going to see a lot of margin upside, better free cash flow generation a buyback larger than expected i think this works >> joey? >> kkr off the piper sandler deal >> all right dow is right now down about 90 points that does it for us. the exchange starts now. thank you, scott here's what's ahead on the exchange everybody, president trump's top economic adviser is standing by the fed chair, at least for now. and he says that there is room to take back that december rate increase we'll talk with larry kudlow about all that coming up also, sir richard branson making a big and soon to be public bet on sending lots of folks into outer space can putting john q. public into orbit be a money maker >> plus, there's a wall street dog fight over chewy, and then instagram wanting to help you be less snarky and mean we have very snarky and mean

people on rapid fire as we get ready for the exchange for this day. speaking of which, dom chu is here to bring us up to date on the day's market action. >> am i supposed to be snarky, mean, or both? >> you be the snarky one >> i'll be the snarky one. a little snark so far in the markets today. not a whole bunch. a bit of a mixed picture the dow industrials off their worst levels of the day, but still off by about 90 points one third of 1% of the downside here just about flat. we recovered quite a bit in the s&p 500, but the nasdaq is, as you can see here, the check mark goes up the one third of 1% nasdaq composite the dow industrials, 3m is 28 points of that decline if you look at the russell 2,000 over the last year, down around 9%, according to this etf that tracks small caps. the spider s&p 500 track is down 7% that gap is getting wider and that has some traders concerned. they continue to watch the developments and trend in that

gap between large cap stocks and small cap stocks we'll pay attention to that today. and also, if you're looking for the stock of the day, the worst performer by a wide margin in the s&p 500 is davita. this is a company that does kidney dialysis. that stock is down due to a political report, in large part because of according to their sources, they say the trump administration may in the coming days look to unveil plans to shift a lot of kidney care away from centers like davita runs. another company is getting hit today, but still, that stock is run up by about 35%. just since the end of may. and now has given back about 12% since those recent highs we'll watch those shares back over to you >> thank you we'll see you on rapid fire coming up. by the way, we do welcome you to the exchange i'm bill griffeth. kelly evans is on assignment in washington we'll hear from her in a moment. first, with the dow down for a third straight day, we check in with bob pisani live at the new york stock exchange. busy talking to his sources, i see there, robert.

i hate to interrupt. i'm sorry. >> i got things i'm doing here, bill we're down three days in a row, but it's not a down trend. bill is right. so much is floundering around. that's what we're doing, we're floundering because we're just off historic highs it's not clear if the fed needs to cut rates as aggressively as the market wants that's a problem there's very little real trade progress being made and some concerns earnings estimates for the second half may be too high. the good news is the low print was right at the open. se semi-conductors have bounced back consumer discretionary has bobo back, and amazon, that's a big mover in that sector a lot of excitement, social capital emerging to do space flights. it's a special purpose acquisition company. these have become very hot investment properties in the last two years there's 30 of them this year they're blank check companies where an entrepreneur raises money to merge or acquire

another company. another one is coming this friday, by the way pivotal investment corp ii, it controlled by jonathan ledecky, a very well known investor, co-owner of the new york islanders. that's on the new york stock exchange, i misspoke earlier saying it was on the nasdaq. it's here on the nyse. >> thanks. see you later. our own kelly evans saturday down for an exclusive interview with national economic council director larry kudlow earlier an the cnbc capital exchange event in washington, d.c and larry spoke openly about the fed, including how our central bank should be independent to a point. >> let me say, i personally believe the fed should be independent. but that word independent, i mean, it doesn't mean they operate from another planet. and as arthur said, the fed reports to congress. and that's in the constitution

and the fed is appointed or the governors are appointed by the president. so i think that on a day-to-day sense, certainly, they're independent, but that doesn't mean that they shouldn't listen to advice from their elders. >> larry also noted that chairman powell's job is safe for now. and that the fed has room to take back that december rate increase that we saw, and that he expects china to purchase our foreign products even as the trade talks continue let's talk more about this bring in jimmy, a fellow at the american enterprise institute and a cnbc contributor steve is also a cnbc contributor. lindsey is chief economist at stifel we're having conversationsunts the fed's independence when somebody asks you why the fed should be independent, what do you say >> i say having a central bank

