backed candidate and aston martin going public it's wednesday, august 29, 2018. "squawk box" begins now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. andrew is off this week. let's look at the u.s. equity futures. we did manage to eke out gains yesterday, just barely the major averages are off their high the dow ending up by 14 points yesterday. the s&p up by less than a point. the nasdaq up by 12 points holding on to slim gains for the

third straight day another record close for the s&p 500. the nasdaq and the russell 2000 also at a close. green arrows across the board this morning let's check out what happened overnight in asia. the nikkei was up by a tenth of a percentage point stocks were higher for the hang seng as well it was up by a quarter percentage point the shanghai composite in china almost down by a third if you look at what's happening early this morning in europe where there is active trading taking place red arrows across the board, with the exception of the ftse which is down a half percent in spain, stocks down 0.8% let's look at treasury yields. joe already warned us he wants to talk about marty feldstein, where we're going with this. >> have to go up got to go up

>> you're saying 3.25 before 2.5? >> 3.25. feldstein points out should be five >> should. that's been a long -- >> by the old rules, i guess, it would be somewhere around there. if you had real yields that would be positive. >> look how we flipped you get hit for year after year after year, it doesn't go up, now we're like, no, it can't be 5. >> gjimmy rogers said it would never hit five, now we're saying five, that's impossible? five sound like shatner so far no signs of intelligence life >> on the set. >> on the set. >> i was including myself.

>> is this going to work is canada going to come running to get in on this? trade talks with canada, chrystia free laland praising mexico >> the fact that mexico was able to do something which was quite difficult for mexico and make those concessions that sets the stage for productive conversations for us here this week >> chrystia was at the ft, wasn't she >> she was was she managing editor? >> editor for the u.s. perhaps >> right >> canada is under pressure to accept the terms laid out in the u.s. mexico deal ahead of a friday deadline. president trump has warned that he could proceed with the deal with mexico alone and levee tariffs on canada if they don't reach an agreement >> but then people say if you put a 25% tariff -- you were the

one who told me this yesterday if you put a 25% tariff on cars made in canada, these are basically american cars. >> the american companies. ultimately that's who the manufacturers are up >> up there. >> up there, but the american car companies making car there's that u.s. consumers are paying a 25% tariff on. >> a lot of it, managed trade, that's what we were talking about yesterday, managed trade is not way we wanted to do things a lot of other country vsz beiee been managing trade for a long time and president trump unblocked some twitter users yesterday. the move was in compliance with a federal judge who directed that he did that in may. he said presenting people from following him violated peeps

constitutional rights. there are some people out there -- there are some people that -- i don't know >> i don't think the constitutional mandate on government accountabilities applies to everybody >> good. because they're staying blocked. i would have three times as many followers. i would. zero tolerance at issue, 41 accounts that remain blocked including several people who had criticized president trump or his policies. really people are saying bad things about president trump? as of yesterday at least 20 of those people had been unblocked. rosie o'donnell said late yesterday she remained blocked he got to keep her blocked the judge did say that trump can mute users >> mute is good. it's satisfying. >> so he would not have to see their nasty tweets >> christy teigen got blocked. she took it as a point of pride.

>> a lot of people say i've been blocked by so and so they take it as a point of pride. >> i say mute is better. >> add me. >> it's like no news is bad news just spell my name right >> they usually spell it a-n cloud storage provider box posting second quarter revenue that beat estimates despite a rise in costs. box is projecting revenues this quarter will miss forecasts. shares are down about 7% hewlett-packard enterprises reporting earnings and revenue that beat forecasts. results helped by a strong performance by its hybrid i.t.

segment. shares of hp are up. and pernod ricard is trading down nearly 2% this morning despit posting better than expected full-year results. they say growth was driven by strong demand in china and india and robust sales in the u.s. the stock is down this morning the big upset in the democratic primary to be the next florida governor. eamon javers joins us. florida doesn't have income tax, does it? i don't believe they do. i never lived there. >> not right now medicare for all really >> you're talking about one of the campaign promises there from andrew gillum. >> how do you do it? >> he won a surprise democratic primary victory last night over the daughter of the former senator and governor bob graham in florida

andrew gillum with 34.2% of the vote over graham's 31.4% of the vote check out this tweet one of the people who supported him was alexander ocasio-cortez. he said the progressive movement is transforming the country and he proved that again tonight on the republican side, we have another person who beat an establishment favorite, an early establishment favorite this is robin desantis who beat adam putnam by a margin of 56.5% to 36.5% desantis running away with it in this race. that's largely on the back of an

endorsement from donald trump who put out a tweet of his own last night congratulating desantis for the victory such a fantastic win for desantis and the people of the great state of florida ron will be a fantastic governor. on to november both candidates, 39. both candidates are insur jegen who beat early favorites this is setting up to be a very intense battle for the florida governorship in the fall to your boint we're s're point e far right and the far left going at it toe to toe in one of the biggest presidential primary states we've got >> we'll see moderate democrats have lost five straight for governor in florida, including a well-known

guy, charlie crist even lost it's hard for me to see if moderate democrats lose, i don't know whether florida as a state was saying, no, you're not liberal enough for us. we want someone really progressive. doesn't seem like the demo for that state >> i think we're seeing something -- in a lot of races we're seeing the center cannot hold the energy is on the wings of both parties it's the trump effect. when donald trump realizes you can win the presidency by riling up the base and getting the hardest core supporters as energized as possible and not tacking to the center. on the democratic side we're seeing a mirror image of that, that's pulling politics apart. >> remember when the right ran those people that they thought would be -- their names have

gone down in infamy. bannon, some of those bannon camps. roy moore. >> right >> when you go out there on either side -- >> it's not always successful. but we're seeing that. the fwrgravitational force seemo be with the wings. that's where the money is, the energy s the soesh social media stuff is >> none of the polls had him running, so who knows what will happen when you get to november. >> the same thing happened in 2016, a lot of pollsters scratching their heads andrew gillum did not lead in a single poll in the run up to this >> we still haven't figured it out. >> exactly >> eamon, thank you. let's talk about the broader markets and the economy, also

the likely impact of any potential trade deal or no deal. joining us is lindsay piezga and on set with us is jim smegal welcome to both of you jim, let's see what you think the market implications are of a deal or no deal when it comes to trade. how much is this playing in and how much of this is noise? >> interestingly i think at this point it is just noise even though we had positive news this week regarding mexico, markets were sanguine about it >> we do see our markets hitting new highs. >> our markets are hitting new highs, it's a reflection that the big whale is china that's what matters. this is a lead up to a potential deal or no-deal with china are you saying assuming there will be a nafta deal, these

three countries get together, is that a given in the markets? >> i think it is i think we're seeing a bit of movement on the canadian side. more of a positive reaction than what we would have originally thought from the mexican deal. this puts pressure on canada, on the foreign minister, on trudeau. it's more likely than not that we get a deal done >> if we don't get a deal done by friday, which is our self-imposed deadline, you are talking about a labor day weekend, long holiday weekend. if you don't get a deal done is there risk for things falling off a cliff temporarily? >> i think there is. though it is self-imposed, it is real this could really push the timeline back and pushing the timeline back will raise the uncertainty. certainly that will take any momentum that the market did have regarding this mexican deal out of the sails >> having said that, the economy

overall is incredibly strong, lindsay. that is the story continually. the economy in the united states how do you measure what's happening in the united states, add up what's happening around the globe and what are your expectations for the beginning of next year >> i think the economy is on solid footing. i would hesitate to say it is on strong footing we saw waning momentum for the previous six months and then a market pickup in the second quarter. when we parse through the details we see question marks about whether or not this is a new upward trajectory for the economy or if this was a one-off data point i do suspect the latter. when we talk about the consumer, heavily reliant on drawing down savings, ramping up credit as opposed to more organic support from an improvement in underlying wage gains and business investment is beginning to lose momentum

particularly looking at the housing market, outright weakness now, sales in the red it suggests returning to trend growth rate and a question about whether or not we are able to maintain that modest 2% gdp pace >> jim, is the market anticipating that? >> i think it is it is pricing in slower growth it's not too surprising given the rate of growth we've seen so far. we have an unusual time in the markets. we have gdp with a 4 handle, we have the ten-year with the 2 handle these things do not add up they don't add up together as you look out as it relates to earnings, as it relates to terminal rate of fed funds, net-net the market is pricing in a slowdown from here. >> when you look across the markets and say where are the blind spots evident in how markets are pricing things whether it's u.s. versus the rest of the world, different parts of fixed income, are there

any layups >> i don't know that there's layups because of the uncertainties around trade and the ramifications from a bad outcome would be severe, but divergences are there, and they're stark. the emerging world looking attractive now we're finding a lot of opportunities in emerging market debt >> lindsay, why do you think the housing market hit this rough patch? >> what we've seen is home price appreciation continue to climb yet income growth has not supported that appreciation. so we see this growing divide between home prices and the consumer's ability to afford that purchase. now you factor in even moderately rising interest rates, that is continuing to erode affordability, and the consumer has supplemented that with a draw down in savings and a ramp up in credit. those factors are just that,

temporary. and consumers are not able to make that large ticket purchase. >> we had steven mnuchin on yesterday. when we asked him about wages, he said he thinks wanl wages ae rising for people in the work force, the idea you have more people coming in, more workers, new workers coming in at lower wages, that masks some of those gains. that was a theory that was kicked around this table last week >> i think we are seeing pockets of wage pressures, and in particular sectors sectors were specific skills are in high demand and low supply. i.t., accounting, engineering, craft labor, the fed has agreed we have seen some bubbles of wage pressure. >> a lot of employers are saying they can'tfind people for thes jobs >> absolutely. the resumes coming across the desk don't have the skills to fill those vacancies

so there's a skills mismatch out in the economy i don't know that i buy the argument that we're seeing a flood of new workers since there are millions of americans sitting on the sideline. we add them back in, now we're talking about slack in the labor marke market >> jim, mentioning about people sitting on the sidelines every time we hit new highs, it pops up on the nightly newsment people say is it too late, i did miss it? what would you tell them >> no. we've been spending time talking about all-time highs, record expansions we think it is somewhat arbitrary. the market did draw down over9% in 2011. it was down peak to trough over 21% intraday >> not too late to get in.

