quarterly numbers from walmart and jcpenney it's thursday, august 16, 2018 "squawk box" begins now. ♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures after a down day in the markets yesterday where the dow closed at its lowest level since july 23rd, you will see some green arrows this morning. dow indicated up by 145 points at this moment nasdaq up by 50. the nasdaq was the biggest loser yesterday, down by 1.25%

versus a half percent for the dow and three quarters of a percent for the s&p 500. we tail earning you can see overnight in asia things were flat in japan. the nikkei closing just below its close from the day before. hang seng off by 0.8% after the declines we had seen the day before shanghai composite down once again. now sitting at a four-year low italy reopening today after the assumption day holiday yesterday. italy is down just over 1% markets elsewhere are slightly higher the biggest gainering t inbeing ftse the ten-year treasury yield at 2.877% finally look at crude oil prices, crude oil down 3% yesterday. 65.01 was the close. that's the lowest severlevel si

june 6th some news for you, china says new trade talks with the u.s. will take place later this month. chinese commerce ministry says it will send a delegation to the u.s. to meet with the u.s. undersecretary of treasury for international affairs. also uber reported a wider second quarter loss as it ramped up spending on food delivery also it has bike sharing going on in the past quarter adjusted net losses grew to $659 million from 577 million in the first quarter. that figure doesn't include items like employee stock options and legal costs. gross bookings were up 41% that's a slight slowdown from growth in the first quarter. because uber is private, these numbers are not reported in a government filing but uber provides them to investors on a regular basis. >> so fast let's get back to the china

thing for a second that was your previous article i talked about these two articles we've been referencing some of this stuff this is the "journal," china expresses unease look at the picture of president xi they maxed it with the title he looks like he's under attack. >> he is uneasy. >> and unfortunately, andrew -- >> yes >> i click on the "new york times" story to read it, i can't get in there it says i used my -- >> you are not a subscriber? >> can you get me a deal >> after all the things you have said -- >> am i blocked? this is like weaponizing -- >> we might have to think about that >> this is like a twitter, facebook blocking thing. >> i thought you didn't read it. >> i was surprised they wrote this piece it was -- trump's trade war is

rattling its leaders did you see it >> yeah. >> it's interesting. censors have been deleting most of the criticism of president xi, but some of it we know about so it's getting through. >> how do you shut down everything particularly when people are able to travel and when they leave klein a china and travel abroad. >> so we know they're sending a minister here to talk? >> i don't know. you know who does? larry kudlow and he will be joining us this morning. last time we spoke with him he talked about how china had gone silent ball was in their court, they weren't responding if this works, i don't want to be around you. if this works with china and we get some kind of -- i'll have to take a week off. it's -- any way. >> if this works i don't know what i'll do to be around you. >> exactly it will be entertaining to watch. stocks to watch.

cisco systems reporting its third straight quarter of revenue growth it is on continued strong software sales earnings beating forecasts current quarter guidance also above analyst estimates. shares look good today up almost 7 mr%. kruk r kr chuck robbins will be on "squawk on the street. he's on the west coast, is that right? >> it's early for him. >> it's early. i hear from him about things he watches he seems to like me. you know, i see him around, but he always goes on at 9:00 a.m. squawk is squawk have i got that right? >> are you questioning your -- >> no there's no "i" in team >> it's a broad squawk team. he's on squawk we appreciate he's on cnbc >> we do you're right you're right leave it there shares of netapp are under

pressure the cloud services company reporting better than expected results on demand for flash storage. starboard has taken a 6% stake in symantec. the "wall street journal" reports that that company is seeking a board seat and says symantec needs operational changes to improve margins >> nbc ni bshgs krshgbc nightlyr lester holt sitting down with jack dorsey. >> i feel, you know, any suspension whether permanent or temporary makes someone think about actions and behaviors. >> do you think alex jones will change his behavior based on a time out >> i don't know.

whether it works in this case, i don't know this is consistent with how we enforce. >> want to talk more about that twitter decision with our next guest. eric desenhall, you got to see the interview last night you heard what mr. dorsey had to say about all of this. it does create -- let me ask it this way, does it create more of a problem for twitter? does it make more of a problem for alex jones >> more for twitter. if you are a communications platform or a media company, you're always wrestling with the central question of am i a business or am i an institution withfirst amendment obligations? having worked on situations like this, no matter what your answer is, you are going to upset somebody so the question is, it's a really business decision what are the consequences. as a publicly traded media company or social media company,

they have a choice not unlike how journalism companies like cnbc. i have no legal right, first amendment right to be on your show i have a legal right to talk at a restaurant but you have to look at what the consequences are i'm not sure there's a great consequence to twitter for doing this is donald trump really going to stop tweeting? where you start to get into a consequence situation is where does the slippery slope stop if you're going to ban or suspend someone with a right wing view, will you suspend someone with a left wing view? those are the types of situation and questions twitter has to ask themselves i'm not certain this is a real crisis >> who has done it better? it seems like you had a number of other services ban him. twitter was the last to ban him. doing so on a temporary basis.

frankly the biggest one to take a stand on this issue and some things he said earlier is facebook which didn't do anything to the extent you're in the camp he should have been banned or taken off these services, apple was the first mover in this. what is unclear is from a business perspective how this is changing their businesses one way or another >> i don't think we know the answer to that i think it's way too soon. generally speaking what i'm seeing is a reluctance to take stands that can be viewed as political. i've seen time and again companies congratulating themselves for taking political views, especially those that are considered politically correct, thinking they are going to be applauded, and they find they're not. you see this with retailers and gun sales. thinking they'll be rewardedby the consumer, and the opposite happens. to me twitter has a larger

question, which has nothing to do with alex jones it has to do with the extent to which are they viable as a business and also are they viable primarily as a business. >> one question is an advertising question, if you are a cmo, will you say i can't do business with these people they say these things. we, meaning the cmo of whomever, will not advertise on this platform meanwhile the other constituency in this is where you're based, washington, d.c., which is what regulators do about this and in this particular case i'm not talking about what democrats do about it, i'm talking about what republicans might do about it to their business in silicon valley >> it's an interesting point i do think there's a lot of concern among conservatives that social media has a left of center bias in large measure

because of where they're based i don't know whether you can bear that out especially in the wake of the 2016 presidential election where the argument has been made that there was a pro trump bias i do think you're seeing a sense in the republican community that there is a bias, a cultural bias against conservatives. so it's going to be interesting to see if a left of center organization takes the position that we must protest in the streets is twitter or a similar organization going to say this is insighting violence, we are not going to have that it's a slippery slope. the better of the bad options tends to be not to suspend or ban people simply because of the enemies you will make. i can't look you in the eye or say the fact that twitter is suspending alex jones is going to have a huge business

implication. largely because where else are people going to go it's like every time there's an airline incident, people say can united or delta survive? if you need to go from baltimore to california, you're not taking a bus. the organizations survive just fine >> athere are some well known leaders of -- you know, i'm trying to be tactful now should i do that you described some well known democrats who would already be deleted in terms of saying, you know, harass trump followers, do this, do that. some of the best known names have already said things like that >> look, i've been in washington for 35 years by way of disclosure i worked in a republican white house i worked for reagan in my 20s. what you see sometimes is when democrats are aggressive, it's community organizing

when republicans do it it's dirty tricks the question applies to social media and media organizations, what are you going to censor i'm not a fan of the alex jones schtick, but i also think there's plenty of left of center behavior that can be considered inciteful and mean spirited. >> definitely a double standard. i see it already >> to me i think business look at this as not wanting to take sides and lay below the radar, because there's not upside to alienating 50% of your customer base no matter what you do >> one thing i would point out is corp ragorations tend to lea strongly, despite the fact that people think they're conservative to politically correct notions. i have spent decades in a room where people think if they take a politically correct position they will be applauded by the marketplace. they find they walk into a

spider web >> we see that all the time. we mention that. the corporate ceo of today is the ultimate canary in the coal mine for every social issue. he has customers that run the gamut. the slightest thing he will be sensitive -- he or she will be sensitive to it. you saw it when they disbanded the entire corporate thing with trump. they all headed for the door >> just because your corporate people are whispering one thing in your ear doesn't mean it will be carried out >> can't you put alex jones in a different category, the comments related to sandy hook and others are factually inaccurate and represent a true level of harassment that seems so mean spirited and deeply unjust

>> and i think that is ultimately going to be the standard are you saying things that are outrageous and not factually based as opposed to supporting a particular movement of some kind i don't think it's the stri ddet stridency. i think we'll have to look into are you taking facts and disporting them in a way that betters -- >> if that's the standard, you can delete half of twitter at least. >> that's right. but again twitter has the obligation -- not the obligation, they have the right. a lot of people are confused about what the first amendment means and what it doesn't mean cnbc has no obligation, if you don't think i'm a good guest, to have me on it doesn't mean -- you can make thatdecision as a media organization on the grounds that you simply don't like my shirt >> these companies have tried to pretend they're not media

companies, they're platforms >> legally they are flat forms they are not creating content, they're sharing content. but again you get into that slippery slope area where you can't have it all ways eric, always great to talk to you. >> you bet >> andrew, you can find things, maybe not to your -- in your view, maybe not to alex jones, but you can find things from the left that's close. close enough for government work believe me they're not going to be affected you're looking at me like -- i know how you are but there are things on the left that are on twitter now that are -- >> if you want to be a holocaust denier, a denier of things like sandy hook -- >> on the other side you have only antifa posts that are advocating the worst type of behavior and they're still there. >> it's not a justification for

that, but the sandy hook situation -- sandy hook in particular strikes a cord with so many. >> right i was reading some of his things if you look at it, his latest thing is he's saying he was banned because there's some black flag or a false flag, something is coming before the midterms, this is coming before that he has a lot of crazy -- >> he can't find justifications for it >> but you're talking about one particular instance, and there's myriad instances on both sides where twitter will have to deal with it. >> which is why these companies have tried to steer clear. >> at this point i would still tell you that it is -- you heard eric saying that there's a perception it's more directed -- >> there's no question alex jones is supported by president trump. president trump has come out repeatedly to say this is a

great guy. >> this is a great topic for you. the broader topic. you can talk about alex jones and wring your hands and mash your teeth about him in particular, the bigger issue is it's not just going to be legislated -- or they won't do it fairly. all these guys are from your side they are going to -- >> if the basis is distortion and social facts and lies, half of twitter is gone >> it will be levied differently. >> we'll see how it gets levied in the end chinese internet retailer jd.com out with earnings dom chu has more on those numbers. >> a big competitor to alibaba in the chinese market. jd.com earnings in focus now headline numbers, we are seeing

