"squawk box" starts right now. ♪ live from new york where business never sleeps, this is "squawk box. ♪ good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. equity futures are lower it's been two days in a row now that the major averages have been down. yesterday's decline for the dow was 114 points this morning things are a bit weaker overall earnings have been strong, but you do have some outliers out there like netflix, that will be bringing down some technology stocks and others today. right now the dow futures indicated down by 32 points. s&p futures down by 7. nasdaq down by 43.

jap japan's exports fell 6.7% in june, much more than expected. they were looking for a 5.4% drop tex tend the bigger surprise drop was a 5.2% drop in importeds versus the 0.2% decline economists were expected the nikkei was down by 2%. hang seng off by a half percent. the shanghai down by 1%. in europe, red arrows there as well spain off by 1%. lesser losses for the other averages check out the treasury market. you will see that the treasury market this morning is showing the ten-year with a yield of 2.054% united health just reporting moments ago. posting second quarter profit of $3.60 per share. that beat estimates of 15 cents. revenue came in ahead of wall

street forecasts the company raised its full-year forecast we'll talk about this more with ana gupte. netflix shares are falling sharply this morning the company reported a drop of 130,000 u.s. subscribers in the past quarter on the conference call reed hastings attributed the lower growth in part to its program lineup during the quarter. >> this is one where we forecasted high. there was no one thing if i think about three years ago, we were also light. we never really were confident of the explanation then we were 2 billion in quarterly revenue.

now we're going 5 billion. it's easy to overinterpret the quarter membership ads >> okay. >> the slowdown comes as competition is set to ramp up in the coming months. disney, apple, warner media and comcast nbc universal are launching rival services and taking content from netflix including two of the popular shows like "friends" and "the office. the company is playing down those losses saying that will allow for spending on more original content we had greenfield on last week i don't think you were here. >> i wasn't. >> he's a huge bull. >> on netflix? >> yeah. off camera i said why wouldn't you short netflix and go long comcast? or disney. comcast, you know what our revenue is 1$110 billion at netflix it's $20 billion. one stock the market cap was

like 1$170 billion, netflix. it used to be 30 billion comcast is moving higher, but nothing -- it hasn't quadrupled in the market cap. it's gone up disney has gone up, too. >> what was his answer >> i think we have it here i didn't say to do that spread on the air i did off the air. this is what i said to him then doesn't look so good now. >> i asked you off camera about valuations between netflix and disney or netflix and comcast. you think it's okay. you wouldn't -- one is not overvalued versus the other because of the future? >> consumer love and technology are hard and the global business -- the fact that netflix has people watching israeli originals -- >> it's not undiscovered

it's a 1$165 billion company it was a $30 billion company when we used to talk >> sure. people hated it at 30 billion. people hated it at 100 billion >> is it going to a trillion >> it's going a lot higher >> it is >> look, these things happen in step functions as you look out over the next few years, this is the beginning. streaming is the future. netflix is the future. >> everybody will have streaming and high speed internet and universal studios and cable and networks and streaming you understand why the valuations are so similar between two companies where one is five times bigger than the other in revenues? >> i have a slightly different question this morning that relates to this. is this the first quarter, if you will, where we're starting to see -- we talked about it on the air -- the idea of generations of people who were very willing to turn off their service after they binge something that is new and fresh.

one thing that reed talked about on the call yesterday was the idea that he didn't think they had the right programming during the quarter. >> they didn't have "the crown." they didn't have "stranger things." this goes back to the reason why i've been skeptical that "friends" or "the office" is what is driving subscriptions. once you subscribe, it's a great babysitter or extra, that's not why you have it. you have it because you're loving "the bodyguard" or whatever it is this quarter was weak quarter. the question is whether you think people are going on and off of these things. if they have a hot show next quarter, people will be back >> one thing nobody mentioned is this is the same time they increased prices in some cases the subscription price went up 18%. >> they got money. they can hire smart people to do shows. i can remember 15 year s a s ag

were getting killed by -- what was the fourth and fifth networks there were like cw or something? you remember them? >> yeah. >> for a while they were beating nbc. with all the wherewithal for designing -- you can't guarantee that you will have a hit >> is was when "friends" rolled off. >> i have nothing. let's make it five minutes longer okay, jeff >> you remember that >> i do. that was not a long-term answer. >> it's amazing that same show is what we're talking about. >> the valuation of netflix, does it go down and everything go up or will it be compressed down >> i doen't -- schadenfreude we're the legacy assets, all these things, they will eat your lunch. it feels so good that the legacy assets might have a little kick left in them

the cord cutters, you could have your cord cut too, reed. how does that feel you have fewer subscribers in the united states. take that. >> but long-term -- >> he had an extra 2.5 million subscribers internationally. >> the streaming stuff is where it's going >> that's what you say >> by the way, hulu, this is interesting, if you care about comcast, you care about the valuation of hulu, so you care about the valuation of netflix >> streaming is the way people are watching these things. binging is how people are watching these things. i do think people are price sensitive. the idea they raised prices by 18% i think matters. >> either netflix is a pipe company, then it's commoditized. there's no mote there. or they'll have the best people figuring out new content i'm not willing to cede that to

them versus ten other places that are trying to make great content. i'll watch amazon and i'll watch hulu i'll watch anything. >> i talked to a content provider last week he talked about how he was looking for $2 million from the old line guys they were giving him grief about it netflix offered 50 million for the same thing it costs money that's the question. if you continue to pay up will that be a game changer >> can you create this sort of virtuous circle where you are bringing in revenue? obviously they're doing it with a low margin if you can create that circle and spend more money on content, for better or worse you get a lot of good content. that makes it harder on everyone else >> back in '99, those annoying comparisons that faber used to do comparing the valuation of aol you could buy boeing, walmart,

mcdonald's sooner or later it comes home to roost. i can't believe netflix can go from 30 billion to 170 billion and we're supposed to say it's going to a trillion. >> i'm not saying a trillion >> half trillion >> no. >> 400 billion 300 billion? not today. >> not today we'll get to the budget battle in washington we have a new update this morning on the talks between democrats and the white house to raise the u.s. debt ceiling. let's get over to ylan mui >> negotiations between the white house and congress over a deal that would increase federal spending and raise the debt ceiling are running into roadblocks the administration is not on board with the timeline laid out by house speaker nancy pelosi yesterday. she said they need to reach a deal by the end of this week in order for the house to vote on it before leaving for summer recess a senior white house official is telling me nancy pelosi's comments are happy talk and they said that the two sides still

have a way to go and there are three major sticking points. first, they need to identify roughly 1$150 billion in offset to make up for any spending increases in the budget. there's no agreement on how to constrain future spending after any deal expires the administration is worried about poison pills in the spending bills that passed the house so far the reason these talks have become so urgent is that treasury could run out of cash in the first week of september forcing the government to default on its loans nobody wants that to happen, but hope is dimming that this can get involved in the next few days back over to you >> thank you very much we'll talk more about the budget battle with steven mnuchin, he will join us right here live in the 7:00 hour. it's an interview you do not want to miss up next, stocks to watch we'll talk about some big after-hours movers and we'll break down the quarterly results from united health those results just out

that stock up by 5 cents right now as we head to break, a look at the biggest premarket winners and losers in the dow. 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.

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beat forecasts on higher margin but revenue for the fourth straight quarter as it continues to shift to the cloud. cloud revenue did rise 5%, but that trailed rivals like microsoft and amazon and disappointed some investors. ibm down about 1% now. ebay's second quarter results top estimates. more shoppers are flocking to the site the company also raising its earnings guidance for the year sending shares up more than 5% ebay's ceo will be on "squawk on the street" today. that will be in the 10:00 hour. united healthcare reporting results. came in with a second quarter profit of $3.60 a share. revenue coming in at $60 billion, well ahead of what the street was expecting joining us now is ana gupte.

analysts expect to earn $14.70 to $14.90. what do you think? pretty good numbers overall. >> the street was basi bracing a beat the medical loss ratio is in line that's a good thing. revenue is in line they raised by the magnitude of the beat i think there's probably room for more they just closed the divida medical group year, and that should be about 30 cents so since it just closed for the second half, you know, that's another 15 cents or so >> good numbers. you can't help but wonder if the company is feeling defensive when you're having democratic debates where 8 out of 10 candidates are raising their hands saying they would like to get rid of insurance

the the entire industry is under siege. >> definitely. they definitely could keep a lid on the beat, it's possible given the favorable reserves they let fall to the bottom line. it was enough to satisfy investors and still not raise the red flag at this time. last week the news was great on the rebate rule going away >> from the administration >> from the administration, exactly. we still have something coming from congress probably by the fall the senate finance committee and the house are working on a draft. this was great news particularly for united, they not only have the healthcare arm, but they also have optimum which has a

big pbm attached to it >> pharmacy benefit managers and what would happen. it's hard to kind of see through this, try to figure out pli political risk, try to assess all of this when you look at great numbers but you have this existential threat to the entire industry >> yeah. medicare for all is the big worry here at this point the debates on the second round will be on the 30 ths ath and 3. investors in april overreacted there was a massive selloff after the united earnings call and the bernie sanders proposal. i think investors have digested that at this point most of the d.c. specialists would tell you that the probability is close to zero of something like that going through. i think wall street calmed down on it. i think last week's performance and the rally on the rebate rule

ahead of the next round of debates, biden losing a bit of ground to warren and harris, it tells you that investors started to think this is not going to happen i also think money that was probably more generalist, not doing as many deep dives on the policy environment has probably been flushed out so we have a more specialist, more knowledgeable investor base >> what would you tell people to do >> i would say buy you have united, anthem, humana, they rebounded strongly since the april selloff. then you have these deeper value names, cvs, cigna and centine. i'm bullish on cvs there's a lot of upside still

even just in the quality names >> ana, thank you for coming in. >> appreciate it. we have more coming up new warnings this morning about the viral app that digitally ages your face have you seen this >> i did it yesterday. >> boy we'll show it. can we show it >> i don't have it >> i'll show it. take a shot. >> of you now. >> yeah. >> here we go. >> lawmakers are concerned about the connections to russia and privacy provisions in the user agreement. we have details after the break. we're changing what's possible every single day., but what does "changing what's possible" mean anyway?