>> not too late. we had pro cyclical stimulus with the trump tax cuts. that will extend things another couple of years. >> are we saying your name right? >> smegiel >> you're thinking smegiel >> i was going to ask him that afterwards >> i went that way for a bit, then the movies came out >> he became a sympathetic -- >> yes you understood why he got the way he was >> the ring. >> i just watched it again last week thank you for coming in. >> andy does all that. >> the actor who did the whole thing? >> yeah. >> hops around a lot

>> next time just say i'm not smegiel. >> use my middle name maybe. coming up, why a top-ranked tennis player got naked -- i watched this >> what? >> they get ten-minute breaks. we'll tell you about it. got naked with his opponent in the middle of a match yesterday. who wrote that tease you're in yellow and we have a special guest in the control room. kyle quail cloned from matt quail, our ep. i didn't sndidn't know they had done it with children. i knew they had done it with sheep. here are the biggest winners and losers in the dow. hey allergy muddlers.

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welcome back elon musk is calling out the "new york times. the move comes after the news outlet wrote a piece on musk stating he alternated between laughter and tears during an hour-long interview and that he choked up multiple times the tesla ceo trying to set the record straight tweeting for the record my voice cracked once during the "new york times" article. that's it. there were no tears. it was a phone interview andrew explained that to us. >> i alternate between laughter and tears daily on this show my voice cracks a fi timeew tims >> shows he's defending his emotional state in a way people are concerned

>> i think he would be better off going silent >> for a while >> isn't the current thinking in our world today that crying is pretty good for us >> sure. >> it is >> you look into the lights? i still don't want to cry, mike. when i drop my daughter off, i still don't want to. should i resist -- >> you do. >> not weep. maybe get teary, but i won't openly weep. >> you and elon both defending yourselves my point was he's such a -- he's an enigma. i don't know whether he's a full-on progressive because he gave a lot of money for republicans. i'm not sure what he is. in this case, he doesn't seem like he's on board with the -- kyle, my man what's happening >> hey >> you coming in what's going to happen >> kyle is here? >> high. >> hi, buddy >> we should put your up next to

you. >> come on, dada >> no. it's scary it's scary how much he looks like you >> no. >> don't come in here. i would be embarrassed, too. >> no reason to -- what happened they just changed the teleprompter >> we just talked too long >> we did. yeah i'm still surprised that ae lon is not like you're darned right. i can cry at a minute's notice >> if it was a major life moment, yes. if people think he's basically on the edge, he's breaking down, that's the issue >> he can't control things that's the huge issue. all the stories about potential drug use that he had to counter and things >> hemingway, robert jordan ever cry? you think nick adams ever did? >> no. >> hemingway -- >> you're talking about an older era, a changed era for ceos -- >> i don't think those are the examples you want for how to bottle it up

>> that's right. >> and with ceos you want to think they're in control i will give you that >> yeah. >> kyle is here because he didn't come to bring your kids workday. we promised to bring him here this summer, and the summer is almost up, so he came today. kyle is here today >> what about a horse bite >> we have aes corporation betting big on renewibility energy the company's ceo will join us next also a programming note, tomorrow i'll speak to warren buffett ahead of his lunch with the winning bidder that's tomorrow on "squawk alley. as we head to break a look at yesterday's s&p 500 winners and losers

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning among the stories that are front and center, the u.s. senate voting to confirm richard clarida as vice chair of the federal reserve. clarida has worked as a managing director at pimco. he was nominated by president trump back in april. aston martin is gearing up for a public offering that would value the company at more than $6 billion the sports car brand is planning

to list on the london stock exchange for 1.$1.29 billion. that's james bond's favorite car. and yum china its holdings have rejected a buyout offer from hill house capital. yum china is the exclusive licensee of the kfc, pizza hut and taco bell brands in china. yum china's board decided that the offer provided no extra value or strategy for the business u.s. equity futures are higher the dow is indicated up by 15 points the nasdaq up by close to 12.5 points the s&p up by over a point aim just glad they put -- well, we'll talk about this. the heat at the u.s. open was so intense, it was in the mid 90s

you have the asphalt, everything else officials allow a ten-minute heat break between the second and third or third and fourth set. novak djokovic in his first-round match, the audience saw him spew a couple times into his towel. >> really? >> he lost the second set. he was down a break in the third set to this unranked guy he asked what he did on this break with his unprecedented break time djokovic did not disappoint. here's what he said. >> it's funny, martin and i were in an ice bath one next to another. we were naked in the ice baths, it was quite a wonderful feeling.

battling for 2 1/2 hours, you are in the locker room and naked in the ice baths quite a magnificent feeling i must say >> it was great. the match in that third set after he lost the second set, it looked like -- you listen to johnny mac, whether he will get that second wind, you saw something snap he took a tablet >> like a sodium tablet. >> something like that came back and won on a defensive point. then he went crazy and won 6-0 in the last set. >> he was spewing? he threw up from the heat? >> yeah. into his owel. you can imagine. >> just how hot it was >> djokovic, every single point. i have never seen him give up. any of those guys. brad is on friday. we can talk to him

brad gilbert so they picked a guy from pimco for the fed, clarida i'm glad they didn't pick bill gross. i'm glad if he got mad, he would be putting dead fish around, spraying fart spray around great reputation he had over the years. now we're talking about fart spray? >> not everybody thinks of bill in those terms rite no s right . >> it's like war of the roses type stuff >> maybe we should say it was part of a divorce proceeding >> still going on. >> things get ugly >> there's a small area called irvine cove, you know, they're so rich they don't want either one to live there. they're each buying up 30 million, $40 million houses forget about her forget about him move on. even as the u.s. pumps

record amounts of oil power companies are pushing for more renewable energy one of those is storage batteries. we have the president and ceo of the aes corporation. the stock gained nearly 30% this year it's good to see you good morning you were on in the past talking about batteries, i think a couple years ago or so, the technology moved quickly you compete with tesla to try to get the cheaper, longer charging lithium-ion battery. you made some progress >> yes i was on two years ago we have made progress. we formed a joint venture with siemens to market lithium ion batteries in 160 countries this is a technology at the time you were wondering whether its time had come, i said yes, it has. i can give you some examples

when there were problems at alesso canyon, the problem to having energy delivered in that area was energy storage. the case in the dominican republic, we had batteries there. when they got hit by the hurricane they did not have all of the problems puerto rico had. >> one of the selling points is that you're approaching investment grade that's not coming from battery sales. you're doing 100 million in battery sales. it's a $9 billion market cap company. >> absolutely. aes does everything other than nuclear. we have gas plants, coal plants, hydros, we have wind, solar. just last week, we had the first l & g g-- lng gas plant in panaa >> they're rewarding your efforts because of lng, not from

any of this other stuff. the sexy stuff you're talking about, lng is still tied to hydrocarbons >> i think the fact that we're able to integrate renewables into the existing power. that's the medium term and future of the industry people talkewablrenewables, they don't realize renewables are intermittent they talk about capacity capacity will come from conventional power, whether hydro or fossil, or you can have batteries. you have to have a lot of batteries to have capacity the first 24/7 renewables really in the world we're doing on the island of kawhi. you can do it, but there's going to be a transition battery costs have come down about 60% the last five years.

they'll probably come down another 60%. it's a transition. you need to use conventional fuels over that time period. >> performance over that time period, while prices come down has improved >> i think that the battery, yeah performance you continue to have technological improvements we have been operating energy storage for ten years. we had no problems we are on our fifth design that's why siemens teamed up with us to market this technology around the world. >> that seems like almost a wildcard for you that may be part of the multiple that investors are giving you now, but a lot of it is your bread and butter >> absolutely. i do think people are seeing aes as a leader in technology. we are not only the leaders in lit yomhium-ion batteries but a in drones. we are leaders in integrating renewables with conventional power. how do you run a coal plant

differently to lower the carbon footprint with renewables? we operate in 16 countries in many cases it's cheaper to put in renewables than burn fuel >> you mentioned the decline in the cost of batteries of energy storage. the skeptical case has been that it won't decline in costs that rapidly. it's not like morse law with computing capacity, it's chemistry. to advances won't make it that much more rapidly competitive with energy. >> there's no morse law in lithium ion batteries. dramatic breakthroughs are around the corner. one thing limiting the drop in the cost of batteries is cobalt. but you're coming up with new chemistries which have less cobalt, more nickel. >> we talked about cobalt last week, a gentleman just purchased some from canada >> yeah. that's one of the rate-limiting

steps for lit yhium-ion >> you have capacities that use less of it and other products from australia. >> we'll keep you in mind and watch it the range 9 to -- it's now at 14 13 and change? >> our stock is -- should be at 13.90. >> up about 20%, 30% this year >> that's correct. >> we'll keep an eye on it >> thank you very much. when we come back, a summer surge for airlines, a new strong labor day forecast that could push stocks even higher. phil lebeau has that story next. then legoland is coming to new york we'll talk to an executive from the project about a massive new catskills park and the timeline for completion later, agriculture secretary sonny perdue will join us to talk about billions of dollars

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time for the executive edge. listen up, business travelers. the nation's air carriers are staging a comeback this summer phil lebeau has that story good morning >> have you looked at many of the airline stocks, particularly over the last month? they're up between 8% and 12%. yes, the market overall has moved higher helping them. but the airlines are also seeing a number of factors move in their favor. early this morning the airline trade association with its forecast for this labor day week, if you will, everything wrapping around labor day weekend. worldwide u.s. airlines will be flying a record number of passengers, more than 16.5 million are expected to fly on u.s. airlines worldwide. they're also seeing momentum when it comes to throws closed-d

bookings typically those are higher priced 257 one way for a business fare. that's being charged, an increase of 8% the airlines are seeing that momentum and it's finally being reflected in the stocks. >> really i think what's happening is investors are starting to look towards the fall, which is typically more of a business period. what's happening is closed-end booking trends and demand is strengthening for the group. and i think investors are starting to zero in on that. >> they're also soar royi izero the fact that jet fuel costs if you look at them which peaked around the june/july period, they have moderated and have not moved as high as many people were expecting they expect to moderate more as we head into the end of the year put that altogether, that's why you look at the airline index which has started to move higher back in june this was a group

that a lot of people were saying stay away from the airlines. higher jet fuel costs, more competition, that has turned around that's why we're seeing momentum behind airline stocks. watch those closed-end bookings, that drives profitability for the airlines it's not the leisure fares, it's the business fares, that's where they make profit margins >> just as a consumer, i book the airline tickets over the weekend for a flight in november, the flight was so booked i couldn't guarantee a seat >> it's capacity discipline. >> i talked to them they said because it's so booked this early, they likely will move it to a bigger plane but seeing a lot of trends like this. >> that's the capacity discipline in the past they might have said let's add another plane to that particular route they're being hesitant about adding more seats. they may upgrade your particular flight you're looking for to a larger plane >> please. >> if possible, but there's so

much demand out there. those are the factors working in favor of the airlines. >> all right phil, thank you very much. >> you bet coming up, legoland is building its largest park 90 minutes north of new york city >> that's so cool. >> it is cool. they use normal building material for the park, but then there's a lot of -- right? that seems dangerous we'll walk to an executive from le legoland new york about the gigantic park and the boost to the region that's ahead at&t provides edge-to-edge intelligence, covering virtually every part of your healthcare business. so that if she has a heart problem & the staff needs to know, they will

