"lion king" hauling in the biggest opening for a july movie ever highest grossing movie of all time, avengers end game. it's monday. avatar used to be. july 22nd today, 2019. "squawk box" begins right now. ♪ >> announcer: live from new york y business never sleeps this is "squawk box." hey, good morning welcome to "squawk box" right here on cnbc live at the nasdaq market site in times square i'm ross sorkin. bekesy is off today and it is a very big week. we'll be hearing a lot of numbers but we want to show you the u.s. equity futures at this hour because we're looking up and are looking higher dow jones looking to open 38, 39

points higher right now. the s&p 500 looking to open little over four points higher let's show you what happened over night in asia as well maybe we're pushing a little bit -- i was going to say, i thought it would be the opposite situation but the hang sang off little over 1% almost 1.5%. shanghai composite down. european equities as well right now. we see what's going on there there you have green arrows across the board finally the number that alan greenspan says he likes to look at, treasury yields. show you where things stand. >> that's a sad -- i look at all those things it's a sad commentary on our life. >> i don't know if it's sad. >> sad that it's the first thing i do >> oh, to see -- >> before coffee, before brushing my teeth, before

anything. >> yeah. >> shaving >> shaving >> any way, developing story this morning, over the british ship that was seized by iranian revolutionary guards last week, iran releasing new video over the weekend shows commandos repelling on to the deck tanker from helicopters uk leaders spent the weekend weighing response. the government is expected to announce its next steps in a speech to parliament today interesting strategy i know that we're the great satan here i guess the uk is our al lice and want to put pressure on anyone they can for the sanctions but -- >> what do you do? what do you do put you in charge for the day you can do what you want. >> just for me, the criticism when we try to do something in

response is we're going alone and need to get a coalition together of the willing. when they indiscriminate about who they're messing with, it seems like we ought to be able to at least do this one where it's not oh, there's the imperialist united states again trigger happy going after a smaller country. i don't -- i'm not happy they're doing it to the uk, but i'm glad it's not the united states wow, they're indiscriminate about who they're -- >> or is this kind of limited engagement it's nuisance factor it's a show of force. >> i thought they were baiting trump. they know that he does not want to get us involved both wars by veterans are seeing not being worth it those are the guys we asked, you know, all the sacrifices from

and if we sent them over there and they go full bore, lay their life on the line, then the end result when it's all said and done, i think iraq maybe -- if it had just been afghanistan, i think maybe we wouldn't have that do you think that's probably true >> i think two of them together in 20 years -- >> plausible, right. >> first thing we talked about, you know how long it's been since your life is going quickly sorkin. >> i know that. >> how long has it been since the fed had an interest rate cut? >> that's a good question. >> it has literally been a decade. >> once they got to 0, that was going to be the last cut. >> well, if they were in the europe, you can go to minus 5. >> that's true. >> but it's still kind of weird. it doesn't seem like it. that was remember when they were cutting.

streets of hong kong are once again descending into chaos that happened over the weekend. a protest march began peacefully until demonstrators reached the liaison office and vandalized china's national emblem and spray painted security cameras movement then took a violent turn unfortunately with police launching tear gas to disperse the crowd. protest rs are fighting for proposed extradition bill and calling for reforms in the chinese territory. isn't that bill dead >> i believe so, yeah. >> once this starts happening, you wonder you're not sure what's causing it at that point. the yellow vests are still around in paris. what is the end result >> some limited basis. >> some people will show up for a demonstration. they're not sure what it's about, i think china unveiling highly

anticipated science and technology innovation board overnight. it is designed to give chinese investors the opportunity to buy into home grown tech companies that have traditional turned to wall street to sell shares the star market comprises 25 markets. those companies soared on the first day gaining between 84% and 400% at the close. of course we just mentioned the overall main chinese equity index were down substantially. and i guess on the traditional exchanges there, the upside is limited to something like 44%. there's no limit on -- no circuit breaker upside on this new market so on day one, they ensured a success. also corporate news over the weekend. this didn't affect you guys, did it either of you? you were safe? cbs and at&t blaming each other for this big blackout of cbs stations on directv and u-verse

started on saturday. stations in more than a dozen locations went dark after the companies failed to reach a new contract cbs says they continue to negotiate with at&t but the loss of program could last a long time this of course has happened over the years multiple times. the question is how long can this really go and if it makes it more complicated, cbs, of course, in the midst of these negotiations to do this deal with via come. if you really think this is going to go on for a long time, dish dropped via com channels forever. it wasn't just cbs would be much harder to do that with. >> usually what settles these things is the nfl. get to football season, there's no way. >> i was thinking that, too. the masters would have been a time when i needed cbs, but be hard pressed forme to think i really need cbs for anything.

>> csi doesn't do it for you >> don't watch any network -- >> big bang theory repeats >> their u-verse, is that them >> directv >> directv, u-verse. >> both of them. i saw 15 minutes of something. it's hard for me to get over i'm a little scarred i have been having nightmares about it, the "bachelorette. i was forced to. just like a clock work orange, i was forced to watch. >> it was so uncomfortable it was -- this woman was i don't know, she had sex with some of the contestants and the guy is a real religious guy i think they were going to get together, you know what i'm saying, he's like grilling her on whether -- well, you haven't slept with any of these other guys and she admitted it -- it was so uncomfortable then she got so mad at him. >> now i'm uncomfortable

>> people out there have seen it know exactly what i'm talking about. then he said after he found out that she did this, he said i'm going to pray over you for her -- it was -- what's wrong? >> it's only 6:08 and we have to go to break. >> no, i'm going to pray over the equifax. >> you seem pretty interested. >> no, this guy is finished. he is done there's going to be another guy is going to be the one she was -- oof that was the first i've seen i can't believe that's -- >> first time you have seen the "bachelorette". >> no, i have seen it before i have been hearing lot about it from other people. let's pray over equifax. i thought this was a company or guy that was going to be put out to pasture equifax nearing a deal to pay about $700 million settle a probe by the federal trade

commission to that massive data breach back in 2017. courts say the settlement could be announced today the breach exposed social security numbers and other private information of nearly 150 million people also johnson and johnson defending against thousands of lawsuits over the safety of its talc products. the judge will hear arguments today whether j&j can exclude testimony from expert witnesses retained by the plaintiffs company is questioning their conclusions but there's scientific evidence that talc can cause ovarian cancer you looked into this, right? you have a view on it. >> about 20 years ago. i didn't know that it was -- they supposedly slight contamination of talc with asbestos i thought talc itself to years ago i thought it was similar to the molecular structure -- i don't think that's true. i think it's hard to make or

produce talc without saying that maybe there's a very small amount of that, but i don't know -- why don't we know? it seems like you can find out whether there were trace elements. >> j&j says no. >> this is a big problem for them because you know how juries sometimes work they may not be totally based on the science. >> on the science. >> right and the awards, too. st. louis fed president said he would love to lead the central bank if given the chance he told reporters friday if ever i got that honor i would certainly take it. i notice the phone, though, has not been ringing off the hook to get that but the phone has -- the phone has been ringing bullard was approached by the trump administration about a position on the fed's board of governors but turned that offer down president trump has been critical of his pick for fed chair jay powell, blaming him for slowing the economy by raising interest rates bullard dissented in june in favor of lower interest rates making the first voting member

to do so. >> so we know jim. do you think that if president trump wins a second term that this is a little bit of an advertisement for that opportunity? >> maybe so. and he -- one of his pal's tenure is up that's assuming -- >> it extends past. >> right then he could do it when it's actually over. >> have you seen fed guys don't advertise? >> you have seen some of the scuttlebutt that's so divisive right now that some of the states that trump could lose by more in the popular vote but actually win more electoral votes. have you seen that i was surprised at who actually printed it it was one of those papers do you think which it was? paper that i thought would have buried that. >> stop. what >> facts of facts. >> i see that a lot. >> did you -- >> i feel like if i don't read "the new york times," i feel like i'm uninformed.

when i do read it, i feel like i'm misinformed. that's an old joke that's an old -- you like that >> you have been practicing. >> try it out on me. >> it was either mark -- one of those guys with great humor, will rogers. is the "bachelorette" abc or cbs? >> it's abc. >> you're fine thank god. i can still get it. >> got to wait for the "survivor" on cbs. >> is that still on? are they still trying to survive? >> some people tell me "squawk" is trying to survive. >> that still on >> we're not in loin cloths. although we could try that. coming up, we'll get you ready for a big week big names in tech and manufacturing set to report. we'll tell you what to report as we head to break a look at the biggest premarket winners and losers specifically

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it's a busy week on wall street for earning we'll hear from 133 s&p 500

companies, 10 dow components, 3 of the faang components and other highlights including coca-cola, at&t, boeing, caterpillar, ford, tesla, comcast. intel and starbucks and mcdonald's on the data front, the main event is friday when we get the first look at the second quarter gdp. sa santoli, i thought about you i didn't think this was that staggering that three of them, microsoft, apple -- four of them. these are big names, amooi crow soft, apple, amazon with huge market caps. the advances this year in the s&p 500 account for 20% of the advances. >> right. >> i usually thought when we think about how tech weighted it, i thought it might be more than 20%. >> right obviously that's more than those

four companies waiting in the index. it says those four stocks are outperformed. >> right they're also all -- >> big gross stocks in general. >> we're getting used to using the t word, too. they're all coming. >> unless they don't -- >> large numbers you used to say. >> unless all these companies stocks stop bleeding the market. if they keep going up, then they can buy back stocks, too. >> last we got 2 above the trillion and then the market corrected. joining us now, jim paulson. thinking about questions for him. hank smith, investment officer paulson, we go way back obviously. correct me if i'm wrong, but in

2018, you got less bullish and it ended up being a flat year, i think. now against the lot of the grain you have been really pretty positive in 2019 and you still are, i think, in terms of more upside surprises than downside surprises. and you still feel that way even about earnings this quarter? >> well, i think joe we have been kind of putting the market back together again. we lowered the valuation we lowered the competitive bond yield. the market is up this year but still a lotcheaper than it was in january of '18 and the competitive bond yield is a lot lower. financial liquidity finally went positive again in the second quarter first time since 2017. you talked about concentration of tech.

