♪ good morning welcome to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. let's start with yesterday's record close from the s&p. getting a boost from apple and microsoft. it was the technology stocks and the financials that led the way yesterday after that trade truce that we saw with china you can see now the s&p is up 26% since its christmas low. up 22 points yesterday a gain of about three quarters of a percent the nasdaq is 1% away from a record the dow is less than 1% away as well looking at u.s. equity futures, not getting much help towards those goals. you see some red arrows. dow futures indicated down by 57 points s&p down by 5. the nasdaq off by 24

it was a big rally yesterday gave back many of the gains late in the session the dow did end up more than 100 points by the end of the session. overnight in asia, a bit more muted today after the big gains yesterday in the markets the hang seng opening after being closed on monday for a holiday. it's the stock market trying to do some catch up it was up by 1.2%. shanghai was flat. nikkei was up by a tenth of a percent. in europe, some early trading taking place a bit of a mixed picture there. ftse up by a half percent. modest declines for the cac and the dax. stocks are higher in italy and weaker in spain. in the united states, if you're watching the threreasury market the ten-year is yielding 0.15% let's talk trade president trump saying trade talks have begun following his

meeting with president xi jinping at the g20 speaking at the oval office yesterday, the president said the renewed talks are being held by phone any trade deals will have to lean in the u.s.'s favor >> obserit has to be a deal tha somewhat tilted to our advantage. if we're not going to do that, we're taking in a fortune from tariffs. unfortunately we're hurting china by doing that. many of their companies are leaving and going to a non-tariff state >> trump and xi have agreed to hold off on imposing those new tariffs on u.s. and chinese imports. trump said existing tariffs on 2$250 billion of chinese goods will remain in place china's second in command has a message for the global economy premier li said china will ease

ownership limits for its financial sector by 2020, that's a year earlier than scheduled. other trade headlines, the u.s. is stepping up pressure on the eu in a long running dispute over aircraft subsidies. the u.s. trade rep's office is proposing $4 billion in additional tariffs on european goods, that list includes olives, italian cheese and scott scotch whiskey the u.s. and the eu have been threatening to impose billions of dollars in a tit-for-tat on planes and food in a 15-year fight now. >> i don't know if that scotch and whiskey has an "e" on it >> we had one in there >> the united states would not ireland would. >> that was a misspelling there.

andrew rolled through it like a pro. tim cook is firing back at "wall street journal" report on tensions between apple and jony ive. i have funny with the first name that's the jony version of jonath jonathan have you seen it like that a lot? >> no. >> the long-time design chief announced his departure last week the "journal" reports ive had been drifting away from apple in recent years but cook calls the story absurd, the conclusions in his words don't match with reality he said at a base level it shows a lack of understanding about how the design team works and how apple works. it distorts relationships, decisions and events to the point that we just don't recognize the company it claims to describe. the response relatively rare for cook, who typically doesn't communicate directly with

reporters over something like this >> normally companies don't push back unless they feel it's totally an air. >> reporter: error or riling things up. >> you think he's lying? >> not lying if you care about your company, you want to support your team, you put out a letter that says this there's no question there's parts of that story -- >> he's massaging. >> the prodd broader idea that y ive i can't fathom would be in dispute with anybody >> designing the phone, features of a phone or a watch or a mac, designing those features, then being developed with the design of the new headquarters, right then you knew it's not the same thing really he sort of is in this role where maybe there wasn't as much to design because there's no new

innovations really >> i think the larger issue with -- there were times that -- jony wanted to leave -- a couple times he tried to leave. he has been living in san francisco, living in england it's hard to run a -- >> got a couple hundred million dollars. >> it's hard to run the design team from -- remotely and try to contend and argue to the public that somehow you're in there every day fighting the good fight. i'm not saying wasn't fighting the good fight i think he was involved and engaged, but, you know, i think there's all shades of gray i think tim wrote a good note. that's what it is. i don't think we're -- the flip side is when you have factual problems with an article, you come out and say there's are the factual problems with the article. it's harder to just broadly brush and say the whole thing is crazy. >> you respond exactly what you

can respond to without actually responding >> it sounded like he was responding to the idea that there are ten shup sions betweem and arguing back and forth >> couple hundred million. you still here >> you're saying if there's tensions between us? >> no i'm saying if you have a couple hundred million, are you still here mac, can you read a teleprompter >> trust me -- >> you still here? >> no, you want to buy me out? feel free. >> you still here? >> i like this it's crazy it's crazy that i like this, but i do >> you're nuts >> viewers will be doomed to just andrew for three hours. wh >>what are you doing >> so, so -- >> couple hundred million? >> i think less than 100 might do it. maybe. i think so probably >> if you're in the fund-raising business, yes.

>> gofundme. >> this could be considered a buyout >> you could say for me, do this if it works, i will be a much bigger jerk. go ahead, buy me out all right. nike is pulling a flag-themed sneaker from distribution days before the fourth of july. the shoe is the air max 1 usa, it was designed featuring a u.s. flag called the betsy ross flag, it had 13 stars that was used during the american revolution those sneakers were pulled after nike endorser colin kaepernick reached out to nike and expressed concern that the flag was used during an era of slavery and said it could be offensive to some americans. that was also echoed by some nike fans on social media. stock is down by 8 cents. when we come back, red flalgs frflal s fr

flags from corporations about their second quarter earnings. as we head to a break, here's a look at biggest premarket winners and losers in the dow. you can go to my gofundme page >> please. please moving is hard.

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. welcome back to "squawk box. believe it or not earnings season just right around the corner we have jobs around the corner this week with the first of the big banks reporting two weeks away from today. there are some storm clouds to report 77% of companies that have pre-announced say their profit picture will be worse than wall street is expecting. that's the second worst quarter for profit warnings on record going back to 2006 typically about 70% of pre-announcements are negative earnings for the s&p 500 are expected to climb 2.6% from a year ago let's talk about this and what it means joining us to talk earnings expectations and predictions for friday's big jobs report, we have lindsay piega and liz

young. preannouncements are not typically a good thing but in some way maybe they're already -- that means they're baked into the cake and typically people throw everything into the kitchen sink and therefore the numbers actually look better than they otherwise would. typically companies underpromise and overdeliver. the markets have also ignored earnings for the last couple of years. this year we expect earnings growth plflat for the first quarter, we were up 19% by april. not to say it doesn't matter, but the market is watching things like monetary policy, watching trade, watching those macro headlines much more than

earnings >> historically, when people have pre-announced on the flip side has the market been better three months later sort of after a quarter where people do these preannouncements, then outearn what they said he they would do, does the market move higher or you're saying they're not even looking at earnings anymore? >> history, long-term history is not what we've experienced for the last couple of years in the last quarter the market has punished negative news more than rewarded positive news. some of that positive surprise ends up being a lack of a negativ negative >> lindsay f she's righ, if she will we see on friday and how will it play out in the market >> i think the market will be watching this employment report. we are looking for non-farm payroll reports to come in around 150, 160.

relative to last month, this would be a vast improvement. on a nominal basis that's hardly robust this sort of unevenness in the data will complicate the picture for the fed. it's very clear the economy is not falling off a cliff, nor is the labor market there's evidence of mounting weakness underneath the surface. when is the appropriate time for the fed to issue that first rate cut? this continued moderate level of strength in the data is not enough to convince the fed i think it we see that print, it's not enough to -- >> we want the number to be terrible you want to tank the number so the fed moves? >> i don't think we want a terrible number a terrible number the market would also sell off it signals the fed missed their opportunity to give that insurance rate cut

the market is looking for a tepid number it's a fine line that we're looking for in terms of the economic data. what do you think will happen? i think the best thing that could happen for the market is a benign response on friday. everybody that was positive coming into the year, it was based on a strong labor market even if we do test appoint on friday, we're starting from such a high spot, it's not like we were teetering on the brink of disaster if we have some negative news, we have the room for that, but what does that mean the fed will do >> how much does the trade negotiations with china matter now? before they were weighing on the fed and the market, now a bit less does that make it less likely that the fed moves in july

>> i don't think the fed will be watching trade as closely to decide what to do in july. they're watching what they should be watching like employment, inflation, those numbers. >> thank you, guys >> thank you when we return, we'll introduce you to a travel startup that focuses on activities and adventures. it's called peak it has some big backers from silicon valley and it has a new partnership with google that could make it the next big unicorn. the ceo will join us next.

. welcome back the travel activities market may hit 1$120 billion this year, an some big investors are betting on it. one entrepreneur riding that wave is with us now, she's ruzwana bashir ce heo of peek, a travel website this is not just a travel website, it is about booking activities describe to us how you got into it >> peek.com is a platform for booking great things to do whether going zip lining on holiday, or doing a great cooking class, you can find things to do with us we provide our peek pro

technology to empower tour operators to come online for the first time only about 20% of businesses with online. so we're helping them make that transition >> how much of this is millennials who want activities, experiences, this is a different thing? >> there's a lot of talk about millennials wanting to buy experiences over products that extends beyond millennials and families saying i want to spend more quality time with my kids, i want to take them on a new local adventure. so we're seeing it extends beyond millennials you have a whole spectrum of people doing that. we have new businesses emerging in the sector. >> so you have attracted some interesting backers. we mentioned jack dorsey, a couple other people, eric schmit, it's not just them, you raised $40 million so far what's your next step with this? what do you need to do with that $40 million? what we see is it's about 1$150 billion market globally.

but so little of it is online what we're focused on is getting all these businesses online to help consumers book great things to do. our job is to continue scaling that >> how much is this a pivot? when you started it was a consumer business. it started for the consumer. it feels like the biz as soon as mo business is moving towards a b-to-b play. >> it was hard to book activities, because many of the businesses were not online we have focused on the business side so with our tours now, the average business is increasing bookings by 30%, 40% they're improving consumer experience

>> how much hardware or software do you have to provide the businesses when open stable firtable first, they were providing terminals to restaurants so they could accept the reservation. >> often the businesses are buying their own hardware, ipads, things like that, but that technology layer is absolutely necessary in the space, because without it businesses would no operate. >> where do you make more of your money, on the business-to-business or -- >> today we're focused on the business-to-business that's driving our engine. >> do you think that changes >> is there a place i could ask you where i want to go and you would say not yet? >> we are predominantly in the u.s. >> don't want to zip line. >> you don't what do you want to do >> i can do some white water rafting. >> delaware river. they have a package on the

delaware river >> yeah. >> can you vouch for the zip line places? >> the biggest thing we're doing with technology is we're actually creating this layer of information. that means realtime availability and tons of reviews. 800,000 verified reviews on average we have 20% more reviews than the next platform so we are making sure you have real information and a 4.8 star rating is extremely high on average. >> do you feel like people are trying to game the ratings >> they're all verified. >> tripadvisor, everything else, you go on, you're not sure -- >> that's a great point. every single person has to be verified >> how do you verify >> because we own the back end of the technology, we only poll consumers that definitely went on the tour. >> the one thing i hate about amazon, when people review the book, they can't verify they actually bought the book >> every review on peek.com has been verified.