that is at the beck and call of elected officials is a good way to have a central bank that's going to print, print, print, leading to a higher inflation and a debased currency it's a bad idea. >> so you're not in favor of the fed's independence >> no, i'm very much in favor of the fed's independence if you don't have it - >> i see >> but can i just say, if you know larry kudlow, and you know his supply side background >> and we do >> yes,io do i think the context here is the way larry views this economy right now is it's kind of like the 1990s where you had this sort of beginning of an economic boom, beginning a productivity growth, and greenspan saw, other people didn't see, and he let this economy run and didn't raise rates. i think that's where larry kind of thinks we are right now, which is why he thinks powell shouldn't be raising rates >> steve, he said that they should look at the inflation numbers, not the growth of the economy right now. if you're jerome powell, what

are you thinking right now as you get ready to testify to congress tomorrow and thursday, and have that meeting later this month with all of this discussion going on around us? >> well, isn't it ironic that six months ago, they were raising rates. now we're talking about cutting them, and the conference board projects we should have a couple rate cuts here as the economy -- as the growth in the economy tends to slow towards the end of the year we don't think it's going to happen this month, however but that says to me, you know, you go from raising rates to cutting rates, we're really just right. this is a goldilocks economy you're in the longest expansion in history you have got unemployment at 50-year lows you have inflation well under control. you've got growth in wages you've got investment going on consumer confidence at 18-year highs. it doesn't get any better than this the only spot that you need to watch is ceo confidence. there, we have a situation where ceos are a little worried about the trade situation. and they get nervous when the

expansions go this long. but that's the only spot we need to watch right now >> lindsey, as you know, few presidents enjoyed the fed chair's decisions on interest rates. we remember h.w. bush blamed greenspan for his failure to get re-elected in there, but never was there a time when the fed chair faced the possibility of actually being fired or demoted by a president how does that impact monetary policy, do you think, right now, if at all? >> well, i think you're exactly right. every administration that we can think of has been incredibly critical of the federal reserve. it's just in today's social media driven age that that criticism is much more in our face both as consumers, as investors, and of course, as fed officials. but i do think that the fed has been very clear that they're not going to kow to any type of pressure, be that from political figures, from the markets. they're going to take a longer term view of how the economy is doing and how the economy is expected to do over the coming

six to 12 months and that's what's going to drive policy right now, the chairman is going to take every opportunity to try and walk back the market's expectations if we look at what the fed told us in june, the majority of fed officials still see rates unchanged through the end of the year, which is a stark contrast to what the market is looking for, that immediate rate cut in just a couple weeks' time at the july fomc meeting. >> if they don't cut rates in july, at the end of the month here, is jerome powell's job in jeopardy does he go the way of the turkish central bank chief >> listen, it seems to me highly unlikely that he's going to serve a second term as fed chair. that's different than saying he's not going to be -- he's somehow going to be removed, though i think the president seeing what's going on in turkey would probably like to do the same i think if i was an investor, what i would pay close attention to, again, are the kinds of people that the president wants to put on the fed, because those are the people who very well might be the next fed chair. so if you have any concerns about judy shelton being on the

fed, and you really should because she could be your next fed chair, i think you really need to look at these nominees and what they might look like down the road. >> folks, i have to run. we have breaking news right now, but thank you. i always enjoy talking to jimmy, steve, and lindsey >> and we have that news alert on a new streaming product with julia boorstin what's going on, julia >> well, bill, at&t's warner media unveiling the name and some details on its streaming service. it's going to be called hbo max. and it will be launching in spring of 2020 some time around april 2020. the company announcing that it has new deals with warner brothers television and exclusive streaming rights to all 236 episodes of "friends." that's meaningful for netflix because netflix had extended its rights for "friends" through the end of this year and it will also have the exclusive streaming rights at launch to all of the episodes of the "fresh prince of bel-air"

