♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's check out the u.s. equity futures. you will see right now the dow is implied to open up by 1.5 points the s&p down by 2.5. the nasdaq off by 15.5 this comes after a modest day of advances or declines yesterday you saw that the dow was up by 8 points yesterday s&p was down by 5. the nasdaq was down by 26. all of this happening as we still await to see what happens at the g20 meeting that's the big one people are watching, those trade talks or potential talks between president trump and president xi overnight in asia, you'll see that at least right now you're talking about the nikkei,

closing down by 0.4% the hang seng was off by 1.1%. then the shanghai was down by almost 0.9%. in europe it looks like, again, a modest decline dax and the cac are relatively flat ftse down by 0.2%. italy and spain down by 0.3% and 0.4% if you check out the treasury market, you will see the ten-year right now looks to be yielding about 2.019%. we do have breaking news on warren buffett he is denying reports of tensions between him and 3g capital and kraft heinz. buffett said 3g's co-founder is a good friend and he plans to see lemann next month. he also plans to attend lemann's 80th birthday party in august. the report has been out about tensions between them.

buffett also expressed support for the ceo of kraft heinz reports of the tensions may have been sparked by kraft heinz under-performance. that stock down by 50% buffett says right now the biggest problem facing kraft heinz is that heinz overpaid when merging with kraft back in july of 2015 he said he paid too much and it will take time to whittle down $31 billion in debt at the company. >> you could reasonably be frustrated by under-performance and not have tension >> yeah. you can have disagreements with people or -- he said he's been a partner with charlie for 60 years. not that they agree on everything, but they never had an argument. there's been under-performance at kraft heinz as charlie munger pointed out in the may meeting, there were a series of deals. it was just the last partnership that was rougher at the time buffett said he could imagine another partnership with 3g. let's talk about some news

this morning iran slamming the trump administration over new u.s. sanctions targeting the islamic republ republic's people leader and other top officials. iran's foreign ministry says it amounts to permanent closure of talks. rouhani called the sanctions idiotic and accusing the white housefflicted by mental illness washington said the new sanctions were designed to discourage iran from developing nuclear weapons. home builder lennar just out with earnings. they look solid here the stock is up a bit. the company earned 1.30 a share in the second quarter beating the consensus estimate of 1.14 revenue also nicely exceeded expectations 5.5 billion or so versus an

estimate of 5.1. there's some other -- they talk about the backlog, which is down it's at 19,000 new orders are up 1% at 14,500 deliveries in the second quarter are up 5%, which is a pretty good number. 12,729 the company did see just a 1% increase in new orders that compared to something else, andrew >> hackers have broken into the systems of more than a dozen telecom companies. the firm identified links to previous chinese cyberespionage campaigns and said it was likely a government, not a criminal group that would have capabilities to do this kind of attack the telecom companies affected were not named but this is just the latest. we have more coming up on

"squawk box. the quest to transform the american energy market we will talk to the author and subject of a new book called "superpower. i read it a couple months ago. as we head to a break, here's a look at the biggest premarket winners and losers in the dow. welcome to vietnam which has been slowly stealing manufacturing production from china for a decade, now there's a trade war and tariffs which has oppele asking can vietnam become the new china that's all day today on cnbc oh, wow. you two are going to have such a great trip. thanks to you, we will. this is why voya helps reach today's goals... ...all while helping you to and through retirement. can you help with these? we're more of the plan, invest and protect kind of help... voya. helping you to

and through retirement.

welcome back a new book explores one entrepreneur's crusade to build a power grid to carry wind energy across the country. it's called "superpower. joining us is the author, russell gold michael sculley is the main subject of the book. just a back story, brian burrows sent me a note a couple months ago and said you have to get this book. this is like the real thing.

i love a great yarn. this was that. i'm happy you were here. because i really enjoyed this book as a great sort of summer beach read, even though you probably didn't intend for it to be that way. >> i'll take it. >> there's lots of stuff in here that is really important about the power grid and what's going on in the energy world today so that's the other reason we want to have you here. you wrote the book, but i want to go to the subject of the book for a moment i want to understand the state of power grids in america. you tried to build a power grid. didn't work. >> it's going to work. our piece has not yet worked >> it seems we are spending time and energy thinking about how to restructure the energy world and we think we need to get to new technologies, all sorts of things you say that's not true at all this is not about technology >> we have the technology. >> all of this exists. >> we got it >> that's the part i didn't

understand before i read this book >> so we've got this grid that we built to do a certain thing it was basically built around cities and we had coal plants, gas plants, nukes fairly close to cities. now we have these resources spread out across the country. >> wind, solar, everything else. >> the job is -- if we want to tap these resources, we have to build the grid to go with that >> but get to the technology piece. i've always thought -- there's always been a big issue about battery technology, how do you store it how do you move it across the country. how do you attach different grids. >> we know how to do all these things we know how to generate electricity really cheaply we can generate solar for 2.5 cents. wind for 2.5 cents these are numbers without tax credits. we know how to do this we need the grid to get it to where people are >> so when you started this project, what inspired you to

look into this issue why him? why this story what were you trying to get at >> i read several books about climate change i found them all depressing. you read them and think there's nothing we can do. i wanted to write a book about what i think might be one of the most important parts of this energy system, that's transition we have hundreds of wind farms that need to be built. i wanted to write who is doing it >> part of it was your argument was it can't even be about climate. business >> it's an investment story. >> to make the investment, what does it take how much money are we talking with how much technology are we talking about? walk us through what has to happen here. >> yeah. so building the grid is about planning, permitting and paying

for it and we know how to plan it we have these smart people all over the country who know how to plan it. we have to permit it that's the hard part we have a set of fairly antiquated laws that have not kept up with the exciting developments on the generation side >> you guys talk about -- you write about and you're involved in the politics of this. you think you're being blocked by political people for political reasons. >> yeah. so unfortunately we've gotten ourselves in this fix in this country where an all-energy thing has become political and not economic if they're economic, renewables will win but when we get -- >> renewables will win on the cost >> yeah. >> because you can bring the cost down to -- >> to, you know, 2.5 cents a kilowatt hour. >> is this only in places where the sun is bright or where the wind blows a lot >> even better solar locations,

it will be less. worse wind locations more. but it's all sort of in the hunt of well under 5 cents a kilowatt hour >> what's natural gas now? >> if you generate electric power with natural gas, it's about 2.5 cents. >> what do you make of luelon musk's attempts to put solar things on roofs, but to have batteries in everybody's home? >> i'm sort of -- i spent 25 years doing central station power. i think this is about scale. it's about networks. and if you think about other things, telecom, other industries, scale and networks are what get you -- they bring down costs i'm not a big rooftop solar and battery in the home person >> if you want a battery in your home for when the lights go out, for when there's a super storm sandy, great that's the perfect reason and

application for a battery at the house. if you want to run the country, you have to talk about centralized big wind farms, big solar farms. >> last question, in terms of -- there's also a danger component. there was a fire in arizona. the more you bring these batteries closer to peoples homes and neighborhoods, then you have a problem, you have a problem, a real problem. >> i think we can figure that out. that's not -- to russell's point, you know, we have to run really big cities, giant industries and for that you need scale. we're not going to get there by putting panels on our roofs. >> we thank both of you. the book is called "superpower." it's a sorry of success and failure. appreciate you coming in >> thank you >> i don't know if we've done justice to the drama in the book thank you. all right. coming up, it's been a hot start to the year for ipos yesterday was rough for a handful of newly public companies. we have a full run through of

the big losers coming up next. woman: my reputation was trashed online.

i felt completely helpless. my entire career and business were in jeopardy. i called reputation defender. they were able to restore my good name. if you are under attack, i recommend calling reputation defender. vo: there's more negativity online than ever. reputation defender ensures that when people check you out, they'll find more of the truth, not trash. if you have search results that are wrong or unfair, visit reputationdefender.com or call 1-877-866-8555.

welcome back to "squawk box. time for the executive edge. check out this chart showing yesterday's big drop for some hot ipo stocks zoom video, beyond meat all dropping zoom dropping 11%. shaving 2$2.8 billion beyond meat falling 8.5%

dropping its market cap by 7$700 million. uber, lyft, cloudstrike and pinterest also fell. another successful launch for spacex overnight the company's falcon heavy rocket blasting off from the kennedy space center in florida a few hours ago. on board several satellites, an atomic clock and the ashes of more than 150 people experiments on board are designed to show space flight by light is possible. a former astronaut and others had paid to have part of their remains, their families paid to send part of their remains >> how big was it? size of a bread basket normally it's not, it's bigger

or smaller >> i was looking this up, something i saw on elon musk did you read that, sorkin? mixed something up with red moon with mars or something i don't know i was going to look at it. >> this is elon musk mistaking blood moon for red planet in a tweet? >> right you didn't see that? hopefully he knows a lot about the solar system >> he had tweeted out something that said occupy mars but maybe had -- i don't know, the image was the blood moon -- the image was from a blood moon as opposed to mars. and it looked like he did it accidentally >> not a big deal, i don't think, right >> i'm giving him a pass we make mistakes all day >> speak for yourself. let's get a check on a couple of big movers

gold and bitcoin should always look at these two together there's $1,433 on gold we need a longer-term chart. that's a multi-year high, i think. up $15 and then bitcoin, bitcoin trades a lot. look at that see, that is a multi-year high on gold. up above 11,000 now. >> we should look at a longer term one of this >> probably should where is tom lee he was on earlier today. he's not far off now from his -- >> you think this will keep going and going and going? >> not sure what to think. my thing now is it has a value i don't know what the value is >> the issue, this is clearly like -- i don't want to say a momentum stock, but it's a thing where people think the train -- it's one of those things where the train is leaving quick or it's not >> volatility. in or out.

>> sorkin, the amount of -- the amount of data that was the blockchain that exists right now that covers all the bitcoins that are around, you know how much bigger it was than three, four, five years ago it's growing i guess you divide that network by what you think it's worth - >> but interestingly the cost to mine these things -- >> they can't mine them anymore. it's too much. >> you can mine them >> the existing -- where we are, it's much tougher. at least the layman should not i was going to mine a few this weekend. decided not to >> the cost of mining had come down to 5,000, $6,000. then that would be the intrinsic value of it. >> it should be there, it's not. i was thinking how is -- when i was a believer in the greater

fool theory of bitcoin rather than you can actually send a unit of digital work across the internet, itwill be something that's possible to do. >> though both are possible. if the intrinsic value is far below where it's trading you could have both cases playing out, where there's value to it. you still have to believe to get -- >> at this point it seems more like gold than a currency. by the time you spend it, it could be worth 20% more. >> it could be easier down the road to trade. >> each bitcoin doesn't need to be worth $400,000 or $500,000. you can do a thousandth of a bitcoin. a kernen is what people thought it should be called. there's a movement afoot to name a certain number of -- >> there is a movement by you? >> no.

no well, i'm supporting the movement that was started by -- >> it came up virally. >> they liked one of our comments yesterday >> who >> one of the winklevoss twins >> really? did you invite them on >> i did not >> you can just reply back to him. >> don't want to beg he's been on both of them have been on. if we can't get tyler or cameron on, we'll have wilf on, the third triplet, right we made him an honorary winklevoss >> we will speak to ben misric today about the billionaire crypto coin people that is coming up later. >> he thinks his book caused know see red i'm still not on facebook, ben your book about facebook did not get me on facebook so your billionaire --

>> all right when we come back, the united states and china have been sparring over trade. one big winner could be vietnam? carl quintanilla is there. what do you have coming up for us today >> becky, good morning the trade war does mean vietnam sees a chance to steal some of china's manufacturing thunder. but how much is riding on the g20 this weekend we'll talk about that when ctiesivfrx"onnu le om hanoi. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best... to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade. no matter what you trade, at fidelity plike... zelle. to conveniently makesend money sier, to your babysitter. for overtime. or pinacle, to tap into your organization in the office, on the go, or in the stop-and-go. pnc - make today the day. my ideal cloud? it has to work like air traffic control. it's gotta let new data integrate with data from our existing systems. ♪ ♪ be able to pull from reservation platforms built 20 years ago. and also be able to use apps to book super-personalized trips on shiny new phones from the future. plus, i need freedom to move my workloads wherever, whenever - but manage it all from right here. and that's the cloud i want. simple, right? expect more from your cloud.

ibm cloud.

♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back u.s. equity futures at this hour are really quiet i don't know, it's not dog days, but feels doggish. down a point and a half on the dow. the s&p down a little over 2 nasdaq giving back about 13. quiet session yesterday. apple is announcing a big

expansion in seattle with plans to put 2,000 employees in two towers blocks away from amazon's headquarters the company announced squatal would the site would be a key engineering hub. and fedex filing suit against the u.s. government saying the new restrictions on huawei are hard to follow. the company has apologized twice in the past month for misrouting huawei packages. huawei and other chinese companies were placed on a u.s. export ban list in may fedex says this places an impossible burden on shippers to know the origin and content of packages warner media hired ann

sarnoff to hn namedbe ceo of war brothers at&t acquiring warner brothers as part of an $85 billion purchase of time warner last year the former ceo resigned from the studio in march following a report that the married executive helped secure roles for an actress with whom he had an affair. sarnoff will report to john stanky. companies are racing to vietnam to produce goods with tariffs looming on china carl quintanilla is there now. what have you found since you landed in veetd nietnam >> a lot is riding on g20 this weekend. will we get a move to tariff all chinese goods to 25% it's driving interests in american brands in vietnam as a

hedge, this company already makes ford focuses, brake cables, all of that. jpmorgan looked at retailers and the estimated price hike you would need to offset a move to the full 25% this assuming no mitigation from a vendor negotiation, nothing from forex 21% at costco. 18% at best buy. 17% at walmart and target. it's no surprise the factories here are in the catbird seat companies calling and say can i add to my longstanding order we went to a company whose line is ringing off the hook. the question for vietnam is where will they find the workers to make all this new stuff vocational schools are a big deal here. the government has a goal of training 2 million people in vocational schools china has been doing that for two decades. they have a huge army ready and

waiting. we talked to one professor at the school on whether the vietnamese want this training. >> a lot of them still want to follow the academy system, go to university to learn with the cost with five years or four years. so it's not easy for them to choose or to change to a vocational system. so that's why it's still lacking people to work in the high skill area >> all day today we'll take you inside the factories in vietnam that are seeing activity we'll show you the ports, talk about whether or not they can move the stuff out of the country if they can make t and what if there's a deal at g20 or sometime in the next few weeks, do all of vietnam's dreams of taking that mantle from china go away a lot of coverage today live

from hanoi >> that's what i was going ask about. we spoke with the head of brook's running shoes, he said he moved his production out of china, trying to get into vietnam before they were full, there would be a time where vietnam couldn't take more additional players trying to come in. how complicated is it once you moved your supply chain? do you think it's likely people would switch back to china if there was a deal to come it's not an easy thing it's not like flipping a switch and saying we're moving here >> no. it's so complicated, just to get the vendor, find the inventory, get the distribution you're right, it's hugely complex. you have to consider your category do you have pricing power? what's price elasticity like in that category? i would think on things like shoes, footwear and apparel it's easier than in high-tech work you are relying on workers that have high skill level. but it's a key concern for

vietnam. they had already been stealing share from china because china's labor costs have been going up over time. so vietnam could argue, hey, you get a deal on your labor here. now that samsung is here, they added a new cell phone factory, wages here are beginning to creep up it's an interesting story. i would not want to be a supply chain manager these days it's complicated >> is the labor component almost equivalent if they crept up in both markets >> well, china's got -- migran coming into the cities to work this population of vietnam is 95 million of people, a portion of that in manufacturing. they don't have nearly the available work force to get people to come in from the countryside. and vietnam is the world's third largest exporter of rice they will not give that up to take a chance that working in a

sewing factory will be a life long occupation. so they're trying to manage their risk as well >> carl, thank you we'll be watching through the day and look forward to the reports coming up. carl quintanilla in hanoi ahead of the g20 meeting >> allergan has been going up recently on the notion that there will be some type of a breakup. now apparently a bshbbvie is ne deal to buy allergan for -- >> it's more than takeover rumors >> $188 in cash and stock. it's at 1.29 it's been up -- it's been up from 1.29, that was already up a

bit on breakup news >> it's a 40% premium on monday's closing price >> it's a huge deal, $60 billion. it's not a deal where we say if you include debt, this is a real $60 billion. they have humira, the world's top selling drug but the end of patent protection is coming. >> the eyelashes >> exactly to get those long, luxurious eyelashes, which i've never -- i have not tried that. ackman was born with beautiful eyes he was beautiful. any way -- >> wow >> coming up, more on "squawk box" this morning. we'll talk about that potential

deal and keep our eyes on when and if it gets announced the home construction etfitb had its best first half since 2012 after lennar beat this morning, is housing set for a summer heat wave you want to be part of? we'll get you ready for the high stakes g20 summit stay tuned, you're watching "squawk box" on cnbc

. welcome back right now it's time for the squawk planner chair jerome powell will be speaking at a council on foreign relations event at about 12:30 p.m. we'll hear from the new york, atlanta, richmond fed presidents today. lennar reporting quarterly reports earlier this hour posting a beat on earnings and revenue. all of this is coming at a time when the home builders are expected to face pressure in the summer months. let's find out how the housing economy could affect the broader markets. joining us is lenlellen hazen ad campbell ed, what do you think? how big of a factor is housing on this? how much does that play into the

economy? what happens with interest rates so low >> yeah. i think housing is a source of strength within the u.s. economy. it had a bad year last year. given the higher mortgage rates and the salt cap and the impact that had on certain areas. the fundamentals of housing are good you know, prices are higher, but they're not excessive relative to rent and to income. if you look at the supply/demand vu fundamentals, the housing vacancy rate is low and housing i think continues to be a source of strength for the u.s. economy. >> ellen the numbers in may were great numbers. june so far have not been wonderful. we do get some more numbers on new home sales later this morning. how much are you waiting on these numbers? >> after what we saw in the fourth quarter when housing was very weak, as ed says, we're

looking at both orders as well as some new home numbers going forward. the double headwind of the higher home prices which made housing less affordable and the higher interest rates took a number on the home builders. if you look at lennar they improved from orders down 4% in the first quarter to orders actually up in the quarter they reported this morning. if he look at the evercore isi home builder survey, that has shown sharp improvement. so we're looking at whether or not the extent to which home builders are improving throughout this year will have a better impact on the broader economy. >> how much of this is housing and how much of this is what happens in the global economy and what happens in the trade talks? >> so much of housing is tied to interest rates with so many sovereign bond yields negative, it is very difficult for u.s. interest rates to remain where they were last year. so consumer housing demand is affected by a lot of things.

with the real wage growth we're seeing that helps. with low interest rates, there's no question that that helps as well >> i'm sorry, i mean more in terms of what the market is looking at right now what's the most important factor >> for the prodd ebroader marke? >> yeah. >> there's a lot of cross currents in the broader markets. i would say on the negative side there's the escalating trade war, rising geopolitical risks global economic growth is probably the weakest we've seen since the financial crisis and the u.s. economy is still relatively strong but slowing. but on the other side we've got global central banks now easing their liquidity fire hose ready and in place so that is reducing some tail risks. >> let's talk about the catalyst this week. g20 meeting. president xi, president trump sit down and talk. nothing is cemented in terms of

a deal, but it looks like they're at least talking once again. what does that mean for the markets? >> a good scenario for risky assets is we get some sort of detente, a trade truce ahead of the presidential election year and then if we have that in the context of still decent valuations and dovish central banks, you have to remember that 16 central banks cut rates during the second quarter, that could be a good scenario >> could be a good scenario meaning you would expect to see stock prices go up >> yes yeah, i think so >> ellen, you agree with that? >> i think housing is important to your point earlier. the consumer is about two-thirds of the u.s. economy. as we've seen, business fixed investment has been soft so the corporate third has been relatively soft. you saw jerome powell mention that in his prepared remarks you need the consumer to be

strong housing is a big part of consumer if we can see animal spirits improve because of more confidence about trade and more confidence about detente globally, that will help the economy. >> you expect the consumer to be much stronger in the second half of the year than the first half? >> if real wages keep improving, that should happen we've seen real wage growth for the first time in the last few months -- sorry, in the last few years. we are seeing wage growth now in the 3%, 3.5% range that should help >> what numbers would you be watching to say this is a big difference, this will mean more than the market anticipated and the market will go up because of the numbers we're seeing here? >> in terms of wages we want to see it stay above 3% in terms of gdp in the 2 handle range. >> in terms of what the consumer is doing you think that's the genesis, the spark for the next move up in the markets >> i think it has to be. people are concerned that the consumer is getting increasingly

concerned about what inflation might happen >> but you're not concerned about that >> less so at moment >> ellen, thank you for coming in ed, thank you. >> it's out. >> it's official it's real. >> amazing abbvie is down down about $4. that's unbelievable for allergan do you -- why 45% premium? >> what it took. if you look at most of the big pharma transactions taking place, this is above the average premium that they've captured. typically they're capturing between 20%, 25% you tell me, maybe there's some drugs coming up. maybe allergan -- what i don't know is whether there's a couple of drugs on the horizon that -- >> i didn't realize humira was

the biggest selling drug i thought lipitor. who was here last week was it scott gottlieb talking about humira being the big one from theed have advertising perspective? >> i have been watching those ads. i don't need any of it sold abbott labs which was split up, remember myles white, all the stuff he did now putting something back together. allergan, amazing. allergan was its own story >> saunders went through the whole rthing, the conversion. >> because of the tax code >> if you remember was involved in the -- they've all been involved in all sor sorts consolidation. >> brent promised -- >> this is a big win forbrent. >> promised to send me some stuff. >> that's the takeaway >> involves needles to the

forehead and things. i'm thinking what about right here people get it there, too >> i don't know, joe >> you look at me like, yeah, i understand your situation. you know, ask not for whom the bell tolls, sorkin it tolls for thee. we're a global community >> i get it. >> you think you have a few years. before you know it >> all right >> i just hope you -- it's all about the hair so just protect and guard that >> coming up -- >> you got some here is that preempting any problems that are -- >> not preempting. >> all right coming up, bitcoin continues to surge up 25% last week. the house meets later today on fintech and digital token regulation we'll talk to one of the members getting ready for that hearing as we head to break a quick

check of what's happening in the european markets right now they're alrel d. that is jarring. are you okay >> i'm okay.

your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity. there's one thing you can be sure of. they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences and engineers outcomes.