shares down about 6% in the premarket trade. earnings per share on an adjusted basis, non-gaap earnings at 0.33 renminbi or yuan it appears as though that's a miss compared to the analyst estimates of 0.67 renminbi again, we're trying to determine whether that's a a trtruly comparable estimate to numbers reported revenues at 122.3 billion renminbi versus analysts estimates for 122.7. a narrow miss there. the shares right now are moving in response to that down by 5% only 127,000 shares have traded so far couple other line items from that report of note. they are noting that fulfillment expenses which premierely include procurement, warehousing, customer service, payment processing increased by 29%. as a percentage of total

revenues, slightly lower than the same time last year. they're spending more on technology and content expenses and on general and administrative expenses. we will go through the numbers right now it's a 5% drop on thin volume in trade. jb.com may be the next possible tea leaf we saw what happened to tencent on concerns over their sales growth we'll see if this sticks out for today's trade. back over to you >> thank you coming up, stocks moving higher we'll talk strategy next as we head to break, a look at some of the premarket winners and losers in the dow. this isn't just any moving day.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. welcome back let's get you caught up on the markets. we've been watching the futures which are indicated higher today. joining us is phil guarco and

jason pride. phil, we have three issues out there. turkey and the emerging markets, you have earnings that continue to come in strong and trade in chi china. which of those do you think is the most important driving markets? >> i think on the instant moment, i think it's really trade and turkey when it comes to turkey, what's going on there is this is not done yet with u.s. rates rising, turkey is exposing some of the weaknesses and a number of other countries out there. we saw argentina we could see osouth africa the liquidity we had, the extremely low rates we had hit a lot of the ills out there, so we have to deal with this now turkey will linger for a while it's not done. it was nice to see the rally two

days ago, but the give back we had yesterday was just saying, hey, this is not fixed yet it's got to come when it comes to trade, i think markets are reacting positively today. when i think of trade, china, it's no war and no peace the administration has a long-term goal about opening up markets and giving access to u.s. companies which have been denied and i think that's a long-term process. and it's not going to be resolved by some lower level trade mission that is coming to the u.s. right now it's helpful but not going to resolve anything >> jason, break that down into two longer term trends that we follow one is trade and whether that goes positive or negative for the markets, the other is earnings which continue to build. how do you see these two forces kind of fighting it out.

we are putting the trade issue and the turkey issue into the risk camp and the long-term fundamental story here of the ongoing expansion, economic and profit story being the ultimate driver our best case is the second one is the one that carries us forward. maybe a bit of headwinds from the trade policy, but the expansion and profit growth cycle being robust and driving equities higher. carrying evaluations to higher levels and the other two items are the trade and the turkey situation those are near-term risks. they'll rise to a certain point of really feeling like they are ultimately important and then recede as part of those risks actually feeling like they're a bit more nuanced because policymakers respond in a better direction the next day

ultimately earnings growth matters. we're locki inlooking at solid digit earnings some are propped up by tack tad other factors, but these are great numbers for equity owners. the stock market is feeling that it will probably be feeling it stronger once we get past a couple of risks. >> gentlemen, thank you. when we come back retailers on high alert after yesterday's 16% selloff for macy's shares. we'll get you ready for reports today from walmart, jcpenney and nordstrom. first a look at the s&p 500 winners and losers

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you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back let's talk about some stories front and center china says new trade talks with the united states are set to take place later this month. the chinese commerce ministry says it will send a delegation to the united states uber reporting a wider second quarter loss as it ramped up spending on food delivery,

bike sharing and expanding in the middle east and india. dara khosrowshahi has been focusing on improving uber's finances ahead of an ipo he hopes to complete next year. he said he doesn't think uber needs to be profitable before going public. cisco reported its third straight quarter of revenue growth on strong software sales. fourth quarter earnings beating forecast first quarter guidance also above what analysts had been expanding. chuck robbins will be on "squawk on the street" later this morning the dow futures are indicated up by 175 points right now. nasdaq, which was down by 1.25% yesterday is indicated to open up by 55 points. the s&p indicated to open up 13. new york govr nernor andrew cuomo sparking controversy yesterday saying america was never that great and wouldn't be great until all americans share

true equality. >> the simple point is all coming down to this. we won't make america great again. it was never that great. we have not reached greatness we will reach greatness when every american is fully engaged. >> and governor cuomo is considered a potential presidential contender in 2020 but he faces a primary challenge next month from actress cynthia nixon from "sex and the city." i'm glad that's -- i used to have to -- that used to be on in my house i felt like i had to be strapped in my chair. >> no. >> what do you mean? >> you were against the show

>> i a couple of times changed the channel and put on "beaches" so i wouldn't have to watch. you liked the show >> my wife watched it. i watched it with my wife for years. >> you blamed it on -- >> if it was on, i would probably watch it. >> did you ever feel uncomfortable or feel like leaving the room >> not any more uncomfortable than i feel right now. >> okay. >> we have other news for you. the s.e.c. committee has reportedly now served tesla with a subpoena after elon musk tweeted he is taking the company private and had necessary funding lined up the subpoena would be a first step into a form inquial inquirt all of this. this happened much quicker than

some people expected i ultimately think this may require a fine of some sort. the question is how do you make an example of him and what he did, which clearly appears to have been a problem. >> how big a fine? >> because the guy tweeted something. several million dollars is not nearly enough when you consider he tweeted something that caused the stock to go up 11% the stock came back down when they found out he tweeted factually incorrect information. his own stock went up $52 million and came back down, but some people bout ght at the hig water mark >> if you're the s.e.c., you could fine him out of existence or say he can't run a publicly traded company >> bring criminal charges. >> bring criminal charges, if you thought there was criminal

intent that's a different case. do it as the s.e.c part of the discussion in your mind has to be, okay, there's this company there's investors behind this company. moms and pops behind this company, retail investors. >> retail investors who just bought in. >> that's not always the case. a lot of retail investors get hurt in some situations, like when the ceo does bad things >> then the question is so, yes, in the most principled way how do you do it >> you are always so principled in so many other areas >> i don't know what the answer is >> that's the question >> i do think that the board must be going nuts over this they have already taken the stance of separating themselves from him the board and big investors had been asking him not to tweet like this. why he continues to do it, it's a huge risk for the company. as an investor i would be furious. >> you don't want to ruin the

possibility of saving the planet by -- >> no, no. >> by something happening to elon musk. >> no. >> i don't know what the appropriate punishment is. >> you want to go to mars. >> it's not enron. >> joe, now -- none of those are the issues the issues are much more about -- first -- >> it's not enron. >> for whatever you think, most of the big investors oddly enough, even with behavior that you might not think is appropriate in certain instances, they seem to be -- like will go along with him. even now >> that's not what they say when they speak candidly and off the record >> that's not good just because everyone is doing it, let him do it. >> i'm not saying that either. i'm saying you have to figure out what you want to do about it >> i don't know what appropriate punishment is. i don't think this tweet is something that is relevant to compare it to enron. i don't know what appropriate punishment is. it seems like a slap on the

wrist is not enough for doing something like this when you consider the individual investors and retail investors affected >> so what do you do >> i don't know. >> the musk boring company announcing plans to dig a tunnel directly to dodgers stadium from east hollywood the 3.6-mile tunnel would take fans in passenger pods to the ballpark that trip would take four minutes. the proposal has the early support from the dodgers, the l.a. mayor >> how about this solution it's not something that is really complicated and totally off the wall what if any individual retail investor who bought on the upside that day from where it started up to the 11%, what if they want to trade their stock back in for whatever price they purchased it on, elon has to buy it out of his pocket you have to take the loss on this if you're a long-term investor and you think it's going to go higher, you won't take that up if you are an individual

investor who got sucked in with that stupid tweet, he has to make you whole he has the money to do it. >> that's an interesting idea. i like that idea >> could we go back to digging big tunnels around the san andreas fault in l.a does that make sense when are they starting i want people to get to the ball game quick, too, dodgers have great pitching >> good question >> all right let's start drilling busy day for retail report card. we will hear from walmart and jcpenney at the top of the hour. jcpenney 700 million, walmart 270 billion. i can see that we're just running the gamut. is that it should we stop mentioning jcpenney with walmart? >> no because we want to see every angle of the consumer. >> it is quite a --

>> dana telsey said yesterday -- >> think about it. 700 million, 300 billion not exactly the same >> sears used to make houses >> yeah. and kmart. we will watch closely because of what happened with macy's yesterday, which posted better-than-expected earnings and sales but struggled a little on the sales side and the stock fell 16% joining us is mary epner from mary epner retail analysis jcpenney bad walmart good do i have that right >> that's my belief. yes. in a nutshell, yes >> i don't miss much >> you're good >> walmart comes in at 7:00 a.m. >> supposedly. >> so what do we expect? >> i'm expecting good numbers from them. i'm expecting positive so i don't call it specific numbers, but expecting good

results there. is that a walmart story or a consumer confidence story? >> i think both. i'm more positive than most about retail and going forward oddly for several reasons. walmart is in that category for me jcpenney, not so much. walmart definitely >> when you talk macro with retail, you talk consumer confidence and amazon. those are the two big issues >> correct for retail, it's power to the ones who have identified their customers and what they want and if they're doing the same old thing like some department stores they're clearly losing and will one of the big effort things now is the divide between the traditional stores and the way they do business along with amazon and other digital retailers who are getting very, very big we have some in cosmetics, in sports merchandise

they're approaching billion dollar business. they're going to take a big piece out of these public traded companies. >> are there retailers, do you think, traditional retailers who are doing well when it comes to online, too? blending the two bases >> yes in terms of department stores, i like nordstrom, macy's and kohl's in spite of what happened in the past day or so i see thoses a positi s those as a positive. i like canada goose, nike, adidas and steve madden. so i think all of those provide a nice balance of in-store and digital. >> i ask this because target has some new offerings walmart lets you now pick up your groceries you order in advance you pick them up in the parking lot target is doing the same thing i tried their new offering with shipt yesterday, it's a personal shopper. you can get delivery the same

day. >> absolutely. >> it came within a few hours. >> yes >> that's almost competing with amazon prime >> absolutely. it's a good story. it's been inconsistent but it's a great idea in theory i'm sure whatever little kinks they have will be worked out >> inconsistent meaning it doesn't work everywhere? >> yes, just in some surveys we've done across the country. >> thanks. >> all right in terms of macy's and what you think of as conventional old line retailers that anchor malls or whatever, what happened yesterday, is it going to -- will we see it again with some others >> i think that what happened yesterday is not consistent with what's going forward we've been out there, you know, to stores looking at digital and a combination of talking to customers. with macy's where their strengths are are consistent with what the customer wants

now. so we see it being positive going forward. yesterday i can't explain why everybody sold off, but i think it may have been the concern about the traditional retailers and where they are going and is this the same old same old >> i'm a big fan of steve madden, too the latest football that you can play -- >> that would be john madden steve is the shoes >> that's john >> confusing your maddens. >> do i wear steve maddens i don't wear steve maddens >> did they wear any on "sex and the city"? >> no. >> they went way luxury. >> jimmy choos >> we have some of those it's weird we buy them one at a time. one costs the same as a normal pair of anything else. >> right >> more than a normal pair of anything else. >> yes >> absolutely. >> look how good you'll look in them that's the difference. >> worth mortgaging the house. >> thank you

coming up, stocks in china are paring losses overnight on news of new trade negotiations with the u.s. later this month we'll look at some of the biggest chinese movers we'll do that next then our guest host at 77:00 :0s gary loveman. at 8:40, larry kudlow will join us live from the white house. so much to talk to larry about you're watching "squawk" on cnbc let someone else do the heavy lifting. tripadvisor compares prices from over 200 booking sites to find the right hotel for you at the lowest price. so you barely have to lift a finger. or a wing. tripadvisor.