and "pretty little liar" also exclusive movie deals with greg burr lanty, a big tv producer as well as reese witherspoon announcing a movie deal with reese witherspoon. both of them will make movies for this new service interesting to get these details ahead of that launch next spring >> hbo max all right, julia, thanks very much so uncertainty about interest rates has sent the dow lower for a third straight session today. what is the market looking for from the fed chairman powell and company when he testifies before congress this week tomorrow, before the house, thursday before the senate darryl kronk is with us today. he's chief investment officer for wealth and investment management at wells fargo investment institute, and christina hooper is here with me she's chief global market strategist as invesco. good to so you both. all fed chairs find themselves between a rock and hard place. jay powell certainly is in that position right now what's he going to say tomorrow? >> i think he's going to leave his options open

i think there is certainly more data they will be processing, and of course, the debate will shape the debate at the meeting will shape their ultimate decision so i think he's going to leave his options open, but i do believe there's a greater likelihood than not that the fed does cut rates at the end of july >> why >> there's really three reasons. first of all, they talked about the possibility of moving the inflation target >> reducing it >> increasing. raising the inflation target so regardless of any economic data, they could cut rates as a result of that second, all we have to do is look at the job reports average hourly earnings which is probably the most important metric for the fed that's still at about 3.1% annualized growth. that's paltry this far into a recovery look at canada they had a weak jobs report, but they had 3.8% average hourly earnings growth. if we had that, then you could make an argument for staying pat, but i think there's still an argument to be made for cutting rates. finally, back in may, the fed

really came out and took a more accommodative stance in response to the trade situation so if we have a flare-up of trade tensions, which i think is likely, they could use that as their rationale. >> darryl, what do you think jay powell says tomorrow certainly, the questions from the republican side are going to be pretty tough. and no doubt bringing up the issue of unless of the federal reserve. he's going to have to defend not just their monetary policy but his very position as chairman of the federal reserve board, right? >> yeah, you're right, bill. i think christina is right, too. there's three elements here that all want and lean towards a july easing one is, of course, the administration, we heard from larry kudlow this morning. but the administration wants the fed to ease. the markets, number two, want the feds to ease, and have priced in at least one ease and some would argue two or three. and then, if you listen to powell's june press conference, he was talking about an ounce of prevention is worth a pound of

cure, right? and that making that statement and getting that called insurance ease right up front makes some sense so should they ease in july? i think that's questionable. and you could make a case on either side of the data. will they? they probably will because you have the administration, the markets, and their own comments in the june meeting. if they don't, he's going to have to walk back those comments, bill, over the next two days in a much more hawkish stance than where he left them in june. >> president trump, christina, has talked about the value of the dollar he wants to see it go lower, but he feels like other currencies are being manipulated, maybe we should manipulate ours what is powell going to say about the dowllar >> hopefully he won't and he'll speak more about the politici politicization of central banks and the importance of being independent. >> christina, darryl, good to

see you both thank you for your thoughts. tomorrow, we get the coverage of the chair's testimony before the house and then on the senate on thursday >> here's what else is ahead on the exchange today >> coming up, a federal judge blocking the president's rule that would force drug companies to list prices in tv ads a win for drug makers or just round one in a long battle plus, d.c.'s inaction on infrastructure leading some states to take matters into their own hands. one state's success story coming up and how an internal conflict at walmart could be slowing the retailer down in its race with amazon >> this is thexcnge. on cnbc. ng a new house. is it that obvious? yes it is. you know, maybe you'd worry less if you got geico to help with your homeowners insurance.

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and the best lte everywhere else. so you save hundreds of dollars a year on your wireless bill. xfinity mobile has the best network. best devices. best value. simple. easy. awesome. click, call or visit a store today. welcome back drug makers have been clieling today after that federal judge halted the trump administration's initiative that would have required companies to reveal the price of drugs in television ads opponents of the rule said that a drug's list price and what people can actually expect to pay varies widely based on insurance coverage joining me now is cnbc's meg tirrell who knows anything and everything about drugs and biotech and all those things do they have a valid point on the criticism? is it misleading to post a price when it's possible that's not what i'm going to pay?

