moguls

>> what kind of coding does this take what language are they using to learn? >> so you start out with kano code which allows you to drag and drop different pieces of code which outputs in java script you begin by physically building the wand yourself. a step-by-step storybook takes you into the components inside those components work together with some special flittering technology to place a cursor on a screen you then code that motion to make, you know, incredible effects. i'll show you that now >> what age do you need to be? do you think >> you know, our point of view is whether you're, you know, 14, 6, 25, there are billions of connective devices in the world. we've designed a system for all ages to be fair, you need some

reading skills to be able to start. so we do say ages 6 and up if you wanted the experience of building something real out of technology, you know, casting a spell on screen, going on an adventure into the wizarding world, it's a great product for you. >> let him finish building the sce thing. >> you're putting me under the cush here. >> some kids start with scratch up at m.i.t. it uses a java script to learn how to do. some are learning using swift which is the apple language. others using unity how easy or hard is this relative to those? >> i can show you here we've designed this to be incredibly simple. people in 150 countries have made and shared hundreds of thousands of applications. they've made time lapse cameras, servers. one thing that distinguishes kano is it does allow you to

create real and fun things servers, screens, artworks, games. we let you actually get into the brain of the machine and make it do something new if i connect here to my app, get this going, you can actually see some of the effects that are made possible with the wand and kano code. i point my wand at the screen, i can raise and lower this feather, twist it around i can actually come into this challenge here, increase and decrease the size of these jelly beans. >> that's cool how long will it take somebody to code that >> well, we actually lead you step by step it's really quite simple you start out by placing a little particle on the screen. you nen start to move it around. actually for those in the studio we can ask you, like, what color should this particle be here

it's completely up to you. we've got red, blue, purple. give us an option. >> hey, how much is this going to cost us >> $99 it'll teach you real code. it'll allow you to do things with magic that you actually won't even see in the world of harry potter for instance, if we come here, we can do things like this control. you see the blocks here to change and create spells create owl there come some owls we can add in some sound every time we create an owl. we can make a cool sound effect. >> very cool, alex i think i just added something to the holiday gift list so we appreciate it very, very much wish you lots of luck with it. anything that gets these kids coding is a good thing see you soon thanks so much let's look at stocks to watch this morning

first data reported quarterly earnings of 39 cents per share they raised the full year revenue outlook as well. juniper networks upgraded to a buy from hold at deutsche bank the bank points to valuation and improving fundamentals for the maker of networking equipment. restaurant operator bloomin' brands, comparable restaurant sales up 2.4%. however, missed revenue forecast the company also cut its full year earnings outlook. bmw raising prices of two u.s.-made suvs in china to off set the costs. cnbc has confirmed the move. bmw with increase the sticker price on the x-5 and x-6 by 4% to 7%. earlier this month china slapped

an additional 25% tariff on imported cars. it shipped more than 100,000 vehicles from the u.s. to china last year. bmw's decision to absorb most of the impact echos a similar move by ford which said it wouldn't increase prices in china for now. reuters reporting car dealers in china say mercedes-benz increased the suv this month th shares slightly lower in german trading this morning a story trending on cnbc.com, remember last year when kanye west gifted his kim kardashian of stock? the kanye portfolio outperformed the s&p 500 by more than 40% since late december. for more on this story, you've got to check out cnbc.com. >> what is in the kanye

portfolio? i haven't read the story >> the faang stocks. and i think he threw in adidas in there it's go with the stocks you know >> it's netflix, man look at that thing more than a dozen deadly wildfires continue to spread across california this morning one is the carr fire torching more than 500 structures most of those homes. jay gray reports from one of those neighborhoods swallowed by the flames in redding, california >> reporter: flames continue to race out of control across california right now >> there's 17 major fires going currently in california with over 200,000 acres currently burning. >> reporter: the worth the carr fire near reading where the latest victim melanie bledsoe and her great grandchildren. seven people who live in the strike zone are still missing. >> i've been a life-long resident of this community

i've never seen a fire with such destruction here in this area ever before. >> reporter: more than 500 structures in northern california alone reduced to rubble and ash as the flames continue to spread throughout the state and intensify. >> extreme is not even the right adjective to use anymore fire is so engs ploesiexplosive. >> reporter: setting backfires on the ground. dropping water from the air. >> those folks, 48-plus-hour shifts they were doing everything they could to save structures >> reporter: and save lives with no relief in sight the hot, dry, and windy conditions expected to continue to fuel the flames jay gray, nbc news, reading, california >> thanks so jay for that story. in addition to the carr fire,

there are 17 other major fires scorching 200,000 acres across california one has already torn through around yosemite national park. still to come this hour, we're going to talk to the former eca chair plus the cbs board meeting to talk about the allegations against les moonves, that's happening today. the latest on that storynd a what may or may not happen stay tuned you're watching "squawk" on cnbc you always pay your insurance on time.