it was much more concentrated last year. the one missing ingredient which is why i still think we had more room is earnings they have been flat line this year and i do think that markets going to be determined here in the latter half not by the fed, not by the trade agreements i think it will be determined by all the policies that we introduced here, money supply, more fiscal stimulus will work and the economy will do better or it's not. and if it doesn't, we're going to have recession fears and probably a bear market but i think it's going to work and if it works earnings will go up again they'll go 2% treasury yield and 2% inflation and liquidity support and i think that means you have another nice leg in the second half of the year. >> hank, that plays into what your thee siz is, too.

and it doesn't seem like it's that hard to understand or come up with, we're back to tina. if rates are going down from low levels, what else is there except for stocks. >> yeah. and absolutely not only that, you can get better yield in the stock market than you can in the bond market. they talk about financial repression, forced to go into the stock market it's wonderful in the stock market because you can buy these great blue chip companies with better than bond-like yields and you get dividend growth. i would like to add one more thing and i totally agree with jim, sentiment sentiment remains sour here we are in the 11th year of a bull market, a historic bull market and there is still plenty of anxiety and fear. that shows up more in what investors are doing as opposed to what they're saying and they're taking money out of domestic equity funds and putting money into fixed income

funds. and anyone buying a bond fund today or marking money and cash is not expressing their confidence, their exuberance, their optimism, their euphoria, they are expressing fear >> oun of the attractive vehicles -- i was a stockbroker once, converts whether bonds are preferred or whatever, you know, they pay a nice yield and then there's the underlying stock goes higher and it goes higher as well but there's always a premium over conversion. when you buy a yield stock now, there's no premium over conversion you're getting a bond-like yield and you get 100% of the upside an there's no call features where you get called away if it goes way above par it's almost like giving things away, isn't it, hank that's pretty good. >> it's truly one of the great features of being an equity investor but there's no free lunch in this business you have to be willing to put up with volatility. let me give you an xample.

we bought block brock in 2013. it was yielding 3% at the beginning of 2013. today, our yield on cost of that original position is over 8% due to dividend increases. >> that's the way it's supposed to work over time over time. paulson, thinking about -- it was hot in minnesota, wasn't it? >> it was very hot, joe. hank smith, thank you. we're going to go. appreciate it. coming up, a lot more to come on "squawk box. do you ever feel like you're being watched? do you joe, you feel like you're being watched? >> i read this story they say they don't look in the email. >> turns out, folks f you thought you were, you actually are and it's happening at work, yep, by your boss. we'll tell you -- >> you noticed the cameras. >> exactly what your company knows about you and what you can do about it, which is probably not much

that's next. >> our job does involve some surveillance. >> yes

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welcome back to "squawk box" it's time for the executive edge employers have more data than ever on their work force from the time you first log in to work, email in the morning,

to which wify hot spots you use at happy hour, employers are using that information to gauge who is influential in the office and as your productivity levels, discover what your employees might be seeking job prospects elsewhere and other stuff. it's the subject of the "wall street journal" report you have to go read it if you haven't already. do it online but we have the author here, we are joined on the reporter by sara krauss. good morning. >> good morning. >> so, i woke up this morning. i went online. i checked my email what do they actually know >> so, do you have a separate work and personal phone? >> so if you are using a work-funded device pretty much anything you do on it is fair game the time stamp of when you logged on, where you were? >> are they reading emails >> some are just looking at the time stamp the velocity, how quickly people respond to you which could give a sense of how

influential you are or are not. >> what do they do >> sometimes it's about understanding you have an org chart but within that there's influencers and trying to understand who is more influential within a company or who is more productive it's really wide range. >> does this get factored into the hr report at the end of the year >> it could. some cases it's an intellectual property retention thing >> i delete all my emails. they're never going to -- >> you delete them >> i delete them >> that's good we are being surveilled, we should say, right now. this is one of the few professions -- >> we signed up for that today, i i would say. >> five cameras and microphones. we're not quite as nervous. >> we're a little less nervous. >> we're a little guarded in general, some of us. >> not really. >> what about telephone calls? >> telephone calls sometimes there's one company that i mentioned in the story 8 by 8

that offers a way to transcribe and save all the conversations that happen. >> who are the companies doing this >> there's a wide range. one of the companies that we wrote about is mckessen. they mapped relationships based on emails not the content but the to, from and the time. microsoft sells an analytics product on the back of 365 they collect the data about how you used that at work. they don't let you look at -- >> microsoft anom miezing it >> they went won't let manages look at a group of five or less. >> so there are some that are logging your key strokes or taking screen grabs every 30 seconds. >> every 30 snekeconds. >> those are about who is doing what in realtime there are others who are culture

base and where did the actual relationships happen and should we change where those teams sit so they are more apt to discuss what they should be discussing. >> so i thought maybe you were just talk about looking for malfeasance or criminal activity or fraud. >> no. >> they will look. >> what if they're trashing the guy you're reporting to? >> little bit. >> that seems intrusive and big brother like. >> u.s. law gives employers pretty wide latitude at the heart of this is sort of conversation between workers and their employee about what feels intrusive and what has a productive business end. >> what do you mean screen grab? >> what do you have on your screen right now >> i have emails and i have thompson. >> if you had amazon, you were

shopping. >> what do you use for stocks thompson >> thompson. >> you don't have drudge up or one of your favorite sites. >> i just got off huffington piece because you sent me that piece. >> one of the companies we mentioned -- >> slate. >> mentioned in the story was they found out their employees were putting in three hours of work a day compared to eight because they were on facebook or youtube so they set up alerts this employee is wasting time. >> final question, do you keep two phones >> i do. i do. >> for this purpose? because of this? >> not because of this because i believe there's a boundary between my work life and personal life. in the day and age where everything gets up loaded to a cloud, i would rather have a delineation between those two things it's a personal choice. >> you have two emails, right in i don't have that. >> it's funny. i have multiple email addresses but i have one phone >> me, too >> but guess what, the one phone everything on the phone can be collected. everything on the phone can be

collected. >> i assume that. >> you assume that. >> i assume that best not to do anything -- if your cayman islands account you have on your other service, right? >> swiss account is over here. i just go desktop for camen. thank you, sara. >> thank you >> do i have to say i'm kidding? >> no, we don't. >> especially when i'm not. >> do you know this word coming up, new -- new performance numbers out this morning for the world's largest hedge fund and the report card isn't good oh, no too busy revising the whole capitalistic system to get any decent returns. heading to break, here is a look at friday's s&p winners and losers ♪

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♪ >> announcer: welcome back, you're watching "squawk box. live from the nasdaq market site in times square. good morning welcome back to "squawk box" right here on cnbc on this monday morning still humid. see the humidity but let's show you the humidity in the markets right now because dow looks like it's going to open a little higher, about 56 points higher. nasdaq up about 27 points, s&p 500 looking to open about 7 points higher. that's the good news let's tell you about some of the bad news this morning because bridgewater associates suffering one of the worst performances for its flagship fund in the first half of the year in two decades. the financial times reporting that the firm, of course, founded by mr. dalio saw its

pure alpha fund lose 4.9% through june this is global markets bounced on hopes for easier monetary policy the drop following a strong year for the fund back in 2018 when it delivered a return of 14.6% return amid market volatility. much of that loss came in january suggesting the fund went into the new year expecting the worst when the markets were just starting to recover. so the fund has managed to pair some of those losses now down about 1.5% this year through mid july of course, the bigger portion, i believe, of bridgewater in total is the all weather fund. >> yeah. >> but a lot of folks have kept their eye on this particular performance metric. >> also, down 5% over six months that's one of your worst half years in 20 years that's pretty good >> not bad. >> wrong footed coming into the year. >> compared to the s&p

>> i can do that i know i know >> he's giving you flat and noncoraled. >> s&p is up 20 and you're down 5, you should go home. that's a joke. >>. manhattan's longest serving district attorney has died at age 99 throughout his storied history he put away mob kingpins and oversaw high profile cases including the murder of john lennon, but he was best known for his dogged pursuit of white collar criminals he served as the inspiration for the original district attorney character in "law&order" and helped mold generations of lawyers including supreme court justice sonya sotomayor. >> took on big corporate cases

>> you were in the courtroom >> i sat through those trials a lot of those trials. i think they were six months each it was lengthy. coming up, when we return, disney with another incredible weekend at the box office smashing two more records. we'll bring you the details right after the break. it's quite incredible. plus, a little later, we'll discuss the coming week of earnings there are 133 s&p 500 companies set to report. plus, ten dow components and three faang na stay tuned

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♪ look at that little cutie, isn't that cute? welcome back to "squawk box. disney's "lion king" winning big at the box office. despite harsh reviews, disney's avenger end game passing avatar being passed here to talk about all, disney's domination at the box office, brent lange, john litman is also here thank you both for being here. what is going on 40% of the market is now dominated by disney? >> if you factor in the fox contribution which is only about 5%, yeah, it's 40% dominated by disney so, disney is just blotted out

the sun for all the other studios and everybody is punching up right now. >> what does that mean does that mean they won't get space in the theaters? is this a concentration issue? >> that's some of it if you look, basically all the other studios steered clear of this summer, this year really. you don't have a bond movie, jurassic world they let disney have this runway >> right >> the reviews have been terrible, terrible like terrible, terrible. we were talking about 8-year-olds who have a view this is not the greatest movie in the world. >> that is true. and yet and yet the genius of what disney has done actually is they're going for these films that are review proof. right? you have lion king, aladdin, toy story, they're well known. people want to go out and see them regardless of what the reviews say. the other thing that disney did that was pretty clever about lion king that made it review proof, you have -- it's a family movie. you have your beyonce fans who

want to come see it, but you've also got your millennials. we were talking during the break how we know some 8-year-olds who are like, yeah, they're not so excited about it but i will tell you, i have a son in his 20s, he and all of his friends, they went to the first showing because these are the movies they grew up on they did with it "lion king," "toy story 4" you're getting these multiple generations coming to the films. >> what about new product, something that's just totally sort of new to the market? do you think that disney is able to do that >> well, i think that's a bigger question that's a concern not just for disney but if you're looking at it, all of these franchises are entering their second, their third decade and you're not really seeing a lot of new ip injektsed into the space instead seeing these spin-offs and retreads and remakes. >> the new ip is in streaming. if you have a new idea, you're

probably not getting funding, not getting studio interest. you're getting the interest out of the streaming services. that's really where the competition is it's disney in the theaters and streaming services. >> in that streaming world, can you ever create the kind of moment, right, where an entire country or an entire globe are watching the same thing? so "toy story" reached the world obviously. "lion king" reached the world and therefore you can spin it off 100 times and it works if you're starting a new ip development on a streamer, can you ever get to that next place? >> you could argue that stranger things has come very, very close most recently on netflix think about that and that is your competition i mean, look, i am guilty, i am one of those people who stayed in an entire weekend and binge watched "stranger things" latest season i didn't go to the movies. i stayed home. so i think that really is your competition. >> right is the concentration of all the

releases in these franchises, these known quantities, is it hollywood being risk averse or look, we tried we tried nobody comes. >> no, it's absolutely hollywood being risk averse. if you look at it the economics for these studios they're covering major, major overhead, huge studio lots you can't afford to make the mid-budget lots. you have to take these really, really big swings. >> will this movie be on disney plus in the fall >> exactly that's i think a lot of the reason you're seeing so many of these big franchise movies, toy story 4, avengers end game all in one year. it doesn't make a lot of sense but they need to launch disney plus with the most potent content available. >> thank you, guys >> thank you >> thanks for having me. coming up, 133 s&p companies are set to report this week. what should you be watching, buying, selling? we head to break, here is a

quick check of what's happening in the european markets right now. bit firmer but not much for a monday we'll be right back. what do advisors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