>> yeah, that was the argument of the drug industry as to why this wouldn't be a good idea but it wasn't their legal argument the legal argument that actually end eed up working with the jude is this exceeded the authority of the hhs, the trump administration but what the drug industry worried about is that by posting the list price of the drug before any discounts, before any insurance coverage, the patients would get confused and perhaps fearful they would have to pay that much and maybe wouldn't even seek care what one drug maker did, johnson & johnson, and i think we have a copy of the ad they have been airing for their drug thinner is they put the list price and also what patients would pay after insurance discounts on average i think we have the image of that here. this is what johnson & johnson has already been airing. while the list price is $448 per month, most patients will pay between $0 and $47 per month that's how j & j was coping with this other drug makers didn't want to do that. what hhs wanted was the list price to be out there to shame

drug makers on their prices. >> transparency is a good thing, and i think that's what they're trying to get at to encourage the decline of prices, but it can also be confusing. doing it this way, you might end up confusing customers to begin with, right? >> that was the drug industry's argument interestingly, the judge didn't weigh in on that said it might make sense to make drug companies share their prices, but hhs doesn't have that authority so they didn't have to go into that >> who does have the authority >> congress. what they said, the judge in his ruling said hhs cannot do more than what congress has authorized the responsibility rests with congress to act in the first instance this is what the judge had said. >> so the next move now is on capitol hill >> possibly, but what's interesting is if you look at drug stocks, they are reacting pretty positively. some folks are telling me it's because they think if trump can't get this done, he's not going to get anything worse for

the drug industry done what other people are interpreting this as is trump might be annoyed this didn't work and he might push harder on more draconian measures. there's a way to read it when the market is not pricing in >> sooyou later. >> coming up, walmart's acquisition of jet.com was supposed to boost its edge against amazon, but new reports say it's done just the opposite. details coming up. first, a venture capitalist is hoping virgin galactic is that company ps nextes, tlaand what sets it apart from spacex that's coming up in rad udfire as someone in witness protection,

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so you only pay for what you need. liberty. liberty. liberty. liberty. ♪ welcome back to the exchange here are some of the movers at this hour on wall street shares of 3m falling 2.5% after a downgrade by rbc to sector perform from outperform. the analyst also slashed the price target, citing an unsettling string of guidance cuts at that company >> pepsi co is down more than 1% despite reporting better than expected earnings. the beverage and snack companyre firmed its 2019 forecast, but reported higher than expected investment spending and pepsi's not the only consumer staple under pressure today. constellation brands, monster beverage, and clorox are among the stocks pulling that sector lower as well today. >> now to sue herera for a cnbc news update. >> good to see you here's what's happening at this

hour, everyone a federal appeals court ruling that president donald trump can no longer block critics from his twitter account. it says trump violates the first amendment when he bans critics upholding a lower court's decision from 2018 >> labor secretary alexander acosta says he is glad financier jeffrey epstein is being prosecuted on sex trafficking charges and he defended himself against criticism over the way he handled the case against epstein in 2008. president trump saying acosta has been an excellent labor secretary. record breaking rainfall and flooding drenching parts of nebraska overnight nearly 9 inches of rain saturated the region officials received several reports of stalled vehicles along with the evacuation of a flooded apartment building >> and the u.s. women's national soccer team graces the cover of sports illustrated this week this after, of course, beating the netherlands to win their

second straight world cup and their fourth overall and the team will be honored with a parade in new york city tomorrow morning and that is must-see tv. that's the news update this hour, bill i'll see you later >> up fifth avenue they go with their ticker tape raining down always a great dramatic thing. i'm see you tonight on nightly business report. >> indeed you will see you there. >> on pbs. >> here's what else is coming up on the exchange. coming up, lift off for virgin galactic's ipo quest. analysts giving wall street something to chew-y on, and instagram wantsia to really think about your post before you share it that's all ahead on rapid fire (soft music)

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welcome back let's catch you up on a few stories that should be on your radar. it's time for rapid fire and here with their takes, kate rogers, domchu, and leslie pickers in the fat seat today. i'm sorry, was i not supposed to say that >> everyone is going to wonder what you mean by that. >> you're going to get away with it, bill >> bill is being totally

politically correct here it's more of a just -- you know, camera angle thing >> we're showing the wires here. >> first up, hedge funds are coming off their best first half in a decade. jumping about 6%, according to hedge fund research. bill ackman's pershing square rebounded in a big way a 45% gain after losing money for four straight years >> these are some fat returns, bill >> yes >> that's what you're referring to here. fat returns. p-h-a-t returns, largely led by acwitty strategies activism, they hold concentrated equity positions, outperforming a lot of strategies, however, on average, none of these are outperforming the s&p 500, except for crypto. those are up over 80% year to date >> this is always the case, though, right? hedge funds do not generate the value for their fees in