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abbreviated tv channels, 200. >> shows like mad money and the profit put the "b," business, in this four letter channel >> what is cnbc. >> that was a soft ball question, but it should have said shows like -- >> that's cool >> it was a great moment last night on jeopardy. time for our executive edge. a word of warning about this morning's viral app that can digitally age your face and photos everybody seems to be doing it i haven't yet. i just downloaded it, maybe i shouldn't have chuck schumer is calling on the fbi to review face app on the ground of national security and privacy.

the app was developed in russia and can store personal information beyond the photos you upload the dnc sent out an alert to the party's presidential candidates warning them against using the app. the face app team said no user data is transferred to russia. however according to the app's terms of service, users give the company permission to use their voice and likeness for commercial purposes and face app has the right to store that data even after users delete the app. the question is whether somehow they're sucking other information off of your phone. >> the company put out a statement saying they were not it was only storing photos that you actually select and tell them to edit >> but when you do it, you have to give them permission to your camera roll or photo roll.

i guess -- by the way, this is an argument for why the apple app store is a great thing and forget about all these monopoly arguments. i want somebody, hopefully, assuming apple is controlling this, so that any old appmaker can't start ripping up your phone. >> apparently the reason there are as many restrictions on it as there are is because of apple and what they required these users to do. somebody took a picture of me yesterday. we aged it made it younger, played through it. but we're idiots the stuff we give away for free so we can amuse ourselves for five minutes collectively we're idiots. >> sure. >> i have a long list of things -- >> that prove we're idiots >> yes daily. >> agree >> yeah. coming up, tech upgrades as well as downgrades to tell you about. we have the calls and the

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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square.

♪ >> good morning. we've been watching the u.s. equity futures they are under a bit of pressure at this point the dow is down by 18 points. again, that does come after two days of declines the fist drst day the dow was dn by 20 points, yesterday down by 118. yesterday was the s&p's biggest dpe kle decline in a couple of weeks you're talking about markets that have been steadily moving higher earnings are looking good. earnings remain a major theme. morgan stanley will post quarterly results before the bell we expect those numbers around 7:00 a.m microsoft tops the list of companies reporting this afternoon. stocks to watch, apple now upgraded to outperform at raymond james. the analyst says he is bullish about the prospects for next

year's 5g iphone cycle amd downgraded to neutral from buy and shares of novartis trading higher this morning. they posted better-than-expected results and raising the full-year guidance coming up more on netflix shares plunging after a big miss on subscriber growth we'll dig into that quarter next this is a pretty serious amount of market cap being sloughed off of that stock. later, don't mess our interview this morning with treasury secretary steven mnuchin from the g7 summit in france he'll talk huawei, the debt ceiling, libra and much more you're watching "squawk box" on cnbc

let's get back to our big corporate story. netflix's disappointing subscriber numbers joining us now is eric sheridan and ed lee

ed lee, cnbc contributor >> i love being here >> intellectual property, "squawk box. it's hard to sum it up, is it not, ed? >> i think you're good at summing it up. >> he joins me also. >> that's what i mean. >> what was your rating eric last week? what was it this week? >> i'm buy rated i remain buy rated we upgraded the stock in january at 330 a share price target is 420 on the stock. >> the questions i've been asking, you have comcast with 120 billion in revenue you have this company with 20 billion. not entirely different market caps one was 170, 165 before today, netflix. the other just going higher,

comcast or disney, disney well above 200 billion. that doesn't set off any alarms that there's a $30 billion market cap difference and a five fold difference in revenue >> one is growing 25%. while i don't cover disney and comcast, i believe they're growing in the low single digits >> low single digits >> one is expanding margins 300 basis points plus a year they said they can do that for multiple years >> netflix was 30 billion a couple years ago the future was kind of clear for what would happen. the future as bullishly as it was portrayed, now that we know the numbers, in this country it didn't match up to that narrative, did it? >> i would say a couple years ago you didn't know they would be the leader in this category i think invests have a greater level of confidence that this is the category leader over the next couple of years i don't want to discount disney. >> in streaming?

>> yes >> everybody will have a streaming service. so they'll be that much better at developing content? >> i think number one, their scale in terms of numbers of subscribers. we could be talking about 250 million to 350 million subscribers. disney will be the most competitive threat over the next couple of years, buff that's starting from zero in november we don't know what the content slate will look like for disney. we do know pricing you have a fairly large lead here for netflix >> ed, i was kidding but i was saying i was feeling good about myself in comcast earlier today thinking okay, cord cutting, i'll be out there panhandling in a couple of years because of cord cutting same thing can happen for the streamers, too they can get disrupted and moved out. >> netflix is the established player now in streaming. they have been for a while there are still 60 million u.s. subscribers. the total addressable market

that netflix sees in the u.s. could be as high as 90 million they have not changed that target they think they can get there. despite the dip they're still anticipating a bigger push that loss of 126,000, that is sort of what cable companies have been seeing >> how much of this is a function -- becky made a smart point about this earlier it's a function of price how much of it is a function of what reed hastings said on the call we might not have had the right mix of shows, new shows to bring people in. we talked about whether millennials are binging shows, turning it off, coming back on when the bodyguard comes back on or the crown and they didn't have those new programs. >> they were adamant last night that between gross additions which is new adds to the platform versus churn, that this was a gross addition problem in the quarter they have already said july is much better than

what they saw in may and june and guided q3 above the street in terms of subscribers, oddly enough when "stranger things 3" came back. so they were fairly clear. even our own work would tell you the credit card data was much better than the app download data we didn't get the subscriber forecast right nobody did last night on the street in terms of what the miss versus their expectations were they were fairly adamant this is a content problem. that could lead to a bigger debate longer term -- >> i would say that's a much bigger concern >> that is a traditional tv issue. >> welcome to the new world, same as the old world. >> it was -- i think i agree with eric here i think the company very much stressed that it was more of a programming issue of when things were available and things they had available in the second quarter didn't quite hit >> if that's true, does that

undermine the argument that you need a "friends quts" or "the oe that that programming doesn't bring new subscribers on >> while "friends" and "the office" are watched a lot on netflix, they seem to be watched by people in their teenage years. we all watched "friends" and "the office" while it was on television years ago >> that's true in our house. >> the controller of the acount is someone who pays the credit card, it's me, not my 12-year-old son. if my wife and i want to continue to watch "black mirror" and "stranger things" that can cause the churn. >> netflix must have thought these programs were worth something, they were paying 1$10 million plus to keep them on the platform >> in the case of "the office" there was an auction for it. there's profit participations. they want to make sure everyone

is getting paid properly netflix didn't win that auction. 100 million a year is where nbc won. what does that tell you? netflix doesn't think it's worth 1$100 million a year. >> what nbc is about to put together is a different proposition because it's advertising driven but as a result hours watched matters in a very different way. >> yes >> let's just put this in context. that's 100 million a year within $15 billion of cash content expen expense. whether you like netflix or not, they made a decision that was not worth what it was contributing within a much wider pool of content spend in a given year >> i think the larger question that joe is getting to at the beginning is the mult piple on netflix or any streamer. you look at what happened to disney stock after they announced disney mruplus is that multiple right or wrong?

a couple years from now we'll look and say we were in a weird streaming bubble or will we say this was the baseline and actually these were all the next amazons. >> i know you might not like the answer but the market determines the multiple based on what they think future growth prospects are. and future industry standing this morning the market will assign a lower multiple because the debate is front and center around subscriber growth and competition. if they come out next quarter and beat numbers, historically the miss is followed by a big beat this happened once a year for the last five years. >> the decline of u.s. subscribers or not as fast growth of international which is the big problem? >> i think international >> i agree >> for a while cw was beating nbc. anybody can get a couple of lucky hits past performance is no guarantee of future performance.

they can throw all sorts of money at these creative people and come up with duds. >> programming is difficult. >> that's what i mean. it's getting more and more crowded. more and more people are getting in it. bezos will throw money at it >> you spend money with proven hit makers in hollywood. doesn't mean everything the producer makes will be a hit >> only netflix will do that >> netflix is not the only one you're right they have the best head start now give than they are the established player back to your question about the multiple i think 300 million is the target >> buy some comcast and bitcoin, take your profits, whatever you made on this thing -- >> i'm much more leveraged to ubs myself >> content people like going to netflix, they pay them more. they don't like being there because of what happens when you're there you don't get promoted >> also netflix is getting better at promoting. it's not as if you go there and you're hidden. they listened to hollywood

>> people like to go to where the money is. >> i'm not loyal at all. >> you have the promotion problem on the other end a lot to of content folks don't want to go to netflix. >> that's what irjus just said >> you did >> yes >> sometimes i don't know whether i'm on prime or hulu i don't know where i am. i know what show i'm watching. >> i agree >> that's the more fundamental problem for all these streamers. >> you will be back here going, geez, i tell you what -- thank you. you can lead a horse to water. eric sheridan and ed lee, the "new york times" legend. when we return, davis marcus was back on capitol hill answering questions about libra for a second day it didn't go much better than the first. details on all of that straight ahead. as we head to break a quick check on the price of bitcoin. under 10,000 went down.