>> will you go worldwide eventually >> yes, absolutely >> you will. that would be expensive. >> the u.s. market, it's about 35 billion it's a huge market but you have europe and other markets that are clearly there and important for consume efrs consumers and businesses >> there is already a business in asia, so will you go there or will you stay out of there because of competitors >> there are some large businesses in asia and europe, but with this technology layer there's not much out there i think we'll have an opportunity to go global, but a big focus for us is europe as the next big market, it is the largest market in the world. >> thank you for coming in today. >> thank you. coming up, more on today's big corporate stories including an update on the grounded 737 max. another day, another high-profile tla high-profile tesla departure.

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to sq"squawk box.b. dow futures are indicated down by 31 points the s&p futures down by 2 points nasdaq down by 13. both the dow and the nasdaq are less than 1% off their highs right now it's time for the

executive edge anheuser-busch anheuser-busch inbev said they want to raise 9.$9.88 billion by offering their product in asia tesla is losing another top executive. lucid motors hiring one of their top former vps of production in tesla's -- >> who have you ever heard of him >> he was responsible for the model s and the model 3. a lot of attention on tesla's delivery numbers

investors have not seemed to blink when so many top executives have walked out the door at tesla. >> an update on the grounding of the boeing 737 max southwest airlines gary kelly says he expects the 737 max planes won't return to the flying schedule until after the current projected reentry date of october 1st last week boeing said it would take until at least september to solve software issues for the ground eplane after regulate her uncovered a new problem. we expect to have more details on the financial cost of the grounding in the second quarter results. coming up, oil rebounding 10% in the last 30 days. we have a live report from what is becoming a critical opec meeting in vienna. kilduff is here. and later, how the trade truce impacts the national

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welcome back u.s. equity futures at this hour

giving back a little of the gains we saw yesterday which was an interesting session cramer was tweeting about it we opened up 245 points higher, there was a sell program that went for four, five hours yesterday. it finally sort of petered out we were able to move back up triple digits, but never did reach the highs from the early morning. today we're giving back 33 points on the dow. the nasdaq giving back about 14. the s&p down two and change. opec ministers agreed to extend the time by nine months for cuts brian sullivan is still in vienna on the company dollar, where non-opec allies are meeting today. if he looks happy, it's because he is, i think hi, brian. >> hi, joe, thank you very much. for most of the last 40 years poke was the boogie man of the

oil and gas markets. they were seen as a cartel, maybe a monopoly, a price fixer. what happened last night was that opec sort of conceded that maybe they needed a little bit of help to blunt the real force in global gas and oil, which is the united states. keep in mind, u.s. oil production has doubled in the last five years. when we met yesterday, we did this yesterday morning, it was another nine hours before that meeting ended. everybody said it would be an easy, short meeting. not the case at the end of the night they extended production cuts, 1.2 million barrels a day for nine months that's important because sthey don't live in the six-month increments between meetings. this cooperation between russia and opec adds more barrels to opec's fire power.

so they're trying to regain some of the mojo they may have lost over the last five years because of the permian shale boom. i asked the audi oil minister last night, i asked what this deal done to counter the threat of the permian he talked about how they think the permian may drain faster than others may think. >> i have no doubt in my mind that u.s. shale will peak, plateau and decline like every other one in u.s. history, the question is when if it does, it's pru dentdent fr those of white house haveus whot stake, to keep adjusting i think it's -- i think that's the reasoning for us to stay vigilant and watchful and adjust slightly here up and down as

necessary. >> joe, that's a big theme the permian basin. hydraulic fracturing a lot of tubes going into the ground he thinks those tubes will drain the permian faster, they're planning on that that's part of this deal that we got here the russian oil minister is about ready to speak in the next few minutes. i got something for you, joe, ready? >> yes, i am >> you said on the company dol we have been living it up here in vienna. not working at all we got you breakfast i will ship that back to englewood cliffs >> oh. >> yeah. that's -- what is that >> sausage >> sauerkraut. >> living lit erally high on the

hog. >> good food >> no time for screwing around i hope you did go down the danube >> the meeting ended 10:30 last night. nobody got to go to the danube that's all right that's why we're here. >> all right we'll talk more. brian, i'll ask kilduff this when you do a production agreement like that, does it at least mean you cheat less or what does it actually mean does it result in less or -- because you're cheating less -- they still cheat, right? >> cheat, since i'm at their headquarters, i'll watch what i say. nigeria would like to pump more. iraq are at 4.6 million barrels a day. they're probably at 5 if you believe the other numbers, the non-opec numbers

iraq said for 15 years we were at war effectively, we're out of the market we need to keep pumping oil. the irony of this in some ways is that you have this great american energy boom, 10 mill yo ion direct and indirect jobs for years opec was the boss, now we're the boss we may pump ourselves down to 40 bucks, 45 bucks a barrel so a lot of those companies in the permian with that debt, they may not survive. if the story is too good, you write yourself out of the book >> all right we have kilduff here brian, try to do something for yourself while you're there. you don't have to share it with us you can keep with the narrative that, you know -- okay have the sausage excellent. have my sausage. i don't think that will last if you send it. i won't eat it let's bring in john kilduff a

cnbc contributor even -- it's worked. we're back higher than we were the last couple of times you were on. will it hold or will people get a chance to sell more. they like to do that >> they're like dieters around the dessert table in terms of cheating the saudi oil minister yesterday did call everybody out on that the saudis are demanding higher compliance to the sense you risk that wrath, that's when the saudis are not as willing to haul the whole load on their own shoulders. right now their production is below 9.7 million barrels. that who to be the lower for them in several years. they are shouldering the load. you might see greater compliance from iraq. certainly the percentage

compliance right now with the scheme is about 160% because of the damage that's been done to vns v venezuela and iran they're doing just fine even with some countries cheating yes. global inventories have been coming down. >> how much of the higher price is tensions we've seen in the gulf how much of it has nothing to do with opec? >> at this point i would say we're up around $60 a barrel you could argue a good 7 to 10 at least >> president trump is not going to like this is he going to tweet is saudi arabia, would they be sensitive to angering trum np that he's been in their camp in a lot of different ways and gotten criticism for kind of being a backer in a lot of ways of saudi arabia. is this going to be seen by trump as betraying his

friendship >> he certainly won't like it. with oil in the 50s, the saudis can sit back and say what are you complaining about? when it gets to above 60 and 70, then he has the beef, the president. the saudis will have to respond. they want to be careful. they're staring down a slowing global economic picture here the manufacturing pmis in the key asian region took a big hit over the weekend same two exports out of cratered those are the key demand centers for oil. that's what they're fighting for now. not just u.s. output but the demand growth in the key asian region taking a hit. i don't even know how to bring

up peak oil, what is peak oil in the u.s., daily production >> i was intrigued by the minister's comments that brian ran there. the death of shale has been talked about almost from the beginning. there were supposed to be steep decline rates, they wouldn't last, too expensive. all of that has been blown out of the water the wells keep on keeping on i think we could probably get to 13 million, 14 million barrels the problem is if we have a price crash, there will be another reckoning in the industry there will be bankruptcies you saw weatherford went into bankruptcy yesterday here's the deal with that. the companies may go bankrupt but the wells don't. somebody else will come in and pick them up on the cheap like the bondholders did yesterday

with weatherford, and we keep on keeping on even that's a red herring to the u.s. losing its positioning as a major oil producer >> john kilduff, thank you. we expect new delivery numbers from tesla at any time now, but will those numbers be just a sugar high? we'll give you the details on that next. as we head to break, a quick check of european markets. green arrows in the uk and france the dax just turned red to green. when it comes to your customers' expectations, 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.

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welcome back to "squawk box. tesla expected to release q2

delivery numbers elon musk signaled last month they were close to record numbers in emails that got leaks. phil lebeau joins us with more on that and the lost of the engineer hotel dinger and how important that is. >> and who is going to lucid we'll talk about that in just a little bit and as judge smells would say in caddyshack, well, we're waiting. we're waiting as usual at the beginning of the next quarter for the q2 numbers from tesla. and we've known for some time that they're likely going to be close to hitting the expectation of delivering between 90 and 100,000 vehicles and we'll see if they achieve that and how close they are to that they have challenges in the third quarter. let's talk about what those challenges are the second half of the year a lower ev tax credit in the united states and at the end of the year, it is gone no more tax credit for tesla buyers there is the china auto tariff in effect as they continue to

export vehicles to that country from fremont, california, and as you mentioned, andrew, the vp of production in fremont who had been there for a number of years, peter holken dinger has left and joined lucid motors and when you look at what happened with tesla estimates for the last quarter, look at where they were in april before the q1 earnings report, they were up for full year earnings expectation of $4.23 boom after that it fell off a cliff barely expectation of profitability on may 1st and now most analysts believe they'll lose $1.83 for the full year and that is why even though this number will come out -- and they'll say, look, it is close to record. whether the records are full global deliveries or just in north america which is a possibility. they'll say we had record numbers in north emergenamericae

region, and they'll be focused on the readings last month or next month and when you have the vp of production in fremont leaving and the head of operations for europe is out, has left the company, put this altogether and when you look at the executive departures, andrew, a lot of these people are people who left bmw or volkswagen after a 10, 15, 20-year career and they go to tesla and there a short period of time. and they're out, either on their own or tesla decides this isn't the right person for this job. >> it is fascinating, phil stick around i want to bring you into this conversation but we want to bring "wall street journal" reporter tim higgins into the conversation. what do you make of all of the departures, tim? we'll talk about the numbers in one minute because there are departures we get headlines, and it is like if it is a tuesday, somebody is

leaving. and yet it doesn't seem to effect the -- the stocks moved around a lot, maybe in the same kind of volatility but not in the way people go, okay, there is a problem here. >> going back to the beginning of the company, 16 years ago, there is a lot of churn in the executive branch especially when elon musk took over as ceo so investors are trained to expect this. and when you look at the fremont factory, you have so much churn because making cars is hard and you need to do it on a consistent basis and you see the churn there and long-time auto people get nervous but here in the valley it is the same old same old for tesla. >> run some numbers for us this morning. what do you expect in terms of delivery and then run the cash burn on the company because there are payments coming up toward the end of the year, early next, as the china factory, there is a lot of money that will go out the door. >> yeah. absolutely i think that the wall street number -- the whisper number is in the 90,000 range, that would