upmarkets. if the s&p 500 goes gang busters like it has been, by the way, the caveat there is what a rough q4 it was in 2018 to set you up for that massive run higher in stocks, but hedge funds do not make that kind of money. they don't generate your out performance in an up market. what they do is generate markets when they're choppy in a range or going down. >> they did outperform in q4, and it's not fair to compare all to the s&p 500 because most hedge funds aren't investing in equities anymore macro strategies and so forth, but equities strategies are running at about half the returns as the s&p 500, including dividends. over pretty much any time period you look at. >> clearly, active management is out of favor because in the last quarter, we saw people fleeing the actively managed funds in favor of the indexes and etfs. >> acumen's gains, starbucks and

chipotle chipotle is up over 70% year to date starbucks up over 30%. the best performing coffee sector, and chipotle is the best performing restaurant stock. big gains. >> you knew he was due after four down years. >> it works to the upside. >> up next, after announcing plans to take virgin galactic public, sir richard branson and their new chairman join "squawk box" this morning with their vision of how the technology could disrupt air and space travel as we know it watch. >> what richard's team has built are technologies that eventually can be used in a hypersonic airplane that means if you're used to a ten-hour flight from los angeles to tokyo or los angeles to beijing, that becomes less than two hours. now, that alone, if you look at the ticketing revenue for that, in the airlines, that's $300 billion of revenue that should vaporize >> wonder how the snacks are on those flights.

>> eat them fast >> you don't need food for two hours. >> for more, it's setting itself apart in the space race, let's bring in our space correspondent, our space correspondent, i'm sorry, i misread that >> both are probably accurate, bill >> morgan brennan at the new york stock exchange. tell us more >> all right, so hypersonic plane travel, that's a five to ten-year game plan for virgin galactic right now, the focus is space tourism. customer backlog of 600. another 2500 expressing interest service launching within the year and full-year profitability projected in august of 2021. virgin galactic is the farthest along in this. they had two crude test flights, but they're not alone. you have jeff bezos blue origin, ylelon musk contracting to send the first tourist to space virgin galactic use a space ship

to fly to 60,000 feet, eight seats, including two pilots. blue origin's reusable rocket capsule is autonomous. first man test for that is expected by year's end, and lastly, you have orbital players as well. spacex and boeing recently getting the green light from nasa to be able to carry quote/unquote private astronauts to the international space station as soon as next year you'll hear a lot more about this from the spacey reporter in the coming months. >> none of us wants to go on one of these flights what about you i bet you do >> absolutely, i do. >> i'm not a first when it comes to those things. morgan might be. >> space travel, no thank you. >> i want the second or third iteration of space travel. >> i have seen too many movies where things go wrong to want to - >> you mean "apollo 13." >> that was based on a real thing. >> or the avengers >> keep in mind, we talk about these companies as space start-ups. boeing has been around forever,

but in general, we talk about them as space start-ups. they have been developing these technologies on a decade, going on two decades very focused on getting all of it right, and particularly those orbital flights with boeing and spacex, nasa has been overseeing their ability to send humans to space, so the fact that you could maybe potentially pay to go up, i mean, there's a lot of safeties in place. that's why i'm much more excited about it in the first iteration. >> as long as richard branson goes first, i'm fine >> there you go. >> that works for me thank you, morgan. see you later. by the way, he also chimed in on the ipo market this morning saying he has not seen a batch of really compelling companies go public until right now. and speaking of recent ipos, analysts have been divided on chewy's stock price as a handful of firms initiate coverage expecting 22% upside on strong growth of its subscription like revenue stream jeffries says keep this one in the kennel and wait for a