right now it's time for the executive edge a record number of investors became 401(k) millionaires this swing. that's according to new data from fidelity. 168,000 of its 401(k) investors had at least $1 million in thei accounts, that's up from 50,000 people a year ago. >> how many people >> 68,000. >> 68,000. 168,000. >> that's a lot, andrew. >> that's just in fidelity's numbers. >> it's like a tripling? >> yeah. we have shares of china's

biggest internet company falling 3% overnight look at this, it's having an impact across the board. tencent posted disappointing earnings quarterly profit dipped 2% it is the first decline in profit for the company in almost 13 years that stock is now down 12.5% in the last week. get this, the company lost 1$165 billion -- they lost 1$165 billion in market value since january. unbelievable >> unbelievable number >> that was brian sullivan's rbi this morning >> but i don't think it's an outlier. i think there's some strain in china. did you read -- andrew, i read this i couldn't believe that i read this is that not unbelievable let me read this quickly they're quoting an economics professor talking about president xi's stance on everything and the problem with

the united states. and he says that this trade dispute delivered in his words a strong dose of sobriety allowing us to realize a huge technological gap still exists between us and the u.s and do we continue to calmly recognize our huge gap u.s. and humbly learn from them or do we insist on walking a populist path of anti-american. that sounds so different than what we think of -- that they're really powerful and that they don't need us -- >> but also the recognition that they're learning from us all the time and -- >> yeah, learning and stealing the technology are -- coming up. we talked more about this trade war fallout. we'll talk about the commodity prices and the stocks that could take a hit if tariffs remain in effect. stay tuned.

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the trade policies sparking moves in commodity prices. jackie deangelis is joining us this morning. she's got a lot more. >> good morning. the rational is that longer term and tougher stance is going to

help the united states but the concern is some short-term bleeding. that could be impact philadelphia a trade war continues and the results were very pervasive, but with commodity prices in particular, fluctuations in the metal, ag and oil spaces put big risks in the market. for example, waste management getting hit because of lowered prices because of recovered metals. u.s. machinery companies like deere battling falling ag prices, higher steel prices shrinking their margins. china is a driver of metals, of course. 50% of the consumption. if gdp slows there, it will take a toll. freight transportation companies could see lower volumes. the autos, costs will rise because of higher metal prices. those costs passed on to the consumer. oil and gas, prices have seen a rebound but energy companies in

the past earnings season they still struggled. another price drop could lie ahead. these are just some of the industry groups, some of the companies that investors should be watching -- >> waste management i didn't think of. >> and there are those underlying companies that you don't necessarily think of off the top of your head. >> thank you. when we come back, our guest host for the next hour is gary loveman who's the former aetna executive and the former ceo of caesar's entertainment and a lecturer at harvard. walmart is set to report and we'll get you the poosrerts and reactions from the street. into everything, and everything into the cloud. it's all so... smart. but how do you work with it? ask this farmer. he's using satellite data to help increase crop yields. that's smart for the food we eat. at this port, supply chains are becoming more transparent with blockchain.

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new this morning.

word from beijing that china and the u.s. are ready to restart trade talks and the futures are rising on that optimism. earnings alert. dow component walmart rigging up quarterly results this hour. we have the numbers and instant market reactions straight ahead. tech trouble and we're not talking about fang stocks. while a couple of big names in china are having a bigger impact on the markets right now as the second hour of "squawk box" begins right now. ♪ announcer: live from the beating heart of business, new york, this is "squawk box." good morning. welcome back to "squawk box" right here on cnbc live. our guest host this hour gary ludman is here. lots to talk to him about, particularly sports betting and health care and so much more.

take a look at u.s. equity futures at this hour. let's show you what's going on. nasdaq looking higher as well. 63 points higher, s&p 500 up about 16 points higher. we'll explain why the markets are moving that way. making some other headlines. china says new trade talks with the u.s. are set to take place later this month. it's going to send a delegation to the u.s. to meet with david malpass. he's of course the u.s. under secretary for national affairs. that could be a very big and important meeting and we'll talk a lot more about trade with president trump's top economic adviser, larry kudlow is going to join us at 8:45 eastern time this morning. also on the economic agenda this morning, you've got to watch for these things, we got weekly jobless claims and the economic data and we have some corporate news to bring you as well. uber reporting a wider second quarter loss. the subpoena spending more on food delivery, bike sharing,

expanding in the middle east and india all weighing on those numbers. that's still a private company, but the expectation is they want to go public in 2019. let's talk about some of the big stocks to watch today. china's second largest ecommerce firm fell short of estimates. dom chu joins us right now and dom we've been watching this stock very closely. >> very closely, because it has been one of these indicative stocks of the chinese internet. down by 4.35%. a wider miss on earnings. this is -- breaking news. >> breaking news are earnings that are out. >> walmart just crossing the wires and crossing the tape. we'll take a quick look initially how the stock is responding. a 1.29 versus 1.22 and

immediately up 5%. theadjusted earnings were quit a bit above expectations and most major metrics beat expectations by 7 cents a share. it looks like a 1.29 adjusted here and that beat analysts forecast. $128 billion. walmart's raising its full year guidance for earnings to a 490 to 505 and also above the street's 481 consensus. those are guided higher. the real strandout. look at u.s. comps up 4.5%. consensus was 2.4% so this is the best reading in ten years. u.s. comp sales guidance from the year up 3% from at least 2%. grocery, the best comp year for this quarter in nine years. walmart's u.s. ecommerce sales brew at 40%. that's the strongest and about three quarters. i spoke to walmart brett biggs

who said it's a combination of the customer really responding to the unique ways we're serving them and a really good environment with both strong consumer economic backdrop and improved weather in may. and bigg said year-to-date u.s. comps are up about 3.3%. and that's due to some higher comparisons that are expected in the back half including comping that stronger spending from the hurricane last year that happened in the third quarter. gross margin is down about 17 basis points which biggs says is in part of the combination to lower prices and also higher transportation costs. pretty good report here. >> it catches me completely by surprise. they say that by year-end they expect that they will be able to have grocery delivery to 40% of the u.s. population. >> that's a goal that they had

stated previously that they were working on and that was sort of an expansion of those initial pilots to use a third party delivery drivers, the lyfts of the world to get groceries to u.s. consumers. now they're saying -- they had said this before, but this is good news that they're on track and so now they have pickup in more than 1,800 locations, but delivery for 40% of the country and there's a fee associated with that, a minimum purchase, but still. >> what's the consensus estimate for yearly revenues? is it half a trillion. >> you're going to throw me. i don't know. >> four times 128. >> and the fourth quarter is always much bigger. >> i'm just thinking, would i rather have a half a trillion in revenue or -- >> 514 billion. >> i think i'd rather have the revenues. >> i think i would too. it just -- >> i'd think i'd rather have earnings. the margins particularly about grocery business not great.

>> and walmart's working on their cost management. they're known for that. margins are going to be an issue as ecommerce grows as it would with any company. >> in terms of wow numbers, what's the response you get? >> revenues not going to go away and revenue is the actual number that's a real market in the books -- market cap is the market's opinion of the -- of any given moment. >> to move that much stuff. >> i'd take either one of them. stay where you are in the meantime, we want to get reaction right now. help parse through this. >> this is a great quarter for walmart and what walmart did three years ago in october when it made the announcement at the analyst's meeting that we're going to invest over multi-year period, you're starting to see that come to fruition right now. the online business is growing

gangbusters, 40% is a big number off of a very large base. the food delivery, the price investments, courtney mentioned the margins. its going to come down. they're in a price war with amazon. i'm an old guy. i like to call out lee frazer. they're going after market share. you're going to see compression probably on the operating income side which is what we really focus on, but that has to happen. when you're making investments for the future, you have to sacrifice for the short-term. >> is there an opportunity for walmart to ultimately catch up to amazon or is it -- is amazon always going to have some kind of lead? >> i think when you look -- >> on the retail side? >> on the ecommerce retail side? >> i think amazon's won the battle against any individual retailer in the u.s. the lead -- its almost insurmountable. if amazon were to stop selling product today, it would take walmart five to ten years to catch up.

we published a piece a couple days ago on walmart's international business and that's completely transformed. i remember -- i've been involved with the company for 15 years at moody's. this is a sea change and its drastic when you say we're going to pull the plug on the uk, we're going to pull the plug on brazil, go all in in india and keep doubling down on china. those are big transformative decision that's the companies made but they make a lot of sense. >> charlie, let me go back to something you said at the top. this is the payoff for all the investment that's walmart talked about when it told the street that several years ago. >> yes. >> is this a time for victory lap for doug mcmillan? because when he made that announcement it was on the show and he told them what it was going to mean -- here's what i did. was it the right move? >> it was definitely the right move. i was on this program the day after that happened and our

position had been this is what brick and mortar retailers need to do. walmart did it. you're starting to see it bubble now. best buy has done similar things and is performing really well. there's a playbook out there. >> it's an example of long-termism versus short-termism which is another conversation we've had time and time again. not managing for the quarter but managing for the long hall. >> absolutely. if you're a retailer in this environment, if you don't manage for the long haul, you may not be there for the long haul. you have to take short-term pain and investors need to be patient. >> what do you think about the acquisition of flip card it hasn't actually closed -- the deal hasn't closed the deal yet. how important is that because you were talking about international. >> that's a huge deal. that's a jet.com squared for walmart. the indian economy is booming. there's not a lot of brick and mortar development like there is in the u.s walmart gets the largest online

provider, blocks amazon to an extent and its a multi-year deal. its another long-term investment. we don't think flip cart will generate profits for at least three years but that doesn't matter when you're looking at this through a long-term lens like we do as credit analysts. >> they're obviously going more into india but selling out of their stake in brazil and that will impact the guidance going forward. they're being thoughtful and methodical about the markets they're entering and the markets they're exiting. >> absolutely correct. they took a look at that international business and said, the uk's tough. its a race to the bottom on price in uk grocery. brazil's a tough economy. its been up and down over the years. india's a clear runway for walmart and you had -- you had to rearrange the chessboard a little bit in order to make india work and that's exactly what the company's doing. >> thank you. let's get back to dom chu who we so rudely interrupted with that breaking news before.