♪ cool. ♪

before the break, we told you about the deal news that just crossed, abbvie is buying allergan for $188.24 a share in cash and stocks. that's changing as abbvie shares move around. it's about $63 billion joining us on the squawk news line, "wall street journal" reporter jonathan rockoff. broke news of the abbvie/allergan deal have you got a feel for why the premium was so high? i guess it's nice and friendly and we hate arguing and stuff

like that, but is it really worth 45% to make it a nice, friendly deal? >> that's a really nice premium, but remember, allergan was going to sell for $150 billion to pfizer not that long ago that's a lot of value in the company and i don't think that ceo brent sanders was going to pay a premium to sell off a company with a crown jewel like botox and other aesthetic treatments both companies have been looking for new sources of growth, and if the combination provides that, the premium would probably be justified. >> is it somewhat defensive for abbvie everybody -- it's the state of the industry for the past 20, 30 years, and patent expiration, so humira, when does that go off patent >> it's already off patent in europe and lower priced version,

we call biosimilars in europe, and abbvie negotiated deals with drugmakers in the u.s. so those rivals can start selling these in the u.s. starting in 2023 it is defensive in the sense that abbvie really needs to find new sales to offset what it's going to lose from humira when it faces bio similar competition in the u.s >> where is the growth with allergan i know that, you know, a lot of it is cosmetic, but we think botox, but what else is there that is so attractive? >> that's the challenge that allergan has faced and why it was probably available for sale, is that its botox business has been doing really, really well the company also has a variety of other different lines,

neurosciences, but it's stumbled to find new drugs, to discover new drugs that can propel new sales in those areas, and that's why those shares have been off their peak, you know, from the pfizer days which i talked about earlier. >> abbvie is now down almost $9, so no longer anywhere near -- what was the price they quoted, $188 it's only $167 on allergan is this worse than they're expecting, do you think, jonathan >> it will be really interesting to see how the market responds to the deal because strategically the two companies are different. abbvie focuses on specialty drugs like humira and cancer treatments, while allergan is, you know, best known for botox and these aesthetic medicine

treatments the deal speaks to just how hard it is for companies of the size of abbvie and allergan to find the kinds of sales that would drive growth that's why i think we're seeing this deal right now. also probably why investigators a -- investors are trying to sort it out. >> we're going to run out of time as we get to the top of the hour congratulations on skoopts and hope to talk to you soon >> when we return, counting down to the big g-20 meeting where president trump will meet with china's pridt aesenxind get you ready straight ahead "squawk box" will be right back.

tension rising with iran, president trump hitting the supreme leader and other iranian officials with new sanctions details and the market reaction minutes away. trade in focus as we get closer to the big g-20 meeting a preview of what you can expect coming coming up. >> the bitcoin rally rolls on, the author of bitcoin millionaire ben mener is here to discuss the phase, as the second

hour of "squawk box" begins right now. ♪ looking high and low don't know where to go ♪ ♪ >> live from the beating heart of business, new york, this is "squawk box. ♪ got to double back >> good morning. welcome to "squawk box" here on cnbc i'm andrew ross sorkin take a look at u.s. equity futures at this hour dow looks like it would open up marginally higher, s&p 500 also looking to open lower at 1 point and we have a major m&a transaction in the pharmaceutical world this morning, joe >> yes breaking just moments ago, abbvie announcing a deal to buy allergan, good old allergan. $188 was the stated price before abbvie shares went down because it's cash and stock. if you do the math now, obviously it's -- we'll see when it's all said and done how

abbvie -- >> some of this is arbitrage -- >> now it's down 5.75. it was about a 45% premium those prices, it's about $63 billion and it's a lot of it has to do with botox and a lot of it has to do with just all these companies, always have these patent expirations to try to replace -- >> selling drugs -- >> you know. >> i'm looking at the deck and they say this transaction will be immediately creative to earnings, expect to attribute 10% over the first full year of the combination and expect $2 billion of pre-tax synergies and other cost reductions. they say that will happen in year three they say they will be able to do that while leaving investment and key growth franchises untouched. we will have to watch all of this. >> the company would still be based in dublin? >> it looks like that way. you know, i'm literally, this deck is -- you can see how many pages we're at least 30 pages,

28 pages, into this. give me a little more time and we'll see where we get >> in the meantime we have breaking news on warren buffet this morning buffet denying reports of tensions between him and 3g capital which is the company's partner in kraft heinz buffet says the 3g co-founder jorge lehman is a good friend and plans to see him next month and plans to attend hemann's 80th birthday party. he expressed support for the ceo who takes over on july 1st reports may have been sparked by kraft heinz underperformance the stock down more than 50% over the last 12 months and by accounting problems at kraft heinz. buffet says now that the biggest problem facing kraft heinz is that heinz overpaid with merging with kraft back in july 2015 and puts a lot of blame on himself and said he paid too much and it will take time to whittle down roughly $31 billion in debt. >> interrupt for one second to

answer your question, upon completion of the transaction the company will continue to be incorporated in delaware and have principle executive offices in north chicago, illinois, where they will be based richard gonzalez will continue to serve as the chairman and ceo of humira or through the humira loe event in 2023. abbvie's board of directors will include two allergan board members including brent saunders. >> it would have been an inversion if abbvie was headed to dub bin. >> do you do an inversion with new tax laws. >> you know, if andrew had his way people would still be moving the tax law made it easier for people to stay here now. >> this almost looks like allergan coming back, baby, come home >> this is the return. >> nobody likes needles in the forehead but a lot of this stuff is instead of a scalpel. a needle is better than a scalpel. we're all trying to look better, fillers, all these things. >> needle in your eye is another. >> what product they have on the

deck. >> tell me. >> not -- it could be taken -- >> you're looking at me -- >> sculpting >> for get rid of like fat. >> yes without cutting you. >> yeah, that's -- >> supposed to be some kind of -- do it from the outside somehow, they heat you with lasers or something. supposed to be >> breaks it down. >> supposed -- >> i don't know. >> nothing is painless >> just -- >> i'm looking through the deck. they have a lot of products here. >> lipo, nothing could be worse than lipo. >> on the list here. >> oh, yes lipo is horrible. >> i'm going to put you -- >> i'm going to get a cocktail of these things for everybody here >> you're generous for you to say everybody. i know what you're saying. at least you're not -- at least wasn't about e.d. or something. >> only because the opportunity didn't present itself. we're not talking merck or pfizer >> all right president trump ratcheting up economic pressure on iran with

new sanctions. joining us right now on this, it's good to see you >> good morning. so yes, the latest round of u.s. sanctions on tehran are targeting iran's supreme leader as well as top officials of the iranian revolutionary guard. now these are aimed, of course, at targeting tariff financing globally, already 80% of the iranian economy is under sanctions. iran's president husan rouhani lashing out at the latest move by the white house saying these new sanctions are, quote, desperate and doomed to failure as well as outrageous and idiotic. extending the hand of friendship it seems once again is the national security adviser john bolton he said all options are on the table. listen in. >> the president has held the door open to real negotiations to completely and verifiably eliminate iran's nuclear weapons program, its pursuit of ballistic missile systems, its

support for international terrorism, and its other maligned behavior worldwide. all that iran needs to do is to walk through that open door. >> reporter: all iran needs to do is to walk through that open door according to the u.s. national security adviser john bolton, speaking there from jerusalem. he's not the only u.s. official here in the region over the weekend as you know, the u.s. envoy to iran, brian hook, visiting in the uae, mike pompeo making a visit to saudi arabia in the uae and the president's son-in-law jim cramer ared kushr alongside steven mnuchin this is the brainchild as you know of the president's son-in-law this is all about bringing an economic solution to the peace problems here in the middle east essentially what we've heard so far the palestinians refusing to come, the israelis not here either i have heard from a lot of my contacts here in the gulf arab countries that say they're here to listen but whether or not this is going to do much to move

the issue down the road is a bigger question. >> they're calling it like a marshall plan or something i don't know i guess it's worth a shot. it's been years and years and years. it just seems so intractable money doesn't solve everything, does it? it makes things easier sometimes. hadley, thank you. china is in focus this week. president xi is getting ready to meet with world leaders at the g-20 summit and eunice eun joins us with more where have you been? >> i know. i've been here but unfortunately not talking to you guys i guess you guys aren't as interested in the g-20 as i am just kidding in the run up beijing's messaging to the g-20 has been very consistent for the past couple of weeks, and essentially the message has been that china feels that this whole process with the united states has been unequal and unfair the foreign ministry today reiterated that point saying that china is a victim in the

current trade restrictions the vice commerce minister said yesterday that trade talks need to be based on mutual respect and state media was reiterating that the vice premier spoke on the phone with his u.s. counterpart steven mnuchin and robert lighthizer at the invitation of the united states. and that is quite revealing that china is very sensitive about appearing as though it is an unequal partner. there wasn't a whole lot of detail in the state media about the what the two sides discussed. i did speak to a source familiar with the chinese side that said that chinese are still very much stuck on the idea that china would have to not be allowed to retaliate if the u.s. decided to impose tariffs and also that china is still stuck on the idea that this -- of how much the u.s. wants in terms of the size and scale of the purchases either way, both sides appear to

be downplaying exactly how much progress can be made at the g-20 most people here believe that the best that people can hope for is a truce or as a china daily state paper described as setting a different course. >> thank you very much we will talk to you a lot this week joining us with more on the expectations from the upcoming summit senior adviser william reinsch, the national foreign trade council president and duff and phelps chris campbell who is former treasury secretary in the trump administration how much is riding on this >> a lot expectations are big we have to find some way of getting to a deal with china and i think china knows that, which is obviously why the president will meet with their president expectations are high. i see why the white house is trying to downplay the expectations but everyone is looking at this and expecting the president to walk away with some kind of a deal. >> bill, we heard from eunice, in china expectations are the best they can hope for is the

truce. what do you think the best case scenario is? >> i think the chinese are right on this. there's not enough time in the next two or three days to deal with all the issues, most of which you just identified, which are the same issues they've been wrestling with for the last six months, expecting them to solve all those problems in the next 72 hours is unlikely what the best outcome here, i think, is handshake, smiles, agreement to go back to the table. trump does not impose new tariffs. then we go through this again. >>, you know, chris, eunice laid out those difficulties that are there. china not wanting to buy as many products as president trump is going to want, but the bigger issue being no recourse, that this is going to be a unilateral deal that the u.s. can decide if it's working or not and walk away from. we spoke with kevin rudd, the former prime minister of australia, close to people on both sides of this situation, he says in terms of buying more products, the chinese may cave

on that but doubts they will cave on the issue of whether or not they'll have any way to turn back if they think they're being treated unfairly. >> my experience with china in the last four administrations in washington, they do a lot of talking and we the united states are the ones actually living by the rules. i think it's actually more than fair of us to expect and demand that we be given the latitude to be able to protect our products and our markets when necessary i think that's not an unrealistic expectation or demand on behalf of the united states i see from china's perspective as well, but clearly we have a long track record of keeping with the rules and they don't. >> if that's the case, why should we even care about a deal that they agree to now if they're not going to follow it anyway, if they don't like it they do what they want >> if we have the opportunity to unilaterally defend our markets and products -- >> they would say you have the unilateral right but turns around and tit for tat all over

again. maybe they will just say yes, and go along and do whatever they want like they've been doing for years. >> a long track record of doing so i think that we have to protect -- we have to pretend they're good actors and work with them as good actors hopefully they will become you know, accept the other large economies in the world and start doing things the way that should be done in a realistic way and law abiding way. >> bill, you used to represent the national foreign trade council. in terms of what we've seen happen to trade how unnerved is business this by and if a deal is reached we feel great about this and let's move on >> i think you have to separate short term from long term. if there's a deal reached everybody would be happy, big market bump. the question is where will we be a year from now? will the chinese comply? is it a good agreement i think long odds on both of those. companies always like certainty

and to the extent that an agreement will provide some, they will be happy i think that it's hard for me to see a deal that will solve the fundamental problems which are not the ones you mentioned the fundamental problems are we want them to reduce their subsidies an we want them to stop discriminating in favor of state-owned enterprises, to become more of a market oriented economy. they're not going to do that you know, i think that is in the end where this agreement is going to have -- going to be difficult. the president can accept something weaker then we'll see what happens. >> chris, we have carl quintanilla in vietnam this week and he's been watching kind of the boom that vietnam has experienced as a result. how have the tariffs been in terms of pressure on china and do you think that that will be effective getting them to the table? >> it's. significant. we're talking to our clients telling them to look for alternative sourcing, vietnam one of them. vietnam will be a big winner if china doesn't come to the table

quickly. china has to have access to the u.s. consumer and u.s. market. without that they can't experience the growth they need to continue the job growth they need for their folks so they're going to have to come there's pressure internally to come to the table and get to a deal i agree with the other guest that likely not going to happen in the next 72 hours, but i think we will start trying to find a way to find where the landing zone is and start, you know, trying to get that factoring into that landing. >> i want to thank you both for your time today. >> thank you coming up, the dow creeping ever so close to a new all-time high the futures this morning up about 4.5 points stay tuned, you're watching "squawk box" on cnbc