pull-back. shares are up about 52% since the ipo about a month ago. i mean, you're a big fan >> i'm a chewy user. they have 11 million customers spending $340 or more per year the subscription model is i think the key to the company's success because you never have to contact the vet, refill your prescription they do this autoship feature, and that's really easy, and it reminds you on its own, and i think that's what could keep people coming back >> i think it's also worth noting jpmorgan being the bull here, they were one of the underwriters for the ipo there are chinese walls that separate those things but i think it's worth noting they were a key underwriter in this ipo. also, a lot of skepticism and concern from analysts, animalists, has to do with valuation. the fact that these shares have run up so far so fast, we have seen this movie before none of the analyst reports really drew the connection to pets.com, per se, but i think a lot of people are being cautious because there's been so much momentum behind the name that at

these levels, a lot of people are kind of at that hold status. >> we should point out the fact there's a slew of these analyst initiations because most of those teams were prohibited from putting out research on them because they were part of the underwriting team that sold shares to the public, so they have to wait a certain time period i'm reminds because of this story and the space story we had before it, any time you have these bull cases, they always talk about tams. total addressable markets for these things morgan mentioned it for space travel how much hypersonic could go chewy has this massive pool of people in america that spend all kinds of money per month the idea is you have to figure out what the competitive landscape is there i use one of chewy's competitors. >> who do you use? >> pet flow, which does a lot hof the same things chewy does they're not public like chewy is right now, but still, these are comautatized services. >> making your company sticky is a key, and that's what they're

doing a good job of. >> netflix said season three of stranger things has set a new record for the most viewed series or film in its first four days this after the streaming company said that its new movie "murder mystery" did have the biggest opening weekend of any netflix film could all of these stellar self-reported numbers be a distraction from the fact it stands to lose tons of licensed content from "the office" and now we heard from julia boorstin that it's also going to be losing "friends" as at&t's new streaming service to be called hbo max will reportedly pay $425 million to carry "friends" for five years starting in 2020. so yes, netflix probably knew that that was coming, and now suddenly, we're getting these ratings numbers from netflix on some of these stellar performing programs >> i'll throw out one initial comment and one i heard from a number of folks in the media

universe or landscape, do we really believe the netflix numbers? this is not to say they're not trustworthy or whatever, but nielsen used to track ratings sti stis statistically for broadcast operations is there an auditor that tells us amazon web services, whoever the cloud provider is, who says by the way, this is the number of people who did it >> this is what amazon dawes as well, they release these numbers that compare to what, what they release last year. they're self-reported. how do you really know it's important that the office and friend are two of the most views and turned on or forgotten about shows you keep watching on net flick. >> you don't do that. >> no, but stranger things, you have to pay attention. murder mystery, which i know some of you didn't love, that was a huge opening for them. they're investing so much money that they need to release these numbers but they're stacking up against hbo and "game of thrones" so it looks like it's

paying off >> do people watch "stranger things" over and over? >> i have been waiting for my husband, who is out of town. he don't watch without me. >> is it a binge worthy program that's going to be repeated over and over again >> i think that's the question ovtimes with these more complicated plot lines, not saying it's more complicated, but arguably more complicated than "friends" or "the office" you do tend to watch it once, other than the case of the marvelous mrs. mazal, but stranger things is a net flick owned property they have been able to advertise this in a way that haven't previously >> i have become a fan of big little lies. >> i like big bang theory. that's my binge. >> instagram launching this new a.i. feature that will notify users when a comment they're about to write could be considered offensive before they post it. we need that here. they have instagram telling "time" magazine the company is

willing to make decisions that keep its users safe from online bullying, even if it leads to a decrease in usage. it's all yours go ahead >> did leslie feel bullied should he have been censors? >> it's like one of those things your mom says. speak before you speak, right? my mom always said that growing up >> don't put something on instagram if you don't want to see it on instagram? i don't know or on the front page of "the new york times." >> remember bambi, if you don't have anything nice to say, don't say anything at all. >> teddy roosevelt's daughter said if you can't say anything nice about anybody, come sit next to me >> if you're not a nice person, are you really not going to post the comment if instagram tells you, probably not? you're probably still a you know what >> three of the nicest people i know they won't have to worry about this feature kate rogers, dom chu, and leslie picker >> cnbc's top state for business will be revealed tomorrow. ahead of that, we're tracking innovation around the country.