be the low end of the forecast from the company the challenge here as you point out is the cash burn even if they hit that number, the margins will be hit. you ha you have huge expenses and a wish list from elon musk a factory building in china and he wants to build a factory in europe and the fact they have to increase the number of super-chargers around the country and facing challenges with servicing these vehicles and getting customers in to take care of problems that they have with these vehicles. so a lot of that costs a lot of money. >> and in terms of that money, is there an expectation that there is an additional money raise, is that what is happening here >> well, elon musk doesn't like to raise money that was one of the issues for the past year was his reluctance in saying, hey, i don't need to raise it even though wall street was looking at the numbers and saying, hey, you're getting real close here man and you go back to the second half of last year and there was

a huge enthusiasm once he started posting quarterly profits on a consecutive basis and he was talking about 2019 being just a blockbuster year, profits and positive cash flow going forward and that is what socked investors in the knows in the first quarter in the expected sales and is there demand for the vehicle that investors have thought for the last two years or so >> and phil, are you still with us do you think if he goes out to the market for additional money, given some of the costs, is there enough pent-up demand maybe not on the sales side but the investor side? >> i think there still is. and i don't think this is a bottomless pit we're just throwing money after money and i think there is enough support on

the bask -- the bankers side to believe in the tesla story. >> thank you for walking up in chicago and thank you tim for waking up really early on the west coast this morning. appreciate it. thank you. when we come back, reexamining the security threat of huawei after this weekend's trade truce. but this morning some insurance companies are monitoring drivers' every move in exchange for the possibility of lower rates but what about privacy concerns? we have that story next. stay tuned, this is "squawk box" here on cnbc as someone in witness protection,

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traid uncertainty creating a market tug-of-war and huawei may be the chess piece that could be the winning move for a deal. that discussion minutes away jobs in america. we check the pulse of small business with the ceo of paychecks. and the summer driving season is in full swing. [ horn honking ] >> and insurance companies want to track your every move but will it help or hurt your premiums >> do i even have my lights on >> we'll test out the system as the second hour of "squawk box"

begins right now ♪ highway to hell ♪ on the highway to hell >> announcer: live from the beating heart of business, new york, this is "squawk box. good morning welcome back to "squawk box" here on cnbc i'm joe kernen and becky quick and ross sorkin. people drive in the left lane and they think it is optional. i like the left lane, not me -- that is what they're saying, and i choose the left lane to drive in i know i'm going 50. i choose this lane and it is my lane to drive in and i don't see why you have a problem -- >> but hold on -- >> supposed to go over -- >> what happens if you're driving 60, 65 in the left lane and then there issomebody behind you who really wants to drive 80 in the left lane. >> what is the speed limit >> i say the speed limit is not

65 miles per hour and your 65 in the left lane. >> if there is no one in the right lane, you should not be in the left lane. >> you're passing people but you're not -- but when you have a chance to move over. >> you move over when you can. >> to left faster -- they want to break the law on the autobahn there is no -- >> we're in the u.s. here. >> you're not trying to prevent other people from breaking the speed. >> do you do that? >> no. >> you're so woke you're making other people drive fast. >> people are rear-ending you in the left lane because you're driving 80 and they want to drive 90 and i don't know what you're supposed to do. >> my point is that the left lane is not an optional lane for just -- >> it is a passing lane. >> moseying along. >> people don't know that, andrew they don't know that they really don't. >> that was a public service announcement this morning. >> u.s. equity futures -- it might be my -- >> now that i know it is your biggest peeve, it is better than

friday i'm in love. >> folks, cgo in the left lane, hang out there and slow down to 35 miles per hour. >> it is by far -- and when i mention it, it is a lot -- it is not optional >> if there are multiple lanes, yes, you're right. >> okay. anyway, futures are -- i would rather talk about my pet peeve because there is not much happening here down 34 1/2, the nasdaq down 14 and the s&p is -- what upsets me is people that don't turn right on red. >> in a state where it's legal >> and where there is not a sign >> but sometimes they're just lazy they just don't feel like looking -- >> nobody likes to get honked at that makes all of us slow down

and look more obnoxious than you are. >> and there is a show with dan -- and he's in a tesla and you can't do a quick courtesy and there is somebody in front of them and they lay on the horn and so they come back -- >> is that what happened when you were driving >> that is what happened. it stuck. >> here is what is making headlines at this hour gary kelly telling employees he expects the 737 max planes will not return to flying schedule until after october 1st. last week boeing said it would take until at least september to solve software issues after regulators uncovered a new problem during simulator sessions opec has agreed to extend current production cuts by nine months and that deal is subject to approval from non-opec allies and they've been reducing output since 2017 and wti just above

$59 a baseball and nike pulling a sneaker days before the fourth of july, the air max 1 usa featuring a u.s. flag called the betsy ross flag, with 13 start -- stars uses during the american revolution and they were pulled when collin kaepernick said that was used during time of slavery and could be offensive to americans. >> checking shares of nike stock is down 8 cents, $85.33 a share. >> big news this morning order being restored in hong kong after protests turned violent yesterday. so what is the fallout want to get to eunice yun with how we could be impacted by all of this. eunice >> thank you, andrew for businesses here in china, a lot of them are saying they're

mostly concerned with the way that president trump had commented on hong kong so overnight we heard president trump speaking to reporters in -- at the white house saying that protesters are looking for democracy and unfortunately some governments don't want democracy. so that was seen as a veiled criticism of beijing and one of the big concerns among the authorities here has been that the situation in hong kong could somehow become a pressure point in the trade negotiations between the u.s. and china. currently we know that the authorities here are are incredibly sensitive about the hong kong situation. right now our signal is being blacked out and it is because beijing really wanted to control exactly what the china public sees they don't want the people here to understand fully that the hong kong protesters are serious and also a lot of the stories

that have been about hong kong have mainly been about the celebrations and about the chinese pride in the country there has been some condemnation in the state press, but mainly that has been targeted at countries such as the u.k., there as been a lot of vitriol spewed at the u.k. not only by the state media but officially by the foreign ministry and the foreign ministry has reiterated over and over that the situation in hong kong is of china's concern and internal affair and that was also the message from the chinese government in the run up to the trade talks at the g-20 when the chinese government was trying to make it very clear to the u.s. as well as to other countries that this is a situation that should not be discussed outside of china guys. >> why so much vitriol directed at the u.k.? because they used to be the ones

who were in charge in hong kong? >> reporter: yeah, well that is one of the reasons but also jeremy hunt, now a hopeful for the u.k. prime minister post, tweeted saying that he fully supports hong kong and that they support the ability for the people there to peacefully protest so that is one of the reasons. but generally in -- here in beijing, people see -- have been playing up the idea that external forces have been involved in instigating the mass demonstrations there >> but it is hard to report and dump the vitriol on the u.k. without reporting that they're supporting the movements that are afoot in hong kong right now. so i guess it becomes a tricky dance. it depends on how much you want to report about that if your trying to cover up the whole thing. >> it is a tricky dance. i think that another point that is important, at least for the business community, is that the

folks in hong kong within the business community have been eyeing what is going on very, very carefully a lot of that is because there is a concern that beijing, if it does decide to crackdown on hong kong in a way that is seen as undermining the structure in terms of the one country two systems, that hong kong wouldn't be allowed to operate freely as it has in the past, that that would send a very negative signal to the business community and you could see a lot of the folks in -- in hong kong and the elite leave and that hasn't happened yet but people are hedging bets. >> eunice appreciate that from beijing this morning we'll continue the conversation. chinese tech giant huawei becoming the chess piece in this tense situation between washington and beijing with further discussion, we're joined this morning by robert

spaulding from hudson institute and senior director, in that role he penned a memo calling for a government takeover of 5g development and john rutledge, a cnbc contributor good morning to both of you. robert, you saw the new deal between president xi and trump which will allow some u.s. companies to supply huawei with technology and equipment does that make sense to you? and is that a security risk? >> so, moving into the g 20, there was concern and i heard the rumors that there was going to be a deal on huawei what i looked for out of osaka is when is hong jo going to released from the indictment and huawei released from the entity list or the executive order on huawei going to -- to be

rescinded and if you listen to the trump conference none of those things were broached so in essence when you look at national security and huawei, there is fundamentally no change in how the federal government is dealing with huawei in terms of enforcement. >> so you think there is smoke and mirrors? >> i think it was rhetorical in order for president xi to save face and get the talks back going again. >> my understanding, if your micron yesterday, or there are 30 plus u.s. companies that do business regularly with huawei that now plan to either continue that or, in fact, increase that. >> well, they'll have to go through the bureau of industry and security and what they're going to have to do is apply for a waiver because if the equipment they're selling is on the export administration regulation, then they're required, because huawei is still on the entity list to apply for a waiver and according

to the current enforcement, there is a presumption of denial of that waiver for national security reasons so there is a 90-day waiver now for four areas and that is servicing existing infrastructure, smartphones, dealing with cybersecurity issues or working on 5g standard so if they have an issue with one of those, then perhaps that is under the 90-day waiver, they're allowed to do that but if it is something else, they'll have to apply for a waiver and there is a presumption of denial of that waiver on the basis of national security there is no change to that. >> let me ask john rutledge, just listening to what was just said, the idea that this is smoke and mirrors, i would imagine that president xi would have a problem with that >> well, sure. you know, we're into government by tweet now, not government by law and regulation so these things change

overnight. obviously huawei loosening up on huawei was an important thing f -- for xi domestically. >> and going back, either they loosen up on huawei or they didn't i'm confused because i'm hearing robert say maybe they really didn't >> i understand. but robert is talking about the way the rules work and the process works. and we're talking about a president who sticks a monkey wrench in the process now and again by tweeting and so we don't know what -- we don't know what, if anything, changed on saturday and that is the problem. that is why it is so difficult to do capital spendingnow because you can't project any cash flows into the future but this tech war is right in the heart of the dispute between the u.s. and china and it is in the trade war and it is actually now become foreign policy, not just trade policy >> robert, i want you to react to this. i had asked secretary of state pompeo about the risk that huawei posed in the claims that

the company ceo had made that it doesn't share information with the chinese government when he was here in may and this is what he to say. >> to say they don't work with the chinese government is a false statement. >> there is a law they must work -- >> they're required to by chinese law to do that so it is just -- the huawei ceo on that, at least, isn't telling the american people the truth, nor the world. >> robert, you believe huawei is a national security threat >> absolutely. and what secretary pompeo said is absolutely the truth. by law they're required to cooperate for intelligence-gathering reasons there is plenty of reports that huawei personnel have been caught doing things that they shouldn't be doing everybody knows it it is not -- it is a -- probably the worst kept secret in d.c. and other capitals. >> and you would try to shut them down if possible. >> think we've already shut them down in 2015 when i first went to the bureau of industry and security