now back up a little bit again we'll talk more about this in a moment

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" again digital plans getting another grilling on capitol hill ylan mui joins us once again from washington. >> reporter: good morning, andrew the second day of testimony was rocky as well, the senate financial hearing, is facebook competing with banks and currencies with libra. alexandria ocasio-cortez wanted to know who exactly would manage

this >> currently, the libra association is governed by facebook, uber, ebay, spotify, visa, capital, union square ventures and a hand. of non-profits as well as some other partners correct? >> yes >> were they democratically elected? >> no, congresswoman. >> reporter: they said that facebook botched the ruleout keeping regulators in the dark several also worried facebook would become the gate keeper for a few kind of money. >> that's what concerns me i love what you are doing. but when we say, we at facebook are going to set the social policies of who can use this crypto currency, in a way, we're going to set the social policy of who is in and who is out? >> reporter: facebook executive david marcus defended the company's intentions and exited to keeping personal information connected separate from social media. still he acknowledged the platform must work to repair its

association and maxine waters the chair woman of the committee says this hearing was just the first step back over to you guys. >> to continue this conversation on libra and crypto currencies they are different things. we want to bring in an investment manager good morning to you. >> good morning. >> so you listened to these hearings and i think we made the argument, libra is a very different thing than bitcoin >> it is >> to the extent people are looking at bitcoin or other crypto currencies in the price of them moving up or down is in large part based on this review around the regulatory framework for libra, which is to say, i don't know if you think there is a corporeallatirelation if bitcoin succeeds and doesn't succeed what that means for these other crypto currencies. >> you are spot on you are talk object abo-- talkit

two different things the investment community is is more excited more engaged if digital currency because for facebook the libra initiative is bringing it more into the spotlight. for the first time we have meaningful dialogue going on with regulators and the pragmatic approach facebook is taking to really try to figure out the best way to bring this through in a compliant manner is the way businesses like grey scale has been operating since day one. >> lawmakers don't think that this facebook rollout is working or they are operating it perfectly. >> you if you look back at secretary mnuchin, he was hinting about aml, money currency >> aml money laundering? >> kyc customer sure those are the types of ways that companies in this space have and continued to operate >> help us with this, though libra i understand actually how

you can protect against things like aml and know your customer. bitcoin and some of the other crypto currencies less so. >> with bitcoin there is fantastic analytical companies that we invested in that look at the provenance o and the funds they've been associated with >> that's like a scientific way to look back at it after the fact it's not a way, there is nobody you just call and say, hey, is the money moving in the wrong direction, right >> it's important to remember -- >> where libra you will be able to do that >> it's important that it's a pseudonone mus currency. at the end of the day the type of oversight that the block chain provides, this is something that policy makers, regulators, the fbi, et cetera, these are folks that have really been excited by the technology because opposed to cash, they

can actually trace transactions. >> is that going to happen any time soon? i hear about every break in that's happened it's in bitcoin. they think it's more anonymous are they wrong it will eventually be the thing that catches them down >> they could be more wrong. using bitcoin for something nefarious is probably the worst thing if you don't want to get caught doing it. >> i talked to fbi and others, the amount of money you can transfer in bulk and with speed is completely different than cash lots of people who love bitcoin often say, oh, well, cash is so much more annan muscle sure, but you have to carry around briefcases of it to get it anywhere. bitcoin i can send it across the world without anybody knowing what's going on. yes, there are people after the fact maybe figure it out it's a very different thing. the question investors are trying to figure out in the

institutional world around their hearings, they're saying okay if they could regulate libra, potentially, even though it's a different thing from bitcoin, do they ultimately turn their attention to a bitcoin when and if it ever becomes stable and as we talked about reaches an escape velocity where it could become the norm? >> institutions are coming in droves right? every day the press is asking where are the institutions and where are they showing up in an asset class? at grey scale they have been here for years and continue to come in droves this past quarter we raids about $85 in mu capital. >> i hear you. i'm asking a different question. are you watching these hearings as a positive? >> absolutely. absolutely this is a moment of validation for the digital currency asset class. the fact that this conversation is coming center stage is causing more investors to think about allocating to digital currency. >> okay. we have to leave the conversation there it's a much longer conversation. >> i know, i have more questions. so i want to hear.

thank you. coming up, we will talk about today's market catalysts, including a couple big earnings reports. that's next. we are a couple minutes away with our interview with steven mnuchin. "squawk box" is coming right back

treasury secretary steven mnuch mnuchin, we will talk trade, more news making interviews straight ahead netflix tanks after the subscriber number misses the mark ceo tom rogers joins us to talk the streaming wars libra and facebook's crypto project catching backlash. former secretary of defense ash carter joins us. china and much more, the second hour of "squawk box" begins right now. live from the beating heart of business. new york this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc i'm beck question quick along

with joe kernon and andrew ross sorkin u.s. equity futures indicated up by five points nasdaq is still down by 33 after the netflix news we got last night the weaker than expected editions for international growth s&p 500 indicated down by 3.5. we are continuing to get earnings in. >> that will obviously be driving the stories as well. let's tell you about what we've heard about so far netflix as i mentioned, those shares are under pressure this morning. the company did beat estimates for its latest quarter it lost streaming providers for the first time in eight years. it's lower than expected additions for international subscriptions. we'll have more on this when former tivo ceo tom rogers joins us later this hour >> that stock right now down by 11%. a number of key economic reports are out this morning at 8:30 eastern time at the same time, the monthly philly fed manufacturing index will also be out

later this morning, we'll get the latest index of leading economic indicators as well. and morgan stanley is set to release its quarterly numbers at the bottom of the hour the firm is expected to release profit on revenue of about $10 billion. we'll have those numbers for you as soon as they hit. joining us now to discuss the markets after we have now just seen the dow turn positive, a little bit it's up about four points. a managing partner at douglas lane as well as a cnbc contributor, mike santoli. mike, can you summarize what we seen in the last week. >> that is a strong move to new highs followed by what i would call very muted pullback, almost just like consolidating those and i don't -- no one is asking me outside, wow, this market's hot. it's hot outside, no one is -- i don't see the froth necessarily although most professionals seem to think that we're very frothy or at least the fundamentals do

not justify the levels in the stockmarket. >> i mean i think maybe he can talk to this people that build a earnings model and this is why this stock should act sell rating lighter here maybe don't see as much because the earnings are flattened out if general across the market. i agree with you, the market kind of broke out to a new high. it's been a mild pause or pullback, whatever you want to call it. the problem i think psychologically is that we've had a couple of these breakouts in the last year-and-a-half that didn't really last very long and they unwound i don't think you are seeing signs that that's going to happen this time necessarily so, yes, a pause is the way i would describe it at least for now. >> someone will be right someone will be wrong. we got a report on morgan stanley results. they're doubling down on 3,000 on the s&p they have a number as low as 2400 on the subpoena as a possibility. i think 27 point 50, though, was a year-end type target so when do the dead enders throw

in the towel >> i don't know if that's what we're necessarily going to see 2400 to 3,000. >> i know, you are thinking 3,000 is the upper end of the range, too >> not necessarily. >> if you didn't think that, you call them 3400, they're dead enders >> right it would chase the market up. >> when do they say? oh, that 27 point 50 -- then they change it and on a friday afternoon at about 5:00 and then next time they're on their target's 3100. >> they'll change it when we get the inevitable pullback. i believe is the short-term pull back i am in the camp things will be better for longer. it's a slower growth we have it's still going to be growth. >> that supports stock prices? >> it absolutely supports stock prices especially in the u.s. and interest rates are back to this whole argument what do you do with your capital? rates of 2% are hard for

long-term investors to invest in if you look at where you put your money, i think of it as a bar growth, they have secular growth in them companies like constellation or you look at dividend stocks that have good fundamentals like at blackstone >> i see you are sort of just reading your comments. you're stick some stocks based on fought quite being that excited about a macro move in the markets? you are looking for secular growth you are choosing your spots rather than saying we're headed higher >> right i think in december we were headed higher with the other 20% pull back. i think there are other markets pretty fairly valued >> ithink a lot of people do >> but there are parts of the market if are you a stock picker, there are opportunities. it's not a time to run away as a lot of people think. because when you get back, i think there are some really good companies out there you can buy that have good stories. >> how do you know it's not a total bubble based on a credit

market or bond market bubble that's just feeding into stocks? it's what everyone says, it's the feds >> part of it is also the fed. part is the credit market. the credit market will start telling you when spreads widen when companies can't get access to capital either. yes, the high yield market and the energy market, you've seen that, but on other companies, spreads have tightened over the last six weeks and you are seeing real yields come down so i think the opportunity there, at least the credit markets are telling you, there is some opportunity in the equities credit as a whole, globally rates will come down >> i look at your notes, you got both cheeks covered on all these things. >> these cheeks? >> no, i didn't mean those what's the bond market worried about? deflation and a global slowdown. so you're -- >> well, he's just assessing >> i thought the same thing. >> i know. but i want to know which is more important. are we slowing down or is it okay to do this because there is no inflation

>> we are definitely slowing down globally. >> what about here >> here, with reslowing down we are still growing we are growing 1 to 2% the rest of the world doesn't have that. if you have companies that can grow faster than that that's where the opportunity is not the companies that are going to be either that growth or slower >> you have a moment here where a soft landing and a pause in growth looks a whole lot like pre secessionary, we're in trouble. -- pre recessionary. bond yields will have a bias lower when the data soften up. at some point in the market's mind we're headed back to zero in the next recession. >> i think it's global >> it's connected. >> it's completely connected negative bonds >> great with it it's a great way to be because we can have pro growth policies here and be tethered to low rates when they're crappy euro socialist policies over there right? >> exactly

>> that's good, best of both worlds see i use two thongs to cover both >> both cheeks here? >> up here and, yeah, what did you say hot diggety? >> hot diggety. >> oh boy, so four total >> that will wake up >> thank you santoli, never embarrassed would ever make a joke the whole time you were there. coming up, when we return, u.s. treasury secretary steven mnuchin, aninterview you do no want to miss he will join us live from the g7 meeting right after this very short break. you are watching "squawk box" on cnbc we're the slowskys.