a look at kansas's booming inland port, coming up

it is that time again. cnbc has tallied the scored and determined america's top states for business now, in the lead-up to the big reveal, scott has a look at how a port smack dab in the middle of our country is shipping goods around the world >> port on the prairie >> this is oceanfront property in the middle of kansas. >> population 1700, 30 miles outside of kansas city, and home to logistics park, kansas city, a 3,000-acre inland port shipping goods across the country and around the world daubl donald roberts is their mayor. >> we're the center of the united states. in two days travel, you touch 80% of the population. in three days travel, you touch 98% of the population. >> opened in 2013, the port has grown faster than anyone

imagined now employing more than 4,000 people even as the state of kansas went through a budget crisis. it helps that the project is a public/private partnership between the state and local governments, bnst railway and northbound development >> as long as they continue to grow, they feeds our pipeline and represents a substantial outcome for everybody. >> letting kansas capitalize on its location, like never before. >> it has taken this region as a whole into a completely new focus area of warehousing and distribution infrastructure that we hadn't seen as a huge opportunity in the past. >> fascinating joining us now from somewhere in america, scott cohen is joining us as we all study the flora behind you and what you're wearing to get the clues there first, how big is infrastructure and what role will that play in this year's decision making? >> yeah, it's important, bill. in the 13 years now that we have

been doing this, it's taken on abincreasing role. so this year, infrastructure is worth 350 out of our 2500 total points a little less than 15% remember, the way do this is we look at what the states are talking about, how they're marketing themselves, and the more we see in aggregate how they're marketing a selling poin, the more weight it carries in our study in this year, workforce is first, economy is second, and infrastructure is third. >> you're apparently in the top state. i somehow this year i think i have it, but i'll leave that for a private message with you later, but how about a hint for everybody else who doesn't know where you are? >> sure. our next diabolical hibit is, time of my life. time of my life. what does that mean? >> exactly >> remember, by the way, bill, you can read more about our study, how we pick the top

states, and all about competitiveness. topstates.cnbc.com, and send your guesses >> we'll get that tomorrow scott, thank you scott cohn, somewhere, and tune in to "squawk box" tomorrow 8:30 a.m. eastern to find out which state took this year's top states title i think i got it this year i think i have it this year. >> more fallout from boeing 737 max model. the details of its latest order numbers and what it means for boeing's bottom line coming up its show of strength... or its sign of intelligence? in crossing harsh terrain... or breaking new ground? this is the time to get an exceptional offer on the mercedes of your midsummer dreams at the mercedes-benz summer event, going on now. lease the gla 250 suv for just $329 a month at the mercedes-benz summer event. mercedes-benz. the best or nothing.

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when you're not, you pay for data by the gig. use a little, pay a little. use a lot, just switch to unlimited. get $400 back when you buy the new lg g8. call, visit or click today. you probably heard that boeing's orders and delivery numbers were out for june earlier today. no orders, no nee orders for its 737 max as the planes remain grounded for a fifth straight month. phil lebeau joins us with more on that story there. phil >> and bill, it really is all about the max right now. it is the most popular, most profitable plane for boeing, or it is when the deliveries are going on which has not been the case since the middle of march, i should point out so the latest numbers, as you mentioned, no firm orders for the max in june. that's three straight month where there hasn't been a single order for this plane the backlog dropped by three planes, still stands at around 4400 planes. the delivery issue is one that

will get some attention. in the first half of the year, delivered 113 737s they're still delivering and building some 737 ngs, not max models, but ngs. look how much of a dropoff that is compared to last year and the first half of 2017 the max work right now is still going on at a rate of 42 per month. down from 52 per month, but nowhere close to the plan of going up to 57 per month in the second half of this year that's not going to happen before the end of this year. take a look at shares of boeing and airbus airbus also out with orders and deliveries today the headline here is that airbus is on pace to deliver more planes than boeing in 2019 bill, that would be the first time that has happened in seven years. >> wow you kne, we had a boeing analyst on nightly business report last night, and she was saying that, yeah, certainly, short term, this is not good for the company to take an earnings hit and so forth, but longer term, she's

still high on boeing that they can weather this whole thing i'm sure you have heard that's before as well >> that's because the backlog remains relatively healthy it's still holding firm at 4400. we haven't seen any cancellations due to the grounding. we have seen some airlines who said they had an interest to order the max, later come back and say i'm going to go with the a-320, but we have not seen mass cancellations. >> phil lebeau, thank you. always good to see you walmart's big e-commerce bet apparently is backfiring according to a new report. the details and what it means for its chances against amazon when we continue after this. hi walter.