co dom was telling us about those big chinese technology names getting slammed. >> i was listening very intently by that analysis there about what's going on. the thing we want to talk about with j.d..com, it's a big presence in china but also because walmart has a 12% stake in j.d..com. this is very much apart of that big international growth story that walmart has. its not working out so well these days because jd have been taking a beating. that's what we're talking about here. walmart making big bets on emerging market. jd's a big story today because it solidifies a trend that's been there since the beginning of the year. alibaba is now down about 18% just emerging from that bear market territory. down pretty big. xiaomi down 22%. baidu down 22% as well.

we know what happened with ten ce tence tencent. huya.com off by nearly half of its value overall as well. if you take a look at how that's effecting some of the etf investing we do have out there, this is the large cap etf. up marginally yesterday, maybe a bit of a bounce, but still over the course of the last one year, off by 4%. since its highs its lost about 25% of its value. another one to watch is the crane shares, large cap china the ticker kbew there. those particular shares are off about 30% from their highs and these guys invest in a lot of these names. the ripple effects of ten cecent and everything else happening is going to play out in a negative stock. we'll see if becky some folks find the buying opportunity there. i spoke to dan niles. he says he's nim bling on some

of these chinese internet names. >> thank you. when we come back, we'll get a checkup on the u.s. health care system. our guest host today is a former top executive at aetna. he's going to be joined by bernard tyson who is on a mission to help get more people covered. he's making a squawk house call from kaiser permanente right after this. here's a trip tip: when you search hotels on tripadvisor... enter your destination and the dates of your stay. tripadvisor searches over 200 booking sites... to find the best deal on the right hotel for you. tripadvisor.

welcome back. the health care debate in this country frequently centers on drugs, insurance and the high cost of both. recently our next guest has put focus on some other determinants when it comes to health, socioeconomic factors. these could play a much bigger role than we think in a person's overall well-being. joining us to talk about just that is bernard tyson. he is chairman and ceo of kaiser permanente. bernard, thank you for being here today. >> great to be here. >> you've said that your zip code can determine a lot more about health care than any of

these other factors that we spent so much time talking about. how does that happen >> well, you know, i think now that we all in the industry are better understanding the whole ecosystem of health, that's what we've been focusing on at kaiser, what you discover is a big difference when you look at the differences in communities in which they don't have grocery stores, in which there's high crime rates, which brings on stress and the inability to go out and play. when you don't have the right infrastructure that is friendly to health, habits and possibilities and so what we're doing is actually working in public/private partnerships, we're working with the school systems. we are working within zip codes to facilitate getting better infrastructure and now with the capabilities of technology, we're able to connect the dots to make sure that resources are being maximized to the full extent. >> let's talk about that. that was what you did at aetna. you took a lot of the

information you could find out about people, that you digitally tracked and tried to find ways to improve health care outcomes because it means not only you can save money at the insurance company but you can give better outcomes. >> the point he's making is critical. one of the tragedies in american health care is so many people are more ill than they need to be, that is to say, they are suffering from some set of chronic conditions but could be substantially healthier if they were able to manage those conditions consistent with the best medical counsel that's available to them, but because of perhaps where they live or the social circumstances under which they're cared for, they end up in a position where their health is far below where it might be and that gap prevents a tremendous ability. so if we can raise a person's health to something consistent with those who are in the best position with similar die nothing stick circumstances

that's a critical outcome and great economic outcome. >> not only for the companies like yours that are watching this but also for the country overall. we talk constantly about this issue because its such a big part of what we spend as a nation and something that needs to be addressed. are these things that you are learning on the company level that can be translated into a government level and really attack this? >> absolutely. and actually in some cases in cities across the country in the markets, for example, as kaiser, we have the government very much engaged in this topic. i mean, the reality is -- its still the basics. what you eat, exercise, sleep, which is all part of rejuvenating the body, all part of good health. these are basic formulas that helps to produce better health and the health care system is also going through a transformation. kaiser permanente was built on

prevention, early detection. the health care industry is a still a fix me system. so many in the health care industry are starting to understand the whole total health concept and, you know -- i think what we are doing now is moving much more into how do we invest in our communities in different ways that builds on the whole ecosystem of health and being in schools is one of them, dealing with issues about housing and shelter is another one. we do foreiarmer markets arounde country. teaching people how to eat healthy. >> can you tie that back directly to bottom line and when we spend this much on prevention and on good diet and helping people that it saves us this much down the road, because that's what it would take. >> a really important point i want to make here, for me its not about bottom line, it's about keeping the money in the pockets of the american

people -- >> and better outcomes too. >> yes. >> if you're going to expect the government to get behind it, you're going to be saving yourself money over the long-term. >> and that's a great example of it because we have an end to end responsibility for the health and well-being for the population that's we take care of. we are fantastic physicians and they are experts in prevention -- >> chronic care. >> you don't want to bash the drug companies. i understand that. they take responsibility for this i think. we had toby on last week. i think he was promoting adopting some of the policies of europe in terms of that we should be reimporting some of these drugs and he realizes that we subsidize the drug development for europe but still thinks we ought to bring back the price controlled drugs into this country to help people

afford more, is that the answer? to me it just seems like we're importing price controls which would make us not develop drugs in the future? what's the answer there? >> i mean, you know, i'm not here to bash, as you said, because -- >> bash them a little. >> we all have to be in. i'm challenged also with drug pricing, but at the same time we now are at a stage in health care where we're seeing drugs that can cure, so i don't want to throw out the baby with the bathwater. >> it might be a lot cheaper to take an inexpensive drug than to spend time in the hospital. >> people are prescribed expensive drugs that are not helpful. with the emergence of much more sophisticated diagnostic -- >> what should we do about the way it works over in europe? should we let them negotiate lower prices for their people over there even though we did all -- we put in all the r & d

money for the development of the drug >> talking about taking the trade war to the -- >> i'm just not sure how we do it. they get a free lunch and much cheaper drugs, should we just say, well, you know, let's not fight them. if you can't beat them, join them, so bring back the price controlled drugs here? >> i would say, you know, we have to look at all options, but quite frankly, in my situation at kaiser, i know what we're spending on drugs and there's got to be a better way. >> what is the better way? what is it then? >> we do need to look at what does it take to put more transparency on the pricing of drugs. we also need to look at systems like kaiser permanente and i've opened my doors, to your point, to look at how our physicians practice medicine because they have tools and they're making great decisions about the best medication for the members that they take care of, so it has to

be a systems approach, not just distributing medicine. >> we're out of time. one word answer on this. you've got 12 million -- more than 12 million members, is that scaleable to 300 million could that go and be the entire country? >> variations of it, absolutely. no question the value system is scaleable. >> great to see you. coming up right after the break this morning, stocks to watch including walmart which was -- that's a huge amount of market cap gains right there. you're watchg quk x"n in"sawbo o cnbc.

coming up, when we return why walmart shares are up nearly 10% right now and at 8:45 eastern time this morning, our news maker of the morning, larry kudlow, have so much to talk to him about. stay tuned. you're watching "squawk box" right here on cnbc.

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welcome back to "squawk box." we are live at the nasdaq market site in times square. we got electronics retailer best buy making its largest acquisition ever. the company buying health services provider greatgreatcal price tag is $800 million in cash. it specializes in emergency

response devices for senior citizens. best buy already sells most of their products. cybersecurity software maker is the latest activist. "the wall street journal" reporting that starboard taking a 5% stake in see man tech. starboard feels symantec needs operational management. the dow component surging in premarket trading this morning after beating estimates of both the top and bottom lines. that stock up 10%. >> that's crazy. we were just talking about the market cap, that's $27 billion moving in the premarket. >> that's a big move for walmart. >> for a dow component that's 60 points itself. >> it also makes me mad at the analysts. they had no idea that any of this great stuff -- missed it by that much. that stock -- also mad about the efficient market hypothesis.

why wasn't -- why didn't the stock market know this >> you're just mad this morning. massachusetts senator elizabeth warren speaking with jim cramer on "mad money" last night on -- she outlined a plan for more oversight of big companies. >> let's get these corporations to charter federally the ones that have more than $1 billion of sales every year and let's have a couple of features. first one, let's put some employees on the board. second one, let's change the compensation structure for the ceos to say that the ceos will not be permitted to juice the price and then once they juice the price, make a quick sale, make a bazillion dollars and keep emphasizing the incentives, that's what we've got now, for short-termism. get rid of it. >> here's how she responded when

cramer asked if she's antibusiness. >> let's be clear. this is no new taxes and i want to be really, really clear, it doesn't cost the american taxpayer a single penny. >> so it's not antibusiness? >> no. this is saying to businesses is, hey, what you need is a little more diversified board and you need ceos and top executives who are incentivize not just to think in the next quarter but to think longer ark about how this business works. >> and you can see the full interview on cnbc.com. central banks around the world have been doing more tightening than easing. steve liesman is going to take us through the list of countries moving rates higher. steve? >> its getting hot out there. rates remain low around the world in several big central banks, continue to ease with the direction of global monitor type policy. unmistakably toward tightening.