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a developing story cbs board set to meet today to discuss sexual misconduct allegations against les moonves. harley-davidson rolling out smaller bikes as a push for growth plus earnings central. dow component caterpillar out with quarterly results the final hour of "squawk box" begins right now ♪

from the most powerful city in the world, new york city, this is "squawk box. >> welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square take a look at futures on this monday morning let's show you what's going on ahead of the market. dow looks like it would open up 17 points higher nasdaq 20 points down. s&p looking to open higher as well but just marginally. let's show you traditionary yields right now the 10-year yield, 2.98%. steve leisman, what was that >> i had a three on my screen. but i guess it must have changed by the time i looked at it anyway >> and you were so rooting for it too >> i wasn't rooting for it making headlines this morning, caterpillar raising its full year profit outlook

the heavy equipment maker says order rates are healthy. its backlog remains strong now the cbs board will be discussing misconduct allegations against ceo les moonves. those allegations came friday in a new yorker article he regretted making some women uncomfortable by making advances that he abided by the principle that no means no we'll have more on this stur when jim stewart joining us. raising the question for today, can the strong growth continue steve leisman is here with a look at what's ahead >> this is a change. skepticism about this strong 4.1% number giving way to optimi optimism many people went in thinking strong growth would be the reaction several emerged as believers that above trend can continue.

jpmorgan in the light of the number boosting forecasts to 2.5% in a completely clinical line they said the composition of growth had favorable forward looking kb ining implications now, two parts of the friday report are fueling the case. they're expected to bounce back this quarter second, government spending was not as high as expected. there's more federal spending to come all of that comes with underlying for the consumer that economists think are fueled by the tax cuts and deregulation. over at fha they say q2 gdp a data has been exaggerated. there is more economic data of import to come this week here we go and the boj decision tonight

i'll let them tell you what they're going to do. because a lot of people are confused about what's going to happen there adp on wednesday gives a curtain raiser the fed statement should set the stage for a september rate hike. jobless claims expected to raise by a quarter point jobs report on friday. and the trade deficit along with ism services >> you want to react to the treasury secretary over the weekend say 3% sustainable for four to five years >> again, i think it's overstated but i don't think it's out of the realm of possibility. there's an economic angle. as i've said a lot, i think raising underlying potential growth from what is 1.8% to somewhere between 2.5% to 3% is possible if you get a sustained capital investment my big question is about the consumer what you had -- if you look at the breakdown of gdp, have this

4% number. i do not know if that is a one off thing from the tax cut there goes the proeblgbabilitier the fed. >> that's one heck of a prolonged cycle. >> it would be a big deal for revenue, big deal for u.s. economic growth, and people's lives if we could get this upward shift in growth trouble is, you cannot tell. there's two things that go into growth we talked about this a bunch of times. productivi productivity you can estimate population growth nobody knows the productivity cycle. the idea being if you do capital investment, perhaps you can have an upward shift in productivity. we'll see about that but nobody understands why the electric engine was invented when it was invented or the internet.

and i don't think anybody predicted it the best you can do is game out the effects of these inventions. but if there's low hanging fruit or medium hanging fruit of productivity, we could have a shift because i'm pretty sure we're not going to do so good on the population front immigration and demographics >> let's ask greg on this. >> he writes textbooks about this >> greg joined us to discuss a new book coming out regarding lessons from the economic crisis we'll discuss that in a second but you heard the discussion we were having. >> i agree with what steve was just saying. i think it's possible we'll get that it's far from a sure thing certainly the 4% we got, we're not going to get a 4 handle in the next few quarters.

but we could get 3% and that would be terrific for the american people. >> why do you think we'll get 3% >> well, it's increasing product iftz through capital investments. i think the policy has a powerful influence on the economy. this was a potent tax cut. it has some downsides wel, but it's certainly going to promote growth over a few years. >> we ready to move on >> i want to ask greg, you know, if you can cut taxes and do so in a way that doesn't have any concern for the fiscal deficit and it does not have a drag that outweights the tax cuts, why don't you keep going you're laughing, but i think you know that one of the ways will take them to the nth degree and see how it goes.

