♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. we're live from the nasdaq market site this times square. u.s. equity futures this morning are a little muted after reporting some big gains yesterday. the dow, the s&p 500 and the nasdaq all eking out another round of record closes in the final minutes of trading this morning a bit of a pullback for dow futures. s&p futures off by a half point. the nasdaq up by 1.5 points. you did see technology, consumer discretionary, consumer staples closing at record highs yesterday. we will get economic date ea la

on this afternoon. in asia, the nikkei was down the hang seng was up 0.23% for european markets, the dax is slightly lower you see slight gains for the cac, the ftse 100, stocks in italy and in spain look at the treasury department. the ten-year is yielding 2.090%. >> we have a very busy day going on in the markets. from wall street to washington, let's get you through the squawk planner. on the earnings front, three big banks on the docket starting with jpmorgan that will come at about 6:45 a.m we have goldman sachs coming in with its earnings. those should be announced around 7:30 wells fargo earnings should cross the tape at 8:00 a.m johnson & johnson will also report at 6:50 a.m. eastern time we'll bring you a first on cnbc interview with the cfo right

after that report. on the data front, we will be getting june retail sales, import and export prices as well that all hits at 8:30 a.m. >> the other big event on the planner is big tech is back in washington today the house judiciary subcommittee on antitrust holding its second hearing on online platforms and market power this is focused on innovation and entrepreneurship this is part of a bipartisan investigation into digital monopolies we will hear from executives from apple, facebook, google, amazon, all scheduled to attend the hearings which will also include a panel of antitrust experts including some that favor breaking up the companies. another topic will be the ftc's expected $5 billion fine agains facebook for privacy violations.

other major hearings on the hill this morning all about facebook and its planned libra digital currency we heard from steven mnuchin yesterday, he shared his concern over the digital coin. >> the treasury department has expressed very serious concerns that libra could be misused by money launderers and terrorist financiers we will not allow digital asset service providers to operate in the shadows and will not tolerate the use of the cryptocurrencies in support of illicit activities >> later in the show, we have the majority leader on, and he wrote an interesting piece he said if you can view your mail -- we can't imagine someone opening and tampering with mail,

knowing everything that is going on with your mail. would you allow that if it was stamps were free all of us would say, uh, no. charge me whatever it is >> 39 cents? i don't know it doesn't say anymore that would be a big no so how is this different it's a bit different, but we all sort of got in this position maybe not willingly and completely knowingly about how much of our privacy -- >> certainly not thinking it through. and what concerns me as a parent is watching your kids give away so much privacy, have so much of their life posted online and knowing they have to live with that through job interviews and -- >> if in return like the postal service could say, i see you're going over to europe here's a couple of hotels we think might be nice. this is a great restaurant over

there. does that make it okay >> no. and the other concerns about what happens in terms of illicit uses is valid. if you talk to law enforcement officers they will tell you every single ransom or crypto -- >> now you're into crypto. every demand comes in for ransom being paid in bitcoin. >> leader mccarthy talks about blockchain being an answer to this where will we get the power? if everything is blockchain, it's so power hungry >> me there's two issues, separate issues. the bitcoin or libra thing is an interesting issue and separate from bitcoin i don't think the rest of america shares your concerns >> because they haven't thought

about it or because they have nothing interesting going on in their lives? >> i'm not sure. we talk about it on tv all the time you can read about it. lawmakers are making an issue of it, yet it hasn't changed the behavior of people by the way, people accept television in large part because -- in many places it's free with advertising or they pay for cable and take away -- >> that's a completely different thing. >> i understand, but people have made strange -- whether you think they're strange or not, trade-offs all the time about what they're getting email is one of those things >> but privacy, giving away your privacy, you don't know what you've done until you're in a real problem with it >> the real question is whether you think the real problem has emerged. >> it's all an erosion the same idea with insurance

companies that want to track your every move. right now they offer it as an incentive, you get a lower fee if you get it, but eventually it will happen that you have to pay more because you won't do it >> you weren't here for contessa brewer -- >> i was that's why i've been mentioning it >> and zuckerberg, 5 billion that's it? you take a debit card? he might do that himself >> you mean a libra card >> that's it he's like laughing we made 4 trillion stealing privacy. 5 billion we can come up with. >> it's a fair question. i don't know what the answer is. i don't know what you're willing to give away, what you're not. certainly we weren't aware of what we were giving away as it started. >> do you know any of these anti trust experts that want to break up -- >> i do.

>> they can make a real case for that >> i don't think it's a good case i don't think it answers the problem. >> that's in your dna, is it not? antitrust type stuff -- >> it is in my dna >> sorkin senior >> it's what the sorkin family has talked about at dinner tables my entire life. >> that explains so much >> but in this instance it's not a solution to me if you think there's a problem whether it's with privacy, breaking them up is not the solution >> i would agree with that. treasury secretary steven mnuchin is throwing cold water on the idea of a looming government shutdown. >> i don't see a government shutdown looming again, that's not an issue until the end of september i have no expectation that there will be a golvernment shutdown. >> his comments come after the latest proposal to raise the debt ceiling before the summer congress recess. pelosi said raising the dell

ceiling on its own without a budget compromise is not a solution the dow is down 14 points after closing at a new record yesterday. when we come back, amazon's sales holiday and the competition from other retailers. right now as we head to break, let's look at the biggest premarket winners and losers in the dow. johnson & johnson leading the way. we'll get earnings in just a bit. people know aflac. aflac! 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. do they help when i have bills health insurance doesn't cover? yeah! that's it! aflac! gross guys. get help with expenses health insurance doesn't cover.

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i'll pass. it is day two of amazon's prime day and other retail giants are looking for a piece of the action. brian mcmillon yesterday speaking about keeping up with amazon >> we fell behind and have been playing catch up and have been doing a number of things to accelerate that progress joining us now to talk about amazon's holiday is courtney reagan >> we're now halfway through that 48-hour prime day event amazon said worldwide sellers predominantly small and medium-sized businesses saw the biggest 24-hour sales day in amazon history

amazon says it has sold millions of alexa-enabled devices including the fire tv stick and the echo dot nerd wallet said prices were lower than 2018 prices for those devices. other deals were instapot, the life straw water filter and crest whitening strips while this is the longest prime day yet, data suggests that this year's prime day sales got off to a slower start on amazon.com than the previous two years. because it began at 3:00 a.m. eastern time most folks are sleeping instead of 3:00 p.m. like last year and 9:00 p.m. in 2017. price blink says based on page views from the start of prime day, 3:00 a.m. monday through midnight, at walmart.com people were interested in the instapot, the google home pad mini and at best buy, the highest page views went to the play station, apple

ipad 128 gig and the tcl e75-inc 4kt tv. >> courtney, thank you did you do your shopping yet i don't need anything. i bought an instapot and never opened it i learned my lesson. >> i have not learned my lesson. i don't need anything but i couldn't avoid the deals yesterday. for more let's bring in daniel flax from newberger bourbon and michael grant. daniel, big day for them will it pay off? will it make a difference on the bottom line? >> i think what's going on is that if you look at the prime membership, each year amazon makes it more and more valuable. so we now are seeing a shift to

one-day shipping there are options to get goods delivered in your car and in your house there's more content so while the day in and of itself we think will drive sales, we see this as a bigger story towards an extension and expansion of the prime offering, which ultimately makes the amazon platform and the ecosystem with alexa going into more and more third party devices become more valuable, which is ultimately what's critical to creating shareholder value. >> michael, i was talking to people behind the scenes who have access to data. they said in terms of ad costs, the units sold, media budgets, allocated product units, it was all up twice as much as it was yesterday. they are definitely making this a bigger and bigger deal what do you think in terms of the bottom line and what daniel was talking about with this impact of luring in more prime members? >> i agree with what daniel said the financial impact is modest

when you think about the context of an entire he year, the holiday season but when you think about, you know, what's going on at amazon, which is growth is slowing as growth slows, it's important to make sure your customer lifetime value is as high as can be by really locking in consumers into the prime flywheel and the offering bundle that amazon has, it helps them elongate the relationship they have with each individual household >> how much money do you think they're pulling forward into sales today? or how much of this is additional money being spent >> i think it's a combination. there's a bit more, as becky was saying, you go online, you see things, there's impulse purchases. >> mine was impulse purchases. apple stuff was 30 plus percent off yesterday that never happen happens. >> that's right. but for many people as they see the benefits of the prime

membership, this will attract them to join then they'll see over the coming years the prime membership will become more and more valuable. >> does it mean they can continue to ram up the price for a prime membership >> if they're adding value, i think they can the cost to create content, all of those are rising. if you look at amazon's profit margins, they have zone they're able to balance growing increasing price where appropriate. for many goods they do cut price. >> marketplace question. one thing that happens, if you're on their marketplace, you have to lower your price to match amazon in some cases amazon is losing money on products, so you have these other retailers who are quite upset about these. >> are they forced to do it or do they have to to compete >> have to to compete.

it's not walmart who is upset about this, but people who are partners of amazon so there's an interesting phenomenon taking place where you have people who are supposed to be in business with amazon and their partners effectively taking losses to help support the prime membership what do you think of that? what do you think that will mean long-term? to me this marketplace issue, you're talking about what's happening in washington today, that's where things get complicated. >> i think it's a balance. in the retail industry there are periods around the holidays, around prime day now where there will be some losses. but you do see greater volumes that can ultimately lead to profitability. i would expect retailers and those third party providers to continue to be attracted to amazon's mralplatform it's a balance between compete and cooperate. if those third party sellers are

finding value in being on the plat form, i wou platform, i would expect the growth of those business to continue >> what does walmart do about this doug mcmillon saying we're behind >> walmart will always be behind because amazon has a distribution flywheel happening. they're better at delivering things at the whole e-commerce ma part of it >> walmart saying they can use stores as distribution centers >> there's a difference between an amazon distribution center as opposed to a repail location where consumers are coming through. it's super important that ama n amazon's not really brand friendly when you look at the categories they have underperformed in, retail and home, where brand is a little more important, they have not been able to really crack the code there as much as

they have with more commodity high velocity products that's an important strategic issue for amazon going forward. coming up, dow transmoports have been lagging, but one stock getting a boost on earnings. we'll have a rundown of today's big movers after the break 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. ♪

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welcome back shares of jb hunt are surging. the trucking giant reported a big miss on second quarter earnings and revenue was in line analysts at citi and stevens putting out a note saying if it wasn't for a one-time pretax charge profits would have topped forecasts. volumes fell 8% largely due to weakness in its eastern network. on the earnings call, the company says they expect volume to improve in the second half of the year some other stocks to watch today. shares of bayer are higher in germany after a u.s. judge cut the damages awarded to a california man who blamed its round-up weed killer for his cancer the judge says evidence supports punitive damages, but he reduced the amount to $20 million from 75 million you can see the stock is up by 1.5% tesla is changing its pricing and its lineup once again. the company is killing the standard versions of the model s

and the model x. that means the model s starts at $80,000, and the model x at $85,000. tesla is cutting the price on the model 3 by $2,000. prologis is buying industrial property trust for $4 billion including debt that deal includes more than 200 properties expanding the company's position in southern california, san francisco, chicago, atlanta, dallas, seattle and new jersey coming up a big morning. we are expecting earnings from two dow components we'll get jpmorgan and johnson & johnson, and that's just in the next 30 minutes. we have more coming up after that we'll hear from goldman sachs and so many more plus we'll talk about this, a bit of a controversy that peter thiel is starting. peter thiel doubling down on accusations of treason against google we will show you his comments

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning u.s. equity features at this hour paired their losses in half they're down 10 points so far this morning the s&p and the nasdaq are now green. that would be a new high territory. peter thiel doubling down on his attack against google. here's what he said last night on fox news.