take a look at our map courtesy of the counsel on foreign relations and it's a lot more red than it was before. a year ago it would have been mostly light blue or blue. there's a lot more red than we had. argentina hiking rates by 500 basis points to 45%. indonesia also hike this had month. the uk went up a quarter. and the czechs all followed the fed. in fact, there have been ten central banks that have hiked since early june including august, including turkey which went up 125 basis points to 17.25. the world is in tightening mode for different reasons in terms of the developing world the fed is having a significant impact on capital flows. countries with the weakest economic indicators are the ones suffering the most. all this is combined to push

cfrs inindex to a ten year high of 3.85. ten is the maximum tightening and minus ten is full global easing. you can see there full global easing almost near ten and we -- >> doesn't surprise me at all. it should be. talking about the ten year anniversary of the financial crisis. >> that's the point, becky. one more thing i want to say, we have a ways to go before we get into a massive tightening mode. that will have to include europe, japan, but the change in direction is clear and what you bring up is the -- how much to worry about? >> i think we're still in the process of normalizing ten years after. we still have just tried to get back to a normal level of rates. i don't even know that we are there. i don't think we are. >> i know i asked to have the map up, but do that index again. i think there's the level of red that gets to normal and then it goes back to the middle. so you have to go up to get

to -- >> before you can ease off. >> right and do they have to go into the deep red to get to normal or can they stay at this modest pace? this index will go a lot more red when the ecb and japan start to tighten. >> sure. >> the way the index is calculated -- >> is that waiting for godo? >> i think europe next year. i think they may. i don't want -- maybe some horror sound effects, they may tighten the quarter. >> dun-dun-dun. >> they may tighten the quarter next year. >> steve, thank you. >> pleasure. law and order," i think we got that -- >> it's just two of them, dun dun. >> that's not what i was after. ♪ >> let's try it again, they may -- ♪ >> tighten the quarter. >> that's better. >> is that better? joining us now a man who

does not waste the letters in his name, eric kanutzman. >> i'm not going to say -- >> he doesn't go with the j, he uses the y instead. >> that's true. any way, eric, proud of his k, multi-asset chief investment officer and james camp head of fixed income at eagle asset management. steve, does a good job >> absolutely. i think he highlighted the key -- one of the two key issues this year which is the continued global growth plateauing global growth can accompanied by tightening. >> they told us if it was for a good reason it wouldn't matter

and that's being borne out. >> it's a race between the growth you get which helps the bottom line of the companies who borrow who have to pay higher interest rates. that's the circle we're in. you can wake up one morning in a sweat over the huge amount of corporate debt that's out there and you can kind of roll over and say the economy's growing and therefore their coverage ratios, so i don't know which one to believe. >> we have a fixed income expert. >> let's believe him. >> do you have something to respond to now or you want to start -- >> i like the comment because steve touches on something very important is the globe continue quantitative tightening with crisis that may emerge. for the first time in u.s., we had a down draft in equities to start the year and the fed stood down, to becky's point, if the markets caught a cold the fed stood down. in this time we do seem to be normalizing based on data dependency, at least u.s. ten year debt is 3.4% and 25

basis points how long are they going to allow that to go on >> right. i can't believe its continue this had long. >> central banks have to be tested in a crisis and continue the course for me to believe qt is really here. >> you think global growth has peaked not here. you mean global. we can't spark the entire globe to renew growth? >> i think you have a fundamental problem in europe which is a broader conversation. the banking system in italy, spain and others is showing the strains. when you see these yield despairties between sovereign debt it sells you something. when we look at u.s. interest rates, its impossible for me to think of a scenario -- it doesn't work. the math doesn't work. >> its possible i think for the -- if you put the map back up. the u.s. could go blue before europe and japan go red. >> we should. >> we would be done. we would be done -- i guess

neutral would be white, but on that map, wouldn't that be cool? >> you're finally telling people that you really won. >> i stepped into that. i deserve that. i meant in terms of global easing -- >> it's not what i meant, but it is possible -- >> jim, should i worry about -- the dollar's already strong and we're already in a trade war. we want to export and it's going to get stronger if we keep raising yields and that could hurt our contribution to global growth. >> we'll have to have some sink crow thighization of central bank policy. the global yield set of is largely negative. its not 33% negative, about down to 12, 14% negative. there's still massive accommodations going o globally. the u.s. problem is going to come up against its own yield curve. we've got two more fed hikes this year. that's baked in the cake. i think back to steve's point, how does corporate indebtedness that's been modified with these

low rates, how does it handle going to 2.7%? >> how will the market, if steve's blue wave does happen, how will the post war blue wave -- >> which blue wave i was talking about the easing thing. the blue was easing in the index. maybe i should do yellow or brown to avoid any confusion. >> you did have elizabeth warren on with jim cramer. >> certainly did. the market is expecting right now what appears to be priced in the democrats taking the house and the senate staying republican. that's kind of normal gridlock and we've seen that in a variety of environments and the u.s. economy tends to do fine. will there be some headlines that will create additional volatility sure. at this point in the cycle we expect volatility. we're back there right now at 16. that's normal at this point in the cycle. so, yes, that's an overhang but

unless we see both houses go democratic -- >> there's one other point we haven't brought into the discussion that's critical and that's immigration. if you look back at the demography of the united states, the country's expansionary policy is critical. if immigration stalls for a variety of reasons, the effect that has on demand can lead to slowing that's unnecessary. >> and if that flows into labor costs and inflation which we haven't seen yet which is very interesting. new labor has been coming back into the market, productivities being ticking up. labor costs have not been going up as much as hourly earnings and even those are all within a moderate ban which back to james' point gives the -- the fed can raise two times more and just be at their neutral rate. our view is they raise twice more, probably september, maybe

december, maybe early in the new year. but then they pause. they don't have to keep raising. they'll be at their neutral rate and frankly if the dollar keeps strengthening, if there appears to be more stress going on, turkey leads to domino number one or two, which isn't our forecast -- >> that's really the question. i know we got to go to break but can we do this process without having a big blowup and if its individual or unique to a single country that's not a problem, the problem is when you get into contagion. the idea that we could've done all this easing without a major blowup was probably the low percentile bet. >> it's already wreaking havoc in emerging markets. >> its not, though. who knows? it may end up but it's not a cat achrisism yet. >> it hasn't spread to everyone else yet. >> but the -- the measure of it all is when the healthy get sick

and the healthy so far are now and what ben steele's comments showed you earlier, it's the ones that had the bad fiscal -- this is the moment. >> central banks that are raising from a position of strength, so the u.s. -- >> and capital deployment is changing to professor's point. productivity is increasing because we're not rewarding buybacks exclusively. companies that can capex in q1 and 2 outperformed the s&p by 200 basis points. >> that's a cool point. >> we now have corporate ceos and cfos saying highest best use of capitals is not buying back shares its doing what -- we don't need elizabeth warren to help us get there. capitalism will do it if we get the fed out of the way. >> we'll end on that note which is fine with me. gentlemen, thank you all very much. when we come back, this is soap box "squawk box." this is our professional "squawk box."

we have much more from our guest host gary ludman. he'll be here with us. he's the former caesar's ceo. we'll talk to him about the economy, the markets and of course sports betting. our news maker of the morning, larry kudlow live from the white house. stayun ted, you are watching "squawk box" right here on cnbc.

welcome back to "squawk box." let's take a look at the futures. markets across the board were lower yesterday. the dow was down .5% and then the nasdaq was off by 1.25%. check this out this morning. the dow is up by 225 points. we were looking at a gain of about 175 points this morning before we heard from walmart then walmart blew expectations out of the water and that is really why you're seeing these even bigger gains right now because walmart up by about 10% is responsible for about 60 points on the dow by itself. s&p 500 up 14 points right now, the nasdaq up by 54. check out shares of retailer jcpenney. the company losing 38 cents a share. that is a much wider loss than

anticipated. jcpenney also slashing its full year outlook and that stock is down by more than a fifth of its market cap this morning. a decline of 22% right now. gary loveman senior finance lecturer and former ceo caesar's chairman and also aetna president of consumer health and services. i want to talk about sports betting and what you think is about to happen to the sports world over the next 12 months. >> its a great shot in the arm. the sports leagues have decided under their new commissioners that sports wagering is good for their sport and so they've advocated the legalization of sports wagering both in the traditional sense of wages you place before a game and also ingame wagering which opens up a much wider range of things for people to do to enjoy the games. >> do you have any concerns

about sports gambling yourself >> i don't really. people -- this is an old argument, of course. people are going to wager on sports. when you have them legal, you have transparency. you have a regulated market -- >> you do make it much more accessible. >> you do it on your phone instead of walking into the book store in your neighborhood and find the guy that doesn't sell books, he takes wager. >> do you have a view on professional sports and college athletics? >> i'm less concerned about the influence on college. obviously they have a whole series of issues to address. certainly at the pro level i think europeans have shown that this could be handled quite easily. >> the clear beneficiaries are going to be the leagues and the tv networks. if you were to bet, though, on the winners who are going to take the wagers, they would be whom >> i think the casinos that have licenses in the states where

there are big markets are going to finds their way to having a privileged position in the state legislation. the supreme court decision allows the states to then go off and figure out what they want to do as they have done in traditional gaming and the incumbents will have a lot of leather in those states. >> when you look at the incumbents as an investor now, who do you like and who do you say i don't know right now >> the ones that have big geographic footprints. ceaser's has a very good position, penn, has a good position, mgm has a good position. they have extensive footprints. >> do you still own ceaser stock? >> i own a lot of caesar stock. so i root for them a lot, but there are other winners as well. the venue owners. if you go to a baseball game and its 13-1 in the second inning what's left to make that game interesting? if you have in-game wagering, who's going to steal a base or

catch the ball -- >> is that a different experience in stadium versus at home >> it will make the in stadium experience richer. they'll combine it with other activities in the stadium. >> and do all the big casino companies effectively outdo the online guys? >> they come together. >> who buys -- okay. if you look at the chessboard, who buys whom? is that how it happens >> i think there will be mergers or strategic alliances between participants who offered the betting frameworks like some of the european bet shops or some of the american fantasy providers that are going to be players in this. draft kings is a meaningful player in this along with fan duel and those who have the licenses in the states are big players. the other parties that you haven't mentioned yet, the states, are going to want to tax this and take their piece of the prize. and the leagues are going to want something for this as well. they call it an integrity fee

which is an interesting use of language. >> while we're talking about gaming, while we have you, just your thoughts on steve wynn and what's happened to wynn? >> the most recent development is the best that the guy who hired me and a guy of tremendous integrity is now the chairman of the company and it looks as if the different shareholder groups have come to some peace about it. the company has a lot to offer. it has tremendous assets and i think its been an unpleasant road but its come to a better place. >> are you steve wynn or elaine wynn person? >> i knew both of them. elaine is more gentile of the two. >> never mind. thank you. coming up this mniorng, "squawk box" is coming right back after a short break. xfinity mobile is a new wireless network

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and ask how you get xfinity mobile included with your internet. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. we've talked about a lot of issues today, economy, gaming, health care. one quick message from you. >> the message from me, there are a lot of simple ways to get people healthier. and the challenge is how do we get interested parties, whether its a spouse or an insurer or employer who has an interest in the furtherance of someone's health to use the information that's available to nudge them and push them toward greater health. >> it's a continuing conversation. we'll have you back soon to talk about it again. thank you for being here. >> my pleasure. wall street reaction to walmart's big report.