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welcome back, everybody. our next guest's new project will help pave the way for an economic boost for the new york catskills region let's welcome matt besterman thanks for being here today. >> it's great to be here. >> we know a little about

legoland and some of the parks how many parks do you have already? >> we have nine throughout the world and legoland new york will be the third in north america. >> how big is it and when is it opening? >> it's going to open in spring 2020 it's built on a 500-acre site. we're building the park and hotel, the resort, which are 150 acres of that. it's the largest that they have built. >> what do you get at the parks. i've been to the stores, know about the factories. what's different about the park than you've seen in some of these other experiences? >> a legoland park, a lot of people are familiar with our indoor legoland discovery centers. legoland park is a multi-day experience all built around lego bricks and all designed for kids ages 2 to 12. >> joe, you've been, right >> i have. it's designed for kids 2 to 12. >> the california park. >> i was just thinking about it because sometimes the park comes first and the products come

later. disney, it started with movies and then it became the park. does it sell more legos to have the park or did they decide that the park business was a great business to be in in and of itself and it was just obvious there were overlaps and synergies between the two. >> merlin is the largest attractions operator in the world. we have 120 attractions worldwide. >> in addition, not just legoland. >> exactly, yeah. >> who thought up legoland would make a good theme park i don't know how you make that leap right at the very beginning. >> the very first legoland park was built in denmark, which is where lego bricks were invented. it's really expanded all over the world. >> and now movies too, so it's almost like legoland is almost a media company, but it's because it's part of merlin, i guess. >> yes. >> we've talked to the lego ceo and i know that the cycles for popularity with lego do ride sometimes with the introduction of movies and different things

that drive sales do you see the same things at the parks, does attendance spike when a movie comes out >> when a movie comes out, we always do something special at the parks. i believe legoland florida is doing something special next year when lego movie 2 comes out. >> and how much of the park as it's now conceived of being built is around the intellectual property of the brands, of the characters, of the partners that you have with whatever other kind of entertainment brands there are? >> legoland is really themed around lego prix a o bricks and based on what we call hands on, minds on experiences there's always something for kids to do at legoland park and places for them to have memorable experiences with their families. >> we bought a bunch of stuff to put together how many do you think we put together do you know what the percentage of kits bought versus kits actually assembled is? have you ever looked at what the -- is it 50%

is it that high? >> are you asking -- >> i'm asking the pr guy whether anyone builds those things after they buy them. >> i know that my kids do and i myself have. >> you work for lego. >> you know what it is, my favorite -- >> did you build them? >> we built plenty of them but for a 6th birthday party, this is appropriate for ages 12 to 15. oh, no, that's a project for mom and dad. anyway, it's very exciting glad to see this because we talk all the time about the casinos coming to the catskills, glad to see this 2020 it's coming >> april of 2020. >> is that a game of thrones dragon >> puff the magic dragon. >> that is ollie the dragon. our one coaster at legoland is a kids' first roller coaster experience >> is it made out of legos >> thanks, matt. what's coming up primary upset in florida

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it becomes 'dancer', what!? all the stars tom hanks keep this movement going strong. every network every star kevin bacon dream big with us. one night to save lives get ready to see it all tune in live, september 7th 8/7 central the records keep on falling. the s&p hitting another high as trade fears are easing the latest on the markets next move straight ahead. is regulation for social media stocks coming? google, twitter and facebook executives set to head to the hill next week to testify in front of a senate committee. what it could mean for tech stocks and your portfolio. tech investorel e ellie wheeler coming up. and a food fight in missouri the state regulating meat. we'll tell you why as the second hour of "squawk box" starts

right now. ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. good morning, everybody. welcome back 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 mike santoli. we are giving back some of the gains. an hour ago dow futures were up by 25 points, now by just under 5 points s&p futures up over just a point and the nasdaq up 11 points. here's what's in our headlines we'll get a revised reading on the second quarter economic growth coming up in 90 minutes' time the government estimated the u.s. economy grew at a 4.1% rate economists are expecting that to remain at that level

morgan stanley has raised its police target on alphabet shares to 1515 a share. that's the highest price target of any wall street firm that covers the google stock. morgan stanley cites a strong core business along with the wamu autonomous car. google is going before congress with other social media stocks and we'll hear more about that. dick's sporting goods is set to report quarterly numbers in the next 30 minutes. they are expected to post earnings of $1.06 on revenue of $2.2 billion analysts are expecting a slight decline in same-store sales. a few stocks are on the move yum china holdings has rejected a $17.6 billion buyout from a consortium led by chinese investment firm hillhouse china. they are the exclusive licensee

of kfc, pizza hut and taco bell brands in china, with more than 8,000 restaurants in 1,200 cities yum china's board decided the offer provided no extra value or strategy for that business. hewlett-packard reporting earnings and revenue higher. shares up 1.5% but that's like 25 cents. jpmorgan has poached an ex c executive from google. the bank hired them as the head of cloud-based management. obtained by a memo obtained by cnbc, he'll join the firm friday as head of a.i. and machine

learning services. we've been talking about the markets. they keep setting new records. let's get to our market roundtable to talk more with that joining us is joe zidel at blackstone and our guest host for the next hour is jason trennert welcome, gentlemen, to both of you. we keep setting these new records and people keep wondering if this is as good as it gets. joe, you don't think so. >> i think the markets can go higher from here first, we have to acknowledge earnings, that earnings are really the catalyst here to allow markets to move higher in the third and fourth quarter we'll see s&p earnings growth north of 20% in each of the two quarters but the bigger, longer term, bullish trend in my opinion is investor positioning. here we are in the longest bull market in post world war history, world war ii history, and this is an underowned, underallocated equity market

if you look at investor flows year to date, we're on pace to see the biggest outflow since 2012 in other words, investors remain very skeptical that is actually a bullish sign because when you look at every other bull market going back to 1980, what you normally find is flows start to pick up and really hit a peak around the time the market peaks. it's unusual for a market to peak when you're in outflow mode >> why do you think we're in outflow mode is that investors who have been burned so badly in the past? >> i think that's a part of it there's a term called recency bias i think people are still living in the shadows of the crisis in 2007, 2008, and they don't let it go. we've got terrific fundamentals, accelerating economy, strong earnings growth, continued low rates. you have everything set for a sustained long-term bull market that i think will break all

records before it's done the key thing is that investors remain very skeptical. >> i would say i agree with you that investors are not chasing it, right? but the market has done their allocation for them. if you just look at where their money is, i look at things like merrill lynch's private client cash levels are very low, equity exposures are at a high for this level. we all have smart advisers who reallocate whether they're robots or not. i just wonder if that's going to be the thing that triggers that signal that says, aha, everyone loves that market too much. >> i think that's a great point. flows have gone everywhere else but u.s. equities. they have hit records going into fixed income the point is when people are allocating to those other buckets or those other segments of the market, they're still making a sell decision because they have got to sell something in order to fund international or fund emerging markets or fund traditional fixed income what they're continuing to do is draw down equities equity levels are rising which is pushing their allocation

levels up naturally. but they're still reluctant to embrace it and say this is the best opportunity in the world. as long as they're avoiding that or allocating away from that, i think it's a contrarian sign. >> jason, i know you've been very bullish for quite a while we had an economist earlier who said, look, things will slow down in 2019 and you'll have the fed raising rates. does that worry you? >> i'm not sure i quite agree with that. i'm of the view -- i agree with virtually everything joe just said which should probably maybe worry people that we have such a consensus here but by the same token, i think the most nonconsensus idea is the idea that you could have a longer business cycle. again, i'm a supply side person, so i look at the tax cuts and i would say the single most -- the biggest contributor of a long cycle could be capital spending that leads to productivity, because productivity has been

one of the things in this nine-year expansion that's been conspicuously absent so if you have a productivity boom that's driven by capital spending, profits go up, wages go up, unit labor costs stay low so the fed doesn't have to get overly aggressive, and you could have a very long cycle so i'm not a big believer in the peak -- i think we're in peak growth of earnings simply because you had a tax cut, but you're not at peak earnings as far as absolute levels. >> productivity levels, i don't want to get too deep in the weeds with this, but the productivity levels drive me crazy. i think they are mismeasured if you just look at how much technology has made you more efficient over the last three, five, ten years, it's like we all have personal an sichssistat this point. >> that's a fair point, especially if you go to the west coast and talk about productivity, people's minds explode. are you out of your mind just look around you here, the

productivity is all over the place. by the same token, i would argue that there has been probably underinvestment in a lot of companies where there's been more of a bias towards financial engineering, issuing bonds to buy back stocks. you're starting to see it in some of the other industries. >> on the subject of underinvestment, one of the things that we're dealing with here is incredibly tight labor markets. if you do get that cap ex cycle, it reduces your reliance on labor. where it's incredibly difficult to hire people, companies are going down in age, going down in skill, paying up more in terms of average hourly earnings even though the government numbers say 2.7%, within blackstone's companies, about 60% of our ceos are having to take up earnings between 3% and 5% this year. >> take up paying wages? >> i'm sorry, take up wages between 3% and 5% this year. >> anecdotally we continue to hear that, which is why it's

hard to imagine the average hourly wage gains that we're seeing reported in the monthly labor department figures. >> i think there's a lag there when we look within those portfolio companies, we hear stories from all of our companies about these incredibly tight labor markets. look, the number one place to look is at teen employment 16 to 19-year-olds entering the workforce for the first time that number hasn't moved up in basically 20 years it tells you when you're hiring 16 to 19-year-olds in areas like health care and technology services, it tells you you're pretty desperate. >> it's funny, this automation boom, now you're seeing automation in service areas. >> mcdonald's? >> yeah. and i think you have a very strange situation where you have actually more job openings than you have unemployed people i mean it's never -- and yet the wage gains are still relatively modest and so that doesn't make sense it seems to me, i agree the wages should increase, but i also think companies will fight

that through automation, which is going to put other pressure on the middle class and other things, especially in retail in my opinion. >> we should be seeing a little more, wouldn't you think, if there was going to be the sustained cap ex boom, kind of across the economy by now? you've kind of been on trend for cap ex at this point. >> in the cop text of a 24-hour news cycle it seems like the tax cut was an eternity ago, but it was just passed in december. the way large companies work, as you know, is that there's a budgeting process. i think this fall will be very important in that regard because people don't -- large companies especially don't move on a dime. there's a lot of -- a lot of work that goes into making capital investments, and so i think we'll get a better idea of whether that capital spending boom that i'm hoping for and also forecasting, whether it will come to pass. >> all right jason is going to stay with us for the rest of the hour joe, i want to thank you for

coming in. >> i have to be here oh, all right, all right i'm here every day, becky. by the way, it's bring your kids to work day unofficially joe brought his son, blake you headed to the lego store and m & m store too? very cool. get a shot of blake. he's 8 years old going into third grade next week. thanks for coming in, blake. thank you, joe >> finance major, is he? >> hoping so still to come, the u.s./mexico trade agreement putting pressure on canada to reach a new deal with the united states you know there's hope for his generation, i think. you teach him about socialism versus capitalism? start early. >> we talk math wins every day math wins. >> just please start early we've got a lot to reverse what's happened in the last eight years. anyway, a live report from washington is coming up after the break. here's a look at the biggest premarket winners and losers in the dow.