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today starts a very busy week of earnings to discuss all of it, let's bring in a man who has a lot of skin in the game, tim, owns a big chunk of companies due to report earnings this week including boeing, facebook, alba bet and amazon good to see, you tim how high the stakes for some of these names you own? one level the beat rate is high, 07, 75% of companies beating published estimates but the market seems to be much more focussed on what comes next, not what happened last quarter >> well, certainly it's always high stakes during earnings season and particularly what we might call earnings week with such a large chunk of the s&p 500 reporting.

it would be hard to have a portfolio and not have a significant number of names reporting this week. the stakes have been higher after fed rate cut talk and how everybody expects the market to accelerate in the second half of the year, so it's pretty important, but really at the end of the day, earnings are what matter >> earnings going to matter a lot for boeing, for example? what's going to be the next thing that drives the story there? >> i think boeings announcement about taking a charge based on the 737 call it reparations to airlines, changes the story a bit. i don't think people are going to be looking at this quarter's earnings but get guidance as to what earnings look like in the future and when if any guidance they can give us when they're going to begin selling the 737s again and that represents a good chunk of earnings. i don't think anybody expects a whole lot from boeing. >> do you think the stock actually kind of incorporates this moderated view of what the

737 can deliver in the short-term >> i think the stock has really been confusing people because it's still up on the year. it's up in the mid teens here to date for a company that had such headline risk and headline problems what it show is the broader strength of boeings product line and including the defense side of boeing. i think -- sure. >> tim, i was going to get to alphabet because didn't have a great quarter or response to that quarter last time around. what are you expecting out of the company this time and again what does the stock price in right now? >> i think what we're really looking for out of alphabet is continued call it mid 20s growth in the advertising business. at the end of the day, really what drives this company is advertising sales and the consumer side of the company, the consumer side of the economy remains strong if they're continuing to gain share in that business, then everything will be okay at alphabet. >> everything will be okay

f facebook, too? >> another company clearly suffering from headline risk, their move into digital currencies put them in front of congress never like to see your companies in front of congress, however, they're still part of a huge secular tail wind of advertising moving online. if you're faced with a decision as to where to advertise right now, you have three or four choices as to where you're going to put those ads facebook is easily in the top two of that list. >> overall, tim, we were talking about how much of this market move this year has been accruing to the very big growth stocks out there. does that make sense to you at this stage given what else is going on in terms of broad global growth or is the market overplaying its hand in some of these stocks >> well, i think the market is putting a premium on those able to grow earnings when you have the federal reserve expected to lower interest rates otherwise growing

economy, it means that other sectors may be suffering so it's really been affecting the industrials and those areas that we trade internationally with where these domestic growth companies seem to be somewhat immune to that. >> if, in fact, the fed is going to cut and you have a lot of these cyclical stocks, would that not be the area that might take up the lead >> certainly certainly the valuations are very compelling. you have defense stocks. you have industrial stocks trading at mid teens multiples in a market that's in the high teens and some of these technology stocks in the mid 20s if not in the mid 40s. the valuations are very compelling in industrials. just very hard for investors to get a sense for what those earnings are going to look like six, eight, 12 months down the road and people worry about those valuations may be high if earnings don't come in. >> market seems to want to pay a premium for a perceived sure thing. thanks a lot appreciate it. >> thanks for having me.

coming up, big two hours ahead on "squawk box." rate cut seems all but guaranteed later this month, but is it the right move could they cut more than a quarter point? we'll break it down straight ahead. then later, we'll tell you what gold could do soon and what ii hasn't done since world war stay tuned you're watching "squawk box. we're back in just a moment. ♪ at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond.

>> virtual flood of earns ready to be released we'll tell you what it means for your portfolio straight ahead. there are faang stocks and bang stocks. >> i love gold >> a new term coined to describe the biggest players in the gold industry why one money manager says they could be poised for a big move to the upside. and the fed front and center as the markets get ready for next week's meeting on interest rates is more than a quarter point cut in the cards a look at what it means for the markets and your money as the second hour of "squawk box" begins right now ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box." good morning welcome back to "squawk box" here on cnbc i'm joe kernen

along with andrew ross sorkin and mike santoli u.s. equity futures have strengthened as the session has gone on, the pre-market session up 53 points on the dow. the s&p will see 133 companies report, about is that around a third, right, not quite a third of the dow, ten of them. i can do that math a little easier there's 30 stocks in the dow. >> you can do 133 times 2, 266, 26% of the s&p 500. >> you're right, since it's 500. 26 versus 33 for the s&p the nasdaq, i'm not going to talk about the percentage is for those or the russell forget it. let's get you caught up on all the big headlines this morning. equifax close to striking $700 million settlement regarding the 2017 data breach that exposed personal information of 150 million americans. we talked about that back then this all, according to "the wall street journal," which says the

deal would settle numerous probes being conducted by both federal and state officials. that settlement could be officially announced as soon as today. just hit the wire as we speak. $700 million the right price tag? >> 600 million. >> $600 million. they got a deal, a steal even. >> unless i'm missing something. 425 in consumer restation, 175 million in payments to states over 900 million to new york alone. >> i don't know if you saw the other news coming that google will pay $13 million for what people thought could be $1 billion the cars going around picking up wify signals. separately the journal is reporting another pending settlement google and the ftc looking into alleged violation of privacy laws involving data of users who are children. goog llc pay a multimillion fine

but the exact amount could not be learned quarterly profit of 35% per share. beats consensus estimates of by 5 cents slightly below forecast. developing story this morning over the british ship seized by iranian revolutionary guard last week video shows commandos repelling down on the deck of the tanker from helicopters. the government is expected to announce its next step in its speech to parliament which could come later today. the fed entering its blackout period ahead of next meeting at the end of this month that will be the market debating on how much action the central bank will take steve liesman joins us now with more on that story still some suspense. >> there's a lot of drama in this upcoming fed decision will it be 25, 50 or could or

should the fed even do nothing let's look at both extremes first off here here is the case for 50. research says act early, act forcefully when near the zero lower bound. even surprise the market the research sukts this would be interest brexit, trade war, flagging cap-x in the economy, debt ceiling concerns and convince the market that the fed is serious about that 2% target and you would in general be expecting a weaker economy in that context on the other screen, case for nothing, jobs are strong, unemployment is strong, consumer really good retail sales numbers. growth is estimated at trend in the current quarter and above trend if you average the first half together. core inflation less than half percent. growth looks solid outside manufacturing. we think any rate cut is a mistake. between these two choices the

market is pretty much decided it will be right down the middle. here are the fed probabilities 100% for july. 80% for 25 and 50% for -- 50 base point is 20% probability. it's heart to look at the data and see much reason for a rate cut using one of its nine quarter point rate cuts to fight recession should it happen. >> if we don't go below zero we actually have a infinite number left, i think >> that's your mit expertise >> when you go below zero, go to a google or i think what's a google, google, google, google that's like a lot of 0s. any way. let's talk more about the case for and against cutting rates. our next guests gregory daco is oxford economic chiefs u.s. economist.

gregory, i like excitement and surprises but when the fed got more and more transparent, would there be any reason to get this transparent if they were going to telegraph what they were doing and then do 50 or 0. would you be shocked if they did something other than what's expected at 25 i would be. >> the key question is what markets are pricing in that's the key question for the fed. do they adhere to what the markets are pricing in wouldn't they be loathed the to do something the markets aren't expecting? >> in the current market, if they don't accommodate some form of easing they're going to risk tightening financial conditions. that's what esaw last year miscommunication led to a significant tightening of financial conditions which went exactly what the fed was trying to do. so in this current environment where markets are pricing in about 100 bases points of rate cuts over the next 18 months i think the fed has to deliver

some form of easing. unless it does that, the rest of the central banks are easing you end up with financial conditions that are tighter and dollar that's stronger it doesn't have a choice the economy is doing relatively well today 12 months down the road, 18 months down the road you have a global economy that's weakening, domestic momentum cooling and inflation that continues to undershoot the 2% target. >> can i throw a wrench into the whole thing here which is that 2 of the fed presidents, george and rosengren are not on board with the rate cuts. >> anyone at 50. >> i'm looking at the list here. >> evans sounded like he would not oppose a 50 -- >> what about bullard? >> he has been 25. i'm trying to look at support

for 50 only the first john williams would have supported a 50 not the second john williams. >> the current stance of things if you have this delivery of 25 bases points you're delivering part of what markets are expecting and signaling there may be further cuts in the fall. i think that's perhaps the right approach today is that you're not sure what's going to happen in terms of trade policy you're not sure what's going to happen in terms of fiscal policy with all the issues surrounding a potential government shutdown. so let's just cut now, signal to markets there is the possibility of further rate cuts coming down the road and essentially positioning yourself in a much more accommodative stance going into 2020. how the yield curve is conspicuous that three month treasury yields are above 3%

presumely we get a resteepening of the yield curve, do you think so >> that's what we're trying to do, get to an environment in which the growth outlook is improving not deteriorating. look to the next 18 months you're looking at a growth environment that is weakening. we cannot forget the importance of the dollar in this whole debate because we have had a series of central banks around the world in asia last week ease monetary policy, the ecb is on track to ease monetary policy. if the fed does not deliver upon the expectation easening of financial conditions, then you're going to get a much stronger dollar. that's going to hurt us. >> if you take the fed's new mantra, one ounce of prevention is worth a pound of cure >> you say weakening is that the same as weak when i look at the data, what -- if you were looking at data just what we know now, what would you say backs up the idea of any rate cut whatsoever?