and asked them about how do we get enforcement on companies like huawei that are breaking the rules and what they said was we had to go through the white house. for any other country or any other company, it was enforcement that the commerce department itself could do and so what happened here in the trump administration is they've allowed the bureaucracy to do their job. so these people that do enforcement and doj and fbi and the commerce department are doing their job in enforcing the rules. >> robert, let me ask you, the counter point, if i told you that we were going to go to war with china tomorrow which i hope never happens, do you believe the u.s. government would call the qualcomm's of the world would call the chip makers, intel and everybody on our side, if you will i and try to use those services in a back door way in the same way i imagine huawei would use. >> i think that is a completely

different notion. >> we're not at war. >> -- as a national security risk. >> what huawei is using the information for is far more pervasive than just a national security issue to support a crisis or a conflict. >> have you seen evidence that the chinese government has used huawei to spy on the united states >> absolutely. >> direct evidence >> yes. >> that has been presented publicly >> yes >> can you point to some of that. >> well, you can point to -- well i can't -- off the top of my head -- >> there isn't any >> look, huawei is the point of the spear in the growth of china around the world they're using the one belt, one road initiative to drive their foreign policy and their economic policy. u.s. is lagging far behind on the spending money on this but the rest of the world wants high speed technology, they want 5g, they like the technology

they say at huawei, they think in every country the big companies work with the government i challenge you to find a big u.s. company without government guys walking around with -- for their contracts. i'm not saying china is a good guy. i'm just saying it is part of the political football that becomes foreign policy and foreign policy now is flipping back and forth between the free traders and the neo cons and it is a very unstable situation. >> gentlemen, we have to end the conversation there but it is a longer one and i'm sure we'll have both of you back to talk more about it. robert and john, thank you. >> thank you. >> thank you. coming up, jobs in america new data from paychex on the state of employees so does instant feedback make you a better driver. contessa is checking it out. a tracker, we'll see if it works. contessa, get out of the left lane. >> it doesn't track whether i'm

in the left lane but it does track how fast i'm going and here is the thing, this is a big new trend in car insurance, and the bet is it is going to be a big boost to the bottom line putting big brother in your car. the question is, and i want you to ponder this before i come back, how much privacy are you willing to give up in exchange for a discount on your car insurance? "squawk box"s ckig aer is iba rhtft under this buttonwood tree, is where people first gathered to form the stock exchange which brought people together 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. ♪

the paychex june small business employment watch is out and joining us is paychex marty busey. what could you tell us. >> this month we have a drop off and we've been consistent for the first five months and we've been seeing a drop off but it doesn't make a trend but we saw it across the u.s., all regions, south is the strongest and across all sectors as well. >> south is the strongest in terms of employment but if you look at wage growth, it is the west that is doing better. >> yeah, it is the west has the highest wage growth and there is more minimum wage changes there you're seeing the overall wage paid is lower in the south the south has more employees, as you see the migration to the south, it is tennessee, texas,

georgia that are the strongest showing the best small business job growth right now. >> marty, just to be clear, we're still seeing growth but things are slowing down. what do you think is causing that >> definitely -- that is what we're seeing still growth but slowing down and it is the one month because it is consistent for the early part of the year but small businesses in the tight labor market are having a hard time finding employees. there is only so many out there and the small businesses don't have the flexibility of the hours, the technology and sometimes the recruiting power that larger companies have and that is being felt it is harder for them to attract and retain the workers than it is for larger businesses right now. >> what have suffered the most. >> travel and leisure and there is a number of minimum wage increases in states and that has dropped off on the leisure and hospitality so they are not hiring as manypeople for summe jobs and trying to get more hours worked out of them and also seeing retail down. so trade and transportation and

retail is part of that that is dropped off over the last year as well. certainly i think we all know retail have dropped off and we've seen that and that definitely is impacting it as well and manufacturing is down over last year. >> marty, thank you. good to see you. >> okay, thanks. coming up, insurance companies want to know your driving habit. but could it help save you money. contessa brewer is putting the system to the test and will join us right after the break >> announcer: time now for today's aflac trivia question. what is macy's budget for this year's fourth of july fireworks? the answer when cnbc "squawk box" continues but not when to use it. do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere? ughhh nooo, there's no insurance for that.

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in patients with diabetes. everything looks good. you have beautiful eyes. ♪ >> announcer: now the answer to today's aflac trivia question. what is macy's budget for this year's fourth of july fireworks? the answer -- more than $100,000 does instant feedback make you a better driver. insurance companies are using beacon-like devices to try to monitor driver behavior and

sharing that information with drivers by rolling out mobile apps contessa brewer is trying it out and she joins us now be careful, you're driving. >> i'm using this app by allstate that is monitoring things like how hard i brake, how fast i drive, how much time i spend behind the wheel of the car, even the time of day that i'm driving. and then they take this information and they -- theycoal ate it for telemetrics and it is been around but one of the new things is that it gives drivers automatic feedback through the apps they download through the insurance company so it is super easy here is the thing. it actually changes driver behavior here is what we know of the drivers that have agreed to have the driving monitored for 26 weeks, they say, look, the overall driving improved dramatically, the instance of

hard braking was 21% less and younger drivers improved most overall. and so what do you get in exchange for giving up the privacy and inviting big brother into your car? well allstate gives you a 3% discount right off the bat and then give you a dollar amount every time you sign up for it again. there are other insurance companies like state farm that say you could save as much as 30% on your car insurance if your a good driver what if your a bad driver? well then your premiums might go up allstate said not through them your premiums won't go up because you like to brake really hard if your interested, on my trip, i have no hard braking, no speeding i'm shaking a little bit because i was managing camera crews and traffic and directions and all of that at once. oh, by the way, the one thing that this does not monitor, if i stay in the left lane. >> contessa, how many people sign up for this because i've heard of this and i'm so curious

the idea that would you let somebody track your every move for something like a pidley 3% discount seems insane. >> for one thing, in 2015 we're told there are 12 million people using this user-basin surance and it used to be devices and now it is on apps. they're predicting by 2023, 142 million people globally will use it we mentioned the privacy we asked a lot of people whether they would use this in exchange for a pidling discount as you call it, 30% is not pidley most of them said, look, my phone is tracking everything i do anyway, why not get something for it but the real concern is what happens if this is no longer voluntary? >> right. >> what happens if, one, you decide not to download it and your premium goes up. >> that is what they're working towards. >> exactly. >> to wear down the rest of us to get to that point >> but wouldn't that be better

>> it does for my kids, i don't want it for me. >> oh, my god. >> why won't you want it >> if you did lower your insurance by 30%. >> i'm bothered by the lack of privacy and the whittling away -- >> 90% of when i'm driving i'm hoping there is no cops around to see the things -- contessa, i've been pulled over and a guy goes, you know what you did, right? it is like, how long you have been following me? that is actually "liar liar" and jim carrey can't tell a lie. >> you have the camera -- you have the camera on you and i have the camera on me. i wanted to show you what happens if your doing the hard braking and speeding then i'm thinking, i'm just giving them actual evidence on television that i'm breaking the law. why would i do that? i'm not doing that. >> this is the worst thing i've ever heard there is a lot of things that i don't want to know -- >> is there a moment where the insurance companies would share the information with

authorities? to me that is the central -- >> and i was is tracking -- >> and speed or potentially if there was an incident whether they could subpoena your records. >> i love waze but if they share my information they are so off of my device. >> you're raising all excellent points right now, it is still in the nascent stage so what this becomes -- and again if your look at waze of what you could determine of police ahead and everybody will slow down before you hit the speed trap, the way we're driving is changing because of the monitoring technology that is now carried in our phones. >> can you break the law on that four cylinder highlander you're trying to drive around in? can you get above the speed limit if you desire to do you know if. >> i'm aware that you can. i'm aware that you can. >> this is the worst story -- i

don't even want to be associated with this story, contessa. >> by the way, contessa, would you sign up for this thing all of the time? >> i'm not saying i'm an aggressive driver but i don't want someone -- i don't even want my husband knowing -- >> what do you think about the easy pass. if you go from one bridge to the next bridge and you get there too fast. >> they've been saying that for years and they don't and then people whips it out and then they have worst traffic. >> so you don't want to try to set a record coming up, news on tesla this morning. reports of multiple executives leaving. what it means to the company and talk production figures. as we head to break, take a look at u.s. equity futures down by 50 now on the dow. "squawk box" will be right bac k.

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still to come here on "squawk box," this morning we have jobs, trade and earnings. key data for the markets coming up in the next few days and

weeks. we'll walk you through what you need to know and then two more tesla executives leaving the company we're going to talk elon musk and company in just a couple of minutes. and later manhattan real estate sales exploding in the second quarter. what is driving all of this in the big apple? it is supposed to be the 'lposite way wel discuss all of that. "squawk box" returns in just a moment

record-breaking session for the s&p 500 thanks to the trade truce between the u.s. and china. joining us now with market outlooks, howard silver blat and kevin difney from russell investments. i try to figure out -- with the stock market, it is best sometimes to sell when you feel like selling, buying when you feel like selling and the most common feeling is usually the wrong one. so there is a guy over at morgan bearish for a long time who said there is going to be a one-day move from the g-20 from the china tried truce. and then we'll be back to serious issues which makes me think that may not be the correct call

is there more here are there more records that will be set or we got the news now and it is a sell on the news. >> we've got the news now but we're one tweet away from directional change and we've been changing that for the last nine months. remember q4 nothing went up and everything went down and q1 was the opposite. this month has gotten shorter. april you had a high may was a devastating down june back here and now we're the high the markets are moving quickly we're not sighing the inter-day volatility but the trends there so we're still evaluating what -- >> what do you answer me going higher or not goin higher. >> there is the not the line and it is reactionary to the market and the fed and if it is not this one it is in the e. one the election is also here. it is 2020 already. >> knowing what the jobs report

would be, kevin, doesn't help me tell you what the market would do if it was good, i hope it's good because i think that was not a great number we had last month and i would hope to see things back on track. but then again we've got anything that makes the fed more -- makes the fed easier or more likely to cut is a positive so how do you interpret it. >> if it is a negative shock, that will decline the market and it is negative sentiment what the market is trading off on is sentiment and valuation and it is looking forward or looking backward so right now the market run-up this year has been primarily driven by multiple expansions, so valuations have gotten richer because the market is pricing in not just a fed rate cut -- a fed rate cut but it looks like it will go down in q2 but that valuation expansion and pricing in the lower discount rate for equity valuations and thinking there aren't aggregate negative shocks from the earning season.