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welcome back to "squawk box," everybody. aston martin is gearing up for a public offering. this would value the company at more than $6 billion they are planning to list on the london stock exchange. let's take a look at the futures this morning they have been in the green but have been giving back -- oh, no, dow futures now indicated up 24 points that's where we started about an hour and 14 minutes ago. nasdaq up by 15, the s&p up by 3 after all of these made minor advances yesterday, holding on to i think their third day of gains in a row president trump putting the squeeze on canada. eamon javers joins us from washington with the latest wish you had a crystal ball. how much time do we have, eamon, for canada to -- if that happens -- >> the idea is they want to get this deal by friday at the white house. >> it's wednesday, isn't it? >> today is wednesday as far as i know that gives them the opportunity to get the deal done and sign ed

by the current president of mexico before the new administration takes power down there. so the idea is they want to see if canada can come through by friday and join this agreement that the united states and mexico have struck we've been on canada watch all week here now trying to figure out what the signals are from that government. last night we saw the canadian minister of foreign affairs, krista freeland, come out and talk to reporters and send positive signals about what she saw in this deal here's what she said last night. >> our position from the outset has been that we hope for the best but we are always prepared for all scenarios. the fact that mexico has taken some tough decisions for mexico and agreed on some compromises around labor in the rules origin discussion really is positive for workers in higher wage

countries. >> so freeland praising some tough decisions by mexico. important in all of this is the idea of raising wages for certain autoworkers. that would be appealing to the canadian side, so we'll see whether we could get that deal by friday. some other news to bring you up to speed on and that is down in florida where we had an upset victory for the mayor of tallahassee in the democratic primary for governor there andrew gillum winning with 34.2% of the vote over the previous favorite, gwen graham, the moderate, at 31.4% gillum, an african-american, would be the first african-american governor of the state of florida if he is to win. he received a lot of support from progressives around the country. meanwhile on the republican side, congressman ron de santis beating out the favorite there, adam putnam, 56.5%, walking away with it after the endorsement from president trump so this sets up an intriguing

battle in the ball two 39-year-old candidates, one endorsed by bernie sanders on the progress i've side, one endorsed by donald trump on the republican side. obviously florida such a key swing state in the presidential races going into 2020, that one is going to be an ekeep an eye november. >> when you see the extremes of the party winning and the polls getting it wrong all over again, is this setting us up for what we can expect in places beyond florida? >> yeah, look, i personally think that polling has gotten a little bit hairy here. we don't quite have full transparency into what's going on with voters in this case gillum didn't lead in any national polls going into the race so the question is what were the pollsters capturing going into this. >> well, the polling was wrong two years ago too. we haven't got any better at predicting this stuff.

>> you're seeing a surge in turnout and a lot of people showing up to vote who pollsters might not have expected to show up to vote so that tilts everything the other is just the rise of cell phones and how hard it is for people to be contacted and don't talk to pollsters who call them at night. >> i don't pick up the phone if i don't recognize the number coming in because there are so many spam calls, every single one is a fake spam call trying to make it look like it's from the next town over. >> right the other factor is people just not telling the pollsters the truth. some people won't say exactly who they're voting for or will suggest they'll vote for somebody and turn around and vote for somebody else in their heart of hearts they want to vote another way all of that creates a cloudy picture going into november. there's all this talk, is there a blue wave, is there a red wave, i don't think we really know >> the polls haven't been right, so good luck, wait and see.

>> but for voters that means you've got to get out and vote because you don't have any idea how this will turn out for reporters it means we've got to pay attention to what the voters are saying and be really nimble here. >> you better be ready to prepare for any scenario thank you very much. when we come back, the fight against fake meat heating up in missouri. self-driving cars are getting a bad rap in arizona we have those stories next. later, a focus on technology stocks the nasdaq hitting another record high. ellie wheeler will join us to talk about the sector. "squawk box" will be right back. aflac!? no-good break. gooood break. i'm so sorry we can't make your barbecue. i'm just sick about it. aflac!? different kind of sick. if i can't work after surgery, how am i gonna pay my rent? all these bills? aflac! oh, aflac! and they pay you cash in just one day.

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we just had one of the guys on yesterday trying to develop these, alphabet, self-driving cars were annoying some folks in chandler, arizona. more than a dozen locals who work near wamo's office complaining about wait times and sudden stops by the vehicles but self-driving cars have rights too the program to drive conservatively and master

situations that human drivers can handle with relative ease. for more on this story and other headlines, visit cnbc.com. >> for a second i got excited that you had one of the flintstones here yesterday. >> the jetsons. >> the jetsons, i'm sorry. that's what i meant, sorry >> my one thought about this is drive conservatively does that mean any time that any of us are riding in an autonomous vehicle, we're going to be going five miles under the speed limit? >> probably. >> oh, my gosh safe >> can you override it >> i would have to -- >> take off the -- >> wouldn't you? the brake or whatever it is? >> look, this is software. don't you think that could connect up to the police department they'll know exactly how fast you're going. >> if you put waze on, it tells you how fast they're going. >> they don't even have to pull you over. >> it will never work in new york city, though. this will never work

people walk right in front of cars all the time. people are not going to have any sort of -- i don't know. i just can't see it working. >> you set it at 55? i can't drive 55. >> okay, sammy hager >> you're not going to be able to speed. >> that's a recommended speed limit. >> they're not going to have an autonomous vehicle that drives over the speed limit. >> do you know anybody who drives 55? >> every once in a while you do. >> and you beat the horn. >> but they're not going to let them drive faster than that because of liability issues, there's no way. >> these guys wonder why new jersey has the highest car insurance rates? they both live there. a little food news for you as well. missouri has a new law that prohibits food makers from use the word "meat" when they refer to anything other than animal flesh. the move takes aim of manufacturers of what's been dubbed fake or nontraditional meat lab-grown meat, the stuff we've

seen that's made of cultured animal tissue cells, plant-based meat is made from ingredients like soybeans. the state law forbids misrepresenting a product as meat that is not derived from livestock or poultry >> so this isn't about taco bell >> i don't think they ever say -- >> no, that's meat there was just that incident from a new years ago david novak was so mad and the people that accused them had to rescind everything. it was like fake news before fake news -- >> was a thing. when we come back, technology executives are going to be heading to the hill next week to testify before the senate intelligence committee. is there enough energy in congress to push through any kind of regulation what will it mean for your portfolio and spoeshl meaocial stocks

we'll hear from ellie wheeler after this break. take a look at the u.s. equity futures dow up 19 points, s&p up by 2, the nasdaq up 14 "squawk box" will be right back. across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

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good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center on this wednesday morning, mortgage applications fell by 1.7% last week both new purchase applications and refinancing activity fell during the week. the average 30-year mortgage rate was down three basis points and now stands at 4.78%. the senate has confirmed columbia university economist richard clerda has federal reserve vice chairman. he was nominated to fill the vacancy when stanley fisher retired last year. another retailer surging after quarterly umbers

express earning 3 cents a share. analysts had been expecting a break-even quarter they posted an unexpected rise in same-store sales. yesterday's market move pushing the s&p and nasdaq to record highs. the trade overhang seems to be fading a bit the president tweeting about a nasdaq's move above 8,000. mike santoli has more on the market's moves >> sonic the hedgehog here to give you the market report or something like that. the record run has the market perched on some round number levels s&p, 2,900, we flirted with that yesterday. nasdaq 8,000 26,000 for the dow i thought i would look back at the nasdaq's outperformance going back to the election there's been this fun kind of contrast, irony, whatever you want to call it with yesterday the president saying nasdaq

8,000 and criticizing some of the companies that got you there. that's the nasdaq 100 but up 62% since the election the dow up more than 45%, the s&p pretty good, just under 40% as a gain. the top three stocks that you would argue perhaps have come under some criticism because of their business models or whatever else from the president, these are major drivers of the nasdaq. amazon up 160%, facebook actually more like a market % performer, 46% after that recent drop, and alphabet has quietly been up 60% since the election too. why the nasdaq i think most roads for investors lead in that direction just real quickly, we had this winner take most economy in many sectors and i think that's reflected in the huge growth platform companies growth i facetiously say is always in style but it's hard to sneeze at 20% top line growth on enormous companies like an alphabet of the and then

quality, even if you say i want to buy quality businesses, that takes you toward the nasdaq because they have such strong balance sheets and high profit margins, so for now anyway it's almost like there's an inertia in the nasdaq. >> it shows you how different it is from 2001. >> it's a different profile of business that is driving it. of course you can overpay for any great business, but it's a different dynamic i think that's driving it. >> mike, thank you i was looking at some -- we're going to talk now to ellie, but i can't believe it's in "the new york times." did you see this dozens at facebook unite to challenge the intolerant liberal culture at facebook. they say we claim -- we welcome all perspectives, but at facebook we're quick to attack often in mobs anyone who presents a view that's in

opposition to left-leaning ideology as many as 100 facebook employees -- number one, i'm shocked that there's 100 facebook employees that would do that number two, i'm shocked "the new york times" would let this news out. anyway, facebook, alphabet and twitter all expected to testify before the senate next week. for a look at what to expect and a wider focus on social technology, ellie wheeler is a partner at graycoff. this whole issue and when i think about what i use google for and how powerful it is and i've heard mark zuckerberg say we have trouble finding anyone to hire out here where they're located that doesn't have that sort of perspective, it makes me worry. but if it were really true that i wasn't getting 100% of the news that's out there, if it was really true that google was presenting to me just news from

a certain perspective, that is frightening and orwellian. >> yes we should figure that out. there's an entire industry trying to figure out the google algorithm. >> somebody knows. >> sure. but it's about relevance, that's how they talk about it what they're trying to show you is relevance and they use a number of different signals. again, whole industries trying to figure out what those signals are. >> there's certain guys in congress, if you said that to them, and they're on the right but if you said it in a straight face, they don't see any conservative bias on twitter who they block or facebook who they block or which websites get this and which don't, they would laugh. >> i bet there's people on the other side that would laugh. >> those are the people that we're talking about that are in

control of the algorithms. >> maybe maybe that's the case. >> when he said, yeah, we probably have a left bias. >> yeah, we're in unprecedented times. you're asking technology companies to be on the forefront of things that used to be nation state and used to be in government i think they should have been thinking about it morally as they built these machines and what they have been able to able to drive in popular culture. obviously they have a tremendous amount of reach and power. but on day zero when these companies started, these weren't things they were thinking about. obviously they need to be now, but how do you regulate a private company that can have their own terms of service, decide what they want to do with their platform, but now they're beingasked to make decisions and act like things that would have been governmental entities in the past.