♪

coming up, your morning movers an bitcoin on a tear lately we're over $11,000 how much of the move in the cryptocurrency is connected to facebook's announcement or is it something else we'll ask the author of two billionaire books at this point, the bitcoin billionaires ben mezrich joins us "squawk" returns after this.

welcome back to "squawk box. i'm dominic chu. a check on some of the morning movers grub hub up just around 3% or so roughly 5,000 shares premarket volume the on-line platform for food ordering and delivery was upgraded from a buy to a prior neutral by analysts citigroup. they acknowledge reasons to be cautious but they like the possibility for bigger deals and restaurant chains down the line. a new compensation construct for delivery drivers and better trends for the overall food delivery industry. those shares up 3% shares of microsoft still the most valuable publicly traded company out there with a market cap just over a trillion bucks shares are modestly lower premarket around 18,000 shares premarket after analystsed a jefferies did boost their target price from 90 to 80 keeping their underperform rating on shares price close to 137 right now. wrong so far and continue to

believe the stock is overvalued with high expectations for its azure cloud platform we will end on shares of kellogg down fractionally on premarket volume downgraded the cereal and package food maker from underweight from a prior equal weight they cited a deceleration in sales growth for key cereal products and tougher comparison after pretty successful product launches for things in snacks like cheese-it and pringles wavy variety. want to get to the big story of the morning, a mega merger, abbvie buying allergan, the price tag, $63 billion joining us is the managing partner at douglas and associates, and a cnbc contributor. mike santoli is here, cnbc senior markets commentator your thoughts on the transaction and what it means in the grand game of dominos among the rivals and competitors of these companies.

>> sure. >> what they're waking up to. >> yesterday's headlines was bristol. is that going to get delayed now this big merger coming too this is about growth we are at that stage -- >> hold on, is this about growth or savings >> combination of both keeping your earnings per share and growing your share cutting costs, which they're going to do and finding other product. you're doing this because you're looking to keep your multiple up and keeping -- you want your stock to actually go up. at this point we're so late that all these ceos -- this is not going to be just pharmaceuticals but other sectors you will see this -- because as you find more and more ability to merge, i think that's where you're going to see more action. >> you look at the premium on this transaction what are we saying, 45 plus? >> that's -- >> that's substantial. >> what does that tell you that means it's scarcity of deals. ceos will be looking for opportunities and those selling will ask for more and more

premiums this will be an interesting game going down the road. i wouldn't be surprised in any of these deals thau see other suitors coming in too. other people will get left out. >> i would argue to you, i'm curious where you land on this, mike, down 8%, which is what abbvie is looking like right now. in a traditional transaction, as they set up their positions, if you're down 4%, 5%, that's all within range. >> yeah. >> 8% says something different >> it might actually explain why the stated premium at the preopen levels was as high as it was. maybe they thought there was room to come down. abbvie has been in the penalty box. stock down off its highs street doesn't love the stock at the moment if you look at how analysts are set up with it also i think that that premium mostly stock, i mean cash rather, cash is free and easy to get for these big companies, so that's not the issue i do think you have to remember allergan was over $300 stock four years ago exactly at what price would they have been willing to sell if not

at the premium -- >> if you're brent saunders is this a win or loss >> it's a -- is this a look we've taken this as far as we can ride this train and now we have to get off? >> it's a relative win and, you know, also part of that is, you know, you have a valuable asset, this huge pool of revenue that's not subject to the kind of medical billing wars because it's a lot of out-of-pocket beauty products. that's valuable in this market right now. you can pick your partner as well. >> that's interesting. even as drug prices -- >> the tremendous piece, it's out of pocket largely. >> it's not going to get squeezed. >> don't have the regulatory pressures on this going into an election season where there will be a lot of focus on pricing. >> even today we're going to be talking to alex azar, the head of health and human services, about new transparency on costs that he wants to see from hospitals and doctors offices. >> absolutely. >> i want to go back to the point you're making about the sort of -- are you calling this an end -- this feels like an end

of cycle kind of transaction where you're running out of room to grow and what you're going to do is start buying growth, if that's the argument you're making >> investors are looking at barbel strategies now. the growth stocks doing well and the dividend stocks doing well where do you fall into this if you are a ceo. >> you think in terms of m&a we're going to see big m&a. >> i do. >> and you think we're going to see big m&a not just in pharma but across the board. >> because as you see a little bit of a slow down economically how will you sustain your multiple. >> the read for the public and for the shareholders is, this is a positive view of great confidence in the board room or this is actually a negative? it seems what you're suggesting this is a negative. >> every company is on this treadmill where they have a certain period of time where they have patent protection and have to replenish. that's an industry remember, abbvie was, you know,

out of abbott. they come apart and come back together m&a has lagged probably the volumes you would expect given where the overall value of the market is right now. this isn't aol/time warner in 2000. >> cash is free as you mentioned. interest rates have come down. why start using your stock when you can borrow money. >> mortgage rates are so cheap and going to help home sflisz companies are flush with cash. add more cash to your balance sheet and cover your ebitda coverage and that gives you the ability to have a transaction. >> thank you for helping us through this mike, thank you as well. coming up when we return more on "squawk," she launched back in the late '90s to find a cure for her daughter's pulmonary disease. martine will be here to tell her story and talk about the deal of the morning, abbvie buying allergan as well it's a conversation you don't want to miss as we head to a break, take a look at u.s. equity futures right now.

you should be mad at airports. excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks. how dare you, he's my emotional support snake. but you're not mad, because you have e*trade, whose tech helps you understand the risk and reward potential on an options trade it's a paste. it's not liquid or a gel. and even explore what-if scenarios. where's gate 87? don't get mad. get e*trade and start trading today.

but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you.

we like drip coffee, layovers- from the day you're born -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. ♪ author ben mezrich talks about the crypto phenomenon, facebook's libra launch and much more then more of the president's latest sanctions against iran. will that move ratchet up

tensions is it time to buy big tech a look at what's working in the space. "squawk box" will be right back. of savings and service. whoa. travis in it made it. it's amazing. oh is that travis's app? it's pretty cool, isn't it? there's two of them. they're multiplying. no, guys, its me. see, i'm real. i'm real! he thinks he's real. geico. over 75 years of savings and service.

what do advisors look for don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. . mega deal. talking about something else, i'm not going to live forever. anyway, a mega deal in the --

back to the pharma industry, abbvie buying botox maker allergan for $63 billion our next guest knows the area as well as anyone, martine rothblatt, chairman and ceo of united therapeutics, started her company in the '90s to cure her daughter's pulmonary disease and not only did they succeed in finding a cure for what was then an orphan disease, it's a public company with 14 fda approved drugs. we don't have that much time i want to talk about the neuroblastoma treatment because that's totally separate from pulmonary, from what the united therapeutics was initially and a small cell lung cancer possibly therapeutic as well. they want us to talk initially about abbvie and allergan, which do you have comments on that >> i think it's very exciting. i'm a big believer in blurring the areas between different medical segments and here you've got pharmaceuticals bleeding

into cosma pharmaceuticals to be healthy you have to be healthy wholistically. feel good about yourself, free of disease this blurring is interesting. >> that's interesting. you're here at the nasdaq for the lbgt leadership conference hosted in honor of pride month you're one of probably the best known transgender ceos in the world i would say without a doubt. how has that affected just your whole career at this point >> yeah. it's been no problem it's not a very big pond to be a big fish in, so -- >> right. >> it's easy on that front but, you know, i feel really fortunate actually just to live where there's so much acceptance of lbgtq individuals and i'm reminded of robert hineline, the

great american author's statement that 95% of the world's problems would be solved if people just minded their own business individual's sexual identity or gender identity it's their own business now that we've allowed people to mind their own business the economy is moving forward. >> you're positive about the progress, but there's still more in the workplace that each person can do in your view in terms of understanding and empathy and just accepting people for who they are. >> we're all works in progress i have other people, my transgender community, still murdered you remember the cases this year from i believe in dallas and there's still great amounts of discrimination against lbgtq people. >> it's better. >> it's getting better as long as we focus on things like pride month activities i think that will keep the momentum going forward. >> how often do you get phone calls from people who are inside big business, big article in "the new york times" this last

week about mauve duvally from goldman sachs, was mike duvally prior, and sort of the transition, what that process is like inside of a major wall street bank? do you get calls from people thinking about doing this or want to do this and anxious ain't h about how it's going to go down? >> not so many calls i get random e-mails here and there. i thought that article in the times was awesome and great respect for goldman and how well, they're handling transitions of this sort it's happening more and more, as is natural when you feel safe in an environment to be yourself, more people become themselves. >> i mean, you started -- i don't know if everyone knows, founder of sirius xm. >> yes. >> and -- >> one of the great entrepreneurs right here. >> it popped in -- there was an anecdotal story about how you actually came up with that idea. that was back in the early '90s. >> early '90s before my daughter developed her illness.