>> we know the earnings comparison this is we're were tough because we had such good growth last year so that the second derivative, the growth, the rate of growth would slow but you're saying that is why -- we've handled that with multiple expansion. could this continue? >> yes there is a bottom line clearly transmitted that led to the pressure in q4. >> in december >> the topline looks stable and rebust, between 4% to 6% for the s&p 500 and what could push it either way are record margins. and that is driven by the tech sector having an -- an overwhelming weighted effect and markets are high and decline by about 100 bips or so and it didn't go down last quarter but the profitability is giving that valuation support if your margins are higher, you deserve a richer valuation and that is -- that sentiment-driven and the bad side is it is a short horizon signal which would be

interrupted by a negative shock. >> and i think of you as a s&p person, what am i going to be for the next six to 12 months? am i feeling a three handle on my s&p 500 or am i feeling a trading range to handle on my s&p 500? do you think we're going above three and then higher? >> i do. >> you do? >> going above 3,000 but it is not straight you're going to test it on guidance for -- that will come out for the second half. not so much the actual results for q2 which have come down about 6% but the guidance for the second half, you have the trade out of the way for a short time period so it is the guidance that will pick up so the second half will look better and if it does, the market will go over 3 and you get trade back in there and you go down a little, but the trend is up, the problem is it is a roller coaster. >> so what do you view the multiple on the s&p?

what is it right now. >> right now on a forward-looking basis it is -- >> if the fed is feeling accommodative, is there a reason that should come down? >> only if margins contract. if the accommodation stays in tact and the margins stay around where they are, that multiple could stay -- >> could stay at -- so then are we going to see enough earnings per share growth to push the market higher or staying at 17 times earnings and then wages? is that playing into your multiple >> on the earnings growth side, i think managements have been more conservative on down side than optimistic on the upside so i think there is a reason to be and the wage pressure, the larger picture there is we don't see deceleration unless we see employee claims spiking and -- unemployment spiking and we haven't seen that. and the wage pressure has not been a big contributor to that profit contraction so far. >> you look like you are 30. how long have you had gray hair like that. >> since i was 30.

>> because of -- you worry about your clients >> all of the time >> is that what it is? >> i think so. >> that is a good thing -- so you really care, don't you >> of course >> excellent >> howard, you're doing well i guess you don't give a crap -- >> about the gray. >> no, about your clients. you're not worried as much so since you were 30 unbelievable you know they have things for that kidding. thank you. >> when we come back, another day, another couple of departures from tesla. we have t details on that. plus what veorinsts could expect from tesla second quarter delivery numbers "squawk box" will be right back. twenty-four people came together to sign an agreement that created the stock exchange. just the right elements coming together. it started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. it started in an office on the corner

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wall street waiting for production numbers from tesla coming amid a number of executive departures phil lebeau joins us with the latest. >> this is out of europe according to reports, the head of europe for tesla is leaving the company. we've not had confirmation from tesla about this but if this is the case, you have another executive leaving tesla. just a week after the former head of production at the fremont plant said he would be leaving tesla and this morning lucid motors announcing that it has hired that executive, so what you've got here is a steady cadence of executives fairly high up within tesla who have said, either on their own or because things haven't worked out with the company, that they are no longer at tesla this comes as the company is

about to report its q2 delivery numbers. and the number that people are going to be focused on, what is happening with model 3 delivery. 74,100, that is the estimate in terms of model 3 deliveries. the wild card in this, china we know there is strong demand if not record demand here in north america but it is unclear what is happening in the tariffs from the vehicles from the united states over to china. so as you take a look at shares of tesla, remember, they open up a plant in shanghai later in year that is the expectation, guys. and that would make a big difference in terms of deliveries in china. which is the world's number one electric vehicle market. >> phil, thank you. let's continue this conversation right now and for that we bring in dan ives of web bush securities and jeff signfeld from the school of management dan, you first, what do you think of what we're hearing so

far and the expectations and overall what you think is going on. >> it is a revolving door on the executive side and i think it speaks to challenges that they're going to have especially in the second half hitting the numbers. i think q2 they missed their guidance in our opinion. and in terms of units, about 85 k but it comes down now to profitability is almost an impossibility as they go into 3 q. that is the issue for the street here as they go into the second half. >> you know, the executive losses, there has been turnover for a long time there. they've been able to muddle through and gotten by with that. you think that will continue >> i do. i think what is starting to happen, i went to the clock struck 12 but from a demand issue, that is what tesla is facing and fundamentally trying to do it while cutting cost. so in terms of europe and what is happening in china. right now they're trying to balance a lot of things and i think that is having pressure not just on the fundamentals but it all comes down to demand and

profitability and for investors that is a glass half empty view. >> your market is just above the market and $230 so you think this is baked into the stock price. >> i think it is baked in but what we're cautious on is the leg down specifically with that guidance number. i think they'll have to rip the band aid off and lower guidance for units for the year i think they think they could hit it in my opinion are wrong and that fundamentally will see in terms of demand in the second half especially in europe and china which are lackluster. >> jeff, you look at this from a broader perspective of leadership overall and very concerned with what you've seen. i still come back to the idea that elon musk is probably the biggest problem for tesla but the greatest asset the company has. >> yes, it is definitely a double-edged sword and i listened to the challenges that dan ives or phil would have coming on so frequently to talk

about the tesla story and yet we never have to wery they're going to be disappointed because of what you point to is elon musk, there is an interesting new story for them every day we consider what musk does, list the d's, the demand saga is very confusing, the departure issue is confusing, the issues doing with his regular delusions and distractions that he comes out w. the debt issues or the boards denial or this death watch that we have going on and by the way, i don't think we are looking at a company on the verge of death i don't think that either phil or dan would say so. it is sort of like mark twain in 1997 saying the rumors of my death are greatly exaggerated but there is something happening here and there is a shell game that elon musk has going on and every one of the d-terms is a whole saga in itself demand is not going to be what we say it is going to be there is debt coming up, half a billion dollars not covered. this november, to the to mention running out of cash at the end

of the year, the demand -- the pent-up demand, and kind of a sugar high that we know the lingering incentives and other reasons have led to perhaps those -- to squeak through with good numbers today or tomorrow when they drop down from the heavens. but by the end of the year, there is no way they're going to hit 400,000 vehicles. >> jeff, calling it a shell game is kind of a big charge. the people who have been shorts on tesla have not seen this play out, when do you think things materialize or is there a point where you say he's a success or a failure? >> obviously he's a genius and we know that this is a board that considers him to be a genius, and yes, can he land a satellite on a small device in the ocean and take a rocket ship back in there, and yet disappointing on so many fronts. even his solar city is dropped from number one to number three.

but the diversionary moves that he'll come out with a chitty chitty bang bang submarine car or the last time with investors or a million robo taxis next summer with no evidence to support that or that he tells us at the end of the year, we'll have consecutive quarters of profits and we see that didn't happen, as we have $700 million of losses last quarter and dan points out he's disappointed and so is everybody else so these are diversionary moves. that is the shell game here. not that he isn't a genius and wang was a genius with wang labs and so is ken olson for digital and nick l-- nikolai tesla is genius and he created wireless and remote control and all things. >> and i want you to ask you about a cash crunch so we'll get

to the end of the year there are cash payments where the cash has to go out of the door is there enough money to go out the door >> well, they raise -- raised on the -- in our opinion you think they have to go back to the market. >> so you think there is next raise. >> they've have to raise money for -- >> what is the appetite among investors for the next raise -- >> you'll see the capital will come at a cost. >> what is the cost? does it dilute the shareholders? what will happen here? convert or what do you think the setup becomes. >> the setup comes can they hit profitability in the second half if they hit profitability, that additional cap raise maybe comes off the table. but in our opinion that is where the $1 billion to $2 billion and they will have to raise another convert because at this point the issue is debt. albatross around musk's neck is the $10 billion in debt. >> and how about those things in april.

there was supposed to be debt came due and potential for issues that came up and -- >> becky, dan was about to compliment me. dan, go ahead. >> jeff talks about is the math doesn't lie and fundamentally that is the issue, the debt is what is squeezing musk and tesla and that is why you're seeing departures because they're trying to do this -- >> the departures are incredible nobody watching this show could name any tech company, any auto company, and with these kind of departures if you go through the list, most of the people they hardly stay a year or two and there is some 400 in the last three years. every time i come on i'm talking about the 50 that left and they left great automakers to come here and they go to great other places after a while the board has to ask the question, what is behind all of the departures. 60 of them already this year. >> many of them -- they have a cup of coffee and leave.

>> and you think it is just such a tough environment. >> they're trying to do something that is almost impossible they're trying to grow demand and do a gig three in china and europe and cutting cost at the same time and that is the issue. >> gentlemen, thank you. >> coming up, big hour ahead an outlook from manhattan real estate while sales are surging this is good news. plus we'll discuss the ipo landscape with nelson griggs here are the futures shough s "squawk box" will return in st montju -driverless cars... -all ground personnel... ...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. nbut prevagen helps your brain with an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. healthier brain. better life.

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drug costs in america. a new report says companies are hiking prices big-time to start the second half of the year. we'll talk about how to keep costs contained with former fda commissioner dr. scott gottlieb. >> what is in a winning ipo. with eight new listings more than doubling this year, we'll recap the first half ipo winner and look ahead to scoring in the second half. >> and a beer giant preparing a public float ♪ ♪ >> and it could be the world's

biggest offering of the year the final hour of "squawk box" begins right now ♪ ♪ >> announcer: live from the most powerful city in the world, new york, this is is "squawk box." good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. with becky quick and andrew sorkin and we've been from down 20 to 30 to over 50 after the dow did manage to eek out a 100 point gain yesterday after opening, even better than that. but manage to trade up triple-digits and s&p down about 3 1/3 and the nasdaq down about 16 and treasuries indicated -- are trading 2.02 on the ten year. >> here are stories investors are likely talking about today drug makers reportedly starting

the second half of the year with big price hikes. the "wall street journal" said that 20 companies boosted list prices of more than 40 prescription drugs yesterday and what the average increase at 13%. the paper said that some of the price hikes came on generic drugs that are in short supply we'll talk about this later in hour with former fda commissioner scott gottlieb. anheuser-busch inbev wants to raise $9 billion from listing the asia-pacific in hong kong and that is the world's largest ipo this year topping the $8.1 billion brought in by uber. the units portfolio includes more than 50 beer brands in asia and an update on boeing struggling 737 max plane southwest airlines ceo gary kelly telling employees he expects the rains will not return to southwest flying schedule until after the current projected return of october 1st. last week boeing said that it would take until at least september to solve software issues related to the plane. >> let's talk ipos