>> the weird fact that is indisputable is that google is working with china and not the u.s. with their ai technology. >> why is that >> first because they have to. management has a decision of either letting this software go out the front door or figuring it will get stolen any way and go out the back door first answer is they have to and there's a broad base of google employees who are idealically super left wing, woke, and think china is better than the u.s >> google denies thiel's claims saying we do not work with the chinese military this came up over the weekend. we had a debate at the table yesterday about does he have proof that google or people at google are working with china. i want to show you how this conversation evolved he started up with this in november at the deal book conference when he talked about china and the role that google was playing or not playing with

the u.s. military. take a look. >> there's something really bizarre about if you're a cutting edge leader on ai like google of not supporting the u.s. military. the inconsistency would be that, you know, in every other context the google statement is always that they're the cutting edge of ai, way ahead of everyone else then we heard the opposite today. >> the issue is -- he sort of ramped up the rhetoric, whether he knows or not behind this some example of some i imagine citizg for google and delivering this back that's the implication the question is should this be investigated does he nknow more than we know

there's a huge competition going on with ai, deep learning, there's google, facebook, microsoft. so what's going on here? i have to imagine if he's making these accusations as forcefully as he is -- though on fox i think he tempered what he said over the weekend, maybe there's something else we don't know yet. >> part of it is the relationship with any of the chinese universities and it gets back to the similar situation with huawei. is it set up so the chinese government and the communist party has access to any of the information or any of the things happening there. >> i can't imagine google at an institutional level think they're helping china at all they were the first american company to get blocked and said they don't want to be in china >> how many concessions have they made to the chinese government >> very little. >> >> what about in terms of

censorship >> on a relative basis to a company like apple, they made virtual no concessions they're not trying to -- they're not trying to create a service for china that way when you talk about who has made concessions for china, the entire cloud on your iphone is now the actual servers are living in china and that was -- you call it a concession or that was the law that china has created. google doesn't want to do that it doesn't exist if you know what i'm saying. so when you talk about who is making the concessions, that's not to say that i think -- >> everybody is making concessions. >> i think google is making the least concessions. any way, we'll see what is behind all of this coming up, a lot more on today's big tech hearings on capitol hill maybe these questions will come up, including the first of two

days of testimony on digital currency and we will hear from jpmorgan, johnson & johnson in just the next couple of minutes do not change the channel. we'll have instant reaction when the numbers cross.

u.s. equity futures are firming up

you will see right now that s&p futures are indicated up by a half point nasdaq futures up by 3 points. the dow fut chooures down by 12 points all three major averages hit new highs yesterday. that happened towards the close. we are awaiting quarterly results from jpmorgan and from johnson & johnson. we'll bring you those numbers as soon as they cross the tape. johnson & johnson up by over a dollar ahead of that jpmorgan chase down by 20 cents. the senate banking committee going to take up the topic of facebook's pro poposed digital currency libra ylan mui has the details >> there's not a lot of love for libra in washington. both republicans and democrats on the committee have been skeptical of facebook's new cryptocurrency they will focus on privacy and others say giant companies should not have power over

infrastructure also not a fan, steven mnuchin he set the tone yesterday when he called libra a potential threat to national security. >> we don't want bad actors usi using cryptocurrencies that's our number one issue. to a large extent these cryptocurrencies have been dominated by illicit activities and spenculation we'll make sure the general public knows what they're investing in and they're proper disclosures. >> mnuchin said facebook still has a lot of work to do to convince him and other regulators that libra will be ready to launch in 2020. the company prepared for this line of criticism. in his written ted david marcus said that the next year will be an open process subject to regulatory oversight and review. and that we know we need to take the time to get this right guys, he struck a humble tone in that prepared testimony, but he is going to be facing a tough crowd. back over to you

>> okay. ylan mui, it's fascinating joe, have you changed your view on bitcoin at all because of this >> bitcoin doesn't have this problem, doesn't >> i don't think it does at all. the only issue s you saw what happened to the price of bitcoin, the interesting thing is if you -- one of the reasons it rose in value was because everyone thought there will be billions of electronic wallets all these facebook user also have, they'll get interested in crypto and they'll realize that bitcoin is probably a better value. but if nobody gets engaged, what does that do >> i much harder to talk about all these things in reference to bitcoin, all the regulation that you're talking about >> we have johnson & johnson hitting. >> looks like a beat on the top and bottom line for johnson & johnson. earnings per share coming in at 2.58 versus the estimate of 2.46 revenue 20.$20.56 billion versu

the estimate of 20.$20.29 billin they raised their full-year guidance for sales but not earnings sales they see at 80$80.8 billi to 81$81.6 billion. that's about 4$400 million highe than forecast. just about in line with the estimate for the mid point there of 81.$81.23 billion they say they're raising the sales guidance due to the strength of the business but not raising that adjusted eps, keeping that the same for the full-year. we'll ask cfo joe wolk that in a couple minutes when he joins us on air stay tuned for that. >> okay. just getting back to that for a second, the thing that you're going to hear again and again and again is nefarious activities are much easier to conduct. >> on any of these >> you will never get around that in looking at the way advocates

talk about it, it's like so is cash there's ways of getting around -- there are ways to make it easier, but that's not enough of a reason. and it's going to be hard once the genie is out of the bottle, you can't put it back in the bottle >> the issue is whether you can create some kind -- there is technology and protocols being built around bitcoin and probably libra that would control the on-ramps in terms of custody and money flow in the u.s., you'll have to use a potentially regulated marketplace where you will end up buying the coin, they can track it >> you have a wallet yet you have a number? >> i had a wallet for a long time >> can i give yours out? >> my coinbase wallet. >> just so if people want to tip me -- >> they want to send you a tip >> send me bitcoin can i have them send it to you you collect it for me?

>> then give it over >> no one will know we're doing this >> no, because nobody is watching >> no, because it's all anonymous and eponymous. i think it is kind of both there's an argument about that there's a chapter in my book >> we'll open you up a coinbase or one other wallet. >> jpmorgan, this is going for us this will be in dollars probably their earnings that's expected to cross the reinnyine now. we'll bring you the numbers and instant reaction it's just $4.95 per online u.s. equity trade. like... a business borrowing solution to help get a little more space with a lot less mom. or home insight, to search for a new house within your budget. because, they really need their space. pnc - make today the day.

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jpmorgan johnson & johnson profit came in better than the street was expecting. revenue also stronger, 25.6 billion versus 22.9 billion the street was looking for the company is raising its full-year sales guidance it sees somewhere between 80.8 to 81$81.6 billion in sales earlier it was looking for 81.4 to 81$81.2 billion. as mike was talking about, that's an increase of 4$400 million. alex gorski making reference to the strong pipeline. we will talk to an executive from johnson & johnson in a few minutes. >> what day was that -- >> friday. >> -- crushed. >> that was the concerns about the potential investigation that is out there the federal investigation, looking into -- >> bloomberg reported that the doj has opened a criminal investigation into what j & j said about cancer risks for its talc products.

they said their products do not cause cancer >> how is your thompson doing today? >> it's up and running >> good. >> so -- >> it wasn't earlier >> 282 for jpmorgan. >> if it's clean, it's versus 250. >> 28.8 billion. >> in line with 29.9 billion was the street number. stock at this point is responding positively to that news it's up 1.52 so many different metrics that marty mosby better be talking about here net interest income, 14.5 billion. noninterest revenue, 15 billion. 16% return on common equity. >> trading revenue >> have not seen trading should be out any second provision for credit losses, 1.15 jamie dimon says he continues to

see positive momentum in the u.s. consumer. what else? >> no. that's the main thing. 16% return on equity is the high for the cycle and the high for the industry in terms of big banks. the stock has been a little bit subdued for enthusiasm citi group was a favorite for the analysts people are more luke warm on jpmorgan because it's not quite as cheap it has a premium because it's been the best operateder out there. looks like a beat in that context, people didn't have high expectations >> for jpmorgan we look at revenue on a majnaged basis. a beat on the top and bottom >> reaction to jpmorgan results from marty mosby we already had some comments from mike santoli. what's the highlighted for y fo

marty? >> two things. >> some tax things as well >> when you look at the actual two things that's driving this beat, it's really being stronger with revenues which is important. if we can create revenue growth on top capital deployment, you really have a really good combination from these large cap banks. secondly, the credit costs were relatively low so much lower than expected and lower than what we even had last quarter. so, you know, again, the economy is doing well. credit costs are staying low and we're seeing some revenue growth, which is a really good combination for the profitability levels continuing to improve through the year. >> so where should this trade in terms of book if book -- the second quarter end book value is 73.77. $73.77 is that about right for a tier >> yes what we look at is tangible book value and we look at the premium

to tangible book value right now they're trading two times tangible book value. >> that's 59. >> yes when you compare that to citigroup, they're right at tangible book value. so the profitability we're seeing at jpmorgan, the high quality that you had the continuation of them being able to find some revenue, probably gain some market share here is what gives them twice the premium to the tangible book value in what we're seeing in companies that are finding their way or still in the turn around, the recovery from the last financial crisis and downturn. >> that sort of explains, i think, why in general people don't necessarily see as much up side for jpmorgan. the rest the math works so well if you have stock trading around book value or less and you got permission to buy back billions of dollars of stock, that's just an easy story to tell in terms of why it should accrue. >> marty, the -- boosted 23 cents by income tax benefits how much do you take out of the beat of that

how much did you know about? >> so when you look at it, we were expecting $2.50 they were coming in here in the 2.80s so, yes, you're going to take out about 23 cents of that favorable and you're going to leave the left with about 7 cents of an earnings beat. >> yeah. i mean, you almost don't want a jpmorgan to beat by 32 to beat by 20% in a quarter because it's probably a one off. it's probably some weird trading swing or something like that. >> especially if you're an analyst because it means -- >> that, too you have most of the metrics out there. you know the market share, what the markets did. you know -- >> dick gabosovich was talking yesterday about you can expect to see more m&a. do you think that makes sense? >> yeah. he was talking on a smaller scale. not among the smaller institutions they're completely hemmed in. >> they buy a lot of fin tech

stuff. >> absolutely. without a doubt. so the sort of peripheral businesses to core banking is where they'll do it. in terms of institutions, slam two institutions together, cut out the costs and rationalize, i guess it should happen on the smaller scale. you would expect it to happen already. >> you were hanging out with dick gasovovich. >> how do you know that? >> he was on closing bell. >> because i read things. >> you were sleeping >> it was like a -- does anyone hear a tree in an -- i had no idea what went on with -- we were talking like we all knew about your debate on "squawk box." >> the viewers do. the viewers who are with us every day, they do you were not one of them yesterday. >> no. >> i know. >> i definitely was not, but i did dvr it i plan on revisiting that. >> i'm sorry to have missed all last week of your thing. >> did you --