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our news maker of the morning joining us right now treasury signature steven mnuchin. mr. secretary, thank you very much for being with us today >> thank you, it's great to be here with you. >> it's great to see you let's ask a pressing question that the markets are really thinking about right now when will the treasury run out of cash if the debt ceiling isn't raised >> so as i've described, we run a variety of scenarios given the size and scale of the u.s. cash flows. in one of the three scenarios, which is the most conservative scenario that we run, we would

have an issue the beginning of september. i've discussed that with the leadership of both the house and the senate that's why i've encouraged them to raise the debt ceiling before they leave. >> raising the debt ceiling before they leave. nancy pelosi said yesterday there needs to be a deal reached before they leave for the summer recess there are people telling ylan mui in washington that's not going to happen. what do you think? >> well, i have been having daily conversations with the speaker. i spoke to her and chuck schumer yesterday. i have a call scheduled with her later today again. i have been having daily conversations with our internal team, myself, mick, russ we met with the president and vice president before i left to make sure we have their input. we had conversations yesterday with both mitch mcconnell and kevin mccarthy so this is very much a team effort the good news is we've reached an agreement between the

administration, the house and the senate on top line numbers for both year one and year two we're now discussing offsets as well as certain structural issues and we've agreed as a part of that deal, there would be a long-term two-year debt ceiling increase so i think all of our first choice is to try to reach an overall agreement and we are working lard to do that. but if for whatever reason we don't get there in time i am encouraging a debt ceiling increase >> what's the biggest ceiling now? is it the 150 billion offset is that what might derail things >> i didn't mention the 150 billion number you did. i'm not going to comment on any specific numbers as i said, the good news is, we spent a lot of time working on the top line we're now working on offsets we've agreed there will be offsets. now we are figuring out whether we can get to the figure and

structuring. we're all working lard to do that >> the markets haven't reacted in great force yet i think the basic assumption is it will get settled. is there a time frame that would make you start to worry? >> i don't think the markets should be concerned. i think that everybody is in agreement. >> that we won't do anything that puts the u.s. government at risk in terms of our issue of defaulting i think that nobody wants a shutdown in any scenario so i don't think the markets should be concerned and we're working hard we'll get there one way or another. >> mr. secretary, the front page of the "wall street journal" today says there has been a road block that's been hit in the trade negotiations between the united states and china because of hauwei. they say no face-to-face meeting versus taken place can you describe where things stand right noud and what your assetment of the situation is? >> well, my first comment is don't believe everything you read in the press. my second comment is ambassador light hauser and i have a called

schedule later today with our counterparts this will be the second conversation we've had there has been discussion at the staff level. i think we're working under the direction of president trump and president xi from the meeting in osaka. we'll see what we got, we continue to make progress, i would consider ambassador litehauser and i to travel over there, have and in-person meeting. as i said, we have another call scheduled for today. >> in terms of what not to believe, though. are you referring to the "wall street journal" article from last week that said that you had been pushing people to go ahead, pushing businesses to go ahead and agree to sell things to hauwei >> well, we have been very clear. we've got on the record saying that absolutely wasn't the case. as i've said, i speak to lots of ceos daily i speak to lots of people about trade in general i've sat in on certain conversations with secretary

ross as in a combination with industry and others. but these decisions are firmly within the commerce department and as the commerce department has made clear, they're considering exemptions that don't impact national security no, in no way have i been encouraging companies to do one thing or another on this and you know i wouldn't say that that's the sticking point in the trade negotiations so, you know, there are a lot of complicated issues i think as i've said before, we have made a lot of progress. we're trying to get back on the path to a lots of progress and ambassador and i are working closely on that plan. >> mr. secretary, you know, over the past several months ahead of that last meeting with president xi and president trump, secretary of state pomp yomp had traveled the world and talked to many of our ilies and encouraged them or shall i say discouraged them from doing business with hughway, calling them a security threat to their own countries and ours to the extent that we get back into some form of business with

hughway, what do you tell our allies >> i think we have been clear that from a whole of government approach that we have concerns about hauwei being in certain infrastructure and i think we have been consistent with that that's a different issue than whether every single product is that's being sold to them creates national security issues or not so i see these as two independent issues we have been consistent on both paths. >> mr. secretary, the other day in the discussion about libra and crypto currencies and bitcoin, i think you were echoing some of the president's comments on using the term thin air in terms of not libra but on i guess all of them or bitcoin specifically that the value is based on thin airport. i know you are a part is guy, goldman, a very successful businessman, i'm just wondering whether you've looked at the block chain technology, the

distributed ledger and decentralization that is the underpinning of bitcoin in which had advocates say doesn't view this with some inherent value, do you, yourself, believe there is based on thin air and has no inherent value or were you just more or less on board with what the president was saying >> so a couple of things on this front. first of all, let me be clear. we very much support financial innovation and anything that lowers payment process especially across border is something that's very important. we discussed that a lot at the g7 the president has raised concerns about crypto currencies bitcoin in general i share those concerns we have been at work over the last year. we put together a working group and there was a clear agreement today from all the g7 finance minsters and central bank governors that libra, in

particular, raises some very significant concerns and crypto currencies more broadly and that before any of us let these go through, we will make sure that those concerns were satisfied. >> that there are money laundering issues, financial issues, consumer protection issues these are complicated issues it's all of our jobs to protect the financial system now on my comment about bitcoin in thin air, i was quoting the president and that's what i said i share a lot of the president's concerns although, i think that the technology and i would separate block chain from bitcoin i think the technology has certain clear uses i want to be careful that anybody who is using bitcoin, regardless of what the price is, using it for proper purposes, not illicit purposes and there are billions of dollars of transactions going on in bitcoin and other crypto currencies for illicit purposes,

at treasury, we have thin send we have responsibility for oversight of money service providers and banks under the bank secrecy act and we're going to enforce these very, very strong so whether it's a physical money service provider or an electronic, they're going to have the same regulations. >> we have a problem if we decided every time that cash, itself, or any other form of currency every time it's used for some ne narrious activities if we weren't going to use it anymore. maybe it's a little easier for technology for certain illicit activities but that can't be the reason, you know, to say you are not going to use them. i wouldn't even use cash then. cash is laundered all the time and used for nefarious activities we certainly had plenty of them. >> i don't think that's accurate at all cash is laundered all the time we have the strongest aml system

in the world you know, we just came back from fadiff they've agreed to implement money laundering i think you know we use sanction tools. we come back, bad actors in the u.s. dollars every day to protect the u.s. financial system all we're saying is -- >> there have been a lot of nefarious activities he is torically, it's never involved bitcoin. obviously, it's been successfully done with cash. that's all i'm saying. nlgs you think there is -- >> i don't think it's been successfully done with cash. i'll push back on that we're going to make sure bitcoin doesn't become the equivalent of swiss numbered bank accounts >> one final question related to that i know we have other quick questions. mr. secretary, i think a lot of investors today are looking at crypto currency and looking at this libra situation you talk about anti-money laundering issues, you know your customer's use to some degree, libra is very

different than currencies like bitcoin. to the extent there will be regulation around a libra-like coin or like currency where you do have an organization that can be ultimately held accountable bitcoin inherently given the way it's structured, there is nobody to call. there is no organization and so, i think the long-term question in investors to the extent people are looking at libra and saying what is going to happen to bitcoin how do you square those two things and how do you look at them >> i think there is completely similar issues on the first issue, again, libra has got a lot of work to do before we are comfortable. if they follow the rules and regulations properly and it's regulated, including potential financial stability issues, that may or may not be something that we get comfortable with. as it relates toand there is a difference because libra is supposed to be a stable coin and i say supposed to.

individuals don't have direct claims on the currency, the underlying currency, that creates issues as it relates to bitcoin, anybody in the u.s. that touches a bitcoin is responsible for money laundering and will be held accountable so if you are in the u.s. and you transact bitcoin, whoever you are transacting with is responsible for enforcing those regulations. those are rules being adapted around the world >> does it concern you that libra is the company is going to be based or the organization is going to be based in switzerland. do you think that's a coincidence? >> you know that per se doesn't necessarily concern me one way or another you know again, what i would just say is, look, obviously, there are certain privacy concerns that facebook has experienced in general those will have to be addressed. there are certain complexities around the technology in this distributed technology what we want to make sure that consumers are protected, that there is someone to stand behind

transactions there is cyber issues. there is regulatory issues there is international currency issues these are very complicated what the g7 is all for is lowering transaction costs so, one of the things we talked about is it's all the central banks. the finance ministers, the international banks. we want to make sure that if people want to transact business between currencies, they can do that real time quickly and without big fees so that's something that we're all trying to do, whether libra is the solution or something else, we will make sure that occurs. >> mr. secretary, it's not a transaction cost in many ways it is for u.s. companies. france putting a 3% tax on our u.s. digital companies where do you think all of that goes where do you think macron was trying to do how do you think the g7 will ultimately respond >> well, we've had very good conversations over the last two days on what i call the

international tax issue. there is no question, i have been very public that we have big issues with the france dst and what the potential uk dst. we think that, one, there shouldn't be a gross tax on our companies. if there are any taxes, they should be on profits, not on gross sales. two, they should fit to international norms and, three, they should be discriminatory attacking our digital xaenls i think the good news is that both chance and the uk and the entire g7 want to find an international solution to tax issues that's important for multinationals so the issues we're addressing are not just about digital, they're transfers, creating more certainty for global multi-nationals. they are dealing with transfer issues, certain nexus issues, which do islam a little more complicated for digital companies. i think we've made a lot of progress this week

but we're going to try to move forward on this as quickly as we can. >> mr. secretary, circling back to the china trade talks you said hughway is not the stick ig point, the journal's headline is wrong. if hauwei is not the sticking point what is? >> there are just a lot of complicated issues i think you know we were very far along on the deal we were disappointed that we went backwards on certain issues. i think we got direction from president xi to president trump to try to get back to the table and move forward and that's what ambassador litehauser and i are working on. that's our aboutive. we want to get a good deal we will only enter into a deal if it's a good deal. if we get a good deal, this is a great opportunity for u.s. companies, for u.s. workers. there is a huge growing market in china of middle income people and we want to be able to compete fairly this has been a one-way street, as the president has said. china can invest here, china can sell into the u.s.

our companies ariment willed that's why we have a giant trade deficit and that's what we are trying to deal with. >> the deal that we had a few months ago, is that back on the table? >> i'm not going to comment on the specifics when we're in the midst of a negotiation >> secretary mnuchin, we want to thank you for your time today. it's always good to see you. we do appreciate you taking the time to talk with us >> thank you very much, great to be with you. coming up, netflix shares are under pressure this morning after subscriber numbers are disappointing. we will hear from former ti tivo ceo to him rogers "squawk box" is coming right back 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.