we seem to have no negative effects. >> well, i think the short run over the period of a few years, it's pro growth. the question is is the longer run fiscal picture is troubling. we had that trouble before the tax cut and the tax cut only made it worse. i think we have is serious long-term fiscal problem and less fiscal room to stimulate the economy in the next recession. >> can i push back on that because i think we agree that the smartest arbiter of these things is the market and you look at the market and you look at 10-year money. it's costing you 3%. why does that -- those facts are all known to the bond market yet they show little to no concern

to the things you talked about >> i think they think we'll do the right thing in the long run. and we will, but it's going to a bumpy political ride between now and then >> it's interesting. you say that the tax policy is having such a huge impact on economic growth and perhaps it will prove mr. mnuchin right yet we're in a political environment where republicans running in the midterms are red se -- redicent to talk about it. >> and corporate tax cuts are probably more popular amongst the economists than the general public

rather than a global tax in the right directions these are nerdy things >> a huge number of people now have much longer -- >> can i answer to that? our polls show not many people are aware of that. it's difficult for people to know how much a given tax cut especially one small on the individual paycheck how it affects pem. some may be a change in taxes. by the time you look at the bottom line, you have no idea what's happening >> doesn't matter. people understand that the economy is good. whether they think to their -- >> no, that's right. >> they get the overall message. >> right >> the economy is good

>> but your question was why aren't they campaigning on the tax cuts >> they do not connect the tax cuts to increased money in their paychecks. >> but i want to have the professor about this there's the issue of the budget defic deficit. >> i think the claims that the tax cuts will pay for themselves are very exaggerated it's always very tempting for people cutting taxes saying they're going to pay for themselves they're almost never true. i think the trump administration is wrong about those claims. it's a long-term problem we've got to come to grips with probably more revenues of some sort. >> we never did get to your op-ed which is the review of the book we're soib about that. but i'm sure people can read it

online thanks very much appreciate it. is it a good read? >> of course it is there's a lot to talk about that when we come back, les moonves' days at cbs, are they numbered the board meeting today to discuss that and more after that explosive story in the new yorker we're going to talk to jim ewnext stay tuned you're watching "squawk box" right here on cnbc 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.

welcome back to "squawk box. big questions about the future of cbs and les moonves on friday the stock dropped 6% on an article detailing allegations of sexual misconduct against ceo les moonves. we want to get to julia boorstin in los angeles this morning to break down the details of where things stand right now julia? >> a source tells me cbs' board will have a meeting mid-day. and that new yorker article out friday night alleged abuse at cbs. the board will surely discuss the investigation into les

moonves. we also expect the board to discuss its plan to do a broader examination of the corporate culture. details of the investigation such as who will be conducting it and certainly by mid week the question is whether the board will continue to support moonves running the company throughout the probe which could take months or whether the board pushes him out moonves saying in the article, quote, i always understood and respected and abided by the principle that no means no and i've never misused by position to harm or hinder anyone's career viacom shares gained 2% on friday over speculation this increases the chances of a merger between cbs and viacom for which shari redstone advocated and moonves opposed. redstone issued a statement

refuting the claim she was behind the report. executives who have worked with moonves over the year have tweeted their support. we'll see if more come forward in support or if we see more allegations emerge we are sure to hear more after the board call today and then cbs earnings are coming up on thursday afternoon andrew >> okay. julia boorstin, thank you. joining us right now to continue this conversation, cnbc contributor and our own david faber. david, i'll start with you any intel you have act this meeting coming up? >> a bit i think the board, andrew, is taking this very seriously i think they're being advised to put the interests of the company ahead of any interest they may have in mr. moonves' future. you'd expect them to get that

advice, of course. do what's right for the company. protect it, protect yourself potentially. but that's not -- that's pretty serious advice one would expect if they do follow it, they have a hard time seeing in some ways how mr. moonves at the very least is not going to be pushed aside pending investigation if not just going to have a hard time keeping his job. >> jim stewart, i think there's two issues here. "a," does he keep his job long-term. and in the immediate term, does d. -- do they suspend him pending the investigation? >> in other companies they do suspend pending investigation. maybe there is another side of this story he made his statement in the article. but it's certainly --my readin of it raised very serious questions. this wasn't just someone -- he wasn't just politely asking someone. it went way beyond that. the best i could say is it's