>> i have no idea what you were saying. >> you were on a different time zone. >> i was what else? what else we got >> i think we're going to tell marty to hang out for the future goldman could beat by 23 and we wouldn't -- >> well, that's what i was going to -- >> one thing we asked marty, we have citi, you have these numbers. can you extrapolate out at all more broadly about the banking business is citi such a unique player and is jpmorgan on the other end of the world such a unique player that there's actually not much to extrapolate for everybody else >> actually, no. there's some really good things to extrapolate here. one is everybody's worried last year we worried about credit, right? when we were here we had this big discount in bank stocks it was all about whether or not credit costs were going to start rising this year, and they haven't at all when you had that six or seven cents that we talked about earnings beat, what we're saying about jpmorgan, five of that is related to provision being

lower. credit costs are staying lower that's kind of moved on. now what we're looking at is what's going on with net interest margin. what's going to happen if the fed begins to lower short-term interest rates and the market is anxious about that that's the -- kind of the next shoe to drop is are we going to be able to get through that pressure point and if we start to see like we're seeing here net interest margin with probably a little bit of pull back but yet net interest pull back still continuing to plot ahead positively, then you've got the capitol story with generally stable to, you know, slightly rising net income that's across the board for the banks and that's the combination of we're looking forward to see that last 15% up side in the back half of this year as we move past the fed story and what's happening with short-term interest rates. >> thank you marty and mike, it sounds like a bad radio show doesn't it >> doesn't have to be a bad one. >> sounds like a good combination. >> or those little candies what are those >> mike and ike's.

>> mike and ike's. thank you both you're going to be around? >> hanging around. >> yeah, you have to basically all right. good our game and you too, marty, who doesn't have to. coming up when we return, more on jpmorgan's earnings. and the cfo will join us on cnbc to break down the quarter. our squawk newsmaker of the morning is house minority leader kevin mccarthy -- >> unfortunately he -- >> -- who will tell us why blockchain is the future you're watching "squawk box" on cnbc well...if you run a business, it means a lot. for starters, we provide you with financing options for your customers. that way, you can help them buy the things they love instantly and pay over time. and that turns them into serious fans.

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earnings season is finally here jpmorgan, johnson & johnson and others reporting this morning. we break down the results and hear from j&j's cfo. tech under fire. peter teo waving the red floag o china. that story and a preview of the big anti-trust hearing is coming up. plus, a hard look at libra treasury secretary steven mnuchin has serious concerns when it comes to facebook's digital currency does it pose a threat to our economy. we're going to debate that as this second hour of "squawk box" begins right now.

live from the beating heart of new york. this is "squawk box." >> good morning. welcome back to "squawk box" on cnbc i'm joe kernen along with becky quick and andrew ross sorkin it's the summer. how long are you here? >> i'm here next week. >> i'm out tuesday >> end of the summer you and me, baby >> no, i'm here -- >> all of us together. >> i heard for the rest of the year we're only together like twice. is that not true maybe they just were telling me that. >> i'm here until the last two weeks of august. >> i'm here. >> i'm not. >> you're not? >> no, at the end of august. >> i'm here for the end of august >> well -- >> meg's here. >> glad we can all sort that through. >> u.s. equity --

>> i miss your vacation calendar. >> i want to see yours please because i still have time left u.s. equity futures are down 20. we have to -- unfortunately in our job we need to -- >> we need to organize around each other's schedules. >> exactly we're not truly free. >> you don't feel free >> no, we're not truly free. i think a union might solve some of these problems. >> oh, please. >> oh, boy oh, boy. oh, boy. >> world's smallest violin is playing. >> we get -- we get time off but you can't really use it. >> let's talk about vacation later. >> so you're not with me okay, thanks, colleagues. >> here's what's making headlines at this hour. >> comrades. >> we have a very big morning on our hands. bank earnings. we have already heard from j.p. morgan chase earnings of $2.82. that's above the consensus of $2.53. that did include a tax benefit the number still coming out

above forecasts. later this hour quarterly results from goldman sachs at the top of the next hour we're going to be hearing from wells fargo. that number across the tape, you're looking at jpmorgan stock off just slightly. between citi and jpmorgan -- >> off i'm just saying -- >> it was up initially. >> it was up initially people didn't know if it was a clean number or what was going on there. >> big morning for economic numbers. we're going to be getting june retail sales we get import prices at 8:30 eastern time later we get figures on industrial production and home builder sentiment. we should tell you that tesla is dropping the lowest priced version of model s and model x cars from the lineup this is in order to simplify that lineup. it's lowered the starting price of the model 3 sedan to just under $39,000. of course the price tag they desperately want to get that car to is ultimately $35,000 dow component johnson & johnson are reporting results

just moments ago meg tirrell joins us. >> it was a beat on both the top and bottom lines coming in at $2.58 ahead of the $2.46 estimate and the revenue also ahead 20.56 billion versus $20.29 billion what we'll talk about with the cfo, joe wool coming up, is that they raised their sales guidance but not their eps numbers. we'll talk about what's going on with the stock friday getting the big hit from the report on the criminal investigation how j&j communicated around the talcum powders. >> in talcum. >> in, in wolk. >> i want him to be wolk. >> just call him that because we all want to be wolk. i mean, that's someone who is, so wolk. >> wolk. >> all right in fact, let's bring in gentleman right now. johnson & johnson cfo joseph wolk for more on the company's quarter.

he's a member of the cnbc global cfo council. thanks for being with us this morning. meg just set it up you raised your sales guidance, not the earnings per share sales guidance alex gorsky made some comments that it's the pipeline and strong company guidance -- strong company pipeline that he's using for this guidance tell us a little bit about that. >> good morning, becky it's a pleasure to be here and discuss the results with you we did take up our top line guidance given the first half strength given our pharmaceutical unit where the pipeline continues we're bringing new medicines to patients in need, extending the package inserts on some of the products that have been successful to date we are seeing trending prices in consumer medical devices we're encouraged by the first half and that caused us to raise guidance for the second half that portends well for 2020 and beyond if you think about how we came into this year facing biosimilar

and generic competition in our pharmaceutical units specifically, we were looking at 3 to $3.5 billion. we've held up a little bit better than that most companies would be talking about contraction with that type of headwind. we're able to talk about growth, which is based on the strength of our pipeline. >> why not raise your earnings per share guidance as well >> so if you look at our earnings growth this year, when we're maintaining it it's two times the rate of sales growth we think that's very healthy and we look to the long term so this gives us a great opportunity to invest in our portfolio, to either accelerate, fortify or even add to our pipeline going forward so that we do solidify not just the next six months but many, many more years to come. >> meaning that you could use this for mergers and acquisitions >> investment in our current pipeline as well as adding to our existing pipeline. we want to make sure there's a strategic right to win

we have to have a scientific expertise, commercial capability that makes sense we're always on the lookout to add to our portfolio in a meaningful way. >> it declined 2.2% operationally whereas overseas it increased u.s. pharma was down is that what drove u.s. declining? is that driven by drug pricing pressure or what's going on in the u.s. >> two factors at play the generic and biosimilar we're experiencing that mostly in the u.s again, we think that's still very strong performance given the size of our portfolio, but the growth that we do have, as you know, is driven by volume for transformational medicines and not price. we had 6% price declines in 2018 we're seeing the same thing through the first half of 2019 at this point. so, again, we think that bodes very well that our products are being received well in the marketplace by physicians and patients and we're not relying on price

>> so give us your response to the report that came out on friday that affected j&j stock driving it down 5% that was $15 billion at one point in market cap that got erased on this report. you said it wasn't new news. you disclosed the subpoena what is your response to this report from bloomberg that the department of justice has opened a criminal investigation >> yeah, so, you know, given that it's a tough question i feel i need to say the product is safe. it's been proven so and validated by not just johnson & johnson but by many respected agencies, government agencies, institutions for many, many decades now. with respect to the report on friday, i would say it's not new news we disclosed it. it's in our sec filing back in february and the surprise, if anything, was the fact that it was considered news. we're complying fully and cooperating fully with the department of justice. it's an astute organization. i'm sure once they go through the facts they'll come to the same conclusions that the

company acted responsibly and the company is safe. >> you are dealing with a lot of different lawsuits, thousands of lawsuits around the country on this and yet you're sort of battling those one by one. i understand you have set aside some legal funds dedicated to the talcum powder outcomes. >> we've set aside $190 million. that is not related to any settlement or liability payments, that is related specifically to costs to defend ourselves. >> all right can you tell us what you're setting aside beyond that for things that could come in the future >> yeah. at this point, meg, if you look at the talca litigation, when we lost on an original verdict, we've prevailed on appeal. we continue to think that that's the right path for us right now. there will be times, as a cfo i consider costs as a potential settlement opportunity but our over arching strategy is to continue to defend ourselves for this product when the facts are

so overwhelmingly on our side. you had a plaintiff on your panel. this is big business for attorneys. they target big businesses in hopes of a large legal settlement much of that payment goes to the plaintiff's attorneys. >> joseph, what about the situation with the opioids do you consider that the same sort of framework? >> it's a little bit different but it's the same type of framework, i guess is a good way to put it, becky if you think about the oklahoma case we readily admit there's an opioid epidemic that needs to be solved, but here the facts don't align to this claim that the state is making, the facts being that johnson & johnson products based on oklahoma own medicaid reimbursement records were less than 1% related to johnson &

johnson products products that were designed to prevent abuse and have proven to do so. even the plaintiffs' attorneys as i understand it throughout the case have said many, many times, this is not about johnson and johnson's products, it's about them being an epidemic. >> let's talk about your pipeline the new drug you have for depression resistant treatments that have been out there in the past what have you seen in the early commercialization? >> we're very thrilled it will be meaningful for the business we're more excited for the patients who will benefit from this treatment resistant depression hasn't had anything new in terms of treatment in over 30 years. it's the leading cause of suicide. we're seeing great uptake. it's administered by the patient themselves but under the supervision of a clinic. there's a process of certifying those clinics. we have 1600 clinics certified here within the u.s. and we're looking at the benefits it can