>> the way to regulate them is to follow what the eu has done and that begs the question for investors, are these risky profiles, or as mike just pointed out, people are drawn toward technology stocks is there a bigger risk profile there, especially with so many of these ceos or other leaders from these companies who are going to go before congress next week >> i think it's going to be interesting before congress next week if it doesn't go well, i think it's going to be quite the topic through the midterms, right? and it unites people so it will not go away but gdpr, people have already adapted. everybody is global in some way, shape or form. they have to make sure they have everything in place for it i don't think it would be that much of a shock to all these different companies. i don't think it would require -- of course it would require some work, but people have already had to react to these regulations coming out in the eu. >> don't you think, ellie, maybe there's a distinction we can make between google search and the social media platforms like facebook and twitter where they're on a one-off basis in

response to complaints or certain activity going and blocking people or taking them off the platform google's algorithm as you point out, it's a black box, sure, but all they really care about is finding you and tracking your behavior and preferences and giving you more of what you want >> that's right. but i think there is a distinction there, sure. but at the same time giving you more of what you want, i think both of the other companies would say the same. >> sure. >> so ultimately you can construct what it is that you want to look at in facebook and continue to see that and if it gets more clicks, you'll see even more of it. i do think google is a little bit different in how at least they purport to -- >> certainly on the news tab, which is how this all started. >> yeah. >> can i ask you a question about valuation, because i think from my perspective, you never have as much political power as when you don't need any political power at all and something has changed for these companies, which is to say

that there was a presumption of virtue probably up until two years ago, which is not -- i would say there's much less of a presumption of virtue on the part of policy makers, the public i think amazon has 13 lobbying firms on retainer in washington right now. so i guess where i'm coming from is that clearly has to have some impact on valuation, right if you're just given kind of an open lane that's worth something, and if the lane make it a little bit more constrained, that probably has some impact on price, no >> perhaps i think you're seeing it with facebook, right? i think it needs to show up in the business if it means that they're going to grow more slowly, if their margins are going to have some compression, then i think you'll see it show up i think you bring up a good point. i think most other industries are probably saying finally, right? we've been having to deal with

this for quite some time you know, they have not. now welcome to the party, right? you know, everyone does need to -- everyone is now kind of coming to the table and we'll see -- we'll see where they land >> google just has a place in society where they have a lot of -- i mean i hope that they don't let personal -- we know how many times eric schmidt visited the obama white house, hundreds of times. we know where he was in hillary's campaign, we know about sheryl sandberg and hillary's campaign if there was the slightest chance that they're not involved with any of the algorithms them, so other people completely unbiased writing the algorithms, we can count on that for sure? >> i just don't -- >> would you feel comfortable if someone visited the trump white house hundreds of times and was deciding what you see in your -- i mean that would be -- >> take it to the other extreme. if they want wanted to really

impact something in a way that would be beneficial to their political leanings, they could have done that and it could have been extreme i don't think that's what we've seen we certainly didn't see it last year. >> you mean because they didn't win. >> that's probably more inherent biases we don't know who's putting these algorithms together. >> it's much more inherent. >> i probably do 30 -- >> they're going to show you what's going to get them more clicks, what's going to get them more money is that kind of a vicious cycle in some regards? probably you ending up in a loop. >> i just need -- i use google so much. it should be almost like a utility. that should almost be where you're so worried -- >> i saw some crazy statistic that something like 80% of all information ever is now -- has now been digitized in some way and accessible through google. i don't know whether that's appropriate or not

>> it's one of those things if you can't find it on a google search, you assume it doesn't exist. >> information that has been relegated to that bucket. >> it speaks to joe's point, which is to say that's an enormous amount of power in a private company. so you can almost bow a victim of your own success. >> i think that's right. people have woken up to just how dominant some of these parties are an i think that's why we're having the conversations that we're having. >> i wonder what it does for people that own the stock, that's the thing all right, thank you, ellie wheeler. you know alan? >> of course. >> tell alan i say hi. >> you think like him, i think. when we come back, we'll introduce you to a private aviation company attracting companies like jetblue they take the flying experience to a whole new level and be sure to tune in tomorrow we'll sit down with warren buffett ahead of his lunch with

the winning bidder of the annual glide foundation auction this year's meal went for over $3.3 million, but you get to see it for free. that's coming up at 11:00 a.m. eastern time tomorrow right here on cnbc. you always pay your insurance on time. tap one little bumper and up go your rates. what good is your insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782

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welcome back to "squawk box. take a look at the futures yesterday we got some tiny gains, got the s&p and nasdaq back to new all-time highs you see the dow now set to go up 28 points, s&p 500 set to tack on 3 points, bring it around 2,900. the nasdaq is looking to gain about 15 points at the open. our next guest role has her soaring to new heights and breaking the glass ceiling along the way. let's welcome stephanie chung, newly named president of jet sweep inc. he's the first african-american female to lead a major private aviation company stephanie, welcome i just think that with consumer confidence at new highs, you need that for a private aviation company, do you not? this is a luxury good, i think one of the most luxury of luxury goods. >> absolutely. you're absolutely correct. but it's interesting, a lot of

our flyers are not necessarily just flying for luxury reasons a lot of them are flying for business so some people do fly for luxury but we have our fair share of business travelers as well. >> it is somewhat sensitive to economic conditions. >> completely. >> sowould you say these are - we're in some pretty good times right now for this business? i know some of your competitors, net jets, it really does make a difference, expendable income and how people feel about the future of the economy. >> 100%. we're having a good time right now. the economy is well. confidence is up so we're seeing all of our numbers go up in the right direction. right now it's funny, in july we just had our second highest month in company history. >> tell me how it works as opposed to a wheels up or any of the -- net jets. how does jet sweep work exactly? >> our particular program is not actually membership based. so you give a deposit and from

there we just deduct your hours and the dollars from the deposit that you give. think of it as a debit card but flying. >> how big of a deposit do you have to put down >> you can go from $50,000 all the way up to half a million dollars or more. >> and how many planes, what kind of planes >> we've got the phenom 100 and phenom 300 and well over 23 planes. >> how many seaters -- i love the little jets that the commercial airliners fly because they're easier to board, they're easier to deplane and they're everything that you need really. are these a little smaller than that how many seats >> yeah, so our phenom 100 has four seats and our phenom 300 has seven seats. >> seven seats and where could i fly? >> you can fly it -- let's say hours because it's probably easer for your listeners you can fly up to two hours in the phenom 100 or four hours in the phenom 300. >> is there a bathroom >> there is, joe

there's a bathroom. >> santoli might not ask you that the new honda jet didn't have a -- >> there's an outhouse >> empty bottle. >> so how will you -- you have some investors now, qatar airways and others what are your expansion plans? how will that work >> we have investors, qatar airways as well as jetblue our expansion, what we're going to do is reinvest in our infrastructure and of course in our people and also buy additional fleet so we've gotten more aircraft on order and on delivery. >> you should probably be addressing all of this to trennert over there. >> he wants to buy a lot of planes >> he has a lot of money he manages money the last in-flight movie you saw was "sound of music. when was the last time you were on a commercial plane? >> i fly commercial all the time but of course i think the point

you made before is that there's certain -- it's all about time as far as a businessperson is concerned. when you're going to places that are very difficult to get to and the times don't work out, it becomes a good solution to pick a service like yours but it also seems to me, i just want to know, it doesn't seem like there's a lot of barriers to entry in your business. it seems like there's an awful lot to choose from if the economy does tend to slow down, would you see any sort of consolidation there? is my read of that correct >> you're absolute low correct what we're finding in the industry overall in the past couple of years, everyone is starting to have a little bit of this and a little bit of that in regard to private aviation way back in the day it may have been that you just bought your whole aircraft or just had fractional shares or just did jet cards. but what we're finding is that the trend is everyone is doing

it a la carte. as the economy changes, people can ebb and flow based on what their needs are. perhaps they won't need their whole aircraft when the economy is tough, they may jump down to a jet card or fractional share and things of that nature. >> there's different ways to approach this whole business you're at the very high ending wheels up, they're going to have turbo props and they're trying to get the hours down so more people are able to do it stephanie is just like, look, you've got to be rich to even talk to me >> joe, joe -- >> we're not going to be embarrassed for it, but this is a luxury product for people that can afford it? >> for our phenom 100, the hourly rate is $4,500 per hour. >> so you've got to put down a minimum of $50,000 you can put down as its as $50,000. >> it's a debit card and those people that need perhaps a little bit more flying or perhaps want a larger

aircraft, our 300 would run $6,500 per hour. >> i have flown private and i've flown commercial and private is better it is. there's just no doubt about it so good luck and update us i hope it keeps working. i wish we could all fly private some day. >> we're waiting. >> i have connections if you need some. >> let's go to break all right, stephanie chung, thank you. when we come back, president trump putting pressure on canada to come to the table on trade. former deputy trade representative robert holliman will join us at the top of the hour to talk about this. and later, agriculture secretary sonny purdue talks tariffs and farmers. "squawk box" will be right back. . so you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that tie. voya. helping you to and through retirement.