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now the answer to today's aflac trivia question. who's last words were, last words are for fools who haven't said enough? the answer, karl marx. morgan stanley reporting quarterly results. leslie has the numbers. >> reporter: hey, morgan beating on top and bottom's lines,

earnings per share came in at $1.23 about 9 cents higher on a per share basis in the street expected on the revenue side, morgan stanley reported $10.2 billion versus the 9.99 billion, estimates were estimating. revenue declined on a year over year basis the investment banking and sales and training unit saw it decline, institutional securities came in above analyst's investment they saw higher revenue on a year over year basis thanks, to higher net flows the company said wealth management delivered a record pre-tax nikkincome of $12 billion. some expenses did decline and return on equity came in at 11.2% down from nearly 15% a year ago morgan stanley shares not doing

too much in the pre market, guys, back over to you. >> leslie, thank you stick around, don't go anywhere. mike santoli joins us with reaction to those numbers. we look at the stock it barely moved. it stayed on the margin in the red there. >> stock is traded very much in line with gold man sax, if you want to look back, they have pulled ahead a little bit now. it seems like relative to muted expectations, a very good quarter. the question has been is the market going to be interested in paying up for this bet on wealth management the flows look good. the market share looks good. >> that was supposed to be the whole ga im. >> i think you can argue it was the correct call but all of a sudden now financial advisers, traditional ones are considered a disruptive group, right it's sticky assets these are great, it's consistent it's not something that seems like it's got a long-term growth sign behind it. >> it's a similar model. >> at least a piece of it. >> i think the question is if

you are a morgan stanley or gold pan sax have you all the infrastructure, all the connections in the world you have been forced to become a bank for regulatory purposes, utilizing that platform in ways that makes sense is the whole story. so lending to those financial advisory clients, trying to integrate, you know, it's a similar story. but i think right now the markets were good enough in the second quarter obviously, you know, client balances are up because the market is up >> that helps. >> okay. thank you for that i appreciate it. okay joe. all righty coming up, facebook's libra raising some questions on capitol hill about national security former defense secretary ash carter joins us to talk tech, ethics and issue facing the industry we'll be right back and rob pittman. eó2w

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. welcome back to "squawk box," i'm domenic chu. earnings report, stocks are on

the move today we'll start with slayers of united health group, which are higher around a percent or so. the health insurance giant reported profits of top analyst estimates on revenues that were inline to slightly better than consensus. it did raise the full year profit forecast as welt. shares of honeywell at least fractionally lowery little bit in trading just about 2500 shares of pre-market volume. the industrial company posted better-than-expected profits revenues came in and strengthed aircraft sales were positive positive solution were weaker. honeywell raised the full year earnings forecast as well. we will ends on shares of philip morris international they came in with better than profit sales and boosted the four-year forecast the heated tobacco products internationally. a strong part of philip morris business back over to you guys. netflix reported quarterly results missing on revenue and

subscriber ads the stock down over 10% him tom rogers, former ceo and executive chairman is also of course a cnbc contributor, good morning what do you think really happened this quarter? is it just a blip or does this say something much larger than the streaming wars >> that is the question. this is a management credibility forecasting issue or is this a fundamental business model issue? i think it's the former. and the team doubled down on projections. they said, look, we are going to beat last year's total subscriber ad, meaning there is still for the year going to add 30 million subscribers or so just to put that in context. in the united states, it took hbo 30 years to get to 30 million and they're still talking about doing that in one year increase their quarterly guidance for next quarter to 7 million subs so if their credibility isn't

fully shot and it was just a management forecasting issue for this last quarter, this thing still has the power of the business model. >> do you buy the reed hastings argument effectively they didn't have the right programing in place during the quarter that's what kept them from adding more new subscribers? >> in part look they put through a price increase as becky mentioned earlier in the show and people have to realize in a non-inflationary environment, putting through 15 to 18% price increases and having larger turn than they typically have they're very low on the turn scale compared to other services, but it's a very modest churn, put into a price increase like that. they put through price increases nationally also. so in western europe on their standard and premium price packages, they're actually higher priced in the euro than it is in the united states that's a big deal. >> when you analyze this space and think about disney plus

coming online in the fall and nbc and warner media coming on with its hbo max plan, how many, you know, of these services do you think the average american family can actually subscribe to at one time? do you think it becomes an off/on situation where you sayoc i want disney, now i don't want netflix. i want hbo max i don't want disney? >> well this quarter was not about that but everybody will be watching that issue. and i think netflix is probably your main stay still, but the issue there is the churn rate on something like hbo hbo has been around forever. it's much higher than netflix is if you haven't subscribed to hbo yet and talk about hbo max they will charge you $2 more and you haven't subscribed because of "game of thrones" or west

world, you haven't subscribed because of big little lies is "friends" going on the service and getting charged $2 more where you have taken 40 years to get to 38 million subs is that going to be the thing that really knocks netflix >> can i ask, somebody wrote this in earlier. it's a good question why doesn't netflix lock people up for six months or a year like other subscription services do why do you get to say i will take it this month, not next month, i will wait until the crown comes out? >> that is the big thing for consumers now. streaming services can be disconnected so easily you don't have to take five hours off from work and stand in line at the cable company to disconnect i think netflix is all about the consumer experience. part of that experience is ease and flexibility. >> so you think it's a good thing? >> i think that is going to be a tougher question i think this whole quarterly

result for netflix is not good news for netflix on. i think it's much worse news for everybody else >> does that mean that everybody was chasing netflix. this is an illusory experiment and everybody is racing in this same game trying to spend an enormous amount of money, because they've seen the success of netflix >> if you take what reed hasteing says, take price into your programing. you say, okay, well, that means there the a segment here that's going to be price resistant. well, if you want to be service two, service three, service four, there is obviously going to be a lot more head winds there than people may have originally thought if it's about programing, netflix is spending $15 billion on original programing dwarfing what everybody else is spending combined if it is about programing, everybody else will have a tougher time with introducing new hits all the time than netflix likely is. so i think while this certainly shows that we are dealing with some segments of the consumer

streaming audience, that is going to be resistant here and may switch some from programing service to programing service based on what hits around, those are going to be much bigger issues for the other guys than netflix. >> tom rogers, thank you, good tow sue, my friend >> thank you coming up, former defense secretary ash carter on facebook's libra, national quk x" cinnd more. "sawboomg right ack. i

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we combat bad actors in the u.s. dollar every day to protect the system >> we involved nefarious activity, it's successfully done with cash. that's all i'm saying unless you think there has been - >> i don't think it has been successfully done with cash. i'll push back on that we will be sure bitcoin doesn't become the number of swiss bank accounts. >> that was treasury signature mnuchin talking with us in the last half hour let's talk about crypto currencies and more with that, we well come ash carter, now director of harvard's bellfor center and author of inside the box. a lifetime of leadership in the pentagon thanks for being here today. >> thanks for having many e. >> crypto currency, you are somebody that thinks about the defense of the nation and a lot of time focusing on new technologies what do you think about the

administration's pushback against crypto currencies right now? >> i think it's appropriate. we got to take a look at this before we jump forward and i saw the exchange between joe and secretary mnuchin. and cash does get abused, for sure, on the other hand, with the secretary, the point the secretary is making was we know something about how to combat that when it comes to crypto currency, we may learn how to combat that, too we will need to hurricane to combat it. so it's reasonable for the government to ask that libra think that through first >> the zealots would say, okay, cash is never used for nefarious activities >> sure it is. >> where is the missing 21 trillion >> you radio right, joe. >> that's what the true believer believes the currency, where is the - >> so perhaps libra will give yet another avenue for that. >> i'm not talking libra

to say we got to look whether we allow this to move forward, the horse left the barn on bitcoin it's already moved forward. >> you know, joe, what i wish would happen is that facebook would, itself, suggest, make a proposal for how it would self regulate and how government should regulate it remember, they have the technologists. they know what they intend to do they have plenty of lawyers and lobbyists. and to go in front of congress, it remind me of the facebook hearings of a year ago, which were a dialogue of the deal. because these members don't, they don't ask very good questions. they clearly don't know exactly where they're going. and so, before they go forward, i wish facebook would itself make a proposal. and that's true of social media as well. let's not lose sight of the big one here we have an election coming up. we still haven't landed the plane of regulation and social

media. >> let me ask you a question let's again stipulate that libra's a very different animal than bitcoin >> yeah. >> i understand how you can regulate libra i know who to call >> you can track it down. >> i can track it down if i want to make them a bank, i can force them to be a bank. i see it it's very obvious to me. if you regulate it that way. that's the way the u.s. government decides that crypto or digital currencies,/commodities, everything needs to be regulated. i think struggle because of the inherent value system and creation of the way bitcoin was developed to understand how you could regulate it given that it's almost unregulatable. >> i'm not sure it's unregulatable. but it has some features that we need to protect ourselves. the critical thing is security, security from terrorism, security from child pornography, all of these kind of things,

illicit payments, joe's very good point all the crypto currencies, there is a way >> it's upon us, not anonymous >> there is a way to do it you are absolutely right, andrew that libra is different technologically from bitcoin in the way it's implemented and it has some advantage lessons >> it's different. >> but they're, well, okay, but it can be done in both cases and it needs to be done because we need to protect ourselves. and i continue to think that given the government's, particularly legislative branch's deficiencies in understanding these, why don't -- >> why doesn't the company -- >> you use the password and coin for i'm not saying coin based or wallet you lose the actual codes, there is nobody to call. there is nobody that will help fix this for you if you are in your business and the security business, you can't track it ahead of time you can maybe look at it after

the fact once the money has moved it's not to say you can't track, it's hard to track the briefcases of cash in advance. you got to carry a lot of briefcases relative to how quickly and efficiently you can do it on the computer. >> right so it's different from lib >> reporter: i agree with you. i don't believe that bitcoin is completely impenetrable in that regard >> you've got centralization these financial institutions keeping afloat you got mark zuckerberg involved >> i'm not arguing one >> it's like a debit card versus a transformative disruption to the way currency has been for the last -- i don't, you said it, one digital gold and the other one is just like a debit card i just don't think libra solves anything it doesn't do any of the things that block chain and bitcoin allow. it's distributed ledger and centralization >> -

>> the bank is not what people are excited about. they're excited about fiat currency around the world debasing currencies if tandem. >> but i think regulators don't want to undo that. what regulators what to do you heard steven mnuchin they want to lower transaction fees, they think they've won the game the question is does bitcoin do that or libra do that? >> regulators beyond their game if they think they will regulate something that's already out there. >> again i would say the people that develop the technology ho us a proposal in this regard and also in regard to social media >> they want the regulators to make the call? >> let's be clear. the government has its deficiencies in responding to things technologically fast enough facebook wants to do it. make us a proposal. >> peter diehl says facebook is

treasonous and working illegally in carolina. do you agree >> i wouldn't use that word. google made a mistake when it capitulated to its employees about a particular dod project and a little more calmly than using a word like treason, i would have said to those employees, good for you for thinking ethically about what you are doing. you ought to think ethically about what google does this is the government of the united states. we take our battles to the battlefield. i wrote those rules for autonomous weapons they say there will always business a human being as there should be involved in the decision-making, not in the loop there is also a very good point that if you are working in china, you don't know whether you are working on a project for the military or not. and these young people need to be realistic about that. then finally to peter's point, there is a duty to this country.

it's a company that operates in this country it's profits and their jobs are protected by its laws. they drive on the streets, the employees can read and write because their public schools we're in debt to the society that we live in. we have enough, an obligation no protect it >> secretary carter, thank you, we appreciate your time. >> another hour of "squawk box" just ahead everyone, look at your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies at scale to advance speed to market.