old. in this environment, this is a consumer company -- >> that was one of the questions which was in all of these situations, the timing meaning does it matter if it took place a decade ago or two decades ago? and not to make light of any of it, but do these dare i say even social norms which is a terrible phrase, does that have any impact on you think the way the board or others think about any of this? >> well -- >> and by the way, there is no social norm which allows either assault or people to bounce on other people so let's just put that out there. >> first is the court of public opinion. that's important for cbs people are turning that network on or off every day and this could affect that. in the court of public opinion so far there's no statute of limitations. people are not making judgments on did it happen today or ten years ago. no then there's the legal issue where also i don't think the timing matters they have a serious issue here

in today's environment, they're sending a message to the rest of the company. i don't see how he -- he's been a great executive. it's sad i mean, he's wildly popular with advertisers. some employees are coming forward. that, too, doesn't matter. it was no defense that you were nice to five people if you attacked two others. that's just not going to play in the public opinion o for in court. >> david, you know, we talked about the stock price of viacom and does this raise the prospect that there's more likely to be a merger if les moonves is not in the top job at cbs do you see them merging and coming together? or could you see that both companies remain independent >> you know, listen. i think it does increase the potential likelihood that you see a combination. right now it seems everybody is focused including shari redstone on the investigation that is going to potentially take place here she of course is also a member

of this board, we should remember and it does seem that's where the focus is i think you have the dust settle no that's @going to take that much to settle and then we see who becomes the interim ceo or the ceo of cbs if in fact he steps down. joe ianniello is likely to step in but you have to believe as the market did on friday that it does increase the likelihood for it it's early right now to start to really focus on that although it is worth remembering. they had greated more on price point. but it was the key and of course i reported on this many, many times. objections of mr. moonves to bob backish being part of the company in any way that was the key stumbling block. and jim reported on what is a terrible relationship between shari redstone and les moonves

one thought, though, on moonves' future so often has been the case, there are more allegations to come ronan farrow was working on this story for eight, nine months he did get a number of people to speak. that doesn't mean there aren't others out there as well women have come out in support of mr. moonves, but my understanding is there certainly may be other who is have yet to tell their story and then you look at his pay package. the man can walk away with $180 million if he was terminated without cause. and a production deal. you just wonder whether it might be in his best interest to figure out a way to settle and at least maintain what was an incredible reputation. >> does he lose all of that money if he's fired for cause? >> potentially, yes. >> julia boorstin has a question or comment to join in this conversation julia? >> yeah. i just think it's worth noting that this report, these

allegations aren't just about moonves but are about a broader culture at cbs my sources tell me that the board is launching an investigation that goes beyond moonves to look at the corporate culture and these issues and allegations of abuse really and the treatment of women there i'm wondering what david and jim think in terms of how this disrupts a company when it stretches beyond the ceo and executives particularly at cbs news which has been under scrutiny because of the charlie rose allegations >> i think that's a good point because when you look at the success in question, who else at cbs is going to be held accountable for this >> there were other names in the article, we should point out not just les moonves >> aide say right now we don't know about cbs until the investigation is complete. so i think that is a real

concern. and it is disruptive i think probably the closest analogy is news corp. and what they went there. it did not end with just one person >> shari redstone says she has nothing to do with that coming out, do you believe her? >> i do. they made it clear this started eight or nine months ago i think that was a bad pr, but on the cbs front because it only further enraged shari redstone >> do you think the deal whether it's more likely or not, do you think it even makes sense? does it make sense, these two companies getting back together? >> my own view is these companies need partners. they both need to be acquired. the idea they're going to be stand alone companies don't make a lot of sense the question is are they worth more together? are they worth more apart. the list of potential acquirers, for example, was in some ways

bigger if they are separate. because they don't have to buy and divest but we'll see. >> okay. jim, david, julia, thank you, guys important conversation and i imagine we will be talking a lot more about this over the coupling days and weeks. thanks coming up, this morning's stocks to watch. stay tuned you're watching "squawk box" on cnbc in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. healthier brain. better life. at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. tap one little bumper and up go your rates. crowne plaza. what good is your insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident.