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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. this wi-fi is fast. i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops.

oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. thank you for jason trennert for joining us this hour >> thank you >> it went so fast. >> i know. i had so much fun. >> coming up, robert holliman on trade. then later agriculture secretary sonny purdue joins us on the farm we're going to talk tariffs and the impact on the nation's crops. "squawk box" will be right back.

helping those at home. the white house gives american farmers millions of dollars in aid to help them weather a trade war. our news maker this hour, agriculture secretary sonny purdue proolive from iowa. plus breaking economic news. an updated reading on the second quarter gdp is just 30 minutes away. and the battle for your bed. mattress companies are turning up the heat in a multi-billion dollar pillow fight.

the final hourof "squawk box" begins right now ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box. >> enter the sandman >> good morning and welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm joe kernen along with becky quick and mike santoli check the futures, they're mostly green, mostly higher earlier. up 29 on the dow if you're listening on the radio, up 3.38 on the s&p and the nasdaq is indicated up 15.5. all of those except for the dow would be records treasury yields inching higher

as the week progresses, 2.88 this morning keep an eye at 8:30 on all these things because we'll get a revised reading on second quarter economic growth. last month the government estimated that the u.s. economy grew at a 4.1% annual rate during the april through june period economists are expecting the number to remain right around at the same level as that so we'll see in corporate news for you, hewlett-packard enterprise reporting earnings and revenue that beat forecast the results were helped by a strong performance by its hybrid i.t. business segment, which includes computing, storage and data networking products cloud storage provider box posting second quarter revenue that beat estimates despite a rise in costs. however, the company projects that revenue for the current quarter will miss analysts' forecasts and sees a bigger than

expected loss. a couple of other stocks to watch, dick's sporting goods taking a hit in premarket trading. the company did beat estimates by 14 cents, posting profit of $1.20 a share, but revenue and comparable store sales fell below street forecasts down almost 7%. roku shares are under pressure this morning. amazon.com is reportedly planning to offer an ad-supported free video app that would compete with the streaming video device maker's roku channel. amazon competes with everybody it seems like. that stock down almost 5%. news from the political world, senator john mccain would have celebrated his 82nd birthday today the arizona senator lost his battle with brain cancer on saturday thearizona national guard will take his casket into the arizona state capitol today. that's where mccain will lie in state. then the public will be able to pay their respects later this week, he will lie in

state at the u.s. capitol in washington followed by other memorial services and then be buried at the naval academy. and in washington today, trade remains front and center canadian foreign affairs minister chrystia freeland says the concessions from mexico have set the stage for productive trade talks. she met with robert lighthizer late yesterday joining us now to talk about this, robert holliman former deputy trade representative under the obama administration and president of cromwell and moring international like so many things, mr. ambassador, we hear one thing from the president and the administration about how great this deal with mexico is, and then critics say, i don't know, i've heard it likened to the north korean agreement, that it accomplishes very little or we won't know how much it accomplishes until later what does it accomplish, anything positive? >> well, it's encouraging that we've now come to a general

agreement with mexico. what we've got to get now is to get canada to the table. really think of nafta as essentially elective surgery it was sort of a pacemaker, it's at the heart of our economic strength as a country. it needed to be updated. we've now gotten part of the work done. but the final work really comes in working out a deal with canada so that this truly is a north american deal. so the remaining elements have to be added. but now that we've gone down this path, it's good that we've gotten the framework of a deal on the table with mexico. >> is managed trade something that always benefits the countries involved that was the journal's piece yesterday, that trump is doing everything to deregulate the domestic economy, the president, and that this almost seems like there's, i don't know, more paperwork, more red tape in terms of a lot of different

sectors. >> depends on which part of the agreement you're looking at. i think overall, overall it makes helpful updates to the existing nafta agreement it clearly in areas like the supply chains around autos puts in place new requirements that are more burdensome. an interesting thing to see happen is that for the first time there's going to be a mandatory minimum wage stated in a trade agreement of $16 an hour for a good chunk of the auto trade. that's more than double the u.s. minimum wage so clearly the u.s. is now putting things on table that we would not have put in prior trade agreements it will be interesting to see how congress does it but overall there are improvements in areas like digital trade and de minimus requirements on trades at the border so it's an important and

good foundation but we've got to work out the details now with canada. >> can we do it without canada as far as the law -- do we know whether we can do it without canada canada seems like they need to do it, but don't we have something to lose if we don't bring canada along >> oh, absolutely we have a lot to lose. the reason you're hearing this week as a deadline is because of a requirement in u.s. law which says that before the president can sign a trade agreement, it has to be available for 90 days before he can sign it. so the race against the clock is a u.s. race because we want to get this done before president p pena nieto leaves office to do this without canada would be cutting off our best partner in this relationship and we need a united reinvigorated north

america. so i think it's good that canada is back at the table they'll have some tough decisions to make, but we need them to be part of a final deal. >> so let's say trudeau, there's an election and he gets all this pressure from whomever and so they say, look, we just can't. we just can't agree to this. can trump terminate nafta and replace it with a bilateral agreement with mexico? is it even possible to do that under existing law >> i think president trump could terminate the existing nafta agreement. it would not terminate all the provisions of the nafta agreement, but a new agreement between the u.s. and mexico cannot go into place without the approval of the u.s. congress. i think leaders of both parties have been clear that they believe it has to be a tri-lateral deal ultimately that -- the president's power is to show both of our trading partners that he can get a deal that can go through congress and for that to go through congress, it really needs to be a tri-lateral

deal of all of north america. >> i don't know how we bluff then with canada i don't know how we say, well, sorry. we can't walk away then. >> look, we really can't walk away there's a lot of reasons to think that canada and the u.s. and mexico can work out their differences still this week. i hope they can. clearly canada has been the loop in all of this, including the major concessions of mexico. so if we can deal with a handful of thorny issues between the u.s. and canada around dispute resolution, ip, dairy, we should be able to get a deal and i hope that that happens by the end of this week. it's important for the confidence in the north american market. >> what happens if we don't get it by the end of the week? because the market is looking at a three-day weekend, a slow trading day, a friday in august. those are the types of things that can really spook markets before you go into a long weekend like that. >> absolutely.

i think we'll know more signals. i'm generally optimistic we can do it. if for any reason we can't do a three-way agreement by the end of this week, then i hope creative lawyers are thinking of a way that we could do it with mexico, meet the signature requirements that we need for mexico to do it and then still strike a deal with canada and pull the two together for consideration. >> i agree, but there have been a lot of leaders in congress, brady and others, some of the top republicans who have said, no, this is a three-way deal not a two-way deal and congress has to sign off on it. >> well, it needs to be a three-way deal i'm just saying there may be procedural ways that we can conclude with mexico with week, conclude with canada next week or the week after and still meet the requirements but i'm really optimistic we can do with this canada. they have literally been at the table all the time negotiating on this. the differences are actually quite modest what we need is a win-win-win so

that the leaders in all three countries can say this works and enclosurely congress expects, the u.s. economy expects this to be an invigorated deal to cut out canada as our single best trading partner in the world and our biggest trading partner would be a huge mistake. i'm confident that we can and should get to the right deal. >> i listen to you and you're confident you're going it's going to get done and you're pretty optimistic about the provisions that are included this would be a big win for everybody, and president trump so it's just hard to get people on certain -- in certain parts of who we interview, it's hard to get anyone to admit that. but you're unabashedly saying it probably gets done and probably is a good thing. you have to chalk another one up for trump. >> clearly what it is is we created the conflict, we created the uncertainty in the markets by saying we were going to renegotiate or -- >> wait a minute so when you stop hitting your head against the wall it feels

so good that's what this is or it needs to be redone and it's a good thing. >> it clearly needed to be done. i think there are elements that could have been done differently. we created some challenges that didn't need to happen. all three parties agreed years ago that nafta needed to be redone so there's been agreement for a long time. we then put a self-inflicted wound. now we're getting out of that. >> you like this you think it's going to happen and you like it, let's just leave it at that, ambassador don't keep all these caveats -- >> look, i'm encouraged by it. >> good. let's lee it there look at your smile you can't help yourself. ambassador, thank you. former deputy trade rep -- he's still smiling. >> he's on tv, smile all right, when we come back, social ceos could be posting too much that's what a lot of people think. elon musk and papa john's

founder are both finding themselves in hot water this summer after talking and speaking out we'll talk about any potential lessons executives should learn, next right here. first, as we head to a break, take a look at the biggest premarket winners and losers in the dow. caterpillar, apple, cisco systems at the top of the pack and at the bottom of the pack, flip it over and you see pzefir, nike, verizon. stick around, "squawk box" will be right back. this wi-fi is fast.

i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is

simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. welcome back to "squawk box. it's 8:15. futures are still in the green could change depending on the big gdp number we have coming at 8:30, which i'm looking forward. i love when we see the gdp >> especially when they're good numbers. >> well, i want to see each time because now the last refuge of scoundrels is that it's only one quarter. it's not staying here, it's only one quarter. it's only one sugar high don't start annualizing this sooner or later, there will be four quarters that when you add them up and divide by four might add up to 3 and they'll have to come up with something else, i guess. >> we'll see anyway, that number is coming up in less than 15 minutes.