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treasury secretary steven mnuchin on the dead ceiling deadline. >> nobody wants a shutdown in any scenario so i don't think the markets should be concerned. >> the secretary weighs in on that d.c. drama. plus, hauwei, the u.s. china trade war and facebook's digital currency libra shares of netflix tanking on weak subscriber numbers. is the competition too much for the streaming service to hand him. a man that wrote the books on bitcoin and facebook joins us to talk about the social network's trust deficit as it tries to ramp up its digital currency project the final hour of "squawk box" begins right now

live from the most powerful city in the world, new york. this is "squawk box. >> good morning, welcome back to "squawk box" here on cnbc. live from time's square. i'm joe concerning along with becky and andrew across the board the s&p down five and change. the nasdaq obviously netflix weighing there to some extent to 38 points. take a quick look at treasury yields, below 2.1. again down at 2.05%. 057. >> let's get you caught up on some of the stories we are focusing only. secretary steven mnuchin trying to soothe fears as a u.s. government default as we get close to hitting the debt ceiling. he joined us in the last hour

here on "squawk box" >> i don't think the market should be concerned. i think everybody is in agreement that we won't do anything that puts the u.s. government at risk in terms of our issue of defaulting. i think that nobody wants a shutdown in any scenario so i don't think the markets should be concerned and we're working hard we'll get there one way or another. >> secretary mnuchin is currently meeting with other global financial leaders at the g7 in france morgan standly meeting the top and bottom line in the quarter. it was solid across all of the businesses, that stock is down right now by about 3 cents also dow component united healthbeating forecast for the latest quarterly earnings report and raising its guidance for the full year. united health's results were helped by growth and membership. the company did raise its guidance for the full forecast beat by 15 cents for the current quarter.

it raised the bracket of what it's looking at for the full year by about 20 cents >> that stock is up by 1%. giant i heart media is coming back after a yearfrom filing bankruptcy. it has the ticker ihrting jo, j it is rob pittman. good morning it's been a long, long journey >> it has. even through this process with that much debt we were able to build this company like this, number one xhoeshl podcaster, number one broadcaster built the number one radio app and concerts and events and built this great name for i heart. >> i want to talk about the company in a moment and the decision to pursue a direct listing. this does seem to be a trend around companies that don't need to raise additional. we saw slack do it and spotify do it. >> we can delever using our cash

flow but it was you know a close call there are certain benefits to an ipo. certain benefits to a direct list ork listing >> take use in the room and do the pro cons on the 15 to on the white board. >> i think the main thing is can we get shareholders liquidity? yes. can you get attention? that was probably the biggest difference in the ipo and listing. we thought we can do that and we got a big brand name usually that's the best thing. finally you know how much volume is there going to be and clearly i think on a direct listing, you picture there to be lower volume and that begin to build as opposed to the ipo >> when investors look at your company, who should they comp against? who do you think the comparables are? because there are some people who would look at the spotifys of the world but your company, fortune magazine has an article that says ihaeart listing is no

spotify, you are relatively flat >> i would say actually we have earnings and we have cash. so i'd like the position we're n. we have a huge audience if you think about it, this company has the biggest reach of any company in america people have run out of time for eyeballs, talking about netflix. they have time for their ears, audio is suddenly hot. spotify is reaching into the music business the margin is with the record companies as it was with tower records. in our business, we have the margin and we keep that business so you know if you've got the kind of renew growth we have in the single digits, you do get leverage on that when it turns to earnings. i like that business model i like where we r. i like the fact that there is no one close to us, they are here and everywhere else. in the tv business, there are six or seven companies of equal size it allows us to go incentvent nw

things and drive it into the market we are clanging the way you advertise, facebook and google changed forever advertising. we really over the last three or four years have built out analytic suites. we have audio right now. i don't look at spotify as a competitor i think we have always been synergistic from the days of hearing cds. they hear a song on the buy it and today they put it on their play list. 85% of spotify users say the main way to discover new music is radio >> what is music, it changed so drastically. you laid out the aronson, how do guys that make the content get paid how does that all flow through >> we are careful, 25% of our stations play no music we are actually not in the music business we're in the companionship music. elvis durant, ryan seacrest are your best friend, talking to you

while are you cooking, talking to you while are you brushing your teeth we are helpers of new industry we promote it. we are not in the business >> are you in competition with apple looking at podcast at ways of building up there are people with deep pockets. >> apple is not a big podcast publisher. >> they're starting to focus on it >> number one as mpr we're about the best side and then everybody else. you don't see apple or spotfy in the top ten. >> my point is apple or netflix is focusing on it. they have deep pockets >> i think it's great. they're a good distribution partner for us we think podcasts are on demand radio and we think it's great. anyone that invests in podcast, invests in music in audio, we're with them. we love alexa. we love everything >> the "new york times" has an article out, have we hit peak podcast? what do you think? there are so many of these things and there is new and the bar to get into this business is so low, go everyone the costs.

>> yeah. look, i think everybody can put one up, like everybody can put something up on youtube. >> that doesn't mean you will get users. i think what you are seeing is an acceleration. last stuff we bought house stuff works. it was slightly smaller than we were we were the number one podcaster. since then, we have grown 50%. i think what you see once you get to this size, there is a fly we'll effect i think people outside the fly we'll increasingly find it hard to get into that world one hit podcast, i think that's another hit podcast. >> what do you think of paid podcast services there is a new service called luminary >> i don't see it. this is a poor analogy we got the biggest podcasts from ron burgundy's podcast to the monster podcast for true crime to stuff you should know, which is the number two podcast this month. we got the whole range by the way from elvis durand to the breakfast club on demand

that's all free. the best stuff's free. it's hard to imagine people will pay a subscription service for stuff they get for free. >> that was the other question, spotify people thought might go into the video business and/or netflix could ultimately go into the music business or. long term, i know you look at me like i'm crazy >> yeah, i am. >> for ten years people were talking about whether there would be a merger of audio and video together >> you know what, consumers look for very clear brands. i think spotify means music collection anything they do in music probably degrades their brand. when they look to us, we think iheart means audio if we do anything besides audio degrades our brand we tried to do on demand, we didn't get a lot of takers him people aren't saying i am looking for iheart to be my music collection

i'm looking it for audio people forget the one thing that matters, the consumer. and we are all bounds by what the consumer wants those of us who decide not to serve the consumer you don't have good luck >> what is a conup -- what does a consumer want? >> in our business, they want a friend, companionship. the average household $66,000 a year half make less than that they have a very crowded life and tough life all of us sitting in manhattan forget that sometimes. we serve everybody our company reaches more people in america than facebook and google reached 91% of americans. we got everybody in the tent but what everybody wants is they're looking for a companion. if we do it well, they reward us with their listening >> real quick to bring it back where we started on the direct listing. there is a suspicion in the market not necessarily iheart, a lot of companies going direct like this plan after the direct listing to

raise money in a secondary in the public markets later what do you think about that >> if i was playing, i couldn't tell you, but, look, i think we can delever nicely and delevering is our number one priority and we can delever nicely with the free cash flow characteristics. the beautiful thing about this business is we can get there with free cash flow. by the way, if we have expractice money deleveraging and can accelerate it, that's great, too >> thanks, a lot appreciate it. >> we look forward to look where things land today. >> coming up, when president trump's tax bill, we stop talking narcotic clear arms. we got a whole new reason to worry about how much intake we have and taxes three states came one a work around now that's being challenged. the states, meanwhile, are suing the irs. when we come back, we will hear from both sides in a so-called salt debate and ask whether big local deductions are a thing of the past we got superman, clark kent

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morning. he's got the tax implications of this big battle. >> good morning, andrew, new jersey, new york and connecticut filing a lawsuit yesterday against the trump administration to roll back the new rules on state and local tax deductions the suit is actually the second filed by high tax states that have been hit hard by the new $10,000 cap on state and local tax deductions known as salt it's a work around states were trying to use to get around those cash they set up charitable funds where taxpayers have pay for school and local governments, get a state tax donation and take the deduction for that charitable do nation from their federal taxes. new york collected 93 million in its charitable gifts trust fund treasury said last month those funds are illegal. the lawsuit saying that decision is arbitrary and outside its authority. what the three governors are not saying is that 96% of the benefits of repealing the salt cap would go to the top 20% of

taxpayers. new jersey governor phil murphy telling cnbc yesterday there is no conflict between his ongoing efforts to tax the rich in new jersey with a millionaire's tax, at the same time trying to cut their taxes through the salt changes. >> there is all about tax fairness it's not an us versus them we welcome the millionaires here we want more of them we want them to pay a little more to help us reinvest in the middle class, education, transportation, all the the off that makes the middle class as strong as it is. >> the ranking member saying the lawsuit will fail, end quote, the real solution ought to be cutting the brutally itaxes. this boils down to it's only okay to tax the rich if we get the revenue. if the feds get the revenue, it's not okay. >> they just want money to cover the budgets. let's face it, this is desperation on these three

states position. >> we should say from a legal position, not to get too wonky, this type of arrangement existed for decades and is used a lot in georgia, north carolina, mississippi, when you give to the state and get a state tax credit >> that has been in practice so for the government to now say it's illegal it could be challenged, that's my point >> i go es the question is, will we see this work through the courts and find a solution there or are we looking at elections my guess is they're all campaigning on this idea if they win and somehow win the three branches of government that they would reverse it it seems like it will be tax chaos long time for anybody in those states >> they save their voters. >> i'd never say that, but to see the democrats cut taxes on all the rich people. i can't wait for that. i can't wait to see it i can't wait to see it