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♪ good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm laughing because this is flo rida when i first saw it i thought it was florida. >> did you say it on the air >> i might have. shares of seagate technology earnings beat consensus estimate of $1.45 revenue also beat forecasts. announced the resignation of cfo david morton he's taking a position at another company. he is not leaving based on any disagreement with the company's financial practices.

tyson foods cutting its full year earnings outlook. the move is due to uncertainty about trade policy and increased tariffs. it now expects earnings of $5.70 per share to $6 per share for the year we should mention, though, it'll be down from the earlier estimate i don't know if you saw this over the weekend, i did not but it's on my list to watch "mission impossible: fallout." it took in $61.5 million in north american ticket sales. "mamma mia here we go again" was second i don't know if that "mission possible" was the highest opening. but at least in recent years harley-davidson rolling out an expanded line of smaller bikes in an international push for growth morgan brennan sat down with the company's ceo and joins us with the highlights again

>> harley-davidson unveiling the details of its turnaround plan it involves a new lineup of lighter weight motorcycles for small displacement bike to be sold in india. the company's betting this will jump start -- to create 2 million new u.s. riders and grow international to 50% of sales. i spoke to ceo matt levatich to discuss where all of those new motorcycles will be made >> our preference in all cases is to supply the world from the united states. that's been our mantra since day one. most of our customers around the world, they value that and the brand. we've invested in international manufacturing over the last 20 years, really, for the single reason that there are trade and tariff situations in certain markets that make it prohibitive of us to be relevant in those

markets without the investments. we're only doing that because these are important growth markets for the company that without those investments we wouldn't have access to those customers at any reasonable price. that's an important part of growing the company and growing where the company has premen douse appeal -- tremendous appeal >> there's a lot of talk about fair and free trade. but it doesn't sound like for motorcycles that's been the case >> we are committed to the idea of free and fair trade we have been dealing with these tariff for many decades. we continue to work with our administration as well as other governments around the world around producing these economic and frankly in a lot of cases non-economic trade barriers that make it difficult for us to compete. we still sell motorcycles in india that are shipped from the united states at full 100%

duties right? they're very expensive and we still sell them. that duty elimination would allow us sell many more. we're going to continue to work on that path as we go forward. >> i asked him how much that contributed to the decision to thanks to the eu retaliatory tariffs shift production overseas, a move that sparked fierce criticism including from president trump. >> we've been working on this for the last six months. this is an unfortunate condition in the middle of work that we would like to do we'd like to invest that money differently. we'd like to spend our time differently. but we have to do what we have to do based on the facts and circumstances before us. >> that's the point i'm talking about you're talking more more in a key market like europe with itch is a growth point for harley-davidson, that money, that capital is you're looking

to put it to use in other ways all the of a sudden it becomes even more difficult of a conversation, i would imagine, with you and your board. >> right well, it becomes a decision that carrying -- the first decision is protecting our customers in the markets. so that is us carrying that $2200 per bike cost. and then obviously we have to figure out ways to mitigate that cost because we'd rather invest that money in things that will help us grow the business, not just maintain the business we have to do what we have to do based on the facts and circumstances before us. and we're doing that we're doing what we have to do >> so this news today harley plans to invest up to $825 million through 2022 on this strategy it also thinks it will get incremental revenue compared to 2017 we're going to have more from this wide ranging interview as the day unfolds. that gives you a taste in terms of how this company is thinking about trade dynamics right now

>> very much in the cross hairs with the administration. you know, maybe made worse by the fact stock prices down 12% >> yeah. over the past year and this is a company that over the last three years has seen sales decline and has seen here in the u.s. which is its main market still has seen pretty dramatic drops as its core demographic have aged and are beginning to move out of the market this is a company looking to expand out to the next generation and also other riders in international markets >> when the announcement came out they were going to move some production, they were accused of using the tariffs as an excuse >> what he says and we're going to continue to roll out more of this interview where he more specifically addresses this. but he specially says if this was a shield, basically, to

shift production and that was already a plan, it wouldn't be taking them 9 to 18 months to do it then at the same time eating the cost of these tariffs as they shift the bikes into europe, this would have played out differently for them also they're not giving any details in terms of where that production is going to be. >> that was going to be my next question >> there's a lot of expectation it's going to be in india or in thailand but it's going to take them money and investment just to be able to shift this production from the u.s. to one of those other facilities so they say over and over again they would rather not be in this position to do that. >> we'll see you throughout the day. thank you. joining us now on the squawk newsline is james hardiman it's good to talk to you this morning to expand the conversation we were just having with morgan. what is harley's issue at hand is it demographics is it lack of products people