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walmart posting a big earnings beat. strong comp store sales and raising its full year guidance that stock is trading sharply higher. analyst and street reaction are straight ahead. breaking overnight, china announcing a new round of trade talks with the united states. stocks jumping on the optimism. we'll talk to national economic counsel director larry kudlow. and its back to school time. >> back to school, back to school. >> we'll talk to the ceo of school supply company with a buy one give one model. the final hour of "squawk box" begins right now. ♪ announcer: live from the most powerful city in the world, new york. this is "squawk box." morning, and welcome back to

"squawk box." live from the nasdaq market site. i'm joe kernen and becky quick. you can feel the -- i feel -- larry kudlow -- what did you think i was talking about? >> netty pots. >> they're up about 160 or so and walmart just had such a great report, its up about 10% and you do the multiplier and now we're up 240 points on the dow, up 57 on the nasdaq. s&p is indicated up 16 or so and i still think its amazing the treasury yields still have not gone to where they're supposed to go based on -- >> which is crazy, but its relatively -- >> its tethered. >> investors have their choice of where to put their money they're going to buy u.s.

treasuries. >> still looking at the futures. 287 is where we are. i don't know what you bet your life we go to 3.24 before 2.5? >> no. but -- but i wouldn't bet my life on just about anything, so good luck with that. i like it. i enjoy it. let's talk about some of the stories that investors will be talking about today to. china says new trade talks are set to take place later this month. it will send a delegation to the united states to meet with david malpass. he's the u.s. under secretary of treasury for international affairs. president trump is preparing to expand buy american rules for government ro jects. that is according to a report from our very own kayla tausche. it would apply programs to programs where they don't currently exist specifically

infrastructure, pipelines and broad bands. we'll ask larry kudlow about all of this. he'll be joining us at 8:45 eastern time. jd.com is seeing its shares coming under pressure this morning. they missed estimates. its customer base grew by more than 21%. revenue was up 31% from a year ago but that's well below the peak growth that was registered three years ago, that stock down by about 2.6%. shares of retailer jcpenney are tumbling and the company lost 38 cents per share for the second quarter. consensus estimate had called for a 6 cent loss. it had said it expected a loss to 7 to 13 cents per share. let's put this in context. this company only $700 million market cap. >> not any more. >> you're now looking at 140.

>> we'll be talking about sears soon. its unbelievable. >> so that's another 25%, so down to like 600. what about those buttons i can't believe this. >> bill ackman buttons. >> i thought that was going to work. >> remember ron johnson, bill ackman. >> i know. they had all the catchy slogans and everything. >> walmart posting a big earnings beat. 1.29 a share. 7 cents above revenue, also beat expectations, comp sales grew 4.5%. that's really probably what people are looking at. how do you grow same store sales at walmart at 4.5% versus an 2.4%. something this big is part macro, part consumer confidence. joining us now michael laser,

hard liner, michael is doug mcmillan a genius or is there something to the macro story for walmart? >> well, i think we can -- some will refer to it as walmart today, joe. there's three factors that drove this type of result. first, inevitably walmart took shares, 4.5% same store sales growth in the u.s. is better than what we've heard from key retailers like in the grocery category and grocery was an area of strength for the walmart in the second quarter. second, the macro is good. the tide of consumer spending is rising. they have more money to spend this year as a result of lower tax withholdings. there was some pent up demand, the weather in april wasn't great and some of that was pushed into may and but walmart noted in its prepared remarks that it saw good trends throughout the quarter.

it just wasn't pent up demand from weather, it was all three of those factors. >> adding to the macro story, its not zero sum. you don't have to think that walmart's gain is amazon's loss. i would think amazon will continue to do well, right there's enough room for everybody. >> i think what we're seeing is the largest well positioned retailers are doing even better. to put some math around what walmart did in the quarter, it added in its u.s. business around $4 billion of incremental sales year over year. there's 120 million households in the u.s. that means on average, the average household spent $33 at walmart. its a pretty incredible number. >> you need a calculator, but you do any of the numbers for walmart and you do the percentage increases on any of that stuff and its like a number like you think you're wrong. you think the calculators -- >> i said the market cap

increase today was $2.7 billion. its 27 billion. >> these are big numbers. >> can you figure out macy's what was that? it's moved from the teens back to the low 40s. is that all that was >> well, consumer shopping behavior is changing quite dramatically. the equity market is reacting to that. i think what we'll continue to see is the winners are going to win and the losers not do as well. >> okay. all right. michael, thanks for your analysis today. our next guest will be there. i want to welcome senator shelly moore, republican of west virginia. she's a member of the commerce appropriations committee, senator, thank you for joining us. >> thanks. >> i have a million questions but i want to ask you, what is your top question that you plan

to ask this morning? >> i live in a rural part of the country and there's a digital divide and i have talked a lot with the chairman pi and he's been to west virginia several times. how we are going to close this digital divide its economic and health care. the rural broadband areas of the connect america fund is something i'm going to be asking a lot of questions about. >> senator, when you think about a couple of the big transactions that the fcc has been looking at or has had to look at, at&t/time warner is one. one that may effect rural areas like yours is this sprint/t-mobile deal, where do you come down on that? >> i want to have the deal fully vetted in the fcc and the members of that commission will obviously do that. at the same time, i am into figuring out how to deploy 5g into areas where i live. i'm interested in how these

companies are going to be moving forward on that and how a merger might affect that. its more about the penetration of the market into areas that are unserved or underserved and t-mobile and sprint are a combination of the two of those could be very useful and very helpful here. so i'm looking at it positively but i want to hear more about it. >> in terms, though, of what you need to do to incentivize that at the same time in terms of that investment at the same time you want to bring prices down or hold them steady, what do you about that >> it's all about broadening the market, broadening the availability and bringing that to new and more innovative markets and i think that's how you hold the price down. i think if you can point the emphasis or at least move the emphasis away from maybe the larger more profitable areas to a broader market, i think that helps and that will help, i think, in areas where i will concerned about and where a lot

of people out in the west absolutely are concerned about as well. >> i'm curious what your take is on whether the fcc needs to look at regulating internet companies in a different way we've been having conversation all morning about this interview that jack dorsey did on nbc news last night about kicking alex jones off of twitter and where you stand on big electronic platforms like that? >> i was at the hearing with mr. zuckerberg when he came before our committee. i was the 43rd questioner of 45 and i think that was basically the crux of the inquiry to him on facebook, was where do you draw the line? how do you draw the line how do you make these decisions? we need to have these executives in front of congress and in front of the american people to talk about how decisions are made, how they direct certain content, do they direct content, how do they judge that content and you also mr. zuckerberg sort

of dance around a little bit on those kinds of issues. i think this is a conversation that needs to be had. >> do you think its become too politically though whether the silicon valley companies may, in fact, lean more democratic than republican and therefore, would be censoring people based on their politics >> that's a source of concern for me as a conservative, as a republican, absolutely. i think you can see that in some of the decisions that have been made previously and so i think that good common sense judgment here is where -- what we're looking for and less political judgements. i think that's the beauty of the internet as you can find any opinion any ir -- >> you put alex jones in that same category? >> i'm unfamiliar with what he does. i know he's very much on the extreme and i'll have to leave that conversation to another day. >> separate question, totally apart from the hearing you'll have this morning, you said last

month you would support the spending bill on up to $5 billion on the border wall. >> right. >> i wanted to get a sense of where you think that stands and why 5 billion? >> i'm the chairman of the appropriations committee on homeland security that does the funding for the wall. we have in our bill what the president requested, i'm very encouraged by that. the house has a different mark. they have $5 billion. it's all about compromise and its all about trying to find how we can rearrange the dollars to meet what we think the border patrol in conjunction with the army corps of engineers can provide us with a good safety number to be able to build the wall and to reinforce the existing wall and to also increase the system. its not just physical wall, its the system that we have, roads and drones and other things to make our borders safe. and so, you know, we're in a process right now. it's tough negotiating but i

look forward to it. >> senator, the opposition to kavanaugh, is there any traction there that you can tell at all or is that just going to happen in september >> he's going to be -- as you know, testifying the first week in september. here's how i look at this. kavanaugh's 300 opinions have been out in the public space for years. he's been at the top of the list for at least two years since president trump was elected. he's a known quantity. i believe if there was a smoking gun here it would already come out enough to really take him down and create a lot of negativity. i got to meet him. he's a stellar individual. he's very well thought of in the legal community. i think he's going to be confirmed. i think he's going to be confirmed bipartisan, but we'll have to wait and see what happens in the hearings. i don't expect anything unexpected because he has so much in the public space. >> okay. senator, thank you so very much. good luck with the hearing

today. >> all right. great to see you all. when we come back, it is back to school season. we'll talk about the big business of school supplies next. and later, we will ask nec director larry kudlow about the new trade talks between the united states and china. beijing announcing overnight that there would be meetings coming up later this month. dl. l confirm that with larry ay tuned.

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ask how to get $300 back when you sign up for xfinity mobile, and purchase a new samsung phone. visit your local xfinity store today. welcome back. take a look at the furlts right now. the dow up right now in large part because of walmart. dow up about 240 points after walmart reported better than expected earnings. nasdaq up about 55 points, s&p up about 16 points. students and parents are stocking up for the school year. joining us with the thoughtful way to do your back-to-school shopping is ida lefler. i am i saying your name correctly. >> this is just like school, it

was either ito or ito or whatever. >> let's talk about what ub does this is a way to buy school supplies but you can do it while you're giving back and making sure that kids who can't afford it can get school supplies as well. tell us how it works >> we make bright fun, colorful stuff for school, home or office. effectively for every ub item we sell, another ub item is donated through a classroom in need right here in the u.s. its really just that simple. >> and the way it works is you buy everything -- everything i buy, something immediately gets bought which adds up to i think a purchase every couple of seconds that is being then turned over to the schools which adds up to how much? >> this past year we've provided free school supplies to over 1 million kids. that's 37,000 teachers that didn't need to spend money out of their own pockets on supplies.

in the u.s. alone, its kind of incredible. teachers are spending over $500 out of their own pocket each and every year. that's over $1.6 billion a year of teachers' salaries. >> i always heard these numbers about how much they're spending. i didn't realize that its 99% of teachers that are spending money out of their own pockets. this isn't just something that happens in poorer school districts, but its happening across the country. when you think about teacher's and their annual salaries, its about $60,000 so that's a significant chunk of their pay, their take home pay that is going to buy these school supplies. what happened? >> my mom was a school teacher. >> mine too. >> so 30 years ago i remember my mum who was earning back then -- she was the sole breadwinner for our family and for her to be taken money out of her own paycheck each and every week to provide supplies for her classroom was something that she did it out of her own heart, that to me is something i can't

believe that 30 years later we're still having this conversation. however, it really behooves us both as parents and both as constituents and as private business owners to be able to try to help that issue and at ub that was the first thing we wanted to solve. we were really lucky that we were able to partner with incredible organizations such as target and kids in needs. to help us not only spread the word about this issue but to solve the problem on a day-to-day basis. >> the districts that you are targeting where these school supplies go, i forget the statistics but its something like 70% of the kids in those schools are in need and are on some sort of assistance? >> exactly. they're on the free and reduced lunch program. we look at schools in most need and in this particular case, we've had more need than ever before. this has been one of the most crazy years with regard to natural disasters. we've seen hurricanes literally across the country.