>> if you look at the outlook 18 months down the road, you have an economy going from 3% growth environment to environment where it's likely to grow under potential, that's really what we're facing. >> it's below 1.8. >> below our estimate is 1.78, yes. >> of potential? >> yes so the data right now our cnbc of which you are a contributor is 1.. we did 3.1 in the first half more than you're running right at or above potential for the first half of the year the job market is strong consumer is strong through retail you have this decline in cap-x that some say is bottoming out. >> the risk in my opinion is that you get a negative shock whether from trade policy, government policy that hits confidence and stock markets and leads to surging volatility that in turn exacerbates the slow down it's hard for economic actors to handle this type of change in momentum, 2018 was all about accelerating 2019 is about decelerating and decelerating is much harder

from an economic perspective from a fed perspective you might as well do some easing today than avoid doing more tomorrow. >> the fed had 2% gdp forecast already in the in its outlook along with 2.75 to 3% feds fund rate they have seen the same growth rate they predicted but now a much lower -- >> remember not so long ago they had a major inconsistency and still have that the unemployment rate was rising very fast in the long term forecast that was implying a recession. their forecast was not necessarily the best way to look at -- >> you made more of an argument for them not to do it. so they data dependent anymore >> i think they are. >> what data >> that's the problem. they don't know what data. they don't know what's going to

happen on trade poll smich they don't know what's going to happen on fiscal policy. they don't know what's going to happen on the global front. >> highest on the planet right now. that makes no sense. >> not when you have the massive budget deficits we have. >> hope in your next debate you bring that up that's coming up soon. >> it has nothing to do with it being good or bad. it has to do with the need for us to issue debt. >> last week i was not that worried. i tried to get the 22 billion to be a big concern. >> who was it? >> can't remember. >> someone i respect >> it creates a need to import a lot of capital that's really the issue. >> so you think that that's not going to -- >> i don't think we'll end up in a debt ceiling crisis because that would lead into a self inflicted recession but the risk is there.

>> i remember that it's not trendy to be concerned about the deficit. coming up when we return, a lot more on "squawk. h huawei heading to the white house. later, forget faang stocks we're talking bang stocks. why top gold producers could be ready for a breakout in their trading range. we have a guest to explain why u' wchg qu yoreatin"sawk box" on cnbc ♪

welcome back to "squawk box. take a look at the futures right now indicating a green open, slightly had some losses for the major indexes last week. looking to pick up little bit here the nasdaq looks up 28 points dow set to open 48 higher and s&p 500 up little less than a quart ore f a percent right now. >> okay. csi lovers pay attention to this court rat news, cbs and at&t blaming each other for this blackout of cbs stations which started on saturday. stations now in more than a dozen u.s. markets this includes biggies including new york and los angeles went dark after the companies failed to reach a new contract cbs says it continues to

negotiate with at&t but the loss of programming could last a long time and we talked about this a little bit before how long that really is. are we waiting all the way until football season? is that what we're talking about here >> cbs has been very aggressive about demanding nor payment. >> meantime, you think in the next two to three weeks we'll get a deal or get closer to a deal with via comm does this matter >> more leverage or less, i don't know >> what are you doing over there, joe. >> i feel better about what we do than network tv, you know what i mean? if netflix is going to disrupt anything, it's -- and when you watch, how you watch what you watch, it's network tv. >> except if you have football >> i know. that's why you keep coming -- masters. that's why you keep coming to that "squawk box. yeah, live programming, nudes, things like that. coming up, huawei suppliers seeking clarity. moment of clarity on the administration stance on national security. we'll discuss that after the

break. and as we have been talking about, it's a big week for earnings we'll preview some of the big names coming out "squawk box" will be right back. we're carvana, the company who invented

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huawei suppliers are expected to meet at the white house to talk about doing business with the chinese telecom giant. good morning. >> good morning, mike. those companies are hoping to get some relief from the restrictions on doing business with huawei. some of the firms reportedly attending include intel and qualcomm larry kidlow invited them and reports that stephen mnuchin will join this meeting as well the companies are worried not just about direct sales to huawei but whether they can keep working on the global rules of the road for 5g if huawei is even involved. back in may, the commerce department put huawei on a blacklist that prohibits u.s. firms from exporting software, commodities or technology to huawei companies can apply for special licenses to get around that but could end up having a bigger impact is the white house executive order banning any transactions with huawei commerce is writing those regulations now, so expect companies to push today to keep those rules narrow but capitol hill is not so

sympathetic. a bipartisan group of senators is calling on the white house to hold the line. it includes republicans marco rubio and mitt romney and mark warner and chris van holland and introduced a bill that would turn the huawei ban into law and force the administration to get congressional approval if it wants to remove huawei from the blacklist. guys, they're worried that the administration is using huawei as a pawn in the broader trade negotiations with china. back over to you. >> thank you for that, elon. i want to talk more about huawei and u.s. tech firms and bring in someone who has been very outspoken about the security posed by the giant tech firm it's great to see you, rob. >> good morning. >> you heard the report from elon, and you think what >> well, i think one of the things that we found in the national security strategy is the way you look at national security in the globalized internet-powered world is that militaries were designed to

protect the population from undue influence from foreign bodies what we saw especially after the 2016 election the russians were able to use big data analysis, artificial intelligence and social media networks to create protests in the united states. this type of behavior is accelerating, so when you combine the might of huawei with chinese large tech companies that are starting to really grow, especially with -- you look at the stock rises with the new bang market up today, there's a big challenge with preventing undue influence of your society using these technologies and these business models. >> rob, i want to take the devil's advocate position only to have this debate. you look at what's happening in the united states with tech companies in the america and their role with the military and there's lots of people who have come out and said that google and amazon and others aren't being patriotic enough because they're not participating with the u.s. government and yet

they're also all sorts of programs going on for the past century, frankly, between u.s. companies and the u.s. government how is that different? >> i think what's different today is if you look just at the market in china, for instance, you see no major telecom providers, of course, there is no major equipment manufacturers that are american anymore. you see none of the major tech companies able to even operate in china so what happens is china basically creates a fortress to grow their companies, to create market dominance with their own country and then uses subsidies basically non-market based active toy to allow them to grant global dominance it's about creating global champions. >> that's an economic argument, right? i could make the economic argument what you want to do is slow huawei down to give some room for u.s. companies who may be behind to the degree you believe they are and the at&ts and verizons of the world will

tell you they're not that's not a national security argument now we're back to this whole dispute around trade which is huawei is national security threat or is this a pawn in some trade negotiations >> that's the point i'm trying to make is economics are tried with national security you look in summer 2017, eu made -- declined a vote on human u.n. human rights violation sanction against china because of greece and hungary vetoing that vote. so there's a lot of investment going in the european countries. that's causing vee owe political outcomes that don't favor u.s. national interests or democratic principals going forward today there's a mix of economic behavior and national security interests tied in ways that just quite frankly didn't exist in the cold war or even before the recent rise of the internet. >> and so if i put you in charge

for at least a day, if not a year, you would do what? >> well, one of the things that i would look at is not only are we going to say, hey, huawei shouldn't be building networks in our own country, but maybe it's time to protect our industries so critical to national security. we're talking about dual use technologies 5g is combination. we are not leading but need to in the future. we need to invest in infrastructure and stem education, research and development, all of those things are called out in the national security strategy that we do much need to do a much better job at building our own economy, not just banning huawei. >> so then the question is the market working right? we sold off lucent a long time ago, the last equivalent of what huawei is doing in terms of r and d building stuff that was sold and that was sold

to nokia to the extent you want to incentivize this, what do you do is this a tax story, rebate story? >> first of all, we spent $800 billion on defense defense has a big obligation and big authority to actually promote industrial policy in those industries we find critical now, if you look at the way the world has been going, we have not done this since the end of the cold war in the '60s we were spending 2% on gdp we sent scientists on federal grants on the basis of the space race we were actually investing in our country in a way that drove economic growth. we have been living off that fat for far too long. >> rob, it's a great conversation we appreciate you being with us this morning >> thank you >> thank you. coming up, basket of gold stocks that could be ready for a breakout higher. we'll speak to the money manager making that call in the sector then, democrats may have different views of the economy,

but there's one thing all the presidential hopefuls agree on and that is raising the capital gains tax. what it means for the economy and investors is tragt ahead. as we head to break, take a look at u.s. equity futures up 41 on the dow. ♪

♪ still to come right here on "squawk box" this morning, time to buy gold. that's the question of the hour. we'll give you a few names could be ready to rally into the end of the year. and then will raising the capital gains tax hurt economic growth the issue is front and center for many presidential candidates and investors. we'll break down what it could mean for your portfolio. then facebook, amazon, google parent company alphabet are all ready to report. we'll preview some of the big names ready to report during the busiest week of earnings season. ♪

gold is trading above $1,400 an ounce for the first time since 2013 and is up more than 12% year to date opportunities in gold prompted our next guest to coin a term of his own it's called baang, b-a-a-n-g. >> john, we'll get to the baang

stocks gold sup from 275 couple month ags. do you see that being sustained? >> we like the fact that gold broke out of six and a half year base and like the fact that central banks keep debasing currencies and excessively low interest rates we think is a good environment for gold. yeah, we do. >> seems like real yields went to zero, gold took off pretty direct relationship at least for now. baang, what are the stocks are best way to play this? >> so, we made this index b-a-a-n-g in o imagine to the fading faang f-a-a-n-g this group of 42% since may 10th strong performance no doubt. a leader relative to gold which is up as you said 13% since may 10th clearly beating the s&p and beating faang as well by a ton.