>> i've heard it from some people those are all the constituent sis, in these wealthy constituencies, i don't know if it's a larger issue. >> they improve human nature it's signaling >> like becky said, it's all about the revenue. >> stay with us. i want to talk to josh right now. stay with us josh is already kind of a republican i think now he definitely is he wants to cut taxes on the rich people. for more on the salt deduction debate, let's bring in our guest, new jersey congressman josh scottheimer, heritage budget director lena -- suddenly are you the opposite, ro my na -- romina. you want to stress it did help middle class people. now all these rich people are whining about their salt deductions normally the heritage foundation would want to help these rich people out where are you? what happened to you when did you lose your way >> not at all. this is all about keeping taxes

fair and transparent the salt deduction was unfair. it was too good to be true what the states suing the government is they want their cake and eat it too. they want to levy itaxes on highing in taxes and say don't worry about it will you get a federal tax deduction. it was unfair, especially middle class taxpayers to pick up the burden for these states. it was unfair. it's good it's gone. we should get rid of the cap as well >> congressman, josh, my man, i'm pretty rich. thank you for being in my corner, dude thank you for trying to get me my money i don't want to pay these taxes. god speed. you and the democrats. do it for me. >> well, with all respect, let's talk about jersey and my district every county, every county, including my rurm counties are above $10,000 average. right? so we're not talking high end. you are talking an average everyone got hit with this when they got a state and local tax

deduction. >> the average is always skewed by those at the top. >> exactly >> okay. fine >> a majority are subject to this especially with the standard deduction, they're not paying this. >> that is not all what we found. if you talked to the average cpa, they're all telling their people to leave. if you live in new jersey, a majority of people in my district got hit with higher taxes. so i can't talk to the private cpas >> i think we should be cutting taxes, not raising taxes, let's start there. also, we should be making life more affordable. i think this ridiculous argument with how the other taxes are crying this is double taxation for new jersey the reason why you had it in place is because of this you are talking about a program, the charitable tax deduction that existed i think becky pointed out in 33 other states have been utilizing this for decades, mostly red states right? you have the red states i effectively call mucher states

i brought my mucher moop -- moocher map. in mississippi, alabama, mississippi takes an average of $4.38 for every dollar they pay into the federal government. right? >> that will get even worse right now. >> of course we're getting stuck, exactly, we're getting stuck in jersey. we're paying the bill for everybody else >> what do you say about the moochers >> josh, you are like the justin amash of the democratic party. are you, are you so out of touch. you don't like double taxation i thought you loved double taxation elizabeth warren wants to do wealth taxes now you don't like double taxation either? >> my job is to fate for my district let me tell you what i'm for, making life more affordable and cutting tax himself. you got to make life more affordable if we are keeping people in jersey and connecticut in these areas, we got to get our costs down on taxes. >> what do you make about the moocher map? it's a real issue? most of the states are getting hurt by the salt deduction

issues are the ones paying in. they're not the takers it's actually everybody else >> so, first of all, we're talking about a very small subset of people if you look at 2018, fewer than 7% of taxpayers actually saw a tax increase after the tax cuts and jobs act 93% either saw a tax cut or no change to their taxes at all. >> that's not the question >> let's talk about moocher states >> it's about fairness you tell me, how it's fair that new york state is paying billions of dollars more into the system than these other states and the other states are taking explain it >> no, agree with you that washington is collecting too much money from the states and sending it back. it makes no sense. we should be cutting most of these programs grants to states, siphon money off at the top and send it back to the state but that's complaining issues. >> that has nothing to do with -- >> you decimate these other states again i'm not going to argue for the other states i'm a new yorker and i'm the one

-- >> it has nothing to do with the salt that's a completely different issue. if you look at the salt, 60% of the benefits would flow to the top 1% of eastern, eers they are earned 750,000 a year the congressman is talking about giving tax cuts to the richest americans in this country. while the tax cuts and jobs act actually benefitted middle class taxpayers. they weren't hit by the salt cap, because they weren't deducting that to begin with and they got a higher standard deduction and other tax changes, lower rates that made sure that the vast majority of americans saw a tax cut. people are confused because it's not transparent. because their income taxes are withheld, their state and local taxes, they have to pay those. so they see how much they pay so if we got rid of this mandatory withholding, people would actually know whether they got a tax cut or not >> in my district, the average

deduction is over $24,000 for salt you are talking about a huge impact on many of my residents, people are leaving the state we're losing jobs because of this this idea, we should talk about the travel tax deduction i don't know how you explain all these other states have been getting it for decades, suddenly you will take it from new jersey anything to stick it to the blue states the red states keep sticking it. >> have you made your case to the governor >> you did of course, we disagree >> you disagree with the governor >> on this point, yeah >> i'm just totally puzzled. anyway, i always say the same thing. the republicans are leaving the lights on for you josh when you come home. >> you should come to my side. come on. >> i have. i am >> i just said, no, i just said i want you to cut. i'm a pretty rich guy, god speed. i want the salt thing lifted believe me, robert

romina, thank you. >> thanks, for having me. when we come back, the first fang stock to report quarterly results gets bitten. why slerays of netflix are tanking today. "squawk box" will be right back.

coming up, breaking physical data 'le latest economic news is out. wel have a number of instant reactions. "squawk box" returns right after this

welcome back to "squawk box" on cnbc live from the nasdaq market site on time's square seconds away from data on initial jobless claims the latest manufacturing from the philadelphia feds i think we said, you are making me hungry rick santoli is standing by. the numbers, please. >> the survey we saw 209 last week down to 208 another 8,000 brings you to today's initial job les claim total. 216,000. continuing claims moved down a bit from 1.728 million to 1.686 just shy of 1.69 million for a july read on philadelphia. philly fed 21.8. holy cow that's a nice jump that's about five times the

report more than we are expecting. it follows unrevised .3. this is the best number since, drum roll, please -- looks like september of 2018, it's up from 2018 actually 21.8 i take that back let's leap july of 2018. we'll call it an even year even year. we see interest rates. they have been sluggish on the long ends after having a nice bounce from the mid-190s, 206 ten year 216 seems to be the currents resistance right around 207 seems to be a good spot to consolidate, dollar index virtually unchanged. joe, andrew, back to you. >> thank you very much, rick meanwhile, we'll talk about apple. raymond james upgrading apple, noting a positive outlook for ven closure into 5g. joining us is the analyst, chris kassio of raymond james. good morning to you. >> good morning. >> you effectively are making an argument around 5g in 2020. >> yes

>> you are also making the argument that you think that this year may be one of the weakest sales cycles in terms of iphones in its history >> yes i think, frankly, probably both of those are somewhat understood by the markets people know 5g is coming next year they know this year is being weak what the prediction to make the call now is some data that's led us to believe that we'll see a wider adoption of 5g across the product line it's different than what would have happened three months ago the change is apple signed that agreement with qualcomm and it provides better performance, better power consun sum shun, which is given the technical ability. >> why are you convinced 5g will happen in 2020 there is a lot of chan is el checks in terms of what verizon is doing, what at&t is doing, how much coverage they're actually going to be able to manage even in the next two years? >> when i think the difference between 4g and 5g is that 4g,

people were waiting for 4g to get to your neighborhood before you bought a 4g phone. for 5g, coverage will not but big we us t-- but big which us the for sometime -- ubiquitous you will get band width. it's the only way car years will be able to deliver the band width. >> this is the part i don't understand about your argument or 2020. 2021, i might go along with you on >> right >> but my mother lives in the suburbs. why is she going to upgrade her phone, she has a good enough phone as they say. right? and the actual interaction with the phone is not going to be that different except for the speed unless you think there is some other integration let's assume it's the speed situation. >> right >> if she's in the suburbs and

she comes to new york, she's not hanging out at time's square every single morning like this why is she necessarily going to need to upgrade? >> she made not. the issue apple has is why we think this coming cycle will be one of the weakest upgrade cycles is people are tending to buy the older phones is because this year's upgrade cycle is not going to be as compelling, people will buy iphone 8s and 7s what you will see is our estimates for fall of 20205g would be 40% of the if you iphones. somewhere in western europe, there will not be 5g available but there is a clang so what happens is the mix of new phones to old phones gets a lot better in fact, our units are only back to where they were two years ago. >> very quickly, 5g coverage, what percent of the united states do you believe will be covered by 5g in 2020? >> yeah. >> end of 2020 when this new phone comes out? >> it's a small percentage

but it's important - >> i hope have you modeled that out in this. what itself number >> i don't have it on the top of my head? >> 5 sponsors? 10 sponsors? 20%? ballpark it. >> it's probably in the area of 10% but in the most congested areas. a sports stadium, you are at a giants game. you want to get a signal >> thank you for coming in fascinating decision we will see from things land in just a bit. meantime, let's talk about netflix, shares are plummeting after subscribers fell short julia boorstin is on the west coast. show joins us more on a stock that has moved lower as a result of it. hey there. >> reporter: that's right, andrew, good morning to you. netflix are downplay theing concerns about the significance of subscriber shortfall and said he focus odd on the long-term potential as well as the company's scale and long-term investment. >> we having a lot of new competitors enter over over the next year our position is excellent.

we're building amazing capacity for content. our product's never been in better shape our native investment is extremely high if investors believe in internet television, which is an easy one to get there, then our position in the market is very strong >> analysts starting to react. they are lower the price target from $425 to $400 saying the third quarter should quote provide another crucial litmus test on the underlying growth test of the company. victor anthony attributing the short faum to a less robust content in price increases saying we will take profits with negative stock reaction given that upcoming competition will be another negative factor that the stock will face rbc's mark m moheney whether the pricing assumed about three-quarters of analysts rating netflix to buy before yesterday afternoon's

earnings we'll be watching for more today. right now shares are down nearly 11% pre-market becky. let's bring in mayckol sen, a recent senior an leis at michael jaffry you are somebody who is standing by what you thought about this before you got these numbers last night are you reiterating your overweight position on let in flicks, your price target of $440 what do you see that makes you think this is a place you still want to be >> well, it was obviously a disappointing quarter and 2 million subscriber misses is a big number in the quarter itself in the context of the overall business, though, it's less significant out of 159 total subscribers, we're talking less than 2%. so the thing that we learned last night has to do with impact of content slate netflix gets more scale, the content slate is becoming more and more important and the beauty of the story for the rest of the year is the second half content slate improves dramatically.