a defining feature for the first half of the year for the market but not all ipos are created equal. we are joined with what makes a successful listing in the first half of 2019 and what is made for a lesser one. >> exactly, andrew that is very much the case not all ipos are the same and some if the first half of the year had characteristics made them more lived by investors than other and for one those with recurring revenue software companies like zoom video and crowd strike have predictable yet growing revenue streams. investors drove shares of both companies to the stratosphere in the debut and managed to trade well above the ipo price since then and then another characteristic, growth into profit and not to be confused with growth at all costs like uber and lyft tend to have characteristics, according to investors, but growth into profit means investors see a pathway to profitability by toning down ad spending or back

office costs, examples with this characteristics include chewy with 68% with modest losses and pinterest with top looline growf 60% in a similar profile and emerging market versions of successful u.s. businesses, china debuted a version of starbucks and luckin and jumia is seen in africa and they are hoping for a second chance with the international ipos listed here in the u.s. >> thanks, leslie. >> joining us to talk about the markets so far thisyear, yesterday was the first, so what we should do -- nelson briggs is president of the national stock exchange, let's talk about the first half do you have any numbers for that so 17.7 billion, 97 ipos, same period last year, under $15 billion. >> so this is reaching 2014

levels where we saw the high for us, about 190 i'pos for the year and so we're on that pace. >> can -- i guess was we've looked so closely, leslie has done such a great job, every one that come out i've been ipo-ed to death. >> yikes. >> i kind of feel -- i was a stockbroker and i never got a single ipos or even 100 shares for my best client. >> you were highly ranked -- >> after it opens. oh, great, thanks. anyway, so the second half can't possibly match up, at least with the name brands -- >> i think you'll be a bit surprised. >> really? >> we're going to slow down in july and august. we only have about 20 deals on nasdaq to go but september is a robust month with names we're excited about -- >> like.

>> until they publicly file we can't actually say the names but you've been covering them. >> the highest profile names that are coming public -- >> we work -- >> maybe i want to talk about that. and post mates. >> peloton. >> there is a lot of great names out there. >> which are the best? >> i think kelly highlighted what the investor is looking for and clearly they're paying more for growth than they ever have. >> we need to keep the camera on you. >> that would be great no, we don't talk about names unless they are publicly filed some announced they filed with the s.e.c. and they are out in the public forum and they're timing is tbd and into august, september, october, november and companies are thinking about 2020 being the potential slowdown and the election is a slower ipo year in general so the whole industry is saying let's get out if we can now -- >> i've got a hypothetical for

you. say there is a big company out there with a valuation based on private markets, or private last round -- say the company was worth like $47 billion, okay, just -- >> hypothetically. >> and let's say in the private markets today, that stock is trading like at half -- or also than that, $23 billion, does the company like that, can a company like that go public? what kind of internal machinations have to happen. >> if you go back two years, the talk is can you go out with the down round that everybody is worried about but there is a handful of companies with a lower valuation than the last time around was. investors are over that idea. >> who is over that idea >> investors, lower than what it was in the private. >> and they're willing to accept that. >> they are. >> and so if there is a hypothetical company like that out there, they could go public -- >> and we're sighing companies stay public longer than ever. >> and to andrew's point, we

haven't seen anyone's valuation cut in half -- >> cut in half would be -- we have not seen that but we've seen the 10% lower or 20% lower but that is the range. >> hey, guys, the companies we work -- just in case you want to know. >> hypothetically. >> nelson, would you know if there was getting frothy, what is the one thing to tell you in the past that things are -- are getting frothy. >> i think if you look at the ipos, right now you have the average tech ipos up about 45% and composite up about 45% and that is a big gap there which is encouragingfor the ipos but th bench mark off the public comps so you have to look at the public because the private companies are finding comparables, so the cloud companies coming public they are doing well -- >> that doesn't help like when you exchange ten really expensive cats for five

really expensive dogs. >> right. >> well, geez, what if the public market is frothy. >> what so what i'm saying is the performance of the public market drives the private market. >> i like what you said before about how there is this pressure to try to come out this year before next year i've heard that from places too. is that a sign that people think that the top is near and you better get out before the market -- >> i think it is a sign of does the economy slow down in 2020? we have the presidential election every election cycle we see ipo market about 10% or 20% lower in terms of the number of years you lose the fall a lot. so that is why they're saying that right now -- >> i wondered from a retail investor perspective and great i have to get in on the ipo or better to hold off and ceos think there may be a downturn coming and maybe you should wait. >> again, look at the 14 and 15 were strong and hall seon has done well and the cloud companies are doing

exceptionally well in the public market. >> in the ipo market you see the highest quality companies come out toward the beginning and over time as the cycle continues you see lower quality companies come out that don't perform as well where do you think we are in that cycle >> where are we in the -- >> we're definitely not -- >> do you expect to see some toward the second half. >> there is high quality companies. you have about 360 unicorns out there and 18 with a valuation of $10 billion or greater and so companies are growing in the private market to scale and have a track record and the ones for the fall are very strong deals. >> nellon, i would be shocked if you said anything else. >> would you why would i -- i did let you know that next year could be slower but right now it is about as good as it has been in a long time. >> nelson, doing what he has to do so i'm going to interview you. what is your most -- is there an exciting ipo that you're most excited about? >> well, i think in terms of excitement, similar to andrew, i'm excited for we work because i think it is interesting to

cover. just from a story standpoint i think there is a lot of interesting aspects to that deal >> that said, you're also being very politic in how you're saying. >> i'm not excited to buy any, because i can't buy in, so we're not allowed to buy into individual names of those that we cover, so -- >> right >> yeah. we'd be sitting on a beach maybe. >> a lot of international deals. so china is strong we've seen deals out of brazil that hasn't happened in six years. >> and the anheuser-busch the biggest of the year in hong kong $9 billion. >> i have a random question because it goes back to the hong kong issue which is do you think there will ever be a time and have you felt any -- pressure [ technical difficulties ] to become a meaningful issue. >> for the companies that tend to go public, most of the business models are based off the activity in china and not

global companies and then from a regulatory perspective, the area being looked at is the access to auditors most of the larger companies that -- the successful ones have access so we're not concerned about that. >> you're not concerned that one day, depending on how this trade negotiation goes, administration or someone will say, actually, one of the things we'll do, we'll let you go public in our country. if your not going to give us access to your markets, we don't want to give you access to ours. >> this is out of our control and we have conversations on the hill and pcob but we feel good about the path we're on now. >> and how about alibaba and others are doing secondary listings and raising money in hong kong. >> that is not surprising. they are becoming more susceptible to companies like alibaba and we'll see more like that going on, yeah. >> is dean watching? your nervous >> i have no idea. she's got a lot going on

relaxed. >> you do seem relaxed are you a boxes or briefs guy? can you answer that? >> i'm a boxers guy. >> i got -- you don't care about that you'll tell us anything personally -- okay nelson -- me too, by the way. >> are you >> absolutely. >> high five. >> we may high five. >> we're roomy. >> thank you. >> roomy okay when we come back, real estate and taxes we just saw a 180 in the market with big buyers like jeff bezos but what looks like a comeback actually be a mirage. it is a potential rude awakening for the sector and wll te'ell you about it when "squawk box" comes right back moving is hard.

no kidding. but moving your internet and tv? that's easy. easy?! easy? easy. because now xfinity lets you transfer your service online in just about a minute with a few simple steps. really? really. that was easy. yup. plus, with two-hour appointment windows, it's all on your schedule. awesome. now all you have to do is move...that thing. [ sigh ] introducing an easier way to move with xfinity. it's just another way we're working to make your life simple, easy, awesome. go to xfinity.com/moving to get started. welcome back to "squawk box. a quick look at futures. where things are we're a little over an hour away from the opening dow will open off about 40 points and nasdaq opening down 14 or 15 and the s&p down 3 points for now. news from outside of the front window here. real estate sales in the key new york market are seeing a long sought-after turnaround but as

with many things these days, taxes may be behind the headlines. robert frank joins us with more on that. >> good morning, becky manhattan real estate posting the first gains in over a year and a half sales jumping 13% in the second quarter according to data from douglas allen and sandler and the median price in north korewi a $1.2 million and many developers cheering what they say could be a recovery for a market that has seen falling prices and six straight quarters of declines. but a closer look suggests maybe another reason taxes. buyers rush to close deals in the second quarter to avoid the new tax on real estate sales called mansion tax that is anything over $2 million in new york city now we know the mansion tax was a main reason because the strength in the quarter came mostly from sales over $2 million home selling for between $2 milli$2,000,005,000,000 jump. if you look at homes under a

million dollars they've fell big question now is how bad, if at all, the fallout will be for the rest of the year inventory now at the highest level in seven years. severals of existing apartments offered the biggest price discounts in nine year as cording to brown harris. the biggest deal in the quarter is jeff bezos $80 million purchase in the flat iron neighborhood and john hinder buying phil falcon's townhouse on the east side for $77 million and both saving over $2 million in taxes by doing it before july 1st. >> stick around. for more on all of this, want to bring in ceo of real estate firm brown harris stevens good morning. >> good morning. >> so that is the good news. is there bad news coming >> you know, i don't -- i think it is going to adjust. i don't think we'll see what we saw in the second quarter because there was a rush to close to beat the mansion tax.