>> we're looking here at a chart that goes back several years which shows you, yes, it's up a lot recently. >> still down. >> broader context. >> still down, much like gold. gold has broken out but down from its highs we think gold and these stocks have more room. >> do they have to cool off first? >> i think they would have to cool off like any athlete that has run a long way in a short period of time they need to base move sideways or consolidate. but what we find very interesting is that while gold has gotten overboard on a daily basis it's not close on a daily or weekly basis. >> do you think this is a market wide phenomenal. you mentioned fade faltering in terms of its leadership but still some of the stocks working fine in favor of things like mining material stocks or is it just a gold specific trade right now? >> so, i think a lot of market participants would like us to

believe there would be a trade out of momentum so to speak and into value it would be hard to believe that could sustain. so, it's too hard for us to say if there's going to be this sort of role reversal a la the odd couple with felix and oscar. if history is any guide, gold improving first is a good sign for commodities going future we think oil drags down. >> right just the other piece of the picture, you mentioned what central banks are doing, bond yields right now look like they're pretty kind of compressed on their charts do you think that there's any room for sustained lift in yields or do you think that trend is going to continue >> we're trend guys. we think it will be for continued low yields think it will be hard for yields to turn higher they could have a bounce or rally in yields, but we think

that would be a bounce to buy bonds rather than expect yields to go much higher. >> then just with the bang index, with these gold stocks, is your preferred approach to own a basket or how would you differentiate, if you would? >> we like the stocks we put in our index. it was cute that it was an anti-dote to faang >> franco, nevada, how small >> nevada, nevada. >> nevada, nevada. >> tomato tomato >> franco nevada is a big enough company, yeah. >> nevada. look it up. >> with that, john, thank you. >> thanks, mike. >> we'll get the pronunciation right. the democratic candidates are all proposing different tax hikes on the wealthy, but they are united around one.

capital gains. so what would it mean for the mark markets and the economy if it was increased. we'll debate that after the break. futures at this hour up a little bit, 40 points kind of a wait and see tired of the fed i would rather look at earnings. we'll get a lot of those this ek we"squawk box" will be right ba.

welcome back to "squawk box. more and more democratic

candidates are pushing for a hike on tax near and dear to all investors. we look at proposals that could raise capital gains taxes. good morning. >> good morning, andrew. joe biden, bernie sanders, beto o'rourke, amy klobuchar and john hickenlooper all saying the capital gains tax should be higher biden last week saying his 750 billion a year health care plan would be paid for in part with increase in the capital gains tax. what would a higher cap gains rate do to the economy, rev nus and the stock market the top income tax rate is 37% many of the candidates want those rates to be equal. saying work shouldn't be taxed more than wealth now the lower capital gains rate cost the government about $120 billion a year the last time the two rates were the same and they have been the same before was in 1987 under ronald reagan. both rates at 28%. now at that time, revenues from

capital gains doubled in 1986 as those investors rushed to sell right before the higher tax took effect then revenues fell by half in 1987 smoothing out after that. stock market was flat the first year then up about 25% in the three years after. now most studies show no correlation between the economy and stock market and capital gains rate now a new study from the tax foundation found if the rate was increased revenues could and they say could fall by $122 billion a year gdd could fall slightly. so basically they're saying a lot of volatility when you change the rate but overall the market and economy are driven by much bigger things so it's hard to point point and say which is what the effect would be. >> let's bring in roger altman, founder and senior chairman of ever core.

roger, your point is that if it is done, it's done in the issue of fairness between work and capital, not taxing it differently because it doesn't raise enough money but 120 billion if it worked in a vacuum, that's a trillion over 10 years >> twlrhere are a lot of debate about whether there's a point of diminishing return in terms of capital gains tax rate, above a certain point it begins to lose money because investors delay selling assets but i think -- i must say, i think the main argument is the one you made in terms of higher capital gains taxes which is the same argument that bill gates recently made which is that you should not penalize work -- >> was there initially a rational that capital formation helps or needs to be

incentivized, isn't that what we always thought it's sort of implied that you want people to invest long term, you want advantageous? does it not work >> you're right about the original to the best of my knowledge. remember, capital gains tax rates have historically been higher than they are now president reagan's famous 1984 reform act put the capital gains tax rate at 28% in the '90s which were boom years that's where it was generally speaking. obviously look at the economic rurlts in the '90s; it didn't deter activity >> we have people in who said i don't care about capital gains but you think -- you think marginal rates are where the money is but you also mention corporate taxes. i needed to ask you, were you not in favor of lowering corporate taxes? would you raise corporate taxes? >> i was in favor of lowering

corporate taxes but not as pad as they were low elower. political forces got a lot of momentum and the rate was set at 21 i any 21 is reasonable >> they're averaging 19% you're jonesing. what can we talk about this for a sec in do you mind are you sure >> i have a question >> can he actually answer mine >> continue on. >> you sure? >> i'm not sha sure. >> is 19 put us below the world so our companies van unfair advantage or make it more even with the world >> i would have to double check the numbers. i think 19 would be a little below the industrialized --

>> but that's not where -- willy sut p would fot go to corporate taxes either he would have to go to marginal rates not just to rich people but across the board if you really want to raise revenue, don't you need to do that >> raising the corporate tax rate to 27%, number one, two, higher marginal rates on w2 income depends on the rate, of course would raise generallyspeaking more money than that and there's all kinds of debates about -- >> you have to go down. >> more fair estate tax. this is a huge debate, right because the core of the debate is whether you think the country needs more revenue or you don't. even if you don't buy the idea of democratic issues, we have 90

billion deaf set this year that's a bad place to be at this late in the economic cycle. >> let me ask you a question, would you raise capital gains rates to match marginal tax rates? >> well -- >> that's the fundamental question. >> the answer is yes. >> yes. >> but i wouldn't raise marginal tax rates to 50 or 60% the argument is we're going to set marginal rates at 60%, do you think the capital gains tax rate should be 60%, no marginal rates should go up but not astronomical -- >> does the capital gains rate have to be lower than the marginal tax rate? >> no. >> the question if you're somebody relying on these investments, take bill gates out of it, if you're somebody who is a retire e selling equities every year to live, do you say under 20%, in terms of

incentives it's sbrinteresting. bill gates has nowhere else to put his money so he'll invest the money. >> there are three tiers in the capital gains tax. >> correct. >> if you have limited amount of income subject to corporate tax rate it's lower. if you raised the top capital gains rate, for example to the current earned rate, do i think that would deter investment or growth, i don't. >> it's not enough money to do what you want to do. >> no. >> there is no more progressive tax than the capital gains on the other hand, as you mentioned, capital gains realization are very discretionary. the wealthy and that group can decide when. so what do you think that break point is to where it gets so high that you just lock in investments, they don't sell, don't generate revenue and

declines. >> if you change the estate tax, then it trickles down. >> maybe even people who are living the rate is 37% up from the current 20, that's going to lock in a lot of investments and you could see even though these democrats talk about we could make $100 billion, you could actually see a major decline in capital gains. >> you know the estate tax today only kicks in for couple who has -- >> $22 million. >> assets over $22 million that's a bit of a joke so i think -- >> no one pays it. >> part of this whole package, you have to have an estate tax or don't and if you want to have one, i think you should, that's not a rational one. >> doesn't matter what the capital gains rate is. if you have know state tax, then the capital gains is irrelevant. >> almost irrelevant. >> what did you decide to do you have a bunch of trusts and everything to protect. you're over that, i'm sure how are you protecting that for

your ancestors >> i hope i have done some intelligent estate planning. >> i'll pay meaningful taxes if i get hit by a taxi walking out of here. all i have done is just try to plan for my kids and be sure they have some, you know, reasonable basis to be able to -- >> that's a great thing about having a lot of money. >> you're asking whether i have given all my money to my kids, i haven't. >> have you taken the steps most wealthy people have taken to minimize estate taxes. >> yes. >> you would be happy they change the laws you couldn't or no make it more complicated. >> i think we should have a higher effective estate tax which means lowering the threshold which it's eligible. >> what's that number? what's that number for you 22 million is too high

>> oh, i think the number should be something like 2 million. >> 2 million >> 2 million. >> everything above that. >> subject to some estate tax yes. >> this is the biden idea step up basis, get this accumulation of untaxed wealth. >> that's not untaxed. that was taxed first time around we're now trading into double t taxation. >> unless it's sweat equity in a firm a founder started in which case that was never taxed. >> but this idea -- >> there's a lot of just taxing what you made in your life time. >> that's right. the capital gains tax -- >> fine. you have to decide, that's a different system than what we're used to. >> it's true that capital gains tax is itself often a second tax. it's a double tax. >> given dollar in the economy only should get taxed once is this artificial -- >> if you think personal

property and things we decided 300 years ago don't matter, i guess. >> more complicated, what about philanthropy you have a bill gates or warren buffett who will never bet taxed either maybe it's appropriate maybe it isn't where do you stand >> i don't think we should do anything in the country to deter philanthropy anybody who gives away all or her wealth and therefore avoids taxes i don't see a reason. >> a lot of wealthy people would prefer philanthropy. they're not going to say they're interested in philanthropy. >> if you're asking me whether a system which allows people to give away all their money -- >> i'll make it difficult. i'm a huge admirer of what bill gates is doing. >> me, too. >> a huge admirer. >> me, too. >> a majority of the money he's giving away snot given away in the united states. if you're living in the united

states -- he's a great beneficiary of living in the united states. he is saving all sorts of people and doing wonderful work in africa. >> right. >> people can debate -- >> he is also a huge supporter of public education in the united states. >> this is not an argument against bill gates i'm just suggesting to you to the extent that the guy on the street their taxes are ben fitting -- to the extent they're paying them paying for roads, paying for this paying for that, some of the great wealth and fortunes in america may not be that's -- you have to decide how you want to deal with that that's a question. >> yeah, i never heard that argument before. you could argue getting rid of malaria in africa -- >> benefits the united states. >> look, mied a min ration -- >> it's interesting. it is u.s. taxpayers and very few, if any, other countries subsidize it so we are essentially subsidizing global philanthropy. >> well, keep in mind, that

america to its ever lasting credit is the world capital of philanthropy by factor of a million. and parenthetically there's no nation on earth that's ever been like america in that way. >> what philanthropy does at the wealthiest levels is effectively gives you or somebody else the right to decide what they want to pay for where as the guy on the street doesn't. right? the guy or woman on the street is just paying their taxes they're paying for everything around here. if you have great means and get to give it away and not pay the taxes, you get to choose what you're paying for. i'm not saying it's a bad things, it's a question among the larger debate. >> the taxpayers are subsidizin your choices. >> there's a cosmic issue about the rolephilanthropy. >> you're close to democratic politics you know all these candidates. what chance do you think any of these proposals whether the estate tax, the capital gains

tax, increasing ordinary income, what chance do you think any of this has of happening? >> well, that depends on the outcome of the election in terms of the senate. so, if the republicans continue to hold the senate after november 2020, this is going to be hard, hard to the point of dubious. >> right. >> if the democrats capture the senate and i think the odds makers say that today is not that likely. >> right. >> but possible. >> then you can use reconciliation, the reconciliation procedure on taxes and budgets and you could actually implement a sweeping agenda of the type we're generally talking about here although, it's not -- you couldn't lose a single democratic vote if you had a one or two-vote margin which is the best democrats could expect. >> you don't see any republican compromise in any of these proposals even a few percentage

points on capital gains or estate tax >> if the debate was limited to one item. >> yeah. >> the capital tax gains going from 20% to 28 prts i'm not sure you could argue that, in terms of raising revenue with a big agenda, a new president i think will propose, i don't think you're going to get a lot of republican votes for that so winning the senate or not will be the real lynch pin here in terms of the types of matters we're talking about this morning. >> bill gates has paid a fortune in taxes i was just looking separately. just to put that out there okay. >> we're good on that. thank you very much. >> thank you. coming up, bridging the gap between cannabis sales and bings. there's a hearing to tackle this problem on the hill. we'll discuss in a few minutes

here are the futures dow up 46 at this hour we'll be right back.