>> the third quarter, obviously, will be another crucial litmus test as one of the other analysts just mentioned. we had somebody else that told us a lot of times after you see a miss by netflix, they come back and have a big quarter after that is that what you anticipate in the third quarter? >> i would think the management team would factor in more conservatism in a quarter like this after a miss. they indicated specifically the first couple weeks of q3 have already shown significant improvement. if you extrapolate that out, it suggests a strong quarter. i think that and the remaining positives of the content slate, there is reason to own the stock here, especially of this pullback. >> what do you think happens when there is more competition a year from now? >> well, that's a good question. because there has been more competition you know continuously as netflix has grown the streaming business so more competition isn't necessarily a positive i don't necessarily think it's a terrible thing, either in general, we continue to expect we will see consumer

content dollars shifting from traditional tv over to streaming services >> that can support multiple players in the market. >> julia >> one thing i think is interesting is reed hastings was exclusive. he did not think competition was the reason, there were no new streaming services that launched in the quarter of course that raises the question of what's going to happen when all these streaming services launch, there are four in the works set to launch in the next year, disney, apple, hbo max as well as nbc universal platform so i think one thing that's interesting is netflix has been nailing down some top content creators, ryan murphy, they'll have the advantage once it starts coming out. it hasn't yet. they also are going to be competing with all of these new platforms. so i think yes netflix is competing with everything in terms of traditional tv, et cetera, for people's time and money. but that market is getting

incredibly crowded going forward. >> does netflix have to pay more than products in the competition in the old line? i've heard this from some content producers they like netflix because they pay them more money there is a downside. they don't think it promotes as well is that something a lot of people in the industry see >> i have been hearing netflix pays an incredible amount. if you release box office bonuses. if you put it on netflix they address on the earnings call saying they want to pay market rates, how they play is a business model from what i am hearing, they are definitely hearing high rates versus when the rest of the

industry was the same. >> thank you for for your time today. good to see you. >> coming up, the libra paradox, that's the new robert ludlull novel as you know it facebook wants users to trust it with their money as part of its digital currency initiatives they have messed up so many times. a trusting relationship is it even possible? we will come back, we will talk about how he wrote the book. he comes up as a bitcoin guy, today he is dressed as a libra guy. ben mezrich, we'll be right back a haircut. you used to be -

libra's got a lot of who, to do wafer we're comfortable but if they follow the rules and regulations properly and it's regulated, including potential financial stability issues, that may or may not be something we get comfortable with >> that was secretary steven mnuchin early on "squawk box" talking about facebook's currency project libra joins us to talk about the social network push. the author of bitcoin billionaire, as well as the accidental billionaire about the founding of facebook his next book is unlikely to be called the libra billionaires in

my view. do you think there will ever be a libra billion flair? >> they're running into a lot of problems that are self-made bus ba us of what facebook is and that waive represented over the past decade. it's all about trust you can't have a bank or be a new currency will it get off the ground there are things i like about it the idea of it is fantastic. it's crypto for the masses, it's not christa for the masses >> i like it will make it easier to find a different way. >> they're pretending it's a whole way to do it >> that's good it's crypto for the masses, it's not crypto for the masses. what are you saying? >> i'm saying it's not really crypto >> it's not peer-to-peer >> either it is or isn't

>> the idea of digital money >> that's my favorite thing. alternate cats are in the business >> that appeals to me. >> market is a control thing >> right >> it's based on the fiat. >> exactly they're basically saying we've paid things before >> how do you trust that >> the great iron my i want democrats to know about this jp morgan wants to do more abmoe about this, except for the banks, had five banks come together with facebook, uber, 12 other companies and said we're doing this, we're chartered. you can call it if there is a problem. >> i think it would go through i this i that amazon could pull this off we trust amazon. we put our credit cards in there every day. regulators would be on them. it wouldn't be like this it wouldn't be like let's put them up in front of a panel andtary

them apart because they lied about data and this and that >> i think you will face tough >> i think it's intriguing i think all of this is eventually good for bitcoin. i think libra is the on ramp the electronic wallet pulls us into this world. it shows us why it's so much better there is nobody in the middle. you don't have to trust anybody. >> the think i question is if they will question libra, how does that more tend? they have to think about any crypto currency if they say we have to put all these guard rails around and the structural peer-to-peer nature of bitcoin it may fundamentally be possible >> who do you pull in front of the congress >> that's what's interesting they can regulate how you buy

and sell it. >> can they track down and figure out who is behind every transaction? because that's what the law enforcement is now >> yes and no. they were able to track down certain people i think there are ways to make crypto private you are not completely out after that >> long term as joe said, there are two space, internationally >> you need a scrambled egg. >> i think if the g7 were to say, if we were to regulate all of the on ramp, the coin bases, you can't buy them using any of these wallets in these countries or if you do, you have to do it in certain ways that is where it gets more complicated. there is technology you could effectively add on to a bitcoin, there are people with ways to do

this, that somehow would solve some of these things i don't know if you can get all the way there. >> i don't see that happening, the whole world, saying we will close down bitcoin i think as you say you can't unscramble that egg. >> that egg is out there i think the idea of bitcoin as a store of value as a commodity of these things is not really the threat that libra is seen as as. libra is a direct threat to banking. >> everyone falls back on volatility >> it doesn't mean it's currency >> i think you have it totally i think it would be at a lot higher level you split it up in millions or whatever. >> you use it like you might use gold to buy something in a stockmarket. >> from chaotic. >> the big advocates, the pumps of the world if it's only 21

million coins and you can get to a number on what it would be worth and stay there, maybe. >> absolutely. it will reach that point >> what do you say about libra >> they say they definitely la first. just because of the name the libra gemini thing i'm not letting that go. i said, how could it possibly be a coincidence? >> but they didn't laugh because it's no more compelling than a debit card >> they think libra has positives to it, but it's all based on trump, and that's the issue mark zuckerberg has. >> doesn't that ruin everything? doesn't that disqualify it immediately? >> it's all about mainstream adoption it's about how can we get everyone until tin the middle oe country -- >> and libra helps it out. >> it's this double-edge thing it gets the whole world talking about it >> all the sexy things don't

exist in libra >> nothing sexy about mark zuckerberg i'll say that personally >> although, jesse eisenberg >> well, jesse >> i've always said he's a better zuckerberg. >> and tell me justin timberlake is not a better shawn parker >> he can pull it off. >> what? don't look at me you love this. >> it are you into bitcoin yet >> no. >> joe has become a maximalist >> enemy of my enemy >> i think it'll continue. will it be worth $100,000 ten years from now i don't know my question as a protocol is, yes, it could either be that or

torrent. do you know what i mean? all the sudden it's worth $8 >> i don't ever see it going back down. >> no, no, no. and that's the coolest thing people say it's created out of thin air if you look closely at the way it's distributed an hour of work that someone puts in is worth something and you can transmit that value on a system, peer to peer. so it is worth something it really, really is >> if everybody decides they want it, it's worth something. >> it has value and it has utility. i think trump needs to sit down with the winklevoss twins. he needs to sit down with someone who understands bitcoin and the positives of it. >> patri mchenry, kevin mccarthy >> well, he's got a nuanced view >> mccarthy said i like bitcoin. leader of the majority >> the other piece of it we

don't know about is whether someone will try to regulate the big countries try to regulate, it gets very difficult, very fast >> i think to be able to create -- like gold, we've had for 4,000 years. it really is worth something j it's worth something because it's shiny and it's a rock >> by there's also so much of it until that asteroid lands. >> being worth something is simply because the market is saying that hour of work is worth something. >> everybody keeps the same records. and you've done something for someone and they owe you because you've done. everybody has the same records you know that. >> six months ago, that hour of work was worth less because the market said it was >> have you ever cashed out your bank account have you ever cashed out your bank account and seen all the dollar bills there you trust those numbers on your statement. it's not -- you don't need -- >> i'm just saying the value of the hour of work changes based on how you feel about it the value of an hour of work changes based on how the market is responding, reacting.

>> is this how people pay for soccer players or something? >> no. i'm just saying it's an hour of work and it's worth something different every day based on the market >> he's going to take something and run with this and bitcoin is going to be the topic. tyler is giving away a bitcoin people have a chance to win one on twitter >> hang tight. we have not talked to jim cramer on this topic. >> he likes libra. >> mr. cramer, what do you think? >> guys, i'm listening, and i love ben you are the best hey, ben, how about we just cut to the chase facebook buys square, historically good actor, for 60 billion. they already have a crypto element. ben, don't we just cure everything >> i love it

i love what you're saying right there. and i love you, jim. i think you're the best. put it all in one big package. >> right my son stole your book i bring it home, right, and he's reading the damn book. i haven't seen anybody do that in a long time i said, that's my book he said, i am not waiting. you have crossed generations, my friend you're a remarkable man. >> lei love my book is in your household. >> i go the to buy a second book >> jim, if you're an investor or a curious person in the world, should you own bitcoin >> no. i just think that -- look, what ben said is right. it's better than what we're getting from libra i really like u.s. dollars larry kudlow explained to me maybe 1,742 times about king dollar i'm a king dollar guy. >> so you're not a maximalist guy like joe here? >> no, but i like gold you never know i had some money in my wallet the other day.

i seem to like that too. >> would your kid buy bitcoin though >> oh, my god. you kidding me wanted to mine bitcoin wanted to buy the nvidia card. he said, listen, why can't i get nvidia in here i thought the college represented good roi >> netflix doesn't accept bitcoin as payment, but what do you think of netflix this morning given the performance last night that i think was unexpected >> you know, andrew, when i'm in one of those situations where i like the c.o.o., i come back and say suboptimal suboptimal situation >> is this a blip or a longer term problem >> i never like it when a ceo says, you know what, but the last 72 hours have been great. didn't you feel like that's what he said? hey, the last couple weeks have been good. yeah, look, everywhere they raised prices was even worse they are historically just terrible, terrible at

predicting given the benefit of the doubt, when it's down 60. >> we'll see you in a couple minutes. >> ben, i love you >> exclusive interview with the c.o.o. of bank of america later with jim n'mi idot sst. at do you look for when you trade? i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪

a special shoutout this morning to becky quick >> oh, thank you >> celebrating -- >> turning 23 years young. >> almost made it through the show >> her wisdom is so far beyond 23 even though it's nice, it's not true she's at least 26. make sure you join us tomorrow "squawk on the street" is next ♪ >> happy birthday, beck. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber from the new york stock exchange. europe mostly red this morning ten year, 2.07 as philly fed blows out expectations and jobless claims were in line. road map begins with