the funny thing for this day, still more people come up and talk about transitioning and calling me, more say martine, sirius xm has transformed my life than the people saved with our medicines. i get more hugs from sirius xm than our medicines. >> that's amazing. tell me, just for my own knowledge, neuroblastoma, horrible children's disease. what is this therapeutic and it seems totally different than anything you developed initially for the lung disease >> it was an opportunistic chance, it's a buy logic, our first biologic it completely cures neuroblastoma in half of the patients that have it. since this is a rare pediatric cancer it makes me feel happy there could be a kid, 5, 6, 7 years old, has this terrible disease, takes the medicine half the time it never reoccurs five years later it doesn't come

back they live a normal, regular life to me it's a blessing. >> you cure yours daughter >> yes >> she still takes her medicine. her disease is under control. >> there's some -- there have been add-on therapeutics that are similar to what your daughter had. >> like the hiv space and the antihypertensives. you need to sometimes combine different medicines together to get a better outcome a lot of diseases are caused not just by one thing, by two or three things you need two or three different medicines to keep the disease in check. >> what's the secret to being able to come up with this developmental pipeline to have the research and development and have it pay off? what's the environment >> i think the secret for us, we love what we do. we have a huge passion for making the world a better place and helping in the area of life and illness in particular. we do constantly get people coming to us saying they developed a new treatment for

this, developed a new treatment for that we look at all of them we have an open mind >> with the regulatory oversight and what we're facing right now with medicine, what needs to stay the same and what needs to change what would be most helpful, do you think, for drug development with all of these concerns about cost controls at the same time >> i think one thing that's really important is to protect the intellectual property rights of the individuals and the companies who have developed these new, amazing cures, like this neuroblastoma one we were talking about a moment ago the treatment we're developing for small cell lung cancer you could not imagine how many hundreds of millions of dollars it takes to develop these new medical treatments the fda rightfully requires us to do these huge clinical trials that span over many years and then the part of our company i enjoy the most is th manufacturing part, but to manufacture medicines, obviously, that's got to be done super, super clean, super, super pure everybody is in bunny gowns when you walk into the manufacturing space so you don't drop any

molecule of your skin or your hair all that costs hundreds of millions of dollars. we have to give these companies like ours and others a chance to recoup that investment that's going to take a good 20 years in most cases. >> in a nutshell, the stock is down in the -- really 2019 was when it started. what's going on with why the stock is coming down >> i think a lot of people are blinded by the fact that a kem of our drugs went generic. so people are blinded by the risk of loss of revenues from those generics and not focusing on the fact that those generics are first generation drugs for the treatment of these diseases. united therapeutics has several years ago moved on to second generation drugs the second generation drugs as i mentioned they take a long time to get through the pipeline and to get into manufacturing. but all of our growth is in these second generation drugs. once the market gets tune to

that i think the stock will recover. >> they're saying that you tried to preclude a generic from coming in, but your argument is they screwed up the filing for -- and patients wouldn't have gotten it if they had to depend on sando's regulatory filings? >> you must have been a lawyer in another life. i think you got the legal arguments down i'm going to leave that litigation to the lawyers. >> okay. and then finally, we -- you know, came back from break and said i'm going back to praying i'm not going to be able to download your -- you're a futurist, you do sirius xm and united therapeutics and all, first electric helicopter to fly for 30 minutes and you didn't fly it yourself but you could have. >> i was in the cockpit. >> you were? >> i got the guinness book of world record for flying that. >> anyway -- >> i love flying. >> the idea that we are a.i. ourselves and downloadable makes

me want to, you know, throw off the shackles of my physical body and live forever with my consciousness. that's not going to happen in my lifetime but it will happen in the next 100 years. >> it's inevitable to happen because we're leaving digital footprints and more and more parts of you are life. you can imagine a curve at the top part was that you had a digital footprint of every thought of yours in your entire life and at the bottom a caveman. we're moving all the way up to the top point. >> do you ever think about the soul and whether we need to somehow transmit that as well? i figure you could clone me but won't be me. you could download me but it won't be me. is there a soul? this is not what we usually talk about on "squawk box"? what do you think? you're a soulless -- no. do you -- >> i did write a whole book just on this particular topic of digital uploading and the soul -- >> no way. >> virtually human. >> i should have known. >> you can get it on amazon.

virtually human. the peril and promise of digital immortality. exactly on topic. >> the peril. >> the peril, just after 4 million years of things happening we're going to miss this by like 50 years, really? what about he says the singularity hits in 2045 no way i'm trying to make it to there >> i'm sure you'll make it to 2045. >> not going to get a soul once it's digital, joe. not like you get it later. >> i told you -- >> he's mad because the avatar, i've taken his avatar. i'm going to look like you, andrew, when i'm digital and that makes you -- >> i take that as a compliment. >> you do. joe 2.0. your wife, you have a robot modeled after your wife? >> she's getting more of a soul on her own she's got a humor, she's funny, she's engaging i refer to it as kind of like kitty hawk like 20 seconds of a soul and then it kind of seems more like a computer

but it's going to get from 20 -- >> that's weird? cheating at some point somebody like your wife but not your wife. >> she likes it. she feels it's like a sister or like a descendent. >> sister wife. >> it's a state-of-the-art robot too. >> it is i think the latest, weight called like neuro network programming. never answers the same question the same way twice it learns. it's on twitter. i should say she or they whatever >> well, we got more to discuss, but we don't have time now >> a lot to think about. >> yes. >> thank you for letting me be here today. >> thank you. >> thank you for supporting pride month. >> great to see you again. >> thank you, martine. when we come back facebook's libra announcement, the bitcoin rally and the battle between washington and big technology, author and friend, ben mezrich will join us to talk about all of this. check out foourts the futures a hour things haven't budged much still waiting for the g-20 bw futures down by 1.5%, s&p

downy 2.5% "squawk box" will be right back. r to invest in all the things that move us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions. because the possibilities of life and investing are greater when we come together. ♪

wanna take your xfi now you can with xfi advantage. giving you enhanced performance and protection. when devices are connected to your home's wifi, they're protected. helping keep outsiders from getting inside. and if someone tries, we'll let you know. so you can stream, surf and game all you want, with confidence you can get coverage where you need it most. that's xfi advantage. make your xfi even better. upgrade today. call, click or visit a store. welcome back senator chris van hollen set to announce proposals for new taxes on the wealthy among the ideas he's putting forward a 10% sur tax on incomes over $10 million, elimination of the stepped up basis which cuts down the tax bill for inherited assets that gained value and raising the estate tax to 2009 levels to pay for fixing social

security the maryland democrat will unveil his ideas at an event in washington later this morning. another successful launch for spacex overnight the company's falcon heavy rocket blasted off from the kennedy space center in florida and 24 satellites for the u.s. defense department and other customers were on board. one satellite, i can't believe it, about the size of a loaf of bread contains a large mylar sail that will use only light photons from the sun as a means of propulsion to a higher orbit. the experiment is designed to show that space flight by light is possible. photons i've -- ever look into that it's very odd. it's a -- >> how they -- >> it's a duality of light a wave and a particle. it's massless and makes no sense. none of it and, you know, that the speed of light is different depending on

your frame of reference, rel relativity and everything else. we're on this kick, can you go faster than the speed of light if two ships are going away from each other at the speed of light do you know how quickly they are going away from each other one times the speed of light figure it out. >> can't move faster than the speed of light. >> a little hard to -- >> can't move faster i guess. >> put your hand on something that's not physical. >> bitcoin >> not physical. >> above $11,000 this week maybe in part to facebook, at least that seems to have inspired some of the company's announcement of its currency called libra sparked a big move on wall street and debates on capitol hill joining us to talk about those things, ben mezrich author of "the accidental billionaires" and just released a new book, "bitcoin billionaires" the story

of the winkles boss twins and their payoff. >> how are you >> you've become a bitcoin believer >> believer. >> what's interesting is that the stock -- the price of bitcoin has moved so much even since your book first came out just a couple of weeks ago at this point but also in between all of this, facebook which was really the subject of your last book and sort of underneath this book is a big topic as well. seems to have changed the game my question to you is, do you believe that the idea of libra, the idea of facebook putting everybody -- giving everybody a digital wallet will change the game for bitcoin or not? >> absolutely. listen, libra is a massive on ramp for billions of people to suddenly be using cryptocurrency suddenly everyone and your mother will have an electronic wallet that's the exciting part about libra. the scary part about libra is that it's this company that none of us trust to hold our photos

anymore is now going to control all of our money there's the mix -- >> here's a piece i don't get. at least as far as i understand it, today, i guess we don't know the answer and a little betting on what's going to happen, the facebook electronic wallet, if you will, i'm not sure that's going to be able to hold or trade bitcoin. >> right. >> i may be able to use it for libra transactions, i may be able to use it for other kinds of crypto, i don't know what other kinds, maybe a wallet libra only if you will >> right. >> it may expose me to the idea of cryptocurrencies but if i can't really -- my mother is using the facebook app and she can't get bitcoin, i'm not sure she's ever going to get bitcoin. >> here's the thing when i'm promoting "bitcoin billionaires" one of the problems people have is they have no idea how to get it, use it, anything like that what libra is going to do it's going to engage billions of people instantly into how to use

digital money and that's going to change the game. >> ben -- >> you're right. you may not use bitcoin on your facebook account but -- >> in one word, the biggest appeal of bitcoin in one word. a lot of friction trying to use it and i will never be able to figure it out. no -- >> better than gold. >> it's better than gold. >> i'm goegtsetting to a point. >> what's the most important thing about bitcoin. it's decentralized that's the big - >> right. >> that's the biggest selling point, that's what makes anyone who is really zealous about it, that's it. this is not. this is zuckerberg-ized. >> absolutely. >> and that's not going to do it for me >> it should trying terror into your heart you're right, it's not decentralized. >> i'm sure he doesn't like me. >> facebook and uber and ebay will have access in the center of it to all of that data that's going back and forth and that's an enormous amount of data. >> no, thank you. >> peer to peer, decentralized,

distributed. >> look at you become a -- are you a holder now >> i get it. i get it i have been told by smart people i'm in like somewhere between the fourth and fifth stage from intellectually curious to a believer and then the next stage is an evangelical. >> here's the thing i'm not sure joe is appreciating and i don't know whether i like libra or not because it's not out yet, i think when you think about the great challenges of bitcoin, the biggest issue is custody, right? and the biggest issue is i somehow lose my code or i lose my thumb drive, if that's where it is and i don't have my key, the game is over if you're my mother, i'm sorry to harp on my mother, if my mother loses the key and can't get at the money that's a problem in the sorkin household. >> right. >> unless bitcoin has that feature and the good news about libra, i think, again we don't know what it's going to look

like it -- >> mark zuckerberg has the sdmee hi mark. >> there will be an arbiter. you can tell me you don't like that arbiter and mark zuckerberg isn't the right arbiter, but there is an element there are real companies behind this and real places you can call when something goes wrong and that doesn't exist in bitcoin land. >> that's true do you trust these companies is this the person you want to be trusting with your bank account, mark zuckerberg that's a question you have to ask yourself for little transactions, sure. it's going to make life easier and like visa without visa and like that. it's not the same as bitcoin i think you're right, there's still going to be a generational issue with bitcoin as we go forward but this is a massive on ramp and i think this and my book are the reason that bitcoin keeps rising towards the moon. like to take credit. can we mention one thing, how insane is it that mark zuckerberg launches libra right after the winklevoss twins launch gemini. do you think that's a coincidence?

the ultimate troll going on right there. >> let me ask you a question, u.s. governments, governments around the world, you saw the reaction to libra almost instantry in washington people saying we have to press the pause button on this governments have monopoly on currency it's one of the last things they have a monopoly and ability to control things with. the idea they're going to let other cryptocurrencies flourish where people can send money untraceable, untaxable, seems to me at some point there's going to be a fork in the road or a conversation where there will be a major pause button being pressed. >> i mean, absolutely right. listen, this is terrifying for governments, more than for banks. this is a form of money they have no control over they suddenly are getting to this battle with these tech giants over something that is supposed to be something the government has a total stranglehold on, money how do they regulate this? how can they possibly regulate

something that is without borders, that is instant, that is controlled by these massive tech companies i think they have got a real problem ahead of them and i have no idea how they manage to do that >> okay. ben mezrich, great to see you. >> thank you. >> author of "bitcoin billionaires". >> when we come back warren buffet shooting down reports of tensions between him and berkshire hathaway's partner in kraft heinz. his comments to cnbc coming up the deal of the day, abbvie buying allergan. we will speak to an analyst about the deal "squawk box" will be right back.