want to buy? what's the bottom line issue >> i think demographics are a good place to start. i would have told you two or three years ago thatit was a lack of new product and a lack of innovation. but since then, we've seen some of the most innovative launches in the history of the company. and yet sales have only accelera accelerated downward it does speak to an undeniable demographic issue. 10,000 baby boomers retire everyday and these guys are trying to replace those customers who has been their core customering with the milan i can't tell generation coming in i think today's announcement >> so some have kus accused hary

of using the tariff issue when maybe there were other issues at work at least why they moved some of the production overseas. presumably in the interview morgan brenner did, the exclusive with the ceo, he'll tell her that's not the case that's not true. what's the right answer? >> as usual is the case, i think there is some gray area here it's some of both. look under the current retaliatory tariffs being placed on motorcycles by the eu, they're not making any money on motorcycles. so that $2200 represents more or less the majority of what they were making per motorcycle and so one way or another, those jobs were going to leave the united states either because they were going to stop making motorcycles or selling to europe or because they were going to move that production having said that, i actually

think it's potentially a benefit long-term, right we talked about how they're going to be eating these costs over the next year to year and a half i think as we look back call it late next year or early 2020, they're probably going to be more profitable because in all likelihood they'll make them in a lower cost market. >> who do you think has controlled the narrative thus far? is it the company saying look this trade policy is bad, tariffs are bad, and here's what we're doing as a result. saying harley is the issue they're unpatriotic. is there a chance of a fallout with their customers >> there's certainly that risk and i think management has done a great job stating their case

but avoiding a twitter war i think it goes without being said there's a significant amount of overlap between the president's support base and harley-davidson's customer base. so the extent this continues, that would be a major issue for them which is smart it's mainly a back than a back and forth they've largely stuck to the script than responding to the president's comments and tweets. >> which makes our exclusive interview with the ceo all the more interesting thanks so many up. >> thank you coming up when we return, caterpillar rolling out better than expected quarterly results. and then tomorrow on "squawk," you don't want to miss this. michelle has an interview with mike pompeo. catch it at 6:00 a.m. eastern time

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welcome back to "squawk box. american express is said to have increased currency conversion rates without telling customers according to today's "wall street journal." the paper says the practice dates back to 2004 and continued until earlier this year. however, american express said it was available for examination

before any transactions were approved caterpillar reporting better than expected earnings and revenues also raising full year profit outlook. order rates are healthy and the backlog remains solid. stocks higher by 3 1/3 percent this morning this company is famous for first quarter saying that this likely -- q1 represented the high water mark. so much for that what's happened since then >> well, they're making me look like a better forecaster i'm glad there's somebody below me for one thing look the economy is strong. i think it's still not fully accepted in some respects that the tax reform we had made every dollar in the united states more profitable i'm seeing roads being widened, roads being built. you need construction equipment to do that you look at the energy sector.

you punch more holes in the ground, you do more for $50 oil. i would expect that to continue. even though the comparisons will become more difficult and challenging after a couple more kw quarters >> sounds like they raised prices and that was to offset costs which we're hearing from a lot of companies >> yes and that's fair. you have both material costs and also more in your smaller companies now you're seeing rising the labor costs yeah inflation is real. it is here and it's going to be passed through. and they'll benefit from that to some extent. >> over three years, the stock is up 87%. over one year, it's up 25% however, year to date, it's not looking good it's really suffered as a result of concerns about the trade war, the impact that they would face in sales in china, et cetera how do you handicap that in

considering the numbers that you see here >> great questions so first of all, let's talk about the trade war and what the real cap is going to be on c caterpillar stock. in terms of trade war and words do matter, you have the relationship with china and you have the one with europe they're not the same thing china is our rival, period from the time they entered the world trade organization, 6 million manufacturing jobs left the united states. you assume five to seven supported jobs for each one of those. that's 35,000 jobs that went away but many of which did not have to with europe, it's a different thing. germany is not our enemy or rival. they're an ally. but they underspend on defense the real issue for caterpillar stock is this. last three years, about 25% of their free cash flow could be accounted for by underspending on capital relative to