in the meantime ceos may be in crisis in an effort to boost personability and transparency, could they be a little too social for their own good. embattled executives like elon musk and john schnatter are the most recent examples of people getting in trouble online. joining us is marvette britto. thank you for being here today. >> thank you for having me. >> so this has been an interesting summer a summer of social media one that has a lot of investors a little wary about what might come next. elon musk, schnatter both come prominently to mind. these guys are larger than life, probably built up the company because of that larger than life status but is there a time when it's just too much. >> there is a time when there's too much

companies are looking at ceos to give the leadership that would be reflected in the character and the moral stature, if you will, of the company and of the brand. and when it works for them, they're an asset when it doesn't work, they become a liability oftentimes if that behavior is in conflict with the character that you want that company to represent, that's when the stakeholders have to be concerned and become alarmed oftentimes when you have a quirky personality or a leader who actually does things that is seen as a liability, it depends on really what resonates with the consumer because it's all about how that behavior will really impact whether or not it becomes an asset, if you will, or becomes a deficit and really impacts the bottom line. >> every one of these cases is different but since you're in crisis pr management, why don't we ask you if you were giving advice to some of these examples, what would you tell them elon musk at this point, that company exists because of his

huge personality what would you tell him told at this point >> where you win is when you stand in the center of authenticity and be organic to who you are. >> but that's what's gotten him in trouble i think we know who he is based on these tweets that come at 2:30 morning. >> it has, but he also has consumers that can relate to his behavior consumers who are going through the very same thing that he's going through. >> it's not the consumers i'd be worried about, it would be the shareholders and the board. >> but the consumers keep the shareholders happy if the consumers don't abandon the company and continue to stand by elon because there's something in his behavior that's relatable, the stakeholders will stand by him. >> the share is down 15% from when he first came out with this tweet about funding secured. what should he do, still be talking or shut up >> he should shut up for sure, he should absolutely shut up but he shouldn't come out and do anything that's not true to who he is. a lot of companies make that

mistake. they put out talking points and messaging that is not reflective of who they really are and the consumers can see through that inauthenticity as well. >> i would imagine a lot of boards are looking at all of this and saying, look, the ceo stay off social media, don't interact, don't bees t the facef the company. >> at times you have to pull back and know when to be visible and present and you have to know when to pull back and really take in consideration the entire company and not just your own personal interests. >> what about john schnatter at the pizza company. this is a situation where he's not the ceo anymore but he's still the major shareholder. he's now kind of going after current management how does this end or is there any way that this can possibly end well for papa john's >> his behavior shows that he should have been removed as the ceo. it shows that he really doesn't have the best interests of the company at hand. he really has his own personal interests and his pride is

really leading his decisions so it's showing that that comment that he made on that call is really reflective of his true character and shows he's not fit to lead that company into the next generation >> so you tell what to the board, just keep your head down and power through this >> i'd say send him a check and make sure he is nowhere near the day-to-day operation or is connected in any way to the dna of the forward vision of the company. >> marvet, thanks for your time today. >> thank you. >> appreciate it i saw another 3, another model 3. have you seen them on the road there are a few of them on the road i saw one that was a dark blue or jet black and i liked it a little more. the light-colored ones, i think they look like that -- what is that little suv that they had. i mean the s is great looking. the 3, it's important. and this one i actually kind of did like. >> you like the dark. >> i just like the shape it looked okay i'm just not sure --

>> maybe it just has to grow on you? >> anyway, i want to be fair i want to be fair with my opinions because tesla, man, it conjures up a lot of emotions on both sides. coming up, can the temperature in your office be sexist some say so, including one well-known woman running for atblic office. th debate when "squawk box" comes right back

this is me >> yep. >> have you ever complained about the temperature in your office if so, you're certainly not alone. some are taking the debate to a new level. the campaign for -- campaign team for actress turned candidate for new york governor cynthia nixon says that room temperatures are notoriously sexist because they're geared toward the comfort level of the average man. this conversation started when nixon's campaign requested that the hall at hofstra university be kept at 76 degrees during her debate with governor mario cuomo tonight. cuomo is known for preferring chillier conditions. an article in "the new york times" dives into the topic

today and cites a 2015 study which found temperatures in most offices are set based on an old formula that relies on the metabolic rates of men. >> i don't know that this rises to a campaign issue, but i understand it. offices are kept cooler. now, the answer could be i could put on a sweater look, i also get why she -- i get why she would try to make this a point if the room is 76 degrees, it's pretty hot you'll see the other guy sweat. >> yeah, you probably would. >> you're going to look like nixon. >> you also feel like -- men in a suit or, you know, are going to be wearing more clothes. >> the metabolic rate, i didn't know there was -- i'm going to defer to whoever wrote that kwaupy that it's true. >> but look at apparel i'm wearing sleeveless you guys have long sleeves on. men would have a jacket when they're standing at a podium but that's kind of the dress norms for men and women these days. >> right new york -- i don't know.

>> but i can see why she'd turn it that's a good request to say i want 76 degrees because if you can withstand that -- >> every household and every office, there's been that little back and forth. >> every household is the key. who controls the thermostat. the last person who got closest to it in my house. >> republicans have a hard time getting elected in new york. >> we're talking about two democrats. >> that's what i mean. because one of them is going to win. one of them said america was never great and the other one is from "sex and the city" who says wee going to give real socialism to people. that's what they want. they're calling us socialists anyway, we might as well give them the real thing. then you've got de blasio as mayor of new york city. >> you seem concerned about the fact that new york as a high tax state is so successful and so productive and such a great contributor to the u.s. economy. >> you think that we have the politicians -- i think new york has the politicians that they deserve. >> it's a great city, though

it is a great city. >> it's a great city, in spite of coming up, breaking economic news a second read on second quarter gdp. the reading and the market reaction i live in new jersey, it's much better ayed, you're watching "squawk box" on cnbc i'm april kennedy and i'm an arborist

with pg&e in the sierras. since the onset of the drought, more than 129 million trees have died in california. pg&e prunes and removes over a million trees every year to ensure that hazardous trees can't impact power lines. and since the onset of the drought we've doubled our efforts. i grew up in the forests out in this area and honestly it's heartbreaking to see all these trees dying. what guides me is ensuring that the public is going to be safer and that these forests can be sustained and enjoyed by the community in the future.

we are just a few seconds away from the second read on the second quarter gdp we've been watching the futures this morning right now the dow down 3, the s&p and nasdaq holding on to the green. rick santelli is standing by at the cme in chicago rick, take it away >> all right second look, here we go. it improved, up a tenth to 4.2 the debate around here was whether we'd hold the 4 handle not only do we do that expanded it a tenth. consumption moved down a couple of tenths, 3.8 from 4% if we look at the price index, it stayed the same, 3% that matched expectations. no movement there. personal consumption expenditure quarter over quarter, same thing, different handle. expecting 2%, received 2%,

followed 2%. so these readings other than consumption, which is key, backing up a bit pretty solid data points the treasury complex thus far really hasn't moved much if you're looking to handicap the yield curve based on this data, you know, whether it affects the fed more or the general feeling of the economy more on the long end, it hasn't moved. 267, 287, 20 basis points going in, 20 basis points coming out and we have this rare event over the last week or so where the dollar index is up about a fifth of a cent and corporate profits up 2.4 versus 8.2. that isn't very good actually on the q2, but we'll keep monitoring that because of course all these numbers can still change a little bit as we move through time. revised new 4.2 -- i'm sorry,

revised to 4.2 i'm getting some conflicting data on corporate profits. joe, back to you. >> rick, you watched in horror as the deficit went from $10 trillion to $20 trillion obviously. now it's going up a trillion a year again i mean do you see -- we had yesterday, and he may not be wrong. do you see even though the economy is this strong, do you see the dollar going into a long-term decline based on our rising deficits, even though rates are going up and we have a strong economy is that what's in the future for us >> i want to answer that, but i also want to put a marker on the notion that we really don't have a deficit problem. we have a spending problem so everybody of course likes to blame this on some current policy and tax reform. taxes aren't the issue we spend too much. having said that, many other countries in highly developed economies around the globe also have deficit issues.

negative interest rates, own a boatload of sovereign paper that's no good do i think that variable is going to be a big defining moment in a more bearish dollar? no >> yeah. if we're bad, everybody else is even worse >> exactly and that's unfortunate i think central bankers are actually counting on that and nothing to disparage them, but in the grand scheme of things, if emerging market volatility makes central banks very nervous, imagine when the big economies, mario draghi and the bank of england and the bank of japan actually have a giant mountain they need to climb. it's going to send shock waves in every direction, so it's just going to take a long, long time. and i did confirm corporate profits were confirmed to be up 2.4. >> bitcoin maybe, santoli, bitcoin. then you don't have to worry

about the dollar. >> is that too heavy to flip a bitcoin? >> he mentioned sonic the hedgehog i love all those coins you pick up as you're going along are those bitcoins have those been bitcoins all along? >> they're made of bits, they're computer code. >> do you remember it? >> i vaguely remember. >> i've played recently. there's all these gold coins and you pick them up and it makes a nice sound and it feels so good. >> i just know it from getting the charges from the apple store and candy crush. >> now i realize i think those were bitcoin all along. let's get reaction to the gdp -- thanks, rick. so i don't know, he doesn't think the dollar is going to collapse randy anderson, chief economist of griffin capital were you listening to that, randy? do you have anything to add to that or do you disagree, agree, or is it more nuanced? >> i really like, joe, your earlier comment. honestly this number is one number, it's a quarterly number.

i think you're going to take all four quarters, add them up, dwight by 4 and you're looking at high 2s to throw 3 number it's kind of okay. you sit there and look at it and what didn't surprise me is what happened with consumption. quite frankly, what concerns me is what's going to happen in '19 and '20 in the economy i think the expectations are going to come in lower than where gdp forecasts are and i think that's what's reflected in the yield curve. quite frankly, when the economy is at full employment and consumption is the main driver of gdp, it's really hard to grow that consumption function when you're already at full employment combine that with a more aggressive fed, with a shortening of the yield curve high, we just see gdp growth into '19 and '20 at that high 1%, low 2% range we certainly don't see a recession, but we see it very difficult to invest in assets kind of at all-time highs at those kind of multiples when you're seeing gdp growth that's more of a 2% number and not a

3.5%, 4% number. >> you say 3 and that's okay if we could do 3 this year, next year, the year after and year after that, that would be a heck of a lot more than okay. that's more than 50% higher than what we got used to being told was the new normal. >> that's right. but what we're saying is i believe by the time we get out to 2019 and 2020, you know, we're going to average under 2% growth i certainly again don't see a recession. but when you see growth stocks getting a run up to big numbers, we're not going to have multiple expansion. you've got to focus on companies, you've got to focus on sectors and assets that can grow the only way that you're going to get appreciation is to find stocks in sectors where you can grow fundamentals and income and that will create equity valuation. we prefer hard assets, we prefer value over growth and that's where we think the opportunity lies because we don't see, again, that thro3% number. we see it moving back to a 2% handle not the kind of growth that you

would expect to see the stock market continue to run at the double-digit returning numbers. >> if we can do 2% with an administration that's not very business friendly, that has so much regulation, layer after layer of new regulation, that raised taxes, that didn't cut corporate taxes and we can do 2%, why when we do all that other stuff are we immediately going back to 2% in your view? why is that a given for you? because of productivity and population growth? >> well, it's sort of not the same old thing, it's just that the economy has been running hot for a long time and, again, the consumer makes up about 70%. >> what do you mean the economy has been running hot for a long time it's been below 2% for eight years. >> it's been growing -- it's been growing since the recession for a long time. it's one of the longest recoveries. >> one of the most tepid. >> that's right. that's what we predicted going back long term because of what was going on in the labor market, we actually -- economists like shapes, whether it was a v or u or l we came up with the idea that it

was going to look like the end of a gravy spout it was going to be a long recovery but slow recovery and that's what we see we saw one quarter with a 4% number that jumped it up 3% this year, that's good. it's kind of backward looking. we got all the benefits of the tax reform. >> were you predicting -- did you think we'd do a year of 3% >> no, we thought we'd have a strong number, somewhere right exactly where the numbers are going to come in at the 2.8%, 3% number and that's largely where we'll be. >> it would be good if we'll stay there we'll see and time will tell anyway, it sounds like you're saying we're going to go back to 2 so you're going to need a stock picker like griffin capital to help you with your stock. that's what it sort of sounded like to me. >> what you need is companies that can focus on earnings that's right >> all right, thank you, randy anderson, of griffin capital >> thank you when we return, agriculture secretary sonny purdue live from iowa he will tell us how the white

house is protecting american farmers from retaliatory tariffs. tomorrow we'll be speaking to warren buffett ahead of his lunch with the winning bidder of the annual glide foundation auction. it comes at 11:00 a.m. eastern time they paid $3.3 million for lunch with him but you'll get a seat for free join us on "squawk alley" tomorrow stay tuned, we'll be right back.