we've seen, you know, even the fires here in california right now. we're monitoring really close with the kids in need foundation and we've been able to impact over 200,000 kids impacted by these natural disasters. that's something that we're very fortunate to be able to do now that we're able to achieve the scale that we have and the need just continues to grow wider and wider and we believe that there's over 5 million kids on an annualized basis that need this support. >> we appreciate the mission you are working on. >> thank you so much. thank you for your support. >> thank you. coming up, sweet dreams, sweet dreams. what will -- what will president trump -- that's the answer -- cheater. >> is president trump going to tweet next some market watchers say its

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a record number of investors that came 401(k) millionaires this spring according to new data and its coming from

fidelity. 168,000 of its 401(k) customers had at least a million dollars in their account and that's up from 50,000 people a year earlier. >> that's incredible. >> i don't get it. >> i don't even get it because -- >> must have been a lot of people that were close. >> almost at the line and -- okay. right now. on the market insider column on cnbc.com, the dollar has been strengthening so much against china's yuan that currency traders are wondering when president trump will start tweeting about it again. its edging toward 71 per dollar. president trump has made it clear in the past that he doesn't like the weakening yuan or a strong dollar. so we'll wait and see. >> okay. former librarian in utah is serving 30 days in jail, after he blew $89,000 of public money on a video game, guys, adam winger was director of the north

logan city library apparently used a city credit cards to purchase gift cards from amazon, itunes and google play to make in app purchases in the mobile game, game of war. its free to play but certain task that's take time to complete in the game can be expedited through payments. winger will pay $78,000 in restitution and will have to complete 100 hours of community service and folks, if you have children who like to have these inapp games, i haven't had $78,000 run up on me just yet, but if you do have children that play these games, turn off the ability to do it immediately. >> this is why earlier this year, i forget which global organization, called gaming addiction a real addiction. they named it such. maybe it was the world health organization. i forget. one of them did. in my generation you could run up your telephone bill.

>> i used to get in trouble with that. >> oh, yeah, those 1,900 numbers. >> no, no. >> what other numbers are you talking about? >> you're projecting again, joe. >> no. like a long distance phone call. >> i lived on a border with long distance, same thing. if you stayed on for too long -- >> i used to go on these bulletin board messaging systems -- >> stop right now. >> free internet with your modem. you have to call long distance numbers to get on them. i remember calling from new york to albany and i thought i hung up -

welcome back to "squawk box." live on the floor. we have some breaking news. initial jobless claims down 2,000 from a slightly revised 214,000 which leaves them at 212,000. low level. continuing claims move from 1.76 million to 1.72. august read on philly fed, definite miss here about half expectations. looking for a number north of 20, maybe even as high as 23. we end up with 11.9 following 25.7. july housing starts.

well, we were looking for 1.26 million seasonally adjusted annualized. light here as well 1.68. our last look was on the light side of 1.158. just to find out how light that is. if you look at may, we had our best read and that was 1.337 million seasonally adjusted annualized unit. now permits, a different story. matched expectations, 1.311 million and that follows 1.292, slightly revised. that's also up a bit, up 1.5%. bit of a miss on starts couple months running. permits looking solid. becky, back to you. >> all right, rick. thank you very much. for more reaction to this let's bring in diana olick and steve liesman who is right here

with us. diana, let's start with you with those housing numbers. that's been a weird conundrum when we have a very strong economy. what do you think? >> reporter: ask the builders. its just too expensive given the high cost of land, labor and materials to build the entry level homes that this market needs. this lfs a little bit bigger than just a little miss. we need to see much more construction in a single family side. a lot of the gains we saw here were multi-family. when you break it down to single family, we're barely up compared to a year ago. last month we were down to a year ago. essentially flat this month and builders are not building on that entry level side. the permit gains were multi-family as well. when you break it down, what the builders are seeing is more profit in the multi-family, in the single family they're doing the moveup homes and luxury and on the lower side its just not there. we saw new home sales drop pretty dramatically and that was due to affordability. you're seeing it on the existing

home sale side and new home sale side. there's a price limit and people are hitting that limit now. we're in the existing home market starting to see price cuts and that's according to a new report from zillow. >> of the three things you mentioned, the higher labor cost and land cost and material cost, is there one that stands out to labor, we lost so many construction workers ten years ago because they stopped building houses. those people went on and got retrained and found other jobs in other industries. that would seem like a pretty tough one to build back up, but is it more of the materials because of the tariffs right now, more -- >> yeah, its really both. its both. we've had that labor story in play for couple of years. there continues to be a labor shortage, although we are seeing more workers come into the construction industry. its growing slowly. the tariff issue is a problem. in the home builder sentiment report which came in yesterday and dropped by one point, the big issue they say was concerned over higher costs of materials

because of tariffs. they were watching them very closely. we know the cost of lumber has gone up significantly. now we see aluminum and other metals rising as well. again p that will keep them away from the entry level homes. >> housing is one of the couple sectors -- if the economy is doing reasonable well, housing has me word. interest rates are higher. housing is a leading sector when it comes to the direction of the economy because its so interest rate sensitive. we're hearing mortgages down in the low fours depending on -- people got used to hearing those three numbers, three, let's buy a house. i'm not sure that was the smartest move back then. let's give magnitude to what diana is talking about. back in 2002 we built houses and there were 40 million fewer people. we struggle now to get to 1.2 million. >> i would say the 1.6 was

overbuilding at that point. >> i used '02. i didn't use '07. the other thing i think -- you have the interest rate issue, the tariff issue. >> labor issue. >> supply issues. another issue that i'm watching and i'm on guarded watch on this one is the effect of the tax change in december, because you have that issue. you have people talking about what's happened to housing prices in the northeast. we did have a big negative on northeast housing starts. i don't know if that's playing a factor. its not had the biggest thing you want to watch. its something worth watching as to whether or not -- >> steve, if i could jump in there -- >> the ends of the salt deduction has some impact on local real estate prices. >> i just got back from miami yesterday where i was talking to real estate agents there and they're seeing a big influx of people from the northeast not just your regular snowbirds but people want to go move to florida where taxes are lower and they were talking a lot about that salt issue in the

northeast, also in the luxury market in new york, you're seeing prices come back because of that and that's what the realtiers are saying. that's what they're all talking about. >> there's a lot of talk about what's happening especially in the meat and potatoes part of the market, which -- >> what do you mean? >> diana will correct me on this and people in other parts who don't live on the coast will gag on their coffee when i say the meat and potatoes part of the market is 800,000 to 1.2 million in the northeast. those are sort of normal -- am i wrong about that when i talk about the -- >> okay, maybe if you're talking in manhattan or new york city. if you're talking about the new york city suburban area which is an island unto itself, maybe you're talking the six to 1 million range, but most of the country is not the coast and that's where most -- >> i'm not even going to clean it out before i sell it to you.

>> no. the meat and potatoes area for new york is under pressure, obviously, because of taxes. when we look at these overall numbers in the vast majority of the number and where the builders are, home builders are not in the new york city area at least not in the single family area. >> what needs to happen, there's a lot of issues, but there was talk in the last hour about the fed getting up to a rate and then staying at neutral. stability in the mortgage market is something that could help sales eventually. i don't know if people are coming into the markets, at least some of them, are saying now's the time to do it because at least rates are going to get worse from here. >> people do think rates will get worse slowly but we're not seeing it in the mortgage application volume. it continues to drop both on the purchase side and on the refi side which was interesting even just last week we saw rates pullback a little bit after they jumped ahead for the previous weeks. we did not see any refi volume. so many people are in there 3% range that now that we're heading toward the 5% range. there's no volume.

>> all right. diana, steve, thank you both. shares of jd.com have reversed direction. they were down sharply just after the china based ecommerce retailer released its quarterly earnings, investors may have been encouraged though by walmart's results which, among other things, showed a surge in electronic commerce activity. walmart owns a stake in jd. >> that's weird. >> but it's not the reverse from what i understand and there had been a lot of pressure just across all of china after we talked about it, ten cecent has really struggled. >> going to talk about china right after this break too, because we have coming up national economic counsel director larry kudlow will join us from the white house and we'll talk about this delegation by the ends of this month. this is august, isn't it that's near term. >> august 16th already. >> yh.ea we have a lot more with mr.

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welcome back to "squawk box." we've been watching the futures this morning. started out in the green, moved up over the course of the morning and when we saw walmart's numbers and saw the street's reaction to that that's when you saw the dow really pop. dow futures indicated to open up by almost 250 points. there's a look at walmart. up 10.7%. that's a gain of $9.73.

as we were telling you earlier, a 10% increase in walmart shares is $27 billion in market capitalization that we've seen move over the last hour and 40 minutes. a couple of stocks to watch this morning. dow component boeing was rated buy. this is new coverage at ubs, i don't know what that means. maybe a new analyst or something. the firm sees a potential 50% upside for the stock based on an acceleration in profit margins, in cash flow and obviously this news about possible trade talks probably helping boeing. another dow stock, cisco systems also higher in premarket trading. cisco reported quarterly profit of 70 cents a share, 1 cent above estimated and better than expected current quarter forecast. kimberly-clark was upgraded. it would raise prices for some of its products although

jpmorgan says there's some uncertainty whether they will stick giving the competitive pricing environment. and take a look at best buy today. the company announcing an acquisition, it's an interesting acquisition because they'll buy health care company great cacall for $800 million in cash. its an all-cash deal. greatcall? they focused on personal emergency response services and devices for senior citizens including the jitterbug line of phones with big screens and large buttons. the company has 900,000 subscribers to the service, including push button urgent response, medication schedules and 24 hour access to urgent care by phone. i know you're thinking about the word buttons and the fact that i -- >> you have modified. >> have i? i used to do the "t" was a "d" and now i'm in between. >> for me -- >> you appreciate it. >> i was just reading something

this morning about how your pronunciations of certain words what it means to people. >> what does it mean >> if you say vase or vase, do you think that people think that you are stuck up >> what if you say vase? >> 54% -- >> that's exactly why i was reading this because of aunt and roof or roof, how you say each of those words 54% for vase think your stuck up. >> some people are stuck up because they can't even pronounce the state of nevada without -- the way that it is pronounced. it is not pronounced nevada but they cannot bring -- i don't even think president trump pronounce it's right. they cannot bring themselves to say nevada. >> i have corrected myself because of your consistent mockery. >> if i keep working on you in other areas, will you progress

>> will i progress >> i don't mean too progressive. >> will you progressive to jim cramer >> let me see what jim cramer has to say about nevada/nevada he knows. >> i'm a philadelphian. >> how do you pronounce -- >> oh, wow look, i thought that becky said the right thing. i remember when doug came on the show, you were calling him mcmillans and he dropped a bomb on me and everybody else and he basically said, look, we've got to do this, this, this, this. look at this. it all came together in one quarter. doug's a hero. this is amazing, amazing quarter and a testament to the fact that you have to maybe take some hard times and pain in order to get this kind of gain. wow, amazing comps. grocery fantastic. love it. >> the one thing i would add to that is, doug, has shareholders who are willing to go along with that in the support of the walton family.

its not every ceo that gets this kind of leeway, doug had strong supporters, they believed in him, this is an example that other companies should stick by and say looking for the long haul, don't go for the short-term. >> you're really right. the family said do what you have to do, doug. go raise wages if you have to. go reinvent the stores, go compete against amazon. the alternative is jcpenney. there's no core there. there's no ceo. >> this is like -- kudlow and cramer. we've got -- >> i can't wait to hear larry. you've got a market that's up. larry is going to be able to say, we can win trade wars and everybody can also win trade wars. it doesn't have to be zero sum. i cannot wait to hear larry because larry is fantastic for stock market. >> if he wasn't coming on, i'd talk to you about it last night. you got a million followers, at least. i'm wondering how that went and how many you answered -- >> 500,000 canceled.