provide to patients of treatment resistant depression and their families. >> is that a different mode of action than the typical anti-depressant? >> it's internasal delivery with very limited side effects and what we love about it, joe, with the typical treatments that were out there to date, it would take two to three months to see whether it was effective or not. here we're seeing positive benefits within sometimes hours but certainly within days. >> so there's a whole patient population what is this -- is the standard mode still ssris >> it is. >> they don't respond to any of them or some for a while and then stop? i'm not that familiar with it. >> yeah. so the indication for treatment resistant depression they have failed two ssris if you will over a period of time they may see some benefit for a while but it's not sustaining and sometimes they don't see any

help at all. >> you relaunched your baby line in the past few years. how is that relaunch going >> it's going well, meg. if you look at the major countries in which we relaunched last year, we're seeing strong close to double digit consumption growth so there's inventory fluctuations that are impacting some of the report results but we're very pleased that we're hitting the right chord with millennial moms and dads. >> as you look to build out your pipeline, any part of your business, not drugs, what are you looking at potential m&a >> we're looking at all parts of the business and we always do. we're very excited about what we can add in our pharmaceutical pipeline earlier this year we added a compound for genex, cd 70 which will hopefully treat aml and mbs down the road. we're extremely excited about the medical device segment and where we invest it in ros health

that's in digital robotics surgery. that's one of the highest growth areas and we're very pleased not just with the capabilities we'll get but the extra case we're bringing over to that team we'll be able to provide digital surgery over to the area, whether that's bronk does skoe pis, orthopaedics and general surgery. >> joseph, thank you for your time today it's good seeing you meg, thank you >> thank you, becky. >> he really is wolk. >> wolk. has anyone ever made that zmeks. >> i've only tried to get my daughters to convince myself that i was wolk. other than that, no. >> you are wolk. that's your name you are wolk that's perfect i wish -- i mean, to be -- you know, there's just no question you don't even have to ask it. >> that's your middle name >> joe wolk kernen. >> kind of now, i think, with bitcoin. coming up, thanks, joe, a red flag for regulators.

the billionaire peter teal doubling down on his attacks against google comments and preview of his testimony where they'll be testifying straight ahead. as we head to break, we were talking about a look at jpmorgan and stock is now down 1.5% wells fargo set to report in less than an hour. we'll be right back. moving is hard.

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go to xfinity.com/moving to get started. . welcome back to "squawk box. the futures this morning have been a little bit lower. we have a couple of dow components the dow futures indicated down by 13. we had seen them bounce a little bit lower. s&p futures down by 2 and this is coming after all three set new records. news out from key corp they have discovered fraudulent activity by a business customer. it is looking into just how much the fraud will cost the bank they put that amount up to $90 million. coming up, facebook's digital currency encounters its first government challenge we'll preview today's hearing on the cryptocurrency

questions about design, privacy and the impact on the economy will be answer erreed the earnings parade has started. should the stock market be where it is based on some of these numbers and a forecast of the numbers. we'll run through the early reports and talk mkeart expectations "squawk box" will be right back.

to the extent that facebook can do this correctly and can have a payment system, you know, correctly with proper aml, that's fine. they got a lot of work to do to convince us to get to that place. >> that was treasury secretary steven mnuchin expressing his concerns about facebook's push into cryptocurrency. later this morning, david marcus is going to testify in front of the senate banking committee and reaffirm the tech giant's commitment he says to working with regulatorregulators marcus says i expect that this will be the broadest, most extensive and careful pre-launch oversight by regulators in fin tech's history joining us is one of those regulators senator pat toomey he's a member of the senate banking committee. he will be asking the questions. what's the one -- if you could

only get one question off, senator, what would it be? >> oh, well i haven't narrowed it down that much yet, andrew. i am very curious about what the ultimate business motive is for facebook here. it sounds like they're suggesting that it's not about getting what i assume would be ultimately very valuable data through libra. so if that's not the real motivator, what is that's a big question for me one of them. >> your feeling, your gut reaction right now, sort of question mark in the marketplace about whether libra will be allowed ultimately to go forward. what's your feeling? >> so i -- i've got a gut feeling it probably will i think there are legitimate concerns that can be addressed i think, for instance, the digital wallet vehicles that are the entry point for consumers and anybody using the currency

like libra, i assume that all of the regulations that apply to any other financial institution would apply there as well, and that's really a very extensive, proven system of protecting privacy and data you know, the aml issues i think would apply there as well. i think facebook gets that so -- >> so you effectively think though libra -- this libra organization though becomes a bank, becomes a chartered bank >> i don't know that it becomes a chartered bank that's a fair question, right? unlike other digital currencies, this is backed by a basket of currencies so there's this intermeadation role. it's very different from traditional deposit taking and lending. that's a fair question i don't know the answer to that yet. >> where do you stand on bitcoin and how it differs from this

>> so what strikes me as one of the obvious huge differences, right, bitcoin is fascinating to me but i don't think it's yet become a practical medium of exchange, probably mostly because it's been incredibly volatile something as volatile as that, that really detracts from its ability to be a meaningful, usable currency. well, libra is meant to solve that problem by having it tied explicitly to a basket of currency so if you have the security and the ease and low cost of transactions of a digital currency, which i think they intend to, when you combine it with the stability of a -- shall we say an established mature fiat currency, then maybe you do actually have a currency that can be adopted broadly i think that's the intriguing difference >> sounds like a debit card. >> do you consider cryptocurrency is a threat to the global banking system? one of the things that's been fascinating over all of these

years is fiat currency, countries have had a monopoly over currency, right >> right right. >> efforts like this potentially could up end that. >> yeah, and i think that's something we really need to think through. i will say, it's a huge advantage to the united states that we are the dominant world's reserve currency that's a big advantage to us in many ways. i think we are a long, long way from a digital currency being a threat to that, but who knows. adoption rates could be quite quick if there's a real major break through. as i say, i think so far on the digital currencies the volatility's precluded that kind of ubiquitous use. libra seems to be meant to solve that problem. >> senator, you sound pretty calm, cool, collected about all of this. it sounds like you haven't entirely decided what you think. we have had people on both sides. usually i expect somebody to be a huge proponent or a huge opponent when it comes to these things you've heard such tough talk

coming from the administration what do you think actually plays o you the? >> so i don't know one thing i will say is financial innovation can be a very good thing. i mean, if you ask me, i think it's still extremely expensive to execute ordinary payment transactions just a credit card company i mean, the fees on the credit card, aside from -- i'm not talking about high interest loans. just the execution over a percent, could be over 2% that's a lot of money to move money. and so it seems to me that maybe there could be some innovation in this space that would provide security and that would dramatically lower the cost of transactions those would be good things >> right. >> so i don't want to presume in advance that we've got to prevent the development of some new innovation. >> the volatility of bitcoin is because it actually has inherent value. libra has no inherent value other than the dollars or the basket of currency that it's based on so of course it's going to be volatile because it's a

fledgling -- and have you noticed that bitcoin's actually already out there and being used and viable and no regulators have had a chance to say, no, you're not going to do this. it's totally different, and the volatility as it becomes more accepted will probably go down to the point, but at least it hasn't here. libra has no inherent value. >> so i think of it differently, joe. i mean, bitcoin has inherent value of scarcity, but it doesn't have any other inherent value that i'm aware of. whereas, the libra is actually backed by a commodity of currency it's only the value -- >> the distributed ledger system is the inherent value and there's zero transaction costs around the world to use it so that -- what is that worth? it usually costs 3 or 4% so it has its own value. >> okay. fine, but libra can replicate that. >> wait. >> whether it's 2,000 or 20,000 at least it has -- >> there's costs to create it as well. >> my point is, that can be

replicated that can be replicated and it -- if that is the sole source of that and scarcity are the sole sources of value, i could envision it might remain volatile maybe not. i don't know how this all plays out. i think it's an exciting innovation we ought not try to strangle it. >> how concerned are you that facebook is the innovator? is that the back drop? >> the big challenge for facebook, an objective matter, they're probably going to be able to comply with the reg gu la to-- regulatory regime >> the other big question i have given that you, like i, would love to reduce the friction and costs of transactions, you talked about credit cards, for example, you basically have 100 companies all getting together, including by the way master card and visa and paypal that are part of this -- >> yeah. yeah. >> -- and what does that say

you know, i know there's a big conversation about raking up big tech, but when you have 100 massive companies all getting together around one idea, is that a good thing or a bad thing for society? >> yeah, i -- honestly, andrew, it's a very good question but i don't think we know the answer to that yet. i think it's too soon to know. >> and the flip side is, how much do you think today's conversation is going to really be about privacy in some of the digital issues that have confronted facebook? >> so i think most of it will, right? i think that's the big concern i think among legislators that's where there's a feeling that we've got to protect our constituents from misuse or other -- you know, other problems with their data and obviously have been problems here let's remember, of course, the problems occur all across our society. every big institution is a target of breaches there have been successful breaches unfortunately in

industry, government, academia so it's an ongoing challenge. >> okay. senator, we're going to leave the conversation there we have goldman sachs just out with its earnings. we're going to get to that right now. appreciate your time. goldman sachs is out the company now tweets its release. if you want to put it on the twitter and run with it, it's $5.81 a share versus the 4.89 that the street was expecting. revenue at 9.46 billion versus 8.28 billion that the street was looking for. david solomon chairman and chief executive officer making statements saying they're encouraged by the results for the first half of the year they continue to invest in new businesses and growth as a way to serve the broader clients raising their quarterly dividend to $1.25 a share, too. mike, just what we've seen so far. >> yeah. i mean, i want to see exactly what the margin of the beat came from i know there was going to be potentially some gains from sales of an investment, but it

seems obviously like it continues the story with the other banks, which is essentially no negative surprises certainly. 11.1% return on equity i believe it was which is essentially the same as it was through year to date so it's obviously still, you know, not quite posting the same kind of profits as jpmorgan but it looks -- it looks like it's relatively clean a little bit of a decline in banking revenue. we knew that was going to be soft. >> net revenue for investment banking, $1.8 million. that was 9% lower than a year ago. it was 3% higher than the first quarter. within that financial advisory was down by 3% in the second quarter. they said that was an industry wide decrease seen with completed mergers and acquisitions institutional client services, net revenue. 3% lower than a year ago and 4% lower than the first quarter investing and lending, 2.53 billion for the first quarter and 16% higher than a year ago

marty mosby is standing by and watching this. marty, what do you think of these numbers? >> well, goldman was our favorite money center bank coming into this earnings season they had the reputational issues last year which took a high quality institution and began to create it and it's trading around a tangible value which is like citigroup this cut is the inflection point where we expected an earnings beat of a pretty meaningful one, which we're seeing we had a little bit more in revenue which is probably coming from some of the gains out of the investing and lending area with the market going up in the past quarter we also expected to see a little bit in expense savings which will reflect them coming out from under the pressures that they had over the last year as well. >> what would you tell people to do with the stock right now, marty? >> yeah, we think that this is a turn around story that's at its inflection point it is amongst the money center banks that we're seeing with