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a $50 value absolutely free! go to revitive.com or call... get moving today! welcome back now, based on stock price, walmart's 2016 purchase of jet.com seems to be paying af. however, in an in depth report from recode, it paints a different picture. despite the investment in jet.com, walmart is light years away from challenging amazon's dominance in the e-commerce arena. in fact, the pressure is reportedly pushing walmart executives into an internal battle joining us is the author of that report, jason dell ray at the

big board, and our own retail correspondent, courtney reagan joins me there was a time when everybody thought marc lore walked oun water and this was the home run for walmart. what happened? >> i think part of this is predictable in that an entrepreneur going into a big traditional organization and trying to drive really drastic change but i think part of it is also just some disagreement over the strategies and some of the organization wanting to see a path to profitability for this u.s. e-commerce operation >> it could be argued they're being very impatient let's not forget how many years amzaup lost money asit built the business of e-commerce, but now walmart expects a profit very soon. >> that's the walmart way. as jason points out in his report, it's not the walmart way to be unprofit nl. the way they have embraced the

innovation and entrepreneurial spirit, they have allowed marc lore and his team to build has been refreshing for investors who want profit right now and have not been as patient as an amazon investor has been that's part of the criticism for folks in retail trying their best to catch up and make sure they systems can be competitive, but it comes at a steep cost, and investors are not so patient. >> what was the goal at this point, right now, walmart is, what, 4.7% of e-commerce where amazon is still 30% plus what were they hoping to achieve by this time, any idea >> well, i think on one side of the organization, you have marc lore, who truly believes that if they do not go head to head in an aggressive manner against amazon, that years from now, we'll be looking back and saying, amazon was the reason walmart has faltered and then, you have the other side of the organization saying, listen, like, we do some things

very, very well. let's lean into that, and yes, we want to be the number two player to amazon, but do we really have to close this market share tremendously and i think a lot of people say no we'll win on grocery and we'll win on in-store pricing. and so i don't know what the specific goals were at this point, but i just think it's become clear that these two sides of the organization are not going to see eye to eye, and i guess it's up to doug mcmillan to sort of make the big decisions on investment strategy when there is that disagreement. >> jason brings up a good point with grocery that's always been a competitive advantage for walmart. something like 56% of sales, and that drives repeat shopping trips. and online grocery is a very big opportunity, but it is tiny. something like 3%, maybe 4% of total groceries are purchased online in the united states. so we talk a lot about what marc lore and his team are doing for online grocery, but to be fair

to greg foreign, that program was in place for him, and he's the gentleman who runs walmart's u.s. stores for longer than when marc lore was there. he's accelerated some programs but the stores are 95% of walmart's business >> jason, what's the strategy now? i mean, you report that they are looking to sell one of the websites, modcloth, are they starting to give up, or what are they going to do here? >> i don't think they're giving up they are going to sell, according to my sources, at least one of the digital brands that they just bought a couple years ago. modcloth, and they considered the sale of bonobos as well. i think they're going to continue to lean into grocery, but i'm not sure there's clarity yet on how aggressively they're willing to build out the warehouse network to battle sort of amazon on next day and same-day delivery with the sort of product selection that amazon has or anything close to it. >> you want to drive in the fast lane, you better get in the fast lane >> that's right.

>> jason and courtney, as always, thank you. that does it for the exchange for this tuesday. kelly is back again tomorrow in the meantime, "power lunch" starts about right now i'll give you eight extra seconds here, gang >> i'm melissa lee along with scott wapner new at 2:00, recession risks rising, where are central banks and investors ready? larry kudlow weighs in on the fed and american economy >> mexican made autos streaming across the border at a report rate what it means for trump's trade war, and going public in three, two, one virgin galactic's ipo set for blast-off. is this a game changing moment for the race to space? "power lunch" starts right now >> welcome to "power lunch." i'm scott wapner stocks down again. investors gearing up for chairman powell tomorrow the s&p 500 on pace for a third straight day o