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after oil tanker is seize md. big tech on deck three faang names set to report earnings this week where do they fit into your portfolio? >> time is running short can lawmakers reach an agreement before it's too late the final hour of "squawk box" begins right now ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box. ♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with mike san tolely and andrew ross sorkin. becky is off today she'll be back on wednesday. maybe it's a couple days off, birthday celebration, extended something like that from last week. >> maybe so. >> i like the way you put that in your calendar so you can pretend you know -- >> i have your birthday on my

calendar too. >> i know you do if i knew how to do it, i would do it. then i would care. >> you don't have people's birthday on your calendar? >> no. >> it's not your birthday, mike? >> not soon. you're not thoughtful enough to learn how to put a birthday? >> no. who makes the cut? who makes the cut. all 40 so i have to put in there. and then do i feel good about not including some people. suddenly i'm ranking people in terms of birthday worthiness i don't know >> very difficult. >> remember seinfeld sponge worthiness futures are indicated 40 you remember that? you did. work with me i need you you probably do. >> yep >> i don't >> knock me down with a feather. all right. let's check out the ten-year i think it's 2.04% it would make you uncomfortable.

2.04%. >> okay. >> here are some of the stories investors will be talking about today. great britain weighing a response after iran captured a british registered oil tanker late last week in the straits of hormuz iran releasing new video showing commandos repelling on to the deck of the tanker from helicopters. world energy markets responding to all of this tension oil is up this morning wti crude 56.20. we'll get a live report on the latest from the gulf this hour also separately huawei suppliers heading to the white house to get clarity today on how to do business with the chinese tech firm. u.s. officials including larry kidlow and stephen mnuchin expected to lead the meeting of software executives. intel, qualcomm and micro soft were among the companies invited

to this meeting. we'll keep our eyes on that one later today. disney's "lion king" topped the box office despite mixed reviews. that was the best july opening we should mention for a movie ever it's so cute look at that little guy. take a look at shares of disney right now $141.15. it has been on a tear ever since the announcement of disney plus service which is expected to begin this fall. we have some breaking news this morning on a settlement from equifax after that massive 2017 data breach we are joined with more details. good morning. >> good morning. equifax the credit reporting company is set to pay up to $700 million in a settlement with federal and state regulators over that massive 2017 data breach that left the social security numbers, birthdays and credit card information of up to 150 million people exposed under the terms of this

settlement, largest ever for a data breach in u.s. history, equifax will pay $425 million into a fund for affected consumers. it is guaranteed to pay $300 million and said it would go up to 425 million if that origin snal figure is not enough they will pay 175 million to 45 states and about $100 million will go to the consumer financial protection bureau in penalties there. equifax said several quarters ago they would set aside $690 million in legal reserves to pay for this expected settlement certainly this would seem to be in line with what the company had already set aside and also under the terms of this settlement must have its security back end assessed by a third party every few years so federal regulators can assure this doesn't happen again. back to you. >> kayla, thanks. lawmakers in washington are

starting off the week still looking for a deal to raise the nation's debt ceiling. >> good morning, joe i'm told the agreement that's taking shape between the whougs and democrats would lift the debt ceiling but without major spending cuts. the administration requested at least $150 billion in spending reductions and they provided democrats a list of options that totalled $1.1 trillion late last night a source told me democrats agreed to significantly less than that treasury secretary stephen m nuc nuchen has been leading those negotiations and he spoke with nancy pelosi they plan to speak again this morning. they need to reach a deal in the house needs to pass it by the end of the week. the house goes on summer recess on friday. the senate leaves next week. if they don't raise the debt ceiling before they go, congress could be out of town when

treasury runs out of money on friday, president trump provided the market some assurance when he called the debt ceiling sacred. >> when they start talking about using the debt ceiling as a wedge to negotiate for things they want, they have told me very strongly they would never use that that's a very, very sacred things in our country, debt ceiling. we can never play with it. >> i'll keep you posted of any new details of the deal as soon as i have them back over to you. >> speaking of, the president pretty long tweets here about the fed 62 million followers says with almost no inflation our country is needlessly being forced to pay a much higher interest rate because a misguided federal reserve. it's hard for our country to compete. interest rate costs should have been much lower and gdp in our

country's wealth accumulation much higher. very unfair that other countries manipulate their currencies and pump money in and then last but not least, the economy does in the future turn down, very inexpensive in fact productive to move now. sounds like he's arguing for a bigger cut when john williams, the old john williams, not the new john williams. the fed raised and tightened to far and missed it big. don't miss it again. all right. we'll continue this conversation right now more on the debt ceiling showdown we want to bring in your guests i want to ask both of you, landon, we'll start with you i anticipate that something will get done, we'll go up to the wire, will look like fireworks

and we know how the movie ends, no. >> yeah, i think that's probably right. i continue to be a little skeptical that the big deal the so-called big deal, is going to get done i think it will be something shorter term i think everybody recognizes this is not something you want to play politics with given where the economy is it's not something you want to play politics with given both sides looking ahead to a presidential election and certainly benefits the president more to get this off the table through next november, create less uncertainty but you know, there's a lot of disagreement between republicans about whether, in fact, you want to do a deal that doesn't actually restrain spending you want to get rid of the caps from the sequester from the budget control act in 2011 but don't want to replace with any kind of fiscal restrain. that will be difficult for some republicans on the hill as well as some within the administration like mick mulvaney to swallow. >> joseph, what are the dems going to do? >> democrats on the house side

have already spoken very clearly about wanting a two-year deal on the spending side and probably the debt ceiling as well, just to take everything off the table before the election. i agree on most of the diagnosis of the political situation the one point i think is important to understand our budget problem has nothing to do with annual appropriations they have been falling as personals of the economy they have been falling in real dollars over the last ten years. going back through the history of the budget, they have been a limited part of the budget, the growth that we have is primarily in health care to say that you're showing backbone by screwing down on the annual appropriations really is mischaracterizing. >> explain this to me, why do democrats want to push this out past te election which would mean that if, in fact, democrat were to win the white house, the first 100 days are typically

when a president wants to have a signature moment is going to be spent fighting last year's fight over having to deal with the appropriations. >> the president, if this deal is done, it will include fiscal year 2021. which means that it will be october 2021 before another appropriations cycle has to be completed. at that point, of course, with the new president, the table is clear and they'll be able to negotiate there. i think you're correct, however, the point behind what you're saying is democrats are more concerned with getting to the election than they are getting through it. >> isn't that surprising, am i crazy? >> no. i think the political benefit largely goes to the president here if he's able to take the uncertainty down for two reasons, one because you don't have to deal with it as a campaign issue "squawk" the

other thing for the economy and president running on an economy that will be strong going into next year, you don't want to do anything that potentially creates compromise on what the situation will be economically as we get into the second quarter of 2020 and people are beginning to assess how am i doing as i think about who i'm voting for no, i think there's greater political benefit to the president. for democrats the idea here is look let's take this off the table because we want to talk about other stuff rather than talking about the economy or issues relating to the budget. >> mike santoli, i have a question for you. >> yeah. markets typically in these situations. >> markets have been conditioned to assume everything is going to be fine. >> always. >> yeah. well, the muscle memory from 2011 there was a bit of a market panic. did seem like they were down to the brink and obviously got to an agreement there ironically what does the market do when they get concerned

they buy treasury bonds. >> is there hangup to keep this from happening >> the one issue the relationship between the president and his base there is a perception totally ungrounded, i believe, is there is a perception that this is the budget fight and for the president to allow steady as you go increases in appropriations for both defense and non-defense spending it's possible that part of the president's base will be unhappy, how long they will stay unhappy is another question. >> what's their alternative? that doesn't matter because it's not somebody running against him. that's part of his party. >> they don't have an alternative. and the alternative in policy terms, as has been suggested already, is instability in the economy at a time when the president certainly wants to continue a strong economy into the election. >> we'll thank both of you appreciate it this morning thanks, guys.

>> thank you. >> i think that stanford guy might be running, right? that dude that memory went running down to south america for something, left his post as governor. >> yeah. that doesn't -- >> oh, you mean to challenge the president? >> yeah. >> there's your option. >> that's your option. don't look at me. >> that's right. you would never look on that side of the aisle. any way, go ahead. coming up, a high stakes week for the cannabis industry nearly a quarter of the united states has legalized pot but access to banking services is one of the biggest hurdles that's next. you're watching "squawk box" on cnbc stay tuned ♪ 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.