jpmorgan earlier or with citigroup yesterday. goldman will be the one that we would favor over the back half of this year. >> all right >> we would be buying it at this point. >> let's take a look at it we now have three dow components that have been reporting goldman sachs with the better than expected earnings is up over a dollar. that's a gain of a half of a percent which is helping the dow which has turned positive, it's 7.8 above fair value, headed up to 10 above fair value j.p. chase, that dow component down 1.5% even though jpmorgan was better than expected it came in at 2.82 over the 2.50 it was expecting johnson & johnson, the other dow component is indicated higher after it came in with 2.58 versus 2.46 the street was expecting and beat in terms of revenue and raised the sales guidance by $4.5 million mike, we've been talking about how this is going to be the guide that tells us whether

stocks are overpriced. what do you think? >> so far it looks like the companies are pretty consistently beating it's pretty early. the question is has the market already kind of gotten there i don't think entirely that's not a tremendous surprise and the market is unwilling to put much of a multiple on that outperformance in one quarter. book values up for goldman 2.1%. so is tangible book. it's trading around the book value. >> how come jpmorgan is off by 1.5% this morning? >> again, the concern is the interest in i.i. and jpmorgan is pulling down the guidance on net interest income. so they're probably on the call going to talk about the fed cuts and the impact that it has what happens is that you actually have with these money center banks, a yield curve does

matter when we went inverted, this he have assets on their balance sheet on the longer end of the curve funded short and their trading accounts and that. we'll see more pressure there like we saw yesterday with citigroup. when we get into the super regional groups we'll see a little bit better traction in terms of loan growth in terms of what they can do on the deposit side. >> what are you building in? cut of 25 basis points, 50 basis points no cut >> we have 25 basis points in july and another 25% in the back end of the year. with inflation coming in, that gives them an opportunity to begin to pull back but we think that's all that we have in store. it's not a precipitous drop going into the downturn in the economy. this is a yield curve given what we have with the international rates is a earth haved and an anomaly and they would like to get the short rates in line with

the long rates of the curve. >> mike, what do you think about inflation because you can say inflation doesn't look to be a problem but if you look at the cleveland fed or atlanta fed, they've seen some pretty high inflation numbers. >> yeah. the way i think about it is the economy is producing roughly as much inflation with the fed funds at 2%. it hasn't changed much it's been stable if your arg zbumt, yeah, it's been stable. no central bank has been successful in creating inflation. what's a quarter point or half point going to do? one thing i would point out, this morning's merrill lynch global fund manager's survey, 1% of people said inflation has up side risk. so i don't think you can see the makings of it. i clearly think the investors are not positioned for an up side surprise to inflation put it that way. >> gentlemen, thank you both mike, it's been great having you

here this morning. marty, thank you for running us through the numbers as they hit. it's been great seeing you. when we come back, a run through of the morning market movers let's take a look at the equity. dow is up 10 points and s&p is there up by 1 point and nasdaq up by 5 points w ghe of the major averages hit nehis once again yesterday johnson & johnson is a baby company.

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shares of domino's pizza are falling this morning the company thought $2.19 was okay 17 cents above estimates revenue was well below estimates at dominos u.s. comparable store sales increase of 3% missed the forecast as well, but it was on a pretty good comeback trail, domino's, in recent years. although the high for the stock is 3.05. 5.5% drop this morning all right. now that earnings season is kicked off, what should markets be expecting in the coming weeks? we'll be right back tk

t at after a quick break dear tech, dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world. but i feel like you have the potential to do so much more. are you working for all of us, or just a few of us? can we build ai without bias? ai that fights bias? ai that helps us see the bias in ourselves? we need tech that helps people understand each other. that understands my business. dear tech, dear tech, dear tech, dear tech, let's champion data rights as human rights. let's use blockchain to help reduce poverty. let's develop new solutions with the help of quantum technology. let's show girls that stem isn't just a boy's club. let's make a difference in people's lives. let's do it all. together. let's expect more from technology. let's put smart to work.

all right. now that earnings season has kicked off what should the market be expecting in the coming weeks.

manny, this is different this time around. why is it so quiet in your world with earnings season kicking off? >> yes that's the question. where is the volatility? what really stands out to us right now is how little volatility is being priced into the options market with stocks going into earnings. and that i would say is not really a reflection of what the earnings estimate is supposed to be but rather driven by the fact that investors are not expecting stocks to move on earnings so the average stock volatility going to earnings for this quarter is lower than last five quarters the option market essentially saying this quarter's earnings will be extremely boring, that stocks are not going to move on the numbers and we disagree. we think if anything this quarter is actually more important than usual given that it will give us a first glimpse into how companies are navigating recent tariff increases, oil price selloff, global growth selloff, et cetera that is what stands out.

>> you would think unless the fed is somehow involved again for no reason -- >> right. >> -- at this point, so, you know, if everything is better than what you can get in fixed income, then that's why earnings don't matter, right? >> right. >> this is the fed again >> i would say at this point i would argue that the fed cut is expected in the july meeting it's fully priced in by the market so to me what will take us higher is earnings. >> but there's plenty of liquidity still. >> for sure. absolutely. >> globally. >> yeah. yeah >> it makes you wonder whether with the -- you can't tell who's naked under the tide when it goes out you see he's not wearing a suit nobody knows now liquidity is up to our nose. >> we'll see i think this quarter, i think stocks will move on earnings i think certainly more to -- more than what is currently priced. >> chris, you have been managing this, it's kind of a small cap fund what are you up to are you beating the market this year

>> i think we're up about 29% so russell is up about 16, 17, so we're having a good year why do you say small caps that you focused on haven't done as well as large caps >> well, i think we've been seeing the global slowdown where small caps need a little bit more acceleration in that area they've also been more impacted by the tariffs and exposure to china where we do a lot of technology investing that's supply chain. what happened with huawei back in the spring was very meaningful. >> 29% is not good enough for you? you're greedy. >> investors want to know what i'm doing today, not yesterday. >> value is in small caps even though you manage that kind of return so far? >> yeah, no. we've seen m&a come back to the space. that's been helpful in a handful of cases we're halfway through the summer which is a tough time seasonally for small caps for the earnings season that's coming up, i don't think we're too focused on what they did in the last quarter because there's

a lot of headlines and noise it's what are you going to be looking for projections coming out and beginning to look in 2020 if you look at the sell side. >> your particular situation given how successful you've been thus far, how much have you taken off the table? >> we took quite a bit off in may. last time i was more defensive and we saw a significant pull back in the early days of june where we deployed capital. >> you didn't go back in >> we did go back in we can't sit on too much cash but we still sit on a cash position now where we think we would be deploying in earnings season on any dislocations in names that we've been doing diligence on. >> i'm down in rio on that train i started taking two years ago every year you're still hitchhiking in south jersey since you still are -- >> new haven. >> you went backwards. chris, thank you manny, thank you we have to go. for some reason. it's a three hour show. >> lots to talk about. in fact, when we come back, big tech back under fire as

executives from facebook, apple, google, amazon and more head back to capitol hill we'll talk about big tech after this break. we are awaiting results still from wells fargo those numbers and market quawboaw just minutes ay "sk x" will be right back. ents,n follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

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with the chinese government. i don't know what that is. anyway, a great guy. great and brilliant guy who knows this subject better than anyone the trump administration will take a look. now trump loves peter thiel, i'm sure, because peter was the only guy in the entire state of california that was a trump supporter. anyway, check out the shares of google less than 1% at this point some of it's already in stock. i guess we knew this was happening already. negative already. >> more when it comes to all of this investigation and what's going to happen in the regulatory front. >> let's bring ed lee, "new york times. john stowell, economist there. want to bring you into this conversation about privacy, about tech let's talk about peter thiel right now and what this means. peter thiel has not offered

evidence and being shot across the bow. he came out over the weekend saying google was working with the chinese. it's sort of an ironic thing to say in large part because google was one of the first tech companies to effectively say, you know what actually, on a principle basis we don't want to do business with the chinese maybe we should try to think about -- >> we'll work with them to figure out how we can. >> but then so far haven't. >> right. >> what do you think this is about? >> it sounds like that there's something -- he knows something that the rest of us don't. if he does, he should be all in on it. the other context, he has close ties to facebook. >> on the board. >> on the board of facebook. it's the one -- between facebook and google, this long standing rivalry, they're nowhere near china. >> you're not suggesting that mark zuckerberg is whispering in his ear saying go out there and tell the world it's google and china? >> no, i'm not suggesting that at all because i don't know that for a fact but that's the

context. jo >> john, what do you think of this >> that's been the news of the day. it's been expedient to take the tech companies out in the political environment. there's been no evidence behind it and like -- >> is there no evidence behind it or no evidence that we know of >> that we know of nothing public that we can comment and speculate on there's more to come if the tweet storm's beginning but just not enough information to really understand what's behind it. >> let's just sort of widen the aperture for a second. there's testimony going on in washington today david marcus is going to be testifying lots of questions about broader antitrust questions about these big tech companies we talked to pat toomey on libra and one of the things that was so interesting was he said sort of his gut reaction was that this kind of thing will go forward so my kind of thought was if something like that is going to go forward, all of this conversation we're having around

privacy. i know there's lots of concerns, i know they're legitimate, that maybe nothing is really actually -- >> it's like take your pick. which ones are you going to be concerned about? which ones aren't you going to be concerned about anything facebook does, libra, that sort of -- all of the social media sort of political plays that's happening, they're a hot potato, right? they're a lightning rod. that was bad timing. the idea is it's going to happen eventually i don't know why they didn't wait longer especially with the fcc fight coming down. it seems like they haven't been strategic. senator toomey is right. it's a pretty smart nuanced take this is going to happen in some form or other. let's embrace it and tackle it now instead of pushing it aside. >> jochn, based on what you've written. i don't want to put words in your mouth, but you are on the other side of this debate? you think real regulation is

coming >> on libra? >> not necessarily on libra but big tech across the board. >> this is a moving target they continue to evolve. marketplaces are changing. their participation in the market is changing and that means the dynamics behind whether they're blocking or inhibiting competitive behavior or innovation -- >> are they? >> in some cases we've seen obviously google has been slapped for this i think it's a hard case to make today because i think a lot of consumers and a lot of people in the marketplace would say they've made access easier and there aren't prices for their products but over time more companies could come out and will come out to say, a, they've blocked our access to the marketplace so there's been unfair practices or -- >> john -- >> but i think the answer to the question is it's very hard t see today that there is a compelling anti-trust case to be made across the board to break up these four or five big tech companies. >> john, i don't know if you can

see it ed can see it. you've got a list of the big faang stocks on the screen who is most in jeopardy right now? of regulatory scrutiny that would have a meaningful -- >> i think facebook. that's the first one listed there. i think they've got the biggest hurdle. >> more than google given what the president is saying now? more than apple with some of the issues that -- >> i think facebook's ambition is sort of -- naked ambition around all of these different projects is attracting scrutiny. >> it's the day of the week. it could be amazon amazon has made a lot of enemies. there are a lot of complaints about they're blocking access to the marketplace, unfair picking of winners and losers when it comes to their marketplace. >> okay. >> day of the week it's what's been tweeted lately and which politician wants to pick on whom. >> we have to leave the conversation there it will continue though. thank you very much, guys. still to come, the stagecoach is ready to roll.