a big deal in pharma, abbvie buys allergan for $63 billion in cash and stock we'll bring you the details and what it means for the drug industry. >> transparency in the medical field. president trump press for more disclosure on health care prices. >> we are fundamentally changing the nature of the health care marketplace. >> secretary of health and human services alex azar will break down the new proposals. wiping out student debt. some high-profile presidential candidates want to slash the bills of millions. who's on the look to pay for it all? the final hour of "squawk box" begins right now ♪ wipe out >> live from the most powerful city in the world, new york. this is "squawk box. ♪ good morning

and welcome back to "squawk box" on cnbc. live from the nasdaq market it >> times square, i'm joe with becky quick and andrew ross sorkin here today. futures up, the highest levels we've seen for the dow, 13.5 points the other average, it's mixed, the s&p down fractionally, but has traded at new recent high. the dow trying to get there. the nasdaq indicated down about 4. treasury yields we're almost under 2 again this morning the ten-year at 2.01 let's get you caught up to speed on the big mega merger of the morning. a pharmaceutical deal in the headlines. abbvie gbuying allergan, the price representing a 45% premium to yesterday's closing price for allergan boy, would you have wanted to own the stock yesterday. the company's stock had surged on breakup expectations. joining us on the "squawk"

newsline, analyst i rina koefler. help us understand this deal what it means for the company itself and the industry and whether there are other deals to be had after it? >> good morning. thank you for having me. so allergan has a dominant aesthetic franchise that has been rumored to be in play for a long time, pfizer was trying to buy this business several years ago. it's not surprising that the company is getting acquired now. in terms of what else is out there that's attractive, you know, in dermatology we have another company that we follow called dermira that has a buy logic for atopic derma tie tis that we view as innovative and potentially interesting to the space. we're watching other valuations for products like otezla. >> what does the premium say to you? we're looking at abbvie's stock

down 8%. we were saying earlier in an abba troj moment, you usually see the buyer on a good day down 3 or 4%. this is different than that, at least in the premarket right now? >> we have a note out today where we value the combined business as $171 it feels like the abbvie shareholders may view this as a little bit of a rich deal. but it is being done partially in stock and not all cash. >> and when you look at the synergies they're talking about $2 billion in year three, does that make sense to you how much of this is a synergy savings story versus a growth story? >> we believe there's a lot of opx that can be cut out. they have a big pipeline in things like nash and we don't think a lot of these pipeline programs are going to end well, so there's a lot to be cut out of there

there is certainly some cross-cutting, cross-cutting on sgna count as well synergy targets, without covering abbvie, are likely -- there's likely a lot to be cut out of the allergan business where you can't really cut is on the aesthetics piece >> right policy question for you, allergan, of course, based in ireland, had gone through what's known as an inversion in large part for tax reasons, looks like as part of the is combination becomes a u.s. dom mow soiled company all over again. >> okay. but u.s. tax rates aren't so bad now, so it shouldn't be much of a problem. you know, they have a dividend that they pay their shareholders so i'm not sure what happens to that there's other things that are interesting around this deal because they -- allergan has a partnership with ironwood that's very prominent so we'll see what happens around that as well. >> and when you look at the story as a brent saunders story, you look at where the stock was

just a couple years ago, obviously much higher but they came down. now back up, up. is this a win, a loss? how do you measure his tenure? >> i mean, when he first came into the company, i thought he was a great fit for the business he was very much a dealmaker he's had very strong deal making with the sale of the business to teva a few whiffs along the way, notably kibela that said on the whole he's had more wins than losses. i think this was a difficult business to manage there was a lot of moving parts and maybe that part was a bit of a struggle, but on the deal making front i think he continues to shine >> okay. we're going to leave it there and thank you so much for joining us this morning. >> yep stingicking with the sector, the trump administration taking a step to try to reform the nation's health care system. signing an executive order to help bring transparency to the health care pricing. specifically, knowing up front when you go to a hospital what

each test will cost. joining us right now with more of the details is health and human services secretary alex azar mr. secretary, thanks for being with us today. >> glad to be with you thank you. >> transparency has been a part of your mission, something you've been working for on a lot of different fronts. explain how this executive order would work >> this executive order will go down as one of the more important events in the history of american health care reform what president trump is demanding is that hospitals post information based on their negotiated rates so that we and others have the information to shop and basically drive greater efficiency in the health care system but also that we require insurance companies to provide patients with information about list price, negotiated discounts, and what they're expected out of pocket would be, before they get services then we're also going to publish claims data, identified patient safety protected claims data from across the federal government that will be a rich pool of big data available to

help systemic improvement of our health care system but also creating consumer usable tools so patients can really shop. >> it seems pretty straightforward, something industry experts have said would help with pricing. why is it so complicated why is it so difficult to get this information out there >> well, a couple reasons. most importantly for decades democrats and republicans have called for transparency of price and quality information, but the simple fact is, the various special interests who are embedded in the system they profit from the lack of transparency they have a good gig going here and they don't want it to end. you're hearing them screech about the demands the president is making for this kind of patient empowerment. it's going to be a tough fight but the president and i are up for it and make sure we empower patients to be in control of their own health care. my message to the special interests would be, the current status of a non-market based approach in health care is not

going to continue. and we'll either end up with a single payer government run system in this country because people are fed up or we can do things that will actually create a market for health care, create more affordability, create higher quality care with the patient in control at the center, treated like a person, not a number you're going to have to choose which side you want to be on there. >> you mentioned those screeching, are you referring to the drug companies suing you because you're trying to make drug companies actually put the list prices for their drugs in the advertisements that are out there? >> as you know on july 9th the president's regulation requiring that pharmaceutical companies put in their tv ads their list price takes effect that will be an important day for transparency also just insurers, hospitals everybody on the executive order yesterday are expressing their opposition to transparency, of price and quality information. i hope they will come along because i think they will see their customers, the patient, need this information. they need it in a usable format

and they should be supportive of an empowered customer and patient. >> never think it's a good look for a drug company to say we don't want to be telling you our list prices but they are suing you saying this is part of their first amendment rights what do you think happens with that lawsuit >> i don't want to comment on that piece of litigation but we're very committed to this regulation that takes effect on july 9th and starting that day the american people will have very transparent information about the list prices of their drugs. we have a proposal through the rebate rule to actually empower patients so they'll even know what the negotiated discounts are on their drugs and they'll get the benefit of those negotiated discounts every time they walk into the pharmacy. a lot of changes in terms of transparency of list price and negotiated price throughout our health care system we're going to create a real market for health care that puts the patient at the center, lets them drive towards higher quality and lower cost in the system you know, sometimes one of the reactions that you hear, you'll

hear, is that the special interests say, who is going to shop for health care first you can't shop right now because even i as secretary can't get this information that's why we have to make that available. 70% of inpatient services at hospitals are shopble. 93% of out patient services at hospitals are shopble. so we just have to empower with information and we'll create a marketer >> have the hospitals complained about the latest regulation? >> well they have about the executive order. we have to put out the regulation it will be done through notice and comment rule making and we'll seek input and consider a range of options in terms of the level of transparency of negotiated rates and information and how to make that machine readable and consumer accessible for patients but i would say you can work with us or you can fight us on this but we're standing up for the american patient. >> year from now you think i will be able to say i need to get a mammogram, i should be able to see very clearly just by going on google or some app

saying ewhat's the best price, m doctor's office or one of seven hospital nears me? >> absolutely. wide variability of pricing for diagnostic service among providers in the same area you know what's really going to be interesting, there is wide variability even at the same provider of the same service there's not much excuse for that. >> why because if you're insured or not insured? >> absolutely. sometimes what you find, some of the data we've been looking at shows that if you're willing to pay cash for services, the discount is actually sometimes radically better than what insurance companies are able to negotiate with hospitals it's because of these provisions and contracts, sometimes called all facilities provisions, it's a take it or leave it. if you want to interact with this massive hospital system you have to take every facility we have, no matter where it's located but also you can't pick and choose and say hey, you're really good at hip replacements so you will be in network for hip replacements but lousy at heart replacements you have to take the whole kit

and caboodle or nothing and that impacts bargaining power and there's legislative proposals that chairman lamar alexander is working on and this kind of -- i think that's why some are afraid of the transparency the president will require people may find out that some of these negotiators may not be doing that great of a job negotiating. >> the hospitals have got an lot bigger in recent years the health care, health insurance companies have gotten bigger and bought pharmacy benefi benefits managers, all teaming up even some cases with the pharmacies, cvs in particular with these situations, but all of these guys have tried to get bigger because they say it's the only way to compete. what's going to happen to them when regulations kind of strip back a lot of that is it not going to be a profitable sector or are there going to be some winners and some losers? >> oh, there's a lot of profit being made in health care so i'm not really crying for them i'm concerned about horizontal and vertical integration and

we've got to scrutinize those deals, those acquisitions very carefully. but i don't know how price transparency and quality transparency is just not the best thing you could imagine for a marketplace or for consumers and for competition. >> yeah. >> i think we -- we're really shaking up the entire system of health care by providing this kind of information and enabling a real for the first time ever real market for health care. look at lasik eye surgery. it's one example, but it's a case where every year, price goes down, quality goes up, why? because you don't have payers and insurers in the middle transparent price and quality information and people paying out of pocket for those services it's an actual market and it works. >> yeah. >> they can work at health care. >> secretary azar, thank you we've been really interested in all these changes that you are making and we hope to have you come back soon again and join us with the latest. >> thank you coming up, presidential candidate bernie sanders looking

to obliterate $1.6 trillion in student debt >> we will make a full and complete education a human right in america to which all of our people are entitled. >> sounds great. what could go wrong? the catch here, wall street is going to pay for it. when we come back we'll take a look at the true cost of student debt and what it would mean to actually wipe it out stay tuned you're watching "squawk box" on cnbc

al: hi everyone! al roker here. as a guy with his own catchphrase, i appreciate that after 75 years smokey's only said... smokey bear: only you can prevent wildfires. al: but, i'm filling in because there's a lot more to report! like when there are parched or windy conditions out there, you gotta be extra careful with things like burning yard waste. after all, wildfires can start anywhere, even in your neck of the woods. go to smokeybear.com to learn more about wildfire prevention.