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welcome back to "squawk box. this week the senate banking committee will hold its first hearings in the cannabis challenges has with the banking system what's at stake is jared seaburg. good to talk to you here what are the terms of this debate right now obviously remains kind of a federal criminal activity to bank with this industry. it's mostly cash business. what's going to be discussed

this week? what might represent clarity for the industry >> well, you know, it's a quagmire of an industry. what other industry can you think of where you have the fed saying it's illegal and you have the state saying go ahead and do it any ways. the banks find themselves in the middle that's what the senate banking committee is going to look at. they're looking at legislation that would allow banks to serve adds cannabis companies in compliance with state law. it's seen as simple way to try to get that cash off the street and to provide greater accounting and if the added benefit is that it's easier to collect taxes and keep track of all that, i think governors are pretty happy with that as well. >> yeah. that has been an issue even on a state basis in terms of states attempting to estimate how much tax revenue is going to come from this legal above board activity and maybe it's been somewhat disappointing >> yeah. i think you have two things at

play certainly you know an all-cash business is difficult to pay your taxes there's always the anecdotes about armored cars pulling up but it's broader than that think about it if you're going to go down to the local 711 and buy a six pack, pull out your credit card, your debit card, but today if you want to go to one of these cannabis dispensaries in a state that's legalized it, you have to hit the atm first. you have to bring a wad of cash. and as you think about the competition between the illegal and the legal market, you know, getting this into the banking system really should give the legal side, which is taxed, a big advantage. >> now, what do you think the prospects are for this bill, for this safe banking act that would enable banks to deal with the industry >> well, i mean, that's what all the fun is going to be about this week. when you think about it, the

senate banking committee, is sort of the first step in the senate to try to see if you can get majority leader mitch mcconnell to even consider a cannabis bill while the majority leader is very supportive of the hemp side on cannabis itself he has not been an ally, in fact, he has been the major roadblock. what our hope is and our expectation is that if you can get some traction in the committee hearing this week, that you're going to open the door for attaching this safe act to some broader bill whether it's the spending package that was discussed in the last segment or some other broader bill early next year. >> now, if it doesn't happen, just how much of an impediment does that remain for the industry it seems like if you look at the cannabis stocks, they have been racing ahead, gaining lots of value, lot of excitement in the area but it's about the relatively distant future, the

process of legalization it's not about doing business today as much where does the industry stand in terms of being held back by the banking rules? >> so, i mean, couple great ways to think about this. first of all, there's no access to the capital markets and so if you're involved in cannabis directly in the united states, you can't raise debt if you want to play in this space, it's harder to raise debt so you have a capital markets problem. more fundamentally, though, you don't have a bank account to be able to write your paychecks to. if you can convince one of the 200 to 300 very small community banks and credit unions willing to service these companies, every week you're wondering, okay, is my account going to get closed is this going to be the week that they decide that they can't accurately track what i'm doing.

you know, that's just -- you can't manage a business that way. and that's theproblem here this has quickly emerged from something that goes on in back alleys to something that's on main street. it's a real business now but it's the only real business we have in the united states with no access to banks. >> you mentioned leader mcconnell's opposition to full legalization of recreational cannabis, does that mean that essentially this is not necessarily going to go anywhere this round >> yeah. that's the big hurdle. the question is what can you do to force the majority leader's hand on this issue he got what he wanted last year in the farm bill, which was legalization of hemp hemp is a big product in kentucky so when we think about, okay, what can you do to advance cannabis that is not going to get the ire of the majority

leader it's these narrow bills like the safe act on banking. there's a number of bills on veteran's medical use to deal with post-traumatic stress disorder those are the kind of provisions that you can talk on page, 2,113 of a massive bill and you're not actually having a debate on cannabis the big legalization stuff, we just don't see the majority leader wanting to devote two or three days of floor time to talking about marijuana. >> yeah. all right, jaret, we'll watch how it unfolds on the hill this month. thank you. >> absolutely. boeing set to report quarterly earnings this week analysts are expecting a multi-billion dollar hit from the grounded 737 max situation what do investors and the rest of the flying public need to hear from management that's when "squawk box" returns after a quick break.

welcome back to "squawk box. futures right now still showing modest gains looks like 54 points on the dow at the moment. and the nasdaq up 26 s&p 500 up just about less than a quarter of a percent at this hour on friday, we told you about that big event that was set to take place in new york city this past weekend, the music ideas

and food festival known as ozzie fest however, blanketed much of the country including new york forced ozzie fest organizers to cancel the organizers and in a message posted to instagram, ozy fest ceo said ticket holders will receive a full refund he's working with new york city to bring ozy fest back this fall we should note that cnbc is a media partner of ozy fest. >> do you think they have insurance? you must have insurance against something like this? then you have to get all the same people to try to come back, make it all work. >> john legend. >> cramer was going to be interviewed on the plaza. >> a lot of the speakers and performances are people paid people who are flying. hard to do. coming up, a potential make or break week for boeing we'll preview second quarter

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♪ welcome back to "squawk box" on cnbc live from the nasdaq market site in times square. here are some of the stocks on the move in premarket trading. hall burton reported quarter will i profits of 35 cents a share, 5 cents above estimates was helped by recovery in international markets. ski resort operator vail announced the acquisition of peak resorts in a deal worth $11 a share in cash for 264 million. peak is a relatively small company but it does own 17 ski resorts including hunter mountain in new york, mount snow in vermont. >> oh, man. >> and the mecca of downhill in ohio, mad river mountain >> oh, boy

shares under pressure this morning cal-maine shares revenue falling short of expectations cal-maine says it's dealing with challenging market conditions, including an oversupply of eggs in the marketplace hard to believe. >> amazing. >> i live on those things. >> it's huge boom bust that stock, it goes in and out with the adkins diet. >> you can't store eggs. it's not like you have inventory corrections. >> you can keep them for a while. >> not like you can do oil. >> that's true. >> i like all the commodities. >> i'm still stuck on this peak mount snow. >> it gets the epic pass those who use the epic pass, then in new york, hunter is going to get totally taken over >> or maybe you get the pass and include even larger number of mountains. >> you know, i gave you my hard boiled egg recipe.

i got it down. no green around the yolk totally two-piece peels. one or two piece, no struggling. >> okay. we'll do a segment on it. >> we really should. >> i feel like we are right now. no, we don't have time >> let's talk boeing right now has big weeks lately as it tries to get its grounded 737 back in the air, but this could be one of the very biggest. phil le bow joins us with more. >> andrew, boeing tried to get front of this by announcing its charge in the warning regarding q2 earnings that gave a sense of relief to boeing investors wondering just how much this entire thing is going to cost the company eventually when it comes to the 737 max that gave shares a bit of a boost. so what's the outlook in terms of max, in terms of when we might actually see this plane back in service, back in the air. first of all the company is saying that there is still in the midst of simulator testing they have been doing this for weeks. that will continue this is part of the process where they are systematically

going through with faa investigators what works, what doesn't work, what needs to be tweaked before they finally submit an application for recertification. they have said all along they expected to be fixed in the september time frame but they're not giving a specific date last week boeing did reiterate their assumption is that the airplane will return to service sometime in the fourth quarter now for boeing and the airlines, this is crucial. especially the three u.s. airlines that have the max in their fleet. they have all said they're taking it off the schedule until november 2nd american airlines by the way don't forget that they are going to be reporting earnings also this week. they do it on thursday we'll be talking with doug parker, the ceo of american airlines that happens again on thursday and then you have boeing reporting earnings on wednesday. that happens before the bell but guys, most of the big questions regarding the impact of the max, that's been taken off the table with the company's preannouncement earlier this week still, that's going to be a

conference call for dennis mullenburg with the analysts a lot of people will be focussed on also to get some sense of the tenor of what to expect with those boeing earnings. >> thank you, phil joining us more for more on boeing and the work it has left to do with 737 max crisis, senior associate dean for leadership studies at the yale school of management, jeff is also a cnbc contributor. what else, jeff? i mean, other than the monetary things that we're going to be reporting on, still more public relations? >> yeah, there's public relations and more work to be done in reassuring pilots who seem to have this pretty well figured out and the air carriers that's where management has been spending a lot of their time quietly but intensively. i think -- i hate to disappoint joe usually when i can come on the show i can either be pretty caustic and critical about

certain management teams or even be playful about other situations this one with the loss of these 346 lives this is obviously a horrible tragedy it's impossible to come out with colorful, satirical, 1960s tv references or all the things we use, this is a horrible situation. and i think if there's anything to point to with confidence and pride what doesn't kill me makes me stronger, boeing will be a stronger company coming out of this, but they have done a lot of things right and a lot to be proud of even though the headlines don't often reflect it i think the management has been as transparent as they could be given that everything they knew was what the investigators knew and they had to sit back and wait for the investigation by protocol and they have been century or so tradition of respect promoting safety i think that still shines through here despite this tragic event. and there were sometimes

horrible things happen and it isn't the result of misconduct on a morning where we're looking at the crisis, of course, at equifax where there was gross misconduct and properly punished for it, i think this stands in counter to an example of sterling leadership. it also happens to be an incredibly strong board that doesn't get talked about much, but the expertise on this board is off the chars they seem to feel very confident with management and the direction of the company has taken in making some corrections and some repairs and allowing for some liabilities in a very, i think, fair way. >> and the outline quite a few of the settlement-type issues last week in the stock i thought was a little bit -- what did you think of the huge move the stock made one day last week, jeff >> it's incredible how the market has responded as we have seen at most the company took a hit of maybe 15% sock price through all this and

if you think of the 737s maxes are perhaps 40% of their product revenues and that that wasn't seen as a danger to the market it never dipped much they come out with as phil and then you point out this $5 billion charge and $100 million of damages with 50 going to the victim's families that the stock jumps up $16 i think they were great to hire the brilliant ken fineburg to wrestle with the damages he has backbone, courage and fairness the king solomon of the modern age, same person we saw 9/11 or gm or other crises, somebody that steps in to really help victims wade through the damage issue so i think they have done a lot of things right. and the software fix, it's basically i think some software transparency that they're

working on the faa will be i guess certifying that probably getting that passed through in september and the planes should be up by q4. we saw the endorsement they got from boeing and airlingis and that whole system they bought 200 planes i don't know if that's $24 billion of list price or whatever as a pretty good endorsement coming in off the paris air show and once the pilot saw what the m cass system was, they realize this is the automatic pilot, they didn't feel they needed to be retrained, but there will be training on this i think they would have liked to know about the stall feature basically everything a pilot needed to know was known and easily to see, altitude, speed and engine performance and there was an indicator light that is not a safety feature that anybody has ever relied on in commercial aviation that wasn't clear how it would

function on the instrument panel, but that isn't what pilots use to fly the plane. so that -- anyhow, they have made those corrections i think that it's looking like a pretty encouraging story i think there are a lot of people that were expecting the stock to have dipped far more than the 15% it's a great buying opportunity. but, in fact, i think this is going to be a very, very strong performing company and they're right to be apologetic and remorseful to the victims as they were and their ceo dennis mulenberg is a transparent, humble, honest engineer, i think a pillar of integrity. >> the downdraft in the averages this december inflicted a lot more damage to the stock price than this horrific situation that the company has been going through. that might say something, too. will it be a 20/20 story or we won't be talking about it in 2020 do you think? >> i think we'll take a look at the model of resilience this shows. we live in what allen brinkley,

a historian al colombia referred to as a culture of scandal we love to whistle -- many times the whistle blowers are accurate, but in this case we love to vilify management, vilify business. sometimes bad things happen, and it isn't due to intentional misconduct or anything being concealed. and i think we'll see how transparency and thoroughness will pay out and i think that the fortification of trust -- you take a look. there are 24 different international regulatory agencies, 9 in particular in a federation reviewing this in addition to the faa the national traffic safety board going through transportation safety board going through this analysis, so it's a very complex issue. you have 900 vendors involved here so there's a lot to wade through. boeing was the general contractor there was a decision made by a subcontractor that separated two types of indicators that tied in with this and took a little while to figure this out what was going on. >> jeff --