wells fargo results are next by the way, here are the futures right now. take a look at what's been happening after we've already heard from three dow components. dow futures picked up. we were in negative territory down by 25 points. this morning at 6:00 a.m we're indicated up by 35 points. s&p futures up by 2, the nasdaq up by 3 and "squawk box" will be back [ dogs barking ]

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a big morning for banking. results already out from jpmorgan and goldman sachs next up, wells fargo. the pressure on tesla as the company strives to hit production goals, a new cnbc report details manufacturing short cuts and is blockchain a double-edged sword this hour we'll ask house minority leader kevin mccarthy why he's such a fan of the technology and also if that extends to facebook's proposed digital currency the final hour of "squawk box" begins right now live from the most powerful

city in the world, new york. this is "squawk box. oh, good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site i'm joe kernen along with becky quick and andrew ross sorkin futures in the positive territory. they moved the arrow down 20 to 30 with dow components we have wells fargo out with 1.30, which is 15 cents above estimates if that's a clean number looks like revenue is almost exactly in line. >> higher. 20.6 versus 20.9 or am i looking at -- >> yeah, that's current. that's june. the march was 21.6 yeah, so that is -- that's about 700 million ahead if that's the number that -- >> i don't see any items that are in here. that looks like that's probably a clear number some comments. remember, there's an interim ceo there. he made some comments that are basically just taking a look at

the company, nothing broadly, that looks at the industry al parker. john shrewsbury, the cfo just said their credit quality remains solid. they are looking at -- yeah, these are all just comments about the company, a lot of things we already know about some of these issues after we've seen from some of the other banks this morning, jpmorgan had numbers better than expected the stock has been trading lower. one analyst said the net income guidance was maybe what the street is focusing on as you start thinking about the potential for fed cuts and what that will mean for some of these big banks where interest rates really do matter on some of these issues, too. >> kind of udge after all was said and done for wells fargo. it's a turn around situation obviously with all of the -- >> right still an interim ceo who's there. >> reputational damage buffet sticks up with him there all along.

yeah >> okay. let's separately move to the other big topic of the morning facebook's digital currency project libra is set to come under congressional scrutiny it will happen today ylan mui is here good morning to you. >> andrew, this is the room where the senate hearing will take place in just about two hours' time. i've got to tell you, facebook is going to be in front of a tough crowd today. both republicans and democrats have been skeptical of the new cryptocurrency expect chairman mike crepo to talk about data privacy and protection ranking member has warned that giant companies should not have power over our public sector clearly treasury secretary steven mnuchin is not a fan after warning yesterday that libra could be a threat to our national security. >> i think there is a preference on both parties to the extent we can agree on the debt ceiling and a budget deal, that that is

the first choice and i think we're getting closer. >> reporter: mnuchin said he is concerned about the illicit activity and use of cryptocurrencies in those type of financial crimes. he said that facebook still has a lot of work do to convince him and other regulators that libra will be ready to launch in 2020. now the company does seem to be prepared for this line of criticism. david marcus who is the lead on libra for facebook, he will be testifying from this chair later on this morning and in his prepared remarks he said that the next year will be an open process subject to regulatory oversight and review and that we know we need to take the time to get this right guys, just a reminder that today is only day one of two tomorrow facebook will be before the house financial services committee and chair woman maxine waters has been drafting a bill that would prevent facebook from launching libra altogether back over to you. >> ylan, thanks.

let's get to our squawk newsmaker. house minority leader kevin mccarthy has a new op ed out in "the new york times" titled "don't count on government to protect your privacy." i have to tell you, i was shocked at what your -- what the answer is because it's -- it's kind of the opposite of what this whole hearing is about today sort of. not necessarily, but you think not only is blockchain a viable and an important technology but it could be the cure not the disease itself for what people are talking about to these privacy issues that's staggering to me. i guess it's because you're from california and maybe you understand this stuff. >> no, blockchain gives you a great deal amount of security. my concern is the answers that i'm hearing from washington are really what i heard during dodd-frank it's simplistic. break the companies up they do nothing to protect my privacy or create a regulator

that make them a utility that take away all innovation when you think about it, and i leave in that editorial something that tom siebold and i were talking about what if the postal service allowed you to mail for free but they could read your letters and send you advertise am. that is how g mail was created google says they no longer read your emails but they allowed third parties to do it people don't understand where their privacy is going when i'm on facebook, i'm not the customer, i'm the product. facebook is free because they sell your data to make money now they want to get into the business and they're not bitcoin in this libra. they're not decentralized. what i'm really looking for in this hearing is how and when will libra actually become decentralized. and companies have to pay $10 million to get into this libra and there's only a few select? so a small business couldn't get in so then you're concerned about competition. is it really an open and free market is this a venmo or is this going to be a bitcoin?

these are questions and it's right that washington asks these questions of where we're going. >> you're preaching to the choir saying all of the things -- it's not decentralized. >> no. >> i don't see what good it is it sets you up to have someone in charge. the 10 million you're talking about, they keep the fluid on that it's a retread of everything that bitcoin was created to sort of be an alternative to. i'm surprised that a republican sitting on a -- in a powerful position is making the case for really -- i think you're making the case for blockchain and bitcoin, leader. >> look, i like bitcoin. is it where it needs to be no but the real thing i like about bitcoin is blockchain. i like the security. >> you understand it. >> yeah. >> it took me a while to figure out exactly what the -- and you know what got me there >> what? >> when i saw what libra was i was like this is -- everything that bitcoin has, that gives it

value and makes it powerful and attractive and really generationally changing, i think, is not evident to me in libra. in fact, it's even worse because it puts -- >> yes. >> -- mark zuckerberg and all those autocrats in charge of even more, which is the opposite of what we're looking for. >> the real concern i have with any of these tech companies is about anti-competitiveness does somebody else have the ability to come up you know the company that really should have been amazon was sears. they had every ability they sold you from a house to clothing they had a catalog they didn't compete. they didn't go forward can somebody else compete with amazon can somebody else compete with google these are anti-competitive that's the concern i have. >> let me just ask you one bigger sort of larger crypto question because -- >> sure. >> -- bitcoin's price has moved in large part because of this idea that libra will ultimately be successful. in many ways the one benefit of libra over a bitcoin is that

there is somebody in a company at least or companies that you can go to when your libra is stolen or something bad happens and ostensibly it gets adjudicated and that potentially depending how this is regulated it will be harder for thieves and other people who are trying to do bad things in terms of -- to use a currency like that that ultimately might be regulated in terms of not just custodial accounts but might be able to be more trackable bitcoin, one of the great benefits is it can cross borders. the flip side is it can cross borders and you might not know it. >> you're making my case when you think about that what you're saying when you look at libra, if you're already a big, powerful company that you can pay $10 million, you can enter this and you're going to take away all competition. so you can only use uber you can only go to one certain bank you can only use facebook. they're taking the big powerful

company seeing something move up when it comes to bitcoin and saying, we better get ahead of the curve. let's notmake it decentralized let's let the public believe they're part of that let's use blockchain and they'll take what i look at and what i buy and make nobody else enter this market because really what you want, you want competition i want to see competition and somebody else able to rise up. i want to see decentralization because libra concerns me that they're going to control the market. >> but the issue that i'm wrestling with is decentralization -- i love the idea of decentralization except for the fact that as you know the u.s. has had a monopoly on money, or at least its own currency for so long decentralization takes away that monopoly, which may be a great thing and takes away the control the country may want on the flip side you have, as you said, companies coming together including, by the way,

the credit card companies. >> the credit card companies are going to get behind this which concerns me. as being the middleman what does blockchain do? take away the middleman. any time you make capital more efficient, yeah, it will make it more efficient that's why the companies are getting involved in it i'm really concerned about the dollar but also when you look to the future, we should be ahead of it. you shouldn't be afraid of technology but you should understand it in a greater sense and how can we prepare that tomorrow is better than today? that's why we should have these. >> seeing a government official speaking positively in any context because you do lose control -- >> yeah. >> which is very powerful with currency that's why i initially when president trump said some negative things about bitcoin, i said, what do you want what do you expect of course he's going to. that's why i'm surprised i think i could talk to him for 10, 15 minutes and i think i could get him to understand it's not what he thinks i think you could, too obviously you haven't. i'll tell you the one thing i'm

worried about. if you're using blockchain for everything, it's going to be like 180 degrees outside because of the carbon footprint and all of the power that it takes to use that aren't you worried about -- i don't know if you're a carbon footprint worried guy. i'm eating just -- i just eat mud now. i don't eat -- >> if you are concerned about that, you should be very happy about living in america. we're lowering our c o2 unlike china, india, france. >> no, i've got it you know what i mean it would be very power intensive. >> every innovation will get better and more efficient. every innovation this is the first -- this technology is the first and second version it's true about the question that you asked about bitcoin but bitcoin could actually take that protection to actually give that assurance to somebody if something is stolen. what facebook is doing, you can't argue against facebook they're trying to keep a monopoly they're trying to keep a control. they went to their biggest customers and they've got a base

to start with of millions of people on a platform and let's control another element of what they're doing. why? they see where bitcoin and blockchain is going. they want to get out in front of you. >> leader, you don't think they're trying to solve the inherent challenges that bitcoin presents >> they are he pr're probably to see -- look, bitcoin has a future maybe it's so many decades ahead of us. what if they can use a small version of it. what i think they're doing is taking venmo and putting a new version on it and trying to add a blockchain to it at the same point because aback wouldn't be in it. >> you have a twitter account. get ready because -- what's your twitter handle you're going to get memes. i have memes where i'm like mows sis rising into the heaven. >> i'm at gop leader >> you're going to get that. >> @gopleader. you're going to get that you're at least in stage four.

you're not quite an evangelist yet but i think you're a believer in bitcoin, aren't you? >> yes the more i study blockchain, the protection that it provides and when i'm looking a the the rest of the world, yes, we want our currency to be the strongest, but when you look at technology and where it's going and you think about china and these other countries and what they're trying to do, we cannot keep our heads in the sand. how can we be more secure? how can we -- >> leader, here's the issue. i'm as you know a big fan of bitcoin. >> how does he know that >> the folks at the fbi or the nsa or the cia, they would tell you that actually bitcoin presents a real challenge. >> it does. >> possibly much more than libra to be honest with you. nkts it does it gives a challenge i can do that in something else. the states have legalized marijuana and we don't allow them into the banking system brings a big challenge because they're using dollars. these are challenges that we

have that's why we can solve these problems. >> i'm one during, now i think there might be something like you because you're very smart and you still went into politics you're way too smart to be doing what you're doing right now. thank you for being there anyway, leader i'm he glad. i'm happy there. >> i don't think any of my teachers or professors say that. >> now i don't understand it it's like, holy smoke. i mean, i watch these guys on the finance committee when they're talking and it's mind boggling you're going to get a lot of -- we're going to tweet this out. i think you actually -- your quote was i like bitcoin did you hear that? >> yes. >> that may be what we tweet out. anyways, thank you minority leader. >> thank you. >> i almost said majority leader aim i'm living in the past. >> we're going to get back there. >> you know i'm living in the past. >> you said it. >> i know, i am. like jethro tull thank you. >> when we come back, the pressure to roduce