senator bernie sanders unveiling a plan to erase $1.6 trillion, why say billion when you can say trillion, of u.s. student debt the presidential candidate cosponsoring legislation he says would eliminate all student debt within six months and make public colleges tuition-free this is an issue that fellow presidential candidate elizabeth warren has been hitting hard calling for the cancellation of up to $50,000 in debt for 42 million americans. back to senator sanders and the $2.2 trillion plan for a moment. it's dubbed the college for all

act. it will be entirely paid for by fees on the trading of stocks, bonds, and derivatives over ten years. >> this proposal completely ehim natsz student debt in this country and ends the absurdity of sentencing an entire generation, the millennial generation, to a lifetime of debt for the crime of doing the right thing. and that is going out and getting a higher education >> now for a look at how sanders' plan could work, welcome ben miller former senior policy adviser with the u.s. department of education now with the center for american progress action fund and james is a fellow with the american enterprise institute and also a cnbc contributor james, i'll start with you and be totally open about this because i think it would be great, it would be great, would it not be great if everybody was able to go to college for free

and what's a half a percent on these greedy traders that basically almost sunk the economy ten years ago? i mean who doesn't want to do that what is the problem with this? i can't see one at face value, can you? >> well, listen, i think right now, the democratic primary is kind of like, you know, those fifth grade student council elections where the kids are promising like dominos pizza for lunch, lemonade on the water fountains, anything goes that's what this plan is bernie has kind of turned this up to 11 and so he wants to cancel all the student debt including for the wall street bankers who have student debt. this is really a solution in search of a problem. to the extent there is a problem with student debt, it's really on the low end why not have a targeted plan to help those people who are really, folks, maybe 5 or $10,000 in debt, went to college, didn't complete, that's where the problem is anything beyond that is really

ideology which is what bernie said in the speech, that this is about making college free for all. it's a human right it's really not about solving a particular problem >> ben, do you, at face value, do you think that senator sanders' plan makes sense? >> i think it's crucial we have some form of debt cancellation on the table our college financing system is broken the original idea of a student loan was a financing tool for sort of middle or upper middle income families. today a majority of people who borrow a loan at some point receive a pell grant, among the lowest income people in college. we're seeing is when you force debt on to those individuals, you end up with really bad repayment outcomes yes, we have major struggles with those on the low end where we have a million people defaulting on a student loan each year and a minority of borrowers able to pay down a dollar of principle within three years, but real equity challenges when you deal with even at bachelor's degrees

we see a black or african-american individual gets a bachelor degree still has a default rate four times higher than a white peer as well as the fact that the typical black or african-american borrower has made no progress repaying their loan 12 years after college. you can't do a narrow targeting thing on the low end because we have problems that go everywhere. >> at center for american progress, we have -- society has a lot of problems and we're seeing a lot of programs with 22 or 23 candidates all trying to rise to the top, obviously a lot of promises are being made, even at the center for american progress i figure you would go along with a lot of these, but is it -- does it get past the point of let's just have the discussion to where you actually think medicare for all, free college for all, free child care, it -- do you see that this is not possible? and do you think that people that -- some of the candidates know in their hearts this is not

possible >> well, i think the discussion is about, you know, we need big investments in the middle income in this country and the low-income the question becomes where do you think that money is best spent? that's a different debate from whether or not we should take a couple trillion dollars from wall street and spend it on student loans versus take a couple trillion and spend it elsewhere. i mean in a world where we had a tax cut and jobs act passed with a simple majority in the senate, you can achieve something. you can free up potentially trillions of dollars and the question becomes, what's the better way to spend that >> to be clear, ben -- if ben was given 1.6 or $2 trillion to spend he would not spend it on this plan. he would not spend it on a plan to eliminate the student debt of people easily affording their student debt, who may be well off. if we have a problem in this country we're spending too much money on wealthy people and that's what bernie sanders would do maybe we need a better class of socialists in this country. >> i have a different question for ben, clearly the cost of a

higher education in america is completely out of whack and what i'm worried about, actually, is if we were to pursue a plan like this where effectively wiping out debt, it only creates a greater incentive for universities and colleges across the country to actually raise prices it doesn't put any cost controls in place, it doesn't seem to be working to try to reduce that overall cost both for the country and for the student and individual. >> or to make colleges more effective at what they're doing in terms of trying to make you ensure you're qualified -- >> how does that prove value. >> part of the problem i would say why we've had sky rocketing prices for higher education these days is because the government is making the loans that it's making >> no. that's actually not true the student loan cap for undergraduates hasn't risen since 2008 while tuition has gone up tons of time again the big problem we have here is

basically we used to have ap understanding in this country that the state would do its job in supporting public higher education and it's largely stopped doing that i think that's a key part that is in the sanders' plan, the castro plan, the warren plan as well, establishing a notion that the federal government and the state those work together to co-finance the cost with a clear promise to students. the place where there is worries about cost control is more on the graduate end and to a lesser extent some types of private colleges and that's something that is easily fixable if you created some sort of accountability system that said we're not going to lend more debt than what people are making on the back end for this, for their investment. >> we had, ben, what was that, rubenstein, on a billionaire, and he's like i told him about all these programs and what they were costing, he's like oh, you know, socially i'm a democrat and i don't really -- they don't really believe they're going to do any of this stuff they're saying this stuff. we're not going to do it that's kind of what i hear,

right? there's no way but it's like, but let's have the discussion this is where we would like to get some day but i don't see -- is it productive to have these things that are never going to happen and talk about it constantly >> well, i think it's a huge distraction because you're not actually talking about solutions which are one, affordable, two, would actually work and address the problem. so then it becomes there's a money tree in the backyard and we will go to the money tree it's college for all, medicare for all, everything for all. >> the new green deal. we can't afford, you know, a tenth of that probably and then put them together and i'm telling you, modern monetary theory better work. >> why are we taxing wall street just mmt the whole thingp. >> >> that's a good point too just, you know, print it >> #print. >> which brings us back to bitcoin. that's why if -- >> always comes down to bitcoin. maybe we just all invest in bitcoin. that would pay for all of the

debt ben and james, thank you, guys. >> yep. >> when we come back more on "squawk" this morning, big tech under fire some of the f.a.a.n.g. companies are finding themselves in the rare position of being criticized by the political left and right. in a climate like this, are harsh regulations inevitable that's the question. warren buffet shooting down reports of tension between him and berkshire hathaway's partner in kraft heinz an update on that when "squawk box" returns in a moment johnson & johnson is a baby company.

but we're also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. from the day you're born we never stop taking care of you. i felt completely helpless. trashed online. from the day you're born my entire career and business were in jeopardy. i called reputation defender. they were able to restore my good name. if you are under attack, i recommend calling reputation defender. vo: there's more negativity online than ever. reputation defender ensures that when people check you out, they'll find more of the truth, not trash. if you have search results that are wrong or unfair, visit reputationdefender.com or call 1-877-866-8555.

why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. we're the tenney's and we're usaa members for life. call usaa to start saving on insurance today.

jorge lehman want social media co come clean on how they are exploiting user data for profit. which f.a.a.n.g. companies are most exposed and the latest proposal to tether big tech. carl quintanilla is in vietnam this morning and week bringing us the story of a country that could be on the road to becoming the next china vietnam's gdp grew 7.1% in 2018. that's up from 6.8% in 2017. live report is coming up stay tuned, you are watching "squawk box" on cnbc ♪♪ ♪♪

♪♪

. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. here are the stories investors will be talking about today. abbvie is buying allergan in a deal worth $63 billion excluding

debt allergan shareholders will get $188.24 in cash and stock. that represents a 45% premium to the botox maker's monday closing price. analyst irina cough her joined us to talk about that deal >> we value the combined business as $171, so it feels like the abbvie shareholders may view this as a little bit of a rich deal, but it is being done partially in stocks and not all cash >> take a look the a the shares of the two companies as she mentioned partially in stock, not all in cash abbvie shares are down by 8.5% and that will affect the overall pricing of the deal because again, it's cash and stock allergan shares up sharply up 31% this morning berkshire hathaway chairman and ceo warren buffet is dismissing reports of tension with 3g capital, berkshire's partner in kraft heinz he told us co-founder jorge

lemann is a good friend, those reports may have been sparked by underperformance at kraft heinz and accounting issues at the food company amazon's annual prime day will actually be two days this year the company says the prime day will cover 48 hours on july 15th and 16th amazon uses prime day to promote membership and its prime program with various deals available to only members big tech under fire more than ever these days with proposals to rein in the biggest companies from both sides now of the aisle in washington. joining us on the potential impact to the f.a.a.n.g. stocks, dan ives is managing director at webb bush securities and john freeman, tech analyst at cfra. good morning to both of you. >> good morning. >> do you think something is going to happen here, that washington is going to do something that will have a material impact on the stocks? >> right now the bark is worse than the bite. the street sees that in terms of the reactions, but it does feel like there's more pressure and the drum rolle is growing from the beltway to big tech. the broader worry it's privacy

today, but does it ultimately lead to more doj anti-trust, the next step. right now we think the bark is bigger than the it >>the is the issue that these companies get broken up or that they can't just acquire, they won't be able to acquire anything in the future or that cost of privacy and all of the tools that they have to put in place will be expensive? to the extent there's a discount on the stocks right now, it's a discount for what? >> yes so i think, here's the thing, i think that the different kind of risk that you're seeing now is what is worrying investors and, you know, perhaps sort of inserting a discount i'm not putting a discount in now, but boy, you know, with -- for example, with facebook, they're not doing themselves any favors they're really bad at lobbying and managing this regulatory risk in a relative to all of the industries that big tech has disrupted like cable and telecom and retail the one thing those guys are

better at is lobbying. facebook goes out and, you know, with this cryptocurrency libra, for example, just the timing was awful, i thought basically you can hear the -- you can hear the politicians, you know, and the legislators sort of quotation, first facebook allows its platform to be used by nefarious actors and arch enemies to interfere with the election and now they're going to, you know, allow the same nefarious actors to pay for that anonymously with money that they don't even have to launder because it's in a cryptocurrency i thought the timing was really poor. >> hang on dan has been making faces as you have been speaking and trying to understand what you're trying to say. >> i mean, i disagree. >> you disagree. >> i think facebook went from the defensive to the offensive when i look at the crypto move, i view it as a smart strategic move for a company that is starting to innovate outside of

the core business model. it does speak to a company on the treadmill and ultimately in terms of what's happened in the beltway, this was a smart move even though there will be regulatory swirls. >> what john is referring to at this point, given the timing and everything, effectively anything new they want to do may be limited, right, because the government is going to come in, whatever it is, whether it's future acquisitions, whether it's getting into a libra, whether it's -- you know, i'm not going to read the -- i don't know what's in mark zuckerberg's crystal ball but whatever is next, is going to come with at minimum commentary if not testimony. >> if we look at the last let's call it month, as the pressure and the drumroll is there in the beltway, google has bought looker, one of the biggest acquisitions in cloud -- >> what? >> in terms of the looker cloud acquisition. then you look at facebook with crypto it just shows these companies are beating their chest saying we are not going to be held down by the drum roll that we're

seeing in the beltway. i think that's just an important strategic move. >> john, real quick, i want to talk on the issue of breakup, because i think there's a misunderstanding in america about monopolies it is not illegal to create a monopoly -- >> that is right. >> full stop it is illegal to create a monopoly legally, it's illegal to main anyone a monopoly illegally. >> that's right. >> elizabeth warren or bernie sanders can wave a magic wand and break everything up i'm not sure is realistic. >> it isn't. given the existing regulation. one of the things that heightened my sort of got the hair on the back of my neck up a little bit -- by the way, i have a buy rating -- we have a buy rating on google and facebook. we think they're fantastic businesses but, you know, the -- with regard to the judiciary committee's recent announcement, i mean they were talking about not just enforcement of

investigating, you know, existing regulations or violations of existing anti-trust regulations, they're talking about crafting new legislation completely to quote/unquote i think they -- the -- the language was something like to make sure that social media companies, you know, are in the, you know, in the best interest of the united states of america and so forth one of the things that i think gets lost here, this is the first time -- this is not like constituents that are mad about microsoft being unfair or microsoft's competitors. this is -- the threat and power and influence that google and facebook have is directly on those people trying to get elected, those people writing the legislation to regulate them it's more personal again, i have buy ratings on them, but i am starting to get a little more concerned with the regulatory risks, no doubt. >> i want to get both of your thoughts on the following. bill gates spoke the other day, yesterday in particular i should say, and he said that his biggest mistake at microsoft was letting the android mobile

operating system from alphabet become the dominant one in the microsoft and that microsoft's own windows mobile missed the top spot by a very small amount. let's listen to what he had to say. >> we were distracted during our anti-trust trial and didn't assign the best people to do the work it's the biggest mistake i made in terms of something that was clearly within our skill set, we were clearly the company that should have achieved that, and we didn't. >> so the real question that i still have for bill is, was it not just as mistake but was it a mistake as a function of the fact that -- was he effectively distracted by the anti-trust case that the department of justice had brought against microsoft? >> yeah. covering microsoft back then through the years, i think that -- they did take their eye of off the ball for a little and mobile was something that they underestimated in terms of where the market was going it was by the biggest strategic

mistake of gates and ultimately bomber what nadella did, focused on cloud and that has taken microsoft to where it is with the doj anti-trust issues, it's a distraction and that's why these companies, you need to be laser focused innovate and that was something when you look back -- >> to the extent that we're looking at the big f.a.a.n.g. stocks who do you think has the greatest potential to become quote/unquote distracted as a function of this. >> on the most risk a google or a facebook the least i put apple. if i had to put a spectrum there. >> i would say -- i would definitely say facebook at the top and then, you know, the other f.a.a.n.g. stocks probably secondary. >> we shouldn't even have netflix on that list, given the conversation we're having. dan, john, thanks, guys. >> thank you >> great to see you. no "n" in f.a.a.n.g. >> it's pending. >> coming up, we're going to

check the stocks with the biggest pre-market action this morning. and we're going to talk markets ahead of the opening bell including some hot sector picks and where investors could feel pain next. 95 million people, 6,000 factories in the garment business alone is vietnam ready to become the new china and is the threat of new tariffs what's going to get it there all day today on cnbc. at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary.