depreciation if you normalize their capital spending and cash flow, this should be $100 stock that would be the true barrier to making money on the long side in caterpillar >> wow that's pretty negative >> it's not their fault. look demand requires inventory. it requires receivables. it requires building plant and equipment. it's just the math the stock went from -- i mean, when we recommended it three years ago at 60 bucks, we said everything stinks it can't get worse. we got off close to a hundred and it ran on us >> you've had it rated to sell for awhile >> we don't do a formal -- we do formal ratings on certain companies. we don't formally rate caterpillar. but we tell clients fair value yes. at a hundred bucks we said

good-bye and caterpillar didn't care >> how do you reconcile that high water mark comment and what the company delivered today? did they simply misspeak did the market get it wrong? what happened? >> well, the market got it right. i mean, people and the consensus, we're expecting them to beat numbers. caterpillar is good at making construction equipment they've historically been bad at forecasting demand it's just not been their strong suit >> no, i get it. but when you say high water mark and then you beat -- and then you raise in the span of three months, what gives >> you see this dumb look on my face i'm with you, okay i can't explain it either. it doesn't make sense. the fundamentals are there why you would think it's a high water mark here's the thing to consider

the tax reform wasn't passed until late last year, early this year when you look at corporate planning cycles, they don't start thinking about building something somewhere else until about august or september. so there's been no real benefite in terms of incremental activity as we go into corporate and strategic planning cycles in the late summer here into the fall, there's a benefit and, you know, who knows if we get an infrastructure bill that would make some sense. so i can't understand why they would think it's a high water mark it hasn't made any sense. >> what should you do instead? >> there are not -- we don't have a lot of buys okay the public markets are pretty elevated we do have buy ratings on united technologies and honeywell

you wouldn't hurt yourself there. i would look there in the larger cap side please don't laugh at me, but we upgraded general electric after having a hold for two and a half years in november. obviously that was several months in about eight points early. if you are brave and patient, i would say go there because ultimately, god, i'll put myself on the line here i don't know what else could go wrong. then i've said that before so safety, utx, and honeywell. if you're adventurous. >> thank you for joining us from green bay, wisconsin when we return, jim cramer will join us from the new york stock exchange so much to talk to him about take a look at the futures as we head to the break. back in a moment with mr. kramer k a leg!

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and i am a senior public safety my namspecialist for pg&e. my job is to help educate our first responders on how to deal with natural gas and electric emergencies. everyday when we go to work we want everyone to work safely and come home safely. i live right here in auburn, i absolutely love this community. once i moved here i didn't want to live anywhere else. i love that people in this community are willing to come together to make a difference for other people's lives. together, we're building a better california. welcome back to "squawkbox." walmart reportedly exploring the idea of starting a video subscription streaming service the "wall street journal" saying the planning is in the early stages the project hasn't been given

the official go ahead. few bad actors are trying to get the leg up on amazon's algorithm. the "wall street journal" reported that they are gamed by other click farms to boost prospects. they are used to try to outsmart amazon's automated ranking of product searchers. there's rival listings posting overly negative or positive reviews. the tactics aren't thwarting amazon's sales and those trying to abuse the system make up a tiny fraction of activity on the site. >> down to the new york stock exchange jim, caterpillar sets the tone for maybe part of the open what else are you watching >> i got to hear the conference call if you remember the context, they made the high water mark and people questioned it then they came back to it and

said we did men't mean it. i don't trust them obviously, they were wrong not once but twice in that call. they may just say, hey, listen we're standing by the fact that the markets are going to come down the big enemy of last week. if that's the case, you'll feel foolish. >> how should we look at tech this week, jim apple coming tomorrow after the bell it's like the least hyped quarter i can remember with apple. nobody is talking about it. >> i know. and there was a note out last week talking about how service revenue may not be as great as we think obviously service revenue is the bright story you have a new iphone coming out. if they don't raise service revenues substantially, i don't think you'll have something like facebook because the multiple is still low. but in order for the stock to power forward here, they've got to say service revenue is

getting bigger and bigger and bigger and, you know, then you put it in the class with spotify and netflix. it's service revenue because no one expects big things. >> you knew you were a fisherman, jim congratulations. >> first place first place! >> i saw the trophy. congratulations. we'll see you in a few. >> and i brought in el monstero.

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thank you for watching the show thank you to michelle and scott. make sure you catch your interview tomorrow morning and scott a little later today in the meantime, join us tomorrow "squawk on the street" begins now. good morning welcome to "squawk on the street." i'm david faber along with jim cramer we're live from the new york stock exchange carl as the morningoff we'll get a look at futures. you can see i don't know i guess we're going to be -- what are we