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welcome back, everybody. a new cnbc article is detailing short falls. phil lebeau has the detail. >> reporter: this is part of a long investigation that has been conducted basically looking into the manufacturing process in the outdoor tent that has received so much attention at tesla talking with a handful of workers at that tent and they've detailed and provided some pictures of shoddy workmenship to say the least, including electrical tape holding in brackets some nuts not being applied in certain areas and also outlining how the conditions there, not always the best, especially when the wildfires were going on in california all of this was in an effort to increase model 3 production. and, remember, this has been the

focus for tesla as you take a look at model 3 deliveries this has been the focus for more than a year. yes, it's overall deliveries, but really model 3 the mass market vehicle. they needed to hit at least 74,000 that was the estimate on the street in the second quarter they came in at 77,550 tesla's response they call these anecdotes misleading going on to say dedicated inspection teams track every car throughout every shop in the assembly line and every vehicle is then subjected to an additional quality control process towards the end of the line and all of this happens before a vehicle leaves the factory and is delivered to a customer did you take a look at shares of tesla? remember, this company reports its q2 financials next week. this is in the next month. it's been a heck of a run and at one point go back six weeks, it was down in the 180 range. one last note about why this story is important if you look at "consumer reports", if you look at other

third party sources, independent that track reliability of vehicles, the reviews on the model 3 are not good in fact, "consumer reports" latest reliability guidelines have them in the bottom half of auto brands. the editors at "consumer reports" say it best look, there's a lot of efforts with the model 3 and that's what this gets at in terms of increasing production. >> phil lebeau, thanks coming up, can ebay, walmart and target steal amazon's thunder. the online retail giant racks up prime day sales facing fresh competition from rivals offering deals of their own we're going to ask the top analysts if peak prime day is something we've already seen or if amazon can keep grabbing market share stay tedun, you're watching "squawk box" on cnbc l normalcy is restored. we'd been working for days on a site in a storm devastated area. a family pulled up. it was a mom and her kids.

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welcome back to "squawk box," everybody. we've been watching the futures this morning, and after hearing from three dow components, you're going to see right now that the dow futures are indicated up by about 25 points even after the dow, the s&p 500 and the nasdaq all set records last night in trading. s&p 500 up by 2 points and nasdaq up by 5 points. johnson & johnson reporting second quarter earnings up above expectations the dow reported adjusted

profit, 258 a share. 12 cents better than estimates revenue beat forecasts and j&j raised the sales outlook the cfo told us in the last hour its results leave us in the solid position for future quarters >> growth this year, we're maintaining it it's two times the rate of sales growth we think that's very healthy and we look to the long term so this gives us a great opportunity to invest in our portfolio, to accelerate, fortify or add to our pipeline going forward so that we do solidify not just the next six months but many, many more years to come. >> not a whole lot happening in the shares you can take another look up 29 cents at 135 down big on friday down 6 points. the news came out in the middle of the day. >> we have a headline, some news coming out of key corp

it's reported fraudulent activity the current estimates put the amount at about $90 million. the stock off 2.5% can't imagine it's all related to that news we'll keep our eyes on it. breaking retail sales data we'll bring you the report as it comes out and break down the numbers and what it means for business, the economy and the fed's latest deliberations, of course, on interest rates. what's going to happen ts hi month. "squawk" returns right after this whwanted to get away who used expedia to book the vacation rental that led to the ride ♪ which took them to the place where they discovered that sometimes a little down time can lift you right up. ♪ flights, hotels, cars, activities, vacation rentals. expedia. everything you need to go.

welcome back to "squawk box" on cnbc. we are live from the nasdaq market site in times square. in fact, we're just seconds away from the latest retail sales and import price data. we've been watching the futures this morning dow futures indicated up by 17 points they had been down by 23 or 25 points we have heard from three dow components, two of them helping things out right now even though all three of them beat earnings expectations s&p is up by a point and a half.

nasdaq indicated up by about four banks have been out today. we've heard from goldman pmorgao j.p. morgan chase down even though it beat on the top and bottom line. part is concern for future fed, rate cuts and what that would mean rick santelli is standing by at the cme in chicago rick, take it away. >> reporter: a litany of data points import prices for the month of june down .9 that's a bit more than down half a percent to down .6 expecting strip out petroleum, down .4 that's also double what we were expecting. year over year down 2% that's actually on the light side but sequentially follows minus 1.1. let's look at the other side export prices. export price month over month down .7. year over year down 1.6. so all these numbers are bigger drops and maybe they go to the notion of how disinflationary

pressure seems to be accompanying many of these trade infractions. the money ball number, retail sales for the month of june, up .4 double expectations. strip out autos, guess what, still outperforming .4 strip out autos and gags, up .7. if we look at the control number, up .7. that's a whopper and last look at .5 control number ends up at .6 some subtle changes in the last look, .1 a nice over performance there and it's immediately reflected in yields. we pop up to 2.11 and 2.62 on tens and 30s respectively. we have a dollar index with a rare up day. it's up 1/3 of a percent and it's up more we see pre-opening he cequities about the same as they were. the dow futures at least

this number sets off the stage for more ongoing debate as many try to handicap exactly how much slowing is being drawn into the u.s. economy from global forces. andrew, back to you. >> thank you, sir. thank you, rick. stick around we don't want you to go anywhere we want to get over to steve liesman who joins us with more steve? >> reporter: yeah. somebody forgot to tell the consumer about the inevitable slowdown here. we were looking for a much weaker number here let me get rid of the thing that actually depressed it, which is gasoline station sales that, of course, will come out when they adjust this data for inflation. gasoline station sales were down 2.6% why? the price fell that may come up in any event, we do get rid of that that's where rick rightly cited. 0.4 if you take out autos. the only other real big negative is department store sales which, you know, department stores have

their issues down 1.1%. but then we look at the non-store retailers, which includes the internet and that's up 0.6 to 0.8. you have the shift to department stores and to the internet that keeps, keeps, keeps going on non-store retailer number is up -- i've got the line right here only 13% year over year. so there you go. let's do the bottom line on this, which is very simple we had a relatively modest below 2% number for second quarter gdp. still data coming in still adjusting the forecast, guys i think that number is going to get up closer to 2, maybe even above 2 with this number there is a tale of two parts of the economy. the industrial part of the economy looks to be slowing. the consumer part, i guess they thought was going to slow more but it really isn't. you've got pretty solid income, pretty solid wage gains. consumers when they have money

in their pocket, they spend it that's exactly what they appear to have done this past month andrew >> appreciate that very, very much, steve. thank you very much. this is a nice little segue to talk about amazon's prime day as it rolls into day two and the consumer what's going on. rivals trying to keep pace with their own. joining us to talk about the competition spend is the managing director of key bank partners good morning nkts good morning. >> i'm going to ask you about one question on amazon and then the competitors. how much do you look at amazon prime day and say this is new money being spent and how much is being pulled forward? that's one of the questions we've been asking the last 48 dollars. >> a big component is new spending some might be back to school spending but they're creating excitement trying to introduce new products it's another example how amazon can continue to take share in retail. >> in terms of new prime memberships as a function of this >> that's obviously a big component of what they focused on

it's probably less important than it has been in previous prime days. >> you think this is more of loyalty let's prevent churn play or is this more of let's actually attract new customers to the prime program >> certainly a little bit of both but i think they're trying to create churn. they had music this year it reinforces to that prime customer that this is the best value in retail today. >> do you thinkpeople are buying prime right now for the video service or for the shipping >> predominantly for shipping but increasing as they add more value to video, more exclusive content, movie over time it's another component of why you would never cancel your prime membership. >> how do you think of amazon relative to walmart and target >> one of the things walmart and target successfully identified is this is a time when they have shopping on the mind that's all due to amazon they're leaning into the stores which is a differentiator versus amazon i think the three ofthem have created what will be a successful event. >> what do you make of the numbers we were hearing from

both from rick and steve in terms of the strength of the consumer and how maybe they didn't get the message that things were supposed to be slowing down >> the consumer is in great shape. you have unemployment very low you have strong wage gains probably what's important is companies haven't really taken up pricing as a result of tariffs. you haven't felt the negative impact of that this is an ideal time for the consumer. >> tech question for you we've been having a big discussion happening in washington right now about whether these companies are broken up, whether there's competitive issues do you think the other guys, walmart, home depot, best buy, target are going to be talking to the doj, ftc, everybody else and try to gang up on amazon do you think that's where this is going next? >> i would think behind closed doors they're ring fencing behind amazon. whether or not they remain successful, that remains to be seen they want to compete with amazon and the other thing. >> do you think that the push back or the push back against

amazon is coming from the big guys or do you think it's coming from the smaller either manufacturer or retailer who's trying to use amazon as a platform but now thinks that amazon isn't a platform for them but it's a competition. >> it's coming from all angles those in dc are responsive to the small consumer. >> as you analyze amazon and how much that company is worth, how do you factor in, how do you model out this dc piece of it? >> it's certainly something that's a bit of a head wind in the business >> if you could buy amazon, walmart or target, you only get one, what do you do? >> today i think target has incredible value. >> target? >> target does they've made some incredible in roads with their product the stock is the least expensive among the three of them. we think that they've finally fixed this online business. >> okay. we will take that. ed, thank you for coming in this morning. >> thanks. >> appreciate it. coming up, three big banks