good morning and welcome back to "squawk box.

shares of american eagle outfitters are lower in premarket trading. its latest earnings report was mostly positive, beating on the top and bottom lines and seeing better-than-expected same-store sales. however, the current quarter number, the outlook fell below analysts' forecasts. as a result it's down almost $2. mortgage applications fell 1.7% last week as mortgage rates edged lower. the mortgage association says refinancing activity declined. it fell three basis points to 4.78%. the agriculture department releasing details of the first round of aid for those farmers directly impacted by retaliatory tariffs from china and other nations. $4.7 billion of direct payments will be made to american farmers. that's the first part of an up to $12 billion grant in emergency aid that the white house promised last month. joining us right now live from des moines, iowa, agriculture

secretary sonny perdue mr. secretary, thank you for your time. >> good morning, guys. >> so now we know a little bit more about how this money will be distributed can you fill us in and tell us what the details are >> yeah, there are three components to the mitigation payments one of them is a market facilitation loan. those are primarily for our program crops like corn, soybeans, sorghum, wheat and some pork and dairy in there as well the second part is a market procurement and distribution program. that's buying commodities that don't have a natural market and a futures determination in that way. thirdly is really a fund to look for other markets to help the industry grow other markets internationally. so it's really three ways. >> i know farmers have been very concerned as their markets have gotten hit hard. they have born the brunt of it to this point. i know as a result some of the

money will be very targeted, especially to soybean farmers. something like $3.6 million will target those farmers is that because they have been hardest hit? >> it is the way we calculated this market disruption trade mitigation payments were really affected by the tariffs. a lot of people see a disparity between soybeans and corn. corn was not affected by the tariffs that much. we got a good corn crop coming on and low prices, as everyone knows. we had low prices before the trade disruptions there. but soybeans, china being the primary soybean customer, are affected directly by those tariffs and that's why you see most of the money being directed toward soybeans. >> so how does a farmer actually get money back into their pockets? is this a situation where you have to prove that you're at a loss or what kind of receipts do you show up with, what kind of proof? >> yes what will happen is our producers will go to the farm service agency they can begin next week after labor day. come in and file for their

payment. they do have to approve their yield. it's going to be based on actual production, not on any kind of average production at all. it's going to be individual by farmer they'll come into our farm service agencies where they always report their crops. they're very familiar with that process. they will -- they will file for the mitigation payments there. and then regarding the procurement, we will work with the industry producers in those categories to buy their crops, take them off the market and support the prices, redistributing those to food banks and our school and lunch programs. >> is the hope to make the farmers whole or just make it so that it's not a disastrous season for them? >> i think the second really there was no way really to make farmers whole. they're under a lot of duress and pressure from dairies to others there are a lot of distress out there, a lot of low income farm prices having been down 50% over the last five years so they're under a lot of pressure that way.

there's no way -- >> that predates the tariffs if you're going back five years, that predates the tariffs too. >> that's exactly right, that's what we're saying. so the tariffs on top of the low commodity prices already was kind of a double whammy. no, there's no ability to make farmers whole in this regard we just tried to calculate the mitigation efforts based on the tariff disruption there for farmers. >> "fortune" had an article that kind of pointed out what some of the farmers are saying is they want trade, not aid. they want trade deals finalized, they want clarity, and they want to be able to plan and prepare for next year's crops. can you give them that >> well, the good news is, i think the president gave them that this last -- just a couple of days ago with the renewed nafta agreement. that's his plan all along. everybody wants trade, not aid there's not a farmer in america that would rather not have a good crop at a fair price than a government check that's what they do. that's what they put their equity on the line every year

for. >> but nafta is one thing. even if we do get a finalized agreement, that wouldn't take care of soybeans because china is the big issue there and that looks like a much tougher negotiation to tackle. >> absolutely. but you have to do these one at a time we think the mexican agreement, mope fully canada will come along very, very soon and then we'll begin to work on, as the president already announced, working on eu as well as china an put these things back together the president's intention is to have a fair an level playing field. china has not played fair since they have been in the wto. >> farmers are bearing the brunt of some of these early negotiations but they are not the only ones who have been hurt we've had reporters who have fanned out and looked at stories around the country, whether that be in pennsylvania where they're making beer kegs right here in america or whether that be in maine where the lobsters are coming in. lobster fishermen have gotten hit pretty hard too because china has lowered the tariffs

for canada, which is kind of a dual whammy that they're facing there. what happens to some of those that don't qualify for these particular aid grants? >> well, i've been to the northeast and talked to the fishermen up there and we're very cog is n cognizant of that. they have been disproportionally hit, the farmers have been, and that's because they have been productive they depend on over 20% of their product is exported. they have helped to feed the world for years now. and we knew early on, the president knew that our farmers would bear the brunt of this unfortunate disproportionate retaliatory effort >> okay. agriculture secretary perdue, thank you very much for your time today. >> thank you, becky. >> let us know what's happening as this program begins too, please. >> will do, thank you. coming up, the multimillion dollar battle for your bed mattress companies are turning up the heat and investors could

benefit. i'm always looking for a -- what's the current thinking, pillowtop? i'm always looking -- whose idea was the waterbed >> that went out in the '70s. >> you're watching "squawk box" cc. this they're wearing iot sensors, connected to the ibm cloud. when poachers enter the area, the animals run for it. which alerts rangers, who can track their motions and help stop them before any harm is done. it's a smart way to help increase the rhino population. and turn the poachers into the endangered species. ♪ ♪

we're all under one roof now. congratulations. thank you. how many kids? my two. his three. along with two dogs and jake, our new parrot. that is quite the family. quite a lot of colleges to pay for though. a lot of colleges. you get any financial advice? yeah, but i'm pretty sure it's the same plan they sold me before. well your situation's totally changed now. right, right. how 'bout a plan that works for 5 kids, 2 dogs and jake over here? that would be great. that would be great. that okay with you, jake? get a portfolio that works for you now and as your needs change from td ameritrade investment management.

and check this out a swarm of over 20,000 honey bees took up residence on a hot dog umbrella in new york's times square officials had to set down an intersection the nypd has a bee guy he was brought in to safely vacuum up the bees and transport them to a hive that was far from the city but i don't know if you happened to be there -- >> ah! >> it would be like if this starts happening a lot. >> right labor day marks is the unofficial end of summer it's a key weekend for retailers. it's clear in the mattress

industry joins us now -- can we get background stuff out of the way. what is the state the art? and sleep, to us, is like one of the great gifts. >> we listen very closely. >> we do. >> what is the state-of-the-art? do we want pillow top? >> sleep is important to health. people are looking for the best way to sleep longer and longer duration of r.e.m. sleep you want to sleep cool and comfortably. the biggest innovations are around cooling cooling layers and memory foam and elastic layers to provide extra support. >> so there are side sleepers and back sleepers. it makes a difference on where

you sleep. are there differences? there are. i don't think there's one mattress appropriate for everybody. you need to buy a mattress based on the way you sleep. >> i know that i can't remember who it was lee cooperman had a big investment in one of the -- who are the leading -- there's some upstarts and established brands who is the leader now? >> the largest u.s. manufacturer of mattresses setra simmons bedding. the second is temperpedic. they've had a long growth streak five, six, seven years ago they acquired sealy. >> what is their hook? temperature? >> the hook for them is the

comfort and the material so it's a special formulation of memory foam that provides the support that you need but also getting the comfort while you're sleeping. >> how about the mattress companies? >> that's not publicly traded. the largest retailer of mattresses in the u.s. is mattress firm which used to be publicly traded. >> okay. so what do you, i mean, are you -- this is what you cover? >> this is one segment. >> okay. >> i just -- and it's very admirable. but can you -- instead of me knows which bed to buy can you tell me what stocks i should be interested in long-term? >> one of my favorites is tempersealy. tpx. we believe it's a good position for industry in turmoil. they are positioned with some great new products that should provide pricing power as well as

potential volume growth in 2000 and '19. there could be big upside if we see some consolidation in the industry and the biggest piece of consolidation we see forthcoming is related to mattress firm. it's on the brinks of bankruptcy, in our view. if they end up closing a lot of stores in their bankruptcy proceedings, that's a lot of share up for grabs other retailers that sell the products will be better positioned so we could see at least $50 million upside from that event and if we see mattress firm sold out of bankruptcy to a private equity firm, there could be $120 million of upside off the base of about $450. so there is a lot of opportunity at tempsealy. >> i like a heavy -- what does that mean? like, when i go to a hotel and it's like -- >> the weighted blankets. >> that's what i mean. i feel like i want to be hugged. >> you're like a dog you're like a dog.

>> does it mean anything do i need to see someone >> i don't think you need to see someone. >> do you like to be hugged with the mattress >> i'm in a fetal position usually after the show most days anyway, no what is something else -- who thought of the - with tough food, your dentures may slip and fall.

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what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks. the s&p is on pace to jump over 2.5% this month. similar moves bode well for stocks with the s&p gaining 9% under the next year.

final check on the markets moderated a little after the gdp number up 8 on the nasdaq s&p up a little. you'll be here tomorrow? >> santolli will be here. >> kyle, you won't be here tomorrow >> no. >> why you got plans. if i beg you to come in, will you come in. >> getting ready for first grade. >> and a play date. >> thank you for letting him come. >> yeah. >> we'll see you kyle, good luck at school. "squawk on the street" is next ♪ take me on a trip i'd like to go someday take me to new york i'd love to see l.a. ♪ good wednesday morning welcome to "squawk on the street." futures pretty steady here as the dow, the