500,000 dropped me. they're not following me anywhere. it's a hot button. >> jimmy, we've got to go but after that interview, would the republic survive if she was not nominated and became president after that interview i don't know. >> the republic can handle anything. we are a great country and i'm sure larry would agree with that. >> thanks, jim. we got to talk, though, right? got to talk to people -- that was good you did that. president trump just tweeting our economy is doing better than ever. money is pouring in like ever before. companies' earnings are higher than ever. inflation is low. business optimism is higher than it has ever been. we are protecting our workers. time for the squawk news maker of the day, let's bring in national economic counsel director larry kudlow. you could have dictate that had maybe to the president but i wouldn't advise you do that,

larry, but he's not entirely wrong in your view i would think about some of the stuff he just said. >> we keep in close touch, potus and i, and i'm honored to do it, right off the top in lieu of the president's tweet, i know there's a lot of weird stuff in the media, my take real fast, the single most important political story of the year is the economic boom that virtually no one thought possible and, joe, that boom is far from over. that's the key message i'm trying to relay to you and the gang this morning. and by the by, atlanta fed looking at another 4% quarter in q3, after tax income, take home pay is booming at over 3%. any way, policies have changed under president trump. we now have tremendous confidence, businesses and consumers and small businesses,

lower taxes, regulatory rollback, et cetera, et cetera. yes, trade reform to protect workers. i think that's an important part. all's i'm saying s there's a lot of whacko stuff out there. its way outside my lane. the political story of this year is an economic boom that virtually no one thought possible. >> tell us about what you know, larry, about -- what we're hearing david malpass asked china to reenter these trade talks, but we weren't going to do that unless they at least gave us some signals that they were willing to take some concrete steps. did they signal that and can you let us know what those steps were who's coming who's going to meet with them? who's spearheading our talks right now and when's it going to be >> i talked to treasury secretary mnuchin this morning about that. my great pal, your great friend, david malpass under secretary is going to lead the talks for the united states.

i can't say anything specifically about it, joe. not sure there's anything specific to say, but -- but -- but, we haven't had a sit-down with the chinese either at the top level or the intermediate level in quite some time. i was there in beijing and then washington. a long time so without getting into any details, i just think this is a good thing better to talk than not talk >> larry, have you seen -- you can't miss it. there is a lot of rumblings that president xi is really -- they'd like to censor it all but there's so much, it is bubbling out, that he is coming under some criticism which is unheard of, to some extent, for him and from the communist party over there in terms of the way it is being handled. does that embolden us to ask for too much or is that the beginning of some -- a crack we can get through to have a favorable

outcome here >> well, look. i'm not a china hand, i'm not a china expert, joe. i can't really comment on president xi's political situation. way out of my lane i'll just say this i think, again, it is a good thing if they're sending a delegation here. we haven't had that in quite some time. second point i'd make is the chinese government in its totality must not underestimate president trump's toughness and willingness to continue this battle, to eliminate tariffs and non-tariff barriers and quotas, to stop the theft of intellectual property and to stop the forced transfer of technology those are the asks that we've been making now for quite some time do not underestimate the determination of president trump. other american presidents have started, then they give up president trump's not going to do that. so that's my only response with respect to the chinese situation.

their economy and currency are slipping, as you all know. but let's just see what happens. sometimes talks can produce better outcomes than expected. let's see what happens >> larry, i know you can't give away too many details or tell us what's behind the scenes because this is an active negotiation. but what we had heard before, i think what you've told us, the chinese would really have to put an offer on the table, one that would get talks started again. the ball was kind of in their court. are we to assume if these talks are on that that's been the case or has been there any negotiation about the negotiation? >> well, look. yeah let's see what happens when they get here then we'll get a full report obviously. any time you talk it is better than not talking we have made -- the last few months i barely got down here and we wind up on a plane to beijing negotiating with the top of their government. unfortunately we just didn't get the movement we wanted that doesn't mean we won't ever.

it just means they know what we want as i said -- no forced technology transfers, no ip theft, bring down -- let a he eliminate tariff and non-tariff barriers and so forth. those are president trump's key points to help american workers and economy. i think it will help chinese becky, if they open up their markets, let's just focus on the trade and tariffs for a minute if they open their markets, whether you're talking agriculture or industry or financial services or technology usa will walk through and increase export sales to china by phenomenal rates. we're the most competitive economy in the world because of this unexpected economic boom as a result of new policy give us a chance america is crushing it right now. the world is investing in the usa. judging by the weakness in the chinese currency the world's not investing in china my point is a simple one

give us market openings. take down your barriers. stop trying to capture and steal technology from the u.s. and western countries. give us a chance to compete. we will sell a ton of exports to china. that's the key point they know what our asks are. perhaps -- let's be optimistic -- they'll fall through -- >> there was a report google was building a new web search engine to be introduced in china that would include censorship what do you think of that? >> i'm not an expert there is that andrew i'm going to stay off that because i don't know near enough about it i'll just let that one go until we get some more information >> mr. king dollar >> yes yes. >> you still mr. king dollar i'm just wondering, is it strong enough for you here given that we like to continue crease exports. is it strong enough here for the president? >> strong and steady

>> is there a point where you wish it wasn't quite as strong and the president wishes it wasn't quite as strong >> the dollar's been in a range for quite some time. the dxy, i think around 95, 96 the high was 105 the low was 70 many many years ago. as the president noted today, i think that the king dollar, the strong dollar, it is a steady dollar, is a sign of confidence. there's a lot of unrest around the world. money's flowing into the usa that's terrific. by the way, a strong dollar holds down commodity prices, gasoline prices are slipping oil prices are slipping. i just want it steady. i'm not here to pile up the dollar the treasury department is in charge of all currency movements. i'm just looking at it in macro economic terms it is sending a positive story of global confidence in the usa. that's all trillions of dollars are coming in here because we are in an

economic boom that virtually nobody thought possible. >> you know, larry, revenues are up tax revenues but the deficit's up on higher spending as a long-time republican and fiscal conservative, are we spending too much and is that going to be something that the administration tries to tackle in some way? i mean we did the defense bill that was a lot of money. but obviously that's not the only reason spending's up so much are you worried about it >> yes, yes, and yes, to all your questions we do spend too much i would suggest to you in the next budget round president trump is going to be a lot tougher than he might have been in the past. i don't think he's going to sign on to these gigantic omnibus spending bills nobody knows what's inside them. they're too big to begin with. the process is broken up there hopefully that can be fixed. but on the deficit question generically, joe, first year of a big tax cut you're going to lose some revenues, quote, unquote.

you don't really lose it but yes, revenue numbers go down, deficits go up i never deny that. if you look though at re-estimates coming out of washington -- even the cbo which doesn't like tax cuts -- we're picking up $6 trillion in nominal gdp and an average tax rate, that gets you $1 trillion of additional revenues over ten years. we already look like we paid for the corporate tax and we've paid for about -- i don't know -- two-thirds or three-quarters of the overall $1.5 trillion tax cut. so my guess is -- many disagree -- but i would argue, deficits are going to come down quite a bit in the next few years as a shared gdp particularly, deficits in terms of the economy is going to come way down take a look at the omb estimates. they're pretty good. so growth, as well as more modest government will solve the deficit problem. >> hey, larry, question on a

topic in the headlines, but maybe not directly something you may be thinking about right this second the nec is an observer and sometimes participates in cfius reviews. the big talk, talking about money coming from foreign lands to ours is whether the saudis are going to make a massive investment to help take private tesla. the question is whether cfius should allow something like that how would you think about it >> well, look. i certainly won't comment on the specific item you just mentioned, andrew. but, it is quite true that working with congress, republican congress, we have bolstered and strengthened all of our foreign investment activities cfius -- i call it cfius-plus. it is not directed at any country. it is a global issue but we do, and we will, protect what i call american family jewels, miles an hour crown jewels we must do that in the technology space particularly, but also elsewhere

there's cyber hacking and this and that nowadays. but yes, the cfius reform bill is about to become law we work very closely with senator cornyn and others on the hill i fully support that i think we've just got to protect the u.s. story because that is our future, particularly in the technology zone >> larry, with one minute left, until we have to turn it over to your current buddy, but old partner, cramer. is nafta -- to do a deal, even if it was bilateral or something with mexico, time's running out with the mexican president could we hear something near term next couple of weeks on this are we getting that close? can you say anything >> yes yes. and our trade meeting with president -- i don't want to give away any detailed secrets but trade ambassador lighthizer, great friend of mine going back to the reagan days, yeah, he's

getting close. i think he was a little more optimistic than i've seen him in many, many moons so, yeah, positive on that >> i'll end it just quickly. can confirm that america is a shining city on a hill i just whether you can confirm that for me because i've always accepted that as fact but now some people are doubting that. it is, right >> america is a shining city on the hill this is the greatest democracy and free market economy in the history of history, joe. >> the hairs on my neck are standing up. >> believe me, it is only getting better >> i've got a chris matthews thrill from that thanks, larry. that does it for us today. we go from kudlow to cramer. right now it is time for "squawk on the street. ♪ good thursday morning. welcome to "squawk on the street." i'm carl