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welcome back to "squawk box. take a look at the futures we're now a little under an hour away from the market open. show you how things look like they will open right now about higher -- 16 points higher. nasdaq up marginally s&p 500 up marginally as well as we've had a slew of earnings reports and other data coming in

this morning joe? >> jpmorgan earnings call is underway after this morning's second quarter results the release of those let's get an update now from cnbc's wilfred frost wilfred, this is the -- it's the most wonderful time of the year for you, i know that. >> it is. >> it is and i can see it on your face. you're -- it's hard to even suppress your excitement. >> genuinely it is let me summarize this morning. the key thing for banks has been stronger and jpmorgan is trading lower. margin, soft, 2.9% citi was soft but they were able to reiterate the full year net interest guidance. jpmorgan cut theirs from 500 million. the new cfo jenn phepszak said there's one rate cut but it could be worse if there's more

than one a reserve release and gains from the trade web ipo. wells fargo, kind of similar also saw net interest and margin disappoint that was on the fee income their provisions looked fine goldman sachs trading higher in part because it is more tilted to fee income than net interest income that beat spread across multiple divisions especially equity trading which was up 6% year over year. investing in lending business and that contained their one off exposure to the trade web ipo. the bottom line exposure to u.s. rates is bad this quarter. exposure to markets is less bad than feared. that's why the regional banks index is down even more than jpmorgan and wells fargo, why goldman sachs is higher with morgan stanley higher ahead of their results in two days' time. >> wolf, excellent explanation

let's bring back marty mosby from vining sparks also for more on this morning's earnings season. mike santoli is back, too. guys, you've had a little time to look through it marty, you told us last time around it was the net interest income you were concerned about cutting exposure anything else that you think this might tell us about the other banks and what we should be watching for the rest of this earnings season? >> well, what we will make sure of is, you know, we're seeing the pressure in i.i. and we haven't had the fed cut rates. it's not the short term rates moving lower key eighting the pressure this is the aisle end of rising interest rates and funding costs moving higher. we're about to get some relief from that as the fed cuts rates and we're about to see the inverted fed curve invert and that will take a negative away all in all what we're going to see is in i.i. not net interest margin but in i.i. it's growing with a capital story on the back

end. share counts are going down 6, 7, some instances 10% which is a really strong catalyst for these banks. >> mike, what do you think the backdrop for the bull case let's say on banks is that this particular quarter probably shouldn't be that big a swing factor because they're so cheap relative to the market they're buying back so much stock. they yield 3%. it's a bigger picture sector story that they are under appreciated. i don't think these numbers do anything to argue against that in fact, if anything the strong retail sales number is kind of your reason to think that the banks potentially have gotten too cheap, meaning did we over anticipate a down turn in the economy? the consumer is strong jamie dimon talking about that now. that should be all good inputs the question is will the market hear it? is the market going to continue to penalize this group for being no growth, just all about balance sheet, financial engineering. >> marty look, banks may not be what they once were but there's some great news that we've seen and some

great performance by some of these companies, including jpmorgan which is trading down by 1.7%. >> the back drop when mike talked about the eke 24078 mico growth, when you go down like goldman sachs, everything was favorable, investing in lending. fixed income was the only thing we saw some weak income there. returns continue to stay flat to move higher. your eps is growing. there's a fundamental strength behind the story credit costs remain low. really what we have to do is fight back what we're going to see a little bit of which is margin compression this quarter. that's going to invigorate that story a little bit more. we have to see the fed cut in july and see that numbers will still hang in there and profitability won't be as negatively impacted as anticipated right now. that's where towards the back end of the year the banks can outperform again. >> marty, which of these stocks would you buy right now? >> goldman's the one we talked about and the kind of money

center side. when we look at the super regional banks, what we want to see is those banks that are kind of restructuring so we talked about going into earnings or banks that we've seen like regents bank or zions or you roll into even like first horizon who reported well this morning. also we look for a high quality bank like m&t bank is a really good safety net for those who want to have some protection if things were to deteriorate those are the ones we want to look at the market is over anticipating impacts that aren't going to happen. as they change their overall business mix they've solidified and don't have much pressure when short term rates go down. they'll outperform like we said in the back half of the year. >> mike, we're bumping up against new highs and trading higher look, pretty greed cursor for what to expect. >> the market's holding those highs right now. i think right now you could sort of make the case that, you know, we're up 20% year to date. we've priced in a lot of the good stuff that we anticipate

including probably a july rate cut. again, the bull case is that people don't really believe it that much. people have been kind of taken by surprise that the strength and maybe feel -- by the way, yesterday trading volume really low. volatility has really drained away from this market. that can be, you know, just kind of a market that kind of goes in the direction of least resistance which right now is to drift higher earnings estimates -- i mean, earnings reports are always going to try to trap index level volatility. >> in the brief pull backs the market has had in this year, do you know how many times people have calculated the market cap losses due to the tariffs? >> that's been one exercise, yeah, sure >> i heard five trillion, eight trillion so just being where we are right now with the tariffs doesn't -- i mean, you say it's the fed. >> $5 trillion in market cap has been cost by the -- >> no, i'm talking about when it was down people are quick to say that was a horrible move, we've

lost $5 trillion trump, how do you say this to investors? >> right >> the same person has said it five or six times. now we're at new highs so is it because of the fed or what do you attribute it to? i'm saying that obviously the tariffs are still on. >> it's about everything >> you know what i'm saying. >> the best rallies in this bull market have calmed when a bad thing that we were anticipating didn't happen. >> tariffs are still on it's just that there's a truce. >> but the truce is -- has helped the market enormously >> the tariffs are still on and we're still in the middle of the trade -- you were pretty worried about the tariffs. i wasn't talking about you specifically if we were down 10%. >> the biggest risk of the tariffs was a nasty hard landing. >> we still might have that and all the fed, too. >> it's not about the cost and friction, just the chinese. >> just the way we report it. >> mike, thank you

marty, thank for being with us, too. >> thanks for having me. also be sure not to miss a first on cnbc interview this afternoon with wells fargo cfo john sh shrewsberry. >> jim cramer joins us now tired of asking you about what new highs mean, jim. that's something that every time you come on i'm asking you about new highs. you've got a new story >> well, i just think this goldman sachs quarter was really better than expected i think invest banking was a force. the recurring revenue was incredibly strong. we're going to a model that i think can really be -- get a price ratio. they were the lowest pe coming into this group. changeable bulk is over 200. they've started to return a lot of capital that's the one i feel the best about today. i have to say i do like citi i think it's terrific. the most important one is j.b. hunt witold you that, look,

trucking is very good. you put trucking good with what steve liesman said this morning about retail good with all the credit card numbers i see from every single company, although i can't believe how big this apple card is going to be with goldman. you say, you know what, the industrial not great and we have to decide how much the industrial economy matters to the fed i think it is significant enough they can still cut rates >> what about faang? where should we worry or should we worry >> they're picking at faang. i think marcus has a good libra story. both democrats and republicans, not so great i think peter keel can make a lot of noise for google. you call someone treasonous, you don't just walk away from that amazon, it may be so good that people may be angry at it. netflix did well, a positive report about how they're going to have much better setups faang is not it. can't play faang last time on "mad money," faang is the most toxic right now and

we have to play through it marcus does a good job >> as a rich person, i could go to goldman and put together libra. but how about as a poor person forget about it. this is about en banc. they position this totally wrong. marcus better come through with what i just said change the dialogue, talk about how rich people can have libra, how about poor people? why he doesn't say that is because he's from pay pal, not from goldman. >> and i know you're saying that you think all the companies are toxic, google is long considered a value play for some people, given where its stock has traded you then see the president -- you see the president this morning saying that he wants to look into what peter teal's talking about. >> that's the problem. i think google is going to have the -- the best upside surprise. you call someone treason -- are they the rosenbergs?

treason is a high crime. >> used a lot in the last year i heard it used an awful lot, especially on twitter. >> i'm not crazy about someone saying somebody is treasonous. but peter thiel has enough money to say whatever he wants that's a hard charge maybe they don't have the right controls, but treason. >> i was trying to figure out how to make any sense of it. if you kind of use it through the same lens of huawei, saying we don't know of any times it has been abused yet, but the way it is designed and the way the chinese government has to have all control, and able to be able to get into these things, trying to back it up that way, maybe. >> it is in the charter. if you are a communist company, you have to work for the communist government but my biggest problem here is this -- does he -- i want him to name names he's senator mccarthy now. how many card carrying chinese

communists work at google? i don't want it to come from 57 like the manchurian candidate. >> treason, the word -- how many times treason was used during the russian collusion story, thousands. >> i know. >> that's when you start using it >> we're going senator mccarthy, i would like to know, i want names. which people in -- it is the state department in the '50s. >> congressman carriamccarthy o. the other guy was unavailable. >> do we need army thiel hearings where is welsh i know where roy cohn is. >> how is the outlook for these companies. is it more important than the results themselves >> i think the outlook is good i think the fed still cuts i haven't seen any really bad numbers. the weakest is jpmorgan. they have a very good yield. i like a lot of jpmorgan it is worst in show. versus citi. wells fargo, they have a ceo, it would be helpful

i find companies that are run by ceos, they're better than companies that don't have ceos just my predilection i want names if peter thiel names names, i want to know who who does he know works for the chinese communist party, because if you say something is treason, i want -- i would like to have thiel hearings and i want to -- a house on american activities committee. if that's the way we're going, you know, bring it on. that's not the finest hour of this country >> all right we'll see you in just a couple ofminutes. five minutes or so until "squawk on the street. and don't miss jim's exclusive interview with the ceo of domino's pizza, coming up tonight on "mad money" at 6:00 eastern. ritch allison, the stock down after a miss on revenues is where people first gathered to form the stock exchangeee,

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. ♪

welcome back to "squawk box. media news, sources telling cnbc that cbs and viacom set august 8th as an internal deadline for reaching a merger agreement.

it could be announced before or after that date, but they're aiming to try to get this done for august 8th, which is also the date that both companies are scheduled to post quarterly results. that makes a lot of sense. companies are said to be leaving price out of deal discussions until other issues including leadership are resolved. this is has been an ongoing saga for quite some time and but i think the expectation is has always been eventually they will merge. the question is when >> tesla is changing its pricing and its lineup once again. the company is cutting prices on the model s, the model x and model 3. separately tesla employees say they were pressured. that stock off by 1.5%. >> house minority leader kevin mccarthy, not the one that cramer was talking about, that was senator mccarthy, joining us on "squawk box" earlier this

hour, he had this to say about bitcoin. >> i like bitcoin. is it where it needs to be no the real thing i like when it comes to bitcoin is blockchain i like the security. i want government to actually start using blockchain >> that was a freudian slip. almost said i want the government to start using bitcoin. that would be something. >> so interesting that because of the advent of libra, it created this attention and the point of people changing their minds, where everybody was on bitcoin a month ago, some people now, it is fascinating what happened here. >> sometimes you don't realize what you have until you see -- >> life is relative, right final check on markets after a very big earnings day this morning. we had wells fargo, goldman sachs, johnson & johnson ragt n right now, the dow would open off a point, everything is down just marginally, nasdaq off three points, s&p 500 off as well but literally we could call all

of this -- show you what's going on in europe real quick, we flip the board around you'll be seeing a picture there of green arrows across the board. some marginal, some not. that's about all we have for today. we have a big show tomorrow. make sure you join us tomorrow, "squawk on the street" begins right now. ♪ ♪ two sides of the coin to choose from ♪ ♪ two sides of the coin i'm getting weary ♪ ♪ which one should i choose >> good tuesday morning. welcome to "squawk on the street." futures pretty flat on day two of bank earnings mixed results from goldman and jpm. big day on the hill as facebook testifies on libra the fed chair is in france europe is steady ten year yield back to 212 as retail sales beat across the board. road map begins with big banks in focus, goldman and jpm delivering beats