>> how much of that was the conversation with all of your customers and clients saying, look, we have to move on this? >> i think there was a lot of that conversation. because people wanted to have a savings. even people buying at the very high end don't want to pay millions of dollars in tax. >> i heard there was a lot of -- a log jam of people trying to get things done and getting mortgage brokers and dealing agents -- and how many closings were you doing a day and compared to the average. >> we were talking to managing agents encouraging them to do extended hours and seven closings a day. >> seven a day. >> because we wanted to facilitate this process. and get it done for people there is savings and it is a positive for everybody. >> so when you look at the rest of the year, and what could be positive for this market, the only thing i see mortgage rates which don't really affect manhattan because over half of the deals in manhattan are cash, you've got on the negative side the salt changes with taxes, the

lack of foreign buyers what could -- >> and so we still have new construction >> right. >> still a lot of new construction. >> oversupply. i agree. there is a lot of oversupply we saw a lot of new construction closing in the second quarter but there is still oversupply a and over-priced inventory. so we need supply and demand to intersect to get the market fluid and i think sellers need to be reasonable it is time to price accordingly. >> you just think there are people holding on, wishing and prayering -- >> exactly they're praying. >> but are they off by 10% or by 30%? >> it depends. >> that is the real issue. >> that depends on where you are. the upper east side there is a lot -- a lot in the co-op market that is overpriced by 10% or 15% and days on the market is your enemy. if your on for a year, you need to adjust your prices. so we're telling this to our sellers over and over again and once they do that, buyers will see an opportunity to negotiate and get a deal. >> and then prices will come down. >> yeah. i think if we could adjust --

already we've adjusted a bit as you mentioned. so if we could come down reasonably 5%, 10% then you tart to see a more fluid real estate market. >> in florida, you have offices in palm beach and miami and what are you seeing there and are you seeing a migration from clients who said i've had enough of new york, i'm going where there is no income tax in florida and has the business there helped. >> you could never have enough of new york. but we did have our best year ever in 2018 for palm beach. we did have a real uptick there. and we're still doing a very healthy business -- >> did you think that was a narrow band. that is a very specific group. >> it is it is a very specific group. >> many northeasterners. >> it is domestic. >> and a lot of retirees. >> and we did have some people from new york saying i'm full timing it to palm beach. >> and also in the hamptons. >> which is a seasonable market and that is a challenge. that market has not been as good

as we would like good rental market but for sales it is been a little challenging. >> for sales i've heard it is maybe even as bad or worse than the crisis in the hamptons when it comes to trying to sell a property there. >> it is like anything, it has to be priced right and sellers everywhere are still on this mindset and they see the ken griffin sale of $238 million and that is reality and they could price high that is not reality. >> and again, in the hamptons, overpriced by 10% or 30% because some -- the net i've looked and that stuff is not moving. >> it isn't. it is sad. >> it is not moving at all and you drive up and down those roads and there is like a sign on every door. >> it is true. that is a sign telling you you need to adjust your prices because buyers are not stupid. even if they are wealthy, we won't overspend. substantiate where you get those prices. >> most people who sell a house, you have to sell a house if you are in the hamptons, it is discretionary

and we're seeing in new york and hamptons this inventory piling because people are going to -- >> but we're not in a situation with the severals and in the crisis there were four sellers because they didn't have a job. >> that was worse because inventory will pile up because we won't see a big drop in prices. >> so people have jobs and they could hold on and they are happy to -- >> that is exact little right. agree. it is discretionary. >> there are just no sales >> they're not willing -- they're not motivated. if they had to sell because of a financial restraint, then you're going to see them get very motivated. just like anything. >> there is one road that leads to the hamptons. becky, tell them -- down at the shore, can't you get there ten different ways >> yeah, but they're all crowded too. >> there isn't even a left lane in the hamptons, i think. >> no. there is not >> you don't need -- the maximum speed is like 8 miles per hour i don't understand that. >> in jersey shore there are alternatives but most of them

are -- >> helicopters, folks. helicopters. >> that is a good idea >> i was going to say that to out you again -- >> by the way, i'm like a window shopper, i like to look. >> and you like to watch. >> thank you so much, have a great day. >> coming up, special interview with a friend of "squawk box" former fba commissioner scott gottlieb newly elected to the board of pfizer and he'll talk about the rising prices and the role of health care in the 2020 election and the war on e-cigarettes don't miss it. you're watching "squawk box" on cnbc

. still to come, health care and the 2020 race for the white house. we'll talk to dr. scott lien about the fizzibility of medicare for all. and the biggest stocks making news before the opening bell and giving back the record-setting gains from yesterday. dow down by 8 and tnasdaq off b 13 "squawk box" will be right back. but perhaps this year, a more exhilarating endeavor awaits. defy the laws of human nature,at the summer of audi sales event. get exceptional offers now.

welcome back to "squawk box. right here on cnbc we're live at the nasdaq market in times square. futures are pulling back a bit right now. i want to show what you is happening. one day after the s&p set records posting a new intra-day and closing high, the dow less than 1% away from a record high but the dow looks like it would

open off about 40 points and s&p 500 off 2.5 points and opec and allies including russia have agreed to extend the supply cuts for another nine months. the countries are trying to prop up the price of crude and we'll show you prices of oil right now. if you want to buy it by the barrel, wti is $58.63 and coming down, we were over $60 yesterday. and the u.s. is stepping up pressure on the aircraft subsidies and proposing $4 billion in additional tariffs on european goods. the list includes olives, italian cheese and scotch whiskey on top of products worth $21 billion announced back in april and the u.s. and e.u. are threatening to impose tit-for-tat dollars on the fight for subsidies given to boeing and airbus. former fda commissioner dr. scott gottlieb has a new gig he was elected to the board of

directors at pfizer and appointed to the regulatory and compliance and science and technology committee joining us to talk about more of this and drug prices and the thoughts on medicare for all proposal is dr. scott gottlieb, the former fda commissioner and former cnbc contributor and it is good to see you this morning. >> thanks for having me. >> talk about the pfizer board position how did this come about? >> well, they approached me. i'm proud of the relationship. this is a big global public platform and it will give me a chance to weigh in on the issues i'm committed to pfizer has made big investments in areas of global public vaccine and drugs and generic medicine and there is a good relationship and i'm proud to be part of it. >> we'll put you through the paces immediately. a story in the "wall street journal" that said yesterday 20 different drug companies raised prices on official list prices for the drugs. i think the average was about

13%. so what do you tell pfizer in terms of raising drug prices because that is something you fought pretty hard as fda commissioner >> yeah, well, look, i'm new and i'm going to leave decisions like that -- the operating decisions to the management team which i have a lot of confident in i spent time with them over the last several weeks and last month and i have confident in the team at pfizer and i've known the company for a while. companies make the price increases on a farley regular schedule, typically in july and typically at the end of the year so it is not surprising that we're seeing price increases right now. when i looked at the data on the price increase, a lot of them were for old sterile injectable drugs and where i think there is market shares and underinvestment for a long period of time and we talk about drugs priced too high and there are many drugs priced too high in relative to the value but some drugs are priced too low and that is creating shortage and that is the old injectable generic medicine where it is not

a trivial function manufacturing these drugs and you want to have investment in manufacturing and have new entrants and we haven't seen that over time so we've seen the shortage of hospital-based drugs and that is where the price increases when i looked at the data were taken. >> when you started talking about those things, that was a market that martin shkreli managed to manipulate and raise prices and as fda director you tried to do things to make it easier for other companies to compete in that arena. has it gotten easier >> well he did something different. he picked off -- a generic drug where there weren't competitors and then jacked up the price and he played what i call regulatory arbitrage and he knew it would take time for the fda to get drug news the market to compete with him what we did there was prioritize the entrance of second and third market generic medicines so people who tried to play that regulatory arbitrage knew they would face competition more quickly and it has gotten easier

to get second to third market innovation on the market and discouraged that kind of behavior the one place we see market failure is in the places where it is difficult to manufacture the drugs and that is with the injectable drugs that need to be sterile, like hospital injected chemo therapeutics or anti-infectives and where the chronic shortage and we need to think how we reimburse that under medicare to create a more robust market. that is a small segment of the market but it is an important segment of the market because they are hospital-based drugs. >> last week we watched the democratic debates and heard about medicare for all some of the candidates who raised their hand and said they would like to get rid of the private insurance industry overall. what do you think about the feasibility of the plans and which one sound like good ideas or concern you. >> it is not that feasible quite frankly. i think that people campaigning on the idea of extending medicare for all going toward

really would would be a single-payer system and the outcome would be a medicare buy-in for a younger age population, maybe 50 and over could have an option to buy into medicare and that is talked about in the past. my biggest concern or i have a lot of concern about medicare for all, crowding out competition and private insurance and crowd out the kind of competition that puts downward pressure not just on the prices of drugs but also on the prices of health care services like doctor services. so you would see less choice in the market place will you ultimately medicare is a slow payer for new technology and slowed the diffusion of new technology and it has been slow to embrace changes in the practice of medicine most of the changes in the practice of medicine have happened as a result of private coverage for new innovation and new delivery not just innovation and technology but new ways of delivering care on part of physicians and medicare has been behind so if medicare is the only payer in the market place, they're going to set the pace on new innovation and ultimately they'll slow innovation and

medical care. >> in your notes you said some companies or private insurancers pay for options that medicare won't and that is what you're worried about losing what are some examples of that, what are private insurers are paying for that medicare refuses right now. >> well car t is a new example, it is a gene therapy approach to treating cancer and highly effective treatments approved on the market and novartis had the first approved when i was at -- at fda and medicare hasn't quite figured out how to pay for the delivery of this medicine in the hospital environment so that when hospitals are delivering car t therapy they're losing money each time and we're seeing physicians and hospitals are steering patients toward clinical trials where the drug is getting reimbursed rather than just prescribing the drug outright so we see all kinds of distortions in how care is being delivered as a result of the fact that medicare hasn't quite figured out what the right reimbursement level is and what the right mechanism is for

paying for this is and we're now two years into it. and this is been on the market for about two years and we know it was coming to the market. and so that shows you that medicare struggles to come up with payment schemes to embrace really disruptive new technology that don't fit into the traditional ways of paying for things >> scott, you were praised in your role as the fda commissioner and i give you a lot of credit for what you did, but there are going to be critics today who are going to -- critics of the revolving door between washington and the private sector are going to say, you know what, maybe he wasn't tough enough on the drug companies and if he was, he wouldn't be in this role what do you say to them? >> well, look, i feel very confident about my record at the agency and the fact that i called balls and strikes and acted in the interest of the public health and the public interest. look, i worked in life sciences sector before i came into the agency and there was a lot of -- a lot written about my prior roles in the industry and in venture capital. and i've largely returned to doing what i was doing prior to

my work at the fda i've returned to the same venture capital firm and the same think tank in washington. and i work with some large drug makers before i came into the agency this new role at pfizer is a bigger role than what i did before i came into the fda it is something i'm very proud of something i think i could make a lot of contributions over time but i made no bones about the fact that i had expertise in life sciences and made my living trying to promote innovation in this sector prior to coming into the agency >> dr. gottlieb, thank you for your time today. it is good to see you. >> thanks a lot. >> coming up, the s&p 500 is back and they're notching some fresh highs but with trade tensions and fears lingering, where is the likeliest spot for the markets to go next and then after you position your portfolio so it is ready, we have possible answers and some of the biggest stocks making news this morning when "squawk box" comes right back. woman: my reputation was trashed online.