take your business beyond. your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity.

you need decision tech. you still have service? call the insurance company sfx: [phone ringing] it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by automating claims with machine learning and analytics, cognizant is helping insurance companies advance how they serve even hard to reach customers. cool ♪

welcome back to "squawk box. this morning take a look at futures ahead of the opening bell we're less than an hour away from the bell ringing. the dow would open up about 20 points higher, nasdaq off 4%, s&p off a point for now. dominic chu joins us right now in time for breakfast with a look at some of the morning's biggest stock movers you have a theme going. >> i have a theme. we're going to make this the fast food edition of morning movers we will start with a slate of quick service restaurants, the qsrs that have been initiated with coverage by the analyst team at credit suisse. they have six new outperforms, three neutrals and two under performers shares of chipotle, very thinly traded premarket but one of those out performs that they have alongside an $870 price target, giving it the highest implied upside of the newly

covered stocks they like its positioning for an omni channel sales strategy and the pace for digital orders and paying optionsp those shares a focus when trading starts. they're a little more cautious on shares of papa john's pizza thin premarket trading so far. the brand is still in recovery mode but activist investors, higher short interest and potential for unlocking value make it a neutral with a $45 price target to balance things out, shares of dunkin' brands on premarket value as well. one of the two und performance, they have a $70 price target they like the stability of the business model and the veteran management team but see downside risks from lower growth prospects and already elevated valuation. those shares off in early premarket trading. >> i don't know. coffee supposedly makes you thin because it gets rid of the brown fat. i don't think that's in your stock movement for dunkin'. >> have you tried the whole

thing, the bulletproof or whatever it is where you mix butter with your coffee instead of cream. >> we tried that a couple years ago. >> butter people came in. >> i'm not sure. i have to try it >> it was okay makes it less bitter. >> supposed to be good for you. >> this is a first >> it's in the post where i get all my news, but called the weight loss -- weight loss is a perk it's about coffee and it's how this is the first stimulating brown fat improved blood sugar control, the first time they've been shown a way to get more brown fat. i don't know do we want brown fat >> we don't want brown fat. >> known as good fat. >> brown fat is good fat >> is it i don't know dom, check it out. have a cup of copffee you don't have to feel bad about having coffee. >> one of the out perform ratings of that credit suisse report is starbucks. maybe there is still a coffee approach to this whole thing if

starbucks does it. >> yes. >> maybe. >> i could say that. >> coffee, i'm telling you, i don't understand nicotine, i understand caffeine. i need it. what might be a contrary opinion on wall street these days, our next guest thinks the odds of a recession have actually gone down joining us now larry cantor, operating partner at atlas merchant capital because of the fed or because of something else >> the fed is the big thing. i mean i don't think people appreciate how big this shift has been at the beginning of the year, people were looking at another 100 basis points of rate hikes now they're pricing in 50 to 75 basis points of rate cuts. it's a massive shift everybody is talking about how the bond market and stock market are contradictory. i don't see it i mean, you know, if the fed is now cutting rates instead of raising rates a lot, bonds rally and stocks have held up pretty well i mean to me it's more of a positive message the second thing is, you know, late summer, early fall, we're

going to go back to the debt ceiling and spending arguments my view, this is going to be resolved by more spending. i mean we saw trump meet with pelosi and schumer, they agreed on a $2 trillion infrastructure package. that's not going to happen, but it kind of gives you a signal of the direction they're going here no way in my view the white house and congressional republicans are going to allow tight fiscal policy, which by the way sequestration, remember that name, is still in effect today, so if they don't come to an agreement you get across-the-board cuts. i don't see that happening when i add that up and easing fed, and i think a lot of the slowing is just you're coming off of juiced up growth in 2018, juiced up by a massive tax cuts and spending package naturally now that that's fading you're slowing. >> what are -- when you look at people that are like canary in the coal mine for recessions, that's all they do for a living and ratchet up the 20%, 30%, some are up at 40% over the next

12 months. >> right. >> it's, for me, it's hard for me to understand there must be some metrics that they're using in terms of retail or consumers, because you got unemployment is so low, you wouldn't expect a recession. >> right. >> the stock market, unless it's the fed, market doesn't seem to be forecasting a recession. but then the bond market, and there is crazy sovereign yields around the world that are negative, but that may not be us, that may be the rest of the world. and it may be inflation. there is all these -- it never repeats itself, it rhymes and it is hard to add up all the different factors that are seeing different things. you come to the conclusion, no recession. >> right i'm sort of -- you sort of just saying my tune here. bond yields are going down because of the change in the fed stance and look around the world. bund yields are negative so where are you going to go we have -- now we have a global financial market and economy and

so forth so i think that's it when you ask the question, why are people forecasting, i think one is whenever the unemployment rate has gotten below 4%, which it did over a year ago, you've had a recession within the next couple of years, and you probably know -- we set a record for the longest expansion. so people are adding that up >> they don't die of old age. >> looking at the yield curve and stuff like that, and, look, caveat here, economists are not including me not very good at calling downturns, and the reason is you tend to estimate direct effects when something bad happens like trade, economists are saying maybe this takes a half a point of gdp, that's not recessions happen, especially in the last couple of decades. it is the indirect effects, the hit to the stock market, business sentiment, there is a lot of leverage in pockets we didn't know about, you remember aig. that's what causes it. that's pretty damn hard to forecast.

>> okay. i guess i believe you. i never really thought -- what about 2020 >> that's what i'm talking -- >> not even in -- no recession in 2020? >> i don't see it. the big thing to me is heading into a presidential election year >> is that coming up >> that's relevant to trade. trade is a risk. i think we have gotten -- just to the precipice of where this thing could get really nasty, so, for example, if they do the extra 300 billion on china, that's final goods the stuff so far is intermeet go goods. i don't see that happening and mexico would be -- to me, i change my view if we go that far on trade. >> what time does that start, andrew, tonight, do you know >> what? >> the debates >> what time -- >> that's tomorrow >> there is two. >> is it not tonight >> i thought it is tonight >> tonight and tomorrow. >> tonight and tomorrow, isn't it >> 8:00? >> you don't know? >> i don't know. >> past our bed time am i not going to be able to

watch this >> i know you want to be up for this >> i want to see the one that biden is on. >> i think that's tomorrow. >> tomorrow? >> i think that's tomorrow. >> still hasn't dealt with that -- i mean -- he said some doozies. but that's really -- that's -- right? okay anyway, larry, thank you >> yeah, great to see you. >> earlier this morning we heard from carl quintanilla in vietnam about how companies are flocking to that country to produce their goods and how america's trade war is affecting local factories. let's get back to carl in hanoi for a look at the increasingly competitive fight there for skilled labor and, carl, we used a lot of the stuff you talked to us already this morning for jumping off points for other conversations. what can you tell us now >> reporter: that was a great discussion about that full 25% and the reason we're in hanoi to begin with is to find out if american companies really do see vietnam as a viable alternative to the china production we have been looking at for the past 20 years.

tng is a vietnamese textilemaker their clients are the big guys, nike, adidas, calvin klein they have never seen an expansion like the one they're seeing right now they have 15,000 employees 3,000 of those were hired in just the last year lynn wynn is one of the managers he says the demand for workers is so fierce, though they're in the apparel business, they're having to get into the housing business building factories is one thing. there is building affordable housing for middle level managers trying to retain and keep workers so tng built an apartment complex, 186 units, beginning at $20,000, u.s., city views, 60% sold right now and it opens in september. >> one of the sustainable business strategy is to build people and have people build our business in order to grow the business,

more important for us to build home for the people than building a factory it is part of the development and part of the long-term plan strategy >> guys, just to give you a sense of wages here, average worker at that factory makes about $280 a month that's less than fox con reportedly pays somewhere in the low 300s a month but above the minimum wage for vietnam. so basically we're left with a question, can they get these, workers, can they train the workers, can they keep the workers which is the exact questions we were asking about china about 25 years ago guys >> great shot behind you, carl got to tell you. it is -- it is great to see you all day. >> have you been to hanoi, joe >> i have not. andrew has been in the caves, been down in the -- not caves -- >> the tunnels >> i've been in the tunnels. >> did you do that >> great place. >> do you do that?

been in the -- are you going to -- >> we did. yeah, we're going to show it to you later on it is haunting the idea that you would run down there in the case of an air raid, yeah >> yeah. >> okay. >> we're going to be seeing carl throughout the day be sure to catch carl's reports from vietnam all day >> it is tomorrow. >> tomorrow is the first one and then debate -- tomorrow. at 9:00. >> wednesday and thursday. >> stay tuned. lot more on "squawk box" in a moment

okay, a final check on the markets, that's the best levels we have seen on the dow, 33 1/2 points the s&p up just under a point. and the nasdaq is indicated up fractionally the ten year note was right around 2%. 2.006. gold is a real feature it has been -- sharply higher recently, back over 14. >> shares of abbvie, we can show where it is now. it moved around a little bit as arbitrage tries to set up their position this morning ahead of the open i don't know if we can get that stock up there now back up to 10% in terms of the stock being off. that's at 45% premium for allergan and a lost people watching both the stocks today. >> the debates, they were randomly selected. elizabeth warren is tomorrow night with cory booker and then the next night with

biden and sanders and buttigieg and others it is 9:00 9:00 >> you'll see the highlights. >> first they put the nba games at 9:00. i can't watch that and now this >> they do it just for you, joe. >> early bird special. >> make sure you join us tomorrow when they have the first debate tomorrow night. "squawk on the street" is next ♪ good morning and welcome to "squawk on the street. i'm david faber with sara eisen. we're live from the new york stock exchange jim cramer has the day off carl quintanilla, he doesn't he's in hanoi. and he's got an in depth look at vietnam's manufacturing boom and what it means for tariffs and u.s. trade let's give you a look at futures as we get started with trading, 30 minutes from now here at the nyse we have the april s&