>> yes. >> do you think that boeing should rename the plane? >> no. >> do you think it's better to keep the max on the name max on or off >> i think that in fact when you see all the reviews that this is getting that any new piece of equipment and phil would back me up onthis gets certified the damage investigation is separate from certification processes. damages right now the investigation of the crash issues are all quite international. but the certification process is always the home country that certifies the equipment. and this case you're going to be certified globally in ways that no piece of equipment is so, in fact, this is going to seem like for sure the safest piece of equipment flying out there. so it will be, i think, a very strong badge of support. and you're not fooling anybody, i think, by the superficial nature i think of changing the

name if they did, then certainly every media outlet everywhere would tell us the new name. >> do you think wework should change its name after the ceo ahead of the ipo do you have a comment? where do you come down on that >> there's a ceo with much more questionable conduct here a company losing $2 billion a year, $120,000 every hour, everyday and just before the ipo he wants other people to invest in, he takes out $700 million himself. really hard to understand this after a period of self dealing, too, where he winds up becoming the landlord back to the company of this space. i don't know, his name, as you know, is adam newman and sort of ironic that next month alfred e. newman goes out of business. mad magazine runs its last news. his motto is what we worry in this case, why we should

worry. i think that clearly there's a lot of question able the pumped up valuation they have they have competitors out there. weworks is providing real estate, bean bag furniture and espresso machines and whatever else they're putting in there, but certainly is no technology >> you're dating yourself, i mean, remember mayor pete never heard alford e. newman people when they're buying into this are going to be going -- newman use that in the future we have to run, jeff thank you for that broad array of stuff see you around. >> thanks a lot. coming up, big tech earnings are imminent three faang names getting set to report quarterly results this week we'll talk about which names could make the most sense for kees portfolio and which nam ma sense stay tuned you're watching "squawk box" on cnbc

and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley.

♪ uk weighing a response this morning after a british flagged oil tanker was captured in the strait of hormuz late last week. nbc's matt bradley joins us now with more. hello, matt. >> reporter: mike, you know, the latest development here is both seizure of that tairnker on friday, but the iranians have come out with 17 names or 17 people they have identified as central intelligence agency assets in iran they're all iranian citizens,

some of them they say are probably going to be sentenced to death or at least all of them given long prison sentences. now, iran has done this before they have come out and accused various iranian nationals of being spies for the united states it's unclear whether they're actually earnest about this, whether they're going to go ahead with the punishments or whether they're going to use this as part of this escalating it far at the that's going on here in the gulf now, as you mentioned that ship was seized on friday just yesterday we got fresh audio showing exactly the interchange between the royal navy and the iranian revolutionary guards it was a very tense moment with the royal navy trying to push off the iranian guards from seizing a british-flagged tanker in the strait of hormuz not far from where i am here in doha in the end, they seized the tanker, brought it back to a port in iran and we have fresh footage yesterday showing that tanker now flagged with an iranian flag all of this is very troubling

for oil marketers. "the wall street journal" saying the brent crude price has gone up by 2% and that could benefit oil producers in the united states now going ahead with this, the uk government has been meeting this morning led by theresa may the out going prime minister this is striking at a very tense and precarious political moment right when there's a handoff of power from theresa may probably to the next prime minister probably boris johnson there's a lot of uncertainty heaping on to this already uncertain situation, mike? >> matt, thank you very much yes, we will continue to watch those oil prices we have a big week for tech coming up with a number of companies reporting earnings adds the journal pointed out this morning, we have microsoft, apple, amazon, facebook. they account for almost a fifth of the s&p 500 total returns this year, joining us to talk about what to expect for this group and the broader market is paul, portfolio manager for the

wire less fund and veteran tech investor we'll be hearing from a lot of these companies. you want to be in the market this week or do you buy on the rumor, sell on the news? >> yeah, i'm a little bit cautious you know, when ever i come on the program i always want to be honest program, i always want to be honest with you guys and your vee viewers. i'm a little bit worried about the tech stocks' valuation and the much bigger worry is the macroeconomic backdrop that being said after we get through the nastiness last week in netflix, i expect the rest of the faangs and the majors to report not stellar results but solid results. but still with the run-up that we've seen in tech stocks so far in 2019, i would rather be a watch-and-see portfolio manager than somebody aggressively buying ahead of quarters. >> is there any of these stocks you'd want to own ahead of the

quarter? >> i was pretty intrigued this morning when i read about goldman sachs' upgrade of micron, which is the most commodity of the semi conductor group in d-ram and flash memory chips. if they're indeed right and we see early signs of a turn in semi conductors, that would bode well for the sector because semi conductors always lead us in and always lead us out >> when you think about micron, though, you also invariably, or at least i have been thinking about huawei there's a big meeting with many of the big technology companies at the white house today to try to understand what the u.s. government is going to allow and not allow in terms of what tech companies can do business with huawei how important is that? >> i think it's very important and even though there was a bit of a relief or at least perceived relief after the latest exchange between the two heads of government, i still don't know what the policy is officially on the u.s. side of the house with huawei. and of course huawei is a major

player, and a major player of import because of so many of the u.s. components going to those systems. that's what i meant at the outset of my comments about aun certain backdrop that macroeconomic factor and others are the biggest worry that i have for the tech sector. >> of the faangs, is there any one you don't want to own at all right now? >> going into the reports on the rest of the faangs because we've had a little bit of action so far, i'm probably most worried about alphabet, given the slowdown in growth the other companies i don't think are interesting valuations, but i hold them and i think the reports will be not spectacular but solid. >> hold on, hold on, back up you're worried most about alphabet people always thought that was one of the undervalued plays here. >> it is an undervalued -- i think so, it is an undervalued play relative to the others. the problem is its growth has slowed

now we're into the teens which is heroic for a tech company but not great particularly for alphabet the last time they reported, there was some disappointment in the slowing growth unless that turns, and i never expect quick turn-arounds in these type of things, they still could be under pressure. >> paul, i wondering how you're thinking about microsoft last week there was a big pop at the open in the stock the next day and it gave most of it back it's indicated to open up a little bit today but what does that tell you in terms of valuations and what's already priced in? >> i think that's an excellent point that you made. now, remember, that was on a backdrop of a day when the overall market was down fairly significantly. but you're absolutely right, that's one of the reachsons i'm just a cautious holder of these names. some of them have come too far too fast and reflect a best case

scenario when you're an investor and in the situation of overbought or overvaluation, even for great companies, you have to be cautious. >> paul meeks, great to see you. thank you, sir. >> thank you. >> we'll keep our eyes on these numbers this week. let's get down to jim cramer at the new york stock exchange jim, over the weekend you probably looked at all 133 s&p companies. you probably have a pretty good idea which ones are most noteworthy to watch just for -- to try to gauge overall earnings season or the economy and everything else? >> i think caterpillar is number one. i think it's supposed to be a new caterpillar, much less levered to china than we think and i think that's fascinating because it had used a china play this stock is hated by i think most of wall street analysts and i think people believe that we are in a slowing cyclical environment. this could be a show otherwise i think that could be a surprise it could be a surprise to the

positive. >> we were just talking all about the faangs, you probably heard the alphabet comments. >> yes. >> do you share that view? >> we still don't know why it decelerated. that's really fascinating to see a major cap company where the number that we thought was going to increase, which is advertising, we saw deceleration so your previous guest, they have a lot of explaining to do they never complain and they never explain. that's a difficult thing if you're trying to build a model. >> do you think we'll be able to put the fed on the back burner because of all these earnings reports or will it still be something we just need to pay attention to >> only we would make it front burner because they just keep talking and talking. thank god there's a blackout soon what matters is the earnings we know that their bias is to want to cut rates. that's better than anything. once they cut rates we have to worry about whether the bias is over what matters to me is earnings, earnings, earnings

we saw that last week. there was that call the previous guest referenced on micron i think that shows you if you do aern earnings call, that can stt going. it's infield fly rule. i prefer home runs. >> you had some comments on oil trying to explain what's happening. can you do that with the time we have left? >> we have the strait of hormuz chokehold. what do they look like the iranian speed boats? how did they take the british fleet down, twin 80s fishing boats? >> probably not boston whalers. >> great whites? where is the british navy? didn't they like beat the japanese and germans geez, speed boats. if they do 50-foot yachts, they shut down the whole thing. >> people point that out

the decline of the british empire, they point to the navy is there a navy? >> i think the navy is great there. something is doing something wrong because we know the british navy can shut down anybody using great whites. ha you, jim. stay tuned "squawk box" will be back in just a minute.

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quick final check on the markets. the dow looks like it will open up higher. nasdaq looks to open about 23.5 points higher, s&p 500 looking to open 6 points higher. mike santoli, thank you for hanging out. "squawk on the street" starts right now. good monday morning, welcome to "squawk on the street." buckle up for earnings a third of the s&p reports this week, including amazon, facebook, cat, boeing, tesla and more we'll watch that china trade, this guessing game that is the fed right now. europe is green, oil obviously is key with the detention of those uk tankers in iran our roll back begins with the busiest