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welcome back to "squawk box. the futures have been under pressure after the s&p set another new record the dow and nasdaq are less than 1% from their highs but the dow is down by 32 points and s&p futures down by 1.5 and the nasdaq off by nine. we've been talking this morning about nike after the company pulled its sneakers with the betsy ross american flag following complaints from collin kaepernick, sponsored by nike

and now don chew has deveils that just happened this morning. >> it was only a matter of time, andrew, right before it got political and now it is getting political in the state of arizona, where the governor doug ducey, the governor of arizona, in a series of tweets this morning laid out the case for why he no longer wants nike in goodyear, arizona. this week the town of goodyear just outside of phoenix have inked a deal to provide tax incentives and free rebates for nike to open a facility there and create about 500 jobs. well now governor ducey in a series of tweets laying out the idea that they no longer want nike in that state and they're going to pull their tax incentives in that tweet he says, again governor doug ducey, nike made its decision and now we're making ours. i ordered the aerds commerce authority to withdraw all financial incentive dollars under the discretion, that the state was providing for the company to locate here he goes into further detail about why, but it has to do with

nike pulling that betsy ross flag sneaker from the market so in interesting development, nike shares, we should point out, a dow component but not moving that much down, fractionally right now on just about 3500 shares of volume. but still, politics, wall street, investing and now of course sneeakers all in the mix back over to you. >> it brings to mind what happened with delta and the nra in the state of georgia and the tax incentive they had in place and the tax incentive ultimately pulled as a function of delta pulling the discount program that they had for members of the nra. >> and not just that, i mean, in the state of georgia as well, the more recent developments with regard to how many businesses are contemplating their presence there given some of the steps they're taking towards anti-abortion legislation in policy in that state. so all of this coming at a time when there is a real issue about whether or not there are certain

social stances taken on the part of businesses and whether or not -- >> from state to state it is different. >> right exactly. >> we've had hear in new york, we lost the amazon jobs and now you're talking 500 jobs in arizona. but like polar opposites, the new york versus -- >> but what was interesting, joe -- >> what was the complaint about amazon. >> the amazon thing -- >> they would ruin the neighborhood. >> no -- >> not being woke. >> no, the amazon issue -- let's just -- just separate these issues >> just talking about the job losses but you don't need to get on a soap box on this we have a couple of good guests to talk -- >> but to con flate the issues. >> i'm not conflating but i'm saying the arizona governor, they had 500 jobs coming there and they don't care about the jobs and he's making a statement about nike i don't foe what happened. why we didn't get amazon here. there were jobs lost there. >> that was -- as i've said a million times, i thought a terrible mistake and a political

one but in a very different way than people think -- >> this is arizona and arizona, i don't think the governors of oregon or washington are going to -- are going to come down on the same side as arizona. >> so joe, andrew and becky, i would point out in one of the tweets in the string that governor ducey put out he did say that arizona and the city of goodyear, arizona, are well off enough without nike being there and that is one of the reasons why they're talking about taking some of the incentives and fee rebates away from that potential nike facility in goodyear, arizona. >> okay, dom, thanks. >> let's talk more about market and possible wild cards. joining us is david bianco from dws group. and tom tessorous from head of fixed income what do you see as far as the jobs numbers coming in and do we want a strong one or a weak one and are rates going lower?

>> i don't think it matters at this point so for the july -- or the june jobs report, the feds cut in july is in the bag whether that is strong or weak, we're going to get that one cut. now if your bullish on the u.s., you want to see that being a strong jobs number but for terms of fed policy for the media term meeting i don't think has any effect. >> what do you think >> i agree with tom. the fed basically promised a cut and they better deliver otherwise we'll be upset with the inability to community clearly. one cut but not a series of cuts the labor market and the report shows the labor market is solid and full and healthy labor market continues, led by services look, we have going on still the trade conflict, slow investment spending, manufacturing and global growth and i find myself continuing to shave my earnings estimate for the s&p we keep reducing the earning estimate and that keeps us concerned about the equity market but on the other side we're surprised about how low interest rates are and that

supports a higher pe. >> and it is offset and we've been talking all morning about whether the offset and the weakness in -- in maybe margins start going down a little bit -- >> we've seen margin pressure and particularly at the industries exposed to trade. like the way i think about it is that the s&p is about 10% over valued versus historical rates, 10% undervalued versus current interest rates but giving credit for how low interest rates are right now is something we can only do over time to see if earnings could prove resilient despite the interest rates. >> there is no reason to think multiple would contract in a period where the fed is -- people pointed out it is not the one cut, it is that what you are in a cutting mode, there are two or three or four. >> i don't expect rapid multiple compression -- >> why would it compress at all? why wouldn't it continue to expand >> the continue of deceleration in the economy. >> how much is negative --

sovereign is negative. we're the best game in town in terms of -- >> the best case of scenario in compression of multiple is a spontaneous pick up in inflation and one that seems like it has staying power which really for the time being that is on no one's radar so i don't see a compression in the multiples right now. >> yep so, david, we always ask you about your s&p targets and so what do you -- weren't you 2950 -- >> for the end of the year we're above that right now in fair value more like 2850 given we have a bunch of challenges to get through including a challenge in second quarter earning season i think the s&p is a good 5% to 10% overvalued not the worst possible outcome at the g-20 but exactly as we expected the existing tariffs remain in tact, i don't expect them to be dropped any time soon. and companies are going to cut earnings estimates because of it. >> so if we see you in three months and we're over 3,000 on the s&p, how are you going to

say, yeah, what would have to change for you to go -- >> i've been doing this for well over 50 years what drives are the earning estimates and the fair long-term returns on s&p driven by interest rates now interest rates are lower than we're expected them to be and if they can stay this low, we will think about a higher pe, but i think it is -- >> if i were listening to you, i don't know if i would sell stocks, but i wouldn't be buying stocks >> yeah, if it -- >> so we're above 29.50 now. you don't think we'll make any gains between now and -- >> no, going down 5%, 10% and then officiali ifinish where we now. if interest rates is the reason why the market is where it is, let's make it simple go buy all the bond substitutes, reits, utilities, buy the secular growth companies, earnings growth regardless of the interest rate in the macro environment, communications, health care companies and

selective in tech. >> could europe recover or is it -- that's not on the horizon? europe takes us down as far as interest rates to some extent. could they take us back up >> well, yes i would say the sensitivity to european yields, germany yields is more on the upside, when german yields rise you get more sensitivity on the u.s. markets from an upside, uptick in german yields than on the downturn because of something we -- we're on the show back in the fall, we were talking about hedging costs. hedging costs are still a major factor that tend to essentially keep flows from europe from going into the u.s and so as you see, when you see those hedging costs come down, you'll see those flows come back into the u.s but the opposite is true german yields push see flows out of the u.s. >> german bond yields were down once again today, more sharply. >> we'll remember, david, you know that. >> i do. i like the way you keep score. >> great, thank you. >> thank you

>> let's get down to the new york stock exchange. jim cramer is standing by, getting ready, coming up in a few minutes to take things over. jim, i saw a couple of reports that were out there, one from morgan stanley, one from bank of america, people saying, okay, we're seeing this big bump that we saw or a little bit of a bump that we saw from the china trade truce. but they're concerned that it is going to mean things that you're not going to see people kind of pulling components forward, doing some of the buying, hoping to get ahead of any tariffs and what will that mean in the immediate short-term do you have any concerns about that >> not as much andrew had an unbelievably good piece this morning in the times about the people who are about trade, the people that are about national security. if the people in -- are in trade, secretary mnuchin, maybe the chinese will do a giant buy of something here. that's going to surprise these people who have gotten bearish there has to be some quid pro quo. the president is satisfied with

how they got it managed, but if it is about trade and making it so that huawei is actually a legitimate company in the president's eyes, i have to expect something in the next couple of days will go big in the united states way. great piece, andrew. i do think that i'm not as concerned as these other people that there is nothing real about this >> what about the fed's movement you anticipate that they're -- we talked to a guest who said it is absolutely baked in, we're going to see at least one cut that comes a little later this month. >> i wish that, yeah, i don't think that's right i think that if we get a strong employment number, we get trade, i think what happened in the trade deal with the chinese, i think powell says, listen, we're data dependent i think you switch it a yellen camp and if we get stronger economic data, i think that he'll just be saying, listen, we got to wait. if it is weaker, it will take action very data dependent. without seeing the data, i don't think it is fair to say what he's going to be able to do.

>> i think you and i are on the right page i have to ask you one question, the donations that buffett made are staggering why does that get, like, two minutes? you -- >> no, it is a -- it is a great point. i think $3.5 billion yesterday that went in to all of these five charitable donations, charities he gives the money away to, it happens in july every year, if you add it up, he's given away over $35 billion since he started doing this. back in 2006 i think was first time so they are big numbers. it is good to see it go out again. and you're right to point it out. >> yeah. it is right to also -- i looked at all the charities, everything great. and i've always -- just -- it is just worth celebrating and i think you know that and you've been the leader in this, it is worth celebrating, a positive great story and it do not be overlooked by trade or

whatever is the flavor of the day. it really is fantastic. >> and in fact if you look at what a lot of philanthropists have been giving away, the giving pledge itself, buffett started along with bill and ma linda gates, just that movement to get out there and talk about it a little bit more, many of them were already giving away a lot of money, but i this ty probably helps to have a group that focuses on it, so they focus on what they have done well in past, what they can do well in the future and it is inspiring to the rest of us to say here's that we can all be doing. >> i'm glad you stayed on this and stayed on him. >> i'm glad you brought item we didn't talk about it yesterday. >> our eyes glass over $3.5 billion. this is insanely positive. you'll be able to do more on it. i encourage you to keep doing? >> jim, great to see you we'll see you in a few minutes don't miss former white house communications director anthony scaramucci on "squawk box" tomorrow, he'll talk markets and much more at 8:00 a.m. eastern st tedme ayun we'll be right back.

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the 14th annual g-20 summit wrapped up over the weekend, a month after previous meetings, the dollar tends to trade

apple ceo tim cook firing back on tensions between apple and jony ive who announced his

departure last week. in an email to nbc news, cook calls the story absurd, says the conclusions just in his words don't match with reality he said at a base level, it shows a lack of understanding about how the design team works and how apple works and the response for cook who typically doesn't communicate directly with reporters over something like an internal shake-up. >> it is interesting caused a lot of stir on twitter today. separately, let's take a quick final check on the market, show you where things seem to be going, half hour away, where they finally land in a half hour from now the dow looks like it would open off about 40 points and nasdaq looking to open down about nine points and the s&p 500 looking to open off a little over 2.5 points we are spending a lot of this week with brian sullivan in vienna at the opec meetings.

you've seen the price come down a bit, hovering over $60, now at $58.37 and we want to wish joe kernen, good time on his european adventure. make sure you join us. >> in europe for july 4th. >> join us tomorrow, "squawk on the street" begins right now ♪ go on take the money and run ♪ ♪ go on take the money and run ♪ ♪ go on take the money and run ♪ >> good morning and welcome to "squawk on the street. i'm david faber along with jim cramer we are live from the new york stock exchange carl quintanilla has the day off. let's give you a look at futures, started with trading one half hour from now, of course we are set up for a slightly lower open europe kind of mixed, asia, yeah, yin and yang thing. >> yeah. >> give and take. >> yeah. >> from yesterday. >> right